Magellan Diagnostics Settled Criminal Charges for $42 Million

Magellan Diagnostics settled criminal charges for billing for faulty lead tests and concealing the malfunction from customers. Magellan, a medical device company based in Billerica, Massachusetts, will pay $42 million to settle the charges.  The defect resulted in inaccurately low lead test results for potentially tens of thousands of children and other patients. Magellan pleaded guilty to two counts of introducing a misbranded device into interstate commerce in violation of the federal Food, Drug, and Cosmetics Act.

The Defective Devices Were Used to Test for Lead Levels

The Centers for Disease Control and Prevention (CDC) states there is no safe level of lead in blood. Lead exposure may cause irreversible lifelong physical and mental health problems. Young children and pregnant women are most susceptible to lead exposure. Houses built before 1978 are more likely to contain lead-based paint and have fixtures containing lead.  Individuals who may have been exposed to lead, especially young children and pregnant women, typically have tests done to determine the level of lead present in their blood. Magellan’s devices, including LeadCare Ultra, LeadCare II, and LeadCare Plus, measured lead levels in blood samples via finger sticks or venous blood draws. LeadCare II, primarily utilized for finger stick samples, accounted for over half of all U.S. blood lead tests between 2013 and 2017. LeadCare Ultra and LeadCare Plus were mainly used for venous blood samples.

Magellan Wrongfully Concealed Device Malfunctions

Magellan admitted to misleading customers and the FDA about a significant malfunction affecting venous blood sample tests. By concealing this issue, Magellan caused many patients to receive inaccurately low lead test results. Magellan disclosed that it first discovered the malfunction in 2013 during the FCA clearance process. Nonetheless, Magellan released the LeadCare Ultra device in December 2013 without disclosing the malfunction to the FDA or its customers.

In 2014, Magellan customers discovered the malfunction and complained about inaccurate results. FDA regulations required the company to file a medical device report about the malfunction within 30 days, but Magellan did not do so. Rather, in November 2014, Magellan sent a letter to its LeadCare Ultra customers advising them of the malfunction and recommending that they wait 24 hours before running their tests. This contradicted the instructions for use approved by the FDA. Magellan did not, however, report the malfunction to the FDA or advise the FDA of its change to the instructions until April 2015, nearly 21 months after Magellan discovered the malfunction and almost 8 months after customers discovered the malfunction on their own.

Magellan also failed to inform customers and the FDA about the same issue in the LeadCare II device, Magellan’s highest-revenue product, until November 2016. Magellen, however, knew about the malfunctions in the LeadCare II since 2013.

The FDA’s Investigation Leads to Recall

In 2017, the FDA reached out to Magellan, inquiring about when the company first became aware of the malfunction. Magellan’s representative falsely informed the FDA that the issue was discovered after receiving customer complaints in late 2014, shortly before Magellan notified the FDA in 2015. However, Magellan had actually identified the malfunction in 2013. The company subsequently provided the FDA with a misleading timeline that omitted their internal 2013 studies on the malfunction.

Ultimately, the FDA determined that the LeadCare Devices were unable to accurately test venous samples. This led to a recall of all LeadCare Devices using venous samples and a public warning against using LeadCare Ultra, LeadCare II, and LeadCare Plus for venous blood samples due to the malfunction.

Settlement Includes Compensation for Affected Patients

Magellan has agreed to compensate all patients demonstrably harmed by their defective devices. Affected individuals can complete a questionnaire on the FBI’s website for further assistance. In addition, Megallen will pay a $21.8 million fine, $10.9 million in forfeiture, and at least $9.3 million to compensate affected patients. Additionally, a deferred prosecution agreement will address felony conspiracy fraud charges.

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