Guidant sentenced

by Ben Vernia | January 13th, 2011

On January 12, the Department of Justice announced that Judge Donovan Frank of the District of Minnesota had sentenced Guidant, LLC, in accordance with the plea agreement announced – and rejected by Judge Frank – in April, 2010. According to DOJ’s press release:

Guidant LLC, a wholly-owned subsidiary of Boston Scientific Corporation, was formally convicted and sentenced today in St. Paul, Minn., before U.S. District Court Judge Donovan W. Frank for criminal violations relating to its interactions with the Food and Drug Administration (FDA). Judge Frank sentenced Guidant to pay more than $296 million in criminal fines and forfeiture and also to submit to the supervision of the U.S. Probation Office for three years. The Justice Department brought criminal charges against Guidant for its mishandling of short-circuiting failures of 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, Minn. The company pleaded guilty to the charges last April.

Implantable cardioverter defibrillators are lifesaving devices used to detect and treat abnormal heart rhythms that can result in sudden cardiac death. The devices, once surgically implanted, continually monitor the electrical activity in a patient’s heart for deadly arrhythmias and deliver an electrical shock to the heart in an effort to return the heartbeat to normal rhythm. If they fail to operate properly when needed, a person can die within minutes.

Judge Frank sentenced Guidant for withholding information from the FDA regarding catastrophic failures in some of its lifesaving devices. Guidant made decisions at various junctures to conceal information from the FDA and medical professionals regarding the device failures. In June 2005, the company finally went public about the problem with information it had known for 10 months, and then only after three deaths had occurred.

The Justice Department’s sentencing memorandum filed with the court explains how Guidant decided to continue to implant hundreds of defective Renewal devices, even after the company had decided to stop shipping them from the factory due to the seriousness of the health risk they represented. Guidant developed a strategy to mitigate the health risk while not raising FDA concerns about the problem. This strategy included the company advising its sales representatives to tell physicians that “nothing was broken” with the Renewal, and falsely telling the FDA that changes it proposed to the device in response to the electrical short-circuiting “ were not being done to correct device flaws that threaten patient safety” but were rather “to improve process throughout.”

Under today’s sentence, Guidant is required to forfeit $42,079,675 to the United States and pay a criminal fine of $253,962,251. In addition, Guidant was sentenced to three years of probation. During that period, Guidant is required to make quarterly reports to the Probation Office and to submit to regular, unannounced inspections of its records by the Probation Office. The court also required Guidant to notify its employees and shareholders of its criminal conviction.

In April, Judge Frank rejected the plea agreement, criticizing the agreement in a written opinion that it lacked a period of probation and failed to provide guidance to victims seeking remission of a portion of the forfeiture for compensation (in the same opinion, he concluded that the victims were not entitled to restitution under the Crime Victims Rights Act for violations of the Food, Drug and Cosmetic Act).

The government’s sentencing memo
took no position regarding probation (in accordance with its agreement with the company), but offered an explanation for how victims could seek compensation through the forfeited amount. As DOJ noted in its press release, Judge Frank sentenced the company to three years of probation.

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