Boston Scientific suspends device sales
Boston Scientific is suspending shipments of two kinds of implantable cardiac devices after realizing it had failed to notify regulators of manufacturing changes.
The move by the Natick, Mass., company, which has major operations in Minnesota, prompted some Wall Street analysts to downgrade the company's stock and criticize its management.
In a statement, CEO Ray Elliott said: "We are acting voluntarily and expeditiously to resolve this situation and we have seen no evidence of any risk to patient safety. We apologize for the inconvenience these actions will cause patients and physicians."
In addition to stopping shipments of all implantable cardioverter defibrillators (ICDs) and cardiac resynchronization therapy defibrillators (CRT-Ds), Boston Scientific is pulling its entire inventory of the two devices from hospital stockrooms.
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The company said it neglected to submit at least two manufacturing changes for approval by the U.S. Food and Drug Administration.
Boston Scientific said it has informed the U.S. Food and Drug Administration, and plans to work closely with the agency to resolve this situation as soon as possible.
Sean Lavin, an analyst with Lazard Capital Markets, estimated the goof could slash the company's profits--on a per share basis--by half if shipments are suspended for as long as a year.
Boston Scientific did not indicate how long the suspension could last.
Lavin also criticized CEO Ray Elliott, who took the helm last July.
"We think a mistake of this magnitude leaves new management with a serious amount of egg on their faces," Lavin said. "It's a bit stunning to learn that a $10 billion company that has dealt with the FDA for decades would 'forget' to file manufacturing changes with the agency."
Joanne K. Wuensch of BMO Capital Markets, was a little less critical.
"To be clear, this is a paperwork issue, not a product issue and not a safety issue," Wuensch said. She said currently there are more questions than answers about the situation.
"On the one hand, the company does not have the best track record with the FDA," she said. "But on the other hand, can a manufacturer that commands some 25 percent of the U.S. market cut supply and have the other two participants (Minnesota-based Medtronic and St. Jude Medical) step up for an extended period of time without negatively impacting patients?"
This is the latest in a series of problems Boston Scientific acquired when it bought defibrillator maker Guidant several years ago. The history includes product safety recalls and an FDA "corporate warning letter" which barred the company from introducing significant new products for a period.