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Postmarket Reforms Dominate CDRH Agenda

MOVERS AND SHAKERS 2006

The reforms might not be as bad as industry expects, says Kahan.
When Daniel Schultz took over CDRH in 2004, he made beefing up postmarket surveillance a priority. The following year, problems with Guidant Corp.'s implantable cardioverter-defibrillators intensified the pressure on CDRH to hold industry to stricter standards on postmarket issues. Now, the center has come out with a plan for reform.

Most of the proposals, unveiled in November, focus on tightening up CDRH's own practices. For example, a top priority is setting up “cross-cutting product groups” to enhance communication between people from different offices who deal with the same products. But some will require extra effort from industry. Electronic reporting of adverse events may be mandated. Putting unique identifiers on most or all devices for better tracking is likely to happen. And annual reports for premarket approval (PMA) products might have to be better organized.

The recommendations should not come as a surprise to industry, says Bradley Thompson, a partner at Epstein, Becker & Green (Washington, DC).

“A lot of the proposed requirements and expectations have been around for a while,” he says. “The agency is doing its best to educate industry as to what its expectations are and what, in my mind, it should have been doing all along. It has given everyone an early warning that it is not pleased with the current level of postmarket surveillance. But the new recommendations will require rule making, which means the implementation is quite a while off in the future.”

Therefore, he says, device companies are not likely to make significant changes to their practices until they see how exactly the proposed changes will be implemented.

“The firms that have made changes to how they handle postmarket issues have done so because of issues that turned up in audits, not because of what the agency has been talking about,” he says.

The effect on industry will depend on the extent of the reforms, says Jonathan Kahan, partner at Hogan & Hartson, a Washington, DC, law firm. Radical change could bring costly new regulations, “but what I got from reading it is that the actual cost will be minimal in terms of cost and burden.”

The proposals to strengthen the Medical Device Reporting program should not be too costly to industry, he says. As for plans to reform the monitoring of postmarket clinical trials, “some in Congress are in the process of pushing an entirely new paradigm [for the drug industry], but I don't see that coming over to CDRH,” he says. “We should get a much more moderate, step-by-step approach.”

Nothing can be taken for granted, though, Kahan cautions. The Democrats now control Congress, and they are even more displeased with FDA's performance on postmarket issues than the Republicans were. “Everyone is in watchful, waiting mode, but my gut tells me it will be OK, that it will not blow up on the device industry like it did the drug industry.”


Copyright ©2007 Medical Device & Diagnostic Industry

Rarely Used Panel Sides with FDA

NEWS TRENDS

An independent panel agreed with FDA's decision not to approve Acorn's CorCap cardiac support device.

The Medical Devices Dispute Resolution Panel (MDDRP) in December convened for only the second time ever, and the panel dealt Acorn Cardiovascular (St. Paul, MN) a setback.

The independent panel agreed with FDA's decision not to approve the company's ventricular support device.

The product in dispute was Acorn's CorCap cardiac support device (known as the “heart sock”), a mesh wrap that encloses the heart to provide muscle support and reduce ventricular enlargement. In June 2005, FDA's Circulatory System Advisory Panel recommended against the device's approval, after which CDRH suggested a small confirmatory trial. Company officials disagreed and requested a referral to MDDRP.

“The trial met all its success parameters, and numerous independent clinical and statistical experts have affirmed the robustness of the trial,” said vice president Steve Anderson before the panel convened. But panel experts, in a 3–1 vote, said more clinical data are needed before the device is made available to the public.

MDDRP was created to be a useful tool for industry seeking a second opinion on the approvability of a product. It was established via the FDA Modernization Act of 1997 to resolve disputes between the agency and manufacturers. But the panel has seen little use since its inception. In fact, the panel has only been convened once before—in the case of Lifecore Biomedical Inc.'s Intergel, a sterile product created to prevent surgical adhesions.

In 2000, FDA rejected Lifecore's PMA application for the product. Seeking an alternative solution, it requested a review from the panel. Intergel was unanimously approved, and premarket approval was granted a short time after.

The panel was scheduled for a second assembly in 2003 over CardioGenesis Corp.'s myocardial revascularization device, but the company cancelled the meeting and supplemented its PMA application with additional information. Another panel is slated for later this year to review Cardima Inc.'s (Fremont, CA) catheter system. Most disputes between CDRH and device companies are resolved before they reach the panel.

Although the panel's decision is the most influential in determining the fate of a product, there are more steps to follow. After the MDDRP meeting, the CDRH ombudsman prepares a statement of findings. Eventually, the findings are routed to the CDRH director to make a final decision on the product.

Acorn states that more than 450 patients worldwide have received its new treatment, which can reportedly halt the progression of heart failure.

Copyright ©2007 Medical Device & Diagnostic Industry

More than a Decade Later, Silicone Implants Still Controversial

MOVERS AND SHAKERS 2006

Allergan's silicone breast implants gained premarket approval in 2002 after a four-year study.
After a 14-year hiatus, silicone breast implants have been welcomed back onto the U.S. market with equal amounts of high praise and strong criticism. Implant manufacturers Mentor Corp. (Santa Barbara, CA) and Allergan Inc. (Irvine, CA) received FDA approval for their gel-filled products in November. Both companies will likely face resistance from opponents for years to come, but it isn't expected to stand in the way of their financial success.

Silicone implants were pulled from the market in 1992, amid concerns over their rupture rate and whether leaking silicone caused certain diseases, including cancer and autoimmune illnesses. After reviewing premarket approval (PMA) applications, FDA restricted silicone implants to investigational use. Only women who needed breast reconstruction or the replacement of existing silicone implants could receive the products, and they were followed via clinical studies.

During the 1990s, Mentor and Allergan (then Inamed) collected study data on silicone implants. Following updated PMA applications by Allergan and Mentor, in 2002 and 2003 respectively, FDA held panel meetings and ultimately issued approval letters.

As stated on FDA's Web site for breast implants, the agency reviewed several factors prior to approval. It examined three- and four-year data collected by Mentor and Allergan respectively, results from studies involving breast reconstructions and revisions, company lab testing data, published scientific literature, and inspections of Mentor's and Allergan's manufacturing plants.

Patient advocacy groups assert that there has never been enough data to justify approval of silicone implants. FDA also has acknowledged that patients who receive silicone implants are likely to need additional surgery, either because of rupture or “unacceptable cosmetic outcomes,” and that many of the changes to the breast following implantation are irreversible. One of the conditions of approval is that Mentor and Allergan conduct postapproval studies, following 40,000 patients each for 10 years after they receive silicone implants. The studies will collect data regarding the effects of the implants, including rates of rupture, long-term local complications, cancer, reproductive issues, connective tissue disease, and neurological disease.

Mentor received premarket approval in 2003 after collecting three-year study data on its silicone breast implants.

Sidney Wolfe, MD, director of Public Citizen's Health Research Group (Washington, DC), questions the agency's use of short-term data in the approval process. “Why is it that after 14 years, [there are] no data longer than four or five years? The idea of approving first and answering questions later is reckless. Lots of women are going to get these devices, and predictably, there will be a lot of problems with them—problems that should have been identified on a long-term basis, prior to approval.” Public Citizen originally petitioned to ban silicone breast implants in 1988.

One of the problems that Wolfe is referring to is implant rupture. According to FDA, and the patient information booklets of Mentor and Allergan, most silicone breast implant ruptures are silent. This means that the rupture is likely to go undetected by a doctor, because there are no symptoms. Silent ruptures are found using magnetic resonance imaging (MRI). Device labeling states that a woman should have an MRI exam three years after silicone implant surgery and then every two years thereafter. The manufacturers also warn that insurance companies might not cover the MRI screenings.

Wolfe calls the approval a bad decision and predicts that injuries will start to mount in a few years as more women receive implants and have had them longer. “This is another nail in the coffin of the way CDRH is being run these days,” he says.

A spokeswoman from Allergan stands by the safety of silicone implants, citing their 25-year success rate in 60 countries. “Silicone breast implants are among the most studied medical devices in existence, with thousands of peer-reviewed and published reports on studies, including robust epidemiological studies to support their safe use.”

Despite safety concerns, analysts expect silicone implants to surpass their saline counterparts, as many doctors and women favor the product for its more-natural feel and appearance. Women will also find comfort in the protocol of the required FDA postapproval studies, according to Jonathan Block, vice president and senior analyst for medical devices and diagnostics at SunTrust Robin Humphrey (New York City).

Both manufacturers are expected to benefit from the reintroduction of silicone implants, but Mentor is likely to feel a stronger financial effect, because it relies more heavily on implant revenue. Block notes that 85% of Mentor's revenue is derived from breast aesthetics. “All the trials and protocols put in place by FDA are likely to cost Mentor around $40 million over the next 10 years, but it's going to open up more than $1 billion in U.S. augmentation revenue,” he says.

Block predicts that silicone implants will account for roughly 40% of augmentation procedures in the next several months, and more than 50% within the next two years. He doesn't, however, expect silicone implants to hit the 90% market penetration that is seen in Europe, because of age restrictions (women must be 22 years or older to get silicone implants) and residual apprehension in the United States. The maximum market penetration of silicone implants is expected to reach about 75% in four to five years.

Regardless of the controversy surrounding breast implants, many women are likely to select silicone implants as the product of choice. Long-term data from postapproval studies are anticipated to be the strongest factor in assessing the product's safety.

Copyright ©2007 Medical Device & Diagnostic Industry

Growing Neuromodulation Market Shows Staying Power

NEWS TRENDS

Chavez cites neuromodulation's multiindication modality as a reason for its growth.

Neuromodulation therapies are changing the way chronic diseases are treated, according to a panel of experts. These implantable devices are now being used for treatment of chronic pain, spasticity, and movement disorders such as Parkinson's disease.

“These devices have enormous potential to improve the overall health of these patients—an implant versus a lifetime of taking medication,” said Ali Rezai, MD, director of the Cleveland Clinic's Center for Neurological Restoration and the Brain Neuromodulation Center. “When you compare neuromodulation therapies with medications, neuromodulation is superior in every category.” Rezai and the other panelists spoke at the Cleveland Clinic Medical Innovation Summit in November 2006.

The neuromodulation market has shown remarkable growth in the last 10 years, according to Christopher Chavez, president of St. Jude Medical Inc.'s neuromodulation division. He noted that it is a $1.5 billion business worldwide and continues to grow. The reason, he said, is that neuromodulation is a multiindication modality. “Neuromodulation targets delivery
of electricity or chemistry to address a specific clinical need,” he said. “It is targeted, so it minimizes side effects, and the therapy is often reversible,” said Chavez. “We are in the early phases of neuromodulation, and we predict that it can do powerful and remarkable things. The industry will grow from $1.8 billion in 2006 to $4.5 billion in 2010. Some market experts have predicted that neuromodulation will eclipse the $8 billion to $10 billion cardiac rhythm management market.”

“It is definitely here to stay,” added Richard Kuntz, MD, president of Medtronic Inc.'s (Fridley, MN) neurological businesses. “Regulatory advances are accelerating. It will change the practice of medicine in the next 20 years,” he said.

The primary challenge for these devices is getting well-designed clinical trials that prove safety and effectiveness and getting FDA to agree on the measurables, the panel noted. “A long-term registry is needed,” said Ed Northup, president of the pain management division of Boston Scientific's Advanced Bionics (Sylmar, CA).

The panelists also said that they view pharmaceuticals as complementary rather than competitive therapies to neuromodulation. “They are different business models, and there are advantages to both approaches,” said Alan Levy, president and CEO of Northstar Neuroscience (Seattle). “Many devices are one-time applications.”

Chavez also predicted that the cost of neuromodulation therapies would decrease as device companies invest in clinical data. Pivotal trials are under way for migraine headaches, Parkinson's disease, depression, angina, obsessive-compulsive disorder, traumatic brain injuries, tinnitus, and obesity, he said.

Kuntz thinks neuromodulation will change how medicine is practiced.

Of particular note is how neuromodulation has been able to make inroads as a treatment option so rapidly. “We have been able to leverage the gains from cardiac devices—miniaturization, antimicrobial coatings, and sensing capabilities with feedback loops,” explained Kuntz. “Neuromodulation enables targeted and regulated delivery of electrical stimulation or chemical compounds that is not achievable by systemic administration. Brain stimulation is now by far the standard of care for Parkinson's.”

In addition, electrical stimulation can be used to treat the cortex to control many neurological disorders, said Levy. “Chronic stroke [conditions] can be treated months or years poststroke by stimulating neurons in a new area of the brain. It can significantly enhance neuroplasticity and function.” By comparison, he noted that the gold standard for treatment of depression is electroshock therapy. He predicted, however, that there would be numerous cortical stimulation applications for depression in the next 10 years.

Boston Scientific has already applied neuromodulation in cochlear implants to restore hearing, and it is now integrating neuromodulation into active implantable devices, precisely targeting chronic pain. “In 10 years, smart and fast microelectronics and flexible power sources could ensure compatibility with other devices, such as implantable cardioverter-defibrillators,” said Northup. “We are developing objective measures and investing in clinical data for emerging indications, such as the use of drug-device combinations and drug coatings to control scar tissue formation.”

Another application is the Braingate technology, made by Cyberkinetics (Foxborough, MA), which allows the patient to control a computer by thinking. “We use spinal cord stimulation to repair acute spinal cord injuries—two fibers grow toward each other,” said Timothy Surgenor, president and CEO. “It's not a cure, but it improves sensation and motor score.”'

A neuroport transmitter is placed on the cortex of the brain so that patients can control assisted technologies such as wheelchairs by accessing cellular signals in the brain. The device is a candidate for Humanitarian Device Exemption approval. “A 10-year-old spinal cord injury is treatable,” said Surgenor. “These are unobtrusive closed-loop device implants.”

“These are powerful advances,” noted Chavez. “For certain disease states, neuromodulation is a very important therapy. It will become the standard of care for several diseases, including Parkinson's and severe depression.”

Copyright ©2007 Medical Device & Diagnostic Industry

McClellan Leaves Strong Legacy at CMS

MOVERS AND SHAKERS 2006

Mark McClellan has joined think-tank AEI Brookings Joint Center for Regulatory Studies.
CMS administrator Mark McClellan's departure was a major event of 2006. But the transition from McClellan to Leslie Norwalk has been relatively smooth, with the agency clearly headed on a stay-the-course path. Norwalk was named acting CMS administrator, effective October 15, 2006. Although McClellan left a few tough device-related issues for his successor to tackle, he set in motion many programs that will have a tremendous effect on the future of healthcare.

Within the mainstream press, McClellan will most likely be associated with the new Part D benefit that came into effect on his watch. In October, McClellan told the Washington Post that he was most proud of his “emphasis on shifting Medicare toward better-coordinated, prevention-oriented care.”

In the device world, McClellan is very strongly associated with the new Coverage with Evidence Development policy. The program aims to allow payment for services that are expansions of existing covered services.

Acting commissioner Leslie
Norwalk seems to have the agency well in hand.

The other major legacy McClellan leaves is the controversial inpatient prospective payment system that was issued on August 1, 2006. A key policy of the final rule focuses on reform of the diagnosis-related groups (DRGs), basing relative weights on costs that are specific to hospitals, and improving the system's recognition of patient disease severity to avoid underpayments.

McClellan was committed to making fundamental changes in the system, and his policies and programs had momentum that will keep them going well after his departure. He was a major proponent of advancing healthcare information technology (IT). During his administration, CMS played a critical role by developing initiatives and reforms to promote improved healthcare IT systems.

“Effective healthcare IT will lead to better patient care,” McClellan said at a health IT summit in 2005. “The quality of healthcare is lessened because there is no financial incentive to adopt advanced IT.”

McClellan has joined AEI-Brookings Joint Center for Regulatory Studies, a think tank in Washington, DC. As a visiting senior fellow, he will focus on developing and implementing ideas to improve the nation's healthcare. The center is a collaboration of the American Enterprise Institute and the Brookings Institution.

Copyright ©2007 Medical Device & Diagnostic Industry

Transforming FDA

NEWS TRENDS

This year could bring sweeping changes to how CDRH regulates the device industry. There is a new Congress, a new FDA commissioner, a new approach to postmarket issues, and at least one piece of major new legislation (the MDUFMA reauthorization). Since so many stakeholders will be taking a fresh look at CDRH, so will we at MD&DI. The changes under consideration may be so sweeping as to affect all of you, our readers, not just those who deal with regulatory affairs.

We want to make sure you don't miss any of this vital coverage. So we will be identifying all articles concerning these major issues with the “” logo, shown here.

When you see an article with this logo, you will know it is calling your attention to an issue that could affect CDRH, the device industry, and you. More such items will appear on our blog at www.devicelink.com/mddi/blog. And to help you get the big picture, we are putting all print and online “” articles in one place, at www.transformingfda.com. We welcome reader suggestions about topics and angles to explore. Please send them to mddi@cancom.com.

Kickbacks Heighten Government Scrutiny

MOVERS AND SHAKERS 2006

Last July, Medtronic Inc. agreed to pay $40 million to settle civil litigation arising from its alleged kickbacks to doctors. Several whistle-blower lawsuits claimed that between 1998 and 2003, the company's Medtronic Sofamor Danek (MSD) division created fraudulent consulting and royalty agreements and supplied lavish vacation packages to doctors who used MSD's spinal products. One surgeon was paid $400,000 annually for a consulting arrangement that required him to work only eight days a year. Medtronic allegedly paid another surgeon almost $700,000 for nine months of work.

But it's not as if Medtronic was the only company suspected of paying illegal kickbacks. A state-run medical school in New Jersey billed Medicare and Medicaid about $36 million in fraudulent charges. A selection of doctors were also paid $5.7 million for no-show teaching jobs. Oxygen equipment supplier Lincare Inc. (Clearwater, FL) settled for $10 million over recent allegations of kickbacks, including providing advertising expenses, food, entertainment, and sports equipment and services. Multi-million-dollar settlements for these activities are sure to have ripple effects throughout the industry—especially for future consulting arrangements.

These cases have prompted the government to increase its scrutiny of the medical device industry with respect to kickbacks. Companies discovered distributing illegal perks for consulting and other services might be forced to jump through several hoops before things even begin to go back to normal. Medtronic, for example, has been forced to enter into a Corporate Integrity Agreement with the U.S. Office of the Inspector General (OIG). The agreement requires the company to designate a compliance officer, create a compliance committee, develop and disseminate a code of conduct, and strengthen policies to prevent fraudulent actions in the future.

And there's more. The policies must include a safeguard to track payments the company makes to outside parties to ensure that people are being paid for services actually provided. Under the agreement, Medtronic also has to develop a training program for its employees to teach them about federal antikickback laws and its own sanctions for violating them. Finally, the company must train independent distributors of its products on antikickback statutes.

Although the kickbacks may cross several ethical and conflict-of-interest boundaries, patients and other parties are not always concerned. A recent study published in the New England Journal of Medicine, for example, revealed that most cancer patients in experimental drug studies do not care about financial conflict-of-interest issues between the doctor and drug maker. The same researchers also discovered in a survey of institutional review board members that 40% of them did not know whether the board on which they served had a formal definition of conflict of interest. With most medical centers and research universities having ties to life sciences companies, navigating the gray area of perks and kickbacks has never been so crucial.

Medical device companies are going to have to be that much more careful to keep from running astray of federal guidelines. Consulting arrangements need to be carefully examined to ensure that people are being paid for services actually provided, and that consultants are chosen for their knowledge in a particular area rather than how amenable they are to prescribing or recommending certain products. AdvaMed's Code of Ethics offers guidelines for medical device companies' consulting arrangements with regard to meals, agreements, meetings, and gifts. Although it was created in 2003, it has since been updated to provide more guidance on corporate ethics. Most recently, AdvaMed officials have been in contact with OIG about physician–device firm arrangements with respect to the antikickback statute.

In addition, a new law effective January 1 requires that all companies that do at least $5 million annually in Medicaid business educate their employees on how to detect fraud and waste. Healthcare providers must also tell their employees that they will be protected from retaliation if fraud is reported and that whistle-blowers are often entitled to a percentage of settlements paid to the government. The new rules apply across the spectrum of medicine, including to medical device and equipment suppliers.



Copyright ©2007 Medical Device & Diagnostic Industry

Von Eschenbach Finally Confirmed

NEWS TRENDS

Von Eschenbach has been confirmed as FDA commissioner, but he will have to restore FDA's damaged reputation.

After a nomination that had been on hold for months, Andrew von Eschenbach, MD, was sworn in as FDA commissioner on December 13. While the presence of a permanent commissioner is significant, it might not have a direct effect on the daily operations at CDRH.

Von Eschenbach's nomination was delayed as a result of controversies, mainly in the drug arena. Senators Hillary Clinton (D–NY) and Patty Murray (D–WA) worked to hold his nomination over the emergency contraceptive, Plan B. Von Eschenbach took heat from Senator David Vitter (R–LA), because Vitter wanted to legalize the importation of prescription drugs. Senator Jim DeMint (R–SC) also put a hold on von Eschenbach's nomination in efforts to push FDA to stop the sale of an abortion drug.

Majority Leader Bill Frist (R–TN) put an end to the dispute by calling for a procedural vote, which resulted in an 80–11 approval for von Eschenbach's confirmation.

The permanent FDA commissioner will now have to deal with concerns about postmarket surveillance of both drugs and devices, which have afflicted the agency in recent years. Jonathan Kahan, partner at Hogan & Hartson (Washington, DC), notes that von Eschenbach can't avoid involvement with postmarket safety issues on the drug side, but he'll probably leave more of the responsibilities related to devices, including postmarket surveillance, up to CDRH director Dan Schultz.

Larry Pilot, partner at McKenna, Long & Aldridge LLP (Washington, DC), adds that von Eschenbach must restore the agency's reputation with the help of others at FDA. Von Eschenbach began serving as acting commissioner after Lester Crawford's sudden resignation in September 2005. Crawford pleaded guilty last October to conflict-of-interest charges related to stock holdings (see “Ethical Breaches Hurt Device Industry's Reputation” on page 76). And in light of highly publicized controversies involving drug safety and device recalls, FDA's reputation has taken a hit.

With the resignations of Scott Gottlieb, FDA deputy commissioner for medical and scientific affairs, and Patrick Ronin, FDA chief of staff, von Eschenbach will also be challenged to select the right people for management positions. “He has to do it through competent supervisors and subordinate supervisors. The test for him is going to be how well he's able to take advantage of the position that he's in and restore what the agency appears to have lost in the context of reputation and image,” says Pilot. (In late December, von Eschenbach named Randall Lutter to replace Gottlieb on an acting basis.)

While having a permanent commissioner is beneficial to the industry, there's also speculation that von Eschenbach won't remain at the FDA post for long. “I believe he's a 24-month commissioner. I think everybody in the world believes that,” says Kahan. “He's a friend of the Bush family. Even if a new Republican candidate came in, von Eschenbach would resign.”

Kahan adds that the absence of a long-term FDA commissioner who's willing to defend initiatives makes it difficult for the agency to take a tough stance on issues. “I think it has an effect on morale at the agency and the ability of senior management at FDA to take a strong new direction on anything.”

Copyright ©2007 Medical Device & Diagnostic Industry

Justice Department Shakes Up Ortho’s Big Five

MOVERS AND SHAKERS 2006

Orthopedics is one of the hottest segments in the device industry, but in the past year it has had its share of publicity for more than just technology.

In 2005, a U.S. Department of Justice (DOJ) investigation focused on relationships between implant manufacturers and orthopedic surgeons. Then, last June, the DOJ issued subpoenas involving potential antitrust violations to five major orthopedic companies—Biomet Inc. (Warsaw, IN), Smith & Nephew Plc (London), Johnson & Johnson's DePuy Orthopaedics Inc. (Warsaw, IN), Stryker Corp. (Kalamazoo, MI), and Zimmer Holdings (Warsaw, IN). The subpoenas requested documents from January 2001 through the present concerning the potential violation of antitrust laws.

Most of the investigation has remained under wraps. However, at the end of July, Smith & Nephew revealed the outcomes of an internal probe spurred by the DOJ subpoena. It found that an independent orthopedic sales representative, who was under company contract, sent an e-mail in October 2005 to competitors. According to the release, the e-mail suggested that they submit a “coordinated response” to an undisclosed hospital's request for bids on orthopedic implants. Smith & Nephew stated that the actions of the salesperson weren't authorized by company management and to its knowledge, the e-mail wasn't acted upon, nor did an anticompetitive agreement result from it.

“We still don't have any closure on the DOJ investigation,” says William Plovanic, managing director and equity research analyst at First Albany Capital (Chicago). “Typically, we've seen it come down [so that] companies don't admit or deny guilt; they pay a penalty, move forward, and change practices from there.”

The controversy surrounding the Justice Department's investigation didn't prevent the acquisition of Biomet in mid-December. After the company put itself up for sale last year and rumors swirled about a buyout by Smith & Nephew, a deal was finally made with a private equity group. Blackstone Group (New York City), Goldman Sachs Capital Partners (New York City), Kohlberg Kravis Roberts & Co. (New York City), and Texas Pacific Group (San Francisco) agreed to buy the company for $10.9 billion. The purchase should be completed by October 31, 2007, after which the company will no longer be publicly traded. Former CEO Dane Miller, who resigned in March, has been rumored to be an investor in the company.

Being acquired by a private equity firm could make Biomet a stronger competitor in orthopedics, according to Plovanic. “A private equity firm can look at the company as the sum of its parts, keep the parts it likes, and spin off what [may not be seen] as profitable or beneficial to the company as a whole.” He adds that the change in management could bring a fresh perspective to Biomet.

The news of the acquisition might not have been celebrated for long, however, as on the same day of the announcement, Biomet stated that it was delaying its second-quarter earnings release after reviewing stock option practices. The company formed a committee to investigate stock option grants from 1996 to the present, which revealed, in a preliminary report, that a “substantial number” of grants issued were backdated to take advantage of a lower stock price on certain dates. The committee reported that some members of senior management were aware of the practice. Two shareholder lawsuits have also been filed against Biomet executives and board members, alleging the manipulation of stock options timing.

Although Smith & Nephew didn't get Biomet, it received a share of proceeds from its joint sale of BSN Medical GmbH & Co. KG (Hamburg) in early 2006. Smith & Nephew formed the company in 2001 with Beiersdorf AG (Hamburg) to combine their wound care, casting, bandaging, and phlebology businesses. Montagu Private Equity (London) bought BSN Medical for about $1.36 billion. BSN medical has three business units—orthopedics, wound care, and phlebology, which collectively bring in more than $500 million a year. Its orthopedics business, headquartered in Charlotte, NC, focuses on products for strains, sprains, and fractures.



Copyright ©2007 Medical Device & Diagnostic Industry

Postmarket Safety Starts within Companies

NEWS TRENDS

Examine the quality policy first when designing a postmarket surveillance system, says Heyer.

With the recent attention focused on postmarket surveillance, manufacturers should revisit (and perhaps redesign) the postmarket programs at their own companies, according to one expert. These programs are essential tools that help ensure the efficacy of products on the market.

“In a perfect world, every product would be safe and effective,” said Sheila Hemeon-Heyer, vice president of global regulatory affairs at Boston Scientific Corp. “In reality, despite our best efforts, all medical products carry some risk.” Heyer explained strategies for building an effective postmarket surveillance program—a timely issue for Boston Scientific—at the Massachusetts Medical Device Industry Council's FDA update in December.

Companies such as Boston Scientific that have to monitor products on a global scale have an even greater challenge. They need to comply with global regulatory requirements, manage multiple facilities with component and finished-product manufacturing, ensure the quality of different types of products, and tackle communication issues across different cultures and time zones.

Heyer said the first step in designing a postmarket surveillance system is to revisit the company's quality policy. One of the most important building blocks is to ingrain the notion that everyone in the company is responsible for product quality. Every employee must be trained to have an active approach in bringing about culture change. Members of management should also be involved at all levels, because they ultimately make the decisions.

There are five elements for an effective system, according to Heyer. First, build safety into the device, because surveillance should start before a product goes out the door. Monitoring products will help identify any quality issues. In this case, registries serve as a good tool, because the data provide real-world experience. Companies should analyze the data, and, if quality is brought into question, take action. Begin communicating with stakeholders, regulatory agencies, and people within the company, advised Heyer.

Other ways to maximize data from postmarket monitoring include opening corrective and preventive action items to correct problems and improve processes and to consider whether the information requires a change in the product's risk profile, design, or labeling.

Postmarket surveillance is an integral factor in ensuring product quality, patient safety, and continual improvement of patient care, said Heyer. “As FDA's Postmarket Transformation Initiative begins moving forward, companies must stay on top of internal policies.”

Copyright ©2007 Medical Device & Diagnostic Industry