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For the first time the Food and Drug Administration on Thursday has publicly admitted a process of approval might have been unduly influenced by politics. The FDA accused four New Jersey congressmen and a former FDA of questionable conduct in the approval of
Menaflex, a knee device manufactured by
Hackensack, N.J.-based
ReGen Biologics (
OTC:RGBO).
In the
preliminary report, the FDA acknowledges that although it is not unusual for members of Congress to inquire about a
constituent's application, it describes the involvement of four New Jersey democrats — Reps. Frank
Pallone and Steve
Rothman and Sens. Robert
Menendez and Frank
Lautenberg — in the
ReGen matter as "highly unusual" in persistence and interest.
The Director of
FDA's Office of Legislation called the pressure as "the most extreme he had seen" and acquiescence to this pressure as "unprecedented in his experience" while the Assistant Commissioner for Accountability and Integrity described daily interactions with the Company's political consultant as "increasingly tense."
Furthermore, the FDA points the finger at the FDA Commissioner, Andrew
von Eschenbach, M.D., who was pushed to intervene by the Congressmen and therefore took charge of matters usually under the control of the Review Division or Center Director. Von
Eschenbach even agreed to a 90-minute meeting with
ReGen executives, who appeared to want
von Eschenbach to review
Menaflex himself.
Anyway, of course on Friday
ReGen gave its own
press release making clear that the quality of its device was not the primary topic under question, as opposed to the FDA approval process which was the source of controversy. CEO Gerald E.
Bisbee, Jr. calls the scientific evidence for the device "solid" and reminds us that 3,000 in Europe and the U.S. have had successful
Menaflex surgery.
What
ReGen conveniently does not mention though, is that the FDA reports although
ReGen had repeatedly complained of "unfair treatment" when
Menaflex did not receive the positive reviews from various groups of scientists reviewing the device, there was absolutely no finding of "unfair treatment" and the proceedings "did not substantially prejudice
ReGen in any event."
Then, the report continues, instead of
ReGen appealing the
unsupportive reviews according to standard appeal procedure, the Office of Legislature simply began receiving phone calls from the Congressmen complaining about the "unfair" reviews.
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I guess that might work when according to lobbying watchdog website
opensecrets.org three
ReGen exectuvies had given $26,000 to the four Congressmen in political contributions (in fact,
ReGen became the
third largest donor for Rep. Steve
Rothman, picture at left, in 2008.
ReGen wasn't even the top 100 top donor list for
Rothman in 2006).
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The FDA is now revisiting the approval of the device. But with efficient market theory beautifully at work here, the company's stock price has responded accordingly, crashing from $2.00 earlier this month to a low of $1.01 on Friday, closing at $1.25. Down because of the news, and still down because of shareholders' realization that the company might use lobbying rather than a device's benefits to speak for approval. ReGen has been posting losses since at least 2005, but a revisition of approval might be good for potential troubles it may save.