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    Breaking News

    Olympus Fined $85M in Endoscope Case; Former Executive Faces Jail Time

    Olympus admitted that it failed to file with the FDA required adverse event reports in 2012 and 2013 relating to three separate infection events.

    Olympus Fined $85M in Endoscope Case; Former Executive Faces Jail Time
    U.S. Department of Justice12.11.18
    Olympus Medical Systems Corporation and a former senior executive in Japan pleaded guilty in Newark, N.J., to failing to file required adverse event reports involving infections connected to duodenoscopes, and continuing to sell the duodenoscopes in the United States despite those failures, the Justice Department announced.
     
    Olympus, which is located in Tokyo, Japan, and Hisao Yabe, 62, of Japan, both entered guilty pleas before U.S. District Court Judge Stanley R. Chesler in Newark Federal Court: Olympus to three counts, and Yabe to one count, of distributing misbranded medical devices in interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act (FDCA). 
     
    Judge Chesler also imposed sentence on the company—fining Olympus $80,000,000 and ordering $5,000,000 in criminal forfeiture, consistent with a plea agreement between Olympus and the Justice Department. Olympus must also abide by an agreement with the Justice Department requiring Olympus to enact extensive compliance reforms.
     
    Yabe is scheduled to be sentenced by Judge Chesler on March 27, 2019. Yabe faces a maximum potential penalty of a year in prison and a $100,000 fine, or twice the gain or loss from the offense.
     
    Olympus admitted that it failed to file with the Food and Drug Administration (FDA) required adverse event reports in 2012 and 2013 relating to three separate events involving infections in Europe connected to Olympus’s TJF-Q180V duodenoscope (Q180V): the infection of approximately 22 patients with Pseudomonas aeruginosa at the Erasmus Medical Center in the Netherlands in early 2012; the infection of three patients with Escherichia coli at Clinique de Bercy in France in November 2012; and the infection of five patients with Pseudomonas aeruginosa at Kremlin Bicetre in France in July 2012.
     
    Yabe admitted his own personal responsibility for the failure to file the necessary information with FDA relating to the Erasmus Medical Center infections. At the time, Yabe was Olympus’s Division Manager for the Quality and Environment Division—Olympus’s top regulatory official, whose responsibilities included adverse event reporting in the United States. 
     
    “Medical devices, such as the Olympus duodenoscope that is used in 500,000 procedures per year in the United States, can extend and improve the quality of life for many people,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “But when a device manufacturer becomes aware of risks that could lead to illness, injury, or death, there is a statutory obligation to report that information to the FDA in a timely manner. By failing to do so, Olympus and Mr. Yabe put patients’ health at risk.”
     
    “Olympus and Yabe failed to file important FDA reports regarding adverse events,” Attorney for the United States Rachael Honig, District of New Jersey, said. “It is especially troubling that they remained quiet when they received additional information from an independent expert questioning the safety of Olympus’ device. Patient safety must always be a paramount concern for medical device companies, and these defendants simply failed to treat that concern with the gravity it deserves. The resolution is a reminder that this office will act whenever patient safety is put at risk by a quest for profits.”
     
    “Medical device adverse event reporting requirements are designed to protect Americans by providing FDA with a tool to detect potential safety issues. When device manufacturers fail to report adverse events, unsuspecting patients are placed at risk,” said FDA Commissioner Scott Gottlieb, M.D. “We take our patient safety mission very seriously and we remain fully committed to aggressively pursuing those who jeopardize public health by subverting FDA’s regulatory requirements.”
     
    Olympus’s and Yabe’s Failure to File Required Adverse Event Reports
    To enable FDA and others to identify and monitor adverse events, the FDCA requires medical device manufacturers to file adverse event reports—known as Medical Device Reports (MDRs)—when the manufacturer becomes aware of information that reasonably suggests that the manufacturer’s device may have caused or contributed to a death or serious injury. The FDCA also requires manufacturers to file supplemental MDRs if they subsequently obtain information about the event that was not known or available when the initial MDR was filed.
     
    Olympus admitted that it failed to make the required initial MDR filing regarding the Kremlin Bicetre infections, and failed to file required supplemental MDRs relating to the Erasmus Medical Center and Clinique de Bercy infections, for which Olympus had filed initial MDRs. Under the FDCA, devices for which required MDRs and supplemental MDRs have not been filed are deemed misbranded, and it is a crime to ship such devices in interstate commerce. Between August 2012 and October 2014, Olympus shipped hundreds of misbranded duodenoscopes in the United States, generating approximately $40 million in revenue and approximately $33 million in total gross profit. Olympus’s payment of $85 million is more than 2½ times Olympus’s total profit from sales of the misbranded duodenoscopes.
     
    Yabe admitted that he was aware of Olympus’s obligation to file supplemental MDRs and was involved in Olympus’s failure to file a supplemental MDR regarding the Erasmus Medical Center infections and a report Olympus received prepared by an independent expert of Delft University of Technology in the Netherlands. That expert report—which Olympus obtained in the summer of 2012—noted numerous problems with the Q180V, including that the Q180V’s tip had various cracks, corners, and crevices that could harbor bacteria and could be cleaned only with great difficulty. The report recommended immediate further investigation of all such scopes, updating the cleaning instructions, and improving the quality of the seals.
     
    Additional Compliance Measures
    As part of its plea agreement with the Justice Department, Olympus has agreed to: retain an independent MDR expert to inspect and review Olympus’s policies and procedures to determine their compliance with the MDR requirements of the FDCA and its implementing regulations; periodic review by the MDR expert of Olympus’s continued compliance with the MDR requirements of the FDCA and its implementing regulations; and conduct a review and audit of the device classification and market pathway for all endoscope device types manufactured by Olympus that are intended for use in the sterile body cavity and that are currently sold in the United States. The MDR expert will report back to FDA and the Justice Department periodically for three years. In addition, the President of Olympus and Olympus’s Board of Directors will periodically conduct a review of Olympus’s MDR compliance measures and classification/marketing pathway review and provide certifications to FDA and the Justice Department relating to those reviews. Olympus also is obligated to inform health care providers in the United States who received Q180Vs between August 2012 and October 2014 of Olympus’s plea, and to provide information to those health care providers regarding Olympus’s failure to file the required MDRs.
     
    In March 2016, Olympus Corp. of the Americas and Olympus Latin America, two separate subsidiaries of Olympus Corp., entered into deferred prosecution agreements (DPAs) and civil settlements with the U.S. Attorney’s Office for the District of New Jersey and the Justice Department’s Civil Division to resolve criminal and civil charges and civil claims relating to schemes between 2006-2011 to pay kickbacks to doctors and hospitals in the United States and violate the Foreign Corrupt Practices Act in Latin America. The DPAs are scheduled to expire in March 2019. While the unlawful conduct at issue in the resolution terminated in October 2014—a year and a half before the government entered into the DPAs—conduct relating to violations of the FDCA and failure to file MDRs was specifically not covered by the March 2016 resolution, as the investigation into the FDCA violations was ongoing at that time.
     
    The guilty pleas are the culmination of an investigation conducted by special agents from FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Jeffrey J. Ebersole of the New York Field Office, along with special agents from the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie.
     
    The government is represented in the criminal case by Assistant U.S. Attorneys Jacob T. Elberg and R. David Walk, Jr. of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, and Senior Litigation Counsel Patrick Jasperse of the Justice Department’s Consumer Protection Branch, with the assistance of Senior Counsel Shannon M. Singleton of the FDA’s Office of Chief Counsel.
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