Drip, Drip, Drip - the Steady Accumulation of Little Cases Pointing to Big Problems

Sometimes an apparently insignificant noise can signal a big problem, like the sound of dripping water in a room with no visible plumbing.

Today, I noticed a few short stories in the media about one relatively small legal settlement involving a medical device company.  It initially seemed to be too insignificant a settlement to merit a comment.  A closer look, however, suggested links to to other larger issues.  This story reminded me about other apparently small cases that are mostly ignored, but remind us of bigger problems.

Biomet Settles Kickback Allegations for $6 Million - the Index Case

Here are the main points from the Fort Wayne, Indiana Journal-Gazette,

Biomet Inc. has agreed to pay more than $6 million to resolve allegations that it paid kickbacks to encourage doctors to use its bone growth stimulators, the U.S. Justice Department announced Wednesday.

The Warsaw-based orthopedic devices company signed the agreement along with its subsidiary, EBI LLC, which is doing business as Biomet Spine and Bone Healing Technologies. EBI, based in Parsippany, New Jersey, sells bone growth stimulators, which are used to repair slow-healing fractures without surgery.

Federal official allege that from 2001 to 2008, EBI bribed staffers in physicians' offices to persuade them to use the products.

The story also included the usual tough quotes from law enforcement, including this from US Attorney for the Massachusetts district Carmen Ortiz,

This settlement demonstrates our resolve in ensuring that patients receive, and the government pays for, health care that is based on sound medical judgment, not compromised by kickbacks....

That was it.  A mere $6 million was the charge to settle allegations that the device company gave kickbacks to physicians' office staff to induce the doctors to use the company's product.  As is usually the case, no individuals who authorized, directed or implemented the questionable activities were named, much less suffered any consequences.

And hardly anyone seemed to notice Biomet's latest case. 

It appears to be a small case, but wait. 

Biomet's Previous Record

Wasn't Biomet involved in some other, bigger cases?  A quick look at Health Care Renewal revealed

-  Starting in 2007, we posted (here, here, here, here and here) about the payments, often huge, that five manufacturers of prosthetic joints, Biomet, DePuy Orthopaedics,a unit of Johnson & Johnson, Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew, revealed they made to orthopedic surgeons and various academic and other organizations in the US. All companies except Stryker were charged with "criminal conspiracy to violate anti-kickback laws," and all were subject to deferred prosecution agreements.
-  In 2012, we posted about how Biomet paid nearly $23 million, including a $17.3 million criminal fine, which appears to imply a guilty plea, to charges that it gave kickbacks to foreign physicians, thus violating the US Foreign Corrupt Practices Act

So this tiny case, that is, in a monetary sense, suggests that Biomet is another recidivist corporation, and that the deferred prosecution agreement it signed in 2007 was useless, since it did not deter activities that occurred in 2008 and perhaps later.

Carmen Ortiz's Previous Treatment of Large Health Care Corporations Versus Her Treatment of Aaron Swartz

Furthermore, haven't we heard of Carmen Ortiz before?  In 2013, we posted that Ms Ortiz was involved in settling three big cases, involving allegations that Forest Pharmaceuticals promoted Celexa in adolescents despite the drug's likely dangers to them, GlaxoSmithKline used misleading drug packaging, also likely endangering patients, and St Jude Medical gave kickbacks to doctors to induce them to implant medical devices.  All cases were settled with fines, but again no individuals suffered any negative consequences.  However, in contrast, Ms Ortiz was also the prosecutor who proved how tough she was when she threatened activist Aaron Swartz with serious prison time for alleged computer fraud, driving Mr Swartz to suicide.

Biomet and Zimmer

Finally, Biomet is slated to merge with Zimmer Holdings Inc, another large medical device company. Zimmer was also involved in the 2007 prosthetic hips and knees settlement, charged with criminal conspiracy to violate kickback laws, and subject to a deferred prosecution agreement (see summary in this post).  So the combined company, whose formation is now subject to a European Union inquiry due to concerns about potentially anti-competitive aspects (see the Wall Street Journal article), would end up with quite a concerning track record.   

So this little case reminds us that when a big health care organization is accused of kickbacks or similar unethical activities that may endanger patients, even supposedly tough law enforcers almost never try to hold any individuals accountable, and that absent such accountability, such organizations often become serial legal settlers, accused again and again of unethical or criminal acts that are bad for patients and the public health.

Yet again, nobody seemed to notice this case.  

Little Cases that Add Up


While this case was small, it had some links to bigger past issues.  It reminded me that I have seen lots of other small cases, which often seemed to small to discuss at the time they occurred.

Thus, it also inspired me to finally pull from my dusty files a host of media reports of little cases which I put away because they seemed to small to individually merit comment at the times they appeared.  I quickly summarize some of them below.  To make the list manageable, I limited it to cases since 2012 involving medical device companies.  In alphabetical order....

Arthrocare Executives Guilty of Securities Fraud (2014)

This case was unusual since it actually involved serious jail time for individual, but perhaps that was because this was a financial crime that did not endanger patients (see the Bloomberg article).   The prosecutor called it an "epic tale of greed"  after the CEO and CFO were convicted.  In 2013, two Vice Presidents, including the head of Strategic Business Units, had also pleaded guilty (see this Bloomberg article).

Baxano Surgical Settled Allegations of Medicare Fraud and Kickbacks to Physicians (2013)

This was standard issue, including a fine of $6 million, allegations of kickbacks, some in the form of speakers' or consulting fees to surgeons for use of the company's back surgery devices, but not admissions of wrongdoing and no penalties for individuals, per the AP. 

EndoGastric Solutions Settled Allegations of Kickbacks to Physicians (2014)

This was another standard issue settlement involving a fine of $5.25 million, allegations of kickbacks to physicians to encourage them to use the company's devices, and a corporate integrity agreement,  but no admissions of wrongdoing and no penalties for individuals, per the AP via the Billings (Montana) Gazette. 

Globus Medical Inc and its CEO Fined for Selling Unapproved Devices (2012)

The only media outlet to report this small case was Reuters.  The company, which was then privately held, and its CEO combined paid $1 million to settle US Food and Drug Administration charges it sold unapproved devices.  Now the company is apparently public, and its most recent proxy statement disclosed its CEO is currently in the million dollar plus club.

Home Diagnostics Inc Ex-CEO Pleaded Guilty to Insider Trading (2012)

He pleaded guilty to SEC charges that he tipped two people about the company's impending buyout by Nipro Corp, per Bloomberg.  His sentence was three years of probation and a fine of $260,000, again per Bloomberg.

Johnson and Johnson DePuy Subsidiary Settled Allegations of Deceptive Marketing of Metal on Metal Prosthetic Hip Joint (2014)

As reported by the Portland (Oregon) Business Journal, the Johnson and Johnson subsidiary settled state claims for $4 million that it marketed its ASR XL metal on metal hip joint without disclosing its known high rate of failure.  The company did not admit wrongdoing, and no individual paid a penalty.  Note that Bloomberg reported, "While the sum is dwarfed by J&J’s earlier settlement of patient lawsuits linked to the ASR hip, the agreement may lead the way for additional accords as federal and multi-state probes continue into the company’s sales of the device."  So it is quite possible there will be more and/or bigger settlements involving the marketing of this device.  Johnson and Johnson has quite an extensive record of mischief (look here).  Johnson and Johnson's DePuy subsidiary, along with Biomet and Zimmer, settled charges of criminal conspiracies to violate anti-kickback laws in the hips and knees settlements of 2007. 

Summary


Note that the summary of little cases suggested that the bigger the company, the less likely is any individual to be held responsible.  Those cases that included individual penalties were all of relatively small companies.  One of those was privately held at the time the case was made public.  One individual who paid a penalty was the leader of a previously small company who held that position prior to the buyout of his company by a larger one.   Furthermore, note that insider trading seems to be treated more severely than actions that violate professional ethics, like kickbacks to doctors, or might harm patients.   The only individuals who went to prison or put on probation were company leaders who committed securities fraud or insider trading.  No one involved in giving kickbacks to physicians, deceptive marketing, etc paid any penalties.  

The impunity of managers of big companies, especially in cases in which the charges involved actions that likely endangered patients and violated health care professionals values, is underlined by our look at "little cases."  Yet this impunity remains unexplained, and has certainly not been addressed by law enforcement authorities. 

 So the Kabuki play that is regulation of and law enforcement for large health care organizations goes on.  As our society is being increasingly divided into a huge majority in increasingly difficult economic circumstances and a small and  increasingly rich minority, it also seems to be increasingly divided into little people who may be ruined by lawsuits, and imprisoned for even minor infractions, and big people who have impunity. 

True health care reform would hold leaders of health care organizations accountable for their organizations' behavior, and its effects on patients and health care professionals. 

Conflicts of Interest or Bribes? - Biomet, Smith & Nephew Settle

More justifications of physicians' and other health care professionals' financial arrangements with industry have been appearing in the media and the medical literature (for recent examples, look here and here). Most commonly, the relationships they defended could be characterized as health care professionals consulting or sitting on advisory boards for industry, or receiving royalties from industry for their intellectual property.

In the last two months, two device manufacturers, Biomet and Smith & Nephew, accepted penalties for less defensible financial relationships with physicians. They entered into deferred prosecution agreement and settled charges that they bribed doctors employed by foreign governments. Some of these relationships, especially those involving Biomet, would have been prospectively indistinguishable from the sorts of conflicts of interest that have been so fervently defended.

Background

Starting in 2007, we posted (here, here, here, here and here) about the payments, often huge, that five manufacturers of prosthetic joints, Biomet, DePuy Orthopaedics,a unit of Johnson & Johnson, Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew, revealed they made to orthopedic surgeons and various academic and other organizations in the US. All companies except Stryker were charged with "criminal conspiracy to violate anti-kickback laws," and all were subject to deferred prosecution agreements.  (Stryker entered into a voluntary compliance agreement.)  According to a US Department of Justice news release, the agreements required:

• A federal monitor will be in place at each company to review compliance with the DPAs and NPA and all new and existing consulting relationships with the companies;
• Each company is required to conduct a needs assessment to determine the reasonable needs for educational consulting services, and new product-development consultants.
• All new consulting agreements shall require physicians to disclose their financial engagements with any company to their patients and require the companies to disclose the name of each consultant and what they have been paid on the company website.

These agreements ended in 2009.

The Latest Settlements

As we noted, in 2011, Johnson and Johnson admitted its subsidiaries, including DePuy, had been bribing doctors in Europe through 2007, and agreed to yet another deferred prosecution agreement.

Smith & Nephew

Last month, Bloomberg reported:

Smith & Nephew Plc, Europe’s biggest maker of artificial hips and knees, agreed to pay $22.2 million to settle allegations by the U.S. Justice Department and Securities and Exchange Commission that it engaged in a scheme to pay bribes in Greece.

Smith & Nephew admitted in filings today in federal court in Washington that two of its units were involved in a scheme for more than a decade to make 'illicit payments' to doctors employed by government hospitals or agencies in Greece in violation of the Foreign Corrupt Practices Act.

The London-based company, which entered into a deferred prosecution agreement with the U.S., agreed to pay a $16.8 million fine to settle the criminal allegations and another $5.4 million to settle a civil suit filed by the SEC.

The colorful specifics were:

Smith & Nephew admitted that from 1997 until June 2008, its U.S. and German units bribed public doctors in Greece to win business. The bribes were paid through a person described in court documents as a 'Greek distributor.' This person used shell companies that masked bribes as 'marketing services,' according to the statement of facts filed in the criminal case.

The document cites a March 2002 e-mail from the Greek distributor to a Smith & Nephew vice president in Memphis, Tennessee, complaining that the 'marketing services' payments weren’t enough, noting that competitors were paying 30 percent to 40 percent more.

'I absolutely need this fund to promote my sales with surgeons,' the distributor said in the e-mail, according to prosecutors.

Reforming a corrupt and dysfunctional public health system was one of the conditions of Greece’s acceptance of a European Union and International Monetary Fund bailout package in 2010. Doctors also supplement their income with payments from patients, called 'fakelaki,' small envelopes with cash for prompt treatment.

In the SEC complaint, the payments made to the physicians were described as "commissions."
Note that the company made the usual sort of statement,

'We have what I believe to be a world-class compliance program, having enhanced it significantly since this investigation began in 2007,' Olivier Bohuon, Smith & Nephew’s chief executive officer, said in a statement. 'These legacy issues do not reflect Smith & Nephew today.'

He did not mention why the payments were continuing at a time when the company was already supposedly operating under the previous deferred prosecution agreement that arose out of the charges in the US discussed above.

Biomet

This week, the Indianapolis Star reported,

To sell its products abroad, medical device maker Biomet at times bribed doctors with cash, travel and meals, the federal government says.

The Warsaw, Ind.-based company agreed Monday to pay nearly $23 million to settle allegations that its payments to doctors violated the federal Foreign Corrupt Practices Act. The Securities and Exchange Commission alleges that Biomet, acting through four subsidiaries and its distributors, paid bribes from 2000 to 2008 to doctors in Argentina, Brazil and China in order to win business.

The settlement includes a $17.3 million criminal fine and $5.6 million to the SEC, the government and company said in separate news releases.

The details were,

he SEC accused Biomet of writing phony invoices to cover kickbacks as high as 20 percent of sales to push its products.

In other instances, Biomet provided doctors with money and travel in exchange for implanting artificial joints and other Biomet products in their patients, says the SEC complaint, which was filed in federal court in Washington. In China, Biomet vendors gave doctors cash upon completion of surgeries using Biomet implants, the lawsuit says.

'I've got to send him to Switzerland to visit his daughter,' a Biomet distributor wrote in a 2001 email to the company, describing a trip given as a reward to a Chinese doctor who implanted 10 Biomet hips and knees a month in patients.

The SEC said Biomet's compliance and internal audit functions failed to stop the practices even after determining they were illegal.

Note how Biomet accounted for the payments,

The payments were falsely recorded on company books as 'commissions,' 'royalties' and 'scientific incentives,' the Justice Department said.

Furthermore, the Fort Wayne Journal-Gazette added,

With the settlement announced Monday, the Justice Department found that Biomet and its subsidiaries covered up bribery payments by officially recording them as 'consulting fees' or 'commissions.'

Note that Biomet's official response was similar to Smith & Nephew's, as reported in another article from the Fort Wayne Journal-Gazette,

Jeffrey Binder, Biomet’s president and CEO, didn’t address the company’s guilt or innocence in a written statement released Monday.

Biomet has 'significantly enhanced' its procedures worldwide in recent years to ensure employees’ conduct is legal and ethical, he said.

'Moving forward, we intend to continue to adhere to our enhanced global compliance procedures, and to promote the company’s commitment to the highest ethical standards in all the markets that we serve,' Binder said.

Again, he did not explain why this time the enhanced compliance procedures are likely to work, given that the questionable conduct was still going on after the company had already entered into the 2007 deferred prosecution agreement.

Summary

Some Apparent Conflicts of Interest are Actually Bribes

In these cases, two medical device corporations paid doctors in several countries for implanting their products into patients. The resulting legal proceedings allow us to characterize these actions as bribes. Clearly both the companies' and the physicians' actions were unethical, since they lead to decisions that put the enrichment of the decision makers and those bribing them ahead of the patients' interests.

Some of the most common financial arrangements between health care professionals and industry that are thought of as conflicts of interest are paid consulting and payment of royalties for intellectual property. As we have discussed, e.g. here, conflicts of interest in medicine and health care are generally thought to raise the likelihood of corruption, but not necessarily to indicate corruption in specific instances. In the cases above, bribes were sometimes called "consulting payments or royalties." This suggests that some consulting payments and royalties which may commonly be thought of as conflicts of interest are outright bribes, that is, outright health care corruption.

Those who fervently defend conflicts of interest as inevitable, and necessary for collaboration and hence innovation (e.g., look here), often minimize the adverse effects of these conflicts (e.g., look here). In fact, any putative benefits of such conflicts ought to be contrasted with their possible harms. These cases make it clear that these harms include outright corruption which may be disguised as mere conflicts of interest.

This adds strength to arguments that conflicts of interest ought to be minimized or eliminated, not tolerated and "managed."

Current Measures to Enforce Laws Against Bribes and Kickbacks are More Theatre than Deterrent

The current cases are just the latest members in the march of legal settlements. We have noted that misbehavior in large health care organizations rarely leads to any negative consequences for the people who authorized, directed or implemented the offending actions. Instead, the penalties are, at most, fines paid by the organizations, not the people involved, and variants of deferred prosecution and/or corporate integrity agreements. We and others have previously argued without negative consequences affecting the people who authorize, direct or implement unethical actions, such actions will continue.

The current cases corroborate this. Corporations that had already paid fines and accepted deferred prosecution agreements for bribes to physicians continued to bribe other physicians. The failure of the offending corporations to admit any wrongdoing, or the need for specific changes of behavior in the future, suggests that the current fines and deferred prosecution agreements will not be any more effective than the previous ones. The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  

As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.

Now You See Them, Now You Don't: 2007 Lists of Payments Made by Orthopedic Device Companies Vanish Into Cyberspace

Starting last year, we posted (here, here, here, and here) about the payments, often huge, that five manufacturers of prosthetic joints (Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew) revealed they made to orthopedic surgeons and various academic and other organizations. We also noted that some of the leadership of the major orthopedic societies have received substantial amounts from these companies, as have the societies themselves.

The information we used in those posts about the payments came from lists posted on the internet by the five companies. The lists were posted under deferred prosecution agreements a US Attorney made with four companies (Biomet, DePuy Orthopedics, Smith & Nephew, and Zimmer Holdings) and an agreement allowing federal supervision of Stryker Orthopedics. The companies were charged with violating anti-kickback laws by paying orthopedic surgeons as "consultants" to use their products. The lists on which I based the above posts contained data from nearly all of 2007.

I recently had occasion to revisit this question, and decided to take another look at these lists. But lo and behold, when I used the links from my earlier posts (Biomet, DePuy, Smith & Nephew, Stryker, and Zimmer), I found that two of them now went to lists of data pertaining only to the early part of 2008. No 2007 data was available from the Biomet and Smith & Nephew lists. Furthermore, perusal of those companies' web-sites did not reveal any obvious way to access the 2007 data. [See addendum below. By 12 May, 2008, three days after this was posted, the Smith & Nephew list included all 2007 data, and the Biomet list included all 2007 data, but appears to have truncated its 2008 data alphabetically after "Wo...."]

When I reviewed the 2007 lists, I was struck by how many doctors, academic institutions, and other not-for-profit organizations were on the lists, and how much money some of them received. The potential for payments of hundreds of thousands or millions of dollars to influence the thinking and actions of these people and organizations was obvious. Many of the orthopedic surgeons involved were prominent practitioners or academics. The likelihood that their practice, teaching or research might have been influenced by financial entanglements of this magnitude was obvious. Similarly, the likelihood that large payments to academic institutions or professional societies might influence their actions and policies was also obvious.

But, two of these lists are now lost in cyberspace. So those wishing to use them to inform their thinking about the people and organizations involved are out of luck. Whether by the end of the year the 2008 lists will essentially provide the same information as the 2007 lists is unknown. Even if they do, the loss of the 2007 lists will make it difficult to determine whether the financial relationships revealed in 2008 were new or not. Furthermore, erasing the 2007 data would obviously reduce the perceived overall magnitude of some of the financial relationships. In summary, erasing the 2007 data off the internet suggests that the companies want to provide as little transparency about their payments to orthopedic surgeons, academic institutions, and professional societies as possible, and that the companies want to minimize perceptions of the magnitude and duration about these financial relationships.

We are only making slow progress in making the web of financial entanglements that pervades health care more transparent.

ADDENDUM (12 May, 2008) - As noted in the comments, the 2007 information from Biomet was apparently recently added to the list available on the web. It now begins after item 168, thus apparently truncating the 2008 data for recipients starting with names beginning with alphabetically after "Wo...." Also, Smith & Nephew has also loaded its 2007 information, apparently completely.

More About Surgeons Who Received Large Payments from Joint Implant Manufacturers

The story about artificial joint manufacturers' payments to orthopedic surgeons and others just keeps bubbling along. We have previously posted (here, here, here, here, and here) about the payments, often huge, that five manufacturers of prosthetic joints (Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew) just revealed they made to orthopedic surgeons and various academic and other organizations. The lists are here: Biomet, DePuy, Smith & Nephew, Stryker, and Zimmer.

A few intrepid reporters have pursued this story by looking for local surgeons on the lists. First, Bill Toland in the Pittsburgh Post-Gazette found some recipients of the companies' largesse, and what he learned from one was typical,

In Pittsburgh, Dr. James D'Antonio, of Greater Pittsburgh Orthopaedic Associates, has received $850,000 to $875,000 through the first 10 months of 2007 from Stryker. On his extensive resume is the development of a new alignment system for artificial knee joints, femoral research, and two decades of experience in knee and hip replacements, performing them at several regional hospitals.

Most of the money received this year, more than $600,000, was for royalties on intellectual properties he helped to develop.

'I could do a lot more surgery if I didn't do this for Stryker,' Dr. D'Antonio said in a phone interview. He also said that he's not beholden to Stryker's products because of the fees he collects.

'I use other implants,' he said. 'I don't hesitate to use other companies for a minute,' if they carry a product he feels is better suited for a surgery.

Toland recorded several other denials that the payments influenced which artificial joints the recipients chose to implant in patients, for example,

Zimmer, the largest of the joint manufacturers, paid out the most to Pittsburgh doctors, $1.16 million through Oct. 31.

Together, the nonprofit clinic and health provider AMD3 and its founder, Dr. Anthony M. DiGioia III, received at least $437,000 from Zimmer.

'As an independent physician, I am not rewarded by either the hospital or the implant company for using any specific products,' Dr. DiGioia said. He is not 'obligated or rewarded to use any of Zimmer's products.'

This week, Lindy Washburn of the North Jersey Media group looked into the situation in her area. Again, she found several surgeons who received large payments. They turned out to be involved with the design of particular devices,

Michael A. Kelly, chairman of the Department of Orthopedic Surgery at Hackensack University Medical Center, and Mark Hartzband, director of its Total Joint Replacement Service, were among the highest-paid consultants nationwide at Zimmer Inc. They also were the highest- paid New Jersey consultants to any orthopedic company.

Both were involved with the development of Zimmer's "female knee."

Zimmer paid Kelly, who is president of the American Knee Society, $1,043,028. It paid Hartzband $995,739, along with $20,619 to his Hartzband Joint Replacement Institute in Paramus.

Kelly and Hartzband, for example, both were listed as members of the design team for Zimmer's "female knee," introduced last year. They were involved in the clinical trials that led to federal approval for the device, and travel around the world to lecture and demonstrate surgical techniques. Hartzband also was a pioneer in minimally invasive hip replacement surgery, which Zimmer introduced in 2003.

HUMC, where the two operate, uses joints from three different companies, including Zimmer. Kelly, as chief of the department, plays a role in choosing the suppliers and is required to disclose any conflicts of interest, said Robert Garrett, the hospital's executive vice president and chief operating officer.

Hartzband, as a private practitioner, is not required to make such a disclosure, and Garrett said he was unaware of the amount Hartzband received.

Neither surgeon responded to messages left at their offices.

"Our policy has always been to get competitive bids on a product and get the best-quality products," Garrett said. "I don't have any reason to believe there's any kind of kickback involved. Dr. Kelly has always acted on behalf of patients and what's best for the patients -- the fact that we have three vendors is testament to that."

Then, John Dorschner of the Miami Herald reported from South Florida. Not surprisingly, he found one local doctor who received large payments, which again turned out to be related to his involvement in the development of a specific device.

A well-known Miami doctor who did Heat Coach Pat Riley's hip replacement surgery has received nearly $600,000 this year in fees from a company that makes artificial hips, according to documents published in connection with a federal kickback investigation.

Carlos Lavernia, medical director of the Orthopaedic Institute at Mercy Hospital, received $586,863 through Oct. 31 from Zimmer, an Indiana company that makes hip and knee replacements.

Lavernia received the most fees of doctors in South Florida, based on lists that revealed the fees of hundreds of doctors nationwide.

Lavernia said he has done nothing wrong. Zimmer is paying him royalties for a hip and knee implant system he designed. He is not paid royalties on devices he implants himself or any implants bought by Mercy, he told The Miami Herald in an e-mail. He said he uses products of all manufacturers, depending on what's best for the patient.

Lavernia told The Miami Herald he is 'currently in the process of developing a patient disclosure letter,' discussing his relationship with Zimmer.

Lavernia and Zimmer are closely connected.

He has given speeches at Zimmer's corporate headquarters in Warsaw, Ind. One of the talks he gave urged surgeons to better understand insurance reimbursement rates for implants so that they can get paid better.

According to a Zimmer press release, Lavernia co-authored a research paper that reported major advantages for Zimmer's Quad-Sparing Knee Replacement Procedure.

Mercy spokeswoman Rey said the hospital had no comment because it was a matter between Zimmer and Lavernia.

All these news reports suggest that the doctors who received the largest payments from the manufacturers of artificial hips and knees were involved in the design of specific products, and often received payments in the forms of royalties, presumably based on licensing agreements for patents they held. Apparently, most such agreements do not pay royalties for devices the surgeons personally implanted, and perhaps for any devices implanted at their hospital.

So far, discussion in the media of possible conflicts of interests caused by the device manufacturers' payments to surgeons has centered on concerns about whether surgeons who got payments from particular companies were more likely to to choose those companies' products for their patients. Some surgeons have denied conscious bias, and it appears that some of their royalty agreements were structured so that they were not paid directly for implants they themselves chose, or were chosen at their hospital.

However, an important issue that has so far not been discussed is the extent that the surgeons who received payments may have influenced other surgeons to use the products of the companies who paid them. It appears that many of the surgeons who got large payments were very well known, and some held prestigious academic posts. Some were in positions to influence trainees (medical students, interns, residents, and fellows) through their teaching. Some could influence the broader community of orthopedic surgeons by speaking and writing. There were examples above of payment recipients touring internationally to speak and teach about the joint implants they had designed, touring nationally to speak about reimbursement for joint implants, and authoring journal articles reporting research on the implants for which they received royalties. Whether the payment recipients revealed to their audiences the magnitude of the payments they were getting, or whether the payments were based on the number of devices the companies sold, which presumably is usually how patent royalties are paid, are all unknown.

The Miami Herald article stated, "for years, there have been unconfirmed rumors and rumblings about device companies paying doctors fees, sometimes for consulting, speaking or doing research on particular devices." This suggests that it was not exactly common knowledge that prominent orthopedic surgeons who taught or wrote about joint implants and related topics were being paid generous royalties by the companies who made the implants for each device sold.

Thus, it appears that surgeons who may have been paid royalties every time a specific device was sold may have had opportunities to influence the surgeons who made decisions about which devices to use. The surgeons who were paid royalties may not have let these decision-makers know their financial stake in the companies selling more devices.

We suspect that all the extent and magnitude of conflicts of interest generated by the the device manufacturers' payments have yet to be revealed.

The AAOS "Patient Discussion Guide" Regarding Disclosure of Payments to Orthopedic Surgeons

We have previously posted ( here, here, and here) about the payments, often huge, that five manufacturers of prosthetic joints ((Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew) just revealed they made to orthopedic surgeons and various academic and other organizations. The lists are here: Biomet, DePuy, Smith & Nephew, Stryker, and Zimmer.

We analyzed a letter by President James H. Beaty MD of the American Academy of Orthopedic Surgeons and the American Association of Orthopedic Surgeons (AAOS), and suggested that it was more remarkable for what it did not say than what it did say. We noted that the presence among the leadership of AAOS of many individuals who had received payments, some large, from artificial joint manufacturers may have lead to its lack of clarity.

The AAOS also produced a "Patient Discussion Guide" which was "intended to provide you [orthopedic surgeons] with important facts and information to facilitate discussions with your patients, and to help you answer any questions that you may receive from your patients concerning a settlement announced by the Department of Justice with five medical device manufacturers of artificial hips and knees."

In my humble opinion, the guide, designed in an "FAQ" format, was equally unclear, but did seem to try to minimize the effects of disclosures of payments made to physicians. Let me go through it, question by question.

First, it posed the question, "why is this financial information posted on the websites of these five companies." After giving some dry facts about the settlement, this appeared in bold type,

It’s important to remember that the appearance of a physician’s name on any disclosure filing referenced above indicates only that he or she has received compensation from the manufacturer. It is not an indication that any doctor on the list has broken the law or violated professional standards.

It then asked, "why would a doctor ever take money from implant manufacturers?" The answer included,

The relationships between physicians and device manufacturers have led to many significant developments that have benefited millions of patients.

This was followed by a listing of some examples of such "significant developments." The answer did not contemplate the possibility that there could be a down-side to an orthopedic surgeon being paid by the manufacturer of artificial joints.

Then, "what different kinds of financial relationships do doctors have with implant manufacturers?" The answer in full was,

First, it’s important to understand that not all physicians have financial relationships with implant manufacturers. In fact, we believe that a majority of orthopaedic surgeons do not.

For those doctors who have relationships with implant manufacturers, there are a number of different types of relationships with implant manufacturers that result in compensation, including providing consulting advice, conducting research, developing new products and educating fellow orthopaedic surgeons and the public.

These arrangements have led to a number of important breakthroughs and developments that have helped millions of patients.

Again, the guide included more words about the limited prevalence of the payments and their possible good effects than about the question itself.

The next question was "If these relationships are commonplace, what did these implant manufacturers do that was wrong and that led to the settlements?" The guide noted,

The U.S. Attorney that led the investigation was concerned that some of the payments made by the implant manufacturers to a limited number of physicians were improper.

However, it never really answered the question, and certainly did not suggest that anyone or any organization, manufacturers, orthopedic surgeons, or others, did anything wrong.

The guide did assert that the AAOS just adopted, that is, in 2007, new "Standards of Professionalism on Orthopaedist-Industry Conflicts of Interest that require orthopaedic surgeon members to identify and disclose potential conflicts of interest to their patients, the public, and colleagues." However, it neglected to note that these standards are not yet in effect.

Finally, the guide got to the crucial question, "have you personally taken money from implant manufacturers," but then refused to answer it directly,

Recognizing that the facts, circumstances and contractual provisions governing the relationships between certain member-physicians and medical device manufacturers, are unique and confidential, the AAOS cannot provide members with individualized counsel on how to respond....

It then just advised doctors "to be truthful and factually accurate," and cite the need, according to the new Standards of Professionalism, to disclose conflicts.

So, to be charitable, the Guide, like the letter written by the President of the AAOS, was more notable for what it did not say than what it did say. In particular, it failed to say anything negative about artificial hip manufacturing companies paying orthopedic surgeons, but did defend "relationships" among doctors and these corporations, while trying to minimize their prevalence. The Guide avoided any discussion of how financial relationships among orthopedic surgeons and device manufacturers could have any negative effect on patients. The Guide failed to discuss any effects these relationships could have on orthopedic surgeons' teaching, research, or health care policy.

As we noted before, some of this lack of clarity might have to do with the relationships between individual leaders of the AAOS and the artificial joint manufacturers.

After an opportunity to further peruse the lists of payments made by the five manufacturers, (Biomet, DePuy, Smith & Nephew, Stryker, and Zimmer), I found that the AAOS itself has been paid quite handsomely itself (so far in 2007) by:

• DePuy, $225,000-250,000
• Smith & Nephew, $25,001 - 50,000
• Stryker, $150,000 - 175,000
• Zimmer, $434,480

Thus, the AAOS received from $834,481 to $909,480 from four artificial joint manufacturers so far in 2007.

Also, note that the related American Orthopedic Association received payments by:

• Biomet, $25,000-49,999
• DePuy, $50,000-75,000
• Zimmer, $200,000

Furthermore, the related Orthopedic Research and Education Foundation received payments by:

• DePuy, $375,000-400,000
• Stryker, $25,000-50,000
• Smith & Nephew, $75,001 - $100,000

So it is not surprising that the AAOS collective response to the release of the lists of payments lacked clarity and failed to address most of the major issues. Not only are some of the top leaders of the organization recipients of payments from the same companies whose disclosures created the controversy in the first place, but also the organization, and some related organizations, get substantial funding from these same companies.

This illustrates the pervasiveness of conflicts of interest affecting medical organizations and their leadership. The fear is that such organizations, rather than being a bulwark of physicians' professionalism, have become just more cogs in the medical - academic - industrial complex.

The AAOS Responds to Disclosure of Payments to Orthopedic Surgeons

We have previously posted ( here, here, and here) about the payments, often huge, that five manufacturers of prosthetic joints ((Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew) just revealed they made to orthopedic surgeons and various academic and other organizations. The lists are here: Biomet, DePuy, Smith & Nephew, Stryker, and Zimmer.

The American Academy of Orthopedic Surgeons and the American Association of Orthopedic Surgeons (AAOS) have responded, first with a letter by President James H. Beaty MD. Dr Beaty's main points were:

• Disclosure is important, up to a point. "AAOS supports appropriate financial disclosures to patients regarding relationships between orthopedic surgeons and implant manufacturers."
• There are good aspects to relationships between doctors and device manufacturers. "Many of our AAOS colleagues choose to work in partnership with implant manufacturers to provide consulting advice, conduct research, and educate orthopaedic surgeons and the public. A number of AAOS members are engaged in developing new medical devices to better serve patient needs."
• It is not necessarily bad for physicians to receive money from commercial firms. "The appearance of a physician's name on any disclosure filing referenced above indicates only that he or she has received compensation from the implant manufacturer."
• More detailed disclosure might be good. "Financial disclosures that display only the name of the physician and the aggregate dollar amount received without any explanation of the nature of the relationship and without educational context may be confusing and misleading to the public and patients."
• In the future, AAOS members should better understand these issues. The letter alluded to a "webinair" on the subject to be conducted in November. It also alluded to a new patient discussion guide (found here). (I may discuss that guide further in another post.)

In my humble opinion, the letter was most remarkable for what it did not say.

Although it sought to justify why orthopedic surgeons should work with manufacturers, it did not explain why these relationships should include payments by the manufacturers to the physicians.

It did not discuss whether disclosures of these financial relationships were made in the time up to the release of the lists by the companies. It did not discuss disclosure to learners in the context of teaching, to readers of articles or attendees of talks, or to subjects in research trials. It did not criticize surgeons who had not disclosed prior to release of the lists.

Although the letter suggested that more detailed disclosure might be better than that which has taken place so far, it did not suggest that doctors who have received money should make such detailed disclosure, or criticize doctors who have not made such detailed disclosure in the past.

Finally, the letter did not advocate that doctors who receive payments from device manufacturers or other commercial firms actively disclose these payments going forward.

All in all, Dr Beaty's letter seemed to avoid more issues than it addressed. It was not exactly a ringing call for greater transparency, much less a condemnation of the opacity of past practices.

I could not help but notice that the letter was written on AAOS letterhead which listed current officers and board members. Ironically, several of these people appeared on the companies' payment disclosure lists. These include:

• Dr Joseph Zuckerman, Second Vice-President, who was listed as the "individual provider" for the Musculoskeletal Research Center, which received $1-25,000 from Smith & Nephew (see list here.)
• Dr William L Healy, Treasurer, received $25,001-$50,000 from DePuy (see here)
• Dr Richard F Kyle, Past President, received $25,001-50,000 from Smith & Nephew (here) and $715,163 from Zimmer (here)
• Dr Joseph C McCarthy, Chair, Board of Specialty Societies, received $475,000-500,000 from Stryker (here)
• Dr William Robb III, Secretary, Board of Specialty Societies, received $75,000-100,000 from Smith & Nephew (here)
• Dr Kevin J Bozic, Member at Large, received $2750 from Zimmer (here)
• Dr Christopher D Harner, who was listed as rendering services for the University of Pittsburgh Department of Orthopedic Surgery, which received $100,000-124,999 from Biomet (here)

As we have noted before, " people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult."

That is yet another argument for avoidance of the sorts of conflicts copiously disclosed in the lists of payments made by device manufacturers.

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.