Medical Device Review Under Scrutiny

Though not specific to South Carolina, I have been reading recently about how the FDA is planning to take a closer look at its 510K review process for medical devices. This is the abbreviated process for obtaining medical device approval. There is a good article in the Wall Street Journal today summarizing what is going on, and if you do medical device work, this should be of interest.

FIRMS WARN OF DELAYS FROM FDA SCRUTINY
(September 30, 2009 edition of the Wall Street Journal)

By ALICIA MUNDY

Medical-device makers including Johnson & Johnson are warning of delays in device approvals after the Food and Drug Administration announced a major review of the process that has allowed quick clearance for thousands of products.

An internal FDA memo suggests that the tightening of the abbreviated process known as 510k is beginning already, before the review has been completed.

"It's Autumn, and change is in the air. This is particularly true for our 510k program," said Donna-Bea Tillman, head of the device evaluation office, in an email to her staff late Friday that was reviewed by The Wall Street Journal.

Dr. Tillman said in the memo that she needed to "get a better lay of the land" and called on branch chiefs to inform her when they were asked to clear a new "indication" or use "that you have never cleared for that device type." FDA reviewers typically don't run such individual applications by an official at Dr. Tillman's level, according to two FDA scientists.

Dr. Tillman didn't respond to requests for comment. The FDA said in a statement that her memo "reflects and is a furtherance of [FDA head Peggy Hamburg's] new direction."

The FDA's action came after it found "definite threats" to the integrity of its approvals in the case of a knee device approved last year that was the target of intensive lobbying by Democratic politicians. Dr. Tillman's role in the approval was critiqued in the FDA report on the episode.
The FDA has also commissioned an outside group to look into the issue.

The reviews "could have an impact now, in that they may lead FDA reviewers to be more conservative or more cautious in 510k reviews," said Jeffrey Gibbs, a Washington lawyer who advises device makers on FDA issues. "It's a very nervous time for the device industry."

A Johnson & Johnson spokeswoman defended the current 510k process, which streamlines clearance for products deemed "substantially equivalent" to devices already on the market. Carol Goodrich said the process "builds on ever-expanding knowledge" and accelerates innovation. Requiring more evidence for approval through the 510k process "would raise development costs substantially while also creating barriers to market entry that would reduce competition," she said.

At J&J, about $23 billion of the company's $64 billion in world-wide sales in 2008 came from the medical devices and diagnostic equipment division.

The FDA's Dr. Tillman said in her memo that the agency has set up a working group on 510k matters in her unit, and she called for extra scrutiny of certain applications.
She said the new scrutiny is "just the first of what I am sure will be many things that we will be doing to strengthen the 510k and all of our other programs in the months ahead."

The FDA's moves came in the wake of other potentially bad news for the industry in Washington. Leading Democrats have included a tax on device makers in health-overhaul legislation that would raise $40 billion over 10 years. Companies are fighting on Capitol Hill to stop or reduce those taxes.

Companies have valued the 510k process because it doesn't normally require lengthy clinical trials, allowing them to get their products to market sooner. Some members of Congress and some FDA device reviewers say the process is used too often for complex products that need more testing for safety and efficacy.

The Advanced Medical Technology Association, the industry's lobbying group, has met with members to discuss how to get their concerns reflected in the reviews at the FDA.

The association's executive vice president, David Exon, said the industry supports the reviews and is open to changes, so long as the "standards are reasonable and applied with consistency and transparency."

But Mr. Exon said he fears the multiple reviews could have a "chilling effect now" on FDA staff.—Nomaan Merchant contributed to this article.

Write to Alicia Mundy at alicia.mundy@wsj.com

Another Punitive Damages Case

The South Carolina Supreme Court decided Mitchell v. Fortis Insurance on September 14, 2009. This is another punitive damages case, coming shortly after Duncan v. Ford, so there has been quite a bit of activity on the punitive damages front here lately. A copy of the case can be found here. Also, my friend and colleague, Christian Stegmaier, has posted some good summary material on his blog concerning retail and hospitality law. You can find his post here.

In a nutshell, the decision seems to show a greater reliance on the punitive damages standards set forth in the United States Supreme Court decision of BMW of North America v. Gore, 517 U.S. 559 (1996). Though the court reduced the punitive damages award, it upheld an award toward outer limits of the single-digit ratio. At trial, plaintiffs had received $36,000 in actual damages for breach of contract, $150,000 in actual damages for the bad faith rescission claim, and $15 million in punitive damages from the bad faith claim. On appeal, the South Carolina Supreme Court reduced the punitive damages to $10 million.

An article about it appeared in the State here, and it is cut and pasted below.

SC man gets $10M after health insurance rejection
By JEFFREY COLLINS - Associated Press Writer

COLUMBIA, S.C. -- The South Carolina Supreme Court on Monday upheld a multimillion verdict against an insurer who the justices said revoked a man's health policy after he tested positive for HIV based solely on a nurse writing down the wrong year for the test.
The court in this conservative, often pro-business state called Fortis Insurance Company's actions "highly reprehensible," but did reduce punitive damages awarded to Jerome Mitchell Jr. from $15 million to $10 million.

Mitchell first found out he might have HIV when he tried to donate blood in April 2002. The Red Cross let him know his sample tested positive, and a trip to his personal physician confirmed the diagnosis.

Fortis said it revoked Mitchell's policy because he didn't reveal his diagnosis when he applied for insurance in May 2001 as the then 17-year-old from Florence prepared to head to college and could no longer be covered under his mother's policy. The company cited a note made by a nurse on Mitchell's chart that incorrectly gave the wrong year for the test confirming the HIV diagnosis, placing it one day before Mitchell's application for insurance, according to court records.

The committee that decides whether to revoke policies heard Mitchell's case and 45 others in a two-hour session. Court records showed the members were given a report from an underwriter that included the note: "Technically, we do not have the results of the HIV test. This is the only entry in the medical records regarding HIV status. Is it sufficient?"

Mitchell would later hire a lawyer who sent the company the original test results with the correct date. But a second committee also upheld revoking the insurance and Mitchell didn't have coverage for 20 months before Fortis changed its mind, according to trial testimony.
The company's "conduct involved repeated acts of deliberate indifference for more than two years," the justices wrote in their decision.

A phone listing for Mitchell could not be found, and his attorneys didn't return a phone call seeking comment. A spokesman for Fortis, which now does business as Assurant Health, said the company doesn't comment on pending lawsuits.

Fortis had appealed the case, saying the trial judge allowed improper evidence, the jury ruled on passion instead of the law and the $15 million in punitive damages was too much. The justices only budged on the damages, saying awarding Mitchell nearly 14 times the approximately $1.1 million it will cost to treat him during his life was excessive.

The justices also ruled the trial judge was correct to allow jurors to consider the value of the care Mitchell got at the free clinic when it considered how much money to give him.

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Update

My apologies for not posting a brief of Ford v. Duncan, as per my last post below. I am two-thirds of the way through briefing this lengthy (and "meaty") opinion, but my wife and I recently welcomed a new baby into the world, so my blog has been somewhat on hold.

I have been trying to average about one post per week, but things have been a bit hectic as of late with settling into a new firm and a new baby. I hope to have a full brief of the case up soon. Thanks for your patience, and I hope that you will continue checking in on the blog.

As I have requested in the past, if anyone has any news that is not posted, suggestions or other feedback, I welcome your comments.