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Friday May 4, 2001  Reuters  http://search.news.yahoo.com/search/news?p=%22FDA%22&c=&n=20&yn=c&c=news

By Ransdell Pierson and Edward Tobin

NEW YORK (Reuters) - U.S. regulators said on Friday Guidant Corp.  appeared earlier this week to have violated the law by making improper claims about the safety and effectiveness of its experimental pacemaker Contak CD, and by suggesting the device would win regulatory approval.

News of the FDA  concerns about a press release detailing a number of positive results from a three-year clinical trial concerning Contak CD sent shares of the Indianapolis-based company tumbling more than 12 percent in the final half hour of trading on Friday.

``It appears from the press release as if Guidant is making claims of safety and effectiveness for an unapproved medical device,'' Sharon Snider, a spokeswoman for the U.S. Food and Drug Administration, told Reuters in an interview when asked about the propriety of claims made in the release.

``It is a violation of the law to make such claims for a product that is in clinical studies and has not been approved.''

However, later in the day, the FDA indicated it may partially backtrack on the comments. FDA Associate Commissioner of Public Affairs Lawrence Bachorik said that after a further review, FDA officials felt it is possible Guidant did act within the regulator's standards but that another examination would be conducted by compliance staff on Monday.

On Wednesday, Indianapolis-based Guidant issued the press release about Contak CD, a pacemaker that resynchronizes the heartbeat in people with arrhythmia -- or abnormal heartbeat -- and delivers an electrical shock if the heart gets out of sync.

For its part, Guidant late on Friday said it has not received notification from the FDA regarding any issues related to the press release. It added that it is contacting the FDA regarding the FDA spokesperson's comments.

``The company believes it is in full compliance with all legal and regulatory guidelines regarding public communication and disclosure of material information related to medical devices pending FDA approval,'' Guidant said in a statement.

The medical device maker said the pacemaker cut the progression of heart failure by 21 percent in less than five months, much quicker than drugs that have been tested for treatment of heart failure. However, the company failed to mention the device missed its goal of reducing progression of heart failure by 25 percent.

Steven Tragash, a Guidant spokesman, said late Friday he believed his firm had not violated FDA standards and that the company was trying to clarify the matter with FDA officials.

``We believe that we are in compliance with all U.S. Food and Drug Administration regulations,'' Tragash said.

Tragash would not comment when asked why Guidant failed to note in the press release that the trial had failed the primary endpoint.

``It would have been nice for Guidant to mention that (the failed endpoint). They were trying to put things in a positive light,'' said Sanjiv Arora, a medical device analyst for Dain Rauscher Wessels.

Other analysts earlier this week said the failure of the study to meet its primary endpoint created uncertainty whether the FDA would approve the device -- although the study showed clearly favorable trends in other areas such as improving quality of life and increased exercise tolerance.

Other healthcare firms have recently been criticized for failing to include information about key trial shortcomings in their press releases, including biotech firm Alexion Pharmaceuticals Inc. ( of Cheshire, Connecticut.

Guidant's stock plunged 12.7 percent, or $4.80 to close Friday at a new 2 1/2 year low of $33 on the New York Stock Exchange.

Merrill Lynch analyst Daniel Lemaitre said he thought investors overreacted. ``There's no evidence that the FDA has determined that Guidant has violated the law. Unless the (FDA) comments foreshadow a more formal complaint, then a $5 drop in the stock is overdone.''

FDA Has Watchdog Role

Among its many duties, the FDA is responsible for monitoring press releases of health care companies to ensure they do not make unwarranted claims about a product's ``safety and effectiveness,'' a phrase the agency does not define.

The agency judges company claims on a case-by-case basis and does not have specific guidelines on when a company runs afoul of the law.

When asked what the FDA reasoning was for its concerns about Guidant's press release, Snider declined to specify how the company appeared to have made improper claims. ``It's the law'' that may have been violated, she noted.

Snider said the agency was particularly concerned about a quote in the press release from Fred McCoy, president of the company's Cardiac Rhythm Management unit, which developed the experimental pacemaker now awaiting FDA approval.

In the release, McCoy said, ``We are pleased with how the study results complement and deepen what we have seen in our earlier studies. We are looking forward to making available to patients the first and only heart failure therapy device with the potential both to enhance patients' lives and to protect against sudden cardiac death.''

Referring to McCoy's statement, Snider said, ``It would also appear that they are making a presumption of approval'' by the FDA.

Snider said the FDA typically issues so called ``warning letters'' to companies that make improper claims about products that are not approved. When asked if the FDA will send such a letter to Guidant, she declined to comment.

Guidant shares, which have underperformed the Standard & Poor's Medical Device index by about 35 percent over the past year, fell more than 6 percent Thursday after several cautious research notes from several analysts.

Glenn Reicin, a Morgan Stanley analyst, on Thursday cut his rating on Guidant to neutral from outperform because of ``new uncertainties that have been created by the presentation of the Contak CD trial.''