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  • dexter_egghead dexter_egghead Dec 29, 2005 11:57 AM Flag


    UPDATE 3-Boston Scientific shipping problems 'serious' -FDA
    (Adds details and background throughout, updates shares to close)
    By Susan Heavey

    WASHINGTON, (Reuters) - Boston Scientific Corp.'s (BSX.N: Quote, Profile, Research) distribution process has "serious" problems that allowed flawed medical devices to be shipped, including its Taxus drug-coated stent, U.S. regulators said in a letter made public on Tuesday.

    FDA inspectors said the company failed to properly monitor products so that only acceptable devices were distributed, according to the letter.
    The warning, which also targeted the device maker's Vaxcel chest ports and Symmetry catheter, is the latest setback for the device maker after a string of manufacturing-related product recalls and other FDA warnings.

    The company's shares, which have underperformend the S&P 500 by 28 percent since January, closed down 4.53 percent, or $1.23, to $25.92 on the New York Stock Exchange.
    Yet industry analysts said Tuesday's letter did renew worries about the beleaguered medical device sector, which has been hit hard during the last year with a series of manufacturing-related problems, they said.

    "We do not dispute that some of these mistakes occurred," Rudnick said. "We're working on the process issues."

    The latest FDA warning letter followed an inspection of Boston Scientific's Quincy, Massachusetts, shipping facility.

    Agency inspectors said the company did not have adequate management oversight to review quality and "failed to implement procedures to assure that only devices approved for release are distributed."

    It also did not properly document corrective actions or review data that could help pinpoint problems.

    "On a number of occasions, your firm shipped medical devices that were not considered acceptable for release," it said. The letter did not mention any impact on patients and an FDA spokeswoman was not available for comment.

    One over one hundred Taxus heart stents that failed a quality test were sent to hospitals. The FDA also said the company shipped five Vaxcel units on three different dates after they were recalled in August 2004.

    Boston Scientific initially responded to the FDA's concerns with a June 20 letter offering its commitment to improving its quality controls, the latest warning said. But the agency said that was insufficient.

    "Your response does not identify how and when you plan to implement significant, broad-based corrective actions, nor does it provide sufficient evidence to establish that you have made real changes to your current quality system," the FDA said.

    Last year, Boston Scientific recalled 99,000 Taxus stents after reports of malfunctions.

    Ryan Rauch, an analyst with Jefferies & Company Inc., said the FDA was not likely to force injunction against the Taxus devices because it would cut the U.S. supply. But he added that the warning highlighted sector woes.

    A.G. Edwards analyst Jan Wald said Boston Scientific's inadequate response to the FDA was a concern.

    "It sounds like there's more work to do for Boston Scientific."

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