The opinion of the court was delivered by: Legrome D. Davis, J.
On November 28, 2011, pursuant to 18 U.S.C. § 3143(b)(1),*fn1
Defendant Thomas B. Higgins moved for release pending appeal
of his nine-month sentence of imprisonment for violations of the
Federal Food Drug and Cosmetic Act (FDCA), 21 U.S.C. §§ 301-399d; see
21 U.S.C. §§ 351(f)(1)(B), 352(f) and (o), 331(a), 333(a)(1). Seven
days earlier when we imposed sentence, we initially remanded Higgins
to custody. We subsequently granted Higgins' oral motion for a stay,
delaying surrender until December 5 in order to allow him to arrange
necessary medical care for his wife. On December 2, we further
postponed Higgins' surrender until December 19 so that we might submit
a formal document resolving the outstanding Motion for
Release Pending Appeal. (Doc. No. 182) Two hours later, Higgins
withdrew his Motion from the docket in this Court. (Doc. No. 194) As
the factual events in this matter are out of the ordinary, and a
direct appeal is still pending, a fact-specific explanation of our
sentencing decision is appropriate.
Medical devices are subject to the regulation and control of the Food and Drug Administration (FDA). The FDA's regulation centers on the degree of regulatory control necessary to ensure the safety and efficacy of a particular medical device. Class III significant risk devices are the most intensely regulated devices because the devices present a potential, unreasonable risk of illness or injury. See 21 U.S.C. §§ 351, 360c, 360e, 360j. The regulations are of substantial importance in preventing impairment of human health. Typically, since minimal safety information as to these devices exists prior to FDA approval, Class III devices gain approval only after successful completion of the FDA's most stringent review process -- a lengthy undertaking that includes a careful examination of valid scientific test data. Only in this way can the FDA satisfy its duty to the public to ensure the safety and effectiveness of significant risk devices. Class III devices typically require premarket approval (PMA) or an investigational device exemption (IDE). The Synthes products at the heart of this case are Class III devices.
The 510(k) route is an alternate method for securing approval for medical devices, including Class III devices, where the manufacturer demonstrates that the new device is at least as safe and effective as a previously approved, or predicate, device. A 510(k) approval requires a showing of "substantial equivalence" to the predicate device. This means the new device will be used for the same purposes as the previously approved device, and the proposed device does not raise new questions of safety and effectiveness. This is a less intense, and much briefer, review process.
Defendant Higgins served as President of Synthes' Spine Division from 1999 through January 2004 and Senior Vice President of Global Strategy, Synthes from February 2004 through May 2005. He pled guilty as a responsible corporate officer to the introduction into interstate commerce of adulterated and misbranded medical devices -- in this case, two Class III significant risk medical devices, SRS mixed with barium sulphate and XR -- in violation of 21 U.S.C. §§ 331(a) and 331(a)(1). Plea Agreement, ¶¶ 1, 9(A)-(J). These devices were adulterated because they were required to have, but did not have, in effect an approved application for premarket approval (PMA) or an approved investigational device exemption (IDE). Id. § 351(f)(1)(B). In part, the devices were misbranded because their labeling did not bear "adequate directions for use," id. § 352(f), and because the FDA was not provided with timely premarket notification of a new intended use prior to the introduction of the devices into interstate commerce for such use, id. § 352(o). The maximum statutory penalty for any person who violates a provision of § 331 is imprisonment for not more than one year. Id. § 333(a).
Although both devices were eventually cleared for use in the spine as general bone void fillers, neither device was ever cleared for use in load-bearing applications or for use in procedures to treat vertebral compression fractures, such as vertebroplasty*fn2 and kyphoplasty.*fn3
Without limiting in any way the voluminous record supporting these findings of Defendant's culpability, the following facts*fn4 , which we find to be true beyond all reasonable question, and which serve as the foundation for our sentencing decision and determination that immediate incarceration is warranted, deserve special recognition. Importantly, this factual narrative focuses on the knowledge and behavior of Higgins himself, not his subordinates.
1. From the very beginning, Defendant Higgins planned a clinical trial of SRS without the FDA's approval. This was reflected in Higgins' February 24, 2000 e-mail to CEO Hansjorg Wyss, captioned "SRS for Spinal Applications -- Action Plan Proposal." G Ex.
3. The plan amounted to a clinical trial before SRS was cleared for use as a general bone void filler in the spine through the 510(k) clearance obtained on December 20, 2001. The plan was to identify surgeons, select test sites, provide SRS product, train surgeons, observe surgeries, and compile and review data. All of this was to be done in 90 days.
2. Former Synthes Group Manager for the Regulatory and Clinical Spine Division Sands reported that, in 2000, Higgins asked Sands what the regulatory requirements would be to have Norian's bone cement approved for use in the spine, in vertebroplasty procedures. Sands stated that he told Higgins and others that an approved IDE was required before any study could be initiated. Sands further noted that there was "no way that these individuals could have misunderstood him." June 21, 2007 Report of Interview of Barry E. Sands ("Sands Interview") at 2, 5, submitted as Huggins Hr'g Ex. 6 at the evidentiary hearing held in this case on June 6-7, 2011. The precise date of Sands' conversation is uncertain.
3. Two of Dr. Delamarter's patients suffered hypotensive,*fn5
but nonfatal, events in February 2001 during
surgeries/kyphoplasty procedures using CRS, a precursor Norian device
that had the same chemical formulation as SRS. At that time, CRS was
not cleared by the FDA for use in the spine. At some point in March
2001, Defendant Higgins learned of the two hypotensive events. Higgins
knew that a Synthes sales representative had been present at the
off-label surgeries. See March 15, 2001 e-mail from Michael
Sharpe/Synthes to Dutcher/Synthes stating: "Both of these [events]
were originally reported to Tom Higgins . . . ." G Ex. 37, Page
4. On March 19, 2001, Michael Sharp/Synthes Regulatory, sent an e-mail to Defendant Bohner and others at Synthes captioned, "Spine [T]est Market for SRS," G Ex. 19, stating in part:
"Tom Higgins . . . requested that I meet with him . . . and I did so on September 5th . During that meeting I made it clear, or so I believed at the time, . . . we absolutely could not do anything which could be considered promotion of SRS for use in the spine. . . . I further told them that we could not do anything in our information gathering that might be construed as 'promoting or encouraging' off label use.
Specifically, I told them that they could not ask surgeons if they had used SRS, how SRS had performed in this indication, possible problems or ways to improve the use of SRS for this procedure, how often they might use SRS for such a procedure, etc. I did concede that we could not stop a surgeon from using SRS, or any Synthes product for that matter, for an off-label indication but that we should not consider that fact a license to 'look the other way' and that if asked by a physician we should make it completely clear that the use was off-label and that we did not recommend it in any way. . . . Tom agreed.
I also made it clear that the spine company should not be providing SRS to any account. No spine consultant should order SRS and spine PD [product development] should not provide . . . SRS to a surgeon. Since we have no spine indication for SRS my position was that there is absolutely no reasons that a spine consultant should ever be discussing SRS with a surgeon or providing the product. . . . Tom agreed with this position."
5. At a November 15, 2001 meeting, "Tom Higgins asked if we should consider a long-term IDE clinical study to follow-up patients with the vertebroplasty technique." Minutes at 2-3, G Ex. 5. A decision was made not to pursue an IDE clinical study for SRS mixed with barium sulphate, and instead, "to get a few sites to perform 60-80 procedures and help them publish their clinical results." Id. Higgins participated in this decision.
At the time this decision was made, Defendant knew that an IDE was required but it would be costly. An IDE would take about three years and a million dollars, and it was also clear that whatever competitive advantage Synthes continued to enjoy in the bone cement market would be lost. Transcript of Sentencing of Thomas B. Higgins ("Sentencing Tr.") 56:20-57:18, Nov. 21, 2011; see also Sands Interview at 2, Huggins Hr'g Ex. 6.
6. During a May 8, 2002 telephone conference with the FDA, Barry Sands, and other Synthes employees, the FDA noted the confusion that the current labeling procedures might cause over whether the bone fillers could be used in load-bearing areas. In particular, the "FDA expressed concern over the imprecision of the spine indication in the current indications for use of bone void fillers. . . . FDA asked that we provide additional labeling that specified load bearing indications, such as vertebroplasty, are not included in the current indication for use." Minutes, G Ex. 13. Sands stated that Synthes would "not promote this material (Norian XR) for such indications as vertebroplasty or other load bearing applications without the appropriate regulatory clearance." Sands Interview, Huggins Hr'g Ex. 6 at 3, 3-4. Barry Sands recalled that the FDA was insistent on language warning about use in load-bearing applications and vertebroplasty. Id. "Sands indicated that Synthes, including upper level management, clearly understood that Norian XR was not to be used for vertebral compression fracture procedures because the vertebral body '. . . is load bearing.' Sands stated there is no way it could [be claimed] he never made them aware of this." Id. at 4. Defendant Higgins received a copy of the minutes of the discussion with the FDA. G Exs. 35, 36 at 1DOJSYN.073.001959. The minutes were attached to Synthes' subsequent Special 510(k) submission for clearance of XR, which was granted December 19, 2002, with warning bullet "Not intended for treatment of vertebral compression fractures." G Exs. 43, 46.
7. In April 2002, the University of Washington began pilot studies on SRS commissioned by Synthes. One researcher, Dr. Jens Chapman, in a May 4-6, 2002 e-mail to Nisra Thongpreda/original Synthes Group Product Manager for SRS-R (which became XR), explained the alarming effect of SRS on a pig:
"[T]he entire pulmonary artery system had clotted off. This could represent an uncontrolled activation of the coagulation cascade. . . . This clearly underscores the need for further investigation of the device while it is in the 'medication phase' . . . .
[W]e were expecting to kill the pig . . . but not suddenly and with a relatively small dose. We also need to worry about a coagulogenic effect of the substance itself. . . ."
Higgins received this e-mail. Government Ex. 3, submitted at the June 6-7, 2011 evidentiary hearing in this case. Thus, Higgins knew no later than early May 2002 that the chemical composition of SRS -- the specific formula of the calcium phosphate cement -- itself posed lethal risks when used in the spine in vertebroplasties. He knew the cement was potentially dangerous in that it appeared to have a rapid and extreme coagulogenic effect in the blood of animals. He knew, or should have known, that the planned development of a cement to treat vertebral compression fractures was potentially suspect, and caution and strict adherence to regulatory procedure was required. Importantly, Higgins knew, or should have known, of the need for further testing before the product could be safely used on humans.
8. On May 30, 2002, Defendant Higgins received an e-mail from Defendant Huggins, who expressed his "second thoughts" about the unauthorized clinical trial of SRS in vertebroplasties. G. Ex. 8. Huggins stated:
"There appears to be some shipments being made of Norian for Spine use which we need to discuss. We discussed the need to perform a real study to test Norian. We shouldn't be sending out product without proper protocols, surgeon sponsors, etc. As you know we have gone to great lengths in SUSA to train surgeons on Norian's use. It seems Spine is bypassing the needed blocking and tackling without thinking this all the way through.
In addition, I had a long conversation with Dr. Lambert who is very concerned about the Spine plan. I am now having second thoughts. . . ."
9. In June 2002 e-mails to Defendants Higgins and other high-level executives, a Synthes medical consultant strenuously warned the recipients that unauthorized clinical trials of SRS with cavity creation instruments were being conducted. The consultant urged that the trials amounted to "human experimentation whose only defense seems to be that it will be a small study. If there are many spine surgeons who, in spite of knowledge of the foregoing are comfortable using SRS, then you should be uncomfortable with those surgeons." G Ex. 32.
10. Defendant Higgins received further clear warnings of the risks of mortality in using SRS in vertebroplasties. In particular, a June 28, 2002 University of Washington letter addressed to David ...