Medical Device Compliance Issues Update

Transcription

1 Medical Device Compliance Issues Update Panel Discussion Fourteenth Pharmaceutical Compliance Congress and Best Practices Forum Washington, D.C. October 29, 2013

2 With you today Paul Kalb, M.D. Partner, Sidley Austin LLP Sandy Kalter Vice President and Chief Regulatory Counsel, Medtronic, Inc. Seth B. Whitelaw Director, Deloitte & Touche LLP 1

3 Medical device companies The Leading Themes Medical device companies are increasingly coming under the scrutiny of key regulatory bodies such as the Office of the Inspector General ( OIG ), Department of Justice ( DOJ ) and Food and Drug Administration ( FDA ). Individual Accountability Quality Anti-Corruption 2

4 Individual Accountability

5 Corporate Integrity Agreement Developments While Corporate Integrity Agreements ( CIAs ) for medical device manufacturers are less frequent (latest was in June 2013) and the settlement sizes smaller than those for pharmaceuticals, they tend to incorporate the provisions of their pharmaceutical counterparts. Manufacturers Issued a CIA (as of October 2013) Number of CIAs Pharmaceuticals Medical Device Graph above is inclusive of companies with closed-out CIAs Source: Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services (DHHS) 4

6 Corporate Integrity Agreement Requirements According to Mary Riordan 1, Senior Counsel, DHHS OIG, CIA settlements are focusing on five major areas of corporate governance, compliance and operations. Focus on Financial Incentives for Individuals Executives Sales representatives Focus on Board Involvement/Accountability Requirement for training Annual resolution Provisions relating to case-specific issues Interactions with government payers Research-related issues Inclusion of Existing Internal Monitoring Activities Flexibility in annual monitoring plans 1. FDLI s Advertising and Promotion Conference (Sept. 16, 2013) Focus on Centralized Risk Assessment Programs CIAs recognize variability among companies Essential elements are: risk assessment, identification, and monitoring/mitigation 5

7 Corporate Integrity Agreement Provisions As a result of the OIG s CIA focus areas, the industry should expect to see a continuation in CIAs containing: a) Executive Claw Back New provisions added regarding clawing back of executive bonuses as a result of two recent pharmaceutical CIAs. According to Inspector General Dan Levinson, DHHS OIG: company executives may have to forfeit annual bonuses if they or their subordinates engage in significant misconduct, and sales agents are now being paid based on quality of service rather than sales targets 2 b) Management Certification - accountability from employees Annual certifications required by managerial employees regarding compliance with applicable CIA, Federal health care program, and other requirements. c) Board Accountability CIAs often require that Boards affirmatively review and oversee compliance programs. CIAs often require Board members to sign annual certifications about the effectiveness of compliance programs. CIAs often require specific training for Board members. 2. Daniel Levinson, OIG Update, (Jul. 2012) (audio podcast). 6

8 Quality

9 Device Quality Recent shift in focus by the DOJ from false or misleading advertising and marketing of medical products as evidenced by recent settlements to be more inclusive of manufacturing failures. In a January 2013 speech at the CBI Pharmaceutical Compliance Congress, Deputy Assistant Attorney General Maame Ewusi-Mensah Frimpong stated: when companies fail to follow current good manufacturing practices, they often place patients at great risk of harm that neither they nor their doctors have any way of mitigating or even recognizing. We will also be taking an especially hard look whenever patients are placed at an unacceptably high risk of harm by those violations of current good manufacturing practices. Frimpong also gave insight into where the DOJ will focus: In addition to focusing on plants and production lines and manuals and policies and testing and controls, I urge you to also focus on people. People are at the heart of what you do, and it is the failures of people often the combined failures of a number of people which result in noncompliance. Therefore, in our investigations, we are looking at people to determine responsibility. 8

10 FDA Form- 483s Overall FDA-issued 483s have increased 35% since 2007, but those issued by Devices and Radiological Health ( CDRH ) have remained consistent over the last four years, with only mild fluctuations. Device 483s Inspectional Observations 5 Year Average (FY ) 5% 1% 1% 7% 1% QSR Violation Types 1. QSR General 2. Records 3. Production & Process Controls 4. Corrective & Prevention Action 5. Design Controls 6. Acceptance Activities 85% Medical Device Reporting Establishments & Listing Other Corrections & Removals Investigational Device Exemption Quality System Requirements (QSR) Source: FDA's Center for Devices and Radiological Health (CDRH), 9

11 Warning Letters Overall Warning Letters issued by the FDA have increased by 50% since 2008, while device Warning Letters increased at a slower pace (34%). Device Warning Letters (Violation Percentages FY ) 3% 2% 1% 11% Adulteration Violation Types 1. QSR Violation 2. CGMP Violation 3. Unapproved PMA 4. Clinical Investigator 83% Misbranding Adulteration IRB Mamography Other Source: FDA's Center for Devices and Radiological Health (CDRH), 10

12 Anti-Corruption

13 Anti-Corruption The Perils Overseas The DOJ is continuing its anti-corruption probes into pharmaceutical and medical device practices outside of the U.S. The bulk of bribery and other forms of corruption occurs in developing countries. Foreign Corrupt Practices Act ( FCPA ) enforcement actions in 2012 by the DOJ amounted to $260 million with over 50% coming from settlements with pharmaceutical and medical device companies: Medical Devices $50 million from three device companies Pharma $90 million from two major pharmaceutical companies Despite the successes noted above, several of companies have reported prosecution declinations. 12

14 Anti-Corruption (cont d) If a company identifies a potential corruption issue, investigates it, and determines that it should consider make a voluntary disclosure to the government; the desired scenario is a government determination that no violation of the law occurred (e.g., declination). Declination Non-Prosecution Agreement (NPA) Outcome Severity Deferred Prosecution Agreement (DPA) There is limited information behind what drives the DOJ and Securities and Exchange Commission ( SEC ) to pursue or not pursue a particular matter. Factors affecting the outcome of FCPA matters Timeline between illicit payment identification, corrective actions and communication with U.S. and local authorities stopped payments, canceled contracts and/or reimbursement, etc. Full cooperation with the government investigation access to investigative material and documents; timely responsiveness to specific government inquiries Personnel actions disciplinary steps, termination, retraining of protocol and practices for impacted employees and agents; reorganization for increased oversight of personnel, departments, or business units involved in potentially corrupt payments Identification or investigation of related or similar misconduct Enhanced measures to prevent future violations updates to existing compliance programs; new procedures and process improvements; increased training; adoption of new requirements for thirdparty agents 13

15 Other Emerging Areas

16 Physician Owned Distributorships (PODs) Potentially problematic characteristics exhibited by PODs, or their physician-owners Physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers (ASCs). Investments driven by value/volume of devices used POD does not maintain continuous oversight of distribution functions POD is a shell entity Ownership interest driven by value/volume of devices used POD physician/owners do not reveal status during conflicts checks/disclosures Referrals to hospitals predicated on hospital/asc purchases from the POD Ownership interests can be repurchased if physicians miss targets POD pressures physicians/owners to meet recommendation targets Source: the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS), Special Fraud Alert: Physician-Owned Entities, March

17 From Promotional Practice Claims. To Labeling Twenty-four Warning Letters were issued by CDRH between May 01, 2012 and April 30, 2013, concentrated in four main promotional claims themes: 1 Claims appearing to disregard FDA s prior admonitions 2 Claims outside a 510(k) clearance 3 Claims that change the device classification 4 Claims requiring clinical data 16 CDRH is putting more emphasis on advertising and promotional claims

18 Post Market Surveillance Primary postmarket surveillance system functions 1. Provide timely, accurate, systematic, and prioritized assessments of the benefits and risks of medical devices throughout their marketed life using high quality, standardized, structured, electronic data; 2. Identify potential safety signals in near real-time from a variety of privacy-protected data sources; 3. Reduce burdens and costs of medical device postmarket surveillance; and 4. Facilitate the clearance and approval of new devices or new uses for existing devices. Key steps for strengthening postmarket surveillance 1. Establish a unique device identification (UDI) system and promote its incorporation into electronic health information; 2. Promote the development of national and international device registries for selected products; 3. Modernize adverse event reporting and analysis; and 4. Develop and use new methods for evidence generation, synthesis, and appraisal. FDA s planned actions 1. Establish a multi-stakeholder planning board to identify the governance structure, practices, and business model(s) required for creation of postmarket surveillance system; 2. Establish a UDI system and promoting its incorporation into electronic health information, including: a) finalize the UDI rule and b) establish a publically accessible global UDI database 3. Promote the development of national and international device registries for selected products; 4. Modernize adverse event reporting and analysis, including releasing a mobile app for voluntary MDR reporting and establishing a modernized MDR database; and 5. Develop and using new methods for evidence generation, synthesis, and appraisal. Source: FDA, CDRH, Strengthening Our National System for Medical Device Postmarket Surveillance: Updates and Next Steps, April

19 As we noted at the outset... Medical device companies are increasingly coming under the scrutiny of key regulatory bodies such as the OIG, DOJ and FDA. and this will continue 18

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