UK: Failure To Report Adverse Events Results In Criminal Misbranding Settlement And Individual Liability

On December 10, 2018, Olympus Medical Systems Corporation and a former quality manager at the company pleaded guilty to introducing misbranded medical devices into interstate commerce in violation of the Federal Food, Drug and Cosmetic Act (FDCA). The government charged that Olympus' Q180V duodenoscopes were misbranded because the company failed to file and supplement Medical Device Reports (MDRs) involving serious infections associated with the product.1 Under the plea agreement, Olympus will pay $80 million in fines and $5 million in criminal forfeiture and will enact extensive compliance reforms. Hisao Yabe, who faces a $100,000 fine and up to one year in prison, will be sentenced on March 27, 2019.

Top-Line Summary

  • FDA and DOJ take adverse event reporting obligations seriously and do not view them as technical regulatory requirements;
  • When patient safety is implicated, FDA and DOJ are more likely to pursue a criminal resolution, even where the adverse events occurred outside of the United States;
  • FDA regulatory lapses can create meaningful risk for a company and having input from the legal department in early stages can better position the company to remediate regulatory lapses; and
  • When a company transfers business functions internally, it is important to ensure that those to whom the transfer has been made have knowledge and awareness of their responsibilities.

Duodenoscopes

The Olympus Q180V duodenoscope is a flexible, lighted tube with a light, camera and forceps elevator at one end. Because the device is reusable, it must be processed (cleaned) in accordance with manufacturer guidelines to remove infectious materials after use. In Fall 2013, the Centers for Disease Control and Prevention (CDC) alerted the Food and Drug Administration (FDA) to a potential association between multidrug resistant bacteria and duodenoscopes. FDA eventually determined that the infections were occurring despite confirmation that the users were following proper manufacturer cleaning and disinfection or sterilization instructions.2 Thus, the ensuing investigation by the Department of Justice (DOJ) occurred against the backdrop of years of FDA focus on the association between duodenoscopes and infections. Olympus is one of three manufacturers of duodenoscopes in the United States and allegedly had approximately 85 percent of the market share during the time period in question. According to the charging documents, Olympus failed to file:

  • Supplemental MDRs for infections of 22 patients at the Erasmus Medical Center in the Netherlands after receiving an expert report regarding issues with cleaning the device and the inadequacy of Olympus' processing instructions;
  • Supplemental MDRs for infections of three patients at Clinique de Bercy in France after receiving a lab report regarding contamination on the device and the inadequacy of the company's processing instructions; and
  • Initial MDRs for infections of five patients at Kremlin Bicetre in France.

According to the government's charges, Yabe was involved in the response to the expert report regarding infections in the Netherlands and the subsequent failure to submit supplemental MDRs.

Compliance Terms in Plea Agreement

In addition to requiring Olympus to pay $85 million in fines and forfeiture, Olympus' plea agreement contains other compliance, reporting and certification obligations. These requirements include:

  • Providing notice of the settlement to relevant U.S. customers and Olympus employees;
  • Retaining an independent MDR expert to inspect and review the company's policies and procedures for compliance with MDR obligations and the correction of any deviations from compliance;
  • Reviewing and auditing the classification and regulatory status of all endoscope devices manufactured by Olympus;
  • Periodically reviewing and reporting of the company's continued compliance efforts; and
  • Providing certifications and reviews by the president and board of directors regarding Olympus' MDR compliance program.

FDA and DOJ Have Focused Enforcement Resources on Patient Safety

Notwithstanding the relative rarity of criminal resolutions relating to failures to file adverse event reports, Olympus' settlement is consistent with FDA's and DOJ's policy of taking aggressive enforcement actions to protect patient safety. Prior to the Olympus settlement, the last company to face criminal charges for failure to file adverse event reports was Endovascular Technologies (EVT), in 2003. A government investigation revealed that EVT, a Guidant subsidiary, failed to file 2,628 adverse event reports relating to its Ancure endograft system, which is a surgically implantable device used to treat abdominal aortic aneurysms. Out of the adverse events that were not reported, 12 involved patient deaths and 57 involved emergency procedures where a physician converted an operation into a more invasive procedure. As a result of its failures, EVT pleaded guilty to 10 felonies, including nine counts of introducing misbranded devices into interstate commerce and one count of making false statements to the FDA. The company paid $92.4 million in criminal and civil fines.

DOJ's enforcement philosophy was well-explained in remarks from Ethan Davis, then deputy assistant attorney general for the Consumer Protection Branch, at the 2017 Food and Drug Law Institute Enforcement, Litigation and Compliance Conference. Davis explained that actual consumer harm, threat of harm and fraud are the most important factors considered by DOJ when deciding whether to start an investigation or bring an indictment. He added that DOJ is not interested in using enforcement resources for "one-off technical regulatory violations" where no harm or fraud occurs. This focus is apparent in other examples of DOJ and FDA enforcement activity involving failure to report information affecting patient safety:

  • A 2015 Warning Letter to Galena Biopharma for failure to develop adequate written procedures to ensure compliance with Postmarketing Adverse Drug Experience reporting requirements relating to Abstral (fentanyl) sublingual tablets;
  • GlaxoKlineSmith's 2012 plea agreement to pay $3 billion to resolve criminal and civil liability arising from activities that included failure to report Avandia safety data that was acquired from post-marketing studies and studies conducted in response to European regulator concerns about cardiovascular safety of the diabetes drug;
  • Guidant's 2011 conviction and sentence to pay $296 million in criminal fines and forfeiture for failure to report safety issues related to implantable cardioverter defibrillators, which are used to detect and treat abnormal heart rhythms that can lead to sudden cardiac death; and
  • The imposition of $340,000 in civil money penalties against TMJ Implants for failure to file MDRs relating to injuries associated with temporo-manidbular joint implants in 2007.

Key Takeaways

The Olympus settlement continues a trend that has been underway for some time toward FDA and DOJ focusing on cases involving quality and safety, and away from cases involving advertising and promotion. In this case, considerable public attention was trained on the duodenoscope cleaning issues because of investigations by FDA and CDC. Given that environment, it is perhaps not surprising that the government insisted on a criminal resolution and individual liability when it observed a failure to report adverse events. The government possesses a broad range of enforcement tools, from administrative to criminal, and widespread public attention to a public health issue may elevate the risk of criminal liability.

The Olympus settlement also is a stark reminder that FDA regulatory lapses can create meaningful risk for a company. Often, companies relegate responsibility for 483 and Warning Letter responses to the quality or regulatory parts of their organizations and the legal department is not meaningfully involved. Having input from the legal department or outside counsel to work through regulatory observations can position a company to better remediate mistakes and contain risk.

Additionally, the charges in this case yield an important lesson about the need to be vigilant about gaps in knowledge that may result from changes within a company. In early 2012, Olympus allegedly transferred the responsibility for filing MDRs for adverse events occurring outside the Americas from personnel in the United States to personnel in Japan. According to the Information, newly responsible personnel received "minimal training" that left them uncertain about what to include in MDRs and when supplemental MDRs were required. Some employees allegedly informed supervisors of their need for additional training and resources about their MDR compliance duties, but their requests were allegedly denied by Olympus management.

As FDA Commissioner Scott Gottlieb noted at the 2018 Food and Drug Law Institute Enforcement, Litigation and Compliance Conference, "Those who make and sell medical products are participating in a noble health care enterprise. Patients and providers should be able to trust assurances that products meet the gold standard of quality to which they're held, and that they're marketed truthfully and responsibly." The Olympus case is a reminder that companies are wise to focus on continuously improving their regulatory compliance controls, which can be key drivers of risk.

Footnotes

1 A device is deemed "misbranded" under 21 U.S.C. § 352(t)(2) if a manufacturer fails to furnish material or information, such as initial and supplemental MDRs, regarding the device. FDA requires manufacturers to submit MDRs even if the adverse event takes place outside of the United States if the device is also sold in the United States. Under 21 U.S.C. § 331(a), the introduction of a misbranded medical device to interstate commerce is prohibited. DOJ charged that Olympus continued to ship its Q180V duodenoscopes into the U.S., despite failing to file the MDRs.

"Infections Associated With Reprocessed Duodenoscopes," U.S. Food and Drug Administration, Dec. 10, 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions