KEY POINTS:
Four medical device implant makers will pay about US$311 million ($412 million) and agree to federal monitoring and other reforms to settle a government probe into improper consulting contracts with surgeons, said prosecutors.
Zimmer Holdings, Johnson & Johnson unit DePuy Orthopaedics, Smith & Nephew and Biomet will pay civil settlements and avoid criminal prosecution by agreeing to reforms, said US Attorney Christopher Christie.
A fifth company, Stryker Corp, will pay no civil settlement, but it has entered into a non-prosecution agreement with the government and agreed to the reforms, including the federal monitoring. Stryker voluntarily co-operated with prosecutors before any other company, Christie said.
Zimmer will pay US$169.5 million, DePuy will pay USUS$84.7 million, Smith & Nephew about US$28.9 million and Biomet US$26.9 million. Separately, Medtronic said that US Senator Charles Grassley, an Iowa Republican, had questioned the payments the medical device maker made to spine surgeons.
The inquiry follows a US$40 million settlement that the company reached with the US government last year to settle allegations it made improper payments to doctors.
The total settlement was "in the ballpark of what Wall Street was expecting," said one analyst, who asked not to be named. "More than half of it was paid by Zimmer ... my guess is that the government found more fraudulent issues there, the analyst said. The net effect of the settlement, said the analyst, is positive since it eliminates negative overhang of the past couple of years.
"It doesn't look like it changes anything competitively for the companies," the analyst added.
The five companies account for 95 per cent of the market for hip and knee surgery, prosecutors said.
- Reuters
