Medical Device Daily Executive Editor

Med-tech titan Medtronic (Minneapolis) was a big newsmaker this week, mostly of the sort not likely to impress investors.

Of this news, what may provide the largest questions for investors was the statement by Gary Ellis, company CFO, at a Wednesday conference that the company will attempt to pare its operating costs by 25% over the next five years. The reductions, Ellis said, will be comprised of various manufacturing site combinations and various supply chain consolidations

The company has made operational cutbacks before, but analysts were calling the 25% reduction goal especially aggressive.

Raising questions of the very negative sort were two product developments.

The company, also on Wednesday, issued a statement saying that the FDA has classified its communication to physicians, related to inflammatory mass formation associated with intrathecal drug delivery, as a Class I Recall.

In mid-January Medtronic sent a letter to physicians informing them of an increase in the rate of inflammatory mass cases in patients who have received intrathecal drug delivery through its implantable infusion systems.

The letter was an update to previous communications on this topic that Medtronic issued in 2001 and 2003.

Medtronic’s January 2008 physician letter provided patient management recommendations that include utilizing the lowest effective dose and concentration of opioids and patient monitoring for early clinical symptoms of inflammatory mass. The letter also recommends diagnostic steps for physicians to consider for patients who have new neurological symptoms aimed at preventing more severe outcomes.

It said that the classification from the FDA does not change the recommendations made to physicians in the January 2008 letter and there is no new action required of physicians or patients.

Inflammatory masses have been reported in patients who receive intrathecal therapy through the SynchroMed and IsoMed infusion systems. Inflammatory mass is a chronic inflammatory or granulomatous mass at or near the tip of intrathecal catheters and has been reported with the infusion of morphine, baclofen and other physician-prescribed drugs and/or mixtures, including pharmacy-compounded drugs.

Medtronic said it has seen an increase in reported cases of inflammatory mass associated with intrathecal drug delivery from 0.1% reported in 2001, to 0.5% reported in 2007.

It added: “The actual incidence is likely to be higher than stated due to under-reporting, but the extent of under-reporting is currently unknown.”

It said there have been no reported deaths associated with this problem.

It said that the most often reported symptoms of inflammatory mass are decreased therapeutic response, pain and neurological deficit/dysfunction. Serious reported symptoms include paralysis and other neurological impairments.

Medtronic recently received FDA approval for an update to the device’s labeling to include the warning concerning the risk of inflammatory mass formation.

The report of the FDA recall classification follows shortly after the release of an FDA notification reemphasizing the need for continued surveillance of patients treated with endovascular grafts and providing updated information on the mortality risks associated with the use of the AneuRx Stent Graft System made by Medtronic Vascular (Minneapolis) to prevent abdominal aortic aneurysm (AAA) rupture.

That notice said that the AneuRx Stent Graft System is “the only currently marketed device with a significant number of patients with long-term clinical follow-up at five years,” providing a variety of recommendations concerning the understanding and communication of contraindications for graft use and a clear understanding of the risk factors.

A Medtronic spokesman said the FDA’s data does not include information about short-term mortality, or the risk of dying within 30 days after surgery. He cited a recent study published in a January edition of the New England Journal of Medicine that showed 4.8% of patients died within 30 days after conventional surgery, compared with 1.2% of patients receiving an abdominal stent.

FDA said its earlier notifications “suggested an increasing trend in aneurysm-related mortality among AneuRx graft patients,” an estimated late aneurysm-related mortality of about 0.4% a year.

It said it now has additional long-term data indicating that aneurysm-related mortality increases after three years post-implant, reaching 1.3% by year four and 1.5% by year five, rates which it called “substantially higher than the mortality rate for open surgical repair, which averages 0.18% per year with a range of 0% to 0. % per year. These mortality data for open surgical repair are comparable to that presented in the recently published results of the EVAR-1 trial.

FDA said that it had developed the new data by working with Medtronic Vascular after previously determining that the risk of aneurysm-related overall mortality in patients with the AneuRx graft was significantly greater than in those undergoing open surgical repair.

On the plus side, the company noted an initiative by the World Health Organization (WHO; Geneva) that could serve to boost the spinal products pipeline from its spinal unit, specifically its balloon Kyphoplasty system, a minimally invasive procedure to correct spinal fractures caused by osteoporosis and cancer Among several means of managing such fractures is balloon kyphoplasty, a that corrects the angular deformity and stabilizes the fracture.

It commended WHO for releasing a fracture risk tool, named FRAX, that it says validates the importance of diagnosing spinal fractures for assessing proper treatment for people at high risk of developing osteoporosis and related fractures.

A 10-year fracture risk model, FRAX was developed by WHO and Dr. John Kanis, professor emeritus at the University of Sheffield (Sheffield, UK), that evaluates bone mineral density and nine other factors to determine a person’s probability of having an osteoporosis-related fracture of the spine, forearm, hip or shoulder within 10 years.

Art Taylor, VP and GM of Medtronic’s Spinal and Biologics Business in charge of Kyphon and Interspinous Process Device product lines in a statement said, “The publication of this tool by [WHO] will create much-needed awareness of the risk factors for osteoporosis-related fractures, possibly leading to earlier diagnosis of osteoporosis and proper treatment to prevent fractures... . [W]e hope that this report will generate earlier detection of existing vertebral compression fractures to help physicians better manage osteoporosis and appropriately treat spinal fractures.”

FRAX identifies a previous fracture as one of the risks that places a person at high risk for future fractures. A prior history of clinical spinal fractures, known as vertebral compression fractures, is identified in the model as an especially strong indicator for osteoporosis and the risk of future fractures.

The cost to the U.S. in 2005 from these fractures was estimated at $17 billion. WHO says the number of these fractures is likely to more than triple over the next 50 years.