Senator Questions Zimmer About “Safety Concerns”

The quest for total financial transparency between doctors and the medical device industry has taken a new twist.

A top Senate Republican from Iowa has asked Zimmer Holdings Inc. to disclose information about its product complaint handling process. A July 29 letter sent by U.S. Sen. Charles E. Grassley asked
Zimmer to list reports of “safety concerns or problems” reported by the company’s consultants or contractors since January 2008. The letter also asks officials at the Warsaw, Ind.-based firm to disclose the way they track the long-term performance of orthopedic devices.

Specifically, Grassley gave Zimmer until Aug. 12 to supply data about:

• The process it uses to respond to all product safety concerns raised by consultants or contractors;

• Product safety concerns raised by consultants and contractors since January 2008 (including the product name, nature of the safety concern, identities of the contractors/consultants that raised the concerns, any changes or modifications to the product, and whether the product was discontinued);

• The number of safety concerns refuted since January 2008; and

• The performance of hip, knee and other implantable devices (including how such data is collected, and whether the company has ever considered implementing a process for tracking and reviewing device performance).

Zimmer, in an e-mailed statement, said it welcomed the chance to discuss its complaint handling process with Grassley.

“For decades, Zimmer engineers and healthcare professionals (HCPs) have worked closely to develop technologies that match patients’ needs and improve clinical outcomes in musculoskeletal care. Collaboration between HCPs and industry is an essential factor in the demonstrable success of orthopaedic implants compared to other medical therapies. Beyond product development, Zimmer welcomes and seeks feedback from surgeons who use our products. This feedback can lead to modifications and improvements to products, their labeling and the manner in which we train and educate surgeons about our products,” the statement read.

Grassley’s original requests were prompted by a June 18 story in The New York Times that detailed disputes in recent years between Zimmer and two of its top consultants. The disputes involved the failures of two different products—a hip component in one case and the NexGen CR-Flex knee in the other case. The consultants claimed the devices failed soon after they were implanted, but Zimmer officials blamed the surgeons’ techniques for the failure rather than the products’ design.

One of the surgeons, Richard Berger, M.D., was a consultant for Zimmer for more than a decade, receiving more than $8 million for his services. In the Times article, Berger said he implanted Zimmer’s NexGen CR-Flex device in about 125 patients in 2005. Though the device is supposed to last 15 years, Berger noticed that some X-rays showed lines where the implant met the thigh bone, an indication that the artificial knee had not fused completely. Patients were able to walk, but experienced pain, he told the Times. In a study he conducted with another doctor, Berger found the uncemented NexGen knee failed early in about 9 percent of 100 patients. In addition, the study concluded, Zimmer’s knee showed signs of loosening in about half of all patients and has been replaced in some of them.

Berger alerted Zimmer executives to the problem (including the company’s top scientist), but the company countered those failures in a filing with the U.S. Securities and Exchange Commission. In that filing, Zimmer noted the low failure rate of its NexGen knee among Australian orthopedic patients (the device, however, accounted for only 2 percent of its overall knee sales at the time).

Another consultant, Lawrence Dorr, M.D., discovered problems with Zimmer’s Durom cup hip component, the subject of numerous lawsuits from patients. Dorr, a Los Angeles, Calif.-based consultant, alerted his fellow surgeons that the Durom cup failed within a few years of being implanted. Zimmer officials, however, claimed the problem was with Dorr’s technique and to prove it, provided the U.S. Food and Drug Administration (FDA) with data from 12 surgical centers that showed the hip implant was working well. Based upon that information, the FDA closed its investigation of the device.

“Zimmer strives to protect patients by adhering to quality system requirements and diligently monitoring the performance of our products through a post-market surveillance program,” the company’s statement (to Grassley’s letter) read. “This program is similar to programs for other medical device manufacturers and is designed to ensure the well-being of patients and address the concerns of surgeons responsibly and appropriately. Our surveillance program includes vetting concerns from surgeons, which may lead to investigations. In addition to Zimmer’s own processes, the clinical performance of implant products is subject to review by independently run national patient registries in many countries.”

Grassley and Sen. Herbert R. Kohl, D-Wis., have been on an 18-month quest to improve the transparency of physician-industry relationships. Last year, the pair introduced the Physician Payments Sunshine Act, which would require the disclosure of physician payments of all medical device, medical supply and pharmaceutical companies.

Though that legislation is still pending, several states have drafted their own legislation requiring disclosure. Massachusetts, for instance, passed a law requiring disclosure of gifts worth more than $50.

Biomet Inks Deal for Pharmaceutical Firm

Biomet Inc. is diversifying its product base. The Warsaw, Ind.-based orthopedic manufacturer has purchased Cytosol Laboratories Inc., a small, privately held firm that develops anticoagulants and other blood processing components. Biomet did not disclose the terms of the deal or its value.

Based in Braintree, Mass., Cytosol was founded in 1968 and initially made specialty blood processing products for Massachusetts General Hospital in Boston, according to its website. Three of the firm’s products have received New Drug Application approvals from the U.S. Food and Drug Administration (FDA): noClot-50, TriCitrasol and Rejuvesol. The latter drug, according to a statement issued by the company after it secured FDA approval, helps restore “fresh” cell characteristics to frozen red blood cells. Rejuvenated red blood cells carry more oxygen to organs and tissue, which helps facilitate the
healing process.

Biomet executives released few details about the acquisition. A release about the deal said the company bought “substantially all of the assets” of Cytosol, but it did not specify the assets (if any) it did not purchase. It also did not disclose the number of Cytosol employees that would be retained; the release merely quotes Biomet Biologics President Stuart Kleopfer welcoming “the Cytosol team.”

Kleopfer said Cytosol’s technology will work well with Biomet’s platelet separation and platelet concentration systems.

“This acquisition solidifies a critical supply component utilized by our GPS III Platelet Separation System and BioCue Platelet Concentration System for concentrating a mixture of blood and bone marrow,” he noted. “In addition, given the increased scrutiny of stored red blood cells and increasing attention being paid by clinicians to the benefits of granulocytapheresis, both of these products have excellent market potential. We are eager to explore additional indications for this product line.”

Integra Christens New Research and Education Center in Calif.

Integra LifeSciences opened the doors of its new Center for Research, Education and Training in Irvine, Calif. The new “state-of-the-art” facility, according to company officials, is designed to accommodate hands-on simulated surgical training, while also creating a laboratory setting for research and development for the firm’s products in spine, orthopedics and neurosurgery.

Integra hosted its first spine research lab at the new facility on August 21, attracting spine surgeons from throughout the United States, in addition to Integra Spine’s product development staff.

The center features 2,800 square feet of combined classroom training and lab space, as well as four fully equipped surgical stations, designed to mirror an operating room, which will allow surgeons to practice procedures on cadavers and test new product concepts. It also includes instruments for use in orthopedic procedures, C-arm fluoroscopy systems, and endoscopy towers for video imaging. A lecture room includes hardwiring for Internet access and is equipped with audio/visual equipment.

“As medical devices and surgical techniques are constantly evolving, advanced hands-on training and surgeon involvement in device development is critical for improving patient care,” said Brian Larkin, Integra’s president, Global Spine & Orthobiologics and head of Strategic Development. “We’re pleased that we can offer this opportunity.”

Integra LifeSciences’ products primarily are used in orthopedics, neurosurgery and general surgery. Headquartered in Plainsboro, N.J., Integra has research and manufacturing facilities worldwide.

Medtronic Gets Mixed Panel OK for Spine Device; Buys Biologics Firm

In late July, a U.S. Food and Drug Administration advisory panel recommended clearance for Medtronic’s spinal implant Amplify, which stimulates bone growth in spinal surgery patients.
The panel did ask that the company perform the appropriate follow-up studies to monitor for cancer, birth defects and other adverse events.

The panel voted nine to four (with one abstention) in favor of the safety and 10 to three (also with one abstention), in favor of the effectiveness of the Amplify recombinant human bone morphogenetic protein 2 (rhBMP2) matrix device for spinal fusion in patients with degenerative disk disease.

The panel was more evenly split when it weighed the risks and benefits of the new device, which uses recombinant bone morphogenetic protein 2 to promote the formation of new bone. Six panel members voted yes when asked if the device worked well enough to outweigh the risks, but five voted no, and three abstained.

FDA’s Orthopedic and Rehabilitation Devices panel looked at data regarding the product from a trial, and found the product safe and effective for fusions of the lower spine in patients with degenerative disc disease, according to the company.

The protein used in Amplify to stimulate bone growth also is used in the company’s InFuse device, which already is on the market for spinal surgery.

In a letter to investors, Analyst Rick Wise of healthcare investment bank Leerink Swann, wrote that he was “cautiously optimistic” that the product’s approval could happen within six to 12 months. Wise said the device had the potential “to drive increased sales momentum for MDT’s under-performing spine business.” He noted that Amplify could add as much $175 million (roughly 8 cents a share), to Medtronic’s earnings in its first year on the market.

Medtronic, the world’s largest maker of heart devices, is trying to revive growth in its $3.5 billion spinal products business, which accounted for 22 percent of the Minneapolis, Minn-based firm’s $15.8 billion in revenue for the year ended April 30.

There were, however, concerns regarding elevated cancer risk and risks to women’s reproductive health. In one of the clinical trials, 3.8 percent of patients using Amplify developed cancer within two years, compared with 0.9 percent in the control group. But because the cancers developed were different types, many panelists felt it wasn’t a result of Amplify.

“We will continue to collaborate closely with the FDA to develop the path forward,” said Tom McGuinness, Medtronic’s vice president and general manager of the company’s biologics panel, in a statement. “The potential approval of [Amplify] will further strengthen our position as the
market-leading provider of a comprehensive portfolio of bone grafting options.”

Medtronic makes a range of medical devices, including pacemakers, implantable defibrillators, and spinal implants.

The FDA normally follows the advice of its panels, though it is not a requirement.

In other Medtronic news, the medical device giant purchased Osteotech Inc. for $123 million, roughly $6.50 a share, which is a 65 percent premium compared with Osteotech’s stock price when the deal was announced in early August.

Osteotech, which makes orthopedic-focused biologic products that spur regenerative healing, recently has been under attack by a group of dissident investors unhappy with the company’s financial performance.

Heartland Advisors, Spencer Capital Management and Boston Avenue Capital, which collectively own nearly 23 percent of the company’s shares, urged shareholders to replace four of Osteotech’s six board members with their candidates.

“The board’s poor oversight of management has contributed to the loss of key customers, revenue stagnation, delayed product introductions and missed opportunities,” the investors wrote in a letter to shareholders.

Last year, Osteotech lost $4 million on revenue of $97 million compared to a profit of $2.2 million on revenue of $103.8 million in 2008. Since September 2009, Osteotech shares have fallen about 20 percent.

Osteotech’s board argued that the company’s performance recently improved, noting that the company reported a small profit in the second quarter. Osteotech also disclosed that it hired Deutsche Bank Securities last year to explore selling the company.

“This acquisition represents a key step in Medtronic’s strategy to build a broader business in regenerative biologics,” Chris O’Connell, Medtronic executive vice president and Restorative Therapies Group president, said in a statement. “Osteotech’s products and capabilities will better position Medtronic in today’s competitive musculoskeletal biologics market, and also position the company more broadly for the opportunity we see in the future.”

Osteotech’s board unanimously approved the takeover, saying it offers “significant value” to shareholders. The deal is subject to Osteotech shareholder and other regulatory approvals.
“We are currently reviewing the proposed transaction and will reserve comment until an appropriate time,” said Kenneth Shubin Stein of Spencer Capital Management LLC, a member of the dissident group, in a statement.

Medtronic officials claim Osteotech, based in Eatontown, N.J., offers “strong products” such as its Grafton demineralized bone mix. Osteotech also is awaiting approval from the U.S. Food and Drug Administration for its engineered human collagen biomaterial technology. These technologies will help Medtronic strengthen its position in the spine, orthopedic trauma and dental markets, as well as expand into new growth areas such as joint reconstruction, foot and ankle, and sports medicine.

Orthofix Opens New North American Operations and Education Center

Orthofix International N.V. opened its North American Operations and Education Center in Lewisville, Texas, in early August.

The new 144,000-square-foot facility, more than doubles the company’s former Dallas-area location in McKinney, Texas. With an additional 51,000 square feet of space compared with its prior facility, the new building allows Orthofix to consolidate its Spinal Implants Division operations from Wayne, N.J., and Springfield, Mass., and allow for growth. The new Lewisville location will house operations for the company’s global Spinal Implants and Spine Stimulation divisions as well as its North American Orthopedics Division.

“The opening of our new North American Operations and Education Center is a historic milestone as we mark the 30-year anniversary of our company this year,” said Alan Milinazzo, president and CEO. “I am excited about the new opportunities this world-class facility provides, including the opportunity to provide our physician customers with an expanded state-of-the-art training facility.”

In addition to the training center, the new facility includes an expanded R&D machine shop for the Spinal Implants division. The 2,500-square-foot shop will house advanced equipment for milling, turning, welding, laser marking and passivating to support the expedited completion of custom instrumentation requests.