Congress Probes Medical Device Payments
WASHINGTON (AP) - After years of criticizing drug company gifts and payments to physicians, lawmakers have turned their scrutiny to similar tactics used by medical device companies.
Senate lawmakers on Tuesday questioned executives from orthopedic makers Stryker Corp. (nyse: SYK - news - people ) and Zimmer Holdings Inc. (nyse: ZMH - news - people ) on gifts and consulting fees paid to surgeons who use their implants. Both companies specialize in replacement knees and hips.
Sen. Herbert Kohl, D-Wis., who called the hearing, accused both companies and physicians of putting their financial interests ahead of patients.
'These types of unethical payments are not anecdotal, but rather have been pervasive and industrywide for far too long,' said Kohl, who chairs the Senate's committee on aging. 'The physicians who take their money are equal participants and equally culpable.'
Device makers have said surgeons are paid fairly to provide important feedback on new devices. But an inspector from the Department of Health and Human Services told lawmakers that many consulting arrangements involve no work at all and are instead aimed at buying loyalty from surgeons who implant hundreds of devices each year.
In one example, the company Advanced Neuromodulation Systems paid doctors $5,000 for every five patients they tested with the company's product. The company later settled with government prosecutors who charged that the payments were nothing more than a marketing ploy to boost sales.
Health and Human Services inspector Greg Demske said it is difficult to prosecute companies for illegal kickbacks because they are often disguised as educational grants or royalty fees. He said legal changes may be needed to curb the influence of money in the industry.
Dr. Charles Rosen, a professor of orthopedic surgery, said it was unlikely physician groups would try to stop the questionable financial arrangements.
'These practices are so embedded among the people running these societies I don't think it will be possible to change them without something from outside,' said Rosen, who heads a group for spinal surgeons who don't accept industry money.
Kohl and Sen. Charles Grassley, R-Iowa, are pushing a bill that would require drug and device makers to disclose how much they spend on gifts, travel and other payments to physicians.
Zimmer Vice President Chad Phipps said his company supports the measure and acknowledged that payments to physicians 'may have been excessive at times.'
Warsaw, Ind.-based Zimmer was one of five companies that together paid $310 million last year to settle charges that they gave doctors illegal kickbacks. Stryker was among those companies but was not charged because it cooperated early in the Department of Justice's investigation.
Stryker Vice President Edward Lipes said mandatory disclosure of gifts, consulting fees and other payments would discourage companies from using the tactics inappropriately.
The industry group AdvaMed said Kohl and Grassley's bill should apply only to companies that spend large sums on physicians -- and exclude those that don't. Lawmakers had mixed reactions to that suggestion.
Stryker shares fell 66 cents to $66.93. Shares of Zimmer Holdings rose 23 cents to $77.45.