Med-tech perks for doctors questioned

Wine-tasting outings to California's Napa Valley. Ski trips to Colorado. Tickets to sporting events. Gourmet meals at swanky restaurants. Forays to "adult entertainment" clubs. Fat checks for what some see as questionable work.

Such payments to doctors by medical device companies -- often disguised as "consulting agreements" meant to encourage use of their products -- were the subject of a packed, daylong hearing Wednesday before the U.S. Senate Special Committee on Aging.

Called "Surgeons for Sale?" the hearing was intended to bolster support for the Physician Payments Sunshine Act, co-sponsored by U.S. Sen. Amy Klobuchar, D-Minn.

The law would require drug and medical device manufacturers to disclose how much money they give doctors through payments, gifts, honoraria, travel, funding for clinical trials and educational grants.

It has drawn measured support from the $355 billion medical technology industry, including Fridley-based Medtronic Inc., the largest of the Twin Cities' many device companies. Medtronic makes devices ranging from heart defibrillators to spinal implants.

While much attention has been focused on questionable pharmaceutical company payments to doctors, the medical device industry has until recently operated somewhat under the radar. That appears to be changing -- several settlements resulting from government inquiries were highlighted in Wednesday's proceedings.

No one knows how much has been spent by device companies on the arrangements with doctors, said Gregory Demske, an assistant inspector general for legal affairs with the U.S. Department of Health and Human Services.

But recent government investigations of four makers of hip and knee implants indicated that, from 2002 through 2006, they paid more than $800 million to doctors through about 6,500 consulting agreements, he said in testimony submitted to the committee.

"Although many of these payments were for legitimate services, others were not," Demske said.

In September, for example, the nation's five largest makers of artificial hips and knees agreed to pay $311 million to settle a U.S. Department of Justice investigation into incentives given to doctors.

Settlements with companies having local ties, including Medtronic and Advanced Neuromodulation Systems Inc., now a division of Little Canada-based St. Jude Medical Inc., were also highlighted in testimony Wednesday.

The Justice Department alleged that Medtronic's spine division offered doctors kickbacks -- paid consulting agreements with surgeons involving little or no work, plus trips for doctors, their spouses, families or girlfriends, meetings at "lavish venues" and "company-sponsored adult entertainment" in a case that was settled in 2006 for $40 million. The company signed a corporate integrity agreement, but admitted no wrongdoing.

Advanced Neuromodulation Systems, which makes spinal cord stimulators, in July agreed to a $2.95 million settlement with the federal government, after the company allegedly paid doctors $5,000 for every five new patients tested with one of its products. (This was before St. Jude bought the company in 2005.)

Industry seeks equity

The industry has long contended that appropriate relationships with doctors are crucial to improving device performance and safety. Med-tech lobbying group AdvaMed, as well as Medtronic, support the proposed transparency bill, but with some caveats.

Law should override states

The legislation should override existing state laws -- including one in Minnesota related to drug company payments to doctors -- that require disclosure, Christopher White, AdvaMed's general counsel, said in testimony submitted to the Senate committee. The industry also wants to change the threshold for disclosure from companies that have more than $100 million in annual revenue, to one that is based on the level of payments made to doctors each year.

Sen. Norm Coleman, R-Minn., who sits on the Senate Aging Committee, said in a prepared statement that "creating a national standard for all companies to report gifts to physicians will go far to enhance transparency." Coleman supports the changes proposed by the med-tech industry as a way to ensure "transparency while not causing harm to Minnesota's medical device industry."

Klobuchar said in a prepared statement that "transparency and accountability serve the best interests of consumers. ... At the same time, it is important that federal legislation protecting consumers provide a level playing field for companies, regardless of size."

Janet Moore • 612-673-7752