Drug & Device News

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.

Peter Harvey, attorney for convicted OtisMed CEO, was less than complimentary concerning the government's prosecution of the case. “What is extraordinary about this felony plea,” said Harvey, “is that the government has not penalized any current executive of Stryker Orthopedics, which owns OtisMed and … has accepted a plea from a Stryker subsidiary which has not had any employees, assets or revenues for the past three years.” He characterized his client's actions as “essentially a regulatory violation involving a product that posed no danger to the public,” explaining that the company's former CEO had shipped the guides after the FDA disapproved them only so that patients whose surgeries were imminent would not be “left hanging.”

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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.

Peter Harvey, attorney for convicted OtisMed CEO, was less than complimentary concerning the government's prosecution of the case. “What is extraordinary about this felony plea,” said Harvey, “is that the government has not penalized any current executive of Stryker Orthopedics, which owns OtisMed and … has accepted a plea from a Stryker subsidiary which has not had any employees, assets or revenues for the past three years.” He characterized his client's actions as “essentially a regulatory violation involving a product that posed no danger to the public,” explaining that the company's former CEO had shipped the guides after the FDA disapproved them only so that patients whose surgeries were imminent would not be “left hanging.”

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