United States. Congress. Senate. Committee on Gove.

Materials supplier liability and the coming crisis in availability of life-saving medical devices : hearing before the Subcommittee on Regulation and Government Information of the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, second session, May 20, 1994 online

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Online LibraryUnited States. Congress. Senate. Committee on GoveMaterials supplier liability and the coming crisis in availability of life-saving medical devices : hearing before the Subcommittee on Regulation and Government Information of the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, second session, May 20, 1994 → online text (page 1 of 18)
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\ / S. Hrg. 103-679

^ MATERIALS SUPPLIER LIABIUTY AND THE COM-
ING CRISIS IN AVAILABILITY OF UFE5AVING
MEDICAL DEVICES



Y 4. G 74/9: S. HRG. 103-679

flaterials Supplier Liability and th.



iING

BEFORE THE

SUBCOMMITTEE ON REGULATION AND
GOVERNMENT INFORMATION

OF THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

SECOND SESSION



MAY 20, 1994



Printed for the use of the Committee on Governmental Affairs







U.S. GOVERNMENT PRINTING OFFICE
79-922 cc WASHINGTON : 1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-044804-2 \

\



\ / S. Hrg. 103-679

J MATERIALS SUPPLIER LIABILITY AND THE COM-
ING CRISIS IN AVAILABILITY OF LIFESAVING
MEDICAL DEVICES



Y 4. G 74/9: S. HRG. 103-679

Haterials Supplier Liability and th..



iING

BEFORE THE

SUBCOMMITTEE ON REGULATION AND
GOVERNMENT INFORMATION

OF THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

SECOND SESSION



MAY 20, 1994



Printed for the use of the Committee on Governmental Affairs




0Cr ' 1SS4



U.S. GOVERNMENT PRINTING OFFICE
79-922 cc WASHINGTON : 1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-044804-2



COMMITTEE ON GOVERNMENTAL AFFAIRS

JOHN GLENN, Ohio, Chairman

SAM NUNN, Georgia WILLIAM V. ROTH, Jr., Delaware

CARL LEVIN, Michigan TED STEVENS, Alaska

JIM SASSER, Tennessee WILLIAM S. COHEN, Maine

DAVID PRYOR, Arkansas THAD COCHRAN, Mississippi

JOSEPH I. LIEBERMAN, Connecticut JOHN McCAIN, Arizona

DANIEL K. AKAKA, Hawaii ROBERT F. BENNETT, Utah
BYRON L. DORGAN, North Dakota

Leonard Weiss, Staff Director

Franklin G. Polk, Minority Staff Director and Chief Counsel

Michal Sue Prosser, Chief Clerk



SUBCOMMITTEE ON REGULATION AND GOVERNMENT INFORMATION

JOSEPH I. LIEBERMAN, Connecticut, Chairman
SAM NUNN, Georgia THAD COCHRAN, Mississippi

CARL LEVIN, Michigan WILLIAM S. COHEN, Maine

BYRON L. DORGAN, North Dakota JOHN McCAIN, Arizona

John Nakahata, Staff Director
James Lofton, Minority Staff Director



(II)



CONTENTS



Opening statements: Pa e e

Senator Lieberman 1

WITNESSES

Friday, May 20, 1994

Paul Citron, Vice President, Science and Technology, Medtronic, Inc 6

Eleanor Gackstatter, President and Chief Operating Officer, Meadox
Medicals, Inc 9

Katherine F. Knox, Business Program Manager, Corporate New Business
Development, DuPont Company 13

James S. Benson, Senior Vice President, Technology and Regulatory Affairs,
Health Industry Manufacturers Association 17

Mark Reily, Houston, TX 23

Peggy A. Phillips, Falls Church, VA 25

J. Donald Hill, Chair, Department of Cardiovascular Surgery, California Pa-
cific Medical Center, on behalf of the Biomaterials Availability Coalition 29

Bernard N. Stulberg, Cleveland Center for Joint Reconstructions, on behalf
of the American Academy of Orthopedic Surgery 32

Pierre M. Galletti, University Professor and Professor of Medical Science,
Brown University, and President, American Institute for Medical and Bio-
logical Engineering 35

M. Kristen Rand, Counsel, Consumers Union 41

Alphabetical List of Witnesses

Benson, James S.:

Testimony 17

Prepared statement with attachments 51

Citron, Paul:

Testimony 6

Prepared statement 45

Gackstatter, Eleanor:

Testimony 9

Prepared statement 47

Galletti, Pierre M.:

Testimony 35

Prepared statement 141

Hill, J. Donald:

Testimony 29

Prepared statement 138

Knox, Katherine F.:

Testimony 13

Prepared statement 48

Phillips, Peggy A.:

Testimony ^5

Prepared statement 136

Rand, M. Kristen:

Testimony 41

Prepared statement 143

Reily, Mark:

Testimony 23

Prepared statement • ••• 135



(III)



IV

Page

Stulberg, Bernard N.:

Testimony 32

Prepared statement 139

APPENDIX

Prepared statements of witnesses in order of appearance 45

Market Study — Biomaterials Supply for Permanent Medical Implants 62

Review Article: Abdominal Aortic Aneurysm — Calvin B. Ernst, M.D. — The

New England Journal of Medicine 148

Bio-Materials at Risk 154

Suits by Firms Exceed Those by Individuals — Wall Street Journal 155



MATERIALS SUPPLIER LIABILITY AND THE
COMING CRISIS IN AVAILABILITY OF LIFE-
SAVING MEDICAL DEVICES



FRIDAY, MAY 20, 1994

U.S. Senate,
Subcommittee on Regulation and Government
Information, Committee on Governmental Affairs,

Washington, DC.

The Subcommittee met, pursuant to notice, at 9:35 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. Joseph I.
Lieberman, Chairman of the Subcommittee, presiding.

OPENING STATEMENT OF SENATOR LIEBERMAN

Senator Lieberman. Good morning, and welcome to the hearing.

This morning our Subcommittee on Regulation and Government
Information turns its attention to what could be a major threat to
many of the miracles of modern medicine. Over the next 2 years,
health care as we know it in America could be radically trans-
formed, and I am not talking for the moment about health care re-
form legislation that is being considered in this Congress. I am
talking about the fact that the makers of many of the life-saving
medical devices that we take for granted today may no longer be
able to buy the raw materials and components that are necessary
to produce their products. This is a public health time bomb, and
it is ticking, and the lives of real people are going to be lost if it
explodes.

What could cause such a public health catastrophe? I am afraid
that the answer is our product liability system, out of control,
which makes it too easy to bring lawsuits against raw materials
suppliers and too costly for those suppliers to defend themselves
even if and when they ultimately win. Now those suppliers are con-
cluding that the costs of defending lawsuits involving medical prod-
ucts is too high in comparison to the money they are making by
selling those products to the manufacturers of implantable medical
devices. In other words, for the raw materials suppliers, it just is
not worth it to be in this business anymore.

How could this be? Well, a recent study by a group called AronofT
Associates paints what I would describe as a clear but dismal pic-
ture. That study surveyed the markets for polyester yarn, resins
such as DuPont's Teflon, and Polyacetal resin such as DuPont's
Delrin. Aronoff found that sales of these raw materials for use in
manufacturing implantable medical devices was just a tiny per-

(l)



centage — 0.006 percent — of the overall market, $606,000 out of
total annual sales that equal over $11 billion.

In return for that extra $606,000 in total annual sales, however,
raw materials suppliers have faced potentially huge liability-relat-
ed costs, even if they never lose a lawsuit. Let me give you one ex-
ample, and it is a notorious example. A company named Vitek
manufactured an estimated 26,000 jaw implants, using in each im-
plant 5 cents' worth, a nickel's worth of DuPont Teflon. The device
was developed, designed, and marketed by Vitek, which was not at
all related to DuPont. It was a separate company. But when those
implants began to fail, Vitek declared bankruptcy, and the patients
sued DuPont. DuPont's record in court on Vitek-related claims so
far has been astounding, 258 wins and only 1 loss, but the cost has
been equally astounding and staggering.

AronofF Associates estimates that DuPont alone was spending at
least $8 million a year over the past 5 to 6 years to defend these
lawsuits, based on the sale of an item worth a nickel for each im-
plant.

To put this in perspective, DuPont's estimated legal costs in
these cases for just 1 year would buy a 13-year supply of DuPont
Dacron polyester, Teflon, and Delrin for all U.S. makers of all
implantable medical devices, not just the makers of jaw implants,
which were the source of the lawsuit.

Now, faced with this cost-benefit picture, as we will hear, DuPont
decided in January of 1993 to stop selling its products to manufac-
turers of permanently implantable medical devices. At that time,
DuPont said it would only permit manufacturers to purchase a
year's supply, based on historical buying patterns. DuPont has sub-
sequently allowed manufacturers to purchase up to 3 years of raw
materials.

One supplier's decision — that is, DuPont, as I have described it —
might not be so troublesome except that there is no reason to be-
lieve that the economics will be any different for any of the suppli-
ers around the world. One of our witnesses today, in fact, has al-
ready contacted 15 alternate suppliers of polyester yarn worldwide.
All were interested in selling raw materials, except for use in prod-
ucts made and used in the United States. Now, that is an out-
rageous result, and unacceptable.

What is at stake here? Well, without raw materials, you cannot
make a final product. I have a heart valve here that I want to
show, if it is visible. The valve is the metal part in the middle.
Around the edge of the valve is a sleeve of polyester fabric. It is
this sleeve — here you have a tag that is sewn into the sleeve. It is
this sleeve that, as I understand it, is the point of connection be-
tween the valve and the rest of the heart. In other words, the sur-
geon sews through the fabric to attach this valve to the heart.
Without the valve, the patient will probably die prematurely.

Take, for example, a pacemaker. Pacemakers are installed—
again, I do not know how many have seen a pacemaker. This is a
pacemaker which is installed, as I understand it, under the skin.
They are installed in patients whose hearts no longer generate
enough of an electric pulse to get the heart to beat. To keep the
heart beating, a pacemaker is connected to the heart with wires.
These wires have silicone rubber insulation. This is literally a life-



saving wire. It is a simple piece of silicone rubber that connects the
pacemaker to the heart. Unfortunately, the suppliers of this rubber
insulation have begun to withdraw from the market for the same
reasons that I have just cited: worry about legal liability costs.
Without the pacemaker and its leads, again, sadly, the patient will
probably die prematurely. With the pacemaker, the patient can live
for decades.

Take still a third example. We are going to hear today from
Thomas Reily, a 9-year-old boy from Houston, Texas, who suffers
from hydrocephalus, a condition in which fluid accumulates around
the brain. A special shunt enables Tom to live a pretty normal life.
But continued production of that shunt is in doubt because of the
raw materials suppliers who are concerned about the potential cost
of product liability lawsuits.

We are also going to hear today from Peggy Phillips of Falls
Church, Virginia, whose heart has stopped beating twice, I gather,
because of fibrillation. Today, she also lives an active, normal life
because she has an implanted automatic defibrillator. Again, criti-
cal components of the defibrillator may no longer be available be-
cause of potential product liability costs.

We simply cannot allow Tom Reily and Peggy Phillips and the
7.4 million other people who owe the quality of their lives to mod-
ern medical devices to become casualties of an outmoded legal li-
ability system. If the economics of supplying raw materials to the
implantable medical device makers is as bad as it seems, then I
think it is imperative that we act. We cannot expect raw materials
suppliers to continue to serve the medical device market out of the
goodness of their hearts, notwithstanding the liability-related costs.
We need to reform our product liability laws, to give these raw ma-
terials suppliers some assurance that, unless there is real evidence
that they were responsible for putting a defective device on the
market, they cannot be sued simply in the hopes that their deep
pockets will fund legal settlements.

I have long believed that the liability reform that we are talking
about here in Congress could be both pro-consumer and pro-busi-
ness. I believe that the testimony we are going to hear this morn-
ing proves this once again. When fear of liability suits and litiga-
tion costs drives valuable life-saving products off the market be-
cause their makers cannot get the raw materials to make those
products, consumers obviously lose. When companies must divert
money from developing new life-saving products to replace old
sources of raw materials supply, consumers again lose. When one
company must spend millions to defend itself in lawsuits over a
product it did not design or make, for which it simply provided a
very inexpensive raw material ingredient, consumers are the ones
who suffer. I think this morning's hearing dramatically illustrates
that efforts to increase compensation for the injured, if the system
is allowed to go out of control, can come at an unacceptably high
cost to society.

Based on the testimony that we will hear this morning, which I
have gone over in some detail, I am committed to forging a solution
that will head off this threat to our national public health. This
morning the Subcommittee is, in fact, releasing a staff draft of a
possible legislative response to this crisis. I plan to introduce a bill



shortly, a final bill, after the Memorial Day recess, with the hopes
that Congress will be able to act quickly.

In my opinion, the patient, which in this case is the miraculous
modern medical device industry, is in critical condition, and we
really need to perform some emergency legislative surgery. Delay
could quite literally be deadly.

PREPARED STATEMENT OF SENATOR LIEBERMAN

Good morning. This morning the Subcommittee on Regulation and Government
Information turns its attention to what could be a major threat to many of the mir-
acles of modern medicine. Over the next 2 years, health care as we know it could
be radically transformed, not by health care reform legislation, but because the
makers of many of the life-saving medical devices that we take for granted today
may no longer be able to buy the raw materials and components necessary to
produce their products This is a public health time bomb — and it is ticking.

What could wreak this public health catastrophe? The answer appears to be an
out-of-control product liability system which makes it too easy to bring suits against
raw materials suppliers, and too costly for those suppliers to defend themselves
even when they ultimately win. Those suppliers have begun to decide that the costs
of defending lawsuits involving medical products is too high to justify selling raw
materials to the makers of implantable medical devices. For those suppliers, it just
isn't worth it.

How could this be? A recent study by Aronoff Associates paints a pretty clear, but
dismal, picture. That study surveyed the markets for polyester yarn, resins such as
DuPont's Teflon, and polyacetal resin such as DuPont's Delrin. Aronoff found that
sales of these raw materials for use in manufacturing implantable medical devices
was just a tiny percentage (0.006 percent) of the overall market, $606,000 out of
total sales of over $11 billion.

In return for that extra $606,000 in total annual sales, however, raw materials
suppliers face potentially huge liability-related costs, even if they never lose a law-
suit. To take one example, a company named Vitek manufactured an estimated
26,000 jaw implants using about 5 cents of DuPont Teflon in each device. The device
was developed, designed and marketed by Vitek, which was not related to DuPont.
When those implants failed, Vitek declared bankruptcy, its founder fled to Switzer-
land, and the patients sued DuPont. DuPont's record in court so far has been envi-
able — 258 wins and one loss — but the cost has been staggering. Aronoff estimated
that DuPont alone was spending at least $8 million per year over the past 5 to 6
years to defend these suits. To put this in perspective, DuPont's estimated legal ex-

genses in these cases for just 1 year would buy over a 13 year supply of DuPont's
lacron polyester, Teflon and Dalcrin for all U.S. makers of implantable medical de-
vices.

Faced with this cost/benefit picture, DuPont decided, in January 1993, to stop sell-
ing its products to manufacturers of permanently implanted medical devices. At that
time, DuPont said it would only permit manufacturers to purchase a year's supply,
based on historical buying patterns. DuPont has subsequently allowed manufactur-
ers to purchase up to three more years worth of raw materials.

One supplier's decision alone would not be troublesome except that there is no
reason to believe that the economics will be different for other suppliers around the
world. One of our witnesses today has already contacted 15 alternate suppliers of
polyester yarn worldwide. All were interested in selling her raw materials — except
for use in the United States.

What is at stake here? Without raw materials, you cannot make a final product.
Take this heart valve, for example. Around the edge of this valve is a sleeve of poly-
ester fabric. This fabric is what the surgeon sews through when he or she installs
this valve. Without this valve, the patient will surely die.

Take another example, a pacemaker. Pacemakers are installed in patients whose
hearts, because of heart attacks or for other reasons, no longer generate enough of
an electrical pulse to get the heart to beat. To keep the heart beating, a pacemaker
is installed on the left side of the chest. It is connected to the heart with wires.
These wires have silicone rubber insulation. Unfortunately, the suppliers of the rub-
ber have begun to withdraw from the market. Without this pacemaker and its leads,
the patient will surely die. With that pacemaker, the patient can live for decades.

Take still a third example. We have in the room today a 9 year old boy who suf-
fers from hydrocephalus, a condition in which fluid accumulates around the brain.
Without a hydrocephalitic shunt, that boy's head would have expanded until he was
killed. With that shunt, he has been able to live a normal life.



We will also hear today from a woman who has already "died" twice when her
heart stopped beating. She was lucky enough to collapse in the midst of people who
could sustain her with CPR until she was revived. Today, she lives an active, nor-
mal life. She has some assurance that she will not keel over dead at any moment
because she has an implanted automatic defibrilator.

We cannot allow this woman, the 9 year old boy, the person with a pacemaker,
and the patient with the heart valve to become casualties of our liability system.
If the economics of supplying raw materials to the implantable medical device mak-
ers is as bad as it seems, it is imperative that we act. It is irrational and unfair
to expect raw materials suppliers to continue to serve the medical device market
as an act of charity, notwithstanding the liability-related costs. We need to rational-
ize our product liability laws in this area, to give raw material suppliers some as-
surance that unless there is real evidence that they were responsible for putting a
defective device on the market, they cannot be sued simply in the hope that their
deep pockets will fund settlements in lieu of spending money on litigation costs.

I have long believed that the fight for liability reform was as much a pro-
consumer fight as it was a pro-business one. I believe that the testimony we will
hear this morning proves this once again. When fear of liability suits and litigation
costs drives valuable, life-saving products off the market because their makers can-
not get raw materials, consumers cannot possibly come out ahead. When companies
must divert money from developing new life-saving products to replacing old sources
of raw materials supply, consumers cannot possibly be coming out ahead. When one
company must spend millions just to defend itself in lawsuits over a product it did
not design or make— for which it simply provided a raw material ingredient — con-
sumers do not come out ahead. This morning's hearing dramatically illustrates that
efforts to increase compensation for the injured can sometimes come at an unaccept-
ably high cost to the rest of society.

We must find the right balance. We cannot tolerate a situation in which suppliers
of some of our country's most sophisticated raw materials feel they must refuse to
make those materials available to manufacturers of life-saving and life-enhancing
medical devices simply to protect themselves against the cost of defending liability
suits.

Based on the testimony we will hear this morning, I am committed to forging a
solution that will head-off this threat to our national public health. This morning
the Subcommittee is releasing a staff draft of possible legislation. While I do not
expect our witnesses to be able to comment on this draft this morning, I plan to
introduce a final bill shortly after the Memorial Day recess. It is my hope that Con-
gress will act on this bill before the end of the year. The patient is in critical condi-
tion, and we need to perform emergency surgery. Delay could, quite literally, be
deadly.

We have three panels of witnesses to assist us in exploring this problem this
morning. The first panel consists of medical device manufacturers and raw mate-
rials suppliers. On the second panel are patients, physicians and medical research-
ers who will tell us what the current situation means for medical care. Our third
panel is Ms. Kristen Rand, counsel for Consumers Union.

Senator Lieberman. We have three panels of witnesses to assist
us in exploring this problem this morning. They are a superb group
of witnesses. I appreciate very much their willingness to be with
us today, and I look forward to their testimony at this point.

Let me say to all the witnesses that in the cases, which are most
of you, where you have submitted testimony for the record, we will
include it in the full record of the hearing. We are going to run the
lights here as a way to try to — we have 10 witnesses and a long
hearing, and so we want to give everyone a fair chance to speak.
The lights are going to run on a 5-minute cycle. I hope you can
speak in that time. If you feel that there is something particularly
important that you have not had a chance to say in the 5 minutes,
do not feel that your First Amendment rights to petition to Con-
gress are unduly restricted.

We will begin with Mr. Paul Citron, who is the Vice President,
Science and Technology, of Medtronic, Incorporated, and we are
going to hear on this panel from people who are in what I would
call the medical device industry.



Mr. Citron, thanks for being here, and we look forward to your
testimony now.

TESTIMONY OF PAUL CITRON, 1 VICE PRESIDENT, SCIENCE
AND TECHNOLOGY, MEDTRONIC, INC.

Mr. Citron. Thank you, Mr. Chairman. Among my responsibil-
ities at Medtronic is assuring that our company is technologically
positioned to develop and produce high-quality, innovative products
that treat disorders of the circulatory and neurological systems.

Senator LlEBERMAN. Let me ask you to move the mike as close
as you can, because it is very directional.

Mr. Citron. Sure. Medtronic, by the way, is a leader in produc-
ing therapeutic medical devices to improve cardiovascular and neu-
rological health of patients around the world.

It has only been 40 years since the first development of medical
device technology which has allowed physicians to effectively re-
place body parts which have become damaged by disease. A pro-
gression of innovative therapeutic technologies has restored health
to literally millions of patients around the world.

The brief history of medical device breakthroughs begins in the
1950's when large-diameter vascular grafts permitting the replace-
ment of dangerously weakened major blood vessels were first devel-
oped. In 1958, the first electronic device, the cardiac pacemaker,
was implanted in a patient. This revolutionary technology stimu-
lated hearts that had too slow a heart rate — to a rate approximat-
ing normal. With this technology, the heart was once again able to
pump sufficient quantities of blood to meet the majority of the pa-
tients' hemodynamic requirements. Without pacemakers, patients
typically experience sharply limited ability to conduct daily living
tasks, suffer from fainting episodes, and experience premature
death.

The 1960's saw the emergence of the mechanical heart valve as
a practicable replacement for defective natural valves. Implanted


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Online LibraryUnited States. Congress. Senate. Committee on GoveMaterials supplier liability and the coming crisis in availability of life-saving medical devices : hearing before the Subcommittee on Regulation and Government Information of the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, second session, May 20, 1994 → online text (page 1 of 18)