Medical Device Daily Washington Editor

ARLINGTON, Virginia — On the first day of the Medical Device and Diagnostics Marketing Compliance Congress held here this week, attendees got a closer look at a development two years in the making. Thanks to the Deficit Reduction Act of 2005 (DRA), states are now in the business of scrutinizing the activities of med-tech manufacturers.

But it doesn't stop there.

In Monday's session covering legal developments at the state level, John Oroho, a principal at Porzio, Bromberg & Newman (Morristown, New Jersey), said that "10 years ago — five years ago even — the only people you had to worry about were FDA and Congress," but "a growing number of states" and even a county — Dade County in Florida — are zeroing in on potential fraud in the device sector.

The DRA, Oroho said, encouraged states to boost monies recovered from Medicaid fraud cases by developing heir own statutes for violative promotions and false claims. The section of the DRA governing this went into force Jan. 1.

In some instances, a firm need not actively do anything to get into trouble.

"In California, you now have to have a comprehensive compliance plan" in order to stay out of hot water, Oroho said. And he cited, in Massachusetts "a bill pending that will make it a criminal act" to make any gift at all to a physician.

He said that the University of Toledo College of Medicine (Toledo, Ohio) now refuses to allow representatives of drug and device manufacturers to speak with physicians employed by the university.

One of the panelists, Michael Sullivan, U.S. attorney for the district of Massachusetts, said, "my experience over the past six-and-a-half years says that there is no way we're going to be able to prosecute our way out of fraud," hence the resultant state involvement.

The U.S. Department of Justice "is geared toward compliance" rather than crackdowns, and bad publicity will continue to "lead to significant deterrence," he said, adding that it is "in the best interest of the company to self-report as soon as possible" when something goes awry.

"With some exceptions, the federal government is still going to be the lead agency" in any action, Sullivan said, but some states are heavily invested "because it's a real potential benefit," thanks to the greater share of recouped fraudulent billings.

Larry Freedman, a partner at the law firm of Patton Boggs (Washington), said that enforcement "comes in waves" and that clinical labs were once the favored target. He said that many observers have been predicting that "device firms would be next — and they will be."

A number of cases are coming through the pipeline, Freedman said, including one that involves Medtronic Sofamor Danek (Memphis, Tennessee), which is in appeal. He said that he was most concerned about "states having these false claims acts because they're incredibly powerful," to the tune of thousands of dollars per incident.

"That's enormous leverage" against some of the smaller players in the device business, he said.

Some states, Freedman said, are examining the idea of hiring private law firms on a contingency basis, but many state prosecutors are resistant. "They appropriately want to keep these decisions [on whom to prosecute] governmental," Freedman said.

Sullivan added that "control and decision-making is incredibly important" to most prosecutors.

Another source of disincentives for states to engage private attorneys is that the 2005 DRA gave qui tam plaintiffs up to 30% of the recovered amount, so the addition of contingency fees means that states capture little lost monies if they resort to outside help.

Casper Uldriks, special assistant to the director of compliance at the Center for Devices & Radiological Health at FDA, gave attendees a clarifying overview of the agency's thoughts on marketing and advertising for medical devices.

He acknowledged early on in his presentation that FDA has issued "no guidance on most of these topics for a long, long time."

On the other hand, he said that when it comes to advertising, the agency's mood has changed very little of late.

"FDA interprets the statute very, very broadly. If there is any question as to the meaning of a law, "we're going to take the most liberal interpretation that we can, and generally, the courts will go along," Uldriks said.

He made the case that a company that wants to stay out of trouble with FDA will recognize that "the real important thing is to learn how FDA thinks."

However, the agency does not exhaustively monitor ads.

"In terms of devices, we don't have a developed program," but a firm's competitors "have no mercy" when it comes to blowing the whistle. These and internal whistleblower cases have to be vigorously supported "for us to devote resources to it," he said.

Regarding the untitled letters that the CDRH formerly sent out for violative promotions, Uldriks said,"we sort of dismantled the program several years ago" because of uncertainty about statutory authority. However, the agency intends to resume issuance of untitled letters for these violations, although it will not publish them on its website.

Anyone wishing to see the letters will have to file a Freedom of Information request, as was the case prior to the lapse of the program.

Uldriks clearly indicated that the agency does not look forward to settling such issues in the courts, citing its losing battle last year with Utah Medical (Midvale, Utah), primarily concerning the differences in interpretation concerning Utah's good manufacturing practices.

Uldriks cited the possibility that "some federal judges don't like FDA." And he admitted that FDA dislikes losing cases because "it creates a horrible uphill battle for us."

Uldriks echoed the agency's message about staying in touch when uncertain as to the meaning of regulations, but he also urged that firms exercise caution in omitting key details when discussing hypothetical situations with FDA.

He said that leaving out one word in any discussion with FDA "can absolutely change the outcome" of a real-world case as compared to a "what if" discussion.