Magellan Diagnostics agrees to pay $42 million for faulty cable testing device

BOSTON — Billerica-based Magellan Diagnostics reached an agreement last month with the U.S. Department of Justice to plead guilty and pay a $42 million fine to resolve criminal charges related to the company’s concealment of defects in its lead testing equipment .

The company pleaded guilty to violating the Food, Drug and Cosmetic Act and agreed to pay $21.8 million in fines, $10.9 million in forfeiture and at least $9.3 million in restitution to victims.

Last year, three former Magellan executives were indicted after a federal investigation found that the company’s blood lead testing products produced results showing lower blood lead levels than they actually were. Former Magellan president and CEO Amy Winslow, 51, of Needham Heights, former COO Mohammad Hossein Maleknia, 64, of Bonita Springs, Florida, and former director of quality assurance and regulatory affairs Reba Daoust, 66 of Amesbury, charged in April 2023 with conspiracy to commit wire fraud, wire fraud, conspiracy to defraud a United States agency, and introducing into interstate commerce a misbranded medical device with intent to defraud and mislead.

Magellan’s settlement does not directly affect the charges against the three former executives, which are scheduled for a June 17 status conference in U.S. District Court in Boston.

The office of Acting U.S. Attorney for the District of Massachusetts Joshua Levy announced the deal on May 21 and said the company “admitted that it misled its customers and the (U.S. Food and Drug Administration) regarding a major failure that impacted devices Magellan’s LeadCare was used to test venous blood samples.”

The devices in question are LeadCare Ultra, LeadCare II and LeadCare Plus.

“By concealing the failure and later deceiving customers and the FDA about when the company discovered the failure, the nature, scope and frequency of the failure, and the risks associated with the failure, Magellan caused the deaths of approximately tens of thousands of children and other patients to receive inaccurate low-lead test results.” – reads the announcement from Levy’s office.

In a statement released after the deal was announced, Magellan Diagnostics CEO Tony Serafini-Lamanna said Magellan and its parent company, Meridian Bioscience, “worked constructively with the Department of Justice” to reach the transaction. Meridian acquired Magellan in 2016.

“Magellan takes seriously our responsibility to provide reliable, FDA-approved products to support some of our most vulnerable populations,” Serafini-Lamanna said in a statement. “The underlying issues that impacted the performance of certain Magellan products between 2013 and 2018 have been fully and effectively remedied. Currently, the devices and tests sold by Magellan are safe, FDA-approved and perform as intended.”

The agreement will also require Magellan to cooperate with a compliance monitor for the next two years.

Prosecutors said Magellan first learned of its devices’ artificially low results in June 2013, but launched LeadCare Ultra in December anyway. The same failure occurred with LeadCare II in 2013, but customers and the FDA were not notified until 2016. The FDA withdrew the devices from the market in 2017, and an investigation began the following year.

According to the U.S. Centers for Disease Control and Prevention, lead exposure is considered hazardous at all levels and can lead to lifelong physical and mental health problems. Exposure can occur in many ways, but it is common for homes built before 1978 to contain lead-based paint and exposure occurs through this source.