Baxter International Inc.’s settlement last week of allegations that two of its popular medication delivery pumps were flawed could open up the company to years of Food and Drug Administration scrutiny for its quality systems, industry analysts said.
The Deerfield-based medical product giant settled U.S. Justice Department allegations that its Colleague Volumetric Infusion Pump and Syndeo PCA Syringe Pump, both made in Singapore by Baxter, were so flawed that they violated federal law.
In a 30-page consent decree approved by U.S. District Court Judge Wayne Anderson in Chicago, Baxter said it would stop manufacturing and distributing the pumps until the company fixes problems that appear to have caused some of the devices to stop operating. Defects in the pumps may have led to eight deaths and 16 serious injuries, the company and the FDA have said.
The settlement resolves a suit filed by the Justice Department in October, after federal agents seized more than 7,000 devices, mostly pumps, distributed from two of Baxter’s suburban facilities. Infusion pumps deliver life-saving drugs and nutrition to thousands of critically ill patients.
“This is a very serious regulatory step that allows FDA significant power to oversee and shape the rebuilding of Baxter’s quality systems in the coming years, as well as tightly control its commercial activities for the affected products,” Ben Andrew, analyst with William Blair & Co. in Chicago, said in a report last week. “While we can argue that this particular consent decree isn’t too bad–limited to just one product area whereas often they relate to entire business units–historically under this process FDA is a tough, deliberate taskmaster.”
Baxter said it intends to take a $70 million charge in the second quarter for remediation connected with the settlement. If Baxter fails to comply with tenets of the decree, the company could face penalties up to $10 million a year, the government said.
To be sure, North Chicago-based Abbott Laboratories in 1999 paid a $100 million settlement as part of a punishing consent decree. The FDA said Abbott ignored federal regulations and failed to comply with standards as far back as 1993.
It was not until late 2003–four years after signing its consent decree–that Abbott won approval to reintroduce dozens of diagnostic tests the federal government forced from the U.S. market in November 1999.
It was also hugely expensive for Abbott. It took the company four years of costly, exhaustive efforts to comply. Analysts estimate the ordeal cost Abbott more than $1 billion in penalties and lost sales.
So far, Baxter is also missing out on more than $150 million in annual pump sales, analyst and company figures show.
After taking over as Baxter chief executive two years ago, Robert Parkinson stepped up efforts to resolve quality system issues that began under his predecessor, Harry Kraemer. The pump problems date to 1999, FDA documents show.
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Still, Baxter’s efforts don’t mean they will be able to satisfy FDA inspectors any time soon.
“Investors should not assume that this will be smooth sailing for Baxter, though it may prove the exception to the rule,” William Blair’s Andrew said. “Working in its favor, the company started focusing on its quality assurance issues roughly two years ago, so it at least has a partial head start on addressing the issues FDA has been raising since 1999.”
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