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Lawmaker Probes Payments to Doctors by Medical Device Companies

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Sen. Charles Grassley, R-Iowa, left, at a hearing on Capitol Hill in June 2010. Grassley called out medical device company Medtronic in a letter to the FDA for the company's payments to doctors. (Alex Wong/Getty Images)

1:30 pm: This post has been updated.

Payments to doctors by medical device company Medtronic could pose conflicts of interest, especially when the compensation is significant or when doctors could benefit financially from the success of a specific product, according to a letter by Sen. Charles Grassley, R-Iowa.

Medical devices, just like drugs, must be approved by the FDA for use on patients. This often occurs through clinical trials conducted by doctors. Both pharmaceutical companies and medical device companies pay doctors for speaking, consulting, and research on particular products. Though these payments are standard practice in both industries, Grassley raised particular concerns about doctors conducting clinical research on a product when they have a stake in the outcome.

In a letter to the Food and Drug Administration, the lawmaker urged the agency to outline the circumstances in which physician payments could present “too significant a conflict” for a physician to be involved in clinical studies of a medical device. From the letter:

For example, the company reported consulting payments ranging from almost $40,000 to one physician to almost $2 million to another. Three of the physicians also received about $1 million in royalties, while another received several thousand in Medtronic stock.

Medtronic’s production also included financial disclosure forms that were submitted to the FDA for more than 50 other clinical investigators. Almost all of these investigators received significant payments from Medtronic. Two of the investigators met three of the four criteria for disclosure to the FDA. Not only did they receive “significant payments of other sorts,” but they also had a proprietary interest in the product tested and a financial arrangement where the value of compensation could be influenced by the outcome of the study.

Check out a redacted disclosure form, which notes that a physician serving as a clinical investigator for Medtronic was receiving compensation that “could be influenced by the outcome of the study,” and that the investigator had a “proprietary interest in the product tested.” 

As we’ve noted, Grassley was an author of a provision in the health care reform bill known as the Physician Payments Sunshine Act, which requires disclosures of doctor compensation by drug companies and medical device companies. These disclosures, however, won’t be made public until 2013.

Medtronic, the world’s largest publicly traded medical technology company, announced in June that it was posting data for payments to U.S. doctors exceeding $5,000 annually. (The Physician Payments Sunshine Act will require disclosure of all payments exceeding $100.)

We’ve asked Medtronic for comment, but have not yet received a response. The company told the Minneapolis Star-Tribune that the arrangement between medical device companies and clinical investigators "is a cornerstone of the innovation in medical technology."

The company has in the past been accused of paying kickbacks to doctors who purchased its products. From the Wall Street Journal:

In 2006, the company agreed to pay $40 million to settle government civil charges that its orthopedic business paid kickbacks to surgeons to induce them to buy Medtronic products. Medtronic denied wrongdoing.

Royalty payments to orthopedic surgeons for their inventions—screws, metal cages and scopes used in back surgery and the like—command high fees, ranging into the millions of dollars. So it can be difficult to discern whether payments are legitimate royalties or inducements to sell products.

Last month, the company also settled thousands of lawsuits brought by patients after a 2007 recall of faulty heart defibrillators that shocked some patients and caused at least 13 deaths, reported the Star-Tribune. Medtronic agreed to a $268 million settlement.

In our coverage of the pharmaceutical industry, we’ve noted that most patients are concerned about their doctors receiving money from the drug industry, and that some of the doctors paid by pharmaceutical companies—while touted as leaders in their field—lacked credentials or faced disciplinary action. (Our survey did not cover physician payments by medical device companies.) We’ve also highlighted some of the top earners—doctors who earned more than $200,000 from drug companies since 2009.

Update: Medtronic spokesman Brian Henry tells me "there are safeguards in place to ensure against conflicts of interest," adding that such conflicts are “mostly perceived."

Those safeguards, according to Henry, include rules barring physicians who collect royalties on a particular device from conducting clinical trials for the same product, except in pilot-stage studies. Royalty-collecting physicians may write about their device and get paid for consulting and training other physicians on the safe use of their device, and they may serve as clinical investigators for other devices.

I asked how the above safeguards address the concerns raised in Sen. Grassley's letter—and the information in the redacted disclosure form—but have not yet received a response to that question.

Update 2: We received a response from Medtronic to our specific question about the concerns of Sen. Grassley and the information in the redacted disclosure form, especially given the company’s assertion that it has safeguards against perceived conflicts of interest. Here’s Medtronic’s response in full:

To your specific question, here is our response:
-- Our renumeration [sic] of physicians is appropriate, legitimate and represents fair market value for their intellectual property and consulting work.
-- We have been, and continue to be, committed to transparency and reporting physician payments in our regulatory submissions.

If this is an example of ProPublica’s ‘investigative reporting’ you folks should hang it up. All this has been widely reported in the NYT, WSJ and elsewhere.  Only thing new appears to be the letter from Grassley, widely regarded on the Hill as something of a blowhard.  For the amounts of money the top editors are making there, you need to do much better than this!

I disagree with Mr. Chase (previous commenter).

Even though “All this has been widely reported in the NYT, WSJ and elsewhere”; I find it very good to have such information aggregated on ProPublica.

It makes it all the more damning to doctors on the take.

Robert C. Bowman, M.D.

Nov. 1, 2010, 5:24 p.m.

From the Journal titled - Stroke - regarding conflict of interest from Dr. Adams.

“How that was managed this time was that we were all given assignments in areas that were unrelated to anything we put on the conflict of interest form;” the upshot is that he was reviewing research, “that I have no interest in or ever spoken about.” All members of the writing group were required to complete and submit a disclosure questionnaire showing all such relationships that might be perceived as real or potential conflicts of interest.  Stroke. Published online October 21, 2010.

From before Stark to Grassley and long after, there will continue to be substantial problems with oversight and more hundreds of millions paid out are only small change compared to the human misery for patients impacted and all of us through too much paid for health care for little real gain in quality of life.

Seems to me that the question to the docs. pharmas, dentists might read something like, “State and and ALL income you received other than your salary or wages, etc of any and all kinds.below”  Then List and and alll kinds of income which was paid to any of your immediate family members, or trusts, or bussinnesses owned or controlled by your family member by _BRIBING COMPANY _______, then state that family members’ expertise in any area of interest in—————-. But the key will be to actually follow up and CHECK UP ON THIS INFO.  Then actually fine those caught violators!!!

Hi Marty, thanks for your comments. Just thought I’d dip in and point out that this post—and some of the others you’re taking issue with—is a blog post and not a full investigation.

Blogging often relies and gives credit to the work done by others. Here at ProPublica we do that through our Investigations Elsewhere feature (http://www.propublica.org/breaking) as well as through our blog. We especially like to use our blog to provide context (http://www.propublica.org/article/A-Reading-List-to-Put-the-WikiLeaks-War-Logs-in-Context), pull out angles we think are important (http://www.propublica.org/blog/item/what-todays-elections-could-do-to-issues-were-watching), and to explain issues that are complex (http://www.propublica.org/blog/item/whos-who-in-the-foreclosure-scandal-a-primer-on-the-players).

That means inevitably there will be content in our posts that has at one time been reported or is already known, especially to those who have been following the issues more closely.

In any case, I invite you to look for our major investigations under our investigations tab. Perhaps they relay information in a format you prefer: http://www.propublica.org/investigations/

Carole is right on target with her proposal.  But the larger question is:  How in the world can the govt enforce such a regime?  And the chances of getting something like this through the gridlocked Congress with members out raising money around the clock?  Nil.

Our culture emphasizes free markets and minimal regulation.  When it blows up, we blame the regulators for being asleep at the switch.  We decry Big Government… but Big Business gets a free pass.

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