September 4, 2015 / 12:07 AM / 2 years ago

Sanofi's Genzyme pays $32.59 million in criminal Seprafilm case

A sign on the fence marks Genzyme's plant in the Boston, Massachsetts neighborhood of Allston March 24, 2010.Brian Snyder

(Reuters) - Genzyme Corp agreed to pay $32.59 million, admit wrongdoing and enter a deferred prosecution agreement to resolve U.S. criminal charges over its marketing of the surgical implant Seprafilm, the Department of Justice said on Thursday.

The biotechnology unit of French drug company Sanofi SA (SASY.PA) was accused of two misdemeanor counts of violating the federal Food, Drug and Cosmetic Act from 2005 to 2010 by allowing Seprafilm to be adulterated and misbranded while being sold. Sanofi bought Genzyme in 2011.

Seprafilm is a clear film used to reduce abnormal internal scarring that can cause organs and tissues to stick together following pelvic and abdominal surgeries known as laparotomies.

But the Justice Department said some sales representatives taught surgeons how to turn Seprafilm into a "slurry" for use in increasingly popular laparoscopic surgery, even though U.S. regulators had never approved the film for that use.

According to papers filed with the federal court in Tampa, Florida, Genzyme admitted and accepted responsibility for the facts underlying the two criminal counts.

The two-year deferred prosecution agreement calls for improved oversight, and steps to halt Seprafilm sales for off-label uses. If Genzyme complies, the government will dismiss the charges.

Genzyme, based in Cambridge, Massachusetts, said in a statement it is "confident" in the compliance measures it has taken.

In December 2013, Genzyme reached a $22.28 million civil agreement to resolve claims related to Seprafilm under the federal False Claims Act.

The Justice Department said Thursday's settlement reflects Genzyme's "significant" cooperation during the probe.

The case is U.S. v. Genzyme Corp, U.S. District Court, Middle District of Florida, No. 15-cr-00352.

(This version of the story corrects name of court in case citation)

Reporting by Jonathan Stempel in New York; Editing by Diane Craft

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