A Medical Device Daily

Smith & Nephew's Advanced Wound Management division (St. Petersburg, Florida) reported that the Specialist Patents Court in the High Court of Justice of England and Wales granted Kinetic Concepts (San Antonio) a temporary injunction prohibiting Smith & Nephew from commercializing foam dressing kits for negative pressure wound therapy in the UK.

The temporary injunction will remain in place until the court can rule on the patent infringement action that KCI filed in the UK against Smith & Nephew in December. An early trial date has been ordered for the next available court date after March 23, to be confirmed by the court.

Smith & Nephew and KCI have been engaged in litigation in the U.S. in connection with KCI's intellectual property rights. As part of the legal process related to the U.S. actions Smith & Nephew has filed details of prior art with U.S. patent authorities.

Robin Carlstein, senior vice president of advanced wound devices at Smith & Nephew, said, "We are confident of our position in this lawsuit and look forward to presenting our submissions and evidence to the court. The present decision by the UK court does not apply to the United States or any markets outside of the United Kingdom."

He added, "These recent developments have no impact on our ability to sell foam dressing kits in the United States, and will not impact any current or pending litigation between the companies in the U.S. We are committed to providing a strong and diverse product portfolio with which the clinician can exercise her or his own best judgment when tailoring negative pressure wound therapy for each patient."

In other legalities:

• Eli Lilly & Co. (Indianapolis) will pay federal and state governments more than $1.4 billion to remedy a wide-ranging, off-label marketing scheme for its prescription drug, Zyprexa. This settlement is the largest qui tam settlement in the history of the False Claims Act.

Stephen Sheller, a mass tort and class-action lawyer from Philadelphia, filed the first complaint in the case in February 2003, bringing the off-label drug allegations to the government under seal as required by law. After six years, the Department of Justice has settled with Lilly the allegations that six former Lilly drug marketing representative whistleblowers first brought to Sheller.

Lilly will pay more than $1.4 billion for its illegal off-label marketing of the antipsychotic drug, the U.S. Attorney's Office for the Eastern District of Pennsylvania said. Zyprexa is Lilly's top-selling drug, with worldwide sales of nearly $40 billion since its approval in 1996.

In the settlement, Lilly will pay $800 million in civil penalties and plead guilty to criminal charges, paying an additional $600 million fine. The six whistleblowers who brought the complaint against the company will share in roughly 18% of the federal and qualifying states' recoveries, Sheller said.

Related complaints filed by other law firms in 2005, 2006 and 2007 were ultimately consolidated into Sheller's first-filed complaint.

The whistleblowers represented by Sheller, two with 27 or more years of service at Lilly, expressed concern through proper channels about the company's marketing practices. All six whistleblowers were eventually fired or forced to resign. One sales representative, who also is a pharmacist, contacted the company hotline regarding unethical sales practices but received no response, according to the complaint.

• UnitedHealth Group (Minneapolis) reported that it has reached an agreement to settle class-action litigation related to reimbursement for out-of-network medical services. The agreement resolves class-action litigation filed on behalf of the American Medical Association (AMA; Chicago), health plan members, healthcare providers and state medical societies.

Under the terms of the proposed nationwide settlement, UnitedHealth Group and its affiliated entities will be released from claims relating to its out-of-network reimbursement policies from March 15, 1994, through the date of final court approval of the settlement. UnitedHealth Group will pay a total of $350 million to fund the settlement for health plan members and out-of-network providers in connection with out-of-network procedures performed since 1994. The agreement contains no admission of wrongdoing. UnitedHealth Group believes it is in the best interests of the company to resolve these matters and move forward.

The company believes that this retrospective settlement, coupled with the prospective agreement with New York Attorney General Andrew Cuomo reported earlier this week, resolves the issues that have been raised by the AMA and the New York Attorney General concerning the company's two physician charge databases.

The company said it will pay for this settlement with cash on hand, and the accrual will be included in financial results for 4Q08, as part of operating costs for GAAP accounting.

• Boston Scientific (Natick Massachusetts) reported a decision by the Court of Appeals for the Federal Circuit. The case involves a Boston Scientific patent, which in part is directed to drug-eluting stents and coating systems. In the decision, the court found that the patent was invalid as obvious over the prior art.

The case was an appeal by Johnson and Johnson (New Brunswick, New Jersey) of a 2005 jury verdict in the U.S. District Court for the District of Delaware that found the patent was valid and infringed by Johnson and Johnson's Cypher sirolimus-eluting stent system.

Boston Scientific said it is considering its options for challenging the decision.