The investigation into arrangements between device companies and physicians didn't end with last September's settlement between the government and five major orthopedics companies.

In February, the U.S. Senate Special Committee on Aging held a hearing to focus on the financial relationships between surgeons and device companies. Witness testimony included representatives from Stryker Corp. (Mahwah, NJ), Zimmer Holdings Inc. (Warsaw, IN), and Applied Medical Resources Corp. (Rancho Santa Margarita, CA).

During the past few months, the committee spoke with several surgeons and sales people from the device industry. They learned that some doctors felt "shunned" after turning down participation in financial arrangements with industry, according to Senator Herb Kohl (D-WI), chairman of the committee.

While relationships between doctors and companies are an important part of the product development process, these interactions can be very complicated and risky.

"Device companies can legitimately compensate physicians for their actual time and intellectual contributions to product innovations and training in the appropriate use of devices," said Gregory Demske, assistant inspector for legal affairs in the Office of Inspector General (OIG) at HHS.

However, when doctors are compensated by device companies via stock options, research grants, and other agreements, Demske noted there's evidence implying that these payments run the risk of inappropriately influencing a doctor's decision. He added it could also increase healthcare costs, lead to unfair competition, and compromise scientific integrity standards and medical research.

Charles Rosen founded the Association for Ethics in Spine Surgery in response to what he called an "increasing negative influence of industry" in treating back pain and spinal disorders. He told the committee about a dark side of the business in which he accused the orthopedic industry of discrediting him and threatening his job after he began voicing criticism for questionable practices.

The government isn't just examining what companies are doing either. It's also targeting doctors, and there are rumors, as reported in The New York Times, that physicians have received subpoenas. The issue was a hot topic at the American Academy of Orthopedic Surgeons' annual meeting in March.

Demske pointed out that in January, Patrick Chan, a neurologist from Arkansas, paid $1.5 million in a civil settlement. He pled guilty to soliciting and taking kickbacks from implant manufacturer Blackstone Medical. The kickbacks included payment for fake consulting agreements and research studies.

As part of the effort to gain more transparency, Kohl and other senators introduced the Physician Payment Sunshine Act last year, which seeks to create a national database of payments and gifts to doctors.

AdvaMed has voiced its support for the legislation, on the grounds that some modifications are made to level the playing field for companies. Christopher White, executive vice president and general counsel for AdvaMed, provided some recommendations in his testimony before the committee. Among the suggestions were using a threshold for disclosure based on the level of payments that a company makes to a doctor each year, as opposed to the legislation's requirement of disclosure only for companies reaching $100 million in annual revenue.

The investigation isn't over, and the OIG and Department of Justice will continue to work together to prosecute against manufacturers and doctors who violate the laws. Demske added that the OIG will also maintain its outreach to companies and physicians to increase awareness and help them manage compliance risks.

-Maria Fontanazza