Stryker Biotech Division Indicted for FDA Fraud by Massachusetts Grand Jury

10/28/09Follow @xconomy

Stryker, the Kalamazoo, MI-based maker of orthopedic hip implants and other medical devices, said today that its biotech division in Hopkinton, MA, along with certain current and former employees, have been indicted by a federal grand jury for conspiracy to defraud the FDA.

The company (NYSE: SYK) disclosed on March 10 that its Stryker Biotech unit was the target of a federal grand jury investigation being conducted by the U.S. Attorney’s Office for the District of Massachusetts, according to a company statement released today. The charges include wire fraud, conspiracy to defraud the FDA, distributing a misbranded device, and making false statements to the FDA.

If the company is found guilty, it could face “significant monetary fines” and be barred from participating in state and federal healthcare programs, which could cause significant damage to Stryker Biotech’s business. “The company is disappointed with this action and still hopes to be able to reach a fair and just resolution of this matter,” Stryker said in a statement, adding it will have no further comment.

The company is charged with illegal promotion of OP-1 human bone growth product and Calstrux, according to a regulatory filing in March. Stryker said that certain former employees have pled guilty to charges related to the investigation, according to its statement in March. The investigation specifically focused on the number of patients treated with OP-1 under one of the Humanitarian Device Exemptions granted to the company. Those exemptions are sometimes granted to companies to market devices for less than 4,000 patients, even if the product hasn’t completed the usual full sequence of clinical trials. Stryker says it was accused of submitting false reports to the FDA regarding the number of patients who were treated with OP-1.

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