Sales force firings and perceived product design issues are adding to an already challenging cardiac rhythm management picture for Boston Scientific in 2010.

But one potential prospect is the firm's apparent progress with FDA toward expanding the indication for cardiac resynchronization therapy with defibrillation (CRT-D).

The company reported on Feb. 10 total CRM sales for the fourth quarter of $645 million, up 2% on a constant-currency basis, and below analyst expectations. Boston Scientific does not expect growth of much more significance in 2010.

This is not necessarily a big surprise. The implantable defibrillator and pacemaker market has been sluggish for some time. Wells Fargo analyst Larry Biegelsen estimates that worldwide ICD growth in Q4 was essentially flat, "which is concerning for all three major ICD manufacturers," he writes in a Feb. 11 note.

Beyond those market dynamics, Boston Scientific faces company-specific challenges that it says could reduce its 2010 CRM sales by up to $100 million.

One such matter resulted from the company's decision at the end of last year to fire an unspecified number of CRM sales team members for breaching the firm's code of conduct in their interactions with health care providers.

Boston Scientific would not divulge the nature of the wrongdoing, but it was clear that the departures would have a material negative impact on revenue in 2010. This is because the dismissed reps could bring accounts to competitors and are likely to attract more former Boston Scientific colleagues to change jobs as well, leading to additional lost revenue.

The firm claims that several of its former reps have already been hired by St. Jude Medical (see box: ¹ 'Boston Sci And St. Jude Trade Barbs Over Firings And Hirings').

Separately, Boston Scientific feels a drag from a safety advisory it issued in December for its Teligen ICDs and Cognis CRT-D products. The ² advisory warned of the potential for the bond between the devices' plastic header and metal generator casing to weaken in the 5% of devices that are implanted under the chest muscle.

Such weakening, which could cause malfunctions such as inappropriate therapy or loss of shock or pacing functions, was reported to the firm for two patients; the company has since refined its manufacturing process to strengthen the header and has started shipping the new devices.

But, Chief Financial Officer Jeff Capello said, "We could face some additional lost sales as we work to restore physician confidence."

That job may get a little harder in the wake of a paper posted online last week in the journal HeartRhythm. The one-patient case study, submitted by Beth Israel Deaconess electrophysiologist and Medical Device Safety Institute Director William Maisel and colleagues, describes an instance of header bond weakening in a Cognis device implanted subcutaneously, which is the more common placement route.

"Although uncommon, device header abnormalities should be suspected in all patients with Cognis and Teligen ICDs who have unexplained noise observed on any lead channel," the authors note.

Boston Scientific strongly refutes the observations and the journal's decisions to publish the paper without consulting the firm's engineering analysis. The company's analysis apparently confirmed the bond weakening, but found that it was not the cause of the device noise and subsequent adverse events.

In any case, the firm argues this will not be a long-term issue. Boston Scientific says it will have completely transitioned to the newly strengthened header bond design for both subpectoral and subcutaneous use by next month.

Tentative March Date For MADIT-CRT FDA Panel

The best forward-looking news the company has for its CRM business came from FDA. Boston Scientific says the agency has set a tentative date of March 18 for its Circulatory System Devices advisory panel to consider expanding the labeling for CRT-D devices to include treatment of earlier stage, relatively asymptomatic heart failure patients.

The firm will present data to the panel from the MADIT-CRT trial, published in the New England Journal of Medicine last year. The study showed CRT-Ds to be significantly more effective than conventional ICDs in reducing the risk of events in Class I and Class II heart failure patients, which accounts for about 70% of the HF population. All CRT-D devices are currently approved for Class III and IV heart failure.

Boston Scientific anticipates FDA approval for the expanded labeling by mid-year. This, along with positive coverage decisions, could significantly expand margins because of the higher price point for CRT-Ds compared to ICDs (³ Also see "Boston Scientific Expects MADIT-CRT Results To Energize CRM Sales" - Medtech Insight, 7 September, 2009.).

"I think that that is probably the most positive news in the short term, which we as a company are actually driving for the industry," said Fred Colen, the firm's chief technology officer.

- David Filmore ( ⁴ d.filmore@elsevier.com )

Boston Scientific CRM In 2010: Steep Challenges, Some Prospects

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