companies who currently market or are developing
drugs or gene therapies to treat the conditions for which our
products are intended.
We believe that the primary competitive factors
in the market we address are capability, safety, efficacy, ease
of use, price, quality, reliability and effective sales,
support, training and service. The length of time required for
products to be developed and to receive regulatory and
reimbursement approval is also an important competitive factor.
We believe Stereotaxis has an important first mover
advantage in establishing clinical standards in these areas. See
Risk Factors for a discussion of other competitive
risks facing our business.
The healthcare industry, and thus our business,
is subject to extensive federal, state, local and foreign
regulation. Some of the pertinent laws have not been
definitively interpreted by the regulatory authorities or the
courts, and their provisions are open to a variety of
interpretations. In addition, these laws and their
interpretations are subject to change.
Both federal and state governmental agencies
continue to subject the healthcare industry to intense
regulatory scrutiny, including heightened civil and criminal
enforcement efforts. As indicated by work plans and reports
issued by these agencies, the federal government will continue
to scrutinize, among other things, the billing practices of
healthcare providers and the marketing of healthcare products.
The federal government also has increased funding in recent
years to fight healthcare fraud, and various agencies, such as
the U.S. Department of Justice, the Office of Inspector
General of the Department of Health and Human Services, or OIG,
and state Medicaid fraud control units, are coordinating their
We believe that we have structured our business
operations and relationships with our customers to comply with
all applicable legal requirements. However, it is possible that
governmental entities or other third parties could interpret
these laws differently and assert otherwise. We discuss below
the statutes and regulations that are most relevant to our
business and most frequently cited in enforcement actions.
U.S. Food and Drug Administration, or
The Food and Drug Administration strictly
regulates the medical devices we produce under the authority of
the Federal Food, Drug and Cosmetic Act, or FFDCA, the
regulations promulgated under the FFDCA, and other federal and
state statutes and regulations. The FFDCA governs, among other
things, the pre-clinical and clinical testing, design,
manufacture, safety, efficacy, labeling, storage, record
keeping, post market reporting and advertising and promotion of
Our medical devices are categorized under the
statutory framework described in the FFDCA. This framework is a
risk-based system which classifies medical devices into three
classes from lowest risk (Class I) to highest risk
(Class III). In general, Class I and II devices are
either exempt from the need for FDA clearance or cleared for
marketing through a premarket notification, or 510(k), process.
Our devices that are considered to be general tools, such as our
NIOBE cardiology magnet system and our suite of guidewires, or
that provide diagnostic information, such as our TANGENT
electrophysiology mapping catheters, are subject to 510(k)
requirements. These devices are cleared for use as general tools
which have utility in a variety of interventional procedures.
Our therapeutic devices, such as our HELIOS ablation catheters,
are subject to the premarket application, or PMA, process.
If clinical data is needed to support a marketing
application for our devices, generally, an investigational
device exemption, or IDE, is assembled and submitted to the FDA.
The FDA reviews and must approve the IDE before the study can
begin. In addition, the study must be approved by an
Institutional Review Board covering each clinical site. When all
approvals are obtained, we initiate a