More Scrutiny of Stenting for Profit Industry

Evelyn Pringle August 2007

The stenting for profit industry hit a major snag on March 1, 2007, when the US House Oversight and Government Reform Committee, ordered Johnson & Johnson and Boston Scientific to turn over documents related to their sales and marketing activities for drug-eluting stents.

Drug-eluting stents (DES) are mesh tubes used in patients with heart disease to keep arteries open after a procedures called angioplasty to remove blockage. The new drug-eluding stents were developed to address the problem of restenosis, which prevents renarrowing of the artery. The relative benefits of DES when compared to bare metal stents was supposed to be a reduction of death, heart attack and vessel revascularization.

“Since the new DES arrived on the market, stenting has evolved into a multi-billion dollar industry for the stent makers and doctors and hospitals alike. According to the May 17, 2007 Wall Street Journal, “Americans spent at least $14 billion on coronary-stent procedures last year, including surgical and hospital fees.”

Both J&J and Boston have received letters from Committee Chairman, Henry Waxman (D-CA), requesting documents to include correspondence with the FDA. The Committee also wants to know whether the companies used marketing funds to conduct clinical trials and how much researchers were paid and seeks information related to any adverse events revealed in the pre-approval clinical trials, as well as in post-approval use of the products.

In May 2007, after J&J announced that it would withdraw the Conor Medsystem’s heart stent from the Indian market after the device failed to complete clinical trials in the US, the Drug Controller General of India raided the company’s distributor’s office in New Delhi and seized all existing stock of the heart stent, India’s drug controller general M Venkateswarlu told the Economic Times on May 10, 2007.

The exact number of Conor stents currently on the market was still being assessed but the Times reports that thousands of patients in India could be at risk because an estimated 8,000 Indian patients have be implanted with the device.

Also the recent “Clinical Outcomes Utilizing Revascularization and Aggressive Drug Evaluation (COURAGE),”study published online on March 26, 2007, by the New England Journal of Medicine showed patients who received stents fared no better than patients who did not.

For the study, led by Dr William Boden of Buffalo General Hospital in New York, half of the roughly 2,300 patients underwent stenting procedures, took heart drugs, and were counseled to make lifestyle changes, such as losing weight, exercising, and giving up smoking and the other half received only lifestyle counseling and drugs to lower cholesterol, relax blood vessels, slow heart rate, and prevent blood clots. After an average of four and a half years, the study found a similar rate of death, heart attack, and stroke in both groups.

In an editorial accompanying the NEJM study, Dr Judith Hochman and Dr Gabriel Steg wrote: “The COURAGE trial should lead to changes in the treatment of patients with stable coronary artery disease, with expected substantial health care savings.”

Experts note that there are massive profits at stake. In 2006 alone, combined J&J and Boston earned $3 billion from the devices. On December 4, 2006, Bloomberg News reported that in 2005, the new stents accounted for 52% of total sales for J&J and 43% for Boston.

In July 2007, the stent makers announced their second-quarter earnings and J&J revealed that sales of the Cypher in the US have dropped 41% from this time last year, while Boston released sales figures for its Taxus showing a drop of 42%.

In December 2006, an FDA Advisory Panel determined that off-label use, or using a stent for a purpose outside the device’s approved label, is associated with an increased risk of stent thrombosis, death or heart attack compared to approved uses.

Some examples of off-label stenting include use in previously stented patients, patients with diabetes, patients who have stents placed immediately after a heart attack or patients who have stents placed in two arteries which branch off from each other.

Experts say that in the majority of cases the devices are being implanted in patients who could potentially be harmed. According to the FDA, over 60% of DES are being implanted in patients with more complex heart problems than the conditions for which the devices were approved.

With a priced tag of $10,000 to $38,000, as many as 85% of the stenting procedures are non-emergency and are being performed on people with only partially blocked arteries for the relief of recurrent chest pain, according to March 23, 2007 Associated Press.

The first DES was approved in April 2003, and by December 2006, at a hearing on the “Prospective on Drug eluting Stents: Balancing Risks and Benefits,” the Advisory Panel reported that 3 out of 5 implants were for unapproved uses.

Dr Ron Waksman presented the results for Contemporary Registries of Washington Hospital Center and reported that the rates of stent thrombosis were almost doubled in cases of off-label use compared to on-label use at 30 days and at 12 months.

He also said that in general, when they looked at on-label and off-label use, “the drug eluting stents are more thrombogenic than bare-metal stents.”

For both on-label and off-label use, Dr Waksman said, “over time, late stent thrombosis is seen more in the DES versus the bare-metal stents.”

Dr Peter Smith of Duke University told the panel that stenting is being performed on patients with high severity coronary problems such as 3 vessel disease who should be undergoing coronary bypass grafting surgery.

He presented data that showed in these types of cases, 1 out of every 20 patients who died after treatment with stenting would have survived if coronary bypass grafting would have occurred and that DES use in patients with 3 vessel disease results in about 3,600 premature deaths annually in the US.

In the end, the panel did recommend that a warning be added to the DES labels stating that off-label use may increase the risk of thrombosis, myocardial infarction, and death, and several members recommended that a black box warning be added. However, Dr Brian Zuckerman, director of the FDA’s division of cardiovascular devices, quickly quashed that idea, saying there would be no black box warning, according to MedPage Today on December 8, 2006.

But as usual, investigations have shown that the FDA was aware of the DES problems for years. Within 6 months of the approval of the first DES, the FDA had already identified 50 cases of allergic reactions and agency records show that a few months after the Cypher arrived on the market, the FDA received a cluster of sub-acute thrombosis reports and the FDA and J&J issued a letter notifying doctors of the initial reports in July 2003.

The Tarus was launched in March 2004, and on July 16, 2004, Boston announced a major recall of 85,000 of the devices after a death and serious injuries were linked to the DES, just two weeks after 200 were recalled following reports of malfunctions during implant procedures. At the time of the announcement, the company also said that it was recalling 11,000 bare metal stent systems, which the FDA found to be linked to two deaths and 25 serious injuries.

Two years later on October 23, 2006, Bloomberg reported that 2.9% of DES patients could develop clots within three years and said, “More than 4 million people have received such stents since 2001, which means clotting related to drug-coated devices may have caused as many as 20,000 heart attacks and 10,000 deaths worldwide.”

The American College of Cardiology posted an editorial online by Dr Sanjay Kaul, director of the cardiology fellowship training program at Cedars-Sinai Medical Center and a colleague on October 11, 2006, that warned that blood clots in drug-coated stents may be causing an extra 2,160 deaths in the US alone each year.

The next month, on November 29, 2006 analysis by researchers at the Cleveland Clinic found the risk of blood clots was increased as much as 5-fold in patients who receive drug-coated stents compared to patients implanted with the old bare-metal stents.

“There are hundreds of thousands of Americans who are currently getting stents placed who do not need it as initial therapy,” according to Dr Raymond Gibbons, professor of medicine at the Mayo Medical School and president of the American Heart Association, in a United Press International article.

In the March 28, 2007, Wall Street Journal Health Blog, Dr Andy Demajio wrote, “It has been distressing to see how interventional cardiologists have been happily stenting their patients to fatten their wallets.”

“This immoral practice should come to a stop,” he wrote. In May 2007, the Medicare Strike Force reported that one cardiologist had implanted 25 unnecessary stents in 2006 alone, with most procedures paid for by Medicare.

Legal experts are predicting that future lawsuits filed against Boston and J&J may well include the names of cardiologists and hospitals that helped turn the stenting for profit business into a billion dollar industry. Being there is no way to reverse the stenting procedure, patients face a life-time of worry because a blot clot in a stent can cause a stroke or heart attack without warning at any time.

Lawsuits against the stent makers continue to mount. On December 6, 2007, 46-year-old Sean O’Shea, a man who had five stents implanted, announced a lawsuit against J&J, alleging the company failed to warn him about potential blood clotting complications associated with the stents.

“Had I known there would have been this many complications,” he said in a news conference, “I would have chosen other options.”

On July 30, 2007, the Zimmerman Reed law firm announced the filing of a lawsuit against J&J by a Minnesota man who suffered a heart attack as a result of a blood clot at the site of his Cypher implant. According to the press release, it is estimated that over 50,000 patients have been implanted with the Cypher stent.

Boston Scientific Hit With Three new Guidant Lawsuits Per Day

Evelyn Pringle May 16, 2007

On March 2, 2007, the Boston Globe reported that since June 2005, Guidant, which was acquired by Boston Scientific early last year, has issued safety warnings or recalls for more than 88,000 defibrillators and 200,000 pacemakers.

At the time of purchase, the deal seemed solid for Boston because the Indianapolis-based Guidant was the second-largest manufacturer of implantable defibrillators. However, according to Boston’s first quarter March 2007 SEC filing, the company is now facing over 75 class action lawsuits and 1,100 individual lawsuits involving Guidant defibrillators and pacemakers, up from 842 lawsuits listed in the company’s November 2006 filing.

The Globe also reported that new lawsuits against the company are being filed at a rate of 3 per day. But medical experts say this is just the tip of the iceberg because many surviving family members will probably never know that a patient’s death was caused by Guidant’s defective products because heart devices are rarely evaluated to determine whether the unit was functioning correctly at the time of death.

According to analyst estimates cited by the Globe, Guidant related liabilities could reach $2 billion and since Boston acquired the firm in April 2006, Boston stock value has dropped about 29%.

As of December 31, 2006, according to SEC filings, Boston has set aside $485 million for legal matters, which represents a $100 million increase from the $384 million reported in September 2006 SEC filings.

Critic say the worst part of the Guidant debacle is that evidence is emerging that shows patients were implanted with defibrillators for profit and not need and the cost of a defibrillator can be as high as $35,000.

The January 2007, Journal of the American College of Cardiology, reported a study that found that as many as one third of defibrillators implanted in 768 patients between March 2001 and June 2004 for irregular heartbeats were unnecessary and therefore, up to a third of the patients received minimal benefits from the device.

In addition, documents have surfaced in litigation that show Guidant knew for years that the devices it was selling were flawed. A report by an independent panel appointed to review Guidant recalls was released in March 2006, and said the firm allowed about 4,000 potentially defective defibrillators to be implanted after the company learned of the malfunction in 2002.

Guidant executives tried to defend their actions by claiming the devices met all engineering projections and that notifying doctors about the flaw might have resulted in more harm than good by causing unnecessary surgery to replace the devices.

But the panel soundly rejected those arguments and concluded that defects need to be disclosed promptly, even when they occur in small numbers. “The Independent Panel believes,” it wrote, “that under no circumstances should a potential or manifest risk of a preventable death be superseded by statistical analyses that indicate that performance remains with general guidelines.”

By the time of that report, at least 7 patients had died because their defibrillators had failed to work due to an electrical defect.

Lawsuits filed by two Corpus Christi, Texas residents who had defibrillators implanted in 2001, alleged that Guidant officials “actively concealed the … defect, suppressed reports, failed to follow through on FDA notification requirements, and failed to disclose a known defect to patients. Instead of revealing the defect, defendants continued to represent their product as safe for intended use, and continued to sell the flawed [devices] despite knowing of the dangers.”

The plaintiffs further allege they have suffered extreme mental anguish from knowing that the defective devices could malfunction at any time.

Legal experts say if plaintiffs can prove that Guidant knew about the problem with the defibrillators and continued to sell the devices, the plaintiffs would be entitled to punitive damages because Guidant has a documented history of knowingly selling defective products and the firm had promised not to do so in the future the last time the company was busted.

In 2003, a former Guidant subsidiary was fined $92 million by the US Department of Justice for concealing serious adverse events, including 12 deaths, related to its abdominal aortic grafts. At that time, as part of its settlement agreement with the DOJ, Guidant pledged to “verify and make sure their reporting procedures were in order, and that they were reporting adverse events for their devices.”

On February 23, 2006, the Associated Press reported that the FDA, US Department of Justice, the Securities and Exchange Commission and several state agencies were investigating Guidant over its recalls. In addition the AP advised that, “Guidant’s St. Paul facility has been the focus of the federal investigations and inquiries into the company’s manufacturing process.”

The DOJ jumped into the current controversy on January 28, 2006, and sent out a press release, when the US Attorney in Minneapolis issued a subpoena seeking the records that were disclosed in the Texas lawsuit that showed the company knew that the defibrillators could fail. Some of the specific documents requested evidence that Guidant executives had discussed whether they should warn doctors that some of the devices could short-circuit and decided against it.

More specifically, the DOJ noted, the documents include notes from Fred McCoy, president of Guidant’s cardiac rhythm management division, that show a decision was made to sell inventory described by the executives as having sporadic ”life-threatening” defects. The DOJ merged its investigation with an investigation already underway by the FDA’s Office of Criminal Investigation.

Experts say product liability lawsuits such as those Guidant is facing have considerable financial implications for a company and failure to notify the public about device flaws can have a more devastating impact on a firm’s financial future than the notification itself.

“Company management should fear the prospect of being accused of deliberately refraining from physician disclosure in order to maintain a high market share that would enhance management’s financial interests,” says Genese Kay Dopson, special counsel at Sedgwick, Detert, Moran & Arnold LLP, in the May/June 2006, Medical Device Link.

“For example, in Guidant’s case,” she explains, “the aftermath of physician notification resulted in the decrease in the value of Guidant’s stock.”

“As a result,” she noted, “a company that was in negotiations to acquire Guidant prior to the physician disclosure negotiated a lower bid as a result of the decrease in stock value.”

“Shareholders have also initiated suits against Guidant for fraud,” she said.

“I think the company is potentially more damned,” she states, “if it does not make the physician disclosure.”

According to Ms Dopson, in product liability cases companies must be able to put forth a defense that demonstrates a commitment to patient safety. “Failure to adhere to the primacy of patient safety,” she says, “coupled with decisions leading to concealment of known defects from the medical community, will fuel lawsuits that lead to jury verdicts that include punitive damages.”

In December 2005, the FDA issued a warning letter to Guidant after inspectors found numerous problems with quality control and record-keeping procedures at the St Paul plant where the defibrillators were manufactured which meant that until the issues were resolved, the FDA would not approve any new Guidant products.

On April 17, 2007, the Boston Globe reported that the FDA had finally lifted the warning letter that had been hanging over Guidant, freeing up the company to introduce products that had been blocked by the quality-control problems.

On April 10, 2007, the FDA said a December 2006 inspection of Guidant indicated that the issues appeared to have been adequately addressed.

However, the good news was likely overshadowed by the FDA’s April 12, 2007, announcement of a recall of approximately 73,000 more defibrillators because of faulty capacitors. “The capacitors,” the FDA said, “may cause accelerated battery depletion and may reduce the time between elective replacement indicator and end of life to less than three months.”

The FDA instructed patients implanted with one of the recalled devices to contact their healthcare provider regarding the steps to take.

Aside from inheriting Guidant’s woes, Boston has major issues pending with the FDA of its own making. On January 26, 2006, Boston received a corporate warning letter from the FDA, notifying the company of serious regulatory problems at 3 facilities and advising Boston that the corrective action plan relating to 3 site-specific warning letters issued to the firm in 2005 was inadequate, according to Boston’s SEC filings.

The FDA warning letter sent on May 18, 2005, about quality-control standards said Boston failed to establish manufacturing controls for the quality of devices and did not properly track quality concerns.

On January 26, 2006, the Associated Press reported that FDA officials said that this was only the third time in the agency’s history that it had issued such a broad companywide warning involving a device maker’s systems to identify potentially defective and unsafe products

According to the AP, the problems identified during inspections involved the company’s headquarters and facilities in Maple Grove, Minn, and Spencer, IN, and also cited continuing problems at sites in Watertown, Mass; Glens Falls, NY, and Quincy, Mass.

On April 17, 2007, the Boston Globe, reported that the companywide warning letter that Boston received in January 2006 is still in effect and applies to Boston’s “drug-coated stent business and the rest of the pre-Guidant areas of the company.”

Company executives told the Globe that they did not expect the issues to be resolved until the second half of 2007. “Until then,” the Globe reports, “the company will be prevented from receiving agency approval of any new models of drug-coated stents.”

More Trouble in Medtronic Heartland

Evelyn Pringle May 16, 2007

Minnesota based Medtronic is one of the world’s largest suppliers of defibrillators through its Cardiac Rhythm Disease Management division and its top selling products are pacemakers and defibrillators. CRDM net sales for the 3 and 9 months ended January 26, 2007 were $1.291 billion and $3.904 billion, according to the firm’s latest SEC filing.

In the Form 10-Q filing for the period ending January 27, 2007, the company predicts a profitable future for defibrillators stating, “the U.S. and worldwide implantable cardioverter defibrillators (ICDs), markets are greatly under-penetrated and represent a solid and sustainable growth opportunity.”

A defibrillator is a device implanted in patients with abnormal heart rhythms to shock the heart back into a normal rhythm when necessary.

“The need for sudden cardiac arrest protection and heart failure treatment,” Medtronic says, “is significant in the U.S. and even larger internationally.”

The firm estimates the US market to have “a total prevalence pool of 1.3 million patients,” and “the penetration level to be between 30 to 35%, leaving approximately 880,000 patients in the prevalence pool.”

Medtronic also estimates that about 250,000 new patients enter the pool each year. 250,000 implants each year translates into huge profits. According to Dr Timothy Shinn, of the Michigan Heart and Vascular Institute, the cost of the surgery and life-time battery replacements for a defibrillator runs about $80,000 per patient.

However, there is a growing debate over whether defibrillators are being implanted in patients for profit. In January 2007, the Journal of the American College of Cardiology reported that researchers at the University of Michigan Medical Center, followed over 750 patients who were implanted with defibrillators between March 2001 and June 2004, and determined that as many as one third were unnecessary and that the elimination of the unnecessary procedures would result in savings of $690 to Medicare alone.

For patients, implanting defibrillators when they are not needed can lead to a life-time of worry, discomfort and health care costs. A recent study published in the May 2007, issue of Circulation found that the rate of failure for defibrillators increases over time and occurs with all models. The researchers found that one in 5 fails to work properly after 10 years and the risk was highest for women and healthier patients who are most likely to live for years.

According to the study, the electrical wires that connect the defibrillators to the heart are the source of the problem. The researchers found that the malfunctioning wires, called leads, sometimes cause the devices to fail when the heart begins to beat abnormally or stops completely. And at other times, the defibrillator shocks the heart for no reason.

Patients say the adverse events caused by the defective devices are uncomfortable and frightening. On September 30, 2005, one woman who was implanted with several defibrillators dating back to 1993, filed an adverse event report with the FDA’s Manufacturer and User Facility Device Experience Database (MAUDE), and said the problem is serious and “these shocks nearly knock one off their feet with no warning.”

In 1995, she said, a wire from the device that leads to the heart broke and rendered the defibrillator inoperable but the malfunction was only found during a periodic check-up after which the unit had to be replaced.

The woman said she had one device replaced in 2001 because the batteries were low and yet on September 13, 2001, when she was feeling fine, she received a shock treatment with no warning. The same month, when she was again feeling fine, she said she received 2 more major shocks in “rapid order.”

After the woman spent a night in the hospital, it was concluded that something was wrong with the defibrillator so the device was turned off and she had to undergo another implant.

The woman noted in her complaint that Medtronic claims that the failure is to be expected at the end of equipment life, “like your chevy is out of warranty.”

“To me this unacceptable,” she said, “there must be some way of warning of a failure short of a shock.”

The US Department of Justice is investigating Medtronic’s marketing practices for devices used with heart disease patients. The US Attorney for the District of Massachusetts has served Medtronic with a subpoena requesting documents related to defibrillators, pacemakers, and related components; monitoring equipment and services; and the provision of benefits to persons in a position to recommend the purchase of such devices; as well as training and compliance materials relating to the fraud and abuse and the federal Anti-Kickback statutes.

In its SEC filing, Medtronic says the company “is cooperating fully with the investigation, and has begun to produce documents on a schedule requested by the United States Attorney.”

However, a point worth noting is that when the firm claims it is “cooperating fully” and “has begun to produce documents,” Medtronic is actually responding to a subpoena with a request for these documents that was issued way back on October 24, 2005.

Who knows how many document-shedding parties occurred over the past year and a half while Medtronic was “cooperating fully with the investigation.”

The firm’s track record for illegal marketing practices is far from spotless. Its not even been a year since it coughed up $40 million to settle charges with the DOJ after the firm was caught paying kickbacks to doctors to the increase sale of the company’s spinal products. And we’re not talking chump change. In that case, Medtronic paid a surgeon in Wisconsin $400,000 for a documented work schedule that amounted to less than 8 days that year.

Over the past several years, there have been a steady stream of recalls for Medtronic’s defibrillators. In April 2004, the firm issued a recall for certain defibrillator models after they were linked to 4 deaths and one serious injury with about 1,800 of those devices in use at that time. The lawsuits that followed produced documents that showed Medtronic had continued to sell the defective products for at least 2 years after learning that there was a problem.

On February 3, 2005, the FDA web site posted a Class I recall for LIFEPAK 500 automated external defibrillators and said the action affected 1,924 devices manufactured in 1997. The reason given for the recall was that the affected devices might display a “Connect Electrodes” message and then will not defibrillate the patient, even when the electrodes are properly connected.

The LIFEPAK is used by first responders such as firefighters, police and others trained in CPR who are often first to arrive at the scene of a cardiac incident but do not have significant medical training.

A Class I recall is defined by the FDA as “a situation in which there is reasonable probability that the use of or exposure to the product will cause serious adverse health consequences or death.”

On February 11, 2005, the FDA announced the possibility of a specific battery shorting mechanism in another subset of Medtronic defibrillators and reported that approximately 75% of the devices were implanted in the US with the number of patients that could be at risk listed as 87,000 at the time. On February 24, 2005, the FDA issued a Class I recall for these devices.

On February 25, 2005, Medtronic issued a press release saying the firm had received 54 incident reports on the LIFEPAK devices, including 8 where it may have prevented patient resuscitation. “In addition,” it stated, “a recently completed theoretical engineering analysis estimates that this issue may occur on up to 8 percent of patients.”

Less than 2 months later, Medtronic announced that it had identified an additional 396 LIFEPAK defibrillators to be added to the original recall.

There have been numerous recalls since that date; too many to list separately in fact.

Medtronic is also mired down with other regulatory issues. On December 4, 2006, it announced an intention to pursue a spin-off of Physio-Control, a subsidiary that markets external defibrillation and emergency response systems, data management solutions and support services used by hospitals and emergency response personnel, into an independent, publicly traded company.

However, on January 15, 2007, Medtronic was forced to suspend US shipments of Physio-Control products manufactured at its facility in Redmond, Washington after the FDA found quality system issues.

Medtronic claims it is discussing what corrective actions need to be taken with the FDA before shipping can resume. But according to its SEC filing, the firm expects “the suspension of U.S. shipments to continue into fiscal year 2008.”

The company is also facing massive litigation over the defective defibrillators. In the SEC filing, Medtronic states: “While the number of cases filed changes continually, as of this writing there were approximately 910 federal court cases and approximately 65 state court cases, reflecting a total of approximately 975 individual product liability cases.”

“In addition,” it advises, “five purported class action personal injury suits have been filed in Canada.”

Lawsuits have also been filed by third party payors claiming an entitlement to reimbursement for payments made on behalf of patients for the defective defibrillators.

All the Federal lawsuits have been consolidated for pretrial proceedings with a judge in the US District of Minnesota pursuant to the MultiDistrict Litigation rules, and separate master complaints have been filed in the MDL for the personal injury and third-party payor cases.

On November 28, 2006, Medtronic took a major hit when the Minnesota Court denied its motion to dismiss several hundred personal injury lawsuits in which Medtronic argued that the FDA’s approval of the defibrillators preempted the lawsuits.

However, the court disagreed and Medtronic immediately made it clear that the company planned to appeal the ruling.

As of right now, it looks like some victims might actually get their cases heard before a jury; a rare event for any American consumer who goes up against the pharmaceutical industry. But on February 8, 2007, the Minnesota court issued a scheduling order for the MDL cases, and set the remainder of the year 2007 for discovery and pretrial motions, and “a ready for trial date for bellwether cases of January 2008,” according to Medtronic’s SEC filing.

Shelhigh and FDA play Blame Game Over Sale of Contaminated Devices

Evelyn Pringle May 15, 2007

On April 17, 2007, the FDA issued a press release to announce that US Marshals had seized all implantable medical devices from Shelhigh, Inc, in Union, NJ, after finding “significant deficiencies in the company’s manufacturing processes.”

“The deficiencies,” the agency said, “may compromise the safety and effectiveness of the products, particularly their sterility.”

According to the FDA, if not sterile, the use of these devices poses a reasonable probability of serious adverse events or death.

But critics say the real story here involves the FDA’s knowledge about the safety hazards at Shelhigh dating back to at least 2000, and the fact that it allowed patients to be implanted with the firm’s devices for basically 7 years.

In the press release, the FDA says it inspected the Shelhigh facility last fall, and warned the firm in a meeting that failure to correct the violations could result in an enforcement action. The agency also noted that it had sent two previous warning letters to the firm about manufacturing deficiencies and other violations.

However, on its web site, Shelhigh has posted a response to the public statements made by the FDA and squarely points the finger of blame at the agency for allowing the sale of the potentially contaminated devices to continue.

“If the FDA truly believes what it claimed,” Shelhigh states, “then the FDA is negligent and guilty of professional misconduct for permitting the use of Shelhigh products during the 10 weeks when 2-3 FDA inspectors were present at the Shelhigh facility and for 4 months afterwards.”

But the history of the controversy at the center of this blame game goes back a lot further than last fall. According to the complaint filed in US District Court of New Jersey by the US Attorney for the District of New Jersey, to support the seizure of Shelhigh’s products, the first FDA warning letter referred to in the agency’s press release was sent 7 years ago on April 26, 2000, and the second warning letter was sent December 14, 2005.

In assessing blame, its necessary to understanding that FDA regulations require device makers to have systems in place to accept and analyze all complaints received from doctors and hospitals and to forward all complaints that indicate that a device failure may have contributed to the injury or death of a patient to the FDA.

The first warning letter proves that on April 26, 2000, the FDA was aware that patients who were implanted with Shelhigh devices were developing serious infections that required surgery to remove the devices and that Shelhigh refused to investigate the adverse events to determine whether its products were contaminated.

In the letter, the FDA said, Shelhigh “failed to evaluate” complaints of patients who developed infections which required surgical removal of the implant to determine whether the infection was due to the malfunction of the device.

The agency also pointed out that despite the fact that there were 4 separate event reports filed with Medwatch from one source that involved patients with infections so severe that the device had to be explanted, there “was no written evaluation or investigation of these Medwatch complaints,” by Shelhigh.

The letter also stated that there were 43 problems related to infections of implanted devices reported by the firm’s distributor, Classic Medical on October 14, 1999, which “were not recorded and evaluated as product complaints.”

Jumping ahead to the FDA’s latest list of safety violations, they include Shelhigh’s failure to (1) adequately monitor critical manufacturing environments for possible microbial contamination; (2) properly test products for sterility and fever-causing contaminants; (3) scientifically support product expiration dates; and (4) manufacturing products in a poorly constructed and maintained clean room where sterilized devices are further processed.

On April 18, 2007, the FDA sent out a Dear Healthcare Provider letter stating, “This is to notify you that all medical devices manufactured by Shelhigh … were manufactured under conditions that may have contaminated the devices and may result in devices that fail to function for the expected life of the products.”

The FDA also said, it was aware of published reports of premature or accelerated failure associated with some devices and the products could potentially be contaminated with bacteria, fungi, and endotoxin. The letter recommended that providers assess the overall health status of each patient, and provide the testing, monitoring and care appropriate to each patient’s individual case.

On April 19, 2007, the FDA issued a public advisory for patients stating: “Devices manufactured by Shelhigh, Inc. may have been implanted during various surgical procedures, including open-heart surgery for valve replacement; and repair of soft tissue structures during abdominal, pelvic, heart, lung, brain, shoulder, and spine surgery.”

The advisory warns that patients vulnerable to infection and those at high risk for complications include the critically ill, children, the elderly, and pregnant women.

Noting that the devices have been available since 1997, the FDA tells patients, “The number of these devices that may be contaminated or experience problems isn’t known at this time,” and problems “could occur at anytime, and may become apparent to you and your physician during routine examination.”

According to the agency, the seizure last month involves many products and includes pediatric heart valves and conduits, described as “tube-like devices for blood flow,” surgical patches, arterial grafts, dural patches, which aid in tissue recovery after neurosurgery, and annuloplasty rings, used to help repair heart valves.

The FDA may not know how many devices have been sold but in the May 3, 2007, Star-Ledger, Shelhigh’s marketing director, Douglas Goldman reported that, “thousands and thousands of the company’s implants have been used since Shelhigh began distributing products 10 years ago.”

The FDA’s warning to patients amounts to a life-sentence of worry and medical care because the devices are permanently implanted into infants, children and adults and the agency advises doctors to monitor patients for infections and proper device functioning throughout “the expected lifetime of the device.”

The meeting referred to in the FDA press release took place almost a year ago on June 16, 2006, and according the complaint filed with the court, “the firm was again warned by FDA that continuation of the violative conduct could result in seizure, injunction, and/or civil money penalties.”

The inspections referred to in the press release took place between October 11 – December 20, 2006, and “revealed that the methods used in, and the facilities and controls used for, the manufacture, design, packing, storage, and installation of the devices do not comply” with safety regulations, according to the complaint.

“Because the firm’s devices are implanted into patients,” it states, “ensuring continued sterility is critical.”

However, ensuring sterility was apparently not a priority to the FDA being it permitted the hazardous devices to be implanted for 7 years. The complaint was not filed until April 16, 2007, and in it, the FDA now claims, “the firm allowed at least four lots of devices that failed sterility testing to be released for distribution in the last two years.”

This is certainly a bizarre allegation considering that the FDA allowed the sale of the devices in the same two years. On April 24, 2007, the arrogant founder of the Shilhigh, Shlomo Gabbay, MD, blasted the FDA on this point in a press release stating:

“There is absolutely no FDA recall of our devices which the FDA claims may cause patient injury. If our products were truly questionable as the FDA is leading the Public to believe, the FDA could have requested a remedy at any time – why haven’t they?”

Legal experts are not amused by the public spectacle of the firm and the FDA arguing over who’s to blame for knowingly implanting patients with potentially contaminated devices.

Attorney, Derek Braslow, of the Pennsylvania Law Firm, Pogust & Braslow, has plenty of experience fighting for the “little guy” against the giant drug companies in large part because of the fact that the industry friendly FDA, under the Bush Administration, refuses to protect the public from dangerous products placed on the market by an industry comprised of the most generous Bush campaign contributors.

In this instance, Attorney Braslow says the conduct of both Shelhigh and the FDA is “outrageous.”

“This is another example of a pharmaceutical company placing profits over people and further,” he says, “why we cannot continue to rely on the FDA to protect Americans from dangerous drugs and devices.”

“Instead of feigning worry about Americans importing contaminated drugs from Canada,” he notes, “our government should be more concerned about the contaminated products in its own backyard.”

“I doubt that even the Senate’s proposed new drug safety legislation will end up being strong enough to prevent this kind of outrageous conduct,” he warns.

“As far as I’m concerned,” he says, “the FDA’s action is too little, too late.”

But Mr Braslow also says, “the failure of the FDA does not give this company a free pass.”

“Shelhigh must be held responsible for its criminal conduct,” he points out, “not only by the government but by those patients it injured.”

According to the FDA, at the time of the seizure, Shelhigh was asked several times to voluntarily recall all of the products that remained on the market but declined to do so. On May 2, 2007, the FDA sent a letter to Shelhigh formally requesting the recall of all devices including those in hospital inventories.

On May 3, 2007, Mr Gabbay issued his own press release and callously refused to recall the devices to prevent the possibility of more implant victims. “This is the first formal request by the FDA for Shelhigh to recall its products,” he said, “and since the FDA allegations are unfounded, Shelhigh has no intention to initiate a product recall.”

“The FDA,” he said, “should understand that it must prove its allegations before it can make a request and their newest statements do not provide any further factual support for their claims.”

Mr Gabbay and the FDA can argue over blame until the cows come home but the cold hard truth is that nobody will ever know how many serious injuries and deaths have occurred over the past 7 years that were not rightly attributed to the company’s contaminated devices and the FDA’s failure once again to protect the public.

No Preemption for J&J against Charite Spine Surgery Victims

Evelyn Pringle April 25, 2007

According to Johnson and Johnson’s SEC filings, as of December 31, 2006, there were 100 lawsuits pending against the company involving the Charite artificial spinal disc, seeking “substantial compensatory and, where available, punitive damages.”

The J&J subsidiary, DePuy Spine, has marketed the Charite since the disc was FDA approved for sale in the US in October 2004, to treat patients who have degenerative disc disease at one level in the spine.

In a nutshell, the lawsuits allege that the Charite is defective, it was improperly marketed, and J&J failed to adequately warn doctors and consumers about the dangers of the disc.

In March 2006, J&J filed a motion for summary judgment in attempt to have 4 lawsuits dismissed in the Superior Court in Bristol, Mass, using a legal defense known as preemption where a device maker cannot be sued if the FDA has approved the device.

Its ironic that J&J would try to use this argument when experts say the fault lies with the FDA for approving the Charite to begin with based on one 2-year noninferiority trial that sought only to show that it worked as well as the Bagby and Kuslich (BAK) cage used in spinal fusions, which had already been abandoned due high failure rates.

And even when compared to the outdated surgery, the disc worked no better in relieving pain and most Charite patients were still taking narcotic pain drugs 2 years later.

On April 11, 2007, Judge Susan Garsh denied J&J’s motion and noted that the plaintiffs alleged that DePuy made specific performance claims to obtain FDA approval that the device failed to achieve and “there is evidence to support the device does not perform in the manner which DePuy represented to the FDA that it must perform,” she wrote.

According to the lawsuits, Charite patients were provided materials by DePuy that stated: “The Charite Artificial Disc has a clinical history spanning 17 years. Its safety, efficiency and remarkable durability have been proven through thousands of implants worldwide.”

DePuy also promoted the disc with the phrase: “Natural Motion is Back.”

J&J claims that replacement surgery will alleviate chronic back pain, permit natural movement and improve the patient’s ability to function under the premise that segmental mobility of the spine will improve, as has been the case with hip and knee replacement.

J&J’s main selling point is that disc replacement is more effective than lumbar spinal fusion surgery, where the damaged disc is removed and the vertebrae are joined together using bone grafts, metal screws and/or cages and motion can no longer occur in that area.

However, critics point out that in many of the surgeries listed as successes, the Charite only worked after the auto-fusing of bones together, similar to spinal fusion surgery, which eliminates the possibility of natural motion that leads patients to chose the costly replacement surgery to begin with.

A long line of studies show the odds for revision surgery in Charite patients are high. Back in 1996, Cinotti, David et al, analyzed the follow-up on 46 patients and eight patients had undergone subsequent fusion surgery. “The main cause of poor outcomes appear to be an inappropriate selection of patients undergoing disc replacement,” the authors concluded.

In 1997, Lemaire, Skalli, et al, reported on 105 patients with average follow-up of 51 months and found that fifty patients or 48% had undergone at least one operation.

A 1999 study by Zeegers, Bohnen et al in the Netherlands reported the 2-year results for 50 patients and found 12 patients, or 24%, needed re-operation.

In a more recent study from the University Medicine in Berlin (2005), Putzier, Funk et al evaluated 71 patients who received implants between 1984 and 1989, and of the 53 patients available for examination, 12, or 23%, had undergone surgical fusion.

But there were warnings that the Charite was not all it was cracked up to be even before it was approved. In April 2003, the Spine Journal published the paper, “Total Disc Replacement for Chronic Low Back Pain: Background and a Systematic Review of the Literature,” that stated: “There is no evidence that disc replacement reliably, reproducibly, and over longer periods of time fulfils the three primary aims of clinical efficacy, continued motion, and few adjacent segment degenerative problems.”

Some experts say the Charite itself is the problem. On October 23, 2006, the reported that researchers at the University of California at Irvine claim the device maker made a crucial mistake when designing the disc that explains why the replacement surgery has resulted in repeated failures with “catastrophic consequences” for patients.

“They’ve based their center of rotation on a disc space that is in front of the spinal canal,” Dr Charles Rosen, a Cal-Irvine spine surgeon, told the Street.

According to Dr Rosen, the makers overlooked the spine’s normal function by creating an “artificial center of rotation” in a space that lies in front of the spinal canal instead of behind it and has compromised the body in the process.

“You have a center of rotation that’s normally there, and they falsely impose another,” he told the Street. “You can’t have two because they will neutralize each other. Something has to give.”

“To give,” he says, “either the back part of the device breaks or the front part dislocates.”

J&J has a lot of money riding on the Charite and if it turns out that Dr Rosen is right, its January 1, 2006, projection the total spine market will bring the company $9 billion by 2010 will go right down the tubes.

Spine surgery is a multi-billion dollar industry. According to the August 5, 2006 LA Times, at least $3.2 billion was spent in the US on spinal fusion in 2005, and Medicare payments to hospitals for implant surgery have risen about 40%, in the past 2 years, from $10 billion to $14 billion, according to the September 26, 2006, New York Times.

However, serious questions are being raised about whether doctors and hospitals are practicing surgery for profit, especially since the revelation that surgeons are investing in companies that make the devices and hardware used during spine surgery.

On December 30, 2006, Reed Abelson reported in the New York Times that over the past couple of years, about 30 start-up companies have begun selling spine devices and hardware and about a dozen have doctors investors.

“Because most of the companies are private and the relationships are not publicly disclosed,” he wrote, “there is no way to know how many spine surgeons around the country are partial owners of device makers.”

Stan Mendenhall, editor of the newsletter, Orthopedic Network News, told the Times that the spine device market has doubled in the last 3 years and there are now about 100 companies and doctors have ownership in some of the newest firms. And there are apparently plenty of profits to spread around because the report says a single screw sells for around $1,000 or 10 times the cost of making it.

Back on June 28, 2006, the Times revealed another funneling scheme set up by doctors and device makers when it reported that, “doctors in private practice have set up tax-exempt charities into which drug companies and medical device makers are, with little fanfare, pouring donations — money that adds up to millions of dollars a year.”

“The tax-exempt money also sometimes flows to the for-profit medical groups affiliated with the charities,” the Times wrote, “sometimes covering business expenses or even paying parts of the salaries of doctors.”

For example, the Times revealed that the tax-exempt, “Blue Ridge Bone and Joint Research Foundation,” headed by Dr Joseph Moskal, an orthopedic surgeon, received $75,000 from DePuy in the year ending July 31, 2004, and then paid $30,000 of that money to the for-profit Roanoke Orthopaedic Center, where Dr Moskal practices, to defray the costs of a fellowship program there.

The Department of Justice made it known that J&J’s relationships with doctors are under investigation in June 2006, when it served subpoenas and search warrants on DePuy, demanding copies of consulting contracts, professional services agreements, and documents that evidence the company’s arrangements with orthopedic surgeons.

Injuries and Death Reported in Patients Implanted With Bard Kugel Mesh Patch

Evelyn Pringle October 29, 2006

On January 13, 2006, CR Bard, Inc announced a Class I recall of the Bard Composix Kugel Mesh X-Large Patch after receiving 24 reports that the device’s plastic coil ring may not withstand the increased stress associated with certain surgical placement techniques.

Davol, Inc, a subsidiary of CR Bard, notified US customers of the recall by letter on December 27, 2005, sent by Federal Express. According to Bard, at that time, the company had sold approximately 32,000 units worldwide since 2002, and the three product codes involved generated sales of approximately $11 million in 2005.

The Kugel Mesh Patch is used to repair ventral hernias caused by thinning or stretching of scar tissue that forms after surgery. The patch is placed behind the hernia defect through a small incision and then held open by a “memory recoil ring” that allows the patch to be folded for insertion and later spring open and lay flat once it is in place.

The FDA reports that the reason for the recall is that the memory recoil ring can break and lead to bowel perforations and chronic intestinal fistulae, causing abnormal connections or passageways between the intestines and other organs.

The Bard Composix Kugel Mesh X-Large Patch recalls include the following lot numbers:

* 41XMXXXX – M = 2002
* 41XNXXXX – N = 2003
* 43XMXXXX – M = 2002
* 43XNXXXX – N = 2003
* 43XOXXXX – O = 2004
* 43XPXXXX – P = 2005

On March 2006, Davol, Bard and FDA notified healthcare professionals of an expanded recall to include Oval, Large Oval and Large Circle Kugel mesh patches and also issued letters to hospitals and health care professionals providing updated Instructions for Use, clarifying the proper insertion technique and patient management information.

In a March 24, 2006 letter to Hospital Administrators, marked “Urgent,” Bard said, Davol, is “expanding the Class I Recall of the Extra Large sizes of its Bard� Composix� Kugel Patch to include certain lots of Bard� Composix� Kugel Large Oval and Large Circle Products and all lots of the Oval product, intended for ventral hernia repair.”

In a letter to distributors of the device, Bard noted that the updated recall includes lots manufactured prior to and including December of 2003, and warned that there “is a risk that the welds could break under the stress placed on the large sized products during placement, which could lead to potential patient complications such as abdominal pain, bowel perforation or chronic enteric fistulas.”

In a March 24, 2006 letter to surgeons, Bard stated: “Immediately discontinue use of the specific product codes and lot numbers listed below.”

“Additionally,” the letter said, “please immediately distribute copies of this Important Patient Management Information to clinicians who may have implanted, or who may be managing patients already implanted with one of these products under voluntary recall.”

Through March 10, 2006, at the time of the latest recall, the company said a total of 31 ring breaks were reported and 20 involved patient injury, including 11 cases where the broken ring migrated into or through the patient’s abdominal wall, with infection in 2 cases; 1 case where the ring migrated into the vagina; 7 cases of bowel perforation; 1 case of bowel obstruction; and 1 death where the patient developed septic shock, consumptive coagulopathy and acute myocardial infarction after surgery to repair small and large bowel fistulas caused by perforation from the broken ring.

According to the company’s August 2006 SEC filing, following the recall, the FDA also conducted a follow-up inspection and issued the company an FDA Form-483 identifying certain observations.

“The company,” the filing states, “is in the process of addressing these observations and cannot give any assurances that the FDA will be satisfied with the company’s response.”

For patients implanted with the potentially harmful devices, the FDA recommends seeking immediate medical attention if they “experience symptoms that could be associated with ring breakage such as unexplained or persistent abdominal pain, fever, tenderness at the implant site or other unusual symptoms.”

Guidant Settles Three Lawsuits – 549 To Go

Evelyn Pringle October 2, 2006

Attorneys for the plaintiffs in lawsuits against Guidant and its new owner, Boston Scientific, view the settlement of a Texas case days before a jury trial as a sign that the company is dodging the courtroom.

Guidant settled the case for an undisclosed amount with two plaintiffs avoiding a public trial set to begin on September 18, 2006.

Boston Scientific acquired Guidant’s heart device business in April 2006, following a year of major recalls of products that have resulted in hundreds of lawsuits against Guidant.

The settled case was to be the first state court jury trial and was scheduled to be heard in Neuces County District Court in Corpus Christi, Texas before Judge Jack Hunter.

Guidant Defibrillator lawsuitThe two plaintiffs, Bernice Hinojosa and Louis Motal, were implanted with Guidant’s Ventak Prizm 2 defibrillators in 2001, and alleged that Guidant continued to sell the defective devices for 3 years and “actively concealed the … defect, suppressed reports, failed to follow through on FDA notification requirements, and failed to disclose a known defect to patients.”

There was one earlier settlement of a case in November 2005, with the family of Joshua Oukrop, a college student who died while using a defective defibrillator, and who’s death helped force Guidant to acknowledge and recall the defects products.

When the student died suddenly, his doctors tried to get Guidant to warn doctors about the defective devices and when it refused, they went to the New York Times which in turn conducted its own an investigation. The first Guidant recall, was issued only days before the results of the Time’s investigation were set to become public.

With the settlements of these cases, it means the company has 3 down and roughly 549 lawsuits to go. According to Boston’s second quarter SEC filing, there are about 72 pending class-action lawsuits and about 477 individual lawsuits filed against Guidant in state and federal courts. The company’s first quarter filing three months earlier listed 300 individual cases.

As of June 30, Boston said in the filing, it has accrued $381 million “for legal matters that are probable and estimable.” At the end of 2005, Boston listed $35 million as set aside.

Overall, Boston’s stock has sunk to a 4-year low due to the downturn in its heart device markets, “as the firm confronts $9 billion in debt and legal liability from Guidant product recalls,” according to the September 27, 2006, Boston Globe.

Legal analysts say the Texas case was likely settled because the state trial would have publicized damaging information months before the other trials are scheduled to begin in March 2007.

According to Lawyers Weekly USA, the lead counsel for the Texas plaintiffs, Robert Hilliard, said documents obtained during discovery show that Guidant knew about the defects with certain devices as far back as April 2002, but failed to alert patients and doctors for 3 more years.

However, its unlikely that settling the case will stop the public disclosure of those documents because on January 28, 2006, the New York Times reported that Federal prosecutors had “opened a new front in their investigation into the Guidant Corporation by issuing a subpoena seeking records disclosed in a Texas lawsuit that indicate the company knew that some heart devices could catastrophically fail.”

The subpoena served on the plaintiff’s attorney, specifically sought internal company documents disclosed in the Texas case. “Among other things,” the Times wrote, “the records indicate that company executives debated whether to warn doctors that some heart defibrillators could short-circuit.”

“The records suggest,” it said, “that Guidant might have sold potentially flawed devices.”

The document request also indicates that federal prosecutors have merged their inquiry with an earlier investigation by the FDA’s Office of Criminal Investigations, the Times reported.

According to the Associated Press on January 28, 2006, the 10 pages of documents include notes from then Guidant president of the cardiac rhythm management division, Fred McCoy, that show that a decision was made to go ahead and sell the inventory that Mr McCoy described as having sporadic ”life-threatening” defects.

Legal experts consulted by the Times, said the broad range of the statutes cited indicate a serious investigation and could mean Guidant may face civil or criminal charges. “They are investigating in the broadest possible way,” said Joan Krause, a director of the Health Law and Policy Institute at the University of Houston.

“They are looking at potential fraud involving government plans,” she noted, “like Medicare, private health plans and employee benefit plans.”

In addition to all its troubles with the FDA and Federal prosecutors, Guidant is also being investigated by attorneys general on behalf of 34 states, according to the January 30, 2006 issue of Lawyers Weekly USA.

Most of the Federal civil lawsuits have been transferred under multi-district litigation rules to a US District Court in Minnesota, where Guidant has several manufacturing facilities, with the first federal trial scheduled to begin on March 15, 2007.

Ted Meadows, a plaintiffs’ attorney with Beasley Allen law firm in Montgomery, Alabama, who specializes in medical device litigation, says a key to the plaintiffs’ claims will be to show that Guidant “knew or should have known there was a potential for this problem.”

Any evidence that suggests the company knew about the problem and responded improperly, he says, would entitle plaintiffs to seek punitive damages.

In 2003, a former Guidant subsidiary was fined $92 million by the Department of Justice for not disclosing serious health problems, including 12 deaths, related to its abdominal aortic grafts. According to Mr Meadows, as part of its agreement, Guidant pledged to “verify and make sure their reporting procedures were in order, and that they were reporting adverse events for their devices.”

If it can be shown that the company failed to promptly disclose problems with its heart devices, he said, “This could become an important part of evidence in this case.”

“Part of the allegation we’re making is that they did not tell the healthcare community in a timely manner,” he said.

The stakes got higher for Boston last month when according to Bloomberg News the plaintiffs in the MSL in Minnesota, filed a motion with the court to officially add Boston as a defendant in all the individual lawsuits in light of its purchase of Guidant. The motion also mentions the more recent problems with defective products since Boston took control of the company, including a June 2006 recall of thousands of devices because of a capacitor problem.

Its unlikely that Boston ever imagined the nightmare ahead when it set out to purchase Guidant. By all accounts when the bidding began, Guidant’s heart device division seemed like a gold mine.

According to the February 28, 2006 New York Times, it accounted for about half of the company’s $3.8 billion in sales in 2004. Defibrillators, which cost up to $35,000 each, the Times said, have a profit margin of about 75 percent.

However, that was then and this is now because the number of defibrillators implanted in the US in the last 12 months dropped 8%, according to the Prudential Equity Group, after a decade when implants rose from 21,000 in 1995 to 250,000 in 2005. Analysts blame the downfall on the highly publicized recalls over the past year.

The market for pacemakers seemed equally lucrative until last year. According to the American Heart Association, pacemaker procedures went from under 50,000 in 1979 to more than 200,000 in 2003. In 2004 alone there were about 150,000 devices implanted worldwide, and the market had continued to grow at a steady pace.

However, according to the Associated Press on September 29, 2006, after all the bad publicity about recalls, consumer confidence has now gotten so bad that the FDA “is considering not using the word “recall” to warn patients and doctors about defective pacemakers and defibrillators at the request of a physicians’ group struggling to deal with a loss of public confidence in the safety of implantable heart devices.”

“It’s a terrible term,” Dwight Reynolds, president of the Heart Rhythm Society, an association of doctors who implant the devices told the AP. “The anxiety created among patients and physicians by this term is the No. 1 cause for replacement of devices.”

According to Mr Reynolds, patients who learn they have a faulty device assume they need to have it removed immediately, even though the surgery to replace the device often involves more risk than leaving it in.

The Heart Rhythm Society is asking the FDA to use “safety advisory” or “safety alert” when referring to device problems.

Boston sparked a bidding war in December 2005 that derailed a deal for J&J to purchase Guidant for a little over $24 billion. In January 2006, Boston offered a $27.2 billion bid and won the prize.

However, according to Dow Jones newswire on September 27, 2006, J&J has now filed a multi-billion dollar lawsuit against Boston and Abbott Laboratories, claiming the companies induced Guidant to breach its merger agreement with J&J.

In a complaint filed in a New York US district court, J&J accuses Boston of leaking “confidential” information to Abbott “for the purpose of arranging a prepackaged divestiture of significant Guidant business to Abbott.”

The lawsuit also alleges that that as a result of the disclosure, Abbott agreed to acquire Guidant’s coronary stent business and provide financing for the deal.

J&J is seeking $5.5 billion in general and special damages for the alleged breach of contract. J&J has already received a $705 million termination fee stipulated under its failed agreement with Guidant, but the company maintains it is still entitled to damages due to the breach. The lawsuit also asks for reimbursement of court costs, attorney fees and interest.

Under the merger deal, according to Dow Jones, Abbott agreed to buy Guidant’s stent and vascular business for $4.1 billion, in order to make the deal more acceptable to anti-trust regulators, and agreed to loan Boston $900 million and buy $1.4 billion in company stock.

In the meantime, both J&J and Boston’s drug-coated stent sales are suffering due to recent research that showed the devices increase the risk of blood clots, when compared to the older bare metal stents that are not drug-coated.

And Boston had better set aside a few hundred million more for its legal defense fund because more heart device lawsuits are filed every month. For instance, in mid-September, an Illinois woman filed a 40-count personal injury lawsuit against both Guidant and Boston with claims that a defective pacemaker required her to be hospitalized, according to the September 19, 2006 Madison St Clair Record.

According to the lawsuit, because Boston acquired Guidant and its subsidiaries in January 2006, it assumed Guidant’s liabilities in this litigation.

The plaintiff claims the pacemaker was not of “merchantable” quality and not safe or fit for its intended use because it was unreasonably dangerous.

She also alleges that, “Defendants actively concealed the defect and its wrongful conduct in order to prevent, and succeeded in preventing, adverse publicity and Plaintiff from discovering the defect.”

In the lawsuit, the plaintiff is seeking damages for pain, suffering, mental anguish, emotional distress, loss of capacity to enjoy life, lost past and future income and incurred expenses.

According to the May-June 2006, Medical Device Link, in addition to the legal and regulatory weight of the lawsuits against Guidant, the cases also involve ethical considerations related to patient and physician notification. And when presented before juries of laypersons, MX says, such considerations could have genuine sway over the people determining Guidant’s fate.

“Once in a courtroom, in the context of a plaintiff who has been injured by the drug or device in question, the jury examines the manufacturer’s actions with hindsight,” experts at Vetter & White told MX. “It is then often more difficult to argue that additional steps should not have been taken.”

The evidence on this point does not look good for Guidant. On June 22, 2006, the Indy Star reported that a Guidant defibrillator failed 10 times more often than the company projected at the time of the recall, citing a FDA document.

The document, unsealed in the Texas lawsuit, was written by FDA staffers one day before Guidant began recalling the devices.

At the time, Guidant said no more than 292 of the Contak Renewal units were likely to break down, but the FDA document shows the agency projected thousands of malfunctions within five years.