Biocompatibles LC Bead: The Promise to FDA and the Drug-Delivery Marketing

In the Biocompatibles LC Bead settlement, the manufacturer agreed to pay $25 million to resolve allegations that its drug-delivery marketing caused false claims for procedures using chemotherapy-loaded beads. In the criminal statement of offense it agreed to, Biocompatibles admitted assuring the Food and Drug Administration that it would not market the bead for drug delivery, then marketing it for that purpose through its distributor. The sales training told representatives to pursue exactly that market. For an insider who knows what a device company tells regulators and what it tells customers, that difference is the heart of this case.

The Justice Department announced the civil settlement on November 7, 2016.

What FDA Cleared LC Bead to Do

LC Bead was cleared as an embolization device, placed in blood vessels to block or reduce blood flow to certain tumors and arteriovenous malformations. Biocompatibles, identified in the settlement announcement as a subsidiary of BTG plc, manufactured the device, which was used to treat liver cancer among other diseases.

The disputed promotion sold another function: delivering chemotherapy. The Justice Department said the Food and Drug Administration had never cleared or approved LC Bead as a drug-delivery device, a drug-eluting bead or a combination drug-device product. Loading the bead with a prescription drug was central to the government’s civil allegation. The government said that combination created a new product that lacked FDA approval or clearance and was not covered by Medicare and other federal health care programs.

The Promise to FDA and the Sales Training

The agreed criminal statement of offense described a direct reversal between the assurance Biocompatibles gave FDA and the instructions sent through its sales channel. The Food and Drug Administration sought the assurance in 2004. According to the Justice Department’s account of that statement, Biocompatibles said that “under no circumstance” would it use the embolization clearance to market the device for drug delivery.

Two years later, Biocompatibles began marketing LC Bead for drug delivery through the company it hired to handle U.S. sales and distribution. The training made drug delivery the selling point, after the company had promised the regulator it would not:

The same account described what representatives then told health care providers. They claimed that LC Bead increased the amount of chemotherapy delivered to a liver tumor and produced “better tumor response rates.” At the time, there was no FDA clearance or approval for that use and no statistically significant evidence supporting those claims.

The promise and the training point in opposite directions. FDA had asked about drug delivery specifically. The sales channel then made drug delivery its selling point, complete with a direction to pursue the market aggressively.

The Application FDA Would Not Accept

In its civil account, the government alleged that Biocompatibles intended LC Bead for use with chemotherapy drugs when it entered the U.S. market in 2005. The company later sought approval for the combined product, but the application did not supply the evidence FDA required.

The Justice Department reported that Biocompatibles applied in December 2009 for approval of LC Bead as a drug-eluting bead combination product. The Food and Drug Administration informed the company that it was not accepting the application because the clinical studies did not provide adequate evidence of a therapeutic benefit.

The government’s civil account then returned to the sales message. It alleged that the distributor routinely advised healthcare providers that LC Bead offered “better” or “superior” therapy for certain cancers despite insufficient clinical evidence for those claims.

The Food and Drug Administration said the evidence was inadequate. The alleged sales message promised providers a better cancer therapy anyway. The alleged scheme put public health care money behind claims the clinical evidence did not support.

How Does Reimbursement Work for Medical Devices?

Medicare generally includes the cost of an implanted or inserted device in payment for the procedure or hospital stay. In the LC Bead case, the government pursued claims for procedures involving the chemotherapy-loaded bead.

That payment structure explains why the provider’s bill matters to a case about a manufacturer. The Food and Drug Administration addresses whether a device may be marketed. Coding describes the item or procedure. Coverage determines whether Medicare pays for the use, and the payment system determines the amount and what it includes. A sales presentation can influence the use even though the resulting bill comes from a hospital or another provider.

The distributor’s alleged billing advice made that connection more concrete. In its later account of AngioDynamics’ conduct, the Justice Department alleged that the distributor knew many insurers declined coverage for certain LC Bead procedures and instructed providers to use inaccurate billing codes for those uses.

Reimbursement support was part of the alleged scheme because the distributor’s advice reached the description on the claim itself.

How Much Is a Whistleblower Claim Worth?

The Justice Department announced that the whistleblower in the Biocompatibles case would receive approximately $5.1 million from the civil settlement. Its later AngioDynamics announcement said the same whistleblower would receive approximately $2.3 million from that company’s LC Bead settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The case began with a qui tam lawsuit, and the related distributor announcement identified the whistleblower as a former employee of both companies’ marketing departments.

What Device Marketing Employees Can See

The LC Bead account puts regulatory communications, clinical claims, sales training and reimbursement advice in the same commercial sequence. Each reaches a different audience. The assurance to the Food and Drug Administration addresses the regulator. Training tells representatives how to sell. Clinical comparisons give a provider a reason to choose the product. Billing advice addresses whether the customer gets paid for using it.

That sequence is useful because an employee may know one part particularly well. A regulatory employee may know what the company promised and how the agency responded to an application. A sales or marketing employee may know which claims representatives were taught to make. A reimbursement employee may know what providers were told after coverage was declined.

We connect those accounts to the procedure and the government claim. In a case like this, the strongest explanation follows the same use throughout: what was proposed to FDA, what was promoted, how the product was used and how that use was described for payment. The business decisions give meaning to the billing records, and the billing records show where the marketing reached public money.

AngioDynamics and the Distributor’s Own Conduct

AngioDynamics agreed to pay $11.5 million to resolve the LC Bead allegations in the separate civil resolution announced on July 18, 2018. The government alleged that it marketed LC Bead for use with chemotherapy drugs while serving as the U.S. distributor from May 2006 through December 2011.

The distributor account added further sales claims to the manufacturer’s story. The government alleged that AngioDynamics personnel described the use as safer and less toxic than alternatives without sufficient clinical evidence. The Food and Drug Administration had declined to approve that use, according to the distributor settlement announcement. Those alleged promises about the therapy accompanied the alleged advice about getting it paid for.

The distributor had its own role in the alleged scheme: what its personnel said about the therapy and what they told providers to put on the bill.

When You Know the Sales Message

If you know how a device’s FDA assurance became a different promise to customers, speak to one of our Whistleblower Experts about the sales message you saw. We build your strongest medical device whistleblower case with you, connecting the decisions inside the business to government-paid procedures and bringing in medical device whistleblower lawyers who understand promotion and reimbursement. We stay at your side as the case moves from your account of the sales operation to the pursuit of a recovery.