Medtronic Infuse sales hurt by critical Spine Journal articles

When Medtronic (NYSE:MDT) executives reported results of its first fiscal quarter Tuesday, Chairman and CEO Omar Ishrak found it necessary to stress the steps the company has taken to address the controversy surrounding the Infuse bone growth product.

Not surprising since Infuse sales took a real beating in the quarter.

In late June, an entire issue of the Spine Journal was devoted to raising questions about Infuse, the blockbuster bone graft product that is part of Medtronic’s Spine division. Specifically, the articles noted that physicians who had lucrative consulting contracts exaggerated the product’s benefits while playing down the risks.

At the time, Ishrak responded swiftly and recently Medtronic took the unprecedented step of providing a $2.5 million grant to Yale University. Yale researchers will conduct two independent reviews of all Infuse-related clinical data.

On Tuesday, Ishrak reiterated his firm belief in the integrity of the Infuse data.

“While the recent (Spine Journal) articles raised questions about the peer review process and the quality of the physician-industry relationship, it is important to note that they did not raise questions about the integrity of the data that Medtronic submitted to the FDA on approval or any of the other subsequent reporting,” Ishrak declared. “We strongly believe that this data supports the safe use of Infuse for indications already approved by the FDA.”

Of course, the statement does not address the off-label use of the product and the risks associated with that. Nor does Ishrak talk about an ongoing Department of Justice inquiry into whether the company marketed Infuse for off-label use, an illegal activity. Reportedly, most of Infuse revenue comes from off-label use. Infuse was approved in 2002 to treat lumbar degenerative disc disease, but it also has been used in cervical procedures.

Ishrak’s statement, which on the face of it appears to be an effort to stress that patient safety is paramount, is likely also intended to alleviate concerns of physicians spooked by the Spine Journal articles.

While Infuse revenue declined 8 percent in the quarter ended July 29, the decline was more dramatic — in the upper teens — in the month after the Spine Journal articles were published, Gary Ellis, Medtronic’s CFO said.

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