Neil, Benjamin and Seganish, W. Michael (2012) “An Ethical Dilemma and Corporate Game Changer”, Journal of Academic and Business Ethics,
Volume 6, September: [This article has been retracted by the journal]
Link to original article: http://web.archive.org/web/20120511142155/http://aabri.com/manuscripts/111075.pdf
Neil
and Seganish, page 2
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Elfin
(2011)
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Although
each of the former executives had plead guilty to a single misdemeanor of
introducing adulterated and misbranded medical devices into interstate
commerce in violation of federal food and drug law, each sought probation and
a $100,000.00 fine instead of a jail sentence. In contrast, the government
argued that all the executives should serve prison time because of the
egregiousness of their conduct.
|
Although
each of the former executives had pleaded guilty to a single misdemeanor of
introducing adulterated and misbranded medical devices into interstate
commerce in violation of federal food and drug law, each sought probation and
a $100,000 fine instead of jail time (191 HCDR, 10/5/10). In contrast, the
government argued that all the executives should serve prison time because of
the egregiousness of their conduct.
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Neil
and Seganish, page 2
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Pearson
and Milford (2011)
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Synthes,
is the world’s largest maker of bone-related medical devices, its Norian
Corporation unit and the four executives were indicted in June, 2009 over
claims they conspired to conduct unapproved clinical trials of Norian-branded
cements from May, 2002 to late 2004. The cement approved for elsewhere in the
body, was used in the spines of 200 patients with fractured vertebrae. Three
patients died from a rapid drop in blood pressure during spinal surgeries.
|
Synthes,
the world’s largest maker of bone-related medical devices, its Norian Corp.
unit, and the four officers were indicted in June 2009 over claims they
conspired to conduct unapproved clinical trials of Norian-branded cements
from May 2002 to late 2004.
The
cement, approved for elsewhere in the body, was used in the spines of 200
patients with fractured vertebrae. Three patients died from a rapid drop in blood
pressure
during spinal surgeries, prosecutors said.
|
Neil
and Seganish, page 2
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Pearson
and Milford (2011)
|
The
sentencing of the four defendants illustrates a trend toward the government
ramping up prosecutions of corporate officers and managers of drug and device
companies for health care fraud at their companies. The “responsible corporate
officer” Doctrine, known as the Park Doctrine, named after United States v
Park, 421 U.S. 658, (1975), in which the Supreme Court affirmed a misdemeanor
criminal conviction of a company officer who was held responsible for
regulatory violations in a food storage warehouse, even though he denied any
knowledge of the conditions.
Government
officials have said that the government likely will bring an increasing
number of such cases against individuals at both drug and device companies.
|
The
sentencing of Huggins, Higgins, and Walsh illustrates a trend toward the
government ramping up its prosecutions of corporate officers and managers of
drug and device companies for health care fraud at their companies. The
responsible corporate officer doctrine, known as the Park Doctrine, is named
after United States v. Park, 421 U.S. 658, 673 (1975), in which the
U.S. Supreme Court affirmed a misdemeanor criminal conviction of a company
officer who was held responsible for regulatory violations in a food storage
warehouse, even though he denied any knowledge of the conditions.
Government
officials have said that the government likely will bring an increasing
number of such cases against individuals at both drug and device companies
(187 HCDR, 9/27/11).
|
Neil
and Seganish, pages 2-3
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FDA
(2009)
|
The
indictment charges that from the beginning, the intended market for Norian
XR[1] was for an unapproved use, i.e., in surgeries to treat VCFs.[2] According to the indictment, the company
recognized early on that there were two possible solutions to this problem:
(1) the legal solution, which was to disclose to the FDA the intended use of
the product and then to try to secure FDA approval of XR for use in surgeries
to treat VCFs after obtaining an investigational device exemption (“IDE”) to
investigate the safety and efficacy of the product, and (2) the illegal
solution, which was to promote XR for use in VCFs through a limited so-called
“test market” during which the company would evaluate the safety and efficacy
of the product in unapproved clinical trials and judge their success
according to its own standards.
|
The indictment charges that from
the beginning, the intended market for Norian XR was for an unapproved use, i.e., in surgeries to treat VCFs. According to the
indictment, the company recognized early on that there
were two possible solutions to this problem: (1) the legal solution, which
was to disclose to the FDA the intended use of the product and then to try to
secure FDA approval of XR for use in
surgeries to treat VCFs after obtaining an investigational device exemption (“IDE”) to investigate the safety and efficacy of the product, and (2)
the illegal solution, which was to promote XR for
use in VCFs through a limited so-called “test market,” during which the
company would evaluate the safety and
efficacy of the product in unapproved clinical trials and judge their success according to its own standards.
|
Neil
and Seganish, page 3
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FDA
(2009)
|
The
indictment charges that the company and its coconspirators consciously and
deliberately chose the illegal solution. That is, according to the
indictment, the company intentionally bypassed the requirement that it obtain
permission from the FDA to conduct clinical trials of the XR device on human
beings for an unapproved use – permission that it knew it needed.
|
The indictment charges that the
company and its coconspirators consciously and deliberately chose the
illegal solution. That is, according to the indictment , the
company intentionally bypassed the requirement that it obtain permission from
the FDA to conduct clinical trials of the XR device
on human beings for an unapproved use – permission that it knew it needed.
|
Neil
and Seganish, page 3
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FDA
(2009)
|
With
the so-called “test market,” the company allegedly tried to save time and
money by cutting out the FDA’s oversight of clinical trials of its device.
The indictment charges that the company did this for two principal reasons:
to rush XR to the market first, before its competitors, and to generate
published studies that it could use later to convince other surgeons to use XR
off label to treat VCFs.
|
With the so-called “test
market,” the company allegedly tried to save time and money by cutting out the FDA’s oversight of clinical trials of its
device. The indictment charges that the company did
this for two principal reasons: to rush XR to the market first, before its
competitors, and to generate published studies that it could use later to
convince other surgeons to use XR off-label to treat VCFs.
|
Neil
and Seganish, page 3
|
FDA
(2009)
|
Starting
as early as late summer 2002, the company allegedly approached selected spine
surgeons and asked them to use a predecessor device, SRS, in VCF procedures
as part of an initial Synthes “test market” for SRS. Despite a June 2002 plea
from one of Synthes’s own surgeon consultants that conducting such a “test
market” would “amount to human experimentation whose only defense seems to be
that it will be a small study [,]” Norian and its coconspirators allegedly
embarked on the SRS “test market.” According to the indictment, the company
taught the selected June 16, 2009 surgeons the recipe for mixing SRS with
barium sulfate to make it more radiopaque, a process called “back-table
mixing,” and trained two groups of surgeons in the use of SRS to treat VCFs.
After training the two groups of surgeons as initial “test market” sites, the
company allegedly enlisted these “test market site” surgeons to train other
surgeons on how to use XR to treat VCFs.
|
Starting as early as late summer 2002, the company
allegedly approached selected spine surgeons and asked
them to use a predecessor device, SRS, in VCF procedures as part of an initial
Synthes “test market” for SRS. Despite a June
2002 plea from one of Synthes’s own surgeon consultants that
conducting such a “test market” would “amount to human experimentation whose only defense seems to be that it will be a small study [,]” Norian and
its coconspirators allegedly embarked on the SRS “test
market.” According to the indictment, the company taught the selected surgeons the recipe for mixing
SRS with barium sulfate to make it more radiopaque, a process called “back-table mixing,” and trained two groups of surgeons in the use of
SRS to treat VCFs. After training the two groups of
surgeons as initial “test market” sites, the company allegedly enlisted these
“test market site” surgeons to train other
surgeons on how to use XR to treat VCFs.
|
Neil
and Seganish, page 3
|
FDA
(2009)
|
According
to the indictment, the company conducted two XR “Test Market Kick surgeon
meetings, and one surgeon forum, from August of 2003 through mid-January
2004, training approximately 52 spine surgeons how to use Norian XR to treat
VCFs. It is charged that, after the third person died on the operating table
during a surgery in which a Norian cement was used to treat VCFs, the company
cancelled the future surgeon forums. The indictment alleges that the company
considered, but rejected, the idea of recalling or removing XR from the
market, either of which actions would have required them to notify the FDA.
|
According to the indictment, the company conducted two
XR “Test Market Kick-Off” surgeon meetings, and one surgeon
forum, from August of 2003 through mid-January 2004, training approximately 52 spine surgeons how to use Norian XR to treat VCFs. It
is charged that, after the third person died on the
operating table during a surgery in which a Norian cement was used to treat VCFs, the company cancelled the future surgeon forums. The indictment
alleges that the company considered, but rejected, the
idea of recalling or removing XR from the market, either of which actions
would have required them to notify the FDA.
|
Neil
and Seganish, page 3
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FDA
(2009)
|
Three
months later, according to the indictment, when the FDA conduct an
unannounced inspection at the Norian plant in West Chester, focused on
whether or not Norian and Synthes had conducted an unauthorized clinical
trial of XR, a number of Synthes employees, including individual defendants
Huggins, Bohner and Walsh, made materially false and
misleading
statements to the FDA investigator.
|
Three months later, according to
the indictment , when the FDA conducted an unannounced inspection at the Norian plant in West Chester, focused on whether or
not Norian and Synthes had conducted an unauthorized
clinical trial of XR, a number of Synthes employees, including individual defendants Huggins, Bohner and Walsh, made materially false and
misleading statements to the FDA investigator.
|
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