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Stryker Corporation Message Board

  • longs_99 longs_99 Oct 29, 2009 2:15 AM Flag

    DOJ Has seldom won a case like this one.

    It was just an accusation by the government. It was not a verdict. Moreover, it seldom prevails on the charge of this kind. The burden of proof is on the DOJ.

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    • Let's review the biding:

      Pfizer $2.3 billion
      Eli Lilly $1.4 billion
      Cephalon, $425 million
      etc. etc.

      Here are settlements just reported by the US Attorney for Mass. just for their office:

      Year Defendant Payment
      2009 Pharmacia & Upjohn Company Pfizer)
      2009 Aventis Pharmaceuticals, Inc.
      2007 Bristol-Myers Squibb Co., Apothecon, Inc.
      2006 Schering-Plough Corp., through its subsidiary Schering Sales Corp.
      2005 Serono, Inc.
      2005 SmithKline Beecham Corp., d/b/a GlaxoSmithKline
      2005 Boston Scientific Corp.
      2004 Pfizer Corp., subsidiaries Warner Lambert, Inc. & Parke-Davis
      2003 Bayer Corp.
      2003 SmithKline Beecham Corp., d/b/a GlaxoSmithKline
      2001 TAP Pharmaceutical Products, Inc.
      2000 National Medical Care
      1997 Damon Clinical Laboratories, Inc.
      1994 C.R. Bard, Inc.

      I guess you're right, the government can't win so they always just cave in for cheap

      (except when Scott Harkonen CEO of Intermune decided to go to trial and somehow he was convicted of wire fraud, but even so he got off on misbranding so he's probably pretty happy overall, don't you think?)

      • 2 Replies to whatsupdoc49327
      • Whatsupdoc,

        Thanks for your cautionary post. I agree that Stryker and investors should not be cavalier in their assessment of this indictment, but I think the link and settlements do very little to substantiate your premise, and almost certainly overstate the economic risk for past sins (I agree that the indictment also impacts Stryker's reputation, which I believe has the potential to develop into a real economic threat).

        The list of settlements relate to all healthcare fraud, and specific examples at the link address price fixing etc., not the off-label use at issue in this case.

        My understanding is that Stryker had approval for a very limited use based on a compassionate care context, i.e. other treatments of long bone fractures were not working, and that pricing was limited to cost recovery (although given the research that went into OP-1 since 1986, or whenever it started, that would still allow a healthy price). I am a financial guy so admittedly my understanding may be incorrect or the approval may have expanded.

        If my understanding is correct, however, it sounds to me like the allegation in the indictment is that Stryker sales reps and management encouraged off-label use. My understanding is that off-label use is the relatively common practice by doctors to use devices and pharmaceuticals for applications other than those for which they are approved. The issue for the seller of the product is when does the exercise of informing the doctor and responding to his or her questions stop and cross over into encouragement or promotion of off-label use. Regardless of the outcome of this indictment, I find it hard to beleive that Stryker sales reps duped a bunch of doctors into compromising the care of their patients in order to administer an experimental treatment approved for limited use. I think that is what the previous poster may have been referring to when he or she said these suits are seldom successful.

        Also, the amount of any settlement, even if Stryker is found liable, would not be in the ball park of those listed in your link because I believe the underlying sales are negligible relative to the products at issue in the settlements listed in your post.

        Having said all that, for me, the important issue is that Stryker establish that it does not operate that way so there is no damage to its reputation.

        I know no one from Stryker will be able to comment, but I would be interested in hearing thoughts from other informed parties that understand the nature of the charges in the indictment or can shed more light on the approval Stryker had and the practice of off-label use, sales for off-label use and the sellers responsibility in that context.

      • "If convicted on all charges, Stryker Biotech faces fines of $500,000 or twice the gross gain or loss from the offense, on each count."

        The fine is not going to be earth shattering, in my view...A couple mil. fine would be all...

        Last Paragraph has some estimate on the fine amount...

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