Bloomberg News

Hip-Device Makers Cut Doctor Consulting Pay After Settlement

October 24, 2011

(Updates with comments from Biomet in ninth paragraph.)

Oct. 24 (Bloomberg) -- The five largest manufacturers of artificial hips and knees scaled back payments to orthopedic surgeons after settling a 2007 U.S. lawsuit that charged them with providing kickbacks, according to a report.

Researchers analyzed data released by Biomet Inc., Johnson & Johnson’s DePuy unit, Smith & Nephew Plc, Stryker Corp. and Zimmer Holdings Inc. for 2007, the year of the settlement, and 2008.

A total of 939 orthopedic surgeons received $198 million in 2007, according to the report released today by the Archives of Internal Medicine. A year later, there were 568 payments worth $119 million, plus $109 million in royalty buyouts from Warsaw, Indiana-based Zimmer, the researchers found. About 1,000 of the 25,000 orthopedic surgeons in the U.S. received money for consulting, royalties on products they helped develop, research and clinical study work, the researchers said.

“We live in a society where we want to reward people for innovation and ingenuity and participation in technology development,” said lead researcher Jason Hockenberry, assistant professor of health policy and management at Emory University in Atlanta, in a telephone interview. “At the same time, we need to manage the potential conflicts of interest that arise from these financial relationships.”

The orthopedic device makers in 2007 agreed to pay $311 million to settle U.S. Department of Justice claims that they paid kickbacks to surgeons in exchange for exclusively using their products. Prosecutors deferred criminal charges against the companies and required them to disclose all their consulting agreements with doctors, put the payment amounts on their corporate Web sites and allow federal monitors to oversee their actions.

Further Review

Researchers also looked at two additional years of disclosures from the DePuy unit of New Brunswick, New Jersey- based J&J, London-based Smith & Nephew and Stryker, based in Kalamazoo, Michigan, who continued to provide the information on a voluntary basis. The number of payments and the proportion given to academic researchers rose in the following two years, though they didn’t return to 2007 levels, the report found.

The number of payments in excess of $1 million didn’t change substantially from year to year, the researchers said. The biggest drop was fees paid to surgeons who received the smallest amounts, Hockenberry said.

Influence Questioned

Previous studies found even small gifts such as purchasing lunch for physicians can alter their treatment and prescribing patterns. The analysis by Hockenberry and his colleagues was unable to determine whether the payments swayed the treatment decisions by the orthopedic surgeons because there are no national databases that track the information.

The vast majority of Biomet’s payments are for royalties on intellectual property, said Bill Kolter, the company’s vice president for government and public affairs. Manufacturers can’t develop or evaluate new devices without working with orthopedic surgeons, he said in an e-mail.

“The contributions that result from such collaborations add tremendous value to the health of patients and to the economics of the health-care system,” Kolter said. “Biomet continues to work in an ethical and compliant fashion with orthopedic surgeons in developing new treatments to address unmet clinical needs, and in educating surgeons on the safe and effective use of its products.”

Spokesmen for the other companies weren’t immediately available to comment on the study.

--Editors: Angela Zimm, Andrew Pollack

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at

To contact the editor responsible for this story: Reg Gale at

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