Medtronic: DOJ closes inquiry into Infuse sales practices

Medtronic ($MDT) can cross off its list one more lingering legal problem relating to the company's controversial Infuse bone graft material.

The Minnesota device giant disclosed this week that it received special word from the U.S. Department of Justice (DOJ) and the U.S. Attorney's office in Massachusetts that they have closed their investigation of the company relating to the product. A Medtronic spokeswoman told the Star Tribune newspaper that their inquiry concluded without finding evidence of wrongdoing.

As the story explains, the investigation was launched in 2008 to look at how the company sold and marketed Infuse for potentially unapproved uses. At issue were concerns that Medtronic might have been using kickbacks and bogus royalties to encourage doctors to use the product in ways not approved by the FDA, according to the article.
In March, Medtronic agreed to pay $85 million to settle a shareholder class action lawsuit regarding the Infuse controversy, alleging that more than 85% of Infuse's sales depended on off-label uses and the company hadn't properly disclosed this. Another suit from other shareholders remains, accusing the company of falsely boosting its stock price by promoting Infuse's off-label use. And a Senate investigation involving Medtronic's financial relationship with doctors regarding Infuse clinical trials apparently continues.

But the DOJ is backing off. The product generated as much as $800 million in sales for fiscal 2011, but they have been plunging this year due to all the controversy. As well, speculation continues that Medtronic may sell its spine business due to poor financial performance. We might learn more on May 22, when Medtronic is expected to report its fiscal 2012 fourth-quarter earnings.

- read Medtronic's brief announcement
- check out the Star Tribune's take
- here's MassDevice's coverage