OtisMed Distributed FDA-Rejected Knee Replacement Devices

OtisMed, a subsidiary of Stryker, is under fire this week for knowingly distributing knee-replacement-surgery cutting guides after the FDA rejected their application for marketing clearance. According to The New York Times, the unapproved knee replacement devices may be to blame for surgery complications in dozens of patients.

The company, which was founded in 2005 to sell its OtisKnee device, sold more than 18,000 cutting guides between May 2006 and September 2009 generating more than $27 million in revenue. Prompted by an acquisition deal with Stryker, OtisMed filed for FDA approval in late 2008. In September 2009, the FDA rejected the application citing that OtisMed had failed to prove the safety of the device. The FDA also told the company it could no longer distribute OtisKnee without approval.

Despite the FDA prohibition–and against its own Board of Directors' vote to immediately stop all shipments, OtisMed CEO Charlie Chi illegally shipped devices to customers who had already placed orders for them. According to the Justice Department, that decision will cost OtisMed $80 million in criminal and civil fines and Chi stands to face up to three years in prison and personal fines of $300,000. He will be sentenced on March 18.

To learn more, read the full story.