A decade ago, orthopedic surgeon Dr. Larry Lenke had an idea of how to do things a little better in the operating room.
Lenke, who specializes in correcting spinal deformities, pitched his idea for an anterior spine surgery system to Medtronic Inc., one of the world’s largest medical device companies.
Since that time, Lenke has led Medtronic’s development of a complete spinal surgery system that can be customized according to the patient’s size. The Legacy Spinal System is now one of the leading systems used by orthopedic surgeons worldwide.
In the first three months of 2010, Lenke earned $832,000 in royalties from Medtronic, putting him on track to top $3 million in royalties this year.
Lenke is one of three local orthopedic surgeons who were paid a total of nearly $1.2 million in royalties by Medtronic in the first quarter of this year for medical innovations they helped develop, according to disclosures made public by the company this month.
“Not a lot of places in the country have orthopedic surgeons who are doing this kind of work,” said Thomas Sullivan, president of Rockpointe Corp., a medical education company based in Columbia, Md. “Clearly St. Louis is one of the nation’s leaders.”
Lenke received between .5 percent and 1 percent of sales of the systems in royalties.
“The royalties are very small, but the sales are large,” he said. Lenke is the co-chief of adult and pediatric spinal, scoliosis and reconstructive surgery and the Jerome J. Gliden professor of orthopedic surgery at the Washington University School of Medicine, the director of spinal surgery at Shriners Hospital for Children, and a spine consultant to the St. Louis Rams and Blues.
Dr. Matthew Gornet of the Orthopedic Center of St. Louis in Chesterfield received $209,000 in first-quarter royalties from Medtronic for his contributions to a pedicle screw and PEEK rod spinal fixation system. Dr. K. Daniel Riew, a professor of orthopedic surgery and neurological surgery and chief of cervical spine surgery at the Washington University School of Medicine, received $143,000 in royalties for his contributions to a posterior spinal fixation system distributed by Medtronic.
According to disclosures from Washington University, during 2009 Riew received more than $200,000 in royalties from Medtronic, along with between $100,000 and $200,000 in royalties from Warsaw, Ind.-based Biomet Spine and between $10,000 and $25,000 in royalties from Manhattan Beach, Calif.-based Osprey Biomedical Corp. Riew also holds an equity position in Osprey, according to Washington University’s disclosures.
In addition to the orthopedic surgeons, Dr. Jane Chen, a cardiologist and assistant professor of medicine at Washington University, was paid between $5,000 and $9,999 in training and education fees by Medtronic in the first quarter of 2009.
Washington University requires all faculty physicians to annually disclose all payments, whether consulting fees or royalties, received from medical companies. Of the 1,390 physicians who filed disclosures last year, only 11 received royalty payments, according to Dr. James Crane, chief executive of Washington University Physicians and associate vice chancellor for clinical affairs at the medical school.
Lenke and Riew were both among the highest paid employees at Washington University in fiscal 2009, according to the university’s most recent 990 filing with the IRS. Lenke received $909,816 in total compensation for the year, and Riew received $1.07 million, according to the filing.
Only three other doctors or physician groups were paid more in Medtronic royalties than Lenke in the first quarter, according to Medtronic’s physician registry. Dr. Kevin Foley of Germantown, Tenn., was the top earner, receiving $3.97 million in royalties for 10 different products or systems.
In total, Medtronic made payments to more than 220 doctors or doctors groups around the country, and it paid more than $15.7 million in royalty and consulting fees to physicians in the quarter.
Fridley, Minn.-based Medtronic announced in February 2009 that it soon would be making its physicians’ payment public, amidst a whistleblower lawsuit over such payments. A federal judge eventually threw out that lawsuit.
The disclosure by Medtronic precedes a disclosure requirement, the Physicians Payments Sunshine Act, that will go into effect in 2012 as part of the recently passed federal health reform legislation.
Critics claim that ongoing payments to physicians by medical device or pharmaceutical firms create a conflict of interest, influencing which drugs doctors prescribe or which surgical devices they recommend. The Sunshine Act will require medical companies to publicly disclose all payouts to physicians over $10.
“Transparency is very important in medicine,” Lenke said. “That’s why I applaud Medtronic for being the first company to make these disclosures.”
Lenke receives no royalties from Medtronic devices he uses in his own practice or those used by his team or at any BJC HealthCare Hospital.