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Magellan Diagnostics to Plead Guilty, Pay $42M for Selling Faulty Lead Testing Devices

The story has been updated to include comments from Magellan Diagnostics.

NEW YORK — The US Department of Justice announced Tuesday that Magellan Diagnostics has agreed to pay $42 million to end criminal charges related to its concealment of malfunctions in a device it sold for measuring lead levels in blood.

As part of the deal, the Billerica, Massachusetts-based company will plead guilty to violating the federal Food, Drug, and Cosmetics Act, pay a $21.8 million fine, forfeit $10.9 million, and pay a minimum of $9.3 million to compensate victims of its fraud.

In 2017, the US Food and Drug Administration raised concerns that Magellan may have broken federal law by selling faulty blood-based lead tests, issuing a recall for the products — which was later expanded — and then issuing a warning letter to the company alleging that it had been selling modified versions of its blood-based lead testing systems without the agency's clearance or approval. Other allegations in the letter included that the company had failed to properly address customer complaints about the tests' results.

Products covered under the recall included Magellan's LeadCare Ultra, LeadCare II, and LeadCare Plus tests, which were designed to detect lead concentrations in the blood of children and adults using fingerstick or venous blood samples.

About a year ago, three former Magellan executives were charged with conspiracy to commit fraud and other crimes in connection with the sale of the tests.

With Magellan's agreement to plead guilty, which also includes a deferred prosecution agreement to resolve felony conspiracy fraud charges against the company, Magellan will compensate all patients who were demonstrably harmed for the financial damages they suffered as a result of the malfunction in the lead testing devices, according to the DOJ.

In a statement, Magellan noted that the use of venous blood samples were discontinued in 2018, at which time issues around the products that were under investigation were fully remediated. It added that the settlement announced this week has no effect on the DOJ's prosecution of the three former Magellan executives.