Pharmaceutical Innovations: Contaminated Gel and the Factory Behind It

The Pharmaceutical Innovations ultrasound gel consent decree required destruction of seized gel, independent manufacturing reviews and continuing Food and Drug Administration oversight. In its criminal guilty plea, the company admitted distributing bacteria-contaminated gel. The July 6, 2016 civil order reached into contamination controls, complaint handling and the responsibilities of the executive running the business.

Pharmaceutical Innovations manufactured medical devices in Newark, New Jersey. Its consent decree of condemnation and permanent injunction dealt with both the seized product and the operation that made it. The company had to arrange supervised destruction, describe how its manufacturing would change and pay for outside scrutiny of whether those changes worked.

Contaminated Ultrasound Gel and Surgical Infections

A Michigan hospital’s report of surgical infections led investigators back to contaminated ultrasound gel. Doctors and hospitals used the company’s gels for ultrasound scans, sonograms, EKGs and similar procedures. The Justice Department’s account of the criminal case describes what happened.

In February 2012, the hospital reported that 16 surgical patients had infections involving Pseudomonas aeruginosa. The hospital believed the infections were associated with a particular lot of Pharmaceutical Innovations gel. A sample from that lot tested positive for the same organism.

A second lot shipped in April 2012 contained Pseudomonas aeruginosa and Klebsiella oxytoca. The Justice Department reported contamination in that lot at both the hospital and the company’s Newark facility. The product investigation had reached back from the place of use to the place of manufacture.

That is why lot identity matters to a quality employee or a hospital buyer. Here, the decree required the company to preserve the seized gel intact and retain records establishing its identity until supervised destruction.

The seizure allegations, recited in the decree, said the gel’s purity and quality fell below what it purported to possess and that its labeling was false or misleading. The government alleged that the bacteria could accumulate in patients without signs of infection and cause serious or potentially life-threatening infections.

From Seized Gel to a Permanent Injunction

The U.S. Marshals Service seized Other Sonic Gel in April 2012. In October 2014, the Justice Department filed the civil injunction suit against Pharmaceutical Innovations and its founding president.

According to the department’s announcement, the civil complaint alleged that the company sold devices without required Food and Drug Administration approval or clearance, violated good manufacturing practices and failed to take required action after receiving reports of serious injuries associated with its products. The alleged failures ran through manufacturing, marketing authorization and the response to information arriving from users.

The civil decree required Pharmaceutical Innovations to destroy the seized gel under agency supervision and pay the cost. The company had to obtain written authorization before destruction. If it failed to destroy the gel within the decree’s terms, the Marshals Service would do so at the company’s expense.

What the Decree Changed Inside the Factory

The decree required a written account of how Pharmaceutical Innovations would bring its actual manufacturing methods, facilities and controls into compliance. Independent experts, agency review and recurring audits supplied checks on that account.

The Plan Had to Describe the Manufacturing

The company had to submit a compliance plan within 20 days. It had to describe its current manufacturing processes and address contamination controls, process validation, sampling, corrective and preventive action, recordkeeping and complaint handling. Suppliers, contractors, design changes and calibration standards also fell within the plan.

The court set October 31, 2016 as the completion deadline, with water-system validation separately anticipated for May 2017. Monthly reports to the Food and Drug Administration had to identify completed steps and include supporting documentation where appropriate or requested.

The outside experts then had to inspect the operation and certify whether the company had corrected violations described in earlier agency inspection observations and its July 2011 warning letter. A new compliance plan still had to answer the problems inspectors had already identified.

The Auditor Reported to the Food and Drug Administration Too

The decree required independent audits for three years after the agency’s written compliance notice. The company paid for the auditor, who had to be free of personal or financial ties to the defendants or their families apart from the engagement itself.

The audit reports had to go simultaneously to the company and the agency. Later reports had to assess whether earlier findings had been corrected, and the company had to retain the underlying data. The Food and Drug Administration could extend or restart the auditing cycle when a report identified a deviation.

Inspectors also retained unannounced access to the operation. They could examine formulations, equipment, materials, containers and labeling, take samples and copy records of manufacturing and distribution. Pharmaceutical Innovations had to reimburse the agency’s costs of evaluating compliance with the decree.

Product Submissions Could Determine What Shipped

For Other Sonic Generic Ultrasound Transmission Gel and other named devices, the decree required premarket submissions by October 31, 2016. A product that missed that deadline had to stop being manufactured and distributed until its submission was made and cleared. An agency decision that a product was not substantially equivalent to a legally marketed device, or a withdrawn submission, also required manufacturing and distribution of that product to stop.

The company could renew requests for Certificates to Foreign Governments only after the Food and Drug Administration’s written compliance notice and the required product submissions. The decree tied those export-certificate requests to both factory controls and product paperwork.

The order also allowed the agency to direct a halt to manufacturing or distribution, a recall, supervised destruction or a safety alert if inspections, samples, reports or other information showed a violation or a need for further correction. An ordered shutdown continued until the agency gave written notice that the company appeared to comply.

The Bond and the Cost of Breaking the Decree

Pharmaceutical Innovations had to post a $25,000 bond as security for carrying out the decree. The company also had to pay for independent experts, auditors, inspections and supervised destruction.

The decree separately set contingent damages at $7,500 for each day a violation continued and the same amount for each violation, together with twice the retail value of a device distributed in breach of the order or device law. Those terms attached a financial consequence to continued violations and unlawful shipments.

For an insider, the operating decisions remain central: what was made, what shipped and what happened after a defect or violation was identified.

Why the New Chief Executive Signed the Consent Decree

The successor president and chief executive consented to be named because he was then the person most responsible for Pharmaceutical Innovations’ operations. The decree recorded that he took those positions in September 2014 and that the defendants represented he had no involvement in the company’s operations before then. The order placed the corrective obligations on him and the company.

That focus on authority also appears in the government’s 2015 manufacturing complaint against Medtronic. The government alleged that the chief executive was the person most responsible at the firm and oversaw product development, product management, international relations and sales. At Pharmaceutical Innovations, the decree made the transfer of operating responsibility explicit.

The company had to post the decree in employee common areas and give copies to its officers, employees and other covered participants. A potential successor to the business had to receive it before a sale or assignment. The order followed the operation into its daily work and any future change in ownership.

Can a Whistleblower Take Legal Action Against a Medical Device Company?

Yes. A whistleblower can bring a False Claims Act case over a manufacturer’s knowing role in causing false claims for government payment. For a manufacturing insider, we examine how the product, the company’s knowledge and the request for payment connect.

The Pharmaceutical Innovations civil order addressed seized goods and manufacturing under federal device law. In a potential medical device fraud case, we trace the purchase and payment records too. A hospital buys the product. Medicare pays according to the rules for the covered item or service. FDA marketing authorization, Medicare coverage and payment each have their own requirements.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud explains that a reimbursement request can be factually false when it misstates the goods or services provided. In examining potential healthcare fraud, we look at what the buyer received, what the manufacturer represented and what the institution asked the government to pay. Quality records, complaint files and distribution records can explain the product side. The payment records show how it reached a government-funded claim.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What Happened Before the Shipment

If you know how contaminated gel left the plant or how the company handled the warnings, speak to one of our whistleblower experts about what happened. We work with you to connect manufacturing decisions to government payments and bring in medical device whistleblower lawyers with the FDA and payment experience your case needs. We remain your partners through the process of building your strongest medical device whistleblower case.