Claims that C. R. Bard (NYSE:BCR) employed a plastic unfit for use in humans in its surgical mesh devices would ordinarily be expected to have a disastrous effect on the company, perhaps even threatening its ability to remain a going concern.
Curiously, though, the revelation has had no effect at all on Bard’s share price. This is all the more remarkable because the New Jersey company has only just resolved, at a cost of nearly $50m, a lawsuit alleging that it had paid kickbacks to doctors to promote its devices, also without fazing shareholders. Bard’s investors appear to have strong stomachs.
The documents came to light in the course of a lawsuit concerning Bard’s Avaulta line of vaginal meshes, used in procedures to repair pelvic organ prolapse. Much controversy has circled vaginal mesh devices recently, with Johnson & Johnson’s (NYSE:JNJ) Ethicon unit forced to pay $3.35m in compensation to a patient who had received its Gynecare Prolift vaginal mesh after being misled about the product’s risks (J&J’s hip problems worsen with US government probe, February 26, 2013).
Vaginal mesh implants manufactured by companies including Endo Health Solutions (NASDAQ:ENDP), American Medical Systems (NASDAQ:AMMD), Boston Scientific (NYSE:BSX), Cook Medical and Coloplast (CLBPF.PK) are also the subject of U.S. lawsuits alleging injuries. There is no suggestion in these cases that the meshes were made of an unregulated substance.
In the Avaulta case, though, the plaintiff’s lawyers say that emails between staff at Bard’s Davol unit indicate that management knew that the polypropylene used in some hernia and vaginal meshes was not suitable for implantation. The manufacturer of the plastic, Chevron Phillips Chemical, had filed a safety data document with the US Occupational Safety and Health Administration with a warning to this effect.
The initial case, alleging that patients were not warned properly about the risks of the meshes, could be damaging enough; as in the J&J case the plaintiff might be able to seek punitive damages in the millions of dollars.
But the new revelations could perhaps lead to Bard’s lawsuits taking a more severe turn – and moving from the civil to the criminal courts. The exemplar of the illegal misuse of unapproved plastics in implants is Poly Implant Prothèse, whose breast implants were found in 2010 to contain industrial rather than medical-grade silicone. That scandal ended with the company in liquidation, and its senior executives could still face up to four years in jail when the verdict in their fraud trial is delivered in December.
Whether Bard’s management will face similar sanctions over the Avaulta mesh is a decision for the courts. What is clear is that many of Bard’s investors appear unconcerned about the company’s business practices.
All data sourced to EvaluateMedTech