Senate Report Criticizes Physician-Owned Distributorships

A report issued by the United States Senate’s Finance Committee takes issue with physician-owned distributorships that sell spinal implants prescribed by the doctors-owners. The findings led the committee to recommend more stringent transparency laws requiring doctors to disclose their financial ties to device companies. “Unchecked, this position of power can give POD spinal surgeons the opportunity to grant themselves a steady stream of income by increasing the use of the products supplied by their POD. PODs present an inherent conflict of interest that can put the physician’s medical judgment at odds with the patient’s best interests,” the report states.

According to the report, PODs exist in 43 states and the District of Columbia as of November 2015. Furthermore, compared to non-POD surgeons, surgeons at PODs saw 24 percent more patients and performed nearly twice as many fusion procedures. In light of the report, the Committee advised stricter laws requiring physicians to be transparent about their financial ties. Hospitals should draft policies regarding PODs, and deadlines for implementation should be set by the Centers for Medicare and Medicaid Services.

“The business structure and payments associated with certain PODs have been found to be illegal. Furthermore, overt or implied threats made by physicians to move their practice unless a hospital accepts their POD would likely violate fraud and abuse laws,” the report states. “Law enforcement should continue and expand their efforts to charge and prosecute those doctors, PODs, and hospitals that violate the law.”

Matthew Wetzel, assistant general counsel for AdvaMed, noted that the report specified the difference between PODs and physicians who have some ownership in medical device companies. “AdvaMed has long raised concerns regarding PODs and has advocated for transparent, ethical business arrangements and ownership models for medical technology manufacturers and distributors under federal laws, consistent with the association’s code of ethics. We are committed to working with our members to continue to raise awareness and develop proactive advocacy solutions to address PODs-related concerns,” he told Mass Device.

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