Medtronic Continues to Fight Whistle-Blower Suit
BY SHELLY ACHAIBAR, JANUARY 24, 2006
Medtronic, one of the nation's leading device makers, is facing continued charges of payoffs to surgeons, as written about today in the New York Times. To summarize, a lawsuit filed against the company two years ago, was brought on by the whistle-blower, a former employee of Medtronic. It accuses Medtronic of giving spine surgeons "excessive remuneration, unlawful perquisites and bribes in other forms for purchasing goods and medical devices".
The article states that many large companies in the device industry are actively involved in similar practices and often retain surgeons with a variety of attractive financial ruses. Medtronic is said to have paid a prominent surgeon in Wisconsin $400,000 a year for a consulting contract that required only 8 days of work. Typically physicians are paid generous consulting fees and speaking honorariums, or by underwriting their trips to attend medical conferences. In the last four years alone, Medtronic spent over $50 million on doctors.
The article points out that both physicians and device makers justify their relationship as being critical for the development of life-saving products. But there is growing concern that these financial ties have become too astronomical not to affect a physician's judgment, especially since payments are rarely disclosed to patients. Payments become illegal when they skew a doctor's decision to use a particular company's device.
This controversy has inspired the adoption of new ethical guidelines that dictate how device makers and physicians conduct business. "Over the last couple of years, companies are saying no" more often to doctors, according to a former Medtronic employee. After recent scrutiny, more companies have scaled back their efforts and discourage overly lucrative arrangements or luxury resort extravaganzas.
The lawsuit, unsealed on January 13th, revealed that the Justice Department has proposed a settlement of $40 million. The company maintains its position as having done nothing unethical and continues to co-operate fully with the government to resolve the case. All the doctors involved in the case commented that payments were appropriate and fair compensation for work done.
[Update Jan 25: We got ahead of events in our original coverage of the article. When we posted the blog entry yesterday, it started, "Medtronic Settles Whistle-Blower Suit" and continued in the same vein. Actually the suit was unsealed, not settled, so we have since made a correction.]
