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Medical device maker accused of fraud, lying

Stryker Biotech faces indictment over marketing

By Todd Wallack
Globe Staff / October 29, 2009

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A federal grand jury indicted a Hopkinton medical device maker and several key employees yesterday on charges that they illegally marketed a surgical device and covered up the misconduct.

Specifically, the indictment accused Stryker Biotech LLC of promoting the use of two devices made for spinal and long bone surgeries for applications that had not been approved by the US Food and Drug Administration.

The Stryker products, called the OP-1 Implant and OP-1 Putty, have only been approved for rare cases. But prosecutors said the company encouraged doctors to use the devices, which were designed to stimulate bone growth, more broadly in combination with a bone void filler, called Calstrux, which has never been formally tested in humans or approved by federal regulators. Prosecutors said some patients who received the combination suffered serious medical problems.

Stryker is facing charges of wire fraud, conspiracy, misbranding, and false statements to the FDA. If convicted on all eight counts, the company could face fines of $4 million, double the damages caused by the misconduct, or double the company’s gross profits stemming from the misconduct - whichever is greatest.

Former company president Mark Philip, who lives in Massachusetts, is also facing charges of wire fraud, conspiracy, and making false statements to the FDA. Three current sales managers were also charged in the case. Four other Stryker employees have already pleaded guilty to charges related to the case, according to the US Department of Justice.

Philip, who was president of Stryker from 2004 to 2008, plans to plead not guilty and contest the charges, said his lawyer, Stephen G. Huggard of Boston. If convicted, Philip could face fines and up to 25 years in prison.

Stryker’s parent company, Stryker Corp. of Kalamazoo, Mich., said it was “disappointed’’ by the indictment.

The company, which told shareholders earlier this year it was the target of a grand jury investigation, said it “still hopes to be able to reach a fair and just resolution on this matter.’’ Stryker also warned investors that the charges could result in significant fines and block the company from participating in lucrative federal and state health care programs, which in turn could affect the company’s revenue.

Todd Wallack can be reached at twallack@globe.com.