Lawmaker asks SEC to investigate Olympus over failure to disclose outbreak report

A U.S. lawmaker is calling on the Securities and Exchange Commission to investigate Olympus Corp. in response to a Times article that detailed how the company kept selling its scopes despite warnings from a 2012 superbug outbreak in the Netherlands.

In a letter sent Monday, Rep. Ted Lieu (D-Torrance) said regulators should investigate the scope maker for possible fraud and violations of U.S. securities laws in connection with a Dutch investigator’s 2012 report.

Lieu cited an article published Saturday in The Times that detailed the report’s conclusions for the first time publicly. Olympus failed to warn U.S. hospitals about the Netherlands findings, which tied the scopes to dangerous infections.

“That report looks like a smoking gun,” Lieu said in an interview. “Instead of taking responsibility and recalling or changing the design of its scopes, Olympus embarked on a campaign of blaming hospitals. As a result of that, patients have died unnecessarily.”

The Food and Drug Administration has identified 10 outbreaks of drug-resistant infections; seven are linked to Olympus scopes, including one at UCLA’s Ronald Reagan Medical Center that claimed the lives of three patients.

In the 2012 outbreak at a Netherlands hospital, a mechanical engineer hired by Olympus and the hospital found that the scope’s design could allow blood and tissue to become trapped, spreading dangerous bacteria from one patient to another. In his report, the independent expert called on Olympus to conduct a worldwide investigation and recall the scopes if similar problems turned up.

Lieu said Olympus can be held liable for making misleading statements or omitting material facts under securities laws. The lawmaker also asked the SEC to refer Olympus for investigation by authorities in Japan.

“Olympus’ alleged actions in this case were reprehensible and immoral. They are also likely illegal,” Lieu wrote to SEC Chairwoman Mary Jo White.

A spokesman for the SEC declined to comment on the matter.

Olympus didn’t respond to a request for comment Monday. The company has said previously it’s working “closely with the FDA in an effort to understand and address potential root causes” for the infections.

In injury reports to the FDA, the company has often blamed hospitals for not cleaning devices properly in accordance with the manufacturer’s instructions.

The company’s shares trade on the Tokyo stock exchange and on Nasdaq in the U.S., where they fell $1.06, or 2.7%, to $38.15 on Monday.

The Japanese company faces scrutiny on several fronts.

The U.S. Justice Department and a Senate committee have been investigating Olympus and two other manufacturers over their handling of scope-related infections.

At the FDA, Olympus is awaiting government clearance for its TJF-Q180V scope even though it’s been on the market since 2010. The company has said it didn’t believe its redesign warranted additional review at the time, but it’s now seeking that approval at the request of regulators.

Olympus holds 85% of the U.S. market for gastrointestinal scopes.

Duodenoscopes are used in a procedure known as ERCP, or endoscopic retrograde cholangiopancreatography.

During the procedure, the flexible scope is put down a patient’s throat to diagnose and treat problems in the digestive tract such as cancers and blockages in the bile duct. Nearly 700,000 such procedures are performed annually in the U.S.

After The Times reported the UCLA medical center outbreak in February, the FDA issued a nationwide alert to medical providers about the infection risk posed by the scopes.

However, federal regulators have said the duodenoscopes should remain on the market because there isn’t a better alternative for patients who can benefit from their use, particularly by avoiding invasive surgery.

Hospitals and doctors are eager for a redesigned scope that lowers the infection risk. In the meantime, hospitals have beefed up their cleaning procedures.

Some hospitals are holding the scopes in quarantine for as long as 48 hours after disinfecting them to check for bacterial growth. Other institutions, such as UCLA medical center, are sterilizing the scopes with a toxic gas. That ethylene oxide can pose risks to healthcare workers and it’s not widely available across the country.

“This will always be a problem until they fundamentally change that design,” said Marc-Oliver Wright, an infection-control expert at the University of Wisconsin Hospitals and Clinics.

“Contaminated endoscopes cause more healthcare-associated infection outbreaks than any other medical device,” Wright said. “That is very sobering and brings home the seriousness of what we are talking about.”

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