Opinion ID: 223134
Heading Depth: 3
Heading Rank: 2

Heading: Statements Regarding Physician Unfamiliarity

Text: Plaintiff also claims that from April 2004 through the July 16 recall, BSC misled and lulled the market by maintaining that the problems with Taxus were due to physician unfamiliarity with the device, rather than a manufacturing issue, and that [o]nly after the recalls did [BSC] admit that the defect in the catheter was manufacturing related. Plaintiff has produced no evidentiary support for its claim, having often conflated the no-deflate problem with the sticky stent problem and failed to differentiate between the problems and their causes. Plaintiff claims that Senior Vice President Paul LaViolette misrepresented the cause of problems with the stent system, and lulled the market, when he said during the first quarter analyst conference call on April 20, 2004 that essentially all complaint activity subsided as physicians became accustomed to using Taxus. This statement was in response to a specific question in which an analyst asked about the sticky stent problem (not the no-deflate problem) and why there had been no reports of such a problem in Europe over the past 12 months. LaViolette explained that there had in fact been sticky stent complaints when Taxus was first launched in Europe, but that these complaints subsided as physicians became accustomed to using Taxus. He did not say that physician technique was the cause of the no-deflate problem. Plaintiff also focuses on statements by BSC spokesman Paul Donovan, who was reported in a Boston Globe article on April 24 as saying that a few doctors in Europe reported similar problems when Taxus was initially approved for use there last year, but the complaints ended as doctors became more comfortable with the stents. This was true as to the sticky stent problem, and as the article reported, Donovan differentiated between the two problems. In discussing the 27 complaints that had been received, he explained that in most of the reported cases the balloons ... seemed to stick to the coating on the stent, creating a potential blockage. In about six of the cases the balloon wouldn't deflate, or would only deflate slowly. It is true that not every article was as clear in differentiating between the 27 complaints, but no inference of scienter can be drawn from this fact. Plaintiff cites an April 26 Wall Street Journal article that stated: Boston Scientific said it has received 27 reports of difficulties removing or deflating the balloon used in the angioplasty.... It adds that it believes the problem will disappear once physicians gain experience using the Taxus. `This sort of thing does tend to happen as physicians gain experience with the device,' said company Senior Vice President Paul LaViolette. Even so, the article went on to state that [c]opies of 21 of these reports reviewed by The Wall Street Journal showed that most of the complaints appeared to be minor annoyances, requiring the doctor to fiddle a bit to remove or deflate the balloon, apparently referring to the same break-down of complaints reported in the Boston Globe article. The fact that this Wall Street Journal article was not as clear as the Boston Globe in reporting that there were two different issuesno-deflate and sticky stentand that physician familiarity solved the latter, does not support a claim that defendants recklessly misled the market as to the cause of the complaints. This is especially so given that reports and statements issued over the next month clearly noted the different problems and solutions. On May 5, the market had clear notice that BSC was not attributing the no-deflate problem to physician mishandling when the FDA announced approval of BSC's request for a modification of a manufacturing process to address complaints related to failure of the delivery system balloon to properly deflate following stent deployment. The day that the FDA approved the change, it was reported in a Merrill Lynch analyst report stating that the company has a manufacturing fix to address the issue of `no deflates' submitted to the FDA to further reduce dependence on operator technique. And two days later, the Boston Globe ran a story that covered both the laser-shift solution to the no-deflate issue, as well as the sticky stent problem. As to the no-deflate issue, the article stated: [T]o prevent the problem of balloons failing to deflate, Boston Scientific is making a small change in the laser-bonding process it uses to join the balloon and catheter before the stent is packaged around them, said spokesman Paul Donovan. The article makes clear that Donovan differentiated between the no-deflate and sticky stent issues, and their solutions, explaining that the manufacturing change is meant to address the problem of balloons failing to deflate, while the company has no plans for manufacturing changes to address the other problem, which was sticky stent. Likewise, a May 27, 2004 Goldman Sachs report stated that the worldwide rate of `withdrawal resistance' (balloons sticking to the stent) is only 0.03%, which has largely been controlled through additional physician training, while other issues, including the 0.0005% worldwide rate of `deflation difficulty' (balloons unwilling to deflate following dilatation), were more-or-less corrected with slight adjustments implemented to the balloon catheter. That physician experience and technique could solve complaints of stent stickiness continued to be clearly reported to the market in the following month. On June 22, a Dow Jones Newswires article stated: Problems doctors have reported with Taxus include trouble getting the balloon to deflate and difficulty withdrawing the balloon catheter. As to the former, it noted that Boston Scientific is making a change in its manufacturing process that will result in the balloons deflating more easily. It quoted one doctor as saying that he had not seen any Taxus stent systems that would not deflate, but that he experienced stickiness with them 60-70% of the time. It also quoted multiple doctors saying that with practice, the stickiness issue was not a problem. [18] Given that market analysts and BSC management regularly differentiated between the two problems and their causes, there is no basis for plaintiff's contention that [e]ven on July 2, after the first recall, market analysts continued to believe that doctors' techniques were the problem behind no-deflate. In fact, the July 2, 2004 Merrill Lynch analyst report that plaintiff cites in support of this claim contradicts it. The report highlighted the manufacturing solution to the problem of no-deflates, explaining that BSC identified a series of manufacturing events that increased the risk of no-deflate; that the recall was based on these manufacturing lots; and that BSC had introduced a manufacturing change in May that is meant to further reduce the incidence of `no deflates.' The report's only reference to the role of physician handling was a single sentence that noted that BSC was sending a letter to physicians to inform them of handling issues that can prevent or mitigate complications with no-deflate. This does not blame physicians for the problem. Rather, it says that physicians could be part of a solution that was being primarily achieved through a manufacturing change.