Medtronic Board Clears Itself of Infuse Off-Label Violations

Physicians seek out information from device manufacturers about off-label uses for their patients. The FDA offers little guidance on exactly what constitutes promotion of medical devices.

With that, a Special Litigation Committee formed by the Medtronic, Inc. Board of Directors determined there was no evidence that the company promoted Infuse in an off-label manner.

Shareholder Demands

In 2012 and 2013, Medtronic, Inc. shareholders, led by Jennifer Howard and William Houston, demanded that the company sue certain current and former directors and officers for complicity in executing a scheme to evade the Federal Drug Administration’s prohibition against off-label promotion of medical devices in order to increase sales of Infuse. The shareholders claimed the officers breached their fiduciary duties to the company by causing it to conspire with physicians to underreport adverse events in studies involving Infuse

In addition, several shareholder derivative actions were filed in Minnesota state court and U.S. District Court for the District of Minnesota.

Special Litigation Committee

In response, the company’s Board of Directors established the Special Litigation Committee on August 23, 2012.

The findings of the committee may well set out legal defenses Medtronic will use in ongoing lawsuits, including the Humana, Inc. charges that the company conspired with surgeons to manipulate research and then market Infuse in an off-label fashion.

The committee was made up of George McGunnigle, a retired Minnesota state court judge and John Matheson, a corporate law professor at the University of Minnesota Law School. They were given the power and authority to investigate the shareholder claims and the derivative lawsuits to determine whether any rights and remedies should be pursued. In other words, should the company take legal action against those directors and officers?

“No Merit” to Charges

On May 30, 2014, after an 18-month investigation, the committee came back with their answers. The former judge and law school professor concluded that the claims against the officers and directors were without merit.

Inadequate FDA Guidance

In a June 10, Medtronic SEC regulatory filing, the committee noted, “Despite the Important Medical Information and the specific warning that the safety and effectiveness of such unapproved uses had not been established, many surgeons did begin to use INFUSE® in procedures other than the FDA-approved single-level ALIF.”

Further in the report, the committee writes that physicians may seek information about a product’s appropriateness for their patients, from the manufacturer.

“Therefore, physicians occasionally request information from a manufacturer about a contemplated off-label use. Although the FDA has long recognized this fact, it has not provided a precisely defined mechanism for a manufacturer to transmit information about off-label uses to a physician without the manufacturer running afoul of the FDA’s ban on off-label promotion.

Therefore, manufacturers, including Medtronic, use FDA guidance documents, FDA letters to other companies, court cases, information about Department of Justice prosecutions, and common sense to establish policies that balance a physician’s need for scientific information about an off-label use with the FDA’s prohibition of off-label promotion. Manufacturers, the FDA, and the medical community all recognize that a clinician, who determines that an off-label therapy would benefit his or her patient, should be able to access available information in order to maximize patient safety.”

Furthermore, “there was little FDA guidance on exactly what did and did not constitute promotion of medical devices.”

Rejects Complaints

The committee determined that it is important to clearly state this finding: “it has not found support for and rejects the core proposition of the demand letters and derivative complaints—that Medtronic, with the knowledge and complicity of the defendants, designed and executed a scheme to evade the FDA’s prohibition against off-label promotion in order to increase the sales of INFUSE®.”

On June 4, 2014, the committee filed a motion for approval of its findings and for dismissal with prejudice of the consolidated shareholder derivative actions pending in the state court. The consolidated cases are captioned Daniel Himmel, derivatively on behalf of Medtronic, Inc. v. Gary L. Ellis, et al.

The committee also intends to file a similar motion on June 14, 2014 seeking the dismissal of a similar derivative action pending in the U.S. District Court for the District of Minnesota captioned Charlotte Kokocinski, derivatively on behalf of Medtronic, Inc. v. Arthur D. Collins, Jr., et al.