Doctors received kickbacks for pushing medical equipment

The Japanese arm of a US-based medical device maker paid kickbacks totaling about 100 million yen ($958,000) last year to about 20 doctors who bought their products at the hospital where they work.

An investigation by The Asahi Shimbun found that the Tokyo-based subsidiary of Globus Medical paid around 10% of the sale price of each item purchased as a discount to doctors.

Internal company documents detail the scale of the practice.

To camouflage the payments and avoid suspicions of blatant exchange of favors, the resources were passed on to companies set up by the doctors or family members.

Payments would be a serious violation of US regulations regarding fair business practices. But unlike the United States, Japan has no laws prohibiting the payment of bribes, nor provisions to jail doctors who accept such payments.

Industry rules in Japan are certified by the Fair Trade Commission and the head of the Consumer Affairs Bureau. Member companies that violate the rule are instructed to take steps to prevent recurrence. If violations continue, a fine of up to 1 million yen can be imposed on the company.

Decisions to purchase medical equipment intended for the benefit of patients may have been distorted by the exchange of money. Additionally, health insurance premiums and taxpayer money may have entered the equation if the equipment was used for treatment covered by the national health insurance program.

Globus Medical established its Japanese arm in 2016 after acquiring the predecessor company. Equipment sold by Japanese arm is used to treat back and hip problems with spinal cord implants. This top-of-the-line equipment costs several million yen.

Before a hospital moves forward and acquires sophisticated equipment, it is certain that the opinion of the doctors who will use it will be taken into account.

According to company sources and internal documents, contracts were exchanged with companies formed by the doctor or family members that make it clear that “sales commissions” will be paid on the purchase of certain equipment.

Whenever a hospital purchased equipment, a commission equivalent to around 10 percent of the sale price was transferred to the company account set up by the doctor or family members.

The roughly 20 doctors who received bribes in 2019 worked in various parts of Japan and each received between 1 million yen and about 20 million yen.

Questioned by The Asahi Shimbun, Stephen La Neve, president of the Japanese arm, said the contents of individual contracts cannot be disclosed for confidentiality reasons, but that suspicious contracts were detected after he became president in August 2019.

While the contracts did not appear to be illegal, he said it went against Globus Medical’s business practices and business ethics and those contracts were terminated.

Globus Medical does business in nearly 40 countries and is among the largest sellers of spinal cord implant equipment. According to Yano Research Institute Ltd., the Japanese arm had sales of around 5.5 billion yen in fiscal 2018.

Company sources say an internal investigation is ongoing and suspicious contracts with doctors are being terminated.

Most physicians contacted by the Asahi Shimbun declined to be interviewed. But one who did said the payments were in exchange for serving as a consultant to the Japanese arm.

Another doctor who worked at a hospital in western Japan admitted receiving payments and said the money was used to attend medical conferences and buy books.

The doctor had been using equipment from the predecessor company for about 10 years. When a Globus Medical sales representative asked the doctor to try a new piece of equipment, the doctor wanted some incentive to do so. The sales representative signed a bribe agreement and said there was nothing illegal in the document.

The doctor acknowledged ethical issues involved with the discount, but said the money did not influence the purchase decision.

(This article was written by Nobuya Sawa, senior staff writer, and Naoki Urano.)

Doctors received kickbacks for pushing medical equipment

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