Since its U.S. launch in 2002, a unique product developed by Medtronic to promote bone growth has been used to mend the ailing backs of thousands of patients and has reaped millions for the Fridley med-tech giant -- a true blockbuster.
But on Tuesday, Medtronic revealed that the U.S. Justice Department is investigating how the product, called Infuse, is being used "off-label" in ways not vetted for safety and effectiveness by the Food and Drug Administration (FDA).
The company said it is complying with a Justice Department subpoena but declined to comment further or provide a copy of the document.
The subpoena is the latest of several inquiries to swirl around Medtronic and certain marketing practices in its high-flying spine business. At issue are Medtronic's payments to influential surgeons who are in a position to use and promote its products. Medtronic has denied claims in two federal whistle-blower lawsuits and says its payments to doctors are legal and proper ways to compensate physicians for their time and expertise.
Promotion at issue
Off-label use of Infuse prompted a 2007 whistle-blower lawsuit against a number of the nation's top spine surgeons, including nine in the Twin Cities, claiming that Medtronic promoted unapproved use of the product by paying doctors thousands of dollars in kickbacks. The doctors have all denied the charges.
Infuse, part of a successful spinal business that now represents 22 percent of Medtronic's revenue, was initially approved for use in the lower back. But many doctors have used it in the neck, occasionally with disastrous results.
In July, the FDA warned doctors that it has received 38 reports of complications in the past four years associated with the use of Infuse to repair the cervical spine.
It is unclear whether this kind of risky treatment has led to any deaths. The FDA notice said the bone-growing product could cause swelling of the neck and throat, causing difficulty in swallowing, breathing and speaking and often requiring emergency care.
It is not illegal or even unusual for doctors to use a drug or medical device off-label. Some industry sources estimate that 80 to 95 percent of Infuse is used this way. However, it is illegal for a company to promote off-label uses.
"We take very seriously the whole notion of appropriate promotion for our products,'' Medtronic CEO Bill Hawkins said Tuesday during a call with Wall Street analysts.
Medtronic does not break out sales figures for Infuse, but one industry analyst said sales of the product approached the $800 million mark last year.
Hawkins said the whistle-blower lawsuit and FDA warning, as well as "negative press coverage," and pushback from insurers who pay for medical devices, likely piqued the Justice Department's interest.
The Justice Department is "more than likely looking for market practices that are illegal, which means in some way, the company has been promoting off-label use of Infuse," said Timothy Nelson, an analyst with FAF Advisors in Minneapolis.
The subpoena is likely to dampen sales of Infuse, analysts said. "Anytime word gets out about a subpoena from the Justice Department, doctors get very nervous,'' said Stan Mendenhall, editor of Orthopedic Network News, an industry newsletter.
Spine division scrutiny
This certainly isn't the first time Medtronic has received scrutiny from government investigators. One pending inquiry involves the marketing of cardiac devices by Medtronic and its competitors.
Much of the government's attention in recent years, however, has centered on Medtronic's Memphis-based spine division, which posted $3 billion in sales last year and has proven to be the most successful, albeit controversial, acquisition in the company's history.
Sen. Charles Grassley, R-Iowa, is investigating the company's relationship with 15 of the country's top spine surgeons, including Dr. David Polly at the University of Minnesota.
The 2007 whistle-blower lawsuit over the use of Infuse also names Polly, as well as Drs. Timothy Garvey, Francis Denis, Joseph Perra, Manuel Pinto, James Schwender, Ensor Transfeldt and Amir Mehbod at Minneapolis-based Twin Cities Spine Center, along with Twin Cities neurologist Stanley Skinner. It is pending in federal court in Boston.
The doctors' Minneapolis attorney, John Lundquist, denied any wrongdoing. "The consulting and royalty agreements have no relation to the promotion of off-label uses of Medtronic products,'' Lundquist said. "All payments that are made to the physicians are carefully linked to fair market value of services provided and intellectual property of the surgeons."
In 2006, Medtronic paid $40 million in a settlement with the Justice Department to resolve another whistle-blower lawsuit, which was filed by one of the spine division's own lawyers. The suit claimed the company used sham royalty and consulting agreements to buy doctors' loyalty, and contained tawdry allegations that doctors were entertained at a notorious Memphis strip club and took lavish trips to Alaska and New Orleans. Medtronic admitted no wrongdoing.
Janet Moore • 612-673-7752