1. Legal Issues Impacting Clinical Trials Medical Device Clinical Trials Update June 19, 2009

2. 2 Overview Update on FDAAA 801 implementation: requirements for registering and reporting results of device clinical trials Recent developments concerning clinical investigator financial conflicts of interest Understanding last week’s criminal indictment: failure to obtain IDE

3. 3 FDAAA Section 801: Clinical Trial Registration and Results Reporting FDAAA defines “applicable device clinical trial” as a prospective clinical study of health outcomes comparing an intervention with a device subject to section 510(k), 515 or 520(m) of the FDCA against a control in human subjects (other than a small clinical trial to determine the feasibility of a device, or a clinical trial to test prototype devices where the primary outcome measure relates to feasibility and not to health outcomes); and a pediatric postmarket surveillance required under Section 522 of the FDCA

4. 4 FDAAA 801 Certification of compliance required since December 26, 2007: Form 3674 January 2009 Guidance defines scope of requirement: PMAs PMA “panel track” supplements HDEs 510(k)s if they refer, relate to or include information on or from a clinical trial initiation of the regulatory review (not amendments) Regulations on results posting required by November 2010

5. 5 Investigator Financial Conflicts of Interest Collection of financial disclosure information for “covered clinical studies” is required under 21 CFR Part 54 Covered clinical studies are submitted studies that are used to demonstrate the product’s effectiveness or any study in which a single investigator makes a significant contribution to the demonstration of a product’s safety Four types of interests to disclose: Compensation affected by outcome of study Significant equity interest (>$50,000 if publicly traded) during study and for one year after completion Proprietary interest (patent, trademark, copyright, license) Significant payments of other sorts (>$20,000) during study and for one year after completion

6. 6 OIG Report January 2009 OIG review of financial disclosure information for 118 approved product applications during 2007 Found that only 1% of investigators disclosed conflicts (206 of 29,691 investigators) 42% of applications had incomplete disclosure information 28% of applications relied upon the ‘due diligence’ exemption for not having information to report (investigator could not be located or would not return form) 31% of applications had no FDA documentation of reviewing the submitted disclosures/certifications No actions taken to minimize bias in 20% of cases disclosing an investigator financial interest

7. 7 OIG Recommendations Creation of central clinical investigator list to track disclosures Use review template to document that financial disclosure/certification information was properly submitted Confirm submission of attachments to disclosures Update guidance on due diligence exemption Disclosure of investigator financial interests prior to initiation of clinical study http://oig.hhs.gov/oei/reports/oei-05-07-00730.pdf

8. 8 NJ Attorney General Used state’s Consumer Fraud Act to obtain Assurance of Voluntary Compliance (AVC) from spinal device manufacturer for failure to disclose investigator financial interests in clinical studies underlying two PMA approvals AVC executed May 1, 2009 Among other terms, prohibits compensation of clinical investigators with stock or stock options Settlement payment of $236,000 Actions from subpoenas to other companies still to come?

9. 9 May 5, 2009 Letter from New Jersey AG to then Acting Commissioner Sharfstein As a result of this investigation, the State has entered into a settlement agreement with Company that requires the company, going forward, to fully disclose the financial conflicts of interest of its clinical investigators to the public and to the FDA. Pursuant to this agreement, Company will, inter alia, (1) monitor, collect and disclose any and all payments to clinical investigators, including investments held by the investigators in the product they are testing, on the company’s website and to the FDA; (2) prohibit compensation of clinical investigators tied to the outcome of the clinical trial, including company stock or stock options; (3) pay clinical investigators “fair market value compensation” for their clinical trial work, as well any other consulting services they provide to the company; and (4) disclose all financial interests directly to health care facilities serving as clinical trial sites. A copy of the agreement is attached. I am gravely concerned about the conflicts of interest that pervade the medical device industry – particularly with respect to high-risk devices - and their deleterious effects upon consumers. The State of New Jersey calls upon the FDA to (1) heighten its oversight authority in this area and to rigorously enforce the conflict of interest disclosure rules and regulations; and (2) promulgate regulations that require all medical device manufacturers and pharmaceutical companies to adequately disclose the conflicts of interests of clinical investigators to the public. It is our hope that the provisions in our Agreement with Company will become part of best practices for the entire medical device industry.

10. 10 Looking under the lamppost June 15, 2009 Grand Jury indictment of Company for, among other things, failure to submit an IDE prior to initiating a 2002 “test market” study “test market” 1. trained surgeons in an off-label use 2. collected safety and efficacy data for the purpose of determining whether complication rate was too high Management admitted that IDE would be required if data were being collected 18 USC 371 and 1001 (conspiracy and false statements)

11. Natasha Leskovsek nleskovsek@cooley.com tel 202.728.7131 nleskovsek@cooley.com