Medical Device Maker Settles Conflict Inquiry in New Jersey

May 7, 2009

The New Jersey attorney general has announced a settlement with a medical device maker accused of failing to disclose financial conflicts of interest among doctors researching its products, and says her office is investigating other similar conflicts in the device industry.

The attorney general's office said it had issued subpoenas to five major device makers, although it did not publicly identify the companies.

"It is outrageous that doctors who are testing, and in many cases, recommending the use of certain high-risk medical devices are being compensated with stock in the very companies that make these devices," the attorney general, Anne Milgram, said in a statement.

The settlement, announced on Tuesday, calls for Synthes, the maker of the ProDisc artificial spinal disk, to disclose any future payments or investments held by doctors involved in researching its products.

The company has agreed to make the information publicly available through its Web site. Synthes has also agreed to stop paying doctors who are conducting clinical trials of its products with stock or stock options.

Under the settlement, the company also agreed to pay $236,000 to reimburse the attorney general's office for its investigation. The state pursued the case as a matter of consumer fraud.

Synthes, which is based in West Chester, Pa., and is a unit of a Swiss company with the same name, said it had voluntarily entered into the agreement "in the interest of a speedy resolution to the inquiry." The company did not admit any wrongdoing.

The ProDisc was the subject of an article in The New York Times in 2008 about surgeons who had conducted the clinical studies leading to the device's approval by the Food and Drug Administration. Doctors at about half of the 17 research centers involved stood to profit if the ProDisc was successful, according to confidential information from a patient's lawsuit that was settled in 2007.

In its subsequent investigation, New Jersey concluded that a majority of the doctors had significant investments in the products but that Synthes did not disclose the conflicts to the F.D.A.

In a letter sent on Tuesday to the F.D.A. and members of Congress, Ms. Milgram criticized the agency for doing "nothing to regulate these conflicts," despite what she described as an obvious lack of disclosure from the researchers, including some forms that were signed and dated but otherwise left blank.

She called on the F.D.A. to increase its oversight and develop new regulations requiring companies to disclose conflicts of interest to the public.

The F.D.A. said Wednesday that it was still reviewing Ms. Milgram's letter but that it had already revised some of its procedures to address some of the issues she raised.

As part of its investigation last year, the New Jersey attorney general's office also issued a subpoena to the Viscogliosi Brothers, the New York investment firm that helped found the original maker of the ProDisc in the United States. Telephone calls to the firm were not returned on Wednesday, and the attorney general's office would not comment on whether it was continuing any part of that investigation.