Boston Scientific Settles Probe Over DefibrillatorsNov 9, 2009 | Parker Waichman LLP
Last year we wrote that a prominent physician from the Minneapolis Heart Institute Foundation had expressed concern about test guidelines for a next-generation heart defibrillator under development at the time by Medtronic, Inc., Boston Scientific Corporation, and St. Jude Medical, Inc. Now, Bloomberg News is reporting that Boston Scientific has agreed to pay nearly $300 million to settle an investigation conducted by the U.S. Justice Department on the medical device maker’s Guidant unit and how it handled cardiac devices and manipulation of third-quarter financial results.
Boston Scientific is planning on paying $296 million—approximately one-fifth of its “cash on hand”—and Guidant is planning on pleading to two criminal misdemeanors, said Bloomberg News. The misdemeanors involve not appropriately advising the U.S. Food and Drug Administration (FDA) regarding issues concerning some of its implantable cardioverter defibrillators (ICDs), according to Bloomberg News. Apparently, the investigation involved some advisories that Guidant distributed on its product prior to being acquired by Boston Scientific, said Bloomberg News. The acquisition took place in April 2006.
ICDs represent a $5 million dollar market, with over 160,000 such devices implanted each year in the U.S., said the StarTribune.com previously, which explained that the devices are about the size of a stopwatch and work to stop sudden cardiac arrest by shocking the heart back into rhythm. One ICD device runs about $30,000 said TwinCities.com.
Dr. Robert Hauser is considered somewhat of an industry expert and is best known for his involvement in the Guidant defibrillator recall in 2005 in which he and colleague Dr. Barry Maron exposed safety concerns about a Guidant defibrillator after a patient died following implantation with the Guidant device, reported the StarTribune.com last year. That revelation was followed by a recall involving thousands of defibrillators and pacemakers, and prompted increased review into how “medical device malfunctions are tracked and monitored by the FDA,” noted the StarTribune.com.
In 2007, Boston Scientific agreed to a settlement of over $240 million for over 8,000 lawsuits that claimed Guidant did not reveal problems with its ICDs. The 2005 recall was ultimately broadened to include some 109,000 defibrillators, said Bloomberg News, which also noted that Guidant likely knew back in 2002 that the ICDs were defective, but hid that fact to protect sales.
News of the defects were reflected in lowered sales and Minneapolis prosecutors looked into how Guidant handled the device and if Food, Drug, and Cosmetic Act violations occurred with its Ventak Prizm, Contak Renewal, and Contak Renewal 2 defibrillators, reported Bloomberg News. As part of the federal deal, Guidant is to plead to the misdemeanor charges over its not including data on the ICDs’ issues in its reports to the FDA, according to a Boston Scientific statement, explained Bloomberg News.
Meanwhile, in other news, the medical device giant stated that it received a subpoena from the U.S. Department of Health and Human Services’ Office of Inspector General in late September that is seeking information concerning contributions made to charities that are associated with physicians and physicians’ relatives.