Medical Device Maker Stryker Unit and Executives Indicted

Facing Prison Time

Stryker Biotech LLC and its executives were indicted by a grand jury Wednesday, accused of fraudulently marketing its bone-growth products and covering-up the misconduct.

The indictments were handed down by Acting U.S. Attorney, Michael K. Loucks in Boston, reports the Detroit Free Press, and includes former president, Mark Philip, and current sales managers, David Ard of California, William Heppner of Illinois, and Jeff Whitaker of North Carolina.

The indictment charges that the employees participated in an illegal marketing scheme to promote medical devices made by the Hopkinton, Mass. company, a division of Stryker Corp. of Kalamazoo.

The devices are used during invasive spinal and long-bone surgeries, such as hip fractures, that fail to heal.

Philips is also accused of making false statements to the Food and Drug Administration during an investigation that began in 2008 over the OP-1 Implant and P-1 Putty.

Under a federal exemption to sell OP-1 under the Humanitarian Device Exemption, the FDA had approved the use of the putty in up to 4,000 patients, without the usual required safety and efficacy research. That approval is given when there is no substitute product available.

Stryker was denied expansion of OP-1, but continued to market Op-1 and company executives are alleged to have promoted mixing the Op-1 product with a bone void filled called Calstrux in a way never approved by or even presented to the FDA.

Bloomberg reports that executives promoted the use of the implant and putty with the filler in “recipes” that required molding the combined product into “cigars,” “Tootsie Rolls,” or “Vienna sausages."

The Boston Globe reports that Philip plans to plead not guilty to five counts of wire fraud and contest the charges. If convicted he is facing up to 25 years in prison. Four other Stryker employees have pled guilty to charges related to this case.

The company is disappointed with this action and still hopes to be able to reach a fair and just resolution,” Stryker’s statement says.

Shareholders were told earlier this year of the grand jury investigation and warned that the charges could result in fines against the company and preclude participation in lucrative federal and state health care programs. #