Federal Investigators Target Orthopedics Sector

One by one, subpoenas from the U.S. Department of Justice (DOJ) were issued, each followed by a company news release pledging complete compliance and cooperation with the investigation. And with each communication, it became increasingly clear that orthopedics—medtech's hottest sector—was under fire.

Earlier this month, Christopher Christie of the Newark, NJ, office of the U.S. Attorney issued subpoenas to the nation's five leading orthopedics firms. The subpoenas requested information regarding the companies' consulting, professional service, and remuneration agreements with orthopedic surgeons dating from January 2002 to the present.

The orthopedic companies under investigation are Biomet Inc. (Warsaw, IN); DePuy Orthopaedics Inc. (Warsaw, IN), a Johnson & Johnson company; Smith & Nephew plc (London); Stryker Corp. (Kalamazoo, MI); and Zimmer Holdings Inc. (Warsaw, IN).

The DOJ is seeking to examine the close relationships that orthopedic manufacturers have with orthopedic surgeons to determine whether any improper activity has occurred. Although manufacturers are permitted to pay legitimate consulting fees to physicians, federal antikickback rules prohibit companies from paying doctors for referrals or providing incentives to encourage the use of their products.