BOSTON — An ExThera Medical Corp. executive has agreed to plead guilty to failing to report adverse events, including the deaths of two patients, with the intent to defraud or mislead the FDA, the U.S. Attorney said Thursday.
Sanja Ilic, 58, of Carlsbad, Calif., who was the chief regulatory officer of ExThera, is charged with one count of failing to report adverse events with the intent to defraud or mislead the FDA, U.S. Attorney Leah Foley said in a statement. She is scheduled to appear in federal court in Boston at a later date.
Ilic is facing the charge of failing to report adverse events in connection with a blood filtration device used on cancer patients who traveled from the United States to a clinic in Antigua for treatment, Foley said.
Separately, ExThera Medical Corp., based in northern California, has entered into a three-year deferred prosecution agreement in connection with criminal information filed in federal court in Boston, Foley said, charging the corporation with failure to file adverse event reports with the intent to defraud or mislead in connection with the device.
Thursday’s announcement marks the first resolution of a corporate defendant by the Health Care Fraud Unit’s New England Strike Force since announcing its partnership with the District of Massachusetts, Foley said.
ExThera manufactured a blood filtration device that removed pathogens from patients’ bloodstreams.
Prosecutors said despite Ilic’s experience, training, and knowledge of FDA adverse event reporting, Ilic “intentionally concealed reportable adverse events, including the deaths of two patients treated with the blood filtration device at a clinic in Antigua.”
Before the start of treatments at the Antigua clinic, Ilic circulated an email to ExThera’s leadership and regulatory staff demonstrating that she understood potential adverse events, including “life-threatening” complications, that patients could experience from use of the device, prosecutors said.
“Ilic understood that disclosure of such information would have triggered regulatory scrutiny from the FDA, caused clinical trial partners to potentially withdraw their participation and jeopardized ExThera’s and Ilic’s future financial prospects,” Foley said in her statement.
“Rather than comply with her legal obligation to report the events, Ilic concealed this critical information from the FDA,” Foley said. “Ilic and ExThera potentially stood to lose financially if negative adverse event reports related to the Antigua clinic were filed with the FDA.”
Following public reporting about the blood filtration device and after ExThera terminated Ilic, ExThera filed several adverse event reports with the FDA related to use of the device to treat cancer outside the United States, prosecutors said.
As part of the deferred prosecution agreement, ExThera admitted that, through Ilic, it acted with intent to defraud and mislead the FDA, Foley said.
ExThera will be required to, among other obligations, provide ongoing cooperation with and disclosures to the Justice Department; implement a compliance and ethics program to prevent violations of the Food, Drug, and Cosmetic Act’s adverse event reporting requirements; and report to the Justice Department regarding remediation and implementation of these compliance measures, Foley said.
ExThera also agreed to pay a criminal penalty of $750,000 which has been adjusted based on ExThera’s ability to pay.
ExThera will establish an escrow account and deposit $750,000 within 60 days.
In the event ExThera is not able to pay amounts owed, if any, in any related civil litigation, the money in escrow shall be used to pay amounts owed, Foley said. ExThera also agreed to entry of a forfeiture order of $5,694,750.
Foley said the government reached this resolution with ExThera based on a number of factors, including the nature and seriousness of the offense conduct, and that ExThera has only minimal remaining operations.
“ExThera did not voluntarily and timely self-disclose the conduct to the Justice Department but did receive credit for accepting responsibility, cooperating with the investigation and engaging in timely remedial measures,” Foley said.
Ilic faces up to three years in prison, one year of supervised release and a fine of the greatest of $250,000 or twice the gross gain or twice the gross loss. She is also subject to forfeiture and restitution.
This is a developing story. Check back for updates as more information becomes available.
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