A Few Answers, and Many More Questions About Device Manufacturers' Payments to Orthopedic Surgeons

With a big of digging, I have found some more media coverage of the story that began with deferred prosecution agreements a US Attorney made with four makers of orthopedic devices (Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Zimmer Holdings, and Smith & Nephew), and an agreement allowing federal supervision of Stryker Orthopedics (a unit of Stryker Inc). The companies were charged with violating anti-kickback laws by paying orthopedic surgeons as "consultants" to use their products. The companies have all posted on their web-sites lists of physicians and physicians groups receiving such "consulting" payments this year. (The links: Biomet, DePuy, Smith & Nephew, Stryker, and Zimmer.) We posted about the initial coverage of these lists here.

There has been subsequent media coverage of these lists. David Voreacos reported for Bloomberg, first on the general context:

The five biggest makers of hip- and knee-implant devices disclosed the names of 1,805 medical consultants they paid this year, including 46 doctors or organizations that got $1 million or more.

The companies posted the names on their Web sites yesterday under Sept. 27 agreements with U.S. prosecutors to settle claims that they paid kickbacks to surgeons who used their products.

Biomet, a Warsaw, Indiana-based company taken private this year, hired 241 consultants, including three who made more than $1 million.

Johnson & Johnson's Depuy Orthopaedics Inc. paid more than $1 million to 10 consultants. Depuy ... listed 469 consultants.

Stryker, of Kalamazoo, Michigan, paid 201 consultants, including six who got more than $1 million.

Zimmer Holdings Inc. paid more than $1 million this year to 21 consultants. Zimmer paid 603 consultants.

The companies supply 95 percent of hips and knees used annually in 700,000 replacement surgeries in the U.S.

The hip and knee industry will generate about $9.7 billion in worldwide sales in 2007....

U.S. Attorney Christopher Christie said on Sept. 27 that the industry 'routinely violated the anti-kickback statute by paying physicians for the purpose of exclusively using their products.' He said 'a significant minority' of doctors got kickbacks for using company products.

Bloomberg noted some of the companies' responses, which were not terribly informative, e.g.from Biomet:

'Without consultant intellectual property, it would be impossible for us to deliver the products that we do,' [Biomet spokesman Bill] Kolter said.

From Smith&Nephew,

'Some of them have certain intellectual property that is part of the product, and some of the payments become royalty payments,' said David Shapiro, a spokesman for Smith & Nephew of London. 'Some of them are for training other doctors. Obviously, royalty payments are going to be larger than just compensating somebody for a couple of days of training.'

From Stryker,

'The services that physicians rendered in helping develop products and educate people about those products are valuable,' Stryker Chief Financial Officer Dean Bergy said.

From Zimmer,

'We are not elaborating beyond what we've posted, and what we've posted is pursuant to the deferred prosecution agreement,' Zimmer spokesman Brad Bishop said. Zimmer paid 603 consultants.

Bloomberg also reported on some particularly noteworthy payments, e.g., by DePuy which

paid between $6.675 million and $7 million each to Drs. Richard Scott and Thomas Thornhill of Brigham and Women's Hospital in Boston. Scott and Thornhill said they get royalty payments for the licensing of a total knee replacement prosthesis in 1986 and a hip replacement prosthesis in 1991. They said almost 2 million of the knee devices have been implanted.

'Neither of us keep any of the money we receive from consulting,' they said in a statement. 'Any money we have received from consulting is donated to charity.'

Depuy spokeswoman Sarah Colamarino said surgeons typically don't get royalty payments when he or other doctors implant a device for which that surgeon gets royalty payments [sic]. Scott and Thornhill said they get no royalties for implants by surgeons at Brigham and Women's Hospital.

Note that the surgeons did not state what charity received their "consulting" payments, what proportion of the money they received were royalties, and whether they kept these royalties, as opposed to "consulting" payments. Also note that the response by the DePuy spokeswoman as printed made no sense. The news article did not rule out that Thronton and Scott kept the bulk of the money paid by DePuy in 2007, conceivably more than $6,000,000 a piece.

Bloomberg also investigated a single large payment by Stryker,

Stryker paid more than $3 million to Dr. Anthony Hedley of the Arizona Institute for Bone & Joint Disorders in Phoenix. He referred a call to Yin Becker, a company vice president who didn't return a call.

The Bloomberg reporters attempt at investigation obviously did not get very far. The reporter had no more luck investigating a large payment by Zimmer,

The company paid $5.5 million to Dr. W. Norman Scott of New York, who wrote 'Dr. Scott's Knee Book' and was the doctor for the New York Knicks in the National Basketball Association for 27 years. Scott didn't immediately return a call for comment.

If nothing else, Bloomberg's reporting confirms that some orthopedic device companies paid out exceedingly large amounts to individual orthopedic surgeons. Some proportions of these payments were ascribed to consulting, educational activities, or royalties or licensing payments for patents or intellectual property. Some of the surgeons who received payments are very well known and influential.

The extent that the recipients were influenced by the often fabulous payments they received from the device companies remains unknown. Whether the recipients of these payments made any significant disclosures of these financial relationships is also an open question. The concerns are that some surgeons may have failed to disclose these financial relationships:

• to patients for whom they made decisions about use of device
• when teaching about the diagnosis, prognosis, or treatment of conditions for which these devices may be used
• when writing or speaking on related topics

This story is a huge reminder about how conflicts of interest pervade current health care. It further illustrates that the size of some of the financial relationships that constitute such conflicts may be far larger than anyone previously thought.

As noted before, some people are concerned by how physicians may be influenced by gifts of pens, coffee mugs, and pizza lunches. If we should be concerned about coffee mugs, how much more should we be concerned by multi-million dollar royalties or consulting payments?

Note that the Bloomberg article apparently was the basis for a blog posting on GoozNews by Merrill Goozner. I took down a previous blog posting which covered some of the news reported above, because it was based on the erroneous assumption that Goozner himself had made the enquiries to physicians who received the payments reported in the Bloomberg article.