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.

Medtronic’s Medical Device Legal Troubles far from Over

Evelyn Pringle July 31, 2006

Minneapolis based Medtronic, Inc. is one of the nation’s largest medical device makers. In mid-July 2006, the company agreed to pay a $40 million fine to settle charges that its Sofamor Danek division paid kickbacks to doctors to get them to use the company’s spinal products, which accounted for 20% of the company’s $11.3 billion in sales in 2005.

On July 19, 2006 the US Department of Justice issued a press release announcing the settlement. The DOJ alleged that, between 1998 and 2003, Medtronic paid kickbacks in a number of ways, including sham consulting agreements, sham royalty agreements and lavish trips to desirable locations and that these kickbacks violated the Anti-Kickback Statute and the False Claims Act.

“Kickbacks to physicians are incompatible with a properly functioning health care system,” said Peter Keisler, Assistant Attorney General for the DOJ’s Civil Division. “They corrupt physicians’ medical judgment and they cause overutilization and misallocation of vital health care resources.”

“Today’s settlement,” he added, “reflects the progress we are making in the ongoing fight against abusive and illegal practices in the healthcare industry.”

The DOJ’s investigation was triggered by whistleblower qui tam lawsuits filed under the False Claims Act. The FCA allows private parties to file lawsuits on behalf of the US government and collect a share of any money recovered. The FCA prohibits any corporation or citizen from defrauding the government and the allegations against Medtronic in this instance involve the Medicare program.

“The settlement,” said David Kustoff, the US Attorney for the Western District of Tennessee in the press release, “demonstrates that schemes involving submissions of false or fraudulent claims by health care companies and health care providers to federal health care programs will be vigorously and energetically pursued.”

“This agreement,” he noted, “should serve as a deterrent to those entities that attempt to defraud or deceive the taxpayers.”

In addition to the fine, Medtronic entered into a 5-year corporate integrity agreement with the Office of the Inspector General of the US Department of Health and Human Services. The agreement requires the company to file regular reports with the Inspector General and track all non-sales related customer transactions.

The company must also set up an outside review organization, improve training and employee screening practices, and make a compliance officer a member of senior management, who reports directly to the chief executive and has access to the company’s board of directors

The two whistleblower lawsuits filed by former employees claim Medtronic paid millions of dollars in kickbacks. For instance, Dr Thomas Zdeblick, a Wisconsin surgeon who is listed as a defendant in one of the lawsuits, signed a 10-year consulting contract with the company in 1998, that only required him to consult with Medtronic for eight days a year for $400,000.

A Virginia physician received close to $700,000 in consulting fees for the first 9 months of 2005, and received $1.39 million between 2001 and May 2005, according to the lawsuit.

Internal Medtronic documents filed as part of the lawsuit in the US District Court in Memphis, reveal the details of the rigorous campaigns that Medtronic set up to influence doctors. The documents show the company made payments of at least $50 million to doctors over a four years period through June 2005.

In the lawsuit unsealed in January 2006, the plaintiff, Jacqueline Poteet, a former senior manager of travel services for Medtronic until 2003, says she handled the travel arrangements for doctors to attend medical conferences and is familiar with the company’s efforts to win the doctors’ favor.

She alleges that the company gave spine surgeons “excessive remuneration, unlawful perquisites and bribes in other forms for purchasing goods and medical devices.”

Spinal implants are used in a procedure known as spinal fusion, to make a patient’s spine more stable. The cost of a devices used in this type of surgery is about $13,000, according to Orthopedic Network News, an industry newsletter.

In a subsequent amended complaint, Ms Poteet, accuses the company of continuing the improper payments to doctors in 2004 and 2005, leading them to perform unnecessary spinal surgeries.

With billions of dollars up for grabs, in addition to consultant fees, Medtronic used other creative methods to induce physicians to use its products. According to the lawsuit, Medtronic hosted medical conferences where the “principal objective” was to “induce the physician, through any financial means necessary” to use its devices.

Company spreadsheets show that after a conference, Medtronic went to great lengths to track the use of its devices by each doctor who attended. A spreadsheet for a June 2003 conference in California, lists over 200 doctors and includes an estimate of the dollar amount of the devices each doctor uses in surgery. One surgeon is described as “a 100 percent compliant M.S.D. customer” (Medtronic Sofamor Danek), and other doctors are marked as needing “special attention.”

According to Ms Poteet, Medtronic zeroed in on surgeons while they were still in training, and the company paid for doctors to attend any of 200 professional meetings a year. If the doctors wanted to play golf or go snorkeling, she alleges, Medtronic paid for the outings. When doctors visited Memphis, she says, company employees would take them to the “Platinum Plus” strip club, and then write off the expense as an evening at the ballet.

In 2003, a company document reveals that Medtronic attorney, Todd Sheldon, questioned whether the company should be paying for all the excursions. “When we are sending scores of doctors to a nice resort like this under the guise of training and education on our products,” Mr Sheldon wrote in an email, “I think we need to be more careful and stick to the limits of our rules as best we can.”

Medtronic claims the company has scaled back payments to doctors, but not so, says Ms Poteet. Her amended complaint alleges that any changes made by Medtronic were merely temporary. Its “bribery program,” she alleges, “has not only failed to cease, but continues unabated with increased payments made to many physicians.”

She points out that while payments to some doctors were lowered in 2004, when the company first came under investigation, the payments went back up last year. For instance, Dr Hallett Mathews, of Virginia, was paid $300,000 in consulting fees in 2003, but only $75,000 in 2004. But then in 2005, he was paid nearly $700,000 in consulting fees in the first 9 months.

Had Medtronic not entered into a settlement agreement with the DOJ, the company could have been hit with a triple damages award if it lost in court, under a key provision of the FCA. As it is, the $40 million fine is the second financial penalty for Medtronic’s spinal division in a year. In 2005 the company paid $1.35 billion to settle a patent infringement lawsuit and cover the costs of additional patents from Los Angeles surgeon and inventor, Dr Gary Michelson.

Over the past couple years, the financial relationships between device makers and doctors have caught the attention of several law enforcement agencies. In 2005, US attorneys in Boston and Newark issued subpoenas to Medtronic, along with just about every other major medical device maker, as part of a far reaching investigation into the financial entanglements between physicians and the industry as a whole.

Therefore, legal experts say Medtronic is probably not breathing much easier these days. Three of the subpoenas issued last fall went to the top cardiac-rhythm-management companies, Medtronic, Guidant and St Jude Medical, and seek information on their marketing practices related to pacemakers and defibrillators.

And Medtronic already had plenty of legal problems with its defibrillator division. In February 2005, the company told 87,000 patients that their defibrillators might fail.

However, company documents filed in the California lawsuit, Randall v Medtronic, No C-05-3707-JW, in the US District Court for the North District of California, show the company knew about the flaw back in 2003, and continued to sell the faulty devices for two more years.

“Medtronic has been taking products they know are not quite right and putting them into people rather than take the loss,” according to Hunter Shkolnik, a New York attorney, who said in a February 13, 2006, interview with Bloomberg News, that he represents more than 200 people whose Medtronic devices were recalled.

“If you know there’s a problem with a component,” he said, “you don’t put it out and sell it to people.”

Since the recall, 19,000 people have had replacement surgery, Medtronic spokesman, Rob Clark, told Bloomberg News.

Critics say Medtronic refuses to acknowledge that undergoing replacement surgery is risky and constitutes an injury in itself. According to Bloomberg, based on Medtronic’s estimate of a 2 to 5% post-implantation infection rate, 380 to 950 patients may have developed infections after replacement of their devices.

Spokesman Clark told Bloomberg that Medtronic does not keep track of deaths, disabilities or extra medical costs resulting from such complications.

When announcing the recall last year, Medtronic said it would provide a new defibrillator to patients and up to $2,500 for out of pocket expenses. But the company expects taxpayers, through programs like Medicare, and insurance companies, to pick up the tab for the hospital and doctor bills incurred during the replacement surgery.

However, the company is now facing scores of lawsuits claiming that patients should not be expected to bear any of the costs for having the devices replaced. About 200 lawsuits from states all over the country are seeking class-action status and have been consolidated in US District Court in Minneapolis before Judge James Rosenbaum.

Last month, Medtronic asked the Judge to dismiss the lawsuits, arguing that FDA regulations for medical devices preempt lawsuits in state courts and that the FDA has special authority over lifesaving or life-sustaining medical devices, such as defibrillators. “Any warning has to be regulated by the FDA,” Medtronic attorney, Michael Brown, said.

But attorneys for the plaintiffs said Medtronic “glossed over” the problem in an October 2003, filing with the FDA that sought approval of a new defibrillator model, according to a July 11, 2006, article by the Associated Press.

Judge Rosenbaum is expected to issue a decision on Medtronic’s motion in early fall.

Six months after the first recall in 2005, the company was in hot water with the FDA again over another group of devices. In a June 9, 2005 letter, the FDA said that Medtronic failed to correct manufacturing problems and investigate its LifePak 12 external defibrillators and cited damaged cable connectors and failures to follow through with preventive action after inspections of the company’s Redmond, Washington plant.

The LifePak 12 external defibrillators, used in hospitals to shock the heart back to a normal rhythm, are similar to the LifePak 500 devices the company recalled. Medtronic’s cardiac rhythm management business, which also includes pacemakers and implantable defibrillators, accounted for 46% of its $2.78 billion in sales in its latest quarter, according to Bloomberg News on June 22, 2005.

At the time, about 60,000 LifePak 12 external defibrillators were in use worldwide, Mr Clark said.

In the warning letter, the FDA said Medtronic did not investigate all complaints about defibrillator malfunctions, including one involving a patient’s death. Problems were linked to broken or bent pins in the cable connectors, possibly because the company did not have adequate inspection procedures, the agency said. Failure to correct the problems may result in legal and civil penalties, the FDA warned.

Finally, in another turn of events that could have a negative impact on the financial future of the company, Medtronic is awaiting the final word on a Medicare proposal that would decrease reimbursement for procedures that are considered excessively profitable such as implanting heart devices.

Under the pending proposal, the Medicare reimbursement for implants would be cut from $31,833 to $23,755, or a loss of $8,078 for each procedure.

Feds Investigate Profits From Off-Label Stent Procedures – Part II

Evelyn Pringle May 2007

In addition to the federal investigations into the off-label marketing of drug eluting stent by Boston Scientific and Johnson & Johnson, on May 10, 2007, Rep Maurice Hinchey (D-NY), who serves on the House Appropriations Subcommittee, announced the introduction of the FDA reform bill which addresses the issue of doctors using products for unapproved uses, which usually occurs without the patient’s knowledge or consent.

If a doctor does not inform a patient that the FDA has not approved the use of a device or procedure, medical experts say, the patient cannot give meaningful consent because the potential problems that can result from the off-label use must be explained so that the patient can weigh the risks and benefits to determine whether to consent to the treatment.

Medical professionals point out that if a doctor wants to use a treatment that is not FDA approved because of a true belief that a certain patient would benefit from a specific treatment more than from others that are FDA approved, the doctor would not hesitate to explain the reasoning to the patient.

The FDA Improvement Act reform bill introduced by Rep Hinchey would require doctors to inform patients when a product is used off-label and also provide more resources to the FDA to go after companies that promote off-label use of their products despite the fact that doing so is illegal.

In recent months, lawmakers have made it clear that investigation of the stenting for profit industry is a top priority and will include not only the device makers, but also the doctors and medical facilities performing the procedures.

Being Congress oversees the spending by public programs like Medicare and Medicaid, lawmakers would have to be blind not to notice the obscene rise in profits. 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.”

Stenting doctors are very well paid. The median salary for invasive cardiologists who perform the procedures is roughly half-a-million dollars a year, says Darshak Sanghavi, a pediatric cardiologist and assistant professor of pediatrics at the University of Massachusetts Medical School, in Slate Magazine on May 8, 2007.

However, doctors and medical facilities may now be reevaluating the benefits of continued off-label stenting since law enforcement officials released information this month from an investigation by the FBI and the US Department of Health and Human Services of a cardiologist at a facility in Maryland that found 25 unnecessary stents implanted in patients in 2006 alone, with the majority billed to Medicare.

The bare-metal stenting procedure was originally marketed as a cheaper alternative to heart bypass surgery, but since the arrival of the DES, that claim is bogus. On February 25, 2007, the New York Times quoted the American College of Cardiology in reporting that the average cost of the DES procedure has risen to about $30,000, or almost equal to the price of open heart surgery for patients with multiple blockages.

The DES were promoted as being safer than bare-metal stents, but on March 8, 2007, the New England Journal of Medicine published an analysis of 4 studies that compared the DES and bare-metal stents with 4 years of follow-up, and found no significant differences in the rates of death, myocardial infarction, or stent thrombosis with the survival rate in the DES group at 93.3%, and 94.6% in the bare-metal group.

In December 2006, the FDA’s Circulatory System Devices Advisory Committee held a hearing to review data on the outcome of DES stenting when they were implanted according to their label compared to when they were used off-label. Dr Ron Waksman, of the Washington Hospital Center, told the panel the rate of stent thrombosis almost doubled in patients with off-label use versus on-label use at 30 days and at 12 months.

He also said, “when we look at on-label and at off-label, the drug‑eluting stents are more thrombogenic than bare-metal stents.”

With both on-label and off-label use, he informed the panel, over time, “late stent thrombosis is seen more in the DES versus the bare-metal stents.”

Dr Waksman said that careful patient selection for DES is mandatory, and “off-label use should be reconsidered or restricted.”

Diabetic patients with multi vessel disease should always be referred for bypass surgery, he added. DES should be contraindicated, he said, “for patients with poor compliance or allergic to Plavix or aspirin and need for upcoming surgery, and warning labeling should be considered for those when used off-label.”

But experts point out that some studies have shown little benefit from taking the anti-clotting, blood-thinning drug Plavix to prevent stent-thrombosis. In October 2006, Dr Alaide Chieffo, made a presentation at a Transcatheter Cardiovascular Therapeutics meeting and reported a study of 3,021 DES patients that found 9 out of 16 patients who had developed late stent-thrombosis were being treated with Plavix at the time.

At the FDA meeting, Dr Peter Smith of Duke University discounted the claims that stenting is safer or as effective as bypass surgery and warned of the importance of weighing the risks and benefits to patients treated with the different procedures.

He stressed that since the introduction of DES, too many patients in need of bypass surgery are instead receiving off-label stenting procedures. “A current perspective,” he said, “is that America’s number one killer is predominantly treated with percutaneous methodology that has not been demonstrated to provide a survival advantage.”

“And this is particularly important,” he advised, “for the treatment of multi vessel coronary disease where substantial quality of life and survival benefits have been conclusively demonstrated for bypass grafting.”

Dr Smith informed the panel of some of the outcomes reported in peer-reviewed published trials, the first a study of 14,000 patients, which demonstrated a significant survival advantage for bypass grafting compared to stenting in three vessel heart disease, he said.

The ROBUST New York State audited database, he reported, of 23,000 patients with three vessel disease published in the New England Journal of Medicine also showed a significant survival advantage for bypass grafting compared to stenting at 3 years.

Dr Smith explained that bypass grafting is more effective because it provides complete revascularization. While stenting treats the isolated blockage, grafting bypasses about two-thirds of the vessel where current and future blockage can occur.

In addition, he noted, bypass risks increase little with increasing coronary disease severity while risks with stenting appear to increase with each additional stent.

He also told the panel, “surprisingly, when we looked at the bare-metal stent era data, we saw point estimate trends favoring bypass grafting even for low and intermediate severity disease, and an extension of the significant advantage that bypass grafting provides compared to intervention for high severity coronary disease.”

Dr Smith said the introduction of the DES led to a tripling of the use of stenting for high severity coronary disease. “And for the first time,” he noted, “less than half the patients were initially offered coronary bypass grafting.”

“How can this happen,” he pointed out, “with the absolute survival advantage that I’ve shown you from these observational data on 40,000 patients showing that at 1 year, there’s a 2.3 percent advantage, absolute advantage in bypass grafting versus stenting; 4.3 percent at 3 years; 5.1 percent at 5 years.”

That means 1 out of every 20 patients, he said, who were treated with stenting would have survived if they had had bypass grafting. When you translate into real world application, assuming that drug‑eluting stents are equivalent to bare-metal stents for the mortality outcome, he advised, approximately 1.5 million drug‑eluting stents are implanted worldwide, 850,000 in the US.

Using data from the DEScover trial about stents per patient in the incidence of three vessel disease, he said, we estimate that 160,000 are with DES worldwide and 92,000 in the US.

Dr Smith informed the panel that this translates into a rate of premature death at 1 year to 3,800 patients worldwide, with 2,000 in the US, and 16,000 patients deaths at 3 years, with 9,000 in the US.

“Annualized,” he said, “this is 6,500 worldwide, 3,600 in the U.S.”

At the end of his presentation Dr Smith addressed previous claims made to the panel by the industry that off-label extension of DES was meeting “an unserved need.”

“We’re not certain whose unserved need that is,” he said, “but we’re fairly certain that it’s not the need of our patients.”

Another major selling point used by the stent makers has been to claim that bypass surgery is riskier. However, a study presented at the American Heart Association’s Annual Conference in April 2007, determined that the DES procedure and surgery have about the same risk for a major cardiac event based on an analysis of 799 DES patients and 799 bypass patients for outcomes in the first 30 days and during the following 3 years.

Lead author, Dr Wilson, a program director at St. Luke’s Episcopal Hospital and Texas Heart Institute, said in Science Daily on April 21, 2007, “We found that the likelihood of any complication in the hospital was the same whether you had a drug-eluting stent or bypass.”

“Five percent of drug-eluting stent patients,” he said, “had some major complication in the hospital, mostly heart attack, as opposed to about 3.8 percent of the patients who had bypass.” At 3 years, the study found, the death rate with bypass was 6.6% and 9% with drug-eluting stents.

The results of a study called COURAGE released in March 2007, may turn out to be the final nail in the coffin for Boston and J&J. The study involved over 2,000 patients who were treated for chronic, stable chest pain, and revealed that medication therapy alone reduced chest pain almost as well as when the drugs were combined with stenting.

Experts say the outcome is probably due to the fact that stenting only fixes one artery blockage at a time while drug treatment affects all arteries.

Many stable heart patients are conned into stenting because they believe that it will extend their lives and lower their risks for heart attack but according to the New York Times, the COURAGE study found that patients who received stents and drugs had the same life expectancy and same number of heart attacks as patients who received drugs only.

The study reported the rate of heart attack, stroke or death in patients who received stents was 20%, compared to 19.5% in patients who used drugs alone. At the end of 4.6 years, there were 211 deaths, or 19% among patients in the group who received stenting compared with to only 202 deaths, or 18.5% in the medication group.

“Our findings parallel those reported in recent trials,” said William Boden, chief of cardiology at Buffalo General and Millard Fillmore Hospitals.

“In the aggregate,” he told United Press International on March 26, 2007, “these studies … show that percutaneous coronary intervention — angioplasty plus stenting — has no effect in reducing major cardiovascular events.”

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

In response to the study, on the March 28, 2007, WSJ 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. “My hope is that the COURAGE data may help payers take action against these doctors.”

It appears that doctors and hospital administrators are thinking twice about off-label DES stenting. On May 17, the Wall Street Journal reported that April marked the 10th consecutive month of share decline for DES, quoting the Millennium Research Group, a firm that surveys about 140 US hospitals, that put the percentage of stentings with a coated stent at 69.7%, down from almost 90% last in June 2006.

Until April doctors had largely replaced the more-expensive DES with older, bare-metal stents, the Journal said. “The new data,” it notes, “indicate that doctors and patients may be skipping stentings completely in favor of drug treatment.”

It sure looks that way according to Boston’s first quarter SEC filing, that reported worldwide sales of its DES had dropped to $468 million in the first quarter of 2007, down from $633 million during the first quarter of 2006.

The SEC filing also shows that J&J has plenty of other problems. For instance, the company is currently facing over 75 class action lawsuits and 1,100 individual lawsuits related to potentially defective defibrillators and pacemakers manufactured by Guidant, a company Boston acquired in April 2006.

J&J future isn’t looking too rosy either. Sales of the Cypher stent are down by more than 25%, according to the firm’s first quarter SEC filing and in addition to DES, J&J is currently under federal investigation over the marketing practices for several other products including the antipsychotic Risperdal, the anti-seizure medication Topamax, the heart-failure drug Natrecor, and paying kickbacks to doctors for using the firm’s orthopedic devices.

In March 2007, J&J received new subpoenas from US attorneys in Philadelphia, Boston and San Francisco pertaining to the investigations of the 3 drugs seeking information about corporate supervision and oversight of the subsidiaries that market the drugs including Janssen, Ortho-McNeil and Scios.

In addition, according to SEC filings, as of December 31, 2006, 100 lawsuits were pending against J&J related to the Charite artificial spinal disc, basically alleging that the company knew the disc was defective and boosted profits by marketing the device for off-label uses.

On May 10, 2007, the Wall Street Journal reported the filing of a lawsuit against J&J by two former salesmen with documents showing how the company “sought to boost sales of its blockbuster anti-anemia drug Procrit by offering contracts that fattened doctors’ profits and urging its salespeople to push higher-than-approved doses.”

This bit of news came shortly after federal lawmakers ordered J&J to cease all direct-to-consumer advertising and physician incentives for Procrit until the FDA could determine whether steps needed to be taken to protect the public following investigations that revealed the rampant off-label sale of the anemia drug was causing serious injuries and death among kidney and cancer patients.

Unfortunately, there is no way to medically reverse the stenting procedure and therefore, the millions of unsuspecting patients who received the DES face a life-time of every day worry because a blot clot lodged in a stent can cause a stroke or heart attack without any warning.

Legal experts are predicting that Boston and J&J will be swamped with lawsuits over the off-label marketing of DES, but say the defendants listed in the complaints will likely include the names of doctors and medical facilities that helped the device makers turn the stenting industry into a billion dollar baby.

Implant For-Profit Industry Not Deserving of Preemption Protection – Part I

Evelyn Pringle July 9, 2007

In addition to the question of how many soldiers will be dead or injured by the time self-proclaimed “war President” George Bush leaves office, Americans need to ask themselves how many citizens will be dead or injured as a result of an FDA controlled by the industry most credited with funding his move to the White House.

Last year, the FDA announced that the agency’s approval of a pharmaceutical product preempts product liability lawsuits against the industry giants in state courts, even when a company actively conceals information that shows serious injury and death are known to be associated with a product.

With the solid backing of the FDA, preemption is now being used as an argument to dismiss lawsuits filed by injured citizens in state courts against medical device makers.

Critics point out that many risks associated with a new product will not be known at the time of FDA approval and that additional safety information often surfaces only after a device is widely used on the market.

Furthermore, FDA regulations allow device makers to add stronger warnings when a risk becomes known, without requiring FDA approval. However, all too often, company documents which surface as a result of litigation show that the device maker was aware of safety risks long before the product was approved and that they actively concealed the information from the FDA.

Legal experts say the legal remedies available under state laws are set up to give additional protection to consumers over and above the minimal protection provided by the FDA approval process, and especially at times like this, when the FDA is run by appointed industry insiders who refuse to police the medical device industry.

The Medical Device Amendments to the Federal Food, Drug and Cosmetic Act establish a federal statutory and regulatory scheme governing the sale of devices in the U.S., but the MDA provides no private cause of action against device makers and therefore, the preemption of state law claims would eliminate most, if not all, legal remedies for persons injured by defective products.

Whether or not the administration has succeeded in immunizing device makers will likely be known in 2008, because on June 25, 2007, the U.S. Supreme Court agreed to hear an appeal in Riegel v Medtronic, involving a case against Medtronic which could determine whether patients will have the right to file lawsuits against device makers under consumer protection laws enacted by the individual states.

The Public Citizen Litigation Group is representing Charles Reigel, who was injured in 1996 when a balloon catheter burst while he was undergoing an angioplasty, a procedure used to open clogged arteries.

After the Second Circuit Court found the lawsuit was preempted based on FDA approval, Public Citizen attorneys Allison Zieve, Wayne Smith and Brian Wolfman, filed a petition asking the Supreme Court to consider whether the Food, Drug, and Cosmetic Act expressly preempts state-law actions brought by patients who have been injured by devices that received pre-market approval, and to issue a ruling due to the inconsistent rulings on the preemption issue in cases filed in the lower courts.

The petition argues that the FDA has switched positions on whether pre-market approval preempts state law claims since the government’s views were solicited by the Court in 1997, when the FDA supported the right to pursue state law claims.

The Supreme Court asked the Solicitor General to offer the government’s views and, of course, the FDA used tax dollars collected in large part from the injured plaintiffs who might have cause to file claims in state courts, to send up a brief that backed Medtronic 1000% in it use of preemption to prevent Americans from suing the device giant.

In direct harmony with Medtronic, the FDA brief tells the Court not to bother with the conflict in preemption rulings in the lower courts because there are now more rulings on one side of issue than the other.

“Also like Medtronic,” Public Citizen responds in a reply brief, “the government asks the Court to overlook the undisputed conflict because it might simply go away.”

“What has changed since 1997,” Public Citizen notes, “is the government’s view on the merits of the question presented.”

“The government’s inconsistency on this question of statutory meaning only underscores the need for this Court to resolve the question presented,” the brief states.

Legal experts say the ruling in this case has the potential to affect thousands upon thousands of lawsuits currently filed in state courts against the makers of medical devices, including defective products implanted in patients with heart disease, such as defibrillators, pacemakers and drug-eluding stents, and devices used during spinal surgery.

A favorable ruling for Medtronic could literally save Boston Scientific from the poor house because, at last count, the company was facing over 75 class actions and 1,100 individual lawsuits involving defective defibrillators and pacemakers manufactured by the recently-acquired Guidant Corp, according to Boston’s SEC filing.

Also, the number of litigants against Boston is rising by the month. On June 15, 2007, the Brown & Crouppen law firm of St Louis filed a 39-count product liability lawsuit in St Clair County on behalf of 14 plaintiffs against Guidant, Boston and Cardiac Pacemakers, alleging the defibrillators/pacemakers were defective and required them to be hospitalized.

These latest lawsuits claim the devices were defective in design, did not conform to federal requirements and subjected users to risks of heart attacks, death and other illnesses that exceeded the benefits of the devices. Other safer products were available, and the makers actively concealed the product defects in order to prevent adverse publicity.

According to the June 29, 2007, Madison St Clair Record, this is at least the third complaint filed by Brown & Crouppen against these same companies.

Spinal surgery represents another division of the implant for-profit industry. A study in the November 2006 Spine journal, conducted at Dartmouth Medical School, analyzed data on lower back (lumbar) surgery among Medicare recipients aged 65 and older nationwide and found that surgery rates in 2002-2003 were almost 8 times higher than in 1992 in some areas of the U.S., and in 2003, Medicare spent over $1 billion on spine surgery.

On August 5, 2006, the LA Times reported that spinal surgery has become a very lucrative business, “with at least $3.2 billion spent last year in the U.S. on spinal fusion.”

In October 2004, Johnson & Johnson obtained FDA approval for the Charite artificial spinal disc as an alternative to spinal fusion surgery, but experts contend that the superiority of the two procedures is limited to the cost. Charite replacement can run as high as $50,000, while spinal fusion surgery costs less than half that, at roughly $23,000.

A favorable ruling on preemption would be great news for Johnson & Johnson, considering that SEC filings reveal that there were 100 lawsuits pending against the company at the end of 2006 related to the Charite artificial spinal disc, alleging that the company knew the disc was defective and boosted profits by implanting the device for uses not approved by the FDA and in patients who would not benefit from the device.

Between the time the disc was approved in October 2004 and July 2006, the FDA had already received over 130 reports of serious adverse events in patients implanted with the device and, in most cases, the disc was implanted in patients who did not meet the criteria for disc replacement as specified by the FDA.

Although a favorable Supreme Court ruling would be beneficial to the device makers in dealing with lawsuits filed by private plaintiffs in state courts, it will do nothing to stop the on-going investigations into the marketing of devices to determine whether device makers are funneling money to doctors and hospitals to increase the use of their products.

Anti-kickback statutes make it illegal for doctors or medical facilities to receive financial incentives to increase the use of devices, which in turn increase the number of implant procedures, in patients covered by public health care programs.

In the end, it was the greed, evidenced by drastic rise in the use of not only defibrillators and pacemakers, but all medical devices with Medicare patients over the past few years that drew the attention of lawmakers and law enforcement officials to the implant for profit industry.

On September 26, 2006, the New York Times reported that overall, Medicare payments to hospitals for implant procedures grew from $10 billion to $14 billion, an increase of about 40%, in just 2 years.

As of today, every major device maker is under investigation for working with doctors and hospitals to increase profits by billing public health care programs for implant procedures performed on patients who, in many cases, did not need the devices.

The FBI, the U.S. Department of Justice and the Department of Health and Human Services have set up a Medicare Fraud Strike Force, and the Strike Force is predicting that as much as $2.5 billion can be saved by cracking down on the device makers, doctors and hospitals involved in the implant industry.

The investigations of J&J and its DePuy Division are not limited to the Charite disc. In June 2006, the company was served a subpoena by the Antitrust Division of the DOJ, requesting documents related to the manufacture and sale of the company’s orthopedic devices, and search warrants were executed in connection with the investigation, according to documents filed by J&J with the SEC on August 8, 2006.

SEC filings also show that Medtronic is responding to a subpoena from the Office of the U.S. Attorney for the District of Massachusetts, issued under the Health Insurance Portability & Accountability Act of 1996, requesting documents relating to pacemakers and defibrillators; monitoring equipment and services; benefits to persons in a position to recommend purchases of such devices; and the company’s training and compliance materials relating to the fraud and abuse and federal Anti-Kickback statutes.

Investigations are also underway into over-use of the new drug-eluting stents (DES), marketed by Boston and Johnson & Johnson, with the average cost to Medicare ranging from $11,184 to $14,287, according to the Centers for Medicare and Medicaid Services.

The first DES was approved in 2003, and on December 4, 2006, Bloomberg reported that, in 2005, the new stents accounted for 43% of total sales for Boston and 52% for Johnson & Johnson. By the end of 2006, the new stent was a top-selling device for Boston, bringing in about $2 billion.

On March 1, 2007, the House Oversight and Government Reform Committee, which conducts oversight of Medicare spending, ordered Johnson & Johnson and Boston to turn over documents, related the marketing of drug-eluting stents.

In May 2007, the Strike Force reported that one Maryland cardiologist had implanted 25 unnecessary stents in 2006, with most patients covered by Medicare.

The salary for the cardiologists who benefit from stent procedures is roughly half-a-million dollars a year, according to an article in Slate Magazine on May 8, 2007.

Legal analysts are predicting that the lawsuits filed by patients injured as a result of the massive over-use of medical devices will involve all the co-conspirators in the medical profession who helped turn the implant business into a billion-dollar industry overnight.

Implant For-Profit Industry Not Deserving of Preemption Protection – Part II

Evelyn Pringle July 10, 2007

All the major medical device makers are using the preemption argument against patients who were implanted with defective devices, but Minneapolis-based Medtronic is a regular pen-pal with the Justices at the US Supreme Court.

The Court ruled against the company on preemption in Medtronic v Lohr, 518 US 470 (1996), a case where a pacemaker failed and resulted in the need for emergency surgery, and the plaintiff brought design, manufacturing and warning defect claims under state negligence and strict liability theories.

The Medical Device Amendments to the Federal Food, Drug and Cosmetic Act establish a federal statutory and regulatory scheme governing the sale of medical devices in the US.

After considering the case, the Supreme Court determined that the preemption clause did not preempt “all common law claims,” because all such claims do not create “requirements” that would conflict with federal law under the MDA and because the MDA provides no private cause of action against manufacturers, and that preempting all common law claims would bar most, if not all, relief for persons injured by defective medical devices.

Further, the Court determined that, if Congress had intended to preempt all state law remedies, it would have said so, and the Court noted the lack of legislative history going back to any such intent.

The Court stated that the state law damages remedy “merely provides another reason for manufacturers to comply with identical existing requirements,” and did not amount to “additional” or “different” requirements than the federal law.

So basically, legal experts say, in order to convince the court that �360k preempts a state law claim, device makers must establish that the MDA procedure under which their device was marketed created an adequately specific or otherwise preemptive federal “requirement” and convince the court that the state law based cause of action creates a preemptible “requirement” that is “different from,” or “in addition to,” requirements imposed by the MDA procedure.

As one of the largest heart rhythm device makers in the US, Medtronic is currently facing scores of lawsuits in state courts with allegations that it failed to adequately inform doctors and the FDA when it learned of a potential battery shorting problem in January 2003.

The firm waited until February 11, 2005, to warn physicians about the defect in 8 models of defibrillators. By that time, approximately 87,000 patients had been implanted with devices powered by batteries that could go dead without notice which were manufactured between April 2001 and December 2003.

Doctors were provided with a list of affected patients, and Medtronic recommended that doctors contact the patients and manage the issue in a way they felt appropriate.

When the defibrillators were recalled in 2005, the company offered to provide free replacement devices but would only agree to pay $2,500 to patients for out-of-pocket expenses for the replacement surgery.

The same year, on June 22, 2005, Bloomberg reported that Medtronic’s cardiac rhythm management business, which includes pacemakers and defibrillators, accounted for 46% of the company’s $2.78 billion in sales in its latest quarter. The cost of a defibrillator is about $20,000, according to Bloomberg.

On February 18, 2006, the New York Times reported that, because Medtronic did not offer to pay the hospital and doctor bills for the replacement procedures, “publicly funded plans like Medicare and private insurers are typically paying them.”

At the time of the article, the Times said, about 19,000 patients had undergone the replacement surgery since the recall.

Any patients who developed complications during the operations were left to fend for themselves. According to Bloomberg in February 2006, the cost of a defibrillator replacement and post-operative complications at a Des Moines hospital reached $100,000 for an unemployed 45-year-old father of six, who was uninsured and disabled when Medtronic sent a letter saying the defibrillator might need to be replaced.

Lawsuits have since been filed by private plaintiffs all over the country claiming personal injury and also by third-party payors seeking reimbursement of costs that resulted from with recall.

The lawsuits were consolidated in Multidistrict Litigation in the U.S. District Federal Court in Minneapolis before Judge James Rosenbaum, and in July 2006, Medtronic filed a motion for summary judgment arguing that the lawsuits should be dismissed, claiming FDA regulations for medical devices preempt the state laws on which the lawsuits are based and that the FDA had special authority over life-saving medical devices.

In the legal filings, Medtronic claimed the lawsuits are baseless, or preempted, because the defibrillator had passed the FDA approval process.

Documents revealed in litigation since the recall show that Medtronic knew of the problem that could cause the defibrillators to suddenly stop working long before the firm warned doctors who were implanting the devices. Company documents filed in a Federal court in San Jose, California, in the case of Randall v Medtronic, show the firm discovered the battery problem in January 2003.

In response to Medtronic’s motion, the plaintiffs argued that the FDA’s approval should have no bearing on the litigation because Medtronic provided the FDA with incomplete information when obtaining approval of the defibrillators, did not comply with the reporting obligations and failed to notify patients and the FDA of the defects in the devices.

On November 28, 2006, in what could be a major defeat for all device makers involved in similar litigation, the Minnesota Judge ruled against Medtronic and issued an order and opinion denying the motion and refused to accept the federal preemption argument.

In the opinion, the Judge stated that Medtronic “asks the Court to look past evidence, which if believed, tends to show it withheld critical information from the FDA while seeking the PMA Supplement approval for its newly designed battery.”

“Plaintiffs have produced credible evidence,” he wrote, “indicating that – after Medtronic discovered the design defect, and confirmed the discovery through patients’ device failures, and after obtaining FDA approval for the modified battery – Medtronic continued to ship and sell devices containing the defective battery.”

“In doing so,” the court continued, “it failed to notify the FDA, physicians, or patients that the battery was defective.”

The judge said Medtronic’s own actions and inactions may have placed it entirely beyond the scope of FDA approval protection. “Congress has chosen, and FDA regulations impose,” he wrote, “a scheme under which the manufacturer – not the government – determines a medical device to be safe and efficacious.”

He said it is the duty of the manufacturer to develop, produce and offer products it knows to be safe. “The FDA,” the judge wrote, “has only the most limited role in independently obtaining the information it needs; the duty to develop and fully disclose information concerning a medical device’s safety falls upon the manufacturer.”

In fact, the judge said, Medtronic’s own actions and inactions may have placed it entirely beyond the scope of FDA approval protection. “Congress has chosen, and FDA regulations impose,” he wrote, “a scheme under which the manufacturer – not the government – determines a medical device to be safe and efficacious.”

The judge pointed out that a device maker’s failure to disclose its own knowledge about the danger of an approved device has its own effect: “the company’s failure to exhibit absolute probity could be found to have knowingly deprived the FDA of information needed to confer its approval for the device to be implanted in humans,” he stated.

“If proven,” the court wrote, “such a failure to fully comply with Congress’s self-disclosure scheme may have deprived Medtronic of federal preemption protection altogether.”

He pointed out that the FDA recall did not occur until after Medtronic issued its February 2005 “Dear Doctor” letter, and said it defies logic and flies in the face of Congress’s decision to impose a regime strictly regulating medical device makers, “to think Congress intended the result Medtronic advocates.”

A favorable ruling on preemption in the Supreme Court might have allowed Medtronic to escape all liability, had the company not been so greedy in ripping off public health care programs and the Democrats had not taken control of Congress last fall.

Promoting Biliary Stents for Dangerous Unapproved Uses

Evelyn Pringle May 2007

There is a major controversy brewing over the off-label sale of biliary stents for unapproved uses. On March 12, 2007, the FDA held a meeting in Washington with the makers of the bile stents to remind them about the restrictions on their promotion of these devices for unapproved uses.

For the record, the FDA approved use for the majority of bile stents is for the temporary relief of bile-duct obstruction in cancer patients who are expected to live less than 6 months. For this reason alone, critics say, these devices should not be implanted in the arteries of patients with a normal life expectancy.

“Biliary stents are metal or plastic flexible tubes used to prop open the bile duct in patients with obstructions related to pancreatic cancer,” according to the March 16, 2007 Pioneer Press. “The treatment helps drain the biliary tract and keep the bile duct open, thereby relieving pain.”

On its web sit, the FDA stated that the March meeting was the result of an investigation “prompted by the promotion of metal biliary stents for vascular indications.”

Representatives from between 10 and 20 stent makers attended the meeting, including officials from Medtronic, Ev3, and Boston Scientific, according to the Pioneer Press.

When a new device is approved, the FDA also approves the labeling which lists the indications for which the product may be used. Although doctors are allowed to implant a device in patients for indications not listed on the label, the maker of the device is banned by law from asking surgeons to use the product for uses not approved by the FDA.

At the March meeting, the FDA warned that some company web sites had crossed a “very fine line” in using language that could be considered to promote or encourage the use of biliary stents in vascular procedures.

FDA spokesperson, Karen Riley stated in the Pioneer Press, “FDA has become aware that metal biliary stents are being promoted and used to open arteries in the vascular system — something they have not been tested to do, or approved for by the agency.”

Ms Riley also added that the FDA “is concerned about the increasing reports of adverse events in patients who received biliary stents off-label for vascular therapy.”

Specifically, the FDA has found the use of biliary stents for the treatment of femoral artery disease has led to an increase in adverse events.

According to Kenneth Cavanaugh, Jr PhD, a Regulatory Review Scientist with the FDA, in the September, 2006 Endovascular Today: “A recent search of the FDA’s publicly available Manufacturer and User Facility Device Experience (MAUDE) database for medical device adverse event reporting suggests that virtually all of the renal stenting procedures currently conducted in the US are performed using stents not indicated for use in the renal vasculature, most commonly including biliary stents.”

The off-label use of devices for RAS, he says, “can subject the patient to unknown risks because the safety and effectiveness of the devices, when used to treat renal artery stenosis, have not been adequately evaluated.”

“Potential procedural adverse events that can result from such use,” Dr Cavanaugh warns, “are vascular trauma, such as dissections and perforations, and embolization of air bubbles from the delivery system or particulates from the lesion.”

Longer-term adverse effects, he notes, “may include stent fracture, additional particulate embolization, and restenosis.”

According to experts, to gain approval for a class 3 implantable stent for use in arteries within the vascular system, a company is required to go through a Pre-Market Approval that requires extensive documentation of engineering and clinical testing and the process is costly and lengthy.

On the other hand, the approval process for non-vascular devices such as biliary stents is far less demanding. Documentation and required testing are much simpler and the device maker normally only needs to show that the stent is substantially equivalent to a similar device that is already on the market in the US.

However, true to form, the FDA has known about the rampant off-label sales of bile stents for years and this is another example of how the nation’s regulatory watchdog has failed to protect consumers from the profit driven pharmaceutical industry.

According to Dorothy Abel, in the March 2003 Endovascular Today, in early 2003 the FDA sent a letter to bile stent makers “to remind them of their obligation to ensure that their devices are appropriately labeled for the way they are actually being used.”

“In other words,” she wrote, “they have been told to obtain the necessary approvals for the specific vascular indications.”

“In addition,” Ms Abel said, “the marketing clearance letter from the FDA for nonvascular stents now specifically states that these devices are not approved for use in the vascular system.”

“The level of regulatory oversight for a device,” she explains, “depends on several factors, including the potential risks associated with the device and how well the device, its testing, and its anticipated performance are defined.”

Biliary stents she notes, “are intended to provide palliative treatment for patients with malignancies who have a life expectancy of approximately 6 months.”

Given the terminal status of such patients, any long-term risks are not ordinarily a matter of concern, she says, “making the less-stringent regulatory oversight reasonable.”

Agency enforcement records show that the FDA had knowledge of the continued off-label use 3 years ago as evidenced by the May 7, 2004, announcement by Cordis Endovascular, a J&J subsidiary, for a nationwide Class I recall of the firm’s revised instructions for use of a biliary stent contained in its medical device notification dated March 29, 2004, because they were not approved by the FDA.

A Class I recall is the most serious recall, indicating that there is a reasonable probability that use of a product will cause serious adverse health consequences. The press release went on to list the serious adverse events that had occurred with the off-label use of the devices, stating the company is “aware of nine patient injuries due to air embolism, including seizure and coma, as well as seven incidents of device malfunction in connection with the use of this system outside of its approved indication.”

Cordis also noted that it had sent a follow-up notification to customers on May 4, 2004, describing these severe adverse events and advising them to limit the use of the device to the FDA-cleared uses only.

And yet four years later in March 2007, the Wall Street Journal estimates that US bile duct stent makers sell about 90% of their devices to catheterization labs for use in arteries.

In addition to all the risks associated with the use of these devices for unapproved uses, their widespread off-label use is effecting the ability of bile stent makers who are seeking FDA approval to treat vascular indications to enroll patients in the required studies needed to gain approval because the off-label use is so common that many patients and doctors believe the devices are allowed to be used for other indications.

However, the profit-driven sales of devices for unapproved uses may be nearing the end because law enforcement agencies are warning that off-label marketing will continue to be a focus of anti-fraud enforcement efforts over the next two years, with more aggressive prosecution of device companies in particular, according to speakers at an American Bar Association health law conference February 22, 2007.

James Sheehan, of the US Attorney’s Office for the Eastern District of Pennsylvania, told the audience that changing promotional practices of device makers will be more “problematic” because the industry has a different structure. Compared with very large pharmaceutical companies, he said, many device makers are typically much smaller, making it harder to communicate rules across the industry.

Also, he said, while there are perhaps a million doctors who can write prescriptions for drugs, only a relatively few number of people decide which particular devices will be used in a hospital, and often these doctors are involved in designing the device in the first place.

“From a marketing perspective, it’s very hard to do unilateral disarmament,” Mr Sheehan said of device companies. “If your competitors are closely involved with physicians, it’s very hard to hold back and still have a business.”

As with most cases of off-label uses, experts say that most patients are unaware when a surgeon decides to use a bile stent for an off-label use and thus, if an adverse event occurs patients are also unaware that the cause might be the bile stent.

And to be sure, the hospital and surgeons are not going to own up to the mistake after the fact, unless they find themselves blocked into a corner where they absolutely have no choice. They are also not going to warn other medical providers not to us the bile stents because it would require them to disclose their own culpability for what happened to the patient.

This in turn is a win-win situation for device makers because it allows them to avoid any liability for the injuries directly caused by the illegal marketing of the biliary stents for dangerous unapproved uses while the off-label profits continue to roll in.

With all the secrecy agreements in place as far as what goes on in the operating room, calculating an accurate estimate of exactly how many patients may have been injured or killed due to the off-label use of these devices is not possible.

Investigations Focus on Illegal Marketing by Medical Device and Supply Companies

Evelyn Pringle May 2007

Government law enforcement agencies have made it known that illegal marketing and promotional practices of medical device and supply companies are now the targets of investigations basically because lawmakers who oversee spending by public health care programs say the booming business in this field of medicine is a little too good to be true.

The combination of health problems that have surfaced with the new wave of medical devices and the massive bilking of public programs for the cost of products, services and off-label procedures is what ultimately drew the focus of lawmakers not only to the marketing practices of the industry but also to the doctors and medical facilities that are on the take.

Over the past 2 years, Medicare payments to hospitals for implant surgery have risen about 40%, from $10 billion to $14 billion, according to an analysis of Medicare records reported in the September 26, 2006, New York Times.

In addition, the Centers for Medicare and Medicaid Services, estimates that between April 2005 and March 2006, $700 million in improper payments by Medicare have been made for medical equipment and supplies alone.

Last summer the New York Times reported that hospital executives were being treated to extravagant resort trips, with massages and golf perks, and paid thousands of dollars to advise companies on how to sell their products and services to hospitals.

Officials in some states are investigating these types of relationships. Connecticut’s attorney general, Richard Blumenthal, told the Times that his office was looking into deals that “at the very least . . . suggest insider dealings — an insidious, incestuous, insider system” that could mean hospitals are not getting the best deals in cost or quality.

At that time, he reported that he has issued more than 100 subpoenas, mostly to hospital suppliers, related to his inquiry

As part of the fraud crackdown, the government has set up a “Medicare Fraud Strike Force,” with members including officials from the FBI, the US Department of Justice and the Department of Health and Human Services and claims it could save as much as $2.5 billion by eliminating the fraud.

And just about every major device maker has reported receiving subpoenas from Congressional investigative committees and or law enforcement agencies in SEC filings, and in most cases, the firms are being forced to respond to subpoenas related to not one, but several investigations.

The majority of the cases involve the off-label marketing of products for unapproved uses. When a medical device is approved by the FDA the labeling lists the indications for which the device may be used. Although surgeons are allowed to implant a device approved for one indication in patients for other conditions not listed on the label, device makers are prohibited by law from influencing doctors to implant their products for unapproved uses.

Device makers Johnson & Johnson and Boston Scientific have been asked to turn over documents as part of an investigation into the off-label marketing of the new drug-eluting stents implanted in patients with heart disease approved in the US for less that 3 years. In December 2006, an FDA advisory panel noted that 3 out of 5 implants of the new stents were off-label.

Investigators are finding that the off-label marketing of these devices is leading doctors to implant for profit not need. On March 7, 2007, the Salisbury Daily Times reported that at least 25 patients in Maryland had received unnecessary stenting by Dr John McLean at the Peninsula Regional Medical Center in 2006.

On May 3, 2007, the Times reported that Dr McLean is now under investigation by the FBI in conjunction with the Health and Human Services Department. “A clear majority of patients under review are seniors on Medicare,” officials told the Times.

“The average charge that Medicare pays for a drug-eluting stent procedure ranges from $11,184 to $14,287, depending upon treatment needed in the coronary artery,” a Medicare spokesperson told the Times.

As part of the investigation, the Times said, records are being seized and subpoenas are being issued to staff and personnel who worked with Dr McLean at the Medical Center.

Donna Richardson, the facility’s public relations director, released a statement saying the Center was not the target of the investigation and was fully cooperating with investigators.

Back in March 2007, the facility announced that a review of Dr McLean’s procedures found that at least 25 stent implants were questionable because alternative methods could have been used to treat blood clots.

In December 2006, Dr McLean forfeited his catheterization laboratory credentials at the Medical Center, which prevented him from diagnosing coronary artery disease and he resigned all of his staff credentials on March 2, 2007. Dr McLean is also closing his own medical office on May 31, according to an ad in the Times.

A spokesperson for the Center said the facility is willing to reimburse patients and insurance companies but according to the Times, the chief medical officer, Dr Tom Lawrence said the Center had not yet determined how much would be paid due to a complicated billing process and an unclear total of unnecessary stent implants. In 2006, he said, the Center had performed 1,800 heart catheterizations with stents divided among 20 cardiologists

The off-label marketing of the Charite artificial spinal disc by J&J subsidiary, Depuy, is also under the microscope. The device was approved in 2004 for limited use but as soon as it hit the market spine surgeons started using the disc for all kinds of off-label procedures with dire consequences for patients. Last year an FDA review found that 12 patients who developed adverse events had two Charite implants when the FDA’s approved labeling specifically allows for only one.

Following the FDA review, the CMS announced that Medicare would no longer pay for the Charite replacement disc in patients over 60, after determining that the $30,000 to $50,000 procedure would not improve net health benefits for patients with low back pain.

On August 18, 2006 the Department of Labor & Industries followed suit and said that it would not authorize the Charite, “for the care and treatment of injured workers or victims of crime.”

Federal and state anti-kickback statutes make it illegal to offer or to accept remuneration in return for a referral of a patient or services covered by public programs. But critics say the pharmaceutical industry is using sham consulting contracts and professional service agreements to funnel payments to doctors in return for using their products.

The DOJ turned up the heat on device makers last year by issuing subpoenas to major manufacturers including Biomet, DePuy; Smith & Nephew; Stryker; and Zimmer, demanding consulting contracts, professional services agreements, and other documents related to financial arrangements with orthopedic surgeons.

On September 11, 2006, Dow Jones reported that the subpoenas sought several years’ worth of documents regarding possible federal criminal and antitrust-law violations, and that the same 5 companies reported receiving a separate batch of subpoenas in a probe of consulting or professional services agreements with orthopedics surgeons in early 2005.

“A number of investigations are under way,” Lewis Morris, chief counsel to the inspector general for the DHHS told the New York Time on September 22, 2006.

“The potential for inappropriately steering medical decisions is always at play, and there is always the risk that doctors will prescribe a particular device because of their own financial interest and not the interest of the patient,” Mr Morris said in the Times.

Device maker Medtronic reported in its filing with the SEC for the period ending January 27, 2007, that it is complying with a subpoena from the US attorney for the District of Massachusetts requesting documents related to defibrillators, pacemakers, and related components 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.

Medtronic just paid $40 million in 2005 to settle charges by the DOJ that a subsidiary paid doctors kickbacks in exchange for using the firm’s spinal surgery products.

In what legal experts are calling a preemptive effort to avoid being barred from having Medicare and Medicaid pay for any of its products, on February 12, 2007, J&J informed the DOJ and the SEC that subsidiaries in other countries made improper payments related to the sale of medical devices which may fall under the jurisdiction of the Foreign Corrupt Practices Act.

A major kickback scheme involving doctors was recently revealed in a January 17, 2007 press release by Illinois Attorney General Lisa Madigan to announce that her office had intervened in a lawsuit brought by a whistleblower private plaintiff against several Chicago area radiology centers over their payment of illegal kickbacks to doctors.

In 2006, the private plaintiff, John Donaldson, the owner of radiology centers in Illinois, filed the lawsuit on behalf of the State and the complaint remained under seal while the Attorney’s office investigated the allegations and determined whether to intervene.

The lawsuit was filed against MIDI, LLC, a Virginia-based company that operates 13 Open Advanced MRI facilities in Chicago, Crystal Lake, Bannockburn, Deer Park, Schaumberg, Elk Grove Village, Buffalo Grover, Niles, Skokie and other areas, and lists more than 20 MRI Centers as defendants in violating the Consumer Fraud and Deceptive Business Practices Act, the Illinois’ anti-kickback law and Insurance Fraud Prevention Act.

The lawsuit says the MRI Centers used “sham” lease agreements to benefit doctors in return for referrals, sometimes for unnecessary testing, and provides the details of how some MRI centers marketed and trained sales people to lure doctors into the lease deals.

According to the complaint, the leases purport to provide for the rental of a particular facility by the referring physician for the performance of the MRI services when in fact, “the MRI imaging services are done solely by the operator of the MRI Service Center and their employees, and not the physician.”

“Under the scheme,” the lawsuit explains, “the insurers pay the physicians and the payment is then divided and split between the MRI Service Center operator and the referring physician.”

The complaint charges that the schemes “involve thousands of fraudulent claims submitted to private insurers in Illinois for MRI scans done on numerous Illinois citizens.”

“The only activity by the referring physician,” it alleges, “is referring patients, billing the services as his own and receiving a kickback.”

On May 10, 2007, the Chicago Tribune reported that Chicago area doctors were told they could make over $130,000 a year by referring patients to these MRI centers. Under the largest payment plan, the Tribune said, doctors could earn “a potential fee of $277 per MRI for each patient referred for a scan.”

Critics say company executives had also better beware because the sanctions for engaging in illegal marketing schemes is no longer merely a matter of civil penalties and fines. In the recent Federal case of the United States v Caputo (ND Ill., 10/16/06), the compliance officer of a device company accused of marketing a product illegally was sentenced to prison for 7-years.

The surgeons involved in the schemes are also becoming targets of litigation. A class action lawsuit was filed in January 2007, against Arkansas neurosurgeon, Patrick Chan, accusing him of performing unnecessary surgeries in exchange for kickbacks from medical supply companies including Orthofix, Osteotech, Alphatec, and Signus.

The Medicare Fraud Task Force investigations are beginning to bear fruit. On May 9, 2007, the DOJ announced the arrest of 38 people as a result of an investigation that found sham companies had billed Medicare for $142 million worth of unnecessary or nonexistent medical equipment or supplies.

One person arrested, Eduardo Moreno, the owner of several medical supply firms who had his Rolls Royce seized last month, is accused of submitted false claims to Medicare for more than $1.9 million including billings for “powered pressure-reducing air mattresses” at a cost of $868.85 per item.