Maple Grove medical-device maker Vascular Solutions and its CEO Howard Root have been acquitted on all counts in a criminal case that had alleged a conspiracy to illegally promote sales of a device to treat varicose veins.
The case, unusual because it featured a CEO who opted to wage a vigorous counterattack against prosecutors, became a closely watched battle that could reshape the FDA’s power to regulate medical device sales.
“I feel vindicated, but outraged by the obscene legal process that I had to endure and the public trashing that my reputation and my company had to take,” Root said in a phone interview Friday afternoon, shortly after a San Antonio jury returned not-guilty verdicts on nine counts in the indictment.
The case turned on a somewhat arcane legal question about the Food and Drug Administration’s approved label for Vascular Solutions’ now-discontinued Vari-Lase Short Kit device. The jury deliberated for a day and a half, following weeks of testimony from prosecution witnesses.
Vascular Solutions said it spent $25 million building its defense, but ultimately chose not to call any of the 20 witnesses it had lined up.
The case is likely to draw industry scrutiny in part because of the trial judge’s instruction to the jury that declared unequivocally that it is not a crime for a device company to provide doctors with truthful, non-misleading information about unapproved product uses. That’s contrary to long-standing FDA legal theory about “off-label” promotion of devices and pharmaceuticals.
“Drug and device companies are following developments in this area very closely, and they will certainly welcome this,” Minneapolis health care defense attorney Tom Beimers said.
A spokesman for the U.S. attorney’s office in western Texas didn’t respond to requests for comment Friday. Root accused government officials of malicious behavior in bringing the case against him.
Vascular Solutions is a 550-employee company that generated $127 million in revenue in 2014 from sales of catheters, hemostat products and vein products and services. Those include the Vari-Lase line of devices, which use laser energy to treat varicose veins.
In the summer of 2014, Vascular Solutions agreed to pay a $520,000 civil settlement to resolve a former sales representative’s allegations that the company had marketed the Vari-Lase Short Kit for unapproved uses. The company denied any wrongdoing at the time.
A few months later, in November 2014, a San Antonio grand jury handed up a criminal indictment of Root and Vascular Solutions on one count of conspiracy to sell misbranded devices, four counts of selling misbranded devices, and four counts of selling adulterated devices.
The central allegation in the criminal case was that Root had coached sales staff to sell the Vari-Lase Short Kit to treat veins deep in the leg, even though the FDA had only approved the treatment for veins near the skin’s surface.
Minneapolis defense attorney John Lundquist, who represented Root at trial, said Friday the Short Kit was actually approved to treat a general category of varicose veins, including “perforator” veins deeper in the legs.
“As it turned out, the government’s case was nonexistent as to whether the product was even off-label,” Lundquist said.
Or as Root, who is also a lawyer and once worked at the Dorsey & Whitney law firm, put it Friday: “These prosecutors could have gotten on the Metro and gone over to Maryland to talk to the FDA, instead of coming down here to San Antonio for a four-week trial to find out that all varicose veins include perforator varicose veins.”
The company said the judge’s order dismissing the case is not subject to appeal. Following news of the jury verdict Friday afternoon, Vascular Solutions’ stock jumped 10 percent to close at $28.85 per share.
Health care companies including Vascular Solutions, Amarin Corp. and Pacira Pharmaceuticals have argued in court in recent years that the FDA doesn’t have the legal authority to prohibit them from telling doctors truthful information about so-called “off-label” unapproved uses of medical devices and drugs. On Friday, Root said the results of his trial should prompt internal examinations at the Justice Department.
“Every current investigation of a medical device company concerning ‘off-label’ promotion needs to be reviewed by the Department of Justice,” Root said in a statement, “to make sure their prosecutors’ theories comply with the law, not just their wishes.”