New Jersey AG Requires Device Company Synthes to Disclose Financial Ties to Physicians

New Jersey Attorney General Anne Milgram announced an agreement with medical device maker Synthes Inc. that requires the company to disclose all financial relationships with doctors conducting clinical trials of its products, and bans it from tying their compensation to the outcome of such trials.  

The Assurance of Voluntary Compliance resolves allegations by the state that Synthes acknowledges the company’s failed to disclose financial conflicts of interest among clinical trial researchers.

According to the investigation conducted by the Attorney General’s Office, physicians working for Synthes who were conducting clinical trials for Synthes's ProDisc Total Disc Replacement System, ProDisc-L, and ProDisc-C, did not disclose their financial stake in the outcome of those trials.

In addition, Synthes agreed under this settlement to pay clinical investigators “fair market value” compensation for their clinical trial work and any other consulting services they provide to the company. Specifically, the press release and the Attorney General noted that:

“ProDisc was developed by Spine Solutions Inc. with financing from a New York investment firm that offered the ProDisc clinical investigators investment opportunities in Spine Solutions and consulting contracts that included gifts of company stock and stock options. When Synthes bought Spine Solutions in 2003, it failed to fully disclose these conflicts of interest to FDA, which signed off on Synthes's applications for premarket approval of ProDisc despite “plainly inadequate” financial conflict disclosures.”

Moreover, the company is now required under the agreement to collect information on financial interests from clinical investigators, conduct reasonable due diligence to ensure that the disclosures are complete and accurate, and record the information in a database that will be provided to the FDA and made available on the company's Web site.

 The agreement also forces Synthes to disclose all financial interests directly to health care facilities serving as clinical trial sites and provide financial interest and disclosure training for its employees.

This agreement applies to all ongoing and future clinical trials, except for those conducted outside the United States and not intended for use in the marketing of products in this country.   As a result from this agreement Synthes will also have to pay the State of New Jersey a total of $236,000 as reimbursement for fees and costs related to the investigation.

Seemingly, this settlement is unique because Synthes will be the first company to include disclosure provisions that ban compensating clinical researchers with company stock or stock options.  In fact, Milgram asserted that “Such disclosure are not required by the FDA, but should be.” Furthermore, she called for stronger disclosure procedures by device regulators at the Food and Drug Administration (FDA), using this momentum to create a “template for industry” that the FDA should adopt and rigorously enforce.

While wasting no time on this matter, Attorney General Milgram sent a letter to the FDA with copies to Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) emphasizing her disappointment with the agency. In her letter she noted that forms were left blank, and investigators with equity interest did not provide enough details. Her “crusade” to further attack medical drug and device companies are also extending further by announcing that the AG’s Office issued subpoenas on May 5 to five major medical device manufacturing companies seeking information about their business practices.

Ultimately, this settlement only marks another blow to industry and physicians who seek to improve patient care through innovation, especially since small and startup medical device companies that often lack the financial resources to conduct clinical trials required by the FDA.   Many are left with little choice but to promise future gains (ie stocks) for consulting and in some cases clinical trial work.   This is especially true if a physician inventor starts the company, and the company seeks to attract the best physicians to help develop their products.     There is no excuse for the investigators not filling out the forms, but no one is questioning the efficacy of the company’s devices or the accuracy of the clinical trials. 

 Many institutions also benefit both scientifically and financially from the development of drugs and devices, and have whole departments dedicated to the licensing of intellectual property and medical patents.     Disclosure is a two edged sword especially for small medical device and drug companies, if physicians are maligned in the press for “working with industry” or “owning patents” as we have seen in several cases this year, their motivations to innovate will be diminished and younger physicians will not be as willing to take the risks that comes with product development, especially if the financial incentive is taken away.  Face it, people work harder if they have skin in the game.

If we continue to take away these incentives for inventors and institutions to create new products, future generations will suffer the consequences.