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OtisMed Corporation Accused of Selling Unapproved Devices

Farren Washington2 years ago

OtisMed Corporation and its former CEO Charlie Chi admitted to distributing more than 18,000 knee replacement surgery cutting guides after the FDA had declined their initial application for marketing clearance.

Illegal Marketing of the Knee Replacements

According to Boise Weekly, the FDA rejected the OtisKnee back in September 2009, because the company couldn't prove it was safe. OtisMed Corporation was then notified that they could not distribute the OtisKnee any further without prior approval.

The company's board of directors unanimously voted to halt all shipments, but Chi instructed employees to ship a batch of the devices that had been previously purchased.

Two months later, OtisMed struck a deal with Stryker, a $9 billion medical device company based in Kalamazoo, Michigan, to market the OtisKnee. The acquisition of OtisMed went through, though Stryker was unaware of any illegal activity at the time. Shortly after the illegal shipment, a Stryker employee filed a whistleblower case accusing OtisMed of selling unapproved devices.

In December 2014, OtisMed and Chi pled guilty to charges stemming from the sales. OtisMed was ordered to pay $80 million in criminal and civil fines as part of a settlement agreement. Chi will be sentenced on March 18, and faces up to three years in prison and $300,000 in fines.

Reports of Malfunctions

The devices may have been responsible for complications, including early failure of implants, in several dozen patients. The OtisKnee was marketed as a time-saver for surgeons and a way to preserve more of a patient's bone and ligaments, but none of the promotional claims had been assessed by the FDA. 

Dr. Ronald Teed, an orthopedic surgeon, had taken part in an OtisMed clinical study and was one of the first surgeons to discover that the procedures were not always effective. 

According to a ProPublica review, problems began showing up as early as November 2007. There were eleven reports that month alone and fifty-eight overall by the end of 2009. The complaints ranged from knee replacements not fitting, to the new knee being misaligned and failing outright.

It is unknown as to how many patients might have been harmed by the OtisKnee. Lawyers for the Justice Department said finding an exact number wasn't part of the original case. The director of premarket compliance at the FDA's Center for Devices and Radiological Health, refused to discuss the OtisKnee case because it had been the subject of a criminal investigation.

The main issue at hand is that are so many Class I medical devices on the market, that the agency generally does not check to see if they are properly classified. According to Diana Zuckerman, president 

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