Defibrillator Maker Pleads Guilty to Not Reporting Safety Problems

April 7, 2010 – A medical manufacturer pleaded guilty Monday to criminal violations for improper reporting of short-circuit failures of three models of its implantable cardioverter defibrillators (ICDs), the Justice Department announced. The company also agreed to pay more than $296 million in damages.

Guidant LLC admitted criminal wrongdoing after a four-year investigation into its handling of the short-circuiting failures. The ICD models include 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, Minnesota. Guidant is now owned by Boston Scientific.

“The entry of a guilty plea by Guidant and the proposed resolution would
represent the largest criminal penalty ever imposed on a device manufacturer for violating the Food Drug and Cosmetic Act,” said Commissioner of Food and Drugs Margaret A. Hamburg,
M.D. “The FDA will continue to commit enforcement resources to seeking this type of criminal resolution and stiff sanctions when device manufacturers fail to adhere to the statutory and
regulatory requirements that exist to ensure the safety and efficacy of their products.”

The plea was made in St. Paul, Minn., before U.S.
District Court Judge Donovan W. Frank. Under the terms of the plea agreement with the Justice Department to resolve the charges,
which must still be approved by Judge Frank, Guidant pleaded guilty to with holding
information from the U.S. Food and Drug Administration (FDA) regarding catastrophic failures
in some of its devices. Specifically, Guidant admitted to: 1) making a materially false
statement in a required submission to the FDA with regard to the Ventak Prizm 2DR device; and
(2) failing to notify the FDA of a "correction" to the Contak Renewal devices, which the
company made to reduce a risk to health caused by the devices. As a result of these offenses, the agreement calls for Guidant to pay a combined criminal penalty in excess of $296 million.

“Guidant’s guilty plea today is about accountability,” said Assistant Attorney General
Tony West, who heads the Justice Department’s Civil Division. “This successful prosecution
serves as an important wake up call to all those who seek to withhold vital information about
public health and safety. We will continue our efforts to prosecute those who jeopardize public
health by evading their reporting obligations to the FDA.”

“The guilty plea today should serve as a reminder and deterrent to those who would
break the laws requiring honesty and cooperation with government regulators whose mission is
to protect the health and safety of the public,” said Frank J. Magill, Acting U.S. Attorney in this
case for the District of Minnesota. “The health care laws are as important as ever. When
medical device and pharmaceutical companies fail to live up to their legal obligations, serious
criminal consequences will follow.”