THE ASAHI SHIMBUN
November 24, 2020 at 18:37 JST
The Japanese arm of a U.S.-based medical equipment manufacturer paid kickbacks totaling around 100 million yen ($958,000) last year to 20 or so doctors who got the hospital where they work to purchase its products.
An investigation by The Asahi Shimbun found that the Tokyo-based subsidiary of Globus Medical paid roughly 10 percent of the sales price of each item purchased as a rebate to doctors.
Internal company documents detail the scale of the practice.
To camouflage the payments and avert suspicions of blatant money-for-favors, the funds were transferred to companies set up by the doctors or family members.
The payments would constitute a serious violation of U.S. regulations regarding fair trade practices. But unlike the United States, Japan has no laws to ban the payment of kickbacks, nor provisions to imprison doctors found to have accepted such payments.
The industry rules in Japan are certified by the Fair Trade Commission and the head of the Consumer Affairs Agency. Member companies that violate the rule are instructed to take steps to prevent a recurrence. If violations continue, a fine of up to 1 million yen can be levied against a company.
Decisions on purchasing medical equipment intended for the benefit of patients may have been distorted by the exchange of money. Moreover, health insurance premiums and taxpayer money may have entered the equation if the equipment was used for treatment covered by the national health insurance program.
Globus Medical established its Japanese arm in 2016 after acquiring the predecessor company. One piece of equipment sold by the Japanese arm is used to treat back and hip problems with spinal cord implants. Such top-of-the-range equipment costs several million yen.
Before a hospital goes ahead and acquires sophisticated equipment, it is a given that the opinion of the doctors who will use it will be taken into consideration.
According to company sources and internal documents, contracts were exchanged with companies set up by the doctor or family members that clearly spell out that “sales commissions” will be paid if a certain piece of equipment is purchased.
Whenever a hospital purchased equipment, a commission equivalent to about 10 percent of the sales price was transferred to the account of the company set up by the doctor or relatives.
The 20 or so doctors who received kickbacks in 2019 worked in various parts of Japan and each received between 1 million yen and around 20 million yen.
Asked for comment by The Asahi Shimbun, Stephen La Neve, president of the Japanese arm, said the contents of individual contracts could not be divulged due to confidentiality reasons but that suspect contracts had been detected after he became president in August 2019.
While the contracts did not appear to be illegal, he said it went against Globus Medical’s trade practices and business ethics and those contracts have since been terminated.
Globus Medical does business in about 40 countries and is among the top sellers of spinal cord implant equipment. According to the Yano Research Institute Ltd., the Japanese arm had sales of about 5.5 billion yen in fiscal 2018.
Company sources said an internal investigation is continuing and suspect contracts with doctors are being terminated.
Most of the doctors contacted by The Asahi Shimbun refused to be interviewed. But one who did said the payments were in exchange for serving in an advisory role for the Japanese arm.
Another doctor working in a hospital in western Japan admitted to taking payments and said the money was used to attend medical conferences and purchase books.
The doctor had been using equipment from the predecessor company for about 10 years. When a sales representative for Globus Medical asked the doctor to try new equipment, the doctor wanted some incentive for doing so. The sales rep whipped out a contract for the kickback and said there was nothing illegal about the document.
The doctor acknowledged ethical issues involved with taking the rebate but asserted the money did not influence the purchase decision.
(This article was written by Nobuya Sawa, a senior staff writer, and Naoki Urano.)
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