Medtronic plc Rob Clark Global Communications & Corporate Marketing 710 Medtronic Parkway Fridley, MN 55432 United States of America www.medtronic.com tel 763-505-2682 email rob.clark@medtronic.com October 24, 2018 Dear Ms. Alecci, Thank you for your October 12, 2018 letter. We appreciate the opportunity to respond to your written questions. Our responses are grouped by topic, and we have addressed a number of inaccuracies regarding our company and our 85,000 employees who are committed to the health and safety of patients using our products and services. Consistent with our prior communication, we request that you consolidate any follow-up questions into a single set. Medtronic’s mission is to alleviate pain, restore health, and extend life. Every second, two patients around the world benefit from our therapies, and this year alone that includes more than 70 million patients. Our products help treat more than thirty chronic diseases and conditions, including heart failure, Parkinson’s disease, chronic pain, and diabetes. Medtronic is proud of its people, products and services, and we disagree with the various inaccurate and misleading characterizations contained in your letter. Safe and Responsible Product Development. At Medtronic, safety is our first and foremost priority. Our business model is based on partnering with physicians, scientists, and patients to develop products that result in better health outcomes and enhance quality of life. Last year alone, Medtronic invested $2.25 billion in developing and testing new devices and therapies, and that number is expected to grow in 2018. While we want to bring new, potentially life-saving therapies to patients as soon as possible, Medtronic does not bring a device or therapy to market unless and until we have confirmed that the product is safe and effective in treating the medical condition at issue. Before coming to market, our products are subject to extensive testing, evaluation, and clearance or approval by FDA and other regulatory agencies. As of the end of July 2018, we have 317 active Medtronic-sponsored clinical studies. Medical experts at FDA and other regulators examine the results of these studies, as well as other data, before clearing or approving our products for use by doctors and patients. Continued Safety Monitoring and Adverse Event Reporting. Our focus on safety does not stop once a product comes to market. We continuously monitor the safety and 1 performance of all of our products through our postmarket surveillance process, which includes the receipt, analysis, investigation, and regulatory reporting of adverse events. Medtronic regularly performs trending analysis of events globally, in order to identify signals in the data that warrant further investigation and analysis, and voluntarily issues comprehensive, semiannual performance reports on certain products. In addition, we regularly collect data from postmarket clinical studies, review studies conducted by independent researchers, analyze scientific literature involving the performance of our products, and proactively seek out information and feedback from the numerous physicians who use our products, all for the purpose of continuing to monitor and improve the performance and efficacy of our devices. You specifically asked about adverse event reports. As you may know, adverse event reports for medical devices are publicly available on FDA’s Medical Device and User Facility Device Experience (MAUDE) database. The MAUDE database is a valuable tool that can help identify signals for potential safety issues that otherwise may not have been detected in clinical studies or other testing. Medtronic takes safety signals very seriously and investigates them thoroughly. In particular, all adverse events involving death are closely reviewed and evaluated, often with direct involvement of our internal team of medical professionals and at times in consultation with independent physician panels. Because Medtronic believes that it is important for regulators to have this information, it is our policy to report death events to FDA and other regulators even if causation is not established. At the same time, it is critical to understand that adverse event reports have significant and well-recognized limitations. To be considered an “adverse event,” only the barest information is required. For medical devices, all that is needed is an allegation of an injury involving a device and a patient. These reports do not typically make any determination or conclusion about whether the medical device had any relationship to, let alone caused, the injury. Other limitations of adverse event reports include the fact that such reports may be voluntarily filed by individuals who may or may not have medical training (e.g., patients, family members, or lawyers), often contain limited or incomplete information, can be duplicative, and occasionally can be affected by external factors such as media reports or litigation. Indeed, FDA has recognized that adverse events reports “cannot be used to establish rates of events, evaluate a change in event rates over time or compare event rates between devices” and that “the number of reports cannot be interpreted or used in isolation to reach conclusions about the existence, severity, or frequency of problems associated with devices.” 1 For all of these reasons, analyses of adverse event data should be approached with caution, and any conclusions about device safety drawn from adverse events alone should be viewed with skepticism. In response to your question about the number of adverse events reported for Medtronic products between 2008 and 2017, it is not scientifically valid to draw conclusions about device safety across thousands of individual medical products based solely on the See MAUDE - Manufacturer and User Facility Device Experience, Disclaimer, FDA website, available at https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfmaude/search.cfm (last visited October 17, 2018). 1 2 number of reported events. In evaluating and monitoring the safety of our products, Medtronic carefully considers the totality of available scientific evidence, with particular emphasis on data from controlled clinical trials and studies conducted under real world-conditions. Such studies provide the most reliable evidence regarding the safety and efficacy of our medical devices and therapies and allow for direct comparison to other products and therapies. We are proud of our safety record and stand behind the safety and efficacy of all our therapies. Collaboration with External Experts. You also asked about payments to healthcare professionals. Collaboration between innovators and external experts (such as surgeons, physicians, and researchers) has long served as a foundation for the development of medical breakthroughs, including, for example, penicillin, the Polio vaccine, CAT scans, laser eye surgery, cholesterol-lowering statins, and vaccines for chickenpox and hepatitis. Such collaboration is a critical part of the invention, ongoing study, safe use and monitoring of medical devices. Indeed, Medtronic’s first revolutionary product—a wearable, batterypowered cardiac pacemaker developed in the 1950s—was the result of close collaboration between Medtronic co-founder Earl Bakken and a pioneering heart surgeon at the University of Minnesota Medical School. Medtronic works closely with outside experts to evaluate our products, monitor their safety, and improve their performance. This is done through sponsored research, advisory committees, and consulting relationships. Medtronic also relies on external experts to help educate their colleagues on the safe and effective use of, and indications for, our devices and therapies. The cooperative relationship between manufacturers and physicians is particularly important in the medical device industry. Medical devices (such as pacemakers, intravascular devices, or insulin pumps) often include complicated technologies and typically require training and practice before they can be used safely. Healthcare providers who intend to use these devices must fully understand how they work, how they should be used, and how their use should be tailored to the needs of individual patients. Experienced physicians and other healthcare professionals often are best equipped to educate their colleagues on these topics, sharing methods and techniques to ensure the best possible outcomes for patients. It is important to emphasize that Medtronic does not fund “favorable” studies or “pay physicians or advocacy groups to promote our products.” While we support research and education, those efforts are intended to ensure that accurate information about our products is available to healthcare providers and patients, so that they can make educated, independent treatment decisions. In accordance with our Global Business Conduct Standards, 2 Medtronic compensates experts for their time and expenses, not for providing specific opinions or medical recommendations. Medtronic relies upon market data and applies well established methodologies to set fair market value rates for all of the ways in which we collaborate with See Medtronic Global Business Conduct Standards, available at: http://www.medtronic.com/usen/about/corporate-governance/global-business-conduct-standards-policy.html (last visited October 17, 2018). 2 3 physicians, which may vary based on geography, specialty and level of experience. We compensate these experts because we are asking them to take time away from their work, patients, and families to help improve our products and therapies. Further, in response to the “critics” referenced in your letter, as Medtronic’s standard consulting agreements make clear, no physician is ever expected or required to purchase or recommend Medtronic products in exchange for a consulting payment. 3 We understand the importance of public trust in collaboration and are committed to transparency in order to increase patient confidence. As a result, we initiated our own voluntary disclosure of payments to physicians on our website going back to 2010, years in advance of the Physician Payments Sunshine Act requirements for the CMS Open Payments Database in 2014. We also have devoted ourselves to ensuring that we have the systems to track the data and to provide reports to meet CMS requirements. Responsible Promotion & Compliance. You also asked about Medtronic’s compliance program. Medtronic’s Code of Conduct (“The Compass”) commits all of our employees and those acting on our behalf to ethical behavior and requires employees to follow applicable laws and regulations, including those governing promotion of our products. We are committed to ensuring that our promotional activities are consistent with the labeling approved by FDA and foreign regulators. Medtronic’s sales and clinical representatives perform an important role in educating healthcare providers about new products and devices and providing access to information about those products. While physicians are free to use medical devices as they see fit based on their medical judgment (including “off-label” use), our sales representatives are not permitted to speak about, or to encourage, the use of any of our products in a manner that is at odds with the approved labeling in a given geographic region. Specifically, in response to your question, Medtronic has made it a priority to educate its direct sales force and distributors on appropriate communications and to implement compliance programs that ensure any promotion or sale of its products is consistent with labeling, as well as all applicable laws and regulations governing relationships with government and private customers. This includes programs taking place in emerging markets, such as China, Brazil and India. Our Global Ethics & Compliance program, established by our Board of Directors in conjunction with Medtronic senior management, is one of the key components of our commitment to the highest standards of ethical practice. This program involves not only a framework of policies, procedures and programming activities, but also the commitment of senior management, and the support of all employees, contractors, distributors, and agents to make the program effective. We regularly review and enhance our compliance program to The “fair market value; no inducement” clause of the contract states: “The parties agree that the payments hereunder: (a) are consistent with the fair market value of the Services and (b) have not been determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties. Nothing contained in this Agreement shall be construed in any manner as an obligation or inducement for Consultant to purchase, order, prescribe, or recommend any Medtronic products or any products of any Affiliate.” 3 4 meet our evolving compliance needs. The program includes: (1) written standards, including Medtronic’s Code of Conduct; 4 (2) a leadership structure incorporating a Global Chief Ethics & Compliance Officer and Executive Compliance Committee; (3) education and training; (4) auditing and monitoring; (5) corrective action procedures; and (6) a compliance hotline, available around the globe in dozens of languages, which allows individuals to confidentially raise any compliance concerns. In addition, you asked about Medtronic’s efforts to prevent corruption in emerging markets. Medtronic’s Global Anti-Corruption Policy requires compliance with all applicable anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (FCPA) and anti-corruption laws of other countries where we or our partners do business. Our Global Conflicts of Interest Policy, applicable to all Medtronic employees worldwide, prohibits engaging in activities that create a conflict between personal interests and the business interests of the company. Designed to supplement our Code of Conduct, this policy provides employees with practical guidance on how to avoid or disclose real or potential conflicts of interest with business partners, suppliers, vendors and colleagues. We also have a global antiretaliation policy, which prohibits Medtronic employees or agents from taking any adverse action against an individual because that person reported a possible violation of law or policy. Medtronic implements robust programs for training our employees and agents globally on their responsibilities under these policies, and we take instances of non-compliance seriously. If an employee or partner is alleged to be in violation of these policies, Medtronic is committed to promptly investigating and issuing the appropriate corrective actions, up to and including termination. Improving Access to Life-Saving Therapies. You also asked whether Medtronic’s lobbying efforts are consistent with our mission of improving the health of patients. Our lobbying efforts are not only consistent with that mission, but they advance it in important ways. Medtronic is committed to ensuring that life-saving therapies are available to patients. Toward this end, Medtronic works with regulators and legislators to make pathways available for accelerated review and clearance for certain types of medical devices, while still ensuring that the safety of those products is evaluated carefully. One example of such a pathway is the Humanitarian Device Exemption (HDE), which provides an alternative approval method for devices intended to treat a rare disease or condition. While approval under the HDE does not require the same level of proof of effectiveness as a traditional pathway, a manufacturer must provide “sufficient information for FDA to determine that the device does not pose an unreasonable or significant risk of illness or injury, and that the probable benefit to health outweighs the risk of injury or illness from its use, taking into account the probable risks and benefits of currently available devices or See Medtronic Code of Conduct, available at: http://www.medtronic.com/us-en/about/corporategovernance/code-conduct.html (last visited October 17, 2018). 4 5 alternative forms of treatment.” 5 Medtronic believes that the HDE is critical in ensuring that life-saving medical devices are available to patients suffering from serious but rare diseases, for which treatments may not otherwise be commercially viable. 6 To accomplish these goals, Medtronic must maintain a healthy dialogue with government officials who have a significant impact on healthcare policy. Many of these efforts have been directed at developing value-based payment and delivery system initiatives that are intended to improve healthcare outcomes while reducing costs to patients and payors. In pursuing these goals, Medtronic adheres to all federal and state laws, including requirements related to disclosure of these activities. Despite the company nearly doubling in size, our lobbying-related efforts over the last ten years have remained relatively stable; the statement in your letter that Medtronic has “significantly” increased its lobbying efforts is thus incorrect. Improving Healthcare Delivery Through Strategic Partnerships. You also asked about our Integrated Health Solutions (IHS) business. As a healthcare company, Medtronic is committed to improving healthcare delivery in the U.S. and across the globe. The company’s IHS business aims to enhance efficiency of care settings, such as cardiac catheterization labs and operating rooms, while also optimizing healthcare delivery from the time a patient is referred for treatment to the time he or she has fully recovered. To accomplish this, we leverage data to highlight variations in clinical decision-making, and we manage processes to enable more standardized and effective decision-making amongst healthcare providers. This leads to better patient outcomes at lower costs. In response to your question, our IHS business does not “stifle[] competition” or “limit options for patients.” We do not control or direct healthcare professionals’ decision-making when it comes to patient care, the indications for procedures, the use of technology in patient care, or the selection of specific medical devices. Any decision to utilize a Medtronic device through a given procedure is a decision made solely by healthcare providers. Throughout our engagement and beyond, these healthcare providers and their health systems retain full autonomy to decide which procedures are indicated for which patients, and which medical devices they will use from which companies. This business also operates behind a firewall structure that functionally separates it from Medtronic’s medical device businesses. One additional example of our commitment to improve healthcare delivery are diabetes management clinics (“Diabeter Clinics”), which provide comprehensive, cutting edge care for over 1,500 children and adults who suffer from type 1 diabetes. These clinics, located in the Netherlands and operated by a subsidiary of Medtronic, offer patients a choice of medical therapies and a host of professional support services from endocrinologists, nutritionists, and HDE Approvals, FDA website, available at https://www.fda.gov/medicaldevices/productsandmedicalprocedures/ deviceapprovalsandclearances/hdeapprovals/default.htm (last visited October 17, 2018). 6 Examples of conditions treated by Medtronic therapies and devices under an HDE include chronic, intractable nausea and vomiting secondary to gastroparesis in diabetic patients or of idiopathic etiology; chronic intractable (drug refractory) primary dystonia; and chronic, severe, treatment-resistant obsessive compulsive disorder in certain adult patients. 5 6 psychologists. Physicians at these clinics use their medical judgment in selecting appropriate treatment for their patients. Medtronic is not involved in the physicians’ medical decisionmaking process, nor are any incentives provided for using Medtronic products. While the Diabeter Clinics are in their early stages, the results are promising, with improved clinical outcomes (better blood glucose control) and reduced costs. In conclusion, Medtronic is proud of its long history and tradition of providing high quality, innovative healthcare products for patients around the world. As a global company, we have a responsibility to all of our patients—in the U.S. and abroad—to ensure that our devices and therapies are safe and effective and that we adhere to the highest medical, scientific, regulatory, and legal standards. Every day we strive to meet and exceed this goal, with an eye towards innovation and continued improvement in healthcare delivery. We at Medtronic always welcome robust scientific discourse and hope that your article includes a fair and balanced perspective on these important topics. Sincerely, VP, Chief Communications Officer Global Communications & Corporate Marketing Medtronic plc 7