The continuing court fight between pulse oximetry companies Masimo (Irvine, California) and Nellcor (Pleasanton, California) translated to a battle of words in mid-July, with both companies providing their own interpretations of the most recent judge's ruling in their ongoing patent dispute. A judge in U.S. District Court for the Central District of California upheld a jury verdict against Nellcor, a unit of industrial conglomerate Tyco (Pembroke, Bermuda), with that ruling requiring Nellcor to pay Masimo $134.5 million for infringement of two of its patents with 15 claims. In a preemptive effort, Nellcor issued its own statement, before the release of Masimo's, promoting its views on the ruling and promising an appeal.

In the ruling, a judge sustained a jury verdict that Masimo did not infringe a Nellcor patent, but reversing the jury's finding that the infringement was willful, and the judge did not grant an injunction against Nellcor, preventing further sales of the infringing products. Brad Langdale, chief financial officer for Masimo, told The BBI Newsletter that the judge did not impose injunction "in the best public interest – to not put the onus on hospitals to take the brunt of the decision." Thus, he saw no change in the competitive landsacape for the short term, and also expressed confidence that Masimo will continue to prevail in the suit and that Nellcor "is going to have to pay Masimo for all of this infringement." Langdale predicted that hearing of the appeals and a final judgment will take a "year to 18 months."

The trial involved four patents and 21 claims asserted against Nellcor and one patent and seven claims asserted against Masimo. The jury found infringement against Nellcor on all 21 claims while finding no infringement against Masimo, according to the latter company. The jury decision found no willful infringement by Masimo, a finding that would have allowed the court to increase the jury damages award.

Joe Kiani, Masimo's chief executive officer, said, "While the court overturned some findings, in the end, a verdict of infringement of 15 claims is a resounding statement that Nellcor infringed Masimo's patents. Masimo pioneered read-through-motion pulse oximetry." He added that the ruling "confirms Masimo's contribution to the field."

In its own statement on the court's decision, Nellcor did not acknowledge the $134.5 million payment, focusing instead on having received "several favorable rulings" in the case. It noted the court's refusal to impose an injunction on the company, and overturning of the jury's finding that the infringement was willful. Nellcor said that the court "removed the jury finding of patent infringement for one and ruled that another was unenforceable, due to Masimo's improper conduct in seeking that patent." The statement added: "The judge, in her ruling, emphasized that an injunction preventing Nellcor from selling certain pulse oximetry products would not be in the public interest, since it would likely compromise patient safety."

David Sell, president of Nellcor, said, "We are pleased that the injunction was denied, as it means customers have uninterrupted access to Nellcor's family of products. We steadfastly maintain that we have not infringed Masimo patents and are confident Nellcor will . . . prevail in this case." The statement said Nellcor will appeal the jury's infringement decision on the remaining two Masimo patents to the Court of Appeals for the Federal Circuit (CAFC), which, it said, "has ruled in Nellcor's favor in previous patent infringement claims Masimo initiated against Nellcor." In October 2000 and August 2001, two federal courts, including the CAFC, ruled that Nellcor's technology did not infringe a similar Masimo patent. The CAFC held that Nellcor's technology is "truly different."

"When given the opportunity to present our full appeal to the CAFC, we strongly believe the remaining rulings against Nellcor will be reversed," Sell said. Nellcor said that if the appeal is successful, "the damages established by the jury will not be awarded." It added: "We have remained the market leader in pulse oximetry for over two decades by continually providing technological innovation and a high level of customer support." Sell added, "This latest series of rulings assures that our customers will not be limited in their oximetry product choice."

Nellcor is part of the respiratory division of Mallinckrodt (St. Louis, Missouri), a Tyco Healthcare company.

Taxus recall erodes physician confidence

Boston Scientific (Natick, Massachusetts) last month reported a substantially widened recall of its lucrative Taxus paclitaxel-eluting coronary stent. The company said during a conference call that the recall will involve about 85,000 Taxus stent systems as well as about 11,000 Express2 stent systems. Overall, the company said it has shipped more than 500,000 Taxus stent systems and more than 600,000 Express2 stent systems. The news came following a day-long halt in trading for Boston Scientific, as well as for Angiotech Pharmaceuticals (Vancouver, British Columbia), the firm that licenses to Boston Scientific the paclitaxel coating used on its Taxus stent, resulting in numerous media speculations predicting the recall.

The popular Taxus drug-coated stent and the company's older Express2 bare-metal stent were linked with three deaths and about 43 injuries. Boston Sci noted that the recall does not affect the Express SD and LD biliary stent systems, and it stressed that the recall does not affect patients who already have the devices implanted since the difficulty is with the delivery system and occurs at the time of insertion, not afterward. The recall expanded on an early July recall that involved about 200 Taxus Express2 Systems, due to characteristics in the delivery catheters that have the potential to impede balloon deflation during a coronary angioplasty.

Following the July 16 announcement of the expanded recall initiative, the company held a web cast the next week, attempting to recover some lost goodwill with physicians and saying it was working hard to restore their confidence. Paul LaViolette, senior vice president and group president of Boston Scientific's cardiovascular unit, acknowledged that while the Taxus and Express systems combined are used more than any other stent systems, that trend would not continue if physician confidence is undermined. "We have let you down," he said. "This no-deflate problem is real, we're acting aggressively, but we also know that by having had to take two steps to . . . get there is not the way we would have liked it to go, and it has affected your confidence in whether or not we are in full control of our product." The company, he said, would continue to work "exceptionally hard" to regain that trust. "We will get there [and] we will get there in partnership with you."

LaViolette reported completion of the recall (on July 19) and that Boston Scientific had begun replenishing its affected supplies. And he repeated the company's position that the problem was confined to the catheter delivery system, not with any failure of the stent itself. He said the defect occurred in less than 1 in 10,000 procedures, but that the company wasn't taking chances with the rest of the inventory. Thus, Boston Sci had to draw very broad boundaries around its degree of certainty, he said. "What we are seeing here, quite frankly, is that we have a problem that is like a needle in a haystack," he said. "And there's an old rule that says if you cannot find the needle, you have to recall the whole haystack."

None of the recalled stent systems will be redistributed anywhere in the world, LaViotte said. He also said that all inventory in the U.S. should be replaced by early August. Additionally, the company disclosed, in a note sent to doctors, that besides problems with the Taxus stent, that there had been 52 complaints linked to the use of 600,000 Express2 stents. These included two deaths and 25 serious injuries.

While the company said the most recent recall should be sufficient, it may not yet be out of the woods. The FDA reportedly is conducting a "top priority" review of the recall and has asked for more information about how the company determined which stents were safe. The review will include an inspection of Boston Sci stent manufacturing plants in Maple Grove, Minnesota, and Galway, Ireland.

In tandem with the recall announcements, doctors at the Cleveland Clinic (Cleveland, Ohio) said that they would "highly restrict" use of the Taxus stent only to procedures where Johnson & Johnson's (J&J; New Brunswick, New Jersey) competing Cypher sirolimus-eluting stent isn't a good option. These would include, for instance, patients with difficult-to-reach blockages, said Eric Topol, director of cardiology at the clinic. Other facilities, including Massachusetts General Hospital, Brigham & Women's Hospital and Beth Israel Deaconess Medical Center (all Boston, Massachusetts), also suspended their use of the stent until demonstration of clinical safety. Stanford Medical Center (Palo Alto, California), Duke University Medical Center (Durham, North Carolina) and the Emory Heart Center (Atlanta, Georgia), were among those that said they expected to significantly reduce their use of Taxus stents for now.

According to Larry Haimovitch, president of Haimovitch Medical Technology Consultants (Mill Valley, California) who covers the cardiovascular sector for The BBI Newsletter and its sister publications, Cardiovascular Device Update and Medical Device Daily, Boston Scientific is fortunate in some respects. "I think there's one thing that's very, very lucky for them – that there's only one other competitor [in this space]," he told BBI. "At least they have some good luck on their side here from the standpoint of timing. You've got one other competitor who may also be capacity-constrained."

Jim Tobin, president of Boston Scientific, estimated that the recall would set back Taxus inventory in the U.S. about a week, and about four to six weeks internationally. "The situation, while obviously something that we are not happy about, is not a complete catastrophe," he said.

BD to pay $100M in Retractable settlement

Retractable Technologies (Little Elm, Texas), a maker of safety needle devices, reported in early July that it had settled its longstanding federal antitrust suit against BD (Becton Dickinson and Co.; Franklin Lakes, New Jersey) for $100 million in cash. After legal fees and other expenses the company said it would receive "the majority" of these proceeds. The lawsuit, originally filed in a Texas state court in 1998, was scheduled to go to trial in federal court in Texarkana, Texas, with testimony slated to begin July 12.

"This is a major victory for Retractable Technologies and healthcare workers in the U. S. and around the world," said Thomas Shaw, president and chief executive officer of the company. "In our view, the substantial amount of this settlement vindicates our allegations that BD has blocked our life-saving technology from being used in American and overseas medical facilities, thereby endangering the lives of thousands of healthcare workers who have suffered accidental needlestick injuries, and millions more patients who have contracted deadly diseases such as HIV/AIDS and hepatitis C through needle reuse. Such injuries are preventable using [our] VanishPoint safety needle devices."

Shaw said, "While we are confident we would have prevailed at trial, we decided to settle because any resulting verdict and judgment would have been subject to the delays associated with an appeal." He added, "We will be in a strong position to market our products to customers in the U.S. and overseas by stressing the superior safety, reliability, and cost-effectiveness of our products."

With the settlement, each company released the other from causes of action based on conduct up to the settlement date.

In May 2003, Retractable settled with the other three original defendants in the federal antitrust case for cash and other consideration. Those defendants were Novation (Irving, Texas) and Premier (San Diego, California), the two largest hospital group purchasing organizations, and Tyco International (Pembroke, Bermuda), the second-largest U.S. needle device manufacturer.

Retractable manufactures VanishPoint automated retraction safety syringes and blood collection devices designed to eliminate healthcare worker exposure to accidental needlestick injuries.

$1 million proposed to fund BioFoam

Biosurgical device and human tissue processing company CryoLife (Kennesaw, Georgia) reported last month that a recommendation to provide $1 million to fund the development of its BioFoam product was passed by the U.S House of Representatives. Rep. Phil Gingrey (R-Georgia), a member of the House Armed Services Committee, introduced the measure which was included in the Department of Defense Appropriations Act (H.R. 4613) for fiscal 2005. "The development and potential use of BioFoam on the battlefield holds great promise for members of our armed forces who suffer serious wounds in combat," he said.

BioFoam is a protein hydrogel adhesive in the pre-clinical stage of development. It contains an expansion agent that sets quickly and rapidly arrests bleeding of large vessel injuries. BioFoam is based on the same technology as CryoLife's BioGlue, approved by the FDA to control bleeding as an adjunct to sutures and staples for use in open surgical repair of large vessels. BioGlue also is CE-marked and approved in Canada for use in soft-tissue repair.

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