Soon after doctors at UCLA’s Ronald Reagan Medical Center traced deadly infections to tainted medical scopes last year, they pressed the device maker to lend them replacements.
But Olympus Corp. refused. Instead, the Tokyo company offered to sell UCLA 35 new scopes for $1.2 million – a 28% 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. “Supplies are already low, where demand is high with all academic institutions expanding their inventories,” Mr. Hernandez wrote to the medical center.
The emails show how Olympus continued to push sales even as the devices it previously sold to UCLA and other medical institutions were linked to illnesses and deaths.
The messages also mark a sharp departure from what had been a close, mutually beneficial relationship between the giant device manufacturer and one of the country’s most prestigious academic medical centers.
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.
Previously, the emails show, UCLA and Olympus collaborated closely: At least one top doctor at UCLA asked for money from the company to hold a medical conference. The company’s employees were allowed to observe medical procedures.
On Jan. 7, 2015, 3 weeks before the outbreak at UCLA was confirmed, Dr. Raman Muthusamy, the director of endoscopy at UCLA, asked Olympus to contribute more money for an upcoming medical conference at a Beverly Hills hotel: “Quick question: Who do I speak to about sponsorship from Olympus to the Mellinkoff symposium,” Dr. Muthusamy wrote to Mr. Hernandez and another Olympus employee. “Last year, Olympus gave $18,000 – this year only $10K. Given our increasing collaborations thought it should at least stay the same.”
Later, on Jan. 23, 2015, Olympus salesman Richard Ramirez sent an email thanking a UCLA doctor for allowing him and another company representative “to sit in on a few of your cases yesterday.”
At the doctor’s request, Mr. Ramirez provided some “special contracted pricing information” on scope-related accessories.
The outbreak was confirmed Jan. 28, and the solicitousness appeared to end on both sides. Rebuffed in their request for replacement scopes, UCLA officials struggled to grasp Olympus’ sharp increase in price.
“Last February [2014] when we were acquiring the 7 new TJF‐Q180V scopes we have today, the price was $26,200.98 and our new quote is $33,470.15 [per] scope which is an increase of 28 percent,” Randi Hissom, a business operations director at UCLA Health System, wrote to Mr. Hernandez in a Feb. 10, 2015, email.
Mr. Hernandez advised her that the university could earn a discount if it ordered more scopes. He also warned that “with the number of scopes being requested, it is possible that we could go on a back order.”
On Feb. 23, 4 days after the Food and Drug Administration issued a safety alert about the scopes to all U.S. hospitals, Mr. Hernandez chastised two UCLA doctors for failing to purchase the amount of equipment specified in their contract with Olympus.
The company’s salespeople “continued to run into a wall with acquiring orders … I would like to arrange a meeting with you soon to further review and discuss the compliance of the contract,” Mr. Hernandez wrote in a Feb. 23, 2015, email.
The sudden demand for gastrointestinal scopes triggered an unexpected windfall for Olympus, the leading supplier in the United States and worldwide.
Olympus executives boasted in February about the company’s “record-breaking” performance, driven by a 13% increase in scope sales for the 9 months that ended Dec. 31. The company’s profit soared 34% to $352 million for the same period.
Rep. Ted Lieu (D-Calif.) 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.