Opinion ID: 223134
Heading Depth: 3
Heading Rank: 1

Heading: Disclosure of the Laser Shift

Text: Plaintiff argues that defendants' failure to implement the planned laser shift in November recklessly created a significant risk that the newly launched U.S. Taxus devices would need to be recalled and is evidence that defendants acted with scienter in not disclosing the existence of the fix sooner than they did. At its core, this argument rests on the premise that the laser shift was not only the ultimate solution to the problem of focal necking, but also the criterion that defined whether or not a device needed to be recalled. This premise is flawed for a number of reasons. First, there is no evidence that the laser shift was itself sufficient to prevent focal necking in Taxus; the fall 2003 conclusion by the six sigma team that the laser shift would prevent focal necking for Express2 regardless of other causal factors did not apply to the causal factor of cone puffing, as cone puffing was not used in the manufacture of Express2 and its relevance to focal necking in Taxus was not known until the summer of 2004. Second, the implementation of the laser shift was not a determinative criterion in the recall. The July 16, 2004 decision about which lots of Taxus to recall was not based on whether they had been produced using the new laser alignment. Rather, the decision was based on whether the lots had been produced before or after the introduction of the reticle inspection at the end of April. The recall covered all Galway-manufactured devices that were manufactured before this, and none that were manufactured after it. Likewise, no devices manufactured in Maple Grove after this were recalled. While BSC was able to limit the recall of Maple Grove lots manufactured pre-reticle inspection by using manufacturing data not available in Galway, the introduction of the reticle inspection was nevertheless the defining moment in time. Therefore, although the laser shift was a manufacturing solution to focal necking that eliminated the need for some of BSC's other solutions, it was not determinative of whether a product needed to be recalled. [15] Plaintiff nevertheless contends that defendants were required to disclose the laser shift sooner than they did. It claims that BSC was prepared to submit its change to the FDA by November 2003, but that the process was aborted by the Taxus PMA Council in order to keep the Taxus release on schedule, thereby misleading the market about the risk that it would be introducing a new product that had a manufacturing defect. It argues that the decision to build inventory without the permanent fix in place made the recalls not just foreseeable, but probable. There is no evidence in the record that supports this claim. The evidence is that as of November 2003, BSC had not validated the .8 mm laser shift and was not prepared to submit this documentation to the FDA, as it needed to do before implementing the change. Although plaintiff is correct that on September 2, the engineer leading the laser shift team, Kevin Griffin, proposed a validation plan for the laser shift that would be completed and submitted to the FDA by November 7, 2003, the email to which Griffin attached this plan also stated that it was a bit optimistic. Likewise, while six sigma team leader Peter Delmer testified that the laser shift had been confirmed as a manufacturing solution to focal necking by October 2003, he also testified that at this point, an awful lot more work would have to be done in order to implement the manufacturing change. Further, the additional work that Griffin and Delmer said was required was in fact done. In October, the team had only recommended shifting the laser from.4 mm to .6 mm, rather than the .8 mm position that was ultimately implemented. It would have been inappropriate for the company to disclose that it was considering a manufacturing change before it was satisfied that the change would not itself cause other problems, and no inference of scienter can be drawn from this non-disclosure. Moreover, Griffin's validation plan was created for Express2 not Taxusa fact that plaintiff ignores in arguing that the Taxus PMA Council modified the plan. Although both the Express2 and Taxus systems were built using the same catheter, the teams worked independently and plaintiff cites no evidence that the validation plan and FDA submissions for Express2 were influenced by the Taxus PMA Council's decision to only allow critical modifications to the Taxus PMA after October 31. [16] On the contrary, when Griffin sent the validation plan to Paul Bulger and asked whether he should keep the Taxus reg folks involved, Bulger replied: I have informed Taxus regulatory of the proposed changes. They have not given any specific feedback or concerns. Since this is a change to the delivery system only, it should have a minimal impact to the Taxus PMA review. [17] Moreover, no inference of scienter can be drawn from the fact that BSC management decided at the end of November that it did not immediately need to disclose or implement the laser shift. At this point, there had been only two no-deflate complaints for the tens of thousands of Express2 and Taxus devices manufactured at Galway after the introduction of the May 2003 changes, and there had been only three no-deflates ever on Express2 devices manufactured at Maple Grove. Based on the information available, no inference of scienter can be drawn from defendants' conclusion that the preventive measures implemented in May had been effective in further reducing what was already, by industry standards, a very low rate of complications. Plaintiff also claims that later, in the March-May 2004 time period, no Defendant affirmatively disclosed any ... information about the approval of manufacturing changes and the fact that some pre-manufacturing change inventory remained in the field. However, it is clear that the market knew that BSC was implementing a manufacturing change to address no-deflates on May 5, when the FDA approved the Special PMA Supplement requesting permission to make the change. The FDA approval, which was publicly available on its website, informed the market that BSC was making a modification of a manufacturing process to address complaints related to failure of the delivery system balloon to properly deflate following stent deployment. The change was also reported later that day in a Merrill Lynch analyst report, which stated that the company was implementing a manufacturing fix to address the issue of `no deflates.' It would have been clear to the market that the stents produced prior to this date did not incorporate this modification.