Boston Scientific to pay $296 million in Guidant probe

The Natick, Mass.-based company manufactures pacemakers and implantable heart defibrillators at a facility in Arden Hills, which it acquired in 2006 as part of a high-stakes bidding war for Guidant.

The misdemeanor charges are related to failure to include information in reports to the Food and Drug Administration, the company said.

In May 2005, the Twin Cities-dominated industry for heart rhythm devices was rocked by revelations that Joshua Oukrop, 21, of Grand Rapids, Minn. had died suddenly while mountain biking in Utah.

Oukrop's doctors had implanted in his chest a Guidant Ventak Prizm 2 defibrillator, a device that's meant to provide a life-saving jolt for patients with dangerous heart rhythms. But doctors in Minneapolis told the New York Times that the device failed to rescue Oukrop because of a product defect that the company failed to disclose to doctors and patients.

At the time, Oukrup's death was the only one linked to the problem. But the disclosure brought with it a series of high-profile product recalls, and word of more patients and families who claimed harm.

Boston Scientific said this morning it had previously disclosed an investigation into the matter by the U.S. Attorney's Office in Minneapolis. The products involved in the investigation, the company said, were the Ventak Prizm 2, the Contak Renewal and the Contak Renewal 2 devices, which were subject to a product recall in 2005.

"We are pleased this investigation has been resolved," said Ray Elliott, president and chief executive officer of Boston Scientific, in a statement.

"Guidant and its employees acted in good faith and believed they complied with applicable laws and regulations," he said. "We elected to resolve this matter so we could put it behind us and devote our full energies and resources to developing our innovative technologies."

Accounting rules require the company to record the agreement in the third quarter; accordingly, Boston Scientific has updated financial results for the quarter to include a $294 million charge -- reflecting the $296 million charge and a $2 million reversal of a related accrual.

Boston Scientific shares were trading up 6 cents this morning at $8.11.

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