Physician ties to medical device firms probed

A Pennsylvania lawsuit alleging that several medical device companies paid illegal kickbacks to physicians raises questions about doctors' relationships with the industry and could signal elevated scrutiny of these ties.

A privately owned medical supply company accused five leading orthopedic device manufacturers of paying dozens of physicians, in the form of travel, meals, royalties and consulting fees, to promote the companies' products.

Intermedics-McCullough alleged that the inappropriate relationships initiated by Biomet, DePuy Orthopaedics, Zimmer, Stryker Orthopaedics and Smith & Nephew prevented the Pennsylvania-based medical supply company from competing for business, in violation of federal antitrust laws.

According to the complaint, the medical device companies induced doctors, hospitals and other medical institutions to buy and use exclusively their hip and knee replacement products, which Intermedics alleged to be inferior and more expensive than competitors' lines.

Such practices increase health care costs while depriving patients of treatment choices, said E. Timothy McCullough, Intermedics' attorney. The suit, filed Aug. 11 in U.S. District Court for the Western District of Pennsylvania, does not name any doctors as defendants but expressed an intent to do so as the case develops.

Physicians "have an ethical duty to act in the best interest of patients" and not based on financial ties, McCullough said.

The lawsuit alleges an $8 million kickback to one orthopedic surgeon, with other physician payments ranging from gifts valued at less than $100 to royalties in excess of $800,000. Attempts to reach several of the physicians were unsuccessful.

Biomet, DePuy, Zimmer and Stryker declined to comment on the pending litigation. Smith & Nephew did not return calls seeking comment.

The case stemmed from a federal investigation charging that four of the top five manufacturers paid physicians more than $800 million through 6,500 improper consulting agreements. Biomet, Zimmer, DePuy and Smith & Nephew agreed in September 2007 to pay $311 million to settle criminal anti-kickback claims levied by the Dept. of Justice. The companies are subject to federal monitoring for 18 months and must disclose the nature of any financial agreements with physicians on their Web sites.

Stryker, which federal authorities said voluntarily cooperated in the probe, did not face criminal charges but must comply with the disclosure and surveillance requirements.

All five manufacturers denied any wrongdoing.

Doctors' roles under scrutiny

The federal probe continues and includes a review of physician conduct, said Michael Drewniak, a spokesman for the U.S. attorney's office in New Jersey, which handled the investigation.

The government alleged that in some instances doctors did little or no work in exchange for the compensation arrangements while consenting to exclusive use of the paying company's products. The physicians also failed to disclose their company relationships, court papers state.

But Drewniak also noted that a majority of total payments were legitimate, including fees for helping to research and develop a product. He declined to comment on the Pennsylvania lawsuit.

New Jersey-based federal investigators in December 2007 subpoenaed two additional orthopedic device companies -- Wright Medical Group and Exactech -- for information related to any consulting arrangements with surgeons or other medical professionals. Both companies said they are cooperating with the inquiry.

The federal case appears to draw some guidelines for doctors, experts said. But information yielded from the settlements and future cases like the one in Pennsylvania are likely to offer more insight into what may be considered appropriate relationships in the medical device arena.

While doctors generally do not directly participate in drug development -- an industry that has been long targeted by federal authorities -- they can help create or improve a medical device, said David J. Rothman, PhD, president of the Institute on Medicine as a Profession, an affiliate of Columbia University in New York.

"What one wants is continued collaboration, but you want to make certain that neither financial arrangements nor marketing activities take place in ways that distort judgment or treatment," Rothman said. Still, "these are entangled financial relationships that I would want to know about as someone sitting in a doctor's office or on a medical research board."

American Academy of Orthopaedic Surgeons President E. Anthony Rankin, MD, agreed that transparency is key. "Our primary goal is always what's in the best interest of patients."

The AAOS supports appropriate relationships between orthopedic surgeons and the industry, which can benefit patients by developing new treatments, Dr. Rankin said. For example, the AAOS advises physicians to enter into consultancy agreements that reflect fair market value and detail an evidence-based need for a particular service. Under such guidelines, doctors would participate only in clinical or educational conference settings.

American Medical Association policy prohibits physicians from accepting compensation from a drug or device manufacturer for prescribing its products. Doctors also should disclose any financial conflicts, AMA policy states.

Meanwhile, from consulting agreements to royalty payments to continuing-education funding, some doctors anticipate industry practices will change under greater scrutiny.

"Now with the [federal] monitors, I think industry is trying to redefine the relationships they have with surgeons," Dr. Rankin said.