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Philips North America LLC and two of its top executives are barred from distributing two of the company’s automatic external defibrillator devices, under a consent decree entered in federal court Oct. 31.
The consent decree of permanent injunction against Philips and the two executives shows the FDA expects top management at regulated companies to be responsible for following through on corrective actions at their companies ( U.S.A. v. Philips North America LLC , D. Mass., No. 1:17-cv-11955-DJC, consent decree for permanent injunction entered 10/31/17 ).
“We need to demonstrate to the FDA that we’re compliant,” Philips spokesman Steve Klink told Bloomberg Law in a Nov. 1 telephone interview. “In the meantime, we have made progress and we hope to resume production in the course of 2018.”
“Manufacturing medical devices in violation of current good manufacturing practice is conduct that cannot be tolerated,” William D. Weinreb, acting U.S. Attorney for the District of Massachusetts, said in an Oct. 31 statement. “This decree ensures that Philips will reform its practices and comply with the law.”
The portion of Philips’s overall business affected by the injunction is estimated at $140 million euros—or about $163 million—on an annualized basis, Klink said.
Meanwhile, other businesses could benefit from Philips’s legal issues, Jason McGorman, a Bloomberg Intelligence senior equity analyst in health care, told Bloomberg Law in a Nov. 1 email.
“Other companies that could pick up some of the sales in the interim include Stryker (Physio Control brand), Zoll Medical (owned by Asahi Kasei), and Cardiac Science (owned by private equity firm Aurora Capital),” McGorman said.
The injunction, entered in the U.S. District Court for the District of Massachusetts, involves Philips, headquartered in Andover, Mass., and Carla Kriwet, the business group leader for the Philips’s Patient Care and Monitoring Solutions (PCMS) business group, and Ojas Buch, vice president and head of Quality and Regulatory for the PCMS business group. The company and the executives are prevented from distributing emergency care and resuscitation devices until certain remedial actions are completed.
The company has stopped distributing two out of the four defibrillator products in its U.S. portfolio until manufacturing quality issues are resolved, Klink said. The devices were manufactured at company plants in Andover, Mass., and Bothell, Wash.
Revenue per quarter from the suspended defibrillators represents about $41 million, about 0.8% of the company’s total sales, McGorman said.
Philips’s issues grew out of Food and Drug Administration inspections of the company’s Andover and Bothell facilities in 2015.
Those inspections revealed Philips didn’t adequately implement corrective and preventive actions to respond to complaints involving certain resistor failures when HeartStart HS1 and FRx defibrillators were used and also in connection with the company’s Q-CPR meter (a device that provides feedback on chest compressions during cardiopulmonary resuscitation). The company also didn’t respond to complaints about design verification in connection with a change to a battery used in the HeartStart MRx defibrillator.
The injunction also requires Philips to hire an independent expert consultant within 10 days to inspect the PCMS business units to ensure the methods and controls used to manufacture and distribute the PCMS devices comply with the Federal Food, Drug, and Cosmetic Act.
Although the FDA usually tries to resolve these types of issues in meetings with the company, in this case, the agency may have decided Philips’s actions weren’t working to resolve health risks posed by the continued distribution and marketing of the AEDs, a former FDA staffer who asked not to be identified told Bloomberg Law Nov. 1.
“The agency is saying to Philips, ‘We’re expecting you to step up here,’” the former staffer said. The agency is sending a message to other companies “that senior management is responsible for oversight and implementation of corrective action plans.” The government is represented by Trial Attorney Alexander Sverdlov of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney George Henderson of the U.S. Attorney’s Office for the District of Massachusetts, with the assistance of Associate Chief Counsel Jennifer Kang of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Goodwin Procter LLP represents Philips and the company executives.
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The injunction and consent order is at http://src.bna.com/tRh.
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