When a tubular device made by Ann Arbor area medical device manufacturer Terumo Cardiovascular Systems was removed from a patient during heart surgery at an unknown hospital, the device looked unusual.

Upon inspection, doctors realized that the diffuser tip of the device, called a cannula, had become entangled with a blood clot.

Sometime afterward, the patient died.

But Terumo CVS, which employs more than 430 workers in Scio Township, failed to properly investigate the incident, according to U.S. Food and Drug Administration investigators.

Terumo Cardiovascular Systems tests its medical devices in a simulated operating room.

Nathan Bomey | AnnArbor.com

The FDA investigators would later conclude that the cannula incident was one of many different problems that exposed Terumo’s failure to implement “an adequate and effective quality system at all levels of your organization,” according to documents recently provided to AnnArbor.com.

Terumo and the FDA last month reached a consent decree requiring the company to pay $35 million in fines, subject itself to regular inspections from an independent auditor and agree to limit sales of several of its products until the company adopts corrective action.

The FDA did not force Terumo to recall any of its devices, which suggests that it does not necessarily believe the company’s products are dangerous. And, in fact, in the incident with the cannula, the FDA accused Terumo of failing to properly investigate and report the incident - not of selling a faulty product.

But the FDA said that investigators observing the company’s Scio Township complex from January 2010 to March 2010 found "numerous" violations, including "deficiencies in processes for corrective and preventive action, nonconforming product, complaints, purchasing, process validation, design controls and adverse event reporting."

The consent decree gives Terumo up to two years to fix its problems to avoid further penalties.

It also comes as the FDA is enduring its own share of criticism for aggressively cracking down on medical devices and squashing innovation.

In an interview, Mark Sutter, CEO of Terumo CVS, said the company is already taking steps to improve its manufacturing processes and reporting procedures to meet the FDA’s demands.

“I’m not going to paint it as unfair,” he said. “We fully take responsibility for our requirement to meet FDA regulations. They’ve cited that we fell short, so we fell short. We’re taking that very seriously and expect to be able to address every one of them.”

For example, one of Terumo’s mistakes was that it would tell the FDA about a customer’s complaints in a single report instead of relaying each complaint as a separate item.

“We understand and agree that that was wrong,” Sutter said.

Sutter also acknowledged that Terumo CVS failed to report certain complaints “because we didn’t deem it as high enough risk for there to be a need to do that.”

Terumo Cardiovascular Systems CEO Mark Sutter

Photo courtesy of Terumo Cardiovascular Systems

In the incident with the cannula, the company said it investigated the situation and coordinated with the patient’s hospital and doctors, who conducted their own investigation.

“They determined and confirmed that the cannula did not have an impact on the patient’s death. That was our assessment (too),” he said. “There’s evidence on multiple angles to show that. The problem was our documentation on that was not sufficient.”

To be sure, Terumo CVS products are involved in more than 1,000 procedures a day throughout the world. And it’s not terribly uncommon for patients to die during heart surgery.

But the FDA was not completely satisfied with Terumo’s explanation.

“Your firm did not document the attempts to retrieve the product from the hospital, or document the reason why no products were returned for investigation,” the Detroit-based FDA investigators concluded in their original inspection report. “The investigation conducted by your firm did not include any attempts to try and recreate the problem on the remaining inventory in stock. Only a visual inspection of the remaining stock was conducted.”

The investigators added: “The investigation did not determine if your firm’s product caused or contributed to the patient’s death.”

Anastacia Bilek, acting director of the enforcement division of the FDA’s Center for Devices and Radiological Health, told AnnArbor.com that the incident illustrated the “types of breakdowns that this company has having.”

“You manufacture devices in the real world, so problems can occur,” Bilek said. “You have to have robust systems in place to detect those problems and when those systems break down, you put patients at risk. Terumo makes life-sustaining devices, and we here at the agency would expect all manufacturers to hold themselves to the highest standards.”

Kelly Murphy, a Kalamazoo-based life sciences attorney with Honigman, Miller, Schwartz & Cohn, said that, based on the FDA’s actions, it appears that the FDA does not believe that Terumo was responsible for the patient’s death.

But the FDA was not satisfied with the “quality system they had in place,” said Murphy, whose firm does not represent Terumo.

Years of problems

The FDA’s decision to pursue corrective action at Terumo comes after years of investigations that uncovered a variety of problems.

After inspections in May 2004 and December 2005, the FDA sent warning letters to Terumo, urging the company to “take prompt action” to improve its organizational structure and reporting procedures, among other things.

Sutter said Terumo had made improvements to its systems after those inspections, but they turned out to be insufficient for the FDA.

“We’ve always made it a top priority for us to take matters of the FDA very seriously and as those things were identified, those things were corrected,” Sutter said. “To be honest with you, we worked off of a false sense of acceptance from those past inspections, that they were good.”

But, after the 2010 inspections, it became clear that there were “systematic breakdowns in the company’s good manufacturing practices, or their quality system, as we call it,” the FDA’s Bilek said.

“This is a facility that’s had issues for some time. We ultimately felt here in the agency that the only way we were going to bring them into compliance was to get them under consent decree,” Bilek said. “There weren’t adequate corrections to prior observations and we saw similar problems showing up with each subsequent correction.”

According to the 42-page consent decree, which was certified by a U.S. District Court judge last month, Terumo is allowed two years to make the appropriate changes to its processes. After that, the company could faces tens of thousands of dollars in violations for every day that it fails to comply.

In the meantime, the company agreed that it will not manufacture or sell two heart-lung bypass systems and several other medical devices to new customers until it makes improvements. The firm can continue to sell the products to existing customers, but those clients must sign a special agreement acknowledging the circumstances.

The company must also open its doors to a third-party auditor who will deliver regular inspection reports to Terumo and the FDA. If Terumo fails to improve its processes, as determined by the auditor, the company could be subjected to additional penalties.

For now, customers using Terumo products — that is, hospitals, health care systems and patients — can continue using them because the FDA is concerned that pulling them off the market would cause disruptions.

A “healthy company”

Sutter said the restrictions would have “only minimal impact” on its revenue.

The company, a division of Japan-based $3.88 billion giant Terumo Corp., shares its sprawling 55-acre Scio Township campus with its Terumo Heart, a separate division that’s not affected by the FDA decree. Terumo Cardiovascular Systems has 435 employees locally, up from 367 a year ago.

The firm had previously been held up by the Michigan Economic Development Corp., Ann Arbor SPARK and industry leaders as an example of the Ann Arbor region's medical device prowess. The two Scio Township divisions in late 2009 completed a $3.6 million expansion that included 60 new jobs over an 18-month stretch.

Sutter said Terumo still plans to add jobs to its local operation to support the growth of its products.

Stephen Rapundalo, executive director of Ann Arbor-based life sciences industry association MichBio, said Terumo continues to be a “very healthy company.”

“It’s certainly not uncommon for companies to run into these compliance issues with the FDA. Clearly Terumo has some matters they have to deal with and improve internal processes to ensure proper compliance,” Rapundalo said.

“I don’t think there was any serious concern over safety. It’s just a matter of dotting the i’s and crossing the t’s, and the FDA is pretty harsh on things like that.”

FDA scrutiny intensifies

The action against Terumo comes amidst heightened FDA scrutiny of medical device and drug companies in recent years.

FDA supporters say the agency is protecting the public from harmful effects of industry products. Critics say the company is causing unnecessary bureaucratic hurdles for companies that are producing products that improve global health.

MichBio has been participating in a campaign with other biosciences industry groups to fight proposed FDA regulations that would involve more scrutiny for new medical device products.

“That would impinge on innovation without really proving that it’s going to add anything, bring along any added safety,” Rapundalo said. “The FDA is trying to load up even more restrictions.”

Rapundalo also criticized a “lack of clarity and transparency in the rules” for inspections.

“We’ve got reviewers who are interpreting the same rules in different ways, sometimes even within the same company at different times,” Rapundalo said. “The FDA has some internal control issues that they need to address.”

Bilek did not address a question about the political motivations behind the FDA’s crackdown except to say that, in Terumo’s situation, the company’s “whole system” for correcting and preventing mistakes was broken.

For instance, she said, the company continued to contract with a circuit board parts supplier even though that supplier’s parts were faulty.

“They had problems with how components were placed inside that circuit board,” Bilek said. “If your computer reboots, it’s probably not that big of a deal. If it affects your heart-lung machine during a heart-bypass surgery, that’s a little more troubling.”

Sutter said Terumo is making the appropriate changes to fix the problems with its products, including a device that was recording inaccurate measurements of patients’ potassium levels.

He said the company’s recent hiring has included engineers and “expertise to augment our quality system efforts.”

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.