Medtronic says it paid $15.7 million to U.S. doctors in first quarter

Medical-device maker Medtronic Inc. (NYSE:MDT) voluntarily disclosed Tuesday that it paid more than $15.7 million to nearly 230 U.S. doctors in the form of royalty payments and consulting fees in the first quarter of 2010.

This is the first time the Fridley-based company made the disclosures, listing payments that total $5,000 or more to physicians on its website. Under a provision co-sponsored by Sen. Amy Klobuchar in the new federal health-care reform legislation, medical device manufacturers, pharmaceutical companies and medical supply manufacturers will be required to make annual disclosures of physician payments beginning in 2012. Medtronic, which had announced its intention to provide annual disclosure before the health care legislation passed, now intends to provide quarterly disclosures.

Fifteen Minnesota physicians received payments from Medtronic in the quarter. The majority of payments, $673,000, were royalty payments for inventions incorporated into Medtronic products. The remaining payments, totaling between $32,000 and $45,000, were for research, training or consulting services according to the company website.

Of the $15.7 million total, $14.2 million went to orthopedic specialists and orthopedic surgeons, $13.9 million of which was for royalty payments for doctors’ surgical inventions, according to a report in the Wall St. Journal. An additional $512,000 went to vascular and cardiac specialists, $495,000 to heart-rhythm doctors and $473,000 to neurosurgeons and neurologist, the Journal reported.

“Collaboration between physicians and industry remains crucial to innovation in the medical technology industry, and it has transformed millions of patients’ lives,” said Chairman and CEO Bill Hawkins in a prepared release. “Because such collaboration is so critical to our mission, it must be based on solid principles, in order to avoid the potential for real or perceived conflicts of interest.”

Medtronic and others in the medical device industry had come under congressional scrutiny and criticism for payments and alleged kickbacks to physicians for using their products. A former Medtronic lawyer had accused the company’s orthopedic unit of paying kickbacks in 2002 to surgeons who bought Medtronic products. The lawyer sued the company and that case was settled and sealed in 2006. Medtronic also paid the government a $40 million civil penalty in 2006 and changed business practices in its orthopedic unit.

In addition, the company said it is implementing additional policies and procedures relating to physician collaboration and transparency. The policies include:

  • A standardized process that verifies and documents the business need for specific physician services;
  • Limitations on royalty-earning physicians involvement in clinical studies, and caps on total annual payments to individual physicians for services;
  • A standard agreement that documents in advance services to be provided and the payments to be made for the services;
  • Documentation that the services have been satisfactorily completed and invoiced prior to payment.

Medtronic has been disclosing its grants and donations since 2008.

Medtronic stock lost 2.25 percent yesterday, closing down $0.88 at $38.30 a share.

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