Guidant Fined $296M for Failure to Report Defibrillator Defects

Nine months after pleading guilty, Guidant LLC was formally convicted and sentenced this week in St. Paul, MN, for failing to report to the federal government life-threatening defects in the medical device maker's implantable cadrioverter defibrillators.

U.S. District Judge Donovan W. Frank ordered Guidant, a wholly-owned subsidiary of Boston Scientific Corp., to pay more than $296 million in criminal fines and forfeiture, and to submit to three-years of supervised probation.

The Justice Department brought criminal charges against Guidant for failing to notify the Food and Drug Administration about short-circuiting failures in three models of its implantable cardioverter defibrillators: the Ventak Prizm 2 DR (Model 1861) and the Contak Renewal (Models H135 and H155). Guidant's Cardiac Rhythm Management division, which produced the defibrillators, is headquartered in Arden Hills, MN.

Guidant was charged in federal court last February, and pleaded guilty in April.

The surgically implanted defibrillators monitor electrical activity in a patient's heart for deadly arrhythmias, and deliver an electric shock to the heart to return the heartbeat to normal rhythm. If they fail, a person can die within minutes.

"FDA always works closely with companies to support compliance with standards that prevent serious safety problems from occurring," said Margaret Hamburg, MD, commissioner of Food and Drugs. "However, as today's sentence demonstrates, when companies fail to comply, we will use our enforcement tools to ensure the safety and efficacy of the medical products that Americans rely on every day." 

Federal prosecutors said Guidant hid information from the FDA and medical professionals about the device failures. In June 2005, the company finally went public with information it had known for 10 months, and only after three deaths had occurred.

The Justice Department's sentencing memorandum said Guidant continued to implant hundreds of defective Renewal devices, even after the company stopped shipping them from the factory because of the health risk.

Prosecutors said Guidant developed a strategy to mitigate the health risk while not raising FDA suspicions about the problem. This strategy included the company advising its sales reps to tell physicians that "nothing was broken" with the Renewal, and falsely telling the FDA that changes it proposed to the device to correct the electrical short-circuiting "were not being done to correct device flaws that threaten patient safety" but were rather "to improve process throughout." Under the sentence handed down Wednesday, Guidant will forfeit $42 million and pay a criminal fine of $253 million.

Guidant was sentenced to three years of probation, submit quarterly reports to the U.S. Probation Office, and allow regular, unannounced inspections of its records. The court also required Guidant to notify its employees and shareholders of its criminal conviction.

In a written statement, Guidant said, "The DOJ's investigation began prior to Boston Scientific's 2006 acquisition of Guidant, as did the alleged conduct and product sales.  The Company no longer sells the products involved in the investigation."