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Former Magellan Diagnostics Execs Charged With Fraud, Conspiracy in Connection With Lead Tests

NEW YORK – Three former executives of Magellan Diagnostics have been charged by the US Department of Justice with conspiracy to commit fraud and other crimes in connection with the sale of the company's tests for determining lead levels in patients' blood.

Specifically, the DOJ accuses Magellan of knowingly selling inaccurate blood-lead level tests for several years, including the LeadCare II test once used for more than half of blood-lead tests in the US.

In a statement, the US Attorney's Office for the District of Massachusetts noted that the US Centers for Disease Control and Prevention has said no concentration of lead in the blood is deemed safe.

The DOJ said that Magellan continued selling its point-of-care blood-lead concentration tests long after its executives knew the tests could deliver falsely low results and that the executives lied to their customers, the US Food and Drug Administration, US congressional staff, and at least one international charitable organization about when and how the firm discovered the problems with its tests. Former CEO Amy Winslow, Chief Operating Officer Hossein Maleknia, and Director of Quality Assurance and Regulatory Affairs Reba Daoust face charges of conspiracy to commit wire fraud, wire fraud, conspiracy to defraud a government agency, and introduction of misbranded medical devices into interstate commerce with intent to defraud and mislead. The executives were arrested by the Federal Bureau of Investigation.

The accusations relate to Magellan's LeadCare Ultra, LeadCare II, and LeadCare Plus tests that were designed to detect lead concentrations in the blood of children and adults using fingerstick or venous blood samples. The LeadCare II test was used in more than half of blood-lead tests conducted in the US from 2013 through 2017, the period covering the accusations from prosecutors, according to the DOJ.

FDA officials said in a 2017 warning letter that Magellan officials had broken federal laws by failing to submit medical device reports to the agency after becoming aware of customer complaints about its test results. In May of that year, the agency issued a recall for all LeadCare tests that used venous samples, warned the public not to use the tests with venous samples, and urged people who were tested using Magellan's technology to get retested.

As of 2017, Magellan was selling about 2.5 million LeadCare II blood-lead tests per year, 420,000 of its LeadCare Ultra tests for use at medium and large hospitals and reference labs, and 40,000 of its LeadCare Plus tests for use at small hospitals and reference labs, according to the DOJ.

The department said that Magellan discovered in mid-2013 that its tests could deliver falsely low results unless patients' samples were incubated hours to days even though the product labels allowed testing immediately after a fingerstick or venous blood sample was mixed with a reagent. An outside statistician hired by the firm eventually determined in March 2015 that tests conducted immediately after mixing produced blood-lead readings an average of 53 percent below the expected results as determined with graphite furnace atomic absorption spectrometry.

An employee first discovered the problem in the run-up to FDA clearance for LeadCare Ultra, the DOJ said. FDA officials had asked for additional studies and documentation to back the company's label statements on the range of acceptable altitudes, temperatures, and relative humidities for conducting the test, and the employee found the tests produced different results shortly after mixing the sample with the reagent in comparison to incubating the mixture one to two days.

The DOJ said that in July 2013, Magellan responded to the FDA's request with results from a different temperature and humidity study that confirmed the test operated at various temperature and humidity conditions, but the company did not provide any blood-lead measurements or disclose the malfunction.

The department also alleged the flaws were identified as the executives were positioning the firm for sale and said that Winslow at one point told an employee to stop studying the malfunction in the LeadCare II test so that the firm could maintain "plausible deniability" about the device's performance. Company officials also notified the FDA about problems with LeadCare Ultra only after an outside consultant threatened to do so, the department added.

Meridian Bioscience acquired Magellan for $66 million in March 2016, and Winslow and Maleknia received bonuses of $2 million and $448,000, respectively, following the sale of Magellan. Meridian officials said in a statement on Wednesday that the company has cooperated extensively with federal authorities during the criminal investigation and noted that Meridian and its subsidiaries have not been accused of any crimes.

"All of the company's current products from the LeadCare line are FDA cleared and will remain available for clinical use," the company said. It also noted that, due to pending litigation and ongoing discussions with the DOJ, the company would decline further comment.

DOJ officials alleged the Magellan executives hid a substantial malfunction and lied to customers and the FDA about the nature of that malfunction, how often it occurred, and when they had discovered it. By doing so, they "endangered the health and lives of incredibly vulnerable victims," especially those who were living in public housing and were at the highest risk of lead exposure, US Attorney Rachael Rollins said in a statement.

"This office, along with our other law enforcement partners, will vigorously investigate and prosecute those who put corporate profits before patient health," she said. "Here, we allege the personal gain is at the expense of poor people, children, and individuals who are pregnant."