In March Abbott Laboratories (NYSE:ABT) pulled the control unit for its HeartMate II pump off the US market. The FDA has now designated the recall class I – the most serious type – making public the fact that 26 patients have died after replacing their controller.
At first blush this sounds like a disaster for Abbott, but options for the severely ill patients who use these devices are very limited. For one thing the main rival, Medtronic's (NYSE:MDT) HeartWare, has also seen class I recalls. For another, a follow-on HeartMate device is close to US approval. But reports of deaths will doubtless alarm many of those using this device, and Abbott's insistence that software updates will help in the meantime is unlikely to reassure.
The HeartMate II’s controller helps power the system, being connected to the implanted pump via a lead under the skin. It is itself powered by batteries or connected to the mains. Patients are given two of the units in case one malfunctions.
The process of changing controllers is quick and straightforward – if the patient is able-bodied and fairly technologically literate. But it does necessitate the pump stopping for a moment, causing dizziness or discomfort, and patients are advised to lie down as they do it.
In its recall notice, the FDA states that Abbott-Thoratec has received 70 reports of incidents linked to the pump, including 19 injuries and 26 deaths. All the deaths occurred when patients tried to change the controllers outside a clinical setting. The FDA now recommends that the process of changing controllers be done in hospital.
Abbott is recalling nearly 29,000 controllers and replacing them with new devices with upgraded software and new leads. Some patients already have these new controllers, but with software that is not the most recent; they will get software updates.
Deals within deals
Thoratec was the originator of the HeartMate product line. It was bought by St Jude Medical (NYSE:STJ) for $3.3bn in 2015, and St Jude fell to Abbott in a $25bn deal that closed in January 2017. These nested acquisitions make recent sales of the devices hard to track down; in its final annual report St Jude stated that “Thoratec products” made $136m in 2015, but it is not clear whether this accounts for a full year of sales. When Abbott released its annual report in February sales of the HeartMate franchise were not broken out, and in any case the company had only been integrated for a month or so.
A similar situation attains with Medtronic's competing HeartWare product. The inventor, also called HeartWare, was bought for $1bn in a deal that closed in August. In its fourth quarter 2016 results, released today, Medtronic does not break out HeartWare sales.
Both products have had repeated trouble with their controllers, power leads, batteries or other parts. Medtronic conducted a similar class I recall just this February, for instance.
Whatever revenue Abbott gets from the HeartMate II seems likely to dip, if not significantly – and then there is the cost of the recall itself. Perhaps getting the next-generation HeartMate 3 device approved in the US will help plug the hole.
The HeartMate 3 is currently in its pivotal US trial which aims to prove its noninferiority to its forerunner. It hit its first primary endpoint, survival at six months, back in November; data on its other primary goal, two-year survival, ought to emerge towards the end of this year.
Device recalls, even class I recalls, are an accepted risk of development, particularly when it comes to complex machines that give patients with poor prognoses a shot at life outside a hospital. The two product franchises contesting this market are not perfect but appear to be fairly evenly matched, and it is not clear that new patients would gain anything from prioritising one over the other. As long the HeartMate franchise stays on the market, there will be demand for it.