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Tuesday, August 9, 2022

How Medtronic’s billion-dollar HeartWare device went bust

Five years after Medtronic’s billion-dollar purchase of HeartWare International, the company discontinued the device at the center of acquisition — a miniaturized, implantable heart pump — with no clear plans for ever selling it again.

Despite pulling it from the market one year ago, Medtronic is still dealing with the fallout from the device’s shortcomings, including lawsuits, ongoing regulatory recalls and media investigations.

The HeartWare Ventricular Assist Device (HVAD) was designed for patients battling severe heart failure. Once the market leader, HVAD is now associated with a number of life-threatening manufacturing defects that resulted in serious adverse patient events, including at least 14 deaths.

Several medical technology experts said it was surprising HeartWare remained on the market as long as it did.

“I think the question [at the time] was, ‘Why hasn’t it been pulled from the market yet?'” said Madris Kinard, CEO of Pennsylvania-based Device Events. “When it happened we were thinking, ‘Of course. This needed to happen.'”

In 2016, Medtronic spent $1.1 billion to acquire the maker of HeartWare, calling it a leading innovator in the cardiac category. The move expanded the company’s heart-failure business with the addition of what was then the world’s smallest VAD system, weighing just 5 ounces and smaller than a hockey puck.

Medtronic’s pitch: progressively improve the product with its expertise and size.

Ventricular assist devices are often implanted when a patient needs a heart transplant but no donor hearts are available. Without an implanted device, those patients would die.

In the narrow niche of VAD products, it had one primary competitor: Abbott Laboratories’ HeartMate device.

The key difference being HeartMate requires an external pack to carry batteries for the device.

“These pumps are a last resort,” said Dr. Deirdre Mooney, a cardiologist with the Providence Sacred Heart Medical Center in Spokane, Wash. “It’s an essential technology.”

HeartWare and HeartMate rank among the most intricate devices implanted in patients.

“These are complicated devices in a complicated clinical situation,” said Michael Argentieri, vice president of transition and business solutions for ECRI, a Pennsylvania-based independent nonprofit that tracks the safety of medical devices and technologies. “This device has basically a propeller in it, actually an impeller, to pump the blood around.”

But after years of research and development, Medtronic halted all sales of the product. What went wrong?

Dr. Alexis Shafii, surgical director of heart transplantation at the Baylor-St. Luke’s Medical Center in Houston, has implanted hundreds of the assist pumps. For several years, he said he preferred HeartWare over Abbott’s device.

Medtronic’s HeartWare was smaller and, in Shafii’s opinion, easier to implant than the Abbott device.

“A lot of good came from the HeartWare pump,” Shafii said.

But when Abbott rolled out HeartMate 3, first available in the U.S. in 2017, it became the market’s preferred device, with lower thrombosis risks than the Medtronic device. Abbott’s VAD sales rose and Medtronic’s declined.

Medtronic had been working on product updates since it acquired HeartWare — occasionally inviting doctors, like Shafii, to visit their operational headquarters in Fridley for a preview.

“They had a lot of stuff in the pipeline,” Shafii said of his visit to Medtronic three years ago.

One product in development was the MVAD (Miniature Ventricular Assist Device) that would have been even smaller than HVAD.

But those updates and new versions never made it to market.

“Medtronic was investing in several updates to the HeartWare system, including a new controller that enabled remote patient monitoring and a development program for a fully-implantable LVAD [left ventricular assist device] system,” said Erika Winkels, a Medtronic spokeswoman. “These were in various stages of development but had not yet received FDA approval.”

Sales numbers in the company’s fiscal 2020 filing show HeartWare losing ground due to “competitive pressures.”

According to a securities filing, the HVAD system brought in $141 million in revenue for Medtronic’s fiscal 2021 — about half of its sales in 2015, which was the last full year as an independent company.

Meanwhile, manufacturing defects with the device that predated Medtronic’s ownership became harder to dismiss.

FDA data shows 12 recalls — either Class 1 or Class 2 — for HeartWare from May 2013 through July 2016 before Medtronic completed the acquisition.

“There were warnings for years before that device came off the market,” said Dr. Rita Redberg, a cardiologist with the University of California-San Francisco and editor of JAMA Internal Medicine.

Redberg called the FDA oversight of HeartWare “very disappointing.”

In 2014, the FDA issued HeartWare a warning letter outlining several concerns after an inspection of its plant in Florida. Among the issues the FDA cited was a “failure to establish and maintain procedures for implementing corrective and preventive action.”

Between 2010 and 2013, HeartWare received at least 27 complaints, and reports of two deaths and four serious injuries, according to a copy of the FDA warning letter, which no longer appears on the agency’s website.

Winkels, Medtronic’s spokeswoman, said the company did its standard due diligence before closing the deal.

“Medtronic was aware of the warning letter and reviewed and understood HeartWare management’s plan to address open issues from the warning letter,” Winkels said.

Medtronic ceased sales and distribution of HVAD on June 3, 2021. By that time, Medtronic reported receiving more than 100 complaints related to defects with the pump, the FDA said. The problem was blamed for 14 deaths.

CEO Geoff Martha, speaking that day at a virtual leadership conference, addressed the issue in his opening remarks.

“The Abbott device is better for patients,” Martha said. “Our system has had a number of quality issues since we acquired it that we haven’t been able to completely resolve.”

Martha pointed to a just-published study that found Abbott’s HeartMate 3 had a lower mortality rate than HeartWare. The company cited a growing body of evidence that HeartMate patients were reporting fewer adverse neurological events than with its device.

That same day, Abbott issued a statement saying it had “capacity and supply to effectively support the growing demand” for its HeartMate 3 device. Reports have estimated the cost of a HeartMate device at $95,000 and is covered by insurance.

Since the market withdrawal, FDA scrutiny has increased. Federal data show 21 separate recalls for different lots of HeartWare devices from June 2021 through today, including two new Class 1 recalls — the most serious — last month for welding defects and risk of battery malfunction.

In a statement, the federal agency said, “The FDA is continuing to work closely with Medtronic and will take appropriate action to ensure the health and safety of device users remains our highest priority.”

During its fiscal 2022, which ended in April, Medtronic took $1.1 billion in charges related to its exit from the HVAD business.

Patients and families that suffered injuries or deaths due to HeartWare face an uphill legal battle, due in part to a 2008 U.S. Supreme Court ruling that barred lawsuits over any device that had received premarket approval from the FDA.

The case involved a Medtronic device. A New York man was trying to sue over an injury caused when a heart catheter burst during an angioplasty procedure.

“That decision was very bad for patients who are injured by high-risk medical devices,” said Dr. Michael Carome, director of the health research group for the Washington, D.C.-based Public Citizen, a nonprofit consumer advocacy group. “They really don’t have any legal recourse.”

Medtronic previously paid $54.5 million in 2018 to settle claims from HeartWare investors, who argued the company misled them about the safety of the device prior to Medtronic’s acquisition.

Medtronic said it’s committed to the safety of patients who still have the device.

“Although Medtronic no longer distributes the HVAD system, we are committed to ongoing quality assessments and control measures to further patient safety and therapy effectiveness,” Winkels said.

Today, about 3,500 patients still have Medtronic’s HeartWare implanted. More than half of those devices were a part of the June recalls.

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