Physicians Risk Lawsuits, Prison for Using Unapproved IUDs

July 29, 2010

July 29, 2010 — The issue of whether or not Congress should legalize the importation of lower-cost drugs and devices from Canada is no academic matter when physicians do the importing.

For them, the subject can turn into a legal and regulatory hell, with federal prosecutors, state health officials, and plaintiffs' attorneys stoking the fire.

Dozens of obstetrician-gynecologists (ob/gyns) in Rhode Island, for example, are on the hot seat for buying and implanting intrauterine devices (IUDs) from Canada that lack approval by the US Food and Drug Administration (FDA).

The physicians have already started to experience what has happened to ob/gyn Kelly Dean Shrum, DO, in Pine Bluff, Arkansas — a veritable test case for the importation controversy. Understanding his story requires a look at medical economics.

Ob/gyns such as Dr. Shrum typically buy the IUDs they implant in patients. If a patient is insured, an ob/gyn then bills the insurer to recoup what he or she paid for the IUD. It often is not a break-even proposition. When Arkansas ob/gyns, for example, implant a levonorgestrel-releasing Mirena IUD (Bayer Healthcare Pharmaceuticals) in a Medicaid recipient, the state reimburses them roughly $448 for the device. Ob/gyns lose money on the procedure because they have to pay $700 to $800 for the IUD, assuming it is the FDA-approved version, which is the only legal version to use in this country.

However, they can buy a Mirena IUD that lacks FDA approval from Canadian pharmacies for a little more than $200. By going with the less-expensive version, these physicians avoid losing money on the IUD procedure and instead earn a modest profit that subsidizes their care of Medicaid patients. After all, Medicaid programs across the country pay so little that many physicians turn away such patients, lest they go broke.

Conviction on Criminal Charges Could Mean Prison

The Canadian price break comes with a big risk. In June 2009, FDA agents found unapproved Mirena IUDs in Dr. Shrum's office — a discovery that triggered criminal and civil charges.

Last October, a federal grand jury indicted Dr. Shrum with drug misbranding, healthcare fraud (for billing the state Medicaid program for unapproved IUDs), and 3 counts of money laundering (for depositing money from an allegedly illegal activity in his bank account). Dr. Shrum faces a maximum penalty of 3 years in prison and a $10,000 fine for misbranding, and a maximum of 10 years in prison and a $250,000 fine for healthcare fraud and for each count of money laundering, according to federal prosecutors.

In addition, former patients have filed a class-action suit against Dr. Shrum in a state court. They allege that by implanting unapproved IUDs in them without their consent, Dr. Shrum is at fault for medical negligence, unjust enrichment, violation of the state's law against deceptive trade practices, and breach of fiduciary duty.

However, Dr. Shrum may not have the support of his malpractice insurer in the class-action case. That insurer, State Volunteer Mutual Insurance, sued Dr. Shrum and the class-action plaintiffs in an Arkansas federal court, looking for a declaration that it is not responsible for either defending Dr. Shrum or covering his damages, given the nature of his case.

"He Never Risked Their Safety"

Dr. Shrum, who is contesting the charges against him, did not grant an interview to Medscape Medical News, nor did his attorney, Charles Hicks. However, in a press release, Hicks stated that thousands of ob/gyns, orthopedic surgeons, oncologists, and other physicians obtain Mirena IUDs and other drugs and devices from licensed Canadian pharmacies. They do so to "legitimately reduce unnecessary healthcare costs that are greatly increased by pharmaceutical companies charging Americans the highest prices in the world for their medications.

"Dr. Shrum wants his patients to know that they are not in any danger and he never risked their safety," Hicks said. "There is no threat to the public safety, and instead, the only conceivable harm is to Bayer's profits."

He noted that all Mirena IUDs are manufactured in a plant in Finland. What made Dr. Shrum's IUDs "unapproved," Hicks said, was that they were purchased at a lower price than what Bayer distributors sold them for in the United States and were packaged differently.

"It is unfortunate that the government is using our criminal justice system to line the pockets of a multinational, for-profit company," he said.

"Identical" Products May Not Live Up to Billing

The issue of unapproved IUDs took center stage last week when the FDA issued a letter to healthcare providers warning them not to use such devices. In addition to the Mirena IUD, the letter listed unapproved versions of the IUDs Implanon (Schering-Plough) and ParaGard (DuraMed Pharmaceuticals), both of which have received FDA approval, as well as T-Safe (Eurim Pharm), which is not FDA-approved.

Patients are exposed to unacceptable risks when a product's "identity, purity, source, handling, and storage cannot be verified," writes Theresa Toigo, director of the agency's Office of Special Health Issues, in the letter.

The FDA contends that imported drugs and devices advertised as being identical to FDA-approved products may instead be bogus, unsafe, and ineffective. Even if the product is identical, it may not satisfy FDA requirements for manufacturing, storage, shipping, and labeling that were imposed as part of the approval process here. Patient information also may be in a language other than English — an allegation made by federal prosecutors about Dr. Shrum's use of Mirena IUDs.

In a statement issued to Medscape Medical News, a spokesperson for Bayer Healthcare Pharmaceuticals noted a variety of differences in Mirena IUDs approved for distribution in various countries.

"Only Mirena that is approved for sale and use in the U.S. includes FDA-approved full prescribing information and a patient information booklet, which includes a patient consent form with a specific lot number that becomes part of the patient record," said Bayer spokesperson Rose Talarico. "The lot number can help the company identify and communicate with specific patients in the event of important safety updates or product recalls. Non-FDA approved Mirena would not include this information and any information may be in a foreign language."

Talarico also said that there are product differences in the Mirena IUD itself from country to country, such as the length of the thread used to load the IUD into the insertion tube.

Rhode Island Health Department Cracks Down on 10 Ob/Gyn Practices

The FDA last week announced that it was investigating reports of physicians in Rhode Island and other states implanting unapproved IUDs. Even without the federal agency taking action against them, several dozen Rhode Island ob/gyns are in enough trouble as it is.

The Rhode Island Department of Health reports that 10 ob/gyn practices, including 4 group practices, have admitted to either purchasing or implanting nonapproved IUDs such as Mirena and ParaGard. The department estimates that 1 group practice alone implanted unapproved IUDs in 400 to 500 women.

The state health department recently ordered the 10 practices to, among other actions:

  • surrender their stockpiles of unapproved IUDs;

  • notify each patient who received an unapproved IUD;

  • turn over the names of these patients, along with their medical and billing records, to the state; and

  • turn over the names of patients who had an unapproved IUD taken out.

The state has referred all the involved physicians, nurse practitioners, and certified nurse midwives to their respective licensing boards, creating a chain reaction of governmental scrutiny.

Private insurers that reimbursed Rhode Island physicians for unapproved IUDs have their hackles up as well. Blue Cross and Blue Shield of Rhode Island, for example, told Medscape Medical News that it expects these physicians to return the fees they received and to assume financial responsibility for removing the IUDs from patients.

Meanwhile, several Rhode Island patients who received unapproved IUDs have taken a cue from their counterparts in Arkansas and filed a class-action suit against the 4 group practices identified by the state health department, 34 individual Rhode Island physicians, and 16 certified nurse midwives and nurse practitioners. The litany of accusations includes battery, based on the insertion of an unapproved contraceptive device without the patient's informed consent.

Physicians Did Hard Time in Bogus Botox Cases

Federal prosecutors have not filed criminal charges — and may never do so — against the Rhode Island clinicians similar to the sort Dr. Shrum is battling. However, the FDA has a track record for coming down hard on those who traffic in unapproved drugs and medical devices.

In 2004, for example, the FDA Office of Criminal Investigations looked into a case of 4 Florida patients who developed temporary paralysis after they were injected with an unapproved, cheaper version of FDA-approved botulinum toxin type A (Botox Cosmetic; Allergan) made in the United States. The dragnet spread across the country and by July 2008, the FDA had racked up 29 convictions of healthcare professionals who had knowingly treated some 1000 patients with bogus Botox. Most of these clinicians had misled patients about the authenticity of the product, according to the FDA.

A sampling of the convicted individuals posted on the FDA Web site includes 5 physicians, all of whom received prison sentences.

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