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Medtronic Announces Layoffs, as Infuse Controversies Drag Down Sales

Sep 28, 2012 | Parker Waichman LLP

Medtronic announced in May it would be cutting some 1,000 jobs, as the controversy surrounding its Infuse Bone Graft product continues to weigh on the medical device maker’s bottom line.  

"We are eliminating about 1,000 positions around the company and around the globe," Gary Ellis, the company's chief financial officer, told the Minneapolis Star Tribune at the time. "It's kind of the normal, ongoing thing that goes forward as we shift resources from slower-growing markets to faster-growing markets."

The job cut announcement coincided with the company's release of financial results for the first quarter of 2012.  According to the company, Medtronic's spinal division saw Infuse sales decline 26% in the first quarter of 2012.  

Over the past year, Medtronic has been embroiled in controversies over the safety and efficacy of Infuse Bone Graft, a synthetic form of recombinant human Bone Morphogenetic Protein (rhBMP-2) that is approved for use in a certain type of spinal surgery.  Among other things, questions have been raised about the clinical trials used to garner regulatory of the approval of Infuse, with one analysis published in The Spine Journal asserting that 13 such studies downplayed the bone growth proteins serious side effects.

Medtronic has been named in a number of personal injury lawsuits alleging Infuse caused serious side effects when used in off-label procedures.  In May, the company was also named in a whistleblower lawsuit alleging it installed an insider, Dr. Thomas Zdeblick, at the Journal of Spinal Disorders and Techniques, where he allegedly published research favorable to Infuse without revealing his financial ties to the company.  Zdeblick invented the LT-Cage, the delivery system for Infuse, and allegedly failed to reveal that Medtronic was paying him royalties on sales of the device.

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