Insurance giant Humana sued Medtronic over the device company's promotion of spinal biologic Infuse.
1. Medtronic has reportedly paid $210 million to physicians over a 14 year period for consulting, royalty payments and other fees. Medtronic comments that this is for legitimate consulting, royalties and intellectual property. From a layperson's perspective, that's a lot of money.
2. Humana claims that the payments are part of a conspiracy with physicians to promote unapproved uses of a key Medtronic bone growth drug Infuse. Separately, Medtronic recently agreed to pay a $22 million settlement to resolve filed and unfilled product liability claims related to Infuse (Medtronic's $22M Infuse Settlement: 5 Things to Know).
3. Humana has brought a federal racketeering claim against Medtronic.
4. Humana claims it has paid millions of dollars for the use of the drug in neck and spine surgeries due to the use of the drugs. In 2011, Medtronic generated around $900 million in Infuse sales alone, according to a Star Tribune report. However, Infuse sales have been steadily declining since then, reaching only $471 million for the 2014 fiscal year (Medtronic 4Q Revenue Down 2%: 5 Key Points).
5. The outcome of these types of suits by payers against device companies is quite mixed. A Wall Street Journal article today cites a win by Kaiser Foundation Health Plan in one such suit and a loss by other plans against Abbott Labs in another such suit.
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