Grand jury convened in probe of Boston Scientific

April 14, 2016

Grand jury convened in probe of Boston Scientific

Original Story: https://www.bostonglobe.com/business/2016/04/13/grand-jury-convened-probe-boston-scientific/v00hHy7djMd3xJfAH5f37J/story.html

By GLOBE STAFF  APRIL 13, 2016

Federal prosecutors have impaneled a grand jury in a criminal investigation of allegations that Boston Scientific Corp. used counterfeit raw material from China in vaginal mesh implants sold to thousands of American women.

The grand jury in Charleston, W.Va., has sent out multiple subpoenas in recent months, according to two people familiar with the probe. The subpoenas, one of which was obtained by the Globe, seek documents relating to Boston Scientific’s purchase of a type of synthetic resin used in the mesh implants. The people with knowledge of the inquiry spoke on condition of anonymity because they weren’t authorized to discuss it.

Among other things, one of the people said, investigators are examining whether the Marlborough medical device company engaged in deceptive trade practices by knowingly receiving substandard resins from China in packaging from a vendor whose materials had been approved by federal regulators, and whether it fraudulently sold defective products to health care providers.

Kelly Leadem, a spokeswoman for Boston Scientific, said on Wednesday that the company has voluntarily provided information requested by the Justice Department. It has not received a subpoena, she said.

Boston Scientific disclosed in a Feb. 24 regulatory filing that the US attorney’s office in West Virginia was reviewing allegations of defective mesh resin. Prosecutors have not accused the company of wrongdoing.

Allegations of counterfeit raw materials first surfaced in January, when a Houston law firm filed a lawsuit in a West Virginia federal court charging Boston Scientific with running an “international conspiracy” and racketeering scheme to sell defective mesh.

“Boston Scientific does not use ‘counterfeit’ or ‘adulterated’ materials in our medical devices,” Leadem wrote in an e-mail. “Boston Scientific has a robust quality system and dedication to patient safety. We stand behind our products, the materials used in those products and our commitment to women’s health.”

The company is also working with the Food and Drug Administration to conduct new tests on the safety and effectiveness of its implants over the next few months.

On April 1, the FDA issued a safety alert saying it was looking into allegations that substandard materials were used in Boston Scientific’s urogynecologic surgical mesh. FDA regulators didn’t recommend that woman remove the implants, however, saying it wasn’t aware of safety problems stemming specifically from the unapproved resin and noting “available data do not suggest any decreased benefit associated with the device.”

The mesh is often used by women to fix a common gynecologic condition called pelvic organ prolapse, where the bladder drops from its normal place in the lower belly and pushes against the walls of the vagina. But the treatment has allegedly caused other health problems.

Boston Scientific and other makers of mesh implants have been the targets of thousands of civil lawsuits over the past decade by women who charge the products have caused painful intercourse, infections, urinary problems, bleeding, and discomfort.

The cases have been consolidated in the court of US District Judge Joseph R. Goodwin in the Southern District of West Virginia.

Last year, Boston Scientific paid $119 million to settle about 3,000 lawsuits stemming from its mesh implants, but it still faces thousands of others. There is no evidence that substandard raw materials played a role in the health problems reported by women who filed the suits.

The suit by Mostyn Law was the first to allege the use of counterfeit materials. It charges that the Massachusetts device manufacturer purchased substandard material from a known Chinese counterfeiter after losing its US supplier. It also accused Boston Scientific of “acting like a drug dealer” to hide shipments of about 33,000 pounds of counterfeit plastic resin from customs agents in the United States and China.

Seeking class-action status, the lawsuit asked for unspecified damages for up to 55,000 woman a year who received the vaginal mesh implants since September 2012. Boston Scientific rejected the charges, saying the suit had no merit and promising to vigorously contest it.

In a Feb. 4 conference call with stock analysts, Boston Scientific chief financial officer Daniel J. Brennan referenced the suit by Mostyn law.

Brennan said the company had provided information to the FDA, health and safety regulators in Europe, and the Justice Department, but made no mention of a federal investigation or grand jury examining evidence in the case.