| Ilena Rose 2005-09-30, 1:15 pm |
| http://www.nytimes.com/2005/09/29/business/29heart.html
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September 29, 2005
Guidant Case May Involve Crime Inquiry
By BARRY MEIER
Criminal investigators at the Food and Drug Administration have
apparently become involved in the agency's inquiry into how the
Guidant Corporation handled problems with its heart devices, said two
people contacted by the investigators.
Since June, the F.D.A. has been looking into several issues involving
Guidant, including whether it properly reported failures of some of
its heart devices and manufacturing changes to correct the problems.
The agency's Office of Criminal Investigations is often called upon to
examine such issues.
The disclosure comes as a pending $25.4 billion takeover by Johnson &
Johnson of Guidant, the nation's second-biggest heart device maker,
nears completion.
A spokeswoman for the F.D.A., Julie Zawisza, said the agency, as a
matter of policy, did not confirm or deny the existence of a criminal
investigation. In a statement, a spokesman for Guidant, Steven
Tragash, said he was not aware that the company had been contacted.
In that statement, however, he added, "We are aware that former
employees have been interviewed by the F.D.A. in connection with their
activities when they were with Guidant." He did not elaborate.
In separate interviews, the two people said F.D.A. officials who had
identified themselves as criminal investigators had contacted them in
recent weeks. Both people, citing the potential sensitivity of the
investigation, spoke on the condition of anonymity.
Neither the direction of the agency's inquiry nor its progress is
clear. But one federal prosecutor said that it was not unusual for the
agency's criminal investigators to get involved if there were
indications that a company might not have complied with the agency's
reporting requirements.
Once an agency like the F.D.A. concludes an investigation it will, if
warranted, forward its findings to the Justice Department, which can
then decide to take a variety of actions. These include bringing civil
or criminal charges or dropping the matter.
Executives of Guidant, which is headquartered in Indianapolis, have
said that they made all required F.D.A. reports related to the heart
devices in question.
The F.D.A. began an inquiry into Guidant in June after a report in The
New York Times that the company had not told doctors for three years
that one defibrillator had a potential electrical defect. Since
mid-2002, when Guidant corrected the problem, that defibrillator - the
Ventak Prizm 2 DR - short-circuited more than two dozen times.
There is one known death associated with the device. A defibrillator
is a device that sends out an electrical charge intended to jolt a
chaotically beating heart back into normal rhythm.
Since then, Guidant has recalled ten of thousands of implanted heart
devices including pacemakers and advanced pacemakers known as cardiac
resynchronization therapy units, or C.R.T.'s. In several cases, two
C.R.T.'s - the Contak Renewal or the Contak Renewal 2 -
short-circuited.
Guidant recently said that three patient deaths were associated with
the devices.
Heart devices like defibrillators and C.R.T.'s regularly save and
extend thousands of lives. But if a unit fails without warning - as in
the case of a short-circuit - a device-dependent heart patient is left
unprotected.
Speaking generally, James G. Sheehan, an assistant United States
attorney in Philadelphia who specializes in cases related to health
care, said that criminal investigators can get involved for several
reasons, including the receipt of information that suggested that a
company did not comply with reporting requirements. The failure to
make such reports can be a crime.
In 2003, a unit of Guidant, Endovascular Technologies, pleaded guilty
to 10 felony charges and paid $92.4 million to settle charges of
failing to notify the F.D.A. about device malfunctions and patient
deaths related to stents for aortic aneurysms. That year, Guidant and
Endovascular signed an agreement pledging, among other things, to
notify the government about product-related problems.
Senator Charles E. Grassley, the chairman of the Senate Finance
Committee, told Guidant last week that his staff was investigating
whether Guidant had complied with the terms of that agreement.
In addition, the F.D.A. released a report last week by inspectors who
had reviewed Guidant operations in St. Paul. In that report, the
inspectors noted a number of problems.
But several Wall Street industry analysts said that the problems
highlighted were relatively minor and that the release of the report
might signal the end of its inquiry into Guidant.
Executives of Johnson & Johnson, which is based in New Brunswick,
N.J., have said that they are proceeding with the planned Guidant
acquisition and that they expect it to close in the fourth quarter of
this year.
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