More device shortages pegged to sterilization plant shutdown

Cardinal Health’s Accu-Trace intrauterine pressure catheter (Image from Cardinal Health)

More medtech companies are experiencing shortages of medical devices due to the sudden closure in February of a Sterigenics sterilization plant.

Officials from Cardinal Health (NYSE:CAH), and Guerbet (EPA:GBT) have written letters to customers indicating that certain devices are already in short supply or may experience shortages, Medical Device & Outsourcing has learned.

The letter from Cardinal Health (Dublin, Ohio) said that the company expects a shortage of its Kendall Accu-Trace intrauterine pressure catheter until early August. This device is placed inside a pregnant woman’s uterus to monitor uterine contractions during labor. The letter from Guerbet (Villepinte, France) said that disposable power injectors used with its Optistar, Optivantage and Illumena contrast delivery systems may experience shortages. Officials from those companies did not immediately respond to requests for comment.

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EO plant shutdown leads to pediatric breathing tube shortage

Smiths Medical Bivona tracheostomy tubes are in short supply, according to the FDA. (Image from Smiths Medical)

The February shutdown of an ethylene oxide (EO) sterilization plant has produced the first temporary medical device shortage, according to the FDA.

The device in short supply is the Bivona tracheostomy tube manufactured by Smiths Medical and used by many pediatric patients. The FDA anticipates the tube will be made available again the week of April 22, according to a statement from Dr. Jeffrey Shuren, director of the agency’s Center for Devices and Radiological Health (CDRH). The state of Illinois ordered the shutdown of the Sterigenics plant in Willowbrook, Ill. due to emissions of EO, a highly carcinogenic chemical compound.

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Johnson & Johnson closes Auris Health buyout, sterilization biz sale

Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) said yesterday that its Ethicon biz completed its $3.4 billion acquisition of robotic surgery dev Auris Health and the $2.8 billion divestiture of its Advanced Sterilization Products to Fortive (NTSE:FTV).

Redwood City, Calif.-based Auris Health, which was created by Intuitive Surgical (NSDQ:ISRG) founder and surgical robotics pioneer Dr. Fred Moll, developed and produces the robotic Monarch platform which has FDA clearance for diagnostic and therapeutic bronchoscopic procedures.

The Monarch system features a controller interface for navigating the integrated flexible robotic endoscope into the periphery of the lung and combines traditional endoscopic views with computer-assisted navigation based on 3D patient models, the company said.

J&J said that Auris’s platform will complement technologies it currently has in development with Verb Surgical for robotic general surgery and the orthopedic platform it obtained when it acquired Orthotaxy.

“We are focused on building a connected, data-driven digital ecosystem that pairs our market-leading surgical solutions with advanced technologies to improve the patient experience. The passionate team and differentiated innovation from Auris will help us amplify the power of digital surgery to address unmet clinical needs and lead a transformation in surgical care and lung cancer intervention,” J&J medical devices worldwide chair Ashley McEvoy said in a press release.

In a separate announcement, the company also said it sold its Advanced Sterilization Products biz to Fortive for a total of $2.8 billion, with $2.7 billion in cash from Fortive and $100 million in retained net receivables. J&J said that the ASP biz had a net revenue of approximately $800 million last year.

The ASP division includes capital, consumables and software for use in low-temperature terminal sterilization and high-level disinfection of reusable surgical instruments, the company said in a press release.

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Sterilization plant closures: Here’s why you need to care

(Image by Jose Fontano on Unsplash)

The recent shutdown of a Sterigenics medical device sterilization plant in Willowbrook, Ill. has affected medtech giants such as Becton Dickinson (NYSE:BDX), Boston Scientific (NYSE:BSX), Medtronic (NYSE:MDT), Smith & Nephew (NYSE:SNN) and Stryker (NYSE:SYK), according to an FDA list of devices processed at the sterilization plant.

Medium-sized and smaller firms, including Teleflex Medical (NYSE:TFX), Arthrex and ArthroCare also had devices processed there. The Willowbrook plant sterilized 594 types of devices, including sutures, clamps, knives, stents and needles. With a Viant sterilization plant in Grand Rapids, Mich. slated to close later this year, the FDA is warning of spot shortages, and smaller medtech companies may be the hardest hit.

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Another medtech sterilization plant will close in 2019

A second medical device sterilization plant is slated to close this year, prompting the FDA and medtech manufacturers to scramble for replacements.

The FDA warned on March 1 about a potential medical device shortage due to the recent shutdown of a Sterigenics plant in Willowbrook, Ill. linked to emissions of the highly carcinogenic chemical compound ethylene oxide. The Willowbrook plant sterilized 594 types of devices, including sutures, clamps, knives, stents and needles. The FDA said it isn’t aware of any device shortages attributable to the Willowbrook facility closure but that existing supplies could be diminished or depleted, leading to spot shortages.

Later this year, Viant will close a plant that uses ethylene oxide to sterilize medical devices in Grand Rapids, Mich., because, as it told nearby residents in an undated letter, “that work is not part of our core business.” The Viant plant sterilizes 46 types of devices, including catheters and surgical mesh, according to the FDA. Viant had self-reported an ethylene oxide leak to the Michigan Department of Environmental Quality (MDEQ) in 2017. The department issued a violation to Viant then and another following an MDEQ inspection in November 2018.

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FDA warns of potential medical device shortage following Sterigenics plant shutdown

FDA-logo-newFDA is warning of a possible shortage of sterilized medical devices — and an accompanying threat to public health — due to the recent shutdown of a Sterigenics plant in Willowbrook, Ill. linked to emissions of the highly carcinogenic chemical compound ethylene oxide.

Agency officials believe that more than 100 medtech manufacturers and hundreds of devices may be affected by the shutdown. The Illinois Environmental Protection Agency issued an order Feb. 15 to stop the facility from sterilizing medical and other products using ethylene oxide, after the U.S. Center for Disease Control’s Agency for Toxic Substances and Disease Registry concluded that “an elevated cancer risk exists for residents and off-site workers in the Willowbrook community surrounding the Sterigenics facility,” referencing a “30-fold increase in cancer potency.”

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Stericycle, investors agree on tentative $45m settlement over fraud charges

StericycleStericycle (NSDQ:SRCL) last month agreed to a tentative settlement with investors who brought a putative class action against it over allegedly fraudulent business practices.

The agreement follows a similar, nearly $27 million settlement approved in February 2016 of a whistleblower lawsuit that accused the Lake Forest, Ill.-based medical waste disposal firm of overbilling federal and state governments. Both suits alleged that the company imposed price increases of up to 18% on its customers, in violation of the False Claims Act and its own contracts with the customers, according to court documents.

The purported class action suit, brought in August 2016, accuses the company and its management of concealing “the fact that a material portion of Stericycle’s revenues was derived from fraudulent overcharging of its [small quantity] customers.”

“Specifically, the defendants knew or should have known that the company systematically and routinely increased the rates it charged SQ customers in violation of their contracts and without notice,” according to a complaint filed in the U.S. District Court for Northern Illinois. “The company would simply increase the amount of a customer’s next invoice and hope the customer would not notice the increase or would pay it without complaint. Although the exact rate increases varied between customers, the company would raise customer rates by as much as 18% every six months. These increases were not tied to either operational changes or costs increases as required by the SQ customer contracts.

“Defendants continued to tout the company’s financial results and consistent growth without informing investors that much of Stericycle’s revenue and growth were built on this foundation of fraud. Customer attrition resulting from these fraudulent billing practices began to materially affect the company’s performance no later the third quarter of 2015,” the lawsuit claims.

In a regulatory filing, Stericycle said it reached a proposed resolution of the class action case without admitting any fault or wrongdoing “in order to avoid the cost and uncertainty of litigation.”

The agreement calls for it to establish a $45 million common fund “from which will be paid all compensation to members of the settlement class, attorneys’ fees to class counsel, incentive awards to the named class representatives and all costs of notice and administration.”

Most of the $45 million would be covered by its insurers, which must still be approved by the Northern Illinois court, Stericycle said in the Dec. 19 filing.

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Sterility assurance tech dev Verrix raises $8m in Series B


Sterility assurance device developer Verrix said today that it raised $8 million in a Series B round of financing, lifting the total the company has raised so far to $17.5 million.

The San Clemente, Calif.-based company said that funding from the offering will support finalizing the development, regulatory submission and eventual commercialization of its Verrix EVA biological indicator system.

Verrix said that the system is intended to verify the success of sterilization cycles and to detect failures, and comes based off technology originally developed at NASA’s Jet Propulsion Laboratory.

The company added that it is aiming for a launch of the first BI system based on its technology some time next year.

“We are excited to see the rapid advancement of Verrix with strong support from our investors. The company has achieved significant progress in the development of the Verrix EVA BI System and is well positioned to successfully transition to commercialization as it prepares to introduce new technology for the fight against hospital acquired infections,” CEO Cameron Rouns said in a press release.

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TSO3 drops Getinge, lands $20m debt round for Sterizone VP4

TSO3 (TSE:TOS) said today it is dropping a distribution agreement with Getinge and that it inked a $20 million debt financing deal with a fund under advisement by Courage Capital Management to support commercialization of its Sterizone VP4 sterilizer.

The company’s Sterizone VP4 is a low-temperature sterilization system which uses dual-sterilants of vaporized hydrogen peroxide and ozone for the terminal sterilization of heat and moisture sensitive medical devices. The system has a single pre-programmed cycle which can be used to sterilize a wide range of devices, the Quebec City-based company said.

In addition to dropping a distribution agreement with Getinge, TSO3 said that both companies agreed to allow TSO3 “unrestricted independent commercialization of its Sterizone VP4.” TSO3 said it also agreed to acquire 230 Sterizone VP4s, of which 220 are from Getinge’s inventory for $33,000 per unit, and that it would transfer Getinge’s sales pipeline to TSO3 in “exchange for shared economics at the completion of sale,” according to a press release.

TSO3 said both companies also agreed to transition responsibilities for service, maintenance and sale of consumables to TSO3 from Getinge.

“Getinge and TSO3 envision maintaining an ongoing collaborative relationship where TSO3 supplies and supports the Sterizone VP4 Sterilizer to satisfy Getinge customers looking for a total sterilization solution,” TSO3 wrote in a press release.

In March, TSO3 said that it won expanded FDA 510(k) clearance for its Sterizone VP4 sterilizer, clearing a new feature of the system that the company claims can improve installation of the device and reduce oxygen supply requirements.

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Fortive offers $2.8B for J&J’s advanced sterilization biz

Johnson & Johnson (NYSE:JNJ) said yesterday that industrial conglomerate Fortive (NTSE:FTV) made a binding offer to acquire the advanced sterilization business from J&J’s Ethicon division for approximately $2.8 billion.

The deal includes $2.7 billion in cash and an additional $100 million in retained net receivables, New Brunswick, N.J.-based Johnson & Johnson said.

J&J’s advanced sterilization products biz reported a net revenue last year of approximately $775 million, the company reports. The offer has an acceptance period of 120 days, and if accepted, is expected to close no later than early 2019, J&J added.

Assets included in the deal for the ASP biz include capital, consumables and software designed for use in low-temperature terminal sterilization and high-level disinfection of reusable surgical instruments, J&J said.

“As we balance the interests of all our stakeholders to deliver the greatest value to customers, healthcare providers and shareholders, we must continuously assess strategic fit and explore alternatives for our businesses. ASP has a long history of pioneering infection prevention technology, and we are confident that Fortive would be well-positioned to continue to drive the business toward achieving its full potential,” J&J interventional solutions and specialty surgery group chair Shlomi Nachman said in a press release.

Fortive said that it is beginning consultation processes with employees’ representative bodies in applicable jursidictions, including France, Germany, Italy, Switzerland and the European Works Council. Fortive added that it expects to enter into a definitive purchase and sale agreement for the acquisition, which has already been approved by its board of directors.

“We are excited about today’s announcement which demonstrates the continued evolution of our portfolio towards improving growth, increasing recurring revenue, and expanding positions in attractive markets. With ASP, we expect to acquire a global leader in medical sterilization and disinfection, with a large installed base and very strong brands. This acquisition is entirely consistent with our focus to help customers drive better safety, compliance and efficiency in critical workflows. We have conviction that the addition of ASP to our portfolio will create compelling value for both ASP and Fortive employees, our customers, and shareholders. We are impressed by the strength of ASP’s innovative product portfolio and its customer relationships. ASP’s culture and commitment to quality and service lends itself to application of the Fortive Business System to drive both accelerated growth and operating synergies. We look forward to welcoming the ASP team to the Fortive family,” prez & CEO James Lico said in a prepared statement.

Last month, J&J subsidiary DePuy Synthes said it inked a deal to acquire the assets of Medical Enterprises Distribution, including its automated ME1000 surgical impactor designed for hip replacements, for an undisclosed amount.

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