The Custom Device Exemption: What Is It And Does It Ever Apply?

REGULATORY OUTLOOK

In 1976, Congress enacted the Medical Device Amendments (MDA). This law, now part of the Federal Food, Drug, and Cosmetic Act (FD&C Act), generally requires FDA clearance or approval before a new device can be marketed in the United States. Congress enacted an exception, however, for custom devices. A device that qualifies as a custom device is exempt from FDA premarket clearance or approval.

The custom device exemption states that a device “which, in order to comply with the order of an individual physician or dentist. . .necessarily deviates from an otherwise applicable performance standard or [premarket approval requirement],” is not subject to performance standards or premarket approval.
However, to be considered custom, a device has to meet certain criteria. According to the FD&C Act, the device should not generally be “available in finished form for purchase or for dispensing upon prescription and is not offered through labeling or advertising.” The device must also be intended for use by an individual patient who is named. In addition, the device must be made in a specific form for that patient, or intended to meet special needs “in the course of the professional practice” of a specific physician or dentist but is “not generally available to or generally used by other physicians or dentists.”¹
FDA has also published a regulatory definition of custom device. The definition essentially restates the statutory criteria in list format, although with some subtle but potentially significant differences. According to FDA, a custom device is one that:

•Necessarily deviates from devices generally available or from an applicable performance standard or premarket approval requirement in order to comply with the order of an individual physician or dentist.•Is not generally available to, or generally used by, other physicians or dentists.•Is not generally available in finished form for purchase or dispensing upon prescription.•Is not offered for commercial distribution through labeling or advertising.•Is intended for use by an individual patient named in the order of a physician or dentist, and is to be made in a specific form for that patient, or is intended to meet the special needs of the physician or dentist in the course of professional practice.²

In exempting devices from the approval requirements to accommodate the special needs and circumstances of patients and physicians, the custom device provision is both compassionate and humanitarian. Custom devices, however, should not be confused with the separate and distinct FDA categories of compassionate use and humanitarian use devices. Compassionate use occurs in the context of a device clinical study and requires prior approval from FDA allowing patients who do not meet the study's inclusion criteria to have access to the device when there is no other alternative to address a serious disease or condition. A humanitarian use device (HUD) is one that is expected to benefit fewer than 4000 patients per year and meets other criteria. HUDs require prior FDA review and approval through the submission of a Humanitarian Device Exemption.
Although there is no dispute that it exists under the law, there has been controversy over what products—if any—actually fall into the custom device category. The drafters of the MDA thought the exemption was needed “so that innovation is not stifled and so that custom fitting or sizing would not be prohibited.”³ They noted that “[a]mong examples of devices in which important features are customized are orthopedic and other prosthetic devices, dental devices, and specially-designed orthopedic footwear.”⁴
The House Conference Report for the bill that became the MDA explained that the exemption applied only to devices intended for use by an individual patient named in an order by an individual physician, dentist, or other qualified person. Further, to be eligible, the device needed to be made in a specific form for such patient or intended to meet the special needs of such physician, dentist, or other specially qualified person in the course of his professional practice.⁵
A Lack of Application
Despite Congress carefully defining the term, reaching a consensus on how the custom device definition should be applied has proved elusive. From FDA's perspective, some manufacturers have abused the category. Over the years, the agency has sent warning letters to several companies alleging that their programs to offer custom devices—even if designed to meet the unique needs of a patient—were unlawful. For example, in a June 2003 letter to Inter-Os Technologies Inc. (Lone Tree, CO), the agency objected that “[t]wo patients received implants of the same prototype. . .device. Although you ‘customized' the device to fit each patient, the [device] was the same design and not made specifically for each patient.”⁶
Industry maintains that FDA's interpretation is unduly cramped. Critics say that FDA confers custom device status only under the rarest of circumstances, e.g., a physician who needs special equipment because of thalidomide-associated birth defects. In their view, FDA has largely written the custom device provision out of the law.
Many years ago, FDA said it would issue guidance to explain its narrow interpretation, but no guidance has yet been issued.⁷ In 2004, the law firm of Klepinski & Duval submitted a proposed guidance document attempting to clarify the criteria. The status of this document within the agency is unclear. FDA assigned the document a public docket number, but the draft remains the only entry in the docket, and the agency has not responded.
Until recently, the only judicial decision to address the custom device exemption, and briefly at that, was the 1985 case Contact Lens Manufacturers Association v. FDA.⁸ There, as a side issue, the court deferred to FDA's view that widely prescribed rigid gas permeable contact lenses, while tailored to patients, could not be custom devices because they were generally available to, or generally used by, other physicians.
Endotec—Round One
More than 20 years after the contact lens case, came the Endotec case.⁹ In 2006, FDA sued Endotec Inc., an Orlando, FL-based orthopedic device manufacturer, seeking to permanently enjoin the company and its officers from manufacturing and distributing various ankle, knee, and jaw implants as custom devices. The agency had previously issued Endotec a warning letter and placed the company on its Application Integrity Policy (AIP) list, rejecting the company's claims that such implants were custom devices exempt from the premarket approval and investigational device exemption (IDE) requirements.
According to Endotec, the ankle devices in question had a three-piece, mobile-bearing design that was not commercially available in the United States. Although similar to a standardized mobile-bearing design then being studied under an FDA-approved IDE, “each had differences because each was designed for an individual patient, according to that patient's physiology and pathology. . . . [S]ome ankles required a custom talus to account for bone loss, some required side walls on the tibial component, and some required flanges on the talar component.”⁹
The knee devices in question were one-part mobile bearings supplied to a single surgeon, who used them in revision surgeries for another manufacturer's knee device. According to Endotec, this elderly surgeon “was concerned about performing revisions . . .because revisions required stretching the tibia and it was very awkward and difficult for him. [He] was also worried about causing ligament damage to the patient.” Endotec claimed its one-part knee bearing was designed to avoid this problem.
The jaw implant at issue was a part of a multicomponent implant then being studied under an FDA-approved IDE. According to Endotec, it was made “specifically for [a] patient. . .who had a tumor and was missing bone. The device was different from a regular fossa component because it did not have a plastic barrier. . . .[T]here was no device available off-the-shelf that would have fit [the] patient.”
During a district court trial in Florida, FDA contended that Endotec's ankle implants were not custom devices. FDA argued that although each device had been specially tailored and sized for a particular patient, the basic design of the implant did not necessarily deviate from ankle implants that were generally available. Thus, the implant was capable of being studied in a clinical trial. The agency also claimed Endotec's knee implants were not custom devices because they could be clinically studied, had been advertised for distribution, were available in finished form, and were not designed to meet the anatomical needs of the implanting physician. FDA argued that the jaw implant provided for a single patient was not a custom device because it was a finished device and had the same basic design as other available jaw implants.
The district court, calling FDA's interpretation “so narrow as to make the definition useless,” held that Endotec's ankle and jaw implants, but not its knee implants, were exempt custom devices. With regard to the ankle implants, the court found that this was “not a case where there was a standard deviation from a basic design because each patient had unique needs according to his or her pathology and each ankle device was manufactured according to the doctor's order for that patient. [The] ankle devices were not ‘merely a variation' within a range of sizes.” The court similarly found that Endotec's jaw implant was “manufactured specifically to account for the bone loss suffered by patient Robinson as a result of a tumor and thus, it was intended to meet the patient's specific needs” and “was not generally available to or used by other physicians.”
With regard to the knee implants, however, the court sided with FDA. It ruled that “Defendants have been unable to identify any ‘special need' of [the surgeon] that would bring the device within the custom device exemption” and that “the same bearing was implanted repeatedly in different patients.”
Endotec—The Appeal
Both FDA and Endotec appealed to the United States Court of Appeals for the Eleventh Circuit in Atlanta. Again, the central issue was whether Endotec's ankle, knee, and jaw implants qualified as custom devices. Reflecting the narrowness of FDA's interpretation, FDA argued that its interpretation of the custom device exemption was that a medical need had to be so rare or unique that clinical investigations were impossible. That is, an adequate population for a well-conducted study essentially could not exist.¹⁰
It also argued that a device meets the “not generally available in finished form” requirement only if it is one that the physician has created to treat a particular patient for a novel situation. Further, the device has to be made in a specific form for a specifically named patient, and it can be used only with that patient. FDA defined specific needs to mean designed to suit one individual, and not a group of patients with similar pathologies or a condition that appears in patient populations. Finally, custom status does not depend on whether the device is “in physical existence and in inventory,“ but rather on whether the manufacturer is able to accommodate the request based on a basic device.
On March 30, 2009, the Eleventh Circuit affirmed in part and reversed in part. It concurred that Endotec's jaw implant was a custom device, but not the company's knee or ankle implants.¹¹
Disappointing those who had hoped for some conclusive analysis of the custom device provision, the Eleventh Circuit issued a very narrow decision. In ruling on the status of Endotec's products, it did not set out any broad-based criteria. Instead, finding that Endotec had commercially advertised its custom ankle devices, the court concluded that “the district court erred with respect to [that] prong of the custom device definition and, because a device must meet all five prongs of the custom device definition, we decline to address the remainder.” On May 14, 2009, Endotec filed a petition for rehearing by the court of appeals. The petition was denied June 23.
With respect to Endotec's knee implants, the court held that Endotec failed to show an abuse of discretion by the district court, failed to demonstrate a special need on the part of the implanting surgeon for these devices, and had advertised some of the knee implants in violation of the commercial distribution prong. The Court of Appeals did side with Endotec on the jaw implant. It said that FDA failed to demonstrate an abuse of discretion by the lower court in determining that such device was “not generally available to, or generally used by, other physicians or dentists.”
Conclusion
For three decades, the scope of the custom device definition has been a source of controversy. The Endotec case offered hope that clarity would at last be achieved. Those hopes have been dashed. The Eleventh Circuit did not provide sweeping guidance.
Yet the Endotec opinion does shed light on a few points. First, companies cannot advertise custom devices directly or implicitly. Promoting a custom device even once may be fatal to its status. Although the court did not rule on the ability to advertise custom device departments under the exemption, the permissibility of this activity is questionable after Endotec.
In addition, although the Eleventh Circuit deliberately avoided discussing the bounds of the statutory custom device criteria, it did make abundantly clear—citing eight federal cases—that the burden of proof lies with the party claiming the exemption. The presumption is that a product is not a custom device. Because FDA, based on past precedent, is very unlikely to give companies the benefit of the doubt on custom device status, this suggests that companies need to devote more effort to document the rationale for why a device qualifies for custom device distribution.
On the other hand, Endotec also suggests that a product does not necessarily forfeit custom device status simply for lack of exhaustive data proving no commercially available product is available. A physician's declaration that nothing else would suffice may be adequate, without having to prove that there are no alternatives.
In responding to FDA's argument that Endotec “did not address the features of the commercially available [jaw implant] and demonstrate it was unsuitable for this patient,” the Eleventh Circuit stated: “The . . . argument amounts to one of degree. . . . [T]he government merely demands more evidence. . . . The district court concluded that the appellees met their burden and the government has failed to show that it abused its discretion.”
When Congress drafted the MDA, it did not foresee how its provisions would be implemented. Congress drafted a lengthy provision for banning unsafe devices, and yet, only one device has been banned. Product development protocols, although appealing in concept, have withered into futility. And, although the custom device exemption was deliberately incorporated and defined in detail, FDA has rarely found a custom device that it liked. The Endotec case is unlikely to change that.
References

1.United States Code, 21 USC 360j(b).

2. Code of Federal Regulations, 21 CFR 812.3(b).

3.Senate Report, no. 94-33, U.S.C.C.A.N. 1070, 1083 (1976).

4.House Conference Report, no. 94-853 (1976).

5.House Conference Report, no. 94-1090 (1976), U.S.C.C.A.N. 1103, 1113 (reprinted in 1976).

6.Warning letter from Timothy A. Ulatowski, Director, Office of Compliance, CDRH, FDA to Randolph C. Robinson, President, Inter-Os Tech. Inc. (June 20, 2003).

7.“Multiple Custom Orders Likely Trigger IDE Rules,” 24:6 Devices & Diagnostics Letter, at 1-2 (1997); FDA Semiannual Guidance Agenda, 64 Fed. Reg. 61,881, 61,885 (Nov. 15, 1999).

8.766 F.2d 592 (D.C. Cir. 1985).

9. United States v. Endotec Inc., No. 6:06-cv-1281-Orl-18KRS, 2008 WL 1909164 (M.D. Fla. Apr. 30, 2008).

10.Brief for Appellant at 23, United States v. Endotec Inc., No. 08-13693-DD, 2009 WL 804399 (11th Cir. Aug. 25, 2008).

11.United States v. Endotec Inc., 563 F.3d 1187 (11th Cir. 2009).

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