Invacare 2011 Annual Report Download - page 24

The company’s failure to comply with medical device regulatory requirements or receive regulatory
clearance or approval for the company’s products or operations in the United States or abroad could
adversely affect the company’s business.
The company’s medical devices are subject to extensive regulation in the United States by the FDA, and by
similar governmental authorities in the foreign countries where the company does business. The FDA regulates
virtually all aspects of a medical device’s development, testing, manufacturing, 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
mobility and respiratory therapy 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. In connection with the FDA warning letter received by
the company in December 2010, the FDA has refused to provide new export certificates for company products
until the matters covered in the warning letter are resolved.
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 as to 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 ultimately may not 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, consent decrees, product seizure
or detention, product recalls and total or partial suspension of production.
As part of its regulatory function, the FDA routinely inspects the sites of medical device companies, and in
2010 and 2011, the FDA inspected certain of the company’s facilities. In December 2011, the FDA requested
that the company agree to a consent decree of injunction at the company’s corporate facility and its wheelchair
manufacturing facility in Elyria, Ohio. See the previous Risk Factor regarding the FDA consent decree. In
addition, in December 2010, the company received a warning letter from the FDA related to quality system
processes and procedures at the company’s Sanford, Florida facility. The company is taking these issues very
seriously and has added resources to ensure it is addressing all of the FDA’s concerns in a timely manner.
However, the results of regulatory claims, proceedings, investigations, or litigation are difficult to predict. An
unfavorable resolution or outcome of the FDA warning letter or consent decree of injunction could materially
and adversely affect the company’s business, financial condition, and results of operations.
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