Another Legal Settlement by St Jude Medical
St. Jude Medical Inc. agreed to pay $16 million to settle a U.S. government probe of claims the company paid kickbacks to doctors who implanted its heart devices in patients.
The accord resolves a five-year investigation of St. Jude’s marketing practices for defibrillators and pacemakers.
This was not even the first recent settlement by this particular company:
In June, St. Jude agreed to pay the federal government $3.7 million to resolve a separate whistleblower case over claims that it made illegal payments to hospitals in Kentucky and Ohio that used the company’s heart devices.
Our relevant post about that previous settlement was here.
Kickbacks, Manipulated Research
The $16 million settlement stemmed from a case filed by Charles Donigian, a former St. Jude technician from St. Louis, who accused the company of using kickbacks to market products.
The kickbacks, which ranged as high as $2,000 per patient, came in the form of 'sham fees' for phony clinical-research studies on the devices, Donigian said in his suit.
There was slightly more detail in a report in TheHeart.org:
According to the DoJ, the company used postmarketing studies and a registry as vehicles to reward physicians participating in those studies to implant the devices. 'In each case, St Jude paid each participating physician a fee that ranged up to $2000 per patient,' a statement from US Attorney Carmen M Ortiz notes. 'The United States alleges that St Jude solicited physicians for the studies in order to retain their business and/or convert their business from a competitor's product.'
The statement also observes: 'Although St Jude collected data and information from participating physicians, it knowingly and intentionally used the studies and registry as a means of increasing its device sales by paying certain physicians to select St Jude pacemakers and ICDs for their patients.'
It all is getting so old, isn't it? Yet another pharmaceutical, biotechnology or device company settles a case alleging payments to physicians to induce them to use its products. The twist here is that the form of the payment allegedly also manipulated the clinical research process.
There have been other cases of manipulation or suppression of research about cardiac devices. For example, see our recent post about how Guidant, now a subsidiary of Boston Scientific, was put on probation for its actions in another such case.
The allegations amounted to serious external threats to physicians' professionalism: payments to promote use of health care products whether or not their implantation was in patients' best interests, and manipulation of clinical research that could have further corrupted the clinical evidence base, and presumably could have broken the trust of clinical research subjects. Left unsaid in the brief articles is how willingly the physicians gave in to these threats to their professionalism for the dollars involved.
Yet despite the apparently corrosive quality of the bad behavior, the penalties to the company were trivial. Per St Jude Medical's most recent financial profile, its yearly revenue was over $4.5 billion. Two settlements totaling less than $20 million amount to a relatively small cost of doing business. And note that St Jude Medical is not admitting it did anything wrong. Per TheHeart.org, its statement was:
We are pleased to have reached a settlement agreement with the DoJ that fully resolves the postmarket-study matter in Boston. The company maintains that its postmarket studies and registries are legitimate clinical studies designed to gather important scientific data, and St Jude Medical does not admit liability or wrongdoing by entering into this agreement. The company entered into a settlement agreement to avoid the potential costs and risks associated with litigation. This settlement brings the previously reported postmarket-study investigation to a close.
So it all gets so tiresome. The continuing march of legal settlements like this do provide evidence of how professionalism and evidence-based medical practice are under threat. However, as we have said ad infinitum, such settlements are likely to do nothing to alleviate that threat.
To repeat the conclusion of our last post about St Jude Medical, the usual sorts of legal settlements we have described do not seem to be an effective way to deter future unethical behavior. Even large fines (and the one described above would be peanuts to a large health care corporation) can be regarded just as a cost of doing business. Furthermore, the fine's impact may be diffused over the whole company, and ultimately comes out of the pockets of stockholders, employees, and customers alike. It provides no negative incentives for those who authorized, directed, or implemented the behavior in question. My refrain has been: we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.