by Debra Sherman

Last Updated: 2008-03-06 16:01:03 -0400 (Reuters Health)

SAN FRANCISCO (Reuters) – Fear about an expanding probe into orthopedic device companies’ financial relationships with surgeons was enough to send chills down the spines of even the most honest doctors at the annual American Academy of Orthopaedic Surgeons (AAOS) meeting this week.

Reform in the wake of the U.S. Justice Department investigation was the main talking point in San Francisco, where more than 30,000 doctors, researchers and industry executives gathered.

It is the first industry meeting since the top orthopedic device companies paid $311 million to settle with the government last September over financial relationships companies maintained with consulting physicians.

With rumors rampant that the Justice Department will announce indictments of doctors, high-end company-sponsored dinners and receptions were tougher to find than in years past. Even cheap giveaways, like backpacks prominently displaying company names, were absent this year.

"Do we get the message that things are changing? The answer is yes. We get it loud and clear," outgoing AAOS president Dr. James Beaty said in an interview. "Our core message to our members is that patients must come first."

He said the academy aims to foster a collaborative relationship between physicians and the industry, which is crucial to innovation.

"I agree with the academy’s position that physicians need to inform their patients of their relationships (with corporations) and assure patients that it will not affect the physician’s choice of treatment," said Dr. David Waddell, an orthopedic surgeon and consultant to Genzyme Corp.

"The academy is asking us to do the right thing," Dr. Waddell added.


Few doctors were willing to speak on the record, but many agreed that fear is driving significant changes in behavior among physicians.

Ned Lipes, an executive vice president at Stryker Corp who testified before Congress last week about the industry’s relationship with physicians, said not much will change at Stryker in the wake of the settlement.

"We don’t have to change very much. The terms outlined by the DOJ were things we were already doing, so there won’t be major changes in our business practices," said Lipes, whose company was the only one in the settlement not fined.

U.S. Attorney Christopher Christie spoke to Stryker’s sales force in January and told them he was looking at some of the smaller companies in the industry as well as individual surgeons, Lipes said in an interview.

"Christie said, ‘I’ve dealt with the supply issue and now I’m looking at the demand issue’," Lipes said. "I only know what he told us."

A spokesman for Christie declined to be more specific and could not comment on rumors of indictments of doctors or confirm that he would attend the meeting here.

Wright Medical, for instance, received a subpoena late last year, after the big orthopedic companies settled. Wright executives declined requests for interviews.


Investors seem to remain unsettled.

Short interest in the orthopedics group increased by 0.9 percent in February, rising to 44.7 million shares, or 3.6 percent of the float, noted Wachovia analyst Michael Matson. That compares with the industry average of 2.1 percent of float and matches the record of 3.6 percent.

Late last year, the five top orthopedic device makers settled a U.S. Justice Department investigation over gift and payment practices the agency said were aimed at influencing surgeons’ implant choices.

Four of them — Zimmer Holdings Inc, Johnson & Johnson’s DuPuy Orthopedics, Smith & Nephew and Biomet Inc — agreed to pay a combined $311 million as part of the settlement. Zimmer paid the lion’s share, $169.5 million.

The companies also agreed to reforms, including federal monitoring.

A watchdog for the Health and Human Services Department told Congress last week that current U.S. law is not sufficient to police medical device companies that pay surgeons consulting fees, and give them gifts, travel and other perks that may influence medical decisions.

In 2007, at least $222 million in such payments were made by the five major makers of artificial hips and knees, according to an analysis by Congressional committee staff.

The shift in mind-set this year has left some company reps adrift in the city by the bay. "We’re not hosting the dinners and receptions, so I’ve got more time," Zimmer’s Brad Bishop said.

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