Leaky Seals Blamed for Cochlear Nucleus 5 Implant Failures

[Guest guest]

The Sydney Morning Herald - October 19, 2011

BobNote: If confirmed, the " leaky seals " , more technically " implantable

feedthrus " would be the same defect as in AB's 2006 recall, often dubbed the

" Vendor B " failure. Implantable feedthru: http://tinyurl.com/3kvzoon

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Cochlear leaky seals cost $150m

Belinda Tasker

Cochlear recalled it's Nucleus C1500 last month, it's biggest selling

implant.

LEAKY seals are being blamed for causing Cochlear's latest bionic ear device

to break down and spark a massive recall that could cost the company up to

$150 million.

Cochlear stunned shareholders and customers in September when it issued a

global recall of its biggest-selling hearing implant, the Nucleus CI500,

after several stopped working.

Shareholders at Cochlear's annual meeting in Sydney on Tuesday heard that,

while investigations were ongoing, experts believed there was a problem with

moisture leaking into the devices through the airtight seals.

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Chief executive said the cost of collecting all the CI500

devices shipped from Cochlear's Australian manufacturing plant would be

between $130 million and $150 million, a hit that would be taken in the

first half of this financial year.

He said that out of the 30,000 or so devices that had been implanted in

patients, dozens had been returned to Cochlear for tests that had revealed

problems with the hermetic seals.

Breaks in the airtight seals were believed to have allowed moisture to seep

inside, causing key electrical components known as diodes to stop working

and shut down the implants.

''We have a lot of work still to do to understand exactly what we need to do

to make that system more robust than it has been and we don't know exactly

when the CI500 series will return back to the market,'' Dr said.

While shareholders at the meeting applauded the company's handling of the

recall, the sharemarket took a different view.

Cochlear shares closed down 96¢, or 1.8 per cent, at $53.54 after early

sales as low as $51.52.

Some shareholders at the meeting expressed concern about the damage

inflicted on Cochlear's reputation as a reliable supplier of hearing

implants, but Dr , who admitted to having lost sleep over the recall,

said there had been ''minimal loss of market share''.

All patients scheduled for surgery to have CI500 devices implanted had been

offered an older model, the Nucleus Freedom.

As a result, Cochlear is stepping up production of these devices to keep

pace with demand.

Dr said he did not believe Cochlear would have to widen its recall

to include CI500 devices that had already been implanted but were so far

problem free.

''The failure rate is very low,'' he told reporters.

''We are still seeing some failures, but the total failure is around 1 per

cent [of the total number of devices produced].''

Dr said patients needing to have a replacement Freedom device fitted

would receive the implant free of charge.

They were expected to have most of their costs covered by their country's

healthcare systems.