An 18-month deferred prosecution agreement that required four orthopedic–device makers to pay $311 million in fines and publicly disclose the financial details of their physician-consulting deals, as well as the names of doctors who enter into the deals, has expired, effectively dismissing the charges, according to the U.S. attorneys office in Newark, N.J.
The agreement, reached in September 2007, was the result of an investigation and charges by the U.S. attorney that orthopedic-implant makers Zimmer Corp., DePuy Orthopaedics, Biomet, and Smith & Nephew violated the federal anti-kickback statute by using phony consulting agreements to induce surgeons to use their particular products. The consulting deals, according to the criminal complaint, often involved little legitimate work on behalf of physicians.
In addition to online posting of physician consulting agreements, the deferred prosecution deal also required the devicemakers to overhaul their consulting agreement practices; strengthen their compliance policies; eliminate physician gifting practices; require consulting doctors to certify that they are providing legitimate services; and undergo 18 months of supervision by independent monitors. The companies, which together claimed 95% of the hip and knee implant market, reduced their consulting agreement payments to $105 million in 2008 from $272 million in 2007, according to federal prosecutors.