FDA has broad post-market and regulatory enforcement powers. We are subject to unannounced inspections by the FDA to determine
our compliance with the QSR and other regulations. If we fail to comply with the QSR or other regulatory requirements, we may
receive a warning or untitled letter from the FDA or be subject to other enforcement actions, including fines, injunctions, civil
penalties, seizures, operating restrictions, partial suspension or total shutdown of production, refusing requests for 510(k)
clearance, de novo petitions, or PMA approval of new products, withdrawing 510(k) clearance, de novo approvals, or PMA approvals
already granted, and criminal prosecution. The FDA also has the authority to require us to repair, replace or refund the cost
of any medical device that we have manufactured or distributed, if there is a reasonable probability that the device would cause
serious, adverse health consequences or death.
order for us to market our products in other countries, we must obtain regulatory approvals and comply with extensive safety and
quality regulations in other countries. These regulations, including the requirements for approvals or clearance and the time
required for regulatory review, vary from country to country and can involve additional product testing and additional administrative
review periods. The time required to obtain approval in other countries may differ from that required to obtain FDA clearance
primary regulatory environment in Europe is that of the European Union, which encompasses most of the major countries in Europe.
The European Union, along with other member countries of the European Economic Area, or EEA, requires that manufacturers of medical
products obtain the right to affix the CE Mark to their products before selling them in member countries of the EEA. The CE Mark
is an international symbol of adherence to quality assurance standards and compliance with applicable directives. In order to
obtain the right to affix the CE Mark to products, a manufacturer must obtain certification that its processes meet certain quality
standards. Compliance with the Medical Device Directive, as certified by a recognized European Notified Body, permits the medical
device manufacturer to affix the CE Mark on its products and commercially distribute those products throughout the EEA. We are
subject to annual surveillance audits and periodic re-certification audits in order to maintain our CE Mark permissions.
be sold in Japan, most medical devices must undergo thorough safety examinations and demonstrate medical efficacy before they
receive regulatory (“Shonin”) approval. We are subject to additional regulations in other foreign countries, including,
but not limited to, Canada, Taiwan, China, Korea, and Russia, in order to sell our products. We intend that either we or our distributors
will receive any necessary approvals or clearance prior to marketing our products in these international markets.
refer to “Regulatory Approval” in Item 1 of this annual report for a description of the regulatory clearance, licensing
and/or approvals we currently have or are pursuing.
and False Claims Laws
are subject to various federal and state laws relating to healthcare fraud and abuse, including anti-kickback and false claims
laws. The U.S. federal healthcare program Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering,
receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual,
or furnishing or arranging for a good or service, for which payment may be made under a federal healthcare program such as the
Medicare and Medicaid programs. The definition of “remuneration” has been broadly interpreted to include anything
of value, including for example, gifts, discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash
and waivers of payments, and providing anything of value at less than fair market value. Penalties for violations include criminal
penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare
programs. Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for
payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid. Recently,
several healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the
expectation that the customers would bill federal programs for the product. In addition, certain marketing practices, including
off-label promotion, may also violate false claims laws.
states have adopted laws similar to the federal healthcare program Anti-Kickback Statute and the federal false claims laws. Some
of these state prohibitions apply to healthcare items or services reimbursed by any source, not only the Medicare and Medicaid
the Physician Payments Sunshine Act, or the Sunshine Act, which was enacted by Congress as part of the Patient Protection and
Affordable Care Act, we are required to track and report to the federal government on an annual basis, subject to certain exceptions,
all payments and other transfers of value to U.S. physicians and teaching hospitals, as well as ownership interests held by physicians.
Such data are made available by the government on a publicly searchable website. In addition, we are subject to similar state
laws related to the tracking and reporting of certain payments and other transfers of value to healthcare professionals.
and Other Privacy Laws
are subject to laws and regulations protecting the privacy and integrity of patient medical information, including the Health
Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes certain requirements relating to the privacy, security
and transmission of individually identifiable health information, and the applicable Privacy and Security Standards of HITECH,
the Health Information Technology for Economic and Clinical Health Act. HIPAA also prohibits executing a scheme to defraud any
healthcare benefit program or making false statements relating to healthcare matters. In addition to federal regulations issued
under HIPAA, some states and foreign countries have enacted privacy and security statutes or regulations that, in some cases,
are more stringent than those issued under HIPAA. In those cases, it may be necessary to modify our operations and procedures
to comply with the more stringent state and foreign laws, which may entail significant and costly changes for us.