In what appears to be a response to last year's run-in with the Department of Justice (DoJ), Zimmer Holdings (Warsaw, Indiana) late last week reported changes in its corporate compliance model that it said are "aimed at establishing an enhanced standard for ethical business practices."
The company said the "refined" compliance model is designed to reduce potential or perceived conflicts of interest inherent in consulting relationships between the industry and healthcare professionals. It said that the intent is to do this "aggressively" while also preserving the best of the collaboration that the company said "drives innovation in medical devices and services."
In September Zimmer, along with Biomet (Warsaw, Indiana); DePuy Orthopaedics (Raynham Massachusetts), a unit of Johnson & Johnson (J&J; New Brunswick, New Jersey) and Smith & Nephew (S&N; London), settled with the U.S. government to resolve fraud allegations, agreeing to pay about $311 million and consenting to federal monitoring and other reforms (Medical Device Daily, Sept. 28, 2007).
The agreements were made to settle a government probe into improper consulting contracts with surgeons, federal prosecutors said.
With the settlement, Zimmer agreed to pay $169.5 million, the lion's share of fines by any of the companies.
Obviously addressing the settlement and the adverse publicity attached to the DoJ's claims, the company said the new model includes fundamental changes in the areas of product development, marketing, surgeon training, educational and charitable funding, and transparency.
"Collaboration with physicians will always be critical to advancing medical technology that improves patients' lives. But the historical model for collaboration requires change to continue inspiring the confidence and trust of our stakeholders," said David Dvorak, president/CEO of the company, in a statement. "The new model we have recently developed at Zimmer implements principles and systems that we believe will drive greater transparency, value to the healthcare system and even more efficient and effective product development cycles."
Dvorak added that his company thinks that its "emerging best practices" are necessary "to ensure a vibrant future for the medical device industry and for the patients our industry serves."
The model, the company said, builds upon its existing corporate compliance program and is consistent with its commitment to meet and exceed the requirements of its September 2007 resolution agreements with the U.S. government.
"We have taken our obligations under these resolution agreements extremely seriously and have now embraced the opportunity to move beyond their requirements to create a more sustainable model for the growth of our business over the long-term," Dvorak said.
Highlights of the initiatives include:
• Establishment of new engagement and compensation structures for healthcare professional consultants. Zimmer said it is currently reviewing all U.S. royalty-bearing hip and knee development agreements to ensure consistency with the fair-market-value principles of its 2005 corporate compliance program and is working with a third party to establish the compensation structure for future agreements with healthcare professional consultants.
• Realign marketing systems, infrastructure and practices. The company said it is "improving and extending internal firewalls to prevent sales, distribution and other marketing teams from having any involvement with physician consultant agreements, services or payments." In addition, Zimmer said it is banning all company gifts to healthcare professionals, prohibiting company-sponsored healthcare professional presentations at medical society events, and moving to eliminate the use of quotations, endorsements, images and product-branding by healthcare professionals, other than scientific literature references.
• Centralize surgeon training and education. The company said it is launching "a more rigorous, integrated and advanced level of surgical-skills training" to further protect the integrity of training interactions. The training will be objective-based, delivered through corporate-approved Zimmer Institute courses. It will also cease utilizing physicians to train and educate on products for which they may receive royalty-based compensation connected to the company's sales of the products.
• Establish a third-party mechanism to oversee Zimmer's educational and charitable contributions. The company said it will work through independent third parties to ensure all funding decisions remain free of perceived or actual influence by the company.
• Develop global infrastructure and systems. Although the resolution agreements apply only to Zimmer's U.S. hip and knee business, the company said it is making its enhanced compliance standards global and applicable to all of its business units. In addition, it will require all healthcare professional consultants to participate in annual Zimmer corporate compliance and ethics training programs, and require them to disclose compensation arrangements to patients, employers and hospitals where they have privileges.
What is unclear from the new compliance rules are the potential consequences to either the doctors or employees who do not follow these new guidelines.
Brad Bishop, a spokesperson for Zimmer told Medical Device Daily in an emailed response that while his company won't get into the specifics of its implementation plan, "we have said that we plan only to work with people internally and externally who embrace these initiatives and share our beliefs, and who are willing to act according to this model."
"We still have much work to do in order to implement fully these enhanced business practices, but we are firmly committed to establishing this new standard," Dvorak acknowledged. "Ultimately," he said, "our goal is to ensure that patients benefit from innovations focused on their needs, and that everyone with a stake in quality healthcare can rest assured that physicians choose products based on what they believe is best for patients."
In the DoJ's investigation last year Zimmer appears to have drawn the most scrutiny, and it is being monitored by former U.S. Attorney General John Ashcroft.
Stryker (Kalamazoo, Michigan), a fifth major orthopedics company mentioned in the DoJ investigation of conflicting arrangements, did not have to pay a civil settlement, but it is part of the pact and has agreed to the reforms, including 18 months of federal monitoring.