$1B+ up for grabs in jury trial over off-label marketing of Abbott's biliary stents

A landmark trial over off-label use of Abbott's ($ABT) biliary stents in vascular arteries kicked off this week, with whistleblower Kevin Colquitt asking the jury for more than $1 billion in damages at a U.S. District Court in Dallas.

Former Abbott salesman Colquitt said the off-label use amounted to experimentation on senior citizens and resulted in unjustified Medicare reimbursement between 2004 and 2006. In his opening statement, the whistleblower's lawyer pointed to a man who lost his leg and died following implantation of an Abbott biliary stent, Bloomberg reports.

He also charged Abbott with ghostwriting articles, false advertising and paying physicians to train other doctors about off-label use of the device. The company settled with the feds over off-label marketing of the stents in 2013 for $5.5 million.

Abbott responded that the use of stents intended for the bile duct (located between the liver and small intestine) in vascular arteries to treat peripheral arterial disease was the standard of care because it could take three to 6 years for a vascular stent to receive an FDA approval.

"To give patients the best care, the government chose to reimburse for the off-label use of biliary stents," Abbott's lawyer, James Hurst, told jurors, according to Bloomberg. "It was with complete knowledge."

Colquitt sued on behalf of the U.S. government in 2006, but the feds did not join the case. If he wins, the damages would still go to the U.S. government and Colquitt would receive a share of the money due to his whistleblower status.

"There is no need to prove that any individual was harmed,'' Patrick Burns of Taxpayers Against Fraud, which advocates for whistleblowers, told Bloomberg. "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.''

But the news outlet reports that Abbott has not revealed whether it has built up any legal reserves to pay for possible damages.

Both sides tried to end the case, but U.S. District Judge Barbara Lynn determined in January that too many facts remain disputed. "A device may be approved or cleared by the FDA and still not be eligible for Medicare coverage," she wrote, according to Law360. "Further, lack of FDA approval or clearance for a specific use does not categorically disqualify a device from Medicare coverage. Medicare reimbursement for off-label uses is permissible in some instances."

Abbott acquired the biliary stent when it paid $6.4 billion to acquire Guidant's vascular intervention and endovascular businesses. Boston Scientific ($BSX) divested the businesses when it acquired the rest of Guidant for $27 billion in 2006, though the deal turned sour quickly, for the company's cardiac rhythm management devices were found to suffer from quality control problems.

Making matters worse, Boston Sci last year agreed to pay Johnson & Johnson ($JNJ) $600 million to settle claims that it acted improperly during the companies' tussle over Guidant. Now Abbott too is dealing with legal issues from the infamous transaction, but at least it walked away with the successful Xience drug-eluting coronary stent.

- read the Bloomberg article