BTG Unit Pleads Guilty to Pay $36 Million to Settle False Claims Charges

Pennsylvania-based medical device manufacturer Biocompatibles Inc., a subsidiary of BTG plc, pled guilty to misbranding its embolic device LC Bead and will pay more than $36 million to resolve criminal and civil liability arising out of its illegal conduct.



Biocompatibles was represented by Richard Scheff of Montgomery McCracken in Philadelphia.

LC Bead is used to treat liver cancer, among other diseases.

Biocompatibles pled guilty to a misdemeanor charge in connection with the company’s misbranding of LC Bead, in violation of the Food, Drug and Cosmetic Act.

LC Bead was cleared by the U.S. Food and Drug Administration (FDA) as an embolization device that can be placed in blood vessels to block or reduce blood flow to certain types of tumors and arteriovenous malformations.

LC Bead has never been cleared or approved by FDA as a drug-device combination product or for use as a drug-delivery device or “drug-eluting” bead.

Biocompatibles will pay an $8.75 million criminal fine for the misbranding of LC Bead and a criminal forfeiture of $2.25 million.

The FDA sought assurances in 2004 that Biocompatibles would not use FDA clearance for the device for embolization to market the device for drug delivery, according to a statement of offense to which the company agreed.  

Biocompatibles told the FDA that “under no circumstance” would the company use the embolization clearance to market the device for drug delivery.

However, two years later, Biocompatibles began marketing LC Bead for drug delivery through the company it hired to carry out its sales and distribution in the United States.

The distribution company told its sales representatives that LC Bead was “[a] drug-delivery device” and trained its sales representatives to “aggressively penetrate the chemoembolization market.”

Sales representatives subsequently told health care providers that the device increased the level of chemotherapy delivered to a liver tumor and resulted in “better tumor response rates,” despite the lack of FDA clearance or approval for that use and despite the absence at that time of statistically significant evidence to support such claims.

“The FDA approval process serves an important role in ensuring that federal health care participants receive devices that are safe, effective and medically appropriate,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will not permit companies to circumvent that process and put profits over patient safety.”

Biocompatibles will pay $25 million to resolve civil allegations under the False Claims Act that the company caused false claims to be submitted to government healthcare programs for procedures in which LC Bead was loaded with chemotherapy drugs and used as a drug-delivery device.

When LC Bead was combined with prescription drugs for use as a drug-eluting bead, it constituted a new combination drug-device product that was not approved or cleared by the FDA and not covered by Medicare and other federal healthcare programs.

The federal share of the civil settlement is approximately $23.6 million, and the state Medicaid share of the civil settlement is approximately $1.4 million.

As part of the civil settlement, the government alleged that when LC Bead entered the U.S. market in 2005, Biocompatibles intended for LC Bead to be used as a drug-delivery device in combination with chemotherapy drugs, despite the lack of FDA approval as a drug-device combination product.

In December 2009, Biocompatibles filed an application with FDA for approval of LC Bead as a drug-eluting bead combination product. However, FDA informed the company that it was not accepting the application because clinical studies did not provide adequate evidence of a therapeutic benefit.

Nonetheless, Biocompatibles’ distributor routinely advised healthcare providers that LC Bead provided “better” or “superior” therapy for certain types of cancer when, in fact, there was insufficient clinical evidence to support these claims.

The civil settlement with Biocompatibles resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.

The civil lawsuit was United States ex rel. Ryan Bliss v. Biocompatibles, Inc., et al.

As part of the resolution, Bliss will receive approximately $5.1 million from the civil settlement

The company also agreed to keep a log of “questionable practices” and report that log to the federal authorities for three years.

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