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Orthopaedic implant company pays £5m order for making corrupt payments to Greek surgeons

BMJ 2011; 342 doi: http://dx.doi.org/10.1136/bmj.d2408 (Published 13 April 2011) Cite this as: BMJ 2011;342:d2408
  1. Clare Dyer
  1. 1BMJ

A UK based orthopaedic implant company, De Puy International, has been ordered to pay nearly £5m (€5.6; $8.1m) to the UK authorities for making corrupt payments to Greek surgeons to induce them to buy its products for the state health service.

The civil recovery order, obtained by the Serious Fraud Office at the High Court in London, is part of a global settlement with the healthcare products giant Johnson & Johnson—which acquired De Puy International and its US based parent company, De Puy Incorporated, in 1999—by the US, UK, and Greek authorities.

Prices of artificial hips, knees, and other products were inflated to provide around £4.5m in inducements, mainly to surgeons who were influential in deciding what products were used in their hospitals or clinics.

From 1998 to 2007 the Greek government paid an intermediary company acting for De Puy about £33.5m for orthopaedic products. The price of a prosthetic knee in Greece was twice that of the European average, with the Greek taxpayer footing the bill.

The investigation into De Puy’s activities in Greece was triggered when Johnson & Johnson made a voluntary disclosure to the US Department of Justice and the US Securities and Exchange Commission. In 2007 the justice department referred the case to the UK Serious Fraud Office.

Under the UK civil recovery order the company will pay £4.83m plus prosecution costs. It will also pay a financial penalty of $21.4m under a deferred prosecution agreement with the US Department of Justice. The US Securities and Exchange will impose a civil sanction of $24.25m plus interest of $6.26m, and the Greek authorities have restrained €5.79m of the company’s assets there, as part of an ongoing investigation.

A plea settlement agreed by the Serious Fraud Office with a “cooperating defendant,” a former director of marketing at De Puy International, John Dougall, said, “Dougall says that the corrupt practice of paying inducements or rewards to orthopaedic surgeons in the Greek public health system was endemic . . . The payments were routinely characterised as ‘cash incentives’ or so-called ‘professional education.’ The level of funds made available for ‘Prof Ed’ purposes was a standardised 20% of the value of end user sale prices.”

Mr Dougall pleaded guilty in April 2010 to conspiring to make corrupt payments or give inducements and was sentenced to 12 months’ imprisonment, although the Serious Fraud Office had argued for a suspended sentence because of his cooperation. The sentence was later suspended by the Court of Appeal.

Richard Alderman, director of the Serious Fraud Office, said, “We worked with the DoJ [US Department of Justice] to find a solution that served both the interests of justice and the company’s desire to put illegal activity behind it and move on. I believe the order approved in the High Court will illustrate to other companies how the SFO [Serious Fraud Office] works closely with organisations across the world in enforcing the highest ethical standards but is willing to engage and listen to companies that come to us with problems and help them find solutions.”

Notes

Cite this as: BMJ 2011;342:d2408