Boston Scientific inherits Guidant Heart Device Lawsuits

Evelyn Pringle August 1, 2006

According to the FDA, the reason there are not more deaths reported in patients implanted with Guidant’s defective defibrillators is because most patients die outside the clinic or hospital and the devices are not sent back to the manufacturer to be checked.

On June 23, 2006, Bloomberg News reported that Guidant’s Contak Renewal devices might fail about 10 times more often than the company projected last year, citing an FDA analysis released in a Texas lawsuit.

The judge in the case unsealed the document that was dated June 16, 2005, which means it was written by FDA officials one day before Guidant began recalling the devices.

At the time of the recall, Guidant claimed that no more than 292 of the units were likely to break down, but the FDA estimate projects thousands of malfunctions within 5 years. In fact, the FDA said “most” of the 16,000 defibrillators may have damaged insulation within five years of use, and 40% of those would fail to produce an adequate electrical shock in a medical emergency, meaning over 3,000 units would likely fail.

“We have no surveillance process for discovering fatal defibrillator malfunctions,” the agency said. “We do not know the death rate associated with this defect.”

“It is probably greater than reported,” the FDA memo noted, “and may be much greater than reported.”

Attorneys representing the plaintiffs against Guident, recognize the significance of the unsealed FDA analysis. “This is as damaging a document as we’re going to come across,” said Attorney, Hunter Shkolnik.

“It flies in the face of all the excuses Guidant has been giving,” he said, “for not telling patients to take these devices out immediately.”

The Texas lawsuit is but one of about 340 product liability cases in the courts so far, and Boston Scientific, the new owner of Guidant, believes more than 3,000 patients may eventually file claims, according to its SEC filing in May.

Boston’s projection may have been made with inside knowledge of the next hurdle right around the bend. In one of its first honorary duties as the new owner, on May 15, 2006, Boston disclosed in a warning letter to doctors, that another batch of 996 defibrillators might stop working due to an electronic defect that causes the batteries to fail, and warned that the battery failures could prevent the devices from functioning properly and restarting a patient’s heart.

The estimated 900 faulty defibrillators that were implanted in patients were not recalled, according to the May 16, 2006, Boston Globe.

The same day, Boston also issued a separate warning to doctors about problems with another group of defibrillators but said it did not know how many patients were affected. Some of those devices were implanted underneath the chest muscles, the company said, instead of under the skin and over the muscles and that positioning caused the defibrillators’ titanium cases to wear, leading to malfunctions.

However, Boston must not have been too worried about these added problems because on May 14, 2006, the Financial Times reported that five “Boston Scientific executives have received special bonuses, some potentially worth more than last year’s salary.”

The five included Lawrence Best, the company’s chief financial officer; Paul Sandman, the general counsel; Jim Gilbert, a strategy co-ordinator; Lucia Quinn, the human resources chief; and Paul Donovan, a public relations executive, and were awarded bonuses worth at least $1.98m in cash, plus options and deferred stock grants, the Times said.

They were given the choice of accepting a large cash payment plus options, or options only and deferred stock. The largest cash payment offered, the Times said, was $625,000 to Mr Best, a amount equal to his salary for 2005.

But next month, it was back to the grind on June 26, when Boston announced yet another recall of 27,200 pacemakers and defibrillators involving six brands of devices. According to an FDA press release, this batch of devices were implanted between December 2005 and June 2006. Boston also asked that about 23,000 more devices, in stock at hospitals or with sales representatives, be returned.

Boston says, of the 27,200 patients implanted with the devices worldwide, 13,800 are in the US and five failures have been reported. One malfunction occurred at the time of implantation and four others failed in patients already implanted. In those cases, the patients needed to have the device replaced. Two of the patients lost consciousness, but there were no reported deaths, according to a July 11, 2006, Up Date statement issued by the FDA. This particular recall includes:

Some Insignia and Nexus pacemakerspacemakers
Contak Renewal TR and TR 2 cardiac resynchronization pacemakers
Ventak Prizm 2, Vitality, and Vitality 2 ICDs (implantable cardioverter defibrillators)

Guidant recommends replacing the implanted devices like its a minor inconvenience. In a July 18, 2005, Dear Doctor Letter, Guident said it will provide “a replacement device at no charge for pacemaker-dependent patients and other patients deemed by their physicians to be best served by replacement, provided the replacement occurs prior to the normal appearance of elective replacement indicators. “

Experts say, its not quite that simple. On March 30, 2006, a New York Times headline read: “Replacing Heart Device Found Risky; It may be safer to leave possibly defective defibrillators in patients, studies show.”

As it turns out, surgery to replace a defibrillator carries a high risk of complications, including death, according to a study published in the March 30, 2006, Journal of the American Medical Association .

The research in JAMA found that one out of every 50 patients needed to have the replacement defibrillator removed because of severe postoperative infections.

One of the study’s lead authors, Dr Andrew Krahn, of Canada’s University of Western Ontario, said the overall complication rate was three to five times higher than expected.

Experts say, patients need to consider all the risks when deciding whether to replace or retain a defibrillator recalled by its maker.

Additionally, the Dear Doctor letter said, “Guidant will reimburse patients up to $2,500 for medical expenses remaining after Medicare and/or health insurance coverage, including device replacement or additional follow-up procedures.” According to SEC filings, Guidant had a $113 million charge in last year’s second quarter for the cost of replacing the recalled defibrillators.

However, Boston had better start putting money aside to pay for the damages because lawsuits are already being filed to force the company to pay up. According to the January 30, 2006, Lawyers Weekly article, “New York State and the city of Bethlehem, Pa. are suing Guidant for reimbursement of medical costs involved in replacing the devices.”

“The bulk of the liability damages sought are for either the cost of explant and replacement surgery or the cost of medical monitoring, which includes periodic evaluation by a physician to test the reliability of devices that remain implanted,” says Attorney Victoria Davis, a partner in the product liability group of Alston + Bird LLP in Atlanta, in the May/June issue of Medical Device Link.

“So obviously the financial implications are huge,” she told Medical Device, “whether you are talking about the cost of defending the growing number of lawsuits or the cost of any payments made to plaintiffs and their lawyers, which could be in the millions if the plaintiffs prevail.”

Even before it acquired Guidant, Boston had its own quality control problems. According to the March/April 2006, issue of Medical Device Link, “just hours after Boston Scientific Corp. (Natick, MA) bested rival suitor Johnson & Johnson Inc. (J&J; New Brunswick, NJ) and nailed down its $27.2 billion bid, the company learned that, in addition to cleaning up the problems at Guidant, it now has to get its own house in order.”

In a warning letter from FDA, Boston was notified of “serious regulatory problems” with medical devices produced at its facilities in Natick, MA; Maple Grove, MN; and Spencer, IN. The letter also referred to three earlier warnings regarding the company’s production plants in Watertown, MA; Glens Falls, NY; and Quincy, MA.

According to the FDA, Boston’s inability to address these issues in a timely manner indicated a “systemic problem with the entire corporate quality management system.”

FDA official, Daniel Schultz, MD, said the warning was only the third time in the FDA’s history that the agency had issued such a broad-based warning to a medtech company. The letter called on Boston “to resolve these serious violations promptly, and to do it not as it relates to specific products, but rather on a corporate wide basis.”

Of particular concern to Boston, MX said, is the stipulation that FDA will not approve any new products until the company’s quality system is in order.”

Which analysts say, likely means that Boston will not be unable to get approval for a new drug-coated coronary stent, until the first quarter of 2007, rather than the final period of 2006, as Boston had hoped.

Boston and Johnson & Johnson are now the only two companies on the US market with drug-coated stents, according to the July 18, 2006, Chicago Tribune.

Last year, Boston paid $750 million, the Tribune says, to settle claims that it broke a contract to jointly manufacture stents by setting up a secret factory in Ireland.

The worldwide market for drug-eluting coronary stents reached an estimated $4.2 billion in 2004, and is expected to nearly double by 2010. In the US, about 1.5 million patients were implanted with stents in 2005, according to The Medtech Marketplace in 2006, Medical Device Link, January/February 2006

The domestic market MX says, is dominated by the Taxus stent from Boston and the Cypher stent from Cordis Corp, a Johnson & Johnson company. Cypher received FDA approval in 2003, and Taxus gained approval in 2004.

However, there was more bad news for Boston in June 2006, when the Wall Street Journal reported that some US hospitals were reducing their use of Boston’s top product, drug-coated heart stents, after a Swiss study found that uncoated stents had a lower rate of complication.

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