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Capitol Hill Questions Device Safety

Washington Wrap-Up

In the same week that a congressional hearing raised concerns about reprocessed single-use devices being sold on eBay without regulatory constraint, FDA posted on its Web site an article on its history and modern mission. The article recalled FDA's founding by Theodore Roosevelt in a 1906 bid to “save capitalism by civilizing it.”

Written by noted author and former New York Times reporter Philip J. Hilts, the article is called “The FDA at Work: Cutting-Edge Science Promoting Public Health.” It gives a broad historical base for FDA's present role and immediate challenges. It discusses the nation's Founding Fathers, who wrote a Constitution that did not foresee the Industrial Revolution; Abraham Lincoln, who was “aghast” at the advent of industrial corporations; and Roosevelt's revolutionary agenda.

Looking to the future, FDA acting commissioner Andrew von Eschenbach had referred to the 21st century device industry as a “Wild West medicine show” that same week. The reference came during an appearance before the House Appropriations Subcommittee on Agriculture, Rural Development, FDA, and Related Agencies on February 16.

Representative Rosa DeLauro noted that the number of conflict-of-interest waivers FDA issues seems excessive.

Representative Rosa DeLauro (D–CT) questioned von Eschenbach about the safety of reprocessed medical devices. She said her staff had recently identified a total of 1056 items of used surgical equipment advertised for sale on eBay. Von Eschenbach blandly replied that CDRH is aware of potential problems associated with reuse of medical devices. He also noted that reprocessors should be treated as manufacturers and that FDA is developing guidances to that end.

DeLauro also challenged von Eschenbach on the frequency of conflicts of interest among FDA advisory committee members—or the appearance thereof. She noted the agency has issued 55 conflict-of-interest waivers for committee members since last November. That number, she said, seems excessive, especially compared with the experience of the National Institutes of Health with its committee members. Von Eschenbach left without ceding any of her points, leaving himself open to further interrogation on these as well as other issues during his confirmation hearings for permanent FDA commissioner.

Bush Budget Focuses on Safety, User Fees

Conventional wisdom inside the Beltway characterized President Bush's FY 2007 federal budget request as a pipe dream. However, the request included FDA provisions that are likely to survive. Among the provisions are a hike in medical device user fees, and $6.4 million to improve device safety.

Less certain is $22 million for a new user-fee provision. It would be paid by companies that must be reinspected after failing to meet CGMP or other critical FDA regulations.

Kathleen Heuer, HHS associate commissioner for management, said the agency believes violative firms should bear the cost of reinspections, rather than American taxpayers. She spoke at a news conference in February, saying that legislation authorizing the new user fee was sent to Congress on February 6. So far, no sponsors have been identified, and there is no indication of how quickly it could be passed. The budget request assumes the user fee would take effect October 1.
Heuer also said the overall budget request totals $1.95 billion, a 3.8% increase over FY 2006. It includes $1.55 billion in budget authority and $402 million in industry user fees.

Officials said the proposed $70.8 million increase would allow FDA to focus on priority initiatives, such as preparing for the threat of a flu pandemic and protecting the food supply from bioterrorism. Other goals include realizing the promise of molecular medicine, strengthening safety of drugs and human tissues for transplantation, and meeting statutory obligations under the medical device user fee programs.

Heuer said there are some 1300 reinspections annually and the estimated cost, based on historical data, is $22 million. She explained that the agency is still working on a fee schedule proposal, so it is not possible to estimate what companies of various sizes or with various violations might have to pay. She noted that FDA expects the user fee to be an incentive to companies to eliminate potential violations. The ultimate effect would be that firms would end up with safer products. “We expect that manufacturers would move judiciously to meet the standards to avoid costly downtime,” she said.

Other highlights of the proposal include $5.9 million for the Critical Path for Personalized Medicine initiative. That plan includes medical imaging for use as cancer trial surrogate endpoints, cardiac drug-eluting stent design, and an ECG warehouse.

Lester Crawford has joined a firm that lobbies for healthcare and biotech issues.

Crawford Joins Lobbying Firm

Former FDA commissioner Lester Crawford has joined Policy Directions Inc. (PDI), a Washington lobbying firm that is active on behalf of healthcare, pharmaceutical, and biotech companies. PDI's senior vice president, Steve Kopperud, said Crawford joined the firm “in early January as full-time senior counsel.” He declined to comment on Crawford's specific responsibilities or accounts. He also did not comment on whether Crawford would appear before FDA once his moratorium against lobbying the agency ends. At presstime, Crawford had not replied to a request for an interview.

According to the U.S. House of Representatives Office of the Clerk Web site, PDI's clients include two device firms: Baxter Healthcare and Bausch & Lomb.
Crawford unexpectedly resigned from FDA last September, shortly after he was confirmed by the Senate. There have been reports that questions were raised about stock dealings he and his wife had with drug companies. The Senate Health, Education, Labor, and Pensions Committee asked the HHS Inspector General to look into the nomination and resignation. It has yet to receive a report from the agency.

Mandatory Device IDs Sought

CDRH officials are not sure they can justify proposing a mandatory regulation for unique identification of medical devices. However, stakeholders at an FDLI meeting in October were consistent in their belief that it would improve patient safety and supply-chain efficiency.

Following the session, nine organizations that were represented there submitted additional comments. Their comments stressed the consensus within the provider community on this issue. “Our organizations support mandatory unique identification of medical devices, as the transmission and translation of critical data has vast potential for improving patient safety and supply-chain efficiency.”

A compelling patient safety interest lies in requiring identification technology for certain medical devices, including implantable items, they said. Such items include hip and knee prosthetics, stents, and cardiac rhythm management pacers. Unique identification technology would facilitate and improve the tracking of these devices, especially in the event of a recall or other safety concern. It also can improve risk management through reductions in supply-chain and medical errors, the firms said. Inventory, warehousing accuracy, and product movement efficiency could be improved, thereby reducing operating costs.

The organizations noted that hospitals are already adopting this technology. But the lack of a national standard means they are investing millions of dollars to create internal tracking systems for devices. “It is clear this investment improves quality and supply-chain efficiency for the hospital, but a national unique identifier system would accelerate these efforts that ultimately benefit patients,” they said.

The meeting allowed stakeholders to provide information to CDRH on four issues:

• The kinds of information that could be readily captured in such a system.

• The kinds of identification technologies that could be employed.

• The advantages and disadvantages of such systems, including patient safety implications.

• The major bar coding systems and device nomenclature systems that are being used by the medical device community.

Kevin L. Cornwell feels disappointed that FDA officials will not admit any wrongdoing.

HHS Denies Utah Medical's Claim

HHS in February formally denied Utah Medical Products' administrative claim for tortious abuse of process by FDA employees. HHS said the claim was “not cognizable under the [Federal Tort Claims Act].” The denial came nearly a full month after the legal deadline for the response.

In a statement, Utah Medical said it remains convinced the claim is valid. The firm noted that it is “now is free to file suit against FDA in the federal district court, or file a request for reconsideration, before August 10, 2006. The company will carefully consider all of its options.”

The statement quoted CEO Kevin L. Cornwell as saying, “We were hoping that independent and objective representatives of the executive branch of government would have been assigned to investigate this claim and be willing to discuss a constructive settlement with Utah Medical.” Such a settlement, he continued, would include restoring the device firm's reputation for manufacturing high-quality products. It would also rectify a permanent public record that incorrectly disparages the firm. Finally, he noted, a settlement would repay the firm's “unnecessary costs of litigation” that resulted because FDA would not open a dialog regarding Utah Medical's responses to what they considered predetermined inspectional observations. “It continues to be disappointing that officials in our government prefer to hide than to admit any wrongdoing,” Cornwell's statement continued.

Cornwell went on to say that “there is much more of a story here of systemic corruption than has been publicly disclosed to date. Fraud is not included in the discretionary function privilege of the government.”

Boston Scientific Warned over Quality

In early February, Boston Scientific executives met with CDRH director Daniel Schultz and top FDA compliance officials about its GMP/QSR problems. Afterwards the executives said the discussions had been “productive.” They and FDA agreed on a commitment to resolving, in FDA's words, “all issues according to an aggressive timeline.” An agency news release said the company “acknowledged FDA's assessment of corporate-wide quality system and device reporting deficiencies.”

A company statement said, “We reviewed with FDA a path to resolve the issues it has identified, and we are committed to working closely with it to ensure they are resolved.” For its part, FDA said it was committed to responding to all questions, plans, and scheduling of verification inspections in an equally timely manner.
The meeting followed a January 25 warning letter. In the letter, FDA New England district director Gail T. Costello told the company that corrections it had previously promised on GMP and QSR deficiencies were inadequate “spot fixes.” It said the firm failed to achieve the necessary systemic approach to comprehensively address the violations. The letter's unusually tough wording suggested FDA had lost patience with the company. It ordered Boston Scientific to “take action on this matter now” to ensure that an effective quality system was put in place and demanded a “prompt meeting.”

Boston Scientific's Violations

The warning letter targeted three recent facility inspections: Natick, MA; Maple Grove, MA; and Spencer, IN. It came on the heels of three separate warning letters last year. During the inspections, the letter said, FDA found recurring deficiencies noted in previous letters. “FDA has found ongoing systemic violations in the quality management system employed to ensure the safety and effectiveness of the medical devices you distribute,” it said. Violations cited in the letter include the following:

• Failure to review the suitability and effectiveness of the quality system at defined intervals.

• Failure to review, evaluate, and investigate any complaint involving the possible failure of a device.

• Failure to establish and maintain procedures for receiving, reviewing, and evaluating complaints.

• Failure to promptly review, evaluate, and investigate complaints that are MDR reportable.

• Failure to establish and maintain procedures for implementing corrective and preventive actions.

• Failure to report within 30 days information that suggests a device may have caused or contributed to a death or serious injury.

“For this meeting, you should come prepared to discuss your current corporate strategy to bring all of your facilities into compliance,” Costello wrote. “You should also come prepared to discuss the recent recalls at your facilities and your ongoing corporate efforts to prevent the recurrence of these violations.”

The letter documented a number of MDR reporting issues where the firm failed to report certain events associated with its drug-eluting stents or where it was late in reporting. In one instance, it said, the firm was up to 366 days late. Also, it said, two “correction or removal” recall actions were not reported and were erroneously classified as Class III recalls. They should have been classified as the more serious Class II.

A statement by Boston Scientific noted that the warning letter primarily focused on product complaint issues related to corporate review, analysis, and reporting. “FDA does not plan to advise hospitals to discontinue using the products referenced in the letter, including the Taxus system,” it said. The company recently established a new global complaint information system to help address the issues raised in the warning letter. It has also launched a global, cross-functional initiative to improve and harmonize its overall quality systems.

Copyright ©2006 Medical Device & Diagnostic Industry

Senate Judiciary Committee Revisits GPO Issue

In mid-March, the Senate Judiciary Committee's subcommittee on antitrust, competition policy, and consumer rights held the fourth in a series of hearings to investigate the practices of healthcare group purchasing organizations (GPOs). The proceedings represent an effort to determine if GPOs are engaging in anticompetitive practices and whether congressional action is needed to ensure a competitive climate in hospital purchasing.

Kohl

Senator Kohl: Disappointed in GPO turnout.

Senator Herb Kohl (D–WI), a ranking member of the subcommittee, expressed disappointment that no GPOs accepted the subcommittee's invitation to testify at the hearing. However, a representative from the Healthcare Group Purchasing Industry Initiative (HGPII; Washington, DC) did testify. HGPII was established last year by the nation's leading healthcare GPOs as a formal program designed to promote and monitor best business practices in purchasing for hospitals and other healthcare providers.

Bednar

Bednar: Support for GPO self-regulation.

“The initiative nurtures an ethical culture of compliance within every GPO; promotes self-governance, discovery, and correction of conduct that falls below the standards; and enforces a requirement that each member share their best practices in dealing with ethics and business conduct issues,” Richard Bednar, senior counsel at Crowell & Moring LLP and coordinator of HGPII, told the subcommittee. “The initiative is off and running on a sure path to success.”

Bednar urged the subcommittee to support the “organizational culture of compliance” promoted by the group rather than impose external restraints. “Behavior follows expectations, and the GPO initiative's expectations are high,” Bednar said.

Mina Ubbing, president and CEO of Fairfield Medical Center (Lancaster, Ohio), said, “The initiative sets a standard of industry practices by which all GPOs are judged. They do not control the purchasing marketplace, but rather help to make it a more robust, competitive, cost-effective, and informed decision-making environment.” She urged the subcommittee to support the continuation of the initiative rather than any proposed legislation, which she said “would impose costly new restrictions on GPOs and the healthcare systems that depend on them.”

The subcommittee also heard from a number of individuals who cited specific examples of alleged GPO abuses and unfair business practices.

Blumenthal

Blumenthal: Revealing suspect practices.

Connecticut Attorney General Richard Blumenthal said that an investigation in his state “uncovered suspect interrelationships and questionable practices involving hospital, GPO, and major medical supply executives whose practices often benefit themselves rather than patients, insurers, and government programs that pay hospital bills.” Citing his “longstanding concern that GPOs create a myriad of conflicts and anticompetitive behavior that must be regulated, if not prohibited,” Blumenthal described voluntary self-regulation efforts offered by GPOs as “simply too little, too late.”

“We find ourselves back in this hearing room for a fourth time in as many years,” Mark Leahey, executive director of the Medical Device Manufacturers Association (MDMA; Washington, DC), noted to the subcommittee. “And as a result, patients, caregivers, and taxpayers still suffer from the anticompetitive and exclusionary practices of GPOs.”

Leahey

MDMA's Leahey: Calling for competition.

Leahey cited reports from the Office of Inspector General of the Department of Health and Human Services (HHS; Washington, DC) that found that six GPOs collected $2.3 billion in fees while their “operating expenses were a whopping $725 million.” Leahey said that as long as GPOs receive fees from vendors based on the volume of products and the value of the transaction, there is no incentive to lower costs. Leahey challenged the notion that GPOs are focused on getting the best products at the best price. “Given the current structure, why would they? The more a hospital pays, the more money the GPO makes,” he said.

S. Prakash Sethi, PhD, a professor of management and president of the International Center for Corporate Accountability at the Zicklin School of Business at Baruch College, the City University of New York, said HGPII was predicated on “a business model based on perverse financial incentives . . . that undermine the imperatives of competitive markets.” He called for the repeal of the safe harbor provisions of the Social Security Act, which would ultimately prohibit GPOs from receiving fees from vendors. Sethi said a voluntary code of business ethics for GPOs would have value, but only after market-based competition was restored to the system.

Sethi's opposition to GPO fees has long been advocated by MDMA's Leahey, who told the subcommittee, “If you repeal the GPO safe harbor that Congress created 20 years ago under entirely different circumstances, you will restore competition back in the healthcare system by realigning the incentives of GPOs with their member hospitals and not the dominant suppliers.”

In response to the possibility of new legislation, the chief executives of the nine leading GPOs submitted a letter to the subcommittee to respond to three draft bills that are gaining traction in the Senate.

Although all three proposed bills are detailed, the following represents the primary provisions of each.

• The Medical Device Competition Act would limit GPO administrative fees received from vendors to 3% of the transaction value.

• The Hospital Group Purchasing Organization Reform Act would eliminate GPOs' safe harbor from antikickback statutes if they failed to comply with an industry code of ethics as monitored by a new HHS compliance office.

• The Ensuring Competition in Hospital Purchasing Act would eliminate the GPO safe harbor completely.

In their eight-page letter to the subcommittee, the CEOs said legislation was unnecessary because “the self-governance effort has made substantial progress.” They detailed their opposition to each bill and said that any proposed legislation to regulate GPOs would ultimately drive up the cost of healthcare.

LoBiondo

HIGPA's LoBiondo: Support for GPOs.

Albert LoBiondo, chair of the Health Industry Group Purchasing Association (HIGPA; Chicago), submitted a letter to the subcommittee supporting the CEOs' written statement. LoBiondo largely echoed the written testimony of the CEOs, stating, “Hospitals rely on GPOs to help control costs while improving patient care. With health costs skyrocketing out of control, we must not restrict their ability to work with GPOs.”

Robert Betz, PhD, president of Robert Betz Associates Inc. (Arlington, VA) and former president of HIGPA, said, “The latest hearing will likely be a turning point for the healthcare purchasing supply chain industry.”

Within the next several months, the subcommittee is expected to decide whether GPO self-regulation is sufficient or if specific legislation is needed. Based on the observations and comments of the subcommittee members, it appears that some form of legislation may now be closer than ever before.

© 2006 Canon Communications LLC

Return to MX: Issues Update.

Corrections and Removals: To Tell or Not to Tell FDA

Regulatory Outlook

Frances Akelewicz
Nancy Singer

On January 26, 2006, Boston Scientific, received a warning letter from FDA. The letter alleged that Boston Scientific had violated numerous provisions of FDA's regulatory requirements. The violations included failing to notify the agency under 21 CFR 806 when the firm recalled two devices that had the potential for overheating and creating a fire hazard. The devices were to be used on patients receiving ablation for arrhythmias.

The precise thought process used by Boston Scientific's legal and regulatory experts is a matter of speculation. However, the fact that FDA issued the warning letter demonstrates that the agency disagreed with the firm's interpretation of the notification requirements under 21 CFR 806.1

Boston Scientific is not alone in sometimes differing with FDA's judgment of when firms need to notify the agency of a correction or removal under 21 CFR 806. When FDA issues a warning letter, it states its interpretation of how a firm has violated the law. If the agency wanted a final determination of the issue, it would institute a legal action, and a court would make the final determination. FDA rarely brings legal actions. FDA's interpretation is provided to the company and to the public. No definitive resolution is provided that clarifies whether a firm actually violated 21 CFR 806.

Because FDA-483 observations and warning letters are public, firms don't want FDA to allege that they failed to submit a required report. To help firms develop approaches to determine whether they need to notify the agency under 21 CFR 806, this article examines the rule, as well as instances when reports are not required. The results of an audio conference in which FDA officials and industry experts applied the rule in hypothetical situations is also presented.

Regulatory Options under Part 806

When a medical device manufacturer realizes that one of its products has a defect, it can select one of the following options:

• Ignore it and hope that its customers won't notice.

• Try to correct the problem (by sending its customers a letter, or replacing, repairing, relabeling or destroying the device) without telling FDA.

• Try to correct the problem and tell FDA.

• Remove the product from the market and not tell FDA.

• Remove the product from the market and tell FDA.

After a manufacturer determines which option is appropriate under 21 CFR 806, FDA will make its own assessment about how the regulation should have been applied.

Why Not Notify FDA?

Corrections. One reason device firms don't want to tell FDA about a correction is that they don't want the agency to second-guess their strategy for handling the problem. Each situation differs, and company officials who understand the product line and conduct the failure investigation may believe they are in the best position to implement the corrective action.

Removals. One of the reasons firms don't want to tell FDA about a removal is that they don't want the action to be categorized as a recall and thus be listed in FDA's Enforcement Report. (This report is accessible to the public and the firm's competitors. These parties may use the information in the report to discredit the firm or its product line.)

The Rule: History and Requirements

Prior to the passage of the Safe Medical Device Act of 1990 (SMDA), FDA lacked the authority to require firms to notify the agency when they recalled their products or assisted their customers in correcting product problems.

This changed with the passage of SMDA. The new law required FDA to publish a regulation obligating medical device firms to inform the agency when they recalled their product or corrected a product problem that could pose a risk to health. On May 19, 1997, FDA published the final rule on Reports of Corrections and Removals, which was codified in 21 CFR 806.

It is important to note that 21 CFR 806.10 generally requires each device manufacturer to submit a written report to FDA of any correction or removal that was initiated to reduce a risk to health posed by the device, or to remedy a violation of the Act caused by the device that may present a health risk.
To understand how to apply the rule, firms need to understand how specific terms are defined.

Correction. Correction is defined as the repair, modification, adjustment, relabeling, destruction, or inspection of a device without its physical removal from its point of use.

Removal. Removal is defined as the physical removal of a device from its point of use to some other location for repair, modification, adjustment, relabeling, destruction, or inspection.

Risk to Health. Risk to health consists of a two-part definition. For a risk to health to occur, only one part of the definition needs to be satisfied.
The first part is a “reasonable probability that use of or exposure to the product will cause serious adverse health consequences or death.” The second part is “the use of, or exposure to, the product may cause temporary medically reversible adverse consequences, or an outcome where the probability of serious adverse health consequence is remote.”

Terms: Common Understanding. Although medical device firms may disagree with FDA about the application of 21 CFR 806, they generally understand the concept about when the use of or exposure to a product will cause serious adverse health consequences or death. This tracks the definition of a Class I recall.2

Medical device firms also generally understand the concept of the definition, “the use of or exposure to the product may cause temporary medically reversible adverse consequences.” This tracks the definition of a Class II recall.3

Terms: Confusion and Controversy. The phrase, “use or exposure to, the product will cause . . . an outcome where the probability of serious adverse health consequence is remote,” continues to cause confusion for many firms.

Figure 1. A decision path (above) can help manufacturers determine when to notify FDA of a correction. A matrix (left) can help assess which actions to report to FDA.
(click image to enlarge)

Risk Assessment Tools

During product design, firms are required in the quality system regulation and ISO 14971:2000 to practice risk management.4,5 This includes identifying potential hazards, conducting a risk evaluation, risk analysis, risk elimination and mediation, and ultimately risk control. The purpose of these activities is to determine the potential health hazard in the event that the product malfunctions or fails. Most firms use a decision path or matrix to help analyze these situations (see Figure 1).

Using such methods, firms can determine the likelihood that any particular problem will occur, the potential for injury, and the seriousness of that injury if the problem does occur.

Reporting to FDA

When Do Firms Need to Report? Firms are required to notify FDA within 10 working days of initiating the correction or removal.6 The clock starts the moment a firm makes the first contact within or outside the firm.

How Are Firms Protected? FDA does not want to penalize firms for making corrections or removals and notifying the agency about these activities. The rule provides that a correction or removal report submitted to the agency does not necessarily reflect a conclusion by the manufacturer or FDA that the device caused or contributed to a death or serious injury. This section of the regulation is similar to the provision in 21 CFR 803.16 that prevents a Medical Device Report (MDR) from being an admission that the device caused or contributed to a death or serious injury.7

When Reports Are Not Required

In certain instances, firms are not obligated to report a correction or removal to FDA. Some of these instances are discussed below.

Previously Filed Reports. Firms are exempted from filing a report if they have previously provided correction and removal information to the agency through an MDR, on a MedWatch Form, or if they have filed a report under the Radiation Control and Safety Act.

User Error. Generally, firms are not required to report isolated instances of user error that would result in remote trivial risks. However, user error should be reported if there is a reasonable probability that the use of the product could bring about adverse health situations.

Normal Stock Rotation/Stock Recovery. A report is also not required if product was removed from the market for normal stock rotation practices. Additionally, firms do not have to tell FDA if they correct product problems before a product is distributed and if the entire inventory is within the firm's direct control.

Market Withdrawal. Additionally, a report is not required if the removal was taken merely to improve the performance or quality of the device. In this instance, the product problem could not pose a health risk.

Furthermore, the product problem could not be more than a technical violation of the requirements, where if the product remained on the market, FDA would use its discretion and refrain from initiating a seizure action. Such a technical violation might include an insignificant typographical error. The problem is that companies would rather not be in the position of second-guessing when FDA would or would not institute a seizure action.

When deciding whether to report, firms should consider several factors. One of the factors should be whether FDA has issued a warning letter on the problem or whether it was cited as an observation on an FDA-483. If the problem is common and FDA has used its discretion not to act, then it is likely the firm would be correct in categorizing the action as a market withdrawal and not submit a report to FDA.

Routine Servicing. Firms do not need to tell the agency about their routine servicing activities. Neither should they inform FDA about regularly scheduled maintenance, such as providing replacement parts at the end of a component's expected life cycle, calibration, or normal wear and tear.

However, repairs of an unexpected nature, such as parts replaced earlier than predicted in the design requirements, would not fit within this definition. If a device contained a battery that was supposed to last for three years, but failed within six months, that would not be considered routine servicing. Firms should maintain reliability and usage pattern data as part of their design controls practices. When events occur that require corrective actions, firms need to ascertain whether the event falls within the predetermined normal use of their product-servicing plan.

Software Corrections. Firms that correct their software to mitigate a problem where there is no risk to health are not required to notify FDA. Although bug lists are not normally considered to be a reportable correction, if a bug list is used as relabeling to avoid a risk to health, then a report would need to be filed.

Hypothetical Examples

On October 26, 2005, FOI Services in cooperation with Compliance-Alliance held an audio conference on medical device reports of corrections and removals. Prior to the audio conference, the registrants were given 11 hypothetical situations and asked to determine which of the following five options should be taken to interpret 21 CFR 806.

• Take no action.

• Do a correction and do not submit a report to FDA.

• Do a correction and submit a report to FDA under 21 CFR 806.

• Remove the product from the market and do not submit a report.

• Remove the product and submit a report under 21 CFR 806.

The registrants were informed that the scenarios did not contain enough facts to provide specific guidance, but they were useful for establishing an approach to determine which option to pursue.

More than 70 locations participated in the conference. The faculty consisted of Frances Akelewicz, Practical Solution; Nancy Singer, Compliance-Alliance; Cap Uldriks, FDA; and representatives from two medical device firms. The remainder of this article discusses five of the hypothetical situations for which there was a consensus among the registrants, FDA, and industry participants.

Hypothetical 1. When one of the modules in Ace's new software program used to interpret the results of a glucose tolerance test is opened, the screen momentarily freezes. This does not result in the software malfunctioning or giving incorrect results. It's just a nuisance to some of Ace's impatient customers. Ace issues a software patch to correct the problem. What should Ace do?

Answer: Correction—Not Reportable. Ace's software patch would be considered a correction, but Ace would not have to notify FDA. Ace would review its risk evaluation and analysis documents and most likely would conclude that the fact that screen froze momentarily does not create a risk to health.

Uldriks reminded attendees that when the correction was made, Ace would be required to validate the fix to be sure there was no negative effect on another function in the software. He advises firms to document exactly how the software was changed so that, if the fix actually creates a different problem, the firm would know what it did and when.

Hypothetical 2. Each time version 3.2 of Beta's software program is opened, a malfunction causes a 3-second delay in the initial cycle of the cardiac pump, which supports an intraaortic balloon catheter. The secretary at the hospital who reported the complaint stated that there does not appear to be any effect on the patient. What should Beta do?

Answer: Correction—Reportable. Beta should do a correction by providing a software patch to its customers, and it should submit a report to FDA. There is an element of uncertainty associated with the patient risk. Although the secretary stated in the scenario that there did not appear to be any effect on the patient, the cardiac pump is a life-sustaining device. Because a malfunction has occurred, and the malfunction caused an interruption in the circulation of blood, there is a health risk.

Hypothetical 3. Delta plans to distribute a sterile kit that has an outer sealed package and an inner package. The kit includes a sterile drape, latex gloves, a surgical gown, and an oncology treatment port. Delta's QA director notices that a corner of the outer sealed package was found to be unattached to the rest of the package on several lots that were located within Delta's distribution center. What should Delta do?

Answer: Correction—Not Reportable. Delta should correct the problem by repackaging and resterilizing the outer and inner packages, but the company would not have to submit a report to FDA because the entire product is under Delta's control. If any of the products had been released for distribution, Delta would have had to remove the product and notify FDA.

Any time there is a breach of a sterile barrier, as evidenced by the outer corner being lifted in this example, there is a risk of infection that constitutes a potential health risk. Uldriks stated that when looking at the history of recalls involving sterility, nearly 98% are usually considered an activity that would meet the definition of a Class II recall. So, unless there is clear evidence to the contrary, firms should conclude that there is a risk to health.

In this situation, there were two sterile barriers. An argument could be made that, even if the first barrier is compromised, the second one is still intact and will maintain the device's sterility. Firms must use caution when making this assumption. If the outer seal has been compromised, bacteria might still be introduced into the sterile field, contaminating the product.

Hypothetical 4. During dialysis treatment at the Harris Dialysis Treatment Center, the femoral artery catheter manufactured by Tops Medical would not draw blood. When a physician's assistant removed the catheter, he noted that the tip was occluded with tissue. This occurs about half the time when doctors are in a hurry and improperly use the catheter. What should Tops Medical do?

Answer: Correction/Removal—Reportable. If the data within the firm confirm that this is not an isolated incident, Tops needs to take the appropriate corrective action and report the correction or removal to FDA. The occluded catheter clearly poses a health risk to dialysis patients, a population already at risk. If Tops modified the instructions or conducted physician training, this would be considered a correction. If Tops removed the product from the market and redesigned the catheter to decrease the likelihood that the tissue would occlude at the top of the catheter when the physician inserts it into the patient, this would be considered a removal.

If, after the first instance, Tops filed an MDR and notified FDA in the report of its correction or removal activities, then Tops would not be required to file an additional report under 21 CFR 806.

Hypothetical 5. The vice president for quality of Tone Dental Supplies was informed that an intermittent software failure of the gamma sterilization cycle might have resulted in the shipment of nonsterile dental instruments that were labeled as sterile. What should Tone Dental Supplies do?

Answer: Removal—Reportable. Tone Dental would need to remove the product from the market and file a report with FDA under 21 CFR 806. Because the instruments are used in a dental office where the patient may experience bleeding, they must be sterile to minimize the transfer of bacteria that may cause infection. Because Tone Dental can't confirm that the product shipped is sterile (due to the software failure that occurred during the sterilization cycle), the company must assume that the device is nonsterile, and there is a potential for a health risk.

Conclusion

Regulatory and quality officials in medical device firms want to comply with 21 CFR 806. They need to study the rule contained in 21 CFR 806 and the preamble to the rule contained in the May 19, 1997 Federal Register, 62 FR: 27183.

When an incident occurs, they need to collect the facts, perform a failure investigation, and then evaluate the results using risk management tools. When appropriate, they should implement corrective action and determine whether they need to notify FDA under 21 CFR 806.

If FDA were to publish a guidance in collaboration with industry illustrating the use of risk management tools, this could provide a common approach for determining risk to health. Additionally, FDA should continue to educate industry so firms can benchmark their techniques for analyzing and correcting product problems and FDA can provide feedback to them.

References

1. Code of Federal Regulations, 21 CFR 806.
2. 21 CFR 7.3(m)(1).
3. 21 CFR 7.3(m)(2).
4. 21 CFR 820.
5. ISO 14971:2000, “Medical Devices—Application of Risk Management to Medical Devices” (Geneva: International Organization for Standardization, 2000).
6. 21 CFR 806.10(e).

Nancy Singer is president of Compliance-Alliance LLC, in Arlington, VA. She can be reached at nancy_singer@juno.com. Frances Akelewicz is founder of Practical Solution Inc. (New Providence, NJ). She can be contacted at franakelewicz@comcast.net.

Copyright ©2006 Medical Device & Diagnostic Industry

Boston Scientific–Guidant Merger Nears Completion

It's been a long haul for Guidant Corp. (Indianapolis) since it first became an acquisition target, in December 2004, following a $25.4 billion offer from Johnson & Johnson Inc. (J&J; New Brunswick, NJ). But now, following a sometimes-fractious courtship with J&J and a $27 billion late-entry bid this past December from Boston Scientific Corp. (Natick, MA), the end is finally in sight.

On March 31, shareholders of Guidant and Boston Scientific overwhelmingly approved the merger. Soon after, the companies reached a consent agreement with the Federal Trade Commission (FTC; Washington, DC) and received antitrust clearance from the directorate-general for competition of the European Commission (EC; Brussels). With these hurdles overcome, the companies expect the deal to close later this month, following final FTC review.

According to Paul Donovan, Boston Scientific's senior vice president for corporate communications, the FTC consent agreement “did not require any material changes” to the merger.

In a related action, the EC also cleared the proposed sale of Guidant's vascular intervention and endovascular units to Abbott (Abbott Park, IL). The transaction is one of the divestitures Guidant was required to make as a condition of approval for its merger with Boston Scientific. As part of this $6.4 billion deal, Abbott will pay $4.1 billion in cash, provide a $900 million loan to Boston Scientific, and acquire $1.4 billion in the company's stock.

Throughout the protracted merger period, Boston Scientific has emphasized that restoring Guidant's cardiac rhythm management device business would be one of its top priorities. Evidence of some recovery is already noted in Guidant's preliminary report for the first quarter of 2006. Estimated U.S. and worldwide implantable defibrillator sales of approximately $308 million and $419 million for the quarter represent declines of 16% and 12%, respectively, when compared with the first quarter of 2005. However, implantable defibrillator sales were up 13% from the fourth quarter of 2005 in both domestic and international markets.

Overall, first-quarter sales of $894 million represented a decline of 6% from the first quarter of 2005, but were slightly higher than the company's forecast revenue of $879.4 million.

Capek

Capek: Rebuilding for launch.

At the end of the March, however, Guidant announced another setback, this time involving its Xience drug-eluting coronary stent program. According to the company, a small number of the stents—less than 1%—were “not manufactured with strict adherence to its quality standards.” As a result, the company halted enrollment in the Spirit III clinical trials in Japan and the United States. The trials are designed to test the safety and efficacy of the device. Guidant said it plans to resupply clinical investigators with newly manufactured units as soon as they become available.

“To ensure that the product meets Guidant's quality standards, the company will not utilize existing inventories and will rebuild devices for Spirit III and the upcoming European launch,” said John Capek, PhD, president of Guidant's vascular intervention unit. Xience received the CE mark in January 2006.

According to Guidant, the company has fully informed FDA, Boston Scientific, and Abbott about the temporary suspension of Xience's clinical trials.

© 2006 Canon Communications LLC

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What Wouldn't You Do If FDA Didn't Make You?

First Person

William A. Hyman.

There is a broadly held view that compliance with FDA regulations, and thereby U.S. federal law, is not only burdensome but also not even helpful. In other words, some people think that FDA compliance is pure burden, with no benefit. In fact, there has been ongoing litigation by at least one company arguing, in effect, exactly this point of view. Moreover, an even more negative view is becoming pervasive. Some think that FDA regulations have an adverse effect on U.S. healthcare in that valuable technologies are either delayed or never brought to market because of FDA's constraining effect. And for devices that are marketed, costs are substantially increased. In this regard, a manufacturer that sees its premarket approval application for a device denied may not be among the agency's biggest fans. The same could be true for a manufacturer in receipt of a warning letter, a consent decree, or a product seizure.

Similarly, it is not unusual at scientific meetings to hear research presentations that include off-the-cuff statements disparaging FDA. Some executives make comments to the effect that their company would be selling a particular device today were it not for FDA's pesky demands for proof of safety and efficacy. Or in academic seminars, it is not uncommon to hear the opinion that OEMs must have a quality control plan because FDA requires one. This burden-only view is reflected in both the name and perspective of many professional and commercial seminars. Such a view even appears in articles in MD&DI, and they often have titles like “Doing X,Y, and Z for FDA Compliance,” but they do not suggest that X, Y, and Z have any inherent value.

In addition, there are several software products available whose sole advertised purpose is FDA compliance. These perspectives collectively suggest that if there were no FDA regulations (or no FDA at all), we could (and would) stop doing many things that we only do now because FDA makes us. (Of course, this view is compromised by international regulations that impose many of the same requirements, albeit under different administrative structures.)

Of course, counterarguments to these we-only-do-it-because-they-make-us perspectives exist. One such argument is that it actually is a worthwhile goal to design and manufacture safe and effective devices that have valid and proven purposes, and labeling that supports the correct use of the device for those purposes. It may even be valuable to collect postmarket performance data to ensure that these devices are effective in the clinical environment and to make improvements if they are not.

Aside from an ethical perspective, it can be argued that making a high-quality product is good business, in that sales will be enhanced, malfunctions minimized, and adverse events mitigated. (Here, quality includes the full spectrum of design, manufacturing, marketing, and follow-up.) In addition, good product performance will bring more sales for the product itself and could possibly spill over to similarly branded product lines, whether related or unrelated. Therefore, quality sells, which produces profit. Strong sales might also reflect strong stock prices, further enriching both public stockholders and a company's executives. By contrast, demonstrated quality deficits (e.g., it becoming known that manufacturing defects were hidden from consumers) can have serious adverse effects on business operations. Moreover, high-quality products may be able to avoid and defend product liability claims. It is generally accepted that the quest for high-quality products requires a systematic approach. This is the essence of the quality system concept and FDA's quality system regulation (QSR) requirements. A fundamental question, then, is: “Do the QSR requirements result in quality systems that result in high-quality products?” One FDA official presented—half in jest—with this question responded—half in jest—“that's our position and we are sticking to it.”

The quality community also generally shares that view. Another telling anecdote came from an OEM's engineering vice president shortly after the QSR went into effect. To be fair, this vice president and his company are committed to high-quality engineering and high-quality products. As the QSR emerged, his concern was not that the QSR was groundbreaking in its requirements, but rather that specific structure and documentation requirements presented an unnecessary burden, given what the company was already doing.

For example, one requirement for design controls is that firms must have formal and documented design review meetings, rather than casual conversations around the coffeepot or at lunch. To explicitly meet the design review component of the requirements, the company restructured its design processes. Shortly thereafter, the executive said to me, “You know, Bill, we had our first design review meeting, and…it was good!”

All good practices require some level of documentation to reflect what the practice is, to capture the results of the process, and to provide a capacity to review those results. But a capacity to review is not very useful unless reviews actually occur. Paperwork (or the electronic equivalent) generally does increase with the further development of process and the recording and analysis of data. If there is a regulatory burden here, it occurs when the paperwork requirement stops providing value. Nobody wants to do paper or electronic work that has no value or that no one ever looks at. In that regard, without FDA there certainly would be no external medical device reporting. But wouldn't there still be value in reviewing reports of death, serious injuries, and malfunctions?

This question leads us to this editorial. When people start to gripe about FDA's burdensome quality requirements, ask them the following questions: If there were no FDA, would you not be careful about design inputs, design reviews, and design changes? Would you not do design verification? Would you not do clinical trials where they were necessary to prove that your device actually does what it is supposed to do in the real world? Would you not exercise GMPs, including process control and validation? Would you not investigate manufacturing deviations and field complaints? And, ultimately, and perhaps most importantly, if you did not do any of these things, would you want that product used on you?

Copyright ©2006 Medical Device & Diagnostic Industry

Congress Considering Healthcare IT Measures

The federal government's push for a national health information network continues. Last month, the Senate approved a reserve fund for healthcare information technology (IT) as part of its fiscal year 2007 budget resolution. Earlier in the month, the Electronic Health Information Technology Act of 2006 was introduced in the House.

Roberts

HIMSS's Roberts: Pressuring Congress.

The reserve fund would “provide incentives or other support for adoption of modern information technology to improve quality in healthcare.” The Senate proposed a similar reserve fund last year, but it was not included in the appropriations budget of the Department of Health and Human Services (HHS). “It's a positive sign that, for the second year, the Senate has felt it should have that reserve fund set up,” says Dave Roberts, vice president of government relations for the Healthcare Information and Management Systems Society (Chicago). The House, however, has yet to pass a budget resolution.

On the legislative side, Roberts says the new Electronic Health Information Technology Act is only one of 41 bills that HIMSS is tracking this year. “We are thrilled with the level of interest in healthcare IT that we are seeing on Capitol Hill,” he says. “We're hoping to keep pressure on both the House and Senate to pass some legislation this year.”

Much like other bills currently circulating in Congress, the Electronic Health Information Technology Act, introduced by Representative William Lacy Clay (D–DE), provides incentives, loans, infrastructure, healthcare antikickback exceptions, and other changes to support healthcare IT dissemination and a national health information infrastructure.

“The bill does a lot of good things,” Roberts says. “With 41 bills out there, there's a lot of overlap among them.” One element common among many of the bills, says Roberts, is the creation of an office of health information technology within HHS. This would codify into law the Office of the National Coordinator for Health Information Technology, headed by David J. Brailer, MD, PhD. The office was established by executive order in April 2004.

Roberts said it's uncertain how far the Electronic Health Information Technology Act will make it in Congress as a bill introduced by a member of the minority party. But he said HIMSS is still hopeful that it will see some healthcare IT legislation passed this year. One challenge will be to get the House to pass a bill that includes grant funding for healthcare IT initiatives, says Roberts. The Senate has traditionally been more supportive of such funding.

Industry association AdvaMed (Washington, DC) has also been coming out in support of the pending healthcare IT legislative initiatives. In mid-March, the group provided testimony to the House Committee on Energy and Commerce's subcommittee on health regarding pending legislative proposals to promote electronic health records and a stronger health information system.

The testimony encouraged expeditious implementation of the International Classification of Diseases version 10 (ICD-10) and federal preemption of Health Insurance Portability and Accountability Act (HIPAA) rules to ensure that data may be stored, updated, and transmitted electronically anywhere in the United States. AdvaMed also encouraged legislation to address certain regulatory barriers that it sees to healthcare IT adoption, including federal healthcare antikickback statutes and physician self-referral laws.

In June, a coalition of about 30 healthcare IT stakeholder organizations, including HIMSS and AdvaMed, as well as various healthcare professional groups, will launch National Health IT Week in Washington, DC. In addition to featured presentations by members of Congress, as well as policy development and education activities, National Health IT Week, June 5–10, will include dual conferences on health IT implementation by HIMSS and the Agency for Healthcare Research and Quality. For more information, visit www.healthitweek.org.

In addition to government initiatives, the integration of healthcare IT and medical devices continues apace. To read more about the latest innovations in device-level IT, look for MX's annual IT Showcase in the upcoming May/June issue.

© 2006 Canon Communications LLC

Return to MX: Issues Update.

Adding Up Poor-Quality Costs Can Subtract Waste

News Trends

Javad Seyedzadeh said that identifying customer problems, and fixing them, can reduce quality costs.

Figuring out what poor quality really costs, and fixing the problems, can save a device firm millions of dollars. An executive at Bayer Healthcare's Diagnostics Div. offered tangible evidence of that to an audience at the Medical Design & Manufacturing (MD&M) West show in January.

The Cost of Poor Quality scheme is based on increasing preventive actions, which lead to reductions in external and internal failures and appraisal costs. By showing how quality issues affect the bottom line, the scheme can convince management to devote more resources to improving quality.

Javad Seyedzadeh said his company reduced quality-related costs from 13% of revenues to 9% after implementing the program. Seyedzadeh is Bayer Diagnostics' senior vice president of quality assurance and regulatory affairs. Quality-related costs are determined by adding up the costs of internal failures, external failures, testing and other appraisal expenses, and preventive actions. Such costs come to 20% of revenues for a typical device firm, according to research.

The first step Bayer took, he said, was to investigate the root cause of the most common reported external failure. In this case, it was the error rate of a four-cavity tool. The firm was able to reduce customer complaints about this tool by 48% and save $275,000. “By utilizing our external failure data, Bayer has been able to identify important cost and customer issues and drive improvements in those areas,” he said.

Daniel Olivier emphasized the importance of root-cause analysis to reduce quality problems.

Bayer then examined field corrective actions, which included recalls and other corrections and removals that occurred at customer sites. The firm found that the average field corrective action cost $250,000, and it launched a preventive-action program to reduce them, Seyedzadeh said. From 1999 to 2004, Bayer reduced field corrective actions by 83%, resulting in savings of more than $13 million.

Bayer kept a database to track external failures. It was broken down in several ways, including by product and by complaint symptom. That breakdown allowed the firm to do statistical analysis to identify trends. With that information, it was able to prioritize corrective actions.

To reduce internal failures, Bayer focused on reducing safety accidents. The key element was an employee close-call system to encourage identification and correction of potential hazards, he said. Another benefit was that it increased safety awareness among the staff. Between 2000 and 2005, Bayer reduced accidents by 73%, saving more than $2 million.

For such a program to work, strong root-cause analysis is a must, said Daniel Olivier, president of Certified Software Solutions Inc. He is an expert on the Cost of Poor Quality scheme.

“A lot of companies fall down when it comes to root-cause analysis [because they do] a superficial response,” he said. “To get at the root cause requires a detailed analysis. It is probably the most important step. You can't figure out the optimal corrective action if you don't know the root cause of the problem.”

Copyright ©2006 Medical Device & Diagnostic Industry

Medical Alley/MNBIO Rebrands, Refocuses

Medical Alley/MNBIO, the medical sciences trade organization formed through the 2005 merger of Medical Alley and the Minnesota chapter of the Biotechnology Industry Organization, has changed its name to LifeScience Alley and expanded its focus to include the broad reach of the term life sciences.

Gerhardt

LifeScience Alley's Gerhardt: Refocused opportunity.

“We are committed to acting, partnering, and strengthening the business climate for the life sciences in Minnesota and the surrounding region to compete on a global scale,” says Don Gerhardt, president and CEO of LifeScience Alley. “This presents our members with a powerful opportunity to access expertise and information from diverse resources.”

According to the group's Web site, the term life sciences is significant. “These markets focus on improving and sustaining health and well-being,” reads the site. “Whether you are a medical device manufacturer, a pharmaceutical company, a healthcare provider, an ethanol or biomass producer, a seed or food company, or any type of support service organization, this definition fits across our broad and diverse membership.”

With a diverse membership comes a diverse legislative agenda—and a greater likelihood that the interests of certain LifeScience Alley members may come into conflict. “When there are conflicting loyalties, there's an increased responsibility for the organization to take a neutral, more-educational view,” Gerhardt says.

According to the organization, its new name and focus drives an expansion of its programs and service offerings for its members. “We will certainly not be abandoning the medical technology sector but will be adding on the foundation we have built over the past 21 years,” the organization reports. “New educational and networking opportunities are being developed for bio-related organizations, start-ups, operations and manufacturers, and others.”

Cerra

LifeScience Alley's Cerra: A unifying step.

Along with the name change, the organization unveiled its new mission statement: “ Enabling business success in the life sciences: A member-focused organization that enables business success in the life science markets through leadership, collaboration, innovation, advocacy, and education.” Along these same lines, the group's new tagline is “Coming together to collaborate, innovate, and succeed.”

“It's a unifying step in Medical Alley's merger with MNBIO to create a single lead entity that responds in unison to the goals and objectives of our newly stated mission,” said Frank Cerra, LifeScience Alley board chair and senior vice president for the University of Minnesota's Academic Health Center.

LifeScience Alley has more than 500 members across a variety of organizations. In addition to its rebranding, the group is looking to extend its reach beyond Minnesota's state border to reach companies and organizations in Canada, Wisconsin, Iowa, Illinois, and the Dakotas.

© 2006 Canon Communications LLC

Return to MX: Issues Update.

Management Control Key to QSR Compliance

News Trends

John Stigi noted that an organized manager can help an FDA inspection go smoothly.

Strong management control is central in establishing an organized quality system. A manager with executive responsibility has the ultimate responsibility to set up and change a company's procedures to comply with the quality system regulation (QSR) requirements.

“The buck stops with the named [manager],” said John Stigi at a session at the MD&M West conference. Stigi is the director of the Division of Small Manufacturers, International and Consumer Assistance (DSMICA) at FDA.

Many tasks fall under management control. A company's manager with executive responsibility does not have to be the CEO or president of the firm. However, this manager must provide adequate resources for operations and also must monitor the quality system to ensure that it's running properly.

Management control is one of seven main control subsystems of the QSR covered by a routine FDA inspection. The manager with executive responsibility is at the heart of this organizational structure. The additional subsystems are the following:

• Design.

• Production and process.

• Corrective and preventive action.

• Documents, records, and change.

• Material.

• Facility and equipment.

If FDA visits a manufacturer, the manufacturer should expect at the very least, management, design, and production and process control will be inspected.

The first thing an FDA investigator will confirm is that the designated manager has set up a quality policy and quality procedures. Management representatives should be in place to establish and report on the quality system. Employees must be trained and staffing levels must be adequate. This manager is also responsible for conducting and documenting audits.

There are about 1700 classified device groups, but fewer than 100 are exempt from the QSR, according to Stigi. Manufacturers must adhere to the QSR if they want to keep their device on the market and pass FDA inspection successfully.

“You can't send bad products out the door and fix them later,” said Stigi. “Fixing products while they're in the field isn't an option.” A manager that has implemented a well-organized system will help his or her company get through an FDA inspection smoothly.

Copyright ©2006 Medical Device & Diagnostic Industry

Survey: Medtech Firms Adopting AdvaMed Code of Ethics

According to a recently released survey from PricewaterhouseCoopers LLP (PwC; New York City), medtech firms are recognizing the need to put in place compliance systems and procedures to combat the potential for fraud and abuse in their marketing programs and sales practices. The findings revealed a nearly 100% adoption rate for the “Code of Ethics on Interactions with Healthcare Professionals” developed by industry association AdvaMed (Washington, DC).

Additionally, the survey reported that two-thirds of company presidents or CEOs have personally endorsed the AdvaMed code in a letter to employees or customers. In addition, 90% apply it to every level of their organization, regardless of seniority or title, and 75% have posted information about their compliance with the code on their companies' Web sites. About 70% track all meals, gifts, travel, lodging, and honoraria provided to healthcare professionals, and nearly all have linked sales compensation with code compliance in some manner.

According to the survey results, most large medical device firms have instituted controls for interactions with healthcare professionals. These controls include agreements that promote ethical behavior, as well as methods for determining the fair market value of gifts, entertainment, and other remuneration of services, and for ensuring that value is actually received in return for the engagement of healthcare professionals.

The survey notes that companies are increasingly placing restrictions on the involvement of sales forces in relation to grant requests. In addition, committees are frequently established for grant review and approval.

Claude

PwC's Peter Claude: Efficient adoption is key.

“The industry has taken the AdvaMed code to heart,” says Peter Claude, a partner in PwC's life sciences advisory practice. “It is clear that medical device firms have seized the opportunity to better integrate ethical standards into their organizations. The key will be to do this in an efficient manner and to connect their compliance obligations with broader corporate goals to improve their performance and competitive advantage.”

Claude adds, “Medical device companies largely enjoy a positive image among healthcare providers and the public—a status they obviously want to maintain and enhance. Initiating systems and procedures to guard against fraud and abuse is seen as a logical, proactive step for most of the surveyed companies.”

Riewerts

PwC's Riewerts: Challenges in implementation.

Brian Riewerts, also a partner in PwC's life sciences advisory practice, notes, “Acceptance of the need for compliance with the AdvaMed code is one thing, but implementation is quite another. Putting these kinds of systems and procedures in place often goes to the heart of a company's culture and the way it conducts its business. It's serious stuff. While practices are mixed across the industry, we hope that by creating a series of compliance benchmarks, we can share better practices in hopes that they will encourage more-effective implementation of compliance across the industry.”

AdvaMed Seal

The survey was distributed in March 2006 to 40 medtech firms, including the largest medical device firms in the United States with global annual sales of more than $1 billion. The reported results are based on responses from the 20 companies that completed the survey.

In related news, AdvaMed recently announced that medtech companies will soon be able to “self-certify that they have implemented compliance policies consistent with the code and maintain a robust compliance infrastructure, enabling them to display the AdvaMed code logo.”

AdvaMed was aware of the PwC survey, but had no involvement in its development, analysis, or funding.

© 2006 Canon Communications LLC

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