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FDA Questioned by Other Feds on High-Risk Devices

The Food and Drug Administration’s approval of certain high-risk medical devices has been criticized in a report from the Government Accountability Office, the investigative arm of Congress.

The GAO said it found that high-risk devices, such as pacemakers and hip joints, are approved for sale by regulators without what it called sufficient proof of safety.

It also said that regulators don’t monitor recalls when concerns arise during marketing.

Marcia Crosse, the GAO’s director of healthcare, told lawmakers earlier this month that the FDA has enhanced oversight but continues to review many types of high-risk devices, including implantable and life-sustaining products.

“It remains to be seen whether these actions will help ensure that medical devices marketed in the U.S. receive appropriate premarket review,” Crosse said, adding that “gaps in FDA’s post-market surveillance show that unsafe and ineffective devices may be continue to be used, despite being recalled.”

Scrutiny of the FDA’s approval process for medical devices has been heightened by some high-profile events, including a series of recalls led by New Jersey conglomerate Johnson & Johnson, which pulled 93,000 artificial hips from the market last year.

The FDA itself is doing an internal audit of its 510(k) medical device clearance program.

The GAO has contended that high-risk devices still are cleared with minimal tests under 510(k).

During the hearing, industry group AdvaMed expressed its support for 510(k), which clears 3,800 to 4,000 devices yearly.

That program “has an exemplary record of protecting the public from unsafe devices,” said David Nexon, senior executive vice president of the Washington, D.C.-based association.

AdvaMed’s chairman is James Mazzo, president of Abbott Medical Optics, a Santa Ana-based eye device unit of Abbott Laboratories.

Alliance Shopping Spree

Newport Beach-based Alliance HealthCare Services Inc. has been on a mini buying spree this month.

Alliance, which operates medical imaging and radiation centers for treating cancer, started with a $53 million cash and debt acquisition of Nashville, Tenn.-based US Radiosurgery LLC.

US Radiosurgery has yearly revenue of $29 million and operates eight radiosurgery centers in eight states.

The centers are owned by partnerships of the company, doctors and hospitals.

Alliance said that US Radiosurgery would be rolled into its oncology unit.

The US Radiosurgery deal led Alliance to hike its 2011 revenue projection to $500 million to $530 million, up from a previous forecast of $475 million to $505 million.

Analysts expect Alliance to have $483 million in full-year revenue.

Alliance followed that deal with a smaller bite, purchasing 24/7 Radiology LLP of Houston for $5 million in cash.

24/7 Radiology provides interpretation services for various types of imaging, including magnetic resonance imaging and X-rays, in 18 states.

Alliance has moved to diversify its business in recent years by adding more cancer treatment and professional services to augment its core medical imaging segments.

Biolase Boss Beats Drum

Biolase Technology Inc. Chief Executive Federico Pignatelli’s work in turning around the Irvine-based dental laser maker recently was examined by Optics.org, an industry website.

Pignatelli is an early Biolase investor who’s been a director since 1991 and has served in several executive positions.

He became the company’s permanent chief executive last September after it hit a financial snag and boardroom battles broke out.

Since Pignatelli took over, Biolase has changed how it distributes its devices, turned a profit in the fourth quarter, raised more than $8 million and paid off $3 million worth of debt.

Analysts expect Biolase to make $494,680 on revenue of $9.6 million in the first quarter. Biolase reports results May 16.

The colorful Pignatelli had to overcome some challenges, he told Optics.org, including battles in the Biolase executive suite.

“I had been fighting CEOs and their decisions and seen them walk away with severance deals worth tens or hundreds of thousands of dollars—even when the company had practically no money in the bank,” he said. “I think that’s scandalous.”

After Pignatelli took Biolase’s top spot permanently, he played a key role in naming half of Biolase’s board. He said his predecessor as chief executive “left without a substantial settlement.”

Pignatelli also discussed his $1 yearly salary as chief executive, noting that “management should only make money when the company performs, and as the largest single shareholder, I will make my money when it does.”

Shares of Biolase have surged on Wall Street—so far, the company’s stock is up nearly 300% with a market value of $171 million as of mid-April.

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