LSHC Horizons Brochure 2024 - Flipbook - Page 98
Hogan Lovells | 2024 Life Sciences and Health Care Horizons | United States
State of affairs: Medical device licensing enforcement is on the rise!
In addition to federal requirements for medical
device manufacturers and distributors, a
large number of U.S. states license entities
involved in the supply chain of prescription
(and sometimes over-the-counter) medical
devices that enter their jurisdiction. However,
many companies operate unaware of these
requirements until they receive a letter from
the state Board of Pharmacy, or similar state
agency, alerting them to a possible violation.
State requirements for who must be licensed and
what type of license is required depend upon a
number of different factors, such as the type of
device, prescription status, facility location(s),
and the licensee’s specific activities. Among
other things, states may license companies
that ship devices to end users or other third
parties in the state, that sell the devices into
the state (but have another company do the
actual shipping), or even companies that only
manufacture a device that ultimately enters
the state’s stream of commerce, whether or not
the manufacturer undertook any distribution
activities whatsoever. In each case, and for each
specific state, different license types may be
implicated and certain exceptions to the license
requirement may apply.
Whether because of the difficulty in
determining which, if any, state license is
required, or simply a lack of awareness as to the
requirement generally, many companies have
left state licensing unaddressed. At the same
time, many states are paying an increasing level
of attention to licensing compliance.
Jodi Scott
Partner
Denver
This attention can take the form of requiring
immediate remediation of any licensing
gap along with, in many cases, an order to
temporarily cease operations within the state
and the potential for civil monetary or, though
rare, criminal penalties. When assessing
monetary penalties, states will often perform a
look-back of past product distribution into the
state and may set penalties on a “per violation
basis”; where a “violation” may be based
upon the number of shipment days, number
of shipments, or even number of individual
products shipped. Although some states cap
the amount of any such fine, many others do
not and, consequently, the dollar amounts at
issue can become very large. Moreover, Board
disciplinary action disclosure requirements
may lead to potential follow-on enforcement
in other states. Accordingly, the threat of
business disruption and hefty fines has made
state licensing a topic of renewed interest in the
medical device industry.
So what should companies do? Get into
compliance! First, determine what license,
if any, is required in the states in which
you operate. Where the company has been
operating without a license, remedy the
situation immediately. If the state has
contacted you regarding potential discipline, it
is highly advisable to seek legal counsel when
crafting your response in order to mitigate
both the initial and downstream effects of the
enforcement. Whatever you do, don’t ignore
your state level compliance responsibilities!
Wil Henderson
Senior Associate
Denver
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