In TMJ Implants v. United States Department of Health and Human Services, the U.S. Court of Appeals for the 10th Circuit upheld the Food & Drug Administration’s imposition of $170,000 in civil money penalties against TMJ Implants and its president, Robert Christensen. The FDA is armed with several enforcement tools against device companies for certain regulatory violations. The most common is the use of warning letters; least common may have been civil money penalties — until now.
The FDA may now more readily fire out civil money penalties than ever before. More importantly, this decision signals the possibility of negative effects to small device companies trying to survive in this industry if they misstep — however innocently.
The Safe Medical Devices Act of 1990 (21 U.S.C. §333) gives the FDA the authority to impose civil money penalties of up to $15,000 per violation against companies and individuals. (The total amount of civil money penalties cannot exceed $1 million.) The penalties can be imposed for various violations; for example, failing to undergo the 510(k) clearance process or failing to meet reporting requirements for clinical trials can result in such penalties. Although not all violations may result in civil money penalties, the FDA is given broad discretion in deciding which company or individual will carry the burden of paying them. An individual who had sufficient decision-making authority with respect to a device company’s noncompliance may be slapped with such penalties for certain violations.
TMJ Implants Inc. manufactures and distributes temporo-mandibular joint implants. In 2004, the FDA issued a warning letter to the company, requiring it to submit medical device reports for 22 adverse events related to its product. The FDA can require device manufacturers, importers, distributors and user facilities to file an MDR “whenever the manufacturer … receives or otherwise becomes aware of information that reasonably suggests that one of its marketed devices may have caused or contributed to a death or serious injury.” The regulation provides that a device company is not required to submit an MDR if there is evidence that would lead a qualified person to make a reasonable medical judgment that the device did not cause or contribute to a serious injury.
TMJI and Christensen argued that they had good-faith, reasonable belief that MDRs were not required in their situation, even though some of the devices had to be explanted, or surgically removed and infections in other patients required treatment with antibiotics. They argued that the explants were due to a natural progression of the TMJ disease and that there was a lack of evidence that the infections were caused by the products, since they are sterile when they leave the facility. TMJI followed prescribed procedures and appealed the judgment through the FDA’s internal forum. Apparently, the FDA rejected the appeal without review because the civil money penalties case was concurrently being pursued.
After an administrative law judge concluded that the FDA penalties were proper, TMJI and Christensen petitioned the 10th Circuit for review of the decision. The 10th Circuit affirmed, and held that:
- An event may be clinically insignificant but may nevertheless be considered a “serious injury” if the event is coupled with interventions (e.g., explants, other drugs, reconstruction, etc.);
- An MDR submission may be required even though the device was not the “cause in fact” of the reported injury; and
- MDRs are required even though the device company does not believe there is enough evidence to support a conclusion that the device cause or contributed to a serious injury.
Larger device companies with deeper pockets may have the capability to quickly settle similar demands from the FDA and thereby dodge a bad reputation. But the 10th Circuit’s decision in the TMJ Implants case places small medical device makers between a rock and a hard place. Small device companies are left with the following choices:
- File an MDR and risk the good reputation of the company’s products;
- Fight the FDA’s opinion and foot the bill themselves; or
- Risk having to pay civil money penalties.
But even if small companies opt to fight the FDA, they seem to subsequently struggle by having to deal with high legal fees and a damaged reputation.