Cleveland Clinic Ties to Faulty Device Maker--Death Not Divulged by FDA_WSJ

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Cleveland Clinic Ties to Faulty Device Maker--Death Not Divulged by

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FYI

The latest Wall Street Journal investigative report about pervasive

conflicts of interest at the Cleveland Clinic--whose cardiac center

has " routinely " ranked # 1 by U.S. News and World Report--reveals

that the Clinic operates more as a center for venture capitalists

than academic science. Indeed, the WSJ shows how these conflicts of

interst--and the Clinic's promotion of lethal devices--pose a threat

to public safety.

The consequence of one such relationship was recently uncovered in

documents contained in a previously undisclosed lawsuit by a family

whose relative died after undergoing surgery using a device in which

Cleveland Clinic, its CEO, and other surgeons had financial stakes.

The case was settled and the device manufacturer, CardioVention, has

since gone out of business--but the intricate financial relationship

continue as before.

According the the WSJ, the (then) CEO of CardioVention, Afzal said he

approached Dr. Cosgrove in the late 1990s about the CardioVention

technology. " He said the surgeon was enthusiastic and helped him

recruit other clinic staffers as consultants. Dr. Cosgrove also

introduced the company to Canaan Partners, Mr. Afzal says. The

venture-capital fund invested $3.4 million in the company in 2001 and

an unspecified amount in 1999, according to two services that track

venture investing. The Cleveland Clinic also decided to invest about

$2 million in CardioVention, Mr. Afzal says. The clinic and Canaan

Partners " like to do deals together, " he added. "

" The Clinic and Mr. Afzal say Mr. Zuercher's death was reported to

the U.S. Food and Drug Administration, as is required of companies

and hospitals.

The incident doesn't appear in the FDA's public database of

complications related to medical devices, and the agency said last

night it was trying to find out why. "

Contact: Vera Hassner Sharav

212-595-8974

veracare@...

Cleveland Clinic Had Ties to Maker Of Faulted Device

By DAVID ARMSTRONG

Staff Reporter of THE WALL STREET JOURNAL

December 16, 2005; Page A3

The Cleveland Clinic, its chief executive and some of its surgeons

had financial interests in a company whose heart-lung machine was

blamed in a lawsuit for the death of a patient at the hospital.

In April 2002, the clinic became the first U.S. hospital to use the

device, made by CardioVention Inc., of Santa Clara, Calif., during a

heart surgery. The patient who died underwent heart surgery using the

company's machine the next month.

A subsequent lawsuit filed against CardioVention and the clinic by

the family of the patient who died, 79-year-old Lawrence Zuercher of

Wooster, Ohio, alleged the machine " posed a serious health risk to

patients. " In the case of Mr. Zuercher, the lawsuit alleged that air

entered the CardioVention system and traveled into Mr. Zuercher's

brain arteries, causing multiple embolisms that led to his death. The

lawsuit, which hasn't previously surfaced, was filed in state court

in Cleveland and was settled last year under confidential terms.

A Clinic spokeswoman said it is likely patients weren't told of the

financial relationship between the company and the hospital and its

doctors. The clinic stopped using the machine after the death, and

CardioVention ceased operations in 2003.

Delos " Toby " Cosgrove, a heart surgeon who is now the clinic's chief

executive officer, praised the new machine after the first surgery,

calling it " a significant advance in cardiac care. " He had earlier

said in a separate press release that results of a small study of the

machine conducted by clinic doctors " look very encouraging and

exceeded our expectations " and could lead to " major benefits to the

patient and the surgeon over a wide-range of cardiac procedures. "

The press releases didn't disclose that Dr. Cosgrove and the clinic

had a financial interest in CardioVention. Dr. Cosgrove was then, and

remains, an investor in Canaan Partners, a $2 billion Connecticut

venture-capital fund that backed CardioVention and other companies

doing research at the Cleveland Clinic. According to Afzal,

the former chief executive of CardioVention, the clinic invested $2

million in CardioVention, and several clinic surgeons, including Dr.

Cosgrove, were also company consultants and received stock options

from the company.

The relationship between CardioVention and the clinic and its CEO and

surgeons is part of a broader pattern of investing and consulting

activity at the famed hospital that is coming under closer review.

Earlier this week, Dr. Cosgrove said the clinic will commission an

independent review of its " organizational conflicts of interest "

following a page-one story in The Wall Street Journal about his and

the clinic's medical investments.

Dr. Cosgrove wasn't available for comment, a spokeswoman said.

The nonprofit clinic says it has recently tightened its conflict-of-

interest rules and also revamped its policies to tell patients who

become research subjects when the hospital or its doctors have a

financial interest in the companies whose products are being studied.

Dr. Cosgrove earlier this year resigned from the board of one medical-

equipment company and says he withdrew from another venture-capital

fund investing in companies doing research at the clinic. Dr.

Cosgrove said he made those moves to avoid the appearance of a

conflict.

Members of the clinic's conflict-of-interest committee have been

concerned that the investments raise issues of whether financial gain

is being placed ahead of patients' health interests.

The Clinic and Mr. Afzal say Mr. Zuercher's death was reported to the

U.S. Food and Drug Administration, as is required of companies and

hospitals. The incident doesn't appear in the FDA's public database

of complications related to medical devices, and the agency said last

night it was trying to find out why.

Mr. Afzal said he approached Dr. Cosgrove in the late 1990s about the

CardioVention technology. He said the surgeon was enthusiastic and

helped him recruit other clinic staffers as consultants. Dr. Cosgrove

also introduced the company to Canaan Partners, Mr. Afzal says. The

venture-capital fund invested $3.4 million in the company in 2001 and

an unspecified amount in 1999, according to two services that track

venture investing. The Cleveland Clinic also decided to invest about

$2 million in CardioVention, Mr. Afzal says. The clinic and Canaan

Partners " like to do deals together, " he added.

The Clinic, perennially ranked as the best heart center in the

country by U.S. News and World Report, became an important advocate

for CardioVention and was often mentioned in company promotional

material. But CardioVention failed to prosper and was forced to close

its doors.

Dr. Cosgrove, in an earlier interview, described Canaan as a large,

multibillion-dollar venture fund and said " my ability to influence

that is small. " He declines to say how much he has invested in Canaan

but adds he was an original investor in the fund 18 years ago and has

continuously reinvested any profit he has received back into the

partnership. Harry Rein, a clinic trustee who started Canaan, also

continues to be an investor in the fund.

Guy Chisholm, the chairman of the clinic's conflict-of-interest

committee, has previously said Dr. Cosgrove's financial interest in

the partnership hasn't been a concern because he doesn't have any

influence on Canaan investment decisions. Mr. Chisholm wasn't

available to comment, according to the Clinic spokeswoman.

Canaan shares the same street address in Rowayton, Conn., as

Foundation Medical Partners, or FMP, a venture-capital fund in which

the clinic is the major investor. Canaan and FMP invest in many of

the same medical companies, including several doing patient research

at the clinic. Canaan is also an investor in FMP, according to Mr.

Rein.

Mr. Rein founded Canaan and was its managing partner until 2002, when

he went to work for FMP, where he eventually became a general

partner. He was appointed to the clinic board of trustees last

January, about two months after Dr. Cosgrove became chief executive,

and serves on the board's powerful executive committee.

Dr. Cosgrove was one of the original general partners of FMP and also

an investor in that fund. He severed those ties at the end of

October, according to the clinic.

Canaan is an investor in other companies for which the clinic has

conducted, or is conducting, clinical-research trials. These include

heart-device maker Viacor Inc., of Wilmington, Mass., which lists

clinic heart surgeon Marc Gillinov among its founders. A clinic

spokeswoman says the hospital is currently conducting a 10-patient

Viacor study. Canaan invested $3.5 million in Viacor in August 2002

and another $2.5 million at the end of last year. Canaan currently

lists Viacor as a portfolio company on its Web site.

Write to Armstrong at david.armstrong@...

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