Will the Democrats’ New Broom Sweep CDRH?

Concerns about FDA’s enforcement actions remain, raising questions about what changes may occur under a Democrat-led Congress.

James G. Dickinson

January 1, 2007

17 Min Read
Will the Democrats’ New Broom Sweep CDRH?


When the new Democrat-led Congress assembles this month, its reformist elements will face many issues resulting from 12 years of Republican disinterest in government regulation. This includes the past decade-plus of congressional inaction, despite the degradation and abuse in CDRH enforcement.

The most mystifying example of this inaction is FDA's unappealed defeat 15 months ago in the Utah Medical Products QSR/GMP case. Except for Republican Senator Orrin Hatch's direct, and apparently effective, intervention with FDA on behalf of this constituent, the case and its plentiful disclosures of FDA abuse have drawn zero congressional interest. Neither have the similar travails of Golden, CO–based TMJ Implants (TMJI).

The agency's attitude seems to be that the Utah Medical case is a one-off exception and better ignored than appealed in a forum that could be acutely embarrassing as well as costly. Ignorance is bliss.

But Utah Medical's court victory is far from an exception, however. Rather, it confirmed a long history of FDA defeat in QSR/GMP court cases. At the time of this writing, the agency has shown no inclination to reexamine its aberrant CDRH enforcement methods.

Steve Neidelman, until July FDA's second-highest-ranking enforcement officer, was steeped in medical device compliance and enforcement policy. He spoke with Compliance-Alliance teleconference moderator and president Nancy Singer on November 14, 2006, about the agency's loss to Utah Medical: “When I left the agency in July, although FDA was not happy with the outcome of the case, it [said it] would continue to use this type of action when it encountered firms with what it felt were egregious violations.” He added that FDA did not think this was a bad case but chose not to appeal it for a number of reasons. He did not explain what those reasons were. (For an in-depth interview with Neidelman, see page 74.)

John Scharmann, a former director of the complicit FDA Denver District, asked Neidelman if he could elaborate on the reasons. Neidelman simply referred him to FDA. And the agency isn't talking.

Former MyoTronics CEO Roland Jankelson wrote an open letter to Congress, which was published last October on FDAWebnews (www. fdaweb.com). In the letter, he told the story of his tortured victory over CDRH in similar circumstances in 1995. He also compared it with the failure that Utah Medical and TMJI experienced trying to break through the center's continuing intransigence.

Neidelman says FDA will still use legal action against violative firms.

“How powerful is the ability of the agency to cover up its misdeeds?” Jankelson wrote. “From my own personal knowledge, it is apparently sufficient to have stopped an [inspector general] investigation just when the investigation was near its end—an investigation into the agency's handling of TMJI's premarket approval (PMA) applications. I was personally told by the prime investigator that he was near the completion of an investigation that had provided evidence of criminally prosecutable wrongdoing—but the results of this investigation were never made public. No explanation was ever given to TMJI, and my and TMJI's ability to communicate with the investigator ceased. Jankelson wrote in his letter

It appears that the investigation was simply stopped and its findings buried from view. Why? How? What can be said is that the culture of cover-up appears to have been refined to an art form. Is it any wonder that FDA employees and management believe they are above the law, immune from consequences?

Even when companies prevail in federal court, as did Utah Medical at great expense, these companies cannot recover the commercial damage and legal costs inflicted on them. Of course, most small companies cannot even consider seeking redress from the courts because of the costs involved. Knowing the cost burden on smaller companies, FDA seems to feel free to harass, intimidate, and retaliate.

Official silence is the agency's strategy on this topic, even as FDA attempts on other fronts to assure everyone that it is for greater openness and transparency.

After 12 years of being effectively free from all congressional oversight of its compliance and enforcement operations, CDRH proceeds as though nothing ever happened in Utah federal court. Even the industry trade associations have hidden from the TMJI and Utah Medical controversies. Perhaps for them the need to maintain FDA goodwill to get agency speakers for their various conferences and workshops trumps their sense of right and wrong.

All of this controversy adds up to an opportunity for the new-broom Democrats. But something tells me not to hold my breath.

Compliance Is Simply ‘Good Business'

“Compliance with regulatory requirements is simply good business,” Larry Spears told the FDA Inspections Summit Conference in November. Spears, the CDRH Office of Compliance deputy director for regulatory affairs, said failure to maintain compliance is costly. It can lead to complaints and customer dissatisfaction, as well as recalls or other enforcement actions that can tarnish corporate image. And all can result in loss of profits and possibly of market share. Moreover, Spears pointed out, a reputation for poor product quality can adversely affect the ability of firms to attract or retain high-quality employees. The conference, held in Washington, DC, was sponsored by the trade publication FDANews.

Figure 1. (click to enlarge) The majority of domestic and foreign manufacturer inspections have resulted in findings of no action indicated or voluntary action indicated.

A total of 1810 inspections of device manufacturers were conducted by CDRH during FY 2006, Spears indicated, comprising 1557 domestic inspections and 253 foreign inspections. These numbers are down only slightly from the number of inspections conducted in FY 2005. Of these, Spears said inspections of domestic manufacturers found no action indicated (NAI) in 718 cases, voluntary action indicated (VAI) in 664 cases, and official action indicated (OAI) in 175 cases, resulting in product recalls or other regulatory actions taken by the agency. Corresponding figures for foreign inspections were 135 NAI, 92 VAI, and 26 OAI (see Figure 1).

The figures cited by Spears were comprehensive. They include PMA inspections; for-cause inspections, where significant safety issues have been raised; and routine inspections, as required by the Medical Device User Fee and Modernization Act of 2002 (MDUFMA) or as follow-ups to violative inspections. Routine inspections also include those of manufacturers of high-risk Class II and Class III devices. Also included are risk-based inspections, which target manufacturers of specific kinds of products known to be associated with industrywide problems as identified by data from such sources as recalls, postmarket surveillance, or complaints; and bioresearch monitoring (BIMO) inspections. BIMO inspections are designed to ensure the safety of human subjects in biomedical research and clinical trials. They also target firms that remanufacture or recondition single-use devices for reuse.

Spears offered some useful advice, in the form of a checklist, to manufacturers that are preparing for an inspection. He suggested that managers in firms scheduled for inspection review their past inspectional history. In particular, they should evaluate the adequacy of any corrections that were made in response to any FDA-483 citations and establishment inspection report (EIR) issues that were noted from previous inspections. “Determine whether the corrections made got to the root cause of the problem,” he advised. “Were the corrections properly documented? Did the corrections warrant a new premarket filing, and was that done? Were [medical device reports] filed where required?”

Sometimes an inspection reveals significant violations, and sometimes there is a major disagreement with the inspector or misunderstandings regarding inspectional findings. In such cases, Spears recommended that a postinspection meeting be sought with the appropriate FDA district office. “It's important,” he said, “that firms demonstrate a willing attitude toward compliance with laws and regulations, and that responses to violations demonstrate that actions taken were well developed, not just knee-jerk reactions.” He stressed that responses should include a substantive plan for correction, to be accomplished within a reasonable timetable.

B&L Promises Corrections after FDA Warning

Responding to an FDA warning letter on quality system deviations at its plant in Greenville, SC, Bausch & Lomb (B&L) said in November that it has kept FDA updated on corrective actions it is taking. The firm expects to be ready for a reinspection at the facility in the first quarter of 2007.

In the warning letter, issued by FDA's Atlanta District Office, the agency acknowledged the company's efforts to address outstanding inspection deficiencies. An inspection conducted from March 22 through May 15 uncovered the deficiencies. However, the agency said that the QSR violations it uncovered were systemic and relevant to all products manufactured at the facility.

The inspection concentrated on the company's MoistureLoc contact lens solution. It has been subjected to a worldwide recall to eliminate a serious health risk associated with an outbreak of Fusarium keratitis. The warning letter said FDA's investigator did not find problems with other products produced at the facility that would warrant product recall or field correction.

The warning letter also said the firm's contact lens solutions are misbranded. The company had failed or refused to furnish material or information required by the medical device reporting regulation.

In response, B&L issued a statement. It said that although the inspection “did not identify any conditions at the manufacturing facility that contributed to or caused the reported adverse events, it identified some important issues that the company is addressing through a series of corrective actions. The warning letter contains no new observations, but rather documents those corrective actions still in process.”

Company officials said FDA is now reviewing a progress report. More than two-thirds of the action items had been completed with most items on schedule, said the firm, although a few had been given new completion dates.

Device Firms Seek Lower User Fees

Device companies are quietly negotiating with FDA officials in hopes of obtaining lower user fees. The Associated Press (AP) reported in November that industry and agency negotiators are reviewing the user-fee program. They are doing so in light of industry concerns that the program has not led to the level of performance that was the selling point when it was approved.

“There's a real consensus among industry that we haven't seen the type of performance we expected,” said retired Edwards Lifesciences vice president Patricia Garvey. She is now an industry negotiator for AdvaMed, which represents more than 1000 companies. An FDA survey earlier this year found that nearly 70% of industry executives don't think user fees have resulted in faster, more-reliable product approvals.

Figure 2. (click to enlarge) Percent of PMA applications reviewed within 6 months of submission.

FDA said it has made modest improvement in some areas, citing 294 days for new product approval in FY 2004, down from 346 days in FY 2001. But AP said the agency is getting further away from goals set when the program was launched. By 2007, when the program is due for budget reauthorization, FDA wants to be reviewing at least half of all applications within 180 days of submission. According to the most recent FDA data available, the number of applications reviewed within 6 months of submission fell to 39% in FY 2004 from 49% in FY 2002 (see Figure 2).

Device makers have expressed concern that fees have soared 82% since the program began, going from $154,000 per application in 2003 to $281,000 in 2007. When the program was launched, it was estimated that fees would increase about 50–60% over that period. The fee increase was primarily caused by a shortfall in congressional funding, which is supposed to cover about 80% of the cost of reviewing devices. “If we're doing our part and Congress doesn't do its part, there isn't much we can do except step up lobbying before budgets are actually presented,” Garvey said.

She said industry doesn't want the device user-fee program to end up like the drug user-fee program in which companies pay more than 60% of the approval expense. “The device review program is still primarily funded by the government, and we like it that way,” she said.

AdvaMed reportedly has proposed a solution that it said would provide more-stable funding for FDA and would decrease user fees substantially. Under that proposal, FDA would charge fees for some activities it now funds itself, such as inspecting plants. Product approval fees would be reduced, and the service fees would provide a more-predictable revenue stream.

Judge Explains Why He Jailed Device Makers

In an unusual step, Chicago federal judge Ruben Castillo has filed a 29-page “memorandum opinion and order” explaining the sentences he imposed in September on Ross Caputo and Robert Riley. A jury convicted both on 19 criminal counts involving their management of the now defunct AbTox Corp. In this October 16 document, Castillo says that although “Caputo is one of many corporate CEOs who have recently been tried and convicted, Riley is one of only a few chief compliance officers ever tried and convicted in federal court.”

Castillo goes on to state, “During the premarket notification process, AbTox engaged in different forms of fraudulent conduct. Adverse test results were, for the most part, withheld from FDA reviewers while favorable results achieved under the same test protocols were disclosed. FDA reviewers testified at trial that the information withheld was material. Caputo signed the first FDA submission—known jokingly among the scientific staff at AbTox as the submission of omissions.”

The judge points to the recently amended organizational sentencing guidelines. They emphasize that an organization must promote an organizational culture that encourages ethical conduct and also exercise due diligence to prevent and detect criminal conduct.

“By any measure,” Castillo comments, “AbTox's system of corporate compliance was a total failure from top to bottom. Caputo and Riley both bear primary responsibility for this failure... Caputo selected Riley to serve as AbTox's chief compliance officer for all the wrong reasons. Caputo knew that he could manipulate and dominate Riley based on his prior personal and business experience with him. Riley did not have any real training as a compliance officer.”

Continuing, Castillo writes that corporate compliance officers are often a company's first-responders. As such, they must focus on both active and reactive efforts to be effective. Active efforts must emphasize the complementary goals of crime prevention and corporate ethical behavior. Reactive efforts should measure how well a corporation reacts when it learns that questionable and potentially illegal corporate conduct has occurred.

Castillo says the defendants' behavior in this case turns the concept of corporate compliance on its head. Caputo and Riley, he writes, subverted the standard compliance goals to ensure that AbTox could proceed with its illegal marketing scheme in direct violation of FDA regulations.

Castillo explains, “In view of all the factors outlined herein, it is the court's hope that the readers of this opinion will come to the realization that the 10- and 6-year sentences imposed here are in large measure part of our country's efforts to create an atmosphere of general corporate crime deterrence.” The judge explains that sentences for serious corporate crime are needed to reflect the actions of Congress and the Sentencing Commission, as well as to avoid unwarranted sentencing disparities. More importantly, he says, “the sentences provide specific deterrence for Caputo and Riley after assessing each of their roles in the offenses proven at trial.”

Castillo concludes, “This court concludes that the proven offenses require sentences that will effectively deter and adequately reflect the seriousness of the defendants' egregious conduct, the need for just punishment, and the protection of the public.” He concludes that the just and reasonable sentences for each defendant were a total sentence of 10 years' imprisonment and 3 years of supervised release for Caputo and a total sentence of 6 years' imprisonment and 3 years of supervised release for Riley. The court waived any fine in deference to the full award of $17,209,074.50 in restitution to the victims in this case.

Supreme Court Seeks Input on FDA Preemption

The U.S. Supreme Court asked the Justice Department's solicitor general in November to weigh in on an FDA preemption case before it decides whether to hear the case at all. At issue is whether premarket approval by FDA preempts state tort claims.

The case, Riegel et al. v. Medtronic, is a product liability suit involving Medtronic's Evergreen balloon catheter. A lower court dismissed the suit on preemption grounds. The U.S. Second Circuit Court of Appeals upheld the decision, finding that product liability claims against devices holding premarket approvals impose different requirements on a manufacturer than those imposed by FDA.

In petitioning the Supreme Court, plaintiffs argue that “FDA's criteria for PMA applications are general and do not require devices to be designed or labeled in any particular manner. Accordingly, several courts, including the Eleventh Circuit and the Illinois Supreme Court, have held that PMA does not impose device-specific requirements for purposes of preemption.”

Clinical Trial Quality Units Wanted

Marcarelli advised trial sponsors to humanize their studies.

A key to improving the quality of device research and advancing new technologies lies in adapting quality system requirements to the conduct of clinical studies, according to CDRH director of bioresearch monitoring (BIMO) Michael Marcarelli. Viewed from this perspective, “Research data are the manufactured product,” Marcarelli told the FDA Inspections Summit in November. He pointed out that FDA is mandated to conduct BIMO inspections of studies involving human subjects in order to ensure the protection of humans enrolled in clinical research, and to ensure the integrity of data obtained from clinical trials.

Marcarelli said that numerous factors trigger BIMO inspections. For example, he listed marketing applications subject to MDUFMA and research directed toward development of novel technologies. Also included are studies involving vulnerable populations such as pediatric, sight-challenged, or physically disabled study subjects. Finally, complaints received by CDRH, in addition to routine surveillance of the activities of IRBs, can trigger BIMO inspections. He said that most are preannounced and that any unannounced inspections are usually for cause.

An effective research quality system must be based on recognized quality system principles, such as those outlined in 21 CFR 820, Marcarelli noted. Although not required, he strongly advised that research sponsors establish clinical trial (CT) quality units to oversee the conduct of clinical studies. He also urged researchers to have a clear understanding of a risk-based approach to the research process. He said special attention should be given to data quality by design, suggesting that this might best be achieved by designing trials around their intended labels. For example, studies could be designed specifically to include methods to obtain data helpful in qualifying the product for reimbursement by CMS.

“The role of CT quality units is similar to that of GMP quality units,” Marcarelli explained. “They are responsible for ensuring compliance with all relevant regulations and commitments made in applications or supplements. They should ensure proper controls over the collection, recording, and reporting of key data, and ensure that the data product meets all quality and reliability characteristics. And they should be vigilant to ensure that device development meets all ethical principles, as applied to human research,” Marcarelli said.

When evaluating staff to conduct clinical research, sponsors should consider the skills and experience that are most appropriate to the device and its specific use in the study. “Assess clinical investigators as you would any contractor,” Marcarelli said. “Marketing applications are driven by the quality of supporting data—not by the fame or prestige of the investigator.” Common sponsor deficiencies, he noted, include inadequate monitoring to ensure that investigators comply with agreed-upon research protocols. “Physician-researchers often care more about patients than they do about protocols,” Marcarelli noted. “For example, physicians may be tempted to enter some patients into studies for which they don't meet the inclusion criteria.”

Finally, Marcarelli counseled sponsors and investigators to humanize their studies. This includes taking into account the reactions of human subjects to conditions imposed on them during clinical trials. “Remember, you have to recruit real people into clinical studies,” he said.

PMA Guidance Gives Hints about Annual Reports

CDRH has issued a draft guidance for industry and FDA staff, Annual Reports for Approved Premarket Approval Applications (PMA). It contains information required by regulations, additional information requirements that may be imposed by approval order, and recommendations for the level of detail to be provided in an annual report. The guidance also identifies steps generally taken by FDA staff when reviewing annual reports, the resources available to assist staff in their reviews, and actions they may recommend in their conclusions.

The guidance also covers postapproval study reports, contents of an annual report, FDA's review of annual reports, and FDA's recommendations.

To view the guidance, visit www.fda.gov/ohrms/dockets/98fr/06d-0408-gdl0001.pdf.

Copyright ©2007 Medical Device & Diagnostic Industry

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