DePuy Orthopedic Settles Kickback Charges

More than three years of legal squabbling have finally reached an end as federal prosecutors settled with five orthopedic device companies after thorough investigation to allegations that the said companies paid bribes to surgeons to favor their products.

In March 2005, five orthopedic companies – Zimmer, Johnson & Johnson’s DePuy Orthopedics, Smith & Nephew, Stryker Corp. and Biomet Inc. – received subpoenas from the US Department of Justice through the US attorney’s office in Newark, NJ. The subpoenas aimed to seek further information pertaining to consulting contracts, professional service agreements and other agreements. The five companies reached to a $310 million agreement to resolve charges proposing they paid kickbacks to doctors.

These five orthopedic device giants account for almost 95 percent of the market when it comes to hip and knee implants. Four of them agreed to pay a total of $310 million, while all agreed to be closely monitored. The amounts were practically based on each company’s market share. According to the in-depth investigations, there is substantial evidence suggesting that health care decisions were being made based on the doctor’s wallet and not on the patient’s welfare.

US Attorney Christopher Christie says the companies bribed orthopedic surgeons huge sums of money to serve as consultants and to exclusively use their products, but their patients and the hospitals of the doctors were blind of the relationships. While Christie did not say if any doctors would be charged as the investigations progress, he did clarify that no company employees were being charged at the moment.

Biomet obliged to pay $26.9 million; Smith & Nephew, $28.9 million; and DePuy, $84.7 million. Stryker Corp. on the other hand will not be paying fines as a part of its agreement. It voluntarily cooperated with persecutors and agreed to engage in a non-prosecution pact; while Zimmer will pay $169.5 million and will be monitored by former US Attorney General John Ashcroft. The United States Department of Justice began probing the industry in 2005 due to concerns that companies may have paid bribes to the orthopedic surgeons in return of using and endorsing their products.

According to US Attorney Christopher Christie, the industry has been routinely violating the anti-kickback law by paying physicians for the sheer purpose of exclusive product use. Before the investigation, several orthopedic surgeons in the country have made medical decisions based on how much money they can make or in simpler terms, choosing the device of the “highest bidder” to implant. The US Department of Justice hopes that with these agreements in place, doctors will now make decisions based on what is best for their patients, and not what is best for their bank accounts.