Medtronic, J&J, Abbott Overcharging And Bribing Doctors, India Media Says

Recent media reports in India claim that major medical device companies are engaged in unethical business practices in the country. Specifically, the reports allege that the companies overcharge hospitals and patients for their products and then using the profits to bribe doctors to drive sales.

According to The Times of India (TOI), a Maharashtra Food and Drug Administration (FDA) investigation revealed that local distributors of Medtronic, Abbott, and Johnson & Johnson were charging customers up to three times the import price of drug eluting stents (DES).

The TOI report cited an example: Medtronic’s subsidiary in India — Medtronic Pvt Ltd (IMPL) — reportedly imported drug eluting stents “at Rs 30,848 and sold to the distributor Bhalani Biomedicals Pvt Ltd for Rs 67,000. Bhalani then sold the DES to hospitals for one lakh plus against the marked maximum retail price (MRP) of Rs 1.62 lakh.”

The International Business Times (IBT) gave another example: “the stents were imported for ₹40,710 but patients were charged ₹1.2 lakh for the device after completing a similar cycle that included companies — Holland based stent manufacturer Abbotts Vascular Devices Holland BV, Abbotts Healthcare Pvt Ltd India, distributor Sinocare and Hinduja hospital.”

The IBT said that the Maharashtra FDA report was submitted last year to India’s National Pharmaceutical Pricing Authority (NPPA), but added that the agency’s chairperson Injeti Srinivas denied receiving the report and had said that he only joined the NPPA in June 2014.

According to TOI, Medtronic initiated its own investigation of bribery by its distributor in India after allegations of corruption in government hospitals surfaced in September 2012. The paper said that Medtronic confirmed that their probe was still ongoing as of June 2013, and that the company had stripped Bhalani of distributorship by then. However, the TOI alleged that Indian doctors and hospitals are still bribed by distributors to push the sales figures of medical devices.

When asked for comment by the TOI, Medtronic USA said in a statement, "Medtronic has an extensive compliance program to assess the conduct of its employees and representatives, including distributors, and if necessary takes action against those who violate its policies and the law. Furthermore, our employees and representatives are provided extensive training and resources to ensure they fully understand our business conduct requirements and local laws. We do not condone nor do we tolerate improper payments of any kind, and we will continue our efforts to ensure compliance with all applicable Indian and US laws."

According to IBT, the Indian government is aware of unethical business practices in India’s medical device industry and healthcare system, but is letting them proceed unabated. One government doctor said, "If the government was serious about doing something, it would have brought in price control as is done in even rich Western countries. The government knows this is happening because they can see the huge difference in cost between the import price and the price at which these devices are being sold to patients even in government hospitals. They just choose to close their eyes to this."