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VOL. 124 | NO. 33 | Wednesday, February 18, 2009

Wis. Supreme Court Tosses Suit Against Medtronic

By RYAN J. FOLEY | Associated Press Writer

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MADISON, Wis. (AP) – Patients cannot sue the makers of potentially unsafe medical devices approved for sale by federal regulators, the Wisconsin Supreme Court ruled Tuesday.

The court ruled against a Wisconsin man who had surgery to remove a defibrillator after the manufacturer, Medtronic Inc., warned its battery had a chance of failing. The ruling is a victory for Minneapolis-based Medtronic and other manufacturers who want to limit product liability. Medtronic’s Spinal and Biologics Business is based in Memphis.

The defibrillators send shocks to a person’s heart to regulate rhythm.

Two justices warned the court’s decision leaves Wisconsin residents at the mercy of the U.S. Food and Drug Administration, which has a poor track record of ensuring the safety of medical devices.

“The result may be no meaningful protection for Wisconsin patients,” Justice Ann Walsh Bradley wrote.

At issue was whether patients could sue in state court over medical devices that received market approval from the FDA. Under a 1976 federal law, companies must prove the safety and effectiveness of such devices to the FDA before they can enter the marketplace.

Joseph Blunt Sr., 63, of St. Francis, Wis., had a Medtronic Marquis 7230 defibrillator implanted in 2004 to try to prevent his heart from failing.

The company warned the following year the devices’ batteries might fail in one out of 10,000 patients, which could lead to a potentially fatal loss of power. Many patients, including Blunt, had surgery to remove the devices.

The company knew of the problem more than two years earlier but kept selling the product. The FDA did not order a recall or withdraw its 2002 approval. In the meantime, Medtronic obtained approval from the FDA in 2003 to also sell an identical device with fixed batteries.

Blunt filed a lawsuit in Milwaukee County Circuit Court against Medtronic after his surgery, alleging the company was negligent for continuing to sell an unsafe device. A judge and an appeals court both ruled the lawsuit was not allowed under federal law.

The U.S. Supreme Court ruled last year that state lawsuits were barred in a similar case involving a malfunctioning heart catheter sold by Medtronic.

All seven Wisconsin justices agreed that ruling meant Blunt’s case must be dismissed. In the majority opinion, Justice Patience Roggensack said the FDA’s approval of the defibrillator with the fixed battery did not affect the approval of the original.

“It’s a sorry day when the law of the land is that a medical device manufacturer is free to sell less safe, obsolete medical devices to clear out its inventory after having received FDA approval for a safer device,” said Blunt’s lawyer, John Cabaniss.

Two concurring justices – Walsh Bradley and Chief Justice Shirley Abrahamson – criticized the U.S. Supreme Court decision, but said they must follow it. The decision leaves Wisconsin residents’ safety in the hands of the flawed FDA, Walsh Braldey wrote.

She cited a letter from FDA scientists released last month that charged “the scientific review process for medical devices at FDA has been corrupted and distorted by current FDA managers, thereby placing the American people at risk.”

“It is not at all apparent that the FDA approval process actually guarantees a minimum level of safety for medical devices,” Bradley wrote.

Wisconsin Manufacturers & Commerce, the state’s powerful business lobby, and the Product Liability Advisory Council had urged the court to dismiss the lawsuit.

The council, a national group whose members include auto, pharmaceutical, chemical and electronics makers, said allowing the lawsuit would drive up the costs of lifesaving medical devices and hamper product innovations.

But the Wisconsin Association of Justice, which represents trial lawyers, said dismissing it would shield companies from being held accountable for marketing dangerous products.

In other Medtronic news, the company reported Tuesday its fiscal third-quarter profit surged because of the prior year’s legal and acquisition charges, though sales fell short of Wall Street forecasts.

The company earned $723 million, or 65 cents per share, in the quarter ended Jan. 23, compared to a profit of $77 million, or 7 cents per share, a year prior when lawsuit charges and acquisition costs weighed down results. Revenue rose 3 percent to $3.49 billion from $3.41 billion.

Excluding charges, the company said it earned 71 cents per share. Analysts polled by Thomson Reuters expected profit of 70 cents per share on revenue of $3.51 billion.

Medtronic will end its 2009 fiscal year in April.

The company has been losing market share to competitors Boston Scientific Corp. and St. Jude Medical over the implantable cardiac defibrillators. The products are part of Medtronic’s most lucrative unit, the cardiac rhythm division, which saw sales fall 4 percent to $1.17 billion during the quarter.

The drop was offset by gains elsewhere, with cardiovascular unit sales gaining 10 percent to $565 million. The unit sells angioplasty products and stents, which are mesh-wire tubes used to prop open arteries after they have been cleared of fatty plaque.

The company’s spinal unit gained 3 percent to reach $832 million, while neuromodulation product sales rose 11 percent to $354 million. Medtronic saw gains in its diabetes and surgical technologies unit as well, but a decline in its smallest division, for physio-control products.

Bill Hawkins

“Despite global macroeconomic uncertainties and an unfavorable impact from foreign currency on our business units this quarter, Medtronic continues to deliver growth in a challenging environment,” said Chairman and Chief Executive Bill Hawkins.

Medtronic and its competitors have been hurt by a stronger U.S. dollar, which is cutting into gains previously seen in overseas sales because of foreign exchange rates.

Overseas revenue rose 1 percent during the quarter, or 9 percent after adjusting for the impact of foreign currency.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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