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BIOMATERIALS ACCESS ASSURANCE ACT OF 1997

THURSDAY, JUNE 12, 1997
House of Representatives,
Subcommittee on Commercial And Administrative Law,
Committee on the Judiciary,
Washington DC.

    The subcommittee met, pursuant to notice, at 10 a.m., in room 2237, Rayburn House Office Building, Hon. George W. Gekas (chairman of the subcommittee) presiding.
    Present: Representatives George W. Gekas, Bob Inglis, Ed Bryant, Steve Chabot, Jerrold Nadler, Martin T. Meehan, and William D. Delahunt.
    Also present: Representatives Harold L. Berman and Zoe Lofgren.
    Staff present: James W. Harper, counsel, Audray Clement, staff assistant; and Stephanie Peters, minority counsel.
OPENING STATEMENT OF CHAIRMAN GEKAS

    Mr. GEKAS. Good morning. The hour of 10 having arrived, this hearing sponsored by the Subcommittee on Commercial and Administrative Law of the Committee on the Judiciary will come to order.
    We note the presence of the gentleman from Ohio, Mr. Chabot, who is a member of this subcommittee and who has in the past exhibited great interest in the subject matter at hand. The number of members having reached two now who are present, we establish a working quorum, and, therefore, we shall proceed with this hearing.
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    The subject matter is well known to everyone in this room because it has been around the halls of Congress for several years. We hope that this is the last hearing that we will employ in the march toward final approval of this legislation. It is one of a very basic concept and, therefore, we see no reason why it shouldn't pass with a unanimous vote of the Congress, let alone a contentious vote, but issues like this being what they are, they will draw criticism. They will draw contentious debate in some quarters, but we will see it through, and we predict that we will be successful in the final outcome of this legislation.
    I say this in advance of the testimony that is going to be presented here today, because I consider this testimony as endorsing the concept by and large and that, therefore, I am not being prejudiced in favor of it when I make these opening remarks and hopefully the speedy approval of the legislation. We know enough about it and this testimony will add to our knowledge and our experience on it, and, therefore, give us even further impetus in the march toward final approval.
    And for the sake of those who do not know exactly what the bill does, it simply provides a mechanism whereby the supplier of generic materials, materials that can be used for a million different purposes, are ordered and bought by a company that is engaging in the business of creating new medical devices and putting materials together for lifesaving purposes in many cases. The supplier innocently sells a batch of these materials and then finds that it, the supplier, is subjected to voluminous suits both in dollars and in time and energy that would be visited upon them, because something along the line may have gone wrong and the patient, within the rights of that patient, brings a legal liability suit.
    But in the nature of the judicial system, the shotgun approach is used many times wherein the supplier who is totally innocent in the whole affair is brought in, is required to expend tremendous sums of money, hire banks of lawyers and waste 2, 3 years sometimes, maybe more, in fighting off this litigation. In almost every instance that we have been able to record throughout the years that we've been involved in this matter the suit against that individual biomedical supplier, the supplier of those generic materials, is absolved from liability anyway, but in the meantime thousands and millions of dollars in some cases have been spent uselessly.
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    What does that do? That causes the supplier of that material to pause in the next transaction that is to come its way on whether or not it should continue to supply and make the market open enough to permit its material to flow to the medical device community. So we have very modestly and practically, but very effectively, built into the proposed legislation safeguards for the patient that, indeed, if it can be shown that for some connection that is not readily visible that the supplier should be held in the net of liability, so be it. However, in those cases where it is obvious to all concerned, we allow a preliminary process to eliminate from the case the supplier who is totally innocent and who has for years supplied this kind of material for a million different purposes and cannot be under legal precept said to be liable for an ultimate injury if such should occur. That is where we are.
    Now, chronologically, our bill dates back a couple of sessions. One aspect of the history, which is important to us, is that it did pass both the House and the Senate in a form in which it became a part of an overall product liability bill. That product liability bill was vetoed by the President, and thus our feature also went down the drain. The language that the President employed as he vetoed the bill gave us reason to believe that our bill, if standing alone or if matched with other liability features that he will find acceptable, would be subject to a Presidential approval and signature and that this measure could pass into law. On those bases, then, we will proceed as expeditiously as we can, and try to clear the bill from this committee, from the full Judiciary Committee, and bring it to the floor in the very near future.
    [The bill, H.R. 872, follows:]

INSERT OFFSET RING FOLIOS 1 TO 27 HERE

    Mr. GEKAS. We will allow a brief opening statement from the gentleman from Ohio if he wishes to offer it.
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    Mr. CHABOT. I thank the chairman, and I'll be very brief in my remarks. I want to, first of all, thank Chairman Gekas for calling this very important hearing on this very important issue. He's certainly been a leader in trying to reform an area of the law that we tried to reform in the last Congress.
    The fact is our legal system, particularly in the area of products liability, is just out of control. I practiced law for 16 years. I'm from Cincinnati, OH, and practiced law for 16 years there, and saw it firsthand in many ways, and it's going to take some time to get it reformed to the extent it needs to be reformed, but this is a small and very important part of that reform which should take place as quickly as possible.
    It costs American companies billions of dollars every year to guard against and defend thousands of frivolous lawsuits whose costs are passed on to the consumer in the form of higher prices or products that never make it on the market, diseases that never get cured, lives that are lost. In the last Congress we attempted, as the chairman mentioned, to reform this legal system, the one that I mentioned is out of control, to make it more fair for plaintiffs and defendants and consumers, and, yes, fairer for the taxpayers, but we were thwarted in our efforts by the President who vetoed the products liability and the overall legal reform bill after he very closely consulted with the trial lawyers of this country. I think it was just a shame that that veto occurred, but the fact is that it did.
    This legislation that we're examining today is a small, yet vital piece of the overall reform that we should move forward with as quickly as possible, and it should be considered on its own, even if the overall legal reform can't get done right now. This bill would simply allow suppliers of biomaterials, the raw materials and component parts that go into medical implant devices, to avoid costly litigation so that they can continue to provide these vital supplies to the device manufacturers. I hope that this legislation, which the President singled out last year when he vetoed the overall product liability reform as a laudable section of the tort reform bill, will become law swiftly so that those who need these lifesaving supplies have assured access to them.
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    Again, there are a lot of people whose lives can be saved and people who have disease that can be treated if we can get this beyond the House, get it through the Senate, and get it beyond the President's veto pen this time, but even though he lauded it last time doesn't necessarily mean that it's assured passage, but I certainly hope that it will be.
    I'll look forward to hearing the witnesses today, and I might just mention members will be coming and going as time goes on as what usually happens around here; we have three or four hearings going on at the same time, and the fact that we're not all here yet does not mean that there won't be more coming nor does it mean that there's not interest in this, because this is a very important piece of legislation, and I again want to commend the chairman for calling this hearing.
    Mr. GEKAS. I thank the gentleman. We acknowledge the presence of the ranking minority member of our subcommittee, the gentleman from New York, Mr. Nadler, and yield to him for any opening statement that he might wish to offer.
    Mr. NADLER. Thank you, Mr. Chairman.
    Today we examine two issues that are of utmost importance to all Americans: the availability of state-of-the-art medical devices and the right of patients to have some assurance that the devices they receive are of the highest quality and will, in the words of the Hippocratic oath, do no harm.
    Unfortunately, sometimes individuals can be harmed by medical devices, and sometimes that harm is caused by faulty design or faulty materials. The authors of this legislation have acknowledged that biomaterials suppliers can engage in conduct—though obviously, usually don't—but can engage in conduct so egregious that they should be held liable. This bill, for example, does not apply to ''harm caused by either the silicone gel or the silicone envelope utilized in a breast implant containing silicone gel.'' The bill also does not apply to ''commercial loss.'' In fact, it does not apply to harming our manufacturers of the medical devices doing business with the biomaterials or component parts suppliers or harm to the doctors or to the hospitals. So, everyone can sue a negligent biomaterials or components parts supplier except the poor patients whose only harm includes—and I'm quoting here from the language of the bill—''One, any injury to or damage suffered by an individual; two, any illness, disease or death of that individual resulting from that injury or damage, and three, any loss to that individual or to any other individual resulting from that injury or damage.''
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    We will hear today that there is a crisis in the biomaterials industry, and that unless we pass this legislation or something like it which insulates that industry from any financial responsibility even if they were to hurt people intentionally, life-sustaining and -enhancing medical devices will no longer be available. That argument is compelling, as we will hear. It is also familiar. We have been hearing from this industry for years that any day now these medical devices will disappear forever. In fact, Mr. Chairman, I ask unanimous consent to place in the record following my remarks a copy of a letter from the Food and Drug Administration to our colleague Nick Lampson concerning the fear a few years ago that the withdrawal of Dow Corning from the medical silicone market would cause an acute shortage in medical grade silicone.
    In fact, according to the FDA, ''The marketplace was able to adapt to Dow Corning's decision. Alternative suppliers of silicone raw materials have emerged. In fact, a greater number of substitutions of materials suppliers has taken place. The result is that we have not had a shortage or withdrawal of critical products.''
    I think we have a responsibility to answer two basic questions: First, is the industry crying wolf? Second, if there is a risk that the market cannot sustain the biomaterials and components parts industries, is this legislation the best form of Government intervention to fix the problem? Would a more narrowly-tailored bill, one that did not, for example, insulate the truly bad actors, including companies that knew their products were dangerous when used for implants but chose profits over the lives of the innocent victims, be more appropriate? Or, if the market cannot sustain a reliable supply of biomaterials and components parts, is some other form of Government intervention, perhaps modeled on the orphan drug laws, more appropriate?
    We are dealing here with people's lives, so I think we have an extra duty to maintain an open mind, and to the best of our ability follow the wise counsel of Hippocrates and do no harm. So, I look forward to this hearing, Mr. Chairman; I commend you for calling it, and I hope we can come to some wise decisions as to what, if anything, we should do about this problem.
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    Thank you, Mr. Chairman.
    Mr. GEKAS. We thank the gentleman. The letter to which he has alluded will become a part of the record without objection.
    [The information follows:]

Food and Drug Administration,
Rockville, MD, May 20, 1997.
Hon. NICK LAMPSON,
House of Representatives,
Washington, DC.

    DEAR MR. LAMPSON: This is in response to your letter of March 24, 1997, requesting information on the availability of medical devices. The Food and Drug Administration (FDA) does not require notification that a device has been or will be discontinued and, therefore, cannot speak to the reasons underlying a firm's decision to discontinue a device. Generally, marketing decisions are based on multiple factors, including business reasons outside of FDA's purview.
    We are aware, however, of the concern generated by the decision by Dow Corning in December 1992, to discontinue supplying medical grade silicone. This decision was made as a result of lawsuits by women allegedly injured by silicone gel-filled breast implants manufactured by Dow Corning. FDA and the device industry met several times in 1993 and worked closely together to develop a policy on alternative materials suppliers in the event that a critical biomaterial were to become unavailable. Accordingly, the marketplace was able to adapt to Dow Corning's decision. Alternative suppliers of silicone raw materials have emerged. In fact, a great number of substitutions of material suppliers has taken place. The result is that we have not had a shortage or withdrawal of critical products.
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    We hope this information has been helpful. If we can be of further assistance, please contact us.
Sincerely,

Diane E. Thompson,
Associate Commissioner for Legislative Affairs.


    Mr. GEKAS. We will now turn to the first panel of witnesses that have been accumulated for this hearing, and we recognize the gentleman from Massachusetts as having joined the subcommittee, Mr. Delahunt.
    In panel No. 1 we'll invite the following individuals to join us at the witness table. As we name you, please come forward and take your place as indicated by the placards.
    Dr. Neil Kahanovitz is the director of orthopedic spine surgery at Washington Hospital Center in Washington, DC. He's a native of Baltimore and attended Randolph-Macon College and the University of Maryland School of Medicine. He has long been active in volunteerism and patient care. He helped treat victims in Armenia after the 1988 earthquake there and has helped set up tuberculosis treatment centers in the Philippines. He organized the first American-Soviet spinal surgery course in Moscow in 1990. Dr. Kahanovitz has been awarded a commendation from the Office of the Attending Physician of the U.S. Congress for treatment of Members of Congress and Justices of the Supreme Court, and he also holds the order of the Supreme Soviet Medal of Personal Courage, the highest civilian honor awarded in the former Soviet Union.
    Seated next to him now is Rita Bergmann, 13 years old, who lives in Clarksburg, MD. In 1994, she was diagnosed with osteosarcoma of the femur, or thigh cancer. Instead of having her leg amputated from the hip down she got a medical device known as a modular segmental replacement prosthesis for the distal femur and knee joint. The device saved her leg. Prior to her cancer, Rita was an active young lady and a gifted athlete. Today, thanks to her prosthetic, she is an active young lady who recently went hiking with her family in the West Virginia mountains, and she'll tell us more about that, I'm sure, during her testimony.
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    Randy Markey, the husband and father from Newton, MA, he has been a professional actor and singer, and he is a published poet whose work has been internationally awarded. He has a degree from Brandeis University, and he will receive his master's in social work from Simmons College next year. When he was born in 1956, Mr. Markey had hydrocephalus. He was one of the first patients to receive a hydrocephalic shunt known as the halter shunt. We welcome Mr. Markey.
    And we invite Stephen D. Kaiser, the president of his own public relations and marketing firm, to join us at the witness table. He is an avid runner, sailor, and cyclist, and leads an active life with his wife and two children. He had no history of heart disease until this past Christmas when he came down with the flu and bronchitis. He was diagnosed with severe aortic regurgitation on December 30, 1996; he was given an aorta valve prosthesis made with a Dacron ring in a surgery that occurred on January 17 of this year.
    Joining him will—and the rest of the witnesses—will be Donald P. Doty, a small businessman from Minnetonka, MN. He was a plaintiff in litigation related to a temporomandibular jaw implant that he received.
    Dr. Kenneth Kent, the final witness of this panel, is director of the Washington Cardiology Center and clinical associate professor of medicine at Georgetown University Medical Center. He is a member of the FDA Circulatory System's Advisory Panel and was its chairman from 1987 to 1990. He received his A.B. in chemistry, his M.S. in physiology, his M.D. and his Ph.D. in physiology from Emory University and the Emory University School of Medicine. Dr. Kent has published 199 papers on medical topics.
    And with that, we'll begin with the testimony. We will tell the witnesses that we will abide by a 5-minute rule for the offering of your oral testimony, which of course would be based on any written testimony that you may have. That written testimony will be accepted for and included in the record, without objection, and so you need not worry about the full extent of your testimony becoming a part of the record.
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    We'll begin then by allotting 5 minutes for summary of his testimony to Dr. Kahanovitz.
STATEMENT OF NEIL KAHANOVITZ, M.D., PRESIDENT AND FOUNDER, CENTER FOR PATIENT ADVOCACY, AND DIRECTOR, ORTHOPEDIC SPINE SURGERY, WASHINGTON HOSPITAL CENTER

    Dr. KAHANOVITZ. Thank you, Mr. Chairman and members of this subcommittee. As a practicing orthopedic surgeon for 15 years, I know firsthand how innovative technology leading to the development of new medical devices can not only save, but also improve the lives of countless patients. As president and founder of the Center for Patient Advocacy, I am dedicated to protecting a patient's fundamental right to have timely access to the highest quality health care in the world.
    I am here today not just on behalf of the scientists, physicians, and researchers who dedicate their lives to developing new medical devices, but more importantly, on behalf of the millions of Americans who today and in the future depend on the medical advances in the field of biotechnology that have occurred in large part because of ready access to biomaterials.
    The Center for Patient Advocacy and its 50,000 citizen lobbyists, patients from all walks of life, strongly support the Biomaterials Access Assurance Act. Like all efforts the center supports, whether bans on physician ''gag clauses'' or guaranteed patient access to emergency room care, this legislation will help ensure quality patient care. Opponents of the Biomaterials Access Assurance Act claim that the legislation will compromise the rights of patients. In reality, nothing could be farther from the truth. The legislation does not harm patients' rights. In fact, patients face an even greater threat to their rights and to their health if Congress fails to pass this legislation.
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    The Biomaterials Access Assurance Act serves to protect the rights of American patients in several ways. First and foremost, the bill will permit patients continued access to the most advanced and innovative medical devices that medical technology has to offer. Second, and equally important, the legislation will help to ensure that future patients, our children, our grandchildren, will not only have access to the technologies that exist today, but will also enjoy the benefits that remarkable advances in medicine promise to bring for generations to come.
    If passed, the Biomaterials Access Assurance Act will help to guarantee that our scientists, doctors, and researchers will have a steady supply of the precious biomaterials they need to bring lifesaving and life-enhancing medical devices to patients. No longer will they worry that the supply of raw materials for medical implants will disappear simply because of the fear of liability. It is equally important and under the bill patients will continue to have the fundamental right to recover damages when they have been harmed by faulty, poorly-designed, or poorly-manufactured medical devices. If a biomaterials supplier was involved in the manufacture or the sale of a faulty medical device or if the supplier failed to meet the rigid contract specifications filed with the FDA, they will be held liable and held accountable.
    Patients will still have the right to recover damages from the manufacturers of medical devices, the doctors who implant them, and the hospitals where the procedures are performed. In no way does this legislation impede the ability or right of a patient to recover damages if they have been harmed by a medical device. It simply places responsibility where it belongs, and holds those parties accountable for their actions.
    Opponents of the Biomaterials Access Assurance Act claim that there really is no biomaterials crisis. If this is true, how do they describe what will happen to the availability of quality health care when more biomaterials suppliers leave the implant market in addition to the at least 14 that have already stopped supplying their products for use in medical devices? Yes, there is a biomaterials crisis, and if we wait until the supply of biomaterials and the medical devices dependent upon them are gone before we call the current situation a crisis, it will be too late—too late to save or improve the lives of the 7 million American patients who each year depend on implantable medical devices.
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    Over the last several decades the American patient has witnessed the development of astonishing medical devices, devices that would have been impossible to produce had biomaterials not been available. The quality of health care in this country, from total joint replacement to cardiac pacemakers, has soared in large part due to the availability of biomaterials. Are you, Members of Congress, willing to take the responsibility of determining the fate of the millions of patients who rely on the medical devices made with biomaterials that will prolong and improve their lives? If you believe what the opponents of the Biomaterials Access Assurance Act are saying, you may not truly believe that this legislation is needed. But before you make up your mind, I would ask you to think about this: seated next to me is a young woman who has beaten the odds against cancer and is leading a normal, if not remarkable, life. At some point in the future, she will need to have the implant that saved her leg replaced. If the biomaterials needed to manufacture her implant are not available, there will be no alternative, no choice; she will need an amputation. She will lose the leg that she has courageously fought to save. Knowing this, are you willing to look her straight in the eye and tell her that she might lose her leg if Congress fails to address the current crisis and does not pass the Biomaterials Access Assurance Act?
    Mr. Chairman, if Congress does not pass the Biomaterials Access Assurance Act, is it prepared to accept the responsibility for those patients who will be denied access to the medical devices that could have saved or improved their lives? For countless patients who depend upon medical devices now and for those who will need them in the future, I urge Congress to act responsibly and pass the Biomaterials Access Assurance Act. Thank you.
    [The prepared statement of Dr. Kahanovitz follows:]
PREPARED STATEMENT OF NEIL KAHANOVITZ, M.D., PRESIDENT AND FOUNDER, CENTER FOR PATIENT ADVOCACY, AND DIRECTOR, ORTHOPEDIC SPINE SURGERY, WASHINGTON HOSPITAL CENTER

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    Good morning Mr. Chairman and Members of the Subcommittee. Thank you for inviting me to testify today.
    My name is Dr. Neil Kahanovitz. I have the unique opportunity to testify before you today, not just as a practicing orthopedic surgeon who has been involved in the research and development of new medical devices for over 15 years, but also as the President and Founder of the Center for Patient Advocacy, a non-profit, grassroots organization representing patients nationwide.
    As a physician, I know first hand how innovative technology leading to the development of new medical devices can not only save, but also improve the lives of countless patients. As President and Founder of the Center for Patient Advocacy, I am dedicated to protecting patients' fundamental right to have timely access to the highest quality health care in the world. Thus, I am here today not just on behalf of the scientists, physicians and researchers who dedicate their lives to developing new medical devices, but more importantly on behalf of the millions of Americans who, today and in the future, depend on the medical advances in the field of biotechnology that have occurred in large part because of ready access to biomaterials.
    The Center for Patient Advocacy and its 50,000 citizen lobbyists—patients from all walks of life—strongly supports the Biomaterials Access Assurance Act. Like all other efforts the Center supports, such as bans on physician ''gag clauses'' or guaranteed patient access to emergency room care, the Biomaterials Access Assurance Act will help to ensure quality patient care. The bill represents a thoughtful and balanced approach to address the current biomaterials crisis. It not only preserves patients' legal rights to recover damages when they are harmed by a device, but also their right to access the highest quality of care.
    Opponents of the Biomaterials Access Assurance Act claim that this legislation will compromise the rights of patients. In reality, nothing could be farther from the truth. The legislation does not hurt patient rights. In fact, patients face an even greater threat to their rights and to their health if Congress fails to pass the Biomaterials Access Assurance Act.
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    The Biomaterials Access Assurance Act serves to protect the rights of the American patient in several ways. First and foremost, the bill will permit patients continued access to the most advanced and innovative medical devices that medical technology has to offer. Second, and equally important, the legislation will help to ensure that future patients—our children and grandchildren and their children—will not only have access to the technologies that exist today, but will also enjoy the benefits that remarkable advances in medicine promise to bring for generations to come. If passed, the Biomaterials Access Assurance Act will help to guarantee that our scientists, doctors and researchers will have a steady supply of the precious biomaterials they need to bring life-saving and life-enhancing medical devices to patients. No longer will they worry that the supply of raw materials for medical implants will disappear simply because of the fear of liability.
    It is clear that the Biomaterials Access Assurance Act will preserve a patients' right to have access to the highest level of care that medical science can develop. It is also clear, that under the bill, patients will continue to have the fundamental right to recover damages when they have been harmed by faulty, poorly designed or poorly manufactured medical devices. If a biomaterials supplier was involved in the manufacture or sale of a faulty medical device, or if the supplier failed to meet the rigid contract specifications filed with the FDA, they will be liable and held accountable. Moreover, patients will still have the right to recover damages from the manufacturers of medical devices, the doctors who implant them, and the hospitals where the procedures are performed. Thus, in no way does this legislation impede the ability or right of a patient to recover damages if they have been harmed by a medical device. It simply places responsibility where it belongs and holds those parties accountable for their actions.
    Opponents of the Biomaterials Access Assurance Act claim that there really is no biomaterials crisis. If this is true, how do they describe what will happen to the availability of quality health care when more biomaterials suppliers leave the implant market, in addition to the at least 14 that have already stopped supplying their products for use in medical devices? Yes, there is a biomaterials crisis. And if we wait until the supply of biomaterials, and the medical devices dependent upon them, are gone before we call the current situation a crisis, it will be too late. It will be too late to save or improve the lives of the 7 million American patients who each year depend on implantable medical devices.
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    Opponents of this legislation claim that this ''hypothetical'' biomaterials shortage has no real effect on biotechnology development in this country. Unfortunately, they do not know how wrong they are. The research and development of new and innovative devices is being noticeably hampered by the shrinking supply of biomaterials and the very real possibility that more and more suppliers will leave the medical device market because of the fear of liability. Over the last several decades, the American patient has witnessed the development of astonishing medical devices; devices that would have been impossible to produce had biomaterials not been available. The quality of health care in this country—from total joint replacement to cardiac pacemakers—has soared in large part due to the availability of biomaterials. If this supply continues to dwindle, the quality of health care available to the patients of today and those of tomorrow will surely suffer.
    I sit here before you today to tell you that the fate of biotechnology research, and ultimately the quality of health care in this country, is no longer controlled by researchers, scientists and physicians. These people, who for decades have dedicated their life's work to improving medical care, no longer have the power to bring life-saving technologies to patients in need. Instead, the explosion of litigation in this country, has forced them—and patients across the country—to look to you, our elected Representatives to control the future of biotechnology. Today, Congress is in a position to pass legislation that will protect the lives of millions of patients across this country—patients who depend on the miraculous developments that have been and continue to be made in the field of biotechnology through the availability and use of biomaterials.
    Are you, Members of Congress, willing to take the responsibility of determining the fate of the millions of patients who rely on the medical devices, made with biomaterials, that will prolong and improve their lives? If you believe what the opponents of the Biomaterials Access Assurance Act are saying, you may not truly believe that this legislation is needed to protect the American patient. But before you make up your mind, I would ask you to think about this.
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    Seated next to me is a young woman who has beaten the odds against cancer and is leading a normal, if not remarkable, life. At some point in the future, she will need to have the implant that saved her leg replaced. If the biomaterials needed to manufacture her implant and thousands of others are not available, there will be no alternative, no other choice. She will need an amputation. She will lose the leg that she has so courageously fought to save. Knowing this, are you willing to look her straight in the eye and tell her that she might lose her leg if Congress fails to address the current crisis and does not pass the Biomaterials Access Assurance Act?
    Millions of patients, young and old, are counting on Congress to protect their right to have access to all the wondrous medical devices that medical technology has afforded us. The future health and well-being of patients across this country is dependent on the continued supply of biomaterials. Mr. Chairman, if Congress does not pass the Biomaterials Access Assurance Act, is it prepared to accept responsibility for those patients who will be denied access to the medical devices that could have saved or improved their lives? For countless patients who depend upon medical devices now, and for those who will need them in the future, I urge Congress to act responsibly and pass the Biomaterials Access Assurance Act.
    Thank you.

    Mr. GEKAS. We thank you, Dr. Kahanovitz.
    We now acknowledge the presence of the gentleman from Massachusetts, Mr. Meehan, a member of this subcommittee.
    And following the lead of Dr. Kahanovitz, we will add to his introduction by reading a few notes about Rita, which we will only say that we know that she's a hiker, and we know that whatever happened to her and how she has responded to that has not prevented her from leading, as Dr. Kahanovitz said, a superbly active life. So Rita, tell us your story.
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STATEMENT OF RITA BERGMANN, CLARKSBURG, MD

    Ms. BERGMANN. Thank you, Chairman Gekas and members of the subcommittee, for inviting me to tell my story today.
    My name is Rita Bergmann, and I'm a 13-year-old, seventh grader at Rocky Hill Middle School in Clarksburg, MD. I've lived in the same house on a hilltop with my mother, father, and brother since I was born and have always enjoyed family activities. My greatest interests are and always have been ballet, creative writing, and hiking. I also love traveling to beautiful areas in America and doing all sorts of activities outside and relating to nature. I am a straight A student with all around interests in many areas. I participate in many extra curricular activities including the student government, drama club, math team, and environmental club. I'm also a peer mediator and a member in groups to prevent smoking in people of all ages. Until December 1994 I also played basketball, baseball, ran track, and did a large amount of ballet.
    I was ''on toe'' at age 10 and within months of dancing ''on toe,'' I was dancing 3 days a week with people who had 3 years of experience ''on toe''. It is rare for people to start dancing ''on toe'' before the age of 12. Ballet meant the world to me. I had taken ballet lessons since I was 3 years old.
    My life was very average for most kids my age as far as medical issues went up until December 1994. Ten days before Christmas that year, I went to the doctor for a third appointment complaining of pain in my leg. I danced, and I knew leg pain, and this was bad. For the first two visits the doctors assumed that, because I was so athletic, I must have had an injury or strain from ballet, but this time they took X rays and drew blood. No injury here; I had osteosarcoma, a form of bone cancer.
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    As I tell the story I am calm and together, but as it happened my composure was a mess. I never knew what to make of it all. I had so many mixed emotions asking, ''Why me?'' as I tried to pull what was good from the whole experience. The cancer was located directly above my knee, on the femur, my thigh. I also had two spots of something on my lungs; whether cancer or just a noncancerous abnormality was not known at that time.
    After a biopsy and an operation to install a broviac central line which would administer the chemotherapy, I was quickly pulled into the worst nightmare of my life. Extremely sick and weak after suffering many side effects from the chemo—fainting, losing a lot of weight—I was put on intravenous feeding through my broviac 12 hours a day, lasting from January until August that year. This supplied my body with the much-needed nutrients chemo was robbing me of and which I was too sick to receive from food. Out of school and all activities, I couldn't turn my head in fear of vomiting all that was left inside of me, not that I had the energy to move anyway.
    On April 19, 1995, I had my first operation to save my leg. My entire left knee and half of my femur was replaced with a polyethylene and titanium knee joint and rod, and all tissue and muscle adjacent to the tumor was removed.
    Mr. GEKAS. The witness is demonstrating for the record the segments of her prosthesis that she's describing.
    Ms. BERGMANN. Yes, this is my prosthesis, and this is the titanium biomaterial that's in it.
    I stayed the next week in intensive care, then in the oncology unit of Children's National Medical Center in Washington, DC. Naturally, the only thing I remember from that week was pain. Five days later the dressing was removed. Unfortunately, the wound did not heal as expected; all the skin and muscle had died, and the following day I found myself back in the operating room having a muscle flap and skin grafts done. This was, as one of my doctors put it, the end of the envelope procedure. We weren't sure at that point if my leg would be saved. Finally, after 3 months I was able to once again put weight on my leg—a big milestone.
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    One fun thing did happen for me that summer when I got to go to Camp Friendship, a camp for kids with cancer in Olney, MD. Here, I really started the process of starting to walk again while I mixed with kids who understood my situation and had been there, too. Unfortunately, the spots in my lungs which hopefully would have disappeared with chemo remained, and so in mid-August I had a lung operation. Thank god, those spots turned out not to be cancerous.
    When the school year again started in September 1995, I was ready to leave this medical life I was leading behind. I went to school as often as my chemo schedule permitted. I got back to my same after-school activities, time with friends, and homework while I battled the cancer. I remained in a wheelchair until January 1996, when the chemo finally finished and the broviac was removed. As soon as the effects from chemo began to wear away, I was back doing all of the activities I loved minus ballet. Between January 1996 and today I did as much as my surgeon, Dr. Malawer of the Washington Cancer Institute, would let me do and a bit more. I always have to be careful not to run, jump, or do any activities which might cause a fall and harm to my prosthesis.
    In the summer of 1996, I went camping with my family near Acadia National Park in Maine for a week. We are and always have been a very nature-oriented bunch. I challenged myself to hike all the trails I used to and more. Not a single cliff face we hiked before cancer went unclimbed. I'm competitive and set high goals. Accomplishing them meant a lot to me. I came back with pictures of me doing cartwheels in the sand and sitting on cliff edges we had just climbed up. I couldn't have made it to any of these hideouts if I had had an amputation.
    That summer we also went backpacking in a remote mountain valley in West Virginia, also a trail I did before. I carried a 15-pound pack for a 7-mile round-trip hike. On that trip we climbed up a mountain by our campsite on the second day of our trip. No resting for sore legs; I was busy climbing.
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    Though the chemo and its side effects are over for the most part now, my leg is a never-ending concern. At any moment I could take a serious fall and have to have another joint replacement, and, regardless of that, in about 10 years I will have to have another replacement. Polyethylene makes these joint replacements possible. Amputation is the only other option for many patients. I've seen and can imagine an artificial leg, and it is not the arrangement I want. I want to be able to always walk on my own leg, bend my knee, wiggle and point my toes. I don't want to have to take off a titanium leg each time I go to sleep, and I want to be able to hold onto the ballet I miss so passionately with the few steps and spins I can do. I like this way of having my own leg, and I know many who feel the same way. I can't imagine how such a needed material could just cease to be made available. Such a rash act would change many people's lives, cause pain and unneeded suffering, and smother many dreams.
    I hope light can be shed on these aspects of polyethylene uses so people like me will have the chance to keep their own leg. If polyethylene wasn't available to make a prosthesis, the only choice for my leg would have been amputation, but this way I can go on and reach for some of my greatest dreams: to continue climbing mountains, and to really dance ballet again.
    Thank you for your time and attention.
    [The prepared statement of Ms. Bergmann follows:]
PREPARED STATEMENT OF RITA BERGMANN, CLARKSBURG, MD

    Thank you Chairman Gekas and Members of the Subcommittee for inviting me to tell my story today.
    My name is Rita Bergmann and I'm a 13 year old, seventh grader at Rocky Hill Middle School in Clarksburg, Maryland. I've lived in the same house on a hilltop with my mother, father and brother since I was born, and have always enjoyed family activities. My greatest interests are and have always been ballet, creative writing, and hiking. I also love traveling to beautiful areas in America, and doing all sorts of activities outside and relating to nature.
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    I am a straight A student with all around interests in many areas. I participate in many extra-curricular activities, including the student government, drama club, math team, and environmental club. I also am a peer mediator, and a member in groups to prevent smoking in people of all ages. Until December of 1994, I also played basketball, baseball, ran track, and did a large amount of ballet. I was ''on toe'' at age 10, and within a month of dancing on toe I was dancing three days a week with people who had 3 years of experience on toe. It is rare for people to start toe before the age of 12. Ballet meant the world to me. I had taken ballet classes since I was 3 years old.
    My life was very average for most kids my age, as far as medical issues went, up until December 1994. Ten days before Christmas that year, I went to the doctor for a third appointment complaining of pain in my leg. I danced, and I knew leg pain, and this was bad. For the first two doctor visits it was assumed that because I was so athletic, I must have an injury or strain from ballet. But this time they took X-Rays and drew blood. No injury here. I had osteosarcoma, a form of bone cancer.
    As I tell you this story, I am calm and together, but as it all happened, my composure was a mess. I never knew what to make of it all. I had so many mixed emotions ... asking ''Why me?'' as I tried to pull what was good from the whole experience.
    The cancer was located directly above my knee on the femur (my thigh). I also had two spots of something on my lungs—whether cancer, or just a noncancerous abnormality was not known at that time.
    After a biopsy and an operation to install a broviac central line which would administer the chemotherapy, I was pulled quickly into the worst nightmare of my life. Extremely sick and weak after suffering many side-effects from the chemo—fainting, losing a lot of weight—I was put on intravenous feeding through my broviac (12 hours a day, lasting from late January until August that year). This supplied my body with the much needed nutrients chemo was robbing me of, and which I was also too sick to receive from food. Out of school and all activities, I couldn't turn my head in fear of vomiting all that was left inside of me up, not that I had the energy to move anyway.
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    On April 19th, 1995 I had my first operation to save my leg. My entire left knee and half of my femur was replaced with a polyethylene and titanium knee joint and rod, and all tissue and muscle adjacent to the tumor were removed. I stayed that next week in intensive care, then in the oncology unit of Children's National Medical Center in Washington, D.C. Naturally, the only thing I remember from that week was pain.
    Five days later, the dressing was removed. Unfortunately, the wound did not heal as expected. All of the skin and muscle had died, and the following day I found myself back in the operating room having a muscle flap and skin grafts done. This was, as one of my doctors put it, ''the end of the envelope procedure.'' We weren't sure at this point if my leg would be saved.
    Finally, after three months, I was able to once again put weight on my leg. A big milestone.
    One fun thing did happen for me that summer when I got to go to Camp Friendship, a camp for kids with cancer, in Olney, Maryland. Here, I really started the process of starting to walk again while I mixed with kids who understood my situation and had been there too. Unfortunately, the spots on my lungs, which hopefully would have disappeared with chemo, remained, and so in mid-August, I had a lung operation. Thank God those spots turned out not to be cancerous.
    When the school year started again in September, 1995 I was ready to leave this medical life I was leading behind. I went to school as often as my chemo schedule permitted. I got back to my same old after-school activities, time with friends, and homework while I battled the cancer.
    I remained in a wheel chair until January, 1996 when the chemo finally finished and the broviac was removed. As soon as the effects from chemo began to wear away, I was back up doing all of the activities I loved, minus ballet.
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    Between January 1996 and today, I did as much as my surgeon, Dr. Malawer of the Cancer Institute, will let me do, and a bit more. I always have to be careful not to jump, run, or do any activities which might cause a fall and harm my prosthesis.
    In the summer of 1996 I went camping with my family near Acadia National Park in Maine for a week. We are, and always have been a very nature oriented bunch. I challenged myself to hike all the trails I used to, and more. Not a single cliff face we hiked before cancer went unclimbed.
    I'm competitive and set high goals. Accomplishing them meant a lot to me. I came back with pictures of me doing cartwheels in the sand, and sitting on cliff edges we had just climbed up. I couldn't have made it to any of these hide-outs if I had had an amputation.
    That summer we also went backpacking in a remote mountain valley in West Virginia, also a trail I did before. I carried a 15 pound pack for a 7 mile round trip hike. On that trip, we climbed up a mountain by our campsite on the second day of our trip—no day for resting sore legs, I was busy climbing.
    Though the chemo and it's side effects are over for the most part now, my leg is a never ending concern. At any moment I could take a serious fall and have to have another joint replacement, and regardless of that, in about 10 years, I will have to have another replacement.
    Polyethylene makes these joint replacements possible. Amputation is the only other option for many patients.
    I've seen and can imagine an artificial leg and it is not the arrangement I want. I want to be able to always walk on my own leg, bend my knee, wiggle and point my toes. I don't want to take off a titanium leg each time I go to sleep, and I want to be able to hold on to the ballet I miss so passionately with the few steps and spins I can do.
    I like this way, of having my own leg; and I know many who feel the same way.
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    I can't imagine how such a needed material could just cease to be made available. Such a rash act would change so many peoples' lives, cause pain and unneeded suffering, and smother many dreams. I hope light can be shed on these aspects of polyethylene's uses so people like me will have the chance to keep their own leg.
    If polyethylene wasn't available to make a prosthesis, the only choice for my leg would have been amputation; but this way I can go on and reach for some of my greatest dreams—to continue climbing mountains and to really dance ballet again.
    Thank you for your time and attention.

    Mr. GEKAS. We thank you, Rita.
    And now we'll turn to Mr. Markey.
STATEMENT OF RANDY MARKEY, NEWTON, MA

    Mr. MARKEY. Thank you, Mr. Chairman, members of the committee. My name is Randy Markey. I live in Newton, MA. It's an honor to testify in front of this august body. I'd like to send greetings to Representatives Meehan and Delahunt who ably, and, in my opinion, with great conscience, represent my neighbors. I'm glad to see you here today.
    H.R. 872——
    Mr. GEKAS. Mr. Markey, if you'll hold on for a minute, it brings to mind that two other members of the Judiciary Committee have joined us to audit this hearing: the gentleman from California, Mr. Berman, and the lady from California, Ms. Lofgren, are here to hear the testimony and to join in the deliberations.
    So, with that, we allow you to resume your testimony.
    Mr. DELAHUNT. Mr. Chairman.
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    Mr. GEKAS. Yes.
    Mr. DELAHUNT. Both Representative Meehan and I would extend a very warm welcome to a fellow Bay Stater from Massachusetts.
    Mr. MARKEY. Thank you.
    H.R. 872 would assure that raw materials used for surgical implants will remain available to those of us who need them to live. You know, the notion to me as a lifelong Democrat of being on the same side of an issue as a Republican is an absolutely unbelievable turn of events. [Laughter.]
    Mr. MEEHAN. We understand, Mr. Markey. You'll be questioned closely on that, too, I might add.
    Mr. MARKEY. I'm sure I will, and so will you. [Laughter.]
    It does, indeed, call to mind the idea that politics makes strange bedfellows. I never thought I'd be on the same side of an issue as a Republican with the possible exception of sporting events. That said, I want to assure members of the committee that I am not here as a partisan but as a private citizen, one of the 7.5 million Americans each year for whom access to silicone for surgical uses is a life-or-death issue.
    As a 6-week-old baby, I received a shunt coated in silicone. This tube went from my brain to my peritoneal cavity; that's part of my belly. It was necessary because my cerebrospinal fluid, the fluid which bathes the brain, was not circulating out of the brain as it does in normal bodies. This caused an increase in intracranial pressure, or direct pressure on the brain, which untreated leads to blindness, retardation, and death. Hydrocephalus is still incurable, and a shunt in a vast majority of cases is the only treatment.
    John Holter had a son born with hydrocephalus in 1956, and the doctors gave little hope for him. Holter was an engineer, and within weeks he had designed a shunt that drains cerebrospinal fluid and remain closed to blood and tissue from the other side. It revolutionized treatment of hydrocephalus, drastically lowering mortality rates.
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    Months later an infant lay dying of hydrocephalus at Texas Children's Hospital. As a last resort a new Holter shunt was placed into this baby. That infant sits before you now, nervously reading. I was one of the first handful of babies in the world to use the Holter technology. I want you to know that shunts save my life every day. I've had eight brain surgeries, seven since November 1995. I've said that silicone coats these shunts. The body doesn't recognize silicone, so it doesn't fight if off. Silicone is the only material about which this can be said. For those of us who need shunts to live and need the silicone coating so our bodies won't reject the shunt, to restrict access to silicone is a death sentence. Let me say that again: if there is no silicone available to coat my shunt, I die.
    This is my family. This is my wife and my son. I brought pictures for everybody, but I haven't had an opportunity to distribute them. Please look at this. Can you fathom what this means to us? One in 500 births result in hydrocephalus. Many others acquire hydrocephalus following head injuries, brain tumors, aneurysms, and other traumas. It could happen to anyone in this room. Recent statistics have shown that most shunts don't last longer than 10 years. Those of us with shunts can expect to have replacement; i.e., more brain surgery, every 10 years at the very, very best. For some of us revisions occur over 100 times in our life.
    While I was in the hospital for three months last year I missed my sons first words; I missed his first steps. After five brain surgeries I held my son in my arms and said, ''Daddy has to go back into the hospital, Max, but the doctors are going to make him better.'' It was the most heartbreaking moment I have ever experienced. We knew, in spite of my horrible pain and in spite of the tragedy of missing such important events in my baby's life, that there was a chance to see hydrocephalus controlled.
    My parents' experience was not the same. My parents knew nothing of the new advances, nothing of support groups. My parents walked in the dark and fought alone for the right of their child to survive and live. I would be remiss if I failed to honor my parents in their heroic battle to make sure their son got the best treatment available.
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    I am a national merit scholar. I am a member of Who's Who. I have a degree from Brandeis University. I'm a published poet with international awards, and, as you've heard, I will soon receive my master's in social work from Simmons in Boston. I have a rich and rewarding social and intellectual life, and my professional life has also been rewarding. I've had the opportunity to love and to be loved. I'm not severely disabled. I do have seizures, and I do have excruciating headaches daily, but there's nothing, nothing that would stand in the way of my presence here to honor my mother and father and to speak on behalf of the shunted community. After being a husband and a father, this is the most sacred responsibility I have ever been given.
    Last month I spoke about hydrocephalus at the NYU Medical Center. Following my speech a couple from Chester, PA, approached me with tears in their eyes, and they said, ''We have a 19-year-old son whose brain injuries have left him nonverbal. Thank you for speaking for our son.'' Ladies and gentleman, I ask no less of you. Please, please speak for us, for the 19-year-old man in Chester, PA, who cannot speak for himself, for the 6-week-old child in Texas who's being shunted right now. It's a matter of life and death that your vote controls. Would you do any less for your own child? Thank you.
    [The prepared statement of Mr. Markey follows:]
PREPARED STATEMENT OF RANDY MARKEY, NEWTON, MA

    Mr. Chairman, members of the Subcommittee. Good morning and thank you for the invitation to testify in front of this August body. My name is Randy Markey, and I live in Newton, MA. I would like to send special greetings to both gentlemen from MA, Messrs Delahunt and Meehan, who ably and with great conscience represent my neighbors; and the gentleman from Texas, Mr. Smith whose district represents my home town and my parents.
    I am here today to speak to you about H.R. 872, the Biomaterials Access Assurance Act, and more importantly to speak to you about the potential effect of this legislation. I know you each have a copy of my testimony, and I also have included a picture of my wife and son. As a proud father,
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    I am in the habit of showing that picture to anyone who will look, and often to folks who have no intention of looking. I bring this to you to put a human face on the issue before us today.
    H.R. 872 would seek to assure that biomaterials, raw materials used for surgical implants, will remain available to those of us who depend upon it for our lives. In the course of speaking to friends and family about this legislation, I have become more aware than ever that politics does indeed make strange bedfellows. I never thought that I would be on the same side of an issue as a Republican, with the possible exception of sporting events.
    That said, I am not here as a partisan or representative of any corporate or political entity. I am here as a private citizen, one of 7.5 million Americans each year for whom access to silicone for surgical uses is a life or death issue. My relationship to this issue began shortly after my birth.
    As a six week old baby, I received a shunt which was coated in silicone. This shunt, or tube, went from inside a ventricle in my brain to my peritoneal cavity ... or my belly. The shunt was necessary because my cerebrospinal fluid, the fluid which bathes the brain, was not circulating out of the brain as it does in normal bodies. This lack of circulation caused an increase in intra-cranial pressure, or direct pressure on the brain; which, untreated, leads to blindness, retardation, and death. The vast majority of children with this condition prior to 1956 were doomed. Although there were approximately 27 different shunts and shunting procedures, the simple fact was that in almost 80 percent of the cases of congenital hydrocephalus, these tubes did not save lives. Even now, hydrocephalus is incurable, and the shunt is a treatment for an ongoing condition.
    In January of 1956, John and Mary Holter had a son who was born with hydrocephalus, and the doctors held out little hope to the young parents. John Holter was an engineer by trade. Within weeks he designed a shunt that had done something no other shunt before could do. The Holter shunt responded to changes in intra-cranial pressure by use of a one way valve. This was a valve that remained closed to blood or tissue coming into the tube from the other side. This raised the efficiency of the shunt and lowered the infection rate considerably. Even now, infection rate is one of the main concerns of shunt placement. Over forty years ago, with his son's life at stake, John Holter did what every parent wants to do. He ''made it better.''
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    Across the country, in August of 1956, an infant lay dying of hydrocephalus at Texas Children's Hospital. The doctors had run out of options for this baby, but a surgeon had read of this brand new shunt which was truly the only hope left. Mr. Chairman, members of the Subcommittee, on a scorching hot day in August of 1956, as a last resort that the doctor was not sure would save a life, a new Holter shunt was placed into his body. That infant sits before you now, nervously reading. The procedure done to save my life, was, like me, in its infancy I was one of the first handful of babies to use the Holter technology. During an emotional conversation with Dr. Holter himself, it was confirmed that he sent out the shunt personally. I want you to know that this shunt saves my life on a daily basis. I want you to know that I have had eight brain surgeries, seven since November of 1995.
    I have said that silicone coats these shunts. The reason is that the body doesn't recognize silicone, and thus, it doesn't fight it off as a foreign body. Silicone is the only material about which that can be said. Therefore, for those of us who need shunts to live, and need the silicone coating to insure that our bodies will not reject the shunt, to restrict access to silicone is a death sentence. Let me say that again. If there is no silicone available to coat my shunt, I die. I ask you ladies and gentlemen, I beg you, look at the picture of my family. Can you even fathom what this means to us? I live with it daily and I can't begin to fathom what it would be like to lose my gorgeous wife and my beautiful son.
    Today, across the country and the world, people are being informed about advances and supported in their needs at an astonishing rate. We are a groundswell of people, parents, and grandparents and adults all of whom either have hydrocephalus or are affected by it. This is not a small matter which affects only a handful of folks. It affects mostly children, but can also be the result of car accidents, sporting mishaps, and increasingly is shown to affect people as they get older.
    The CDC estimates that approximately 1:500 births result in a diagnosis of hydrocephalus. Recent statistics have corroborated the fact that most shunts don't last longer than ten years. What this means is that those of us with shunts can expect to have replacements placed, i.e., more brain surgery on the average of every ten years. For some of us, the number of revisions, changes to existing shunts or placement of new ones, can occur over 100 times.
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    While I was in the hospital for almost three months a year and a half ago, I missed my son's first steps, his first words. Ladies and gentlemen, after five brain surgeries, I had to hold my child in my arms and said to him ''Daddy has to go back to the hospital Max, but the doctors are going to try real hard to make him better.'' It was among the most heartbreaking moments I have ever experienced.
    But it was not without hope. We knew, in spite of my horrible pain, and in spite of the tragedy of missing such important parts of my baby's life, that there were lots of alternatives to see that my hydrocephalus was controlled. My parents' experience was not the same.
    They knew nothing of the new advances, nothing of support groups. They had read no neurosurgical journals, nor had they ever met another parent with a child so sick. My parents walked in the dark, and fought for the right of their child to live and survive. They were alone. I am here today to talk about the necessity of silicone to save my life, but I would be remiss if I failed to honor my parents and their heroic battle to make sure that every treatment option was explored.
    I want you to know what my life has been like. I am a National Merit Commendation winner, and a member of Who's Who. I have a degree from Brandeis University, and I have attended the New England Conservatory of Music. I have been a professional actor and singer, and a published poet whose work has been internationally awarded. I will be receiving my Master's in Social Work from Simmons College in Boston in May 1998. I have had a rich social and intellectual life, and my professional life has been enormously rewarding.
    I have had the opportunity to love and to be loved. My experience represents what might be called the ''high end'' of hydrocephalus outcomes. For the most part I have my faculties, and I am not severely disabled. Yes, I have a seizure disorder, and yes, I get excruciating headaches almost daily. I can think of nothing that would stand in the way of my presence here, to honor my mother and my father, and to speak for the shunted community. It is the most sacred and important responsibility I have ever been given.
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    At the end of May, I had the honor of being invited to speak on a panel at a symposium on hydrocephalus sponsored by and held at the New York University Medical School. Following my speech, a couple from Chester, PA approached me with tears in their eyes. This is a paraphrase of what they said. ''We have a 19-year-old son whose brain injuries are so significant as to leave him nonverbal. We would like to think that if he could talk, he would thank his parents as you have today. Thank you for speaking for our son.''
    Ladies and gentlemen, I ask no less of you. Please, please, speak for us today. For the 19-year-old man in Chester, PA who cannot speak for himself; for the six-week-old child in Northern California who is being shunted right now. For the pregnant women and their husbands, who just received an in utero diagnosis of hydrocephalus and are scared out of their minds. To me, this seems very simple. It is a matter of life and death that your vote controls. Would you do any less for your own child?

    Mr. GEKAS. Thank you, Mr. Markey.
    And now we ask Mr. Kaiser to begin his testimony.
STATEMENT OF STEPHEN D. KAISER, BALTIMORE, MD

    Mr. KAISER. Thank you, Chairman Gekas and members of the subcommittee. In keeping with the precedent of full political disclosure set by Mr. Markey here, I too must admit that I am a lifetime Democrat, although I will acknowledge that I have elephants on my tie.
    Let me start my testimony today by going back to a Sunday in May when I was on a bike, and I was 15 miles into a 20-mile bike ride. I was pedaling uphill in north Baltimore, and an ambulance went by with the sirens blaring, going to a nearby hospital. It caused me to flashback about 4 months to that very day I was lying in Johns Hopkins University wondering if I ever would be able to ride again. The journey from east Baltimore to a hill outside Towson was made possible by what I consider a miracle of medical technology. Having been diagnosed with aorta valve during an otherwise routine doctor's visit over the Christmas holidays, I received a cardiac valve, one of the valves that's covered by this legislation. That journey from Hopkins Hospital in east Baltimore to Towson was made possible by what I consider a miracle of modern medical technology.
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    As you indicated when you introduced me before, over Christmas I had the flu and possible bronchitis. I went in to see my physician for a routine visit. She heard a heart murmur. I had never heard that before. The next thing I knew her colleague, a cardiologist, was asking me questions that I thought were only asked of people in their sixties, seventies, and eighties who had suffered heart attacks, and I learned that my heart valve, despite 30-some years of biking and running, had malfunctioned.
    Fortunately, I had a world-class institution right around the corner; I had a world-class surgeon, Dr. Duke Cameron, and I had open heart surgery on January 17. I was walking out of the hospital on January 21; I was back at my business a week later; I was back on the bicycle within 2 weeks; I rode just this week.
    Unfortunately, future implant patients who have the same needs that I do may not have that chance. Why? Because the Dacron ring that attaches my valve to the aorta is made out of a biomaterial, one of the classes of materials covered by your legislation. DuPont, who manufactured the material that went into my valve, pulled out of the market completely in 1994, and the manufacturer of my valve is now relying on stockpiled materials to meet the needs of future patients.
    I own my own company. I understand profit and loss; I understand taking risks; I understand, somewhat, liability and insurance and all of that, and I understand why DuPont would pull out of the market. After all, their total sales to the heart implant market were less than $200,000, whereas, the total worldwide market for that polyester yarn material is about $9 billion. It's a no-brainer. When the costs of litigation and the potential liability outweigh the potential profits, it doesn't make sense to remain in the business, except for patients like us.
    Nor is DuPont alone. In April, I was made aware of a study by Aronoff Associates out of New York, and that study said that three out of four suppliers have banned sales of biomaterials to U.S. implant manufacturers. Others are now evaluating whether they should stay in the market.
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    This trend is a threat to American health care. A shortage of biomaterials means that Americans like me and like my colleagues sitting here today may not have access to the latest lifesaving, or in my case, life-enhancing devices. And in fact some of the research that I read through as I studied my own situation showed that a spinal implant is going to disappear from the U.S. market altogether.
    I have a public relations firm. I work with a number of industries including the health care industry, and I realize that the health care industry is a high-growth, high-tech sector, particularly here in the Baltimore/Washington market. Should we lose our edge in this sector, we're going to lose unknown future treatments. We're going to lose the ability to help my fellow patients here at the table. Fortunately, with my valve, it's going to last somewhere between 70 and 110 years, so if I live to 113 and need a new one, I'll be very happy. I just hope it's available.
    I also learned in my research that companies who manufacture medical devices like ours are now forced to divert research dollars and use them, instead, to search for alternate sources for the materials that go into our lifesaving and life-enhancing devices, and I think that's wrong.
    Mr. Chairman, I'd like to personally thank you; I'd like to also acknowledge your colleagues in the Senate: Senator Lieberman from Connecticut and Senator McCain from Arizona in particular for introducing the Biomaterials Access Assurance Act of 1997. The importance of this bill is clear. Biomaterials are used to save and enhance lives. I should know; mine's just one of them. After all, there are more than 62,000 implant surgeries in the country performed each year similar to mine. There are 725,000 people walking around in the world today with St. Jude's valves. In fact, St. Jude's had a 20th anniversary party down here in Washington just a month ago.
    Tonight when I go home, I'm going to go out for another bike ride. When I do, I'm going to think about how lucky I am that the material used in my bicycle tires that keep them from going flat is the same material that saved my life. I don't know who that patient was in the ambulance, but I only hope that should he or she need an implant in the future, that he or she has the same chance I did. Thank you very much for the opportunity.
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    [The prepared statement of Mr. Kaiser follows:]
PREPARED STATEMENT OF STEPHEN D. KAISER, BALTIMORE, MD

    Chairman Gekas and Members of the Subcommittee, I'd like to thank you for allowing me to come before you today to talk about The Biomaterials Access Assurance Act of 1997 currently before your Subcommittee.
    Let me start by going back to a recent Sunday in May, when I was fifteen miles into my weekend bike ride. I was steadily climbing a hill in North Baltimore when an ambulance, siren blaring, passed me on the way to a nearby local hospital. Immediately, I flashed back four months to the very day, when I was lying in the Cardiac Surgery Intensive Care unit at Johns Hopkins Hospital, wondering if I ever would be able to ride again.
    The journey from East Baltimore to a hill outside Towson was made possible by what I consider a miracle of medical technology. Having been diagnosed with a defective aorta valve during an otherwise routine doctor's visit over the Christmas holidays, I received a St. Jude's mechanical heart valve in mid-January. Through hard work and exercise, I am now resuming the running and biking which have been part of my fitness routine for over thirty years.
    Unfortunately, future implant patients may not have the same chances I have had. Why? The Dacron ring used to attach my new valve is no longer available, due to the risk of unwarranted product liability lawsuits. Because DuPont halted sales of the polyester yarn to medical device manufacturers in 1994, most are relying on stockpiled materials to meet their needs.
    As an independent business owner who has worked extensively with health care companies, I can understand why DuPont has chosen to leave a market which it has served since the 1950's. The total value of the material in the medical implant market is less than $200,000, compared to $9 billion in other industrial markets.
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    DuPont has chosen to stop selling the same material used in my heart valve to implant manufacturers because current liability law allows the company to be brought into litigation over products they neither manufactured nor designed. The costs of litigation and potential liability far exceed the total sales of the materials in question.
    Nor is DuPont alone. When I read a recent study by New York-based Aronoff Associates, I was shocked to find that at least 75 percent of biomaterials suppliers have banned sales to U.S. implant manufacturers. Those who are still supplying the market are now evaluating whether they should continue to do so, and under what terms. Those terms—an indemnification agreement, sky-high liability insurance coverage, and/or sales exceeding $1 billion—are difficult for most companies to meet.
    This trend is a threat to American health care. A shortage of biomaterials means Americans like me will not have access to the latest life-saving and life-enhancing devices. In fact, the research I've read shows that by the end of this year, an implant used in spinal surgery will disappear from the U.S. market. If suppliers continue to exit the medical device market and manufacturers go out of business, American medicine will no longer be the best in the world.
    The medical implant industry, a high-tech sector, is also a strong component of the regional and national economies. Should we lose this sector, we lose the possibility of unknown future treatments. In instances where a known biomaterial has disappeared or is being stockpiled in order to shore up dwindling supplies, companies are already redirecting valuable research and development dollars to the search for alternate supplies.
    A federal legislative solution is needed, and I'm pleased that your Committee is holding these hearings today to help craft that solution. Mr. Chairman, I'd like to personally thank you and your colleagues in the Senate, particularly Senators Joseph Lieberman (D–CT) and John McCain (R–AZ) for introducing the Biomaterials Access Assurance Act of 1997 to address the serious and growing raw materials shortage in the medical device industry.
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    The importance of the bill is clear: biomaterials are used to save and enhance lives. I should know; mine is just one of them. After all, more than 62,000 similar implant surgeries are performed each year and 725,000 people have the same valve as I do. In fact, the company which made mine just recently celebrated the twentieth anniversary of the St. Jude's valve.
    The next time I go out for a ride, I plan to reflect on how lucky I am that the same type of materials used in my bicycle tires to prevent punctures also saved my life. I don't know what was wrong with the patient in the ambulance which hurried by on Sunday. But should he or she need a medical device using biomaterials, I can only hope that the same lifesaving technology will be available.
    Chairman Gekas and Members of the Subcommittee, I urge you and your colleagues in both Houses to support this critical, lifesaving legislation as quickly as possible, so that future patients can have the same chances of living a full and healthy life as I have had. Thank you for the opportunity to appear before your Committee. I would be happy to answer any questions.

    Mr. GEKAS. Thank you, Mr. Kaiser. We turn to Mr. Doty.
STATEMENT OF DONALD P. DOTY, MINNETONKA, MN

    Mr. DOTY. Good morning, Mr. Chairman Gekas. My name is Don Doty. I live in Minnetonka, MN. I'm married. I have a 13-year-old daughter. I own and run two different companies, two small companies, one a home building, and I also am a home inspector.
    My story's going to be a little bit different than what you've just heard. I'm going to talk to you about a product that didn't work. I'm here because I was seriously injured by a TMJ implant manufactured by the company named Vitec using DuPont's teflon disk. I needed the implant in my jaw because in 1972 I had 2,500 pounds of sheetrock fall on me when I was a contractor. Among the injuries I suffered was the TMJ, and it's also called the TMJ syndrome temporomandibular joint. I was required after a few surgeries to get the implant installed, and the purpose of this implant was to cushion the joint as—the jawbones—as they came together, similar to the disks in your back.
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    My jaw became immediately worse when the implant was put in. I had a severe reaction from this implant. My ear was always hot; it was red. When I talked or chewed my jaw would squeak, so it sounded like I had little mouse in my jaw. Everybody could hear it if they were close enough to me. And, also, that was accompanied with headaches and difficulty to chew and to speak which—that's sort of how I made a living, is to talk. I was unable to really run my business with any effectiveness due to the pain.
    Over the last few years while I was having the implant the only way I really learned about the implant was a little article in the Star and Tribune, that's our Minneapolis paper, and it was—the article had indicated that this product was being recalled, and so later I found through the attorneys that 100 percent of all of these implants failed—100 percent. So, therefore, to get this product out of the side of my head, it was required to have a 6-hour operation and, obviously, months of rehabilitation. The surgeon couldn't remove the teflon implant in its entirety due to it broke up into tiny fragments. These fragments actually ended up going in white as this bottle cap and coming out black as tar paper. So, therefore, obviously, it was not designed to be in people.
    Attorneys found evidence that DuPont knew that this teflon was unsuitable. They found out that it shouldn't have ever been put in people. They had sold it to this Vitec company anyway, and they sold it for a profit.
    As I indicated, I am a small businessman, and I take pride in my work, and I do a good job and do a professional job building and inspecting. I also require that from my employees. I have an important job; I build homes for people, and I also have an inspecting company that people rely on how I inspect their homes. Now, having jobs like this I'm held accountable, and I do carry insurance for my accountability if a mistake should ever occur. So should DuPont.
    DuPont is a huge company unlike mine. They have many scientists; they have many experts; they have laboratories; they have all the wherewithal to become what DuPont is today. DuPont is not some mom-and-pop organization that's operating out of the basement, out of some home, mixing up some sort of chemicals and selling them to the public. I believe that DuPont has an obligation to tell a person like me, that if they're making a product that's improper, they should let me know. I shouldn't have to read it in a newspaper. DuPont was the sole profiteer from this product. They paid their salesman commission; they increased their stock values, and they put money in the bank. And keep in mind, I, too, am a businessman, and profit to me is not a dirty word. Profit is the American way, but companies must play by the rules. I have to play by them; we all have to play by them.
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    You would think that a company as large as DuPont would stand behind their product, but they didn't. Not only did I get stuck with this product, but 25,000 other people got stuck with this product. I don't think that it's unreasonable to expect that when a large company hurts people they should be held accountable. For instance, when GM has an improper product in their car or a recall, they let us know, the same with toy manufacturers. Many manufacturers that put out products are held accountable. Why isn't DuPont?
    But that's not what happened in this situation. Vitec—we had nobody to go back to. Vitec actually went bankrupt. The company that sold the product went bankrupt. They went to the Cayman Islands. They also went to Switzerland, all of their owners of their companies. DuPont spent $8 million evading people like me and 25,000 other people. This is not about my gain; I'll get nothing for coming out here to Washington. The reason why I came out here is so that my daughter, my 13-year old; your daughters, your sons, won't be damaged by big corporations that put out improper products.
    So I urge you to consider that. My story's a little bit different than what you've just heard. Big companies, small companies have obligations when they sell a product, and they better know what they're selling. Thank you.
    [The prepared statement of Mr. Doty follows:]
PREPARED STATEMENT OF DON DOTY, MINNETONKA, MN

    Chairman Gekas, members of the Subcommittee on Commercial and Administrative Law and other interested parties, my name is Don Doty, I am 55 years old and reside at 2842 Mayfield Road, Minnetonka, Minnesota. I appreciate the opportunity to appear before this Subcommittee today. I am here to testify today at the request of the Minority members of this Subcommittee as an unwitting victim and recipient of a defective medical device. This device, known as a ''proplast interpositional implant'' was implanted in my jaw ostensibly to replace the damaged cartilage disc and to correct the problem of Temporomandibular Joint Pain or TMJ. In fact, this defectively designed and manufactured device not only correct my TMJ, but instead, exacerbated my problem resulting in even greater pain to my jaw, neck and head.
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    Importantly, the jaw implant device I receive contained Teflon or PTFE-Polytetraflouroethylene supplied by DuPont Company. In this instance, DuPont acted not as a manufacturer of the device, but as a raw material and bulk supplier of component parts to the device. To manufacture proplast in its final form as an implantable device, the manufacturer would utilize the PTFE, purchased from DuPont in powder or resin form. The PTFE was then heated to form a solid substance. In heating the substance, however, the PTFE molecule remained unchanged in its molecular form. The PTFE is unquestionably responsible for the injuries and further damage to my jaw as the PTFE degrades and abrades the tissue in weight-bearing joints, such as in the jaw. While the Court ruled against me and several thousand other Plaintiffs in our case, we produced evidence showing that DuPont was the sole-supplier of PTFE; that it knew that the Proplast manufacturer intended to use the PTFE in an implantable medical device to be implanted in a joint; and, knew that such was certain to cause injury and other consequences but kept that information secret and failed to warn anyone that PTFE would cause such injury and consequences used in this way.
    As I understand it, and I am a businessman, not a lawyer or a legislator, H.R. 872 is attempting to limit or eliminate all together liability for raw materials and bulk component suppliers who provide component parts for medical devices. I urge you to consider my own case as evidence of ways in which raw materials and bulk component suppliers should be held liable. I realize that implantable medical devices can and do serve a useful purpose. But my own circumstances serve as an example that strict scrutiny of their design and manufacture, as well as of their component parts is imperative if the Pre-Market Approval process upheld by the FDA is to be maintained with integrity. To this end, suppliers of raw materials who know of the intended end-use of their product(s) as component parts in implantable medical devices should not, I argue, be allowed by law to have their liability limited or worse, eliminated. Rather, they should be held to the same standard of liability as a medical device manufacturer if they seek to profit from the sale of their products in medical devices.
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    Again, I am not familiar with all of the wheretofores of H.R. 872—I will leave that to those who know more than I. However, I urge this subcommittee in discharging its duty to pass laws which protect the public and do not favor any special interest, to draft language into this bill which does not allow raw materials and bulk component parts providers to abrogate responsibility and ''wash their hands'' clean of liability, when clearly they have a duty in the chain of commerce to ensure safe usage of their products in implantable medical devices.
    Thank you for your consideration.

    Mr. GEKAS. Dr. Kent.
STATEMENT OF KENNETH M. KENT, M.D., DIRECTOR, WASHINGTON CARDIOLOGY CENTER, AND CLINICAL ASSOCIATE PROFESSOR OF MEDICINE, GEORGETOWN UNIVERSITY MEDICAL CENTER

    Dr. KENT. Chairman Gekas, ladies and gentleman of the committee, the testimony of these patients puts a face on the statistics with which we're all familiar: almost 10 million Americans each year undergo lifesaving or life-enhancing procedures and operations that are dependent on the use of medical devices. Almost 1 million patients undergo angioplasty or heart surgery to restore blood flow to the heart because of coronary artery obstruction. One-and-a-half million people undergo cataract operations. One million patients undergo dialysis because of kidney failure; arthroscopy surgery, 600,000 patients. Seventy-five thousand children undergo intracranial shunt procedures. All of these patients lives are dependent on medical devices that are addressed in this bill.
    Over the past 50 years, physicians, scientists, and engineers have developed sophisticated technological advances to address specific disease processes that benefit our patients. These devices are as diverse as pacemakers and heart valves—which were among the first medical devices developed in the 1950's—to very sophisticated implantable electronic instruments which can detect fatal heart rhythms and correct them with an electric shock. These devices all pass through phases of development and technological improvements. They are scientifically evaluated by the medical community and then scrutinized and subsequently approved by the FDA. Hundreds of such devices have been shown to save lives and substantially improve the quality of lives of our patients.
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    I daresay that none of the inventors of these devices ever gave a second thought about the availability of raw materials. These devices are made from such mundane materials as the fabric from which our clothes are made and the plastic cements that we can buy at the hardware store. When the inventors and scientists developed their devices, they turned to readily available supplies of metals and plastics. As the technologies have proliferated, the medical device manufacturers have grown to a $100 billion a year industry. More formal arrangements for the purchase of these raw materials inevitably followed; however, the combined market for these raw materials, which are subsequently fabricated into medical devices, represents only a tiny fraction of the industrial production.
    Unfortunately, because of the litigious climate in our country, lawsuits directed toward the real or perceived malfunction of the medical device target not only the manufacturer of the device, but also the suppliers of the raw materials. Thus, the raw material producers sell less than five-thousandths of a percent of their industrial production to medical device manufacturers; however, the raw material manufacturer spends millions of dollars a year on legal costs defending their companies which share no guilt in the potential malfunction of the medical device.
    The raw material manufacturers, one by one, have made the decision to stop selling raw materials to the manufacturers of medical devices. This is, indeed, a crisis. During this year, the stockpiles of raw materials for many medical device manufacturers will be exhausted, and shortages of the devices we use day-to-day to help our patients will quickly follow. Thus, this legal conundrum jeopardizes continued production of these medical devices and places in jeopardy the lives and well being of the patients you've heard here today and millions of other patients who will depend on these medical devices in the future.
    Without the assurance of continued supply of metals and plastics for the fabrication of medical devices, there will be no angioplasty procedures to clear blocked arteries; no open heart procedures to supply more blood flow to the heart or replace a faulty heart valve; no more artificial hip joints; no intracranial shunts for children born with hydrocephalus, as you've heard here; no pacemakers for patients with abnormal heart rhythms and no cataracts operations for our elderly patients. Without the availability of raw materials for these medical devices, children born with hydrocephalus will die or have debilitating mental retardation. Patients with coronary heart disease will die or be incapacitated by crippling angina. Elderly patients who break their hips will remain in the hospital for months instead of days. Our elderly patients will go blind instead of having their eyesight restored. The lists go on and on. This is an untenable position for me and all of my physician colleagues to watch.
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    Without this bill which will exempt the producers of raw materials from liability, the medical device industry will fail. These medical devices will just not be available. We will turn the practice of medicine back to the 1930's. Although it seems almost irrelevant in light of the suffering and death that has been described this morning, we will also witness the demise of an almost $100 billion medical device industry in this country which has been built on American ingenuity and technological superiority and continues to control the worldwide market for these technologies.
    Thus, I urge you to pass this vital piece of legislation so that you and your constituents may continue to benefit from the lifesaving and life-enhancing technological developments and that physicians may continue to offer the very best care for their patients with the appropriate medical devices. Thank you.
    [The prepared statement of Dr. Kent follows:]
PREPARED STATEMENT OF KENNETH M. KENT, M.D., DIRECTOR, WASHINGTON CARDIOLOGY CENTER, AND CLINICAL ASSOCIATE PROFESSOR OF MEDICINE, GEORGETOWN UNIVERSITY MEDICAL CENTER

    The testimony of these patients puts a face on the statistics with which we are all familiar, almost 10 million Americans each year undergo life-saving or life-enhancing operations that are dependent on the use of medical devices. Almost 1 million patients undergo angioplasty or heart surgery to restore blood flow to the heart which is limited because of coronary artery obstructions. One-and-a-half million patients a year undergo cataract operations, 1 million patients a year would undergo dialysis because of kidney failure. Arthroscopy and surgery are performed on 600,000 patients. 75,000 children undergo intracranial shunts procedures. All of these patients' lives are dependent on the medical devices that are addressed in this bill. Over the past 50 years, physicians, scientists and engineer have developed sophisticated, technological advances to address specific disease processes so that our patients may benefit. These devices are as diverse as pacemaker and heart valves which were among the first medical devices developed in the 1950's to very sophisticated implantable electronic instruments which can detect fatal heart rhythms and correct them with an electrical shock. These devices all pass through phases of development and technological improvements, they are all scientifically evaluated by the medical community and then are scrutinized and subsequently approved by the FDA. Hundreds of such devices have been shown to spire lives or substantially improve the quality of lives of ow patients. I dare say But none of the indicators of these devices ever gave a second thought about the availability of the raw plastic materials which they used to develop their devices such mundane materials as the fabric from which our clothes are made or the plastic cements that we buy at the hardware store. When the inventors and scientists developed their devices, they turn to the readily available supply of plastics. As these technologies have proliferated, the medical device manufactures have grown to a hundred billion dollar a year industry. More formal arrangements for the purchase of these raw materials inevitably followed. However, the combined market for these raw materials which are subsequently fabricated into medical devices represent only a tiny fraction of the individual production of plastics. Unfortunately, because of the litigious climate in our country, lawsuits directed toward the real or perceived malfunction of the medical devices target not only the manufacturers of the medical device but also the suppliers of the raw materials. Thus, as the raw material producers sell less than .005% of their industrial production to medical device manufacturers, however the raw material manufacturers speed millions of dollars a year on legal costs defending their companies which share no Cult in the potential malfunction of the medical device. The raw material manufacturers, one by one, have made the decision to stop selling the raw materials to the manufacturers of medical devices.
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    Thus, this legal conundrum jeopardizes the continued production of these medical deuces places in jeopardy the lives and well-beings of the patients you have heard here today and the millions of other patients who will depend on medical devices in the fixture. Without the insured continued supply of plastics for the fabrication of medical devices, there will be no angioplasty procedures to clear out blocked Aries, no open heart procedures to supply more blood flow to Tic heart or replace faulty heart valves, no more artificial hip joints, no intracranial shunts for children born with hydrocephalus, no pacemakers for patients with abnormal heart rhythms and no cataract operations for our elderly patients. With out the mailability of the raw materials for medical devices, children born with hydrocephalus, as described to you this mowing, will die or have debilitating mental retardation. Patients with coronary heart disease will die or be incapacitated by crippling angina. Elderly patients who break their hips will remain in the hospital for months instead of days, and our elderly patients mill go blind instead of having their eyesights restored. The lists go on and on. This is an untenable position for me and all physicians to watch.
    Without this bill, which will indemnify, the producers of raw materials, the medical devices industry will fails these medical devices drill just not be available. We will turn the practice of medicine back to the 1930's. Although it seems almost Irrelevant in light of the suffering and death that I have described, we will also witness the defuse of an almost hundred-billion dollar medical device industry which has been built on American ingenuity and technologic superiority and continues to control the world-wide market for these technologies.
    Thus, I urge you to pass this vital piece of legislation so that you and your constituents may continue to benefit from the life-saving and life-enhancing technological developments and that physicians may continue to offer the very best care for their patients using all of these devices that are now available.

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    Mr. GEKAS. We thank you, Dr. Kent.
    As is our custom, we will indulge in a questioning period on the part of the members of the subcommittee, restricting each one to—at least during the first round—5 minutes, and the Chair will begin with allotting himself 5 minutes for the first round.
    Mr. GEKAS. Mr. Doty, the suit that you filed against DuPont was ultimately dismissed in their favor. Is that correct?
    Mr. DOTY. Yes.
    Mr. GEKAS. Did the court make specific findings there, do you recall, that DuPont was not negligent or did not violate any contractual liability or contractual obligation? Do you remember?
    Mr. DOTY. I couldn't answer that.
    Mr. GEKAS. Do you believe, and I know you do, that DuPont should be held responsible whether or not its part or its component or how it was changed or how it was placed into a medical device should be held liable, no matter what, simply because they sold the part. Is that correct?
    Mr. DOTY. Well, I think that there's a clear difference of selling a part and knowing the part never would work. That's the clear difference.
    Mr. GEKAS. Yes, but we have to judge from the basis of what you told us that such a finding was not made in the case. That is, that DuPont did not know in advance that it would harm you in the device that would be—tried to be utilized for you.
    Mr. DOTY. I don't know if I would be the person to ask. I would think that there would be attorneys and doctors that could answer that, but——
    Mr. GEKAS. Yes. I'm not—I don't want to press you on legal conclusions. I have a tough time myself with legal conclusions.
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    Mr. DOTY. But I do believe that they knew.
    Mr. GEKAS. I want you to know that this bill, if it had been in place at that time, would not have, in my judgment, changed the outcome of the case that you're talking about, because we try to preserve the patient's right to sue and to recover damages when there is a case of negligence made out. What we're trying to do is to continue the flow of these materials, so that the supplier will not fear frivolous or unfounded suits. We want you to know that.
    Mr. DOTY. And I want everybody here to know that I'm all in favor of people living; there's nobody against that. I mean, who would be against something that's good?
    Mr. GEKAS. I've asked the same question. We thank you for your interest in this subject matter.
    I wanted to ask Rita, do you now have pain in your leg? Do you now have pain?
    Ms. BERGMANN. Now? No.
    Mr. GEKAS. And you can do everything excepts full ballet. Is that it?
    Ms. BERGMANN. Yes. I don't want to do anything that would cause me to have another operation sooner than the best outcome.
    Mr. GEKAS. Dr. Kahanovitz, what medical device company made the device that helped Rita?
    Dr. KAHANOVITZ. It's a company, Howmedica, which is a Division of Pfizer, and I think they're based somewhere in New Jersey.
    Mr. GEKAS. Did they indicate to you the possibility that their inventory is dwindling?
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    Dr. KAHANOVITZ. I don't know that, sir.
    Mr. GEKAS. We want to acknowledge the presence now of the gentleman from South Carolina, Mr. Inglis, and the gentleman from Tennessee, Mr. Bryant, and we will now yield five minutes to the gentleman from New York, Mr. Nadler.
    Mr. NADLER. Thank you, Mr. Chairman.
    Let me just observe at the beginning before I get into questions that a number of things are clear. No. 1, it's clear, and we don't have to belabor the point, that all these modern miracle devices are wonderful, and we want more of them, and we don't want anything to stop them from coming. And No. 2, it's also clear that people who are victimized by things that don't work should be compensated if someone was negligent or, even worse, just didn't give a damn. And the question is: How do you balance those, so that affording the ability of people to recover damages from people who were in fact negligent, given the cost of modern litigation, does not in fact threaten the availability of these devices? So, the question isn't: are these devices good, and do we want them? The question is: how do you balance that?
    Now, let me ask now, in Mr. Doty's case, the court essentially held that DuPont was too far in the stream of commerce from the victim to be held liable, but let me get to Dr. Kahanovitz. We have heard—let me ask you a question, Dr. Kahanovitz. Let's assume hypothetically that a parts supplier knew—not should have known—knew that the use of this part in a medical device was inherently dangerous and would result in people dying or being terribly damaged, and let's assume further that the parts supplier knew that the purchaser—that the intended use of this was for such a use. Now, let's assume—do you think that that parts supplier should be free from any liability for selling that part?
    Dr. KAHANOVITZ. No.
    Mr. NADLER. But this bill would do that. This bill would say that as long as the part that he sold to the manufacturer of the medical device met the specifications of the manufacturer, the parts supplier is not liable even if the part supplier knew that the use that they intended to make of it would kill people. That's what this bill says. Or do you not agree with that?
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    Mr. GEKAS. Will the gentleman yield for just a moment?
    Mr. NADLER. Yes.
    Mr. GEKAS. The legalities of the bill, I think would be better answered on questions pertaining to them by our second panel.
    Mr. NADLER. Well, I'm not asking about the legality; I'm stating as a fact.
    Mr. GEKAS. You're asking hypotheticals with Dr. Kahanovitz that lead to conclusions that he cannot really make.
    Mr. NADLER. All right. Then let me say this: Do you believe that such people should be liable?
    Dr. KAHANOVITZ. Well, again, I think——
    Mr. NADLER. And subject to suit?
    Dr. KAHANOVITZ. Yes. I think you need to back up a couple steps in the process, because, No. 1, it's not just the manufacturers specifications; these are specifications—and I've been involved in this process as well in a number of devices that I've developed over the years—these devices have to be not only the specifications of the manufacturer, but those need to go through the FDA approval process which, I'm sure you are well aware of, are certainly the most rigorous anywhere in the world. So, it's not just what the manufacturer says; it's also what the Food and Drug Administration says.
    Mr. NADLER. Let's just discuss, first, principles. If the parts supplier knew that the use of his product in the way it was intended to be used would result in harm to people, should he be liable?
    Dr. KAHANOVITZ. I think what we're dealing with is hypothesis, obviously, and it's very difficult to answer and go from reality to hypothesis, as I just alluded to that this approval process, the manufacturing process isn't an hypothesis. But to answer your question, I think if the manufacturer knew absolutely without a doubt that they were selling a bad product that will cause harm in a patient——
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    Mr. NADLER. No, no, they were selling a perfectly good product, but as used, by putting it in people it was bad.
    Dr. KAHANOVITZ. Well, that's what I inferred. Yes, then I think that those manufacturers of the harmful, knowingly harmful, products should then be held liable, yes.
    Mr. NADLER. OK, because bear in mind that there are a lot of proposals around this building and around the Capitol to weaken the FDA supervision, and who knows what's going to happen in the next few years.
    Let me ask Dr. Kent—Dr. Kent, you testified about—and Dr. Kahanovitz, too; you both said the same thing—about the imminent danger that if we don't pass a bill, this bill or something like it, that we will not be able to—that parts suppliers have been pulling out of the market, would pull out of the market.
    Let me read you some quotes from three years ago: ''The medical community can no longer treat this as someone else's problem; our patients are going to be affected in as little as 18 months when the supply of Dacron, for example, runs out. Other shortages will surface in two or three years,'' the congressional hearing, May 1994, Jay Donald Hill, representative, Biomaterials Availability Coalition.
    I have a whole bunch of other quotes going back to 1993 saying the problem is imminent and you've got to act right away. It's 3 years now. Are you aware of any actual shortages so far? I mean, has this happened?
    Dr. KENT. When I got involved with this 3 years ago with that same coalition, I asked the same question. I asked the people that we purchased catheters from and implants from, and nobody seemed to understand this as a problem. Today it's a problem. Every CEO of every company that makes medical devices says this is an imminent problem and that this year the stockpiles are finished and next year we're going to have shortages.
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    Mr. NADLER. But they're saying it now. My point is the following: 3 years ago they were saying we wouldn't have this material, or some key materials like Dacron, in 18 months. Did that happen? Were they right or wrong?
    Dr. KENT. The timeframe was probably a little wrong, but right now it is a crisis. Today this is a major problem, and you ask any CEO of any medical device supplier, they'll tell you this is a problem.
    Mr. NADLER. Thank you.
    Mr. GEKAS. The time of the gentleman has expired. We yield 5 minutes to the gentleman from South Carolina, Mr. Inglis.
    Mr. INGLIS. Dr. Kent, following up on that line of questioning, you testified that your concern is that we could be thrown back into the 1930's kind of era without these medical devices. Is it—this is—the CEO's you're referencing there, the information you've got, is it their concern that the suppliers of the materials that go into their devices are going to stop supplying them? Is that correct?
    Dr. KENT. I don't know, again, and I don't know what the time warp is, and, again, I was part of that coalition. I heard the same arguments 3 years ago, but, again, I can tell you 3 years ago in talking to the people in the industry it wasn't a crisis. Today it is. How they got around the special arrangements of large companies like that, I don't know, but today it is a crisis. Every company that supplies us with catheters for angioplasty or devices for use in the cath lab and the operating room says that this is a major problem for them and that their stockpiles will run out this year.
    Mr. INGLIS. I don't know, maybe you do have expert status on this—what's your impression about the relative size and financial capabilities of the suppliers of the product as opposed to the suppliers of the devices? Is there a discrepancy there? Pfizer, well, that's a big company that has a lot of resources. In other words, I'm sort of trying to figure out whether this is a deep pocket that everybody goes for. Is it DuPont, for example, that is behind—are the medical device suppliers relatively small or are they large?
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    Dr. KENT. Well, it's a very large spectrum. Almost all of the newer devices are small startup companies, and I think like the temporomandibular joint, when they had a problem, they went bankrupt, and, you know, that's what small device companies can do. You know, it's a shame, and it's obviously—that's a tragedy. That's a tragedy we all know about, but many of the small companies cannot indemnify a producer of the raw materials, and as these companies are diversifying, what used to be controlled by a company like Pfizer now is split up into much smaller companies. So, there's a very wide spectrum and, in fact, I would imagine all the new devices are coming out of very small startup companies which cannot indemnify the raw materials supplier like Pfizer might be able to do.
    Mr. INGLIS. Now, what causes this to happen? Is that somebody with a better mousetrap and an idea that they decide to start a company or am I the cynical person to assert that that's a large company spinning them off for liability purposes? Do you have any hints about that?
    Dr. KENT. I don't know. You know, I think in my particular narrow field, it's usually the former; it's usually a physician or a scientist has an idea; they get some venture capital money together; they put up a company, and buy a few plastics, a few metals wherever they can at the hardware store, and they make some products, but after that point, after they go through the initial IDE, then the supplier of raw materials right now in this country is a problem.
    Mr. INGLIS. Thank you. Thank you, Mr. Chairman.
    Mr. GEKAS. We thank the gentleman. We recognize the gentleman from Massachusetts, Mr. Delahunt, for 5 minutes.
    Mr. DELAHUNT. Yes. Thank you, Mr. Chairman, and I also want to applaud the very poignant and moving testimony of Ms. Bergmann and Randy and Mr. Kaiser and Mr. Doty. It did give a face to an issue for us.
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    I guess my first question is, is there significant or clear and convincing evidence that these companies, the suppliers of raw materials, are leaving the market because of fear of litigation or is it just simply a business decision that the profit that is attainable in terms of this particular—these particular materials is insufficient? And a followup question, and I guess I direct that particular question to Dr. Kahanovitz and Dr. Kent, is there data available that would show the number of lawsuits against suppliers of raw materials and whether it's in the form of verdicts returned by juries or whether it is done via settlement procedures—via settlements, if you have that data available? Maybe this is a question that I could pose to the suppliers of raw materials. What's that rationale for making the decision? Is it fear of litigation, and is that fear perceived or is it real?
    Dr. KAHANOVITZ. I think you'll—it's my understanding you'll hear a lot more about that on the second panel and some of the testimony that I read earlier today will address that from the folks that follow us, but it's my understanding, and, again, those folks behind me will probably have a much better firsthand understanding of that, is that it's both; that there is clearly a fear of litigation out there that has drawn the biomaterials suppliers out of the market as well as some of the settlements that have occurred. So I would have to say that clearly this is having a direct effect.
    To address your second question, I don't know of any specific statistics, perhaps someone on the second panel may, but clearly cases like the temporomandibular implant in which DuPont had, I think, well over 250 cases were all settled in favor of DuPont. So, I don't know much beyond that, perhaps the second panel can help you.
    Mr. DELAHUNT. Doctor, let me ask you, you referenced earlier the role of FDA. It's my understanding that the FDA does not in any way monitor or supervise raw materials. I mean, I think it's important to make the distinction here between raw materials and components, and that's my understanding in terms of the bill that is before us today includes components and raw materials. I mean, if you——
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    Dr. KAHANOVITZ. Well, the manufacturing process—and, again, I would defer to the second panel on this because you will have some manufacturers to speak about this directly—but the raw materials, are then converted into the components, the plastics like you see here, the polyethylene, so——
    Mr. DELAHUNT. No, and I understand in components, obviously, get conferred into a end process, but the FDA has no role in terms of quality assurance of raw materials.
    Dr. KAHANOVITZ. But those components that you see here, this polyethylene, in fact, has a very long list of standards, contract specifications, that the manufacturer must adhere to to allow the FDA to then go ahead with the manufacturing process. So, no, in fact, it's my understanding the FDA does not look specifically to the powder, but what they do look specifically at and have very strict criteria and specifications for is this which then goes in the patient.
    Mr. DELAHUNT. OK. Let me just ask one final question, and, again, Dr. Kent you're more than willing to respond—you're more than welcome to respond, but we're talking about raw—is the crisis in terms of the raw materials or is it in terms of the components? Because, again, it's my understanding that the proposal would immunize the manufacturers of the components, but the crisis as you represent it to us is the availability of the raw materials. Is that a fair statement?
    Dr. KENT. Certainly, my understanding is the raw material problem—and, again, just the FDA—when the device manufacturer says, ''We're going to make a widget,'' you've got to list what those are as polyethylene, PTFE; those are sort of standard industrial grade materials, but they all come with a list of specifications; they're well known.
    Mr. DELAHUNT. So, if this——
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    Dr. KENT. So, the FDA actually accepts that material as a part of that device, and when they do their animal implants and all of those other things, those materials are in fact tested. Now, maybe the models are wrong, but the materials are tested as a part of that device, and they become part of the standard for that device. One of the biggest problems is if tomorrow we no longer have Dacron or PTFE for a heart valve or a graft, then the manufacturer can't just go off and find something else that looks like. They'd have to go through the whole regulatory process——
    Mr. DELAHUNT. But in terms of the intent of the proposal, what we're trying to do is to assure a ready stream of raw materials, not necessarily protect or immunize the subcontractor, if you will, of a particular component. For example, if that subcontractor manufactured a defective component because of an inappropriate mix of raw materials, you're not suggesting that that component maker should receive any immunity, any protection?
    Dr. KENT. It is my understanding that is if the raw materials supplier provides the specified material, that that raw material supplier would be exempt from litigation. If that raw material supplier——
    Mr. DELAHUNT. And that's your problem?
    Dr. KENT. Yes. You know, if makes a bad product——
    Mr. DELAHUNT. You're not concerned about the component maker?
    Dr. KENT. Right.
    Dr. KAHANOVITZ. And it's my understanding as well that if you're involved in the manufacture or design of that product but not the supply, as you just said, then you will remain liable and should be liable if you make a faulty part.
    Mr. GEKAS. The time of the gentleman has expired. The gentleman from Tennessee, Mr. Bryant, is recognized for 5 minutes.
    Mr. BRYANT. Thank you, Mr. Chairman, and thank you for bringing forth this bill and holding this hearing. I want to submit for the record my complete statement, but I also want to make some comments from that statement.
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    Mr. GEKAS. Without objection, the statement will be accepted for the record.
    [The prepared statement of Mr. Bryant follows:]
PREPARED STATEMENT OF HON. ED BRYANT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

    Thank you Mr. Chairman,
    Mr. Chairman, the availability of biomaterials is of critical importance if Americans are to continue to have access to life-saving and life-enhancing medical technology. Each year, more than 7.5 million lives are saved or improved by medical implants.
    Smith and Nephew, a world leader in the manufacture of implantable medical devices, has two . operations within my district: the Orthopaedic Division and the ENT (Ear, Nose and Throat) Division. These two divisions employ approximately 1,600 people in the Memphis area.
    Unfortunately, the health care industry is finding it more difficult to obtain the raw materials used to make medical implants. The reason is that many suppliers are eliminating or cutting back on the sale of biomaterials to implant manufacturers as a result of the dramatic increase in product liability lawsuits.
    Smith and Nephew's ENT Division is the world's largest manufacturer of surgical implants and instrumentation for the treatment of diseases in the middle ear. A significant number of these products, as well as those for nose and throat applications, are made from fluoroplastic materials once supplied by DuPont or silicone once supplied by Dow Corning. Because of the risks under current U.S. product liability law, these vendors are now refusing to supply raw materials for use in implantable medical devices.
    In December of this year, the Smith and Nephew Orthopaedic Division will be forced to cease distribution of an effective spinal fixation product because the raw material supplier will no longer allow's material to be used in medical implants. This particular material is proprietary and there is no alternate source.
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    Ultimately, these surgical implant products, which have a history of excellent performance, will be available only in markets outside the U.S. If this trend continues unabated, the U.S. will lose its leadership position in advanced medical technology, and most importantly, U.S. patients will not have access to the medical devices they need.
    And I thank the Chair.

    Mr. BRYANT. Smith & Nephew is a world leader in the manufacture of implantable, medical devices, and it has two operations within my district in Tennessee: the orthopedic division and the ENT division, which is ear, nose, and throat division. These two divisions employ approximately 1,600 people in the Memphis area. Unfortunately, the health care industry is finding it more difficult to obtain the raw materials used to make medical implants.
    Smith & Nephew's ENT Division is the world's largest manufacturer of surgical implants and instrumentation for the treatment of diseases in the middle ear. A significant number of these products, as well as those for nose and throat applications, are made from fluoroplastic materials once supplied by DuPont or silicone once supplied by Dow Corning. Because of the risk under current U.S. product liability law, these vendors are now refusing to supply raw materials for use in implantable medical devices.
    In December of this year, the Smith & Nephew Orthopedic Division will be forced to cease distribution of an effective spinal fixation product because the raw material supplier will no longer allow his material to be used in medical implants. This particular material is proprietary, and there's no alternative source.
    Ultimately, these surgical implant products, which have a history of excellent performance, will be available only in markets outside of the United States. If this trend continues unabated, the United States will lose its leadership position in advanced medical technology, and, most importantly, U.S. patients will not have access to medical devices they need.
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    I say that as a preliminary, and I think I probably state the sentiment of many of you all on the panel today. I do thank you for coming in and testifying to us today. As a former attorney who practiced law and litigated cases primarily on the side of the defense against plaintiffs' attorneys, I have a strong view that we need to ensure that the courthouse doors do remain open for those cases that need to be there. I have a personal feeling that we have swung that out of balance, and we've got too many lawsuits out there that are of a frivolous nature. But the point that I would make today is we do need to ensure—and to answer my colleague from Massachusetts, I think the primary motivation here is to ensure, as I mentioned in my statement, that these products are available to the public as they need be, and that there is ultimately proper accountability where there are mistakes made, where there is negligence.
    I am a cosponsor of the chairman's bill. I feel this bill does reach that balance that I certainly hope to achieve.
    I was particularly struck, Doctor, by your written testimony. I think it says it very well, in that you say, and I think you've testified earlier, that you sit here today before this subcommittee to tell us that the fate of biotechnology research, and ultimately the quality of health care in this country, no longer is controlled by the researchers and the scientists and the physicians. The people who for decades have dedicated their lives' work to improving medical care no longer have the power to bring lifesaving technologies to patients in need. Instead, the explosion of litigation in this country has forced them and patients across the country to look to us in Congress to help them, and it scares me to think that your work is being impeded by litigation and that you have to come to us for help.
    But we are here; we have in other instances had to do this before and become involved. But, again, I think if we achieve that proper balance—and I think that's what you're all saying, and I think Mr. Gekas' bill does that—I think that we're going to be pleased with our work.
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    Does anyone have any—I haven't really asked a question, but does anyone have any comment? I know that maybe some disagree with me on the panel, but this is your opportunity. If not, I'll yield back the balance of my time.
    Mr. GEKAS. We thank the gentleman.
    We recognize the gentleman from Massachusetts, Mr. Meehan, for 5 minutes.
    Mr. MEEHAN. Thank you, Mr. Chairman.
    I think the problem that some members have is that this bill seems to immunize suppliers of raw material and components, even when they're negligent, as long as they comply with the contractual specifications. That's the problem that we're dealing with here.
    And let me also say, the President, when he vetoed products liability reform last year, specifically said the reason that he was doing this was because it would exempt from liability a biomaterials supplier who knew, or should have known, that materials as implanted would cause injury. So many Members of Congress, including myself, we've made it clear that, if we're going to try to do a biomaterials bill, No. 1, it shouldn't be attached to a larger products liability bill.
    But, secondly, the question here is when the supplier of a raw material or a component is negligent, the supplier being able to say, ''Well, I complied with the contractual obligations that I had to comply with. I'm fine. No liability for me.'' And that's really where the difficulty comes in on this issue.
    Dr. Kahanovitz, let me ask, you repeated in your testimony and also in your written material that H.R. 872 ''in no way impedes the ability or right of a patient to recover damages if they have been harmed by a medical device.''
    Now consider the following scenario: a patient is injured by a medical device. A manufacturer of a component used in that device supplied an unreasonably dangerous product. Although defective, the component does not violate the applicable contract or the specification, and the manufacturer of the medical device is now bankrupt, as Dr. Kent says happens oftentimes.
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    Now under current law, the patient could at least recover in tort from the supplier of the defective component used in the medical device, but that source of compensation would be denied under this bill. In the scenario that I've just described, wouldn't the patient's ability to recover damages, indeed, be impaired if this bill became law as written?
    Dr. KAHANOVITZ. Again, I think some of that—obviously, I'm not an attorney—needs to be deferred to the second panel. But we're talking a lot about hypothetical situations here, and one needs to understand in this process—and, again, I've been involved in this; Dr. Kent, I'm sure, as well can add to this—if I'm to develop medical devices, and I've done that in the past and presented material to the FDA for their approval, I don't call up and say, ''Can you deliver some biomaterials to my lab.'' It's delivered; I put them into a device; it goes through the FDA process.
    There's a process where I work with the biomaterials suppliers. This is not a blind process, which I think breaks down with your hypothesis. But there is this work between myself as the inventor of a device, the manufacturer who makes the device, the biomaterials supplier who supplies the biomaterials. And, sure, hypothetically, that greedy, bad biomaterials supplier could say, ''I know this is bad. Nobody else in this process, including the doctor or the manufacturer or the engineers or the polymer scientists who work for the company, know it, but I'm going to sell these guys some really bad biomaterials to put into that device which is going to hurt people.''
    Mr. MEEHAN. Well, that's not what I'm suggesting. What I'm saying is, what if all the great stuff that we hope happens doesn't happen? What if, in fact, a supplier is negligent, but conforms with the contract specifications? What about those instances?
    And let me just say, I'm one Member who has—I've worked with medical suppliers in my district, and there have been instances where I have been able to support security litigation reform and other pieces of legislation, and when there are compromises made that address both sides of a concern. But waiving liability—waiving liability—to suppliers in every instance, as long as they've complied with the contract, isn't in the public interest, from my perspective, and we hope that they comply with everything that you've said, but, ultimately, what about that instance when somebody is harmed and damaged or loses their life and has no place else to turn because the Congress has waived liability as long as they comply with the contractual agreements? That's really what the issue here is.
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    Mr. BERMAN. Would the gentleman yield?
    Mr. MEEHAN. Sure, I would yield to the gentleman—through the chairman, of course.
    Mr. BERMAN. I thank you very much.
    If I could just give a response to one aspect of what you're saying—the problem has been that if you leave open the negligence route to a supplier, you can rest assured that every single lawsuit that's filed against a medical device manufacturer will name a supplier with the general allegation of negligence which will probably be at some point dismissed or dropped, but the supply problem that comes up in the—the supply problem that's being talked about here will still exist because of the insurance risks to the suppliers. That is the problem dealing with not touching the negligence avenue, and that's the one thing—that's why I think a version of this bill, although not the existing form, I think might move——
    Mr. MEEHAN. That's why, Mr. Chairman, ultimately, I think—strike any procedural mechanisms designed to prevent frivolous lawsuits—I think there's a way to deal with what we're talking about dealing with here, but it isn't giving a waiver to liability in instances where people specifically cause harm and are negligent.
    Thank you, Mr. Chairman.
    Mr. GEKAS. The time of the gentleman has expired.
    We thank the panel for the very poignant testimony that has been offered, and we invite them to remain in the room while the testimony of the second panel evolves, because you will be able to place your personal testimony in context of the legal provisions with which we are concerned. Thank you very much.
    And we will now convene the second panel. The first member of the second panel is Ronald Greene, a partner in Wilmer, Cutler & Pickering in Washington, DC. He represents the Health Implant Manufacturers Association.
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    He received the A.B. degree magna cum laude and his J.D. degree summa cum laude from Harvard College and Harvard Law School, respectively. He clerked for Justice Thurgood Marshall on the U.S. Supreme Court.
    The second member is an individual—for the purposes of introduction, I yield to the gentlelady from California, so that she may conduct the formal introduction to the committee.
    Ms. LOFGREN. Thank you, Mr. Chairman.
    I'd like to introduce Dr. James Brown, who is here from California and from my hometown to talk about this issue as it relates in his personal experience. Dr. Brown, a graduate of San Jose State University, also got his doctorate at the University of California at Davis and did additional graduate work at Columbia. He has a distinguished career and is currently vice president of ALZA Corp., one of the premiere biotech companies, I would say not just in California, but in the world, and has done some extremely innovative things in drug delivery, which he will discuss today, including, I might add—for some of us this is particularly important—the nicotine patches that have helped many Americans quit the addiction of nicotine.
    Dr. Brown is someone who is well regarded not only in industry, but in our community, and I'm honored and proud to have the opportunity to introduce him.
    Mr. GEKAS. We thank the lady for participating in the introductions.
    Dr. Dane Miller, the next witness on the panel, is president and CEO of BioMet Corp. He's a member of the Surgical Implant Committee of the American Society for Testing and Materials, the International Society for Biomaterials, and the Orthopedic Research Society. He's also one of the founders of the BioMet Foundation, which provides educational scholarships and also gives financial assistance to various charities.
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    Dr. Miller has a B.S. in mechanical materials, science engineering, and a master's and Ph.D. in materials science, biomedical engineering. In 1978, Dr. Miller joined three others to form the BioMet Co.
    Joining him is Dr. Jorge ''George'' Ramirez. I'm ''George''; you're ''Jorge''—or are we both ''George''?
    Mr. RAMIREZ. We're both George.
    Mr. GEKAS. All right. And he's the sales and marketing manager of the Americas for the Hostalen GUR business unit of Hoechst Corp. He has been part of the business management team for Hoechst products in the implantable device market for 5 years. His 15 years with Hoechst include 10 years in the marketing of technical fibers and 5 years in the marketing of technical polymers. He is the author of 14 publications in these two areas. Prior to joining Hoechst, he received his Ph.D. in physical chemistry in 1981.
    And the last to be introduced is Prof. Mark McLaughlin Hager, professor of law at Washington College of Law, American University. His teaching and research areas include constitutional law, international worker rights, labor and employment law, legal history, jurisprudence, and torts. He's also the director of Labor Rights Advocates in Washington, DC.
    He received an A.B. in American studies from Amherst College, his juris doctorate from Harvard, and a master's and Ph.D. in religion from Harvard.
    With that, we repeat our suggestion that the witnesses will have their full written statement accepted for the record, without objection, and we will ask each one to try to restrict the oral testimony reflecting that written testimony to five minutes. We'll begin with Mr. Greene.
STATEMENT OF RONALD J. GREENE, ESQ., WILMER, CUTLER & PICKERING, REPRESENTING THE HEALTH INDUSTRY MANUFACTURERS ASSOCIATION, WASHINGTON, DC
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    Mr. GREENE. Thank you, Mr. Chairman and members of the subcommittee. I'm pleased to be here today to testify on behalf of my client, the Health Industry Manufacturers Association, to offer our strong support for H.R. 872, the Biomaterials Access Assurance Act of 1997. We believe this legislation will help ensure the continued availability of implantable medical devices to the 7.5 million Americans who each year depend upon them to live safe and productive lives.
    The other witnesses you've already heard, and some other of my colleagues on this panel, have already testified and will testify further to the reality of the supply crisis that the medical implant industry is facing. So I won't repeat that now. But it is clear that what is driving biomaterials suppliers from the market is not the fear of liability; it is the litigation costs that are associated with our tort system.
    We're not aware of a single, final judgment holding a biomaterials supplier liable for damages—not one case. It's the cost associated with defending themselves that is forcing suppliers out of the medical device market. In some instances, the supplier defendants have spent more on litigation costs than the gross revenues they receive in sales—not the profits, but the gross revenues they receive on sales to the medical device industry.
    The extreme case is DuPont that supplied the teflon in the TMJA implants we heard about earlier. They received from the Vitek company $1,000 for the sale of the teflon. They spent $40 million defending over 200 suits over many years, and won every single lawsuit. Now it just doesn't make business sense for companies to incur those kinds of costs.
    Because of this problem, the pending bill is basically a procedural approach, not a substantive one. It's not devised to give anyone immunity. It's devised to allow biomaterials suppliers to be dismissed from these suits quickly, at low cost, and to achieve the same result that they're receiving under current law at much lower litigation costs.
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    I was very pleased to read the prepared testimony of my colleague on this panel, Professor Hager, who also covers some of the same ground. He agrees, I believe—I'll let him speak for himself—with the analysis of the purpose and effect of the bill. If I read him correctly, he has only two quarrels with our reasons for supporting the bill.
    First, he believes that suppliers, although they're winning these cases in the courts, are winning them quickly and cheaply, and that the procedural protections in the bill are not necessary. On that, I think he's just wrong. As I said, DuPont spent this $40 million over 5 years winning 259 cases. I divided that out this morning. That's about $150,000 a case. As a lawyer in private practice, I can tell you that's a bargain to win a major product liability case for $150,000. DuPont wasn't making this up. These costs aren't low; they are real. And unless we have a quick and easy way for suppliers to get out of these cases, they're not going to supply the materials.
    Second, if I read Professor Hager's testimony correctly, he argues that this bill is ill-advised because, as he also said in the 1994 law review article that I read the other day, he disagrees with the results that the courts have reached in these cases, and particularly in the TMJ cases, where this issue has been litigated most thoroughly.
    Now the fact is that the law on the liability of suppliers of raw materials and component parts is absolutely clear. The American Law Institute just recently, last month, approved a new third Restatement of Torts on product liability. It includes in that Restatement an explicit statement that suppliers of raw materials are not liable as long as the raw material is not inherently defective—that is, not dangerous, no matter how it's used—and as long as the supplier didn't participate in the manufacture or sale of the completed product.
    That's the result the courts have been reaching. The courts and the ALI are not wrong. It makes no sense to require raw materials and component part suppliers to duplicate the research that manufacturers of completed products conduct. It makes no sense for them to second-guess decisions the completed device manufacturers make. It's these manufacturers who have the expertise and the regulatory responsibility to ensure that the implants they make are safe and effective. The courts have been right not to require suppliers to duplicate these efforts. The problem that this committee is facing is quite the opposite. The process of constantly reexamining settled law, settled law that the suppliers are not liable, repeatedly case by case, is driving lifesaving implantable devices out of the market.
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    I know I'm going a little over my limit, and I'll finish up quickly. But, in light of some of the questions that were asked earlier, I want to stress that it's important that this bill will not in any way diminish the liability of medical device manufacturers. These companies, most of whom are members of our trade association and who support the legislation strongly, are not seeking immunity for themselves. They accept the responsibility for producing safe products. They're only asking that their supplies of essential raw materials be assured, so that they can continue to manufacture implantable devices.
    Now I can address now or later, in response to questions, some of the objections——
    Mr. GEKAS. Yes, suppose we try to follow the protocol, but we'll try to cover some of your territory in the questions portion.
    Mr. GREENE. Okay, and I'd be happy to address those issues.
    [The prepared statement of Mr. Greene follows:]
PREPARED STATEMENT OF RONALD J. GREENE, ESQ., WILMER, CUTLER & PICKERING, REPRESENTING THE HEALTH INDUSTRY MANUFACTURERS ASSOCIATION, WASHINGTON, DC

    My name is Ronald Greene. I am a partner at the Washington law firm of Wilmer, Cutler & Pickering and am testifying today on behalf of the Health Industry Manufacturers Association (''HIMA'' ). HIMA has been actively involved for several years in the public debate over the impact our product liability system is having on the continued availability of life-saving and life-enhancing implantable medical devices. We are pleased to have this opportunity to offer our strong support for H.R. 872, the Biomaterials Access Assurance Act of 1997. We believe this legislation will help ensure the continued availability of implantable medical devices to the 7.5 million Americans who, each year, depend upon them to live safe and productive lives.
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    The Health Industry Manufacturers Association is the largest medical technology association in the world, representing more than 700 manufacturers of medical devices, diagnostic products, and medical information systems. HIMA's members manufacture nearly 90 percent of the more than $51 billion of health care technology products purchased annually in the United States, and more than 50 percent of the $120 billion purchased annually around the world. The member companies of HIMA urge Congress to enact, and the President to sign, legislation designed to ensure continued access to biomaterials used in the manufacture of medical implants.
THE PROBLEM

    A study released in April of this year by Aronoff Associates shows that continued patient access to lifesaving implantable devices is being threatened by correctable defects in our product liability system.(see footnote 1) Raw materials and component parts used to manufacture implants—we call them biomaterials—are disappearing at a rapid rate. According to the study, at least 75 percent of the suppliers of biomaterials used to make medical implants—ranging from pacemakers to heart valves to hip and knee joints—have banned sales to U.S. implant manufacturers. This is a 40 percent decrease in the percentage of suppliers willing to sell to the implant market since 1994. Most of the companies that remain in the market are seriously evaluating whether they should continue to do so.

    The troubling news in this 1997 Aronoff study corroborates the experience of those who deal on a daily basis with implantable medical devices. A 1995 study of the medical device industry by the Wilkerson Group, Inc., a New York-based research firm, found that 73 percent of the implant manufacturers interviewed had difficulty obtaining raw materials.(see footnote 2) In the face of this stark evidence, it is difficult to see how opponents of the legislation can even suggest that no shortage of biomaterials has been established. HIMA's grave concern about the shortage is shared by other supporters of this legislation: by physician specialty groups, such as the American College of Cardiology and the Society of Thoracic Surgeons; by consumer and patient groups including the Center for Patient Advocacy and the Paralyzed Veterans of America; by national health organizations such as the American Heart Association and the Society for the Advancement of Women's Health Research; and by U.S. manufacturers who have had to find new suppliers or provide costly indemnification and insurance policies to ensure a continued supply of materials.
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    Fear of litigation costs is driving biomaterials suppliers from the market. Under today's product liability law, these suppliers can be brought into litigation against device manufacturers, even though the suppliers had no involvement in the design, manufacture, or sale of the device. Because some suppliers are large companies with considerable financial resources, they have come to be viewed by plaintiffs' counsel as ''deep pockets.'' The problem for these suppliers is not the risk of ultimately being held liable. We are not aware of a single medical device case in which a court has found a biomaterials supplier liable for damages in a final judgment.
    It is the cost associated with defending themselves that is forcing suppliers out of the medical device market. In many instances, supplier defendants have spent more on litigation costs than the gross revenues they receive in sales to the medical device industry. For example, DuPont spent nearly $8 million per year over a five-year period defending 259 liability suits, all of which it won. Each implant contained five cents worth of DuPont's biomaterial, and DuPont sold less than $1,000 worth of it to the implant manufacturer. Suppliers have little economic incentive to provide raw materials and components to device manufacturers if they inevitably must face years of protracted litigation to extricate themselves from lawsuits. Indeed, the Aronoff study found that, in deciding whether to sell to the implant markets, risk of lawsuits was a key factor for all the suppliers surveyed. There is no reason to believe that biomaterials suppliers will return to or stay in the implant market unless the risk of high litigation costs can be diminished.
THE SOLUTION

    The ''Biomaterials Access Assurance Act of 1997'' is designed to help ensure the continued availability of implantable medical devices by protecting suppliers against high litigation costs, without affecting in any way the liability that device manufacturers face under existing law. This measure enjoys wide support, and HIMA hopes that, with the determined backing of the Chairman and others, it will soon become law. A strong foundation for enactment of the bill has been built through many hearings like this and the scrutiny the legislation has received since the first version was introduced in 1994.
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    The legislation is carefully crafted to address the needs of patients and biomaterials suppliers. The bill is essentially a procedural approach designed to permit biomaterials suppliers to obtain the same result as they do under existing law, but without the enormous litigation costs. It would allow biomaterials suppliers to be dismissed from product liability suits in which they are named without extensive discovery and legal costs if their only connection with the alleged injury was to supply a raw material or component that fully met all contract specifications. This puts responsibility for the product squarely on the device manufacturer who designed and produced it.
    The bill is drafted so that litigation may proceed against suppliers who are wrongdoers or are in a position to control the manufacture or sale of an implantable device. The bill does not allow suppliers who furnish products that fail to meet contract specifications to be dismissed from litigation brought by a person alleging injury. A plaintiff can proceed against a supplier on the grounds that the biomaterials did not constitute the product described in the contract between the supplier and the manufacturer or failed to meet any applicable specifications concerning the materials it supplied. Thus, if a plaintiff could show that his injury was caused by the raw material supplier's failure to deliver the product that the implant manufacturer expected to receive when it ordered the supplies and designed and tested the implant for safety and efficacy, the supplier would not be dismissed from the suit. In addition, the bill does not allow for dismissal of suppliers who are themselves manufacturers or sellers of the products.
    It is important to note that the bill will not in any way diminish the liability of medical device manufacturers. Persons alleging injury would retain their rights to sue the manufacturer of the device. Only implant manufacturers have the competence to determine whether the materials and component parts they purchase are safe when implanted in the human body. These companies, most of whom are HIMA members who support this legislation strongly, accept the responsibility for making such decisions. They are not seeking immunity from suit. They are only asking that their supplies of essential raw materials and components be assured so that they can continue to manufacture the implantable devices needed by millions of Americans.
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    To address concerns expressed by some persons regarding the effect of the legislation on silicone gel breast implant litigation, H.R. 872 contains an exclusion for claims alleging harm caused by the silicone gel or the silicone envelope used in breast implants. The protections in the bill would not be available to suppliers of those biomaterials. HIMA supports this exclusion, which preserves the legal status quo for such cases. Because of this exclusion, HIMA disagrees with assertions that the legislation would affect the ability of current breast implant litigants to seek compensation from silicone gel suppliers for alleged harm caused by silicone gel breast implants. In addition, a U.S. federal court in Oregon recently ruled that many of the studies relied upon by breast implant plaintiffs are, in effect, no more than ''junk science'' and should be excluded from evidence because they fail to establish the probability that silicone gel breast implants cause disease. Nevertheless, in order to help assure enactment of this vital legislation, HIMA reluctantly supports the silicone gel breast implant exception.
MYTHS PROPAGATED BY OPPONENTS

    Opponents of the Biomaterials Access Assurance Act have attempted to muddy the waters by misconstruing the bill's provisions and likely impact. I would like to take a few minutes to dispel some of these myths.
Willfully Negligent Supplier

    Opponents have argued that the legislation would change existing law to shield component and raw materials suppliers from liability even if they were clearly and grossly at fault. These concerns are unfounded. The bill provides suppliers with a defense against liability that is substantively no broader than the defense already available to such suppliers under existing common law in most states. Since suppliers are winning suits brought against them, the bill does not need to provide any broader immunity than suppliers already have. The focus is procedural, not substantive.
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    Under the law in most states, even negligent biomaterials suppliers have a valid defense against liability. The Third Restatement of Torts: Products Liability was approved by the American Law Institute, a prestigious body of scholars and practitioners, only last month. Restatements are designed to reflect existing common law in most states and to guide future decisions. Section 5 of the new Restatement describes the principles courts have followed in cases involving suppliers of component parts that are not inherently defective, meaning that the parts are not in and of themselves dangerous. Such suppliers are being found liable for harm caused by a final assembled product only if the supplier exercised substantial control over the design and manufacture of that assembled product. The same rule applies to suppliers of raw materials. If such control were in fact exercised by a supplier in a case covered by the proposed biomaterials legislation, the FDA and the courts would properly treat the supplier as a manufacturer, and manufacturers remain fully liable under the proposal. If the component part or raw material were inherently defective and could not be safely used in any application, it would almost certainly violate the applicable contract or specifications, and the supplier would remain fully liable under the pending legislation. Thus, the defenses provided by the new law are no broader in practice than the defenses suppliers already have. The advantage of the proposed law is that its supplier defenses, unlike those in current law, can be adjudicated under summary procedures described in detail in the bill, thus minimizing the litigation costs that are driving suppliers out of the medical implant market.
    A recent law review article surveyed the developing case law in this area and concluded that courts are routinely finding in favor of suppliers.(see footnote 3) For example, two recent federal appellate cases held that if a multipurpose raw material or component is properly manufactured and is inherently safe in most or all of its end uses, but becomes hazardous only as used in a particular type of finished product, its supplier cannot be found liable on a design defect or failure to warn theory.(see footnote 4) Similar results have been reached in cases involving implantable medical devices.(see footnote 5) In reaching such conclusions, courts frequently invoke the ''bulk supplier'' and ''learned intermediary'' doctrines, which hold that the supplier of a generic material—one that has both safe and unsafe potential uses—has no duty to warn an ultimate consumer of a finished product of potential risks concerning the safety or suitability of the finished product.(see footnote 6) Instead, the duty to warn, and the duty to assure that a finished product is neither defective nor unreasonably dangerous, rests with the ultimate manufacturer, not with the bulk supplier.
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    Courts have applied these principles to insulate suppliers from liability even if a danger in the finished product should have been foreseen by the suppliers. In one of the federal appellate cases mentioned earlier, the court assumed that the supplier knew of a machine valve's ultimate function in an allegedly dangerous finished product. In the other, the supplier was not only aware of a potential danger, after the machine that injured the plaintiff had been sold, but before the injury occurred, it had redesigned the machine manufactured with the supplier's component to eliminate the hazard. Nonetheless, the component suppliers obtained judgment as a matter of law even on negligence claims.
    Courts have justified this approach on grounds that are particularly applicable to the manufacture of medical devices: It would be unreasonable and impractical to require a supplier to retain experts in every field of business to determine whether the customers who buy its raw materials intend to develop safe products. End product manufacturers know how they will use a material and therefore are in a better position to guarantee the material's suitability for those specific applications. Indeed, in the case of medical devices, manufacturers must demonstrate the safety and effectiveness of their raw materials and components to the FDA. Manufacturers must perform safety and comprehensive toxicological tests on all raw materials and components, establish design controls to ensure that the device's design (including selection of raw materials) is appropriate, maintain purchasing and acceptance controls for raw materials and components, and document that suppliers are capable of supplying raw materials and components that meet contract specifications.
    The problem with existing law is that in all of the cases I have described, the raw material supplier was exonerated only after extensive discovery and lengthy trial proceedings. This occurs because, under existing common law doctrines, plaintiffs are entitled to inquire into the extent of the supplier's knowledge of its customer's intended use of the raw material, the hazards that might exist in that application, and the relationships between the parties. After an evaluation of the facts, the courts invariably reach the same conclusion—the duty to assure the safety of the finished product, and to warn ultimate users, is most appropriately placed on the finished product manufacturer, not on the supplier of the raw materials or components.
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    The legislation truncates this expensive, and ultimately futile, investigation into particularized facts in the narrow class of cases involving suppliers of raw materials and component parts to manufacturers of medical implants. In order to assure the continued availability of these crucial products, the legislation places the responsibility to assure safety and to give warnings squarely on the device manufacturer as a matter of law, dispensing with the expensive case-by-case search for evidence of what each supplier knew and when it knew it.
    To the extent that suppliers might be found liable under common law after extensive discovery, they would almost certainly still be liable under the proposed law. As I stated earlier, to our knowledge, biomaterials suppliers have never been held liable in implant litigation. The few cases holding suppliers of materials other than biomaterials liable indicate that the facts would have to be extreme and the wrongdoing more egregious than mere negligence.(see footnote 7) In such situations there are exceptions to the supplier defenses provided in the bill that plaintiffs might invoke. For example, contrary to the claim of opponents of the bill, the bill's supplier defenses would not apply in a case involving contaminated biomaterials. A plaintiff could attempt to show, under the bill, that the supplier of the contaminated biomaterials was liable because it delivered a product different from the product described in a contract with the manufacturer, or because it violated specifications it had published or agreed to.

Liability for Component Parts

    Opponents have argued that the proposed legislation would change the standard of liability for component parts. They cite the fact that two patients died after a crystal component in Ventritex's Model V–110 defibrillator failed as a reason that component manufacturers should not receive immunity from liability. This argument misrepresents existing common law. Under existing law, suppliers of component parts are subject to the same principles of liability as suppliers of raw materials. The proposed legislation replicates this parallel treatment of raw materials and component parts.
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    As with raw materials, multiple protections against unsafe use of component parts in implants would remain in place under the proposed legislation. Under the Food, Drug and Cosmetics Act, manufacturers are responsible for ensuring that components used in their devices are appropriate for such use. An injured party could seek compensation from the manufacturer, and the manufacturer could seek compensation from the supplier for a breach of warranty or contract violations. And an injured party could sue the supplier directly if the component did not comply with contract specifications.
    Ensuring a supply of component parts is critical to the manufacture of life-saving implants. The 1997 Aronoff report found that component parts such as electronic components and circuitry, specialty electrical wires, films used for flexible circuitry and for insulating tape in implants, and specialty adhesives are difficult to obtain. This shortage is as alarming as the shortage of raw materials. If the legislation excludes component parts, as some opponents have suggested, certain implants simply will not be available to patients—and we will not have solved the public health problem we are addressing today.
Liability in the Case of Bankrupt Device Manufacturers

    Opponents also suggest that the legislation is flawed because an injured party would not be able to recover from a supplier if a device manufacturer has been discharged in bankruptcy and therefore could not be required to pay damages. This, like other myths I have discussed, makes the erroneous assumption that the bill will diminish the likelihood that suppliers of raw materials and components parts will be held liable to an injured party. Suppliers simply are not being held liable, even in situations where the device manufacturer is bankrupt. In medical device and other tort cases, the fact that a manufacturer has filed for bankruptcy does not, under existing law, make it easier for a plaintiff to prevail against a supplier. The legislation does nothing to change that aspect of tort law.(see footnote 8)
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FDA Review of Devices for Safety or Effectiveness

    Opponents claim that medical devices are not reviewed for safety or effectiveness and therefore litigation against suppliers is the only guarantee of safety. They refer to a passage in a 1990 House Report to claim that 98 percent of all devices and 80 percent of the riskiest devices (grandfathered Class III devices) were never reviewed by the FDA. Opponents have taken that 1990 passage out of context and are ignoring the regulatory framework that governs medical devices today. The House report in question discusses the percentage of devices that cleared the FDA as of 1990 through the so-called section 510(k) or ''substantial equivalence'' process that requires manufacturers to demonstrate that a new device is as safe and effective as a previously marketed safe device.(see footnote 9)

    There is simply no truth to the allegation that the FDA does not review such devices. The 510(k) process can require data from mechanical, in vitro, and animal testing. Other safeguards applicable to 510(k) devices include the FDA requirement that device manufacturers comply with good manufacturing practices or quality system requirements, as well as post market controls and the FDA's enforcement authority should safety problems develop. In addition, contrary to what opponents claim, the FDA in 1995 called for safety and effectiveness data on most grandfathered Class III devices—Class III devices on the market prior to the 1976 Medical Device Amendments. (The FDA could have required such data long ago but presumably did not believe that the lack of such reporting permitted the use of unsafe grandfathered devices.) All Class III devices not grandfathered must undergo a rigorous pre-market safety and effectiveness approval by the FDA that includes physical, scientific, biological, and engineering tests and human clinical trials.
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    I would be happy to address other objections raised by opponents in response to your questions.
CONCLUSION

    HIMA appreciates the interest of the Committee and the continuing leadership of the Chairman in developing a real solution to this important public health problem. Adopting this legislation will assure that millions of Americans have continued access to life-saving and life-enhancing implantable medical devices. We look forward to assisting in this effort and thank you for your attention today.
   

Health Industry Manufacturers Association,
Washington, DC, June 19, 1997.


Ms. DIANE THOMPSON,
Associate Commissioner for Legislative Affairs,
Food and Drug Administration,
Rockville, MD.

    DEAR MS. THOMPSON, I am writing regarding your letter to Congressman Lampson regarding the availability of biomaterials for use in implantable medical devices. The letter, dated May 20, 1997, was entered into the record during a June 12 House Judiciary Subcommittee on Commercial and Administrative Law Hearing on the Biomaterials Access Assurance Act of 1997.
    Your letter specifically discusses Dow Corning's decision to stop supplying medical grade silicone as a result of the numerous law suits regarding silicone gel-filled breast implants. This decision has had a huge impact on all biomaterials suppliers. Since Dove Corning's decision in December 1992, at least fourteen suppliers of a wide variety of materials (see attached list) have withdrawn from the medical device market. Additionally, as of this year, 75% of those companies that supply four of the most widely-used biomaterials have banned sales to the implantable medical device market due to liability concerns; this is a 40% drop from the percentage of suppliers willing to sell to the market in 1994. We are aware of one product, an implant used in spinal surgery, that will disappear form the market by the end of 1997 (see the attached Aronoff Report, ''Biomaterials Availability: A Vital Health Care Industry Hangs in the Balance'').
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    I am particularly concerned that your letter states that ''... the marketplace was able to adapt to Dow Corning's decision [and] alternative suppliers of silicone raw materials have emerged.'' While two companies, NuSil and Applied Silicone, have stepped in to breach the gap for silicone, they are small and could easily be put out of business if forced into litigation. Therefore, a biomaterials shortage is a real problem for manufacturers that use silicone and most other biomaterials. The statement and position stated in your letter are misleading, given the public health impact of the biomaterials shortage.
    In a July 1994 letter to Dr. David Kessler, I discussed this issue and asked the FDA to consider the ''consequences'' of a biomaterials shortage and to support ''... aggressive action to address this issue'' (see the attached letter). Please consider this again, else longer we wait, the worse the situation becomes. It is imperative that FDA understand the importance and the danger of the biomaterials shortage to the public health. Until legislation is passed, the availability of all raw materials used in implantable medical devices will continue to be at risk. If you would like to discuss this further, please feel free to call me at (202) 434–7220.
Sincerely,

James S. Benson,
Senior Vice President,
Technology and Regulatory Affairs.

cc:Rep. George Gekas, Chairman, Subcommittee on Commercial
and Administrative Law.

Rep. Nick Lampson.

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Michael A. Friedman, M.D., Lead Deputy Commissioner,
Food and Drug Administration.
   


Health Industry Manufacturers Association,
Washington, DC, July 12, 1994.
    I write to request your support in preventing a potential patient crisis. As you are aware, there is increasing concern in the medical device industry about the reduced availability of raw materials used in implants. Recently, major raw materials suppliers have restricted or ceased altogether the sale of their polymers for permanent medical implant applications. The suppliers frame these actions purely as business decisions. The costs of responding to litigation from implantable devices are simply too high to be justified by the limited revenues granted from the sale of these materials.
    As a result of these market activities, device manufacturers are having difficulty obtaining materials used in a variety of critical medical implants. Patients may soon face shortages of vital medical implants, such as pacemakers and vascular grafts, if the availability of biomaterials continues to decrease. A materials market study (sent to you in May), conducted by Aronoff Associates, forecasts such shortages within 18 months to three years.
    Currently, several members of Congress are interested in the biomaterials availability problem. As you may know, Senator Joseph Lieberman held a May 20 hearing on this issue in his subcommittee on Regulation and Government Information. I also understand that Rep. Ron Wyden has requested HHS input on the subject.
    While biomaterials supply is clearly not an issue under your jurisdiction, I hope that, because of the potentially severe consequences for patients, you will support aggressive action to address this issue. In addition, I believe that FDA must be a part of any solution in avoiding device shortages.
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    In closing, I want to thank you on behalf of our members for FDA's work on the silicone issue. By establishing the ''equivalence'' testing regime, expediting reviews, and allowing products to stay on the market under a materials shortage status while reviews were pending, the Agency was critical in averting a shortage of silicone devices like hydrocephalus shunts. I applaud your efforts and hope that we can count on your continued assistance in assuring the uninterrupted supply of vital medical devices.
Sincerely,


James. S. Benson,
Senior Vice President,
Technology and Regulatory Affairs.
cc:Linda Suydam
Bruce Burlington, M.D.
Susan Alpert, M.D.

INSERT OFFSET RING FOLIO 28 HERE

    Mr. GEKAS. Thank you, Mr. Greene.
    Mr. GREENE. Thank you.
    Mr. GEKAS. Mr. Brown.
STATEMENT OF DR. JAMES E. BROWN, VICE PRESIDENT, BIOPHARMACEUTICAL AND IMPLANT R&D, ALZA CORP.

    Mr. BROWN. Thank you, Mr. Chairman and members of the committee. I particularly want to say hello to two fellow Californians.
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    And just to start off, I'd like to say I wouldn't be here if I didn't know there was a problem that needs to be addressed, I believe, and that is why I'm here. One can look at the number of suppliers that are out there for biomaterials, and the numbers are declining, have been declining. In my personal experience with the products that I am producing we have had numerous changes. What's happening in the industry is the DuPonts and the Dows, the big companies, the ones who produce the new and innovative materials, are getting out of business because of the issues. No matter what the circumstances are, and no matter how we try to protect them, if there is, I believe, if there is any possibility at all that they can be named in a lawsuit because of their deep pockets, they will, and by virtue of that they're not going to play; they're not going to get involved.
    And so what is happening is small mom-and-pop shops are the ones that are now starting to produce the materials that are available to us, to those of us who are producing the products that are going to be used in the implants and in the products of the future. And so what you've got, then, is only basically generic kind of material because these small organizations don't have the research and development to produce the materials. So no new and innovative materials will come out, and you'll only have small companies that will basically fold at all, if there are any issues out there producing it.
    So I think it's definitely an issue that needs to be addressed, and I'm very pleased to see that this bill is going forward, and that's why I'm here.
    So I want to just acknowledge the physicians and the medical device manufacturers who have come before me, and, in particular, with regard to Rita, Randy, and Stephen for their testimony; I think it was really very heartfelt and spoke very well to the issues.
    They've each spoken about unique devices that are needed for a particular disease state, whether it's drug replacement or for cardiac care through shunt or pacemaker or valve, or other singular indications. What I'm talking about here today, I'm here to tell you about another medical field that is threatened by the biomaterials shortages, and that's the growing and new fledgling field of biotech drug delivery. This is an area we haven't really talked about yet. It's one that actually affects millions more patients than we've talked about today—to the point of, certain disease states, hundreds of millions of patients, and in that case that's why I'm here.
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    You may ask the question: why do we need to be able to have biotech drug delivery? What are the differences here? We've been hearing about the potential for biotechnology for years. You may have heard of a couple of compounds; streptokinase from Genotech or EPO from Amgen are big products that are out there.
    The full potential of biotechnology has yet to be really recognized, and the reason for that goes into the inherent nature of what makes up a biotechnology molecule, and that's what I'd like to explain to you a little bit.
    The traditional pharmaceutical product is what we call a small molecule. It's a chemical that is modified by man to mimic an action in the body, and that's the kind of drugs that are typically taken orally. These are the products that have served us well for the past 100 years, given us aspirin, things like that, all the way up to some of the antibiotics, and the like, that we have today. And they've done very well, but to get to the next realm, to really touch on what we can with the human genome project and some of the new science that's out there, we need to be able to exploit these products of biotechnology.
    And if you take a look and you think back—you have to get a little bit teleologic here, but if you look at the products that biotechnology produces, these are proteins and peptides and genes that are produced and have their actions in the body in a matter of sometimes milliseconds; certainly some of them last no longer than a few seconds in the body. So it's a protein that's produced within a cell, has its effect, and is gone within the wink of an eye. These things affect Z states very, very significantly, and if we can actually come to the capacity to be able to make these things stable and deliver them in the right amount to the right place in the body, we can treat disease states that heretofore we have not been able to touch. And I'm going to talk to you about the capacity that I have been able to develop within my company to start us down that road, and that's this new fledgling industry of the delivery of biotech drugs.
    And I've got this little implant here that I'd like to pass out; I don't know what the protocol is for that, but maybe I can just hand these out.
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    Mr. GEKAS. Some of our staff will help distribute the exhibits for your purposes.
    Mr. BROWN. Thank you.
    Take a look at these, and what you're going to get, you'll see, it's in a little case. This is a 1-year delivery system that goes under the skin. Right now we have currently 50 prostate cancer patients that are being treated with a biotech product, and this is a 1-year delivery form. So this thing goes under the skin, if you take out that little thing. It's actually all made of biomaterials. It's sheathed in a titanium sheath. It's implanted under the skin, and it's a little highly-engineered system that you actually—in the handout that I passed out, there's a picture of how it works.
    And let me describe for a moment—I don't want to get too technical, but just to show you how it works, so I can talk about some of the wonders that we've got and that we could lose. Basically, this is what the thing looks like. It's got an outer shell of titanium that actually is a component part that's made by a raw material supplier for me. The other parts here are polymeric parts. There's a semipermeable membrane and a piston and an orifice. These are all made by plastic suppliers. These companies supply me with the raw material, and I have engineers who mold these things and make them into parts.
    What I'm suggesting, if this bill goes through, I will be—our company will be held liable for making sure thing is what it is, but the supplier of this polymer that we now mold into this part will not be held liable. I can tell you that it's a difficult chore finding companies that will supply. We have been delayed in getting this thing forward, moving into the clinic, because of that.
    In my mind, holding the guy who supplies me with the polymer liable is no different than trying to hold the water company liable because they supplied water for the process. At some point we need to stop this process of continued liability.
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    Anyway, what happens is water is being able to be taken through this specially-designed membrane. Salt ions in this engine can't get out. This engine is made up primarily of simple sodium chloride, table salt, but it can generate 5,000 psi and slowly over a year move that piston down this shaft and deliver the drug. Because we keep the drug away from the body, we can keep these biotech products very stable.
    We're working on, for example, alpha interferon for the treatment of hepatitis. We're able to show it's stable at body temperature for 8 months; normally, it's only stable for days. So we've got some very nice formulation technologies that we can deliver.
    This product delivers about a hundredth of a drop of water a day very, very precisely, and we've taken that measurement down to 6-minute intervals, showing 1.3 nanoliter delivery and showing that it's zero order. So we've got some very, very fine engineering. It's a wonderful science going into this.
    And on top of that, we can keep these things stable. That enables us to be able to take biotech products that have a very narrow therapeutic window, which means they're—I'll explain that very briefly. They are products that, if given by injection, they get toxic. If you were to give them via injection, they get toxic, and we can actually get in there and deliver them at their correct level, and in such a way that they can be effective. And it's enabled us to be able to open up doors for biotech drugs that normally wouldn't be available, because of this precise delivery out of a syringe-like device.
    Anyway, I've kind of gone off the track, and I apologize. Let me get back to the main point here.
    Mr. GEKAS. Well——
    Mr. BROWN. Have I run out of time?
    Mr. GEKAS. You can cover that in some of your answers to the questions to be posed by the members.
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    Mr. BROWN. OK, I'd maybe just make 1 additional point, and then I'll wrap it up.
    Mr. GEKAS. You're insistent and I'm compliant. [Laughter.]
    Mr. BROWN. I'm sorry. I appreciate that.
    I just wanted to say that I've actually included in the back of my testimony a letter from an attorney who has issue with ALZA's position here, and I just think it's worth reading and having you take a look at that. Thank you.
    [The prepared statement of Mr. Brown follows:]
PREPARED STATEMENT OF DR. JAMES E. BROWN, VICE PRESIDENT, BIOPHARMACEUTICAL AND IMPLANT R&D, ALZA CORP.

    I'm Dr. James E. Brown, Vice President of Biopharmaceutical and Implant Research and Development at ALZA Corporation, the world's leading drug delivery company.
    The men and woman who preceded me, be they doctors, patients or medical device manufacturers, have made compelling cases regarding the urgent need for passage of the Biomaterials Access Assurance bill. Each has spoken of unique devices which are needed to treat a particular disease state, whether in the area of joint replacement, cardiac care through shunts and pacemakers, or other singular indications whose effective implant treatment is threatened by the current serious threat presented by Biomaterials shortages.
    I'm here to tell you about another medical field which is threatened by Biomaterials shortages, the growing field of biotech drug delivery.
    You may ask, why do we need biotech drug delivery? You have heard about the potential of biotechnology for years. You may even know of a few biotechnology products, perhaps Genentech's streptokinase (TPA) or Amgen's EPO. Biotechnology products have brought wonderful advances to medicine and great improvements to patient care. But the full potential of the promise of biotechnology, of greater therapy for a wide range of diseases such as cancer, cardiovascular, necrologic and many others, still remains to be accomplished. Precise and directed biotech drug delivery is perhaps the key part of the answer to fulfilling the promise of biotechnology.
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    In order to understand the relevance of the Biomaterials bill to enabling biotechnology products to truly fulfill their promise, it is important to understand the difference between a biotechnology drug and a traditional pharmaceutical drug. Traditional pharmaceutical products attempt to mimic nature through the use of chemicals known as small molecules. These are compounds which are most often taken orally and because they are man-made or modified chemicals, and they last long enough in the body to have their intended effect. Biotechnology uses the multitude of naturally occurring compounds which are made within our body every second, 24 hours a day. Because of the vast number and variety of biotechnology targets and molecules, we now have the potential to go directly to the source of a specific disease state, find out what is different from the normal state and attempt to resupply the compound that is missing or turn down the production of an offensive compound that is being produced.
    These products of biotechnology are typically protein based molecules that are produced within the body, have their intended effect and are inactivated within seconds. The short half life of these products within the body is one problem that drug delivery addresses. ALZA's DUROSSM implant reservoir and innovative drug formulation technologies protect these sensitive molecules until they are delivered at a therapeutically optimal dose for an extended period of time. Another problem which is being solved by drug delivery is the ability to deliver the right amount of drug where it needs to be when it needs to be there.
    ALZA's DUROSSM drug delivery device is an implantable delivery system that has the potential to change a large number of drug therapies treating a wide range of disease states from cancer to hepatitis. For instance, you have all heard about the thousands of lives saved by heart valve implants. There are currently some 100 new drugs being developed by U.S. companies for the treatment of heart disease and stroke. We believe our DUROSSM implant could successfully deliver many of these new compounds.
    The DUROSSM system, which can deliver standard pharma drug compounds, also opens the door for the delivery of large-molecule biotech therapies, in steady doses for up to one year or more. The DUROSSM implant, as illustrated by this chart, consists chiefly of a titanium drug reservoir which delivers its contents by use of an osmosis-driven piston manufactured out of a polymer. The fluid entry membrane, and the drug exit port, are also made from plastics. This drug delivery technology should result in greater safety and efficacy profiles, replacing a dozen or more expensive visits for injections or infusion therapy at physician offices with one simple subcutaneous implantation requiring only local anesthesia. More importantly, by strictly controlling the pace of drug delivery, DUROSSM will overcome the often troublesome and sometimes dangerous problem of drug side effects which often accompanies infusion or bolus injection. Beyond such economies and improvements in patient quality of life, DUROSSM implants will also eliminate concerns regarding patient compliance with drug therapy regimes. Finally, DUROSSM implants will overcome the ''drug delivery barrier'' which has often prevented revolutionary new biotechnology products, consisting of large peptides, proteins, and genes from successfully reaching the market.
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    I hope you see how important the DUROSSM technology can be to the future of health care in America. Now let me tell you how the Biomaterials crisis in this country has slowed down our development of the DUROSSM implant and potentially threatens its future.
    The DUROSSM system is based on similar implantable devices we have manufactured for use in animals for nearly 15 years. When we first started our DUROSSM system development program, we considered using the very plastics and polymers used in those devices. Needless to say we were surprised, and our DUROSSM development program delayed, when the same suppliers who had sold us those materials and with whom we had a strong business relationship flatly refused to provide those very same plastics, with the same material specifications, for human implants. Instead of focusing solely on our primary goal seeking to save lives, treating disease, and fighting pain—we spent a great deal of time and effort trying to locate sources of the plastics and other materials needed for the DUROSSM implant. Ultimately, we moved from a plastic drug reservoir to a titanium reservoir, at least for the first DUROSSM product—a leuprolide delivery device for the treatment of prostate cancer. While we believe that in this instance the titanium shell is a better choice for this particular product, the fact remains that our treatment for prostate cancer was delayed in getting into clinical trials, because of our inability to locate the plastics we needed.
    The potential for this improvement in medical treatment is great; hemophilia, hepatitis and cancer are just three of the disease states we are actively investigating which could enable significant improvements in patients' lives. We are also preliminarily reviewing the potential use of DUROSSM technology in the treatment of AIDS wasting, diabetes, cancer, chronic or intractable pain, coronary artery disease, myocardial infarction, Parkinson's disease, Lou Gherig's disease, arthritis, and multiple sclerosis. We have the potential of taking a patient who currently must undergo a painful procedure three times a week and give them a system which can safely and effectively deliver the drug they need for 6 to 12 months with a single application.
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    That is why we are so involved in the effort to convince the Congress and the President of the urgent need to pass the Biomaterials bill. We believe it to be a minimal, targeted statutory response to the shortages that currently threaten patients and their treating physicians, like those you met today, as well as the millions of Americans who could and should ultimately benefit from the new therapies arising from biotechnology products delivered through the DUROSSM system.
    Finally, let me address a matter of additional concern one that I've just recently been made aware of. I am told that trial lawyers are spending considerable time and money fighting against the Biomaterials bill, arguing that there is no shortage of biomaterials and, in any event, that the bill would unfairly limit the rights of any consumers who might be hurt by an implant. I wouldn't be here today if I didn't know first hand that companies like ours are facing the real prospect of being unable to manufacture life-saving implants because of the biomaterials shortage. Secondly, nothing in this bill protects ALZA or any other implant manufacturer from being sued if its implant hurts someone. My general counsel tells me that even the trial lawyers admit that biomaterials suppliers have never once ultimately been held liable for injuries caused by implants. If that's true, I don't understand why the trial lawyers would argue against a bill designed to help save patient's lives when all that bill does is recognize what is in fact already a legal reality. In any event, I'm attaching a copy of a letter sent by a member of the trade association of trial lawyers that I think reiterates what I've just said.
   
McTernan, Stender, Walsh, Weingus and Tondreau,
San Jose, CA, May 6, 1997.
LINDA LIPSEN,
Senior Director for Public Affairs,
The Association of Trial Lawyers of America
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Washington, DC.

Re: Biomaterials Access Assurance Act.

    DEAR MS. LIPSEN, I have been an active member of ATLA for many years an have never before raised any objections to how ATLA spends my yearly dues to further the interests of our organization. However, I am greatly concerned about a campaign currently being waged by our representatives on Capital Hill against the so-called Biomaterials Access Assurance Act sponsored by Senator Lieberman and Congressman Gekas. I know enough people in California's huge biotech and medical device industry to know that they are currently experiencing enormous difficulty in locating raw materials suppliers who are willing to sell to anyone planning to use their plastics, etc. in a human implant. This is true notwithstanding the fact that to date not one of the suppliers who would be protected by the proposed Act has ever been found liable in a case involving a human implant (again, as defined by the Act). The costs of defense simply outweigh the minimal sales to the medical community.
    I have been told that ATLA's attacks on the proposed legislation state that there is no such shortage, notwithstanding all the evidence to the contrary (e.g. a NIH study issued less than 18 months ago warning of the potential for a huge crisis in the medical implant field if this problem is not solved). I am also told that ATLA materials distributed to Senators and Congressmen contain distortions, untruths and ad hominem attacks on noted members of the medical community. If true, I find this a wholly unacceptable use of ATLA resources and would not in any event wish to be associated with such questionable attacks.
    I am also told that ATLA has indicated that they would not oppose the Biomaterials Act if it were separated from the Product Liability bill. I hope that this is true, and I would hope that our representatives would be instructed to spend their time seeking such a splitting of the bill, rather than attacking the Biomaterials provisions.
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Sincerely,

Brian C. Walsh, Counsel.

INSERT OFFSET RING FOLIO 29 HERE

    Mr. GEKAS. Thank you.
    Mr. Miller.
STATEMENT OF DANE A. MILLER, PH.D., PRESIDENT AND CEO, BIOMET, INC.

    Mr. MILLER. Thank you. I would like to begin by expressing my appreciation to the House Judiciary Committee for this opportunity to speak and express my opinion, especially to you, Chairman Gekas.
    I'm here, despite what you may have heard from others this morning, to tell you how critical it is that the Biomaterials Access Assurance Act is passed, if the American public expects to continue receiving the advances, and, I would also add, the very products that I have with me today in the future.
    We at BioMet for nearly 20 years have been in the business of developing, manufacturing, and marketing a broad line of total hip, total knee, total shoulder products and a variety of other total joint kinds of devices. We have been fortunate in that process to have the support of the highly-sophisticated biomaterials industry or American general materials industry, and many of our successes can be directly related to that close working relationship with companies such as Montell, DuPont, Dow, and so forth.
    I've brought along a few samples of hips and knees for the committee to look at. I won't go into any great detail about how they work and how they function.
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    The material I'll be talking about today will be primarily the polyethylene component of total joints. You heard from an earlier panelist a little bit about that. I've brought a small sample of the powder along. I returned from Europe yesterday, and I had to have this shipped separately to Washington. I don't think I would have made it through Customs with this vial of white powder. [Laughter.]
    But it is polyethylene, I can assure you.
    The highly wear-resistant polymer that I've described or referred to is a very special grade of UHMW, ultrahigh molecular weight, polyethylene. I'll call it polyethylene throughout this testimony; however, believe me, it's not a simple polyethylene.
    To the best of my knowledge, there are only two manufacturers of a material like this in the world. Over the past couple of decades, we have evaluated material produced by both manufacturers, and with our very unique process have determined that the material provided by Montell serves us best in the ultimate fabrication of total joints.
    As referred by other panelists this morning, it's important for this committee to understand the significance, or lack of significance, of biomaterials to the materials industry in general. For example, Montell polyolefins—polyolefins are polyethylene, polypropylene, hydrocarbon polymers basically produces approximately $5 billion worth of polyolefin raw materials per year and sells about $150,000 worth of that material, the very highest quality of their production, to the orthopedic industry.
    There is a considerable imbalance in the liability associated with that $150,000 worth of products, and the remaining $5 billion in Montell's sales. In fact, we received a call from Montell the very afternoon in the fall of 1995 that a jury reached a verdict in Reno, NV, that Dow Chemical Co. should receive a multimillion dollar verdict in its supply of silicone to the breast implant market. That very afternoon, literally, we heard from Montell, indicating that they would not be shipping us any more raw material because they, as our raw material supplier, felt very uncomfortable about the liability.
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    Needless to say, we spent the next year working very hard to solve the problem. We have put together a broad form indemnification agreement with Montell. It's my understanding that other producers of orthopedic products have done the same thing. We have basically risked our last dollar in protecting Montell and inquiring their continued supply. We appreciate Montell's agreement and willingness to continue to supply raw material to us, but clearly understand the imbalance in liability to which they're exposed.
    Critics of the bill we're talking about today have voiced concern about the possibility of a biomaterials supplier producing poor quality or harmful materials that would injure a patient. I have brought along with me, although we consider much of the material included here as trade secrets, about 40 pages of quality control and receiving inspection procedures that we go through. Our raw materials suppliers of polyethylene know of our testing program, and they have previously completed a similar testing program before they ship the material to us. We repeat that once we receive the material.
    The problems with access to quality biomaterials from the best materials science companies are clear and real. They're not today's crisis. They're not a possibility in the future. They are real. We're fortunate that we still have a supplier of polyethylene. Passage of this legislation is critical to ensure that total joint patients such as my mother, who has been walking on two of our knees for almost seven years now, will continue to have access to the best biomaterials.
    Once again, I commend this committee on its efforts to help millions of total joint patients currently walking on the best total joints available in the world. Thank you.
    [The prepared statement of Mr. Miller follows:]
PREPARED STATEMENT OF DANE A. MILLER, PH.D., PRESIDENT AND CEO, BIOMET, INC.

    In support of the Biomaterials Access Assurance Act of 1997, I would like to begin by expressing my sincere appreciation to the House Judiciary Committee Subcommittee on Commercial and Administrative Law and, specifically, Chairman Gekas for his sponsorship of the important legislation that is the subject of this hearing. I am here today to tell you first hand, just how critical it is that the Biomaterials Access Assurance Act is passed, if the American public expects to continue receiving the advances in medical technology that they have come to expect.
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    We at Biomet, Inc. have been, for nearly twenty years, in the business of developing, manufacturing and marketing a broad line of total hip, total knee and total shoulder prosthesis for the elderly arthritic patient. Biomet continues to be the world's third largest manufacturer of total joint replacements. We have, over the years, been fortunate to gain the support of a broad range of highly technical material suppliers and the material scientists associated with these companies.
    A total joint typically consists of two or three components traditionally fabricated from various metals such as Titanium alloy, Cobalt Chrome alloy and stainless steel in combination with a special plastic polymeric component which provides the articulating surface. The highly wear-resistant polymer traditionally used in total joint replacement is a special grade of ultra-high molecular weight polyethylene. For brevity, I will simply refer to this as polyethylene throughout my testimony.
    To the best of my knowledge, only two manufacturers of this special polyethylene exist in the world. Over the past two decades we at Biomet have evaluated and, at times, used commercial polyethylene produced by both suppliers. We have in recent years, however, concluded that the slightly different version of the polyethylene produced by Montell Polyolefins is the preferred polyethylene for total joint fabrication when using the Biomet process. Through many years of technical effort from our in-house material scientists and those supporting us from Montell, we have concluded that wear resistance can be improved by as much as thirty percent using this polymer in our process. I might add that this conclusion has also been reached by independent outside university-based laboratories.
    It is critical that this Subcommittee understand the importance of these major raw material suppliers to the manufacturing process of surgical implants. Virtually no materials used in surgical implants have been developed specifically for use in medical devices. The relatively small volumes of these materials that are used in the manufacture of medical devices do not justify expensive basic research by the material scientists who develop these materials for the materials suppliers. We have ''borrowed'' these materials from other fields such as aerospace and marine engineering. We, therefore, are highly dependent upon a close working relationship with the materials suppliers despite the fact that they primarily exist in order to provide the raw materials to other non-medical industries.
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    While I could site several other stories involving biomaterials shortages over the past several years, I would like to address one particular incident involving our access to this special grade of polyethylene for total joint replacement. When Dow Chemical Company faced a multi-million dollar lawsuit, we received a call from Montell Polyolefins indicating that they were not prepared, on the basis of this lawsuit, to continue our supply of polyethylene for the manufacture of total joint replacements. This was soon followed up with a letter confirming this decision dated November 2, 1995, a copy of which I have attached to this written testimony.
    In the months that ensued, we learned that Montell supplies fewer than $200,000 worth of polyethylene to the orthopedic implant manufacturing community. This is a ''drop in the bucket'' compared to the approximate $5 billion in polyethylene supplied to the industrial community at large. We were informed that Montell's long-term liability risk advisers informed the senior management of Montell that their long-term liability risk for this relatively small amount of revenue was grossly out of balance and that Montell consider exiting the orthopedic implant supply field.
    Fortunately, we had recently acquired nearly a year's supply of polyethylene for our process from Montell and could, therefore, continue manufacturing and supplying our total joint products for a time period. From the fall of 1995 until just a few months ago, we saw our existing stockpile of polyethylene decline month by month, with no apparent solution to this problem in sight.
    In the meantime, we began serious negotiations with Montell that resulted in a broad-based indemnification agreement assuring Montell that, until Biomet spent its last dollar defending any future litigation involving the polyethylene, Montell would be completely indemnified. In other words, we at Biomet ''bet the store'' to see that our orthopedic surgeons and their patients were provided continuing access to the best material for fabrication of their total joints.
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    Because Biomet is the world's third largest manufacturer of total joint replacements, we had the net corporate assets to support this indemnification agreement. However, since many smaller manufacturers in orthopedics and other surgical implant fields would not have the capital to support such indemnification, they may be barred from a solution such as this in the future. Since much new technology in the medical device field comes from these younger, less-capitalized companies, this will have a serious impact on the future of technology development in America unless you take action now.
    Critics of this bill have voiced concern about the possibility of a biomaterials manufacturer supplying poor quality or harmful materials that would injure a patient. What needs to be fully understood by this Subcommittee is that any biomaterial used in a medical device must meet rigid contract specifications approved by FDA standards, which are clearly the most rigorous in the world. I have attached a copy of the contract specifications for the polyethylene contained in our total joint replacements. Thus, even if we were inadvertently or purposefully supplied inferior biomaterials, it is our ultimate responsibility as the manufacturer of the medical device to ensure that the supplied biomaterials meet the FDA requirements.
    The problems with access to quality biomaterials from the best material science companies are real. Passage of this legislation is critical to ensure that total joint patients, such as my mother who has been walking on two of our knees for several years, will continue to have access to the best biomaterials. Once again, I commend this Committee on its efforts to help the millions of total joint patients currently walking on the best total joints available in the world. Thank you for providing me this opportunity to express my views.
   

Montel North America Inc.
Wilmington, DE, November 2, 1995.
Mr. DANE MILLER, President,
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Biomet Inc.,
Warsaw, IN.

    DEAR MR. MILLER: I am writing to advise you of Montell's corporate position on the use of 1900 UHMW PE for medical implant applications. After careful consideration of the current business and legal ramifications, Montell has made a decision not to sell this product for use in medical implant applications.
    Our product is not produced with the intent that it be used in medical implant applications, and we do not perform any testing for such applications. Because we have no knowledge regarding the suitability of 1900 UHMW PE for use in medical implants, we do not recommend it for such use and, in fact, expressly disclaim any warranty or representation with regard to the fitness of this product for any medical implant applications whatsoever.
    The present legal climate does not encourage raw material suppliers such as Montell to engage in the sale of product for use in medical implant applications due to the likelihood that such suppliers will be named as defendants in costly lawsuits brought by persons claiming to have been harmed by medical implants not designed, manufactured or sold by the raw material supplier. As you are probably aware, national legislation is being considered that may provide some protection for raw material suppliers to the medical implant industry. We intend to reevaluate our corporate policy in the event such legislation is passed and will so advise you in the event our policy changes.
    Thank you for your patience and understanding regarding this issue. If you have any further questions, please direct them to Mark Nikolich at 302–996–6196.
Sincerely,

Robert J. Ockun,
Senior Vice President.
   
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AGREEMENT WITH REGARD TO PRODUCT SALES

    This agreement, dated August 30, 1996, is made by and between Montell USA Inc., a Delaware corporation (''Montell''), and Biomet, Inc., an Indiana corporation, and its affiliate, Kirschner Medical Corporation, a Delaware corporation (individually and collectively, ''Biomet'').
BACKGROUND

    A. Montell is engaged in, among other things, the business of producing and selling ultra high molecular weight polyethylene (the ''Products'') for various nonmedical applications.
    B. Biomet desires to purchase the Product from Montell as a raw material for use in the manufacture of orthopedic medical implants designed by Biomet for use as replacement joints (the ''Implants'').
    C. To induce Montell to sell the Product to Biomet, Biomet is willing to agree that the terms and conditions stated hereinbelow shall apply with regard to all sales of the Product by Montell to Biomet on or after the effective date of this Agreement.
In consideration of the premises and other consideration hereby acknowledged, and intending to be legally bound hereby, the undersigned agree as follows:

1. Use of the Product. Biomet represents that it will purchase and use the Product solely for the manufacture of the Implants for sale by Biomet. Biomet agrees to give Montell at least thirty (30) days prior written notice of any intent by Biomet to purchase and use the Product for any other purpose. Biomet further agrees not to permit any other entity to use the Product purchased by Biomet for the manufacture of Implants or for any other use without the prior written approval of Montell.
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2. Quality Control and Testing. The parties acknowledge that (a) Montell does not produce nor test the Product for use in medical implant applications and is unwilling to warrant it for such use and (b) Biomet has superior knowledge and experience regarding the suitability, use and performance of the Product in the Implants. Montell agrees to furnish samples from production lots for Biomet's quality control and testing. Montell further agrees to furnish a certificate of analysis with each production lot sample that provides Montell's test results, representative of the material in that production lot, for intrinsic viscosity, color, dirt content, total volatiles, bulk density, screen analysis, and trace elements for titanium, aluminum and chlonde. Notwithstanding the foregoing, Biomet assumes full responsibility for and agrees to perform all quality control and testing necessary to assure that the Product is suitable and safe for use in the Implants and that the Implants are in compliance with all applicable industry standards and governmental laws, rules and regulations.

3. Notice of Claims. Biomet agrees to provide Montell with (a) written notice of any claim asserted or action filed against Biomet with regard to any Implant within thirty (30) days of the same and (b) a written report detailing the status of all claims and
actions pending against Biomet regarding the Implants on a semi-annual basis or with such greater frequency as Montell reasonably may request. Montell agrees to keep confidential the information obtained from Biomet pursuant to the preceding sentence and further agrees not to disclose any such information to any third party without the express prior consent of Biomet.

4. Financial Status. Biomet agrees to supply Montell with copies of its quarterly interim financial statements, annual report and audited annual financials when available. Biomet further agrees to promptly notify Montell in the event of any material adverse change in Biomet's business or financial condition.
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5. Warranty. Montell warrants only that the Product supplied to Biomet will have a minimum intrinsic viscosity of 27, using Montell's test methods. There are no other warranties, express or implied, including the implied warranties of merchantability and fitness for particular purpose, with regard to the product.

All claims of the Product not conforming to the warranty set forth above in this Section 5 must be notified to Montell within six (6) months of delivery thereof to Biomet. Failure by Biomet to so notify Montell shall constitute acceptance and a waiver of all claims with regard to the quantity of the Product at issue. Upon receipt of timely notice of failure of the Product to conform to the foregoing warranty, Montell shall, at its option (and after inspection to confirm such nonconformity, if desired), either replace such nonconforming Product with conforming Product or refund to Biomet the purchase price of such nonconforming Product. The foregoing remedy shall be exclusive and in lieu of all other remedies at law or in equity.

6. Limitation of Liability and Remedies. The liability of Montell, if any, for breach of contract, breach of warranty, negligence or other tort, strict liability, or any other claim or cause of action whatsoever shall in no event exceed the purchase price of the quantity of the Product with regard to which the claim arose; and Biomet agrees that its exclusive remedy against Montell for any claim or cause of action is a claim for damages limited to such an amount. In no event shall Montell be liable for consequential, special or incidental damages, including (without limitation) loss of profit or loss of goodwill, regardless of the claim or cause of action asserted. All limitations and waivers established in this Agreement shall inure to the benefit of Montell, its affiliates, officers, directors, employees, agents, and insurers.
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7. Assumption of Risk and Indemnity. Biomet assumes all risk and liability whatsoever resulting from the use of the Product, whether used singly or in combination with other substances. Except to the extent of Montell's limited liability for breach of warranty set forth in Section 5 of this Agreement, Biomet agrees to fully indemnify, hold harmless and defend (including paying attorneys' fees and costs) Montell its affiliates, officers, directors, employees, agents, and insurers (collectively, the ''Indemnitees'') from and against all claims, suits, judgments, damages, liabilities, losses, and related expenses arising out of or in any way connected with (i) the Product sold at any time to Biomet or (ii) the Implants manufactured or alleged to have been manufactured using the Product, regardless of cause or claimant (collectively, the ''Claims''), including (without limitation) claims alleging the negligence or strict liability of any or all of the Indemnitees, and excluding only
claims caused solely by the willful misconduct of any or all of the Indemnitees.

Montell agrees to provide written notice to Biomet of any claims received by it that might be covered by this indemnity. Unless otherwise agreed with Montell Biomet shall assume the defense and control of any Claim brought against Montell and shall use counsel of reasonable skills and acceptance to Montell. Settlement of any Claim the actual or implied allegations of which bear on the performance of the Product and/or on the negligence or fault of any of the Indemnitees shall be subject to the prior written approval of Montell, which approval shall not be unreasonably withheld. The parties agree to fully cooperate in all respects with each other and their attorneys in the defense of any Claim. Such cooperation includes (without limitation) providing in a timely fashion any and all documents that are required to meet discovery obligations and/or that will assist in the defense of any such Claim, providing and making available witnesses for consultation and/or to be present or testify or otherwise give evidence at any deposition or trial, if required to do so. Biomet agrees to be responsible for all costs associated with the defense of the action herein.
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8. Insurance.

(a) Throughout the term of this Agreement, Biomet shall maintain at its own expense insurance of the types and with the minimum limits set forth below, which limits shall at all times be available and unimpaired:

(i) Commercial General Liability, including coverages for the Products Completed Operations Hazard and the Contractual Liability assumed by Biomet under this Agreement, with minimum limits for bodily injury and property damage of One Million Dollars ($1,000,000) per occurrence, plus defense costs and supplementary payments payable in addition to those per-occurrence limits.

(ii) Excess Liability, providing indemnity limits that, in combination with the limits and coverage referenced in (i) above, shall total Thirty-Three Million Dollars ($33,000,000) per occurrence.

(b) The policies described in (a) above shall include Montell, its subsidiaries and affiliates, as additional insureds with respect to any claims arising out of or in any way connected with the Product sold to Biomet or the Implants.

(c) Biomet shall obtain waivers of subrogation from its insurers in favor of Montell its subsidiaries and affiliates, under all policies of insurance, including (without limitation) those referred to in (a) above, that relate to the Product or the Implants and are secured or maintained by or for the benefit of Biomet. Biomet waives its rights to recover against Montell, its subsidiaries and affiliates, in subrogation or as subrogee for another party.
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(d) The coverages referred to in (a) above are set forth in fills in the respective policy forms approved by the applicable state insurance commission and the foregoing descriptions of such policies are not intended to be complete or to restrict such coverages in any manner. Insurance required by this Agreement shall be primary to and shall not contribute with any insurance carried by Montell. Biomet shall be solely responsible for all deductibles, retrospective premiums, loss-conversion or loss-adjustment expense and any other similar charge or expense under the policies referenced in (a) above. Biomet's obligations under this Agreement shall not be limited by the insurance coverage maintained by or for the benefit of Biomet. Montell's rights to insurance coverage under policies issued to or for the benefit of Montell shall not be limited by this Agreement.

(e) Upon execution of this Agreement and again in connection with any renewal or replacement of said policies, Biomet shall furnish Montell with Certificates of Insurance including (i) the types and amounts of insurance required by (a) above; (ii) the names of the insurance companies providing said coverage; (iii) the effective and expiration dates of said policies; (iv) that thirty (30) days advance written notice will be given to Montell of (A) any change in policy limits (including current self-insured retention limits), (B) any change in retro date(s), (C) any change in the provisions regarding Products-Completed Operations Hazard (including definition of the excluded products) or Contractual Liability, and (D) cancellation of any of said policies or coverages with regard to either or both of Biomet, Inc., and Kirschner Medical Corporation; (v) that Montell is an additional insured under the policies as required by (b) above; and (vi) that the insurers waive their rights of subrogation as required by (c) above. Biomet shall further provide to Montell the addresses to which any notice of a claim, occurrence or accident is to be sent under each of said policies.
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(f) Upon execution of this Agreement and from time to time thereafter as reasonably requested by Montell, Biomet shall provide Montell with copies of all insurance policies (including all current endorsements) maintained pursuant to (a) above.

9. Technical Assistance. From time to time, Montell may furnish technical advice or assistance with regard to the Product. It is expressly understood that all such advice or assistance is rendered without compensation; that Montell assumes no liability with regard to such advice or assistance; and that the rendering of such advice or assistance shall not modify or otherwise affect any provision of this Agreement, including (without limitation) Sections 2, 5 and 6. In no circumstance shall Montell's furnishing of advice or assistance about the Product be deemed to constitute control over the design or application of the Implants, which is in Biomet's exclusive control.

10. Montell Reputation. Biomet agrees to at all times seek to preserve Montell's business reputation and good reputation of the Product by avoiding making any claim or comment, in public or to any third party, that is disparaging to Montell or the Product.

11. Sales to Competitors. Montell agrees that it will not knowingly sell the Product directly to any other manufacturer of similar medical implants unless such manufacturer enters into an agreement with Montell that contains terms and conditions similar to those of this Agreement.

12. Term. This Agreement shall continue in effect until terminated by either party upon the giving of at least thirty (30) days prior written notice of termination to the other party. No such termination shall prejudice either party's rights hereunder with regard to events or acts occurring prior to such date of termination. The obligations of the parties pursuant to Sections 6, 7 and 8 hereof shall survive the termination of this Agreement.
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13. Purpose of Agreement. The purpose of this Agreement is to set forth the agreement of the parties regarding certain terms and conditions that Biomet has agreed will apply with regard to the sale of the Product to Biomet in order to induce Montell to consider selling the Product to Biomet for use in manufacture of the Implants. Accordingly, the terms and conditions of this Agreement will govern all sales of the Product occurring during the term of and prior to the effective date of termination of this Agreement. However, this Agreement is not intended and shall not be construed to require either Biomet to purchase from Montell or Montell to sell to Biomet any quantity or quantities of the Product whatsoever or to sell or buy the Product for any period of time in the future.

14. Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the matters addressed herein and there are no other understandings, representations or warranties of any kind with regard thereto. This Agreement may not be amended or otherwise modified except by a written agreement expressly stating such purpose, referencing the specific section(s) of this Agreement to be modified, and signed by both parties. While the parties anticipate the issuance of purchase orders, order acknowledgments and similar documents to establish price, quantity and delivery terms pertaining to any future sales of the Product to Biomet, it is agreed that in the event of any inconsistency in terms or implied in law between any such documents or other agreements (except modification(s) of this Agreement executed as required by the preceding sentence) and this Agreement, the terms of this Agreement shall control.

15. Notices. Any notice, report or other communication given or required to be given in connection with this Agreement shall be deemed to be properly given, effective upon receipt or refusal of acceptance, when sent to the other party by overnight express courier, facsimile transmission, or first-class certified mail/postage prepaid, and addressed as follows:
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If to Montell: Montell USA Inc., 2801 Centerville Road, Wilmington, DE 19808, Attention: General Counsel, Facsimile No.: 302–996–6056.

If to Biomet, Inc., or to Kirschner Medical Corporation: Biomet, Inc., Airport Industrial Park, Warsaw, IN 46580, Attention: General Counsel, Facsimile No.: 219–267–8137.

A party may change its address for purpose of this section at any time upon at least fifteen (15) days prior notice given to the other party pursuant to this section.

16. Waiver. A party's waiver of any breach or failure to enforce any term of this Agreement shall not be deemed to be a waiver of any subsequent or continuing breach or of the right to enforce such term in the future.

17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of Montell and Biomet, provided that Biomet shall not delegate all or any part of its performance nor assign all or any part of its rights under this Agreement without the prior written consent of Montell.

18. Governing Law. This agreement shall be governed by and construed in accordance with the laws of Delaware regardless of principles of conflict of laws.

19. Headings. The section headings used herein are for convenience only and shall not be deemed to limit or define the text of said sections.

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    In witness whereof, the parties hereto have caused their authorized representatives to execute this Agreement the day and year first aforesaid.

    MONTELL USA INC.,
    ROBERT J. OCKUN, Senior Vice President.


    BIOMET, INC.,
    DANE A. MILLER. PH.D. President and CEO.


    KIRSCHNER MEDICAL CORPORATION,
    DANE A. MILLER, PH.D., President.
   


SUPPORT FOR BIOENGINEERING RESEARCH—DEPARTMENT OF HEALTH AND HUMAN SERVICES, PUBLIC HEALTH SERVICE, NATIONAL INSTITUTES OF HEALTH

EXECUTIVE SUMMARY

    Public Law 103–43, the National Institutes of Health (NIH) Revitalization Act of 1993, Section 1912, directed the Secretary of Health and Human Services, acting through the Director, NIH, to work with appropriate organizations and representatives—including academics, industry leaders, bioengineering societies, and public agencies—to conduct a study of bioengineering research. As directed by the statute, this report contains the study findings and recommendations for actions to implement them. The study was restricted to bioengineering as it applies to medical and health research (excluding agriculture and the environment).
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    The NIH conducted a detailed inventory of sources and amounts of public and private funding for basic bioengineering research for fiscal year 1993. Within the Federal government, the NIH is the largest source of support for bioengineering research. The Whitaker Foundation is the largest nonprofit private source of funding. Support for basic bioengineering research constitutes approximately one-third of all Federal support for bioengineering. In contrast, an average of 60 percent of the overall NIH extramural research budget supports basic research. Industrial support for bioengineering is at least six to ten times greater than that of the Federal government; support for basic bioengineering research by industry, however, is virtually nonexistent.
    To assist in understanding how innovation in bioengineering proceeds, a case study was conducted in a representative field of bioengineering. Implantable prostheses were studied because the United States has a long history of success and leadership in this field. Data were collected on three stages of the innovation process: the science base, which is essential to the innovation process; patents, which are fundamental to technology transfer and investment; and new health care products, which are the ultimate objective of the investment in research and the innovation process. One of the most important findings of the effort was that relevant data are inadequate to assess this with confidence.
    Recommendations: Based on results of this study and the advice that was provided, the following four recommendations are made:
The NIH should establish an Interagency Bioengineering Coordinating Committee.

The NIH Institutes and Centers should include basic bioengineering research within appropriate intramural programs.

The NIH, using the Federal Register, should provide a comment period notice to solicit research topics suggested for inclusion in the annual Small Business Innovation Research (SBIR) Omnibus Solicitation.
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Analysis of the bioengineering innovation process would benefit from improved documentation in patents, research publications, and new product introductions.

INTRODUCTION

The Act

    Public Law 103–43, the National Institutes of Health Revitalization Act of 1993, Section 1912, contained provisions for a study of support for bioengineering research. According to the statutory language:
Study—The Secretary of Health and Human Services, acting through the Director of the National Institutes of Health, shall conduct a study for the purpose of—

1. determining the sources and amounts of public and private funding devoted to basic research in bioengineering, including biomaterials sciences, cellular bioprocessing, tissue and rehabilitation engineering;

2. evaluating whether that commitment is sufficient to maintain the innovative edge that the United States has in these technologies;

3. evaluating the role of the National Institutes of Health or any other Federal agency to achieve a greater commitment to innovation in bioengineering; and

4. evaluating the need for better coordination and collaboration among Federal agencies and between the public and private sectors.
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In conducting such study, the Director shall work in conjunction with appropriate organizations and representatives including academics, industry leaders, bioengineering societies, and public agencies.

a. Report—Not later than 1 year after the date of enactment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Committee on Labor and Human Resources of the Senate, and the Committee on Energy and Commerce of the House of Representatives, a report containing the findings of the study conducted under subsection (a) together with recommendations concerning the enactment of legislation to implement the results of such study.

Background

    Bioengineering is a broad, dynamic field that applies engineering principles and methods to medicine, biology, agriculture, and the environment. The estimated 20,000 practitioners of bioengineering are trained in many disciplines, including the life sciences, the physical sciences, clinical medicine, and engineering.
    Basic research in bioengineering covers a wide range of medical and disease areas, including occupational health and injury prevention, as well as the physical and life sciences, engineering, and mathematics. Research in biomaterials science, for example, expands our knowledge of how synthetic materials interact with body tissues. That knowledge can lead to development of improved implantable devices, such as joint prostheses and heart valves; improved therapeutic procedures, such as angioplasty for coronary occlusive disease; and more accurate delivery of drugs to particular body sites.
    Research on accurate delivery of drugs to particular body sites.
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    Research on acoustic, electric, and magnetic field effects and how they can be used to produce images has lead to developments in ultrasound, magnetic resonance, and computer tomography imaging that have revolutionized diagnostic procedures. These methods allow internal organs to be viewed without the need for exploratory surgery, and they make it possible for radiation therapy to be administered with greater precision than has previously been possible. Research in optics has led to improved eyeglasses, contact lenses, and implantable intraocular lenses for patients with cataracts. People affected by heart failure and heart rhythm disturbances have benefited from basic bioengineering research focusing on biomaterials, flow mechanics, energy transmission, and electric energy conversion that have led to development of ventricular assist systems, pacemakers, heart valves, and the automatic implantable defibrillator.
    The status and future of bioengineering have been addressed in a number of reports since 1967, when an international conference was held in Washington, D.C., to assess the interactions between the engineering sciences and biology and medicine. Most recently, an ad hoc review committee for the National Center for Research Resources, NIH, produced a report . Observations and recommendations for the future of bioengineering have remained remarkably consistent. They have stressed the need for a central extramural bioengineering focus at the NIH, a strong intramural bioengineering program at the N–IH, and increased coordination of bioengineering activities among the various Federal agencies.
This Report

    This report was prepared by the NIH Bioengineering Working Group composed of representatives from all NIH Institutes and Centers and the Division of Research Grants. The Working Group was advised by a steering Committee of senior NIH of finials, and received input from representatives of other Federal agencies that support bioengineering research, and focus groups from academia and industry. Representatives from academia, bioengineering societies and foundations, and industry were appointed to an External Consultants Committee, which produced its own report. NIH evaluation funds were secured to address the innovation provisions of the legislation.
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    An evaluation workshop held April 21–23, 1994, in Rockville, Maryland, allowed all interested parties to exchange information, comment on study findings, and provide specific recommendations for consideration by the External Consultants Committee. Approximately 150 academic, private sector, and Federal experts participated in development of this study.
    Particular attention was directed toward determining Federal and private support for basic bioengineering research. The inventory of public and private sector funding for bioengineering research support is the first inventory to document contributions of individual Federal agencies and of the NIH components. With this framework now available, it will be possible to obtain more detailed information—such as data on specific funding levels for research in biomaterials sciences, cellular processing, and tissues and rehabilitation engineering—in the future.
    This study's short time-line limited the evaluation of bioengineering innovation to one case study of implantable prostheses.
    This report explores the current state of the Nation's bioengineering research in its efforts to enhance the health of its people and retain the innovative edge of American bioengineering businesses. Because the NIH is the major supporter of bioengineering research and promoter of health research policy in the Umted States, the report generally discusses issues pertaining to bioengineering in the context of the NIH.
PUBLIC AND PRIVATE FUNDING OF BIOENGINEERING RESEARCH

Definitions

    The Steering Committee formulated the following definition of bioengineering research in medicine and health, recognizing that no definition could completely eliminate overlap with other research disciplines or preclude variations in interpretation by different individuals and agencies:
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Bioengineering is an interdisciplinary field that applies engineering principles and quantitative methods to the advancement of knowledge at the genetic, molecular, cellular, tissue, organ, and system levels; to the development of new and novel biologicals, materials, processes, devices, and systems for prevention, diagnosis, and treatment of disease; for patient rehabilitation; and for improving health.

    Bioengineering research was subclassified according to the following schema:
Basic research: Original study to gain fuller understanding the fundamental aspects of phenomena with any specific application. This broad base of findings will form the foundation for solving known or unrecognized issues. (Note: Basic bioengineering refers to the use of engineering principles and quantitative methods as a central focus in a basic research project; it may also refer to the study of new bioengineering principles.)

Applied research: Original investigation undertaken in order to acquire new knowledge and directed primarily toward specific practical aims or objectives, such as determining possible uses for findings of basic research or solving recognized problems.

Developmental research: The systematic use of the knowledge or understanding gained from research as directed toward the production of useful materials (including molecules, cells, and tissues), devices, systems, or methods, including the design and fabrication of prototypes and processes.

Results

Public Sector
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    One of the primary sources of Federal government support for bioengineering research is NIH. NIH funding components reviewed their portfolios to identify research projects supported in fiscal year 1993 that met the definition and to classify each as basic, applied, or developmental bioengineering research. The NIH determined that 1,781 research projects had a primary bioengineering emphasis (>75 percent), supported at a level of just over $300 million. Of that amount, about $80 million was devoted to basic bioengineering research.
    The vast majority of the NIH bioengineering research effort is conducted through its extramural research ogram; only 88 intramural projects were identified, for a total of about $20 million. Presently, the only organized intramural biomedical engineering activity is the Biomedical Engineering and Instrumentation Program of the National Center for Research Resources, and it is an outgrowth of what has been primarily a service activity.
    Other Federal agencies and departments that were considered to be likely to support bioengineering programs were asked to compile their inventories using the same definitions. The following organizations reported support for bioengineering during fiscal year 1993: Centers for Disease Control and Prevention, Department of Defense, Department of Energy, Department of Education, Department of Transportation, Food and Drug Administration (FDA), National Aeronautics and Space Administration, National Institute of Standards and Technology, National Science Foundation, and Department of Veterans Affairs. In total, they reported support for 592 projects at a level of about $ 180 million. The majority of the support came from the Department of Defense. Both the Environmental Protection Agency and the Advanced Research Projects Agency (ARPA) reported no support for bioengineering projects in fiscal year 1993. However, the ARPA expects to support bioengineering research in fiscal year 1994.
    Overall, Federal support for bioengineering research totaled $484 million in fiscal year 1993, of which $158 million funded basic bioengineering research.
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    Local government support for bioengineering was not included because of difficulties in obtaining such data. Discussions with State agencies suggested that they fund little basic bioengineering research.
Private Sector

    Estimates of industry support of bioengineering research were obtained from Standard and Poor's Compustat and Business Week. Research and Development expenditures were estimated at seven to ten percent of sales, for a total of $3 to $5 billion in 1993. Because the health care technology companies registered with the FDA number more than 10,000, and 72 percent have fewer than 50 employees, it was not possible to inventory all industrial sources of bioengineering support.
    Industry data are not available on the distribution of projects according to basic, applied, and developmental research. Discussions with many industry representatives made it clear that they support virtually no basic research, and that the total level of support could be prorated at 25 percent for applied research and 75 percent for developmental research.
    Nonprofit private-sector support for bioengineering research is provided almost totally by the Whitaker Foundation, which has contributed more than $112 million to universities and medical schools in the United States and Canada since its inception in 1975. In 1993, 366 projects were supported by the Foundation for a total of $23 million. The great majority of their engineering grant awards were for research, and more than 10 percent of them were for fellowships.
Summary of Findings

    Within the public sector, the NIH is the largest source of support for bioengineering research. The Whitaker Foundation is the largest nonprofit private source of funding.
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    One-third of all Federal support for bioengineering research is directed toward basic investigations. The corresponding share for the NIH is one-quarter. In contrast, an average of 60 percent of the overall NIH extramural research budget supports basic research.
    Private sector support for bioengineering, provided primarily by industrial sources, is at least six to ten times greater than Federal government support; private sector support for basic bioengineering research, however, is virtually nonexistent.
EVALUATION OF BIOENGINEERING INNOVATION

    To assist in understanding innovation in bioengineering, a case study was conducted in a representative field of bioengineering. Implantable prostheses were studied because the United States has a long history of success and leadership in the area. Data were collected on three stages of the innovation process: the science base, which is essential to the innovation process; patents, which are fundamental to technology transfer and investment; and new health care products, which are the ultimate objective of the investment in research and the innovation process .
    One of the most important findings of the effort was that relevant data are limited. Consequently, the following conclusions of the study concerning the level of innovation the area and the role of the public and private sectors in supporting related research and development must be view as preliminary:
Implantable are more closely linked to scientific research than other areas of invention.

Top foreign-owned companies are patenting at a higher rate than top U.S.-owned companies.

The United States continues to dominate the area. The U.S. invention activity level is equal to the aggregate activity of Germany, France, Great Britain, Switzerland, and Japan combined.
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The United States could lose dominance if it were unable to exploit new innovations competitively.

Science Base

    Data were obtained on the references to articles in scientific journals that were included in implantable prosthesis patents issued in the United States between 1981 and 1991 to examine the extent to which Federal research funding contributed to implantable prosthesis inventions. The level of journal references per implantable prosthesis patent (1.2) was higher than that found in studies of some other areas of technology, which suggests that implantable prostheses inventions may be more closely linked to scientific research than are other areas of invention. However, only 27 percent of the patents had journal references, so no firm conclusions on this issue can be drawn.
    Attempts to identify funding sources for those articles were even more difficult. Funding sources could be identified for only 23 percent of the patents with journal references. Thus, overall only 6 percent of the patents in the area could be related to a funding source for the underlying science. Although no firm conclusions can be drawn from such extremely limited data, it is worth noting that non-Federal organizations were cited as a funding source (76 percent) about as often as the U.S. government (63 percent). Within the Federal government, the Public Health Service was by far the single most frequent source of research funding (58 percent).
    The work of the top U.S. firms appears to be more closely tied to the science base than that of the top foreign firms. The top U.S. firms appear to be drawing on the science base more rapidly than most firms in this technology, with an average journal reference age of 7.7 years. The top foreign firms by contrast are not only citing fewer journal references in this technology, but the age of those journal references averaged 9.3 years.
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Patents

    Based on implantable prosthesis patent applications filed in some 30 countries for the years 1981 through 1994 (a measure of technology activity intended for international exploitation), it appears that U.S. companies have maintained a competitive international patent position. Interestingly, Small Business Innovation Research (SBIR) companies had international patent families equal to the leading U.S. and foreign firms. However, in 1987 the technological activity of top U.S. firms began a decline that led to a drop below the activity level of top foreign companies. If this trend continues, the United States may lose dominance in the field as new inventions are exploited by top foreign firms. A similar trend is apparent in the broader field of medical devices as reflected by U.S. patents granted from 1980 through 1993. U.S. origin for those patents decreased incrementally from 81 percent in 1980, to 76 Percent in 1986, and to 74 percent in 1993.
New Products

    Approximately 160 new implantable prosthesis products were introduced from 1980 to early 1994. The number introduce per year followed a generally increasing trend until 1991, when it peaked at 40, a figure that was more than twice as high as in any previous year. Especially active areas were cardiovascular technology, including pacemakers, defibrillators, artificial heart valves, and cardiac assist devices; artificial joints (especially knee and hip replacement systems); skin substitutes; implantable drug infusion systems; and cochlear implants.
    The products were introduced by 74 companies, 61 of which appear to be based in the United States During the period of analysis, companies of foreign origin generally introduced their products outside the United States, and U.S. companies generally introduced theirs domestically. Although 85 percent of the new products were introduced first in the United States, the figure probably overstates the percentage of the products that were U.S. developed because products may be introduced into the U.S. market by subsidiaries of foreign companies.
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    Unfortunately, there was no way to link these product data to patents and, therefore, to research funding sources. Future innovation studies would benefit from a data base that identified patents with new product introductions.
U.S. UNCERTAINTIES AFFECTING INNOVATION

Biomaterials Availability

    Uncertainty over the future availability of commercial-grade biomaterials is a major factor affecting bioengineering research and development. Over the next two years, U.S. manufacturers will remove from the market a number of biomaterials that are widely used for long-term medical implantation because of concerns over product liability. The pending withdrawal from the market will have an immediate and significant adverse impact on health care and may eventually shift basic biomaterials research overseas.
    Medical implants that may be affected include artificial joints, ligaments, urinary sphincters and blood vessels, bone fixation devices, intraocular lens implants, pacemakers, mechanical heart valves, ear vent tubes? silicone implants, catheters, ventricular shunts (to relieve hydrocephalus), dental implants, and infusions pumps.
    Unless corrective action is taken, this condition could spell the end of the American medical implant industry; that industry has benefited some eight to ten percent of U.S. citizens who have implants. The NIH supported biomaterials research at a level of $86 million in fiscal year 1993, but little effort was directed at research into new biomaterials.
    In addition to product liability concerns, other innovation uncertainties include regulation, health care financing and reform, and tax incentives. Each of these factors could influence the innovation process significantly. Reducing uncertainties in these areas would be expected to stimulate innovation and aid Federally funded bioengineering research, as well as private sector efforts.
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Overseas Products Testing and Introduction

    Industrial representations noted a U.S. trend toward increased planning for the introduction of new health care products overseas. This trend has accelerated during the last 10 years and has serious implications for basic bioengineering research.
    Overseas manufacturing leads to increased overseas research requirements, including applied and developmental research and training, that are filled by local medical centers and universities. These industrial needs result in hiring appropriate faculty who obtain support for basic research. Thus, the potential exists for movement of basic bioengineering research overseas.
    Overseas testing spawns the development of competition and the rapid introduction of second-generation technologies overseas; these foreign technologies are based on the principles of a U.S.-generated technology, As a result of overseas testing, the most advanced technologies in some areas of the U.S. bioengineering industry are available only outside the United States. Some U.S. companies have even lost their competitive edge to second-generation technologies developed overseas.
    The further movement of testing and introduction of new products overseas should continue to be monitored. Two measures that could potentially be used to assess the effects of these trends are increased overseas manufacturing and greater availability of more advanced generations of original U.S. technology in countries outside the United States.
PUBLIC AND PRIVATE SECTOR COORDINATION

Technology Transfer

    Improved coordination in biomedical research and development between the public and private sectors can be expected to lead to improved innovations and, thus, competitiveness for bioengineering health care products. Several activities initiated by the Federal government over the past 10 to 15 years address this need. The Cooperative Research and Development Agreement (CRADA) mechanism and the SBIR program have succeeded in transferring technology from Federal and academic laboratories to commercialization in the private sector. Additional Federal initiatives such as the Small Business Technology Transfer (STTR) program, should lead to further competitive technology transfer.
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SBIR Omnibus Solicitation

    The study participants agreed that the SBIR program could benefit from a regular process through which the private sector was given the opportunity to suggest precompetitive research topics that would have broad application to the bioengineering industry in general. This could enhance the innovation process by expanding the research base, while improving the U.S. competitive position and speeding technology transfer.
Federal Organizational Commitment

    The advantages of close cooperation among Federal agencies were noted by various committees, including the External Consultants Committee. Collaborations (both formal and informal) already exit in some areas. The Federal focus group convened during the April 1994 workshop discussed ways to improve cooperation. A principal recommendation was to improve communications, possibly through the Internet or an electronic bulletin board, so that program announcements would be available to all agencies. It was also suggested that the National Science and Technology Council establish a subcommittee focused on bioengineering.
Standards and Guidelines

    Activities in the development of standards and guidelines for bioengineering have steadily increased since 1976, when the FDA was directed to regulate medical devices. U.S. standards and technical guidelines have been developed almost solely by voluntary organizations. Although compliance with such guidance is voluntary, the FDA has made it clear that it uses the guidance to verify labeling practices and to conduct regulatory processes. Several international organizations are simultaneously developing medical device standards with participation of U.S. representatives, including some from the Federal government.
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    These activities should be encouraged and supported by Federal agencies to the extent possible, particularly by provision of scientific and technical expertise. Efforts would be continued by appropriate Federal agencies, such as the FDA and the National Institute of Standards and Technology, to harmonize U.S. and international standards to benefit U.S. competitiveness, while at the same time ensuring that safety and efficacy are not compromised.
RECOMMENDATIONS

    Basic bioengineering is an important government-wide research and development activity. In response to the legislation, the scope of this study was limited to bioengineering in medicine and health. Therefore, study findings focus primarily on the NIH as the major supporter of bioengineering research in medicine and health. These recommendations are provided recognizing the severe constraints that confront Federal of finials making resource distribution decisions during this period of national government reorganization.
    Recommendations I and II address support of basic bioengineering research and an organizational commitment to optimize investment in bioengineering research. These recommendations can also be expected to enhance innovation and cooperation within the NIH and between the public and private sectors. Recommendation III encourages private sector advice on precompetitive research topics for small business research projects. Recommendations IV should benefit future studies by providing information linking Federal research support with patents and new medical and health care products.
The NIH should establish an Interagency Bioengineering Coordination Committee

    Bioengineering is an important trans-NIH and trans-Federal research activity that should be promoted in accord with the missions of the various agencies. Bioengineering research would benefit from improved Federal coordination and an interface with the extramural community. The proposed coordinating committee, structured through a memorandum of understanding among participating agencies, would seek ad hoc advice from the extramural community; coordinate trans-NIH, Federal, and industry discussions as necessary; and provide a focus for generating information and reports.
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The NIH Institutes and Centers should include basic bioengineering research with appropriate intramural programs

    The NIH intramural program benefits from the orientation and interdisciplinary nature of basic bioengineering research. The revitalization of the NIH intramural program provides the opportunity to include basic bioengineering components within the appropriate Institutes and Centers.
The NIH, using the Federal Register, should provide a comment period notice to solicit research topics suggested for inclusion in the annual SBIR Omnibus Solicitation

    The research topics within the annual PHS SBIR Omnibus Solicitation could be expanded to include topics suggested by the private sector, particularly those companies not eligible for the SBIR program—that is, those companies with more than 500 employees. The NIH could solicit precompetitive research topics by publishing a Notice of Period for Public Comment in the Federal Register. The anticipated benefit is identification of research topics with potential for rapid transfer to the private sector.
Analysis of the bioengineering innovation process would benefit from improved documentation in patents, research publications, and new product introductions

    Patents are the acknowledged currency of technology transfer and new health care products. The link between patented inventions and the science base could be more easily traced if the Patent and Trademark Office enforced existing policy [35 U.S.C 202(c) (6)] requiring a statement of government support, If appropriate, using complete literature citations in a standard format. A global data base devoted to new product introductions and their patents could link innovations to their research funding sources and help define the relative competitive position of U.S. health care technology companies.
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    Mr. BRYANT [presiding]. Thank you, Mr. Miller.
    We'll now hear from Dr. Ramirez.
STATEMENT OF JORGE E. RAMIREZ, PH.D., SALES AND MARKETING MANAGER OF THE AMERICAS, HOSTALEN GUR, HOECHST CORP.

    Mr. RAMIREZ. Thank you, Mr. Bryant. I wish to thank the House Judiciary Subcommittee on Commercial and Administrative Law for the opportunity to support H.R. 872, which will help ensure the continued availability of biomaterials and the continued participation of companies such as Hoechst.
    This act strikes a fair balance between protecting the rights of 7.5 million American patients who annually benefit from medical implants and protecting suppliers of biomaterials from unwarranted lawsuits. Fear of litigation often prevents U.S. companies from selling existing technologies into implant applications. This weakens our international competitiveness and costs jobs for American workers. This act will help bring about a meaningful and much-needed reform to our country's tort law.
    Ultrahigh molecular weight polyethylene, or UHMW–PE, has both the highest abrasion-resistance and impact strength of any plastic. UHMW–PE has been used for the past 30 years in common high-volume applications. Less than 1 percent of all UHMW–PE polymer sold worldwide is sold into the implant market.
    Hostalen GUR polymers are manufactured and tested in strict accordance with accepted industry standards such as ASTM and internationally, ISO. When our products leave the shipping docks, it is in the form of a white granular powder. Our material is sold to customers who compress and mold the resin into stock shapes such as rods or sheets. They manufacture and test their products in accordance to accepted industry ASTM and ISO standards.
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    The device manufacturer further processes these shapes into their exact dimensional requirements using precision-shaping techniques, as was shown by Dr. Miller. After passing numerous quality control checkpoints, the finished parts are sterilized, packaged, and made available for sale.
    Each step in the above biomaterials supply chain requires its own expert knowledge and manufacturing skills. Hoechst's area of expertise is confined to the first step, the manufacture of high-quality polymers.
    UHMW–PE was first used in hip prothesis in 1963, knee implants in the early 1970's, and shoulder implants in the early 1990's. The demand for joint reconstruction continues to grow in the United States, especially with the aging of our population. In the United States alone, joint reconstruction represents a $2.5 billion with over 450,000 hip and knee replacements each year. Worldwide it is over a $4.5 billion industry.
    The typical weight of polymer used in a part is about 2 ounces per device. Thus, each pound of polymer sold by Hoechst will make many implant devices, each carrying risks and liability. As a raw material supplier, Hoechst is far-removed from the implant device manufacturer's design and fabrication processes. Thus, we do not think we should be held responsible for the use of our materials beyond our sphere of direct business control.
    Hoechst continues to be concerned about placing our entire UHMW–PE business, which is dependent on nonimplant applications, at risk by supplying material for use in implant devices. Be advised that the only other alternative UHMW–PE supplier in North America has publicly withdrawn from the implantable device market due to lawsuits concern, except for a singular exception, as you've heard.
    The liability and litigation encountered by DuPont due to use of its fluoropolymers in joint implants caused them to withdraw from that application. Hoechst recently refused the use of our polymer in that application. We did so because of the costly litigation which has surrounded the application over the past several years. At the present time, Hoechst can only support the use of our UHMW–PE in the applications with nonpredatory lawsuit track records.
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    The patchwork of 50 separate product liability laws leads to venue-shopping and confusion. The existing product liability system allows suppliers to be sued for merely selling biomaterials to the implantable device industry. This is causing a crisis in the health care industry due to increased unavailability of these biomaterials. This system can be improved by limiting liability of innocent materials suppliers who support lifesaving and life-enhancing medical implants.
    The Biomaterials Access Assurance Act offers a fair balance between the 7.5 million American patients who annually benefit from medical implants and protecting biomaterials suppliers from unwarranted lawsuits. H.R. 872, its counterpart S. 364, need to become law as soon as possible.
    I frequently encounter people in everyday life that have had their life improved due to medical implants. Last year Hugh Downs, the cohost of the television show ''20/20,'' described on national television his double-knee replacement operation and the resulting dramatic improvement in the quality of his life. Device manufacturers are always working to improve the performance of their products. Without the availability of polymers such as UHMW–PE, standard implant devices, economical implant devices, with proven track records would not be available. Passage of legal reforms, as called for in H.R. 872, will ensure that Americans continue to benefit from medical implants.
    Thank you.
    [The prepared statement of Mr. Ramirez follows:]
PREPARED STATEMENT OF JORGE E. RAMIREZ, PH.D., SALES AND MARKETING MANAGER OF THE AMERICAS, HOSTALEN GUR, HOECHST CORP.

PERSONAL BACKGROUND

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    I am Jorge E. Ramirez, Ph.D. My job is Sales & Marketing Manager of the Americas for the Hostalen GUR Business Unit of Hoechst. Employment with Hoechst dates back 15 years with most of that time spent in marketing of technical fibers and technical polymers. My Ph.D. is in physical chemistry and I have authored fourteen publications in the areas of chemistry and high performance polymers. I have been part of the business management team for our products in the implantable device market for five years and currently reside in Houston, Texas.
HOECHST

    The Hoechst Group operates worldwide in the life sciences, and industrial business sectors with over 160,000 employees. Within the industrial business sector, Hoechst-owned affiliates manufacture and market products in basic chemicals, fine chemicals and additives, polyester products, polymers, industrial gases and powder coatings. Ticona is the operating company which manufactures and markets technical polymers.
    One of the businesses within Ticona is the Hostalen GUR Business Unit which manufactures and markets ultrahigh molecular weight polyethylene. The common generic acronym for this polymer is UHMWPE. The tradename for our products is also Hostalen GUR. The business unit consists of 110 employees.
SUMMARY

    I wish to thank the House Judiciary Subcommittee on Commercial and Administrative Law for the opportunity to support H.R. 872, the Biomaterials Access Assurance Act, which will insure the continued availability of biomaterials and the continued participation of companies, such as Hoechst, in providing biomaterials which may be used in lifesaving/enhancing medical implants. Hoechst is the only supplier of the ultrahigh molecular weight polyethylene that is used to manufacture knee, hip and shoulder implant devices.
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    The laws governing our product liability system must be made rational. This Biomaterials Access Assurance Act strikes a fair balance between protecting the rights of the 7.5 million American patients who annually benefit from medical implants and protecting suppliers of biomaterials from unwarranted lawsuits. Fear of litigation and its excessive cost often prevent U.S. companies from introducing or selling new products or existing technologies into implant applications. This weakens our international competitiveness and costs jobs for American workers. The patchwork of separate product liability laws leads to venue shopping and confusion. There is a crisis in the health care industry due to the unavailability of materials for lifesaving or life enhancing implantable medical devices. This situation can be improved by limiting the liability of innocent suppliers who merely provide needed biomaterials to the implantable medical device industry. This is of particular interest to my company, because we are the only supplier of the UHMWPE that is used to manufacture knee, hip and shoulder implant devices.
    The Biomaterial Access Assurance Act will help bring about meaningful and much needed reforms to our country's tort law.
    UHMWPE—''The Material of Choice for Replacement Knee, Hip and Shoulder Joints.''
    Polymers are large molecules manufactured from smaller repeat units of basic chemical raw materials called monomers. With molecular weights greater than 3 million, UHMWPE is ten times higher in molecular weight than standard high density polyethylene (HDPE) and up to one hundred times higher than some other plastics. Hence the term ''ultrahigh'' is used. UHMWPE has both the highest abrasion resistance and impact strength of any plastic. Therefore, since the 1960's UHMWPE polymer has been the material of choice, due to its unique combination of properties, as the articulating wear surface in joint implants.
    The largest volumes of UHMWPE have been used for the past thirty years in common applications such as liners for grain silos, dump trucks and railcars and as wear strip materials in bottling, canning and package conveying. More recent additional high volume applications include its use in electrode separators for maintenance free automotive batteries.
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    Hoechst is the only supplier known to us which is selling UHMWPE commercially in the knee, hip and shoulder joint application. Less than 1 percent of all UHMWPE polymer sold worldwide by all manufacturers is sold into the implant market. Therefore, the overwhelming use of UHMWPE is in industrial applications which compete with commodity plastics, wood and some metals. The entire worldwide UHMWPE polymer volume sold by all suppliers on an annual basis is approximately 150 million pounds.
STEPS IN THE BIOMATERIAL SUPPLY CHAIN

Step 1—Polymer Manufacturing

    Hostalen GUR polymers are manufactured and tested in strict accordance with accepted industry standards such as ASTM and ISO. Sales are made on the certification that our material meets the performance specifications as delineated in the attached ''ASTM standard'' (Attachment I). When our product leaves the shipping dock, it is in the form of a large cardboard box full of 800 pounds of white granular UHMWPE powder.
Step 2—Compression Molding

    Our material is sold to customers we call converters, who compression mold the resin into stock shapes such as rods, blocks or sheets. The converter manufactures and tests its products in accordance to accepted industry ASTM and ISO standards. The semi-finished parts are then sold to the implantable device manufacturer.
Step 3—Implantable Device Finishing

    The implantable device manufacturer further processes the semi-finished parts into their exact dimensional requirements using manufacturing steps such as drilling, planning, cutting and other precise shaping techniques. The implantable device manufacturer might do these part- finishing steps themselves or contract them to outside machine shops. Quality control measures are taken during each step in the finishing process to ensure that the parts demanding dimensional and performance requirements are satisfied. After passing numerous quality control check points, the finished parts are sterilized. A complete set of implantable device parts, some made of various metals, are then packaged and made available for sale to hospitals and physicians.
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    Each step in the above biomaterial supply chain requires its own expert knowledge and manufacturing skills. Hoechst's area of expertise is confined to Step 1, the manufacture of high quality polymers, that consistently meet demanding industry standards.
THE HISTORY AND SCOPE OF KNEE, HIP AND SHOULDER IMPLANTS

    UHMWPE was first used in hip prosthesis in 1963, knee implants in the early 1970's and shoulder implants in the early 1990's. The demand for joint reconstruction continues to grow in the United States, especially with the aging of our population. In the U.S. alone, joint reconstruction represents a $2.5 billion industry including the physician and hospital level, with over 450,000 hip and knee replacements each year. Worldwide, it is over a $4.5 billion industry.
THE LIABILITY PROBLEM

    Hoechst participates in only a small fraction of the overall handling and quality control of the UHMWPE which goes into an implantable device. Hoechst does not design, test, manufacture nor sell any implant parts made from our polymer. Hoechst only sells polymer products which meet industry standard sales specifications. The polymer conversion into stock rods, sheets or semi-finished parts, the machining steps, handling and quality control in these processing steps require technologies which Hoechst has no expertise nor participation.
    The typical weight of the UHMWPE derived by averaging knee, hip and shoulder parts is about two ounces per device. Thus, each pound of polymer sold by Hoechst may make many implant devices each of which carries a potentially high risk of liability.
    Unfortunately, the ability of the medical device manufacturers to simulate material wear, via their laboratory wear tests in specific applications has been difficult. This is partly due to the fact that wear mechanisms are complex and highly interactive. People are very different in body size, shape, and life life-style. A polymer supplier does not have the expertise for control over the high degree of engineering which device manufacturers put into their designs. As a raw material supplier, Hoechst is far removed from the implantable device manufacturer's design and fabrication processes. Thus, we do not think we should be held responsible for the use of our materials beyond our sphere of direct business control.
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ENTIRE BUSINESS PUT AT RISK

    As previously detailed, a very small portion of the Hostalen GUR business is involved with implantable device applications. Hoechst continues to be concerned about placing our entire business, which is dependent on non-implant applications, at risk by supplying material for use in implantable devices. Be advised that the only alternative UHMWPE supplier in North America has publicly withdrawn from the implantable device market, due to lawsuit concerns (Orthopedics Today, January 1996, pages 1, 10–13, Attachment II).
    Recently the liability and litigation encountered by DuPont due to the use of its fluropolymers in jaw implants has caused them to withdraw from this life enhancing device implant application. Jaw implant device manufacturers have now been forced to turn to other materials including UHMWPE to replace fluropolymers. Regretfully, Hoechst recently refused the use of our UHMWPE polymer in that application. We did so because of the costly litigation which has surrounded that application over the past several years. At the present time, Hoechst can only support the use of our UHMWPE in the applications with non-predatory lawsuit track records.
    The patchwork of fifty separate product liability laws leads to venue shopping and confusion. Fear of litigation and its excessive costs often prevent U.S. companies from participating let alone introducing improvements in technologies. For example, Hoechst currently has high-tech liquid crystal polymer resins that it will not offer for sale to implantable device manufacturers due to product liability concerns. This weakens our international competitiveness and costs jobs for American workers and denies implant manufacturers access to state-of-the-art biomaterials.
    The existing product liability system allows suppliers to be sued for merely selling biomaterials to the implantable device industry. This is causing a crisis in the health care industry due to the increased unavailability of biomaterials. This system can be improved by limiting the liability of innocent materials suppliers who support the lifesaving and life enhancing medical implant industry.
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    The Biomaterials Access Assurance Act offers a fair balance between the 7.5 million American patients who annually benefit from medical implants and protecting biomaterial suppliers from unwarranted lawsuits.
LEGISLATIVE SOLUTION

    H.R. 872 and Counterpart S. 364 need to become law as soon as possible. My company, Hoechst, needs the reforms sought by this legislation because we are the sole supplier of the UHMWPE polymer that is used as the articulating wear surface of knee, hip and shoulder implant devices in the United States.I frequently encounter people in everyday life and even from our customer base that relate stories to me which contain testimony that they, family, neighbor and fellow worker have had their life improved due to medical implants. Last year, Hugh Downs, host of the television show ''20/20'' described on national television his disability situation, his double-knee replacement operation, and the resulting dramatic improvement in the quality of his life.
    No implant device is without some level of risk. Device manufacturers are always working to minimize those risks by improving the performance of their products. Without the availability of polymers such as UHMWPE, standard implant devices, with proven high performance track records would not be available. Device manufacturers would then have to divert limited resources from R&D to qualifying less desirable alternative biomaterials. Passage of legal reforms as called for in H.R. 872, will insure that Americans continue to benefit from the miracle of medical implants.
    Thank you,

INSERT OFFSET RING FOLIO 30 to 40 HERE

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    Mr. BRYANT. Thank you, Dr. Ramirez.
    We'll now go to Professor Hager.
STATEMENT OF PROF. MARK McLAUGHLIN HAGER, WASHINGTON COLLEGE OF LAW, AMERICAN UNIVERSITY

    Mr. HAGER. Good morning, Mr. Chairman. My name is Mark Hager. Thank you for inviting me to comment on H.R. 872.
    The issues raised by this bill are important, difficult, and complex. I sympathize with the concerns behind the bill, but I am concerned that the bill addresses the wrong aspect of a complex matter and does so in a shortsighted and ineffective way.
    I'm a professor of law at American University, where I have taught product liability law for 10 years. I have written on the subject and have been a close student of tort reform proposals. In addition, I have worked as a consultant for a defendant in precisely the type of lawsuit with which this bill concerns itself.
    Essentially, the bill suggests that suppliers of materials and parts for medical devices are intimidated by legal costs they may face in securing dismissals of product liability suits filed against them. It is suggested that these legal costs may induce suppliers of crucial parts and materials to avoid furnishing them to medical device manufacturers, and that this will make valuable and useful medical devices unavailable to people who need them.
    I am heartened that the draft bill recognizes that product liability suits against upstream suppliers of parts and materials have rarely, if ever, succeeded. A fabric of common-law doctrines has effectively protected upstream suppliers from such suits. These doctrines—the sophisticated user doctrine, the component parts doctrine, and others—have been constructed by courts to protect upstream suppliers in the medical device industry and elsewhere from liability. Courts have worried that upstream liability could saddle suppliers with burdensome duties to monitor the safety of parts and materials they sell for a thousand-and-one different uses.
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    I emphasize the effectiveness of the common-law doctrines I mentioned in getting upstream supplier suits dismissed at an early stage, and the members are correct that those suits are dismissable even if there is culpable negligence on the part of the supplier.
    The costs inflicted by such lawsuits are primarily the relatively minimal costs associated with securing those dismissals, and when those costs have skyrocketed due to multiple suits on the same subject, perhaps the solution lies in changing rules on consolidation of lawsuits and class action rules, but that problem will not be solved by the bill that is before us this morning.
    Even discovery costs are seldom major because the dismissals occur before the main discovery phase of litigation. My mind is open, but I am currently unconvinced that the costs of securing dismissals under common-law defenses are significant enough to be playing a major role in the economics of the medical device industry. If I am wrong and there is a serious problem here, I do not think that H.R. 872 does much to alleviate it. Real solutions would require different approaches.
    H.R. 872 essentially furnishes a new statutory ground for securing lawsuit dismissal. This would change very little on the ground because the common-law doctrines I mentioned are already highly effective in securing dismissals. The bill merely sticks a different label on dismissals that would happen anyway.
    The bill also provides for delayed discovery while motions to dismiss are pending. This presumably relieves defendants of unnecessary and burdensome discovery costs, but the fact is that major discovery costs typically arise only after a suit has survived a motion to dismiss. Since suits against upstream suppliers can easily be knocked out by motions to dismiss, discovery costs are already comparatively minor under the current common-law system. It is, therefore, unlikely that the bill would have a major economic impact on the industry.
    In short, the bill forecloses discovery costs which are relatively minor anyway and leaves the cost of securing dismissals pretty much the same because it merely changes the label under which dismissals are granted. If Congress wished to get drastic and serious about eliminating the cost of securing dismissals, it should enact statutory immunities for upstream suppliers. This would make it easier for courts to sanction lawyers for even filing suits against upstream suppliers. Such a statutory immunity would more efficiently alter the legal and economic landscape. I think, however, that such immunity would be unwise, for reasons I will try briefly to explain.
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    The meaningful effect of H.R. 872, if enacted, would be to freeze in place the well-defended position of upstream suppliers under current common-law doctrine. The common law has protected upstream suppliers, but it is the nature of common law to evolve over time in light of changing perspectives.
    Right now there are reasons to worry that the common law protects upstream suppliers too much because there are situations in which they really should be held answerable under product liability. While the bill concerns itself with the disadvantages of upstream liability, there may also be important advantages which I will highlight momentarily.
    If courts lend a more sympathetic ear to arguments for upstream liability, it is conceivable they might revise current common-law defenses to make them more porous. As I say, the real import of H.R. 872 is that it would place a Federal statutory freeze on any such common-law evolution occurring at the State level. Friends of legal pluralism and of preserving government power at the State level might wish to ponder the wisdom of entrenching a unitary statutory approach at the national level.
    I will list quickly two possible advantages of upstream liability: manufacture or bankruptcy and upstream culpability. First, bankruptcy. Medical device manufacturers are frequently startup and high-risk enterprises maneuvering for advantage in a fluctuating and highly-competitive field. The rate of bankruptcy is correspondingly high. When manufacturers go bankrupt, consumers grievously injured by faulty products can be left without any source of compensation under tort law. When the manufacturer is bankrupt, upstream suppliers may be the only viable source of compensation, but efforts to hold upstream suppliers liable will be thwarted by the common-law defenses I discussed above. This is at least tragic and perhaps unjust. It is precisely what has happened to the main victims of teflon-based jaw implants. Expanded upstream liability would provide such victims additional sources of possible compensation.
    Second, culpability. On some occasions at least, upstream suppliers are well-positioned to foresee that parts and materials they sell are being put to highly dangerous applications. I believe this may be what occurred with teflon-based jaw implants, where the supplier of teflon apparently knew they were to be used for jaw implants, knew such use would be hazardous, knew that testing had been inadequate, yet furnished the material for that use anyway. It is not clear to me why suppliers in such circumstances should not be held answerable. Both fairness and rational deterrence might favor holding them liable.
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    I am not unmindful that such liability, if not carefully limited, could saddle upstream suppliers with extravagant duties to monitor many various uses of parts and materials they supply. The job of defining the limits of such duty is a work of careful discrimination in judgment that common-law courts are often quite good at.
    Some observers will protest that expanded upstream liability is exactly the wrong direction to move. After all, we are here today addressing the concern that upstream suppliers are already too vulnerable. We should bear carefully in mind, however, that the law and the market already furnish tools for ameliorating whatever negative effects may flow from upstream liability and even from upstream dismissal costs.
    Parts and materials suppliers are perfectly free to secure indemnification arrangements from manufacturers they sell to as a condition for furnishing supplies. Liability risks and costs can be shifted through the magic of the marketplace to remove impediments to commerce. Through indemnification arrangements, law and the market can ameliorate the negative effects of upstream exposure while preserving the advantages of a duty to minimize unsafe product features. Upstream suppliers will seek out manufacturers confident enough of the safety of their products to provide indemnities to suppliers of the parts and materials needed to make them. Without any statutory intervention whatever, a system that optimizes both safety and supply should emerge.
    Is there any reason to worry that the indemnification I posit would not produce optimum results? Yes, there is one very important concern. Again, that concern stems from bankruptcy risks facing many fly-by-night medical device companies. Parts and materials suppliers faced with liability or even dismissal costs will take literally assurance from promises of indemnity offered by medical device companies that may be bankrupt tomorrow. There are, no doubt, advantages to the aggressive experimental and go-go nature of the small company medical device sector, but there may be disadvantages as well where ambition, haste, and greed lead to the marketing of hazardous devices. It will by no means be rare that the company is no longer around when the bill for hazardous devices comes due.
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    And, Mr. Chairman, the conclusion of my remarks suggests that the Congress should consider the bankruptcy problem and some areas of bankruptcy pooling or insurance requirements to control against the risks of bankruptcy of small medical device manufacturers.
    [The prepared statement of Mr. Hager follows:]
PREPARED STATEMENT OF PROF. MARK MCLAUGHLIN HAGER, WASHINGTON COLLEGE OF LAW, AMERICAN UNIVERSITY

    Good morning, Mr. Chairman. My name is Mark Hager. Thank you for inviting me to comment on H.R. 872. The issues raised by this bill are important, difficult and complex. I sympathize with the concerns behind the bill, but I am concerned that the bill addresses the wrong aspect of a complex matter and does so in a shortsighted and ineffective way.
    I am a Professor of Law at American University, where I have taught product liability law for 10 years. I have written on the subject and have been a close student of tort reform proposals. In addition, I have worked as a consultant for a defendant in precisely the type of lawsuit with which this bill concerns itself.
    Essentially, the bill suggests that suppliers of materials and parts for medical devices are intimidated by legal costs they may face in securing dismissals of product liability suits filed against them. It is suggested that these legal costs may induce suppliers of crucial parts and materials to avoid furnishing them to medical device manufacturers and that this will make valuable and useful medical devices unavailable to people who need them.
    I am heartened that the draft bill recognizes that product liability suits against upstream suppliers of parts and materials have rarely, if ever, succeeded. A fabric of common law doctrines has effectively protected upstream suppliers from such suits. These doctrines—the bulk supplier doctrine the sophisticated user doctrine, the component parts doctrine, and others—have been constructed by courts to protect upstream suppliers in the medical device industry and elsewhere from liability. Courts have worried that upstream liability could saddle suppliers with burdensome duties to monitor the safety of parts and materials they sell for a thousand and one different applications.
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    I emphasize the effectiveness of the common law doctrines I mentioned in getting upstream supplier suits dismissed at an early stage. The costs inflicted by such lawsuits are primarily the relatively minimal costs associated with securing those dismissals. Even discovery costs are seldom major because the dismissals occur before the main discovery phase of litigation.
    My mind is open, but I am currently unconvinced that the costs of securing dismissals under common law defenses are significant enough to be playing a major role in the economics of the medical device industry. If I am wrong, and there is a serious problem here, I do not think that H.R. 872 does much to alleviate it. Real solutions would require different approaches.
    H.R. 872 essentially furnishes a new statutory ground for securing lawsuit dismissal. This would change very little on the ground because the common law doctrines I mentioned are already highly effective in securing dismissals. The bill merely sticks a different label on dismissals that would happen anyway.
    The bill also provides for delayed discovery while motions to dismiss are pending. This presumably relieves defendants of unnecessary and burdensome discovery costs, but the fact is that major discovery costs typically arise only after a suit has survived a motion to dismiss. Since suits against upstream suppliers can easily be knocked out by motions to dismiss, discovery costs are already relatively minor under the current common law system. It is, therefore, unlikely that the bill would have a major economic impact on the industry.
    In short, the bill forecloses discovery costs which are relatively minor anyway and leaves the costs of securing dismissals pretty much the same because it merely changes the label under which dismissals are granted. If Congress wished to get drastic and serious about eliminating the costs of securing dismissals, it should enact statutory immunities for upstream suppliers. This would make it easier for courts to sanction lawyers for even filing suits against upstream suppliers. Such a statutory immunity would more efficiently alter the legal and economic landscape. I think, however, that such immunity would be unwise for reasons I will try briefly to explain.
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    The meaningful effect of H.R. 872, if enacted, would be to freeze in place the well-defended position of upstream suppliers under current common law doctrine. The common law has protected upstream suppliers, but it is the nature of common law to evolve over time in light of changing perspectives. Right now there are reasons to worry that the common law protects upstream suppliers too much because there are situations in which they really should be held answerable under product liability. Though the bill concerns itself with the disadvantages of upstream liability, there may also be important advantages, which I will highlight momentarily.
    If courts lend a more sympathetic ear to arguments for upstream liability, it is conceivable they might revise current common law defenses to make them more porous. As I say, the real import of H.R. 872 is that it would place a federal statutory freeze on any such common law evolution occurring at the state level. Friends of legal pluralism and of preserving government power at the state level might wish to ponder the wisdom of entrenching a unitary statutory approach at the national level.
    I will quickly list two possible advantages of upstream liability: manufacturer bankruptcy and upstream supplier culpability.
    First, bankruptcy. Medical device manufacturers are frequently start-up and high-risk enterprises maneuvering for advantage in a fluctuating and highly competitive field. The rate of bankruptcy is correspondingly high. When manufacturers go bankrupt, consumers grievously injured by faulty products can be left without any source of compensation under tort law. Where the manufacturer is bankrupt, upstream suppliers may be the only viable source of compensation, but efforts to hold upstream suppliers liable will be thwarted by the common law defenses I discuss above. This is at least tragic and perhaps unjust. It is precisely what has happened to the maimed victims of teflon-based jaw implants. Expanded upstream liability would provide such victims additional sources of possible compensation.
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    Second, culpability. On some occasions at least, upstream suppliers are well-positioned to foresee that parts and materials they sell are being put to highly dangerous applications. I believe this may be what occurred with teflon-based jaw implants, where the supplier of teflon apparently knew they were to be used for jaw implants, knew such use could be hazardous, knew that testing had been inadequate, yet furnished the material for that use anyway. It is not clear to me why suppliers in such circumstances should not be held answerable. Both fairness and rational deterrence might favor holding them liable. I am not unmindful that such liability, if not carefully limited, could saddle upstream suppliers with extravagant duties to monitor many various uses of parts and materials they supply. The job of defining the limits of such duty is a work of careful discrimination and judgment that common law courts are often quite good at.
    Some observers will protest that expanded upstream liability is exactly the wrong direction to move. After all, we are here today addressing the concern that upstream suppliers are already too vulnerable. We should bear carefully in mind, however, that the law and the market already furnish tools for ameliorating whatever negative effects may flow from upstream liability and even from upstream dismissal costs. Parts and materials suppliers are perfectly free to secure indemnification arrangements from manufacturers they sell to, as a condition for furnishing supplies. Liability risks and costs can be shifted through the magic of the marketplace to remove impediments to commerce. Through indemnification arrangements, law and the market can ameliorate the negative effects of upstream exposure while preserving the advantages of a duty to minimize unsafe product features. Upstream suppliers will seek out manufacturers confident enough of the safety of their products to provide indemnities to suppliers of the parts and materials needed to make them. Without any statutory intervention whatsoever, a system that optimizes both safety and supply should emerge.
    Is there any reason to worry that the indemnification scenario I posit would not produce optimum results? Yes, there is one very important concern. Again that concern stems from the bankruptcy risks facing many fly-by-night medical device companies. Parts and materials suppliers, faced with liability or even dismissal costs, will take little reassurance from promises of indemnity offered by medical device companies that may be bankrupt tomorrow. There are no doubt advantages to the aggressive, experimental, and go-go nature of the small-company medical device sector. But there may be disadvantages as well where ambition, haste and greed lead to the marketing of hazardous devices. It will by no means be rare that the company is no longer around when the bill for hazardous devices comes due.
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    If Congress wishes to maximize the advantages of such an industry while minimizing its disadvantages and promoting safety for the public and proper responsibility in the various sectors of the industry, it should put H.R. 872 to one side and address itself instead to the bankruptcy issue. To control the adverse effects of bankruptcies, Congress should mandate or encourage enrollment in bankruptcy pools or purchase of bankruptcy insurance by medical device manufacturers. If both consumers and upstream suppliers could be protected against the effects of bankruptcy by particular medical device firms—ensuring that cash would be available for victim compensation and supplier indemnification—we could secure a system that would best furnish the public with useful and safe medical devices at reasonable costs.
    I would be happy to try to respond to any questions or comments from the panel. Thank you, Mr. Chairman.

    Mr. GEKAS [presiding]. We thank the gentleman.
    Mr. Greene, I will yield myself 5 minutes that I've found to be very useful.
    Mr. Greene, Professor Hager says that the current system which would allow for early dismissal after discovery is—or before discovery—would be minimal in cost. Let me ask you, did the DuPont company, in your recollection, try to do that in its 250 cases?
    Mr. GREENE. Of course they did, Mr. Chairman——
    Mr. GEKAS. Yes.
    Mr. GREENE [continuing]. And I know the professor is familiar with the DuPont cases because he cited them in his article and discussed them at length. If you read the cases, you will see that the courts based their dismissal of DuPont on a great deal of factual material that was gathered from documents and from taking testimony of DuPont officials. Discovery was not halted in those cases in order to allow the DuPont motions on these common-law theories to go forward.
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    As a practical matter, in most tort suits judges, as I'm sure the members of the panel know who've practiced law, don't like to resolve cases on motion. They like to have the parties develop the facts first. And when you read these cases, you will find that they ultimately decide for the supplier after going through a great deal of detail about the relations between the parties, who knew what, when they knew it, what information was available to various people in the chain of supply. At the end of the day, though, what the common-law courts have ruled, as Professor Hager says, is that the upstream suppliers are not liable. They are not in the right place in the chain to do the research. They supply things for a thousand-and-one uses. They can't anticipate all those uses. They can't control all those uses, and it's unfair and inefficient to burden them with the duty of finding out what problems might inhere.
    There are a number of cases—I was going to mention this earlier, in light of some of the questions some of the members put—there are cases in which the upstream supplier knew, absolutely knew, of the risks that its customer was exposing consumers to, and yet the courts find for the supplier. The knew or should-have-known standard that many people have suggested should be added to this bill is not the law.
    Mr. NADLER. Shouldn't it be?
    Mr. GREENE. I don't think so, Mr. Nadler. I think if you put that responsibility on these upstream suppliers, you're asking them to duplicate the work that their customers do. They're not in a good position to follow through on the results of their research. They aren't making the final product. They are supplying a generic raw material, and they rely on their customers. And in the medical device context, remember that the customers, the medical device manufacturers who remain fully liable under this legislation, have the expertise. They're the ones who are required to do the clinical testing to make sure that the device is safe and effective in its actual usage context, and they're the ones that are subject to the regulatory controls. It's not sensible to require DuPont, which makes teflon for frypans and nose cones of rockets, to run tests to see whether it's all right in a jaw implant, and that's what the courts have been saying.
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    Mr. GEKAS. Professor Hager seemed to have been implying, if not actually stating—Mr. Greene, I pose this to you from listening to Mr. Hager and from his written testimony—that he would like to cast, unless I'm wrong, the upstream suppliers as insurers. That is, whether or not negligence or contractual breach has occurred or wrongdoing any place, somebody should be liable, Professor Hager says, and, therefore, we should go to the deep pockets. Isn't that contrary to the basic precepts of our common-law tort theses?
    Mr. GREENE. It's certainly contrary to the case law that's now been codified and described in the Third Restatement. There are theories of tort that academics have proposed that put the emphasis on who's in the best position to pay, and there might be some theories that would support that, but in practice in this context, if you did that, the supplies would simply not be available. The DuPont who gets $1,000 from the teflon can't charge a high enough insurance premium to pay for the litigation costs that it subjects itself to.
    Mr. GEKAS. I have some extra time because Mr. Nadler expropriated some of my time in posing questions, but I'm not going to be small about that. I will yield to the gentleman from New York 5 minutes. [Laughter.]
    Mr. NADLER. Thank you, Mr. Chairman.
    Professor Hager, would you comment on why the DuPont case, which is so often cited, does not disprove what you were saying essentially about the cost of the dismissals? In other words, DuPont spent a lot of money and common law apparently—or Mr. Greene would say that common law didn't work in that case. They had to spend a lot of money for discovery, contrary to what you were implying before.
    Mr. HAGER. Yes, I think there are two or three things going on perhaps. One is the problem of the multiple suits dispersed throughout the jurisdictions, and when you have that kind of scenario, you are going to have a problem of repetitive costs. And as I tried to suggest before, I don't think the bill would make any difference in that. You're still going to have to go through the same legal mechanisms, and they may still be dispersed. So I suggest that the——
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    Mr. NADLER. So you're saying that, if we pass this bill, DuPont would have essentially the same costs?
    Mr. HAGER. That's correct. I think also, in the DuPont case the tragedy and the level of culpability of the upstream supplier were vivid enough that the court spent some time straining to see whether there might be grounds to hold the company answerable despite these doctrines and——
    Mr. NADLER. In other words, what you're saying is that the reason for the cost of DuPont was twofold: one, because you had so many different lawsuits, even the small cost of dismissing each lawsuit mounted up, and the solution wouldn't be in this bill, but be in something to do with class actions or consolidation. And, secondly, you're saying that DuPont was different because there was considerable evidence of knowing wrongdoing on DuPont's part. And the courts had to look at that?
    Mr. HAGER. There was a great deal of suggestion of negligence on the part of the company, and I think the courts did not—they wanted to process that a little bit and eventually came out in the negative. I don't suggest that the upstream suppliers, Mr. Chairman, should be insurers. What I have suggested is that they be held answerable for negligence.
    If you can distinguish two different scenarios, depending on the length of the market chain intervening between the upstream supplier and the ultimate injured victim, and the degree of transformation of the material as it moves down through the stream, in the DuPont case you had very close proximity, such that it was really the supplier of the material that was in the best position to understand the properties of what was going to be implanted in the human body ultimately. In other situations where the degree of processing and transformation as the product moves downstream is going to be greater, it will be the manufacturer, rather than the supplier, who's in the better position to understand the actual physical and chemical properties of what's actually being implanted. But I think it would be wise perhaps for the law to try to track that——
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    Mr. NADLER. Professor, let me ask you one further question, and then I want to yield to Mr. Berman. Do you think that this problem could be solved by our requiring medical manufacturers to have some sort of indemnification assurance of suppliers?
    Mr. HAGER. I think that would be very helpful.
    Mr. NADLER. And what is the practicability of small manufacturers purchasing large indemnification policies?
    Mr. HAGER. I'm not a student of that aspect of the insurance industry, but I would generally assume that, where there is a market where money can be made, insurers will find a way to occupy that market and make that money.
    Mr. NADLER. I yield to the gentleman from California, Mr. Berman, such time as he may consume.
    Mr. BERMAN. I just didn't understand the theory, putting aside the question of what's right in terms of liability on suppliers, why, if this bill were to pass, DuPont would have faced the same costs from this widely dispersed series of lawsuits, if the only theory left to stew DuPont was the theory that they somehow breached their specifications to the medical device manufacturer or the specifications that were in front of the FDA, and there's no basis—I don't know what the truth was here, but I assume that it wasn't so easy to know that they had violated any specification they provided. What would have been the basis for the lawsuit?
    Mr. HAGER. Basically, because——
    Mr. BERMAN. Not saying whether it's good or bad, just why wouldn't this have worked?
    Mr. HAGER. In order to secure a dismissal, a defendant has to come in and articulate the reasons under the law, whether they be common law under the current system or the statutory grounds, for dismissal, and that takes as much time and money as it takes. Under the current common-law system there are certain assertions and proofs they need to make in order to get the dismissal, and under the statute it would be a different set of assertions and proofs, but still somewhat complex.
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    Mr. GEKAS. I yield to—excuse me. I yield to the gentleman part of my second round of questions, on the condition that he also ask Mr. Greene his opinion on the same thing. [Laughter.]
    Mr. BERMAN. Just to follow up, a lawyer for an injured plaintiff who had one of these artificial jaws, or whatever they were, that was supplied by DuPont will now have to allege in a complaint that specific specifications that were made to the medical device manufacturer or put before the FDA were breached. To make a general allegation of a breach of specifications without any basis for knowing that, I think would put that guy up into a potential sanctioned situation. I would think it would cause—it's a lot different than just a general allegation of negligence. I'm wondering why you're so sure that it wouldn't have kept a lot of these lawsuits out.
    Mr. GREENE. If I could, Mr. Berman, Mr. Chairman, Mr. Berman is quite right; the bill specifies in great detail the procedures that would be applied in adjudicating the new defenses that are set out in the bill. The new defenses reach the same result as the result that was reached in the DuPont cases, but they do it in ways that allow summary adjudication with minimal discovery and at low cost.
    The specification issue is one that the plaintiff might allege. He might contend that the teflon that was supplied didn't meet specifications, but it would be very easy to prove whether it did or it didn't. The specifications are in writing. They can be produced. A lab test could be produced: is this teflon or is it not teflon? You wouldn't have to have the kind of lengthy depositions and document discovery that you read about in those cases of what DuPont knew and when it knew it, and all of its testing programs that it did on various other products.
    So I think the situation under the bill would be very different from the situation currently, and we wouldn't find $30 million worth of litigation costs, even if there were 259 cases, as there were in the DuPont situation.
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    Mr. GEKAS. Mr. Hager, do you want to add something?
    Mr. HAGER. Well, Mr. Berman could have a point, if the bill is sufficiently simplifying compared to the current system, but I don't really think it is. There's still a handful of criteria, legal criteria, that will be in play, and it's almost like the number of issues that you have to deal with, and I'm not persuaded that the bill is—you may be right that it would make it somewhat easier for courts to sanction lawyers for filing pleadings that aren't going to get anywhere. I think that's going to be marginal.
    Mr. GEKAS. But if it does succeed in simplifying, in expediting, in clearing out the issues at any early stage, and if the result of that would be to give incentive to some of the suppliers who have been hesitant in allowing the flow to continue of these raw materials, wouldn't you approve of the bill?
    Mr. HAGER. Well, I think if——
    Mr. GEKAS. Assuming those things.
    Mr. HAGER. If you really want to accomplish that objective, you should pass a flat immunity. I'm not persuaded that the objective is——
    Mr. DELAHUNT. Mr. Chairman, would you——
    Mr. GEKAS. I'm going to yield to the gentleman 30 seconds on this point. I yield to him.
    Mr. DELAHUNT. Maybe I'm missing it, but my sense is that the concern of the potential plaintiff here is the opportunity to secure civil discovery to determine whether there has been some defect. I mean from the perspective of the plaintiff, of he who wants to litigate. I mean, if you start to simplify the procedures and the criteria to the point where there is no possibility to secure discovery to determine whether there is negligence, I see that as a problem. Mr. Greene.
    Mr. GREENE. Mr. Delahunt, there will be still ample opportunity for discovery. The lawsuits will go forward against the device manufacturer. The device manufacturer is not seeking and will not obtain any immunity.
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    Mr. DELAHUNT. But if the device manufacturer doesn't have deep pockets, if the entity is such as described by Professor Hager as a, you know, a go-go medical device manufacturer without any substantial assets, what happens then?
    Mr. GREENE. Well, what happens then, unfortunately, is just what happened in the Vitek cases, and you can't get blood from a stone. You can't get a recovery from a bankrupt company, but my point is that under the common law in the cases today, plaintiffs in those cases are not getting any recovery, and this bill will not change anything.
    Mr. DELAHUNT. But my point is let's presume for a moment that, just for in arguendo, that there is a defect on the part of DuPont, but it's not—but the potential plaintiff hasn't had an opportunity to explore through discovery, and that discovery comes out during the course of the case-in-chief against the medical device supplier. What about tolling the statute of limitations, allowing the—against the initial supplier?
    Mr. MILLER. I think we're missing the point here.
    Mr. DELAHUNT. I might be missing the point.
    Mr. MILLER. The point is that the Dows and the DuPonts and the Montells and the Hoechsts will not be around, that the new biomaterials supplier, if we can find one, will be a mom-and-pop operation without the scientific underpinnings of the great materials companies in this country, and the Dows and the DuPonts will not be here. That's the whole point of this legislation, I believe.
    Mr. GEKAS. The gentleman's time has expired. My second round has expired. I yield to the gentleman from Tennessee 5 minutes.
    Mr. BRYANT. Could I, without exhausting any of my 5 minutes, just refer to Mr. Delahunt's question?
    Mr. GEKAS. Absolutely.
    Mr. BRYANT. And I think—again, I'm just quickly looking through this—I think I understand what he is saying is that, while I think I'm on the side of this bill—I co-sponsored it—he is saying that we have to be careful that the defendant, if the plaintiff sues the supplier, the supplier files a motion, a summary judgment motion to dismiss, whatever, very quickly, and you're concerned that the plaintiff would be precluded from taking any discovery back to determine if there is a breach of specifications.
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    I think on page 23 of the bill, under subparagraph (b) Discovery, it talks about, if a defendant, which would be a supplier in this case, files a motion to dismiss on the grounds that the biomaterials supplier did not furnish raw materials or component parts in violation, and so on, so on, and so on, the court may permit discovery, as ordered by the court, but that discovery would be limited to the issues direct relevant to that pending motion to dismiss or the jurisdiction of the courts. I think that would alleviate, Bill, any of your concerns there that the plaintiff would not have an opportunity to find that out.
    Let me——
    Mr. DELAHUNT. I mean, that—and, again, I need time to reflect, but if that is a concern, I think you've expressed it well. If there happens to be a defect, clearly, the aggrieved party ought to have an opportunity to have available that discovery.
    Mr. BRYANT. And I think they do. It's a more limited form of discovery.
    Mr. DELAHUNT. I can't imagine a medical—if the Chair will indulge a colloquy between myself and——
    Mr. NADLER. We've been indulging. [Laughter.]
    Mr. DELAHUNT [continuing]. Myself and Mr. Bryant, I can't imagine a situation where a medical device manufacturer would not implead the supplier in any litigation. I mean, I can't imagine an attorney such as Mr. Greene, representing Mr. Brown, and a major suit being brought not including the DuPonts and the Montells who have supplied it. I mean, I would think it would almost be necessary——
    Mr. GREENE. And the bill places no limitations on those suits at all.
    Mr. HAGER. But it would be malpractice, I think, not to file that impleading.
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    Mr. NADLER. But under the bill, if a manufacturer wanted to implead the supplier, wouldn't he be precluded from doing so if the grounds for the impleading were a theory of liability that is precluded by the bill?
    Mr. GREENE. No, I don't believe so, Mr. Nadler. The only thing that is precluded is a suit by a claimant, as defined, who is a person who suffers a personal injury.
    Mr. NADLER. Well, now I'm totally confused. If that is the case, what does the bill do at all? So the claimant sues the manufacturer; the manufacturer turns around and impleads the supplier, and the supplier is on the hook and nothing's changed.
    Mr. GREENE. What the bill does is to prevent a plaintiff from suing the manufacturer for purposes of their deep pockets and trying to coerce a settlement. The claimant, the injured party, will not be able to bring that suit by itself. It will require action by the device manufacturer before that person can be named as a defendant.
    Mr. DELAHUNT. There's a real concept of privity here.
    Mr. GEKAS. Clearly, we've deteriorated into a roundtable discussion here. We want to get back to regular order.
    Mr. DELAHUNT. It's been very good.
    Mr. GEKAS. I want to yield now to Mr. Delahunt.
    Mr. DELAHUNT. Well, I will yield back the time that Mr. Bryant gave me, and I'm looking forward to yielding to my friend and colleague from California, Ms. Lofgren.
    Mr. GEKAS. Well, we're going to end this hearing at quarter of 12. Whose time is it now? The gentleman from Tennessee.
    Mr. BRYANT. OK. We've raised a number of interesting points here, and I'm not sure we're going to resolve them today, but I would ask Mr. Greene very quickly—maybe I'm oversimplifying this bill, but, as I read it, it certainly provides a viable defendant to a claimant in this instance because it allows—well, basically, it takes out the supplier, only to the extent that they haven't supplied materials that meet the specifications. If they haven't met those specifications, then they can be sued. If they have met those specifications that were furnished to them by the manufacturer, then you sue the manufacturer for defective designing—defective design or whatever. I mean, there's a whole—as I read this, there shouldn't be a problem here.
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    Mr. GREENE. Yes, that's right, and the manufacturer is free to bring whatever litigation it wants to bring against its supplier.
    Mr. BRYANT. And if we provide this statutory protection in all 50 States by way of Federal litigation, I think we will see, Professor Hager, probably fewer lawsuits filed. I think the plaintiffs' attorneys will have to be, by necessity of rule 11, more cautious in filing these lawsuits, and I think you will see, then, the cost of litigating go down because there won't be as many lawsuits filed. I mean, that's the way I see it.
    But let me get off this issue of liability just a minute and go back to Mr. Brown. I've got a series of questions I wanted to ask you, if you could be brief in your answer, because I think you make a very good—you bring a lot to this hearing from your perspective, and I want to get these questions answered.
    How long, if you can estimate, has your drug-delivery device held up because of your trouble in finding raw materials?
    Mr. BROWN. We've had a couple of instances where we've had to go back and find additional suppliers, larger suppliers, and weren't able to do that. We were able to identify smaller suppliers by agreeing to indemnify them as much as we could, given our size, that would supply. I would say it's been months. It's difficult to exactly say, but I would say maybe six to eight months, something like that.
    Mr. BRYANT. To restate a point that all of you have made, that this bill does really nothing for your direct liability, your exposure as a manufacturer.
    Mr. BROWN. We're very willing to take on liability, but, as I said, the more specialized materials are not going to be available to us because the large suppliers don't see us as being big enough defenders of that.
    Mr. BRYANT. So you're, as you say, you're fully willing to take on the legal responsibility for the design, testing, and the FDA approval of the devices that you make?
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    Mr. BROWN. That's right.
    Mr. BRYANT. Professor Hager had reference in his statement, the aggressive and experimental and go-go nature of the medical device sector. How do you feel about this characterization of your industry, and is go-go what it takes to get the FDA approval for your medical implants and devices?
    Mr. BROWN. I appreciate the chance to speak to that. Actually, I think it's really a mischaracterization. I've been in the industry 14 years now, and every product I've ever worked through, we taken through the FDA, through all the processes. It takes years to move a product through. In my case, there's a device component and a drug component to it. So it takes—we basically have to file an NDA for a new drug or a BLA for a biotech product, which can take anywhere from 5 to 7 to 8 years to get this thing to the marketplace. So if you want to try to define that as go-go-go, I mean, we certainly—all the safety issues complied with with new drugs.
    Mr. BRYANT. Mr. Chairman, thank you.
    Mr. GEKAS. We will end this hearing after yielding to the gentleman from New York for one more poignant question, which he insists he must ask—one.
    Mr. NADLER. It will be one question, for Mr. Brown and Mr. Greene, because nobody has asked this, although it was referred to before. Everything we've been talking about on all sides has really been with respect to the effect of the current Tort system on the availability of biomaterials and components. Now, by components, it seems to define it in such a way, so that, let's say, I'm making a valve for the artificial heart. The valve is defective. The FDA, in my understanding, does not give the same level of scrutiny to the valve that you're putting in your artificial heart.
    The bill would seem to immunize the manufacturer of the defective valve as long as it meets the contract specifications, but if there's something wrong with the valve, because it's a component, they're immunized. Please comment on why we ought to do that and why we shouldn't.
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    Mr. BROWN. All these components—you don't have to talk about—you can talk about the piston, say, in our system, something like that. Actually, we do make that. But the outer chamber of our system, that titanium tube, that is a component part that's made by a machining company, and in that case we actually have, through the device component, device laws, regulatory approval of these products. There's a whole design history that has to be met, and all the specifications and everything that require that the device, that component, to be exactly what it is. And we, as my colleague, Dr. Miller, has stated, we have a like stack of standard operating procedures and specifications in place, a phonebook kind of size things, where you have to go through all the processes to assure the part is what it is, and it has the liability that it has, down to all the finite statistical analyses of that. And that is our responsibility, and that's——
    Mr. NADLER. I appreciate that, but the question is, should the component manufacturer be held to the same standard of liability that you are or should he be more analogized to the biomaterials supplier, and why? In other words, which side of the line do you——
    Mr. BROWN. There are only right now—I don't know the exact number, but there are only, I believe, two or three suppliers of medical grade titanium that would fit what we need.
    Mr. NADLER. Not the titanium—the guy that's making the piston—the piston——
    Mr. BROWN. I'm using this to make a point.
    Mr. NADLER. I'm sorry.
    Mr. BROWN. So if they aren't going to be around—in other words, if they don't want to supply this because they don't want to deal with the liability issues, then the only opportunity we would have to be able to bring these medical advances forward would be to do it in Europe or somewhere else.
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    Mr. NADLER. No, no, that's the titanium.
    Mr. BROWN. Right.
    Mr. NADLER. I understand——
    Mr. BROWN. It's the same for titanium or polymers or anything.
    Mr. NADLER. Wait a minute. The titanium, I understand; you're talking about the biomaterials supplier. My question was the fellow who makes the piston.
    Mr. BROWN. I make the piston.
    Mr. NADLER. Oh, I thought you said there was a subcomponent?
    Mr. BROWN. No, I buy—what we do is we buy the polymer and then we make it ourselves.
    Mr. NADLER. But let's assume you bought the piston from somebody else.
    Mr. BROWN. OK.
    Mr. NADLER. He took the titanium; he made it into a piston.
    Mr. BROWN. Right.
    Mr. NADLER. The guy who makes the piston that gets put into your product——
    Mr. BROWN. Right.
    Mr. NADLER [continuing]. Should that component subcontractor, in effect, should he be liable in the same way you are or should he be, in effect, immune, to the extent he is immune, the way the materials supplier would be, and why? In other words, which side of the line would you put him on?
    Mr. GEKAS. Would the gentleman yield?
    Mr. NADLER. Yes.
    Mr. GEKAS. As I understand it, we'll yield to Mr.—I'll ask you to ask Mr. Greene the answer to that question.
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    Mr. NADLER. OK.
    Mr. GEKAS. We treat component parts and raw materials in the same fashion——
    Mr. NADLER. Yes, we do.
    Mr. GEKAS [continuing]. As common law now does.
    Mr. NADLER. Precisely.
    Mr. GREENE. The common-law cases treat component parts the same way as raw materials. In my testimony you'll see citations to a couple of common-law cases. One involves a chain in a machine that cleans out chittlins or something, and another involves a valve on a log-splitter. The cases treat the valves and the chains the same way they treat plastic or metal. The ultimate responsibility is on the person who makes the finished product, not on the person who makes the component.
    Mr. GEKAS. I thank the panel for its instructive testimony. I end with the assertion to my colleague from New York that what we try to do in this bill, and we'll consult staffwise and memberwise before we come to markup, is that we do not change the law of torts one whit in this procedure. And what we do is try to make sure that the process will allow for confidence on the part of suppliers that they need not subject themselves to multiparty, multidollar, multiyear suits; that's the basis of it. I want to assure the gentleman from New York that I don't want to change the law of responsibility, liability, one whit.
    I thank the panel for——
    Mr. DELAHUNT. Mr. Chairman, I would invite—I think we should invite, and I understand the formal hearing has concluded, but they've raised some very serious concerns here, and I think Representative Lofgren, who is an eminent member of the full Committee on Judiciary, has some questions, and while the formal part of your hearing has concluded, I think that those who are more than welcome to stay to just simply exchange a dialog—I know I, for one, would like to stay and continue, and I know that Representative Lofgren, as well as Mr. Berman and——
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    Mr. GEKAS. The formal hearing is closed, and I will turn the——
    Mr. NADLER. Mr. Chairman, Mr. Chairman, before we do that, please——
    Mr. GEKAS. The gentleman from New York.
    Mr. NADLER. Mr. Chairman, I ask unanimous consent for members to have 7 days to submit further questions to the witnesses in writing.
    Mr. GEKAS. Without objection.
    Mr. NADLER. Thank you, Mr. Chairman.
    [The information follows:]
QUESTIONS SUBMITTED BY MR. NADLER ON BEHALF OF THE DEMOCRATIC MEMBERS OF THE SUBCOMMITTEE FOR RONALD J. GREENE, ESQ.

    Q. 1. Identify any biomaterials suppliers that you are aware have been sued and held liable in a court of law.
    A. Suppliers such as DuPont, Dow Chemical, Dow Corning, Hoechst Celanese and other chemical companies supply materials for a wide variety of applications including among others the electronics, aerospace, carpeting, and clothing industries. The device industry has no interest in these other applications. Thus, if such lawsuits exist, we are not likely to be aware of them.
    Nor does HIMA systematically track suits against suppliers of biomaterials used in medical implants. We are aware of one situation—involving jaw implants—in which a supplier has been sued repeatedly. Significantly, of the 1,746 lawsuits related to the jaw implant, the supplier, DuPont, has not lost a single case in a final judgment. Only 5 worth of DuPont's Teflon was used in the jaw implants (for total sales of a few thousand dollars) yet DuPont has had to spend $40 million over the past five years defending itself in these cases.
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    Other suppliers fear the same consequences. As a result, suppliers are refusing to sell to the implantable medical device market due to the potential risk of being involved in a costly product liability lawsuit. As is evidenced by DuPont's experience, the costs of defending and winning these lawsuits are high, and greatly exceed the total implantable device marketplace value (from .002 to 3 percent of the total market) for these materials and components.
    Q. 2. Can you provide any support for the belief that the withdrawal of biomaterials suppliers (other than DuPont and Dow) from the medical device market is directly and exclusively attributed to the liability issues and not to other economic factors?
    A. I would like to submit the attached report, Biomaterials Availability: A Vital Health Care Industry Hangs in the Balance, conducted by Aronoff Associates, for inclusion in the hearing record. The report finds that at least 75 percent of suppliers have banned sales to U.S. implant manufacturers, a 40 percent drop in the percentage of suppliers willing to sell to the implant market since 1994. The risk of legal liability was the key factor in the decision to withdraw from the implantable medical device market for 100 percent of the suppliers surveyed in the report.
    Q. 3. Can you provide any empirical evidence supporting the proposition that under the Biomaterials Access Assurance Act of 1997 Biomaterials suppliers would be more apt to supply medical device companies with component parts? Can you identify any Biomaterials suppliers who have withdrawn from the market that will reenter the market if the Biomaterials Access Assurance Act of 1997 is enacted?
    A. It is unreasonable to expect suppliers to make firm commitments about future actions based on pending legislation, especially given the ever-changing nature of the marketplace and the likelihood that proposed legislation will change repeatedly during the legislative process. Since many of these suppliers are large companies, whose supply to the implantable device market is at best peripheral to their principal business, Congress' goal should be to make the market less hostile to some and more inviting to others. In fact, a 1994 study conducted by Aronoff Associates concluded that many suppliers provide materials to the implantable device market not for any financial gain but out of a sense of social responsibility:
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There is little, and in some cases nothing to be gained financially from selling to the permanent medical implant market. . . . We conclude that the motivation for sales to manufacturers of permanent medical implants appears to stem from a feeling that medical needs, particularly when they are associated with saving or improving lives, are in a special category and should be met. . . . Currently, fear of being penalized with massive lawsuits for acting in this socially responsible manner is forcing suppliers to avoid the United States permanent implant market.

    In short, the purpose of the Biomaterials Access Assurance Act of 1997 is to establish an environment in which suppliers, large and small, are less likely to leave and entrepreneurial suppliers are more likely to enter the implantable medical device market. Put another way, the legislation will allow suppliers to continue to act in a socially responsible manner.
    Q. 4. Do you believe the Biomaterials Access Assurance Act of 1997 preserves the rights of an injured plaintiff to seek compensation from a supplier who knew or should have known that the biomaterial or component part was defective. Why or why not?
    A. First, I must take issue with the proposed hypothetical situation of a supplier who ''knew or should have known'' that a biomaterial or component was defective. Such a situation is unlikely since the supplier is usually responding to extremely detailed material or component specifications that have been developed by the device manufacturer. Thus, in the unlikely event that a raw material or component should prove ''defective,'' the most likely cause would be a misjudgment by the manufacturer in preparing the material or component specifications or a failure of the supplier to meet the specifications. In either case, the biomaterials legislation would hold the appropriate party responsible for damages. In the first case, the manufacturer would clearly be at fault. In the second, the legislation clearly holds suppliers liable if they fail to meet contract specifications they have accepted.
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    Second, the Federal Food, Drug and Cosmetics Act (FFDCA) holds device manufactures responsible for the safety and efficacy of the materials and components used in an implantable device. Failure to do so can result in severe civil or criminal penalties.
    Under the FFDCA, device manufacturers are required to demonstrate the safety and quality of all materials and components used in the finished device. All devices must be deemed safe and effective by the FDA before they can be marketed and sold.
    The FDA device approval process has numerous material and component safety and quality assurance requirements. Among others, device manufactures must:

Safety test all materials and components—do bench tests and submit data on the chemical identity, purity, biocompatibility, degradation, strength, susceptibility to stress, permeability, and other factors as appropriate to ensure the suitability of the materials and components used in the device.

Perform comprehensive toxicological tests—to address any potential toxic effects that might be caused by the materials or components, taking into account the manufacturing process for that device.

Have design controls in place—to ensure that the device's design is appropriate. Product design includes the selection of appropriate materials and components.

Qualify suppliers—have a system in place documenting that suppliers are capable of supplying the materials and components that meet the specifications agreed to in the contract with the supplier.

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Have materials purchasing and acceptance controls in place—to ensure that incoming materials and components continue to meet specifications.

    In short, even if the supplier were to withhold or provide inaccurate safety information about the material or component to the device manufacturer, the FDA requires device manufacturers to safety test all materials and components making it highly unlikely that such supplier negligence could, in fact, occur.
    Third, suppliers don't have the knowledge, skill, experience, or expertise to judge the suitability or safety of materials and components when they are used in medical devices. In the case of implantable device manufacturing—a highly specialized and complex discipline that is part of the practice of medicine—the safety of the materials and components is highly dependent on the application. It is impossible to expect suppliers to have the necessary expertise to be held responsible for how its materials and components will perform in a myriad of implantable device applications.
    Moreover, suppliers cannot reasonably know how the manufacturer will process or apply the materials and components in a particular device. For example, lithium is highly toxic, and a supplier of lithium could reasonably object to the use of lithium in an implantable device. However, lithium batteries are preferred for implantable devices because of their superior longevity as a reliable power source. When encased in a hermetically sealed canister, such as a pacemaker, a lithium battery's toxic qualities are negated. Most importantly, use of these batteries helps eliminate the need for an invasive operation to replace a device simply because its power source has lapsed.
    Fourth, we are not aware of a single example of a supplier being held liable in a final judgment because it knew or should have known its material or component was harmful. Courts have found that if a multi-purpose material or component is properly manufactured and is inherently safe in most or all of its end uses, but becomes hazardous only as used in a particular finished product, the supplier cannot be found liable on a design defect or failure to warn theory. Instead, courts have found that the duty to warn rests with the ultimate manufacturer—in this case, the device manufacture—not the supplier.
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    These principles have been validated by their inclusion in the Third Restatement of Torts: Products Liability, approved by the American Law Institute in May, which reflects existing common law. The restatement indicates that suppliers are subject to liability for harm caused by defective design or failure to warn only if the supplier had substantial control over the design of the final assembled product. Courts have justified this approach on the grounds that it is unreasonable and impractical for a supplier to retain experts in every field to determine whether the end-product manufacturer intends to develop a safe product. Moreover, end-product manufacturers are in a better position to guarantee the suitability of a material for its particular application. This is especially true in the highly specialized and complex field of implantablemedical devices.
    As outlined above, the Federal Food, Drug and Cosmetic Act appropriately places this burden upon device manufacturers and requires that device manufacturers demonstrate the safety and efficacy of the materials and components it has chosen before the device can be marketed or sold.
    Finally, there is no incentive for suppliers to withhold information or misrepresent their materials. As I've discussed above, the implantable medical device market represents a minuscule market for suppliers (from .002 to 3 percent of the total market) for these materials and components. And, in the unlikely event that a supplier were to act negligently, a rigorous checks and balance system exists between the supplier and the device manulach r because the manufacturer continues to have a right of action against the supplier.
    Q. 5. Can you provide any empirical evidence that there is a shortage or imminent shortage of component parts for medical devices? If so, please provide the specific component parts that are in short supply and the medical devices affected (e.g. rods or screws for orthopedic implants). Please also provide the number and names of component part manufacturers that have withdrawn from the medical device market.
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    A. It is important to understand that while lay persons may make a distinction between materials and components, the FDA makes no such distinction with respect to the manufacture of devices. The FDA defines a component as ''any raw material, substance, piece, part, software, firmware, packaging, labeling or assembly which is intended to be included as part of the finished, packaged, and labeled device.''
    The Aronoff Report, referenced above, describes a serious shortage of key raw materials and also documents numerous component shortages including electronic components, circuitry, Kapton Film, lithium used in batteries, specialty adhesives, coloring agents, and polyamide film and fiber that are ''difficult, if not impossible for permanent implant makers to obtain . . . .'' All of these components are essential to the manufacture of certain implantabledevices. Without the components, these devices—including life-saving devices such as pacemakers, and defibrillatory—will not be manufactured.
    Kapton Film, made by DuPont who no longer sells materials or components to the implantable device market, is used in certain implants such as pacemakers for flexible circuitry and insulating tape. There are only two other suppliers of an ''equivalent replacement.'' The Aronoff Report found that one of those will not supply due to liability fears. The other supplier's film is not as flexible and thus results in ''a less miniaturized implant—a step backward.''
    Q. 6. In 1992, in response to the announcement by Dow that it will no longer supply the silicone used in many implantable devices, manufacturers like Pfizer met with the FDA and developed a strategy to respond to a possible shortage. As a result of this meeting, several biomaterials suppliers emerged and as of May 20, 1997, the FDA reports there is no shortage. In light of this, why can't the same industry effort be undertaken to respond to a possible shortage of other biomaterials?
    A. There are really two parts to this question. The first issue is the accuracy of the FDA assessment that there is ''no shortage'' of silicone. The second is whether the same approach that was taken with silicone can be used to address other material and component shortages.
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SILICONE SUPPLY DEPENDABILITY

    The work that was done in 1992 through a cooperative industry/FDA effort was the result of an FDA demand that manufacturers ''prove'' that the silicones they were planning to use to replace the Dow Corning products were ''not substantially different'' from the original Dow Corning products. The issue was addressed independently by industry and FDA, with each group developing a list of tests that it believed would be sufficient to demonstrate the ''equivalence'' of the alternative products. When the two lists were completed, the groups met jointly to compare their work and iron out any differences. The completion of the protocol went smoothly, and a guidance for manufacturers was available in mid-1993.
    There were two key factors that made this effort both possible and successful:
    First, FDA established a separate procedure for manufacturers to inform the agency of the status of their materials. This eliminated any potential need for filing new 510(k) submissions, with their associated expense and delay, and the concomitant requirement that the devices be taken off the market while the submission was being processed.
    This was a departure from normal procedure, which resulted primarily from the FDA's public sensitivity about silicone. Normally, it is the manufacturer's responsibility to determine if a vendor change for a material used in a device will effect the safety or effectiveness of a device. The manufacturer then either performs testing to demonstrate the safety of the substitute material (maintaining records of the testing) or files a 510(k) submission with FDA. Generally, such submissions are not needed.
    Second, silicone does not require major capital investment for its manufacture and processing. For this reason, there were two small alternative suppliers who were available to sell to the medical device industry. These two suppliers are, as compared with chemical companies like Dow Corning, rather small. Consequently, neither company represents the type of ''deep pocket'' that Dow Corning represented. In that sense, they are unlikely litigation targets. However, their small size is at the same time their weakness. Being small companies, they are much more subject to the vicissitudes of the market place than one of the chemical giants. Thus, they are much less dependable as suppliers than a Dow Corning. (Both companies also happen to be located near each other in an earthquake-prone region of California, which poses the risk that a single natural disaster could destroy the industry's sole source of silicone.)
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OTHER BIOMATERIALS

    The low price tag for silicone manufacture is the exception rather than the rule in the chemical industry. Many materials used by the medical implant industry, Teflon and polyethylene, for example, require major capital investment to manufacture (on the order of $50 million or more), and the quantities that must be produced far exceed the needs of the medical device industry. In other words, for some materials, there are no small manufacturers.
    In addition, it is impractical for medical device companies to manufacture the materials themselves. First, many simply do not have the cash for the investment. Second, they would have to become raw materials merchants to sell the excess production beyond their needs. Since that production would exceed the needs of the entire industry, it would mean becoming a materials company rather than a medical device company. It is hard to believe that it would benefit the public health to dilute or divert the missions of medical implant manufacturers in this manner.
    Other factors that affect the medical implant industry's ability to mitigate materials shortages are the small quantities needed and the small number of manufacturers that make an acceptable product. When DuPont stopped selling to the medical implant industry, the decision encompassed the entire DuPont catalog. Some of the products in that catalog are made by very few other companies (in some cases only one). If those companies are unwilling to sell to the medical implant industry, the material becomes totally unavailable.
    For these reasons, the approach used for silicone will not solve the more general problem. It is not possible for the medical implant industry to replace an entire catalog of chemicals (polymers) of which it is an almost insignificant user on the scale of the chemical industry simply by finding small manufacturers. The universe of small manufacturers is too small to meet the needs of the medical device industry.
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    Q. 7. In order to maintain the competitive edge that U.S. manufacturers enjoy in the medical device industry, do you believe that foreign manufacturers should be required to abide by the same product liability laws as American companies in terms of jurisdiction, discovery, and service of process? If not, why not?
    A. The reference to foreign manufacturer is somewhat vague. If the term is intended to refer to foreign suppliers of raw materials and component parts, there is no reason why the protections of the Biomaterials Access Assurance Act should not be extended to such suppliers to help ensure American patients continued access to implantable devices. To the extent the foreign suppliers may be sued in U.S. courts, as most of them can be, they need the protection of the bill as much as U.S. suppliers do. Many suppliers happen to be foreign corporations, and access to their materials and components by device manufacturers is essential to the continued manufacture of implantable devices. The bill does not address specific issues relating to jurisdiction, discovery, and service of process for foreign manufacturers. These issues would be resolved in accordance with otherwise applicable law.
   

QUESTION SUBMITTED BY MR. GEKAS ON BEHALF OF THE SUBCOMMITTEE FOR RONALD J. GREENE, ESQ.

    Q. 1. Would the ''Biomaterials Access Assurance Act,'' (H.R. 872) prohibit a manufacturer from impleading a supplier in a suit by an injured person?
    A. The bill would not prohibit a manufacturer from impleading a supplier in a suit by an injured person. The bill does not deal with litigation by a manufacturer against a supplier, because the bill applies solely to a civil action brought by a ''claimant'' for ''harm'' caused by an implant. These terms do not encompass a manufacturer's claim against a supplier. A ''claimant'' must allege ''harm''—injury to or damage suffered by an individual—caused by an implant. A motion by a manufacturer to implead a supplier in a suit by an injured person would be decided under otherwise applicable law.
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QUESTIONS SUBMITTED BY MR. NADLER ON BEHALF OF THE DEMOCRATIC MEMBERS OF THE SUBCOMMITTEE FOR DR. JAMES E. BROWN

    Q. 1. Identify any Biomaterials suppliers that you are aware have been sued and held liable in a court of law.
    A. Regarding biomaterials suppliers who have been sued and held liable, I know of none. Indeed, I've checked with our legal counsel, who informs me that even the trade association for the trial lawyers who are opposed to the Biomaterials bill admit that they can not find one instance where a Biomaterials supplier has been held liable for injuries alleged to have been caused by an implant (although they almost always have to spend fortunes defending themselves when they are sued). If implantees have never been able to successfully sue Biomaterials suppliers (because of the so-called ''bulk supplier doctrine''), then what are they losing under this bill? They can still sue ALZA and any other manufacturer, and they can still sue a Biomaterials supplier who has not met contract specs and other contractual requirements. By the way, as someone who has to approve any such contracts with biomaterials suppliers, I can tell you that our contract specs are quite specific and demanding.
    Q. 2. Can you provide support for the belief that the withdrawal of Biomaterials suppliers (other than DuPont and Dow) from the medical device market is directly and exclusively attributed to the liability issues and not to other economic factors?
    A. I can't ''prove'' that Biomaterials suppliers other than Dow and DuPont have withdrawn from the market for economic as opposed to liability reasons. However, I can tell you what I know to be absolutely true: all of the suppliers who have refused to sell to us and who have been willing to give us a reason have all said it was fear of litigation that led to that decision.
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    Q. 3. Can you provide any empirical evidence supporting the proposition that under the Biomaterials Access Assurance Act of 1997 Biomaterials suppliers would be more apt to supply medical device companies with component parts? Can you identify any Biomaterials suppliers who have withdrawn from the market that will reenter the market if the Biomaterials Access Assurance Act of 1997 is enacted?
    A. I can't provide ''empirical evidence'' that Biomaterials suppliers will return to the human implant market if Congress passes the Biomaterials bill, although common sense tells me they will. That is, however, provided that the bill as presently drafted is not gutted by amendments that—whatever their stated goal—have the effect of not limiting discovery costs engendered by suits against Biomaterials suppliers.
    Q. 4. Do you believe the Biomaterials Access Assurance Act of 1997 preserves the rights of an injured plaintiff to seek compensation from a supplier who knew or should have known that the biomaterial or component part was defective? Why or why not?
    A. As I understand it, the bulk supplier doctrine that results in Biomaterials suppliers avoiding ultimate liability does not embrace the ''known or should have known'' standard. It stands for the proposition that the ultimate user of the supplied materials is the party who has the obligation to ''Know'' whether the material as used is defective. Most importantly, given the rigorous, demanding specifications we impose on those materials suppliers who are willing to sell to us for use in human implants, I simply cannot imagine a practical ''real world'' case where a supplier could meet its obligations to us under the contract specs and other provisions knowing that it was selling us defective materials.
    5. Can you provide any empirical that there is a shortage or imminent shortage of component parts for medical devices? If so, please provide the specific component parts that are in short supply and the medical devices affected (e.g., rods or screws for orthopedic implants). Please also provide the number and names of component part manufacturers that have withdrawn from the medical device market.
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    A. I think I can provide ''empirical evidence'' that there is a shortage of biomaterials for medical devices. I am enclosing two documents. One is part of an NIH report, approved by HHS Secretary Shalala, that documents such a shortage (see pg. 8 thereof). The other is a sophisticated, thorough analysis on the subject written by Dr. Marvin Aronoff. I know that the Rand Critical Technology Institute performed an in-depth study on this subject, but the draft copy I have is so dark that I doubt I could successfully fax it to you; however, if you wish, I could try to have it copied and mail it to you, or, even better, you could ask the Rand people to supply you with the final draft of their report. That report does say the following, however:

Recently, product liability concerns have caused the leading materials manufacturers to restrict or terminate supply of materials for use in implantable devices. These actions are widely perceived as having created a serious crisis in biomaterials availability with prospective adverse consequences on patient care, public health and survival of a segment of the medical device industry. The following consequences may be expected:

Many implantable device companies will stockpile materials, seek alternative suppliers from foreign countries, confine their operations to offshore, abandon manufacturing affected products or go out of business, with effects on patient care and public health. It is estimated that the situation will affect about 85 permanent implant products, more than 30 surgical procedures and about 7.4 million patients.

Academic and entrepreneurial institutions conducting research and development of novel medical devices based on enabling technologies such as tissue engineering and cell therapy will find it difficult to transform their innovations into commercial products since most of these efforts require the use of biomaterials.
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    Q. 6. In 1992, in response to the announcement by Dow that it will no longer supply the silicone used in many implantable devices, manufacturers like Pfizer met with the FDA and developed a strategy to respond to a possible shortage. As a result of this meeting, several biomaterials suppliers emerged and as of May 20, 1997, the FDA reports there is no shortage. In light of this, why can't the same industry effort be undertaken to respond to possible shortage of other biomaterials?
    A. I presume that your reference to ''the FDA reports'' is to a leper from the FDA's Associate Commissioner for Legislative Affairs to Congressman Lampson recounting the silicone raw materials saga. I can't speak to the basis of the Associate Commissioner's opinion. I did find it notable, however that the letter to Congressman Lampson notes that the ''. . . (FDA) does not require notification that a device has been or will be discontinued . . .'' Presuming that is so, how could the Agency speak to the question raised by Congressman Lampson, i.e. whether devices have been taken off of the market, whether because of biomaterials shortages or other reasons? In any event, as you know from testimony at the June 12th hearing, most large companies (e.g. DuPont, Dow) have withdrawn various essential biomaterials from the medical market. In some cases, a hand full of small, financially weak companies have stepped in to produce the biomaterials no longer sold by the larger companies, but they are limited to generic compounds no longer covered by patents. This results in only older compounds being manufactured, as well as no new, cutting edge and presumably better biomaterials being researched, developed, manufactured and made available to the bio medical market.
    Q. 7. In order to maintain the competitive edge that U.S. manufacturers enjoy in the medical device industry, do you believe that foreign manufacturers should be required to abide by the same product liability laws as American companies in terms of jurisdiction, discovery, and service of process? If not, why not?
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    A. As I said, I'm not a lawyer. I do believe, however, that any legal system, whether it's ours or a foreign nation's, should not have the effect of denying dying or ill patients life-saving medical implant technologies by insisting that trial lawyers have the continued right to sue a class of defendants who are, without exception, protected from ultimate liability under current bulk supplier law (albeit not from huge legal defense costs).
   

QUESTIONS AND RESPONSES SUBMITTED BY MR. NADLER ON BEHALF OF THE DEMOCRATIC MEMBERS OF THE SUBCOMMITTEE FOR DANE A. MILLER

    Q. 1. Identify any Biomaterials suppliers that you are aware of who have been sued and held liable in a court of law.
    A. Various companies, including DuPont and Dow, have been liable for millions in defense expenditures.
    Q. 2. Can you provide support for the belief that the withdrawal of Biomaterials suppliers (other than DuPont and Dow) from the medical device market is directly and exclusively attributed to the liability issues and not to other economic factors?
    A. Please see attached letter from Montell included in my submitted statement.
    Q. 3. Can you provide any empirical evidence supporting the proposition that under the Biomaterials Access Assurance Act of 1997 Biomaterials suppliers would be more apt to supply medical device companies with component parts? Can you identify any biomaterials suppliers who have withdrawn from the market that will reenter the market if the Biomaterials Access Assurance Act of 1997 is enacted?
    A. (a) I don't have empirical evidence, but I know from personal experience. (b) Please see attached letter from Montell included in my submitted statement.
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    Q. 4. Do you believe the Biomaterials Access Assurance Act of 1997 preserves the rights of an injured plaintiff to seek compensation from a supplier who knew or should have known that the biomaterial or component part was defective? Why or why not?
    A. This is a complex legal question that only an attorney could address.
    Q. 5. Can you provide any empirical evidence that there is a shortage or imminent shortage of component parts for medical devices? If so, please provide the specific component parts that are in short supply and the medical devices affected (e.g., rods or screws for orthopedic implants). Please also provide the number and names of component part manufacturers that have withdrawn from the medical device market.
    A. I don't have empirical evidence, I only know from my personal experience.
    Q. 6. In 1992, in response to the announcement by Dow that it will no longer supply the silicone used in many implantable devices, manufacturers like Pfizer met with the FDA and developed a strategy to respond to a possible shortage. As a result of this meeting, several biomaterials suppliers emerged and as of May 20, 1997, the FDA reports there is no shortage. In light of this, why can't the same industry effort be undertaken to respond to possible shortage of other biomaterials?
    A. I testified based on my personal knowledge and experience. Other witnesses have more extensive knowledge to answer these questions.
    Q. 7. In order to maintain the competitive edge that U.S. manufacturers enjoy in the medical device industry, do you believe that foreign manufacturers should be required to abide by the same product liability laws as American companies in terms of jurisdiction, discovery, and service of process? If not, why not?
    A. I testified based on my personal knowledge and experience. Other witnesses have more extensive knowledge to answer these questions.
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QUESTIONS AND RESPONSES SUBMITTED BY MR. NADLER ON BEHALF OF THE DEMOCRATIC MEMBERS OF THE SUBCOMMITTEE FOR PROF. JORGE RAMIREZ

    Q. 1. Identify any biomaterial suppliers that you are aware have been sued and held liable in a court of law.
    A. Biomaterial suppliers like ourselves supply materials for a number of applications in addition to the small percentage which is incorporated into medical implant end uses. The Hostalen GUR Business Unit of Hoechst(see footnote 10) manufactures and markets ultrahigh molecular weight polyethylene, of which less than 1 percent sold world wide is for processing into the implant market. Although this question could broadly be interpreted to cover all suits for all applications, we are limiting our answer to those suits of which we are aware that involved medical or dental implant applications.

    Like HIMA, the Hostalen GUR Business Unit of Hoechst does not regularly track suits against suppliers of raw materials for medical and dental implant applications. Nevertheless, through industry associations, publications and other media we are aware of the emerging trend to name raw materials suppliers particularly where the suppliers are larger and financially more stable relative to the manufacturer of the implant. One example of which we are aware is DuPont, which was found to be liable by an Oregon jury for damages caused by faulty jaw implants made partly from Teflon. The manufacturer of the implants, Vitek Inc., had since gone bankrupt and was not a defendant. [Note: Jorge, I have a copy of an article from the Wall Street Joumal reporting on this suit.]
    Even if a Biomaterials supplier is ultimately found not liable, the costs of defending such suits are enommously high. The risks of being named and defending such suits cannot be justified in light of the relatively small quantity of raw materials that go into each device.
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    Q. 2. Can you provide any support for the belief that the withdrawal of Biomaterials suppliers (other than DuPont and Dow) from the medical device market is directly and exclusively attributed to the liability issues and not to other economic factors?
    A. We can only respond with first hand knowledge on behalf of the Hostalen GUR Business Unit and its affiliate, Hoechst Celanese Corporation. The technical polymers business of Hoechst Celanese Corporation, Ticona, has infommed customers that it will not sell its wide portfolio of products, including Celcon acetal copolymer, Vectra liquid crystal polymer, and other resins for use in medical or dental implants. This was the direct outcome of assessing the potential liability issues and costs of defense.
    Q. 3. Can you provide any empirical evidence supporting the proposition that under the Biomaterials Access Assurance Act of 1997, a biomaterials supplier would be more apt to supply medical device companies with component parts? Can you identify any biomaterial suppliers who have withdrawn from the market that will reenter the market if the Biomaterials Access Assurance Act of 1997 is enacted?
    A. Frankly, there is some confusion about the interpretation of the first part of question 3. The Hostalen GUR Business Unit is a Biomaterials supplier but does not manufacture or sell component parts for implantable devices as component parts are generally understood in the industry. We are not currently, nor have we ever been in the business of manufacturing and supplying component parts. Since we continue to sell polyethylene product for implant applications, the issue of entry or reentry into the market is not applicable.
    As to the second part of question 3, we would have no first hand knowledge of the intentions of other biomaterial suppliers to reenter the market if the Biomaterials Access Assurance Act of 1997 is enacted. However, in an article published in Orthopedics Today, January 1996, pages 1, 10–13, the only alternative of ultrahigh molecular weight polyethylene in North America announced that it was withdrawing from this market application due to product liability concerns. Presumably, if the Act could diminish the likelihood that suppliers of biomaterials would be named in lawsuits and forced to assume astronomical defense costs where there is no basis for liability, companies such as these would consider reentering the market.
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    Q. 4. Do you believe that the Biomaterials Access Assurance Act of 1997 preserves the rights of an injured plaintiff to seek compensation from a supplier who knew or should have known that the biomaterial or component part was defective? Why or why not?
    A. Although we believe this question calls for a legal interpretation and conclusion which is more appropriately directed at counsel, we will attempt to respond from the perspective of the Hostalen GUR Business Unit. The Act dearly provides for relief against a supplier of raw material if the supplier fails to supply material according to the specifications that have been provided by the device manufacturer. One significant concern is the interpretation of ''knew or should have known.'' Suppliers of raw materials are not in the position to detemmine the suitability of it products for use in any application—that is the responsibility of the manufacturer of the end use product. It is our opinion that inclusion of the clause ''knew or should have known'' not only preserves the rights of an injured plaintiffto seek compensation from suppliers but prejudices the rights of the supplier.
    Q. 5. Can you provide any empirical evidence that there is a shortage or imminent shortage of component parts for medical devices? If so, please provide the specific component parts that are in short supply and the medical devices affected (e.g. rods or screws for orthopedic implants). Please also provide the number and names of component part manufacturers that have withdrawn from the medical device market.
    A. As an industry member, we are aware of the prevailing concerns all raw material suppliers to the device market have regarding the high risk associated with defending products liability claims despite the integrity of the components. Device manufacturers have directly and indirectly approached our industry members concerned that there is a scarcity of raw materials and that companies are being forced to turn their backs to much needed lifesaving and life enhancing devices. The Hostalen GUR Business does not, in its ordinary course of business, compile and retain the specific information requested in this question.
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    Q. 6. In 1992, in response to the announcement by Dow that it will no longer supply the silicone used in many implantable devices, manufacturers like Pfizer met with the FDA and developed a strategy to respond to a possible shortage. As a result of this meeting, several biomaterials suppliers emerged and as of May 20, 1997, the FDA reports that there is no shortage. In light of this, why can't the same industry effort be undertaken to respond to possible shortage of other biomaterials?
    A. The Hostalen GUR Business Unit of Hoechst manufactures and markets only one type of polyethylene resin, UHMWPE, for application in medical implants. As such, we were not involved in and have no infommation regarding the supply of silicone and the strategy devised to respond to any possible shortage.
    Q. 7. In order to maintain the competitive edge that U.S. manufacturers enjoy in the medical device industry, do you believe that foreign manufacturers should be required to abide by the same product liability laws as American companies in temms of jurisdiction, discovery, and service of process. If not, why not?
    A. This question again calls for a legal interpretation and opinion. From a business perspective, however, this issue has particular significance to Hoechst, given that we are a global supplier. We would expect and support changes that ensure that the protections afforded under the proposed Act would extend to foreign as well as domestic suppliers of raw materials. Whether or not foreign manufactures should be required to abide by the same product liability laws depends on several factors including (1) if they sell products into the U.S., (2) if their regulating authorities impose different standards, (3) if questions of reciprocity of jurisdiction, discovery and service is contemplated by the Act.

    Mr. GEKAS. This subcommittee is adjourned.
    [Whereupon, at 12:50 p.m., the subcommittee adjourned.]
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A P P E N D I X
     

Material Submitted for the Hearing

PREPARED STATEMENT OF JAN GILDIN, EXECUTIVE DIRECTOR, HOUSTON EAR RESEARCH FOUNDATION

    The cochlear implant is a surgical procedure to help those hearing impaired individuals who are not able to benefit from hearing aids, due to the severity of their hearing losses. The cochlear implant, an electronic inner ear hearing device, provides some amount of sound awareness and speech understanding for those who would otherwise have no sound detection. There are two parts to the cochlear implant: 1) the surgically implanted receiver/stimulator and 2) the external equipment, which is individually programmed for each person, according to their specialized needs. Over 17,000 people worldwide have received cochlear implants. My experience with cochlear implants includes almost 12 years of working with children and adults, programming the equipment and evaluating benefits received with the devices.
    Although no cochlear implant can restore normal hearing to the recipients, the benefits are many. Adults are able to hear not only environmental sounds, such as telephones ringing, alarm signals, and birds singing, but also they are able to hear conversation and many are able to understand speech, without the use of visual cues, such as lipreading. This provides many with the ability to improve their communication abilities; many have the ability to use the telephone. After using the cochlear implant, almost all adults demonstrate improved lipreading skills, which translates to an even greater increase in communication.
    How does this specifically benefit adult cochlear implant users? I'd like to share some examples of individuals whom I have worked with over the years. At the age of 8, G.B. began to have a progressive hearing loss, although she was able to utilize hearing aids with good benefit. By the age of 18 years, hearing aids no longer provided any useable help for G.B. At the age of 31 years, she received the cochlear implant; at this time she was working at a major corporation, but was not able to function in any job that required telephone useage or daily communication with coworkers. Her responsibilities included technical writing. After receiving the cochlear implant, G.B. was moved into a position that depended more on interactions with others, and she continued to be promoted with increasing job responsibilities until 5 years later she decided to leave the company and open her own business, one that depended on contacting clients via telephone, in addition to attending meetings in which she was required to follow the conversation and add input as needed. Five years later her business is thriving. L.W. also had a progressive hearing loss since early childhood, but was able to function with her hearing aids quite well. In her early 30's, she suffered a sudden drop in her hearing that left her with no useable hearing, even with her hearing aids. She received the cochlear implant and continues to be promoted with increasing job responsibilities, including telephone useage. L.K., in her early 70's, had isolated herself from friends and family, and although she was quite healthy, never left her apartment because as she stated, it was too uncomfortable to sit at gatherings and not know what was going on. Before receiving the cochlear implant, her desire was to be able to work again. Although I counseled her that the cochlear implant could not necessarily provide that for her, she was determined. About a month after received the implant, L.K. called me on the telephone to tell me about her new job waiting tables! She continues to work this job three years later and is extremely happy with herself as she feels very productive.
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    Children with the cochlear implant are able to detect conversational speech and environmental sounds; some can recognize and identify the everyday sounds, such as car horns, doorbells, telephones. Many children can learn to distinguish among different speech sounds. After training and experience with the device, many children demonstrate improvements in speech production.
    A.Z. received the cochlear implant at 2 years of age. Now at 9 years, he is in a regular classroom, with hearing peers, plays soccer, baseball and basketball. He attends his neighborhood school, along with his older hearing brother, rides the school bus and considers himself ''just a regular kid.'' He is able to lead this life because of the cochlear implant. A.Z. is not the only cochlear implant recipient who is able to function in this way; I could tell you many stories such as his, that have allowed children to participate in the childhood activities that allow for the socialization that makes them feel that they fit in. I recently gave a presentation at a statewide speech and hearing convention; with me were 2 cochlear implant recipients, a 13 year old and a 9 year old, with their mothers. Both children sat in front of about 150 adults and readily answered questions from the audience with a tremendous amount of comfort and ease. Both of them have approximately 95% speech intelligibility, meaning that about 95% of what they said could be understood by people with no experience talking to the deaf. Please keep in mind that without their cochlear implants on, these children can not hear anything.
    Implantable medical devices, such as the cochlear implant, could not be made without one or more biomaterials. More than 7.5 million people every year rely on implantable devices. Children can outgrow certain implants, and some implants do wear out and need replacement. What will happen to these patients if their implants are no longer available because biomaterials suppliers are pulling their products out of the medical implant market?
    It is extremely rewarding to me to work with these cochlear implant recipients. I see on a daily basis how their lives have been completely turned around and how the cochlear implant allows so many daily activities to be possible that those of us with hearing take for granted. I am very fortunate to be able to provide a service that has such a major impact on the lives of so many special individuals. The genuine hugs and thanks from these grateful individuals is worth so much. That is why I urge Congress to pass H.R. 872, the Biomaterials Access Assistance Act of 1997.
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DuPont,
Wilmington, DE, June 18, 1997.
Hon. GEORGE W. GEKAS, Chairman,
Subcommittee on Commercial and Administrative Law,
House Judiciary Committee,
Washington, DC.

Re: H.R. 872—Raw Materials for Use in Medical Devices.

    DEAR CHAIRMAN GEKAS, On June 12, 1997, your Subcommittee held hearings regarding the supply of raw materials to manufacturers of implantable medical devices. I have been told that the experience of E.I. DuPont de Nemours and Company (DuPont) in the Vitek TMJ Litigation was the subject of testimony by Mr. Donald Doty. With your permission I hereby submit this letter and materials for inclusion in the Subcommittee's official record. I believe these materials correct the record and give your Subcommittee accurate information regarding DuPont's experience.
    There are many individuals in America that suffer from chronic illness. We sympathize with the pain and difficulty those people suffer. The treatment of medical conditions is a very important matter to all of us. However, the mistreatment and mischaracterization of the role of suppliers of standard, useful, raw materials does not help the situation. In fact, it makes the situation worse for all of us including TMJ patients.
    A copy of the latest status report on the TMJ Litigation is attached hereto as Exhibit #1. That report contains a comprehensive discussion of the litigation. A total of approximately 1,605 Vitek Proplast TMJ implant recipients (plus their spouses) filed 651 lawsuits against DuPont in 41 states and Canada over ten years. As of this date, DuPont has won every TMJ case that has been decided to final judgment by the courts. FIFTY–FIVE (55) courts in a row have ruled in favor of DuPont in this litigation. Every appellate court ruling has been in favor of DuPont. At this time a defense judgment or favorable dismissal has been entered for DuPont on 98% of the claims. DuPont expects the remaining 2% also will be dismissed favorably.
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    Mr. Doty's case was dismissed on January 17, 1995, in favor of DuPont by Federal District Judge Paul Magnuson. The 8th Circuit Court of Appeals affirmed Judge Magnuson's ruling in favor of DuPont on October 4, 1996. A copy of Judge Magnuson's Opinion is attached hereto as Exhibit #2. Regarding Mr. Doty's case Judge Magnuson concluded,

[T]he PTFE and FEP film used in the Vitek TMJ Implants were not ''defective products.''

Plaintiffs claim DuPont should be held liable because it acted as more than just an ordinary supplier of raw materials. This claim is simply an accusation, however. Plaintiffs have failed to point to any evidence that shows DuPont acted any differently than the usual supplier of bulk materials.

DuPont merely supplied products that have multiple industrial uses. To impose liability upon DuPont for the uses to which those products are put would force DuPont to retain experts in a huge variety of areas in order to determine the possible risks associated with each potential use. Vitek, which specialized in the field of prosthetic devices, certainly had superior knowledge regarding the risks associated with its TMJ implants. DuPont had no specialized knowledge in that field and specifically disclaimed such knowledge.

To require manufacturers of such ''building block'' materials to guarantee the safety of their products for each and every possible use would impose an unbearable burden on those manufacturers.

[D]uPont acted reasonably in relying on Vitek to communicate warnings to the Plaintiffs . . . DuPont had also issued other disclaimers to Dr. Homsy and provided him with information regarding the Charnley studies and other research regarding medical uses of PTFE and FEP. . . . DuPont thus warned Vitek to the full extent it could of the risks associated with using PTFE and FEP.
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[Vlitek was required by federal law to provide warnings with its finished product. DuPont reasonably expected that Vitek would comply with the intricate federal regulations of medical devices. . . . There is no feasible method of affixing a warning to the PTFE and FEP in such a way that the warning would remain intact until reaching the recipient of the implant.

Based on [the] accomplishments by Dr. Homsy, the president of Vitek, reasonable minds could not differ as to the conclusion that Vitek was a ''sophisticated purchaser'' as that term has been applied in this area of the law.

The Court also finds no factual or legal support for any claims of misrepresentation, concert of action, conspiracy, aiding and abetting, breach of duty to act, intentional or negligent infliction of emotional distress, medical monitoring, or state consumer protection laws.

    Attached as Exhibit #3 is a copy of (1) DuPont's Policy Regarding Medical Applications of DuPont Materials, (2) DuPont's Caution Statement, and (3) a brief article from DuPont World, October 1994, explaining DuPont's position in this matter.
    Attached as Exhibit #4 are 10 short news articles reporting on the trend of decisions favoring the accepted position that suppliers of standard commodity raw materials do not have the legal duty to (1) design the medical devices made with their materials, nor do they have the duty to (2) design or provide the warnings that accompany another company's finished medical device made with those raw materials. Also included are two short articles describing significant payments made to TMJ patients in this litigation by parties other than DuPont. In addition to such payments TMJ patients have received approximately $10 million dollars from the Vitek bankruptcy.
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    Attached as Exhibit #5 are two published articles ( December 1995 and October 1996) reporting on the status of DuPont in the Vitek TMJ litigation.
    Please accept these materials for consideration. If you have questions about these materials, I can be reached at 302–992–2085.
Very truly yours,


Ross F. Schmucki, Senior Counsel.
    cc: Ames Harper, Counsel to the Subcommittee on Commercial and Administrative Law, House Judiciary Committee.
   

Crowell and Moring, LLP.,
Washington, DC., June 12, 1997.
Hon. GEORGE W. GEKAS, Chairman,
Subcommittee on Commercial and Administrative Law,
Washington, DC.

Re: Hearing On Biomaterials Access Assurance Legislation.

    DEAR CHAIRMAN GEKAS: I am co-counsel to the Product Liability Coordinating Committee (PLCC), the leading coalition of the business community in the effort to enact federal product liability reform legislation. Our coalition supports your work to safeguard the availability of lifesaving and life-enhancing medical devices for all Americans. You were one of the first to recognize the looming public health crisis caused by the shortage of biomaterials used to make implantable medical devices.
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    One of the subjects that was discussed at the Subcommittee's hearing today on the Biomaterials Access Assurance Act (H.R. 872) was the experience of E.I. DuPont de Nemours and Co. (DuPont) in litigation arising out of temporomandibular joint (TMJ) implants manufactured by Vitek, Inc. As a raw material supplier, DuPont had no control over the design, manufacture, or sale of Vitek's TMJ implant. Consequently, DuPont has won every TMJ case that has been decided to final judgment by the courts.
    For the record, I am enclosing a copy of my written testimony before the Subcommittee on Telecommunications, Trade and Consumer Protection of the House Commerce Committee on April 8, 1997. The testimony supplements today's discussion of the Vitek TMJ litigation.
Sincerely,


Mark A. Behrens, Esq., Senior Associate.
    Enclosure.
   

MARK A. BEHRENS, ESQ., SENIOR ASSOCIATE, CROWELL AND MORING LLP

    Mr. Chairman, Members of the Committee, thank you for inviting me to testify today regarding the emerging public health crisis caused by the inability of medical device manufacturers to purchase supplies of basic raw materials (biomaterials) and components needed to make life-saving and life-enhancing implants. My name is Mark Behrens. I am a senior associate in the Washington, DC law firm of Crowell & Moring LLP.
THE EMERGING BIOMATERIALS AVAILABILITY CRISIS

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    Approximately 7.5 million Americans depend on the availability of implantable medical devices, such as pacemakers, heart valves, artificial blood vessels, shunts, and hip and knee joints. The availability of these devices is threatened, however, because suppliers have ceased supplying raw materials and component parts to medical implant manufacturers. The nature of the problem has led Senator Lieberman to observe that Americans are facing a ''public health time bomb.'' Senator Lieberman and many in the House, such as Representative Gekas, were quick to recognize the need for federal biomaterials access assurance legislation.
    Suppliers of biomaterials and component parts used to make medical devices are reluctant to sell to medical device manufacturers because, under current litigation practice, the suppliers are routinely sued with device manufacturers in actions alleging inadequate design and testing of the medical device and inadequate warnings related to the use of the medical device. The raw materials and component parts, however, are not designed or manufactured specifically for use in medical devices. Mostly, they are used in a variety of nonmedical products. Furthermore, the suppliers do not design, produce or test medical devices. That is the responsibility of the medical device manufacturer under regulations promulgated by the Federal Food and Drug Administration. Consequently, courts are not finding suppliers liable.
    Nevertheless, the costs to suppliers of successfully defending themselves in product liability lawsuits far exceed the expected return from supplying the biomaterials. There may be only pennies of a raw material in a medical device, but successful defense of a single product liability lawsuit could cost a company several hundred thousand dollars. As a result, supplying materials for medical devices is a very small portion of the suppliers' businesses and is foregone to avoid the cost of (successfully) defending liability suits.
    Dr. Arnoff, who is testifying before the Committee today, will unveil a sound and thorough study on the current biomaterials availability problem. His findings are compelling and show that significant shortages of essential biomaterials will occur as existing stockpiles are exhausted. Patients will suffer.
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    These patients include some who appear today to testify before the Committee. Others including Thomas Deuschle, a private citizen from Liberty, Missouri, and Dr. Steven Gunther, Chief Resident of Orthopaedics at George Washington University Hospital in Washington, D.C., testified on March 4, 1997. before the Senate Commerce Committee.
    Thomas Deuschle told about his daughter, Emma, who was born in 1990 with a hole in her heart, a condition known as VDS. Emma was born with an extremely low birth weight and was unable to gain weight, because her heart condition artificially elevated her metabolic rate. After several months, Emma underwent open heart surgery to have a heart patch made from Dacron polyester material placed over the hole in her heart. Today, Emma is a healthy, happy six year old. Her father testified that it would have been a personal tragedy if the heart patch made from Dacron polyester had not been available for Emma and urged passage of federal biomaterials access assurance legislation. DuPont, the manufacturer of Dacron polyester, has indicated it will no longer supply that material to manufacturers of medical devices.
    Dr. Steven Gunther spoke as a private citizen and patient advocate. In October 1996, he sustained second- and third-degree burns over sixty-five percent of his body. The severity and scope of his burns made the threat of infection and dehydration deadly possibilities. Shortly after Dr. Gunther sustained his injuries, his legs were wrapped in a new medical product known as Integral Integra is a two layer ''artificial skin'' made from bovine collagen and silicone that prevents both infection and fluid and electrolyte loss. The Integra effectively ''masked'' the burns on his legs, allowing his physiological defense mechanisms to focus on those parts of his body that did not receive Integral As a result, the healing process was hastened exponentially. Dr. Gunther has now resumed his Orthopaedic practice full-time. He called for passage of federal biomaterials availability legislation.
A PENNEY OF PLASTIC AND A LEGAL COST—HOW THE BIOMATERIALS AVAILABILITY CRISIS STARTED
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    Until recent years, E.I. DuPont de Nemours and Co. (DuPont) was a major supplier of key materials used to manufacture implantable medical devices. These materials are made for general applications and are not made specifically for use in implants. In fact, the medical implant market represents a tiny portion of total raw materials sales—in some cases the percentage is almost invisible.
    Polytetraflouroethylene (PTFE) resin is one example. DuPont uses the trademark ''Teflon'' together with the polymer name to identify its brand of the material. DuPont Teflon PTFE is famous as a nonstick, slippery, solid material which has a multiplicity of uses. It may be part of the finish on kitchen skillets you have at home. DuPont Teflon PTFE is also used in a variety of implants ranging from ventilation tubes for infants to coatings for sutures. The medical device market, however, accounts for less than one-half of one percent of total PTFE sales.
    One of the companies that purchased DuPont Teflon PTFE was Vitek, Inc., a manufacturer of temporomandibular joint (jaw) implants. As a raw material supplier, DuPont had no control over the design, manufacture, or sale of Vitek's TMJ implant.
    Vitek went bankrupt in 1990, because of mass litigation involving its implant. As the ''deep pocket,'' DuPont was left to confront numerous lawsuits. A total of approximately 1,605 Vitek TMJ implant recipients (plus their spouses) filed 651 lawsuits against DuPont in 41 states and Canada.
    DuPont's defense of the TMJ Implant Litigation has been enormously successful. DuPont has won every TMJ case that has been decided to final judgment by the courts. The company's raw material supplier defense has been affirmed by all seven U.S. Courts of Appeal that have ruled on the issue. Three of these federal appellate courts have ruled for DuPont twice; another has ruled for DuPont three times in a row.
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    The company also has prevailed at the federal district court level. Most notably, in January 1995, U.S. District Court Judge Paul Magnuson granted summary judgment for DuPont in a consolidated case involving 280 federal TMJ cases and ordered that any future federal TMJ cases are to be automatically dismissed. This order was affirmed by the Eighth Circuit Court of Appeals.
    In addition, DuPont has prevailed in all state appeals courts that have considered its raw material supplier defense. DuPont's dismissal from the Vitek TMJ Implant Litigation has been upheld by state appellate courts in Arizona, California, Colorado, Louisiana, New Mexico, Oregon. Texas, and Wisconsin.
    The decision of the Wisconsin Court of Appeals in Westphal v. E.I. DuPont de Nemours and Co., 531 N.W.2d 386 (Wis. App. l99o), review denied, 537 N.W.2d 571 (Wis. 1995), is illustrative. The Court of Appeals found that,

As a component supplier, DuPont had no control over the design or manufacture of Vitek's TMJ implant. Vitek's TMJ implant is a highly specialized product. Public policy is best served by shifting liability from DuPont in this situation.

531 N.W.2d 386 at 391.
    Similarly, the Colorado Court of Appeals wrote in Bond v. E.I. DuPont de Nemours and Co., 868 P.2d 1114, 1120 (solo. App. 1993) that,

[T]he social utility of permitting DuPont to grant relatively unrestrained access to purchasers of its product [Teflon PTFE] is high, especially here, because it encourages development of new products in the medical field and does not unnecessarily inhibit technological advances.

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    At this time, a defense judgment or dismissal in favor of DuPont has been entered on ninety-eight percent of the claims. DuPont expects that the remaining two percent also will be dismissed.
    These wins, however, represent a very costly victory. DuPont's Teflon PTFE sales to Vitek totaled only a few hundred dollars per year (about $0.05 worth of Teflon PTFE per implant). Yet, the Vitek TMJ Implant Litigation has cost DuPont an estimated $8 million per year in legal costs, according to a 1994 study by Dr. Aronoff. Apart from direct legal costs, these suits have drained ''person power'' away from other more productive tasks, such as research and development.
    What would any reasonable person do in these circumstances? As a result of its Vitek TMJ Implant Litigation experience, DuPont announced in 1993 that it would no longer supply materials like Teflon PTFE or Dacron polyester for use in medical implants. Other major suppliers have made similar announcements.
    These were rational and necessary business decisions. Materials like Teflon PTFE are sold for a wide variety of general applications. The medical device market represents only a minuscule portion of total sales. And, the potential cost of responding to litigation involving finished implants that the company does not design, manufacture or control remains staggering, even though courts are not finding suppliers like DuPont liable.
FEDERAL LEGISLATION IS URGENTLY NEEDED

    Federal product liability reform legislation that includes biomaterials access assurance legislation is urgently needed. I have highlighted some of the numerous witnesses who have testified in support of biomaterials availability legislation. The extensive hearings before House and Senate Committees provide in-depth support.
    Unless Congress acts, adverse effects on patients, doctors and the medical device industry can be expected. These effects run counter to the best interests of this Nation.
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    First, as Dr. Arnoff's 1997 report makes clear, when stockpiles of unique materials are used up, some implants will no longer be available. Doctors will have fewer choices available to provide the best treatment for patients. Patients will suffer.
    Second, the competitiveness of the medical device industry is undermined when device manufacturers must divert resources away from research and development to ''find'' new sources of materials. Innovation is also frustrated when new product efforts must be confined to available sources of raw material supplies.
    One must remember that the leadership position of the U.S. in the medical device area relies heavily on start-up and ''small cap'' companies. These companies, in particular, are hurt by the lack of biomaterials availability. While some very financially powerful companies can obtain supplies of some (but not all) biomaterials by entering into restrictive indemnification agreements with suppliers, this is simply not an option for many smaller companies.
    Third, although sales of raw materials for medical implant uses represent a small portion of all raw materials sales, there is nevertheless a market need that exists. Federal biomaterials legislation would help stop the needless exportation of jobs to foreign countries by allowing market needs to be met by sound U.S. companies.
    Federal biomaterials access assurance legislation would protect patient health, maintain the competitiveness of the medical device industry, and preserve U.S. jobs by placing rational limits on the liability of biomaterials and component suppliers. The legislation would hold suppliers liable for failure to meet contractual specifications. In addition, it would establish a procedure to ensure that suppliers can avoid litigation without incurring heavy legal costs.
    The legislation would not in any way diminish the existing liability of implantable medical device manufacturers. If the legislation becomes law, any party who makes a defective implant will still be fully liable.
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    To address a very specific and limited political concern that was raised with respect to legislation which passed out of the House and Senate last Congress, legislation currently being considered specifically excludes silicone breast implant cases from coverage.
''FRAUDULENT SUPPLIER'' ARGUMENT IS BASELESS

    Recently, the Association of Trial Lawyers of America (ATLA) and its allied professional consumer groups have argued that federal biomaterials access assurance legislation would protect ''fraudulent suppliers'' from liability (i.e., a supplier who knows that is raw material (biomaterial) could cause harm if implanted, but fails to inform the device manufacturer). This argument ignores the reality of the biomaterials availability problem and the strong public policy supporting the need for federal legislation.
    Basically, opponents are arguing that, under current liability law, they get to fly ''first class'' now and they do not want to fly ''coach.'' The problem is that, when current stockpiles of biomaterials are exhausted, there will not be any ''plane'' to fly. Certain devices will no longer be available at all in the United States.
    Consequently, U.S. citizens will have to travel to foreign countries to obtain certain devices, and have no meaningful legal recourse if something goes wrong. Or, manufacturers of medical devices will have to purchase supplies from foreign manufacturers who have no assets or place of business in this country. In this situation, a plaintiff will have no case against a supplier of raw materials in any situation, even if the raw material supplier violated contractual requirements. See Asahi Metal Industry Co., Ltd. v. Superior Court of California, 480 U.S. 102 (1987) (holding that a foreign manufacturer did not purposefully avail itself of the U.S. market merely because it was foreseeable that its product would be sold in the U.S.; accordingly, the manufacturer could not be subject to the jurisdiction of U.S. courts).
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CONCLUSION

    Federal biomaterials access assurance legislation is urgently needed. The subject has been the focus of careful examination in extensive hearings spanning several years and enjoys strong bipartisan support. Congress should adopt this important, pro-patient legislation now.

44–196 CC

1997
BIOMATERIALS ACCESS ASSURANCE ACT OF 1997

HEARING

BEFORE THE

SUBCOMMITTEE ON
COMMERCIAL AND ADMINISTRATIVE LAW

OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

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FIRST SESSION

ON

H.R. 872

BIOMATERIALS ACCESS ASSURANCE ACT OF 1997

JUNE 12, 1997

Serial No. 34

Printed for the use of the Committee on the Judiciary

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
STEVEN SCHIFF, New Mexico
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ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Virginia
STEPHEN E. BUYER, Indiana
SONNY BONO, California
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRISTOPHER B. CANNON, Utah

JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
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WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN ROTHMAN, New Jersey

THOMAS E. MOONEY, Chief of Staff-General Counsel
JULIAN EPSTEIN, Minority Staff Director

Subcommittee on Commercial and Administrative Law
GEORGE W. GEKAS, Pennsylvania, Chairman
STEVEN SCHIFF, New Mexico
LAMAR SMITH, Texas
BOB INGLIS, South Carolina
ED BRYANT, Tennessee
STEVE CHABOT, Ohio

JERROLD NADLER, New York
SHEILA JACKSON LEE, Texas
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts

RAYMOND V. SMIETANKA, Chief Counsel
CHARLES E. KERN II, Counsel
JAMES W. HARPER, Counsel

C O N T E N T S
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HEARING DATE
    June 12, 1997

    H.R. 1544

    Gekas, Hon. George W., a Representative in Congress from the State of Pennsylvania, and chairman, Subcommittee on Commercial and Administrative Law

    Bergmann, Rita, Clarksburg, MD

    Doty, Donald P., Minnetonka, MN

    Kahanovitz, Neil, president and founder, Center for Patient Advocacy, and director, orthopedic spine surgery, Washington Hospital Center

    Kent, Kenneth M., director, Washington Cardiology Center, and clinical associate professor of medicine, Georgetown University Medical Center

    Hager, Prof. Mark McLaughlin, Washington College of Law, American University

    Ramirez, Jorge E., Ph.D., sales and marketing manager of the Americas, Hostalen GUR, Hoechest Corp.

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    Bergmann, Rita, Clarksburg, MD: Prepared statement

Letter dated May 6, 1997 to Linda Lipsen from Brian C. Walsh, counsel, McTernan, Stender, Walsh, Weingus and Tondreau
Prepared statement
Questions submitted by Mr. Nadler on behalf of the Democratic Members of the subcommittee
Bryant, Hon. Ed, Representative in Congress From the State of Tennessee:
Prepared statement
    Doty, Donald P., Minnetonka, MN: Prepared statement

Letter dated July 12, 1994 from James S. Benson, senior vice president, Health Industry Manufacturers Association
Prepared statement
Question submitted by Mr. Gekas on behalf of the subcommittee
Questions submitted by Mr. Nadler on behalf of the Democratic Members of the subcommittee
    Hager, Prof. Mark McLaughlin, Washington College of Law, American University: Prepared statement

    Kaiser, Stephen D., Baltimore, MD: Prepared statement

    Markey, Randy, Newtown, MA: Prepared statement

Letter dated November 2, 1995 from Robert J. Ockun, senior vice president, Montel North Americ Inc. L84, 131
Prepared statement
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Questions and responses submitted by Mr. Nadler on behalf of the Democratic Members of the subcommittee
    Nadler, Hon. Jerrold, a Representative in Congress from the State of New York: Letter dated May 20, 1997, to Representative Nick Lampson, from Diane E. Thompson, Associate Commission for Legislative Affairs, FDA

Prepared statement
Questions and responses submitted by Mr. Nadlers on behalf of the Democratic Members of the subcommittee

APPENDIX
    Material submitted for the hearing









(Footnote 1 return)
Aronoff Associates, Biomaterials Availability: A Vital Health Care Industry Hangs in the Balance, April 1997; see also Marvin S. Aronoff, Market Study: Biomaterials Supply for Permanent Medical Implants, 9 Journal of Biomaterials Applications 206 (1995).

(Footnote 2 return)
The Wilkerson Group, Inc., Forces Reshaping the Performance and Contribution of the U.S. Medical Device Industry, June 1995.

(Footnote 3 return)
See Edward M. Mansfield, Reflections on Current Limits on Component and Raw Material Supplier Liability and the Proposed Third Restatement, 84 Ky. L.J. 221 (1996). Another recent law review article reached the same conclusion regarding existing law but recommended that courts adopt principles more favorable to plaintiffs. See Mark M. Hager, Don't Say I Didn't Warn You (Even Though I Didn't): Why the Pro-Defendant Consensus on Warning Law Is Wrong, 61 Tenn. L. Rev. 1125 (1994).

(Footnote 4 return)
Crossfield v. Quality Control Equipment Co., 1 F.3d 701 (8th Cir. 1993); Childress v. Gresen Manufacturing Co., 888 F.2d 45, 49 (6th Cir. 1989) (''The obligation that generates the duty to avoid injury to another which is reasonably foreseeable does not—at least yet—extend to the anticipation of how manufactured components not in and of themselves dangerous or defective can become potentially dangerous dependent upon the nature of their integration into a unit designed, assembled, installed, and sold by another.'').

(Footnote 5 return)
See, e.g., M. Klem v. E.I. DuPont de Nemours Co., 19 F.3d 997 (5th Cir. 1994) (no duty to warn consumer regarding Teflon); In re: Silicone Gel Breast Implants Products Liability Litigation, 887 F. Supp. 1463, 1467 (N.D. Ala. 1995) (no duty to warn consumer regarding bulk foam).

(Footnote 6 return)
See, e.g., Kealoha v. E.I. DuPont de Nemours and Co., Inc., 82 F.3d 894 (9th Cir. 1996) (no liability for supplier of Teflon used in jaw implants).

(Footnote 7 return)
See, e.g., Suchomajcz v. Hummel Co., 524 F.2d 19, 22, 29 (3d Cir. 1975) (holding grant of summary judgment in favor of firework component supplier was improper, where supplier actually knew that its customer intended to use the component to produce illegal fireworks kits that would be potentially dangerous to children using the kits).

(Footnote 8 return)
Sections 5(b)(2)(C) and 5(c)(2) of H.R. 872 deal with the possibility that an insolvent manufacturer or seller might be related by common ownership or control to a supplier seeking protection under the legislation. If such a situation were to arise, a court could impose liability on the related supplier.

(Footnote 9 return)
See H. Rep. No. 101–808, at 14 (1990), reprinted in 1990 U.S.C.C.A.N. 6305, 6307 (recognizing that a determination of ''substantial equivalence'' involves FDA review of safety and effectiveness and may include clinical testing).

(Footnote 10 return)
Prior to 7/1/97, known as Hoechst Celanese.