Oct. 28 (Bloomberg) -- A Stryker Corp. unit that makes bone-surgery products and its former president were indicted by a grand jury for misleading the U.S. Food & Drug Administration about the uses of its products, prosecutors said.

Stryker Biotech LLC and Mark Philip, who was its president from 2004 to 2008, are accused along with three sales managers of promoting the use of its therapeutics in a manner contrary to their FDA-approved use, Acting U.S. Attorney Michael K. Loucks in Boston said today in a statement.

The products were made to stimulate bone growth in the spine and long bones, Loucks said. The men promoted the use of its implant and putty with a bone-void filler in “recipes” requiring medical personnel to “mold the combined product into ‘cigars,’ ‘Tootsie Rolls,’ or ‘Vienna sausages,’” Loucks said.

Philip and the other men are charged with five counts of wire fraud, punishable by as long as 20 years in prison, and one count of conspiracy. The company was charged with fraud. Both it and Philip are also accused of making false statements to the FDA.

Stryker, based in Kalamazoo, Michigan, said in a statement it was “disappointed” and hopes to reach “a fair and just resolution of this matter.”

‘Material Effect’

“Conviction of these charges could result in significant monetary fines and Stryker Biotech’s exclusion from participating in federal and state health care programs, which could have a material effect on Stryker Biotech’s business,” the company said in the statement.

The case was filed today in federal court in Boston, said a spokeswoman for Loucks. Philip, who surrendered to authorities, made his initial court appearance there today before U.S. Magistrate Judge Judith Dien, said the spokeswoman, Christina DiIorio-Sterling.

“Mark Philip conducted himself honorably through out his time at Stryker,” his attorney, Stephen Huggard, said in a telephone interview after the court appearance.

Philip plans to enter a plea of not guilty and proceed to trial, said Huggard, who chairs the White Collar & Government Enforcement Practice Group at the Boston law firm Edwards Angell Palmer & Dodge LLP, according to the firm’s Web site.

The Stryker products, identified by Loucks as OP-1 Implant and OP-1 Putty, were approved by the FDA to treat a condition affecting fewer than 4,000 patients under a “Humanitarian Device Exception.” They couldn’t be sold for a profit, the prosecutor said.

Stryker and Philip are accused of making false statements to the FDA about how many patients were being treated annually with the putty, said Loucks.

The mixture of the OP products with the bone void filler, Calstrux, hadn’t been approved by the FDA and caused “serious medical problems” in some patients, he said.

Stryker fell $2.02, or 4.2 percent, to $46 in New York Stock Exchange composite trading. The shares have gained 15 percent this year.

To contact the reporters on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net; Cary O’Reilly in Washington at caryoreilly@bloomberg.net.

Last Updated: October 28, 2009 18:38 EDT