Boston Scientific Corporation
- Company Name
- Boston Scientific Corporation
- Stock Symbol
- Class Period
- February 26, 2015 to April 16, 2019
- Motion Deadline
- June 23, 2019
- Southern District of New York
The complaint charges Boston Scientific and certain of its officers with violations of the Securities Exchange Act of 1934. Boston Scientific develops, manufactures, and markets medical devices for use in various interventional medical specialties worldwide. Within the Company’s Urology and Women’s Health business segment it develops, manufactures and sells devices to treat various urological and gynecological disorders, including transvaginal surgical mesh products indicated for pelvic organ prolapse (“POP”).
The complaint alleges that during the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and operations. Specifically, defendants failed to disclose that Boston Scientific’s surgical mesh products for the transvaginal repair of POP were unsafe and, as a result, Boston Scientific’s continued sales of these products in the United States was unlikely to be sustainable. In addition, the Company had sold vaginal mesh implants containing counterfeit or adulterated resin products imported from China, which would subject the Company to a heightened risk of regulatory scrutiny and/or government investigations. As a result of this information being withheld from the market, Boston Scientific securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $40 per share.
In July 2011, the FDA issued a warning regarding complications related to the use of surgical mesh for the treatment of POP and stress urinary incontinence. By February 24, 2015, over 25,000 product liability claims related to transvaginal surgical mesh had been filed against Boston Scientific. Nevertheless, Boston Scientific continued to deny the allegations concerning its products. On February 24, 2016, Boston Scientific disclosed that a putative class action had been filed against it alleging, inter alia, that it had used counterfeit or adulterated resin products imported from China in its vaginal mesh implants, resulting in personal injury. On May 13, 2018, CBS’s 60 Minutes aired a story highlighting the Company’s alleged use of counterfeit imports in its surgical mesh products. In response, Boston Scientific stated that it had “extensively tested the [plastic] resin to confirm its composition, safety, and performance.”
Finally, despite years of denials by Boston Scientific that its vaginal mesh products were unsafe, on April 16, 2019, the FDA announced that it had “ordered the manufacturers of all remaining surgical mesh products indicated for the transvaginal repair of [POP] . . . to stop selling and distributing their products in the U.S. immediately.” The FDA stated that “the manufacturers, Boston Scientific and Coloplast, have not demonstrated [the] reasonable assurance of safety and effectiveness” required to continue marketing these devices in the United States. According to the director of the FDA’s Center for Devices and Radiological Health: “In order for these mesh devices to stay on the market, we determined that we needed evidence that they worked better than surgery without the use of mesh to repair POP. That evidence was lacking in these premarket applications, and we couldn’t assure women that these devices were safe and effective long term . . . .” On this news, the price of Boston Scientific stock fell $2.90 per share, or more than 7%, over the following two trading sessions, to close at $34.91 per share on April 17, 2019.