Dr. Christopher Joseph Devine, President, Devine Guidance International
Devine Guidance

Heigh-Ho, Heigh-Ho, It’s Off to Jail You Go

By Dr. Christopher Joseph Devine
5 Comments
Dr. Christopher Joseph Devine, President, Devine Guidance International

Charlie Chi, former CEO of OtisMed Corp, is sentenced to prison for shipping adulterated medical devices into interstate commerce.

While visiting the FDA’s website the other day, Dr. D came upon another troubling incident where a Chief Jailable Officer (CJO), deservedly so, was sent packing for a 24-month prison stay and a chance to spend some quality rehabilitation time with other sinners. Did the doctor fail to mention that this individual’s wallet will also be a little lighter? Charlie Chi, the former Chief Executive Officer of OtisMed Corp., was sentenced last Friday (June 26, 2015) to:

  1. 24 months in prison
  2. Serve one year of supervised release
  3. Pay a $75,000 fine.

Additionally, back in December 2014, OtisMed (acquired by Stryker in November 2009) agreed to pay $80 million in penalties in an effort to resolve criminal and civil liabilities. Not wanting to parse (look-it-up) the wording in the agency’s news release, Dr. D recommends visiting the FDA’s website and reading the news release in its entirety. Enjoy!

The Crime

Convict Chi pleaded guilty to the introduction of adulterated devices into interstate commerce in the United States. You see, when the FDA has identified an establishment’s medical devices as adulterated, the CJO just might want to consider a stop-shipping order until the agency’s concerns have been addressed.  Ignoring the FDA and continuing to ship product is not unlike an ordinary citizen deciding not to show-up for court to plead a case for traffic violations. In any case, both events will end badly, especially for the CJO that has made a poor decision, which could impact public health. The transgressions mentioned in the previous sentences can be viewed as the raising of the proverbial bird (middle finger) in defiance of the court or in Chi’s case, the FDA.

According to George M. Karavetsos, director of FDA’s Office of Criminal Investigation, more than 600,000 knee replacement surgeries (total knee arthroplasty or TKA) are performed in the United States each year. Additionally, Karavetsos stated, “We will continue to protect the public health by bringing to justice those who disregard FDA regulations.” So let Dr. D quickly summarize: You have a CJO making bad decisions and a fully-committed FDA and DOJ shutting down offending establishments and bringing badly behaving CJOs to justice. You know this story has to end badly. Please read on.

OtisMed designed, developed and entered into commerce the OtisKnee cutting guide. The cutting guide was a tool employed by physicians for making accurate bone cuts premised on the results of an MRI prior to surgery. Between May 2006 and September 2009, OtisMed sold more than 18,000 devices (in the United States), which generated $27.1 million in revenue. Unfortunately, here lies the problem. You see, OtisMed never bothered to file a premarket notification with FDA. In fact, they waited until October 2008 to file, seeking FDA’s clearance. What happened next, and you just cannot make this stuff up, was priceless. The FDA refused to grant clearance, a.k.a., APPLICATION DENIED! However, one week after the agency refused to grant clearance, the company basically said screw the FDA and shipped another 218 devices to surgeons scattered around the United States. According to FDA, Chi directed OtisMed employees to organize a mass shipment of all OtisKnee devices that had been manufactured but had not yet been shipped and suggested ways for the employees to hide the shipments from FDA regulators.

The Case Outcome

Simply stated, “go directly to jail, do not pass go and collect your $200.” There is no doubt the agency was livid when they realized that OtisMed had completely ignored the refusal to clear their device and continued shipping product. Some CJOs just do not understand that the United States Department of Justice is just one phone call away from our friends in the agency. In a brief statement made by Benjamin C. Mizer, principal deputy assistant attorney general, “Today’s sentencing of OtisMed’s CEO ought to send a clear message to others in positions of authority within the medical device and pharmaceutical industries: the Department of Justice will vigorously prosecute not only corporations, but also the individuals at their helm who are responsible for endangering public health and safety in pursuit of profit.”

One additional comment that Dr. D found particularly appropriate was made by Paul J. Fishman, United States Attorney for the District of New Jersey,  “The defendant betrayed the trust of patients whose doctors were using his unapproved surgical device for a serious medical procedure. With everything else people have to deal with when they are facing surgery, they shouldn’t have to worry whether their doctor is using equipment that has been approved for use. The punishment meted out to Chi and his company is appropriate.”

Takeaways

For this week’s guidance, the doctor will leave the readers with just one takeaway. Please do not be the CJO who gets to spend some quality time in a federal penitentiary. When the FDA says NO, they mean NO! Yes, entering medical devices into commerce, with the hopes of making a nice profit, is just good-ol’ fashion business. However, when money clouds the thinking of the CJO and bad decisions such as entering medical devices that have not been cleared or approved by FDA into commerce are made, bad things will happen. “If you do not believe Dr. D, just ask Mr. Chi” (Dr. D likes the rhyme). In closing, thank you again for joining Dr. D, and I hope you find value in the guidance provided. Until the next installment of DG, cheers from Dr. D. and best wishes for continued professional success.

References

  1. Code of Federal Regulation. (2014, April) Title 21 Part 820: Quality system regulation. Washington, D.C.: U.S. Government Printing Office.
  2. OtisMed Corporation and former CEO plead guilty to distributing FDA-rejected cutting guides for knee replacement surgeries. (December 2014). United States Department of Justice News Release. Accessed June 30, 2015. Retrieved from http://www.fda.gov/iceci/criminalinvestigations/ucm426475.htm
  3. Devine, C. (2011). Devine guidance for complying with the FDA’s quality system   regulation –21 CFR, Part 820. Charleston, SC: Amazon.
  4. Devine, C. (2013). Devine guidance for managing key attributes of a FDA-compliant quality management system – 21 CFR, Part 820 Compliance. Charleston, SC: Amazon.
  5. OtisMed Corporation former CEO sentenced for shipping adulterated knee replacement cutting guides. (June 2016). FDA News Release. Accessed June 30, 2015. Retrieved from http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm452987.htm

About The Author

Dr. Christopher Joseph Devine, President, Devine Guidance International

Comments

  1. Kevin McFarlin

    I am interested in the FDA findings preventing the approval and resulting in stopping shipmemtns of the product. What did the FDA feel was unsafe about the product?

  2. Dr. D

    Kevin, great question. FDA’s biggest concern was related to the actual lack of regulatory clearance in the United States. The vast majority of Class II devices and a handful of Class I devices entered into commerce in the United States require a 510(k) to be submitted to FDA for review and their subsequent blessing. The entire 510(k) clearance process is premised on the availability of a strong predicate device to claim equivalency. That said, I believe (conjecture on the part of Dr. D) the FDA was: (1) peeved at OtisMed’s failure to obtain clearance; (2) when OtisMed finally filed with FDA they lacked a reasonable predicate; and (3) FDA was sending a strong message that compliance failures would not be tolerated. Best Regards, Dr. D

  3. Ron Bowman

    I wonder if there are alternative tools that doctors can use in place of Otis Med’s device. Since there is no predicate device, it would seem that there is not such a device. Is it possible that Mr. Chi was concerned about the patients that would not be able to have knee replacement when they needed it? If that is the case, being peeved is hardly a good enough reason to remove the product from the market. No one has yet claimed that the device is unsafe or that it risks public health, only that the company’s behavior made someone at the FDA angry. Not a good idea, I grant you, But the health of patients should be the over-riding concern of everyone involved.

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