Guidant Corp.’s run as an Indianapolis company ended in a blaze of controversy, with allegations flying that the company failed to come clean about potentially fatal defects in its heart defibrillators.
Now, four years after Guidant’s $27 billion sale to Natick, Mass.-based Boston Scientific Corp., a federal judge overseeing a criminal case against Guidant has refused to sign off on a plea agreement negotiated by prosecutors, saying it doesn’t go far enough. The April 27 order by Minnesota federal Judge Donovan Frank sends prosecutors and the company back to the negotiating table.
The plea deal, unveiled in early April, called for a $296 million criminal fine, which the Justice Department called the largest ever levied against a medical-device company. A top government official called it “an important wake-up call to all those who seek to withhold vital information about public health and safety.”
But some doctors and patient advocates were underwhelmed, noting Guidant was pleading guilty only to misdemeanors and that shareholders of Boston Scientific—rather than executives involved—were paying the consequences.
“These [defibrillator] devices killed people,” Lisa Salberg, a patient advocate who serves as CEO of the Hypertrophic Cardiomyopathy Association, wrote in a letter to the court.
“So what is the penalty for knowingly contributing to the death of your customer? In this case, nothing more than a financial hit to ... stockholders and no personal accountability to the individual human beings who made the CHOICE to withhold data from regulators, doctors and patients.”
It’s not clear from court documents in the case, and from civil lawsuits brought over similar issues, which executives were most directly involved in the wrongdoing cited in the plea agreement.
The agreement covers 2002 to 2005, a span when Ronald Dollens was CEO. Dollens could not be reached for comment; he did not respond to phone messages left at his Zionsville home.
The New York Times was the first to bring to light the issues that spawned the criminal investigation. In a series of stories in 2005, the newspaper reported that the company had not alerted doctors and patients that some of the defibrillators had a defect that could cause them to fail when activated. At least six patients died.
In the rejected agreement, Guidant pleaded guilty to two misdemeanor charges related to the completeness and accuracy of its filings with the U.S. Food and Drug Administration. According to the 13-page pact, the company in 2002 added insulation to one of its defibrillators to fix a flaw that had caused several devices to short-circuit. But it told the FDA the following year that the change was unrelated to safety or performance.
Among those urging rejection of the agreement were Robert Hauser and Barry Maron, Minneapolis cardiologists who helped expose the problems after a 21-year-old patient implanted with a Guidant defibrillator died.
The doctors said in a letter to the court that they were “extremely dismayed by the U.S. Attorney General’s decision to enter into a plea agreement ... rather than prosecute the company and the individuals responsible for this egregious act.”
In his 37-page order, Judge Frank pointed out that “sophisticated medical devices, such as the ones at issue in this case, generally have a very high rate of reliability and provide life-saving benefits for many people.”
And he said it is up to prosecutors, not judges, to decide whom to charge. He said the government’s decision not to prosecute executives was not grounds for casting the agreement aside.
But Frank said the deal was flawed in other ways, including that it “did not adequately address Guidant’s history and the criminal conduct at issue.”
He noted that a prior investigation ended in 2003 with a Guidant subsidiary pleading guilty to 10 felony charges and paying $92 million to settle charges of failing to notify the FDA about stent malfunctions. In addition, last year, Boston Scientific paid $22 million to settle allegations that Guidant years earlier used medical studies as vehicles to provide kickbacks to physicians for implanting its pacemakers and defibrillators.
Frank said that, in addition to a fine, any new deal should include probation for Boston Scientific. During probation, he said, Boston Scientific could be required to perform community service to rebuild the public’s confidence in the safety of heart devices. He said the company also could be required to devote specific sums to charitable causes it already supports, including one that addresses disparities in cardiac care for minorities.•