Medtronic 2014 Annual Report Download - page 24

Our global regulatory environment is becoming increasingly stringent, and unpredictable, which could increase the time, cost
and complexity of obtaining regulatory approvals for our products. Several countries that did not have regulatory requirements
for medical devices have established such requirements in recent years and other countries have expanded, or plan to expand, on
existing regulations. Certain regulators are requiring local clinical data in addition to global clinical data. While harmonization
of global regulations has been pursued, requirements continue to differ significantly among countries. We expect this global
regulatory environment will continue to evolve, which could impact our ability to obtain future approvals for our products, or
could increase the cost and time to obtain such approvals in the future. We cannot assure you that any new medical devices we
develop will be approved in a timely or cost-effective manner or approved at all.
Ongoing U.S. FDA Regulations
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, including a hold on approving new devices until issues are resolved
to its satisfaction, and assess civil or criminal penalties against our officers, employees, or us. The U.S. FDA may also
recommend prosecution to the DOJ. Conduct giving rise to civil or criminal penalties may also form the basis for private civil
litigation by third-party payers or other persons allegedly harmed by our conduct.
Governmental Trade Regulations
The sale and shipment of our products and services across international borders, as well as the purchase of components and
products from international sources, subject us to extensive governmental trade regulations. A variety of laws and regulations,
both in the U.S. and in the countries in which we transact business, apply to the sale, shipment and provision of goods, services
and technology across international borders. Because we are subject to extensive regulations in the countries in which we
operate, we are subject to the risk that laws and regulations could change in a way that would expose us to additional costs,
penalties or liabilities. These laws and regulations govern, among other things, our import and export activities.
The U.S. FDA, in cooperation with U.S. Customs and Border Protection (CBP), administers controls over the import of medical
devices into the U.S. The CBP imposes its own regulatory requirements on the import of our products, including inspection and
possible sanctions for noncompliance. Medtronic is also subject to foreign trade controls administered by several U.S.
government agencies, including the Bureau of Industry and Security within the Commerce Department and the Office of
Foreign Assets Control within the Treasury Department. We import raw materials, components and finished products into the
countries in which we transact business. We act as the import of record in many instances, but we also sell and ship goods to
third parties who are themselves responsible for complying with applicable trade laws and regulations. In our role as importer of
record, we are directly responsible for complying with customs laws and regulations concerning the importation of our raw
materials, components and finished products. If third parties violate U.S. FDA or customs laws and regulations when engaging
in cross-border transactions involving our products, we may be subject to varying degrees of liability depending on our
participation in the transaction. In addition, the activities of third parties may cause supply chain disruptions and delays in the
distribution of our products that impact our business activities.
Many countries, including the U.S., control the export and re-export of goods, technology and services for reasons including
public health, national security, regional stability, antiterrorism policies and other reasons. In certain circumstances, approval
from governmental authorities may be required before goods, technology or services are exported or re-exported to certain
destinations, to certain end-users and for certain end-uses. In addition, international sales of our medical devices that have not
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