Fridley-based Medtronic, Inc., announced Friday that it will pay $85 million to settle a shareholder class-action lawsuit involving its Infuse bone-growth product.
Several Medtronic shareholders, including a pension fund called the Minneapolis Firefighters Relief Association, filed the lawsuit in December 2008 and accused Medtronic of making false and misleading public statements about its Infuse product.
According to an Associated Press report, the lawsuit-which was consolidated into a class-action suit in 2009-claimed that Medtronic misled shareholders by not disclosing how much of the company's revenue from Infuse came from "off-label" uses, or uses that have not been approved by the Food and Drug Administration (FDA).
Infuse is approved for use in spinal, oral, and dental graft procedures, but it has reportedly also been used in neck surgeries and other procedures. While doctors can use drugs and medical products as they see fit, it is illegal for companies to market their products for uses not approved by regulators.
But the lawsuit reportedly claimed that Medtronic had illegally marketed the product for uses not approved by the FDA. The company also allegedly did not disclose to shareholders the side effects that some patients were suffering from the product. Medtronic's actions inflated the company's stock price, and when the company's actions were revealed, the stock price fell, the plaintiffs claim in their lawsuit.
Media reports that surfaced in April 2011 indicated that the Department of Justice was investigating the marketing of the Infuse product. Also last year, medical publication The Spine Journal published two articles about Infuse, one that claimed the product may increase the risk of sterility in men, and another that claimed that the product's adverse effects were not reported in clinical research. The publication pointed out that researchers for 12 of the product's 13 industry-sponsored studies had multimillion-dollar "financial associations" with Medtronic.
Two members of the Senate Finance Committee sent a letter to Medtronic in June, seeking information about the use of the Infuse product and payments that the company made to its clinical investigators. In August, the company announced that it has provided a $2.5 million grant to Yale University for an independent investigation of the Infuse product.
In its news release about the settlement, Medtronic said that it "explicitly denies that it made any misrepresentations or omissions or that it otherwise engaged in any wrongdoing." The proposed settlement is subject to court approval.
Medtronic is the world's largest medical device company and Minnesota's seventh-largest public company based on revenue, which totaled $15.93 billion for the fiscal year that ended last April. The Wall Street Journal reported that revenues from Infuse fell 30 percent in the company's most recent quarter.