Medical device giants are notorious for their aggressive marketing strategies, often using high-profile scientific conferences as a key tactic. Picture this: extravagant events hosted in lavish five-star hotels, complete with glittering gala dinners and luxurious overseas trips for surgeons and their spouses. The millions spent on these affairs aren’t just for show; they’re a calculated ploy to sway the medical community.
At these grand conferences, companies pull out all the stops. They stage live surgeries and product launches that feel more like theatrical performances. Surgeons and their peers are dazzled by these high-tech showcases, subtly nudged towards adopting and promoting the latest devices. The opulence and spectacle are meticulously designed to leave a lasting impression. The goal? To ensure that when a patient walks into the operating room, the surgeon is more likely to choose and recommend these expensive, cutting-edge devices. The boundary between genuine scientific discourse and corporate influence becomes increasingly blurred.
Even before the August 2010 voluntary recall, DePuy, a subsidiary of Johnson & Johnson, was already under scrutiny for its ASR implant – particularly in Australia and the UK. Orthopaedic registries had begun reporting troublingly high revision rates, raising red flags.
In India, a year before the recall, the Indian subsidiary, Johnson & Johnson Ltd – 75 per cent of which was owned by Johnson & Johnson Inc (US) and the remaining 25 per cent was owned by DePuy Medical Pvt Ltd (India) – was facing its own issues, but not with the drug regulators over safety concerns linked to the Articular Surface Replacement (ASR). Instead, it was the Income Tax Department (ITD) that was taking a closer look.
Johnson & Johnson had claimed a hefty tax benefit of Rs 231.1 million for “professional sponsorship” expenses for the assessment year 2006–07.2 When the ITD questioned these claims in December 2009, Johnson & Johnson responded by saying it had sponsored top doctors to attend international conferences, offering them firsthand information and live surgery demonstrations. At the same time, Johnson & Johnson was hosting its own live surgeries in India, including those featuring the ASR implant.
However, the details provided about these international trips were scant, and it wasn’t clear how these sponsorships were tied to the company’s business. The ITD found the explanation lacking and disallowed the entire Rs 231.1 million claim. As expected, Johnson & Johnson challenged this ruling before the Income Tax Appellate Tribunal.
Johnson & Johnson wasn’t alone in facing such scrutiny. Over the years, the ITD had flagged similar tax benefits claimed by other major pharmaceutical companies. The ITD’s stance was clear: companies can offer doctors freebies, but they can’t claim tax benefits on these expenditures.
Despite this, companies continued to exploit a loophole in Indian law. While the Medical Council of India (MCI) regulations govern doctors, they don’t apply to the companies making the expenditures. This legal gap has allowed these companies to push the boundaries, making the most of every opportunity to influence and impress.
This was in stark contrast to the situation in other countries. By March 2005, DePuy was under the microscope. The US Attorney’s Office for the District of New Jersey had sent them a subpoena, demanding records of their deals with surgeons involved in hip and knee surgeries. The company faced scrutiny over their business practices.
DePuy wasn’t the only one in hot water. The investigation targeted the big names in the hip and knee implant market: Zimmer, DePuy, Biomet, Stryker and Smith & Nephew, which together made up nearly 95 per cent of the market. All five companies were under intense scrutiny, with their financial dealings and contracts closely examined.
In September 2007, the five companies avoided criminal prosecution over financial inducements paid to surgeons by agreeing to a new corporate compliance programme.
They agreed to pay a combined total of $311 million to settle the claims, with DePuy alone paying $84.7 million. This agreement was a significant shift, forcing the companies to change their ways.
While announcing the agreement, US Attorney Christopher J Christie did not shy away from saying that the industry routinely violated the country’s anti-kickback statute by paying physicians to exclusively use their products.
“Prior to our investigation, many orthopaedic surgeons in this country made decisions predicated on how much money they could make – choosing which device to implant by going to the highest bidder. With these agreements in place, we expect doctors to make decisions based on what is in the best interests of their patients – not the best interests of their bank accounts,” Christie emphasised.
In India, there was no such investigation into the questionable marketing practices of big medical device companies. Instead, these companies enjoyed tax benefits for their marketing practices. Expecting Indian enforcement authorities to dig into these practices was almost too much to ask.
In many countries, regulators kept a close watch over medical devices even after they hit the market, like a hawk circling its prey. There were already strict rules for post-market surveillance to ensure the devices performed as promised. Systems were firmly in place for adverse event reporting, making it mandatory for manufacturers to promptly report any issues. These reports were then made public on dedicated websites, like warning signs flashing in plain view, so patients could see which devices might fail them.
But in India, the scene was very different. Even the most basic patient safety concerns were left in the hands of powerful manufacturers, as if the fox were guarding the henhouse. The regulatory system meant to monitor the safety and effectiveness of medical devices – a system that should have been strong – was practically non-existent, leaving patients vulnerable and uninformed.
Devices critical to health, such as coronary stents, pacemakers, pelvic meshes, intrauterine devices, and breast and hip implants, were circulating with little to no oversight. Imagine a marketplace where these crucial medical devices were aggressively marketed and sold, often with promises that outpaced their real efficacy, and implanted into patients’ bodies with scant regulatory review. It was against the backdrop of this regulatory ecosystem that the ASR was launched in India.
Life expectancy in India has seen a remarkable rise. Back in 2001, it stood at 63.4 years. By 2010, it had soared to 67 years, thanks to strides in healthcare and medical technology that have allowed many to live longer, healthier lives.
But all this progress has not been without its drawbacks. As people live longer, the rise in sedentary lifestyles has led to increased rates of obesity, diabetes and heart disease. For many, this has meant turning to private hospitals, driving a surge in the private healthcare sector.
Imagine walking into a sleek, modern private hospital, where the costs are eye-wateringly high. In 2004 and 2005, expenditure in the private sector accounted for a staggering 78 per cent of health expenses in India. This suggests either a sharp rise in people opting for private care or that these hospitals were charging far more than public institutions. A substantial 65 per cent of a patient’s bill often went towards medicines and consultations.
The impact of these rising costs was profound. Private hospitals thrived as out-of-pocket expenses surged. Families spent crores on private care, and investors eagerly poured money into these facilities, making India a hotspot for global medical device manufacturers. New products were hitting the market almost every year.
Take the orthopaedic field, for instance: in 2003 and 2004, India imported artificial joints worth Rs 28.8 million. By 2010, this figure had skyrocketed to Rs 2.23 billion.
But amidst this booming industry, a darker side lurked. Despite the Drugs and Cosmetics Act being in place for over fifty years, it did little to regulate the influx of medical devices. Implants entered the market with scant oversight, putting patient safety at risk.
Regulators found themselves in a tight spot. Devices were approved on paper and flooded the market, each promising a better quality of life. Yet, the real challenge was not just in approval but in monitoring their performance and identifying flaws. Unfortunately, this crucial step was often neglected.
As these issues began to surface, alarm bells started ringing at the highest levels of the government, signalling the need for urgent action.
Excerpted with permission from The Johnson & Johnson Files: The Indian Secrets of a Global Giant, Kaunain Sheriff M, Juggernaut.
