Device Maker Ending Royalty Deals With Docs
2 CommentsBy Ed Silverman // May 19th, 2008 // 12:43 pm
Zimmer, which is one of the biggest makers of orthopaedic implants, is considering terminating royalty contracts with surgeons in a bid to make consulting relationships more transparent, The Financial Times writes. The effort would involve buying out existing agreements and handing docs a one-time payment in exchange for regular fees down the road, the paper adds.
One unnamed analyst tell the paper such a move could cost about $250 million, because the deal could irriate some surgeons, who may demand large sums to be bought out. The payments, by the way, would come on top of a $169.5 million fine levied last September by the US Attorney in New Jersey for paying kickbacks to docs. Several other device makers reached similar deals.
Since then, the device makers began listing payments to individual docs, plans to disclose grants to outside groups, and last month, Zimmer announced new rules covering its relationships with docs, specifically, payments for consulting, gift giving and medical education funding.
These various efforts amount to approximately $475 million when including an estimated $54 million for various compliance measures taken over an 18-month period ending next April, the FT writes, adding that the one-off payments could be classified by the company as a special charge, and are due to be worked out during the next few months.
Dan
Crime and Punishment: Enough for Corporate Wrongdoing?
Corporate crime should not be a new concept to many. However, it has evolved into more troubling ways- not only in regards to its severity, but the methods of deterrence now being implemented against corporations. So it may be becoming progressively worse for U.S. citizens as a result.
Rather than speak of all corporations, what will be discussed is government health care fraud. Fraud basically is deception with the potential to harm others. In the case of pharma companies, this may include improper promotion and marketing, meaning that such tactics are or may be deceptive misconduct that may be illegal. In addition, there are the crimes of kickbacks and lesser crimes of misbranding products. Probably more methods of wrongdoing as well do in fact exist and happen. Yet the point is that drug companies should not engage in such wrongdoing to enrich their faceless existence with profiting off those who are ill in illegal ways.
How is such conduct discovered? Typically by whistleblowers who worked for the described pharma company, and such people are rare for a number of reasons. The whistleblower then seeks legal agents and files what is called a qui tam false claims act with a district attorney’s office (Boston or Philadelphia, if you want prosecutors to take you seriously). After the case is filed, the whistleblower verbally acknowledges the charges and evidence to the chosen prosecutors and others.
Such cases usually take years for unclear reasons, yet in the past two years, the settlements from such cases has approached 2 billion dollars after investigations ended that took years, which is tax dollars returned to the American public with these settlements.
So, what has been happening once a pharma or medical device company is busted. Criminal indictment by the district prosecutor? Hardly, yet appropriate. Usually, the prosecutor’s objective is to dismiss the case, but give the impression that such activities will not be tolerated by our government. So Corporate Integrity Agreements are mandated to the pharma company, but not really taken seriously, as some have more than one of these agreements active still. It’s an invisible ankle bracelet. A pharma company can and have committed equal or worse crimes while under such an agreement. This Agreement is issued after the deferred or non prosecution agreement is sentenced to the law-breaking corporation, which basically is a pre-trial diversion. Essentialy, it’s just parole, which is supported by the DOJ and the administration. The criminals admit wrongdoing, but not guilt. And they pay a settlement in the neighborhood of hundreds of millions of dollars.
Not that shocking, if you consider the income of big pharma companies. These agreements are relatively new and partially a result of suggestions from what was known as a Thompson memo, which basically was created by a DOJ guy as commandments for prosecuting corporations and variables to consider when doing so, which ultimately offered responses as to why a greater degree of punishment was not enforced.
We are one of three countries in the world with the most prisoners behind bars, yet those that do similar if not greater harm to others get out of jail free. Double standard, I would say. Is this behavior by our legal system towards corporations an effective deterrent? Most think not. It rather seems like tacit approval of their conduct. And health care fraud may be more damaging than other types in other industries, yet lack of regulation allows such crimes to continue.
Citizens should make the laws in our country. Justice would then finally exist. Utopic concept, yet perhaps appropritate
“Corporations cannot commit treason, nor be outlawed, nor excommunicated, for they have no souls.”
—- Edward Coke
Dan Abshear
Paul
So what if some surgeons are upset. The gravy trend of doctors personally profiting from the devices they chose has to end. These pervasive incentives in the devices sectors give the whole industry a black eye…and the doctors who are the ones who demand it, manage to escape all criticism.