Thoratec And The Wrath of Recalls (THOR)
Thoratec Corporation (NASDAQ: THOR) is getting some negative reaction this morning after issuing a Urgent Medical Device Correction to doctors. The maker of the HeartMate II LVASheart failure device announced a product recall on Friday. Thoratec issued a worldwide medical device correction of all serial numbers of the HeartMate II Left Ventricular Assist Systems having Catalogue No. 1355 or 102139, which have been distributed since the beginning of clinical studies in November 2003.
It said that over time, wear and fatigue of the percutaneous lead connecting the HeartMate II LVAS blood pump with the System Controller may result in damage or injury. It said that this could interrupt pump function, require reoperation to replace the pump and potentially result in serious injury or death. It also said that the estimated probability of the need for pump replacement due to percutaneous lead damage is 1.3% at 12 months, 6.5% at 24 months and 11.4% at 36 months.
Here is part of the excerpt:
Patients who are currently being supported by a HeartMate II LVAS should contact their doctors, who can assess the wear and fatigue of the percutaneous lead as well as provide proper instruction on management and care of the lead.
Thoratec is voluntarily issuing an Urgent Medical Device Correction notice after confirming 27 reports where wear and fatigue to the percutaneous lead necessitated pump replacement. These reports occurred over five years of clinical experience with 1,972 implants. All patients who have undergone a replacement of the HeartMate II pump survived the operation and were alive at least 30 days postoperatively. In five cases, pump replacement was not feasible and the patients expired.
The affected systems were distributed to 153 hospitals and distributors throughout the United States, Europe, Canada and other countries. The HM II LVAS can be identified by the catalogue number located on the label of the package.
The real problem with recalls and product defects in medical device companies is that a recall isn’t exactly a auto recall from tires or windshield wipers. Patient generally have to undergo a new surgical procedure to have the recalled item removed and have to have new devices inserted. While procedures are almost always done at the same time, it can come with a high price and inconvenience to the patient. Recalls can destroy the image medical device company which issued a recall over a defective product. How many patients want defective heart devices?
Recalls can also turn doctors away to competing products or encourage them to stop use of the recalled product even if the replacement is fine. Doctors are frequently not immune to public opinion and are rarely immune to product defect news.
Thoratech shares are down 16% at $21.00 at 10:15 AM EST and we have already seen the stock trade its average daily volume in just 45 minutes. The only good news here is that this is not worse.
Here is a link where you can hear the full details of the recall and the implied impact from teh company.
Jon C. Ogg
October 27, 2008