J&J Receives U.S. Subpoena Over Bile Duct Stent Sales

Johnson & Johnson said it was subpoenaed by the US Justice Department in connection with its sales of bile duct stents, broadening a probe that has touched competitors Abbott Laboratories and Boston Scientific Corp.

The US Attorney’s Office in Massachusetts requested the information in June, the New Brunswick, NJ-based J&J said in a filing with the US Securities and Exchange Commission. That followed reports from Abbott and Boston Scientific, which also produce the stents, that they had been contacted by investigators.

The devices, also called biliary stents, are plastic or metal tubes designed to treat obstructions to the liver. They had a US market of about $40 million in 2007 for approved uses, according to Millennium Research Group, a market research firm in Toronto, Canada. In February, Boston Scientific said the Justice Department was probing whether manufacturers were promoting the devices for unapproved uses, among them the repair of weakened blood vessels.

Even with sales for unapproved uses of the stent, “it’s just a really, really small part of Abbott’s and J&J’s business,” Linda Bannister, an analyst with Edward Jones & Co. in Des Peres, MO, said in a telephone interview. “From an investor’s standpoint, it really hasn’t made it to our radar screen.”

Little Impact

Abbott said in an SEC filing last month that the government is investigating whether the company violated civil or criminal laws in connection with government Medicare and Medicaid reimbursements paid to third parties. The device maker said that it doesn’t expect a “material adverse effect” on finances.

Boston Scientific, based in Natick, MA, and Abbott, of Abbott Park, IL, have said they are cooperating.

J&J is “cooperating and responding to the subpoena,” said Carol Goodrich, a spokeswoman for Cordis, the unit of J&J that makes stents, in a telephone interview. She declined to comment further.

Christina DiIorio-Sterling, a spokeswoman for US Attorney Michael J. Sullivan in Massachusetts, said she could neither confirm nor deny any investigation.

The US Food and Drug Administration warned about illegal stent sales in March 2007 when it met with companies that make the devices. Other manufacturers include Minneapolis-based Medtronic Inc. and ev3 Inc. of Plymouth, MN.

`Nominal Portion’

Cordis’ $3.43 billion in revenue accounted for 5.6 percent of J&J’s sales last year. Goodrich declined to say how many biliary stents the division sells. An Abbott spokesman said last month that such stents represent a “nominal portion” of the company’s $1.67 billion in sales in 2007 for blood-vessel devices.

While biliary stents are approved to treat obstructions in tubes that carry bile, a digestive fluid, to the intestines, they are more often inserted to prop open blood vessels in the legs, the New York Times reported in January. Reports to the FDA indicated that unapproved uses may be injuring patients, the newspaper said.

Once a medical product is approved by regulators, doctors are free to use it to treat any ailment. FDA guidelines say drug companies and device makers may not promote their products for unapproved purposes or patient categories, such as adult medicines for children.

SOURCE: Bloomberg.com