Makers of medical device implants try to settle concerns over doctor kickbacks

A $310 million (219 million EUR) agreement has been signed between makers of medical device implants and prosecutors to resolve concerns over doctor kickbacks.

Photo: Makers of medical device implants try to settle concerns over doctor kickbacks

The agreements were made by Biomet Orthopedics Inc., DePuy Orthopaedics Inc., Smith & Nephew Inc., Stryker Corp., and Zimmer Holdings Inc.

The five companies account for nearly 95 percent of the market in hip and knee implants. Four of them will pay a total of $310 million (219 million EUR) and all agreed to be monitored. The amounts were based on market share.

"This investigation uncovered evidence that health care decisions were being made based on a doctor's wallet and not on a patient's well-being," said Weysan Dun, the agent in charge of the FBI's New Jersey division.

Authorities said the companies paid orthopedic surgeons exorbitant amounts of money to be consultants and exclusively use their products. Patients and hospitals were not told of the relationships, U.S. Attorney Christopher J. Christie said.

Christie would not say if any doctors would be charged in the continuing investigation, but said no company employees were being charged at this time.

He said some doctors were paid "hundreds of thousands" of dollars but that only a minority of the consulting contracts companies had with surgeons were considered improper.

Biomet will pay $26.9 million (19 million EUR); DePuy, $84.7 million (59.7 million EUR); Smith & Nephew, $28.9 million (20.4 million EUR); Stryker will not be paying any money; and Zimmer will pay $169.5 million (119.5 million EUR) and be monitored by former U.S. Attorney General John Ashcroft.

The U.S. Department of Justice began investigating the industry in 2005 regarding concerns that companies may have paid kickbacks to orthopedic surgeons in return for favoring their products.

Messages seeking comment from the companies were not immediately returned.

In July 2006, another medical device maker, Medtronic Inc., agreed to pay $40 million to settle civil allegations that it paid kickbacks to doctors. The allegations dealt with its Memphis, Tennessee-based subsidiary Medtronic Sofamor Danek, which makes implants used in back surgery to stabilize a patient's spine.

The government said that between 1998 and 2003, Medtronic paid kickbacks that included sham consulting fees, bogus royalty payments and trips to tourist destinations. Medtronic denied any wrongdoing in the settlement.

Biomet, of Warsaw, Indiana, was acquired Tuesday for $11.4 billion (8.04 billion EUR) by a consortium of private equity firms and ceased trading on Nasdaq.

DePuy, also of Warsaw, Indiana, is a unit of New Brunswick, New Jersey-based health care giant Johnson & Johnson. Zimmer is also based in Warsaw, Indiana.

London-based Smith & Nephew has its U.S. orthopedics operations in Memphis, Tennessee.

Stryker is based in Kalamazoo, Michigan.