Boston Scientific Charged in Guidant Device Case

Business Week

The U.S. Department of Justice filed charges against Boston Scientific Corp.'s Guidant division Thursday, saying Guidant did not fully disclose problems with its devices to regulators.

The charges are part of a previously announced agreement for Boston Scientific Corp. to plead guilty to the two misdemeanor charges.

The company, based in Natick, Mass., agreed in November to plead guilty to the two counts, which had not yet been filed, and pay $296 million to resolve the investigation.

The investigation concerned three implantable heart devices. The Justice Department said Guidant discovered in 2002 that its Ventak Prizm 2 DR was prone to electrical arcing, which could keep the device from responding when the patient suffered irregular heart rhythms.

Guidant changed the design of the device in November of that year, but in August 2003, it told the Food and Drug Administration that the changes did not affect the safety or effectiveness of the device.

In early 2004, the company allegedly found a similar problem with two other devices. A patient died in July 2004, and the Justice Department says that death was related to a short circuit.

Following the death, Guidant knew the instructions for responding to a short circuit in the device were false and misleading, the Justice Department says. As a result, the company sent out new information that was described only as a product update. The charges say Guidant broke the law by not notifying the FDA about the change within 10 days.

In June 2005, Guidant issued safety advisories on the three devices. The FDA determined these were Class I recalls, which are the most serious type of device recall because there is a reasonable change the devices could cause serious health problems or death.

Boston Scientific acquired Guidant for $26 billion in 2006.

Boston Scientific Issues Heart-Device Warning
From the Wall Street Journal

Boston Scientific Corp. warned doctors of a rare defect that can cause implanted defibrillators to deliver improper shocks to the heart, adding to concern about the high-end medical devices.

The devices, implanted near the shoulder, deliver a jolt to restart stopped hearts and try to heal failing hearts. They cost about $30,000 apiece.

The affected models are among the first that Boston Scientific released under its own brand name after the company's $28 billion acquisition of defibrillator maker Guidant Corp. in 2006. Despite medical evidence that the defibrillators can extend the lives of people with heart failure, sales haven't recovered from a string of recalls since 2005 that hurt the devices' reputations.

In a letter earlier this week, Boston Scientific told cardiologists to turn off a sensor in the devices that records a patient's breathing rate. If left on, the breathing-rate sensor can cause extra shocks in rare circumstances, the company said. About 8,000 people, or 25% of all patients with the affected models, are using the breathing-rate sensor. Fifteen people have received improper shocks so far, and no deaths have resulted, the company said.

Implanted defibrillators consider a patient's heart rate, but not the breathing rate, when deciding whether to shock. Boston Scientific, which is based in Natick, Mass., didn't immediately explain why the breathing-rate sensor would lead to the improper shocks.

The Heart Rhythm Society, whose doctors implant defibrillators, said the problem was minor and correctable. Nonetheless, Christopher Warren, an analyst at Caris & Co., said it represents a "black eye" for Boston Scientific. "These products were supposed to correct years of engineering issues at Boston Scientific."