Part I: Medical device payments to doctors draw scrutiny

  • Article by: JANET MOORE , Star Tribune
  • Updated: September 8, 2008 - 12:19 PM

Lawsuits and government investigations are providing a glimpse into financial relationships between doctors and medical device companies.

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With 25 million Americans suffering from back pain, spinal surgery has become a growth industry. Recently, at St. Joseph’s Hospital in St. Paul, Dr. Charles Burton, left, replaced a spinal neurostimulator. Burton is vice president of the Association for Ethics in Spine Surgery, a grassroots group of doctors who do not accept compensation from companies for using their devices.

Photo: Glen Stubbe, Star Tribune

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Dr. David Polly's reputation precedes him and it's worth a lot. Among spine surgeons, this rather unremarkable-looking 51-year-old is a rock star.

Arrayed before him as he spoke at the annual Design of Medical Devices Conference at the University of Minnesota were two dozen doctors, engineers, students and medical device company representatives, some furiously scribbling notes. In this reverential group, Polly's mention of a particular surgical technique or medical device would be golden.

They already knew much about this man with a 29-page résumé. The head of orthopedic spine surgery at the university, Polly has led close to 80 research studies and co-written at least 90 scientific papers on repairing aging, injured and contorted spines. In an era of active baby boomers, many with ailing backs, Polly's specialty is a growth industry.

Polly's paid consulting relationship with Medtronic Inc., the global leader in medical devices, was not a focus of discussion that muggy April day. The Fridley-based firm makes the plates, screws, cages, neurostimulators and bone grafts that largely comprise the toolbox of spine repair.

Patients may notice the notepads and pens bearing drug company logos in their doctor's office. They may have read accounts in recent years of drug companies paying doctors to try to influence what they prescribe. Few are aware of the deeper financial relationship their doctor may have with medical device companies and how that may influence their care.

To probe the practice, and the ethical and legal issues engulfing it, the Star Tribune has examined hundreds of pages of legal and government documents, and interviewed dozens of government officials, doctors and industry insiders.

A recently unsealed whistleblower lawsuit, and Congressional and Justice Department investigations, are finally bringing into public view the practice of handsomely reimbursing top doctors to consult for medical device companies.

The industry says it's the best way to ensure devices are safe and effective for patients and workable for doctors. Who better, they argue, to perfect a device than a doctor who actually uses it over and over? Who better to train doctors to use a device than a physician who had a hand in inventing it?

Government investigators, lawyers for former employees and a few breakaway surgeons have some questions of their own -- about a practice they allege exists primarily to give companies an edge over competitors by paying doctors to recommend their products. Sometimes these consulting fees involve speakers' fees, royalty income or money for research, or training courses, the whistleblower lawsuit claims.

It's not just the spine industry exposed in the newly harsh glare of investigations into this practice. Last year, the government reached a $311 million settlement with the country's biggest makers of hip and knee implants after a probe into doctor consulting agreements. In 2005, subpoenas were served on major cardiac device makers -- and, in the past month, even on companies that make relatively obscure bile duct stents.

Patients are usually none the wiser about these agreements. Pending federal legislation would require drug and medical device companies to publicly reveal on the Internet what they pay their doctor consultants. Minnesota is one of the few states requiring public disclosure of payments to doctors by drug companies. But the law doesn't cover medical devices, the state's signature industry.

The $344,375 in consulting fees Polly allegedly received from Medtronic in 2006, and similar amounts in 2004 and 2005, are only emerging because of a complaint filed in a whistleblower lawsuit by two former Medtronic employees in U.S. District Court in Massachusetts.

Although the government declined to intervene and conduct its own investigation into the claims, the lawsuit continues in federal court. It alleges the agreements are a sham used by medical device companies to buy doctors' loyalty in the hotly competitive $7.5 billion spine industry.

"The medical device industry is unique," said Medtronic spokeswoman Marybeth Thorsgaard. "The products we develop and manufacture cannot be invented by trying a new formula in a lab like the pharma industry. They must be designed and produced in close collaboration with the men and women who will use them: the world's most highly-skilled and innovative doctors and surgeons."

The Star Tribune requested from the University of Minnesota the amount medical device companies pay researchers, staff and doctors. But the university refused, saying it is private personnel data that is not public under the Minnesota Data Practices Act. University records that are public reflect only that the portion of Polly's income from his base university salary was $52,750 last year.

The Massachusetts lawsuit accuses Polly and 112 other leading spine surgeons of allegedly accepting a total of $8 million in unethical and possibly illegal consulting payments in 2006 alone.

Polly declined to comment for this story. He referred all questions to his Minneapolis attorney, John Lundquist, who represents 82 of the surgeons named in the Massachusetts lawsuit -- including Polly and other doctors from Minnesota.

Lundquist would not confirm the amount of consulting fees the suit alleges were paid to Polly. "We are not going to comment on the personal finances of any of our clients," he said.

Seven of the other defendants are from the Minneapolis-based Twin Cities Spine Center, a nationally known practice headquartered at Abbott Northwestern Hospital. The complaint alleges they accepted consulting payments from Medtronic totaling approximately $466,400 in 2006. They are Drs. Timothy Garvey, Francis Denis, Joseph Perra, Manuel Pinto, James Schwender, Ensor Transfeldt and Amir Mehbod. A Twin Cities neurologist, Stanley Skinner, is also named.

"These surgeons have done absolutely nothing wrong," said Lundquist. "They are among the most renowned and respected orthopedic surgeons and neurosurgeons in the nation." Lundquist recently filed a motion to dismiss the suit on a number of legal grounds.

But Dr. Charles Burton takes a different view of the consulting arrangements. The St. Paul neurosurgeon is vice president of the Association for Ethics in Spine Surgery, a grassroots group of doctors who do not accept compensation from companies for using their devices. "The payments have gone too far. It's gotten out of hand," Burton said. "It's become an embarrassment to the medical profession. I think people have to say, 'Enough.'"

Big dollars for small devices

Doctors hold powerful sway over which brands of medical devices are used on patients.

Many of their consulting agreements with device companies are simply intended to extract doctors' expertise to improve devices or to train doctors on new products. But if a company strikes an agreement with a doctor intended to steer his product choice to its own device, the behavior becomes illegal under federal law.

No one knows how much the device industry spends on these agreements. In congressional testimony this year, Gregory Demske of the federal Office of the Inspector General said four of the biggest hip and knee implant companies doled out more than $800 million in 6,500 consulting agreements with doctors between 2002 and 2006.

The three makers of heart defibrillators and pacemakers -- Medtronic, Boston Scientific Corp. and St. Jude Medical Corp. -- have received subpoenas from the U.S. Attorney's office in Massachusetts, according to documents filed with the Securities Exchange Commission. The documents sought information about how the companies market heart devices, which comprise a $10 billion industry with deep ties to the Twin Cities.

A spokeswoman for the U.S. Attorney's office in Boston declined to comment or even confirm whether the information was requested. The companies said they are cooperating with the request.

For now, the most intense spotlight appears to be trained on the spine device industry, one of the fastest growing in medical technology, thanks to the 25 million Americans suffering from back pain.

Sen. Chuck Grassley, an Iowa Republican, and Sen. Herb Kohl, a Wisconsin Democrat, have sponsored a bill to open the payments to public scrutiny. Last fall, the bill was referred to the Senate Finance Committee, where Grassley is the ranking member.

The same month, Grassley wrote to Medtronic CEO Bill Hawkins, requesting information about the company's financial relationship with 15 of the country's top spine surgeons. Among them: the university's Polly.

"As you know,'' Grassley wrote, "[Medtronic] has been accused of paying doctors exorbitant amounts of money to encourage the use and promotion of its products." Grassley said he was "disturbed" by the allegations.

In a statement last week, Grassley said: "I've asked questions directly of Medtronic. My investigative staff is reviewing documents that have been provided, and I await additional information and a full response from the company."

Huge profits are at stake as companies attempt to persuade doctors to use their devices.

Each year, some 500,000 U.S. spine fusion surgeries -- a common, yet often controversial, procedure to stabilize the spine -- are performed on patients, many in desperate pain.

The markup on products used in these procedures is often dramatic. A pedicle screw used in spine surgery may cost $60 or $100 to make, but the discounted price hospitals pay for the product is about $1,100, according to Orthopedic Network News, an industry newsletter. While highly complicated surgeries may use 40 screws, a more typical fusion operation uses four to six, plus other devices, according to Stan Mendenhall, the newsletter's editor. Medicare and most private insurers pay for the bulk of the procedure.

At a congressional hearing where he testified this year, Demske cited research that although doctors believe stock options, royalty agreements and research grants don't influence their medical decisions, in reality, they do.

Dr. Wilton Bunch, a retired orthopedic surgeon who is now an ethicist at Samford University in Alabama, summarized the philosopher Plato to describe the controversy: "Plato said a craftsman is a craftsman only as long as he pursues his craft. I believe a physician is only a physician if he is pursuing healing. If he's pursuing wealth, he's a businessman."

A patient's suspicions

Beverly Hemmingson spends her summer days watching others swim, ski and fish on Wabana Lake at her resort, Birch Bay, near Grand Rapids, Minn. Following spine surgery by Polly five years ago, Hemmingson, 74, is paralyzed from the waist down and in a wheelchair.

"Most days, I just sit,'' she says.

Two years after her 2003 spine surgery, Hemmingson filed a malpractice lawsuit against Polly in Hennepin County District Court. The complaint alleged that the surgical procedure used by Polly was "inherently high risk" and caused trauma to her spinal cord.

But it was more than a standard malpractice complaint. It also claimed that Polly's consulting arrangement with Medtronic "was substantial enough to have potentially clouded [his] judgment," causing him to use the company's products when they may not have been in Hemmingson's best interest.

Polly's lawyers denied the malpractice allegations, saying that the care he extended Hemmingson was within "accepted standards of medical practice," and that his contractual relationship with Medtronic was "irrelevant." They described Hemmingson as a patient with numerous health concerns who had undergone multiple back operations before her surgery with Polly.

The case was ultimately settled, its terms confidential. Hemmingson returned to Birch Bay last fall after two years in a nursing home. When told that her situation has resurfaced in a federal whistleblower lawsuit in Massachusetts, she was flabbergasted.

Three pages of the 67-page complaint in the federal lawsuit (which names 113 surgeons) are devoted to Polly, who retired from the U.S. Army as chief of orthopedic surgery and rehabilitation at Walter Reed Army Medical Center in Washington, D.C. before coming back to Minnesota.

In a September 2005 deposition of Polly in Hemmingson's case, he said his consulting relationship with Medtronic began in October 2003, after he left the military. In it, he characterized his work as a company consultant as "varied. ... I'm asked to teach at courses, to provide instrumentation, and on conceptual approaches to spinal problems."

Using devices off-label

A genetically engineered Medtronic surgical product called the Infuse Bone Graft provides much of the grist of the Massachusetts whistleblower lawsuit aimed at Polly and other surgeons.

At issue is whether the company's consulting arrangements with doctors encourage use of Infuse in ways not approved by the Food and Drug Administration (FDA).

Sophisticated medical devices must be approved by expert panels of the FDA before being sold in the United States. Typically, medical device companies sponsor clinical trials on patients to make sure a device is safe and effective.

But sometimes patients can be successfully treated using a device "off-label" -- that is, in a way not approved by the FDA. Doctors are free to use the devices beyond the scope of what the FDA approved, but companies may not market the devices for uses beyond those approved. The FDA does not track off-label use, a spokeswoman said.

Medtronic's Infuse Bone Graft is used in spine fusion surgery, permanently linking vertebrae. Before regulators approved Infuse in 2002, spine fusion required two surgeries -- one a painful harvest of bone from the hip, and a second to implant the bone inside thimble-like cages inserted into the spine. The idea is to promote bone growth between the vertebrae.

Infuse is approved for a single-level fusion in the lower back and other limited uses. But few doctors heed the FDA's mandate. That includes Polly in Hemmingson's case, according to the complaint in the whistleblower suit. Industry analysts estimate that 80 to 95 percent of Infuse use is off-label. Medtronic said in a statement it does not promote off-label use of Infuse, though it is aware that "physicians are free to prescribe Infuse for purposes other than the FDA-approved indications."

The Massachusetts suit claims that the consulting money paid to Polly and other surgeons encouraged use of Infuse in off-label ways potentially harmful to patients. Because these surgeons are seen as key opinion leaders in spine care, the suit maintains, their opinion would encourage other doctors to use the bone graft product in the same way.

"[Infuse] is a good product; it had good data when it was approved,'' said Dr. Charles Rosen, spine surgeon at the University of California, Irvine, and the founder of the Association for Ethics in Spine Surgery. "It definitely was a boon to spine surgery. If someone is using it off-label, I don't have an issue with it, unless they're getting a kickback for using it.''

Infuse has proven to be a blockbuster device for Medtronic, although the company does not break out sales figures for individual products. For about five years, Medtronic has enjoyed a monopoly for the product in the United States, a run unheard of in medical technology.

Janet Moore • 612-673-7752

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