Genzyme to pay feds $32.5M for unlawful distribution of its surgical film

Genzyme agreed to pay the feds $32.5 million for unlawful distribution of its Seprafilm surgical film, on top of the $22.2 million it paid in December 2013 to resolve allegations made under the False Claims Act.

The unit of Big Pharma Sanofi ($SNY) admitted to the government's allegations and agreed to groundbreaking measures to improve compliance, the Department of Justice said in a release. In return, the government asked for its case against Genzyme to be stayed for the duration of the agreement. If Genzyme follows the just-announced agreement, the feds will dismiss the charges at the end of the two-year deferred prosecution agreement with the DOJ.

Seprafilm is supposed to be applied to internal tissues during pelvic and abdominal surgeries to reduce the formation of scar tissue that can form between tissues and organs following intervention, causing them to stick together, the DOJ says, citing court filings.

The device was PMA-approved by the FDA in 1996 for use during open abdominal or pelvic laparotomy. The invasive technique involves the cutting of a large incision, but has fallen out of favor. Less invasive laparoscopic surgery is now more common.

"To respond to the diminishing number of laparotomies performed, some Genzyme sales representatives taught surgeons and other medical staff how to mix the Seprafilm sheets into a liquid "slurry" that could be squirted through the narrow tubes used during laparoscopic surgery, even though Seprafilm was never indicated or FDA-approved for use in laparoscopic procedures. Genzyme sales representatives' participation in the preparation of slurry in the operating room caused Seprafilm to become adulterated, according to the criminal charges," the DOJ says.

In addition, the company voluntarily informed the feds that it distributed promotional material which falsely implied the device had been proven safe and effective during gynecologic cancer surgeries, in spite of the fact that it was never indicated for use during laparoscopic procedures. The DOJ says the claim was based on a study of 14 patients, "which was far too few to support such an assertion."

"Today's action demonstrates that the Department of Justice will evaluate the facts of each case and choose the most appropriate tool of the several available to it to best address criminal misconduct," said Benjamin Mizer, the head of the Justice Department's civil division in a statement. "The deferred prosecution agreement with Genzyme is yet another example of the department's continuing efforts to ensure that pharmaceutical and medical device manufacturers adhere to laws and regulations that have been put in place to protect the health and safety of the American public."

In a statement, Genzyme said that it has "instituted compliance measures regarding the sales and marketing of Seprafilm to ensure that the DPA (deferred prosecution agreement) requirements are met. We are confident in these programs and are pleased to move forward."

While best known for its drugs, Genzyme has achieved 5 PMA approvals since 1996, according to the FDA database. The Seprafilm has 42 PMA supplements to its name, which permit small modifications or indications changes to PMA-approved devices.

In addition, the company has earned 53 510(k) clearances since 1991, though none have occurred after 2010. Cleared products include the Sepramesh Biosurgical composite for the reconstruction of soft tissue deficiencies, and Sepragel ENT to prevent adhesions in the nasal cavity and aid in the healing process following nasal or ear surgery.

- read the release from the DOJ