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Payments to doctors from medical device company questioned

Posted Apr 08 2011 9:13am

Friday, April 8th, 2011

By Ed Howe
Former president and CEO, Aurora Health Care

In Nevada, state officials are investigating whether payments to a group of cardiologists from a heart device company were legitimate consulting fees or an inducement to the doctors to use the company’s products. The investigation of the company called Biotronik and details surrounding this case have made it into The New York Times. State officials are looking into whether this relationship involved any patient safety issues .

In my opinion, these types of payments to cardiologists should be banned. In the Nevada case, the only way a new company could enter the market place was to do what Medtronic and Boston Scientific have always done. When medical device companies do not compete on price and quality, but only on financial relationships with practitioners, both payers and patients are harmed.

According to The New York Times, cardiologists in the Nevada case started using Biotronik implants in nearly all of their patients in 2008, after company documents show the medical group became “consultants” to the device maker and were paid up to $5,000 a month. The New York Times writes:

Under federal law, anyone who gives or receives something of value to induce the use of a drug or a medical device paid for by a taxpayer-financed program like Medicare can face criminal or civil charges. In the case of the medical device industry, kickbacks to doctors have been disguised as consulting fees or payments for other services.

What is ironic is that the Medical Device Manufacturers Association always complains that group purchasing organizations (GPOs) stifle the market entry of smaller device companies. What the Nevada case shows is that it is the dubious business practices of their own members that are the real barrier to market competition.

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