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Guest Author: Ali Gallagher, J.D. 

Non-compliance with FDA regulations can not only delay your product getting in the hands of consumers but once there, it may also force you to institute a recall of your product, causing business losses and far-reaching legal consequences. 

The FDA has the power to seek injunctions against individuals and corporations, plus the ability to sanction criminal and civil penalties, including fines, recalls, and arrests. Penalties can range from a warning letter to fines up to $100,000 for misdemeanor violations (per occurrence) and higher for felony charges and conviction. 

Understanding the potential legal liabilities throughout the product life cycle is at the heart of a good medical device quality system.  Being proactive in setting up your company with the proper foundation will save you money and help avoid legal issues down the road.  Remember this rule if you want to stay on top of the regulations: “Quality is always better if built into the product or services, not ‘inspected in’ later.”  

The following are a few topics of which I regularly advise clients: 

  • Understanding the FDA’s role in protecting the public
  • Protecting your intellectual property
  • Knowing the ‘low hanging fruit’ of what are common regulatory problems and early planning to avoid them
The Role of the FDA in Protecting Public Health

The FDA is responsible for protecting public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices.” The FDA is not just going after bad actors but is committed to protecting public health at all levels.

Failing to inform the consumer via Warnings, Disclaimers, and proper Instructions for Use, are as much a part of non-compliance as a product malfunction or defect. Adulteration and misbranding are two of the most commonly discussed non-compliance issues. However, the real culprits are Corrective and Preventative Actions (CAPA) violations.  Not having or not implementing proper post-market corrective action plans when notified of a product or services issue accounted for nearly one-third of all 483 FDA letters issued in 2018. If you are marketing a medical device, then the notion of following CAPA processes, complying with GMPs, and implementing your QMS should be all too familiar to c-suite managers.  

In addition to government agencies tracking consumer and industry complaints/required notifications, a notice of product failures may also come directly to a company from consumers, purchasers, or even your own third-party manufacturer. When you receive a warning letter or notice of a product failure, you should seek legal counsel and immediately begin instituting your own post-market complaint policies.  

The good news is the FDA gives companies a lot of room and power to monitor and self-police themselves. Companies should plan to work with the FDA and consumer groups to maximize efficiencies in ensuring compliance throughout the commercialization process.  

Potential Liabilities Abound Throughout the Product Life Cycle

Medical device manufacturers know their products inside and out. Precisely because you are hyper-focused on it, it’s easy to miss documenting critical information in your design history file or simply leaving some tasks undone. 

In my 27 years of experience working both as a manufacturer and later in advising manufacturers, the most overlooked areas with downstream legal consequences are: 

  1. the vendor selection and approval process and 
  2. post-market surveillance of the products and services. 

Improperly vetting the vendors manufacturing, or marketing and distributing your product exposes your organization to varying degrees of liability if not done properly. Today, this liability includes the trend for potential class action or mass tort actions against medical device and drug (and cosmetic) companies at both the federal and state levels, and beyond the reach of FDA, for example, the FTC and other consumer agencies. Therefore, it’s critical that your internal policies are in place and being utilized by employees who understand their importance and that distribution agreements are reviewed by specialized legal counsel having experience in the medical device or drug industry.

Your website is your most viewed “product” label.  Even in areas unregulated to some extent by FDA, the website must provide true, conspicuous, and easy to understand information to the consumer – even over-the-counter product claims must not over represent the results of the product and include clear directive for instructions for use and warnings as appropriate.  

Ways to contact the company are crucial. If you do not have these listed and obvious for a consumer to find, you increase your risk for liability in the post-market world. One easily missed requirement is to make certain you have a clear Refund Policy in place so consumers understand their purchase rights. Even if the policy is No Refund, that is your policy, and it must be made clear to the consumer. 

Protecting Your Intellectual Property

While many medical device manufacturers will take steps to protect intellectual property (IP) from being stolen by other companies, the biggest threat to your IP may come from the inside. It is also the easiest threat for a company to exercise control over. This is especially true for startups who often bring in consultants and contract employees. 

Without the proper legal contracts with those third-parties, you may be inadvertently failing to protect your IP. For example, companies usually get a non-disclosure agreement signed before exploring a business opportunity. However, they may not include protections to the IP rights so that when working together, these strategy sessions are deemed ‘work for hire’ so that any ‘inventions’ are the IP of the company, and in questionable areas, the consultant or employee assigns to the company any rights they may have gained during the process.  

Your medical device startup process should include a legal review of your contracts with all third-party consultants and contract employees with an eye to protect your IP first and foremost. 

Lean Into Our FDA Consulting Strategy

A knowledgeable FDA consulting partner with legal expertise is critical to your organization’s success. 

Non-compliance with FDA regulations is not just a business issue, but potentially a legal one, and the impact on a startup or even a multinational corporation, can be devastating. Make sure you’re pinpointing possible legal pitfalls throughout the product lifecycle while protecting your intellectual property with the right legally binding contracts. 

About Ali Gallagher, J.D.

Guest Blogger Ali Gallagher holds a J.D. from the University of TX Law School and a B.S.N., also from UT and frequently assists QA Consulting clients with legal matters. She completed a postdoctoral Congressional Healthcare Fellowship in the U.S. Congress and has testified before several Congressional health committees on Oversight and Investigation representing consumers and industry interests.