The U.S. Department of Veterans Affairs ordered $241 million of cadaver tissue and other material derived from human and animal bodies in the last three years, some of it from vendors warned by federal regulators about contamination in their supply chain.
About $4.7 million of the VA purchases came from Alachua, Florida-based RTI Surgical Inc. (RTIX:US) and the nonprofit Musculoskeletal Transplant Foundation, of Edison, New Jersey, according to data obtained by Bloomberg News under a Freedom of Information Act request.
The VA ordered human tissue from the two suppliers after they were warned by the U.S. Food and Drug Administration for safety deficiencies -- RTI for contaminated products and processing facilities, and Musculoskeletal Transplant for distributing tissue from tainted donor bodies, according to federal contracting data compiled by Bloomberg.
The suppliers said they have addressed the problems, which weren’t tied to human harms.
The disclosures come as Congress and veterans’ advocates are pressing the VA about whether it tracks body parts and other implants used to treat veterans well enough to warn patients of potential dangers. In September 2012, the VA shelved a system it was building to help alert patients when the parts are recalled. Some of the VA’s buying was made outside standardized purchasing contracts without required justifications, the Government Accountability Office said earlier this month.
“It’s a big accident waiting to happen,” said Rick Weidman, executive director for government affairs with the Silver Spring, Maryland-based Vietnam Veterans of America.
RTI received a warning letter from the FDA in October 2012, and Musculoskeletal Transplant received one six months later, following agency inspections.
The congressional scrutiny of the VA’s medical purchasing follows a surge in patients treated in its hospitals, where grafts from cadavers are used to replace burned skin, restore broken bones, or treat other wounds.
The VA has added more than 2 million veterans to its health-care system since 2009. The number receiving biological implants rose 22 percent to 19,350 in the two years ended in September 2013, according to the agency.
A year earlier, the department suspended a computer project known as the Veterans Implant Tracking and Alert System -- which “was developed to address shortcomings” in its ability to track surgical implants, including biologically derived ones, and help find their recipients during recalls, according to a Jan. 13 report from the GAO, Congress’s investigative arm.
The project’s future is being evaluated, the VA said in a statement. The agency’s safety office tracks recalls for biological products and notifies its hospitals when necessary, Thomas Lynch, the VA’s assistant deputy undersecretary for health clinical operations, said in a congressional hearing last week. The VA said its safety office hasn’t received any reports from its hospitals about contaminated implants.
Reports of tainted tissue in the industry are especially troubling because oversight of the suppliers isn’t strong, said Chris Truitt, a former tissue procurement technician who left the industry in 2005. One body can provide tissue for as many as 100 patients, according to the FDA.
A Minnesota man died in 2001 after a knee surgery in which he was given contaminated cadaver bone, according to written testimony his parents gave the U.S. Senate Committee on Governmental Affairs in 2003.
In another case, a cadaver was the probable source of hepatitis C infection in at least eight people who had received organs or tissue from the donor, an official with the U.S. Centers for Disease Control and Prevention said in written remarks to the same committee.
“There is no way to track tissue,” Truitt, who wrote a book called “The Dark Side of Tissue Donation,” said in a phone interview. “So a recall may not reach everyone it needs to reach. There may be best practices, things that most people are doing, but if you don’t have 100 percent participation, it’s really no good.”
RTI and Musculoskeletal Transplant, which received the warnings from the FDA, are among hundreds of vendors providing biological products to the department, according to the VA data reviewed by Bloomberg News, which details spending commitments made from October 1, 2010 through September 30, 2013.
Drew Brookie, the VA’s press secretary, declined to say whether the department altered its spending with RTI and Musculoskeletal Transplant after the suppliers received FDA warnings. Such warnings aren’t designed to cause hospital systems to cut off suppliers, the VA said in a statement.
The department “is committed to providing the high quality, safe, effective and timely health care veterans have earned and deserve,” Brookie said in an e-mail. “VA has established a record of safe, exceptional health care that is consistently validated by independent reviews and organizations.”
VA contracting processes must give “physicians the flexibility to make the best decision for each individual patient,” Brookie said. The agency is making changes in its procurement process to allow it to make better purchases, he said.
Some of the VA orders were made outside agreements known as federal-supply schedule contracts, according to the House veterans committee and a report from the GAO last week.
The department officials didn’t file waivers or clinical justifications about why existing biologics contracts weren’t used, in violation of VA requirements, the GAO said.
If officials don’t use such contracts, purchases may cost taxpayers more and not include assurances about the country of origin for the tissue, said Representative Jeff Miller, a Florida Republican and the House veterans committee chairman.
“Veterans and the government are at an increased risk for problems associated with product efficacy and quality” when the buying takes place outside contracts that follow purchasing regulations, Miller said in an e-mail.
Academy Medical LLC, a supplier that has contracts with the Veterans Administration, finds it “inexplicable that so many vendors are able to participate in the VA market in violation of the procurement rules and sell their products through unauthorized means at prices that they set rather than prices set through competition,” said Daniel Shaw, managing partner of the West Palm Beach, Florida-based company.
The data obtained by Bloomberg shows a wide range of costs and diversity in the VA buying: $3,555 for eye tissue from Johnson & Johnson (JNJ:US), more than $27,000 on leg bones from Medtronic Inc. (MDT:US) and $282 on “demineralized” rib bone from Zimmer Holdings Inc. (ZMH:US) No issues have been raised with these purchases.
Grisly stories, such as a man sentenced in 2008 for running a now-defunct company that conspired to steal tissue from more than 1,000 corpses, have intensified calls for increased industry oversight.
In 2006, Senator Chuck Schumer, a New York Democrat, proposed legislation requiring the FDA to conduct annual, surprise inspections of tissue banks in the wake of the investigation into Biomedical Tissue Services Inc., the defunct company linked to the stolen-tissue crimes. The measure failed.
“People who sell you homes are regulated. People who sell you food are regulated,” Michel Anteby, an associate professor at Harvard Business School who has studied the supply channels, said in a phone interview. “Yet the people who operate in this tissue donation world collected from human cadavers are almost completely unregulated.”
Ukrainian authorities investigated allegations that some morgues were supplying body parts obtained through forged documents or pressuring relatives of the deceased to sign consent paperwork, according to a July 2012 report by the International Consortium of Investigative Journalists.
RTI, mentioned as an importer from the country in the report, said in a statement that it decided that year “to voluntarily cease receipt of tissue from the Ukraine due to sensitivities and political disruptions” affecting suppliers there. The decision “did not impact tissue safety in any way,” RTI said.
Firms should take FDA warning letters like those sent to RTI and Musculoskeletal “very seriously,” said Steven Niedelman, a former FDA deputy associate commissioner for regulatory affairs, who worked for the agency for 34 years.
“They are basically the free pass before the agency considers injunction, seizure or some other action through the Department of Justice,” said Niedelman, a health-law compliance consultant at the law firm of King & Spalding in Washington.
“It is not common for a tissue establishment to be sent a warning letter by FDA,” said Sarah Gray, director of public affairs for the American Association of Tissue Banks, a non-profit group based in McLean, Virginia, that provides accreditation to tissue banks.
Bacteria, including one strain that can infect humans, were found on 70 separate occasions in RTI’s finished sports-medicine goods, the FDA said in an October 2012 letter. The products were made from human tissue and weren’t distributed, Jenny Highlander, an RTI spokeswoman, said in an e-mail.
The VA continued to purchase from RTI after the FDA warning letter, according to online federal contracting data. The post-warning orders included a $3,375 Achilles-tendon order in April 2013 and a $3,355 skin-graft order in September 2013, according to the data.
The agency’s letter told RTI that it found fungus in tissue-processing and packaging areas, bacteria in its water systems, and had failed to recognize environmental-monitoring data “indicative of contamination throughout your facility.”
Some RTI relationships with customers suffered as a result of the warning, Brian Hutchison, the company’s chief executive officer, said in an August 2013 call with analysts.
“There are certain accounts only in certain pockets of the country where we are blocked based on that letter,” Hutchison said. “So we just have to put those customers aside for now and go focus where we can and grow business where we can and go back and address them once we have the clearance letter that we need or that they say we need.”
The VA ordered $260,679 in human tissue and other surgical implants from RTI during the fiscal year ended September 30, 2013, and almost $1 million from the company in the three years to that date, according to the data obtained by Bloomberg.
FDA investigators conducted a re-inspection in September, after RTI took corrective action, Wendy Crites Wacker, a spokeswoman for the company, said in an e-mail. The FDA told the company in an October 2013 letter that “it appears that you have addressed the violation(s).” Some customers came back to RTI after the re-inspection and the company was confident it would “gain back our market share,” Hutchison said that month.
The veterans department also ordered more than $3.7 million in biologics over the three years from Musculoskeletal Transplant, according to the data obtained by Bloomberg.
The supplier was cited by the FDA in an April 2013 warning letter for distributing tissues that came from donors whose bones tested positive for bacteria that can cause pneumonia, food poisoning or other illness. VA orders from the supplier made after the letter included $11,827 for “graft” products and $12,704 for “acellular human dermis,” or skin, in September 2013, online federal data show.
The tissues referenced in the warning letter came from parts of the tainted donors’ bodies that weren’t contaminated and didn’t contain the bacteria, said Gordon, of Issues Management/Insight Communication in Princeton, New Jersey, who is designated to speak for Musculoskeletal Transplant.
The body parts were processed and distributed, which “was against our protocols,” Gordon said in an e-mail. The company voluntarily recalled the products, she said.
Musculoskeletal Transplant has “taken steps to fully address all of the observations noted in the inspection and in the warning letter,” she said. It is waiting for the agency to conduct a re-inspection.
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