Infuse lawsuit: Judge orders Medtronic to produce safety data on bone growth protein

Infuse lawsuit: Judge orders Medtronic to produce safety data on bone growth protein

A federal judge ordered Medtronic Inc. (NYSE:MDT) to produce documents detailing the safety record of its controversial Infuse bone growth protein.

The shareholders’ lawsuit accuses the firm of artificially inflating its stock price with an off-label promotion scheme for a bone morphogenetic protein used in the Infuse device. Medtronic is weathering a spate of lawsuits over the product after a Spine Journalissue this summer revealed serious concerns about its safety.

In June, the journal took the unprecedented step of devoting an entire issue to re-examining company-sponsored studies of Infuse. Its investigation found problems with 13 studies by MDT-sponsored physicians, all of which downplayed or omitted the rates of adverse events associated with the protein, known as recombinant human bone morphogenetic protein-2.

Although the furor ignited by the study eventually died down on Wall Street (where analysts warned of a possible 3-cent-per-share dip in overall profits), Medtronic and Infuse are under intense scrutiny elsewhere. The U.S. Justice Dept. and theU.S. Senate are each conducting probes into the bone morphogenetic compound and its Fridley, Minn.-based maker’s marketing practices. Personal injury lawsuits are also beginning to mount for Medtronic over the implant.

The shareholders’ suit, filed in the U.S. District Court for Minnesota, alleges that “Medtronic and its stable of highly paid doctor-consultants recklessly downplayed the safety risks of Infuse – especially in off-label procedures – and that Medtronic’s improper off-label marketing and revenue growth were directly tied to a troubling and financially dangerous rise in safety concerns linked to Infuse, including ‘potentially serious, and even deadly, adverse events, particularly in the cervical spine,'” according to court documents.

Specifically, the plaintiffs accuse the company, former CEOs Bill Hawkins and Arthur Collins Jr. and CFO Gary Ellis of making “materially false and misleading statements and omissions concerning the sale, promotion, and marketing” of Infuse, according to the documents.

“In particular, plaintiffs allege that defendants failed to disclose that the strong revenue generated from sales of Infuse was the result of marketing for off-label use, and that when the market learned of this fact, the stock price fell,” according to Judge Paul Magnuson, who is hearing the case.

The plaintiffs in the case, led by the Minneapolis Firefighter’s Relief Assn., moved to compel Medtronic to produce sales and marketing material dealing with the safety profile of Infuse. Magnuson granted the motion, but denied a bid to expand the time period covered by the order. In a previous ruling, the judge opened that window to cover documents generated between Jan. 1, 2005, and Dec. 31, 2009; the plaintiffs, spurred by the Spine Journal exposé, had asked Magnuson to expand the period to cover docs dating back to 2002 and through to the present.

“The court does not find compelling circumstances in the instant case. While the Spine Journalarticle itself may be new evidence, since plaintiffs already moved for and were granted a motion to compel production of documents on this issue from some of the doctors whose publications were criticized by the Spine Journal article, its recent publication does not alter the landscape of what plaintiffs knew at the time of the earlier order,” he wrote. “As a result, the court does not find the circumstances dictate alteration of the relevant discovery time period and declines to so extend as advocated for by plaintiffs.”