Is the Medical Implant Industry Facing its “SEC Moment?”
In 2002, as part of a $1.5bn settlement with Deutsche Bank Securities, Inc., Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc., US Bancorp Piper Jaffray Inc. brought by then NY Attorney General, Eliot Spitzer, the US SEC took an additional action to enforce the SEC 17a-4 around books and records. This subtle change in the regulatory posture catalyzed the email archiving industry.
A recent report by the International Consortium of Investigative Journalists (ICIJ) may catalyze changes in another regulated industry. Medical device and implant manufacturers take note—your “SEC moment” may be upon you. Are you ready?
The Implant Files
The ICIJ’s report, titled The Implant Files, is the result of a year-long investigation by over 250 reporters in 36 countries. The multi-faceted report covers in great detail the stories of patient experiences with faulty, recalled, and harmful medical device implants.
Beyond these patient stories, the report focuses on regulatory oversight and the recall process for potentially defective devices, which is shockingly lax given the nature of the topic. According to one of the headline stories, “Regulators often don’t require large-scale human trials for devices like they do for prescription drugs. As a result, authorities have allowed faulty devices to come onto the market, where they have lingered for years even as injuries mount.”
There also exist international legal issues, where victims of harmful implants are forced to attempt suit of device manufacturers in other countries. This all contributes to what the ICIJ calls “a broken system” in the opening line of its FAQ document.
As an amazing coincidence, the Food and Drug Administration just announced that it is changing one of its key medical device approval processes. The article explains, “In modernizing the 510(k) approval process, the FDA wants to nudge companies to base new products on devices that are no older than 10 years old.”
While the FDA’s changes might not be related to the ICIJ’s report, they are likely not the last changes the industry will see. The ICIJ’s report on the Panama Papers in 2016 elicited global outrage and prompt changes to curtail tax evasion. The source of the Implant Files isn’t a data leak but shining a light on the data will certainly bring a heightened level of scrutiny.
On the surface, the most obvious impacts will be felt by medical device manufacturers. There will likely be lawsuits as more patients learn about recalls or defects with their own implants. Regulators will be knocking on the door, asking questions, and developing new guidelines to follow. These companies will need to handle an influx of discovery-related requests, including their duty to preserve evidence and comply with litigation. They should reasonably expect to be asked about clinical trial data and communications about specific products, at a minimum.
But they aren’t alone. With increased litigation, law firms will be busy on both sides of the courtroom. Assuming the device manufacturers kept significant findings during the research and development process, they’ll have heaps of information to review and corroborate with the aforementioned communications, market projections, and other facts.
Let’s not forget that the regulatory bodies will be just as busy reviewing the same information. They’ll be under scrutiny to see how they react to the news, and I can guarantee they’ll be careful to impose new standards that are thoughtful, informed, and quite possibly a bit heavy-handed considering the ICIJ’s report.
Prepare Now for Litigation
Companies facing possible litigation and greater regulatory scrutiny would do well to build a litigation-ready repository that’s properly deduplicated to ensure consistent productions to all external requestors. They should also take steps eliminate the unchecked duplication of the same information for different external parties.
There’s significant value to be found in creating a litigation-ready data lake and filling it with records held on frequently or potentially litigated custodians, communications, and data sets. Having all the information indexed, deduplicated, and ready to go can hasten any discovery response ahead of the game, saving valuable time and money in possibly the most stressful of circumstances a company can face.
If you’re concerned with the possibility of regulatory scrutiny, legal action, or any other reason that you might have to search and produce information under a tight timeline, talk to us and find out how our software can meet your organization’s specific needs.