Medtronic 2012 Annual Report Download - page 30

Employees
On April 27, 2012, we employed approximately 45,000 employees (including full-time equivalent
employees). Our employees are vital to our success. We believe we have been successful in attracting and
retaining qualified personnel in a highly competitive labor market due to our competitive compensation and
benefits, and our rewarding work environment.
Seasonality
Worldwide sales, including U.S. sales, do not reflect any significant degree of seasonality.
Government Regulation and Other Considerations
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.
Authorization to commercially distribute a new medical device in the U.S. is generally received in one
of two ways. The first, known as pre-market notification or the 510(k) process, requires us to demonstrate
that our new medical device is substantially equivalent to a legally marketed medical device. In this process,
we must submit data that supports our equivalence claim. If human clinical data is required, it must be
gathered in compliance with U.S. FDA investigational device exemption regulations. We must receive an
order from the U.S. FDA finding substantial equivalence to another legally marketed medical device before
we can commercially distribute the new medical device. Modifications to cleared medical devices can be
made without using the 510(k) process if the changes do not significantly affect safety or effectiveness. A very
small number of our devices are exempt from pre-market review.
The second, more rigorous process, known as pre-market approval (PMA), requires us to independently
demonstrate that the new medical device is safe and effective. We do this by collecting data regarding design,
materials, bench and animal testing, and human clinical data for the medical device. The U.S. FDA will
authorize commercial distribution if it determines there is reasonable assurance that the medical device is
safe and effective. This determination is based on the benefit outweighing the risk for the population
intended to be treated with the device. This process is much more detailed, time-consuming, and expensive
than the 510(k) process. A third, seldom used, process for approval exists for products intended for orphan
populations, which is less than 4,000 patients per year in the U.S. This exemption is similar to the PMA
process; however, a full showing of product effectiveness from large clinical trials is not required. The
threshold for approving these products is probable benefit and safety.
Both before and after a product is commercially released, we have ongoing responsibilities under U.S.
FDA regulations. The U.S. FDA reviews design and manufacturing practices, labeling and record keeping,
and manufacturers’ required reports of adverse experiences and other information to identify potential
problems with marketed medical devices. We are also subject to periodic inspection by the U.S. FDA for
compliance with the U.S. FDA’s quality system regulations, which govern the methods used in, and the
facilities and controls used for, the design, manufacture, packaging, and servicing of all finished medical
devices intended for human use. In addition, the U.S. FDA and other U.S. regulatory bodies (including the
Federal Trade Commission, the Office of the Inspector General of the Department of Health and Human
Services, the Department of Justice (DOJ), and various state Attorneys General) monitor the manner in
which we promote and advertise our products. Although surgeons are permitted to use their medical
judgment to employ medical devices for indications other than those cleared or approved by the U.S. FDA,
we are prohibited from promoting products for such “off-label” uses, and can only market our products for
cleared or approved uses. 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 require us to notify health professionals and others that the devices present
unreasonable risks of substantial harm to the public health, order a recall, repair, replacement, or refund of
such devices, detain or seize adulterated or misbranded medical devices, or ban such medical devices. The
U.S. FDA may also impose operating restrictions, enjoin and/or restrain certain conduct resulting in
violations of applicable law pertaining to medical devices, and assess civil or criminal penalties against our
13