Theranos Aftershock – Lessons Learned & Regulatory/Investment Changes on the Horizon

so please put your hands together for David or more thank you brave well that's not something I've ever been called but okay I'll go with that so thank you everybody for joining today I am actually it's a my first time at 10x surprisingly I mean I've been doing this for about eight or nine years now and I for some reason I've never stumbled upon here which is a shame because it really is a fantastic conference so I'm really happy to be here I actually want to start a little bit you know I was actually talking to my grandmother believe in her MOT and I'm I'm really from Miami Miami Florida so not too different from San Diego except the people are worse probably no offense I'm from Miami I'd say that and really you know I think that's what's what's really hilarious is when I was a kid growing up you know Cuban grandmothers they're notorious for one thing I'm Cuban by my background my parents are Cuban from Cuba from Havana don't ask me how they feel about the Obama policy please feel of God but anyway so when I was growing up one of the biggest things that I would I remember on Saturday and Sunday mornings and draw it throughout the week was my grandmother watching these TV novellas they call these little soap operas right so you know the Americans have their you know young and the restless' and that type of stuff well in you know our family was Guadalupe and all these really you know unique sounding Spanish words and Spanish phrases and I was talking to my grandmother the night and it was about four or five days ago you know and I was getting ready to come over to San Diego and I said man oh well you know I think I think I'm presenting on the topic actually that's that's better than any novella that you've you know you've ever seen this thing is I mean it's a roller coaster of a ride and I it's not finished by any means and it's it's incredible the story of how we got to you know where we are with this their nose you know company you know full disclosure I actually wrote an article about a year ago fourth era nose defending the company so I actually was a still kind of am a fan of the technology if it works which is something we'll get into but I actually wrote an article defending the technology and defending the company of a year back and then what happened is I'll tell you honestly and I hope if there's people in from theranos in the room god bless you I really hope everything goes well for the company I really do but otherwise you know what happens is over the last year my faith has started to erode a little bit with continuous issues that have emerged continuous finding CMS violations their CLIA exemption status I mean all these different things have really started to pop up and I still hope really for the benefit of their investors the benefit of the technology and for me personally because when I see a needle I want to pass out so the first thing I'll do is who hasn't heard about thier nose okay who is an expert in the Thera nose case so I could stop talking to you okay good all right so we're gonna go through a couple things today we're gonna go through a little bit of an overview about the Thera nose story for those of you who are not familiar which is good so there's not a ton of you who are you know experts in this case so we'll go through how we got to where we are today with Thera nose and we'll go through as a quality and regulatory consultant you know I have to bring in the regulations to this right so we'll go through some quality and regulatory stuff towards the end but frankly it's stuff that's applicable to all of you who's in a medical device company yeah well mostly right so you're gonna have to learn this stuff anyway so might as well go through it in context of thier nose so with that being said let's just get started here so this is my one of my favorite sentences and it is so apropos to this right In God We Trust all others bring data right absolutely this is if there are notes would have kind of followed this this model I think we would be in less trouble than we are today however you know if you look at what their nose has been you know coming out within the press and Elizabeth Holmes and her statements you know they believe that that's that's the case and they might have valid data we just haven't seen the extent of it quite yet so who knows who this is trivia question William Deming sound of the sound familiar father of modern quality okay so he's very very good friend of mine not really good friend of mine he's I'm a little bit young for that but that's still he's a good good mentor a good guy so today we'll going over a couple things the good of Thera nose so what happened what is theranos if some of you are saying like you keep saying their nose with who the hell are these people right or who the heck are these people so we'll go through the good you know how they got to where they got the bad and the ugly and that's kind of all really think about it this way up until October 2015 everything was going swimmingly for this company I mean there was started to emerge some questions about the technology and some questions about the founders and some questions about the scientists but overall I mean that they were raising capital left and right everything was going swell and then October 2015 something happened that really caused a huge downhill and they've really been in defense mode ever since then we'll go through that and also what can we learn you know I think one of the big takeaways is we see other companies struggling we shouldn't applaud that we should really say hmm why can't what how can we prevent ourselves from going through those same issues and the key theme of that part of the conversation will be and this is kind of a surprise to a lot of people when I give this talk but the key surprise here is fairness is not the first company to go through this stuff in fact most of the violations at the FDA cited within their quality with their 43 deficiencies were really things that a lot of medical device companies struggle with now there are some potential allegations of fraud and that's not something that a lot of companies struggle with but overall in terms of just the quality system deficiencies or the quality deficiencies it's not something that's oh it's the first time in their world we've seen this but because of the press and the way that the press has tackled this story it really has become something that a lot of people are now starting to learn what a 483 is what a quality deficiency is and what do we new need to do to resolve them right who here has been through a warning letter or a43 remediation project not fun right so you know six-month project managers always say ah six months and we're out and then six years laters when it happened so yeah so this is Elizabeth Holmes in 2003 miss Holmes dropped out of Stanford University she was a chemical engineer I still regardless I'm a huge fan of her I mean I think that the things that she's done regardless of regardless of the company personally you know she's a very strong character she she presents very well she did a TED a TEDMED talk a few years back but I thought was fantastic so as a person I really actually admire her vision for this company in 2003 she drops out of Stanford biomed right social engineering program sorry she's 19 years old and starts this company at that point in time the company was not called Thera no it was called real-time cures and really the whole point of that company was to try to figure out how to extract a ton of information from a small pinprick of blood everyone has had a blood test you sit there for quite a long time and you get all these little vials filled up and we'll see a comparison you know her goal was to see how can we make that process more seamless so thorough notes wasn't even born yet but by 2006 there's a couple things that had happened by 2006 they had raised almost 15 to 16 million dollars right so that a Series A round in the series be around now the venture capitalists that raised that money are not what I would say our famous venture capitalists you know so the Peter Thiel's of the world they weren't part of this deal however you did have some pretty good backing from some several well-established VC firms as well as private equity and private equity was the reason that they ended up in this nine billion dollar valuation which we'll get to shortly but that's their nose they're our nose in 2006 several patents right a company just on the rise Elizabeth Holmes started to be featured in some magazines but really the period between 2006 and 2013 was kind of what they call a stealth mode there wasn't a ton of press there wasn't a ton of publicity there were a couple articles that had come out in 2012 they were all very flattering of Elizabeth and her and her talents and she was named top 30 under 30 it's not 40 under 40 all these different minor things that really ultimately didn't get picked up by the press until a little bit later on so the Thera knows promise for those of you are not familiar with the company the key takeaway is today to take blood samples for different tests you have you stopped you know you go to a lab or you go to a hospital or you go to your physician's office you hey you might have somebody come to your actual house and take out blood and that blood draw process is timely it's time-consuming it's extensive they have to take out three huge vials depending on the number of tests that you have it's pretty it's pretty intense and if you have a fear of needles one of the big issues with blood draws that has occurred over the last 20-30 years the issue is really that a lot of people who should be getting diagnostic tests don't end up getting diagnostic tests because of their fear of needles so Elizabeth Holmes who has a self-proclaimed fear of needles and grew up with an uncle who you know had several diseases that she wanted to help him get you know better access to came up with this technology or decided that there was this technology that was worth validating which was essentially collecting you know 1.3 centimeter hi vial called a nano Taner a nano container really tiny container worth of blood and being able to extrapolate any sort of tests of battery of about 50 or 60 tests in the beginning from just that one tiny single drop of blood so that was the key promise some other key aspects of you know this specific company pricing so one of the things that you get when you have smaller nano tanners is that you get to do you basically get a menu so her theory was you know instead of going to the doctor getting a prescription and saying hey go get this blood test her theory was it should be like a grocery store or you have a menu you say I want to know what my my potassium levels are I want to know what my vitamin D levels are I want to know what you know if I have if I could screen for this cancer if I get screened for this basically a menu of options that you would choose off the shelf essentially and some of these options were a price about one tenth or one twentieth of what they're reimbursed rates are on a normal you know on a normal basis so obviously this was a huge huge win for the for the industry so they got a lot they started receiving a lot of press starting about 2013 when that stealth mode kind of emerged from its cocoon so about 140 of these tests starting 2014 were under ten dollars so imagine you wake up one day you say I want to check my creatinine levels and I want to do it for ten bucks so I go I take you know I go to one of the Walgreens which eventually spa partnered with their nose and I take a little bit of blood and I get to take that and I get to check that out for 10 bucks not a bad deal right it's like going to I guess here it's Vons yes Vons and really buying you know something off the shelf so that was the Thera nose promise you know another thing was this whole empowering of patient so delivering the results right to you not having to get screened out through a physician this was really good the the patient empowerment movement was really emerging and you know 2005 2006 2007 and that continued with the Thera knows promis they basically wanted to make sure you had access to everything and B you had transparency to everything before you actually underwent this test so very promising right I mean if this if this comes to fruition who would who would be a huge fan of that option I think everybody right that's a really big thing so this is an example of their blood test catalog so you see things like for example adenovirus DNA $29 albumin so that's a that's usually reimbursed at $30 at something that was three dollars and 37 cents so they basically had this test menu where you can theoretically go select your tests and call it a day and this is what the Nano tainer looks like their theory or their claim to fame was one tiny drop changes everything and again it's a one point two nine centimeter container how does it compare to other ones well this is what it looks like right so if you look if you're doing a blood draw and again I just got my blood drawn two weeks ago you know I'm not a huge fan of needles but because I'm big bones um I often cannot get you know a needle draw through here I often have to go through over here and it's quite painful it's not you know it's not fun so for me when I saw this originally a few years ago I was like man this is awesome I hope this I hope this pans out because sitting there while the lady's trying to stick me 900 times and say sir yes your patient profile is difficult to get this and I'm like yeah okay fine I'm fat I understand okay so anyway so that's what you know that's what this technology ended up you know looking like now although other good things started happening the company started booming in 2013 walgreens filed some partnerships with them at one point they had hundreds of centers that were about to be open and the goal is really you'd be out of Walgreens you go do this quick draw and you get your results I mean it was really kind of just like there's like the MinuteClinic theory for some of these other health care remedy or healthcare maladies the thoroughness approach was the same thing but for blood containers so that's really where they you know started to emerge as a very very promising company at that point in time there was also a private equity firm that committed almost 400 million dollars to this company at that point in time Elizabeth Holmes became the quote/unquote richest self-made billionaire in the world and basically you know at that point their valuation was nine billion dollars almost eight billion dollars nine billion dollars depending on what term she look at but more or less an eight billion dollar company which funny enough in an article in Wired magazine the first cracks in the Thera nose case started emerging they started saying hmm well this is a nine billion dollar company we're trying to look for peer-reviewed journals about their technology can't find any okay find some companies like to operate in stealth mode where they're very secretive they wanna you know they don't wanna release anything so let's talk to some experts in the field they surely must understand how this works no experts in the field understood how it works okay fine so let's talk to regulators regulators definitely understand how this works right so they're the ones regulating them no regulators refused to them all regulators refused to speak on public comment regarding thier annals and similar technology so this Wired magazine article started you know there was a couple of questions that started emerging fairly late in 2013 about this technology some of this also came from the two big players in the market so quest Diagnostics LabCorp 90% of you probably used them for your blood test they represent about 20% of that overall lab market right the other 80% are in hospital the physician visits all that stuff but 20% of a huge market so you can imagine that they started raising their own questions as well which is interesting so at that point in time again they were an eight billion dollar unicorn everybody familiar with the term unicorn it's a company that's evaluated over a billion dollars right a lot of these unicorns it's a derogatory term because they end up going bust at this point in time again a billion I wanted I want to keep emphasizing that eight billion dollars nine billion dollar valuation that means that people out there that were investing in this company without having valid data supporting the theories they were able to put this price tag on this company now one thing I failed to mention that's very interesting to know is that the only way that this company theranos claimed they can do their testing on that one droplet of blood was through a proprietary testing mechanism called Edison it was basically their own certified validated system that was able to take this small blood drop and it's the only system in the world that could have extrapolated all these different dozens of tests within that one drop and that left a lot of scientists scratching their head saying man that is fantastic your patents don't really enable this technology so if that's the case I'd really love to see how this works let's see some peer-reviewed studies radio silence so keep that in mind 2013 2014 Elizabeth Holmes becomes a rock star she's a legitimate health care rockstar if you've not seen this face before I'm surprised you probably are on Facebook too much so please get off and look at your industry so fortune inquired Forbes funny enough one of the one of the best articles that emerged about Elizabeth Holmes one of the most flattering was from The Wall Street Journal and for some of the for some of you who are familiar with this story you'll find out what that's kind of ironic but Wall Street Journal featured Elizabeth and one of their articles and again very flattering praised everything was you know peachy keen perfect right and I'm trying to find one quote that I love particular that I'm going to save for a little bit but anyway so 2014 2013 she's getting featured on these articles Theron else is blowing up they sign additional investors they sign additional Safeway is another area where 800 clinics are starting to get opened up for them to do their tests I mean this company is just booming and then just when they were starting to get some what they call haters in the field right FDA clears one of their tests so they basically slammed it and everyone's face saying ha you see that FDA cleared one of our tests using the 510 K mechanism which is a very stringent and complicated and world-class mechanism okay so that's that's there okay so they got FDA clearance everything was going well then this guy shows up anybody know who this is John Kerry yep so four months John Kerry from The Wall Street Journal had been calling again let me just be clear a lot of this is alleged right because you cannot fully vet just like they haven't validated technology necessarily I can't validate some of this stuff it's all hearsay right but he claims that for many months he was requesting an audience with thier nose he was hearing rumblings in the back about how some of this technology wasn't valid he received some you know some whistleblower cases some whistleblower information from some disgruntled ex-employees there was a lot of you know smoke that was starting to emerge about this company that it really couldn't do what it claimed to do so John pursued this consistently over over five six months gave them several opportunities to answer and he basically indicates that they never never answered so basically the bottom line here is per his side of the story Elizabeth Holmes would take every single opportunity she could as well as the rest of the fairness staff to go into flattering pieces to do featured articles where was flaring about them however when it came to his article which was questioning their technology a little bit and at that point he indicates he wasn't planning on doing this destruction piece he just wanted to get some clarity and actually help them because again wall journal was helping them get out you know into the public they were doing a good service for them so he his goal was just say hey can we just refute these things real quick and that way you know you guys have a smooth sailing some people on the other side say that he had a vendetta who knows but long story short he ends up publishing an article on October of 2015 which really represents I hope not the death knell but really the beginning of the end for thier nose if they end up being an end I hope not because the technology is so cool and so novel that it does I do hope it becomes validated but this was really the cascade of the of that that's negative spiral that happens over this last two years right or this last year sorry so the article is entitled hot start up their nose to struggle with it's blood test technology seems simple enough right nothing nothing too crazy it's just saying hey they've struggled some with technology but some of the things that emerged from that article were very very interesting the first thing was that several disgruntled employee said hey you know that Edison machine that we're supposed to be using to test our blood containers we use it for less than 10 percent of our tests we actually use off-the-shelf stuff from Siemens and from Roche to do our analytical tests in our lab so that started seeing merge as an interesting comment from the gruntled employees obviously ther enosis pushback was there disgruntled employees they want to just you know they want to get back at us so that was one of the themes that started emerging their thing I started emerging is that their knowledge of regulatory compliance and quality practices were fairly deficient and that will come to light here in a few minutes but basically at the end of 2014 and by that time the article was published it was clear that there were some issues with the way that you know Thera knows was conducting their tests now they never disclosed publicly before their fundraising that they were doing those tests with non Edison machines with off-the-shelf machines so you could imagine why that would be an issue right if you're claiming that you can do a specific test or you can do something new that the industry cannot do by extrapolating you know by extracting one drop of blood testing using a proprietary Edison tool and basically coming up with results at a lower cost yet what you're actually doing is extracting that blood diluting some of the samples and sticking it into and again allegedly diluting some of the samples and sticking it into you know off-the-shelf analyzers then your technology isn't really validated so that's what was emerging now a lot of this was happening in parallel while Elizabeth Holmes was still building her brand in fact before this article came out there was a two hundred million dollar pledge from an investment group that was supposed to come out and it never emerged because of all these issues so that was something that I think really did not did not bode well for the company now what this happen what happens is that when you have this phrase on your website one tiny drop changes everything and now it's really maybe because we're not sure a couple things ended up happening they did a company did a gap analysis essentially of Thera noses website pre october 2015 and post october 2015 and found seven major changes within the website and a lot of it was what do you think the changes were anybody give me one example of a change in verbage or text sure but yep making the language more vague what else yep so that language that vagueness also started saying basically claiming that they could do things without or they they could potentially do with Edison Edison was one way of many to get the samples a lot of different redactions from their website that really came up you know during this timeframe so as you can imagine Theron Rose fired back ton of ton of back and forth studies were finally released by a lot of these labs that had been saying that ther enosis test data was not valid one of the biggest difficulties is so remember I told you that most of their tests were not conducted on their Edison machines so the ones that were conducted on their Edison machines had significant differences between those tests and tests that were done at typical laboratories or traditional laboratories so you can you can obviously tell that this is a major concern right if you're getting a lab test for alkaline phosphates and your your test with Thera notes is significantly different than the tests you get you know in a clinic that can drive a different diagnosis decision so that's very much a uninvite the test is not getting you results that are actionable by a physician so this again was the biggest reason that their analyst was again becoming under scrutiny now Thera knows had an answer for all of this so in full transparency they do have an answer for absolutely everything that I've presented so if you're interested in that go to the fairness website there's some information there do your own due diligence bla bla bla but long story short you know having done this for a bit there was some stuff there that was a bit questionable so but full transparency they they have been able to answer all of these allegations not successfully because you still don't find one big person you know or well-known physician or well-known diagnostic expert defending them however this is the case so more importantly just this year in January 2016 CMS found significant quality deficiencies with one of their with several of their labs and in fact to the point where they were they're potentially revoking a lot of their tests so that they do not get Medicare coverage which is a hue which would be a huge blow for this company so CMS got involved FDA we haven't talked about da yet but all these different agencies New York Health Department got involved a lot of these different agencies started basically coming up with independent inspections and reports about how thier enosis tests were invalid and this was the most recent piece of news and this was just this month where fairness founder Elizabeth Holmes was under consideration for being banned now whether this happens or not you know if I had to guess I'd say it probably would not happen unless they don't resolve their deficiencies in a timely manner however one of their biggest issues has been when they get a deficiency notice they have not been able to respond in a timely manner so their CMS deficiency had 10 days for response you know the FDA when they issue their 483 is they had several you know a time frame for response you know whenever they get whenever they get asked for peer-reviewed journals by an independent publication or independent organization entity they have X amount response and they usually have failed to respond in a timely manner so you know this is what we're gonna focus on the rest of today because this is our world right we live in FDA world and anybody in an IVD company or a diagnostic company okay so you guys know that me know medical devices include IV DS per Section 201 H the Q s are the Code of Federal Regulations and this is our world we live under FDA so we dinner we kind of skipped over the FDA aspect of this remember FDA cleared ther Knossos product right you saw that clearance I didn't make that up they cleared it but we're gonna get to why that's very important in October 2015 not only did this Wall Street Journal article came out but boom perfect timing FDA shoes to 43s everyone familiar with what our 43 is basically systemic deficiencies within your quality system in your facility so this was issued and what I'm gonna go through is really some takeaways from these 43 s that we can learn about because a lot of these 42 fuse again are not new so let's go through some of them there's fact and fiction in this theros case study the fact is that there are systemic issues issue that there knows it's clear some of the stuff is very basic you know how can a company be valued at nine billion dollars without having a post market surveillance program right that's that's like a very basic parts of medical devices that's in special controls you're doing a 510 K you get post market surveillance you probably learned that yesterday in the 510 K workshop so really that's effect you can't deny that right the fiction is that these are unique or first seen with their nose in fact if you look at their different types of deficiencies design control complaint files kappa and regulatory deficiencies this is the FDA trends and warning letters and 43 s over the last you know few years 2011 2015 okay so you see kind of some common hitters here design controls kappa complaint files god if companies ever figured out how to do complaining kappas and design controls i'd have no job so you know please please pay it don't pay attention to this right now go back to sleep so this is the common recurring theme in medical device companies i'm gonna highlight in red which ones their nose had issues with okay at least they received their stuff correctly that's good so that's that's interesting alright but you know can you can you tell that a lot of these issues are not issues quality system deficiency that just their nose has a lot of companies do i mean again you know i say i jokingly but a lot of our work that we do is fda remediation work so we go to companies that have these issues and fix them right so it's it's common it's not a matter of when if it happens it's when it happens in fact if you look at some of these kappa complaint files design control production process controls are not on here but process validation is another you know recurring issue with companies it's also part of the quality system inspection technique from fda so quality system inspection technique for those of you might not be familiar is basically the FDA's manuals to its inspectors on what are the big focal points of the quality system and it lists five different sub parts guess what some of those are kappa complaints production process controls design controls they're all there right so it's not just companies struggling fda acknowledges that these are some of the most critical aspects of being a medical design developer so let's go through some of these observations or deficiencies and see how can we prevent them how can we avoid them the first one design validation did not ensure that the device conforms to divine defined user needs intended uses so what's really difficult here is is the right product being built now in context of what you heard for design validation maybe you don't know exactly what a 20 30 says about design validation right do you think that their design was validated okay we don't have exposure to their public to their private records but from what it looks like from the public again allegedly their design was not validated properly it didn't show that it can actually extract that blood and do those tests in a way that was comparable to a laboratory test remember they were cleared using the 510 K mechanism thus they had to prove substantial equivalence to some other test lab tests and you saw in that previous comparison when they were put up in independent tests versus a typical lab test they failed right so just by that they were not able to meet their intended use their indications which in this case was to diagnose certain disease states certain molecules certain entities using their technologies so in that point their design was not valid one of the things to do when you have this type of issue and one of the things that I find always when a company gets cited under a 2030 for design validation is that they fail to separate you know what their intended use what their indications say versus what their technical requirements are they seem to kind of bucket that all together and put it into one document into one area and one of the things that we try to do as companies is make sure we identify who those stakeholders are who those users are those users can be the patients the physicians it all depends and those are really what the FDA considers concept documentation per their FDA guidance right so those are that's kind of the first step understand how your intended use is translated to these user needs because ultimately that design validation is going to be performed against these needs so that's one of the first things that you can take a look at within your company is do we do a good job of distinguishing between technical requirements and some of these higher level conceptual requirements that the fda calls concept documents so that's one of the things to consider and the easiest thing to ask yourself is are you going to go to a doctor and the doctor is gonna say you know hey I want a catheter that has a tensile strength of 10 Newtons you know they're probably gonna say hey this thing probably shouldn't break right because we don't want to kill our patients that's that's something say user need and that's what'll be so that's something that will be validated through design validation translating those into technical requirements into design input requirements is that second step right so for example if theranos had an IV d if an annotator and that nano Tanner was supposed to you know keep a certain volume that might be a technical requirement the user need the corresponds to that might be hey we need sufficient volume to do these tests all right so you go high level lower level more in detail and then design validation itself benchtop testing clinical trials usability studies simulated use testing it didn't seem that Thera nose really was able to demonstrate to fda that they did a lot of those things that's typical design validation so really that's why they were cited under that observation one of the key things for design validation is to perform these tests under simulated use conditions so thoroughness was cited for not performing their design validation testing under simulated use conditions what that means is you could imagine if you're doing a assay this actually happened to me once we were performing we were doing an assay for combat zones and within the test plan the combat zones were in Afghanistan and Iraq so what do you think is something that might be different about those environments versus Minnesota where I'm currently from temperature right so if I test this if I use this assay outside which this assay in particular was used outside often within negative 20 degrees which unfortunately is my reality for several weeks do you think it would it might give the same results as if you test it in 120 degrees Fahrenheit maybe but we don't know so we had to evaluate that right so that's simulated use conditions and sure that when you're doing your medical device development you do that and you obviously heard of some of that yesterday you're just kind of driving the home point the point home now the other thing that companies fail to do and fit there in those fail to do this as well is to perform testing on what's called production equivalent units production equivalents is essentially you ask yourself this question hey the stuff that I got on the market and it's gonna go to market is it the same stuff that I used to test for design validation and to submit to FDA those results with and if your answer is no or you can't really justify why they're equivalent that's why you're going to get cited for that part too observation okay so how do you do that you could do a BOM gap analysis you look at your bill of materials they're the same product no then why is it why can I say that you know this material that was used for a design verification validation is quote-unquote production of equivalent well has the same tensile strength it has the same you know material makeup it should perform the same as the one that we're gonna go to commercial with fine cool use environment again there's a new standard that came out I see 62 3-6 6-1 it's a usability guidance it's something that everyone should be aware of when you're doing your testing make sure that you do human factors and that really shows that you're considering the use environment so all this was part of what Thoreau knows could have done to avoid that issue and designed input requirements were not adequately documented we talked about design input requirements a little bit but basically they didn't define the product fully so what that could mean is that in this case they didn't translate those user needs into those more technical requirements as this observation claimed this is a big aspect of the observations who-knows-what 4971 is you guys probably all know right you guys are all experts in it okay using a consensus standard or consensus recognized standard by FDA or an EU you know just a harmonized standard is a really good way of showing compliance to risk analysis right so how do you assess and determine which risks are acceptable have you done risk benefit analysis one aspect of risk benefit analysis which is part of risk analysis is hey what's out there that does these same tests right it's a it's a it's a comparison alternate therapies in this case they're enosis alternate therapies would probably be the Diagnostics being run at different clinics right so they would be they would want to say why is ours better or as you know as good essentially as those so that's part of the risk analysis it's really understanding what are the potential design issues within your product and what are the risk associated with them and that's part of the things that they didn't do now another observation that they had here was documents were not reviewed and approved so this is one of the biggest things with startups right it's document control getting things signed off changes getting you know issues getting design changes process changes you know who approves them how do you demonstrate that you signed off on them some companies use manual processes some companies use enterprise quality management systems right so all these different types of Grand Avenue greenlight guru all these different platforms that you can use to do document control Thera knows failed to adequately document that their documents were reviewed and approved by somebody so essentially if Elizabeth Holmes were you know having a bad day and she said you know what I wanted to I want to change the way this process work she could have walked in there changed the process and it never would have been approved by somebody so that's what document control does you know within your quality system and that's one of the things that they were cited for with document control having a dedicated document management system is the key to prevent those type of observations right so it can be manual but a lot of times you have an e QMS solution that can help you you know figure out electronic signatures electronic records maintain them get them approved by the right people there's always help in that type of solution so this is one solution that I like to use called green light guru but basically you can kind of put all your stuff into one platform and say hey you know I got a I got a couple documents routing for approval right now we can make this design change until we get the VP of quality the engineering manager and the VP of clinical labs to approve this so that's one of the ways that document control can be effective within your company so you don't get those type of observations that their nose did another observation here devices for which listing is required have not been listed so this was their nano tainer remember how I said FDA cleared their product remember I remember okay so here's the thing if you look at the actual clearance letter I'm gonna read it here Thera knows today announced that it has received the US Food and Drug Administration's clearance of its test system and test for herpes simplex one virus okay why is this important if I'm a company and I say that I have a hundred and fifty types of tests that I conduct using this one single drop and I got FDA clearance for herpes simplex am I allowed to now use this product for the rest of the hundred and forty nine tests who says true who says false well good you guys are smart you guys all ten of that workshop yesterday so I'm sure you guys are experts in this now but basically yeah this is this is what happens so regulators were claiming hey hold on for a second we cleared you for herpes we did not clear sorry that sounds really bad we cleared you for her business we cleared your product for use with her visa flex not all of these other things that you're saying if that's the case you either have to do two things right you have to test you have to validate each one of those test individual individually or provide some sort of rationale or strategy that look thirty of these tests we're doing one test and it's you know you know it's comparable to these rest so those all are validated but they didn't even do that and obviously there's been several FOIA a Freedom of Information Act request for the the response but long story short intended use within your 510 K is critical right so if your indication or your intended use in this case is for this specific disease state for diagnosis you're not gonna be able to leverage that for the rest of your test so that was one of the keys that you know Theron Rose got in trouble for clinical rationale as well so this is a really interesting case that they came on in Scientific American we're a huge panel of different physicians and laboratory technicians as well as you know PhDs in them in the matter in the subject matter said who told you or basically saying that there are no theoretically I said who told you that blood taken from your finger is different than blood there is is the same as blood taken from your you know from veins right from other veins and their argument was there are a lot of molecules that you can draw analogous conclusions from if you pinprick versus you know systemic blood however there's a lot of proteins lipids and other molecules that you cannot so basically they this panel came out and they said we have been asking for information for years we've never received information you guys must have this I'm paraphrasing you my guys must have this phenomenal like New Age technology that allows you to basically extract 150 type of tests from your finger and that's really not the case so that was one of the big things that came out long story short when you're developing a test or you're developing your indications and your intended use you should have clinical rationale for that I mean I know that sounds like a duh but you'll be surprised at how many times a company will emerge the technology and they won't defend their clinical rationale for selecting that technology that's I'm gonna keep in mind okay so complaints long story short this observation was hey you guys have no way of looking at complaints you guys don't assess complains you don't have a formal post-market program now post-market program is part of being a class ii device so whenever you kind of upgrade in classification per fda right so you start with class one you end up in class three the type of controls you have to follow also increase in class one you follow general controls that's things like listing your product you know make sure that you're not miss branding or adulterating your product kind of some very basic you know you have to do this as a medical device manufacturer as soon as you happen to class to and you designate yourself as a class two device that requires a 510 k you're gonna have to follow something called special controls and that includes a little bit more detail but not something that a nine billion dollar valued company should not have invested in so we'll talk a little bit about what that is for general controls here's a couple things that you need to follow as a medical device manufacturer the first one is adulteration misbranding device registration and listing what was that observation what did it say you failed to register and list one of your medical devices that nano tainer because again that nano trainer you said works for this this specific disease state but not for all these others so frankly that's what's considered and misbranded or adulterated product a product that is found to be deficient for its quality system and not really meeting its intended use that it was filed on so those are three things that Thera knows even under general controls did not comply with so that's a huge issue right under special controls that observation that I told you the no complaints program they did not implement a post market surveillance program so what that means is once you get your product to market you have to have a unit or at least a designated individuals who are responsible for collecting complaints customer feedback and assessing whether or not they're critical or they're high-risk enough which in this case they didn't have proper risk analysis so we've been tough anyway but in this case you really have to do that right that's part of being a 510 K cleared product having that post market surveillance program patient registries performance standards special labeling requirements all this was stuff that they got clearance on for one but when it came to their quality system inspection they failed some of the quality system regulation requirements and one of those was post market surveillance so another thing is that kappa right corrective and preventive actions were not documented so who knows what capita is who deals a cap on a daily basis so long story short when you get bad info or you get info about potential quality system deficiency or product efficiency or other not type of non conformance you have to evaluate it to determine whether or not you need to take any sort of corrective actions to address it and then preventive actions to make sure it doesn't happen again it doesn't recur right but however preventive action also includes or actually specifically is looking at other areas of your quality system of your products to determine to make sure that this doesn't happen this type of issue doesn't happen again so that being said you know Kapla is a lot of the work that we do in remediation and there's a couple things that I usually recommend for CAPA that you have to have in place which is the easy way the easiest way to defend yourself within an FDA inspection or notified body audit the first thing is an escalation process so a lot of people say hey you know what everything is a CAPA you know everything requires corrective action every non-conformance needs to be escalated that's not true in fact if you look at the two types of guidance that I'm going to look I'm gonna I'm going to show you long story short with corrective actions and preventive actions the actions you take should be commensurate with the risk of your product okay over the risk of the issue and we'll go into that a little bit here but here are some things that might trigger you to have to implement a corrective action or preventative action is it a high risk has it happened again so if something happens over and over and over again and you don't fix it what does the FDA think well you really don't you don't have good management controls over your system your quality system is deficient because you don't address this thing that keeps happening over and over again so doing trend analysis saying hey you know this specific issue has happened multiple times that's something that might trigger a Kapo now if you look at this type of guidance if some of you are not familiar ght F global harmonization task force they're not called something else I am I am DRF sorry they change like every ten years but basically their guidance suggests that the manufacturer should process corrective actions of preventative actions commensurate with the significance of the nonconformity so one of the key things that your companies your take away from this from all this hubbub basically is not every single type of non-conformance needs to have that corrective action issued you can trend it you can track it you can determine by risk whether it's critical this is something that's in that guidance as well as the a the Amy quality system companion which is a manual that I love to use it says the same thing the potential non-conformance escalation should be appropriate for the magnitude the problem for their risks encounter now a lot of these problems that tharros is encountering a lot of those are probably internal capitals right if they keep getting post market complaints at this Wall Street Journal article these other inputs those are probably Kappa worthy things that are higher risk to the company high risk to the product they should probably escalate those and I'm going to skip over a couple things in the interest of time this is just a kind of escalation criteria you take all these different inputs from audits complaints reviews service and you basically determine if you need to escalate those non performances into your campus system for improvement so I have to skip a lot because I have some time left and obviously I don't know how to control my time so we're gonna skip through a couple other things purchasing controls and quality audits are things that they got in trouble with I'll send you these slides so you can take a look at it the last thing I'll talk about though is is this which is management responsibility so one of the things with your quality system is your quality system grows right when you're a small company you might have a tailored quality system that's lean that focuses on the mate on the four major sub parts production process controls kappa complaint files design controls right as you grow as you become a nine billion dollar valuated company you might want to implement a more robust quality management system and that's part of what this aspect of the quality system regulation or subpart G under subpart B really talks about how does management determine whether your quality system is suitable and effective that's done through management reviews audits and other internal and external influences so when you're looking at suitability is the quality system appropriate for our company you know one thing that Thera knows could have done is if they're doing a management review they could determine hey we just got a bunch of 43's from the fda CMS is on us we probably have to determine whether we have some quality system deficiencies that we need to address and in fact one of the responses did indicate that they're gonna address them effectiveness are we meeting our quality policy and objectives interval and frequency how often do we need to look at our quality system let me ask you a question if I'm a class one dental floss manufacturer am I going to take a look at my quality system more or less than Thera notes we just got to 43 years what do you guys think yeah right so my manager view might be once a year right or once a you know once every two years if you will once a year is usually the minimum right is the minimum but Thera notes might be doing quarterly management reviews right now right because they're getting such negative publicity and negative issues with their it with their with their products so that's one of the things you want to consider when you're doing management reviews last but not least one of the key takeaways is anybody an investor in this room okay so one of the things that I do that I really enjoy it as my and my job is doing due diligence for companies for investors who are looking to you know to put money into company if any of these you know investors who would have looked at their nose prior to their investment 2014 or 2013 would have done a little bit of digging they would have realized that doing quality and regulatory due diligence is a critical aspect of this process it's understanding what's their regulatory path how their quality system looks so that they don't get to this this October 2015 timeline and basically everything hits the fan so one of the things I very much encourage you if you're an investor or even if you're a company looking to get investment have an independent due diligence strategy with somebody hire a consultant hire somebody an intern only hire one of your board members to do this assessment so that you prevent these type of issues like fairness went under so and last but not least can fairness come back 23andme is personal genomics personal gene health company they got cited by the FDA a couple years back now 2013 as well the key difference is they're now selling their director consumer kits after resolving their issues resolving their deficiencies validating their product it's not analogous quite quite analogous but it's very similar because they basically were questioned on hey do we want everybody to have access to this data and as the data you're providing valid they underwent a two or three year remediation effort and I just actually ordered my 23andme kit a couple months ago I'm still waiting for the results so it's something that companies can come back from they didn't get hit as hard from the press but you know the key takeaway here just to end is basically if you're gonna get promoted in the press especially by the tech press you got to be able to alert learn to live and die by them you get brought up by them you're gonna get crashed down by them as well so you got to take the good in the bed yep and that's kind of the takeaway here right so when you raise nine billion dollars make sure you have a quality system that's robust so David you are a very gifted speaker you're a gifted speaker a brave speaker thank you if I end up dead tonight you know where to go no but don't leave the podium just yet while we're out of time I do want to ask one question you mentioned one of the things that you do is you help companies do due diligence before investing yeah a quick plug for yourself what else might we hire you as a consultant to do for us so right now the focus of our practice if ik practice is I do a lot of work in combination products so 505 B twos are kind of our preferred mechanism it's basically a combination product drug in a device which who regulates it from FDA depends on that primary mode of action is it primarily a drug or primarily a device when you stick them both together you basically submit to the FDA branch that is that mode of action so we do a lot of that work the regulatory strategy quality system strategy as well as other regulatory and quality stuff which I won't bore you with because you're you know probably gonna fall asleep so okay thank you David or more thanks everybody nice driver you

Channel: MedicalMarcom

Views: 112,333

Keywords: medical device, medical devices, david amor, Medgineering

Id: T27bRljaxsM

Length: 50min 59sec (3059 seconds)

Published: Mon Aug 01 2016