A CEO Begs the Questions About Paying Physician "Consultants"

We previously posted about financial ties between Professor David Polly at the University of Minnesota and medical device maker Medtronic. The main issues we discussed were 1) that when the good doctor spoke to a US congressional committee in support of research that might reflect favorably on one of Medtronic's products, he did not reveal that he was paid by Medtronic for "lobbying related costs (according to the Wall Street Journal); and 2) that many of the specific activities for which Dr Polly was paid by the company seemed related to marketing or lobbying, not science or education.

Now the Pioneer Press (Minneapolis - St Paul, MN) and other papers have reported that the payments to Dr Polly have interested not only US Senator Charles Grassley, but at least one active Medtronic shareholder:

Medtronic Chief Executive Bill Hawkins on Thursday defended payments by the Fridley-based manufacturer to doctors who serve as company consultants.

Hawkins told a crowd of about 300 people at the company's annual meeting that such paid relationships are key to the development and improvement of new medical devices.

In his comments Thursday, Hawkins did not specifically mention Polly but noted, 'there is today an active Congressional and media debate about how health care companies work with the clinical community.'

'We must continue our strong support for the physicians and surgeons who provide us with their innovation, passion and unique insights into patient solutions,' Hawkins said at the company's headquarters.

During a question-and-answer period, shareholder John Burbidge, 77, of Edina, said that while he understood the need for input from physician consultants, he was 'taken aback' by the sums of money involved.

'Is it really necessary to pay that kind of money to doctors in order to get good information?' he asked.

'Can you rely on information that you pay that much money for?' added Burbidge, who said he is a longtime Medtronic shareholder. 'Obviously, nobody is going to want to tell you anything you don't want to hear and jeopardize his relationship with the company.'

Hawkins said some doctors collect large sums by virtue of royalty arrangements for their role in developing patented technology.

Others doctors collect fees for providing consultant services. Those service arrangements are important, Hawkins said, because physicians help the company design clinical studies of Medtronic products in development and then teach other doctors how to use the devices once regulators clear them for sale.

Hawkins added: 'Occasionally, we will have physicians come in and work with us and be a part of a team to think about new ideas and new innovations.'

Notice first that the Medtronic CEO never seemed address the reasons the company paid Dr Polly. His comments about payments to physicians were entirely generic. Even those generic comments begged more questions than they answered. In particular,

- "large sums by virtue of royalty arrangements" - In regard to Dr Polly, I do not believe he ever claimed to be paid royalties. The question begged is why specific patents might merit huge sums paid to their holders?
- "physicians help the company design clinical studies" - But most large device, biotechnology, and pharmaceutical companies now employ full-time physicians, statisticians, and biomedical scientists to design studies. Why would they frequently need to hire part-time physician consultants as well? Furthermore, such companies customarily give grants to medical schools, universities, and hospitals to implement clinical studies. In such grants, the investigators are already paid from the grant through the university. So why would companies need to pay other physicians as part-time consultants to design or implement studies?
- "teach other doctors how to use the device" - Again, why not use physicians who are full-time employees of the company to do this?

Finally, Mr Hawkins did not address why it was necessary to pay Dr Polly to "recruit patients for publicity efforts; attend Medtronic national sales meetings;" for " two phone calls with Medtronic CEO William Hawkins as well as charging the company $2,000 when Mr. Hawkins visited an operating room'" and finally "to lobby congress." (Quotes again from the Wall Street Journal.) None of this seems to have anything to do with designing clinical studies or teaching doctors how to use devices.

So it seems that Mr Burbidge's concerns were never addressed, and that there were more questions he ought to have been able to ask.

I think it is telling that Mr Burbidge's concerns only generated vague dismissals from Mr Hawkins. In theory, Mr Hawkins is a company employee who works for stockholders such as Mr Burbidge. (for which Mr Hawkins' total compensation was $ 7,512,626 in 2008, per the company's 2009 proxy statement.) But in the US, public corporations have evolved - perhaps devolved would be a better term - to the point that hired executives really do not seem to answer to those who supposedly are the company owners and their employers.

As we noted earlier, large public health care corporations are now often run by leaders with no apparent training or personal experience in health care. (As we posted earlier, Mr Hawkins does have a bachelors degree partly in biomedical engineering earned in 1976, and did some form of psychology research at that time, but his public biography indicated no further biomedical science or health care experience since 1976.) Freeing such leaders from more than nominal accountability to those who supposedly own the corporations may open the door to mismanagement, personal enrichment by hired executives, and then over-priced drugs and devices whose benefits may be exaggerated and harms hidden, resulting in high costs, poor access, and threatened quality.

To achieve true health care reform, we need to at least make transparent, if not limit or ban health care corporate payments that let medical academics use the prestige of their positions to market drugs and devices. To achieve true health care reform, we need to make sure that leaders of health care organizations have knowledge of, contextual experience in, and sympathy for the values of health care. Maybe leaders with such qualifications would understand how such payments to academics undermines research and teaching, and leads to high costs, poor access, and bad quality.

See also comments by Prof Margaret Soltan in the University Dairies blog, and by Dr Daniel Carlat in the Carlat Psychiatry Blog.