Getinge Group Reaches Agreement with FDA Regarding Consent Decree

Sweden-based Getinge Group reported that is Medical Systems business unit has reached an agreement concerning a recent consent decree with the U.S. Food and Drug Administration (FDA). This voluntary agreement establishes a framework that provides assurances to FDA that the company will complete improvements currently underway to strengthen its quality management system to respond to manufacturing issues at multiple sites.

A consent decree is a legal agreement entered into voluntarily by a company and the U.S. government. It sets forth the terms that the parties agree are needed to resolve FDA quality system-related observations.

Under the terms of the consent decree that was approved by a federal judge in New Hampshire on Feb. 3, certain products manufactured at Medical Systems’ Atrium Medical Corporation business unit based in Hudson, N.H., temporarily will be suspended while corrections are being made. The products will be temporarily unavailable, once existing inventory located at Medical Systems’ distribution facilities has been exhausted.

Getinge bought Atrium in 2011 for nearly $700 million.

Atrium specializes in manufacturing medical devices for the treatment of coronary and vascular disease, tracheal bronchial management, chest trauma, hernia and soft-tissue injury. Certain products currently manufactured by Atrium have been deemed medically necessary under the decree and will continue to be made available to customers inside and outside of the United States.
Operations at Medical Systems facilities in Wayne, N.J., and Rastatt and Hechingen, Germany, also fall under the decree and will be subject to additional inspections, but will continue to produce and distribute products globally. All other Medical Systems manufacturing locations are not part of the decree.

There is no indication that any of the products are unsafe, according to the company. The consent decree does not require the company to remove, recall or perform corrective actions on any products currently in the market or at Medical Systems’ distribution facilities.

“We have learned from this experience, and this agreement with the FDA provides us with a clear path forward,” said Johan Malmquist, CEO Getinge Group. “We have taken this situation very seriously and have committed substantial investments into the quality management system. The remediation work is well underway and has already led to significant improvements.”

The overall financial impact, excluding the remediation costs, is estimated to amount to $60.4 million and will have a negative impact on the operating profit for 2015, company officials reported. The amount includes an initial payment of $5.8 million to the U.S. government and also covers loss of revenue as a consequence of temporary unavailability of products, training and education of staff and investment in customer relations. Not covered in the $60.4 million is the possibility of an additional payment of $5.8 million if certain milestones in the enhancement program at Atrium’s Hudson facilities are not completed within six months of the first payment.

As previously disclosed, Getinge has committed $120.2 million related to the remediation program for strengthening the quality management system within Medical Systems, which was recognized during 2014. The goal is to conclude the remediation program by the middle of 2016.

Temporarily unavailable products include certain vascular grafts and surgical meshes manufactured at Atrium’s facilities in Hudson. The restrictions do not apply to vascular grafts that are manufactured at other facilities and sold under the brand names of Hemashield, Intergard, Fusion and Exxcel Soft.

Products available under a Certificate of Medical Necessity include chest drains, local therapeutic infusion catheters, and covered stents.