Charite Spine Victims and DOJ Go After J&J

Evelyn Pringle October 2006

Lumbar spinal fusion is a procedure in which the vertebrae of the spine are fused together so that motion can no longer occur. As an alternative, the Chirate disc replacement surgery is supposed to restore spinal flexibility, reduce pain and improve the patient’s functional activities. However, in less than two years, the FDA has received over 130 reports of serious adverse events related to the Chirate.

The disc is manufactured by DePuy Spine, a Johnson and Johnson subsidiary, and was approved for use in the US in October 2004, for patients who have degenerative disc disease at one level in the spine and have been unable to obtain relief from low back pain from other spine treatments for a period of at least 6 months.

When seeking approval by the FDA, J&J provided only one 2-year trial purporting to show that the Charite worked as well as the Bagby and Kuslich (BAK) cage, a product used in spinal fusions surgery, which was abandoned years ago by many surgeons due its high failure rate.

Critics say a 2-year trial is far too short for a device that is expected to remain in the spine indefinitely without becoming displaced or causing other problems. Many experts now predict that over the next decade, there will be a slew of Charite patients who will suffer complications and require surgical removal of the disc, which they say is problematic because the removal procedure can be more dangerous than the original implant surgery.

The procedure for replacement involves an anterior approach for exposure for the spine and Santos et al, states, “Revisions surgery for a failed disc arthroplasty is life threatening. Dealing with the scarring around the great vessels is the main challenge Indeed, the location of vital vascular structures may make it altogether impossible to perform such anterior abdominal exposures.”

Expert also warn that other postoperative difficulties such as infection, persistent pain, instability, and osteolysis can occur.

In the study submitted to the FDA for approval, J&J did not include pain relief as a measure of the disc’s success and the product’s ability to restore natural motion was also not listed as a definition of success. And apparently for good reason, because the disc does not live up to its promise of relief.

One Charite victim states: “I have retained my range of motion that is evidently so important.”

“However,” he says, “I am still experiencing the same, if not worse pain than prior to the surgery.”

“I have no idea what is wrong with the implant,” he notes, “if it has moved, broken or was just part of a bigger undiagnosed problem.”

He hesitates to investigate, he says, because his hospital experience was “so horrid.”

“So if a surgical remedy is needed to fix whatever is wrong,” he states, “I’m not going for it again.”

In conclusion, the patient says he would not recommend this procedure to anyone.

The same sentiments are shared by many Charite patients. To date, out of the 5,000 patients implanted with the disc, the Houston, Texas Pulaski and Middleman law firm leads a group of firms that represent over 350 patients who have been injured and allege that the Charite disc is defective and that the company failed to adequately warn patients about the potential risks associated with the disc.

In addition, according the Street.com on June 5, 2006, a Chicago law firm has more than 200 clients who have suffered complications from the disc and are seeking reparations from DePuy.

Dr Charles Rosen, founding director of the University of California-Irvine Spine Center, is an outspoken critic of the Charite disc. On June 5, 2006, he told the Street.com, that after much prodding, he finally got the FDA to send him 67 reports on adverse events involving the Charite disc and that he found the information incomplete and worrisome.

Some “71% of reports were generated by ‘company representatives’ only, [and] not one report to the FDA concluded any device malfunctioned or was defective — including the 11 cases where the device intrinsically malfunctioned with the plastic dissociating from the metal plate,” Dr Rosen told the Street.com.

Also, he said, “it is striking that only 15% of retrieved specimens [Charite disc] were sent to the manufacturer for analysis.”

“It is accepted widely,” he says, “and with little question — that retrieval and analysis of any implant is critical for both evaluation and research.”

But the legal troubles of J&J and DePuy are by far not limited to the Charite disc or civil court arena. They now has the US Department of Justice to contend with.

In June 2006, DePuy was served up with a subpoena by the Antitrust Division of the DOJ, requesting documents related to the manufacture and sale of the company’s orthopaedic devices. The DOJ even had search warrants executed in connection with the investigation, according to documents filed by J&J with the SEC on August 8, 2006.

The Wall Street Journal, reports that a spokeswoman at the DOJ has said that they are looking into “anticompetitive practices in the implant-device industry.”

On September 11, 2006, Dow Jones reported that the subpoenas sought several years’ worth of documents regarding possible federal criminal and antitrust-law violations.

The antitrust probe is one of two known DOJ investigations, and Dow Jones notes that “an earlier investigation regarding doctor-company relationships is still an open question.”

All total, five firms were slapped with subpoenas including Biomet Inc, Stryker Corp, Zimmer Holdings, Smith & Nephew and Johnson & Johnson’s DePuy Orthopaedics

The same five companies, Dow Jones says, reported receiving a separate batch of subpoenas regarding a probe of consulting or professional services agreements between companies and orthopedics surgeons in early 2005.

Analysts say the probe revolves around whether the companies actually received the services for which they paid the surgeons or whether they used the agreements to get the doctors to use their devices.

Lehman Brothers analyst, Bob Hopkins, said in a research note that the original investigation may have escalated. “There is a possibility that this is a completely separate investigation, but it is likely that the two are related,” he wrote.

“Either way,” he says, “the involvement of the antitrust division and the wording of the subpoena suggest a serious investigation that may be ongoing for some time.”

“A number of investigations are under way,” Lewis Morris, chief counsel to the inspector general for the Department of Health and Human Services told the New York Time on September 22, 2006.

The question for investigators, he said, is whether the companies and the doctors have crossed a line from legitimate compensation for valuable services rendered in the development of the devices to unethical payoffs for securing competitive advantage in a crowded marketplace.

The question for investigators, he said, is whether the companies and the doctors have crossed a line from legitimate compensation for services rendered in the development of the devices to unethical payoffs for securing competitive advantage in a crowded marketplace.

“The potential for inappropriately steering medical decisions is always at play, and there is always the risk that doctors will prescribe a particular device because of their own financial interest and not the interest of the patient,” Mr Morris said in the Times.

The price spread for medical devices provides plenty of leeway to tack on kickbacks for surgeons. “With manufacturers guarding pricing information closely,” the Times reports, “the price of a given device can vary by thousands of dollars from one hospital to the next.”

For instance, one hospital in the New York area paid $8,000 more for a DePuy hip than a competitor, according to a recent survey by the Greater New York Hospital Association.

In the August 2006 Health Law Fraud Alert, Gregory J. Naclerio, Esq, says that the subpoenas issued to the five device makers “demanded consulting contracts, professional services agreements, and related documents which could evidence the corporation’s arrangements with orthopedic surgeons.”

“Clearly,” he says, “the thrust of the Justice Department’s subpoenas is to establish whether the device companies are in some way offering “remuneration” to orthopedic surgeons to use their products.”

Typically, he says, it is through consulting contracts and professional services agreements that ways are found to compensate physicians for ordering a company’s products.

“Educational seminars at “resort areas” where the “free time” exceeds the “seminar time,” he states, “as well as stipends for research and educational programs that require little or no work by the physician only serve to confirm the government’s belief that violations of the anti-kickback statute are occurring.”

“Under the Medicare/Medicaid anti-kickback statute,” Mr Naclerio explains, “it is illegal “to offer” or “to accept” remuneration in return for a referral of a patient or services paid for by Medicare.”

Not only does the acceptance of payment constitute a federal felony, with a maximum of 5 years imprisonment, he says, “it can also result in civil federal false claims violations and exclusion from the Medicare/Medicaid program.”

Based on reports that the action by the DOJ constitutes a second round of subpoenas that were issued to the same five device makers, Mr Naclerio writes in the alert, “This can only lead one to conclude that the first round of subpoenas led the government to believe that further inquiry was required.”

According to the September 26, 2006, New York Times, the rising cost of devices and the relationships between doctors and device makers are “causing profound concern among hospital executives, health care economists and other experts, mirroring recent reactions to the way pharmaceuticals are marketed.”

“In the last two years,” it reports, “Medicare payments to hospitals for implant surgery have risen about 40 percent, from $10 billion to $14 billion, according to an analysis of Medicare records.”

And that’s why, the Times says, federal prosecutors are questioning the deals between device makers and doctors, trying to determine if they amount to payoffs.

One example of payoffs described involved Dr William Overdyke, an assistant professor at the Louisiana State University Health Sciences Center, who oversaw operations to replace worn-down knees. From 2000 to the middle of 2001, whenever a patient needed an artificial knee, he or the residents he supervised, implanted one made by Sulzer Medical, state documents show.

Dr Overdyke claims he used the Sulzer knee because it was the best available. But Louisiana officials say he had another incentive, the $175,000 a year that he stood to make from contracts with Sulzer that called for him to consult on product design and “promote and educate other surgeons” on the virtues of Sulzer products.

Before signing with Sulzer, Dr Overdyke said that he had never used the company’s artificial knee but as it turns out, he previously had a contract with another company, Wright Medical and while under that contract, he and his residents largely used Wright’s artificial knees.

Wright Medical paid him $150,000 to $200,000 annually, according to the Times, quoting a court deposition.

Dr Overdyke paid $10,000 in fines after Louisiana officials determined that his consulting arrangements with Sulzer were an improper conflict of interest under the state ethics code.

“There is another central figure helping cement the company-doctor relationship,” according to the New York Times, “the sales representative.”

The representatives work on commission of as much as 10 to 20% and according to the Times, can make as much, if not more, from an operation than the surgeon, industry consultants say.

They frequently make several hundred thousand dollars a year, the Times says.

One former salesman who refused to be identified because he still worked in the industry, told the Times that to encourage a surgeon’s loyalty, he used to pay the doctor’s assistant $200 a case. “It was a bonus they didn’t have to pay with their money,” he said.

In addition to all of its legal problems, J&J has also run into trouble with retaining coverage by public and private health care insurance plans to pay for the Charite disc surgery.

Medicare will no longer pay for the procedure with patients over 60. That decision to deny coverage for the Charite has prompted private health insurance companies to not cover the device.

For instance, on September 1, 2006, Tufts Health Plan announced that it does not cover the use of an artificial disc in the treatment of degenerative disc disease, because according to the Plan’s Evidence of Coverage (EOC), a treatment or procedure is considered experimental or investigative “if reliable evidence shows that prevailing opinion among experts regarding the treatment is that more studies or clinical trials are necessary to determine its safety, efficacy, toxicity, maximum tolerated dose, or its efficacy as compared with a standard means of treatment or diagnosis.”

On August 18, 2006 the US Department of Labor and Industry put into rule an existing medical coverage decision to not authorize the Charite disc for the care and treatment of injured workers and victims of crime, based in part it said, on the fact that the disc had only been on the market since October 2004 and yet “more than 133 serious adverse events have been reported to the FDA from its use.”

“The department reviewed the best scientific evidence on artificial discs and made a noncoverage decision,” it said, “because there was not substantial scientific support and thus the device has not been proven to be safe and efficacious.”

“Putting this noncoverage decision in rule,” the department advised, “will give the department more legal support if challenged about the noncoverage decision and ensure the safety of treatment provided to injured workers since the Charite III disc is a treatment option not proven by scientific evidence. “

The Department also noted that Blue Cross Blue Shield reviewed the Charite disc and came to the conclusion that “the evidence is insufficient to determine whether the use of artificial vertebral discs improves the net health outcome or whether they are as beneficial as any established alternative… Therefore, the use of artificial vertebral discs for degenerative disc disease does not meet the Technology Evaluation Center (TEC) criteria.”

However, for what its worth, according to the July 12, 2006 Orange Country Regiser, J&J is educating doctors and patients on the appeals process when coverage is denied and the company’s Web site offers a bibliography of articles about Charite to “enhance your case,” as well as addresses for contacting state insurance regulators.

Charite disc overall sales will also be much lower from here on in since it recently gained a competitor. In August 2006, Synthes Inc, a Swiss medical device maker, won FDA approval for the artificial spine disc ProDisc-L According to Dow Jones, financial analysts estimate that around $100 million sales in 2007 will stem from ProDisc-L.

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