Medtronic was hit this week with another shareholder lawsuit alleging the company illegally promoted off-label use of its Infuse bone growth product. This lawsuit alleges that because of false statements Medtronic and its officers made regarding Infuse, the company’s stock price was artificially inflated. As a result, Medtronic was forced to repurchase more than $2.8 billion of its own shares at inflated rates, the lawsuit claims.
“Unbeknownst to shareholders, the company was risking adverse regulatory actions, investigations, lawsuits, and declining sales,” the complaint states. “The improper statements and omissions have devastated Medtronic’s credibility.
“Under the board’s authorization, the company bought back more than $2,847,113,040 worth of its shares at a weighted average price of $50.39,” the lawsuit alleges. “Tellingly, this weighted average price is substantially higher than Medtronic’s share price of $31.60 on November 18, 2008, when its true business health was revealed.”
Medtronic is facing a mountain of legal trouble over Infuse, including several product liability lawsuits claiming it caused serious complications in patients. Over the summer, The Spine Journal raised serious questions about the validity of the research that was used to gain regulatory approval of Infuse.
Medtronic Infuse injuries can include ectopic or uncontrolled bone growth
Medtronic Infuse injuries can include ectopic or uncontrolled bone growth at or near the site of the surgery; ongoing or chronic radiating pain in the legs or arms; male sterility, retrograde ejaculation, or other uro-genital injuries; nerve injuries causing severe and chronic pain; and even cancer. In cervical spine surgeries some Infuse patients have experienced acute severe neck swelling several days after surgery resulting in death or permanent injury.
In November, a prominent researcher warned that Infuse may be associated with a higher risk of developing cancer. In December, Medtronic settled a U.S. Department of Justice lawsuit over Infuse marketing for $23.5 million without admitting wrongdoing,
In August 2009, the Minneapolis Firefighters’ Relief Association and other institutional investors alleged in a separate shareholder complaint that Medtronic had deliberately promoted the Infuse system for off-label uses and failed to disclose that its sales were largely dependent on unapproved uses.
The lawsuit sought class action status on behalf of holders of the company’s stock who purchased or acquired their shares between November 2006 and November 2008 and suffered financial losses.
That lawsuit alleged Medtronic stock plunged 13 percent after it was forced to reveal that the U.S. Department of Justice was investigating the alleged off-label promotion of Infuse.