Abstract

Guidant Corporation is a manufacturer of implantable defibrillators—life-saving devices implanted into patients to deliver electric shock therapy to irregularly beating hearts. In 2005, a young man implanted with one of Guidant’s defibrillators, the Prizm 2 DR model 1861, died when his device failed to deliver its electric pulses as he was suffering cardiac arrest. The cause was a short-circuit which Guidant had known could affect units of this particular model manufactured before April, 2002. Guidant had changed its manufacturing process to eliminate the potential malfunction, but had chosen not to inform doctors. The stated reason was that the risk of malfunction was minuscule, and that publicizing the malfunction would likely encourage some patients to undergo replacement surgery, which carries risks of complication and even death at least as great as the probability that a Prizm 2 DR unit would malfunction. Guidant was also in a critical stage of takeover negotiations with the healthcare products giant Johnson & Johnson, which had made an offer to acquire Guidant.

Introduction[1]

Joshua Oukrop, of Grand Rapids, Minnesota, was an active teenager who enjoyed an outdoors lifestyle. When he was seventeen, Joshua began to experience bouts of faintness and some times total blackout. His physician, Dr. Barry J. Maron, eventually uncovered the cause of the problem. Joshua was diagnosed with hypertrophic cardiomyopathy, a heart condition in which the wall of the heart is unusually thick. The condition put Joshua at a high risk of dying young due to heart failure.
 

Dr. Maron recommended that Joshua undergo surgery to receive a heart defibrillator, an electronic device designed to deliver an electrical shock in case the heart stops beating. Joshua’s father, Lee Oukrop, suffered from the same heart condition and had already had a defibrillator implanted. “I promised my son it would save his life,” Lee Oukrop said.
 

In October 2001, Joshua underwent surgery and received a Prizm 2 DR 1861 defibrillator made by Guidant Corporation. Soon after, he returned to hiking, bicycling and snowboarding back home in Grand Rapids, and was able to carry on his previous active lifestyle. Joshua eventually matriculated into Bemidji State University in Minnesota, hoping one day to become a teacher.
 

The impact on Joshua’s life of having the defibrillator implanted in his chest was minor. Every three months, he would see Dr. Maron to have his device checked and maintained. “Each time, it was normal,” Dr. Maron said.
 

In March of 2005, six weeks after his last checkup, Joshua went to Utah with his girlfriend for spring break. During a mountain bike ride, he started complaining of fatigue. He stopped, got off his bike, collapsed, and died of cardiac arrest.
 

Later tests by Guidant Corporation showed that his defibrillator, the Prizm 2 DR 1861, had failed the deliver its lifesaving electrical jolt when Joshua needed it. The cause of the malfunction was a short circuit that would not have been detectable in advance. It could have happened during or before Joshua’s cardiac arrest, but because of it, the device was unable to save Joshua’s life.
 

Two months after Joshua’s death, Guidant officials met with Joshua’s doctors to explain what went wrong. The doctors learned that the company had already been aware of the possibility of a short-circuit in the Prizm 2 DR model 1861, since they had observed it in other, returned, devices (but no other patients were thought to have died due to the malfunction). In fact, Guidant had changed its manufacturing process twice in 2002 to address the problem, which had been eliminated after the changes. In compliance with the law, the company had informed the federal Food and Drug Administration (FDA) of the manufacturing changes, but was not required by law to inform doctors, and had decided not to do so.
 

Joshua Oukrop’s doctors, Dr. Barry J. Maron and Dr. Robert G. Hauser, were outraged. They told the New York Times that they would have replaced they unit if they had known of the potential malfunction. In response, Dr. Joseph M. Smith, Senior Vice President and Chief Medical Officer of Guidant’s Cardiac Rhythm Management Division, argued that the risks associated with replacing the device, as many patients would be likely to do if the company publicized the problem, were much higher than the risk of malfunction, which remained very small and within product specifications.
 

The genesis of a dilemma

Guidant Corporation was originally a spin-off from Eli Lily and Company. In 1994, it adopted the name Guidant—a name derived from the word guide, one who shows the way by leading. It made its first initial public offering (IPO) on December 14, 1994, on the New York Stock Exchange (ticker symbol: GDT).
 

In the following ten years, Guidant experienced strong growth as the demand for its medical devices increased with the aging population. From 1994 through 2004, sales went from just under $900 million to $3.8 billion — an average growth rate of 16% per annum. Market capitalization grew from $1 billion to $23 billion as of the end of 2004. Today, Guidant employs over 12,000 individuals and more than 2 million patients worldwide are treated by its therapies.[2]
 

Guidant was the first company in the world to introduce the automatic implantable cardioverter defibrillator (ICD), a device that restores a normal heartbeat for patients with abnormally fast and life-threatening heart rhythms, which can lead to sudden cardiac arrest. Guidant also pioneered the world’s first cardiac resynchronization therapy defibrillator (CRT-D) for heart failure (the gradual weakening of the heart muscle that affects more than 20 million people worldwide).
 

Of its various business groups, Guidant’s Cardiac Rhythm Management business in particular has consistently grown faster than the market, which increased a total of 14 percent over the last decade. In 2004, Guidant’s implantable defibrillator sales reached $1.8 billion, an 18 percent year-over-year increase, fueled in large part by cardiac resynchronization therapy defibrillators for heart failure patients. Sales of implantable defibrillator systems make up 47% of total revenues (Exhibit 1).
 

Earlier in late December of 2004, Guidant found itself courted by healthcare products giant Johnson & Johnson which sought to acquire the medical devices manufacturer to bolster its portfolio of medical products and enter a growing market in which it had little presence. On December 15^th, 2004, Johnson & Johnson announced that it would offer Guidant shareholders 25.4 billion dollars in cash and stocks to take over the company. The value of the deal translated to roughly 76 dollars a share.
 

After the death of Joshua Oukrop in March, Guidant came under pressure due to media attention to the case. On June 17^th, 2005, the New York Times published its story about Joshua and interviews with both his doctors and Guidant executives. On the same day, Guidant issued an advisory to physicians with information about the possible malfunction. [3] In the advisory, Guidant recommended that patients do not replace their ICDs prior to the appearance of normal replacement indicators. Despite the recommendation, Guidant offered a free replacement device to any of its patients deciding to undergo surgery to remove a PRIZM 2 DR 1861 unit produced before the April, 2002, manufacturing modification, as well as up to $2,500 of unreimbursed medical expenses incurred by patients associated with replacement surgery. In a follow-up advisory issued on August 8^th, Guidant reported that no additional clinical failures had been observed with the model.
 

By summer 2005, the deal with Johnson & Johnson had still not been closed. With the media fallout from the malfunction in its Prizm 2 model, Guidant’s position was deteriorating fast. Playing the role as a tough negotiator, Johnson & Johnson began to call for a lower price than the one originally offered, citing the trouble Guidant was experiencing over its defibrillators, and the possible financial ramifications, as the reason for the revaluation. Unless another company made a competing offer for it, Guidant officials knew that they would have to accept a significantly lower offer from Johnson & Johnson in a renegotiated deal. As expected, Johnson & Johnson on November 15, 2005 revised its offer down to 21.5 billion dollars or 63.08 dollars a share[4].

How ICDs work

Implantable Cardioverter Defibrillators (ICDs), the type of implanted device that was used by Joshua Oukrop, constitute the mainstay of Guidant’s business. These devices help regulate heart rhythm through the use of electrical charges, preventing potentially fatal consequences of an irregular heartbeat. Guidant’s ICDs are surgically placed under the skin and powered by batteries. They are often used in patients who are at risk of sudden cardiac arrest, and can provide doctors with critical, detailed information regarding each episode in which the ICD was activated to deliver therapy.
 

ICDs have grown increasingly complex since their inception, but generally share a number of similar components: a computer microprocessor, a battery, and leads[5] that all work together to detect cardiac activity and deliver stimulating energy. The computer component has become increasingly sophisticated, often combining diagnostic software, hundreds of programmable options, and combined pacing, defibrillating, and heart failure therapy.
 

ICDs require replacement every 5 to 6 years depending on the model being used. Factors that play into the need for replacement may include hardware and software malfunctions, frequency of therapy, and environmental conditions; however, the dominant reason for almost all ICD replacements is battery depletion. Towards the end of its expected life, the failure rate of ICDs increases exponentially, and so patients are often advised to replace their units before this happens. Battery life is the biggest limitation on how long ICDs can last before replacement is necessary.
 

The ability of ICDs to prolong the expected lifespan of its users has been well documented in medical literature. In the Sudden Cardiac Death in Heart Failure Trial (SCD-HeFT) sponsored by the National Institute of Health (NIH), 2521 patients with heart failure were randomly assigned to receive a placebo treatment, medication with the drug amiodarone, or an ICD.[6] At 5 years, the mortality rate was 29% in the placebo group, 28% in the amiodarone group, and 22% in the ICD group. While the risk of death in the group receiving drug medication was not statistically different from the placebo group, ICD therapy was associated with a statistically significant reduction in the risk of death of six percentage points or 23%. The results of the study are summarized by the chart in Exhibit 2.
 

Overall, fewer than 20% of the 1.6 million US patients with recognized indications for ICD implantation as defined by the Center for Medicare and Medicaid Services have a device implanted. Another 600,000 US patients have heart failure but none of the Center’s indications for ICDs. They may also be candidates for ICDs according to the SCD-HeFT trial, but almost none of them have received an ICD.[7] The potential of ICDs to benefit millions of Americans with deadly heart conditions has yet to be fully realized.

A faulty product

The increasing complexity of ICDs and the intrusive operation required to implant them raise obvious concerns regarding the safety of the devices. As with any mechanical device, failures will occur. Batteries drain over time, decreasing reliability. Leads are exposed the mechanical forces of a beating heart and may have their wires and insulation wear out over time.

On July 1^st, 2005, the FDA issued a report that identified Guidant’s June 17^th advisory regarding the Prizm 2 DR device as a Class I recall.[8] Devices carrying this classification are those believed by the FDA to have the potential to cause serious adverse health consequences (i.e. death) in the case of malfunction.
 

In mid-September 2005, Guidant issued a comprehensive Product Performance Report to make quality and performance information publicly available. Details concerning the failures experienced by the Prizm 2 DR were also included in the document.[9]

The product performance report counts the total number of U.S. registered implants for the device at 43,000. 124 (0.29%) non-premature battery depletion related failures have been confirmed. Out of these 124, 63 failures were of a nature that compromised the electroshock therapy and could result in the death of the patients. Thus the overall failure rate must is very low, in particular in comparison with the significant reduction in mortality that devices provide.
 

26 of the failures that compromised therapy were due to the short-circuit that proved fatal to Joshua Oukrop. The rate of confirmed failures in the U.S. population of units, due to other causes than the short-circuit, therefore, is 0.23%. This short-circuit has only occurred in units manufactured prior to  April, 2002, when Guidant changed its manufacturing process to eliminate the problem. The short-ciruit is not thought to be possible in units produced at later dates. No failures have been observed in post-April 2002 products, and Guidant improved its manufacturing process again in November, 2002, to provide additional safeguards against manufacturing defects. Both changes were reported to the Food and Drug Administration, in compliance with the law; however, Guidant was not required to publicize either the changes or the reason for them. In particular, they were not legally required to divulge the potential malfunction to doctors.
 

Guidant had documented a total of 28 cases of short-circuits among a worldwide implant population of 26,000 units produce before April, 2002 (the 26 in the United States, and two more abroad). This would translate to a failure rate of 0.11% (which would come on top of the 0.23% failure rate for all Prizm 2 DR devices). Naturally, the risk could be higher, since not all failures are necessarily noticed and documented. In returned product testing, 1,005 devices manufactured on or before April 16, 2002, were examined in the summer of 2005. Out of the sample, four failures (0.40%) were provoked. Guidant noted that these devices represent only a small, non-random sample of the implanted population, and may not be representative of the rest of the active units. The company’s estimate of the risk of short-circuits in the pre-April 2002 units could be between 0.10% to 0.24%. As of August 31, 2005, 14,000 units from this population remain implanted in the U.S.

The dangers of information

The federal government regulates the manufacturing and use of medical devices under the 1990 Safe Medical Devices Act and the 1992 Medical Device Amendments. Post-sale surveillance of medical devices was strengthened by requiring health care facilities to report device-related serious injuries or deaths, by establishing tracking of certain high-risk devices, and by giving the FDA authority to require tracking for any other device. Manufacturers were also required to report to the FDA any device malfunction that could cause significant injury to a patient. As a result of this legislation, the FDA has received numerous device-related adverse event reports, including approximately 160,487 reports submitted in 2004, with the vast majority of the reports coming directly from manufacturers.[10] The law, however, left it to Guidant’s discretion whether to inform doctors of the potential malfunction.
 

In response to the criticisms by Joshua Oukrop’s doctors, Guidant pointed to the risks associated with undergoing surgery to replace an ICD before its normal expiration. The risk of complications under or after such surgery is indeed considerable. A study published in the medical journal Heart estimated the total risk of infection, erosion[11], and other complications from either implant or replacement surgery to be at least 1.9%.[12] In fact, the risk of complication from replacement alone was even higher, at 6.5% in the same study. The different types of complications include wound infection, erosion, lead displacement and/or malfunction, non-healing wounds, and death.  Of the 2621 patients in the study, there were 50 complication (1.9%) of which 2 were deaths (0.08%).
 

On average, the increase in the risk of death attributable to the possibility of short-circuits in the Prizm 2 DR was therefore comparable to the risk of death due to surgery. Both numbers also imply no more than marginal changes to the average risk of death among heart failure sufferers with ICDs.[13]
 

The small improvement raises the question of whether device replacement surgery warrants the monetary cost of a new device and the surgery itself. One of the reasons for the small proportion of qualifying patients using ICDs is the steep cost of the devices. According to Kevin Kirchen, vice president of hospital operations at New York University Hospitals Center, the device alone costs perhaps $22,000.[14] For people who qualify for Medicare, this cost falls on the government, which reimburses up $30,000, including for the surgery to implant the device. Otherwise, patients and their insurance providers are left to pick up the tab. After issuing its advisory, Guidant also announced that it would be bear the cost of the replacement units and pay patients up to $2,500 to defray costs of unreimbursed medical care. Whoever has to foot the bill, reducing the risk of death by replacement surgery therefore comes at a high price.

Medical ethics

Regarding the decision to withhold device information by Guidant, many different views were expressed.
 

Joshua’s doctor, Dr. Maron of Abbott Northwestern Hospital in Minneapolis said that Guidant was simply using numbers to support his stance. ''It is a statistical argument that has little to do with real people,'' Dr. Maron said. He also said that the numbers reported to Guidant might understate the situation because product problems could go undetected or might not be reported.[15]
 

The Heart Rhythm Society responded to these events by calling for a task force to examine and develop new guidelines to better protect patients. In a press release, Anne B. Curtis, MD, president of the Heart Rhythm Society said, “Patients need to discuss the variety of treatment options available with the heart rhythm specialist overseeing their care. Each patient is unique and the decision regarding ICD treatment based on recall information from the manufacturer and the FDA will depend on the patient’s specific medical condition.”[16]
 

In an article published by the Journal of the American Medical Association, Dr. William H. Maisel writes, “Manufacturers are required to report to the FDA any device malfunction that causes or could cause significant injury. The decision for a manufacturer, however, of whether or not to notify physicians, patients, or the public about an observed malfunction is less straightforward. Historically, judgments have been made on a case-by-case basis by considering factors such as rate of malfunction, likelihood of patient injury, cause of device failure, and potential to mitigate the problem with an intervention. Because of the enormous financial consequences of the manufacturer’s decision, there is also an inherent conflict of interest.”[17]
 

In the case of defibrillators, expert physicians often diverge on their clinical recommendations for many common advisory scenarios and do not always make the right choices. There is a dearth of guidelines commonly established to help patients facing a product recall.

Conclusion

Medical devices will always contain an element of risk of malfunction, but not all malfunctions are the same. A fine line needs to be made between a major malfunction that may prevent the delivery of life-sustaining therapy and a minor malfunction where the observed abnormality does not jeopardize life. Where then, should that line be drawn? And in the case of Guidant Corporation and its defibrillators, who should be the ones making that critical decision. As the number of people who require these medical devices continue to grow, the importance of making the right call increases as well.