While Guidant Corp., the troubled maker of implantable cardioverter defibrillators, struggles to repair its reputation and salvage its acquisition by Johnson & Johnson, physicians are finding it increasingly difficult to convince patients of the benefits of ICDs.
“It is more common now for a patient to say that they are concerned about whether or not they should have an ICD implanted because of problems they have read about, so I'm having to spend more time explaining the very small risk of the device compared to the huge benefit,” said Dr. Stephen C. Hammill, director of heart rhythm services at the Mayo Clinic, Rochester, Minn. “That's a longer discussion now. My concern is that it's deterred people from even pursuing it with the doctor.”
In May, the Food and Drug Administration began investigating reports that Guidant failed to notify physicians for several years that one of its devices had short-circuited in some patients.
In November, New York State Attorney General Eliot Spitzer filed suit against the company in federal court, alleging, “In April and November 2002, Guidant made manufacturing changes to the Prizm 1861 defibrillator intended to remedy the systemic defect and prevent the short-circuiting and resulting catastrophic failure of the device. Despite making these design changes, Guidant continued to sell Prizm 1861 defibrillators that had been manufactured before April 2002. Guidant did not disclose to physicians and patients that these devices contained a serious design flaw that had been corrected in later devices.”
A few days later, Johnson & Johnson, which had agreed to buy Guidant in a deal valued at more than $25 billion, announced that it was reconsidering the deal. Guidant sued Johnson & Johnson in federal court to force it to complete the buyout. However, Guidant also noted in its 10-Q filing to the Securities and Exchange Commission the same day that the SEC was investigating the company “related to certain of [Guidant's] product disclosures and trading in Guidant stock.”
In the same 10-Q report, Guidant also announced that it had received three requests for information from the attorneys general of Arizona, Illinois, and Oregon relating to whether the company violated any state laws in connection with its ICDs, and that 31 other states and the District of Columbia “are cooperating in these [requests].” The company also is under scrutiny from the U.S. attorney's office in Boston “concerning marketing practices for pacemakers, ICDs, leads, and related products,” according to the filing.
Eventually, Johnson & Johnson agreed to buy Guidant at a reduced price, lowering the value of the deal to $19 billion. “We are delighted that our companies have reached an according,” Johnson & Johnson CEO William C. Weldon said in a statement.
While all this is going on at Guidant, device makers and physicians alike are trying to figure out exactly what level of postmarket reporting is needed for problems with ICDs.
“If people want notification about [every] model that has a malfunction, you're going to be hearing about essentially every model of every device,” Dr. William Maisel, director of the pacemaker and ICD service at Beth Israel Deaconess Medical Center, Boston, said at a meeting sponsored by the Heart Rhythm Society that was held in cooperation with the FDA.
These disclosure issues will become more prominent as medical device companies' sales volumes increase, said Thomas Gunderson, senior research analyst at Piper Jaffray & Co., a Minneapolis-based investment banking firm. “You can't have a '1-in-10,000' problem until you start selling 10,000 products. In the old days, these companies didn't. Now they do, and they're going to have to provide more data.”
This is especially important in the type of market that device companies now find themselves in, he added. “What you don't want to do in a tight oligopoly with large margins is lose consumer confidence.”
And indeed, in mid-November, Guidant issued a 153-page report listing outcomes for all of its devices. The company noted that the report was being published “in response to the medical community's call for more detailed description of device performance and access to product performance information. … We understand that lives depend on our products, and that we must seize every opportunity for continuous quality improvement. The detail in this report is meant to provide an open window into this process.”
The report “looks like a fire hose of information,” Mr. Gunderson said. “It will be difficult to complain that physicians, patients, Wall Street, and the media are not being provided enough data.”
The Guidant report is available online at www.guidant.com/physician/ppr