Briefing: Boston Scientific verdicts
Boston Scientific of Marlborough suffered a rough month in the legal system in November after two federal court juries awarded more than $45 million to eight women who claimed injuries from the medical device manufacturer's transvaginal mesh devices. The verdicts were handed down just two months after a Texas court ordered the company (BSX) to pay $73 million — including $50 million in punitive damages — to a woman after the company was found to have been negligent in the design and marketing of its Obtryx transvaginal mesh sling, which helps treat urinary incontinence and pelvic organ prolapse.
How do these rulings impact Boston Scientific?
Two days before the first verdict was delivered, the company's stock price reached $13.68, its highest point in seven months, before falling 4.3 percent on Nov. 19 to $13.09. Since then, it has fallen to as low as $12.81, but rebounded. However, the company's credit ranking doesn't seem to have suffered. In late November, Standard & Poor's affirmed its 'BBB-' rating, meaning BSX has enough to pay its bills, according to a report on StreetInsider.com.
What lies ahead for the company?
S&P called the company's outlook “stable,” the StreetInsider report said. “We expect low- to mid-single-digit revenue growth in 2014 and 2015, with the help of double-digit growth in certain smaller product and geographic markets. We expect internally generated cash flow to fully cover acquisitions and earn-out payments.”
In its third-quarter report to the Securities and Exchange Commission, BSX said that as of Nov. 4, there were more than 24,000 cases or claims against it related to transvaginal mesh products. But the firm also said it has set aside money to pay out claims, reporting $945 million in legal reserves.
What does BSX say in response to the verdicts?
BSX disagrees with the recent verdicts and will “vigorously” pursue appeals, according to an email response from company spokeswoman Kelly Leadem. “Patient safety is of the utmost importance and we dedicate significant resources to deliver safe, high-quality products,” she said. “Transvaginal mesh remains an important treatment option for women who suffer from pelvic organ prolapse and ... urinary incontinence.”
How common are such legal actions?
In the world of pharmaceuticals and medical devices, probably more so than in other industries. According to the web site Drugwatch.com, medical devices is now an $85-billion-per-year industry, and despite the many regulatory hoops companies have to jump through on their way to product approval, “manufacturer negligence and flaws in the approval process have exposed millions to hidden risks,” which leads to liability lawsuits.
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