Olympus Corp. has had its fair share of legal troubles, some of which culminated in a settlement of $646 million in early 2016. That settlement resolved anti-kickback violations and criminal charges related to the Foreign Corrupt Practices Act, and really shed a light on the lack of internal compliance efforts at the company.
Further showing the lack of internal compliance efforts, in late 2014, doctors at UCLA’s Ronald Reagan Medical Center traced deadly infections to tainted medical duodenoscopes, manufactured by Olympus. In 2013, Olympus faced deadly superbug outbreaks in other countries, including Japan, and instructed its U.S. division not to warn American hospitals about possible fatal infections from its medical scopes. Due to the lack of warning, hospital patients in Seattle; Los Angeles; Denver; Charlotte, NC; and other cities were sickened by antibiotic-resistant bacteria – superbugs – after being treated with Olympus scopes.
The United States Food and Drug Administration reviewed the scopes and found that they were hard to clean and could harbor deadly bacteria. Following that FDA warning, a handful of superbug infection lawsuits sprung up across the country. Olympus maintained that the superbug infections were a result of hospitals not adequately cleaning the devices.
In late 2015, the FDA mandated duodenoscope makers to perform safety studies on its devices and issued a safety alert, warning the public of the risk of infection, also warning manufacturers like Olympus of the violations of not reporting the infections. The FDA, however, admitted that it never approved the redesign of the scopes in question, nor did it receive sufficient proof that hospitals could properly clean the devices according to manufacturer specifications.
In January 2016, Olympus finally recalled its medical scopes, issuing action steps for facilities that were still using the endoscopes.
In March of 2016, it came out that UCLA asked Olympus to lend them replacements. Olympus refused to do so, instead offering to sell the hospital thirty-five new scopes for $1.2 million – a 28% price increase from just a few months earlier. Olympus claimed that the previous discounts no longer applied – “supplies are already low, where demand is high with all academic institutions expanding their inventories.”
In April 2016, Congressman Ted Lieu of California filed a bill known as the Device Act, which would make it mandatory for device makers to share safety alerts more widely, including those issued abroad. The legislation would require companies to notify the FDA when they issue safety warnings in other countries related to the design and cleaning of their devices and would also require manufacturers to notify the FDA when they change the design or cleaning instructions of their devices, regardless of whether those changes warrant new government approval. Lieu noted that he planned to press lawmakers to take up the bill once they reconvened.
In July 2016, Congressman Ted Lieu of California pushed for Congress to toughen requirements on medical device warnings, calling a 2013 decision by Olympus Corp. to not issue an alert to U.S. hospitals about scope-related superbug outbreaks “despicable.”
On August 29, 2016, Rep. Lieu sent a letter to Secretary John Kerry, urging the State Department to request that Japanese authorities investigate and prosecute Olympus for civil or criminal misconduct in their mishandling of the aforementioned infections. He notes that internal emails “reveal that Olympus executives in Japan purposely told U.S. executives to not issue warnings associated with its medical scope devices, leading to antibiotic-resistant “superbug” outbreaks, infections, and deaths in hospitals all across the country.”
According to Lieu, “this is why Congress needs to act and pass legislation to make sure this doesn’t happen again as well as hold a hearing. I believe it is now time for the decision-makers at Olympus to be held accountable and for Congress to hear what they have to say.”
No action has been taken on the Device Act yet, which can be tracked here. It seems as though Rep. Lieu is laser-focused on this issue and depending on how the election season progresses, we may be able to see this bill come to the floor sometime soon.