Four years after it stopped selling the Riata and Riata ST defibrillator leads, St. Jude Medical has agreed to settle most of the device-related ongoing U.S. lawsuits and unfiled claims. The company will pay at most an estimated $14.25 million to settle approximately 950 cases and claims, including attorney fees and administrative expenses.
According to a company press release, “the parties have not admitted any liability or the validity of settled product-liability claims and will request dismissal of the settled Riata-related cases throughout the country.”
Riata leads were recalled by St. Jude in November 2011 because the silicone coating insulating the electrical conductor wires within the lead was found to erode prematurely. Leads like this are used to transvenously connect the implantable cardioverter defibrillator (ICD) generator to the heart in order to deliver shocks when needed. According to FDA, the usual lifespan for an ICD lead is about 10 years or more, but Riata silicone insulation was found to erode much earlier, after about four years. Premature insulation erosion sometimes led to externalized electrical conductor wires and device malfunction.
St. Jude took the Riata and Riata ST leads off the market in December 2010, notifying doctors in a letter. The company sent an updated advisory letter to physicians in November 2011 and the next month, FDA classified this as a Class I recall. Today, there are approximately 90,000 Riata and Riata ST leads in use worldwide, according to an e-mailed statement from St. Jude spokesperson Kate Stoltenberg. She added, "we are committed to post-market surveillance studies to further advance our insight into the performance of our Riata and Riata ST leads, and to enhance patient safety."
In a Securities and Exchange Commission (SEC) filing Thursday, St. Jude stated that on December 17, 2014, it agreed to enter into the settlement and had set aside approximately $15 million in the last quarter of 2014 for payment. As of January 3, 2015, St. Jude had over $1.4 billion in cash and cash equivalents on its books. Plaintiffs have until March 16 to sign on to take part in the settlement.
There are three lawsuits in the U.S. that will not enter into the settlement, according to the SEC filing. In addition, a proposed class-action suit filed in Canada remains ongoing.
In its December 2010 letter, St. Jude pointed to its newer generation defibrillation leads with Optim insulation, noting that the new insulation showed a significant reduction in lead abrasion versus the silicone insulation used with Riata and Riata ST. Scrutiny, including published journal articles, began to focus on these Optim-insulated leads.
"Durata lead performance continues to meet expectations by all measures. Our confidence in the Durata lead performance is backed by a comprehensive collection of data that continues to demonstrate its strong safety and reliability...Data from up to 7 years surveillance continues to demonstrate strong reliability and safety in more than 11,000 Optim-insulated leads," Stoltenberg said in an e-mailed statement.
Over the past couple years, investors have shifted attention away from Riata and Durata, instead concentrating on the potential of new devices like St. Jude's CardioMEMS implantable wireless heart monitoring system.
[Image courtesy of RENJITH KRISHNAN/FREEDIGITALPHOTOS.NET]