Olympus Tainted Scope Scandal Grows

Dr. David Feinberg, president, UCLA Health System, right, takes questions from the media outside the Ronald Reagan UCLA Medical Center in Los Angeles Thursday, Feb. 19, 2015. Health officials at the news conference sought to reassure the public that a "superbug" bacterial outbreak at the local hospital doesn't pose any threat to public health. A day earlier, UCLA officials said nearly 180 patients at Ronald Reagan UCLA Medical Center had been exposed to antibiotic-resistant bacteria called CRE. (AP Photo/Damian Dovarganes)

According to Kaiser Health News, Olympus Corp’s troubles are mounting as evidence of scandal related to tainted medical scopes and price gouging last year grows. This on top of the recent kickback investigations the company ended with a record $646-million settlement.

Not only are federal prosecutors are investigating Olympus and two other device manufacturers — Pentax and Fujifilm — over their role in the outbreaks, but emails on Kaiser Health News’ site show how Olympus raised prices and continued to push sales even as the devices it previously sold to UCLA and other medical institutions were linked to illnesses and deaths.

Sharp price increase in medical device scopes after infections

When doctors at UCLA’s Ronald Reagan Medical Center traced deadly infections to tainted medical scopes last year, they pressed Olympus to lend them replacements, but they refused. Instead, the Tokyo company offered to sell UCLA 35 new scopes for $1.2 million — a 28 percent increase in price from what it charged the university just months earlier, according to university emails obtained from a public-records request.

Olympus sales manager Vincent Hernandez told UCLA that the company’s previous discounts no longer applied due to high demand and limited supply.

Once the outbreak was confirmed in late January 2015, UCLA urgently needed replacement scopes to safely perform gastrointestinal procedures, in which the duodenoscopes were snaked down a patient’s throat.

In response to the outbreaks and government warnings last year, many medical centers rushed to adopt new cleaning measures. That left them with fewer of the reusable scopes on hand, so they felt compelled to buy more.

Ultimately, three UCLA patients died and five more were sickened from October 2014 to January 2015 by drug-resistant bacteria trapped inside the Olympus scopes. Only in January of this year did the company agree to recall its duodenoscopes and repair them over the coming months to cut the risk of bacteria passing to the next patient.

The sudden demand for gastrointestinal scopes triggered an unexpected windfall for Olympus, the leading supplier in the U.S. and worldwide.

Olympus executives boasted last month about the company’s “record-breaking” performance, driven by a 13 percent increase in scope sales for the nine months that ended Dec. 31. The company’s profit soared 34 percent to $352 million for the same period.

Rep. Ted Lieu (D-Torrance) said the emails with UCLA show that Olympus sought to profit from a crisis that it created. In a letter to the company last year, he asked Olympus to donate scopes to hospitals or forgo profits from the sale of additional devices. Olympus spokesman Mark Miller attributed Olympus’ recent financial gains to the overall strength of the business.

“Olympus launched several new products for medical and surgical specialties during the last 12 months that were all well-received by the market and contribute to our results,” he said.

UCLA continues to use Olympus equipment. But after the company’s response to the outbreak it eventually turned to a rival manufacturer, Pentax Medical, for more scopes.

Kickback practices already caused problems for Olympus

Olympus recently ran afoul of federal law in regard to its sales practices companywide. This month, the device manufacturer agreed to pay a record $646-million settlement to end federal government investigations into illegal kickbacks and bribery in the U.S. and Latin America.

The company had courted prominent doctors and hospitals for years with millions of dollars of free equipment, cash payments, trips and entertainment such as winery tours and balloon rides in violation of U.S. law, according to federal prosecutors. No specific institutions or hospitals were named in the federal criminal complaint filed March 1, and the practices were not confined to scopes.

Meanwhile, the deterioration in the company’s relationship with UCLA continues. Several UCLA patients or their families have sued Olympus over the infections there. Olympus responded to one of the first wrongful death cases by blaming UCLA for the outbreak.

In a Feb. 1 filing in Los Angeles federal court, Olympus said UCLA failed to clean its scopes according to the company’s protocols and to obtain available training from Olympus.

In interviews, UCLA doctors have said Olympus employees didn’t raise those concerns when they visited the hospital after the outbreak was discovered. The FDA has said infections occurred even when hospitals followed the manufacturer’s instructions.

UCLA and Olympus said they won’t comment on the pending litigation.

A recent Senate investigation linked Olympus to 19 superbug outbreaks in the U.S. and Europe from 2012 to 2015, including at UCLA and Cedars-Sinai Medical Center. The report also criticized the company for failing to alert U.S. regulators and hospitals sooner about the risk of infection from its scope design.

Reporting for Kaiser Health News & the LA Times by Chad Terhune and Melody Petersen

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