Regulatory Rumbles Have Unexpected Effects on Device Industry

Originally Published MDDI July 2006NEWS TRENDS Heather Thompson

Heather Thompson

July 1, 2006

4 Min Read
Regulatory Rumbles Have Unexpected Effects on Device Industry


The number-one influence on the regulatory climate for devices is the controversy surrounding Guidant Corp., said a specialist in FDA law at a recent symposium on device regulation. Guidant's situation could affect how other companies fare in the market.

Jeffrey N. Gibbs, a senior partner at Washington, DC, law firm Hyman, Phelps & McNamara PC, placed Guidant first on a list of 10 influences that could have a bearing on device regulation. He said that the Guidant situation “has everything a good drama should: high financial stakes, bidding wars, skulduggery, and media backlash.”

And while Guidant's situation seems like something from a soap opera, Gibbs warned that the company's woes are not unique. Other companies could face the same storm. The situation has brought media, and therefore public, attention to the industry. “We have to be aware that any complaint could be put under a microscope, and we have to act accordingly,” he said in his address at a May conference on device regulation. The conference was sponsored by his firm, located in Irvine, CA.

But at this point, the regulatory fallout is still unclear, he said. “Guidant's circumstances may be felt in ambiguous ways.” Besides event reporting, the controversy could lead to new legislation on recall notifications and increased FDA oversight of company culture.

However, he said, the controversy is more about the court of public opinion. One of the main lessons, said Gibbs, is that industry needs to think less about keeping FDA happy than it does about preserving industry reputation. “This is a cautionary tale to teach device makers that maintaining people's trust is a top priority.”

Gibbs also discussed how MDUFMA, up for reauthorization next year, needs to be viewed as a positive change. There are still some significant issues that need to be resolved. “The return on investment for MDUFMA is still too small,” he said. “The device industry has seen little tangible progress despite the rising fees.” Gibbs said that industry has seen a change in attitude from FDA since MDUFMA was enacted. Industry has complained that FDA seems to be less available for informal discussions and that personnel at the agency seem less likely to want to work through minor issues.

Among other concerns for the device market was leadership at FDA, or the lack thereof. “David Kessler was the last commissioner to really take an interest in the marketing of devices,” Gibbs said. The host of commissioners and acting commissioners since Kessler have had more experience—and therefore more interest—in the pharmaceutical side of FDA. Even the Critical Path Initiative, which is the major focus of the commissioner's office right now, he said, largely ignores devices, except to the extent that they affect drugs.

What Gibbs describes as a “vacuum at the top” makes it difficult for device makers to assess their relationship with FDA. And so, it seems, Congress has gotten involved. Gibbs explained that the Senate Finance Committee has done the most to fill the void. He cited the hearings on Vioxx, a recent report that criticizes new intended uses for a neurostimulation device from Cyberonics Inc. (Houston), letters on breast implant premarket approvals, and an investigation into the sponsorship of continuing medical education programs. The committee has instigated all of these actions.

“It's not clear why the Senate Finance Committee has stepped in, but we can't underestimate the importance of congressional attention,” Gibbs warned.

Likewise, rulings on pharmaceutical and device litigations should not be underestimated. Gibbs noted the recent verdicts for the Rx Depot and Lane Laboratories cases. In these cases, the judge agreed with FDA that district courts could order disgorgement (funds repaid with interest to those affected by what is ruled an unethical or illegal action) and restitution on a company with manufacturing or quality problems. “Companies could have to pay penalties, with interest, per unit sold—that's a potentially enormous burden,” Gibbs said.

The Utah Medical victory was narrowly won, explained Gibbs, and it could make it harder to expand GMP requirements through enforcement-based interpretations.

Other regulatory influences Gibbs noted included the question of who regulates combination products, consistency of CDRH, and the call for physician notification in the event of recalls (see sidebar).

“The ranking, of course, is fluid,” said Gibbs. “Talk to me in six months, and chances are the list will have changed dramatically.”

Copyright ©2006 Medical Device & Diagnostic Industry

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