St. Jude Medical's Little Canada headquarters
The company previously said it expected to receive such a letter from regulators following the inspection of a manufacturing facility in California.
January 15, 2013
St. Jude Medical, Inc., has received a warning letter from the U.S. Food and Drug Administration (FDA) pertaining to processes at a California manufacturing facility.
The letter comes as no surprise: CEO Dan Starks said in October during the company’s third-quarter earnings call that he expected to receive a warning letter from the FDA following a routine inspection of the company’s manufacturing plant in Sylmar, California. At the time, Starks did not disclose why he believed such a warning would be issued.
About a week later, Little Canada-based St. Jude confirmed that it had received a “Form 483” from regulators—a document that notifies companies of “objectionable conditions” observed during inspections. Some of the regulators’ concerns related to St. Jude’s risk analysis of the design process for its Durata brand of leads, which connect defibrillators to the heart. Regulators also said St. Jude failed to adhere to its own policies regarding the testing of its Durata products.
In a November 7 response to the Form 483, which was made public last week, St. Jude vowed to make a number of improvements to address regulators’ concerns.
In the warning letter, which was made public Tuesday by the FDA, regulators said that they found some of St. Jude’s responses to be inadequate. For example, the FDA said St. Jude did not provide evidence that it had implemented certain corrective actions. The FDA also said that St. Jude had “misbranded” its Durata lead, in that it failed to report to the FDA within 30 days after it received or became aware of information "that reasonably suggests that a device that your firm markets malfunctioned and that this device or a similar device that your firm markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur."
The FDA said St. Jude must take “prompt action” to correct violations, and failure to do so may result in regulatory actions such as “seizure, injunction, and civil money penalties.”
In a Monday filing with the U.S. Securities and Exchange Commission, St. Jude said that the FDA warning letter did not identify specific concerns regarding the performance of its Durata leads or any other products, and that the company will continue making and shipping products from its Sylmar facility as it works to resolve the issues that regulators brought forth.
Under the terms of the warning letter, however, the FDA will not give St. Jude export certificates or grant pre-market approval for devices that are “reasonably related” to problems with the company’s processes as identified by regulators, until those problems are addressed.
St. Jude said that it “takes this matter seriously and has already begun to respond to the FDA’s requests.” The company also said it expects to resolve the FDA’s concerns “without a material impact” on its financial results.
St. Jude’s defibrillator leads have come under scrutiny in recent years: The company recalled its Riata line of leads in 2011 amid reports of their failure. The company then launched its Durata line, claiming that the new leads were designed to prevent the problems seen in the older ones. In November, when news surfaced that the FDA had raised concerns over processes related to Durata, the company’s stock price dropped more than 12 percent to $31.37.
On Monday, its stock closed up about 1.5 percent at $38.85—but it was trading down about 1 percent at $38.45 on Tuesday, after the FDA made the warning letter public.
St. Jude is Minnesota’s 15th-largest public company based on revenue, which totaled $5.6 billion in its most recent fiscal year.