Medtronic (NYSE:MDT) said today that it agreed to pay $22 million to settle an estimated 950 lawsuits filed over its controversial Infuse bone graft product, admitting to no wrongdoing in what it termed a "compromise" of disputed claims.
Medtronic said it stands behind Infuse, saying it’s been used in more than 1 million patients, and pledged to "vigorously defend the product and company actions in the remaining cases." There are about 750 lawsuits pending in state and federal courts, involving about 1,200 patients, according to a press release.
The 1st Infuse lawsuit slated for trial ended in Medtronic’s favor when a California judge granted its motion for summary judgment, according to the release. More lawsuits could be in store, with law firms telling Medtronic they may bring "a large number" of similar suits for roughly 2,600 more potential claimants, according to the release.
Medtronic said it expects to take a $120 million to $140 million charge during its fiscal 4th quarter, which closed in April, accounting for the $22 million deal announced today plus enough to cover the estimated settlement of the remaining 3,800 claims. The Infuse lawsuits generally accuse Medtronic of illegally marketing the product for uses not approved by the FDA. A years-long federal investigation into Medtronic’s practices closed in May 2012 without finding evidence of wrongdoing.
The controversy over the Infuse product, a bone morphogenetic protein that stimulates bone growth, erupted during the summer of 2011. The Spine Journal dedicated its entire June issue (PDF) that year to problems with the BMP-2 bone-growth protein in off-label procedures and cited problems with some of the Medtronic-sponsored research behind Infuse. A shareholder lawsuit accused Medtronic and its leadership of misleading investors about its prospects for Infuse, and the ensuing clamor spurred federal investigations into allegations that Medtronic’s paid consultants may have concealed Infuse’s risks. In the fall of 2012 a U.S. Senate report blasted Medtronic over its handling of the Infuse product, saying the company deliberately obscured evidence of adverse events and promoted off-label use of the product and paid out millions to the doctors who co-wrote positive studies, charges that the company "vigorously" denied.
