The allograft industry post-CryoLife
BY EDITOR, JUNE 30, 2003
It's been 19 months since a surgeon in central Minnesota unknowingly implanted a c.sordelli contaminated allograft tissue into a healthy 23 year old male. It's been 15 months since the Centers for Disease Control published its first findings from the investigation of that young patient's death and sent, essentially, an open letter to the FDA telling it to step up its enforcement of the allograft industry. It's been 10 months since the FDA ordered Cryolife, Inc., the supplier of the contaminated tissue, to recall distributed human tissue processed and to ALSO withhold from the market or destroy tissue processed between October 3, 2001 and August 14/2002.
Through these past months, the allograft industry has assimilated the lessons from CryoLife's saga and as a result is operating under these informal guidelines;
Don't fight the FDA: CryoLife's questioning of the specifics of the FDA authority in the early days following the CDC report was not a smart move. This lesson hasn't been lost on other managers.
Create sterile products: All the major suppliers are trying to develop processing systems that can restore Trust and essentially deliver a sterile allograft product. Of course, being allowed to put that on the label is key. To date, only Regeneration Technologies and Tutogen are labeling tissues as “sterile.”
Err on the side of patient safety: Osteotech showed the way. At a time when the most visible allograft company was troubled CryoLife, Osteotech stepped up in late 2002 and showed the industry how to handle potentially contaminated tissues. Not surprisingly Richard Bauer, Osteotech's CEO, is a JNJ veteran and of course, knew well the lessons of the famous Tylenol tampering case. Lightning had struck the company's new production plant in late 2002. As a result there were higher than normal finished product sterility failures. He shut everything down. Lost $2.5-3.5 million in sales and has yet to recover some of his customers even 8 months later. Saw his stock price plummet. Told the FDA. Endured both his own and the FDA's audit. Received two Form 483 write-ups from the FDA. Corrected the problems. No patient ever received any contaminated tissue. Stand-up guy. No dinking around. Patient's safety comes first.
Accept the likelihood of FDA 510(k) regulation. It's a strange regulation for the FDA to enforce. Allograft, by definition, works. It's human tissue transplanted into other humans. Who needs a clinical trial to prove that it works? The FDA has told the allograft industry that one particular allograft product, Demineralized Bone Matrix (DBM), which is usually blended with a carrier material like collagen or glycerol, is subject to approval by the FDA under rule 510(k). Of course, Rule 510(k) requires a predicate device or the supplier needs to conduct clinical trials to prove safety and efficacy. Is the predicate device Calcium bone void fill? Maybe, maybe not. The FDA's been a little unclear on this point. But, in the environment of heightened concern over allograft, the burden of proof was on the allograft supplier. And... should the FDA indeed grant 510(k) approval for one or more DBM products all non-approved DBM products were at risk of being pulled from the market. Still... we're picking up some interesting vibes from the FDA. The allograft industry has really worked hard this past year to build a level of trust with the FDA as well as with surgeons and patients. Could the FDA be willing to approve one of the current DBM products and then declare that allograft is a predicate device? If for no other reason than to establish its authority to require 510(k) approval of some types of allograft? Hmmmm.
Build up and support the AATB. The American Association of Tissue Banks (AATB) is an industry agency that sets processing standards, audits its members and provides accreditation. Historically, whether a processor belonged to the AATB or not, didn't really matter. Two notable non-members were Regeneration Technologies and CryoLife. Last year that all changed. Regeneration submitted its application, went through an AATB audit and today, waits hopefully for its inclusion into that industry association. The largest allograft supplier, MTF Foundation, is a founding member of the AATB. Osteotech, Allosource, LifeNet and essentially every other major tissue processor belongs. CryoLife is still holding out. This past year the AATB became even more the necessarily authoritative rating agency for the allograft industry.
As the industry changed its processes and policies trust levels began to recover. Tangible evidence of that will be first half 2003 revenues. Regeneration Technologies will report, we think, a 46% increase in allograft sales. Exactech +45%. Tutogen +25%. Even Osteotech, which is still recovering from last year's shut-down, up over 10%. (CryoLife? Well, orthopedic shipments, we expect, will be down 70-90% from prior year levels and we think the name CryoLife will forever be associated with last year's tribulations). Surgeons and patients are back and, perhaps, making up for slow demand last year. Allograft remains an increasingly preferable implant for orthopedic surgeons. For all of 2003, we estimate that allograft and biologic implant (including growth factors and concentrated platelet products) sales will reach or exceed $950 million for a 28% rate of growth. It may have taken 15 months but we think the allograft industry... the transition technology to a biologic orthopedic future... is back.
