Invacare 2006 Annual Report Download - page 23

labeling, promotion, distribution and marketing. In addition, the company is required to file reports with the FDA if
the company’s products cause, or contribute to, death or serious injury, or if they malfunction and would be likely to
cause, or contribute to, death or serious injury if the malfunction were to recur. In general, unless an exemption
applies, the company’s wheelchair and respiratory medical devices must receive a pre-marketing clearance from the
FDA before they can be marketed in the United States. The FDA also regulates the export of medical devices to
foreign countries. The company cannot be assured that any of the company’s devices, to the extent required, will be
cleared by the FDA through the pre-market clearance process or that the FDA will provide export certificates that
are necessary to export certain of the company’s products.
Additionally, the company may be required to obtain pre-marketing clearances to market modifications to the
company’s existing products or market its existing products for new indications. The FDA requires device
manufacturers themselves to make and document a determination of whether or not a modification requires a
new clearance; however, the FDA can review and disagree with a manufacturer’s decision. The company has
applied for, and received, a number of such clearances in the past. The company may not be successful in receiving
clearances in the future or the FDA may not agree with the company’s decisions not to seek clearances for any
particular device modification. The FDA may require a clearance for any past or future modification or a new
indication for the company’s existing products. Such submissions may require the submission of additional data and
may be time consuming and costly, and may not ultimately be cleared by the FDA.
If the FDA requires the company to obtain pre-marketing clearances for any modification to a previously
cleared device, the company may be required to cease manufacturing and marketing the modified device or to recall
the modified device until the company obtains FDA clearance, and the company may be subject to significant
regulatory fines or penalties. In addition, the FDA may not clear these submissions in a timely manner, if at all. The
FDA also may change its policies, adopt additional regulations or revise existing regulations, each of which could
prevent or delay pre-market clearance of the company’s devices, or could impact the company’s ability to market a
device that was previously cleared. Any of the foregoing could adversely affect the company’s business.
The company’s failure to comply with the regulatory requirements of the FDA and other applicable
U.S. regulatory requirements may subject the company to administrative or judicially imposed sanctions. These
sanctions include warning letters, civil penalties, criminal penalties, injunctions, product seizure or detention,
product recalls and total or partial suspension of production.
In many of the foreign countries in which the company markets its products, the company is subject to
extensive regulations that are similar to those of the FDA, including those in Europe. The regulation of the
company’s products in Europe falls primarily within the European Economic Area, which consists of the 27 member
states of the European Union, as well as Iceland, Liechtenstein and Norway. Only medical devices that comply with
certain conformity requirements of the Medical Device Directive are allowed to be marketed within the European
Economic Area. In addition, the national health or social security organizations of certain foreign countries,
including those outside Europe, require the company’s products to be qualified before they can be marketed in those
countries. Failure to receive or delays in the receipt of, relevant foreign qualifications in the European Economic
Area or other foreign countries could have a material adverse effect on the company’s business.
The company’s products are subject to recalls, which could harm the company’s reputation and business.
The company is subject to ongoing medical device reporting regulations that require the company to report to
the FDA or similar governmental authorities in other countries if the company’s products cause, or contribute to,
death or serious injury, or if they malfunction and would be likely to cause, or contribute to, death or serious injury if
the malfunction were to recur. The FDA and similar governmental authorities in other countries have the authority
to require the company to do a field correction or recall the company’s products in the event of material deficiencies
or defects in design or manufacturing. In addition, in light of a deficiency, defect in design or manufacturing or
defect in labeling, the company may voluntarily elect to recall or correct the company’s products. A government
mandated or voluntary recall/field correction by the company could occur as a result of component failures,
manufacturing errors or design defects, including defects in labeling. Any recall/field correction would divert
managerial and financial resources and could harm the company’s reputation with its customers, product users and
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