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Boston Scientific Nears Stent-Probe Settlement

Feb 24, 2005 | Dow Jones

Boston Scientific Corp. (BSX) is in negotiations with the Justice Department to pay about $70 million to settle an ongoing investigation into the 1998 recall of a defective coronary stent system.

A formal deal hasn't been signed, but the parties agreed in principle on the dollar figure several months ago, these people said. In the third quarter of last year, Boston Scientific took a $75 million charge for "legal and regulatory" expenses, but the company has declined to confirm that the provision is related to the Justice Department probe.

Paul Donovan, a company spokesman, declined to comment on the settlement talks. Samantha Martin, a spokeswoman for the U.S. Attorney's office in Boston, also declined to comment.

A settlement would rid Boston Scientific of an investigation that has lingered for more than six years. The probe involved the recall of the company's Nir-Sox coronary-stent system in October 1998 due to a manufacturing glitch, two months after the Food and Drug Administration approved it for sale. At the nub of the investigation is whether Boston Scientific reacted quickly enough to protect patient safety.

Stents are small metal scaffolds that prop open arteries after they are unclogged by a procedure called balloon angioplasty. The Nir-Sox stent system was viewed as a significant advance for the field, but a manufacturing glitch resulted in dozens of defective products. In the two months the Nir-Sox was on the market, 26 people were injured, the company disclosed at the time. Injuries included damaged artery walls. One patient died 11 days after stent surgery, but the patient had multiple medical problems and likely died of other causes, the FDA and the company have said.

Justice Department investigators contend that Boston Scientific continued to ship the stents even after it knew they were defective, according to people familiar with the matter. In its third-quarter regulatory filings, Boston Scientific said it believes it acted "responsibly and appropriately." The defect involved small pinhole leaks in the balloons used to open arteries before inserting the stents.

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