Abbott Faces $1 Billion Claim in Trial Over Stent Marketing

  • Company used unapproved stents on patients, ex-salesman claims
  • Whistle-blower suit attempt to `rewrite history,' Abbott says

Abbott Laboratories is accused in a trial that started Tuesday of marketing unapproved stents for unsuspecting patients and cheating Medicare as a whistle-blower seeks more than $1 billion, a risk the company hasn’t fully disclosed to shareholders.

The company faces allegations it increased sales by marketing devices for uses that weren’t approved by the U.S. Food and Drug Administration. Kevin Colquitt, a former salesman for Abbott and Guidant turned whistle-blower, claims it pushed bile-duct stents, intended for short-term purposes, for more complex vascular use.

The drugmaker didn’t conduct a clinical trial on the safety, instead using so-called off-label marketing to test devices on patients without their informed consent, Colquitt claims. Multiple patients suffered complications including fractures of the devices after implantation, stroke, infections and migration of the stents, he alleges.

The company conducted an “experiment on senior citizens” and a “fraud” on the Medicare system, Chris Hamilton, Colquitt’s lawyer, said Tuesday in court. Abbott “hid the paper trail and buried evidence of malfunctions,” including the case of an elderly man who lost his leg and then died after a stent was placed in him, Hamilton said in his opening statement to the jury.

Rewriting History

Abbott, which acquired Guidant’s stent business in 2006, denies the claims and calls the lawsuit an attempt to “rewrite history.’’ The use of biliary, or bile duct, stents to treat peripheral vascular or arterial disease was “a generally accepted medical practice and indeed, standard of care,’’ Abbott lawyers said in court papers.

“To give patients the best care, the government chose to reimburse for the off-label use of biliary stents,” James Hurst, Abbott’s lawyer, told jurors Tuesday in Dallas. “It was with complete knowledge.”

During the period covered in the lawsuit, the FDA’s system for giving approval to vascular stents was broken, he said. “It had been broken since the ’90s.” By the time stents went through three to six years of clinical trials and testing, they were outdated, he said.

‘Best Technology’

“Doctors demanded the latest and best technology for their patients,” Hurst said. Biliary stents provided the latest technology, he said. “Who is going to buy the iPhone 3g when there’s an iPhone 6 available?” he asked.

“Nobody was harmed,” he said. “When the government paid for these procedures, they were getting exactly what they paid for –- care for our seniors.”

Darcy Ross, a company spokeswoman, called the suit meritless. “Physicians have chosen to use biliary stents in vascular stenting procedures as the standard of care for more than a decade,” Ross said by e-mail. “Reimbursement was not only permitted under the Medicare regulations but also the right decision for patients.”

The three-week federal court jury trial will cover some of the products at issue in Abbott’s $5.5 million settlement with the U.S. in 2013 over kickbacks paid to doctors to use stents. The Dallas suit focuses on off-label marketing, actively marketing a drug or device for an unapproved use.

Share of Damages

Colquitt sued in 2006 on behalf of the U.S. government, which declined to join the case. His lawyers continued to pursue the claim independently. Any damages would be awarded to the U.S., with Colquitt getting a share.

While Abbott since 2008 has disclosed legal cases surrounding the sales and marketing of its biliary stents in regulatory filings, it hasn’t indicated whether it has insurance or reserves for possible losses. None of the legal issues it faced was expected to have a material adverse effect on the company, it said.

The case may turn on what jurors think of claims that patients weren’t told the devices were unapproved, said Patrick Burns, of Taxpayers Against Fraud, a Washington advocacy group for whistle-blower laws including the federal False Claims Act under which the suit was filed.

“There is no need to prove that any individual was harmed,’’ he said in an interview. “But who would allow bile duct stents to be put in themselves or their mother or father if they weren’t FDA approved? If Abbott loses this case, they’re going to lose it big.’’

Court Rulings

U.S. District Judge Barbara Lynn in January rejected Abbott’s request to dismiss the case and denied Colquitt’s motion to find Abbott liable for making false claims before a trial.

Guidant “pursued a reimbursement-driven marketing strategy for off-label use of biliary stents that were not only unapproved for vascular indications, but carried an express warning from the FDA that the devices were not established to be safe or effective,’’ Colquitt’s lawyers said in an October filing.

The stents weren’t eligible for Medicare reimbursement because they weren’t approved for vascular use, according to the suit. About 99 percent of the bile-duct stents the company sold from 2004 to 2006, the time covered by the suit, were used off-label, according to an Abbott expert’s testimony, court papers show.

Ghostwritten Articles

The company ghostwrote doctors’ articles, used false advertising, sent letters on behalf of doctors to potential patients, paid millions of dollars to physicians to support the product and train other doctors, and taught hospitals and physicians how to enter codes resulting in Medicare reimbursements, Hamilton told jurors. Each of about 40,000 reimbursement claims was a false statement, Colquitt contends.

Colquitt’s damages expert estimated that off-label promotion caused the federal government to pay $214.7 million to $330.4 million for peripheral vascular stent procedures using unapproved stents. The U.S. paid $219 million for false claims covered by Colquitt’s case, his lawyer told the jury.

The False Claims Act allows any damages awarded by a jury to be tripled. The Colquitt suit also seeks fines of $5,500 to $11,000 for each of the alleged false claims.

Abbott denies that Medicare was fooled into paying for the stents or that such payments were barred.

Market Share

“Well over 95 percent” of vascular procedures used biliary stents from companies including Guidant in the time covered by the case, said Hurst, the company lawyer. Guidant had 15 to 20 percent of the market, he said.

Doctors are allowed to use devices for purposes that don’t have formal FDA approval. The agency warned them and device makers about the risks after receiving reports of hundreds of adverse events. An FDA analysis found that more than 90 percent of biliary stent injuries and malfunctions from 2001 to 2006 occurred when the devices were used in off-label procedures.

The case is U.S. ex rel. Colquitt v. Abbott Laboratories f/k/a Guidant Corp., 06-cv-01769, U.S. District Court, Northern District of Texas (Dallas).

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