Utah Medical Products and FDA Go to Court

In what is likely to be one of this decade’s most closely watched trials in the medtech industry, Utah Medical Products Inc. (UTMD; Midville, UT) and FDA will meet in the U.S. District Court in Salt Lake City at the end of this month to settle a long-standing dispute over the company’s compliance with the agency’s quality system regulation (QSR).

Following a number of inspections of UTMD’s Midville plant dating back to 2002, FDA cited UTMD as having demonstrated a pattern of consistent disregard for the QSR. The agency reported finding “a variety of problems, including the failure to establish that manufacturing processes were adequately controlled, and the failure to have an effective system to identify and correct manufacturing problems.” Several warning letters were issued.

The situation further heated up in April 2003, when FDA refused to issue certificates for foreign governments on behalf of UTMD. Although FDA does not require such certificates as a condition of product export, the agency typically issues them upon request as a means of assuring foreign countries that a company and its products are in compliance with U.S. law. According to UTMD, the certificates provide a “level of comfort” to regulators in other countries. UTMD contended that FDA’s action had a “retarding effect” on the company’s international sales.

In August 2004, FDA filed suit against UTMD and sought a permanent injunction to stop the company from manufacturing and distributing its gynecology, perinatology, neonatology, electrosurgery, and critical-care products. The company countersued, asserting that FDA had abused its investigational processes and ignored a number of documents showing that UTMD’s procedures exceeded QSR requirements.

UTMD’s Cornwell: Facts and law.

“We remain disappointed with the length of time required to resolve this unnecessary lawsuit against UTMD and its employees, but are pleased that the time has arrived for the FDA allegations to be proven in court, on the basis of the facts and the law,” says Kevin Cornwell, UTMD’s president and CEO.

The trial was originally set for August 30, but was postponed, according to UTMD, because of “FDA’s refusal to reasonably cooperate in the preparation of a proposed mutual pretrial order.”

Cornwell says that, throughout the dispute, FDA has refused to discuss the alleged QSR violations with the company, even disregarding the recommendation of the agency’s own ombudsman that the two sides meet. UTMD, in correspondence with customers, investors, and industry analysts, reports that FDA, during discovery, conceded that UTMD products are safe and effective and have not posed any health risks, nor have they been shipped in defective condition.

In its countersuit, UTMD is seeking an undisclosed amount of damages, including court costs. FDA has until January 2006 to respond to the damages claim although it will not be addressed in the current trial, which is expected to last six days.

Utah Medical Products Inc., with 200 employees, had 2004 revenues of $26.5 million, down 2.6% from 2003 revenues of $27.2 million.

Canon Communications LLC

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