Medtronic Exits Knee Replacement Business Amid Pricing Pressures, Retains Intellectual Property

In 2016, Medtronic acquired Responsive Orthopaedics, a startup aiming to expand the artificial joint market through low-cost and bundled payment models. Recently, Medtronic announced that it would abandon Responsive’s knee replacement business, with the official closure taking effect after changes to the U.S. federal Pay-for-Performance Act.

The Comprehensive Care for Joint Replacement (CJR) alternative payment model under U.S. Medicare was officially implemented in April 2016. This program links payments and penalties to patients’ 90-day post-treatment recovery rates, mandating participation from 1,800 hospitals across 67 population centers, covering one-quarter of the Medicare beneficiary population. The agency estimates that the program will save the U.S. government $343 million over five years.

In 2017, the Trump administration proposed reducing the number of mandatory population centers involved in this program from 67 to 34, with patients in the remaining 33 population centers and all rural and small pharmaceutical providers participating on a voluntary basis.

In a statement, Medtronic said, “Following Medtronic’s acquisition of Responsive in 2016, U.S. federal guidelines on orthopedic joint replacement changed, and implant pricing became highly competitive, making it difficult for Medtronic to offer more breakthrough or lower-priced solutions.”

Earlier this year, Medtronic began gradually exiting the plastic surgery implant market to respond to changing market dynamics and focus its business on future growth, while maintaining its commitment to value-based healthcare.

“The Responsive Orthopedic Knee System remains a high-quality, effective implant, with patients receiving the implant demonstrating favorable outcomes,” stated Medtronic. Although announcing its withdrawal, the company will retain intellectual property rights for related therapeutic devices, including the Responsive artificial knee and hip systems (the latter not yet approved by the FDA).

Meanwhile, Medtronic is actively expanding its market presence in titanium spinal implants and spinal fusion procedures through the acquisition of Titan Spine, based in Mequon, Wisconsin, aiming to achieve new progress in its spinal implant business.

The surface texture of titanium implants is relatively rough at the microscopic level, which facilitates osteoblast adhesion and growth during fusion. Furthermore, compared to spacers made from the organic polymer polyether ether ketone (PEEK), titanium offers greater rigidity, providing patients with superior stability.

“There is clearly market demand for PEEK, but the demand for titanium devices is also growing rapidly,” Sharrolyn Transfeldt Josse, Vice President and General Manager of Core Spinal at Medtronic, told FierceMedTech. “Surgeons also have their own preferences when it comes to treatment options, and this is a gap that Medtronic needs to address.”

Josse stated that Medtronic will further evaluate whether Titan Spine’s nanotechnology surface coatings and proprietary textures can be applied to other medical devices and spinal implants. Currently, the specific terms of the acquisition have not been disclosed. The two companies aim to complete the transaction before the end of Medtronic’s first fiscal quarter (ending July 26).

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