Boston Scientific and the Road to Ruin

By Catherine Elton | Boston Magazine |

In court proceedings Tobin denied that he had ever made those comments. Boston Scientific countersued the couple, and insisted that the secret facility was developed as a backup plan because, the company said, the Richters had fallen behind in production. In a summary judgment weighing both suits, a judge determined that Boston Scientific had acted in bad faith. The company settled and paid Medinol $750 million in 2005.

But the tale of the Nir stent involves allegations far worse than double dealing. According to the U.S. Attorney’s office, an investigation revealed that within weeks of launching Nir on the U.S. market in August 1998, Boston Scientific received reports of life-threatening problems with the stent’s delivery system. Some of the balloons used to expand the stent to its full size leaked or burst. According to a resulting lawsuit, Nicholas admitted in a conference call that he knew the Nir stent was faulty and that the company couldn’t continue to sell it. But it did anyway. Boston Scientific kept the faulty product on the market — making $1.5 million in sales each day. The company did send out a letter to physicians that mentioned the flaws, but tried to downplay them.

The FDA found out about the stents and ultimately met with Boston Scientific to discuss them. By that point, one person had died and 26 had been injured due to the flawed stent, according to the FDA. On October 5, 1998, Boston Scientific issued a recall. In 2004, the company paid the government $74 million to settle the case. It admitted no wrongdoing.

ANOTHER CASE EMBLEMATIC of the problems at Boston Scientific was the purchase of the Indiana company Guidant. By 2005, with revenue in the billions thanks to a new stent, Boston Scientific’s board wanted the company to diversify beyond its main business. Guidant had a good chunk of the lucrative market for pacemakers and implantable cardiac defibrillators, devices that shock the heart back into rhythm.

Guidant, in other words, looked like an attractive buy. But Boston Scientific wasn’t the only company to take notice, and, adding to the consternation, Johnson & Johnson looked like it was about to beat them to the punch. But as a J&J–Guidant deal was nearing completion, a patient with a Guidant defibrillator in his chest died. Guidant was forced to issue a massive recall and faced lawsuits and investigations. These developments led J&J to lower its offering price for the company. Undeterred, Boston Scientific pounced. It made an unsolicited offer for Guidant, which set off a bidding war.

  • craig

    I worked for Sci Med until it was acquired in 1995. I was fired by dumb assed engineers who were given titles called ‘manager’, who were full of themselves, had no knowledge of the functions of a manager (I had an undergrad. in management, five years’ experience prior to Sci Med, plus a degree in electronic technolgy). Firms that are almost entirely engaged in engineering make the mistake of promoting their ‘own kind’ – that is, engineers, who while they are essential in the engineering function, are absolutely CLUELESS when it comes to maximizing human resources. Hubris, group-think, discrimination against people with other world views, prima donnas, all create a culture of fear among those who love their jobs more than being courageous and speaking truth to neanderthals. Hubris, arrogance CAN KILL!!!! This is how faulty devices find their way into victims and ultimately why B.S., Medtronic etc, are doomed to oblivion UNLESS the culture fosters true managers/coaches who are actually interested in the development of talent who have spent years and tons of their money acquiring the skills. How much talent is sent packing by a dumb-assed engineer who can’t even spell or…

  • Ruben

    I’m a former international employee that was fired when I was the responsible to run the business in a country that was one of the largest market opportunities in the world for BSC.
    Fired in retaliation because through the use the Channel that was included at the Code of Ethic made a formal complaint about many operators “BSC is used to call them Managers” that were using “cold sales” to reach quote that allows them to gain bonus.
    Those fictitious sales were later considered to be part of the annual “write off” at company balance-sheet. As an example, I found ($130K) value equipment (IVUS), seated at a distributor since two year without any action from “BSC Managers” no payment – no return, just an Invoice to gain the bonus for “managers” that of course was paid.
    I made a claim for retaliation at Boston court, that was rejected because the The Sarbanes-Oxley doesn’t protect a citizen of a foreign country. While it was created to protect the investors from any risk, that in a global company can come from international business also. The last CEO “improves” his salary from 600K to 32.4M per year using the same strategy of “bonus…

  • sandy

    confused and saddened that in a time of economic hardship state-wide, and nationally… a local magazine would choose to disparage a locally headquartered company that employs thousands in this state.

  • chris

    I worked at NSC for 2 years in clinical sciences. The place was toxic and leadership was non existent. What goes around comes around. Mr manager was a moron, she is highlr paid, no degree, no morals, and was inappropriate as she bullied any one she wanted to and leadership let her get away with it, no balls to confront her. The ship has sunk.

  • BH

    The article was a clear demonstration of cowardice on the part of the author and the “unnamed analyst”. It’s easy to post negative comments if there is no accountability. In addition, the unprofessionalism demonstrated in publishing unnameed vulgar assessments is inexcusable. Would expect more objective (at least more balanced) “reporting” from a local magazine in writing about a local company that develops life saving medical devices that reduce healthcare costs and help physicians treat patients needs.

  • Martin

    This women signing this article is obviously a crazy feminist writing this coments like;
    “Fed by hubris, testosterone, ego, and greed”.
    Former executives describe what ensued as an all-out testosterone fest.
    Its showing us that testosterone *(men hormon) is responsible for all problems here… Now we should just say that this lady wrote this article estrogenicly stupid and unbalanced and unsure??? Its simple discriminating men and blame them for all here ;p

  • Joel

    This company gets whatever it deserves and folks in the comment section defending them are simply pathetic. I worked for them as a manager for several years and their just the typical old school, east coast good ole boys squeezing every ounce of blood out of their workers and then throwing them away to stay profitable.