Wrong Prescription

There's apparently little shame in supervising the sales force of a company that bribes doctors, either. In recent financial filings, Micrus announced that it had fired its CEO and its vice president of global sales and marketing in connection with the bribes to foreign doctors. A couple of months after marketing VP Herbert Mertens was fired, however, he resurfaced as sales and marketing vice president of Endologix Inc., a California aneurysm-device company founded and, until not long ago, led by current Micrus board chairman Michael R. Henson. Mertens did not return two calls requesting comment.

Current Endologix CEO Paul McCormick said he knew of the criminal behavior of Micrus' European sales force, but he didn't consider the potential role of Mertens, their supervisor, a problem for Endologix. "It's not a concern at this moment. I saw the same information, and we didn't see it as a problem," McCormick said. "His hiring was based on discussions with references, which were very positive." McCormick said former Endologix President and CEO Henson did not speak with Endologix about hiring Mertens.

Meanwhile, Micrus doesn't seem to have shied away from paying out cash to domestic doctors, though in the U.S. there's no reason to believe Micrus' payments are in violation of the law. The company keeps a stable of doctors called "physician advisers" who receive stock options and honoraria in exchange for "providing feedback" on the Micrus aneurysm device. Each of these doctors works for a hospital, which presumably would be in a position to buy Micrus products.

"Although these advisers may contribute significantly to our affairs, we generally do not expect them to devote more than a small portion of their time to us," Micrus notes in financial statements.

Two calls to Micrus "adviser" in Northern California, Kaiser Permanente physician Sean Pakbaz, went unreturned. Kaiser Permanente spokeswoman Kathleen McKenna said the health care company does use Micrus' embolic coil devices at its Sacramento facility. Kaiser's conflict of interest policy prohibits a doctor in a position to influence the purchase of a medical device from receiving money from, or having financial interests in, the manufacturer of the device. Pakbaz was away at a conference last week, McKenna said, and couldn't be reached to find out what financial benefit he might receive from his role as a Micrus "physician adviser." She also said she was unable to determine by press time whether Pakbaz had been in a position to influence the purchase or use of Micrus' product.

How could a company settle with the Justice Department for making payments to physicians overseas, then, two days later, announce it's making payments to doctors in the U.S., and all while asking for millions of dollars from investors?

According to William Steinman, vice president of Transparent Agents and Contracting Entities, a nonprofit group that gives anti-bribery workshops to corporations, it's common in the U.S. for medical companies to provide doctors with "incentives." These sorts of payments may run afoul of the law in countries with government-financed health systems, because doctors can be considered public officials subject to the Foreign Corrupt Practices Act. Here, it seems, such payments seldom lead to prosecution.

Assistant U.S. Attorney James Sheehan in Philadelphia has made a career of prosecuting medical payola and health care fraud cases, though he was not involved in the Micrus agreement. He says payola may now be more common in the United States because in 1989 the health care industry lobbied Congress for legal provisions that make it extremely difficult to prove that payments from medical companies to doctors are in fact bribes. Before then, federal anti-kickback laws made it illegal to accept any payment or other benefit in return for buying medical services or goods subsidized by a federal health program. The 1989 revisions provide a "safe harbor" from kickback prosecution for doctors who accepted money from providers under personal service agreements or consulting contracts.

"The reason that [Steinman] says it's widespread, I think, is the government, in order to succeed in a case, has to show a connection between the payment and the act of ordering a product or service. We have to show that the doctor, in fact, intended to use the device based on the payment," Sheehan said. "You look for memos. You like to have tapes. For their part, they'll say, 'It was only because of my professional judgment, not because of the payment.'

"It's important, because the medical devices we're talking about are potentially lifesaving," adds Sheehan. "Patients are vulnerable. When a doctor is putting a stent in an artery, or doing something with your heart, or putting a patch on your aorta, you're trusting your doctor. We want them to make a decision to serve their patients.

"Not to put money in their pockets."