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Dirty Devices Are Killing Patients. Can Congress Stop It?
Apr 18, 2016 | Bloomberg
By John Tozzi
...The committee said it didn’t believe there was “a public-health crisis related to unsafe or ineffective medical devices.” But a string of high-profile safety problems with products ranging from vaginal mesh and artificial hips to power morcellators and endoscopes have harmed thousands of patients and prompted lawsuits costing companies billions of dollars. That’s led to renewed calls for better oversight. -
Injured Patients’ Attack on CDRH Chief Moves to Capitol Hill
Apr 18, 2016 | Medical Device and Diagnostic Industry Online
By Jim Dickinson
...“This is my biggest problem with Shuren,” Howie’s comment continues, “the 510(k) process is a legal loophole for untested devices to go straight to market without any pre-market testing, simply based on the fact the device resembles a predicate device. Having had a device implanted that was based on a predicate device that was pulled from the market, yet the devices in me were not [pulled and this] shows exactly where a huge problem exists. -
The dubious business of investing in mass torts
Apr 18, 2016 | Reuters
By Alison Frankel
...A few months later, Gerchen supposedly put up about $45 million to fund the acquisition of tens of thousands of pelvic mesh claims by the Houston plaintiffs’ firm AkinMears, according to a lawsuit by AkinMears’ former business development officer. -
Public Citizen: Big Pharma Pays Big Civil and Criminal Penalties
Apr 18, 2016 | Mesh Medical Device News Desk
By Jane Akre
...Public Citizen was the first consumer group to ask for the recall of surgical mesh for transvaginal repair in August 2011.
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Dirty Devices Are Killing Patients. Can Congress Stop It?
Apr 18, 2016 | Bloomberg
By John Tozzi
Antibiotic-resistant superbugs spread by tainted endoscopes, those flexible devices used to peer into your body, have sickened hundreds and killed more than a few. Outbreaks at hospitals in Los Angeles, Seattle, and elsewhere have triggered regulatory warnings, litigation, and even a recall.
Now one California congressman wants to change a law governing medical device makers to prevent future infections: He wants them to tell the Food and Drug Administration when they make a design change.
“There are loopholes in the law that need to be closed,” said Representative Ted Lieu, a Los Angeles Democrat. Right now, it’s up to manufacturers to decide whether a change is significant enough to tell the regulator. “I don’t think it’s appropriate for device manufacturers to make the decision,” Lieu said.
His plan may pit him against a powerful medical device lobby that has worked hand in hand with regulators and lawmakers to get favorable oversight rules. But with revelations of hundreds of infections in at least 40 hospitals worldwide since 2010—more than had previously been reported—the dynamic may have shifted.
AdvaMed, the lobby group for the industry, said it's reviewing the legislation and shares Lieu’s “commitment to ensuring the continued safety and effectiveness of medical devices marketed in the U.S.”
Medical devices are regulated differently than drugs and in some ways less stringently. New drugs must undergo trials to show safety and effectiveness. For most new devices, manufacturers have to show only that they're similar to existing products. The system, in place since 1976, “is not intended to evaluate the safety and effectiveness of medical devices,” according to a 2011 report by a committee of the Institute of Medicine.
The committee said it didn’t believe there was “a public-health crisis related to unsafe or ineffective medical devices.” But a string of high-profile safety problems with products ranging from vaginal mesh and artificial hips to power morcellators andendoscopes have harmed thousands of patients and prompted lawsuits costing companies billions of dollars. That’s led to renewed calls for better oversight.
“Medical device changes need to be thoroughly reviewed and approved by the FDA,” said Sanket Dhruva, a cardiologist and research fellow at the Yale School of Medicine who has studied device regulation. “A small modification can certainly lead to significant harm, and I think the endoscopes are one unfortunate example."
In recent years, endoscope manufacturers, including Olympus, Fujifilm, and Pentax, changed the design of specialized instruments called duodenoscopes, used to probe tiny ducts in the small intestine. The companies sealed off a channel that could trap bacteria in the device, making it harder to clean. The dirty scopes spread superbugs among patients in the outbreaks that came to light last year.
It’s hard to say for sure how much the design change contributed to the problem. Olympus made the alteration to its scope in 2010, according to a report from Senate Democrats published in January. Two years later, a hospital in the Netherlands told Olympus the change made the scope harder to clean.
After learning about the new design, the FDA privately told Olympus in 2014 the modification would require the company to seek a new clearance for the device. The agency, however, didn’t recall the scope or alert the public that it wasn't cleared for use until it was tied to outbreaks making headlines almost a year later. Olympus obtained a new clearance in January.
Olympus spokesman Mark Miller said in an e-mail that “we do not agree with all of the conclusions leading to the proposals” from Lieu but that manufacturers, hospitals, and government all must contribute to improving safety. Olympus’s situation wasn’t unique. The FDA also told Fujifilm in 2015 that one of its scopes, on the market for a decade, was missing a clearance from the agency.
More than 200 companies or products have been the subject of similar letters from the FDA alerting them that their products, already on the market, may lack the proper regulatory permission to be sold, according to documents obtained by Bloomberg through a public records request.
Doctors and patients may not be aware that devices in use haven’t been vetted by regulators. “Patients should at least have some information about the devices that they are receiving,” said Dhruva, the Yale researcher. “I think that’s a part of the informed consent process.”
But even Lieu's modest proposal could face a difficult road. The FDA has made efforts in the past to monitor changes to medical devices better, only to be shot down. In 2011, the agency proposed a new set of guidelines for manufacturers when they need to seek new clearances. The proposal was expected to increase the number of design changes that would prompt more paperwork. In the end, Congress took the extraordinary step of ordering the agency to withdraw the guidelines the following year.
Despite last year's outbreaks, the FDA’s latest advice on when companies need to seek new clearances is expected to stay largely the same, a policy seen as a victory for the device industry. A representative from AdvaMed met with FDA officials on the subject last summer, but the agency has declined to provide details of the meeting to Bloomberg. The industry lobby has previously collaborated with the FDA to draft legislation that would ease regulation on device makers.
Lieu’s bill wouldn’t go as far as earlier proposals—the paperwork burden for companies and the FDA would be less than the regulator's previous recommendations, he said. And he thinks he can convince his colleagues in Congress that the changes are needed.
"I think the situation is different now, because we can point to a concrete example where a company did not notify the FDA of a design change,” he said, “and that design change resulted in hundreds of infections.”
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Injured Patients’ Attack on CDRH Chief Moves to Capitol Hill
Apr 18, 2016 | Medical Device and Diagnostic Industry Online
By Jim Dickinson
The unprecedented, coordinated attack by medical device-injured patients on CDRH director Jeffrey Shuren, first reported here last December, has moved from his email inbox to Capitol Hill in the form of an Internet petition to have Congress fire him for, among other things, putting industry concerns before patient safety.
This coincided with an aggressive inquiry from Minnesota Democrat Al Franken with a closely parallel focus, citing concernsreported by the Minneapolis Star Tribune about Medtronic’s Infuse bone graft device and patient injuries the company reportedly failed to submit to CDRH for five years.
In an acrimonious political season in which a wide swath of corporate-versus-citizen complaints are commanding heated headlines in diverse online, broadcast, social and print media, the injured patients’ issues with Shuren and his Center seem likely to have traction.
Led by LASIK victim/activist and former CDRH advisory committee consumer representative Paula Cofer, the Internet petition to Congress charges that Shuren’s leadership of CDRH has seen the Center “become mission-corrupted, placing industry interests over public health.
“Failures of the CDRH,” it continues, “have harmed countless people and led to many preventable deaths.
“CDRH is ‘captured’ by industry. Division managers at the CDRH have close working relationships with representatives of medical device manufacturers.
“Fraud and data tampering occurs regularly in FDA clinical trials of medical devices. The CDRH’s oversight of device trials is weak and ineffective, leading to approval or clearance of unsafe devices.
“Post-market surveillance by CDRH is lax. Problems with medical devices go undetected, which leads to injuries to unsuspecting American citizens.
“Patient advocacy groups and whistle-blowers who reach out to the CDRH to raise a red flag about problems with a medical device have been shut out or ignored. MedWatch reports of device-related injuries fall into a black hole at the agency.
“We call on the United States Congress to remove CDRH director Jeffrey Shuren from the FDA so that a new leader can take his place. A new CDRH leader must honor the agency's mission to protect and promote the public health.”Cofer says her petition is being followed by Pennsylvania Republican congressman Mike Fitzpatrick, who she hopes will bring it to the attention of his colleagues. Fitzpatrick has strongly supported injured patients’ criticisms of Shuren and CDRH safety management in the power morcellator and Essure birth control controversies.
In its first 24 hours in cyberspace, the petition attracted over 270 signatures, including many comments Cofer characterized as “brutal” toward Shuren.
Some, like that from a New Jersey person named Tara Howie (only identification posted by the petition site), seemed well informed about the subject:
“In 2011 Shuren, when asked about the 510(k) process, Shuren said he doesn’t know where precisely it is going, but it certainly won’t be scrapped. He believes the system works well, although he knows there are those in the industry with ‘angst’ about the program—and he has seen this concern increasing. But the largest challenges pertain only to a small minority.
“This is my biggest problem with Shuren,” Howie’s comment continues, “the 510(k) process is a legal loophole for untested devices to go straight to market without any pre-market testing, simply based on the fact the device resembles a predicate device. Having had a device implanted that was based on a predicate device that was pulled from the market, yet the devices in me were not [pulled and this] shows exactly where a huge problem exists.
“Is Shuren that shortsighted? I think not. In his time at the CDRH he has lied (kinda) under oath, he has pushed his agenda, one that benefits him, yet leaves the consumer, frankly, screwed. The ‘small minority’ Shuren speaks of is not too small actually. Perhaps in his limited view of everything that doesn’t pertain to him, or the lobbyists he’s been making extremely happy, it is small, but if you ask thousands and thousands of consumers what they think of the way Shuren has decided to run the CDRH, they will undoubtably tell you there are many, many problems. Not only ‘minor’ ones.
“How can anyone within the FDA, or specifically the CDRH, be trusted when they work so closely with representatives from medical device manufacturers? The writing is on the wall so to speak. And it’s well past time to make the changes necessary to protect the consumers, and not the wallets of the medical device industry. Greed in this country is putting dollars before clear, rational thinking. And it’s time to change this, along with the leadership at the CDRH, beginning with Shuren . . .”
Franken’s parallel but less pointed complaints about CDRH’s management of patient safety issues and its post-market surveillance deficiencies came in the form of an unusually penetrating, three-page letter to newly-installed FDA commissioner Robert Califf.
Sparing Shuren any direct accusations, Franken nevertheless presented numerous questions reflecting adversely on CDRH management of device risks going back to Shuren’s predecessor, Daniel G. Schultz, such as:What information did Medtronic provide to FDA about adverse events identified by a company retrospective study and when, and how did the agency advise the company to respond?In what ways did the current postmarket system, as well as its reporting structure, limit FDA’s ability to fully capture the Medtronic adverse event information earlier?Given that Medtronic received two Warning Letters about the late submission of other adverse event data, did FDA consider taking additional steps to penalize the company for noncompliance? If not, why not? What enforcement mechanisms does the agency employ to make sure that companies comply with reporting requirements and what consequences do companies face if they don’t comply?Why was public release of the Medtronic adverse event report data drawn out over several months and why did FDA initially deem the number of patient injuries to be a “corporate trade secret”?
CDRH’s management deficiencies have long made it arguably the weakest of FDA’s six program Centers. For decades it has resisted administrative reforms and protected deficient managers from outside criticism as a succession of Center directors have courted user fee-paying industry leaders, seeking to make them happy and keep them that way.
Device-injured patients do not pay FDA user fees and no comparable efforts are made to make and keep them happy. Indeed, the Essure email campaign by about 1,500 individuals against Shuren produced no person-to-person responses from FDA, but instead only an innocuous FDA Web page update that indirectly acknowledged their interest without addressing substance.
And FDA’s response to Cofer’s petition was an arrogant “The FDA is aware of the petition” statement issued in response to my request for comment.
For a decade and a half I have watched and reported on the progressive march of FDA opacity toward the public it is bound by statute to protect even while it fudges that duty, a process dating from and proportionate to the advance of user fees and the agency’s latter-day statutory obligation to be accountable to the payors of those fees.
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The dubious business of investing in mass torts
Apr 18, 2016 | Reuters
By Alison Frankel
Have you heard the latest in get-rich-quick investment ideas? All you have to do is find thousands of people injured by a drug or medical device, sign them up as clients, find lawyers to file and settle their cases and collect a share of the legal fees. It’s easy! You can’t lose!
Or so you might think from the plethora of litigation financiers touting mass tort litigation as anew asset class. In theory, as the manager of a $260 million hedge fund explained at a 2015 conference on alternative investments, sophisticated investors that put money into a docket of mass torts cases after the defendant’s liability has already been established can earn as much as 25 percent interest on its capital. No wonder an unnamed Texas investor supposedlyfunneled nearly $8 million to plaintiffs’ lawyer Mikal Watts in 2010 to help him build an inventory of seafood workers to sue BP after the Deepwater Horizon oil spill.
Elite personal-injury lawyers tell stories about having been pursued by litigation financiers offering tens or even hundreds of millions of dollars to buy a piece of their mass torts dockets. The litigation funder Gerchen Keller raised more than $400 million last winter for a new fund dedicated to investments in late-stage cases. A few months later, Gerchen supposedly put up about $45 million to fund the acquisition of tens of thousands of pelvic mesh claims by the Houston plaintiffs’ firm AkinMears, according to a lawsuit by AkinMears’ former business development officer. (Neither Gerchen Keller nor AkinMears has confirmed the fund’s involvement, and AkinMears has disputed the price tag alleged in its former executive’s suit, which has settled on confidential terms.)
Now comes news that investing in mass torts litigation is not the exclusive domain of sophisticated hedge funds. According to a fraud complaint filed Friday by the Securities and Exchange Commission, an outfit called Prometheus Law allegedly took in about $11.7 million from more than 250 small investors, many of them retirees, promising to double, triple or even quadruple the money they put into Prometheus’ “legal marketing” program for mass torts.
Prometheus consisted of a Michigan-licensed tax lawyer, a Washington State-based legal marketer and several dozen sales agents trying to entice investors. (Among the tactics: ads in USA Today.) The outfit’s pitch, according to the SEC, was that it would use investors’ money to locate and screen personal injury plaintiffs in cases in which defendants had already set up settlement funds.
Prometheus allegedly told investors it would partner with plaintiffs’ firms to bring claims on behalf of the clients it found through its legal marketing. When cases settled, Prometheus would receive one-third of the legal fees – 11 percent of the total settlement. According to the SEC’s complaint, filed in federal court in Los Angeles, Prometheus sold “prepaid forward contracts” that guaranteed spectacular returns, 100 or 125 percent in 24 months, or even more for a longer-term investment.
The payouts depended, of course, on Prometheus generating mass torts claims. In rough numbers, to double the $11.7 million the SEC alleges Prometheus took in from investors, the firm needed to sign up personal injury clients whose cases would be worth at least $212 million. According to the SEC, in its year or so of operation, Prometheus did become counsel to 2,300 personal injury clients, of whom 700 filed claims. (The majority were against the maker of one particular drug, though the SEC does not name the product; Prometheus marketing materialsmention Bayer’s Yaz and Yasmin birth control pills and the GlaxoSmithKline antidepressant Paxil.)
But the SEC alleges that Prometheus’ business plan had fallen apart by the middle of 2014. Instead of using investor funds to generate additional clients, the SEC complaint said, Prometheus principals James Catipay and David Aldrich “spent millions of dollars on personal items, including a million-dollar loft in downtown Los Angeles and paying Aldrich’s personal income taxes.” Catipay, the lawyer of the two, blamed Aldrich for the supposed misappropriation in a 2015 suit in Los Angeles Superior Court, but the SEC said Catipay continued to hustle investors after he and Aldrich split in 2014.
Moreover, the settlement prospects weren’t very good for the cases Prometheus did manage to generate, according to the SEC. A medical claims underwriting lawyer supposedly told Catipay and Aldrich in late 2014 that the cases comprising nearly 90 percent of Prometheus’ portfolio were “junk” that no one else was “still trying to generate.” When the first round of contracts came due, Prometheus didn’t have revenue from settlements to pay out. Instead, according to the SEC, Catipay and Aldrich used new investor money to pay old investors – a “Ponzi-like” scheme both admitted under oath, the SEC said.
And then there is the not-so-small matter of Aldrich, the non-lawyer Prometheus principal, sharing in legal fees kicked off by the cases he generated. Fee-splitting with non-lawyers in prohibited everywhere except in Washington, D.C. (where some hybrid mass torts law-and-marketing firms have set up shop to take advantage of that very loophole). Before Aldrich met Catipay in 2013, the SEC’s complaint claimed, he’d been turned down by about 100 plaintiffs’ lawyers concerned about ethical prohibitions on sharing fees with a non-lawyer.
Aldrich and Catipay were allegedly advised that the fee-splitting arrangement was a violation of ethical rules in April 2014 – the same time they received legal advice that the contracts they were selling were securities, despite their protestations to the contrary. California opened an investigation into Prometheus’ alleged sale of unregistered securities in June 2014, yet, according to the SEC, Aldrich and Catipay continued to sell the contracts.
I left a message on Prometheus’ answering machine, which is also the phone number Catipay lists on his Michigan bar registration. I could not find a phone number for Aldrich, but sent an email to an address he is said to use. I did not hear back from either man.
The SEC’s allegations are just that, of course, and the actions of defendants who supposedly oversold the prospects of an investment to unsophisticated customers should not discredit the entire asset class.
But if nothing else, the SEC complaint disproves the truly silly theory that it’s easy to make quick money by investing in mass tort litigation. According to the SEC, Prometheus took in less than $10,000 in revenue from legal fees in settled cases. If you do the math, that means the total value of settled claims in cases generated by Prometheus was about $91,000. To break even with investors, Prometheus needed its cases to generate $106 million. To delivers the returns it promised, as I mentioned, the fund needed settlements to top $212 million.
Nor is Prometheus the only outfit to fall into potholes in the mass torts investment game. AkinMears, the Texas plaintiffs’ firm that allegedly spent $45 million to acquire a huge docket of mesh cases last summer, subsequently told me and my reporting partner Jessica Dye that it was unaware some of those cases had originated at offshore call centers. The firm also told us that an unexpected significant percentage of clients opted not to proceed or not to use AkinMears as counsel when their cases were transferred.
That is not to say AkinMears (and Gerchen Keller, if it is true that the litigation funder financed the deal) won’t make money from the mesh cases – the firm didn’t directly address that question when we asked – but the process has not been simple. And really, it shouldn’t be. At the heart of every mass torts claim is an allegedly injured person, someone whose life supposedly changed because of a defective product. Proponents of outside investment in mass torts litigation argue that more money means more legitimately injured people will be able to bring claims. Defendants argue that pressure from outside investors will drive up the number of meritless suits. I’m not sure we know yet who is right on that point. But I am sure that personal injury cases, even in mass torts featuring tens of thousands of suits, are not a commodity.
It disserves the idea of justice to treat them as if they were.
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Public Citizen: Big Pharma Pays Big Civil and Criminal Penalties
Apr 18, 2016 | Mesh Medical Device News Desk
By Jane Akre
Public Citizen is going back in time 25 years to give a big picture look at the penalties Big Pharma has paid out.
While financial news networks act like cheerleaders about Big Pharma and its big profits, the consumer group Public Citizen reports on the underbelly of what the real costs are to these companies.
In a 25 years survey, Twenty-Five Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 -2015, Public Citizen finds from 1991 to 2015 there were 373 settlements reached between big Pharma and state and federal governments. The price tag – $35.7 billion.
These are companies that behave badly and commit what would be considered crimes if they were deal with criminally. They are, however, dealt with civilly so the only penalty is to pay for your bad behavior.
*State Medicaid programs represented the most common violation. Companies overcharge Medicaid commiting fraud.
*Unlawful promotion of a drug resulted in the largest financial penalties.
*GlaxoSmithKline and Pfizer paid the most in financial penalties – $7.9 and $3.9 billion.
*J&J, Merck, Abbott, Eli Lilly, Teva, Schering-Plough, Novartis and AstraZeneca also paid more than $1 billion in financial penalties.
*Qui Tam or whistleblower actions were responsible for 58% of federal settlements and 71% of federal penalties, amounting to at least $10.5 billion in financial penalties under the False Claims Act.
*A suspected bribery ring orchestrated by GlaxoSmithKline’s subsidiary in China was found guilty and fined nearly $500 million by the Chinese government. The DOJ is investigating GSK over the bribery charges.
*The third largest health fraud settlement in history $2.0 billion was paid by Johnson & Johnson over its antipsychotic drug, Risperdal, for use in elderly patients with dementia. A multi-state settlement of $181 million against J&J was leveled for off label marketing of Risperdal.
*One lawyer writes feds have shied away from making use of the stronger sanctions available to them which has likely been a major factor responsible for drugmaker recidivism especially considering sales figures for the drugs involved in fraudulent activity.
For example, GlaxoSmithKline paid $3 billion in violations while Paxil, Wellbutrin SR and Avandia made $28 million in sales. Risperdal brought in $11.7 billion in sales while J&J paid $2 billion in penalties.
*Sen. Sanders and Rep. Cummings introduced legislation in May 2012 to prevent companies from maintaining FDA-granted marketing exclusivity for those companies and their drugs involved in illegal activity.
These violations were litigated under the False Claims Act (FCA), commonly used to prosecute fraud with the help of insiders or whistleblowers. Those folks are supposed to be provided protection against retaliation and receive a percentage of the financial recovery of 15 to 25 percent that results from a government investigation. The Food Drug and Cosmetic act is also used to prosecute the pharmaceutical companies, often for off-label promotion.
Public Citizen was the first consumer group to ask for the recall of surgical mesh for transvaginal repair in August 2011.
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