Medtronic 2014 Annual Report Download - page 30

Our industry is experiencing greater scrutiny and regulation by governmental authorities, which may lead to greater
regulation in the future.
Our medical devices and our business activities are subject to rigorous regulation, including by the U.S. FDA, DOJ, and
numerous other federal, state, and foreign governmental authorities. These authorities and members of Congress have been
increasing their scrutiny of our industry. For example, we have received inquiries from members of Congress and other
government agencies regarding a variety of matters. In addition, certain state governments and the federal government have
enacted legislation aimed at increasing transparency of our interactions with health care providers. As a result, we are required
by law to disclose payments and other transfers of value to health care providers licensed by certain states and, starting with
payments or other transfers of value made on or after August 1, 2013, to all U.S. physicians and U.S. teaching hospitals at the
federal level. Any failure to comply with these legal and regulatory requirements could impact our business. In addition, we
may continue to devote substantial additional time and financial resources to further develop and implement policies, systems,
and processes to comply with enhanced legal and regulatory requirements, which may also impact our business. We anticipate
that governmental authorities will continue to scrutinize our industry closely, and that additional regulation may increase
compliance and legal costs, exposure to litigation, and other adverse effects to our operations.
We are subject to many laws and governmental regulations and any adverse regulatory action may materially adversely
affect our financial condition and business operations.
Our medical devices are subject to regulation by numerous government agencies, including the U.S. FDA and comparable
agencies outside the U.S. To varying degrees, each of these agencies requires us to comply with laws and regulations governing
the development, testing, manufacturing, labeling, marketing, and distribution of our medical devices. We cannot guarantee that
we will be able to obtain marketing clearance for our new products or enhancements or modifications to existing products. If
such approval is obtained, it may:
•take a significant amount of time,
•require the expenditure of substantial resources,
•involve stringent clinical and pre-clinical testing, as well as increased post-market surveillance,
•involve modifications, repairs, or replacements of our products, and
•result in limitations on the proposed uses of our products.
Both before and after a product is commercially released, we have ongoing responsibilities under U.S. FDA regulations. We are
also subject to periodic inspections by the U.S. FDA to determine compliance with the U.S. FDA’s requirements, including
primarily the quality system regulations and medical device reporting regulations. The results of these inspections can include
inspectional observations on U.S. FDA’s Form-483, warning letters, or other forms of enforcement. Since 2009, the U.S. FDA
has significantly increased its oversight of companies subject to its regulations, including medical device companies, by hiring
new investigators and stepping up inspections of manufacturing facilities. The U.S. FDA has recently also significantly
increased the number of warning letters issued to companies. If the U.S. FDA were to conclude that we are not in compliance
with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the
U.S. FDA could ban such medical devices, detain or seize adulterated or misbranded medical devices, order a recall, repair,
replacement, or refund of such devices, refuse to grant pending pre-market approval applications or require certificates of
foreign governments for exports, and/or require us to notify health professionals and others that the devices present
unreasonable risks of substantial harm to the public health. The U.S. FDA may also impose operating restrictions on a company-
wide basis, enjoin and/or restrain certain conduct resulting in violations of applicable law pertaining to medical devices, and
assess civil or criminal penalties against our officers, employees, or us. The U.S. FDA may also recommend prosecution to the
DOJ. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling our
products.
In addition, device manufacturers are permitted to promote products solely for the uses and indications set forth in the approved
product labeling. A number of enforcement actions have been taken against manufacturers that promote products for “off-label”
uses, including actions alleging that federal health care program reimbursement of products promoted for “off-label” uses are
false and fraudulent claims to the government. The failure to comply with “off-label” promotion restrictions can result in
significant administrative obligations and costs, and potential penalties from, and/or agreements with, the federal government.
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