FDA and Valor Medical, INC

Lessons Learned from the Valor Case

by DeeAnn Visk

On Thursday, April 17^th, the San Diego Clinical Research Network (SDCRN) and the San Diego Regulatory Affairs Network (SDRAN) held a joint meeting at CareFusion entitled “Increased Focus on Enforcement in Clinical Research – Lessons from Recent Cases.” 

Clinical research activities are currently subject to unprecedented government scrutiny, as evidenced by many recent settlements between the U.S. Department of Justice (DOJ) and both medical device and pharmaceutical companies. Typically, government investigations focus sales and marketing practices; they have now expanded to include research and development activities.  

Thomas W. McNamara, a white-collar defense attorney from Ballard Spahr LLP in San Diego, presented the case of “Valor Medical: A Local Prosecution with Universal Lessons.”  McNamara, a former federal prosecutor, discussed the case against the San Diego biomedical device maker Valor Medical.  They have been prosecuted for not including two negative lab test results in their 2008 Investigational Device Exemption (IDE) application.

The case began with the company filing their IDE in 2008, and ended with the U.S. Attorney’s Office filing criminal charges against the company and its officials in 2014.  McNamara concluded that the company’s lack of transparency, and failure to grasp the seriousness of the FDA’s inquiry, combined with Murphy’s Law to produce “a perfect storm” of events, ending with criminal charges against the company and four of its leaders. How did they get into this mess?

Word Cloud drawn from note on McNamara's talk

In 2007, the company began seeking pre-market approval for their product Neucrylate, which was implanted via catheter to treat aneurysms.  Upon its contact with blood, Neucrylate becomes sponge-like, thereby stopping life-threatening hemorrhages. Chromosomal assay (CAA) and mouse lymphoma assay (MLA) tests were done, and indicated that Neucrylate was cytotoxic and mutagenic.  

The company’s regulatory affairs consultant received this report, but did not include these tests in Valor’s IDE application to the FDA in 2008. The IDE was rejected.  In 2009, the consultant left the company with hard feelings—he had also been a member of the Board and was removed from this position.  Unbeknownst to Valor, he reported to the FDA the company’s failure to include the CAA and MLA tests in their application to conduct clinical testing.

Repercussions of Whistle Blowing

In 2010, the company filed a new IDE for Neucrylate, again omitting the CAA and MLA test reports. The FDA then inspected their site for two days, during which the company’s leaders were not forthcoming about the tests.  Meanwhile a lower-level employee told the FDA that there was an intentional decision to not include these test results.  

In 2011, FDA sent Valor a warning letter indicating their failure to include reports of all prior clinical, animal, and laboratory testing of the device in their IDE.  Valor’s management responded that the omission of the animal tests was “inadvertent”, blamed it on the personnel change, and claimed the tests only came to their attention in February 2011.  

The FDA then turned to the U.S. Attorney General’s Office, which issued a search warrant that was executed in 2012.  Imagine the work disruption when armed, bullet-proofed vested, federal agents enter your company and order you to step away from your computers.  Every scrap of paper is removed, along with any computers (that they cannot make a mirror image of on a hard drive).  Email messages found on the company’s computers indicated that Valor was aware of the negative test results long before 2011. 

The "e" in email stands for evidence, warned McNamara

Valor’s presidents, Chief Scientific Officer, and clinical research consultant pled guilty to misdemeanor violations, and the company pled guilty to a felony charge.

So what lessons can be gleamed from this tale? 

1)  If a decision is made to not include a test in a regulatory filing, ensure this is reviewed by a regulatory attorney.

2)  Take FDA warning letters and inspections seriously. If possible, include a management representative on all employee interviews during an inspection. 

3) If given notice of an FDA audit, come up with a plan to comply with their requests.

4) Beware of the possible repercussions of parting ways on bad terms with employees.
 

In listening to an NPR report on tax evaders, the author realized that law enforcement likes to give people to opportunity to “come clean”, especially to non-violent crimes.  Officials at Valor choose not to admit their knowledge of the CAA and MLA reports when given the opportunity by the FDA.

Another reason for the mess may be the sense to time perception between nimble startup companies and the government bureaucracy.  The gears of the federal government turn much more slowly.  What Valor perceived as ancient history, was still an ongoing investigation for the federal government.

McNamara believes that by following the above suggestions, companies can avoid the outcomes like Valor’s when dealing with the FDA.