Medical Device Daily Executive Editor

Medtronic (Minneapolis), the mega-med-tech firm, is being pummeled this week from various sides — questions from a high-profile congressional legislator on one hand, a major infringement suit going against it on the other, and a nagging complaint related to the ongoing complaints concerning the implantation of biological tissues hi-jacked from funeral homes and improperly handled.

In that same order, more detail:

U.S. Senator Charles Grassley (R-Iowa) has sent a letter to Medtronic (Minneapolis) concerning its payments to orthopedic physicians using spinal repair products made by the company’s Sofamor Danek (Memphis, Tennessee) unit.

Overall, those payments appear to have reached $6 million, even after Medtronic made a penalty payment of $40 million last year (Medical Device Daily, Aug. 2, 2006). (While the company paid that fine, it took the standard pro forma opportunity to deny any wrongdoing.)

The company acknowledged yesterday that a jury has ruled that its Vertex line of spinal surgery screws infringe a patent licensed to DePuy Spine (Raynam, Massachusetts), a division of Johnson & Johnson (J&J; New Brunswick, New Jersey), and that it must pay DePuy damages of $226.3 million.

Medtronic said it will appeal that ruling.

And, as reported yesterday, Sofamor Danek was named in a lawsuit filed by a Texas resident, claiming fraud and negligence in a “body-snatching” scheme that left him with a stolen piece of bone in his neck (Medical Device Daily, Sept. 27, 2007).

The continuing curiosity by Grassley into these payments arises from repeated complaints to Congress by attorney Andrew Carr concerning the six-figure payouts to physicians. Carr said that while the U.S. Justice Department has investigated the matter, its investigation has been inadequate and that what he calls “sham payments” to physicians have continued.

These claims are likely to be highlighted further by this week’s large penalties against other major orthopedic manufacturers, arising from similar claims (see adjacent story, this page).

Carr, of the firm of Bateman Gibson (Memphis, Tennessee), is representing Jacqueline Poteet, previously manager of travel services for Sofamor Danek.

The $40 million payout by Medtronic in July 2006 was the result of a suit filed on behalf of Poteet in 2003. She has brought a second suit that was dismissed and she is appealing that ruling.

A Medtronic spokesperson has told news outlets that the company is cooperating with Grassley’s request to provide information concerning the payments and that they are legitimate, their size — running to hundreds of thousands of dollars in some cases — reflect the time and effort provided by practicing physicians. He has suggested that the whistleblower is only interested in the percentage of any fines against the company that she would receive under qui tam practices.

Carr has responded that the intent is to stop the payments which he has characterized as kickbacks — unethical and unnecessary.

Regarding the patent infringement ruling against it, Medtronic said that it will appeal the verdict under the doctrine of equivalents. It noted that a federal circuit court previously had ruled in its favor and that it had found no literal patent infringement and that the case was remanded for trial under the doctrine of equivalents.

DePuy said that if the judgment against Medtronic is final, it will seek a permanent injunction based on that ruling.

Medtronic became involved in the suit concerning unlawfully implanted bone and tissue because it purchase these materials from Biomedical Tissue Services (BTS; Fort Lee, New Jersey) and its operators.

The lawsuit against Medtronic and two other companies claim that it should have been aware that the tissues were not properly handled and presented a risk to patients implanted with them.

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