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Stryker Biotech, Past President and Current Sales Staff Indicted

The Biotech division of Kalamazoo, Mich.-based Stryker Corp., the unit’s former president and three current sales managers recently were charged in U.S. federal court with alleged improper promotion of its OP-1 bone-growth products—implant and putty—used in spinal and long-bone surgeries. The indictment did not charge Stryker Corp.

The company disclosed in March that its Biotech division was the target of a federal grand jury investigation being conducted by the U.S. Attorney’s Office for the District of Massachusetts.

Stryker Biotech, a small division within Stryker, has had problems recently, including a U.S. Food and Drug Administration (FDA) panel’s rejection in March of the company’s bid to sell OP-1 bone- growth products more broadly. At present, OP-1 products only are approved under a humanitarian device exemption (HDE) for limited use in trauma situations and spinal surgery. The FDA issued a warning letter to Stryker’s Biotech unit last year involving issues that included the falsification of hospital-approval documents used under the HDE.

Stryker said at the time that it discovered that problem and reported it before the FDA inspection that prompted the warning. Meanwhile, the company said prior to the announcement of the indictments that the Biotech warning letter has been resolved following an FDA re-inspection. The company still has three warning letters related to issues the FDA found at other company plants, however, and is spending more than $200 million over three years to improve quality and compliance.

“The company is disappointed with this action and still hopes to be able to reach a fair and just resolution of this matter,” Stryker officials said in a released statement. “Conviction of these charges could result in significant monetary fines and Stryker Biotech’s exclusion from participating in federal and state healthcare programs, which could have a material affect on Stryker Biotech’s business.” The company added that it would not have any further comment on the allegations.

The names of those charged are: Mark Philip of Lexington, Mass., former president of the Hopkinton, Mass.-based Stryker Biotech; and sales managers William Heppner of Illinois, David Ard of California, and Jeff Whitaker of North Carolina. Stryker Biotech and Mark Philip also were charged with making false statements to the FDA, according to the U.S. Attorney, and Stryker Biotech, Ard and Whitaker were charged with misbranding.

One of the restrictions placed on the OP-1 products was that the devices could only be used to treat a condition that affected fewer than 4,000 patients in the United States, and could not be sold for a profit. The indictment charges that the defendants promoted the use of these devices in a manner that was different from its FDA approved use—namely that they promoted a combination of the devices with a bone void filler called Calstrux, and provided “recipes” to surgeons, medical technicians and others as to how to mix the OP-1 products with Calstrux. Prosecutors said some patients who received the combination suffered serious medical problems.

The indictment also charges that Stryker Biotech and Philip made false statements to the FDA about the number of patients that the firm was treating on an annual basis with OP-1 Putty.

If convicted on all counts, Stryker Biotech could face fines of $500,000 for each count of wire fraud, conspiracy, misbranding and making false statements to the FDA; double the damages caused by the misconduct; or double the company’s gross profits stemming from the misconduct—whichever is greatest. Total fines could reach $4 million.

Philip, Heppner, Ard and Whitaker each face up to 20 years in prison, three years of supervised release if convicted on the wire fraud charges. They also face a fine of $250,000 or twice the gross gain or loss from the offense, whichever is greater, if convicted. The conspiracy charges carry up to five years in prison and the same fine and supervised release provisions for the four men, should they be convicted. If convicted on the misbranding charges, Ard and Whitaker could get up to three years in prison, a year of supervised release and the same fine. Philip faces up to five years in jail, three years supervised release and the same fine if convicted of lying to the FDA. Philip, who was president of Stryker from 2004 to 2008, told the Boston Globe that he plans to plead not guilty and contest the charges.

The case began last November, when former Stryker sales representative Darnell Martin pleaded guilty to the off-label promotion scheme and to faking clinical trial approval paperwork. According to Martin, he learned that Stryker had fired another, unnamed sales manager after it discovered falsification of the same type of approval paperwork, prompting him to send emails to the Biotech subsidiary in an attempt to cover his tracks. The company motivated its sales force with bonuses for meeting quotas for clinical trial approvals, according to Martin’s plea agreement. In February, a second former salesperson, Justin Demming, admitted to participating in the off-label scheme.

Stryker doesn’t break out the revenue of its biotech division, but it is a small percentage of the company’s overall $6.7 billion in revenue for 2008.

FDA Deputy Chief Outlines Agency’s Device Priorities

The U.S. Food and Drug Administration is an agency in transition.

With a change in leadership, the multi-faceted organization charged with protecting public health is undergoing a transformation that officials hope will restore credibility and confidence to the embattled agency.

The transformation began six months ago with the appointment of Margaret Hamburg, M.D., as FDA commissioner. Her appointment is considered by many in the healthcare industry as a turning point for the agency because of the importance she has placed on regulatory compliance, device safety and open communication.

Hamburg reinforced her commitment to device safety in September with the appointment of Jeff Shuren, M.D., a physician and attorney, as acting director of the Center for Devices and Radiological Health (CDRH). Shuren replaced Daniel Schultz, M.D., who resigned as CDRH director in August amid a firestorm of controversy over the center’s device approval process.

When he assumed control of the CDRH, Shuren announced six immediate priorities for the center. First, he promised to focus on ways the FDA can adapt to changes in technology while still providing the industry with avenues that foster innovation.

“A key question that we are considering is how gradual improvements in product design and safety will affect decisions about first-generation devices that are currently on the market,” Joshua M. Sharfstein, M.D., the FDA’s deputy commissioner, said during a recent industry meeting. “The Task Force on Science in Decision-Making has been convened and has begun meeting. The group will seek input from others both within and outside the FDA.”

Another priority for the CDRH is the much-publicized review of the 510(k) process, a device review system that has been under fire on Capitol Hill for several years. A report released in January from the Government Accountability Office determined that the program was inappropriately used to clear hundreds of complicated medical devices, and suggested the agency strengthen its approval standards and make them more consistent. The CDRH has convened an internal working group to explore steps the center can take to improve the 510(k) process. “It’s been a number of years since the device review process was set up, and questions have come up on all sides,” Sharfstein noted.

In addition to the 510(k) process review, the CDRH is working to develop a comprehensive compliance strategy, and it is considering ways to improve the integration of premarket and post-market information. FDA officials hope the integration of data will help trigger the implementation of a total product life cycle approach to product safety. The Total Product Life Cycle (TPLC) management approach involves sharing information among various product life cycle stages and between departments within a company. It also encourages the use of preventive actions over corrective actions, advising firms to develop solutions that prevent problems before they occur.

Perhaps one of the more challenging priorities for the CDRH includes the development of procedures to better communicate the rationale for decisions made by the Center and the FDA. Improved communication and more visibility into the thought process at the FDA might help restore some of the confidence consumers have lost in the agency in the wake of recent food and product recalls.

“There are times when the FDA has credibility and times it doesn’t,” Sharfstein said. “When there is confidence in the FDA, the medical device industry does well. When people question why a device was approved, for instance, that has an effect on the industry. More transparency will help people understand where we are coming from so we are not like a black box that people don’t understand.”

Another short-term priority for Shuren is the establishment of procedures for resolving differences of opinion within the CDRH. Last month, Shuren announced a new Standard Operating Procedure for resolving internal differences of opinion in regulatory decision-making. The Center also is updating its guidance on the processes for outside parties to resolve disagreements with the agency.

“At the end of this period of transition, I hope [people] see a responsive FDA, an FDA that can adapt to changing technology while setting clear standards, a credible FDA, an FDA that fosters innovation by companies to meet critical public health needs,” Sharfstein said.

FDA Shakes Up Its Policy Team

The U.S. Food and Drug Administration (FDA) has appointed critic Peter Lurie, M.D., to its policy team and John M. Taylor III as counselor to the commissioner.

Lurie will serve in the agency’s Office of Policy, where he will help develop strategies to facilitate medical product availability to meet critical public health needs, reporting to the assistant commissioner for policy, according to the agency. Lurie most recently served as deputy director of health research group Public Citizen, a consumer advocacy group based in Washington, D.C. Additionally, he is an adjunct faculty member at Johns Hopkins Bloomberg School of Public Health in Baltimore, Md., and the George Washington University School of Public Health and Life Sciences in Washington, D.C.

Taylor’s post is a new one at the FDA, where he will oversee the agency’s crisis functions, as well as advise on a range of policy and regulatory matters, the FDA said. Taylor, who is an attorney, served previously with the FDA as a staff lawyer, an adviser to previous commissioners and as associate commissioner for regulatory affairs. He most recently has served as executive vice president of health at the Biotechnology Industry Organization in Washington, D.C., after serving as a divisional vice president for federal governmental affairs at Abbott Laboratories, based in Abbott Park, Ill.

The moves come as FDA Commissioner Margaret Hamburg seeks to make changes at the agency after criticism about the agency’s medical device approval process.

Industry Firmly Behind 510(k) Review Process

Medical device companies—as if they didn’t have enough on their plates at the moment—are eager to learn how the most common U.S. Food and Drug Administration (FDA) review process is going to change in the near and long term.

The agency’s 510(k) device evaluation process has been under the microscope recently—under attack from some lawmakers and industry watchdog groups for not being robust enough, particularly when it comes to more advanced devices. The head of the FDA’s Center for Devices and Radiological Health (CDRH) recently stepped down, in part because of fallout from 510(k) program. To add fuel to critics’ fire, the agency recently admitted it “failed” when it cleared the Menaflex collagen scaffold by ReGen.

According to FDA Deputy Commissioner Joshua Sharfstein, there were “definite problems in the review process” of Menaflex. In December 2008, the FDA cleared Menaflex to be marketed for use in surgical procedures for the reinforcement and repair of soft tissue injuries of the medial meniscus in the knee.

In response, the FDA recently asked the Institute of Medicine (IOM) to conduct a two-year study of the program and to provide recommendations for changes, if necessary. In addition, officials within CDRH have said they will implement an internal review process immediately. As part of its study, the IOM will convene a committee to answer two principal questions: Does the current 510(k) process optimally protect patients and promote innovation in support of public health? If not, what legislative, regulatory or administrative changes are recommended to achieve the goals of the 510(k) process? The IOM review is supposed to be completed in 2011.

Despite all the wrangling, the message from some industry insiders, however, seems to be: What’s the big deal?

“[The 510(k) process] works well,” said Steve Ubl, president and CEO of the Advanced Medical Technology Association (AdvaMed) to reporters during a press briefing during the association’s annual conference in Washington, D.C. “I think some of the reporting has been misleading. It is a good, science-based process. That said, any process can benefit from more clarity.”

At the AdvaMed medtech conference, a panel of industry experts outlined what some of the misconceptions of the program have been, and how, perhaps, the problems may have been blown a little out of proportion.

The FDA classifies medical devices into three categories depending upon the product’s level of risk. Class III devices, which have the highest level of risk, generally require premarket approval application (PMA) to prove safety and efficacy before they are marketed. Class I and Class II devices usually are lower risk. Most Class II devices are cleared through the 510(k) process.

The agency requires that a 510(k) device is at least as safe and effective—what the FDA calls “substantially equivalent”—to a product currently on the market that is not subject to a PMA. Devices that present a new intended use or include new technology that presents new questions of safety or effectiveness may not be found substantially equivalent and, thus, may require premarket approval.