Guidant’s Major Ethical Lapse - Etnic In Action

In 2005, Guidant Corporation, a maker of medical cardiac devices, revealed that many of its defibrillators had an electrical defect that might cause them to fail when needed to interrupt an erratic and possibly fatal heart rhythm. Guidant was forced to recall more than 100,000 implantable heart devices, including three models of defibrillators with similar electrical flaws that were tied to at least seven patient deaths.

One of the most troubling aspects of the recall came into view when it was revealed that Guidant had known about the electrical problem for at least 3 years after two physicians in Minneapolis, Dr. Maron and Dr. Hauser, told the company about the problem and urged Guidant to alert physicians about the device defect so they could check their patients and implants new models. Guidant made no effort to communicate the problem to physicians nationwide, or to the Food and drug Administration (FDA) that has a clear procedure for when a company should make a legal written declaration about known problems with a medical product. When the company failed to act on their message and take their advice the physicians contacted other physicians and The New York Times. The resulting story and outcry quickly forced Guidant to reveal the problem with its devices and communicate the problem to physicians nationwide.

In the ensuing investigation, as panel of medical experts came to conclusion that Guidant had deliberately kept its faulty cardiac devices on the market without considering the medical impact and had knowingly failed to alert doctors and patients when the devices started to malfunction. Once legal proceeding were started against the company, internal documents further revealed that a consultant to Guidant had informed the company’s top executives that he believed it had a clear ethical obligation to inform physicians about heart device defects and he urged the company to begin a recall process informing them that their decision to withhold such data was highly questionable. He also noted that Guidant had a clear conflict of interest that would naturally lead it (and other companies) to disclose product failures only when absolutely necessary. So, if a tragedy occurred—which it did—Guidant’s actions would be viewed in the worst possible light possible; it is always in a company’s best interest to expose its dirty laundry.

This proved true when Guidant faced a product liability lawsuit filed in Texas by patients who received Guidant defibrillators and then faced a federal lawsuit in Minnesota that claimed the company had acted criminally when it knowingly sold potentially flawed defibrillators. Guidant had to pay hundreds of millions in damages to patients, and after intense negotiation with the Justice Department, it reached an agreement to plead guilty to two “misdemeanors” that related to problems concerning the completeness and accuracy of its filings with the FDA and to pay a $296 million fine—the largest ever imposed upon a medical device company.

In April 2010, however, responding to ongoing criticism by the Minneapolis physicians who first revealed the problem that the fine was not enough to punish the company for its criminal actions, a federal judge in Minnesota rejected the plea agreement. The judge said that the deal did not hold Guidant sufficiently accountable for its criminal conduct in knowingly selling potentially flawed defibrillators and that prosecutors should have sought probation for Guidant and its new owner, Boston Scientific. Possible criminal charges against the executives who had orchestrated the cover-up were also suggested by some parties. While on probation, the company would be required to take certain steps to ensure such unethical and illegal behavior did not happen again, such as by putting in place strict new ethical communication guidelines, an ethics ombudsman to take charge of the decision about when to communicate product defects, and charitable activities by Guidant to improve medical care among minority patients. The company announced it would support such steps and that it would put in place the performance programs necessary to ensure its managers would never make such unethical and illegal decisions again.