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Looking at Liability

Medical malpractice lawsuits soon could be taken to a new level.

Medical device makers have been protected from suits brought by injured patients, but a bill being debated in Congress could change that.

A proposal called the Medical Device Safety Act of 2009 could remove the shield protecting device makers from personal injury lawsuits if a device malfunctions.

The shield was put into place last year after the Supreme Court ruled that a Food and Drug Administration approval of some types of devices absolved device makers from fault if those devices injured patients.

That ruling led to thousands of liability suits against device makers being thrown out of court.

Proponents of the bill,including patient advocates and trial lawyers,argue that the Supreme Court’s decision misinterprets the law and that the FDA isn’t an adequate watchdog for device safety.

Industry groups are lining up against the bill, saying that removing lawsuit protection could chill innovation and may scare away venture capitalists and investors who don’t want to be entangled in lawsuits.

But the Medical Device Safety Act may not affect Orange County device makers much if it becomes law, as a lot of what local companies produce doesn’t fall under the “pre-market” approval category that the bill addresses, lawyers say.

The pre-market approval process is the FDA’s most stringent device application process and deals with devices that sustain life, are vital to preventing human harm, create unreasonable risk of illness or injury or are new and have unknown safety risks.

Products that are updated versions,rough equivalents,of devices that have already been approved for sale can go through a fast-track 510(k) program. This program requires a 90-day notice to the FDA before being marketed but doesn’t require the same stringent application process of a pre-market device.


OC Companies

“Most medical device products in Orange County are doing a clearance called the 510 (k); this (law) is not about that,” said Bruce Feuchter, a partner at Newport Beach-based Stradling Yocca Carlson & Rauth whose practice is concentrated on medical devices.

There are some OC companies that have had pre-market approvals for their devices. Ev3 Inc., which has 350 workers in its Irvine neurovascular operation, received pre-market approval for a polymer that is implanted in the brain to prevent aneurysms.

Ev3, through a spokeswoman, declined a request to comment on the proposed law.

The Medical Device Safety Act is a response to the Supreme Court decision in Riegel v. Medtronic Inc. that ruled in favor of the device maker. A widow of a man who died after a Medtronic catheter ruptured during heart surgery sued the Minnesota-based device maker.

In the Riegel case, the Supreme Court concluded that the thorough pre-market approval process barred patients from filing lawsuits that basically second-guessed regulators’ judgments about the safety and effectiveness of such devices.

The Riegel decision resulted in thousands of medical device lawsuits being dismissed, including cases filed by patients who were injured by a defective lead wire in Medtronic’s Sprint Fidelis defibrillator that was recalled in 2007.

That decision led to the introduction of the Medical Device Safety Act by Reps. Henry Waxman, D-Calif., and Frank Pallone, D-N.J., backed by trial lawyers and patients’ advocates. Sens. Patrick Leahy, D-Vt. and Edward Kennedy, D-Mass., introduced it in the Senate.

Device makers, through trade groups such as AdvaMed and the Medical Device Manufacturers Association, have argued that overriding the Supreme Court’s decision would open up attacks on the FDA.

The industry also has said that allowing personal injury lawsuits could chill companies’ attempts to develop what it calls “innovative medical technology.”

“If the FDA is not the regulatory gold standard, it becomes very expensive for companies,” said Mark Leahey, chief executive of the Washington, D.C.-based Medical Device Manufacturers Association, in a Dow Jones report. The association’s board chair is Joe Kiani, chief executive of Masimo Corp., an Irvine maker of patient monitoring devices.

“The Medical Device Safety Act is not about safety. It’s about whether patients should be able to recover damages,” Stradling’s Feuchter said.

Besides pre-market approvals, devices that also receive “humanitarian exemption” approvals by the FDA would be subject to the Medical Device Safety Act.

A humanitarian exemption occurs for medical devices that are intended to treat rare diseases that affect 4,000 or fewer patients yearly. As an example, Medtronic, which has a 650-person heart valve plant in Santa Ana, is awaiting humanitarian regulatory clearance for Melody, a less-invasive heart valve.


Investment

Feuchter also said that if the law is passed, venture capital firms could possibly look askance at investing in medical device companies if they become subject to “continuous litigation.”

If the law passes, Mark Wan, a partner at Three Arch Partners, a Menlo Park venture capital firm, told Dow Jones that it might change how venture firms invest in device makers.

“Because you are taking on more risk, it is already extremely difficult for a new device company looking at a (pre-market approval) to get funding in this environment,” Wan said. “You are seeing many venture firms move away from (such) products.”

Three Arch’s local portfolio includes Arbor Surgical Technologies Inc., an Irvine company that makes replacement heart valves from cow tissue and the instruments used to insert them.

Overall, Feuchter said most of his life science company clients aren’t currently thinking about the proposed law and what it might mean to the industry.

“They’re at a point where they’d as soon not see the act passed, but they’re not spending time on it,” he said.

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