Dive Brief:

• Danish medical device maker Ambu will pay $3.3 million to settle False Claims Act allegations that it manufactured products in China and Malaysia for sale to U.S. government agencies despite a Trade Agreements Act prohibition, the Justice Department said.
• The investigation and settlement puts companies doing business with the U.S. government “on notice” that the Trade Agreements Act "is an important law that must be respected," William M. McSwain, U.S. Attorney for the Eastern District of Pennsylvania, said in the announcement Thursday.
• Ambu sold its medical products to the Defense and Veterans Affairs departments, according to the DOJ.

Dive Insight:

The Trade Agreements Act of 1979 requires that products sold to federal agencies come from countries with which the United States has a trade agreement. China and Malaysia are not TAA compliant countries.

Nearly 90% of recoveries during 2017 and 2018 under the False Claims Act came from the healthcare industry, with physicians, hospitals and clinics the most frequent violators, according to an analysis by Bloomberg Law. The False Claims Act is aimed at preventing fraud against federal agencies 

Ambu is a maker of medical devices that include ventilation bags for artificial respiration, visualization devices, training manikins, masks, circuits and single-use electrodes for ECG tests. It sells about 98% of its products on export markets through its sales companies or distributors, according to Ambu’s website.

In May, Ambu CEO Lars Marcher stepped down from his post after more than 10 years at the helm and was replaced by Juan-José Gonzalez, the former president of Johnson & Johnson’s DePuy Synthes business.

Ambu’s settlement resolves allegations that between December 2011 and March 2015, the device maker submitted false claims to the Defense Logistics Agency and the Department of Veterans’ Affairs for payment for sales of medical supplies. Ambu manufactured the products in China and Malaysia and knowingly sold them to the U.S. government in violation of the TAA, the DOJ said.

More than 80% of Ambu’s sales to DLA and VA under its contracts were from the noncompliant countries during the years covered by the settlement yet Ambu executives certified that the products came from compliant countries, the government said.

The settlement resolves claims that are allegations only, with no determination of liability, the DOJ said.

"By investigating the allegations and reaching a settlement in this case, we have put all companies doing business with the United States government on notice that the TAA is an important law that must be respected," McSwain said in a statement announcing the settlement.