When Heart Devices Fail, Who Should Be Blamed?

When Heart Devices Fail, Who Should Be Blamed?
By BARRY MEIER
Copyright by The New York Times
Published: April 20, 2010
http://www.nytimes.com/2010/04/21/business/21device.html?th&emc=th


It was a landmark episode brought to light by two Minneapolis cardiologists that changed the way the medical device industry deals with the safety of heart implants.

Now the doctors, five years later, are raising a fundamental question about medical safety and the law: who should be held accountable when a company sells a flawed product that can injure or kill patients? Is it the company or the people who run it?

The legal case that grew from the doctors’ revelations involves heart defibrillators once made by the Guidant Corporation, which is now part of Boston Scientific. Guidant continued to sell the devices, evidence indicates, even after it discovered that some might short-circuit and fail. The defibrillators, intended to protect people from erratic, potentially fatal heart rhythms, have been associated with at least six deaths, including that of a 21-year-old patient of the two cardiologists.

A federal judge will consider an agreement this month with Guidant in which the company would plead guilty to two criminal misdemeanors and pay a $296 million fine. The Justice Department is hailing the result, saying the fine would be the largest ever paid by a medical device maker.

But the cardiologists, Dr. Robert G. Hauser and Dr. Barry J. Maron, are not celebrating. Instead, they have written a letter to the judge, Donovan W. Frank of United States District Court in Minneapolis, urging him to reject the deal.

“This is not a plea agreement that should be allowed,” Dr. Hauser said in an interview. “Nobody is being held accountable.”

Officials at Boston Scientific declined to discuss the plea agreement, but a lawyer for Guidant defended it as fair at a court hearing earlier this month.

Robert M. Lewis, the assistant United States attorney in Minneapolis who is prosecuting the Guidant case, declined to say whether the government was separately investigating its executives, who have since left the company. The plea deal would not block additional charges.

But in an interview by phone, Mr. Lewis emphasized that proving any individual employee broke the law could be more difficult than holding a company responsible for the collective actions of its employees.

“We don’t bring charges unless we believe that there is evidence sufficient to convict someone,” Mr. Lewis said.

In recent years, the Justice Department has won hundreds of millions of dollars in fines from drug and device makers, including a string of cases in which the companies have pleaded guilty to violating federal laws.

But corporate executives rarely face criminal charges in such actions, even though they can be held liable under federal law for regulatory violations that occur on their watch — whether or not prosecutors can prove the executives participated in the wrongdoing or even knew about it.

More broadly, officials of the Food and Drug Administration say that the Obama administration intends to push for more prosecutions of corporate officials, a move that is likely to please patient advocates but also to touch off intense debate.

John M. Taylor III, counselor to the F.D.A. commissioner, Dr. Margaret Hamburg, said the agency would soon start training agency personnel about the reach of the Food, Drug and Cosmetic Act of 1938 as part of a heightened approach to enforcement. The United States Supreme Court has held that the statute places an inherent duty on executives of drug, device and food companies to act lawfully and ensure product safety.

“What we plan to do both internally and externally is make people aware that this is another arrow in the quiver that we plan to use,” Mr. Taylor said.

John R. Fleder, a lawyer who represents drug and device companies, said the F.D.A. seemed to be tilting toward the view that the Justice Department, which determines how to pursue cases referred to it by regulatory agencies, had not used all the legal weapons available to it.

“Prosecutors want the money,” said Mr. Fleder, of Hyman, Phelps & McNamara. “And at least in the big money settlements they have had in pharma cases, it appears that prosecutors are willing to settle even if it means forgoing prosecutions against individuals.”

Short of executives facing prosecution, companies see the hefty financial settlements demanded by the Justice Department as another price of doing business, industry critics say.

In the corporate world, the likelihood that an executive would face criminal prosecution depends on the industry and the shifting interests of prosecutors.

In recent years, the Justice Department has placed a particular emphasis on charging individuals in bribery, antitrust and other financial cases, said Jonathan L. Stern, a lawyer with the firm, Arnold & Porter. In one of the most notable cases, Bernard L. Madoff was sentenced to 150 years for running a Ponzi scheme.

While officials of medical products companies have sometimes been prosecuted, one of the few recent criminal cases involving corporate officers of a major medical manufacturer was in 2007, when federal prosecutors in Virginia brought misdemeanor charges against three top executives of the drug company Purdue Pharma, which makes the prescription narcotic OxyContin.

That year, when the company pleaded guilty to a felony charge that it falsely promoted the painkiller as less prone to abuse than other narcotics, the executives also pleaded guilty to charges against them. The company paid $600 million in fines, and the three men paid a combined $34.5 million in fines.

John L. Brownlee, a former United States attorney who led the case, said the officials were charged because it was their job to make sure OxyContin was properly promoted and they had a responsibility to prevent it from being marketed illegally.

“A lot of people got addicted to this drug and died of overdoses,” said Mr. Brownlee, now with the law firm Holland & Knight.

But lawyers for the Purdue executives accused prosecutors of acting punitively. And other lawyers like Mr. Fleder who defend F.D.A-regulated companies are expressing concern that the agency, if it steps up its push for criminal prosecutions, might go after executives unnecessarily.

In addition to other fallout, the Department of Health and Human Services can bar executives convicted of criminal offenses from dealing with federal health plans like Medicaid and Medicare. The executives in the OxyContin case, for example, were barred for 12 years.

A former prosecutor in many drug and medical device-related cases, Michael K. Loucks, said he never charged corporate executives with misdemeanors — which apply in cases when the violations are deemed unintentional — because he believed that being barred from the industry was too harsh a consequence.

“I think that if you are going to take actions that take away someone’s liberty or livelihood, you should have to prove felony conduct,” said Mr. Loucks, who spent over 20 years as an assistant United States attorney in Boston.

But in the Guidant case, Dr. Hauser and Dr. Maron told Judge Frank in their letter that they did not believe simply exacting money from a company was deterrent enough to prevent other company officials from making bad decisions.

“It looks like the only people really being affected here are the shareholders of Boston Scientific,” Dr. Hauser said, referring to the proposed fine.

At the time of the incident five years ago, Guidant had defended its actions by saying it feared that alerting doctors about the potentially flawed defibrillators could create problems because replacing them also posed risks.

Lee Oukrop, the father of the cardiologists’ 21-year-old patient who died in 2005, said he still found it difficult to talk about what happened to his son, Joshua. But one thing was certain, he said in an interview by phone. It did not matter how big a fine was imposed on the company.

“Somebody, somewhere said, ‘We don’t care about this, let’s just let it go,’ ” Mr. Oukrop said, referring to the flawed device his son received. “It would have been a lot nicer if they would have dug a little deeper and found out who that person was. That might have made sure it didn’t happen again.”

The problems involving Guidant’s heart devices came to light in 2005 when The New York Times published an article based on interviews with Dr. Hauser and Dr. Maron.

It was soon disclosed that Guidant had known that two of its defibrillator models could fail catastrophically by short-circuiting just when they were charging up to send out a life-saving jolt.

The company fixed the flaw in newer devices. Guidant, however, never alerted doctors or regulators about the problem, and patients continued for a time to get the potentially flawed older defibrillators because the company did not pull the implants from hospital shelves.

The case highlighted problems with the way makers of medical devices disclosed defects, and it resulted in both greater regulatory oversight of the industry and increased self-regulation.

Prosecutors charged in court papers that Guidant had knowingly sold the potentially flawed defibrillators, but that issue was not addressed in the company’s plea agreement this month. The two misdemeanor charges in that agreement relate to the completeness and accuracy of the company’s filings with the F.D.A.