Power & Politics | Aug 20, 2011 |

Title Page
Title Page

Introduction Medtronic is the organization that I have chosen for the topic of discussion. Medtronic was co-founded by Earl Bakken over forty years ago. With many people praising his products he wanted that to be company’s purpose. Many people regained their mobility, feel better, and ever felt that time was added to their lives. These comments lead to the company’s mission of: “…alleviate pain, restore health, and extend life. (Medtronic, 2010) This mission remains the focal point of every employee to this day. Mr. Bakken frequents the company yearly. Our business overview covers Spine & Biologics, Neuromodulation, CRDM, Diabetes, Cardiovascular, and Surgical Technologies. (Medtronic, 2010) I currently work in the Spine & Biologics division of the company within the Memphis Manufacturing division. The Spine business teams with world-renowned surgeons, researchers, and innovative partners to offer a broad range of state-of-the-art products and technologies. The Spine and Biologics division in FY2010 revenue accounted for $3.5 billion of the company’s $15.8 billion reported. (Medtronic, 2010) My current job title is Principal Quality Inspector. In my department, I am responsible for ensuring that our products are manufactured to the engineered drawing tolerances. Other assigned duties range from training new hires in the department to assisting anyone that’s in need under our umbrella. This would include personnel that extend beyond my immediate work group such as shipping, receiving, DHR and metrology. I am also responsible for maintaining a critical database for the department’s daily use. My tenure with the company began July 2005 in the quality department. Medtronic is a company that has used it power and influence to gain a competitive edge. The company’s power, politics and influence has placed it in a situation of defending itself again anti-kickback laws. Several articles have been written alleging that the company paid doctors for their support of a product line named “Infuse.” The U.S. government has been involved in cases similar to this one. Chapter five and twelve of the text identifies a few concepts presented in the problem. There is no one particular answer to address such cases or issues, but there are a few alternatives or temporary fixes to the problem. “Power is the ability to get someone else to do something you want done or the ability to make things happen or get things done the way you want.” (Schermerhorn, Hunt, Osborn, & Uhl-Bien, 2010) Politics is defined by Webster dictionary as: political affairs or business; especially: competition between competing interest groups or individuals for power and leadership (as in a government).” (Merriam-Webster, 2011) There seems to be an environmental and systemic perception in corporate America about the politics involved in the work place. Upon observations within my job area the powerful and those who play the political games get the promotions.
Problem Statement To what extent and whom does kickbacks by Medtronic affects? The problem is that Medtronic allegedly paid physicians to write good reviews of their Infuse product. This behavior exhibits kickbacks. Kickbacks are illegal with limitations. The rules for acceptable behavior are detailed in the Anti-Kickback Statue as safe harbors regulations. On the books since 1972, the federal anti-kickback law's main purpose is to protect patients and the federal health care programs from fraud and abuse by curtailing the corrupting influence of money on health care decisions. Straightforward but broad, the law states that anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal health care program business, including Medicare and Medicaid, can be held accountable for a felony. Violations of the law are punishable by up to five years in prison, criminal fines up to $25,000, administrative civil money penalties up to $50,000, and exclusion from participation in federal health care programs.

Because the law is broad on its face, concerns arose among health care providers that some relatively innocuous -- and in some cases even beneficial -- commercial arrangements are prohibited by the anti-kickback law. Responding to these concerns, Congress in 1987 authorized the Department to issue regulations designating specific "safe harbors" for various payment and business practices that, while potentially prohibited by the law, would not be prosecuted. The Office of Inspector General has previously published 13 regulatory safe harbors, 11 in 1991 and two in 1992. A new final rule scheduled for publication in the Nov. 19, 1999, Federal Register will establish eight new safe-harbor provisions and clarify six of the original 11 safe harbors published in 1991. These proposals were published in the Federal Register in 1993 and 1994 and have been significantly modified in response to voluminous public comments. Additionally, an interim final rule establishing a safe harbor for shared-risk arrangements is scheduled for publication in the Nov. 19, 1999, Federal Register. After publication of the two new rules, there will be a total of 23 anti-kickback safe harbors consolidated in the Code of Federal Regulations in 21 subparagraphs.(Affairs, 1999) Actions of such affect the government, Medtronic, other medical device makers, doctors, employees, and ultimately patients. In response to many agencies treading the fine line too close, the government has passed the Physician Payment Sunshine Act. This law requires payments to physicians to be reported to the Federal government. Companies that have made agreements with the government because of such allegations have to enact a “corporate integrity agreement (CIA).” The physician payment sunshine act will take effect January 1, 2012. Medtronic is currently under a CIA for another product of their portfolio. If Medtronic is found guilty of giving kickbacks to the physicians for their Infuse products they will fall subject to these laws. Actions of kickbacks and payoffs affect the medical industry as a whole. These actions increase the cost of Medicare and Medicaid for patients. Doctor’s credibility is damaged and employees endure extensive training and increase work hours. The company stands the chance of losing market share and credibility. Ultimately, Medtronic could lose its federal reimbursement for their products. If this occurs, the company closes and patients have one less choice of product to use. Many companies did not want the Physician Payment Sunshine Statue to become a law. In March 2011 it became law effective January 1, 2012. According to many people of the medical device industry, it’s just the way business is done. The government is not disagreeing with the companies seeking physician input; however they are concerned with the excessiveness of their compensation. Physicians receiving courtside seats to a New York Knicks game would be considered too lavish. Literature Review
Equipment, B. (2004, Feb.). EBSCO HOST. Retrieved August 19, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=0a071556-44b1-4bc6-9690-81aa4cfc3271%40sessionmgr14&vid=12&hid=10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=12035933 Medtronic gets FDA premarket approval for the use of their Infuse product. The product has been approved for use along with other implantable devices. Infuse is used to fuse degenerating disc of the spine. This bone morphogenetic protein (rhBMP-2) is intended to replace the second surgery that is traditionally performed.

Book, B. (2011, February). EBSCO HOST. Retrieved 08 19, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=0a071556-44b1-4bc6-9690-81aa4cfc3271%40sessionmgr14&vid=8&hid=10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=62851901 The off-label use of Infuse does not prove to be as beneficial as Medtronic has stated. Physicians and patients enjoy the use and procedures for using this product. The MEDCAC committee does not see the extent of effectiveness that Medtronic claims it provides. Evidence that was gathered stated just the opposite. Infuse proved to be the cash cow for Medtronic in FY 10 and they hope to extend that in FY11 with Infuse with AMPLIFY which may continue to be used as off-label.
Meier, B. &. (2011, 6 29). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=98602236-42f2-4e95-91ea-aec2bf741160%40sessionmgr15&vid=16&bk=1&hid=11&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=61929345

Physicians used in a Medtronic-sponsored study of Infuse stand by their professional opinions of the product. The physicians also deny any direct or indirect influence by Medtronic. However, one of the physicians Dr. Zdeblick has received over $20 million from Medtronic over a number of years. Payments have been linked to royalties and patents. Another group of spine specialists are repudiating the study. Their study has concluded that the company study was bias and misleading. There appears to have been a conflict of interest. Physicians may have received kickbacks.

Ford, O. (2011, 7 5). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.comproxy.devry.edu/ehost/pdfviewer?nobk=y&sid=98602236-42f2-2e95-91ea-ae2bf741160@sessionmgr15&vid=11&hid=11

Medtronic is bashed by a group of spine physicians in the North American Spine Society “The Spine Journal” for their Infuse product. There were several side effects that were not reported in the company-sponsored study. Male sterility, infections, unwanted bone growth, and bone loss were side effects not reported. Physicians in the independent study feel that these were omitted by the physicians because of their directly or indirectly benefiting from Medtronic. An investigation by the Senate Finance Committee has begun to discover if the physicians omitted this information because of the personal financial gain.

Taylor, M. &. (2006, 7 24). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=81de1962-d806-4aa9-86fa-0f92161a3eac%40sessionmgr14&vid=27&hid=24&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=21935832 Resulting from a federal investigation, Medtronic settled for $40 million. Medtronic settled against allegations of kickbacks in 2006. The federal government stated that Medtronic violated the Medicare Kickback statue and Stark laws. Doctors received lavish trips in attempts to cover up the kickbacks. The company also paid royalties and consulting fees that were violations as well.

Meier, B. &. (2009, 7 29). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=98602236-42f2-4e95-91ea-aec2bf741160%40sessionmgr15&vid=28&hid=11&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=43433196 Dr. David Polly has put himself on the Senate’s radar. He testified for the continuation of payment for the Defense Department research. This research is for combat-related injuries. The doctor did not include in his testimony that he was a Medtronic consultant nor that he was paid $6,000 by Medtronic for his appearance. His testimony was given under the assumption of representing a group of orthopedic surgeons.

Infuse (rhBMP-2) was approved for use by the Food and Drug Administration for Medtronic, Inc. July 2002. This recombinant human bone morphogenetic protein along with threaded fusion devices were supposed to eliminate the second surgery for alleviating back pain. Use of the Infuse product made it possible to avoid removing bone from the patients’ hip that would be used to promote bone growth on the vertebrates being fused. Therefore, Infuse eliminated the second surgery of harvesting bone from the hip. Approval by the FDA was for use of Infuse in the lower lumbar of the spine for degenerative disc disease. An orthopedic surgeon, Mr. Kenneth Burkus from Columbus, GA stated “this revolutionary technology is well on its way to becoming the new gold standard as an autograft replacement.” (Equipment, 2004) He has used and plans to continue using the product. The product is a powder that is reconstituted with sterile water. The putty (paste) is place into a collagen sponge that is placed in the threaded devices that are implanted into the spine. This is to maintain proper height of the vertebrae until fusion is complete.
Photos from (Book, 2011)

Despite the FDA approval of Infuse for lower lumbar fusions, many physicians are using the product off-label. Statistics show that Medtronic saw a forty percent growth rate between 2003 and 2007 because of Infuse. Majority of this growth rate is because of the off-label use of the product. The rhBMP-2 was not being used as engineered design intents suggests. As a result of off-label usage, Medtronic has been issued a warning letter from the FDA. There are life-threatening complications associated with the product when used in the cervical area of the spine. This has caused the company to see a reduction in the usage of the product. There was an article written and it suggested that about ninety percent of fusions performed were off-label. Medtronic hopes that AMPLIFY will help to reduce some of the off-label usage of the rhBMP. This product is manufactured for treatment of the L2-S1 levels of the spine.
Chart shows the on and off-label usage of Infuse (rhBMP-2) (Book, 2011) Dr. Burkus from Columbus, GA in an earlier article stated, “this revolutionary technology is well on its way to becoming the new gold standard as an autograft replacement.” (Equipment, 2004) Upon studies conducted by another group of physicians, Dr. Burkus did not want to respond to the allegations of receiving kickbacks from Medtronic for his involvement with the product. However, one of his colleagues involved in the company-sponsored study has received financials of over $20 million for his work. Dr. Thomas Zdeblick has received payments for royalties and patents from Medtronic over the years. He too claimed to have no direct or indirect financial interest in the product for the company. As a result, records have been requested of Medtronic by two Senators to investigate the payments and communications of the studying physicians from the initial review of the product. Another physician, Dr. David Polly was drawn under fire for his involvement in the company-sponsored study of the Infuse product manufactured by Medtronic. He was paid $6,000 to appear before the Senate panel to urge them to continue payment for research. This research was for the Department of Defense for combat injuries. The University of Minnesota rules were for him to disclosed compensation annually of $10,000. The school did not see the work he was doing as a conflict. Working for the Department of Defense and Medtronic seem different to the school because work was performed on animals not humans. Overall Dr. Polly has received an estimate of more than $1 million from Medtronic over the years in addition to travel expenses domestic and international. The Spine Journal article reports on July 5, 2011 that Medtronic’s Infuse study was bias and lacked critical side effects. Side effects such as male sterility, infection, bone loss and unwanted bone growth were not disclosed during the company-sponsored study. (Ford, 2011) It was also reported the $16 million were paid to the studying physicians as consultants. Sums greater than $16 million have been paid to many of these physicians disguised as consultant work among other things. The Senate Finance Committee as stated before is investigating the payments and methods used by Medtronic. Medtronic has opted to perform an independent study of the product in response to the biased allegations. In 2006, Medtronic settled what would be one of many kickback allegations for $40 million. Medtronic was thought to have disguised their method of payments to the physicians as royalty agreement, luxury vacations and consultant work. There was a whistle-blower that exposed these practices to government officials and the public. This would in turn start a chain reaction in the medical industry. The government soon after began investigating the practices of many of devicemakers. They are not limiting their investigations to device makers but this would include pharmaceutical companies as well as hospitals of practicing physicians. To whom and what extent does Medtronic violating Anti-Kickback laws affect? The patients, doctors and employees are affected by the actions of Medtronic when they violate Anti-Kickback laws. The actions of the physicians and Medtronic are similar to those who have violated inside trading laws. The conflict occurs when you receive some form of payment and have a vested interest in the company making profits. If the company does not profit, you cannot receive your royalties or other forms of payment. Analysis Pressure from an ever changing market may have pressured Medtronic to violate Anti-Kickback Laws. Did the company have to go to such extreme measures to maintain market share? Many in Medtronic would say it’s just the nature of the beast. Physicians being paid large sums of money for their opinions were a direct violation of the law. To make matters worse, the company tried to disguise how some of the doctors were paid. In addition to violating anti-kickback laws, the Stark law was also violated. The views and opinions that were purchase by Medtronic place many people at risk. Just to name a few, men are at risk of become sterile. Others are at risk of infections and unwanted bone growth. These complications will cause the patients to receive a second surgery that they were trying to avoid. According to the text of chapter five, McClelland’s theory applies to the actions of the physicians. As a doctor, they have achieved more than most people will. Once they have plateaued with achievements, their quest turns toward power. “McClelland’s acquired needs theory focuses on the needs for achievement, affiliation, and power, and it views needs as developed over time through experience and training.” (Schermerhorn, Hunt, Osborn, & Uhl-Bien, 2010) Coalition power was exhibited between the parties involved in the Infuse study. Many of the physicians fit this category because they want to make a difference. Many desire to have their work published in the top medical journals around the world. Those that received royalties from Medtronic may feel obligated to continue their obedience to the company for future projects. Therefore, these individuals fit into the resource dependency category. Some physicians may have fallen into the referent power pool. This would take place because the doctor has the desire to fit into the larger picture with such a power house. To be able to say their research and opinions were provided for Medtronic, the world’s number one medical device provider would carry a lot of weight in the medical world.
Solutions
There may be several alternatives to this problem. Having a study conducted by a third party could assist in avoiding biased opinions. However, this is not a 100% guarantee of unbiased personnel being utilized. Those who are involved in the research should be required to disclose financial information to ensure there are no anti-kickback law violations present. Another alternative would be more government involvement. Effective January 1, 2012, the Physician Payment Sunshine Act will require disclosure of payments to physicians. This is a good attempt to curtail and minimize the violations. This will allow the government to pen point companies and physicians that continue to violate these laws. There the fines and fees stipulated by law will be recovered and punishable. Violations may be punishable by means of corporate integrity agreements (CIA), warning letters, up to closure by the FDA. Government conducted audits that are unannounced may deter companies from such behavior as well. Having auditors show up and ask for certain records that should be on file and accurate may change the actions of some companies. This may seem harsh, but standing firm is a great way of letting these big businesses knows that this is a serious offense. Currently there are fine and penalties in place for violating anti-kickback laws. If these fines were larger and the stipulations were stricter, would companies insist on violating them? If these violations led to people involved being sentenced to prison, would this deter such unethical behavior? For too long the government has let many of these businesses run and abuse the system. The best example of this would be their pricing. An instrument that may have cost the company five dollars to manufacture may cost the patient $105 for usage. The markup on products and the government reimbursing for the use of these products is very cost inefficient. Many people know that the cost of having a surgery performed in the U.S. is much more expensive than having the same surgery performed in a different country.
Reflection
Reflecting upon the articles that I’ve read through this project, I have concluded that I work for a very ambitious company. Medtronic exhibits behavior of them wanting to success at all costs. The entire situation reminds me of behavior that kids sometime exhibit. Many teenagers do not mind getting in trouble if it allows them to do what they desire to do. The child knows that they may become grounded or have privileges taken from them. They are willing to sacrifice the future for what they want now. Infuse shows great ROI for the future of the company. Instead of the studies being unbiased, Medtronic wanted the growth and profits now. They were willing to place many in danger in order to make stakeholders happy. I am reminded of a case discussed in a business law class earlier this year. The case was about Ford and their decision for their Pinto to remain on the market. This decision caused many people to lose their lives. There were problems with faulty gas tanks, but the recall would cost more than the company would pay in settlements. Ultimately people died and Ford just settled. Personally, Medtronic was exhibiting the same careless behavior for the bottom line. Professionally, someone was doing what they were told to do. As a professional, I try not to ask people to do things that I am not willing to do myself. If there is a conflict and I feel it’s unethical, I will question those asking and refuse to partake in the activity. This has gotten me in more trouble from a corporate viewpoint. I know one man that was terminate for standing on his conviction of doing what he felt was right and morale. This course has taught me that doing right is difficult to do when there are so many taking the easy rode. However, if it’s in your nature to do right, you will find a place in this world where it is recognized and appreciated. To be a great leader I must choose the path that is less taken. I have to do right morally and ethically. Setting a great example for those following to travel is most important and is what I want to be remembered for. As saying that sticks with me is, “to whom much is given, much is required.”

References:

Medtronic.com. (2010, December 03). Retrieved July 15, 2011, from Medtronic: http://www.medtronic.com/about-medtronic/business-overview/spinal-and-biologics/index.htm
Affairs, O. o. (1999, Nov.). OIG. Retrieved August 19, 2011, from Office of Inspector General: http://oig.hhs.gov/fraud/docs/safeharborregulations/safefs.htm
Book, B. (2011, February). EBSCO HOST. Retrieved 08 19, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=0a071556-44b1-4bc6-9690-81aa4cfc3271%40sessionmgr14&vid=8&hid=10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=62851901
Equipment, B. (2004, Feb.). EBSCO HOST. Retrieved August 19, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=0a071556-44b1-4bc6-9690-81aa4cfc3271%40sessionmgr14&vid=12&hid=10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=12035933
Ford, O. (2011, 7 5). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.comproxy.devry.edu/ehost/pdfviewer?nobk=y&sid=98602236-42f2-2e95-91ea-ae2bf741160@sessionmgr15&vid=11&hid=11
Meier, B. &. (2009, 7 29). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=98602236-42f2-4e95-91ea-aec2bf741160%40sessionmgr15&vid=28&hid=11&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=43433196

Meier, B. &. (2011, 6 29). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=98602236-42f2-4e95-91ea-aec2bf741160%40sessionmgr15&vid=16&bk=1&hid=11&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=61929345
Merriam-Webster. (2011). Retrieved August 03, 2011, from Merriam-Webster Dictionary: http://www.merriam-webster.com/dictionary/communication
Schermerhorn, J. R., Hunt, J. G., Osborn, R. N., & Uhl-Bien, M. (2010). Organizational Behavior. In J. R. Schermerhorn, J. G. Hunt, R. N. Osborn, & M. Uhl-Bien, Organizational Behavior (pp. 276-303). Hoboken, NJ: John Wiley & Sons.
Taylor, M. &. (2006, 7 24). EBSCO HOST. Retrieved 7 27, 2011, from Devry University Library: http://web.ebscohost.com.proxy.devry.edu/ehost/detail?sid=81de1962-d806-4aa9-86fa-0f92161a3eac%40sessionmgr14&vid=27&hid=24&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=21935832