Minnesota device makers paid out $211 million to doctors, hospitals in 2014

A handful of physicians received big paydays from Minnesota medical device companies last year, new ­federal data show.

A review of payments of $1 million or more shows that eight doctors across the country collected a combined $81 million from Medtronic PLC and St. Jude Medical. All told, Minnesota companies paid out more than $211 million to doctors and hospitals in payments not related to research last year, according to the federal Open Payments database for 2014 that was published Tuesday.

The single largest payment by a Minnesota health care company last year went to Georgia cardiologist Sanjay S. Yadav, who was founder and CEO of a company acquired by Little Canada-based St. Jude. Yadav was paid $15.4 million as part of the acquisition of the company, CardioMEMS.

Tuesday marked the second annual release of data from the federal Centers for Medicare and Medicaid Services, detailing payments from industry to the doctors and hospitals. It was the first time a full year of data were included, and unlike last year, the agency published 99 percent of the payment information submitted to it. More than a third of the prior data had redactions.

The Open Payments program, which was mandated by the Sunshine Act provisions of the Affordable Care Act, was created because of concerns about whether large companies like Medtronic have in the past improperly used secret payments to influence the practice of medicine. Medtronic, based in Ireland with operational headquarters in Fridley, has denied applying undue influence on doctors or clinical research.

"We are proud of our work with physicians and have policies to ensure our interactions with physicians are principled and appropriate," spokeswoman Cindy Resman said in an e-mail. "Appropriate collaboration … gives us insights to understand patient needs, advance technologies, and train other physicians how to safely use the products and therapies we develop."

In June, the University of Minnesota banned many of the types of payments reported Tuesday, following criticisms that financial incentives create conflicts of interest in research programs for drugs and ­medical devices.

Critics of industry payments welcomed the latest ­disclosures.

"What you're trying to do is use transparency to make certain that there is no conflict of interest," former Gov. Arne Carlson said of Tuesday's data release. "The moment you have a direct relationship between a drug company and whoever is going to facilitate the [research] study, you are going to have a built-in bias."

Minneapolis lawyer Mark Gardner, who represents health care companies, said disclosures of such payments may reduce physicians' willingness to work with companies to make better products.

"Some physicians don't want this information public," Gardner said. "Hopefully, it does reduce fraud and abuse on the system, but it may come at the expense of less investment in the industry."

Taken as a whole, the 2014 edition of the federal database shows how more than 600,000 doctors and 1,100 hospitals accepted payments totaling $6.49 billion in a single year. The payments cover more than a dozen categories of spending, including consulting payments, gifts and honoraria, royalties, stock dividends, and travel and dining.

In Minnesota, where the medical device industry employs tens of thousands of people, Medtronic and St. Jude easily accounted for the largest non-research payments to doctors across the country. That includes the eight doctors who together collected the $81 million that comprises all of the payments for more than $1 million each. Two of the doctors received payments from St. Jude; the other six received payments from Medtronic.

The St. Jude payments were all related to the CardioMEMS deal. Yadav, the top recipient, also received additional payments for a total of more than $22 million. He could not be reached Tuesday.

Other than those one-time payments, St. Jude paid out about $16 million to physcians.

"We support transparency in financial relationships among manufacturers, health care providers and teaching hospitals and have worked to ensure accurate and up-to-date listings of our physician payments," St. Jude spokeswoman Kate Stoltenberg said in an email.

All of the seven-figure Medtronic payments to six doctors were for royalties, most of which stemmed from the company's spine division. That division generated headlines several years ago after the Senate Finance Committee accused it of hiding its involvement in the editing of journal articles by doctors who were being paid for "consulting, royalty and other arrangements."

Resman said the company has worked hard to improve how it tracks and reports its physician payments, which it says are ethical.

"Medtronic was one of the first companies to voluntarily disclose payments to physicians on a public website, well ahead of new federal disclosure requirements under the Affordable Care Act," she said.

Minnesota doctors received their largest payments in the form of royalties from out-of-state companies. Many of the highest-paid doctors in the state were orthopedic and neurological physicians who were paid by companies whose devices they can prescribe for patients.

The Minnesota doctor with the highest non-research payments was Dr. Daniel J. Berry, an orthopedic surgeon whose $1.2 million in royalties from orthopedics-device maker DePuy Synthes were paid to his employer, the Mayo Clinic in Rochester.

Berry was a top name in the 2013 Minnesota payments, as well. Mayo officials said then that while they encourage constructive collaboration between doctors and industry, they maintain strict rules governing financial arrangements, including prohibiting royalties on sales involving an inventor's patients.

Mayo officials say it's impossible to avoid all conflicts of interest, so they focus on identifying and managing them. At the University of Minnesota, scrutiny of payments is ratcheting up.

In mid-June, the U banned some of the most controversial payments from industry in an attempt to put to rest a decade-old scandal involving the suicide of a U psychiatry research subject named Dan Markingson.

The state legislative auditor in March joined Markingson's family in criticizing the U for not protecting the 27-year-old during research on a schizophrenia drug made by AstraZeneca. Critics including U bioethics Prof. Carl Elliott have questioned whether a series of payments from AstraZeneca to U doctors could have influenced decisions to include vulnerable patients like Markingson in the study.

"The University of Minnesota encourages the collaboration of [U] investigators with industry for the discovery and development of new technologies and therapies," the 75-page report adopted at the U says. "At the same time, we recognize the importance of disclosing and managing real and perceived conflicts of interest when such research is undertaken."

Joe Carlson • 612-673-4779

Twitter: @_JoeCarlson