United States v. Endotec, Inc.United States v. Endotec, Inc.
Pursuant to the Medical Device Amendments (“MDA”),
For the reasons that follow, we affirm the district court’s order as to the knee and jaw devices but reverse as to the ankle device and remand with instructions to the district court to enter a permanent injunction in favor of the Government.
I.
A. Statutory scheme
In 1976, Congress passed the MDA, which amended the FDCA and imposed a regime of detailed federal oversight for medical devices. The MDA divided medical devices into three classes “based on the risk that they pose to the public.”
Medtronic, Inc. v. Lohr,
Medical devices in interstate commerce at the time of the passage of the MDA were grandfathered and allowed to remain on the market unless and until the FDA promulgated a regulation requiring premarket approval.
See
The FDCA prohibits the introduction into interstate commerce of any adulterated or misbranded device.
See
The FDCA and MDA contain several exemptions, two of which arise in this case. First, the investigational device exemption (“IDE”) allows an adulterated device to be distributed as part of a clinical investigation if certain conditions are met.
See id.
§ 360j(g). Second, the custom device exemption exempts from performance standards and premarket approval requirements a device that meets the definition specified in the statute.
See id.
§ 360j(b). Lastly, section 332 of the FDCA provides that “[t]he district courts of the United States and the United States courts of the Territories shall have jurisdiction, for
cause shown
to restrain violations of
B. Factual background
Endotec is a Florida corporation engaged in the business of manufacturing and distributing medical devices. Pappas is Endotec’s President and co-owner, and Buechel is Endotec’s Vice-President, medical director, and co-owner. The devices at issue include (1) ankle replacement implants with mobile bearings; (2) two types of mobile bearings used with knee replacement implants; and (3) a temporomandibular joint (“TMJ”) implant, or a jaw device.
1. Ankle device
The Buechel-Pappas Total Ankle Replacement System (“B-P Ankle”) is a generic mobile bearing device that consists of three components: (1) a tibial component; (2) a talar component; and (3) a mobile bearing between them.
3
Since 1991, En
The ankle devices at issue here include (1) all ankle devices distributed by Endotec for use in patients beyond the scope of the IDE clinical study for the B-P Ankle, and (2) all ankle devices distributed by Endotec as “custom” or “surgeon specials.”
See Endotec,
In 2001, Barbara Maulfair, an FDA investigator, inspected Endotee’s New Jersey facility to collect information with respect to the IDE clinical study of the B-P Ankle. At trial, she testified that “Endotec’s level of accountability was the worst she had ever seen and violated FDA’s regulations governing clinical trials.” Id. at *3. As a result, the FDA issued a Form 483 to Endotec listing “seventeen observations which were significant deviations from the regulations.” Id. Endotec’s database identified 4,000 ankle units, but the IDE only included 109 patients. Her inspection revealed that Dr. Feldman (a clinical investigator under the approved IDE clinical study) had implanted 17 ankle devices into 17 new patients but failed to notify Endotec of these patients. In addition, Dr. Feldman had implanted 10 additional ankle devices as “surgeon specials” and Dr. Buechel (not a clinical investigator under the approved IDE clinical study) had implanted 218 ankle devices as “surgeon specials.”
The 2001 inspection by Maulfair led the FDA to impose an Application Integrity Policy (“AIP”) to Endotec on or about February 14, 2002 as a result of “system-wide failure by Endotec to ensure the integrity of data and that data submitted to FDA regarding this study [was] unreliable.” Id. The AIP letter announced to Endotec that the FDA deferred action or review on any pending submissions or further submissions by Endotec “until questions regarding data integrity are resolved.” On March 15, 2002, the FDA also issued a warning letter, informing Endotec that its shipment of B-P Ankles to Drs. Feldman and Buechel were not covered under the approved IDE clinical study and did not constitute “custom devices.”
Maulfair conducted two additional inspections of Endotec’s New Jersey facility in 2002 and 2004. As a result of her second inspection, Maulfair determined that Endotec continued to ship ankle devices as custom devices. She observed that some of the ankle devices shipped to Dr. Buechel were marked with serial numbers “05,” which referred to B-P Ankle components, and “95,” which referred to custom device components. However, con
Richard K. Vogel, an FDA investigator and a medical device specialist for the FDA, conducted two inspections of Endotec’s Orlando facility. First, in August of 2004, Vogel sought “to collect documents regarding Endotec’s shipment of ankle devices to two specific patients.” Id. at *4. When he returned to finish the inspection in January of 2005, however, his investigation “changed to the collection of documentation of the manufacturing and shipment in interstate commerce of ankle devices manufactured between September 2004 and January 2005.” Id. at *4. At the end of his investigation, Vogel explained to Pappas that the continued distribution of the B-P Ankle violated the law insofar as the IDE clinical study had reached full enrollment and that the ankle devices were not custom devices. Second, in November of 2005, Vogel returned to the Orlando facility for a second inspection to investigate the distribution of unapproved devices and investigational devicеs outside the scope of the IDE for the B-P Ankle. Vogel observed that one shipment of a purported custom ankle device had been returned by the patient, sent back to Endotec’s Orlando facility, repackaged and relabeled, and sent to another patient.
Dr. Pappas testified that, after Endotec received the 2002 warning letter, it limited the manufacture and distribution of ankle devices to custom designs. Dr. Buechel testified that while he was not a clinical investigator under the IDE clinical study for the B-P Ankle, he implanted B-P ankle devices as “surgeon specials before the 2002 warning letter from the FDA.” 4 Dr. Buechel testified that he implanted only custom ankle devices after the letter. In April of 2007, however, he implanted a BP Ankle device, but explained that it “must have been an emergency situation.” Id. at *6.
2. Knee device
Endotec manufactures artificial knee devices with two types of designs: (1) the FlexGuide Knee Bearing with Anterior Stop, and (2) the Fenning Modular Bearing. Both devices were distributed to one surgeon, Dr. John Fenning.
3. Jaw device
The Hemi temporomandibular joint (“Hemi TMJ”) is a partial jaw implant that Endotec distributed to one doctor for use in оne particular patient not covered by an IDE clinical study as to a similar jaw device. 5 The patient who received the Hemi TMJ device was missing a large piece of bone in his jaw as a result of a tumor.
On August 23, 2007, the Government filed its “Amended Complaint for Permanent Injunction” against Endotec, Pappas, and Buechel in the United States District Court for the Middle District of Florida, seeking to enjoin the distribution of alleged adulterated and misbranded ankle, knee, and jaw implants in violation of
Beginning on March 18, 2008, the district court held a three-day bench trial. After the conclusion of the trial, the parties submitted written briefs and, on April 30, 2008, the district court issued its Order.
See Endotec,
On May 1, 2008, the district court entered judgment in favor of the Appellees. On June 26, 2008, the Government filed a Notice of Appeal as to the district court’s conclusions related to the ankle and jaw devices. On July 10, 2008, the Appellees filed a Notice of Appeal as to the district court’s conclusions related to the knee device.
“We review the ultimate decision of whether to grant a preliminary injunction for abuse of discretion, but we review
de novo
determinations of law made by the district court en route.”
Owner-Operator Independent Drivers Ass’n, Inc. v. Landstar System, Inc.,
In considering the Government’s request for a permanent injunction under the FDCA, the district court did not consider the traditional equitable criteria for injunctive relief.
8
See Siegel v. LePore,
Rather, the Government argues that the district court erred in finding that (1) ankle and jaw devices constitute a custom device and (2) that the Appellees did not violate the IDE clinical study of the BP Ankle. Likewise, the Appellees argue in their cross-appeal that the district court erred in finding that the knee device did not constitute a custom device. In doing so, both parties challenge the district court’s findings as to the applicability of an exemption to a statutory scheme. Significantly, the Appellees in their cross-appeal do not argue that the Government failed to meet its burden of proof to demonstrate the propriety of a permanent injunction as to the knee device, or the ankle and jaw dеvices. As such, we need not speculate as to the proper standard of review for injunctive relief pursuant to section 332 of the FDCA and we decline to consider whether the Government met its burden. 9
III.
The Government challenges the district court’s order as to the ankle and jaw devices insofar as it found both devices fall under the custom device exemption. The Government also challenges the district court’s finding that the Appellees did not exceed the scope of the IDE clinical study of the B-P Ankle. The Appellees challenge the district court’s order as to the knеe device insofar as it found that said device did not fall under the custom device exemption. We will address each medical device in turn.
A. Ankle device
The Government asserted two distinct yet related claims as to the manufacture and distribution of the ankle device. First, the Government contended that the Appellees violated
1. Custom device exemption
The MDA exempts “custom devices” from premarket approval. A custom device is one thаt
necessarily deviates from an otherwise applicable performance standard or requirement prescribed by or under section 360e of this title if (1) the device is not generally available in finished form for purchase or for dispensing upon prescription and is not offered through labeling or advertising by the manufacturer, importer, or distributor thereof for commercial distribution, and (2) such device—
(A) (i) is intended for use by an individual patient named in such order of such physician or dentist (or other specially qualified person so designated) and is to be made in a specific form for such patient, or
(ii) is intended to meet the special needs of such physician or dentist (or other specially qualified person so designated) in the course of the professional practice of such physician or dentist (or other specially qualified person so designated), and
(B) is not generally available to or generally used by other physicians or dentists (or other specially qualified persons so designated).
Custom device means a device that:
(1) Necessarily deviates from devices generally available or from an applicable performance standard or premarket approval requirement in order to comply with the order of an individual physician or dentist;
(2) Is not generally available to, or generally used by, other physicians or dentists;
(3) Is not generally available in finished form for purchase or for dispensing upon prescription;
(4) Is not offered for commercial distribution through labeling or advertising; and
(5) Is intended for use by an individual patient named in the order of a physician or dentist, and is to be made in a specific form for that patient, or is intended to meet the special needs of the physician or dentist in the course of professional practice.
As a threshold matter, we note that the district court considered issues outside the scope of the definition of a custom device. In particular, the district court noted that “the Government did not present any evidence to indicate that the ankle devices were potentially dangerous.”
Endotec,
The district court concluded that the ankle devices distributed by Endotec beyond the scope of the IDE clinical study constituted custom devices and hence were exempt from premarket approval. The Government argues that the district court abused its discretion in concluding that the ankle devices qualified as custom devices. Specifically, the Government asserts that the ankle devices fail each prong of the definition of a custom device. We conclude that the district court erred with respect to one prong of the custom device definition and, because a device must meet all five prongs of the custom device definition, we decline to address the remainder.
A custom device is a device that “[i]s not offered for commercial distribution through labeling or advertising.”
First, the Appellees advertised the custom devices through a July/August 2006 edition of Orthopaedic News, containing an advertisement for “Endotec customs.” 12 The subsequent text refers to, inter alia, custom ankle devices as Endotec’s “speciality.” On its face, the advertisement offers custom ankle devices by Endotec for commercial distribution. By its own language, this advertisement cannot be attributed to the B-P Ankle device as it explicitly refers to “Endotec customs,” which we read as a reference to custom ankle devices, not the B-P Ankle. Such a reference constitutes an impermissible advertisement of a custom device. Endotec offers no explanation to the contrary, except to assert that the Federal Register allows them to advertise custom devices of a “generic type.” However, even if we were to endorse a “generic type” exception to the prohibition against advertisement for commercial distribution, this advertisement is anything but generic. On the contrary, the advertisement specifically refers to Endotec custom ankle devices.
Second, the district court found that any advertisement on Dr. Buechel’s medical practice website (South Mountain Orthopaedic Associates) referred to the B-P Ankle, not the custom ankle devices.
See Endotec,
The district court found that “Dr. Buechel implanted B-P Ankles as
surgeon specials
until 2002 when [the] FDA issued its warning letter to Endotec.”
Endotec,
In defense of the advertisement, the Appellees do not echo the district court’s finding that the advertisement referred only to the B-P Ankle. Rather, they provide another explanation: a disclaimer on the website advising that the B-P Ankle is only available through the “compassionate use” program cures any violation of the prohibition against the commercial distribution of custom ankle devices. 15 We disagree. The Appellees fail to direct us to any statute, rule, or case thаt allows for a disclaimer exception to the commercial distribution prong and they bear the burden to demonstrate that their device constitutes a custom device. Moreover, we refuse to allow a disclaimer to shield the Appellees from what otherwise constitutes blatant advertisement of their purported custom ankle devices. Such a rule would render the commercial distribution prong of the custom device definition ineffective and meaningless.
Given the nature of the custom device definition, either of the advertisements of the custom ankle devices, standing alone, removes the ankle device from the protection of the custom device exemption. Accordingly, we find that the Appellees have failed to carry their burden as to the commercial distribution prong.
2. IDE
The Government contends that the district court erred in refusing to enjoin the Appellees from manufacturing and distributing the B-P Ankle until they fully complied with the IDE regulations. Specifically, according to the Government, the evidence demonstrates that the Appellees’ repeatedly violated the requirements of the IDE clinical study, including Dr. Feldman’s implantation of 10 ankle devices beyond the scope of the IDE clinical study and Dr. Buechel’s implantation of 217 ankle devices, even though he was not an investigator under the IDE clinical study. The Appellees respond that, after receipt of the AIP and March 2002 warning letter, it took remedial measures to obtain compliance with the IDE clinical study on the B-P Ankle and the FDA lifted the AIP.
The FDCA provides for an “investigational device exemption” in
The district court’s own findings of fact intimate that the Appellees manufactured and distributed the B-P Ankle device in violation of the IDE clinical study:
Dr. Buechel admitted that he is not a clinical investigator for the B-P Ankle and that means he cannot implant B-P Ankles pursuant to the approved IDE. However, Dr. Buechel implanted B-P Ankles as surgeon specials until 2002 when FDA issued its warning letter to Endotec. Since 2002, Dr. Buechel has only implanted what he describes as custom ankle devices. Dr. Buechel admitted that in April 2007, he implanted an ankle device in which all the component numbers began with ’05,’ indicating that it was the standard B-P Ankle. Dr. Buechel offered that the particular situation must have been an emergency situation. In other situations, Dr. Buechel used components that had been originally manufactured for another patient because it offered the patient the best fit.
Endotec,
The district court’s decision not to enjoin the Appellees’ manufacture and distribution of the B-P Ankle relied upon findings irrelevant to whether they complied with the IDE clinical study of the B-P Ankle. The district court determined that Endotec had not violated
First, similarly to the custom device exemption, neither the statute providing for the IDE exemption nor the applicable regulations require the Government to allege, much less to prove, that a device (alleged to exceed the scope of an IDE) is “unsafe” or “dangerous.” The district court cited no authority for the new “dangerous” requirement and the Appellees fail to cite to any binding оr persuasive case law in support thereof. 18 We find the Sixth Circuit instructive here:
It is not the government’s burden to prove that a product is not safe and effective. FDCA regulations exist to allow the public to assume that marketed devices have received the imprimatur of FDA approval. To circumvent the law by marketing illegally without approval is to deceive the public both as purchasers and users of the device.
United States v. Universal Mgmt. Services, Inc., Corp.,
Second, the district court’s commentary that the FDA’s interpretation of the MDA stymies, rather than advances, innovation fails to justify its ruling.
See Endotec,
Accordingly, we conclude that the district court employed faulty reasoning in finding that the Appellees had not violated
B. Knee device
On cross-appeal, the Appellees argue that the district court abused its discretion in determining that the knee device did not constitute a custom device, specifically as to the “special needs” clause of the custom device exemption that falls under the last prong of the definition. The Government responds arguing that the district court committed no error.
The district court concluded that the two knee devices did not qualify as custom devices. As to the Flex Guide Knee Bearing with Anterior Stop, the district court found that the Appellees did not identify any “special need” of Dr. Fenning and “the same bearing was implanted repeatedly in different patients.”
Endotec,
In support of its argument that the knee devices constitute custom devices, the Appellees invoked the “special needs” clause of the custom device exemption.
See
Accordingly, Endotec has failed to show that the district court abused its discretion as to the knee device.
C. Jaw device
The Government argues that the district court abused its discretion in determining that the Hemi TMJ device constituted a custom device because the Appellees failed to show that it was “not generally available to, or generally used by, other physicians or dentists.” 20 In support, the Government points to an FDA regulation addressing this type of implant. 21 The Appellees respond that Dr. Pappas testified that the device available did not meet the patient’s specific needs because he had lost a bone in his jaw.
The district court found that the Hemi TMJ device used for that particular patient “was not generally available to or used by other physicians.”
Endotec,
The Government’s argument amounts to one of degree. While Dr. Pappas testified that the commercially available device did not meet the patient’s needs because of his tumor-related bone loss and the Government concedes that the Hemi TMJ included special features designed for the particular patient, the Government merely demands more evidence. The custom device definition requires that the device at issue — the Hemi TMJ device — “[i]s not generally available to, or generally used by, other physicians or dentists.” The district court concluded that the Appellees met their burden and the Government has failed to show that it abused its discretion as to the Hemi TMJ.
IV.
In summary, we find no reversible error as to the knee and jaw device and we affirm the district court’s entry of a permanent injunction as to the same. As to the ankle device, however, we find that the district court abused its discretion in denying the Government’s request for a permanent injunction. Because Endotec has not carried its burden to demonstrate that the ankle device falls under the custom device exemption, we reverse the district court’s ruling as to the ankle device and remand with instructions for the district court to enter a permanent injunction as to the ankle device in favor of the Government. 22 As to the regulatory IDE violation, we remand to the district court for consideration in light of this Opinion.
Notes
. On appeal, both parties spell his name "Buechel.” While the district court did the same in its caption, it spelled his name "Beuchel” throughout the text of its Order.
See United. States v. Endotec, Inc.,
No. 6:06-cv-1281-Orl-18KRS,
. The FDA’s review for substantial equivalence is known as the "510(k)” process, named after the section of the MDA in which it can be found. "Most new Class III devices enter the market through § 510(k). In 2005, for example, the FDA authorized the marketing of 3,148 devices under § 510(k) and granted premarket approval to just 32 devices.”
Riegel v. Medtronic, Inc.,
- U.S. -,
. The tibia is the shin bone and the talus is the bone at the top of the foot.
. The phrase “surgeon specials” is one used by Endotec and, as far as we know, hаs no meaning under the FDCA or case law.
. Endotec has an FDA-approved IDE for a replacement TMJ device known as the Hoffman-Pappas temporomandibular joint (“H-P TMJ”). In 1997, the FDA approved an IDE clinical study for the H-P TMJ. The Government’s case included the distribution of two H-P TMJ devices used for revision surgeries in patients enrolled in the IDE clinical study. The Government requested injunctive relief as to the two H-P TMJ devices, arguing that the revision surgeries went beyond the scope of the IDE protocol. The district court disagreed and found that the "two H-P TMJ devices used for revision surgeries did not constitute deviations from the study protocol, did not require prior approval from the FDA, and were exempt from [premarket approval] requirements.”
Endotec,
. The Government filed its original complaint approximately one year before its amended complaint, on or about August 28, 2006.
. The Appellees filed their original counterclaim on or about May 7, 2007.
. The district court did not specifically indicate the standard of review that it applied for a permanent injunction under the FDCA.
. We have not yet had the occasion tо address explicitly the proper standard of review for injunctive relief under the FDCA. Fifth Circuit precedent, however, suggests that a moving party need prove only a violation of the statute at issue. In
United States v. Hoxsey Cancer Clinic,
In the same way, the Second and Ninth Circuits have appliеd modified standards to a request for injunctive relief pursuant to the FDCA. In
United States
v.
Diapulse Corp. of America,
. The Appellees do not argue to the contrary.
. While the district court found that Endotec did not offer the custom ankle devices for commercial distribution through advertising or labeling, it included language that appeared to contradict its own conclusion. After finding that Endotеc advertised only the B-P Ankle, the district court warned Endotec regarding its future advertising and marketing, seemingly conceding that it had unlawfully advertised or marketed the custom ankle devices: "The Court cautions ... that Defendants must scrutinize their website and other marketing materials carefully to avoid the unlawful advertising or marketing these devices.”
Endotec,
. The district court made no mention of this advertisement.
. The advertisement is dated February 26, 2007.
. Ms. Maulfair testified that Endotec's "sur
. The compassionate use exception allows a drug company to distribute an unapproved drug if: (1) the drug is for a serious or life-threatening disease, (2) there is no good alternative, (3) the drug is currently under investigation in a clinical trial, and (4) the sponsor is actively pursuing marketing approval.
. In all likelihood, “remedial measures” refer to the Appellees' contention that, after the March 2002 warning letter, they manufactured and distributed only custom ankle devices, or "surgeon specials.” We have already rejected that argument.
.
. At oral argument, counsel for the Appellees even agreed that dangerousness was not a proper consideration.
. In support of their "test[ing] the waters” theory, the Appellees rely uрon
. The Government does not address any other prong under the custom device definition as to the Hemi TMJ and, therefore, neither do we.
.
. We leave it to the district court to craft the proper permanent injunction.