Doctors Took Kickbacks from Orthopedic-Device Makers

Bribery scheme may be difficult to eliminate

By D. O. Volente

February 28, 2008
A U.S. investigator told Congress Wednesday that four companies that manufacture artificial hips and knees sought to bribe doctors with more than $800 million in royalties and fees in an effort to get them to use their implants.

The bribery scheme apparently lasted four years.

Gregory E. Demske, an assistant inspector general at the Health and Human Services Department, testified before Congress that four unidentified companies that control about three-quarters of the $9.4 billion market for hips and knees, made illegitimate payments so aggressively that it would now be nearly impossible to eradicate this practice.

The fees have enriched doctors and distorted the market by bolstering sales of lower-quality devices, said Demske.

The hearing was conducted following a probe of the orthopedic-device industry by U.S. prosecutors which was settled last September by the industry for an estimated $311 million. The government had alleged that the companies handed out excessive consulting agreements, lavish trips and other trips to reward surgeons who used their products.

This is not the first time that a section of the medical community has been accused of being greedy. Many doctors on a day-to-day basis have to fend off numerous eager sales representatives from pharmaceutical companies that try to influence them to sell their products or recommend their medications as prescriptions to patients.

The orthopedic-device companies that were party to the settlement were two Warsaw, Indiana-based companies: Zimmer Holdings and Biomet, as well as New Brunswick, N.J.-based Johnson & Johnson and London-based Smith & Nephew companies.

A legal counsel for one of the companies, Zimmer Holdings, even acknowledged in media reports that his company may have gone too far in its efforts to bolster its sales and may have used consultants too aggressively to push doctors to recommend their products.

Some other companies, however, are arguing that it's difficult to sort out which payments are unethical and are open to online disclosure forms that the public can access to get a better understanding of the business. But they are also saying that Congress should not target the big companies alone. Larger device makers are worried that physicians may now shift their loyalties to competitors who may not be coming under such scrutiny and could perhaps continue the questionable practices in various direct and indirect forms.

A spokesman for the Association for Ethics in Spine Surgery testified that efforts to curb questionable consulting fees have failed so far because the industry has colluded in such schemes and groups such as his are considered outcasts in such debates.

"Something from the outside needs to happen," said Charles Rosen who started the ethics association.