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Indian Stent Distributors May Have Bribed Docs

The MaharashtraFood and Drug Administration in India claims that distributors of cardiac drug-eluting stents made by major medtech manufacturers charge hospitals triple the sale price at import and use the proceeds to bribe doctors to use the devices, according to a report in the Times of India.

The Maharashtra FDA notified Fridley, MN-based Medtronic Inc. in 2012 of the alleged practice by its then-distributor, Bhalani Biomedicals Pvt Ltd, the Times of India story said. The company's Indian importer, Medtronic Pvt Ltd, reportedly imported the stents at 30,848 rupees (about $506) and sold them to distributor Bhalani Biomedicals Pvt Ltd for 67,000 rupees, or $1,009. Bhalani then allegedly sold the stents to hospitals for more than $1,640, the report said.

In September 2012, a Mumbai newspaper reported alleged corruption in the sale of stents to Indian hospitals. According to the Times of India report, Medtronic hired the U.S. law firm Jones Day to investigate the allegations, and ultimately took the distributorship away from Bhalani, the Times of India report said.

Qmed.com previously reported that Indian hospitals were allegedly overcharging patients for medical devices.

A Medtronic spokesperson did not respond to Qmed's request for comment, but the Times of India included this response in its report:

"Medtronic has an extensive compliance program to assess the conduct of its employees and representatives, including distributors, and if necessary takes action against those who violate its policies and the law. Furthermore, our employees and representatives are provided extensive training and resources to ensure they fully understand our business conduct requirements and local laws. We do not condone nor do we tolerate improper payments of any kind, and we will continue our efforts to ensure compliance with all applicable Indian and US laws."

The Maharashtra FDA report also included details of alleged overcharging by Abbott Laboratories (Abbott Park, IL) as well as Johnson & Johnson (New Brunswick, NJ), the Times story said.

J&J announced in 2011 that it would stop selling drug-coated stents in 2011 due to stiff competition, according to a New York Times report. In response to the Times of India story, J&J spokesperson Amy Jo Meyer cited the company's anti-corruption policy, which reads, in part:

"J&J prohibits, directly or indirectly, offering, promising, giving, or authorizing anyone to give anything of value to or for anyone acting in an official capacity for or on behalf of: a national, regional or local government; an agency, department or instrumentality of a national, regional or local government; a government-owned or government-controlled company; or a public international organization to influence any official act (or failure to act), or any decision in violation of his or its lawful duty; or induce the use of his or its influence to affect any governmental act or decision; or secure any improper advantage in connection with business. Furthermore J&J Companies will strictly comply with applicable commercial bribery rules."

Abbott did not responded to a request for comment.

Other companies have been plagued by such allegations. Biomet (Warsaw, IN) paid $22 million in fines to the U.S. government over what prosecutors described as improper payments made in Argentina, Brazil and China from 2000 to 2008.

Biomet, its executives, employees and agents recorded the payments on its books and records as "commissions," "royalties," "consulting fees," and "scientific incentives" to conceal the true nature of the payment, according to the Justice Department.

More recently, In May 2014, the Chinese government fined J&J and Bausch & Lomb a combined $3 million over alleged price-fixing in the sale of contact lenses in that country.  

Refresh your medical device industry knowledge at MD&M Chicago, October 15-16, 2014, and MD&M Minneapolis, October 29-30, 2014.

Nancy Crotti is a contributor to Qmed and MPMN.

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