- The Washington Times - Tuesday, March 18, 2008

A settlement to end a federal investigation into potential kickbacks to U.S. doctors is shining light on hundreds of agreements under which surgeons across the country receive trips, meals and consulting deals from artificial-hip and -knee makers.

Critics worry that the payments, which amount to millions of dollars annually, could sway doctors to pick more-expensive devices for patients and drive up health care costs. More than half of the nation’s 700,000 hip and knee replacements are performed on Medicare patients.

“You’ve got a situation where the hospital buys the implant, but has little choice but to buy whatever one the surgeon wants,” said Paul Ginsburg, president of the nonprofit District-based Center for Studying Health System Change.

“In theory, the physicians are using their best judgment about what’s best for the patient but, to the extent they’re given these consulting arrangements, it’s something that could clearly distort their incentives.”

But others say the arrangement allows doctors and medical-supply companies to collaborate, paving the way for important technology advances in hip and knee replacements.

“I think doctors do what’s best for the patient,” said Dr. Tony Rankin, president of the American Academy of Orthopedic Surgeons, who disputed that hospitals have no say in what implants to buy.

Hundreds of consulting arrangements — a handful exceeding $1 million per year — between doctor and medical-supply companies have been made public in recent months as a provision of corporate settlements by the Justice Department last year with hip and knee makers.

Four of the world’s top companies last year agreed to pay a combined $311 million to settle a federal probe into whether the manufacturers paid kickbacks to doctors to get them to recommend their products. The companies are Zimmer Holdings Inc., Depuy Orthopaedics Inc., Biomet Inc., and Smith & Nephew Inc.

A fifth company, Stryker Orthopaedics Inc., cooperated early in the investigation and paid no fines, but agreed to disclose its consulting arrangements. None of the five companies, which supply about 95 percent of the worldwide market in hip and knee surgical implants, admitted wrongdoing or pleaded guilty to any criminal charges.

Stryker for the first time last month also disclosed that it had received a subpoena from the criminal division of the Justice Department concerning possible violations of the Foreign Corrupt Practices Act, which prohibits paying bribes to foreign officials. Zimmer said the Securities and Exchange Commission had begun a similar inquiry.

Overall, four hip and knee companies paid out roughly $800 million to doctors through consulting from 2002 to 2006, according to federal officials. Despite the corporate settlements, federal authorities say the investigation isn’t over and that they’re continuing to investigate certain doctors.

“The investigation is continuing as to particular doctors and their conduct,” said Michael Drewniak, spokesman for U.S. Attorney for New Jersey Christopher Christie, who initiated the investigation and approved the settlement deals.

“It was never our suggestion that for all of the doctors who received compensation, that the compensation was unlawful,” Mr. Drewniak said. “Most of them were quite legitimate compensation packages for research or product development and or royalties for products.”

Still, the arrangements are raising questions in Congress.

“Although many of these payments were for legitimate services, others were not,” Gregory E. Demske, assistant inspector general for the U.S. Department of Health and Human Services, told a Senate panel last month.

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