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Olympus to Pay $635 Million Settlement for Kickbacks, Bribery

March 1, 2016
Olympus and other endoscope manufacturers have been under fire for more than a year since deadly outbreaks of drug-resistant bacteria linked to their products came to light.

Olympus Corp., a medical device maker, agreed to pay at least $635 million to resolve separate criminal and civil investigations into kickbacks and foreign bribery, the company said.

The company’s U.S. unit will pay $612 million plus interest to end the kickback case, while its Latin American medical business will pay $22.8 million to resolve a separate criminal case, Olympus said in a statement.

Both units face criminal charges that the Justice Department will later drop if the company complies with terms imposed.

“Olympus leadership acknowledges the company’s responsibility for the past conduct, which does not represent the values of Olympus or its employees,” Nacho Abia, president and chief executive officer of Olympus Corporation of the Americas, said in a statement. The unit is based in Center Valley, Pa.

“Olympus is committed to complying with all laws and regulations and to adhering to our own rigorous code of conduct,” he said.

The kickback case involves an investigation of “interactions and financial relationships with medical business customers and with physicians who use Olympus products,” according to the statement. The investigation focused on “activities between 2006 and 2011 to induce the purchase of Olympus products.”

Federal Probe

The U.S. Attorney’s Office in New Jersey led the investigation, which involved the anti-kickback statute and the federal False Claims Act, Olympus said. The company agreed to a corporate-integrity agreement and the appointment of a monitor.

U.S. Attorney Paul Fishman has scheduled a news conference in Newark to announce a settlement of $646 million with the largest U.S. distributor of endoscopes and related equipment.

Olympus and other endoscope manufacturers have been under fire for more than a year since deadly outbreaks of drug-resistant bacteria linked to their products came to light at hospitals in Chicago, Los Angeles, Seattle and elsewhere. The scopes trapped bodily fluid or tissue in tiny channels, sometimes passing superbug infections among patients for months before doctors realized the problem, according to regulators and hospitals.

Civil Suits

In May 2015, Olympus disclosed a subpoena from the Justice Department regarding the scopes that it received in March of that year. The company is also facing civil lawsuits from patients who claim they were injured by the devices.

Olympus is the leading U.S. manufacturer of the instruments implicated in the outbreaks, known as duodenoscopes, with 85% of the market share in the U.S. They’re threaded through the mouth and into the patient’s gastrointestinal tract to diagnose and treat diseases of the pancreas or gallbladder. They’re used in more than 500,000 procedures a year in the U.S., according to the Food and Drug Administration.

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