Orthopedic firms reveal payments in settlement

Minnesota doctors and medical institutions were paid up to $7.7 million so far this year in financial agreements with the nation's largest hip and knee surgical-implant companies, according to information released Wednesday in a multimillion-dollar government settlement with the device makers.

Four of the nation's five largest makers of artificial hips and knees agreed in September to pay $311 million to settle a U.S. Department of Justice investigation into the consulting fees paid to doctors that it says are intended to encourage use of their products.

A condition of the settlement involves the companies posting on their websites the names and locations of their consultants, or the names of the institutions, and how much they were paid so far this year.

The first posting went up Wednesday, and it includes more than $2 million paid to the Mayo Foundation for Education and Research, and at least two Minneapolis surgeons who each received more than $500,000.

The five companies that were involved in the initial investigation, begun in 2005 by the U.S. attorney's office in Newark, N.J., are Zimmer Inc., DePuy Orthopaedics Inc., Biomet Inc., Smith & Nephew Inc. and Stryker Orthopedics Inc. They control nearly 95 percent of the U.S. hip and knee surgical implant market.

While much attention has focused on gifts extended by pharmaceutical companies to doctors, fees paid to medical device makers are a bit more complicated. Minnesota requires drugmakers to report all consulting payments made to doctors, but no such requirement exists for medical device companies, which are among the state's largest and most lucrative employers.

Medical device companies and many doctors say financial agreements with doctors are crucial to inventing and perfecting their products, particularly in the evolving orthopedic field. In some cases, doctors were involved in clinical research testing experimental devices.

Dr. Richard Kyle, a Minneapolis surgeon who is listed as receiving about $740,000 from Zimmer and Smith & Nephew, said the information required by the Justice Department is highly misleading. "It's really unfair to lump everything together," he said. (Only Biomet lists services rendered for fees, such as "education grant" and "clinical investigator.")

Kyle said all of the fees he received were royalties for new technologies he developed in his surgical practice.

"Almost everything that we do from an orthopedic standpoint, particularly with knees and hips, requires surgeon input for development," he said. "[Company] engineers are very important, but you not only have to have something that mechanically works, but you have to have someone to implant it properly."

Mayo also got payments

The Mayo Foundation for Medical Education and Research received between $2.94 million and $2.99 million this year from DePuy, a division of drug giant Johnson & Johnson; Zimmer, and Stryker, according to the websites.

Mayo spokesman Lee Aase said the foundation receives royalties for devices invented by staff members and for other intellectual property. The foundation has 26 such contracts with makers of artificial hips and knees.

Most of the money from orthopedic companies supports research and medical education, although some is shared with the inventors of new devices, Aase said. However, the Foundation and its inventors do not receive royalties for Mayo-invented devices prescribed for Mayo patients.

"This is to ensure that there is no conflict of interest, no financial incentive to use Mayo devices; the only consideration is what is best for the particular patient," Aase wrote in an e-mail. So any royalties received by the foundation come from use of the device at other hospitals.

But the Justice Department clearly believes other types of consulting agreements exist. Its investigation spanned the years 2002 to 2006 and focused on orthopedic surgeons who were paid tens to hundreds of thousands of dollars a year for consulting contracts that it said were intended to encourage the use of their products.

Criminal complaints were filed against four of the companies, Zimmer, DePuy, Biomet and Smith & Nephew, accusing them of conspiring to violate federal anti-kickback laws. The complaints will be dropped if the companies comply with the terms of the settlement, which lasts 18 months. A criminal complaint was not filed against Stryker, the first company to cooperate in the investigation.

None of the companies admitted to any wrongdoing.

Fridley-based Medtronic Inc., which makes spinal devices at its Sofamor Danek division in Memphis, was not involved in the investigation.

Janet Moore • 612-673-7752

Janet Moore • jmmoore@startribune.com