Dr. Krauthamer Comments on Fraud in the Medical Device Industry

June 2, 2023

Dr. Victor Krauthamer

In the article, “Lured by a bigger payday, a medical device maker sold fake plastic parts. Many were implanted in chronic pain patients,” Stat News covered the story of the company Stimwave’s device fraud that became widespread news in March. Stimwave executives realized in 2016 that expensive, implanted batteries provide a larger insurance payout and thus added a dummy piece of plastic to their otherwise sleek peripheral nerve device that allowed them to sell the device for thousands of dollars more than they otherwise could.

The altered peripheral nerve simulator was never presented to the FDA and instead went through the agency’s 501(k) pathway, which lets manufacturers earn clearance without clinical data if they can show their device is ‘substantially equivalent’ to products already on the market. The dummy parts of the device were then implanted in nearly 8,000 patients between 2017 and 2020, defrauding Medicare and private insurers millions of dollars.

The story of Stimwave is an alarming example of how fraud can fall through the cracks. “The FDA is charged with making sure devices are safe and effective before they hit the market. But they’re not equipped to spot unnecessary components, like Stimwave’s receiver, that could defraud patients, doctors, and insurers.” Visiting Professor of Biomedical Engineering at GW and former director of the division of biomedical physics at the FDA, Victor Krauthamer, said “employees at the agency are swamped and particularly limited by a dearth of data with the 510(k) process.”

“When you’re at FDA, things are going 100 miles an hour,” Krauthamer said. “Reviewers have very short deadlines, and they’re limited on the questions they can ask.”

While the plastic receiver did not pose severe risks to patients, it did reduce the efficacy of the simulation that was supposed to treat the patient’s pain or migrated to other parts of the body in some cases. Krauthamer said, “Any material, the body tries to reject it. I would not want anything implanted unless it had a real use.”

Read the full article on Stat News