The U.S. Attorney's office in Newark, N.J. subpoenaed four hip and knee implant manufacturers -- DePuy Orthopedics, a Johnson & Johnson company; Stryker Corp.; Biomet; and Smith & Nephew -- for documents related to any consulting and service contracts the companies have with orthopedic surgeons using or considering the use of their orthopedic implants.
The inquiry is expected to be "lengthy and comprehensive," said Edward Shenkan, an analyst for Wells Fargo Securities, in a report issued today. All of the companies reported that they intend to cooperate fully with the request.
In reaction to the investigation, orthopedic companies throughout the industry would become more conservative in their consulting relationships, which would possibly cause fewer and smaller hospital price increases, Shenkan said. "We infer that the inability of the orthopedic manufacturers to police themselves signals that the government may be more assertive in monitoring sales and marketing practices in the future," he said.