Japan-based Olympus Medical Systems and a former top regulator at the company admit they knowingly distributed endoscopes in the U.S. that carried a risk of serious infection.
Olympus Medical Systems and a former senior executive pleaded guilty this week to distributing endoscopes after failing to file FDA-required adverse event reports of serious infections, the Department of Justice said.
Olympus, which is headquartered in Tokyo, Japan, and Hisao Yabe, 62, of Japan, both entered guilty pleas in a federal district court in Newark, New Jersey.
Olympus pleaded guilty to three counts, and Yabe to one count, of distributing misbranded medical devices in interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act, under a deal reached with DOJ.
Olympus will pay an $80 million fine and surrender $5 million in criminal forfeitures.
Yabe will be sentenced on March 27, 2019, and faces a maximum potential penalty of a year in prison and a $100,000 fine, which is twice the gain or loss from the offense.
According to DOJ, Olympus admitted that it failed to file with the FDA required adverse event reports in 2012 and 2013 relating to three separate events involving infections in Europe connected to Olympus’s TJF-Q180V duodenoscope involving 30 patients.
Yabe admitted his own personal responsibility for the failure to file the necessary information with FDA. At the time, Yabe was Olympus's Division Manager for the Quality and Environment Division – Olympus's top regulatory official, whose responsibilities included adverse event reporting in the United States, DOJ said.
Rachael Honig, U.S. Attorney for the District of New Jersey, said the infractions were "especially troubling" because Olympus and Yabe were told about the safety concerns by an independent expert.
"Patient safety must always be a paramount concern for medical device companies, and these defendants simply failed to treat that concern with the gravity it deserves," Honig said.
The FDCA requires medical device manufacturers to file adverse event reports—known as Medical Device Reports—when the manufacturer becomes aware of information that reasonably suggests that the manufacturer’s device may have caused or contributed to a death or serious injury.
Under the FDCA, devices for which required MDRs have not been filed are deemed misbranded, and it is a crime to ship such devices in interstate commerce.
Between August 2012 and October 2014, Olympus shipped hundreds of misbranded duodenoscopes in the United States, generating approximately $40 million in revenue and approximately $33 million in total gross profit.
Olympus's payment of $85 million is more than 2½ times Olympus’s total profit from sales of the misbranded duodenoscopes.
Yabe admitted that he was aware of Olympus's obligation to file supplemental MDRs
An independent report—which Olympus obtained in the summer of 2012—found numerous problems with the Q180V, including that the scope's tip had various cracks, corners, and crevices that could harbor bacteria and could be cleaned only with great difficulty.
The report recommended immediate further investigation of all such scopes, updating the cleaning instructions, and improving the quality of the seals.
John Commins is a senior editor at HealthLeaders.