Johnson & Johnson Subsidary Acclarent Settles Illegal Marketing Case for $18 Million

Johnson & Johnson’s subsidiary Acclarent recently settled False Claims Act allegations brought against the company for a record $18 million. Justice Department documents show that Johnson & Johnson will face a one-time payment of $18 million, plus interest.

The case quickly gained national attention after a whistleblowing claim made by an Acclarent sales team employee. The employee, Melayna Lokosky, stated that senior leadership told salespeople to promote the Relieva Stratus MicroFlow Spacer for purposes other than its intended use.

The incident shed light on a dangerous trend of manufacturers illegally marketing medical devices in order to generate higher profits. Off-label marketing puts patients at risk for developing serious, potentially life-threatening side effects. This form of healthcare fraud involves unethical practices and lacks the quality testing required for all medical devices.

Acclarent Relieva Stratus MicroFlow Spacer

In 2009, Johnson & Johnson acquired the privately held medical-technology company Acclarent. It was a move that would boost Johnson & Johnson’s presence in the ear, nose and throat product business.

Acclarent manufactures and distributes devices that provide relief for individuals with chronic sinusitis. Many of Acclarent’s products sold to physicians were to be used in sinus surgeries, including the Relieva Stratus MicroFlow spacer (Stratus).

After receiving approval in 2006, the Stratus was marketed as a device to keep a patient’s sinuses open for 14 days after surgery. Soon after its debut, Acclarent started to to use Stratus as a drug delivery device for prescription corticosteroids – a use that was not part of the device’s original approval. These strong medicines reduce pain to an inflamed area and can cause severe medical complications if administered incorrectly.

Over the next few years, Acclarent continued to market the Stratus for unintended uses. Its sales team also dishonestly promoted it to physicians as a drug delivery device during this time.

Johnson & Johnson Litigation

The whistleblower lawsuit claimed Johnson & Johnson promoted unproven, unapproved benefits of its Stratus device. Other allegations explained that insurance companies were misled in paying for patients’ medical devices that were misbranded, medically unnecessary and promoted for off-label practices.

The government also stressed that Acclarent’s false marketing led physicians to submit incorrect claims to Medicare and other insurance companies for treatments outside of the device’s intended use.

After legal allegations were brought against the organization, Acclarent discontinued all sales of the Stratus and no longer distributes the device in the United States. The company also withdrew any FDA marketing clearances that were associated with the device.

The case settled at the U.S. Attorney’s Office in Boston in July 2016. As part of the agreement to resolve charges, Acclarent will pay a total of $18 million. Ms. Lokosky was awarded $3.5 million in settlement money and will have her legal expenses compensated by Acclarent.

Acclarent’s former Chief Executive Officer and former Vice President of Sales faced legal consequences as well. Following the settlement, both were convicted of 10 misdemeanor counts of introducing adulterated and misbranded medical devices into interstate commerce.