A Medical Device Daily
Attempting to avoid the difficulties posed by extended time in court, Boston Scientific (Natick, Massachusetts) late Friday reported that it will pay $195 million (1141.5 million) to settle around 4,000 claims involving implantable rhythm management devices made by Guidant , which it acquired last year for about $27 billion.
In a statement, the company said that the settlement was reached during mediation sessions with U.S. Magistrate Judge Arthur Boylan in Minneapolis.
The claims were all consolidated in the federal court in Minneapolis, with the first trial due to start July 30.
Boston Scientific said the agreement also includes an undetermined number of other similar claims from across the country, but not all of them.
Guidant — now Boston Scientific's cardiac rhythm management unit — recalled more than 100,000 of the products between 2005 and 2006 which were at risk for failure.
With the recalls, patients implanted with the devices were faced with the difficult decision of having the devices explanted and replaced, or not having an explant and dealing with the continuing concern that the device could fail. Thus, besides asking for the coverage of explant/reimplant expenses, many patients claimed pain and suffering.
The problems leading to the litigation were first revealed in 2005 with the FDA's recall of 11 models of Guidant ICDs with electrical flaws.
The company may have made a troubling situation worse by attempting to address these problems by categorizing them, not as recalls, but "physician communications."
On May 23, 2005, the company sent out that type of communication regarding the VEntak Prizm 2 DR defibrillator model manufactured before November 2002, advising physicians concerning what it called "a rare failure that results in the device's inability to delivery therapy."
Following, on June 17, the company issued another "voluntary" worldwide communication to physicians notifying them of important safety information, designed to limit the number of adverse events associated with six additional models of defibrillators.
Then on June 25, Guidant sent letters to physicians worldwide regarding defects with four more defibrillator models.
On July 1, 2005, the FDA characterized the communications as recalls.
A major allegation in the liability lawsuits is that Guidant continued to ship and sell the heart rhythm devices even after learning that there were possible defects.
In December of last year, Jim Tobin, president/CEO of Boston Scientific who had engineered the Guidant purchase, outlined at the Piper Jaffray Healthcare Conference, a variety of changes that had been made throughout its CRM operations, saying that he had found at Guidant "structural problems" and a pattern of thinking that "there was always time to do it over, not do it right."
He said that changes at the division included "different release criteria for product leaving the plant" and "more testing to make sure it's built the way it's supposed to be built."
Charles Zimmerman, lead attorney for the plaintiffs, in a statement said that the settlement provides "meaningful and expedient relief" for plaintiffs and their families. "We are pleased that we were able to come to an agreement with the company that serves the best interests of all parties involved."
Tobin, in a statement commenting on the settlement, said, "It will better allow us to focus our time and resources on developing innovative products to serve physicians and patients."