The opinion of the court was delivered by: Legrome D. Davis, J.
On November 21, 2011, a nine-month sentence of imprisonment was imposed on Defendant Michael D. Huggins, who pled guilty as a responsible corporate officer for violations of the 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). The sentence varied upward from the applicable Sentencing Guidelines range of 0 to 6 months for imprisonment. The variance is warranted because a Guidelines sentence would not adequately address the unprecedented nature of the criminal conduct of Huggins and his co-Defendants. The scope of their scheme is without parallel, the risks created for an unsuspecting public were grave, and the scale of the deception of the Food and Drug Administration can only be characterized as extreme.
At sentencing, Defendant orally moved pursuant to 18 U.S.C. 3143(b)(1)(B)(iv)*fn1 for release at the expiration of six months, absent a contrary ruling by a court. Transcript of Sentencing of Michael D. Huggins ("Sentencing Tr."), 83:2-86:3, Nov. 21, 2011. The motion for release was denied and Defendant was remanded to custody. On December 2, 2011, Defendant filed a notice of appeal of the final judgment entered on November 22, 2011 and the denial of the motion for release. (Doc. No. 178)
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, serious risk of illness or injury. See 21 U.S.C. §§ 351, 360c, 360e, 360j; ; 21 C.F.R. § 812.3(m) (A "significant risk device" is one that presents a potential for serious risk to the health, safety, or welfare of a subject."). 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 Huggins was hired by Synthes at the end of 1994. From 1999 through January 2004, he served as President of Synthes North America, Inc., a subsidiary of Synthes, Inc. From February 2004 through January 7, 2007, he held the position of President of Global Synthes Spine Division. Presidents of the company's other units, such as Defendant Thomas B. Higgins, President of the Spine Division, reported directly to Huggins. Huggins was the most senior, responsible officer on the line of command before the Chief Executive Officer of Synthes' multinational business enterprise, Hansjorg Wyss. Huggins reported directly to Wyss.
Huggins 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 or an approved investigational device exemption. 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
1. In July 1999, Synthes acquired Norian Corporation, a manufacturer and seller of two calcium phosphate bone cements, Norian Cranial Repair System ("CRS") and Norian Skeletal Repair System ("SRS"). SRS had been approved by the FDA to be marketed for use in the distal radius, a long bone in the arm. Upon acquisition of Norian, Synthes began exploring new uses for the bone cements. In February 2000, Hansjorg Wyss, announced to Synthes personnel "a strong push for vertebroplasty". See G. Ex. 2, Government's March 26, 2010 Presentence Memorandum (G Ex. 1 through G Ex. 81), Doc. Nos. 93 and 94.
In early 2000, Synthes planned to conduct a clinical trial of SRS without the FDA's approval. This was reflected in Thomas B. 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. The plan was to identify surgeons, select test sites, provide SRS product, train surgeons, observe surgeries, and compile and review data. 510(k) clearance for SRS was obtained on December 20, 2001.
2. A number of Synthes' regulatory personnel strenuously warned in 2000 and 2001 that a clinical trial of SRS would be illegal. See, e.g., June 21, 2007 Report of Interview of Barry E. Sands, former Synthes Group Manager, Regulatory and Clinical Spine during 2000-2003 ("Sands Interview"), submitted at the evidentiary hearing held in this case on June 6-7, 2011, as Huggins' Hr'g Ex. 6 at 2, 3, 5; March 19, 2001 e-mail from Michael Sharp/Synthes Regulatory to co-Defendant Richard E. Bohner, Vice President of Operations who reported directly to Defendant Huggins until February 2004, captioned, "Spine [T]est Market for SRS," G Ex. 18.
Huggins received at least one warning through an August 23, 2000 e-mail from Michael Sharp, which Bohner forwarded to Huggins, G Ex. 17; see also G Ex. 18. Sharp warned against promoting off-label use of SRS without clearance from the FDA, stating in part:
"As everyone is well aware, I hope, we do not have a spine indication for Norian SRS at this time. . . . We cannot promote the use of SRS for unapproved indications, and this is especially true for use in the spine, where FDA has previously made it clear to Norian that any intra-spinal use would require additional approval. . . . We are aware that the spine PD group has been considering developing a delivery system which could be used for vertebroplasty with any substance . . . . However, any suggestion on our part that the instrument could be used with SRS would be considered promotion of an unapproved use of SRS."
3. Two of Dr. Delamarter's patients suffered hypotensive, and nonfatal, events*fn5 on February 8, 2001 during vertebroplasty/kyphoplasty procedures using CRS, a precursor Norian device that had the same calcium phosphate formulation as SRS. At that time, CRS was not cleared by the FDA for use in the spine. In March 2001, Huggins learned about the Delamarter hypotensive events. See January 28, 2003 e-mail from Bohner to Higgins, attaching Huggins' March 29, 2001 e-mail, G Ex. 52. Huggins knew that a Synthes sales representative had been present at the off-label Delamarter surgeries.
Huggins addressed this off-label, and therefore illegal, promotion in his March 16, 2001 e-mail, captioned, "Dr. R. Delamarter. He wrote: "You need to real [reel] the salesforce in ASAP." G Ex. 26.
4. Huggins attended the November 15, 2001 Synthes -- Stratec Spine Management Review Board Meeting. CEO Hansjorg Wyss and Higgins also participated. Minutes at 1, 2-3, G Ex. 5. At the meeting, "Tom Higgins asked if we should consider a long-term IDE clinical study to follow-up patients with the vertebroplasty technique." Id. 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.
The safer and lawful approval route was expressly rejected. Huggins' single reported comment evinces an understanding of the correct route for examination of the vertebroplasty technique.
The Addendum to the MRB Meeting Minutes reveals that Wyss, Huggins, and Higgins later met and discussed Dr. Sohail Mizra's [University of Washington] presentation at the annual meeting on vertebroplasty and the serious nature of complications associated with the procedure. They ratified the decision to proceed via a limited test market involving at least 50 patients, whose cases would be followed before the Synthes product would be released to the broad medical market. Addendum, G Ex. 5 at 3.
At the time this decision was made, Huggins along with Synthes' other most senior executives 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. It was also known that Synthes' planned clinical trials on humans could not be lawfully conducted. See Sands Interview at 2, Huggins Hr'g Ex. 6.
5. On December 20, 2001, the FDA gave a 510(k) clearance for use of SRS as a general bone void filler in the spine, but only for "bony voids or defects that are not intrinsic to the stability of the bony structure." The label warned: "Do not mix . . . with any other substance." G Ex. 11.
6. During a May 8, 2002 telephone conference with Barry Sands and other Synthes personnel, 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." Id.; 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. Sands Interview, Huggins' Hr'g Ex. 6 at 3-4. "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 Huggins was fully informed about the call and the FDA's concerns and requirements. Agenda and minutes for September 17, 2002 Synthes -- Stratec Spine MRB Meeting, G Exs. 35, 36 at 1DOJSYN.073.001959. Also, the minutes of the FDA call were attached to Synthes' subsequent Special 510(k) submission for clearance of XR as a general bone void filler, which was granted on December 19, 2002. G Exs. 13, 43, 44. The label cleared for XR included a warning bullet: "Not intended for treatment of vertebral compression fractures." G Ex. 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-S (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. G Hr'g Ex. 3, submitted at the evidentiary hearing in this case on June 6-7, 2011. Thus, no later than May 2002, see G Ex. 8, Huggins knew 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, Huggins knew, or should have known, of the need for further testing before the product could be safely used on humans.
See also G Ex. 37 at 1DOJSYN.089.000366-.000395 (University of Washington studies and grant proposal ...