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Drug & Device News

By ALM Staff | Law Journal Newsletters |
January 31, 2015

Company Pays Heavy Penalty for Selling Adulterated Surgical Device

OtisMed Corp., maker of the OtisKnee guide, a device used by surgeons to make accurate cuts during knee surgeries, has pleaded guilty to selling unapproved medical devices. OtisMed, a Stryker subsidiary, and its former CEO entered their guilty pleas on Dec. 8, 2014. The company ageed at the same time to pay civil financial penalties that, along with the criminal fines levied against it, amount to more than $80 million. OtisMed also agreed it should be prevented from taking part in all federal programs for 20 years. Stryker will not be prosecuted, according to the parties' agreement, as long as OtisMed fulfills its obligations under the terms of the settlement within 90 days of sentencing.

The OtisKnee guide entered the market in 2006. Its maker sought marketing clearance from the Food and Drug Administration (FDA) in 2008, but that clearance was denied in 2009. A week later, the company shipped out more than 200 of the guides, thus introducing “adulterated medical devices” into interstate commerce, according to the government. Stryker did not acquire OtisMed until two months after the adulterated product shipments; according to the U.S. Attorney's Office, the parent company was unaware of OtisMed Corp.'s infractions until after it acquired the subsidiary.

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