Scrutiny Of Growing Medical Device Industry Increases

1 Dec 2016
Mark Josephs

A recent criminal and civil settlement between the government and a medical device manufacturer and a recent step taken by the Food and Drug Administration (FDA) together demonstrate the attention medical device companies are increasingly receiving as that industry continues to grow.

Last month, Biocompatibles, Inc., a Pennsylvania-based medical device manufacturer, pleaded guilty to a misbranding violation of the Food, Drug, and Cosmetic Act relating to its marketing of its embolic device called LC Bead.  FDA had approved LC Bead as an embolization device designed for placement in blood vessels to block or limit blood flow to tumors and other dangerous growths.  The company assured FDA after approval for this sole use that it would not market the product as a drug-delivery device.  Nevertheless, Biocompatibles’ distribution company aggressively marketed LC Bead as a drug-delivery device that could increase the level of chemotherapy delivered to liver tumors.  Under the terms of the plea agreement, Biocompatibles will pay a criminal fine of $8.75 million and a criminal forfeiture of $2.25 million.  The company will also pay $25 million to resolve a False Claims Act case relating to claims that Biocompatibles submitted to government healthcare programs for procedures in which LC Bead was used as a drug-delivery device.

This settlement follows similar cases earlier this year against both medical device companies and executives of such companies, including the recent Massachusetts trial in which the former executives of Acclarent, a medical device company, were acquitted of felony misbranding charges, but convicted of related misdemeanors, in connection with the alleged off-label marketing of a medical device designed to help open sinuses.

Perhaps more important, the FDA recently created a new website for receiving allegations about regulatory misconduct on the part of medical device companies.  This website, created after reports that FDA had consistently accepted late adverse event reports from device companies, allows any individual or entity to submit a claim that a medical device manufacturing company or an individual is distributing devices in a manner that violates statutory and/or regulatory requirements.  Among the types of violations that FDA listed as examples of reportable allegations are failing to submit required reports or perform mandatory investigations, off-label marketing, failing to list or register devices with the FDA, and importing devices that do not meet U.S. requirements.  Establishment of this website potentially will subject device companies to increased allegations of illegal or improper activities, particularly from internal whistleblowers.

The United States medical device industry is large and continues to grow.  It is also diffuse, in that small-and medium-sized companies proliferate.  In 2015, there were over 7,000 medical device companies in the U.S. alone.  Regulating and monitoring such a diffuse industry is challenging, but the events described above show that the attention devoted to device companies is increasing.

The Law Office of Mark L. Josephs possesses the expertise and capability to represent medical device manufacturers and distributors both in addressing government or whistleblower allegations after they occur and in providing compliance services to avoid such allegations in the first place.

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