Allergan to pay $3.5-M to settle False Claims Act violations on weight-control device
Allergan Inc., a New Jersey-based seller of a weight-control medical device called LAP-BAND Gastric Banding System, has agreed to pay the US government $3.5 million to resolve False Claims Act (FCA) violations alleged against one of its devices. The LAP-BAND device was approved by the Food and Drug Administration for weight reduction of adult patients who failed to meet their weight target through more conservative weight-reduction measures. But the devices it sold had numerous malfunctions which the company allegedly tried to conceal while continuing to sell it, billing the country’s federal government and Medicare in the process.
LAP-BAND is an inflatable silicone band installed in a patient’s stomach by surgery. This constricts or expands the stomach as needed by adding or removing saline fluid through a subcutaneous access port.
For nearly three years, from January 2008 to November 2010, Allergan knowingly sold LAP-BANDs with flawed access ports, the lawsuit alleged.
“Patients have every right to expect that medical devices used during surgery are free of defects,” said Robert K. Hur, United States Attorney for the District of Maryland. He said patients have the right to expect that medical devices have been subject to the rigorous review and approval process of the Food and Drug Administration.
“When marketing and selling medical devices that may have defects or may be used in unapproved procedures, patients can be put at risk,” Hur emphasized when he announced the settlement with Allergan Monday, April 16.
The United States said in its lawsuit that Allergan misrepresented the cause of access port leaks so health care professionals will continue using the LAP-BAND. On top of this, Allergan failed to gather data and complaint files. Also, between 2008 and 2012, Allergan allegedly promoted the LAP-BAND for use in two ways that were not approved by the Food and Drug Administration. Some of these were not needed for diagnosing or treating an illness or injury. But to promote LAP-BAND’s use, Allergan allegedly tipped health care professionals with proctoring, workshops, advisory boards, and training events where they discussed or showed the use of LAP-BANDs.
The $3.5 million qui tam settlement resolves the original 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 attain a part of the government’s recovery. The whistleblowers filed charges in the District of Maryland, where it was captioned as the United States ex rel. Schwartz and Tinsley v. Allergan, CCB-10-2796. Dr. Schwartz and Mr. Tinsley are set to receive around $594,064 from the settlement; the federal government $3,300,360 and the state Medicaid $199,640. Relator or whistleblower awards have proliferated in the last decade with billions of dollars of recoveries for the government which generally result in whistleblower awards of around 20% of the amount the government recovered.
The claims resolved in the settlement remain as allegations as there has been no determination of liability.
Allergan Inc. used to be an American company since the 50s. In 2015 a global pharma company Actavis Plc acquired it and continued expanding the company as well as defending it from hostile takeovers. Its earnings as of last quarter of 2017 have increased compared to same period in the previous year. The company’s bottom line totaled $2.17 billion, or $4.86 per share.
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