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Guidant heart pacemakers at risk of failure

Posted on: Thursday, 22 September 2005, 11:40 CDT

By Debra Sherman

CHICAGO (Reuters) - Cardiovascular device maker Guidant Corp. said on Thursday it has identified two separate problems with two models of its implantable pacemakers that could lead to device failure.

Guidant, which agreed to be acquired by Johnson & Johnson for $25.4 billion last year, said failure could result in sudden, intermittent or permanent loss of pacing, causing serious health complications. No deaths have been reported as a result of the device failures.

The problems involve Guidant's Insignia and Nexus pacemakers and come just months after a spate of failures and recalls of some of Guidant's most lucrative heart devices, implantable cardioverter defibrillators or ICDs.

Guidant has been in the spotlight in recent months following revelations that it knew about a potential problem with its ICDs, but did not tell doctors or patients for three years. The problem was uncovered last Spring when a 21-year-old college student died of cardiac arrest after his ICD short-circuited.

The Heart Rhythm Society, a group of cardiologists specializing in heart rhythms, last week met with device manufacturers, regulators and heart patients in Washington D.C. to discuss how recalls should be handled. The group hopes to eventually establish guidelines and policies.

Guidant's shares initially fell to a two-month low after the latest recall was announced, but quickly regained some ground and were down 25 cents to $69.25 around midday on the New York Stock Exchange.

FAILURE RATES LOW

Indianapolis-based Guidant said it confirmed one type of failure in 36 out of 49,500 pacemakers, which treat slow heart beats. It estimates the potential future failure rate of between 0.017 percent and 0.037 percent for the 41,000 patients who still have the device.

U.S. Food and Drug Administration has classified the first problem as a recall, the company said.

Guidant said a second type of problem resulted in 16 device failures out of 341,000 Insignia and Nexus devices distributed worldwide. Guidant said one patient, who was dependent on the pacemaker, experienced fainting and was resuscitated for cardiac arrest after the device failed.

Glenn Reicin, an analyst with Morgan Stanley, called the FDA action "puzzling," noting that failure rates are in line with other devices on the market.

"At first blush, it does not look to be a material communication," he wrote in a research note to clients. "We hope that this is an indication that we are nearing the tail end of the FDA investigations into Guidant."

Guidant, the No. 2 maker of implantable heart devices after Medtronic Inc., said an estimated 145,000 devices are active in the United States. It said the FDA may classify the second problem as a recall. Guidant recommends doctors verify pacemaker operation in the packaging before implanting the device.

The FDA inspected Guidant's heart device plant in St. Paul, Minnesota, and provided it with a list of problems, including observations about the two pacemaker brands noted in the physician advisory, the company said.

"Pacemakers are a small part of the story from a revenue perspective and it's a shrinking market, so there probably won't be much financial impact," Susquehanna Financial Group analyst Mark Landy said. "And people don't die from bradycardia (slow heart rhythms), they just feel terrible."

John Farrall, an analyst with National City Private Client Group, said he does not believe Guidant's most recent device problems will affect its deal with J&J.

"I'm not in that camp. At worst, it may delay the deal, but it won't change the terms," Farrall said. "But there are a lot of people out there who do believe the price will be cut.

Source: REUTERS

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