Genzyme Seprafilm Admissions Muted In New DOJ Settlement

Posted September 4th, 2015.

As It Appeared On
law360

By Sindhu Sundar

Law360, New York (September 4, 2015, 9:20 PM ET) — Genzyme Corp.’s criminal admissions Thursday that its sales representatives helped surgeons modify its Seprafilm adhesion barrier device are tempered compared to previously settled False Claims Act allegations that described direct company pressure to promote its off-label use, but defense attorneys say the deal will still deter against such marketing.

The U.S. Department of Justice announced a $32.5 million deferred prosecution agreement Thursday with the Sanofi SA unit over Genzyme sales representatives’ involvement in the use of the Seprafilm surgery product in off-label ways. In a statement of facts that accompanied the agreement, Genzyme admitted those representatives advised surgeons on how to turn the product into a slurry that could be injected in surgeries through tubes. The DOJ alleged that converting seprafilm in this way contaminated it.

The admissions suggest broadly that the representatives were acting within the scope of their jobs, without going into specifics about why they facilitated the alteration of Seprafilm in the first place. FCA suits that Genzyme settled in December 2013 for more than $22 million alleged that Genzyme had trained its representatives to promote the use of Seprafilm as slurries, and that it included sales of Seprafilm slurries in their sales quotas. Genzyme’s admissions Thursday are mostly silent on these types of previously alleged conduct, beyond an acknowledgment that from 2008, the drugmaker scaled back sales quotas for Seprafilm.

Defense attorneys say despite that, the deferred prosecution agreement could still have a deterrent effect on pharmaceutical companies, because such deals can open the door to potential criminal liability if the company doesn’t follow the compliance requirements outlined by the agreement.

“This was likely the product of a hard-fought negotiation,” said Ross Brooks of Sanford Heisler Kimpel LLP. “These are misdemeanor charges, so the statement of facts that Genzyme admitted to appears consistent with those types of charges. But that’s not to say that the limited admissions in the statement of facts have no effect — any criminal charges on the record are consequential.”

The statement of facts contains excerpts of email exchanges between sales representatives telling each other how to prepare a Seprafilm slurry, and how to advise surgeons to use it. The excerpts offered a window into the unusually active role that Genzyme’s sales representatives played in surgeries that used the product in the unapproved ways.

Doctors are allowed to prescribe and use medical products in ways that the U.S. Food and Drug Administration hasn’t approved, but pharmaceutical companies are not allowed to promote them for such off-label uses. And although it is common practice for pharmaceutical sales representatives to be present at surgeries, attorneys say it’s more unusual for them to be there modifying a product for use in surgery.

“Sales reps are generally highly trained experts in their products, are routinely in operating room,” said Michael Walsh of Strasburger & Price LLP. “But it’s not common to change the product, unless that’s part of its design. That’s what makes the Genzyme case so unique.”

Seprafilm, a device that is a clear film, is used to minimize the formation of scar tissue after surgery that could cause organs to attach. It is approved for open surgeries of the pelvis and abdomen known as laparotomies, which involve a large incision on the body. As the procedure sank in popularity with the rise of the less invasive laparoscopic surgery technique, surgeons began to adapt Seprafilm for use in these new procedures, with the help of Genzyme’s sales representatives, according to Genzyme’s statement of facts.

In one email exchange in 2007, a sales representative gave detailed directions to another on how to convert the film into a slurry, and on what to tell the surgeon to do.

“Make sure the surgeon who applies the slurry holds the red robin [catheter] on to the Toomey [syringe],” the unnamed sales representative instructed in the email. “If they kink it or don’t hold on to the tip, the red robin can slip off and the slurry goes everywhere. Not good.”

As a film used in laparotomies, Seprafilm would be place onto affected tissues after surgery. As a slurry in laparoscopic procedures, which involve smaller incision holes through which tubes are inserted, the liquid solution would coat injured tissues, according to the statement of facts.

Genzyme said although the sales representatives were acting “within the scope of their employment” and that their conduct was “at least in part, to benefit the pharmaceutical,” it fired one of its top sales representatives in late 2009, even before the DOJ’s investigation. One of the false claims act suits over Seprafilm was filed in July 2009, according to court records.

Thursday’s settlement was striking also because it followed two years after the 2013 civil settlement. That settlement did not include any admissions of wrongdoing, which attorneys say is fairly typical of civil suits like such FCA cases.

But it is fairly unusual for a company not to negotiate a single global settlement that resolves such claims at the same time, according to Ty Howard of Bradley Arant Boult Cummings LLP.

“Oftentimes these cases are going to be negotiated and resolved at one time, because companies want certainty,” he said.

Genzyme is represented by Kathy B. Weinman of Collora LLP.

The case is USA v. Genzyme Corp., case number 8:15-cr-00352, in the U.S. District Court for the Middle District of Florida.

–Additional reporting by Jeff Sistrunk. Editing by John Quinn and Emily Kokoll.

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