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Push on for Hip, Knee Implant Makers to Disclose Doctor Payments

Jul 1, 2008 | Parker Waichman Alonso LLP

Companies that make joint implants, including Stryker Corp., have made it a practice to pay physicians that use their products five-, six- and even seven-figure royalty payments,  consulting fees and speaking fees. Critics of such fees say they represent a conflict of interest, and sway doctors' judgments on how best to treat their patients.  In the past year or so, the practice has attracted a great deal scrutiny, and now lawmakers, regulators and even the companies themselves are advocating that such payment arrangements be made public.

Many payments are  legitimate. Doctors do in fact, speak at industry-sponsored conferences, and are very often instrumental in designing new joint implants.  But because there was very little transparency in the way payments were made, it was difficult to discern when a payment was appropriate, and when it was just a kickback. It is that lack of transparency made it very easy for companies to engage in wrongdoing.  

Even industry insiders have admitted that payments to physicians got out of hand.  "With hindsight, it now appears that as industry expanded to meet patient needs, the use of consultants may have been excessive at times,"  Chad Phipps, general counsel for Zimmer Holdings Inc., said in testimony before Congress earlier this year.

The momentum for reform may have started last year when, according to the Philadelphia Inquirer,  a U.S. attorney in New Jersey filed criminal complaints alleging that four of the largest artificial-joint makers conspired to violate a federal anti-kickback statute by making payments to surgeons in an attempt to keep their business.  Four of the companies, Biomet Inc., DePuy Orthopaedics, Smith & Nephew, and Zimmer Holdings Inc. - paid a total of $310 million, without admitting wrongdoing. A fifth manufacturer, Stryker Corp., cooperated with the probe and was not charged.

The settlements stipulated that the participants disclose any payments made to physicians on their websites.   According to the Philadelphia Inquirer,  those disclosures reveal that 51 doctors got more than $1 million each in 2007 alone.  Several of those doctors were receiving royalties for implants they had a hand in designing.

Though those payments were disclosed as part of a settlement, it is becoming more common for such payments to be publicized. At the University of Pennsylvania Health System  patients are told which implant companies are paying the doctors, though not the amounts, officials told the Inquirer.  Many other hospitals have instituted similar policies.

Several members of Congress are pushing a bill that would require better disclosure. The Physician Payments Sunshine Act, for example, would require companies to disclose all gifts, fees or other compensation of more than $500 a year. If it passes, the Food & Drug Administration would create a searchable database of industry payments to all doctors. Trade groups for both the pharmaceutical and device industries have backed the measure.

At least one implant maker, Zimmer, is going even further.  According to the Philadelphia Inquirer, earlier this year, the company announced that it would overhaul its compensation arrangements with doctors, ban gifts, and tighten its training programs. Zimmer has also banned its sales and marketing staff  from playing a role in determining payments to physicians. Zimmer has also stopped paying doctors to speak at medical seminars.