A Medical Device Daily

Schering-Plough (Kenilworth, New Jersey) yesterday reported reaching an agreement with the U.S. Attorney's Office for the District of Massachusetts and the U.S. Department of Justice to settle an investigation involving the company's sales, marketing and clinical trial practices and programs.

The agreement provides Schering-Plough to pay a fine of $435 million, with Schering Sales Corporation , a subsidiary of Schering-Plough, pleading guilty to one count of conspiracy to make false statements to the government. Schering Sales will pay a criminal fine of $180 million, and Schering-Plough will pay the remaining $255 million to resolve civil aspects of the investigation. It said the agreement resolves that investigation, which began prior to the arrival of the company's new management team.

“Since April 2003 when new management joined Schering-Plough and launched its Action Agenda to transform the company, we have made great progress in building an organization that puts business integrity at the center of its work,” said Brent Saunders, senior vice president, Global Compliance and Business Practices, Schering-Plough. “With this agreement, we are putting issues from the past behind us.”

The company said that previously disclosed litigation reserves will be sufficient to cover the settlement amount.

Schering-Plough also will sign an addendum to an existing corporate integrity agreement with the Office of Inspector General (OIG) of the HHS. The company said that the addendum will not affect its ongoing business with any customers, including the federal government.

In other legal action, the U.S. Court of Appeals for the Federal Circuit recently overturned a verdict reached by a jury in the Federal Court for the Northern District of Indiana concerning biomaterials derived from bladder tissue for use as medical products.

The patent at issue is one in a portfolio of patents that protects both breakthrough technology discovered at Purdue University (West Lafayette, Indiana) and numerous newly-created medical products that are manufactured by Cook Biotech (Bloomington) at its facility in the Purdue Research Park.

Cook said it has developed extracellular matrix (ECM) technology into a range of medical products used by surgeons.

“We believe that the Court of Appeals decision is flawed because it reflects a fundamental misunderstanding of the complex anatomy of bladder tissue that is the basis of the patented tissue graft technology,” said Mark Bleyer, president of Cook Biotech. “The jury and the district court understood the patented technology and reached the right result. Cook Biotech will pursue correction of the appellate court's decision and will continue to protect its rights to this important technology.”

Joe Hornett, senior vice president/treasurer/COO of Purdue Research Foundation , said, “Protection of Purdue inventions is one of Purdue Research Foundation's missions, and we support Cook Biotech's continuing efforts.”

The ownership of Cook Biotech, founded in 1995, is shared by Cook Group , Purdue Research Foundation and Methodist Hospital/Clarian. The company develops tissue-engineered biomaterials and ECM technologies, tissue-engineered biomaterials used to form acellular scaffolds providing a framework for tissue repair.

SEC investigates Arthocare stock options

ArthroCare (Austin, Texas) reported that the Securities and Exchange Commission has requested from it documents and information related to its stock option grant practices.

The company said that earlier this year, “prior to this request,” it undertook an internal review of its compensation activities from February 1996 to the present. Based on this review, the company said it believes there have been “no unusual patterns in the timing or pricing of its equity awards, and that there is specifically no evidence of backdating of option awards.”