Boston Scientific Loses First Federal Trial Over Vaginal-Mesh Implants

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Boston Scientific

In the first federal trial related to its vaginal-mesh implants, Boston Scientific (NYSE:BSX) has been ordered to pay a total of $26.7 million in compensatory damages to four women by jurors by a federal court in Miami. In addition to concluding that the company’s Pinnacle pelvic floor replacement kit was faulty in design, the jury said that the company had failed to effectively warn patients and doctors of the possible risks associated with the device. Boston Scientific stated that it disagreed with the verdict and had a strong case for post-trial motions and appeal. Pelvic-organ implants are used in treating female patients experiencing major discomfort due to pelvic organ prolapse. ((Boston Scientific ordered to pay $26.7 million over mesh devices, Reuters, Nov 13 2014))

The federal court verdict follows another unfavorable ruling by a state court jury in Texas in September, when Boston Scientific was ordered to pay $73 million to a woman who experienced constant pain after being treated with one of the company’s vaginal-mesh implants for urinary incontinence. This was later reduced to $34 million to comply with Texas state laws, but the court maintained that Boston Scientific was liable for gross negligence and a faulty product. Boston Scientific currently faces about 23,000 lawsuits over its vaginal-mesh implants in the U.S., Canada and U.K. courts, and even if we assume that the company wins the majority of those cases, we expect significant litigation expenses in the next few quarters. ((Tort Reform Cuts $73M Boston Scientific Vaginal Mesh Verdict to $34M, LawyersandSettlements.com, Oct 10, 2014))

We have a price estimate of $13 for Boston Scientific, which is in line with the current market price.

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See our full analysis for Boston Scientific

Watch Out For the Johnson & Johnson Trial

In the third quarter results reported last month, Boston Scientific announced that its litigation expenses for the quarter were $139 million, taking its total litigation spending to $945 million for the nine month period ending September 2014. In addition to the aforementioned cases, Boston Scientific faces several lawsuits, including those brought by the Internal Revenue Service and rival healthcare major Johnson & Johnson(NYSE: JNJ). Johnson and Johnson filed a $4 billion lawsuit against Boston Scientific in 2006 following the latter’s $27 billion acquisition of heart device company Guidant, alleging “breach of contract and deceitful behavior”. This trial is scheduled to start on November 20, running through the 25th. We will be keeping an eye on its developments.

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