Medtronic Pays $2.8 Million to Settle Another Off-Label Case

The settlement, involving marketing of a pain procedure, is a tiny fraction of Medtronic's annual sales.

Chris Newmarker

Medtronic recently agreed to pay the U.S. government $2.8 million to resolve accusations that it encouraged off-label use of a spinal cord stimulation device.

Federal prosecutors claimed that Medtronic between 2007 and 2011 knowingly caused dozens of physicians in more than 20 states to submit claims to Medicare and TRICARE for "SubQ stimulation" a pain relief procedure that had not been cleared by the FDA.

"Targeting chronic pain patients with a medical procedure that lacks evidence of clinical efficacy wastes the country's health care resources," Joyce R. Branda, acting assistant attorney general of the Justice Department's Civil Division, said in a Friday news release announcing the settlement.

Medtronic--now headquartered in Ireland--noted in a statement that it denied any wrongdoing while making the settlement: "Medtronic is committed to following appropriate marketing and reimbursement practices at all times, and for many years has had in place a comprehensive and robust employee compliance program."

Medtronic, now merged with Covidien, has a combined operation that has pulled in about $27.2 billion in sales annually. So the settlement is about 1/10,000^th of Medtronic's annual sales--a drop in the bucket (or more precisely, a drop in a 1 gal jug)

Medtronic has run into issues around off-label uses in the past. The medical device giant announced last year that it would pay $22 million to settle about 950 claims, and set aside up to $120 million to settle an expected 3800 additional claims, related to its Infuse Bone Graft. It has been widely reported that as much as 85% of the Infuse that Medtronic sold was used for off-label purposes. Some of the lawsuits filed allege that Medtronic was engaged in promotion of those off-label uses, which the company denied as vigorously as the claims over its "SubQ stimulation" marketing.

The SubQ procedures involved Medtronic's spinal cord stimulation devices being placed just beneath the skin near an area of pain, most often in the lower back. The devices would provide electrical impulses to create a "tingling" sensation intended to alleviate chronic pain. The major issue, according to federal prosecutors, is that the safety and efficacy of SubQ stimulation had not been established as required by the FDA.

Medtronic, however, promoted the procedure by sponsored "on-site training programs" for the procedure, according to the U.S. Justice Department.

The civil settlement steps from a lawsuit that former Medtronic sales representative Jason Nickell filed against the company. Nickell will receive $602,000 under the False Claims Act.

Over the past six years, the Justice Department has recovered a total of more than $23.5 billion through False Claims Act cases. More than $15 billion came from cases involving fraud against federal health care programs.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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