Guidant Pleads Guilty to Hiding Defibrillator Problems

John Commins, April 6, 2010

Boston Scientific Corp. subsidiary Guidant LLC pleaded guilty on Monday to criminal misdemeanor charges for its failure to notify the government about short-circuiting problems in three of its implantable cardioverter defibrillators. The medical device maker will pay nearly $300 million in penalties, the Department of Justice announced.

Under the terms of the plea agreement, first announced on Nov. 6, Guidant pleaded guilty in U.S. District Court in St. Paul, MN, to withholding information from the Food and Drug Administration regarding catastrophic failures in some of its devices.

Specifically, Guidant admitted to: lying to the FDA about the status of the Ventak Prizm 2DR device; and failing to notify the FDA of a "correction" to the Contak Renewal devices, models H135 and H155, which the company made to reduce a health risk caused by the devices. The agreement calls for Guidant to pay a criminal penalty in excess of $296 million, according to DOJ.

The plea caps a four-year federal investigation and still must be approved by U.S. District Court Judge Donovan W. Frank. If approved, the plea would be the largest criminal penalty ever imposed on a device manufacturer for violating the Food Drug and Cosmetic Act.

"Guidant's guilty plea today is about accountability," said Assistant Attorney General Tony West, who heads the Justice Department's Civil Division. "This successful prosecution serves as an important wake-up call to all those who seek to withhold vital information about public health and safety. We will continue our efforts to prosecute those who jeopardize public health by evading their reporting obligations to the FDA."

Guidant was charged in federal court on Feb. 25. The guilty plea agreement was then filed with the court on March 11.

Boston Scientific first announced the settlement "in principle" on Nov. 6.  The Natick, MA-based company said Guidant's failure to disclose the problems with the defibrillators occurred before Boston Scientific acquired it in 2006. Boston Scientific added it had already posted a third-quarter charge to cover the $294 million fine.

"We are pleased this investigation has been resolved," Ray Elliott, president/CEO of Boston Scientific, said in November. "Guidant and its employees acted in good faith and believed they complied with applicable laws and regulations. We elected to resolve this matter so we could put it behind us and devote our full energies and resources to developing our innovative technologies."

Monday's plea agreement marks the second time in four months that Boston Scientific has agreed to a sizeable fine for actions at Guidant. On Dec. 23, Boston Scientific entered an agreement with the Justice Department to pay $22 million to settle a civil complaint related to post-market surveys conducted by Guidant.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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