Originally Published MDDI May 2003

WASHINGTON WRAP-UP

The use of third-party inspectors, allowed by recent federal legislation, may pave the way for a universal quality system inspection, says an FDA official.

James G. Dickinson

Business Motives for Compliance Beat Regulatory Ones | Baxter Dialyzer Deaths Probe Goes to Justice | No User Fees to FDA, Please! | Sterilizer Makers Indicted for Fraud

Every year, it seems, medical device makers face a barrage of routine quality system inspections mandated by the EU, ISO, FDA, and others. Could one inspection every two years replace them all? 

This was the vision laid out by FDA assistant commissioner for regulatory affairs Steven M. Niedelman last March. Niedelman broached the topic at the Regulatory Affairs Professionals Society (RAPS) annual medical device conference in San Francisco. 

Third-party inspections were authorized by last year's Medical Device User Fee and Modernization Act (MDUFMA). Niedelman said that behind the negotiations for third-party inspections was a goal of a single, all-purpose inspection. It is possible, he said, that FDA could empower third parties accredited by EU/ISO to conduct all-purpose inspections at FDA-registered companies in lieu of FDA GMP inspections.

There would be a crunch, Niedelman acknowledged. Would any of these potential third-party inspectors want to submit to FDA's rigorous demands?

If they did, third-party inspections could become a key part of the new law. Some observers predict that they may become a leading example of the Bush administration's approach to government reform. Along with the new product-review user fees, constituent outreach, and other measures, they could remake FDA. An old and market-stifling bureaucracy could become, these pundits say, a market-driven, hands-off regulator. Increasingly, FDA would deal with product sponsors indirectly, through third-party reviewers and inspectors.

Niedelman said that the third-party inspection provisions of MDUFMA were modeled on FDA's approach to Europe. Through mutual recognition agreements (MRAs), the United States and Europe accept the use of third-party inspections. Progress in implementing the MRA approach has been slow. But he said FDA remains committed to it, and sees a close connection to domestic third-party inspections.

Governed by the same rules, both kinds of third-party inspections are voluntary for qualified manufacturers. In both cases, FDA retains the right to inspect the company's facility. FDA will give U.S. third parties “almost identical” training to that given to MRA auditors, Niedelman said.

Not all companies will be allowed into the program. To qualify, the most recent FDA-conducted inspection must be classified as “No Action Indicated” or “Voluntary Action Indicated.” FDA will maintain a public list of all accredited parties. Companies will have to notify FDA of which third party they choose and wait for the agency's agreement before proceeding. “We have the right to refuse, to say that we don't think that particular individual is appropriate,” Niedelman said.

There are other restrictions as well. Only companies that market a device in both the United States and a foreign country may participate. The third party must be certified, accredited, or otherwise recognized by one or more of the foreign countries where the device is marketed. Further, FDA must specify the functions and qualifications to which each accredited party is limited. No more than 15 parties may be accredited by FDA at first.

Very tight conflict-of-interest rules will apply. No accredited party for device inspections may have business associations regulated by any other part of FDA. Interfering with or falsifying information to an accredited party will be covered by the same criminal sanctions as apply to FDA investigators.

FDA will take no interest in compensation arrangements between accredited parties and their client companies, other than to police a federal prohibition on fees being linked to inspection outcomes.

Business Motives for Compliance Beat Regulatory Ones

“Don't ever tell your employees the reason for doing it is a regulatory requirement. Give them a business reason for doing it.” That advice was given by Alaris Medical Systems vice president of quality and regulatory affairs William H. Murphy to a RAPS San Francisco audience. He said staff respond better to regulatory quality requirements if they're expressed in business terms. They then see them in terms of profitability and earnings, rather than as disagreeable tasks imposed upon them.

Murphy said Alaris had rewritten its quality system manual to express its goals in customer-oriented or business terms rather than regulatory ones. This is not subterfuge, he said; Alaris's philosophy is that compliance is key to profitability.

Murphy also urged close collaboration with FDA on product recalls. He urged waiting for district office comments before sending out the recall notice. One unnamed company, he said, had to send out a second recall notice because FDA objected to the language of the first. Murphy said he estimates the cost of every notice to be about $10,000, including certified mailing.

“It's worth it to get it right the first time,” he said. “Look at it as a way of ensuring good relations with the local FDA office. . . . Also look at it from a product liability perspective. [You are] keeping the company profitable. Your insurance company might even give you a lower premium for having such a policy.”

FDA San Francisco District compliance officer Russell A. Campbell spoke on the same panel as Murphy. He stressed that the intent of the corrections and removals reporting regulation is to make sure that FDA knows about any risks to health associated with the activity. This has to be done within 10 days of the decision to correct or remove—and the regulation does not specify “business days.”

He urged companies starting a correction or removal to make an honest risk assessment. “This is my personal opinion, but it always seems like the firms try to minimize the risks. I know you guys think FDA tries to maximize the risk. Do an honest risk assessment. That's the best thing I can tell you.”

Baxter Dialyzer Deaths Probe Goes to Justice

FDA has turned over to the Justice Department its investigation into more than 50 deaths from dialyzers manufactured by Baxter. Justice, in turn, has issued a civil subpoena to the company. In its 10-K filing for 2002 with the Securities and Exchange Commission, Baxter cited the subpoena that it had received for company records. By that time, however, Baxter reportedly believed the investigation to be complete. 

The company first notified FDA of the deaths in October 2001 after discovering that 23 dialysis patients in Croatia had died over one weekend while using the company's devices. Baxter notified its customers to stop using the devices immediately and recalled both its A- and AF-series dialyzers. It was not until one month later that the company identified the actual cause of death related to dialyzer use—a processing fluid called perfluorohydrocarbon, or PF 5070. By November 2001, the death toll had climbed to more than 50, and included four U.S. hemodialysis patients.

A retired Baxter nephrologist, Lee Henderson, said in November 2001 that the fluid was being used to test the filters for leaks during the manufacturing process and that it “should have been removed from the filters before packaging.” The investigation team, however, found the fluid “in very small quantity” in some filters used in patients. CDRH director David Feigal called the nontoxic fluid “interesting, in that you can almost drink it.” The problem, he said, is that the fluid, which is a liquid at room temperature, boils or becomes a gas at body temperature. Those gas bubbles can then block blood flow and impede oxygen delivery throughout the body.

No User Fees to FDA, Please!

“No money directly to FDA, please!” begged CDRH director of device evaluation Daniel G. Schultz. As he told his San Francisco RAPS audience, he has already had to return to sender several hefty device user-fee checks sent to his office. His director of 510(k) staff, Heather Rosecranz, put it even more bluntly: Sending user fees to FDA instead of directly to its bank in St. Louis will cause unnecessary delays in processing submissions.

The officials made their points during separate presentations in March. Rosecranz said a company should submit a copy of the original 510(k) cover sheet with its check to the bank in St. Louis. The two copies of the 510(k) submission should be sent separately to ODE's document center, as usual. The 510(k) will be held there until the bank says the check has cleared, purportedly within 24 hours of receipt. “If there's no payment [the 510(k)] will never leave the document center,” Rosecranz said. “The reviewers will never know it's been received.”

FDA has released a guidance to help industry determine the appropriate fees for an application submission. It is entitled Assessing User Fees: PMA Supplement Definitions, Modular PMA Fees, BLA and Efficacy Supplement Definitions, Bundling Multiple Devices in a Single Application, and Fees for Combination Products; Guidance for Industry and FDA.

The document is based on last year's Medical Device User Fee and Modernization Act. Like the law, the guidance notes that the following types of premarket approval (PMA) applications are subject to a review fee:

•Original PMAs.
•Premarket reports (PMRs).
•Product development protocols (PDPs).
•Panel-track supplements.
•180-day supplements.
•Real-time supplements.

Fees for real-time supplements during the current fiscal year will be $11,088. Review fees for 180-day supplements will run three times higher ($33,100). Applicants who submit an original PMA, PMR, PDP, or panel-track supplement during fiscal year 2003 will face a $154,000 fee— the same amount as applicants submitting an original BLA or a BLA efficacy supplement.
Modular PMAs for which at least one module was submitted before October 1, 2002, will not require a fee for any subsequent module. Those submitted on or after that date will require the full fee for an original PMA.

Finally, the document states, fees for a combination product with a device component (i.e., a drug-device or a biologic-device product) will be based on the type of application required for the product's premarket approval, clearance, or licensure.

To read the guidance, visit www.fda.gov/cdrh/mdufma/guidance/1201.pdf. 

Sterilizer Makers Indicted for Fraud

Four former medical device executives have been indicted by an Illinois federal grand jury on mail and wire fraud charges related to selling unapproved sterilizers that deposited toxic copper and zinc salts on devices. The 36-page, 19-count indictment named former executives of now-defunct AbTox Inc.: president and CEO Ross Caputo, vice president of regulatory affairs Robert Riley, marketing director Mark Schmitt, and director of clinical services Marilyn Lynch. The last three were each also charged with one count of making false statements to an FDA investigator.

Gillum Ferguson, assistant U.S. attorney for the Northern District of Illinois, filed the criminal indictment against the four individuals; AbTox was not named in the indictment and exists only as a liquidating company.

Caputo's attorney said his client would plead a First Amendment–based defense, citing a U.S. Supreme Court ruling that honest off-label advertising claims are protected speech. None of the representations made by his client were false, he said. Attorneys for the other defendants declined to comment. All face maximum penalties of five years in prison and $250,000 in fines.

The investigation of the medical device firm was initiated by FDA's Chicago office. In 1998, it was turned over to the agency's Office of Criminal Investigations. The subsequent investigation resulted in the filing of the indictment last February. The grand jury indictment charges mail and wire fraud relating to the selling of nonapproved sterilizers to unwitting hospitals. Caputo and Riley were also officers in a related firm, Pharmaceutical Systems Inc. (PSI), of Mundelein, IL. 

The indictment states that the four defendants would encourage customers and prospective customers to conduct or obtain validation studies that would purport to show the effectiveness of the AbTox Plazlyte system for uses other than those cleared. These customers and prospective customers would be referred to PSI—the company in which Caputo was an officer—for validation work.

The indictment states that the conspiracy partly involved the use of an FDA clearance letter for a smaller sterilization device as the basis for making and marketing a different, much larger device. Using this clearance letter, it asserts, the defendants were able to deceive who then bought customers the larger, unapproved device. The indictment alleges that some copies of the letter shown to customers were altered.

In addition to private hospitals, the product was sold to health programs and facilities run by the U.S. Department of Veterans Affairs, the U.S. Department of Defense, and the Indian Health Services.

Earlier FDA actions involving the AbTox Plazlyte sterilization system included the issuance of a safety alert warning in April 1998. The problem with the system appeared to be deposits of copper and zinc salts on the devices sterilized with the system. Copper compounds are toxic to human corneal endothelial cells. Several patients required additional medical treatment because of problems related to surgical instruments sterilized in the nonapproved device. A three-month investigation at hospital facilities and the manufacturer resulted in the seizure and destruction of 26 AbTox sterilizers valued at over $2.8 million. 

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