Recently, the U.S. Food and Drug Administration (FDA) agency instructed medical devices major, St. Jude Medical, Inc. (STJ) to conduct a study to examine insulation failure in Riata defibrillator leads, a thin wire used to connect cardiac resynchronization therapy defibrillator (CRT-D) or implantable cardioverter defibrillator (ICD) to the heart to monitor abnormal heart rhythm.
The agency has recommended that X-rays or other imaging alternatives should be conducted in patients who have been implanted with the heart device to increase clinical know-how. The FDA also recommended St. Jude to carry out post-market surveillance studies to accumulate information regarding the risks associated with the Riata leads for 3 years.
The FDA had issued, in late 2011, an urgent recall of the Riata and Riata ST leads given the potential risk of serious injury or patient death. St. Jude had stopped selling the product in 2010. As of 2011, about 79,000 U.S. citizens had been implanted with these leads.
Although the FDA believes that most of the leads are harmless, despite signs of electrical conductor migration or externalization, it is still necessary to collect data on the frequency and timing of insulation failure to advance medical treatment and enhance patient safety.
The FDA’s scrutiny is supported by a number of studies which have indicated that a regular checkup may identify more problems that remained undetected earlier. However, the FDA has also cautioned health care professionals not to remove the leads randomly, without properly evaluating the condition of the patient.
Earlier, St. Jude had announced early phase-one results from its Riata Lead Evaluation Study. It was found that externalized conductors occurred less frequently in Riata ST 7F with a small diameter in comparison to the thicker Riata 8F leads. Management asserted that the results were consistent with other published studies. The company’s Leads Medical Advisory Board did not make any changes to existing patient management recommendations.
Apart from the post-market studies for Riata and Riata ST ICD and CRT-D leads, the FDA has asked St. Jude to conduct post-market surveillance studies on its QuickFlex LV CRT leads, QuickSite LV CRT leads and Riata ST Optim and Durata ICD leads. In April 2012, St. Jude had voluntarily recalled its QuickFlex LV CRT leads and the QuickSite LV CRT leads due to insulation abrasion.
If such a trend continues and similar product recalls follow in the future, it will negatively impact the company’s goodwill and might act as leverage for its peers such as Medtronic (MDT) and Boston Scientific (BSX) to gain market share. Moreover, we remain cautious about the restructuring expenses within the CRM business as well as the overall weakness in the CRM market. We currently have a Neutral recommendation on St. Jude, along with a short-term Zacks #4 Rank (Sell).
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