A Medical Device Daily

A federal judge has ruled that some product-liability claims against Boston Scientific (Natick, Massachusetts) over implantable heart defibrillators can proceed, rejecting the device maker’s motions to dismiss them.

Guidant (Indianapolis), which Boston Scientific bought last year, continued to sell heart rhythm-management devices after learning of possible defects, Judge Donovan Frank of the U.S. District Court in Minnesota said in a ruling on Tuesday.

“This case concerns the issues of whether, how and to whom information was shared ... about a device with an alleged defect,” Frank wrote in his ruling. The ruling clears the way for a July 27 trial.

The first lawsuit against Guidant is being pursued by Leopoldo Duron, a California man who had one of the devices removed. Duron seeks punitive damages over Guidant’s failure to adequately warn doctors and consumers about problems with the defibrillators.

Despite the purported benefits of Boston Scientific’s $27.2 billion acquisition of Guidant last year, the company said in March that it continues to see lawsuits piling up over problems with Guidant’s heart rhythm devices (Medical Device Daily, March 6, 2007). At that time the company faced more than 1,100 individual and 75 class-action lawsuits over recalls and safety warnings issued in 2005 and 2006 involving Guidant’s implantable defibrillators and pacemakers.

Guidant has acknowledged that the defibrillators have been linked to seven deaths.

Annette Ruzicka, director of media relations for Boston Sci’s CRM unit, said the company is prepared to defend the defibrillators in court.

Boston Scientific, the No. 3 maker of the implantable heart devices after Medtronic (Minneapolis) and St. Jude Medical (St. Paul, Minnesota), has estimated damages and costs to cover legal expenses will be $732 million.

Boston Scientific said in March it had set aside $485 million for expected legal matters as of Dec. 31, primarily related to products made by Guidant.

“Clearly, Boston Scientific knew they’d be facing litigation ... and in any litigation you’re going to have wins and losses,” said David Katz, chief investment officer at Matrix Asset Advisors, which owned 2.3 million Boston Scientific shares as of March 31. “You have to take them in stride.”

Katz said the most important issues for the company over then next three to 12 months are progress in resolving a warning letter with the FDA, a turnaround in the markets for implantable cardioverter defibrillators (ICDs,) and drug-eluting stents (DES), and cutting costs.

Michael Barr, an industry analyst with Victory Capital Management, added, “Boston Scientific definitely wants to get its debt levels down ... this is just one more thing that moves this company toward cost cutting.”

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