4 Stocks Proving That Regulation
Matters
Medical device manufacturers play
fast and loose with product safety.
By Sara E. Wright
updated 5/22/2012 5:53:05 AM ET
Medical devices can and do make
life decidedly better for a whole lot of people. However, some device
manufacturers have alarmingly put out products that either fail to improve
patient outcomes or, in too many cases, actually cause more damage. It looks
likely that the FDA is going to tighten up surveillance, which means that these
companies are going to have to get their acts together.
How could this happen?
The basic problem here is that, unlike drugs, a whole lot of medical devices make it to market with no clinical testing. Once
implanted, they receive precious little oversight. Regrettably, it seems we
cannot rely on the companies themselves to ensure that their products are safe,
and so begin our problems.
Many of these offenders come from
the 501(k) process that lets device makers gain approval for new products by
claiming they are not materially different from pre-existing approved ones. In
one case, a company didn't seek approval at all, leading to an inquiry from Sen. Charles Grassley, as we'll see below. And in 2009, the Government Accountability
Office went so far as to release a report on the FDA's oversight failures. All
this has finally pushed the FDA to begin work on a national surveillance
strategy, due for release by the end of this year.
And our offenders are...
Let's take a closer look at four companies exhibiting bad
behavior and responsible for some, in my opinion, egregious medical device
troubles.
Johnson & Johnson's DePuy Orthopaedics unit makes total hip replacements. These
ice-cream-cone-shaped devices used to be made of both plastic and metal, but
when DePuy chose to switch to an all-metal design, the device slipped through
the clearance process without testing because it was deemed "substantially
equivalent" to the previous model.
Trouble is, it did not behave
equivalently once implanted. Nearly half of all implant recipients needed a
second surgery within six years to repair the damage. DePuy only recalled the
device after almost 100,000 people had already served as unwitting test
subjects. A recent Forbes estimate puts the cost of claims settlements
for all-metal hips to J&J, Zimmer, and other manufacturers at about
$5 billion.
Edwards Lifesciences makes annuloplasty rings, which literally hold a leaky heart
valve together. The company had full FDA approval for an existing set of rings,
but in 2006 it released the Myxo ring, a new product Edwards had reengineered
on the basis of the old one.
The Myxo ring went into hundreds of
people's chest cavities with no testing or approval of any kind. To be fair to
Edwards, this was all perfectly legal, and was based on a gaping loophole in
the FDA's regulations. But critics in the medical community say the process
amounted to an aftermarket experiment on unwitting human guinea pigs. The
process was so alarming that it prompted that previously mentioned Senate
probe. Edwards ultimately came away largely unscathed, but had to pull the
product from the market and rebrand it under a new name with FDA approval.
Boston Scientific makes surgical mesh that is designed to support internal
organs. The company had a mesh product designed to repair internal hernias, and
sought approval for that product's vaginal use to treat urinary incontinence.
Never mind that this was a different body part and required a different
implantation method. The ProteGen Sling sailed through to market, again without
specific testing for this new application.
The complaint reports started to
flood in. One study found that 15% of vaginal mesh recipients suffered complications,
and that the mesh benefited them no more than alternative treatments. Boston Scientific has not budged on its assertion that the mesh is safe and
effective, so the FDA finally got off the couch this January and ordered proper
studies of the product. We'll have to wait for results, but I'm betting they
won't look too good.
St. Jude Medical makes implantable defibrillator leads. Defibrillators are
similar to pacemakers, and basically shock a struggling heart back to life. The
leads are the wires that connect the defibrillator to the heart. High-profile
malfunctions have plagued the entire heart device industry, but St. Jude's may
take the cake.
The company's Riata lead -- wiring
up about 79,000 fragile hearts in the U.S. alone -- started eroding through its
protective coating in some patients, thereby jolting them unconscious with raw
electric shocks. One study found the flaw in 15% of patients, but other studies
show the actual number may be double that. All this culminated in a recall, but
only a full year after St. Jude had stopped selling Riata and sent guidance to
doctors about the known flaws.
Accountability returns?
There is clearly a thread through these stories: If medical
device manufacturers were high school kids in the basement with a keg, the FDA
was the parent who went upstairs and trusted the teens to holler if there was a
problem. But these companies are not children, and I expect better from them. I
cannot see clear to investing my money in companies that
do not take the safety and efficacy of their products more seriously. It's only
going to get harder for them now that the FDA is finally rousting itself to
action.
Joleen Chambers comment:
MSNBC and Motley Fool is providing a public service by
printing this article. Increased FDA regulation and closing the loophole
that has allowed significant patient harm is derided by medical device
manufacturers. An industry claiming $Billions in profit from 'innovation'
and not being accountable for the inevitable percentage of failures and
compensation/care is a burden to taxpayers. The #1 expenditure of
Medicare is joint replacements. "Proprietary data" must be
released for the benefit of public health.
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