Following the trend of major pharmaceutical companies such as Pfizer, Eli Lilly, Merck, and GlaxoSmithKline, medical-device maker Medtronic Inc. disclosed this week that it made payments of more than $15.7 million in royalties and consulting fees to U.S. doctors in the first quarter. According to the Wall Street Journal, this is the first time the big Minneapolis company has provided such details.
In doing so, Medtronic is voluntarily disclosing such payments ahead of requirements mandated by the Physician Payment Sunshine Act, which requires companies to post such payments by 2013.
WSJ reported that the vast majority, or $14.2 million, went to orthopedic specialists and orthopedic surgeons. Of that amount, $13.9 million took the form of royalty payments for a wide range of doctors’ surgical inventions. An additional $512,000 went to vascular and cardiac specialists, $495,000 to heart-rhythm doctors and $473,000 to neurosurgeons and neurologists. The article also noted that 227 doctors and doctor groups received consulting or royalty payments exceeding an aggregate $5,000 in the first quarter. Lower amounts weren’t reported, nor were payments to foreign doctors or to doctors doing clinical studies.
Some physicians who received payments asserted that they or their groups “were the primary developers of one of Medtronic’s biggest products, and others acknowledged that they do not get paid royalties for surgery at a hospital where they have privileges.
The Physician Registry for Medtronic includes U.S. physician relationships (including MDs, DOs, MBBSs, and DDSs) that result in aggregate compensation above $5,000 in each calendar year. The registry, which is updated quarterly, includes the names of U.S. physicians in that category, which services they provided and the amount they were paid by Medtronic. Participation in any of the following four activities will bring a physician within their definition of reportable information and it will be posted on their physician payment registry:
- Engagement in clinical practice (diagnose, advise or treat patients);
- Performance of academic or sponsored (private, charity, government) medical (basic medical science, clinical, medical economic or social) research;
- Lecture (didactic or panel participant for academic or sponsored venues) on medical (basic medical science, clinical, medical economic or social) topics to patients or health care providers, where the physician presents him/herself as a clinician and not as an inventor or product developer; and
- Publish (original research, reviews or editorials) on medical (basic medical science, clinical, medical economic or social) topics via publication media (peer- and non-peer-reviewed medical journals, internet websites, local, national or international media outlets) intended to inform patients or health care practitioners.
On an annual basis, Medtronic will ask physicians who have sought to have payments excluded from Medtronic’s voluntary physician compensation reporting to reconfirm they are not performing any of the activities listed above. Medtronic also has a Donation Registry, which list payments. In choosing to voluntarily disclose payments, Medtronic believes its actions will:
- Preserve the integrity of the physician-patient relationship by helping ensure that treatment decisions are driven by patient needs and physician expertise;
- Enhance patient and public confidence by minimizing perceived or real conflicts of interest; and
- Ensure that the importance of physician-industry collaboration is understood as vital to providing long-term healthcare solutions.
Additionally, Medtronic has asserted that it will:
– Continue to use documented fair market value methodology for all compensation;
– Place annual limits on HCP-services relationships;
– Implement a fixed fee compensation model for training and education events;
– Place restrictions on royalty earners and their participation in clinical research for products on which their royalties are earned; and
– No longer allow any “general consulting” contracts, insisting instead that the specifics of all such relationships be spelled out in detail.
Medtronic Chairman and Chief Executive Bill Hawkins told WSJ that the medical-device field is highly technical and that it depends on collaboration between company engineers and outside medical experts. In fact, he could not think of “any innovation that didn’t come from Medtronic working with physicians.” He added that in revising the company’s policies, he eliminated some relationships that did not make sense as an “aim to raise the bar for the industry.”
Senator Herb Kohl (D-WI), a sponsor of the Sunshine Act, praised Medtronic’s step as “a voluntary decision to stay ahead of the transparency curve.” The other co-sponsor, Senator Charles Grassley (R-IA), has been investigation Medtronic’s relationships with various orthopedic surgeons over the past two years. The company agreed to pay $40 million in 2006 to settle government civil charges that its orthopedic business paid kickbacks to surgeons to induce them to buy Medtronic products.
Conclusion
In voluntarily disclosing payment information, Medtronic has given patients the enhanced ability to decide on doing business with a given doctor. Given Medtronic’s trust in publishing the data ahead of schedule, this information must be used fairly so it does not hurt the process of creating innovative medical products, which require both technological and medical expertise.
Abusing payment information by listing payments without any context will hurt patients and medtech companies that provide needed technology requirements, such as materials science, bioengineering, and manufacturing. Despite providing these services, “it would be impossible to maintain cutting edge medical expertise without physician-industry collaboration.” As a result, companies such as Medtronic must continue working “with physicians on an as-needed basis to provide deep understanding of areas such as physiology, pathology, anatomy, and epidemiology.”
Moreover, “with soaring chronic disease rates and healthcare costs, there is greater demand than ever for medical innovations that can transform lives.” Using payment information inappropriately will slow progress in device making because “by working with physicians who treat patients directly, medical device companies can more quickly develop effective and safe therapies that meet specific patient needs.”
Ultimately, “medical devices include sophisticated technologies that require deep knowledge about how they work in the body, how to deliver them, and how to program them.” Since “physicians play a key role in helping companies educate other physicians on how to use our therapies safely and optimize therapy effectiveness,” publishing these payments should emphasize the importance of their collaboration and the impact such partnerships have improving the lives of millions of patients.