Humana Accuses Medtronic of Infuse Racketeering

Humana Inc. is accusing Medtronic, Inc. of racketeering under the federal RICO (Racketeer Influenced and Corrupt Organizations Act) statute. RICO was originally put on the books to fight organized crime.

In a federal lawsuit filed in Tennessee on May 30, 2014, the insurer cited The Spine Journal, Eugene Carragee, M.D., a U.S. Senate report, and Yale University’s YODA Infuse Study as evidence of Medtronic’s racketeering “enterprise.”

Humana charges that Medtronic paid at least $210 million to key opinion leader (KOL) surgeons to minimize the dangers and exaggerate the effectiveness of the product in peer-review literature. Had Humana know this, it would not have paid for millions of dollars of procedures.

Carragee, the Senate and YODA

We have written extensively on the flawed Spine Journal conclusions and called for the resignation of their Editor-in-Chief Eugene Carragee, M.D. The flawed journal conclusions were then used in a U.S. Senate report to call for greater transparency and disclosure by device companies for payments to physicians.

To settle the matter, Medtronic turned over all its clinical data to Yale University to sort out the conflicting opinions about the product, the company’s handling of the data and charges of research bias by authors of Infuse studies. The Yale study found some bias on the part of researchers with financial ties to Medtronic, but that, in essence, the data from the Medtronic sponsored clinical trials was sound.

Rare Legal Maneuver

There is nothing new in Humana’s lawsuit that hasn’t been alleged in previous shareholder and patient lawsuits. Medtronic recently settled a number of patient lawsuits. What is different is that a payer now wants its money back and is accusing the device maker of racketeering.

Legal experts quoted in a recent Wall Street Journal article said it isn’t uncommon for insurance companies or other third-party payers to sue under the RICO statute to recoup damages related to alleged fraud, but most such claims have been made against pharmaceutical companies. In 2010, a federal jury found that Pfizer Inc. violated the RICO statute by promoting its epilepsy drug Neurontin for unapproved uses, leading health insurer Kaiser Foundation Health Plan Inc. and its affiliates to suffer damages by paying for off-label uses of Neurontin. The jury ordered Pfizer to pay Kaiser damages of about $142 million.

Jeffrey Gibbs, an attorney at Hyman, Phelps & McNamara, told the Journal it was “very unusual” to see a suit by a major insurer against a device maker, and even rarer for RICO to serve as the legal grounding. “The dollars at stake here are likely what helped shape this litigation, ” he said.

Humana claims that not only did Medtronic pay for academic and peer reviewed literature that falsely represented Infuse as safe and effective for uses not approved by the FDA, but also helped hospitals and physicians obtain payments from Humana through, “false statements and fraudulent omissions and concealment to obtain insurance payouts where Infuse and/or BMP was used. Humana would not have paid for such claims had it known the true facts regarding the uses of Infuse and/or BMP or the risks and efficacy of such uses, ” claims the suit.

Medtronic: Case Is “Baseless”

“The claims in this case are baseless, ” said Medtronic in a statement submitted to OTW:

“The potential risks and benefits of INFUSE® Bone Graft have been described in the product labeling since 2002, and all payers had access to that information. Medtronic stands behind INFUSE® Bone Graft and will continue to vigorously defend the product and our actions in court.

Medtronic vigorously disagrees with any suggestion that the company improperly influenced peer-reviewed published manuscripts. Medtronic does not compensate physicians for the use or endorsement of our products, and disagrees with any suggestion to the contrary.

Physicians are compensated for their intellectual property rights and contributions through royalty payments, and for legitimate and documented consulting services provided to the company. Royalty and consulting agreements help medical device companies develop life-saving technologies and are a commonplace and appropriate practice in the medical device industry.”

Flawed “True Facts”

The source of the “true facts, ” referred to in the suit, is the June 2012 issue of The Spine Journal which charged that researchers not only downplayed the dangers of Infuse, but failed to report any adverse events with the product. The Spine Journal further alleged that the researchers did this because of hidden payments from Medtronic.

In direct contrast to The Spine Journal’s flawed review of early Infuse studies, OTW was able to document reports of adverse events by researchers in those early studies. Furthermore, OTW double checked The Spine Journal’s allegations of financial influence and determined that many of Medtronic’s payments occurred years after the publications of the early studies or were for intellectual property unrelated to Infuse, or were paid by their academic institutions to conduct the research.

Off-Label Promotion

In addition to the alleged manipulation of clinical data and undisclosed payments to the surgeons, Humana says Medtronic promoted Infuse off-label from approved FDA applications.

At the January 10, 2002 FDA orthopedic panel meeting considering approval of Infuse, Humana says Thomas Zdeblick, M.D., Hallett Matthews, M.D. and Scott Boden, M.D. presented testimony for the company and assured the panel that only the use of Infuse for the single level lumbar anterior approach would prevent leakage of the BMP product into the neural elements of the spine.

Surgeon “Coaching”

The suit also alleges that according to internal Medtronic documents made available to the U.S. Senate, company officials coached the surgeons on their testimony in front of the panel. Human also alleges that the company ghostwrote some of the scientific articles.

Anyone who has ever attended an FDA orthopedic panel meeting knows this is true. All the clinical evidence gathered for the panel meeting is proprietary company information and cannot be disclosed without their permission. FDA convened panels always ask questions during the meeting. The company and their surgeon consultants then huddle together in a private room to provide the panel with answers. Presumably company officials and the consultants are talking to each other before, during and after the meeting.

“Deceptive Marketing”

The suit alleges that Medtronic then engaged in a “sophisticated and deeply deceptive” marketing strategy to expand the uses beyond the approved FDA label. Medtronic did this because the market for the approved uses was very small.

Medtronic spent “hundreds of millions of dollars” to encourage surgeons to use and insurers to pay for off-label uses. However, claims Humana, “the reliable scientific evidence demonstrates that [Medtronic’s] claims regarding [Infuse] are false.”

(The Yale study has something to say about that at the conclusion of this story.)

Humana further alleges that Medtronic was “wildly successful, ” listing Infuse sales of approximately $900 million for 2011 alone. The vast majority of those sales were for off-label uses. The success was, in part, due to a reimbursement strategy with insurance carriers using the paid KOL, who were paid $210 million in the form of “disguised royalties.”

“Conspiracy”

Humana claims Medtronic and their KOLs “knew and conspired to keep secret that the KOLs were simply highly paid salesmen of Defendants’ products, and were not, as they appeared, objective scientists and investigators giving opinions regarding the safety and efficacy of [Infuse].”

Again, Humana points back to the North American Spine Society’s (NASS) Spine Journal.

“As Doctors Michael Heggeness and Charles Mick (former NASS presidents) observed, there is no way that a surgeon making the decision on what procedure and/or medical device to use for their patients, would use a procedure and/or medical device where the manufacturer of the device had paid the lead authors of the studies amounts ranging from $1.7 million to $64 million…” states Humana’s suit.

Scientific Evidence

But back to the scientific evidence.

Humana says Yale’s YODA study “confirmed Infuse and BMP did not perform” as represented by Medtronic.

However, in the words of the YODA investigators:

“…using either autograft or rhBMP-2 [Infuse] to enhance fusion rates in patients having anterior lumbar interbody fusion or posterolateral fusion seems clinically reasonable. In some procedures, such as anterior lumbar interbody fusion, graft harvest is a separate procedure and avoiding a second incision and associated graft site pain may be well worth the exceedingly small increased risk for cancer.

Although there is some potential for bias associated with patient-reported outcomes, in general, we consider the body of evidence for comparative effectiveness to be strong.”

Finally, the YODA authors addressed Dr. Carragee’s comment in The Spine Journal that “the risk of adverse events is 10 to 50 times higher than reported in trial publications.”

“Our review differs from [Carragee] in that we had access to more extensive and detailed data than did Carragee and colleagues and that after reviewing all of the data, the difference between the adverse events reported in the trial publications and actual adverse events was minimal, ” wrote the authors.

The Medtronic statement added, “Medtronic strongly believes that the safety profile reported to the FDA and detailed in product labeling support the continued safe use of INFUSE® Bone Graft for approved indications. The Company has reported potential adverse events to the FDA, and those risks have been reflected on the product’s label from the time of the FDA’s approval, ”

YODA Conclusions

The Yale YODA study concluded that we’re back where we were before The Spine Journal’s assault on Infuse. Infuse works in certain patients and certain indications and not in others. And it is comparable to ICBG (the gold standard) in its ability to stimulate bone growth. Further the YODA authors determined that retrograde ejaculation is a non-issue, the cancer risk is exceedingly small; the clearest case of where not to use Infuse is anterior cervical fusion; and, early Infuse research was biased.

Humana is demanding a jury trial to determine exact damages.