Attempts to Outsmart the FDA Could Lead to Mass TortsBy Deborah L. Shuff – March 19, 2014
On January 30, 2014, the United States brought suit against Valor Medical, Inc., a medical-device manufacturer—as well as the company’s CEO, manager of clinical and regulatory affairs, president, and chief chemist—in the U.S. District Court for the Southern District of California, alleging violations of the Federal Food, Drug, and Cosmetic Act for failure to furnish preclinical data with its investigational device exemption (IDE) application to the Food and Drug Administration (FDA). United States v. Valor Medical, Inc., No. 14-cr-00196 (S.D. Cal. Jan. 30, 2014).
Valor is a biomedical-device manufacturer that created Neucrylate, a liquid product that was designed to treat aneurysms in the brain and near the heart. “Valor Medical Reports Early Clinical Results of New Technology to Treat Cerebral Aneurysms,” PR Newswire. Neucrylate is a 1-hexyl n-cyanoacrylate compound that, by way of catheter, is injected into an aneurysm and becomes sponge-like upon contact with the aneurysm. Early studies reportedly yielded positive results.
During an FDA inspection of Valor’s facility to ensure that the data and information provided to the FDA in the IDE application for Neucrylate were scientifically valid and accurate and that human subjects of future clinical trials would be protected from undue risk, the FDA discovered that Valor had withheld two animal studies from its IDE application. Thereafter, on March 24, 2011, the FDA issued a warning letter for withholding the studies. The animal studies were found on company computers under search warrant. News Release, Office of the United States Attorney, Southern District of California, Local Biotech Firm and Employees Admit Concealing Toxic Nature of Product from the FDA (Jan. 30, 2014).
The withheld studies were a mouse lymphoma assay (MLA) and a chromosomal assay (CAA), both of which failed. The MLA proved to be mutagenic in testing, changing the genetic material, and the CAA proved to be cytotoxic in testing, toxic to cells that came into contact with the product. Evidently, the CEO and regulatory-affairs manager decided to withhold the failed tests from the FDA when they submitted the IDE application to the FDA on behalf of the company.
Pursuant to 21 C.F.R. § 812.1, an approved IDE is required to conduct clinical trials of a device that will require premarket approval (PMA) by the FDA before the device sponsor may market the device. Neucrylate would be a Class III medical device, which required PMA. As part of the IDE application for such a device, the sponsor must submit, among other things, a “complete report of prior investigations of the device.” 21 C.F.R. § 812.20(b)(2). Failure to provide all investigations and studies is a violation of 21 U.S.C. § 331(q)(1)(B): “failure or refusal . . . to furnish any notification or other material or information required by or under section 360i [records and reports], 360j(g) [IDE requirements], . . . or 387t [recordkeeping].” Violation of 21 U.S.C. § 331 invokes criminal penalties under 21 U.S.C. § 333(a):
(1) Any person who violates a provision of section 331 of this title shall be imprisoned for not more than one year or fined not more than $1,000, or both.
(2) Notwithstanding the provisions of paragraph (1) of this section, if any person commits such a violation after a conviction of him under this section has become final, or commits such a violation with the intent to defraud or mislead, such person shall be imprisoned for not more than three years or fined not more than $10,000, or both.
Valor pled guilty to a felony violation of 21 U.S.C. §§ 331(q)(1)(B) and 333(a). News Release, Office of the United States Attorney, Southern District of California, supra. The CEO and regulatory-affairs manager pled guilty to misdemeanor violations of the same crime. The rest of the defendants entered into deferred prosecution agreements. U.S. Magistrate Judge David H. Bartick sentenced the CEO to one year of probation and a $5,000 fine, and the regulatory-affairs manager to one year of probation and a $2,500 fine.
Fortunately for Valor, the FDA rejected the company’s IDE for Neucrylate for reasons unassociated with the withholding of the studies. Had the FDA approved the IDE and the company initiated clinical trials on human subjects, and had those subjects been injured, the company could have faced mass-tort cases based on violations of consumer-fraud acts and negligence, among other claims. As provided in the U.S. Attorney’s press release, “[t]he American people depend on the FDA to determine that there is sufficient scientific basis to believe that a proffered medical device is safe and effective before permitting clinical trials on human beings.” Withholding the animal studies prevented the FDA from being able to determine whether Neucrylate was safe for use in human clinical trials. If the FDA had approved the studies, it may have determined that Neucrylate was unsafe for use in human subjects.
Valor could have also faced claims for fraudulent concealment. As provided by 21 C.F.R. §§ 50.1-.27, the FDA requires that human clinical-trial subjects provide informed consent to participate in clinical trials. Informed consent may be provided based on the investigator’s description of the trial, the experimental nature of the trial, as well as the potential risks. 21 C.F.R. § 50.25. Upon providing that information, the human subject must execute an informed-consent form. 21 C.F.R. § 50.27. If a Neucrylate human-subject clinical trial proceeded, the subjects’ informed consent would be invalid because Valor withheld necessary risk information from disclosure. The investigator for a clinical trial would not have had the withheld animal studies to disclose to the human subjects.
It is important to note that plaintiffs in a potential mass-tort case would not be able to claim violations based on marketing or Medicare/Medicaid fraud because IDEs are not “marketed,” because FDA regulations prohibit “commercialization” of IDE devices by requiring payment for them. 21 C.F.R. § 812.7.
In conclusion, withholding reports and studies from the FDA when submitting an IDE application not only opens a company and the individual decision makers to criminal liability but could also subject the company to mass-tort liability if a clinical trial is conducted without disclosing all of the known risks and the human subjects are harmed in the trial.
Keywords: mass torts litigation, Valor Medical, FDA, IDE, PMA, Neucrylate
Deborah L. Shuff is special counsel with Saul Ewing LLP in Princeton, New Jersey.