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Inside Medical Devices

Updates on Developments for Medical Devices from Covington & Burling LLP

Recent Decision in Device Products Liability Case Highlights Key Strategic Issues for Removing Cases to Federal Court

Posted in Products Liability

A decision by a federal district court in Allen v. Bayer Healthcare Pharms., Inc., 2014 WL 655585 (E.D. Missouri Feb. 20, 2014), demonstrates key complexities in a common strategy used by device companies in product liability lawsuits — removing the case from state to federal court.  In the case, twenty-five plaintiffs from eleven states (including Delaware) filed a single products liability action in Missouri state court alleging that they were injured by the device Mirena®, an intrauterine contraceptive system.  The defendant manufacturer, a citizen of Delaware and New Jersey, removed the action to federal court based on diversity jurisdiction.  As we’ve discussed in previous posts, product liability plaintiffs usually prefer to have their claims heard in state courts, while the defendant manufacturers favor federal forums.

To remove a case to federal court, the federal court must have subject-matter jurisdiction, which (in medical device cases) typically requires diversity jurisdiction—in which (i) the parties are citizens of different states or are non-U.S. citizens, and (ii) the minimum amount in controversy of $75,000 is met.  In Allen, the defendant argued that complete diversity between the plaintiffs and defendants existed because, although the defendant and plaintiffs were both citizens of Delaware, the Delaware plaintiffs’ claims were time-barred under Delaware’s two-year statute of limitations.  Therefore, the defendant argued that those plaintiffs were fraudulently joined and should not be considered for purposes of diversity jurisdiction analysis.

In response, the plaintiffs argued that their claims should not be barred under Delaware’s statute of limitations because they were not on notice of the claim against the defendant until seeing a personal injury attorney’s advertisement for Mirena® IUD litigation in 2013. The court ruled, however, that the statute of limitations began to run in 2009 when the relevant plaintiff underwent a surgical removal of the Mirena® device as a result of pelvic pain. At that point, the claims against the defendant could have been discovered through diligence on the part of the patient.  Therefore, the Court agreed with the defendant that the Delaware plaintiffs were fraudulent joined and complete diversity existed.

Nevertheless, despite agreeing with the defendant on fraudulent joinder, in a strange twist, it remanded the case to state court because it concluded that the defendant had not come forward with any evidence showing that the amount in controversy exceeds $75,000.

As amended in 2011, the removal statute, 28 U.S.C. § 1446, states that when removal is based on diversity jurisdiction:

“[T]he sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy, except that—(A) the notice of removal may assert the amount in controversy if the initial pleading seeks—(i) nonmonetary relief; or (ii) a money judgment, but the State practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded; and (B) removal of the action is proper on the basis of an amount in controversy asserted under subparagraph (A) if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds [$75,000].”

In Allen, neither the original complaint nor any other pleading or paper stated an amount in controversy of at least $75,000. The Complaint stated that plaintiffs were seeking an excess of $25,000 in damages and the plaintiffs refused to admit or deny a Request for Admission that they were collectively seeking damages in excess of $75,000. The defendant argued that satisfaction of the minimum amount in controversy could be inferred by the fact that the lawsuit involved numerous plaintiffs, some of whom alleged serious bodily injury, seeking compensatory and punitive damages. The court rejected this argument and ruled that the defendant had “failed to establish federal jurisdiction by a preponderance of the evidence.”

Allen raises the question of what evidence a defendant can present to support the assertion of the necessary amount in controversy when the plaintiff does not allege it or otherwise admit it, for example, in response to discovery requests.

FDA Issues Revised Draft Guidance on Distributing Reprints

Posted in FDA Device Regulation

On March 3, 2014, FDA announced the availability of a revised draft guidance document entitled “Distributing Scientific and Medical Publications on Unapproved New Uses—Recommended Practices.”  This draft guidance revises the final guidance, “Good Reprint Practices for the Distribution of Medical Journal Articles and Medical or Scientific Reference Publications on Unapproved New Uses of Approved Drugs and Approved or Cleared Medical Devices” published in January 2009.

The revised guidance goes beyond the previous document in that it separately addresses journal articles, reference texts, and clinical practice guidelines (CPGs).  In the Federal Register notice of publication, FDA notes that the draft guidance was issued in part to respond to citizen petitions from drug and device manufacturers received in July 2011 and September 2013 that included requests specifically related to the distribution of CPGs.

In the revised draft guidance, FDA’s recommendations for distribution of scientific or medical journal articles remain largely the same.  The revised guidance, however, contains a distinction between drugs and devices that was not present in the 2009 guidance.  The previous guidance document provided that information in the journal articles should “address adequate and well-controlled clinical investigations” that “can include historically controlled studies, pharmacokinetic (PK) and pharmacodynamic (PD) studies, and meta-analyses if they are testing a specific clinical hypothesis.”  The revised guidance provides that journal articles should “contain information that describes and addresses adequate and well-controlled clinical investigations,” and only for devices states that “significant investigations other than adequate and well-controlled studies, such as meta-analyses, if they are testing a specific clinical hypothesis, and journal articles discussing significant non-clinical research (such as well-designed bench or animal studies) may be consistent with this guidance.”

For scientific or medical reference texts distributed in their entirety, FDA recommendations are similar to those for journal articles, such as texts should be based on a systematic review of existing evidence, be published by an independent publisher, be the most current version, be peer-reviewed, be distributed separately from promotional material, and contain a prominent disclosure identifying that some uses may not be approved or cleared by FDA.  For distribution of individual chapters, manufacturers should ensure that the chapter comes from a reference text that follows the recommendations of the guidance, is unaltered and unabridged, is disseminated with other chapters when necessary to provide context, contains a prominent disclosure statement, and is disseminated with the approved labeling.

For CPGs, “statements that include recommendations intended to help clinicians make decisions for individual patient care, including in circumstances where there are few or no approved drugs or devices indicated for the patient’s condition or the approved therapies have not proven successful for the individual,” FDA sets forth standards that include the Institute of Medicine’s standards for CPG “trustworthiness.”  At a “minimum,” the CPG should:

  • be based on a systematic review of existing evidence;
  • be developed by a knowledgeable, multidisciplinary panel of experts and representatives from key affected groups;
  • consider important patient subgroups and patient preferences;
  • be based on an explicit and transparent (publicly accessible) process by which the CPG is developed and funded that minimizes distortions, biases, and conflicts of interest;
  • provide a clear explanation of the logical relationships between alternative care options and health outcomes, provide clearly articulated recommendations in standardized form, and provide ratings of both quality of evidence and the strength of recommendations; and
  • be reconsidered and revised when important new evidence warrants modifications of recommendations.

Similar to reference texts, FDA also sets forth requirements for CPGs that are distributed in their entirety, and additional requirements if only a section is used.

FDA requests that comments on the draft guidance be submitted by May 2, 2014.  In addition to soliciting public comment on the new draft guidance, FDA is soliciting public comment on three additional issues:

  1. further explaining “scientific exchange”;
  2. developing guidance on manufacturer responses to unsolicited requests for information relating to unapproved or uncleared uses; and
  3. considering draft guidance on industry interactions with formulary committees, payors, and similar entities, including clarifying terms discussed in section 114 of Food and Drug Administration Modernization Act of 1997 (FDAMA) and recommendations for evidentiary support for health care economic information disseminated to formulary committees and similar entities.

The Risks of One-Way Jurisdiction Clauses and Unilateral Arbitration Clauses

Posted in Transactions

One-way jurisdiction clauses are becoming more prevalent in medical devices related transactions where, by way of example, licensors want the flexibility to deal with patent related disputes in the courts of the country where the patent is applied for or granted.  A one-way jurisdiction clause requires that one of the parties to a contract must always submit a dispute arising from the contract to a particular country’s courts, whilst allowing the other party the flexibility to commence proceedings in the courts of any country it may choose.

This approach differs from the more “tried and tested” approach of “exclusive jurisdiction clauses,” where both parties are tied to resolve disputes in a particular jurisdiction, and “non-exclusive jurisdiction clauses,” where either party may submit a dispute arising from their contract to a particular country’s courts, whilst the other parties may commence proceedings in another country’s courts.

While one-way jurisdiction clauses can be tempting, as explained below, recent court decisions in a number of jurisdictions have questioned the validity of one-way jurisdiction clauses and the alternative dispute resolution equivalent, the unilateral arbitration clause.

One-way jurisdiction clauses have generally been considered valid under European law, however the French Supreme Court has regarded as invalid a jurisdiction agreement in an international loan agreement, which provided for the parties to submit their disputes exclusively to the Luxembourg courts, whilst reserving for the lender the right to bring proceedings in any other competent court.  X v. Rothschild (French Supreme Court, First Civil Chamber, 26 September 2012, No 11-26.022).

In contrast to the decision of the French Supreme Court, the English Commercial Court has found that unilateral jurisdiction clauses are valid under English law.  Although the interpretation of EU Law is expected to be uniform across the EU, national courts do apply their own interpretations to EU Regulations and Directives.  Mauritius Commercial Bank Ltd v. Hestia Holdings Ltd and another [2013] EWHC 1328 (Comm).

The contrasting decisions in the Mauritius Commercial Bank case and the Rothschild case demonstrate the differing national views on the interpretation of one EU law.  In the absence of a decision by the Court of Justice of the European Union on the validity of one-way jurisdiction clauses, which would bind the courts of the EU Member States, there is no longer any guarantee that clauses of this nature will be found to be valid by courts in the EU outside of England.

The situation is little better outside of Europe, with the courts in Russiareaching a similar decision to that reached by the French Supreme Court, but with regard to a clause which allowed one party to refer any dispute to arbitration or the courts, while one party was restricted to referring disputes to arbitration (a so-called “unilateral arbitration clause”).  CJSC Russian Telephone Company v. Sony Ericsson Mobile Telecommunications Rus LLC., Case No. ВАС-1831/12.

Unilateral arbitration clauses have come under widespread scrutiny in an even broader range of countries than one-way jurisdiction clauses. While unilateral arbitration clauses are enforceable under English law, such clauses have been found to be unenforceable in a number of countries including Russia, Romania, Poland, and Bulgaria.  The enforceability of unilateral arbitration clauses is also currently in doubt in Japan, Singapore, Sweden, the US, Brazil, and China.

To maximise the likelihood of a one-way jurisdiction clause, or unilateral arbitration clause, being enforceable, consider taking the following steps:

  • Choose as governing law the laws of a jurisdiction that recognises the validity of one-way jurisdiction clauses or unilateral arbitration clauses, as applicable;
  • Include in the one-way jurisdiction clause an explanation of why the right (for one party but not the other) to bring proceedings in a second jurisdiction is required, or, in the case of a unilateral arbitration clause, why one party may need the right to bring proceedings before the courts rather than by arbitration in certain circumstances (or vice versa).  Many of the recent decisions on the validity of one-way jurisdiction clauses and unilateral arbitration clauses focus on the lack of fairness to one party; and
  • If you know at the outset that disputes are likely to arise in certain jurisdictions, take local law advice on the enforceability of one-way jurisdiction clauses and unilateral arbitration clauses in these jurisdictions before executing the contract.

 

Analyst Report Indicates that Health Care Organizations, Including Internet-connected Medical Devices, Are Vulnerable to Attack

Posted in Privacy

A recent analyst report indicates that health care organizations and internet-connected medical devices are increasingly vulnerable to cyber-attacks. The Health Care Cyberthreat Report was issued in February 2014 by the SANS Institute, which describes itself as a cooperative research and education organization that is a source of cybersecurity training, security certification, and research information.

SANS collected cyberthreat intelligence from the health care sector for the period between September 2012 and October 2013.  SANS reported that, during the period studied, health care organizations of all types faced malicious IP traffic. The report found that there were 49,917 unique malicious events that targeted medical devices, conferencing systems, web servers, printers, and security technologies. Furthermore, the report found 375 instances where U.S.-based health care organizations suffered compromised networks–which could result in data breaches or theft of medical information.

The report also found that medical devices and applications with internet connections were openly exploitable. Specifically, the report concluded that:

Connected medical devices, applications and software used by health care organizations providing everything from online health monitoring to radiology devices to video-oriented services are fast becoming targets of choice for nefarious hackers taking advantage of the [Internet of Things] to carry out all manner of illicit transactions, data theft and attacks. This is especially true because securing common devices, such as network-attached printers, faxes and surveillance cameras, is often overlooked. The devices themselves are not thought of as being available attack surfaces by health care organizations that are focused on their more prominent information systems.

As more and more health care information is being stored electronically, regulators will expect companies to take appropriate steps to safeguard sensitive health and other personal information.  Indeed, FDA has increasingly focused on cybersecurity and medical devices, including issuing two guidance documents — Content of Premarket Submissions for Management of Cybersecurity in Medical Devices (June 14, 2013)  and Cybersecurity for Networked Medical Devices Containing Off-the-Shelf (OTS) Software (January 14, 2005).  We have previously addressed the FDA cybersecurity guidance here.  Medical device manufacturers will want to stay current with the latest threat analyses and with FDA and international efforts relating to cybersecurity.

China Issues Special Procedures for Innovative Medical Devices

Posted in Device Regulation in China

In February 2014, the China Food and Drug Administration released Trial Procedures for the Special Examination of Innovative Medical Devices (Special Procedures).  CFDA released a draft of the Special Procedures for public comment in mid-2013, described here.  Under these special procedures, if a medical device meets certain criteria it will be eligible for “priority” evaluation and approval procedures.  Applicants for these procedures may be domestic or foreign companies.  The Special Procedures went into effect on March 1, 2014.

The Special Procedures lay out eligibility criteria in three areas.  First, the applicant must hold an invention patent on the core technology in China; the patent or use rights in China were legally transferred to the applicant; or the State Intellectual Property Office of the State Council has already published the patent claims on the core technology.  Second, the primary work on the product’s design and use mechanisms must have been the first of its kind in China; its safety or functionality must be a fundamental improvement over comparable technology; it must be leading technology internationally; and the device must have clear clinical value.  Third, and finally, the applicant must have completed the preliminary research and finalized the design of the product; the research process must be accurate and controlled; and the research data must be complete and traceable.

If the device meets those criteria, the applicant must submit standard business documentation, IP-related documentation, a summary of the research and development process and results, and technology documentation to the relevant regulators.  The Special Procedures set forth more detailed requirements on the type of technology documentation that must be provided.

Several levels of approval are required before a device may be eligible.  Domestic applicants must submit an application to the food and drug regulatory authority in the province where they are located.  Once that local regulator makes an initial decision to accept the application after 20 days, the application is passed on to CFDA.  A foreign applicant applies directly to CFDA.  Once CFDA has initially accepted either a domestic or foreign application, it is passed on to a special office that will be established for innovative devices inside the Center for Medical Device Evaluation (CDE), which will organize a panel of experts to evaluate the device.  The panel will issue a decision within 40 days of accepting the application.  However, before a final decision is issued, the applicant’s name and the name of the product will be published on CDE’s website.  After a period of 10 days, during which objections may be filed, a final decision will be made.

“Innovative devices” will receive priority consideration in various respects, i.e., acceptance for evaluation, communications with CFDA, evaluation of clinical studies, and ultimately final approval by CFDA.  The Special Procedures do not set forth a specific time frame according to which CFDA must ultimately approve the device for marketing.  They only state that the device will be given priority.

Medical device companies doing business in China should monitor the implementation of the Special Procedures to determine whether it may provide an advantage to their products there.

FDA Issues Untitled Letter Focused On Promotional Claims On Facebook

Posted in FDA Device Regulation

On March 12, FDA’s Office of Prescription Drug Promotion (OPDP) posted an untitled letter on its webpage alleging that Institut Biochimique SA’s (IBSA) Facebook page for the drug Tirosint® misbranded the drug.  Though the enforcement letter discusses a drug, the principles discussed in the letter are instructive for medical device promotion activities.  The untitled letter is particularly noteworthy for its focus on one statement on a firm’s Facebook page.

The untitled letter cites the following statement on the Facebook page regarding Tirosint:

If you have just been diagnosed with hypothyroidism or are having difficulty controlling your levothyroxine blood levels, talk to your doctor about prescription Tirosint, a unique liquid gel cap form of levothyroxine.

According to OPDP, the statement above was a promotional claim about efficacy, and the company should have included risk information regarding the use of Tirosint on its Facebook page, particularly because Tirosint contains a “Boxed Warning” (a warning that FDA considers particularly serious).  In addition, OPDP stated the company failed to include material information regarding a limitation on the use of Tirosint (i.e., that it was not indicated for hypothyroidism during the recovery phase of subacute thyroiditis).

FDA has previously included claims made on Facebook or other social media platforms along with broader allegations of misbranding using a variety of sources in its enforcement letters.  For example, in December 2012, FDA issued a warning letter to AMARC Enterprises, Inc. for “liking” a third-party poster’s comment, which FDA alleged misbranded the drug.  The reference to the statement on Facebook was one of many other statements cited by FDA, including statements on AMARC’s website.  In addition, in July 2010, FDA issued an untitled letter to Novartis Pharmaceuticals Corporation relating to the “Facebook Share” widget on its Tasigna® product website.  According to FDA, the widget generated many promotional claims about Tasigna that popped up on the Tasigna website (which a user could then post to Facebook with a few clicks) and misbranded the drug by failing to include any risk information with the claims, among other reasons.  Similarly, in other recent letters citing statements on a Facebook page (e.g., here, here, here, and here), FDA also discussed a number of other sources and statements allegedly indicating that products were misbranded or adulterated.  By contrast, the present untitled letter focuses solely on a single statement on a Facebook page and does not take issue with any statements outside the Facebook page.

The untitled letter was issued to IBSA with a copy to its U.S. agent, Akrimax Pharmaceuticals, on February 24, 2014.  This was roughly a month after the Center for Drug Evaluation and Research (CDER) issued a draft guidance on social media (analyzed here), which provides recommendations on whether and how drug manufacturers should submit certain promotional material on social media to FDA at the time of first use, which is required under FDA’s drug regulations.  Interestingly, OPDP’s letter does not indicate whether IBSA submitted the Facebook page to FDA at the time of first use, nor allege that the company violated regulations by failing to do so.  In addition, OPDP’s letter did not indicate that the Facebook page should be taken down.   However, the Facebook page appears to have been disabled as of March 13, 2014.

Update on the French Sunshine Rules

Posted in Device Regulation in Europe

In August last year, we wrote about the extent to which the French “sunshine rules” apply to the medical devices industry (see our post), alongside the pharmaceutical and cosmetic industry, and other health-related industries.

A number of developments have occurred since then.

First, we highlighted in our previous post the uncertainty regarding the territorial scope of the French sunshine rules, which apply to companies engaged in manufacturing, distribution, or other services related to products covered by those rules.  An official from the Ministry of Health has confirmed that the reporting requirements apply to all such companies that interact with healthcare professionals or other persons in the healthcare sectors covered by the French sunshine rules (e.g., healthcare students, HCP associations, healthcare institutions, patient associations etc.), i.e., those conducting their activities in France.  It is irrelevant, in that respect, whether the company is established or has its registered office in France or whether its products are actually marketed in France.  This interpretation is in line with the applicable legislation and the interpretative Guideline published by the Ministry of Health in May last year.

Second, a Decree on the operating conditions of the centralised public website was published last December.  The publication of this Decree put an end to the transitional regime for transparency reporting, which required disclosure on the companies’ websites as well as on the professional councils’ websites, when applicable.  Companies must now register with a centralised website managed by the Ministry of Health.  All reporting for benefits and agreements covered by the sunshine rules must be done through this unique website.  At the moment, the website is only accessible to declaring companies.  It should become accessible to the public on 1 April 2014 at the latest.

The entry into force of this Decree also put an end to the transitional deadlines applicable for declaring relevant agreements and benefits (i.e., twice a year; by 1 August for benefits granted and agreements concluded between 1 January and 30 June; and by 1 February for benefits granted and agreements concluded between 1 July and 31 December of the previous year).  While this timeframe still applies for the reporting of benefits, agreements must now be reported within 15 days of their signature.

Third, a draft Decree is under discussion, the aim of which is to simplify the reporting requirements under the French sunshine rules.  It is proposed that agreements be declared on a bi-annual basis, according to the same timelines as for benefits.  It is also proposed that the qualifications and title of healthcare professionals no longer be reported and that the programmes of scientific events no longer be submitted (but be replaced by the name of the organiser, the name, date, and location of the event, as suggested by the Annex to the December Decree on the operating conditions of the centralised public website).  Finally, it is proposed that the deadline for re-submitting the transparency information for the year 2012 and the first 6 months of 2013 (initially published on the companies’ and the professional councils’ websites) on the centralised website be postponed to August 2015.

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International Consensus on “Software as Medical Device” Definition

Posted in Device Regulation in Europe

Last month, the International Medical Device Regulators Forum (IMDRF) reached a consensus on a potentially key aspect of the future regulation of medical software in the US, the EU, Brazil, Canada, and Japan, that is, a harmonized definition of when stand-alone software will be considered to be a medical device.

This category of software, dubbed “Software as a Medical Device” (SaMD), includes PC, cloud, or mobile applications (apps) that are intended to be used for a specific medical purpose, for example, to assist healthcare professionals in making a diagnosis.  SaMD is distinct from embedded medical software, such as the software that runs MRI control panels, which the IMDRF refers to as “software in a medical device.”

The IMDRF is a taskforce composed of US, EU, Brazilian, Canadian, and Japanese regulators.  It was launched in 2013 as the successor to the Global Harmonization Task Force (GHTF).  The abandonment of the GHTF was motivated in part by a desire to relegate industry participants to mere observer status; only regulators have voting rights within the IMDRF.

Following a public consultation that ended in late August 2013, the IMDRF decided that the harmonized definition of SaMD should be “software intended to be used for one or more medical purposes that perform [sic] these purposes without being part of a hardware medical device.

The basic SaMD definition is unlikely to cause controversy; the real substance lies in the definition’s annotations.  In particular, the IMDRF notes that:

  • “without being part of” means software not necessary for a hardware medical device to achieve its intended medical purpose;
  • Software is not SaMD if its intended purpose is to drive a hardware medical device;
  • SaMD may be used in combination (e.g., as a module) with other products including medical devices; and
  • SaMD may be interfaced with other medical devices, including hardware medical devices and other SaMD software, as well as general purpose software.

The IMDRF’s annotations arguably raise more questions than they answer; for example:

  • What does “drive a hardware medical device” mean?
  • Is it possible for software to be intended to “drive” hardware, but not be “necessary” for that hardware to “achieve its intended medical purpose”?

Take for example a PC-based app allowing the remote control of a medical robot, which also has manual controls.  The above IMDRF’s annotations appear to cause the following paradox:

  1. The medical software is then not “necessary” for the achievement of the hardware’s purpose, and therefore is not “part of” that device, so is SaMD; but
  2. The software “drives” a hardware medical device, and is therefore not SaMD.

The IMDRF previously announced an intention to replicate the regulatory approach now being adopted for in vitro diagnostic (IVD) devices to classify the various types of SaMD according to their risk, based on their importance in the care setting, their complexity, the severity of the disease state, and their importance to the user.  SaMD industry players will therefore need to pay close attention to the proposed reforms to the European IVD regulatory framework.  Agreement on a final draft of the proposed new IVD Regulation could be just a few months away, but reforms relating to the proposed Medical Devices Regulation have so far grabbed the spotlight (see our previous post).  A key question is whether these European reforms are premature given the progress being made within the IMDRF towards agreeing harmonized international standards for the regulation of software devices.

The publication of the key SaMD definitions brings phase I of the IMDRF’s software-related discussions to a close; it will now focus on clarifying the risk categorization of SaMD types and the level of regulatory expectations and controls to be applied.  An informal public consultation closed on 30 January 2014, with a fuller public consultation beginning in March 2014, which is expected to run until the end of May 2014.

New MHRA Guidance on Borderline Medical Devices

Posted in Device Regulation in Europe

In February 2014, the MHRA published new guidance on borderline medical devices.  The guidance considers only medical devices within the terms of the Medical Device Directive and not the Active Implantable Medical Devices Directive or In Vitro Medical Devices Directive.

Purpose and mode of action

The MHRA makes clear that borderline determinations “will be based on the stated intended purpose of the product and its mode of action.”  The intended purpose will be determined by the labelling, instructions for use, and promotional material for the medical device.  However, the governing factor in assessing whether a product is a medical device or medicinal product is the mode of action of the product concerned.

Application to products

The guidance provides examples of borderline devices across a number of categories, including medicines, sport and leisure products, personal protection equipment, software, machinery, spare parts, second-hand devices, and custom-made devices.

The guidance makes clear that:

  • Products that are not specifically intended for a ‘medical purpose’ are not considered medical devices even if a secondary purpose of the product is the prevention of disease, e.g. muscle toning products or slimming products are not normally medical devices but muscle toning products with medical claims (such as treating incontinence) or slimming products indicated for treating clinical obesity that are not medicinal products may be considered medical devices.
  • Products that have multiple purposes, which may occasionally be used within a medical environment, are not normally medical devices unless a manufacturer assigns a specific medical purpose to such products.
  • The determining factor for deciding if aids for daily living are medical devices is whether there is a direct link between the corrective function of the equipment and the individual concerned and that there is a stated medical purpose e.g. baths with integral hoists, mobility aids for the visually impaired, and wheelchairs are normally medical devices but acoustic signals at traffic lights, baths with doors, and stair lifts are not usually medical devices.
  • Sports or leisure products are not generally considered medical devices.  However, products that make specific claims for the treatment of pain or injury may be considered medical devices e.g. heat/cold pads for pain relief, support bandages, or gym equipment placed on the market specifically to measure a physiological function.  Gym equipment that contains an element to measure heart rate for example is not a medical device as the primary purpose of the equipment is fitness rather than measuring physiological functions.

Standalone software or software used in combination with a device which is ‘intended by its manufacturer to be used specifically for diagnostic and/or therapeutic purposes’ may be a medical device, e.g. software intended to enhance images from x-ray or ultrasound may be deemed to be a medical device but a patient management system or a records storage system is unlikely to be a medical device.

Products falling outside the medical device regulatory regime may still be covered by the Consumer Protection Act and must be safe for their intended purpose.

Amid High Recoveries for Health Care Fraud, Government Contractors May Be Able to Expect Fair Treatment

Posted in Government Contracts

The Department of Justice (DOJ) recently announced that it had recovered $3.8 billion under the False Claims Act (FCA) in Fiscal Year 2013.  According to DOJ, $2.6 billion of this recovery was associated with health care fraud, and some of the largest recoveries resulted from judgments or settlements involving companies in the pharmaceutical and medical device industries.  The Office of Inspector General of the Department of Health and Human Services reported earlier this month that DOJ will continue to focus enforcement efforts on both industries.  Although the majority of health care related recoveries under the FCA resulted from claims submitted to Medicare and Medicaid, DOJ highlighted that a number of recoveries stem from other federal programs as well, including TRICARE, veterans’ health care programs, and the Federal Employee Health Benefits Program.

The success of DOJ’s efforts may signal an increase in enforcement actions under the FCA.  A recent decision in the Eastern District of Pennsylvania, however, provides medical device manufacturers working with the government some comfort that limits exists with regard to the future enforcement of the FCA.  In United States ex. rel. Thomas v. Siemens AG, the court rejected a claim that a medical device manufacturer could be held liable under the FCA for failing to disclose the full extent of its commercial discounts, because of the absence of proof that any misrepresentation or omission induced the government to enter into a contract with the manufacturer.  The court’s decision extensively discusses the potential implications under the FCA of providing the government with inaccurate or misleading pricing information during contract negotiations.

The government uses discount information provided by contractors to determine whether it has been offered a fair and reasonable price.  Thomas indicates that a manufacturer could be found liable under the FCA for making a misrepresentation with respect to its commercial discounts if the government relied on that information in entering into a contract with the manufacturer.  According to the court’s reasoning, a manufacturer could face liability under a fraudulently induced contract for any claim that it submits to the government—regardless of the claim’s validity—as a result of the entire contract being tainted by fraud.

The court ultimately concluded that the device manufacturer in Thomas was not shown to have fraudulently induced the government to enter into a contract due to ambiguities with respect to the extent of the manufacturer’s obligation to provide discount information to the government, as well as the government’s failure to question the information provided by the manufacturer after auditing the manufacturer’s pricing information.  The court’s decision adopts a practical view of the exchange of information between device manufacturers and the government, representing a common sense approach to enforcement of the FCA.

Government reliance may have been particularly difficult to establish in Thomas given the government’s failure to intervene in the case.  In addition, the court may have reached a different conclusion under the 2009 amendments to the FCA, which arguably modified the analysis of the materiality of a false claim in the circumstances at issue.  Nevertheless, device manufacturer’s should view the decision as a positive development indicating the limitations of the potential reach of FCA liability.