Industry News Update – November 30, 2011

Former Synthes Officers Receive Prison Sentences

Two former Synthes Inc. executives were sentenced to nine months in prison and a third sentenced to five months in prison for their roles in the medical-device maker's promotion of bone cement for unauthorized uses.

U.S. District Court Judge Legrome Davis sentenced Michael D. Huggins, who was chief operating officer of Synthes, and Thomas B. Higgins, former president of the Synthes spine division, to nine months in federal prison Monday.

John J. Walsh, former director of regulatory and clinical affairs in the Synthes spine unit, was sentenced to five months in prison.

Lawyers for Mr. Huggins and the other executives had argued that prison terms would be excessive, and that probationary or fine-only sentences are sufficient. Each of the former executives pleaded guilty in 2009 to a misdemeanor charge of shipping adulterated and misbranded bone cement into interstate commerce, and agreed to pay the maximum fine of $100,000.

Synthes and its Norian unit agreed last year to plead guilty to charges that between 2002 and 2004 they conspired to conduct unauthorized clinical trials of the Norian bone cement in surgeries to treat vertebral compression fractures of the spine, a type of fracture that often occurs in the elderly. The prescribing label for the Norian bone cement, however, specifically warned against using it for vertebral compression fractures, due to concerns it could cause dangerous blood clots. The cement was approved to fill bony voids or defects that weren’t essential to bone stability.

Three patients died on the operating table after spine surgeons used the Synthes product in 2003 and 2004. To settle the corporate charges, Synthes and Norian agreed to pay $23.2 million in fines, and Synthes sold Norian to Kensey Nash Corp. Synthes, which has its headquarters in Switzerland and has major operations in the Philadelphia suburbs, has agreed to be acquired by Johnson & Johnson for about $21 billion in a deal expected to close next year.

The four men pleaded guilty under the so-called responsible corporate officer doctrine. Under this doctrine, corporate officers can be found criminally liable if they held positions of authority in which they could have prevented or promptly corrected an alleged corporate violation, but failed to do so.

The doctrine is controversial, however, because it doesn’t require proof that a corporate officer had knowledge or awareness of the alleged wrongdoing.

Conclusion: Justice Department, can hold individual executives criminally responsible for corporate violations of food and drug laws even if they were not directly involved with the criminal actions. Corporate officers do not get a pass if this happens under their watch.

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For more information on this FDA Update you can go to the following link: http://online.wsj.com/article/SB10001424052970204443404577052173679627572.html

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