FAQs REGARDING RECENT MEDIA COVERAGE

Q&A RESPONSE TO QUESTIONS

Background

The Q&A presented below is based on Medtronic’s two responses to ICIJ and is intended to serve as a guide for responding to further questions on these issues.

Pre-Approval Activities

Q: It has been alleged that Medtronic’s business model is to develop a product and get it to market as quickly as possible. Do you dispute this characterization?

A: That is not accurate. At Medtronic, safety is our first and foremost priority and we reject any suggestion that Medtronic puts “innovation and profits” over safety. While we want to bring new, potentially life-saving therapies to patients as soon as possible, Medtronic will not offer a device or therapy to patients unless and until we have confirmed that the safety and efficacy profile is favorable in the context of the medical condition at issue and that we meet all of the appropriate regulatory requirements applicable in that market.

The process of medical device development, testing, and evaluation for safety and effectiveness is a highly developed scientific field. As a leading company developing new technology that extends patients’ lives, improves their health, and alleviates their pain, Medtronic has deep expertise in the testing and evaluation of new technology.

Our work in this area is overseen by leading regulators such as the U.S. Food and Drug Administration (FDA) and its counterparts in other countries around the world. These agencies also employ thousands of leading scientists, and they draw upon the expertise of independent scientific and medical experts. These officials review our risk analyses, our test plans and study designs, and they evaluate the results of our analyses. They oversee our work to monitor products that have been approved and are in the market, and they audit our facilities and management processes.

Each new technology, or each update or improvement to an existing technology, requires an evaluation plan based on that specific product, and what is new or changed and what risks may be incurred in its use. Regulatory agencies oversee, guide, and audit our decisions in all of these areas. Getting these processes right and ensuring the safety and effectiveness of our products is the core of our business. For this reason, Medtronic employs 86,000 employees, including scientists, clinical research personnel, and regulatory and quality experts, and, during the past ten years, Medtronic has spent more than $10 billion on research and development.

Q: What does Medtronic do to ensure that its products are safe and effective before bringing them to market?

A: Medtronic has a large team of dedicated professionals – including physicians, scientists and engineers – whose first and foremost priority is to ensure that all our medical devices and therapies meet the highest safety, efficacy, and performance standards. During development, our products are rigorously tested to ensure that they are safe. Because our devices and therapies are complex and innovative, before coming to market, we often seek advice from outside experts and regulators, including the FDA.

Our products are also 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. These include concept, feasibility, verification, and biocompatibility studies, as well as clinical trials. Medical experts at the 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. Last year alone, Medtronic invested $2.25 billion developing and testing new devices and therapies, and that number is expected to grow in 2018. In addition to pre-market clinical testing, Medtronic is an industry leader in post-market study and surveillance, during which we monitor, track, report on, and communicate with our regulators regarding safety and efficacy signals that emerge from “real world” experience with many of our products after they have been cleared and are being used by physicians and patients around the globe.

Q: There have been allegations that CoreValve, like the approval of other TAVR devices, were approved before there was adequate evidence of its safety and effectiveness. How do you respond?

A: The CoreValve system provides life-saving treatment options for high-risk patients who are poor candidates for traditional surgical procedures. It has been successfully used in more than 200,000 patients since 2007. Additionally, the safety and efficacy of the CoreValve system has been evaluated in more than a dozen clinical trials, including Medtronic’s CoreValve U.S. Pivotal Trial (1,453 subjects followed for up to 5 years) and the SURTAVI trial (1,600 subjects followed for up to ten years). These studies reported consistent data regarding the safety and efficacy of the CoreValve system, and confirmed its durability out to at least five years.

Post-Approval Safety Monitoring

Q: It has been alleged that Medtronic does not adequately monitor product safety after its products come to market. How do you respond?

A: At Medtronic, the safety of patients is our first and foremost priority, and our commitment to patient safety continues after our products are approved or cleared for patient use. In fact, Medtronic has been a market leader in driving post-market surveillance in the form of registries, data analytics, and real-world studies. For example, Medtronic has partnered with the Medical Device Innovation Consortium (MDIC) and the FDA, along with other industry participants, to help develop a first-of-its-kind electronic health record-based network to support collection and analysis of safety and efficacy data for medical devices across their full life cycle.

Medtronic also constantly monitors product safety. Medtronic’s post-market surveillance team – made up of highly-trained personnel including many medical professionals and engineers – continuously monitors the safety, efficacy, and performance of our medical devices and therapies in the U.S. and globally through our postmarket surveillance process. They regularly analyze adverse event data, collect and analyze 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 and patients who use our products, all for the purpose of continuing to monitor and improve the performance and efficacy of our devices. We stand behind our surveillance systems, and we are confident that they represent best-in-class practices for our industry.

Q: Does Medtronic report all adverse events involving death to FDA and other regulators?

A: 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.

Q: It has been reported that a former employee uncovered a study documenting reports of more than 1,000 injuries and four deaths linked to INFUSE that went unreported for years. How do you respond?

A: As Medtronic previously acknowledged, in 2008, certain data obtained from a retrospective chart review (RCR) of the INFUSE bone graft was not properly documented in the complaint handling system and was not assessed for reportability to the FDA. Once this issue was identified, Medtronic took steps to assess and report the information to applicable regulatory bodies, including FDA. Medtronic also implemented new policies and procedures to ensure that the issue would not reoccur. However, it is important to understand that the adverse event data identified in the RCR were consistent with those identified in prior INFUSE studies, and did not alter the benefit-risk profile of the device. The FDA has reviewed the safety of INFUSE on a number of occasions since these events took place and, as recently as April 2018, approved additional indications for the device.

Q: Would you agree that adverse event reports are a valuable source of safety information about your products?

A: Adverse event data can help identify signals for potential safety issues that otherwise may not have been detected in clinical studies or other testing. However, adverse event data has significant and well-recognized limitations, and thus cannot be used to draw conclusions about causality. Thus, while adverse event data can raise questions, controlled studies are needed to get answers. As the FDA has stated, “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.”² That is why, in evaluating and monitoring the safety of our products, Medtronic carefully considers all of the available post-market data, including data collected from controlled clinical trials and real-world observational studies, when available.

Q: What information is needed for an injury to be considered an adverse event?

A: 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.

Q: What are some the strengths and limitations of adverse event data?

A: Adverse event data can help identify signals for potential safety issues that otherwise may not have been detected in clinical studies or other testing. However, adverse event data has significant and well-recognized limitations, and thus cannot be used to draw conclusions about causality. Limitations of adverse event reports include the fact that such reports may be voluntarily filed by individuals who do 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.

Q: How does Medtronic evaluate potential safety issues with its medical devices and other therapies?

A: In evaluating potential safety issue for patients, we carefully consider the totality of available scientific evidence, frequently in cooperation with independent experts and consultants. In so doing, we put 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 direct comparisons to other products and therapies.

Q: How does Medtronic respond when it determines that a product must be recalled?

A: If our surveillance systems identify a potential performance issue, our personnel promptly evaluate the problem, including when appropriate, conducting root cause investigations and internal testing to assess whether the product continues to meet specifications and defined performance criteria. In some cases, based on this evaluation, Medtronic may determine that a recall is necessary.

Q: Aren’t recalls of Medtronic products indicative of product safety and quality control concerns?

A: The word “recall” is a generic term that refers to various types of corrective actions, many of which do not involve product retrieval or market withdrawal. Some communications to customers about new risk information or labeling updates may be classified as a “recall.” For example, in May 2017, Medtronic notified customers using a specific insulin pump of a potential hardware issue that can result from rapid changes in atmospheric pressure, such as in flight during take-off or landing , and provided instructions to address this rare issue if it occurred. The product remained in the customers’ hands, but the communication enabled correction of any potential situation. So a “recall” does not necessarily indicate that a device is defective or dangerous.

Q: What steps does Medtronic take when it determines that a “recall” is necessary?

A: When Medtronic determines that a recall is necessary, we communicate with healthcare providers and/or patients, and provide recommendations to address the issues. Such communications can include letters, emails, calls, press releases, physician notifications, and social medial postings. Medtronic also informs FDA and other regulators of the action in accordance with applicable regulatory requirements. We strive to minimize the number of recalls related to our products, and we are proud of our safety record and the systems we have in place to detect, address, correct and communicate these issues when they do arise.

Q: An AP analysis of FDA data found that Medtronic spinal cord stimulators had more than 1,700 reports of “shocking” or “jolting” over the past 10 years. Why are there so many reports of the same problems??

A: Medtronic maintains a Product Performance Registry that collects performance and safety data for many of our products, including SCS therapies. The data collected in cooperation with major healthcare centers in the United States, Europe, and South America is posted annually on our website. Between June 2004 and July 2016, the registry includes data on 4,286 patients from 75 healthcare centers that used spinal cord stimulators. For this period – more than 10 years – the registry reflects only two events of “shocking” or “jolting.” Medtronic also conducted post-approval clinical trials with spinal cord stimulators, including the PROCESS study, the first randomized, controlled, multicenter trial comparing the effectiveness and safety of spinal cord stimulation plus conventional medical management (CMM) versus CMM alone. None of the patients in the study reported experiencing shocking or jolting.

Promotion & Marketing

Q: Does Medtronic encourage sales representatives or Medtronic-sponsored doctors to promote unauthorized use of devices?

A: While physicians are free to use medical devices as they see fit based on their medical judgment (including “off-label” use), our sales and marketing representatives and consultants speaking on our behalf 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 product labeling. Medtronic has an extensive policy regarding interactions with healthcare providers involving off-label uses of our products and conducts regular training of customer-facing employees in applicable countries. Medtronic’s Code of Conduct (“The Compass”) commits all 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. Medtronic has made it a priority to educate its sales force and distributors on appropriate communication and to implement compliance programs that ensure any promotion or sale of its products is consistent with labeling.

Q: What is Medtronic doing to prevent sales representatives from promoting off-label use of devices or other irregular practices?

A: Medtronic’s Code of Conduct (“The Compass”) commits all 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. Medtronic has an extensive policy regarding interactions with healthcare providers involving off-label uses of our products and conducts regular training of customer-facing employees in applicable countries. Medtronic has made it a priority to educate its sales force and distributors on appropriate communication and to implement compliance programs that ensure any promotion or sale of its products is consistent with labeling. 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.

Q: Did Medtronic promote its INFUSE Bone Graft system off-label to physicians and hospitals?

A: That is not accurate. In fact, these very allegations were investigated by the U.S. Department of Justice (DOJ) and the U.S. Attorney’s Office beginning in 2008. For four years, these two offices investigated allegations of off-label promotion of INFUSE – as well as claims that Medtronic concealed risks associated with INFUSE. In 2012, however, they closed their investigations without taking any action.

While there is off-label use of INFUSE driven by physician decisions made in the best interest of patients, Medtronic has long prohibited its employees from advocating or encouraging use of the INFUSE Bone Graft system in the United States in a manner that is at odds with its FDA-approved product labeling. The INFUSE Bone Graft contains manufactured bone graft material that is used to repair a patient’s damaged or injured bones, without the need for harvesting material from the patient’s other bones. INFUSE provides an important, less invasive option to patients with bone certain conditions. Medtronic lawfully distributes INFUSE through sales to hospitals, which do not order the device on an “indication for use” basis. The ultimate decision on how the INFUSE device is used is made by physicians who practice at the hospital. Physicians are free to use the device as they see fit based on their expertise and knowledge.

Q: In 2012, the Senate Finance Committee found that Medtronic had ghostwritten studies for scientists. Is it Medtronic’s policy to have its employees draft studies and have “independent” scientists publish them?

A: Medtronic vigorously disagrees with the suggestion that the company improperly influenced or authored peer-reviewed published manuscripts or that it engaged in “ghost writing.” As reflected in the Senate Finance Committee report, in the early- to mid-2000s, a limited number of Medtronic employees provided biostatistical support or suggested edits to drafts of a small number of articles written by physicians conducting real-world retrospective reviews of patient data. Those physicians at all times retained full authorship of the articles, and the articles went through full peer review before being published.

Lobbying/Conflicts of Interest

Q: U.S. records show that Medtronic has increased its lobbying expenses over the last decade. Why has Medtronic done so?

A: That is not accurate. While our company has nearly doubled in size over the last ten years, our lobbying-related efforts have not significantly increased during that time period.

Q: Some of Medtronic’s lobbying efforts included opposing a more rigorous device-approval process and extending the humanitarian device exemption. Do you believe such efforts are consistent with your mission of improving the health of patients and, if so, why?

A: Our mission at Medtronic is to alleviate pain, restore health, and extend life. Our lobbying efforts are not only consistent with that mission, but they advance it in important ways that help patients. For example, Medtronic works closely with legislators and regulators to ensure that accelerated pathways exist for approval of devices intended to treat a rare disease or conditions (pursuant to the Humanitarian Device Exemption) and to develop value-based payment and delivery system initiatives that help improve patient outcomes and lower healthcare costs. Medtronic believes that these initiatives—and others like them—strengthen our healthcare system and promote patient health and welfare.

Compliance

Q: Medtronic has been accused of numerous legal violations in the U.S. and abroad, including taking kickbacks and promoting its products off-label promotion. Is there any truth in these allegations?

A: Medtronic has always been an industry leader in the area of ethics and compliance. And like any large company in a highly regulated industry such as medical technology, as well as any company operating in the U.S. legal system that is home to an aggressive plaintiffs’ bar that is incentivized to bring cases against large companies, Medtronic frequently faces investigations and lawsuits regarding the conduct of its employees. Allegations in lawsuits are not facts and should not be interpreted to suggest that Medtronic violated its legal, ethical, or regulatory obligations in any way. Medtronic has vigorously and successfully defended against allegations of “legal violations” by its employees on a number of occasions. In any organization of 86,000 employees, however, there is the potential for individual departures from expected standards of conduct. Medtronic takes such situations very seriously and implements appropriate corrective actions as soon as possible. And just as any large company, Medtronic occasionally chooses to resolve litigation and investigations on terms favorable to the company and its shareholders as appropriate under the circumstances, typically without any admission of liability or other wrongdoing, but rather to bring an end to lengthy and distracting legal proceedings.

Q: What steps has Medtronic taken to improve its compliance with regulations in the U.S. and worldwide?

A: Medtronic strongly believes in the integrity of its business practices and is proud of the compliance programs we have in place today. Medtronic requires its employees, and others acting on its behalf, to follow all applicable laws, regulations, company policies and industry standards whenever interacting with customers. Our Global Ethics & Compliance program was established by our Board of Directors, in conjunction with Medtronic senior management. The program includes: (1) written standards, including Medtronic’s Code of Conduct;¹ (2) 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. Medtronic invests in robust programs for training our employees and agents globally on their responsibilities under these policies, and we take instances of non-compliance very seriously. Medtronic’s commitment to ethical and compliant conduct was recognized just last year when our Global Chief Ethics and Compliance Officer was honored with the prestigious PricewaterhouseCoopers (PwC) Award for Leadership in Advancement in the Medical Device Industry.

Q: Over the last decade, there have been allegations against Medtronic and its distributors of corruption in emerging markets, including in China, Brazil and India. How do you respond to those allegations?

A: 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. We train all of our distributors and our employees interacting with them on our Global Anti-Corruption Policy, and regular monitor and audit many of those distributors.

Q: What are you doing to prevent and stop corruption among your direct employees as well as distributors in emerging markets?

A: Medtronic strongly believes in the integrity of its business practices and is proud of the compliance and anti-corruption programs we have in place today. 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 in the U.S. and worldwide. Further, Medtronic’s Global Anti-Corruption Policy requires compliance with all applicable anti-corruption laws and regulations; our Global Conflicts of Interest Policy prohibits engaging in activities that create a conflict between personal interests and the business interests of the company; and our global anti-retaliation policy prohibits Medtronic employees or agents from taking any adverse action against an individual because that person reported a possible violation of law or policy.

Payments to Consultants and Physicians

Q: U.S. records show Medtronic has paid millions of dollars to doctors and research institutions in the past five years. Why is that the case?

A: Medtronic works closely with outside experts and institutions to evaluate our products, monitor their safety, and improve their performance, all with a goal toward improving the lives of patients. We compensate these experts for their time, efforts, and expenses, because we are acutely aware that we are asking them to take time away from their own lives to help improve our products and therapies. It is important to emphasize, however, that the compensation paid is not conditioned on providing specific opinions or medical recommendations, or promoting the use of any of our products.

Q: Why does Medtronic rely on outside experts to teach healthcare providers about the use of its products?

A: Medical devices (such as pacemakers, intravascular devices, or insulin pumps) are critical for improving the lives of patients, but 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 all patients.

Q: What is Medtronic’s position on transparency regarding payments to its consultants?

A: We are committed to transparency in all of our business practices. In 2010, we initiated our own voluntary disclosure of payments to physicians on our website, years in advance of the Physician Payments Sunshine Act requirements for the CMS Open Payments Database. We also have devoted ourselves to ensuring that we have the systems to track the data and to provide reports to meet CMS requirements.

Integrated Health Solutions

Q: In the last few years Medtronic has been developing partnerships with hospitals as part of its business model. Some doctors say this new hospital partnership model is a calling card for overtreatment and overuse of devices because the company may push doctors to implant more devices, sometimes unnecessarily. How do you respond to that?

A: Medtronic is committed to improving healthcare delivery for patients in the U.S. and across the globe to improve the management and care of patients with chronic diseases and to reduce health care. To achieve this, Medtronic is collaborating with partners around the world to move healthcare in a more sustainable, collaborative direction through our Integrated Healthcare Solutions (IHS) business. Medtronic’s IHS programs are not intended to incentivize patient over-treatment. Rather, the 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 advance these important goals and improve healthcare for patients, 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. Numerous examples of successful collaborations are discussed on our website, including the Diabeter clinics, obesity clinics in the Netherlands (Nederlandse Obesitas Kliniek), as well as numerous other partnerships with healthcare organizations around the world.³ While these programs are in their early stages, they are showing promising results, including decreased healthcare costs, greater access to services, and improved patient outcomes. But Medtronic does 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. Importantly, our IHS business operates behind a firewall structure that functionally separates it from Medtronic’s medical device businesses.

Medtronic believes that integrated healthcare is the future of healthcare delivery and that IHS and value-based initiatives will be instrumental in reducing healthcare costs and improving quality of care. At the same time, we acknowledge that this is a new model for our industry and that some have expressed concerns about how this model will be implemented. Medtronic is working closely with regulators, legislators and other stakeholders to develop a responsible and ethical framework for advancing these initiatives in the coming years.

Q: Other critics have suggested that Medtronic’s IHS model stifles competition and limits options for patients. How do you respond?

A: Our IHS business focuses on improving healthcare delivery for patients. It 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. Throughout our engagement and beyond, healthcare providers, their patients, 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.

Medtronic believes that integrated healthcare is the future of healthcare delivery and that IHS and value-based initiatives will be instrumental in reducing healthcare costs and improving quality of care. At the same time, we acknowledge that this is a new model for our industry and that some have expressed concerns about how this model will be implemented. Medtronic is working closely with regulators, legislators and other stakeholders to develop a responsible and ethical framework for advancing these initiatives in the coming years.