Medtronic Used Strip Club Visits, Other Perks to Encourage Use of Infuse Bone Graft, Other Spinal Products, Lawsuit AllegesSep 25, 2008 | Parker Waichman LLP
Visits to strip clubs, undeserved patent royalties, and lavish trips are just a few of the illegal incentives Medtronic allegedly furnished to spine surgeons, a federal lawsuit filed by a former company lawyer claims. According to The Wall Street Journal, the lawsuit charges that Medtronic used the perks to encourage spine surgeons to use its spinal products, including its Infuse Bone Graft.
Infuse Bone Graft contains recombinant human Bone Morphogenetic Protein (rhBMP-2), a protein released naturally by the body. It is approved to treat a spinal condition called Degenerative Disc Disease, as well as open fractures of the tibia. It is also approved for use in two dental bone grafting procedures: sinus augmentation and localized alveolar ridge augmentation.
In July, the Food & Drug Administration (FDA) warned that the use of the Infuse Bone Graft had caused serious problems when it was used off-label in cervical spine (neck) surgeries. Patients reported difficulty swallowing, breathing and speaking. Several required emergency treatment, including tracheotomies and the insertion of feeding tubes, as well as second surgeries.
The former Medtronic lawyer's allegations are contained in a 2002 whistleblower suit filed in U.S. District Court in Memphis. Under federal law, whistleblowers who recover money for the government can receive a share of any judgment or settlement. According to The Wall Street Journal, the Memphis lawsuit, along with another one that also made kickback allegations, were the basis for a $40 million settlement deal between Medtronic and the government in 2006. As part of the settlement, the lawsuit was dismissed. But a second plaintiff to the suit has appealed the dismissal on the grounds that the settlement amount is too small.
According to the Memphis lawsuit, Medtronic's practice of paying kickbacks to doctors was "pervasive" and "the culture and way of doing business". Allegedly, physician were routinely taken to visit Memphis' Platinum Plus strip club, and Medtronic paid for the dancers' services during "VIP visits." Platinum Plus was closed in 2007, after the club's owner pleaded guilty to charges related to dancers engaging in acts of prostitution, the Journal says.
The lawsuit also alleges that, among other things, Medtronic paid patent royalties to doctors who hadn't contributed anything of substance to product development and hired business consultants that helped doctors boost profits. Medtronic also allegedly paid for twice-a-year seminars in Orlando and Las Vegas where doctors and hospital administrators received free management advice, and supplied physicians with office staff.
The Memphis lawsuit remains under seal, except for redacted a copy that does not include the names of doctors and specific allegations. Somehow, The Wall Street Journal was able to obtain an un-redacted copy, upon which its report was based. There is no clear reason for the lawsuit to be under seal - usually such documents are made public when a settlement is reached.
Senator Charles Grassley (R-Iowa), who has been investigating whether Medtronic has been using illegal kickbacks to encourage off-label use of the Infuse Bone Graft, has repeatedly asked Medtronic to supply an un-redacted copy of the Memphis lawsuit. So far, the company has refused to do so.