Dive Brief:

• Abbott's Alere has agreed to pay $38.75 million to resolve allegations that it billed Medicare for defective rapid point-of-care testing devices.
• The Department of Justice accused Alere of selling its INRatio blood coagulation monitoring systems with a known defect from 2008 to 2016. Alere allegedly made a "business decision" to close its internal investigation and told FDA no deficiencies were found.
• The government alleged Alere concealed the defect for years despite knowing the tests were linked to over a dozen deaths and hundreds of injuries. Alere, bought by Abbott in 2017 after the events occurred, has agreed to settle without admitting liability. An Abbott spokesperson noted the product was discontinued and never sold by Abbott.

Dive Insight:

The settlement agreement states Alere knew about a defect with the INRatio algorithm since at least March 2008. The defect allegedly made the algorithm unable to reliably determine Prothrombin Time (PTs) values for certain types of impedance curves. PTs show how long it takes blood to clot, a key consideration for patients on warfarin and in other situations.

"Alere received repeated warnings, including from their own personnel, that INRatio's algorithm was flawed and could return discrepant results. For example, the INRatio software developer warned Alere in April 2009 that INRatio's algorithm "has no 'defense'" against the class of ski slope curves," the settlement states.

The government said the developer tried to fix the algorithm but was unable to find an acceptable solution. Alere allegedly responded by closing out its Corrective and Preventive Action investigation without fixing the problem, despite the software developer warning improvements were "sorely needed."

After closing its probe, Alere allegedly told FDA it had looked into meters reported to have generated discrepant results and "did not uncover any deficiencies." Statements that the root cause of the discrepant results was unknown went unchanged. 

The settlement quotes an internal Alere communication from 2014 that states "a design issue that has been part of the INRatio product since the early days" and was known of since 2008. The test was on the market for eight years after Alere gained that knowledge, in which time DOJ said it was "linked to over a dozen deaths and hundreds of injuries." Alere allegedly admitted internally that the defect "led to patient harm." Alere recalled the device in 2016.

DOJ pursued Alere for submitting false claims to Medicare, arguing that the federal health insurance program would not have paid the claims if Alere had disclosed the defect. The argument is based on a belief that the use of the defective device "was neither reasonable and necessary, nor safe and effective."

Alere settled a lawsuit that alleged it misled consumers in 2017.

This story has been updated with a comment by Abbott.