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Senior Citizen Politics
Aging Committee Hears Surgeons Paid Millions to
Promote Medical Devices
Investigator testifies that hip & knee replacement
market paid $800 million to doctors over five years
 Feb. 27, 2008 – Government investigators found that
during the years 2002 through 2006, four manufacturers, which controlled
almost 75 percent of the hip and knee replacement market, paid physician
consultants over $800 million under the terms of roughly 6,500
consulting agreements, according to Greg Demske, an investigator for
Health and Human Services. He testified today at a hearing of the Senate
Special Committee on Aging that examined the financial interactions
between medical device companies and surgeons.
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Demske, Assistant Inspector for Legal Affairs from
the Office of Inspector General (OIG) for the HHS, said the Justice
Department and the OIG have been examining these troubling and
widespread conflicts for the past three years.
In September of last year, the Justice Department
reached settlement agreements with the top five orthopedic device makers
which dominate their industry. According to the Aging Committee staff’s
calculations, the five orthopedic companies which settled agreements
with the Justice Department last fall spent a combined total of at least
$230 million dollars on these consultant and other payments.
Chairman Herb Kohl (D-WI) called the hearing,
entitled “Surgeons for Sale: Conflicts and Consultant Payments in the
Medical Device Industry,” to examine the financial interactions between
medical device companies and surgeons, which often involve substantial
payments in the form of consultant fees, educational grants, royalties,
funding for clinical trials, travel and gifts.
These financial relationships create conflicts of
interest, can exert inappropriate influence over medical decisions and,
in some documented cases, violate federal anti-kickback and
self-referral statutes. An investigation undertaken by the committee
has shown some of these payments to be grossly excessive, illegitimate,
and often not properly documented.
“Today’s hearing underscores the need for the
Physician Payments Sunshine Act (S.2029), a measure co-sponsored by
Senator Charles Grassley (R-IA) and Chairman Kohl to require
manufacturers of pharmaceutical drugs, medical devices, and biologics to
disclose the amount of money they give to doctors through payments,
gifts, honoraria, travel and other means,” according to a news release
from the committee.
The bill was introduced last September, following
another hearing, which examined the relationships between physicians
and the pharmaceutical industry.
“These types of unethical payments are not
anecdotal, but rather have been pervasive and industry-wide for far too
long. The physicians who take their money are equal participants and
equally culpable,” said Chairman Kohl.
“If these physicians are essentially putting their
medical judgment up for sale, where does the patient’s well-being fit
into the equation?”
“Senator Kohl is providing important leadership in
bringing attention to the issue of payments by the medical device
industry to medical doctors as he and I work to build support for our
legislation to shed light on these sorts of financial relationships,”
said Senator Chuck Grassley, Ranking Member of the Senate Committee on
Finance and former Chairman of the Special Committee on Aging.
“Our bill doesn’t do anything to change the ability
of device or drug makers to tap the expertise and insights of
physicians. Rather, the proposal works to build public confidence in
the system with openness and transparency. It’s a common sense
initiative.”
Committee staff interviewed dozens of surgeons and
medical device industry sales representatives over the past six months
to learn more about the conditions surrounding these payments.
Testimony offered at today’s hearing related that
some physicians have felt shunned after declining to take part in
financial relationships with the medical device industry. The first
panel featured Dr. Charles Rosen, president of the Association for
Ethics in Spine Surgery and a clinical professor from the University of
California – Irvine; and Said Hilal, president and CEO of Applied
Medical Resources Corporation, a medical device company in California.
The hearing also featured representatives from two
of the companies involved in the federal settlement: Edward Lipes,
Executive Vice President of Stryker Corporation, and Chad Phipps, Senior
Vice President, Secretary and General Counsel of Zimmer Holdings, Inc.
Lastly, Christopher White offered testimony
pertaining to the industry’s voluntary ethical guidelines on behalf of
AdvaMed, the leading industry organization.
Today’s hearing also touched on another aspect of
the committee’s investigation in the area of surgeon-owned medical
device companies. In recent months, the committee has sent detailed
questions and document requests to a number of surgeon-owned medical
device companies. Testimony from the HHS OIG warned that these types of
corporate entities pose potential conflicts and these ventures should be
closely scrutinized under the fraud and abuse laws. Chairman Kohl
announced in his opening statement that the committee would review the
responses from these companies and continue with this inquiry.
Witness Testimony – Click names for printed
testimony
Greg Demske, Assistant Inspector for Legal Affairs, Office of
Inspector General, US Department of Health and Human Services,
Washington, DC
Charles Rosen, Clinical Professor, University of California, Irvine,
CA; President, Association for Ethics in Spine Surgery
Said Hilal, President/CEO, Applied Medical Resources Corporation,
Rancho Santa Margarita, CA
Edward Lipes, Executive Vice President, Stryker Corporation, Mahwah,
NJ
Chad Phipps, Senior Vice President, Secretary and General Counsel,
Zimmer Holdings, Inc., Warsaw, IN
Christopher White, Executive Vice President, General Counsel and
Assistant Secretary, AdvaMed, Washington, DC
>> A webcast of the hearing should be available
later this afternoon on the committee webpage:
www.aging.senate.gov
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