We posted nearly a year ago about the trial court decision in United States v. Endotec.
The Eleventh Circuit has deemed it time for an update. United States v. Endotec, __ F.3d __, 2009 WL 804399 (11th Cir. Mar. 30, 2009).
We confess that we'd forgotten all about this puppy, so you probably need a refresher on the facts, too.
The case involved a small manufacturer of medical devices that was apparently struggling to market products despite its inability to obtain the necessary PMA or 510(k) approvals. The company failed six times to obtain 510(k) clearance of an ankle device, but it did have an IDE to conduct a clinical trial. The company fully enrolled the clinical trial and then continued to sell devices outside of the clinical trial, insisting that those were sales of "custom devices."
Endotec also sold its knee devices to only one surgeon, maintaining that all of the sales were manufactured to the particular needs of specific patients, and so were permissible sales of "custom devices."
And Endotec distributed most of its jaw devices (TMJ implants) as part of a clinical trial, but it sold one implant to a doctor for use in one particular patient who was missing a large piece of bone in his jaw as a result of a tumor.
The government filed a civil action against Endotec and its two owners, alleging that they violated the Federal Food, Drug & Cosmetic Act in assorted ways. The trial court prohibited Endotec from selling the knee devices, but rejected the government's requests to stop sales of the ankle and jaw devices.
The Eleventh Circuit affirmed the trial court decision on the knee and jaw devices -- so the knees could not be sold, and the jaws could -- and reversed the trial court's decision as to the ankles. The appellate court held that the ankle implants were neither "custom devices" nor protected by the IDE exemption and so could not be sold.
The Eleventh Circuit noted that Endotec was trying to take advantage of exceptions (the custom device and IDE exemptions) to the usual rule that a company must have premarket approval to sell a device. Since Endotec was claiming an exception to the general statutory rule of prohibition, Endotec bore the burden of proof.
The Eleventh Circuit criticized a couple of aspects of the trial court's reasoning. First, the trial court thought it relevant that the FDA didn't allege that the medical devices hurt anyone or that distribution of the devices posed any risk. The appellate court begged to differ: "First, by requiring the Government to show dangerousness or actual harm, the district court effectively shifted the burden of persuasion as to the custom device exemption from [Endotec] to the Government. And second, . . . the custom device definition does not require any showing of dangerousness or actual harm from the Government."
Thus, although the ankle devices may not have been dangerous or hurt anyone, advertisements offering the devices for commercial distribution violated the FDCA. Endotec couldn't claim the benefit of the custom device exception.
Endotec also couldn't claim the benefit of the IDE exemption. Like "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 exeed the scope of an IDE) is 'unsafe' or 'dangerous.'" Moreover, the trial court was wrong to assess whther the FDA's interpretation of the IDE exemption would stifle medical innovation: "It is not within the province of the district court (or this Court, for that matter) to weigh the medical pros and cons of a certain medical device -- that is best left to the FDA." (If this were a preemption decision, folks would be salivating over that sentence. Somehow, in the context of a governmental enforcement action, the words take on an entirely different meaning.)
The court thus reversed the trial court decision as to the ankle devices, and it routinely affirmed the trial court's decisions as to the knee and jaw devices.
If you're ever litigating a custom device case, this expansive decision from the Eleventh Circuit is a pretty good place to start your research.