Guidant Case May Involve Crime Inquiry

Guidant Case May Involve Crime Inquiry

Thu, 29 Sep 2005

The New York Times reports that “criminal investigators at the Food and Drug Administration have apparently become involved in the agency’s inquiry into how the Guidant Corporation handled problems with its heart devices, said two people contacted by the investigators."

“In 2003, a unit of Guidant, Endovascular Technologies, pleaded guilty to 10 felony charges and paid $92.4 million to settle charges of failing to notify the F.D.A. about device malfunctions and patient deaths related to stents for aortic aneurysms. That year, Guidant and Endovascular signed an agreement pledging, among other things, to notify the government about product-related problems.”

From the bits and pieces of information garnered by the Times, it appears that the new criminal investigation focuses on exactly similar violations in regard to the Guidant defibrillator. The case demonstrates that biomedical companies are not at all deterred from committing the same criminal offenses repeatedly, given the negligible fines. In the aftermath of Enron, Tyco, WorldCom, Adelphia…et al– Why are biomedical corporations whose misconduct kill people, shielded from criminal punishment?

In a previous article the Times reported (September 27) that critics of the industry as a whole, “have long charged that some companies have used research studies to mask what are really marketing efforts that provide financial incentives to doctors to get them to use a new drug. Now, the Guidant documents and recent interviews suggest that the line between research and product promotion may also be blurring where heart devices are concerned.”

The Nuremberg Code sets the standards for “permissible” research involving human subjects in a civilized society. For human research to be ethical, it must be justified: “The experiment should be such as to yield fruitful results for the good of society, unprocurable by other methods or means of study, and not random and unnecessary in nature.”

Why is there a double standard in meeting out punishment for criminal conduct by corporations whose actions result in loss of life? It takes more than financial penalties – a mere slap on the wrist– to stop corporate criminal conduct.

Contact: Vera Hassner Sharav
212-595-8974

THE NEW YORK TIMES
September 29, 2005
Guidant Case May Involve Crime Inquiry
By BARRY MEIER

Criminal investigators at the Food and Drug Administration have apparently become involved in the agency’s inquiry into how the Guidant Corporation handled problems with its heart devices, said two people contacted by the investigators.

Since June, the F.D.A. has been looking into several issues involving Guidant, including whether it properly reported failures of some of its heart devices and manufacturing changes to correct the problems. The agency’s Office of Criminal Investigations is often called upon to examine such issues.

The disclosure comes as a pending $25.4 billion takeover by Johnson & Johnson of Guidant, the nation’s second-biggest heart device maker, nears completion.

A spokeswoman for the F.D.A., Julie Zawisza, said the agency, as a matter of policy, did not confirm or deny the existence of a criminal investigation. In a statement, a spokesman for Guidant, Steven Tragash, said he was not aware that the company had been contacted.

In that statement, however, he added, “We are aware that former employees have been interviewed by the F.D.A. in connection with their activities when they were with Guidant.” He did not elaborate.

In separate interviews, the two people said F.D.A. officials who had identified themselves as criminal investigators had contacted them in recent weeks. Both people, citing the potential sensitivity of the investigation, spoke on the condition of anonymity.

Neither the direction of the agency’s inquiry nor its progress is clear. But one federal prosecutor said that it was not unusual for the agency’s criminal investigators to get involved if there were indications that a company might not have complied with the agency’s reporting requirements.

Once an agency like the F.D.A. concludes an investigation it will, if warranted, forward its findings to the Justice Department, which can then decide to take a variety of actions. These include bringing civil or criminal charges or dropping the matter.

Executives of Guidant, which is headquartered in Indianapolis, have said that they made all required F.D.A. reports related to the heart devices in question.

The F.D.A. began an inquiry into Guidant in June after a report in The New York Times that the company had not told doctors for three years that one defibrillator had a potential electrical defect. Since mid-2002, when Guidant corrected the problem, that defibrillator – the Ventak Prizm 2 DR – short-circuited more than two dozen times.

There is one known death associated with the device. A defibrillator is a device that sends out an electrical charge intended to jolt a chaotically beating heart back into normal rhythm.

Since then, Guidant has recalled ten of thousands of implanted heart devices including pacemakers and advanced pacemakers known as cardiac resynchronization therapy units, or C.R.T.’s. In several cases, two C.R.T.’s – the Contak Renewal or the Contak Renewal 2 – short-circuited.

Guidant recently said that three patient deaths were associated with the devices.

Heart devices like defibrillators and C.R.T.’s regularly save and extend thousands of lives. But if a unit fails without warning – as in the case of a short-circuit – a device-dependent heart patient is left unprotected.

Speaking generally, James G. Sheehan, an assistant United States attorney in Philadelphia who specializes in cases related to health care, said that criminal investigators can get involved for several reasons, including the receipt of information that suggested that a company did not comply with reporting requirements. The failure to make such reports can be a crime.

In 2003, a unit of Guidant, Endovascular Technologies, pleaded guilty to 10 felony charges and paid $92.4 million to settle charges of failing to notify the F.D.A. about device malfunctions and patient deaths related to stents for aortic aneurysms. That year, Guidant and Endovascular signed an agreement pledging, among other things, to notify the government about product-related problems.

Senator Charles E. Grassley, the chairman of the Senate Finance Committee, told Guidant last week that his staff was investigating whether Guidant had complied with the terms of that agreement.

In addition, the F.D.A. released a report last week by inspectors who had reviewed Guidant operations in St. Paul. In that report, the inspectors noted a number of problems.

But several Wall Street industry analysts said that the problems highlighted were relatively minor and that the release of the report might signal the end of its inquiry into Guidant.

Executives of Johnson & Johnson, which is based in New Brunswick, N.J., have said that they are proceeding with the planned Guidant acquisition and that they expect it to close in the fourth quarter of this year.

http://www.nytimes.com/2005/09/29/business/29heart.html

THE NEW YORK TIMES
September 27, 2005
Implant Program for Heart Device Was a Sales Spur
By BARRY MEIER

By January, about 80 cardiologists nationwide completed an evaluation run by the Guidant Corporation of one of its products, an improved electrical component, known as a lead, that connects an implanted cardiac device to the heart.

In exchange for implanting the lead in three patients and completing five survey forms, each physician received $1,000 from Guidant.

“The primary purpose of the study was to get feedback on how well the system worked,” said Dr. Wayne O. Adkisson, a cardiologist in Portsmouth, Va., who took part.

The program did generate feedback. But internal Guidant documents and e-mail messages provided to The New York Times suggest that the initiative also had another apparent goal – increasing sales of the company’s most sophisticated and expensive heart devices. Those devices are advanced pacemakers called cardiac resynchronization therapy devices, or C.R.T.’s. They cost about $29,000 each.

The program proved so successful in increasing Guidant C.R.T. sales that when the survey ended in January, company executives sent around congratulatory e-mail messages, the records show. “It generated 300+ implants,” one January e-mail message stated. “Let’s say that just 25% were incremental … that yields >$2 million in new sales with physicians who are not necessarily Guidant friendly. We paid each physician who completed all five surveys $1,000 so our total cost was $80,000.”

In a statement, Guidant said that it ran surveys like the lead evaluation to generate data on how doctors use company products so that it could improve future models.

Critics of the industry have long charged that some companies have used research studies to mask what are really marketing efforts that provide financial incentives to doctors to get them to use a new drug. Now, the Guidant documents and recent interviews suggest that the line between research and product promotion may also be blurring where heart devices are concerned.

A C.R.T. regulates the beating of one side of the heart independently from the other. The Guidant lead was intended to be easier to use and to reduce the chronic hiccupping that some implant patients develop when a lead from a C.R.T. is placed too close to a nerve.

The Guidant records indicate that many doctors approached by the company to take part in its lead study were not those who regularly implanted its heart devices, but rather those more apt to use the units of competitors. Though the agreement signed by doctors taking part in the lead evaluation did not explicitly require them to implant a Guidant C.R.T. along with the lead, they effectively had to do so because of software-related issues.

One Guidant document is a chart that indicates that, on average, the monthly number of company C.R.T.’s implanted by physicians taking part nearly doubled during the survey period that began last September.

A person professing to be a Guidant employee provided the documents to The Times. The Times provided Guidant either with copies or text from the documents. Guidant, while declining to confirm the records, did not dispute their authenticity.

“In order to respond best to the needs of patients and preferences of physicians, Guidant has sometimes utilized market research and evaluation programs of our F.D.A.-approved and -cleared products,” said Guidant.

The disclosure of the records comes amid a growing controversy over how heart device manufacturers release data about product failures to doctors and patients. Since late May, Guidant has recalled tens of thousands of heart devices, and some units implanted during the survey were probably among the models affected.

The two other major heart device companies, Medtronic Inc. and St. Jude Medical, also said they run product evaluation programs. All three companies said their payments to doctors for taking part in such surveys reflected reasonable compensation for a physician’s time.

“Any payments made in connection with such surveys are in modest amounts,” Medtronic said in a statement.

A number of physicians who participated in the Guidant evaluation said their involvement in such reviews did not influence which company’s units they implanted. Still, the Guidant survey and ones like it raise questions about what doctors tell patients about any added payments they may be receiving in connection with a heart product’s use, several experts said.

Several doctors who took part in the Guidant survey said that they did not tell their patients about the payments they received.

It is illegal under federal law in certain circumstances to provide financial benefits to doctors to induce them to use a product or service. In its statement, Guidant said that all of its research and evaluation programs “are intended to comply with applicable laws.”

Product evaluation surveys like the Guidant one are far less rigorous than a traditional clinical study of a drug or a medical device in their purpose, scientific rigor and oversight. But several heart specialists suggested in interviews that heart device makers may also be using formal post-marketing studies of devices that the Food and Drug Administration has already approved – to increase sales as they battle for market share.

There is little question that many post-marketing studies of heart devices like defibrillators and pacemakers have yielded crucial data, including those that have shown patients implanted with defibrillators survive longer than patients who are treated only with drugs. A defibrillator sends out an electrical charge intended to interrupt a chaotic and often fatal type of heart rhythm. A pacemaker regulates a heart that is beating too fast or too slowly.

But other post-marketing studies may yield far less data. Consider, for example, a study that St. Jude Medical is currently running.

It began recruiting doctors and medical centers last October to participate in a study intended to follow for two years the health outcomes of 5,000 patients implanted with either a defibrillator or a C.R.T. with a defibrillator made by St. Jude Medical.

A copy of the study’s protocol shows that St. Jude Medical will pay $2,000 to doctors or medical centers for every patient. Of that amount, a doctor will get $500 when a device is implanted, with the remainder paid over a two-year period when a physician submits patient data.

According to the protocol, the study, which is technically called an outcomes registry, will yield data on how different types of heart patients implanted with the St. Jude Medical devices fare over time. The Times asked four cardiologists not involved in the study to review the protocol. Two of the doctors said that the study might provide St. Jude Medical with some useful data about its device. But the other two doctors said they saw little value in it. One, Dr. Robert Rea, a cardiologist at the Mayo Clinic, said, “The amount of information that can be gleaned from these kind of trials is relatively limited.” …xxx…..cut ….xxxx

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