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The 18-month federal oversight of four orthopedic device companies has come to an end. The U.S. Attorney’s office in Newark, NJ dismissed criminal charges that the companies paid thousands of dollars to surgeons who used their devices, according to The Star-Ledger. The charges were dropped by U.S. Magistrate Judge Madeline Cox Arleo in Newark.

Back in September 2007, Biomet Orthopedics Inc., Depuy Orthopaedics Inc., and Zimmer Inc. (all Warsaw, IN), along with Smith & Nephew Inc. (Memphis), paid a combined $311 million in settlements and were required to undergo monitoring by the Office of Inspector General for five years as part of corporate integrity agreements. Stryker Orthopedics Inc. (Mahwah, NJ) was also part of an investigation by the Department of Justice, but the company didn’t have to pay a fine, because it was the first to cooperate. Criminal complaints weren’t filed against Stryker either. However, all five companies, which make up almost 95% of the hip and knee implant market, were required to pay for a federal monitor, appointed by the Department of Justice, to oversee their practices for 18 months.

The U.S. Attorney’s office said that federal involvement significantly reduced consulting fees for surgeons, which reached as high as $200,000 a year for promoting orthopedic devices.

“We are confident that the industry, which had been engaged in illegal kickback practices to secure market share, has made significant changes in their practices to strengthen compliance programs, increase compliance staffs, and enhance internal compliance and procedures,” said acting U.S. Attorney Ralph Marra in a statement.

“The monitors engaged by the companies were a critical driving force in fully integrating the goals and requirements of the agreements into the companies’ business practices,” said Marra. “These changes will ensure that physician consultants are retained, not for the volume of their business, but for the legitimate consulting services they can provide.”
The companies made several reforms in the area of compliance, consulting payment processes, and training programs. They included:

• Overhauling consulting arrangements and reducing sales and marketing influence.
• Reorganizing compliance departments—establishing a policy and conducting training and auditing performance.
• Public disclosure of consultants and payment amounts, along with conducting fair market value studies to determine compensation rates.
• Establishing confidential hotlines for complaints concerning improper behavior.
• Funding medical education programs to eliminate conflict of interest.
• Eliminating gifts to healthcare professionals.
• Adopting AdvaMed’s revised Code of Ethics.

According to the U.S. Attorney’s Office, combined consulting payments to surgeons dropped 61% from $272 million in 2007 to $105 million in 2008. The number of doctors receiving payments also declined 63% from 1693 in 2007 to 627 in 2008.

Device manufacturers—especially those of orthopedic and cardiovascular products—are being closely watched not just by FDA, but also by consumer advocacy groups.

In December, a group called The Prescription Project petitioned FDA to take action against video news releases (VNRs) that appeared on YouTube, and called for agency guidance for online advertisements. The VNRs involved Abbott’s Xience V drug-eluting stent, Medtronic’s Prestige cervical disc, and Stryker’s Cormet hip resurfacing system. 

Although FDA hasn’t issued new guidelines on direct-to-consumer (DTC) advertisements, AdvaMed recently introduced voluntary guiding principles for DTC ads that apply to all forms of media, including television, print, radio, and the Internet. ”Today’s patients are voracious consumers of information,” said AdvaMed President and CEO Steve Ubl. “[DTC advertising] educates patients about advanced medical technologies, facilitates better quality dialogue between patients and their healthcare professionals, empowers patients to become more informed about their medical condition and treatment options, and it raises awareness of [the] underuse of medical technologies.” Ubl cited a recent National Institutes of Health report, which found that only 9–13% of patients who could benefit from joint replacements actually receive one. 

In addition to supporting FDA and the Federal Trade Commission’s authority in regulating DTC advertising, AdvaMed wants to ensure that ads are consumer friendly and encourage a full discussion between patients and their doctors. The trade association also promotes the education of healthcare providers related to new technology or a new device indication prior to the launch of a DTC ad campaign. The guiding principles were formed with both patients and manufacturers in mind. They’re not mandatory, but considering the scrutiny placed on high-risk devices like orthopedic implants and drug-eluting stents, it’s certainly a good idea to heed them. They’re posted online here. 

From Med-Tech Precision’s E-newsletter. To subscribe, click here.

In Med-Tech Precision’s Tech Update that was just released today, Anthony Viscogliosi discusses the future of orthopedics (it’s still bright) and how the current recession could affect industry growth. Yes, we can expect some fallout, but Viscogliosi is predicting that the demand for clinically proven technologies will pick up speed rather than slow down. He also acknowledges that times are changing–overall revenues of the large, publicly traded companies are expected to grow by 7–9% through expansion in the hip, knee, and spine area. Midsize companies that have established products or dominate in niche markets hope to keep up a 20% growth rate as well. Check out Viscogliosi’s article for more details about where this industry is headed.

A young start-up company from New Jersey has just received the initial close on a $33 million Series C financing that will help it complete the registration trial and impending launch of its pocket micropump in Europe. CircuLite has developed a partial circulatory support device to treat chronic heart failure and is anticipating CE Mark approval this year. The Synergy Pocket Micro-pump provides a less invasive alternative for an underserved population of patients who are at an earlier stage of heart failure–before the disease becomes irreversible. The device has a pump that increases total cardiac output and allows the heart to rest, which could help it recover in function. It can be implanted minimally invasively. Check out the video on CircuLite’s Web site to see how it works. 

The approval of ReGen Biologic Inc.’s (Hackensack, NJ) knee implant Menaflex is drawing criticism from those who believe FDA is approving products as a result of corporate and political pressure. Despite repeated concerns and rejections by FDA scientists about the device’s efficacy, the device was cleared via the 510(k) process. The Wall Street Journal also reports that former FDA Commissioner Andrew von Eschenbach has expressed dissent with the fast-track approval process in which clinical trials don’t need to undergo a full review. According to von Eschenbach, the process “has gotten out of control.” However, CDRH Director Dan Schultz has stated that normal procedures were followed in the approval of Menaflex. The device is a C-shaped pad used to repair a torn meniscus. It has been on the market in Europe for several years. The chairman of the FDA advisory committee for approving Menaflex, Jay Mabrey, told the WSJ that there aren’t any devices like Menaflex and thus FDA shouldn’t have approved the device (since it was cleared under 510(k) rules). Mabrey is also an orthopedic surgeon. Other FDA scientists who were involved in the approval decision were reported to have described Menaflex as a new type of device that needed rigorous review, because it would be implanted in the knee and would undergo daily wear. After past attempts to get the product approved failed, ReGen sought the help of NJ lawmakers who reportedly signed a letter to FDA in December of 2007, which asked the commissioner to personally review the issue.

Critics of FDA are calling for President Obama to choose a commissioner who will shake up the agency’s so-called bias toward device companies. Industry stakeholders obviously have a very different position and want to ensure that unnecessary obstacles aren’t put in place to prevent innovative technologies from entering the market. 

Researchers in Germany have created a guidewire made of plastic that allows doctors to insert the device into the body with the guidance of magnetic resonance tomography, exposing patients to less radiation. They used pultrusion to create the 2-m guidewires, a process that makes continuous profiles for glass-fiber-reinforced plastic. The method doesn’t generate ionizing radiation and the soft tissue is clearly visible, which also eliminates the need for a contrast medium. 

We are constantly bombarded with news about how business is slower, investors are more cautious, and companies have been pulling back on spending. And while some analysts say the market will continue its decline, innovation isn’t going to stop in the eyes of orthopedic and cardiological product manufacturers. In these volatile financial times, there are still opportunities.

Earlier this week, Medtronic announced the billion-dollar purchase of CoreValve Inc. and Ventor Technologies Ltd. Both companies manufacture products (not yet on the U.S. market) that enable minimally invasive transcatheter heart valve replacement. These are strong acquisitions for Medtronic, because it sets them up well for the long-term market outlook, says Venkat Rajan, industry manager, medical devices, at Frost & Sullivan. He sees this market moving more towards percutaneous heart valve repair and replacement, opening it to a different patient population with the benefits of faster recovery and lower infection risk. 

“Overall, the [cardiovascular] market is pretty solid, just not quite [at] the high growth it had a few years ago,” says Rajan. More specifically, major market segments, especially coronary stents, are expected to continue their decline this year. The cardiac rhythm management device market is growing, just not at the double-digit rates that were reached from 2005 to 2006. However, despite the economic downturn, patients need these critical technologies, so they’re not going anywhere. 

Although orthopedics has been harder hit, companies in this sector continue to launch products that offer patients and surgeons new alternatives. This week’s annual meeting of the American Academy of Orthopedic Surgeons showcases several new technologies, such as Wright Medical Group Inc.’s navigation guides for knee replacement and Curexo Technology Corp’s ROBODOC, a surgical robotic device that aids in total hip arthroplasty. 

While manufacturers in these industries are tasked with tighter budgets, doing more with less, and increased responsibilities, they haven’t lost sight of their goals. What’s reassuring is that whether it’s a spinal implant that helps prevent infections or a transcatheter valve system, companies remain committed to developing products that not only improve quality of life, but in many cases, save lives. 

From Med-Tech Precision’s E-newsletter. To subscribe, click here.

A recent study to be published in the June issue of the Journal of Orthopaedic Research has identified an immunological defense reaction that could lead to the development of new therapeutic ways to avoid the early failure of joint replacements. The study, conducted by researchers at Rush University Medical Center (Chicago), found the molecular pathway that triggers inflammation (without infection), which leads to the loosening of tiny debris from metal components as they rub against each other. According to Nadim Hallab, one of the study’s authors, as soon as these devices are implanted, corrosion begins, and particles and ions are released. The body’s immune system interprets this as a danger signal. The study is significant, because it shows that debris and ions from implants cause this danger signal pathway, leading to inflammation. The researchers are hoping that this study could result in new and targeted therapeutic methods to prevent early joint replacement failure. Of the more than 600,000 annual total joint replacements performed in the United States, up to 10% of the cases involve the loosening of metal components, according to Rush University. When this happens, the patient must endure a second surgery. 

After closing $1 million in Series A financing, NuOrtho Surgical Inc. is preparing to file an FDA application for its first product. The technology uses low level RF energy to preserve healthy tissue, which in turn restores patient mobility. The device, which is undergoing early stage validation testing, will contour and smooth damaged articular knee cartilage. The funding will also help the company prepare its manufacturing capabilities for an early 2010 product launch. NuOrtho has 12 patented products intended for preserving healthy tissue. Its technology, which could have use to treat bone tissue by fusing it together, might one day replace conventional screws and plates.