Stryker Biotech Case Exposes Risks in Physician-Manufacturer Relationship

Several lessons can be gleaned from the DOJ’s case against the company.

Robert L. Ullmann

August 30, 2012

10 Min Read
Stryker Biotech Case Exposes Risks in Physician-Manufacturer Relationship

It was an emotional moment for me and my client William Heppner (former Stryker Biotech vice president of sales) earlier this year, when the U.S. Department of Justice (DOJ) announced that it was dropping all criminal charges against Bill and other defendants shortly after the start of what was expected to be a fiercely fought six-week trial. Just days earlier, the government had settled with Stryker Biotech for a single misdemeanor plea and a $15 million fine—a paltry sum compared to fines of several hundred million dollars and even billions of dollars that the federal government has secured in other drug and medical device cases (most recently the record $3 billion settlement with GlaxoSmith Kline). Indeed, when the Stryker trial abruptly ended, it seemed that much of the entire medical device industry breathed a collective sigh of relief.


But before anyone gets too complacent, the Stryker Biotech case exposed certain potential vulnerabilities inherent in the relationships between medical device companies and physicians that should receive the industry’s full attention. The decision of the Boston U.S. Attorney’s Office to wrap up its case so early in the proceedings temporarily precluded any public airing of these issues.


However, given broad public concerns about potential doctor-industry conflicts of interest and the quality and cost of healthcare, aggressive law enforcement, legislative action, and civil litigation against medical device firms are not going away any time soon. While working with policy makers, the medical device industry would help itself greatly by addressing some of the difficult questions posed by the Stryker case and other legal proceedings. Fundamentally, our legal system must balance the need to insulate physicians from undue industry influence with the fundamental role that industry-physician collaboration plays in research, innovation, and the safe and effective use of medical devices.

Background on the Stryker Biotech Case

In 2009, the Boston district of the U.S. Attorney’s Office  indicted Stryker Biotech and four of its managers on conspiracy, wire fraud, and felony misbranding charges arising out of the alleged off-label promotion of Stryker’s two products. Specifically, the Boston U.S. Attorney’s Office, which has been at the forefront of prosecuting device and drug companies during the past two decades, accused the company and its managers of illegally promoting the combination of OP-1, Stryker’s bone morphogenic protein, and Calstrux, a bone void filler that serves as scaffolding for the protein. OP-1 and Calstrux were FDA-approved products, but the agency had not approved their use together, and it specifically cautioned against the mixing of Calstrux with other products. Notwithstanding this caution, surgeons routinely mixed OP-1 with Calstrux and other bone void fillers (there were approximately 60 brands on the market), which they have authority to do in the exercise of their own medical judgment. Regardless, FDA charged Stryker with illegally promoting the joint use of the products and deceiving orthopedic surgeons into believing that they had been either approved for use together or that they were a single product.


In bringing criminal fraud charges, the government created for itself the highest possible burden—and one that it could not meet. Several of the surgeons whom the U.S. Attorney accused Stryker and its employees of conspiring to defraud were prepared to testify that they in fact had not been deceived and understood the distinction between OP-1 and Calstrux. Moreover, it was implausible that the Stryker representatives, whose effectiveness as salespeople depended on establishing strong credibility with surgeons, would intentionally seek to deceive them, especially when their financial success hinged on expanding use of OP-1, a game-changer in orthopedics, and not Calstrux, the commoditized bone void filler.

Relationships between Physicians and Medical Device Reps

The government clearly overreached in bringing fraud charges against Stryker and four of its managers. But had the defense team not succeeded in undermining the government’s case at the outset and the trial continued, the case would have featured the close working relationships that exist between medical device sales representatives and surgeons. These relationships differ from those between pharmaceutical sales representatives and doctors.


After spending almost three years on the Stryker Biotech case, it is clear to me that most members of the public, and many government officials, do not fully understand the relationship between surgeons and medical device sales representatives. Based on the nature of medical devices as compared to drugs, surgeons and medical device representatives often forge a closer working relationship than most doctors form with pharmaceutical sales reps. With both drugs and devices, the patient is the end user. But the physician’s role is limited to that of an intermediary in prescribing a drug, whereas with a medical device, the surgeon physically works with the product. Medical devices also can be extremely complex for physicians to use, particularly in the context of real-time, high-pressure surgical procedures in which someone in the operating room must have complete knowledge of the product.


Thus, it should not be surprising that surgeons depend more on medical device sales representatives than most doctors depend on pharmaceutical reps. Nor should it be surprising that surgeons will often request that medical device reps accompany them in the operating room, in the event that they have any questions about the device or need immediate access to additional supplies. Testimony during the Stryker trial would have revealed that surgeons relied on sales reps in the operating room for their knowledge of OP-1 and bone void fillers.


The real-time need that surgeons have for product information also has ramifications for the ability of medical device companies to completely separate their promotional and educational functions. Most large medical device and pharmaceutical companies have a medical information department designed to provide fair and balanced responses to physician questions about uses of the company’s products (including off-label use). These departments typically occupy different office space than sales and marketing, and employee compensation has little, if any, connection to sales volume, in contrast to the compensation of a typical sales representative. In the case of a drug, physicians can almost always wait to direct questions to a manufacturer’s medical information department. In contrast, surgeons often don’t have the luxury of time and must rely on someone in the operating room for precise information about a product. A medical device sales rep in the operating room who tells the surgeon to call 1-800-MED-INFO during the next day’s business hours can expect an annoyed reaction. In fact, that is precisely how many surgeons react when medical device sales reps are precluded by company policy from responding to surgeon questions during surgery if the device is being used off-label, which is how many medical devices are used.


The depth of relationships between medical device companies and doctors is further reinforced by the vital role of surgeons in developing, testing, and improving devices. Most innovation in the medical device world comes from manufacturers who work closely with clinicians and engineers to develop new therapies and treatments. The development of new medical devices is distinctive from the development of pharmaceuticals. In drug development, insights generally emerge from pharmacological testing in the laboratory, whereas the idea for a new or improved medical device often originates with a surgeon who, over the course of his or her practice, has identified an unmet clinical need. In other situations, biomedical engineers may collaborate with a physician to assist in product development. Device companies are highly dependent on surgeons for insight into how a device functions and could be improved. Without close industry-physician collaboration, the pace of innovation would almost certainly be slower, and the safety and effectiveness of medical devices could be compromised.


Understandably, surgeons expect to be paid for their innovations and the role that they play in developing and improving medical devices. Medical device companies are allowed to pay physicians who use their products the fair market value of their innovations and consulting work. Fair market value is often an amount of money that, to many people, seems inconsistent with maintaining one’s independent judgment about using the products of a company for which the surgeon is consulting versus a competitor’s products.

Implications for Medical Device Companies

The relationships between medical device companies and surgeons can raise significant conflict- of-interest concerns. Over the past 15 years the federal government has targeted many practices employed by drug and device manufacturers, most notably providing physicians with expensive meals, lavish entertainment, and travel. Regulators and industry have made valid efforts to circumscribe these practices. But the baby should not be thrown out with the bath water. These relationships serve important purposes and should not be restricted in ways that impede research, innovation, and the safe and effective use of products that benefit patients.


Despite the outcome of the Stryker case, federal and state prosecutors and other regulators will continue to scrutinize sales practices and other relationships between physicians and industry, bringing civil and criminal enforcement actions when they believe that federal statutes have been violated. To minimize the risk of government enforcement matters and the civil law suits that inevitably follow, the medical device industry can help itself greatly by fostering relationships with surgeons that benefit both industry and the public, and limiting the relationships that raise concerns about undue industry influence on the medical profession.


Over the past decade, attention has increasingly focused on industry gifts to physicians, including its potential harmful effects. In April 2007, a widely read New England Journal of Medicine article addressed this issue in detail.1 Survey results published in the Archives of Internal Medicine reveal that drug companies are curtailing their spending on drug rep details, and fewer physicians are taking gifts from the industry.2 These are healthy trends.


At the same time, it is crucial not to curtail physician-industry relationships that lead to research, innovation, and safer and more effective use of drugs and devices. To foster these important relationships, the medical device industry must demonstrate that it understands public and government concern about undue industry influence on the medical profession, and that it is acting responsibly. Many medical device companies have adopted the AdvaMed Code of Ethics to guide their interactions with healthcare professionals. However, the code does not specifically address the behavior of sales representatives in operating rooms. The device industry should promulgate guidelines that govern such interactions, just as the device industry has established regulations on gifts to physicians. There have been several sets of guidelines issued by healthcare organizations, including the American College of Surgeons and the Association of Perioperative Registered Nurses, that recognize a legitimate need for sales personnel in the operating room and seek to define the limits of that role. Some top teaching hospitals have adopted their own guidelines on the presence of company representatives in the operating room as well. Adopting these regulations, and establishing a process for training and certifying sales representatives, would go a long way towards allaying public concern about sales reps in the operating room. They would also provide a potential defense against government enforcement actions that sought to present these interactions as nefarious.


The Stryker Biotech trial was an important victory for the medical device industry, but it hardly marks the end of federal and state efforts to scrutinize suspected improper marketing activities and conflicts of interest between physicians and medical device companies. Prosecutors will continue to carefully probe the prescribing practices of doctors for evidence of patterns suggesting improper influence or illicit marketing practices. Medical device companies need to get ahead of the curve and establish industry standards and best practices relating to relationships between industry representatives and physicians. Industry also needs to continue educating government officials about the relationships that medical device sales representatives have with surgeons and work with them in agreeing on accepted standards of behavior. Long-term and close working relationships between surgeons and medical device companies are critical to the development of new devices and to enhancing the safe and effective use of existing products. Protecting these powerful and beneficial collaborations will require proactive industry efforts. Without such efforts, increasingly aggressive federal action can be expected.


1. E Campbell, et al., “A National Survey of Physician-Industry Relationships,” New England Journal of Medicine 356 (2007): 1742–1750.

2.  E Campbell, et al., “Physician Professionalism and Changes in Physician-Industry Relationships From 2004 to 2009,” Archives of Internal Medicine 170, no. 20 (2010): 1820–1826.

Robert L. Ullmann is a partner, trial lawyer and Chair of the Government Investigations and White Collar Defense Practice Group with the law firm of Nutter McClennen & Fish, LLP.


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