Boston Scientific pays $22 million to settle DOJ probe on kickbacks

Heart device maker, Boston Scientific yesterday agreed to pay $22 million to settle charges that the company's unit Guidant paid kickbacks to doctors to get them to use its heart devices.

The US Department of Justice (DOJ) had started an investigation against Boston Scientific's subsidiary, Guidant Corporation in 2005 for paying physicians between $1,000 and $1,500 each to participate in one of four studies conducted in 2003 and 2004, designed to assess the performance of pacemakers and defibrillators.

The DOJ said yesterday in a press release that in reality, Guidant was paying kickbacks to physicians to opt for its pacemakers and defibrillators over its rivals.

Pacemakers are implanted devices that monitor and help control heart rhythms, while implantable defibrillators provide shocks that can jolt a failing heart back to life.

The US Attorney Carmen Ortiz in Massachusetts, whose office conducted the investigation of the medical studies said in a statement, "Although medical device makers and pharmaceutical companies can use post-market studies legitimately to obtain information about how their products work in the field, they cannot use those studies, and the honoraria associated with them, to induce physicians to use their products."

Massachusetts-based Boston Scientific said that that it has entered into a civil settlement with the DOJ and agreed to pay $22 million and enter into a corporate integrity agreement, which requires its cardiac rhythm management unit to disclose payments to doctors on its Web site.

Although agreeing to settle the litigation, Boston Scientific did not admit wrongdoing on its part and said that the investigation against Guidant had started before it acquired the company.

''This civil settlement brings to a conclusion an investigation that began in 2005 and involved no admission of wrongdoing by the company,'' Boston Scientific said in a statement

Boston Scientific had acquired heart device maker Guidant Corporation in January 2006 for $27 billion in a nearly two-month bidding war with rival Johnson & Johnson and the cardiac rhythm management had become part of Boston Scientific through the acquisition.

But Boston Scientific had to settle several litigations of Guidant's final years in business.

In 2007, Boston Scientific agreed to pay $240 million to settle more than 8,000 lawsuits bought against Guidant for concealing defects in defibrillators.

In another DOJ investigation, Boston Scientific paid $296 million in November to settle high-profile defibrillator recall issued by Guidant in 2005.

A Texas jury ordered it to pay $431 million in damages in February 2008 to drug-coated stents inventor and patent holder, Dr Bruce Saffran for infringing his 1997 patent.

Dr Saffran had brought the infringement lawsuit against Boston Scientific in 2005.

In September, Boston Scientific agreed to pay Johnson & Johnson $716 million to settle more than a dozen patent related lawsuits, including the Palmaz-NIR suit. (See: Boston Scientific and Johnson & Johnson settle patent disputes)