Updated from 3:30 p.m. EDTGuidant ( GDT) said one of the company's divisions reached an agreement with the Justice Department to plead guilty to 10 felony counts. The news, which broke shortly before a trading halt could be imposed, sent the company's shares reeling. Among the counts are nine for shipping misbranded products. The other count centers on a former employee who made false statements to the government. The felony counts were connected with a device Guidant's EndoVascular Technologies unit makes for aortic aneurysms called the Ancure. Under the terms of the agreement, EndoVascular agreed to pay $43.4 million and an additional $49 million civil settlement to the government. The expenses associated with the settlement were recorded in prior periods, Guidant said. Shares of Guidant plummeted in trading both on and off the New York Stock Exchange before a news halt was imposed after midday. The stock reopened lower and ended the session at $40.56, down $2.67, or 6.2%. While halted, the stock had been indicated as low as $37.
Recalled and ReintroducedEndoVascular voluntarily recalled the Ancure in March 2001, and Guidant said it implemented "thorough corrective actions to address certain regulatory compliance deficiencies." The product was reintroduced following Food and Drug Administration approval in August 2001. Guidant said the issues outlined in the plea agreement pertain only to the delivery system of the Ancure device prior to the recall, and don't relate to the Ancure graft once it has been implanted. The company said that no patients with the Ancure implant are at risk. More than 18,000 people worldwide have received the Ancure system. Aortic aneurysms are potentially life-threatening conditions commonly associated with people with heart disease. The Ancure is inserted into the patient's body during a surgical procedure.