Settlements for Medtronic Infuse Bone Growth Lawsuits Cut Into Q4 Profits

It appears that costs associated with Medtronic Infuse bone graft lawsuits, including millions that may be paid to settle hundreds of claims, are cutting into the profits for the medical device manufacturer.

Earlier this month, Medtronic announced that its fiscal fourth quarter profits are down 54%, indicating that the drop was due in large part to settlements and legal problems, including its efforts to handle lawsuits brought by recipients of its Infuse products.

About 1,600 product liability lawsuits have been filed by individuals throughout the United States who allege they have suffered problems following Medtronic Infuse surgery, indicating that the bone growth product is defective and caused severe and sometimes deadline complications.

Medtronic indicates that it made $448 million in profits over the quarter ending April 25, down from $969 million in the same quarter the year before. Part of that was due to $89 million in product liability costs over associated with Medtronic Infuse, but some estimates suggest that the company may ultimately pay between $120 and $140 million to settle Medtronic Infuse cases.

In the most recent quarter, the largest hit to the company, however, came from an agreement to pay Edwards Lifesciences Corp. $750 million on its CoreValve artificial aortic heart valve, after the company was found to have infringed on its competitors’ patent.

Medtronic Infuse is a newer type of bio-engineered bone graft product that has been promoted as an alternative to traditional spinal fusions, where bone is harvested from another area of the body or used from a cadaver.

The FDA approved Infuse recombinant human bone morphogenetic protein (rhBMP-2) for limited use during spinal fusion procedures where the lumbar spine is approached through the front and the product is applied to an absorbable collagen sponge that is placed within an “LT-Cage” that is implanted to encourage bone growth and fuse the gaps between the vertebrae. However, Medtronic has been accused of illegally promoting the device for non-approved uses, with a vast majority of sales for Infuse involving applications that were never approved by the FDA.