THE PRODUCT LIABILITY MORASS : Complications Set In : Big Suppliers Pulling Out of Medical Market
Product liability concerns are driving major suppliers of silicone and other polymers out of the medical implant business, forcing many Southern California implant makers to swallow huge price increases and scramble for alternative supplies.
Companies that make catheters, heart valves and the like say silicone prices recently have skyrocketed to $100 a pound from $6 a pound. “This is the largest increase in material cost per pound that I’ve seen in 35 years,” says Jack Brown, president of Gish Biomedical, an Irvine maker of intravenous catheters primarily used for drug infusion.
Many of the large suppliers--such as DuPont, Dow Chemical and Dow Corning Corp.--have decided to stop making plastics for medical implants because of mounting lawsuits from people who claim they’ve been harmed by products made from the manufacturers’ materials.
Enormous settlements also have forced the suppliers’ insurers to withdraw from the marketplace.
Dow Corning on Thursday warned that it may have to file for bankruptcy protection because of its potentially enormous legal liability from women who claimed they were harmed by breast implants made from its silicone products.
As suppliers continue to dwindle, Gish Biomedical and other local manufacturers suddenly face the daunting prospect of passing along price increases in the cost-conscious health-care industry.
Gish has only about a month before it runs out of its silicone supply and must start using pricier plastic in its catheters, says Brown. Once that happens, he’d like to cover his higher costs by raising the price of his products by about $7.60 each to $47, an increase of 19%.
But he accepts that he will have to eat at least some of the cost increase. “We are in a very tight margin area,” he says.
For years, medical product makers have used small amounts of polymers--such as silicone, polyester and polyurethane--to make a variety of devices, including artificial joints, pacemakers, defibrillators, grafts and shunts.
When people who believed they’d been harmed by the devices were looking for parties to blame, they sued not only the manufacturers but also the giant suppliers, because of their financial resources.
DuPont, for instance, supplied its trademarked Teflon fluoropolymer resin to Houston-based Vitek Inc., a company that made an implant for people with faulty jaw joints, says Anne McIntosh, a DuPont spokeswoman.
After Vitek went bankrupt in 1990, DuPont faced 650 lawsuits by 1,500 implant recipients in 42 states who claimed the joints were breaking down, McIntosh says. The Health Industry Manufacturers Assn. in Washington says DuPont has spent about $8 million a year to defend itself, though McIntosh would not confirm that figure.
But given the minuscule amount of Teflon that went into each joint--less than 5 cents’ worth--DuPont saw no reason to stay in a business that had become so costly to sustain.
“It just is not worth it,” says McIntosh.
The supply problem has left many Southern California manufacturers struggling to find alternative materials for their implants.
Medtronic Heart Valve Inc., an Irvine unit of Minneapolis-based Medtronic Inc., used to buy DuPont’s Teflon and Dacron products for making a covering used to attach its pig-tissue heart valves in cardiac patients’ chests. Now that DuPont has withdrawn from the implant market, Medtronic Heart has been forced to pull about 10 researchers away from its other product development efforts to search instead for alternative materials, says Walter Cuevas, vice president of operations.
Though he expects the company will find an alternative before it runs out of its DuPont supplies, “it’s not a slam dunk,” he says. Researchers must test new materials and then get clearance from the U.S. Food and Drug Administration to use them in its valves.
Other companies worry that the dwindling number of suppliers will affect future costs of their materials.
Dennis Condon, president of a Mentor Corp. division in Santa Barbara that makes breast implants and tissue expanders, says the company used to have plenty of suppliers to pick from, but now has only two. “No new manufacturers are coming into the market, so that will allow current manufacturers to raise prices as they will,” he says.
Still, some companies see the supply problem as an opportunity to build business.
Luther Medical Products Inc. in Tustin, which makes only a limited amount of silicone-based catheters for intravenous apparatus, is pushing ahead instead with efforts to convert customers to its main line of catheters, which are made from polyurethane.
“There are many different sources and grades of polyurethane” available, says David Rollo, Luther’s president and chief executive, even though Dow Chemical has quit selling polyurethane to the device industry.
Meanwhile, the last remaining suppliers of silicone also see opportunities to expand sales to the implant industry.
For instance, in the last two years, while large suppliers have been fleeing the industry, NuSil Technology, a small, privately held silicone supplier in Carpinteria, has lined up 100 new customers from the biomedical industry, says Richard Compton, its president and chief executive. Annual sales to that market jumped by $3 million to $8 million.
Though NuSil has been named in 4,300 product-liability lawsuits, Compton says the company isn’t at fault, its name gets routinely dropped from lawsuits in court and he isn’t terribly worried about litigation.
With sales of about $20 million and no product liability insurance, NuSil can risk staying in the business precisely because it is so small, Compton says.
“Ultimately,” he says, “we can’t pay much, because we don’t have much.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Shortage Impact
Silicone and various plastics are used in a multitude of medical devices ranging from sutures to pacemakers. An overview of medical uses: * Cardiology and thoracic surgery: Angioplasty balloon catheters, pacemakers, mechanical valves, cardiac defibrillators, grafts, blood filters and heart-lung oxygenators used during open-heart surgery * Reconstructive surgery: Hand surgery, breast reconstruction, cheek and chin implants for accident victims * Ophthalmology: Corneal implants, rigid gas-permeable contact lenses, repair of detached retinas * Neurology: Shunts used to drain fluid from the brains of hydrocephalic infants and brain-injured accident victims * Urology: Prostate, urinary incontinence and kidney stone surgery * Orthopedics: Prosthetic joints, such as hip replacements
Source: Biomaterials Availability Coalition; Researched by JANICE L. JONES / Los Angeles Times
The Lawsuits
A sampling of product liability lawsuits and their outcomes: * Asbestos: Johns-Manville Corp. was one of 18 asbestos companies forced into bankruptcy protection by lawsuits. Manville placed more than $2.5 billion in a trust fund for claimants. The company filed for Chapter 11 in 1982. * Dalkon shield: A.H. Robins Co. filed for Chapter 11 bankruptcy protection in 1985 in the face of 325,000 lawsuits. The company--bought out by American Home Products Corp. that year--set up a $2.5-billion trust fund for claimants. * Agent Orange: To avoid bankruptcy, makers of Agent Orange, a chemical used during the Vietnam War to destroy jungle foliage, established a fund of $184 million as part of a settlement agreement in 1985. The makers included Dow Chemical and Uniroyal. * Copper 7 IUD: G.D. Searle & Co. settled hundreds of cases alleging injury from the intrauterine device, at an average of $10,000 to $20,000 each. * Bendectin: Merrell Dow faces thousands of lawsuits claiming that the drug, taken by pregnant women to ward off morning sickness, caused birth defects, but it has yet to pay a claim.
Source: Times reports. Researched by JENNIFER OLDHAM / Los Angeles Times
