Wednesday, June 22, 2011

Senatorial Assault on Medtronic

As a famous General once said; "we're stormin' the beaches of Normandy and you are worried about a little sand in your boots. Fight on!"

On June 22, 2011 it was reported in the NY Times that our highly esteemed Patricians of Congress, Senator Max Baucus (D-Mont), and Charles "Chuck E's in Love" Grassley (R- IA), had sent a letter to Omar (Welcome to Spine) Ishrak, the newly anointed chairman and CEO of Medtronic, seeking documents related to INFUSE.  Baucus and Grassley are the equivalent of a U.S. artistocracy that intends on protecting the Plebians of our society. A noble cause if there ever was one.

As if Baucus and Grassley don't have better things to do like, worrying about the debt ceiling, helping over 15 million unemployed people have an opportunity to find a job, convincing the POTUS to draw down the troops in Iraq and Afghanistan, boy would that be a financial relief, pressure the banks to start pulling that TARP money out of securities and start INFUSING capital into the economy, or simply spend some of that lobbyist capital to stimulate the economy, the noble Senators are attempting to do everything in their power to ensure companies aren't concealing serious medical complications from patients just to increase profits.  Now that has never happened before, has it?

Our good old friend at Medtronic, Mary Thorsgaard acknowledged that the Senators were seeking information on side effects related to, abnormal bone growth, now has anyone ever heard of that side effect, swelling in the neck and throat, and a form of sterility.  Those of us looking for a new form of contraception might be willing to take a shot at the title with that one.  But on a much more serious note, how many of our bloggers have heard of boney in-growth, in or around the spinal foramen or canal as far back as 2002 or 2003.  As someone once quoted a spine surgeon to TSB, "I have had a few incidence occur, but I would never say anything considering that I am a consultant on this project."  Imagine, all for the love of medicine.

A July 11th, deadline has been set, requesting all documents and communications with researchers, medical journals, the FDA, advisory board members, concerning any and all adverse effects.  The good Senators are looking for e-mails that potentially could result in a smoking gun, good luck on spending more of the taxpayers money, where were you eight or nine years ago?  The most entertaining aspect of the article was that Medtronic reported that it had $15.9 billion dollars in sales last year, with $3.1 billion in profits.  A formidable war chest, now would be the time to start funneling money to Baucus and Grassley from your representatives on K Street. Unfortunately for the Senators, Medtronic claims it does not break out sales by products, which is the biggest crock of BS that anyone has ever read.  So in closing, TSB would like to welcome Omar Ishrak to the wacky and wonderful world of spine, where there are plenty deals to be had.  Hopefully, now that your buddy Immelt is on the President's advisory committee someone will finally cut your company a break, so you can get back to restructuring your organization all for the love of the shareholders profits.  TSB wants to know what our readers think?


  1. I'm covering a case right at this very moment where a surgeon is using an XX-Small BMP kit on a 1-level ACDF. This is typical for him and a good majority of the other surgeons that I work with in the major metropolitan area that I cover. 2-3 adverse reactions in the past year alone.

  2. TSB, I agree with all the other priorities you listed, but cannot suppress a smile when I read this. After getting away with anything for years and years, the cowboys from Memphis now feel the tepid breath of the plodding but relentless bureaucratic Washington dragon in their necks. And once that dragon has been stirred, it needs to be fed. I wonder what proportion of original Medtronic employees rue the day they bought Danek.....99%?

    (Checking the MDT physician registry and going over the Q1 pay-outs, they still make money enough to pay fines for quite some time.)

  3. 6:02 u must be referring to the medtronic capital of Illinois also known as the NorthShore!!

  4. It is hard not to smile at seeing The Empire dealt another blow, however more of Uncle Sam's intrusion into our business is not good either...
    On another subject, several successful Medtronic reps in Florida have moved on, any word on this happening elsewhere and why?

  5. A very successful Medtronic rep in "Longhorn Country" is quietly looking for a new gig too. I wonder what's causing the exodus. Any ideas?

  6. Great post TSB. I am so frustrated with the government's priorities. I'm not even going to get into our debt problems. Just focusing on the healthcare topic alone in the US, I am pretty sure that obesity and smoking are harming/killing people more than any clinical outcomes seen in spine surgery. You don't see them going after food companies for processing or putting preservatives and all kinds of chemicals in our foods. And, the only reason they are not being investigated is because those food companies spend probably a good percentage more money on lobbying than spine companies. I would hate to see even more money being put into greasing wheels in DC instead of trying to invest in jobs, product development, and new technology in hopes of improving patient outcomes. As it is, spine companies spend a lot of money on "consultants".

    But, ultimately, my main point is that spine is a very very small chunk of the healthcare pie. We, as a country, have a lot of other crap to worry about.

  7. 8:38 obvious MDT employee. I've heard my local MDT rep telling the same story to anyone willing to listen - "smoking and Obesity are bankrupting the system, not BMP", "smoking and obesity are responsible for bad outcomes, not misuse of equipment". FYI Smoking is an addiction and obesity is a disease. Neither fall into the category of surgical implant that a doctor consciously decides to use in surgery.

    While I must agree that I don't like uncle SAM overseeing every little thing in our lives, I do believe that some questions need to be asked when valuable information is kept from people whose job it is to see that only safe products make it to market. Perhaps the decision of the FDA would have been different in '02 had they had ALL of the relevant information from the investigators.

  8. Medtronic(Danek) always comes out smelling like a rose!!

  9. 6:04 Yes,

    Most of the Danek soldiers I started with 'Rue the day'.
    Fortunately most of us are in a better place now.
    The super successful Wild West boys from Memphis in the board rooms alongside the Minneapolis stuffed suit geniuses.
    This was the beginning of the end.

    It's been fun watching the Empire just simply crumble around it inept self.
    The blue suits came In with all of their MBA's and fresh ideas after the acquisition. What a tremendous clash of cultures. Did Medtronic really know what they were getting into by making this purchase?
    I would bet that they did not fully understand how we played the game back then.

    IMO medtronic absolutely planned to use Infuse 'off label'.

    Do any of you danek reps remember the little black graft volume books the company gave us?
    The little black books were issued right along with Infuse approval and surgeon training. The information contained in the book listed the 'graft containment' volume of every device we sold in cc's. Why you ask ?
    I was told it was so that we could open the right kit of infuse.

    We are now learning that indeed the product can be harmful to patients ?
    And most alarmingly that highly compensated surgeons may have surpressed knowledge of possible adverse events ?

    These facts, along with questionable Oral Max infuse use just points to the pure Arrogance of the Big Blue machine that can pretty much do and sell whatever it wants, however it wants to do so.

    Profits first - Patients second.
    That is one of the Maim reasons I left Big Blue.

  10. Not an MDT employee. Thanks. This issue goes beyond who I or anyone else works for. I guess I view things slightly differently. The way the US structures safety and government regulation, I would define food as equipment. Food is required to live and to maintain a certain health level. One consequence of food abuse comes in the form of a disease called obesity (you are correct 9:21). The consequences of obesity can be diabetes and heart disease.

    The difference between food and surgery is that the "patient" is able access and use the food as they see fit. The patient elects to have surgery due to trauma or disease (Example: DDD) and our country mandates that a licensed professional provide the service. The reason for that is if a patient needs surgery, their health level has dropped so significantly that they cannot alleviate the issue without professional intervention. There can be consequences associated with DDD and spine surgery as well(consider them side effects, if you will). Just how we are informed about the consequences of obesity (through studies) and prescription drugs, we should be informed about consequences of DDD and spine surgery.

    I am not discounting the fact that surgeons are not always doing the right thing or using the right equipment and if I were in the field, I would never use my food and smoking argument with customers as I think we should try to act responsibly AT ALL TIMES and do what's best for the patient. Talking about obesity with a customer would merely be a distraction and excuse to divert a discussion involving some of the negative aspects of this industry. So, I agree with you 9:21 wholeheartedly. There is no excuse for abuse of spine equipment of any kind. But the abuse across ALL parts of health industry is definitely not helping the rising costs of healthcare.

  11. Isn't the FDA partially to blame with approving rhBMP-2 as a device and not the drug that it truly is?

  12. can anyone tell me where medtronic reports how much they pay surgeons on their website. I have been looking and cant seem to find where it is on their site???

  13. Who here believes any future osteoinduction agent, whether large or small molecule, that is used with graft material (exactly like Infuse is with collagen) will be reclassified as not a device but a drug or biologic? What timeframe might this regulatory perspective change? If not entirely reclassified, what addition preclinical & clinical studies might be demanded?

  14. The hits keep coming! The Exodus is here and no Kyphon based leadership team is going to save us. We are finally going to pay for the sins of our founders. All Hail King Dug!

  15. 10:51

    You can also use this cool search engine called google.

  16. Actually, it's

    Found using that cool search engineer you spoke of... :)

  17. I can't help but disagree with all those that want to deflect attention from the misuse of the health care dollar in spine. So what if there are "bigger fish to fry." All the fish need to be fried at some time, if we are to fix the disaster that is American medicine. A surgeon using BMP routinely in ACDFs???? Unless he has a population of smoking diabetics, then HE should bear the financial burden of that choice - NOT those that are insured through the same insurer, NOT those that pay this Workers Comp claim through higher product prices, NOT the tax payer. The payors and hospitals need to smarten up, surgeons need to smarten up - industry is the only group that actually have it "together!" They are for profit companies seeking to maximize profits before things change. Physicians need to take some responsibility for their actions. If we (I am a surgeon) don't do it, then somebody else will, and our salaries and freedom will shrivel.

  18. “He who joyfully marches to music in rank and file has already earned my contempt. He has been gi+ven a large brain by mistake, since for him the spinal cord would surely suffice.” ~Einstein

  19. This situation is sounding like a replay of the Synthes Norian disaster. A few patients died and those guys are struggling to stay out of jail. If promotion of BMP in the C-spine actually occured, anyone with knowledge should lawyer up now and cut a deal before its too late.

  20. MSD's physician consultant list is a joke, I see one surgeon that has been retired for 4 years and another that passed away 2 years back. Omited are countless names that checked the box "Don't publish my name, damn it!" Other doctors that have disclosed relationships with MSD on their web sites or studies are not listed. Best bet, go to the "find a doctor" on their site and enter your area. Chances are that most have a financial tie or benifit from Medtronic. Don't think they need to disclose strippers or prostitutes yet.

  21. Medtronic has done such a great job of hiding these potential adverse events that they put them in the FDA Approved Package Insert that has been INCLUDED WITH EVERY BOX OF INFUSE SOLD SINCE 2002. See the link below to the original SSE that has similar language to what comes in the Infuse Package Insert.

    Notice a precaution regarding Ectopic Bone Formation? Notice Retrograde Ejaculation (sterility)is listed as a potential adverse event? All of this has been public information since the 2002 PMA Approval.

    Why would Medtronic pay surgeons not to write about adverse events that are public information and then be the first and only Spine Company to list surgeon consulting payments? It's a ridiculous assertion.

    New Medtronic CEO should fire his entire PR and Government Affairs departments for their complete incompetence in explaining this to Capital Hill/WSJ/NYT.

    Why keep posting surgeon consultant payment information online or give Grassley more information when all it does is keep generating more media attention?

  22. 1:17

    They gave all "consultants" a one year warning. In 12 months we will begin to collect data for publication. In 24 months we will publish the collected data. You can stay on and your name will appear but we can modify your agreement beforehand by paying you a portion of money upfront or we can pay you off totally an pretend that you never received a dime. Your choice. How would you like your distribution? Or would you prefer a high level position with the company?

  23. Hey 9:21 and 10:24 Obesity is NOT a disease! it is a weakness and a lack of willpower! If it's a disease can you show the rest of us a picture of an obese person in the Nazi concentration camps? I'm tired of pathetic behavior being excused which is the case with the subject of this post as well. !

  24. What's the matter 5:29 are you feeling pre-menstral? Take an Advil PM you'll feel better. Thank you for the diagnosis.

  25. 10:51

  26. When do we stop the fallacy that smoking is costing the health care system money? Lung cancer is much faster and cheaper than Altzheimer. If you don't believe this, here is the reference:

    The health care costs of smoking. N Engl J Med 1997;337:1052-7.

    "Conclusion: If people stopped smoking, there would be a savings in health care costs, but only in the short term. Eventually, smoking cessation would lead to increased health care costs. "


    All of these potential adverse events are discussed in the FDA Approved Package Insert that has been included in every box of Infuse sold since 2002. See link above.

    To accuse Medtronic of trying to hide these issues by paying surgeons not to publish about adverse events is ridiculous. The adverse events are public information in the labeling. Medtronic is still the first and only spine company with the guts and to post their surgeon consulting payments.

    Medtronic's problem is that they are completely incompetent from a PR and Government Affairs stand point. That's why this same story keeps coming back up over and over. The new CEO better address those areas quickly or suffer the fate of Bill Hawkins and retire early.


    All of these potential adverse events are discussed in the FDA Approved Package Insert that has been included in every box of Infuse sold since 2002. See link above.

    To accuse Medtronic of trying to hide these issues by paying surgeons not to publish about adverse events is ridiculous. The adverse events are public information in the labeling. Medtronic is still the first and only spine company with the guts and ethics to post their surgeon consulting payments.

    Medtronic's biggest problem is that they are completely incompetent from a PR and Government Affairs stand point. That's why this same story keeps coming back up over and over. The new CEO had better address those areas quickly or he will suffer the fate of Bill Hawkins and retire early.

  29. Speaking of incompetent:

    Has Globus gone public yet??

  30. 6:15

    When is the last time you spelled a label? You have to go through a lengthy table in small print to see it. And how honest is it to write up the data for Spine or JBJS, and when you come to the one adverse event that is clearly higher in the Infuse group, close your mind to the principles of scientific inquiry and jump to the conclusion that it must be related to surgical technique? Laughable.

    And regarding the published consultant list, as was observed earlier, the list is woefully incomplete. But you're right, the likes of Globus and Nuvasive have not had the balls as yet, nor do I think they will grow a pair soon.

  31. 10:51 and 11:28, just want to know if you think Depuy Spine has more or less consultanty deals than Medtronic. anyone know the answer to that?

  32. This is old news and will go nowhere, on to the next monkey banging a football.

  33. 6:35
    you crack me up, that is exactly what most of their surgeons are asking everyday, so they can cash in their worthless stock options. Keep it going

  34. I just got the spinemarket email and read that NuVasive is doing a convertible note of $325-350M. Seems it was actually announced yesterday so I'm probably the last to know. Oh well, I'm about to rant.

    It looks like Nuvasive got some 'cheap' money. 2.75% interest, and a 2017 conversion price 30% above the current price. $230M of the $350M is to pay off notes at 2.25% due next year. What's an extra half point on $230M? Chump change. So they pay off that note plus raise another $100M. Where will that $100M go?

    Even after all these years of losses, NuVasive is just now making a (small) profit- given their market cap. Operating income is less than 10% sales and 65% of their revenue goes to SGA. I just think that's crazy. Who hasn't heard of XLIF? I need another 100 million dollars. ATEC is another one. Over $150M in revenue but losing more than $10M a year. 59% to SGA. OFIX is a similar boat. 55% to SGA.

    I was curious about the interventional market, which is where my passion lies these days. Admittedly, there aren't many public examples but one can use Arthrocare as a model. Yeah, I know they are more into scopes than spines lately but the products are similar enough. ARTC has sales of $355M and turns that into an operating income of $54M. SGA is just 42%. Sweet. No, I don't work for them.

    From a business perspective, it seems intuitive that its less expensive to train clinicians to do interventional procedures than training spine surgeons to do XLIFs or MIS. I would go out on a limb and bet that the consulting commitments are significantly lower as well. Interventional procedures don't seem too sexy in this crowd but I think one can make a case that it can be more profitable. A sexy business is one that makes money.

    Who's making money on spinal implants and surgery these days? Its not the shareholders of these public companies. From what I read here, its not the reps. I know you guys are going broke because of PODs but we sure have had some great parties over the years! I doubt its the engineers as their budgets are a tiny, tiny fraction of the SGA line. Why are executive salaries so high when they can't bring home the bacon in terms of operating income? I guess PODs are in fact making money. Very little SGA and if you fly below the radar you can skimp on other things (Part 812).

    So what will The Bear do with his new found $100M? Hey, have you heard about XLIF?

  35. Why in God's name would anyone want to buy into this company? They rode the tube to the point where the wave has broken with XLIF, its time to reload, Love sitting on the analyst calls listening to The Bear hypnotize the analysts about how wonderful his company is, "20% growth, billion dollar baby, XLIF, where's the beef Alex? What's new? Can't wait to hear the reaction from those that drink the purple kool aid.

  36. 10:40 excellent analysis. Add a few more points re NuVa:
    Cash: ~$200M
    Annual Profits: ~$5M

    Debt: $230M (convertible mid to high $40's)
    Debt: $62M - NeuroVision Trademark lawsuit (asking where the extra money will go....)

    Potential Debt: Medtronic lawsuit goes to jury in August 2011.

    Not much left, so essentially this new $350M convertible debt is a near wash.

  37. Hey 5:29 - Lighten up, Francis.

  38. That leaves Alex with $25 million to buy more wine, take his family to another world cup event, and invest in another B'way play. Got 2 luv America, especially when you're a first generation American living the dream.

  39. Selling, general and administrative expenses

  40. 10:40 Great post! Thoughtful and with some good insight. Kudos!

    I too wondered why the needed funds, and concur that expanded marketing of XLIF and other current products, even internationally, should be fundable out of existing operating revenues. That leaves two options - acquisitions and new ventures, or cash reserves for tough times ahead. While they've shown they have a talent for developing XLIF and other new procedures, will they be able to continue the streak with another product, especially in the cost-conscious market of the future? And if they're stocking up on reserves, then why? (Future payments on acquisitions?)

    As for interventional, it's a market that's interesting for all of the reasons you mention, but plagued by being outside the realm of traditional medicine and surgery. It too has also seen an explosion of technology and costs, but on the backs of some of the most targeted patient populations for health care reform. (Chronic low back pain, Failed back, new entrepreneurial docs building practices on new and somewhat questionable techniques.)

    So if orthopedic/neuro spine is a traditionally great neighborhood in a good location with good schools, but some overvalued prices and crumbling houses, then interventional is the bright shiny new neighborhood but in a town that may see its new big factory shut down soon.

  41. For all posting w/ specualtion re: Nuvasive financial move this week, it serves many purposes. However, the one that wasn't mentioned is that they will be looking to launch the PCM cervical disc sometime later this year. With the new facility on the East coast, they will look to train MANY surgeons in hopes of making a VERY BIG splash w/ this product. Much of their future success & ability to continue to deliver the types of financial results the The Bear continues to promise the Street depends on the success of PCM.

  42. Good luck with reimbursement on that disc.

  43. Hahahahahahaaaa
    Haa haa haaaa haas haaaaaaaa

    Ahh haa haas haaaaa haa

    NuVa is going to introduce an artificial cervical disc ?

    No reimbursements ??

    Haa haa haaaa haas haaaaaaaa

  44. No chance PCM makes it to market. The PorDisc patents will make sure of that.

  45. And following the market busting cervical disc NUVA will launch the ever elusive lumbar disc!!! All other competitors will get washed away in the wake of awesomeness!!

    Seriously though.... this will be epic flop like the rest of them due to reimbursement that will get no better. I say this from first hand experience as I have one in my bag.

  46. Scary

  47. Even Scarier

  48. This comment has been removed by a blog administrator.

  49. IRS needs to probe POD's on employment issues! I am sure they have all independent contractors who actually only work for the POD's. Huge back tax issue! They are true employees!!!

  50. I’ve had it.

    I still work for Medtronic and I will be honest that this company has it’s problems and is heading in the wrong direction due to our “leadership” who don’t have the courage to do anything without getting the sign-of-the-cross from legal and continue to pass along boring, un-motivating nonsense that know one is listening to anymore. Any of my Medtronic brethren who have been on the last few conference calls can attest that there is no leadership at Medtronic. But self absorbed, MBA, butt kissing, yes men are who seem to be the apple of the executives eyes these days and Medtronic is not alone in that aspect.

    Now back to the subject at hand.

    Researchers are motivated by many factors like money, recognition and favorable outcomes to just name a few. There are bad apples all over academia who tarnish the data.

    Infuse is the most innovative medical product that has been introduced since Penicillin and the majority of you who have jumped on this bandwagon would have Infuse in your back in a second if you needed surgery, so ease off on the rhetoric.

    Infuse has been on the market for 10 years now and after hundreds of thousands of surgeries, the benefits FAR out way any of the unfortunate complications. Yes, the majority of those surgeries were off-label and yes, prior leadership made the mistake of not conducting a TLIF study, which would have been enormously beneficial and taught us a lot about how this product worked in that environment. But let’s be honest, if any of you were in charge and had the option of spending 40M on an IDE study, or let the product fly off the shelf I can assure that most of you would have done the exact same thing………nothing. It’s a numbers game folks, get used to it. This is what our society and business schools have taught us and will continue to teach your children.

    The PLIF study was stopped for two reasons. #1 some surgeons were not following the procedure during the study and #2 those adverse events from those sites would have had negative effects on the outcome of that study. It wasn’t the product it was the user. This product has revolutionized fusion rates around the world and if we have learned anything with Infuse, it WORKS!! Anything that works well and is used excessively will always have consequences.

    Some other key facts:

    Infuse was awarded the Prix-Galien USA award which if you don’t know, is the equivalent of the Nobel Prize for Bio Technology products. This award is not given lightly.

    Wyeth (Phizer) takes 50% of every dollar sold so please take that into consideration before throwing out the inflated profits of this product.

    The FDA is no shining star when it comes to being the medical device watchdog. Look at their history of unbelievable blunders in approvals i.e. Phen-Phen, Celebrex etc. It takes two.

    This subject is the exact reason we need patient registries in this country similar to Europe. The patients in these registries are tracked for decades and data is easily attainable and accurate. Thanks to HIPPA you won’t ever see if in the US.

    The surgeons are just as culpable in this as anyone. When something works, they use more of it and the indications become thinner and thinner until the outcomes become too negative to ignore and they always blame the product. Look at BAK, X-Stop, Trans 1, Dynamic rods etc.. Fads are always short lived.

    Be thankful you all have jobs and start concentrating on the things that really matter, our health, our families, our country and getting that knucklehead out of the White House.

  51. 8:56, you have a dog in the fight, so you are not neutral. Whether Infuse works or not, there are well-defined protocols for research and research papers, and it certainly appears that those protocols were not followed by Medtronic. Labeling issues aside, this is another instance of Medtronic making unethical payments to surgeons/researchers. Also whilst they are also paying big bucks to shill lawfirms to anonymously slam Physician Owned businesses as unethical. The "payments to researchers" issue is is all over the news today, and it will not go away quietly.

    By the way, I agree completely that we need to get that knucklehead out of the white house.

  52. I am an employee of Medtronic, so to and a dozen other strippers in Vegas that "dance for" medtronic reps and their pain mgt docs they bring with them. one in particular filthy medtronic rep had lots of girls "dance" for him while allegedly attending a pain mgt workshop--while his 9 mth pregnant wife was at home waiting to deliver any day. All while egging on the surgeons, even those who seemed uneasy, BIG promises. They, and the drs they bring with them, are all corrupt. I am privy to many private conversations, and nobody, none of them, cared about anything but money, and sex. Then change face while in the public eye to be caring about the suffering of dying cancer patients, (or wives giving birth). They even time how quickly they can get the pain pumps in, so they can get to the next patient, the more stims they did, the bigger the reward. It is a collaboration of evil mascarading as caring healthcare providers, exploiting people in desperate positions, talking about how I think we can get this patient to qualify, and try for that one too.