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Doctors linked to device makers
Report says Justice Department, hospitals probing financial ties between device companies, surgeons.
September 22, 2005: 8:04 AM EDT
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NEW YORK (CNN/Money) - A published report says the Justice Department and many hospitals are looking into financial arrangements between medical device manufacturers and surgeons who typically decide which device will be given to a patient.

The New York Times reported Thursday that the rising cost of the devices and the relationships between doctors and manufacturers are causing profound concern among hospital executives, health care economists and other experts. Part of the problem is that the doctors' ties to the device manufactures are often unknown to the hospitals, and almost always unknown to patients, according to the paper.

"We're paying for it, but no one can see it," Paul Ginsburg, president of Washington research group Center for Studying Health System Change, told the paper.

What hospitals are charged for devices varies widely, according to the paper, and the hospitals' lack of information has kept them from negotiating better prices. The hospitals' administrators have been reluctant to challenge doctors about their choices of devices, the article says.

The device companies' trade association, AdvaMed, told the paper that payments to doctors are intended not to buy loyalty but to pay for research and training and for the help doctors provide in designing these sophisticated instruments.

The president of the American Academy of Orthopedic Surgeons, Dr. Stuart Weinstein, also defended payments to doctors. He told the paper that since doctors are responsible for most of the innovations in medical devices, "There have to be these close relationships between surgeons and industry." He said these relationships should be above board and disclosed to the patient, and that the doctor should choose the best device for that patient.

But in March, the United States attorney in Newark, N.J. issued subpoenas to five orthopedic implant companies, asking them about their consulting agreements and other arrangements with doctors. And this is not the only active probe, according to the paper.

"A number of investigations are under way," said Lewis Morris, chief counsel to the inspector general for the Department of Health and Human Services.

The paper reports that federal authorities are looking into sales practices at Medtronic's (Research) Sofamor Danek unit, which sells spinal implants. Now the inquiry has broadened to much of the orthopedic-implant industry, with the subpoenas to Stryker, Johnson & Johnson's (Research) DePuy unit, Zimmer, Biomet and Smith & Nephew (Research). The companies told the paper they are cooperating.

At least one hospital has taken legal action. Grant Medical Center in Columbus, Ohio, which in 2003 sued Biomet (Research) and one of its distributors, saying the distributor had tried to take advantage of the insistence of leading orthopedic surgeon Adolph Lombardi, Jr. on using Biomet's implants in about 1,200 joint replacements a year he performed there. The hospital charged in the 2003 lawsuit that the distributor had given the hospital an ultimatum: pay 35 percent more or purchase a service agreement worth several hundred thousand dollars. It also said Lombardi was a consultant and received royalties from Biomet. The suit was settled and Lombardi, the hospital, company and distributor all declined to comment to the paper.

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