Company to end production of malfunctioning medical device

Tuesday, June 17, 2003

INDIANAPOLIS -- A subsidiary of Guidant Corp. is ending production of a medical device, days after pleading guilty to covering up problems with the product that may have led to a dozen deaths.

Endovascular Technologies Inc. pleaded guilty to 10 felonies last week involving its Ancure "stent-graft" device, including shipping misbranded products and making false statements to government regulators. It faces $92.4 million in federal penalties.

Guidant officials said Monday that Menlo Park, Calif.-based Endovascular would cease ongoing operations other than continuing to provide long-term services for patients who have received the device, an abdominal aortic graft.

The company will continue to ship the device until October.

Endovascular spokesman Stephen Tragash said the Ancure "continues to demonstrate excellent long-term clinical data and proven safety," and attributed the closing to slower-than-expected growth. The subsidiary, which has 285 employees, represented less than 2 percent of Guidant's total sales of $3.2 billion last year.

The majority of affected employees will be offered other positions within Indianapolis-based Guidant, the company said. Guidant shares closed up 40 cents to $40.35 on Monday.

The problems with the device, used during operations to treat abdominal aortic aneurysms, were resolved after the device was voluntarily recalled in March 2001 and before it was reintroduced five months later, the company said.

The device, inserted through the groin, was designed to let doctors patch the aneurysm without requiring risky surgery to open the abdomen.

The criminal complaint against Endovascular alleged the company misled federal regulators and reported only 172 malfunctions. Prosecutors said Endovascular had records of 2,628 malfunctions, including reports that the incidents may have led to 12 deaths and 57 surgeries to remove the device.

Guidant faces 14 civil lawsuits related to the device and expects more, said Ralph Hall, the company's deputy general counsel.

Fewer than 7,700 devices were implanted before March 2001, and only 5 percent suffered serious physical problems, Hall said. Those findings were consistent with the clinical trials under which the FDA approved the product for use, he said.

Guidant also faces several lawsuits seeking class-action status on behalf of patients who have received the Ancure device. The latest, filed Monday in San Jose, Calif., represents a 70-year-old widow whose husband died, allegedly as a result of complications from the Ancure device.

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