Senate panel probes medical device companies

By Kim Dixon

WASHINGTON (Reuters) - Medical device companies will come under scrutiny on Wednesday when a U.S. Senate committee probes financial payments to doctors which some say are aimed at creating loyalty for products like artificial hips and knees.

The U.S. Senate Special Committee on Aging will discuss gifts, royalties and other financial enticements made to doctors and surgeons from medical device makers, and consider legislation requiring the companies to disclose the incentives on the Internet.

According to a report prepared for the committee hearing, Zimmer Holding made $86 million in direct payments to doctors in 2007, while Stryker Corp made at least $40 million in such payments. Both companies are major makers of artificial hips and knees.

The figures may underestimate the payments because of delays in reporting. Sen. Herb Kohl, the Wisconsin Democrat who heads the aging panel, said he will release full results from the six-month investigation into the payments at the hearing.

Officials from Stryker and Zimmer will testify at the hearing. Both companies said they already disclose their payments as part of a settlement with the U.S. Justice Department and said they would cooperate with lawmakers.

The Justice Department settled late last year with four medical device makers, including Zimmer, Johnson & Johnson's DuPuy Orthopedics, Smith & Nephew and Biomet Inc. The companies paid $311 million to settle the probe which centered on consulting deals investigators said were made with surgeons to sway decisions on which implants to use.

Stryker paid no civil penalty but agreed to certain reforms, including federal monitoring.

(Reporting by Kim Dixon; Editing by Tim Dobbyn)