St Jude's reputation has literally seen its stock fall over the past month from a six-month high of $44.54 in late March, to hovering in the $38 range for most of April and into May as the shocking debacle over its Riata leads has shaken physician and investor confidence.
The problem began when Dr. Robert Hauser published a peer-reviewed article in Heart Rhythm linking 22 deaths to a malfunctioning Riata implantable cardioverter-defibrillator (ICD) lead, compared to only 5 deaths attributed to a Medtronic lead. Companies deal with negative press and study findings all the time and worse things have happened; however, the real problem began with St Jude's response to the article. The company demanded the article be retracted, arguing Dr. Hauser severely undercounted the deaths attributed to Medtronic's Quattro lead, amongst other methodological approaches St. Jude took issue with (Medtronic's own analysis supported Dr. Hauser's findings). St. Jude also blamed Medtronic of starting a whispering campaign connecting the Riata lead, which had already been recalled before Dr. Hauser's article was published, to St. Jude's current-generation Durata lead.
St Jude's attack on Dr. Hauser's findings alienated a fair amount of physicians, as well as drew more negative attention to the study's results. St. Jude's own analysis has been brought into question as well. An independent peer review found significant methodological differences between St. Jude's and Dr. Hauser's results accounting for the difference in outcomes, ultimately supporting Dr. Hauser's findings of lead-related deaths (many of the deaths St. Jude attributed to Medtronic were not lead-related).
Although the impact on the Riata lead is moot because the device has been pulled from the market, the main consequence of this event will be on Durata use, not just because it is a St. Jude product, but because it is based on the Riata lead platform; thus, some physicians remain sceptical about adopting the device.
However, not all is bad for St. Jude: the company recently received Food and Drug Administration approval for its Ellipse ICD, a device notable for its unique design, inspired by feedback from over 200 physicians worldwide, and its diminutive size. More pertinently, the Ellipse comes with improved algorithms meant to reduce inappropriate shocks, a main culprit in the Hearth Rhythm article. This recent development should help the company gain back some of the industry confidence it lost as a result of its response to the Riata article.
You can access Dr. Hauser's original article here.