Why does the world’s largest cardiac devices company, Medtronic, based in Minneapolis, USA, come to Durgapur in West Bengal — and open offices in over a dozen Tier II towns across India?
In 2010, a year before its CEO said that India was the company’s “biggest hole,” Medtronic launched Healthy Heart for All here. Its goal was to do good and to do well: sell pacemakers and cardiac stents to people below the poverty line, offer them loans if they couldn’t pay and make what regulators called “a massive profit”.
Last year, the project, running in at least 25 cities — where it sold the ten flagship cardiac device products — was suddenly shelved. Medtronic claimed it was “phased out” because of “changing dynamics of the healthcare sector and low visibility”.
But an investigation by The Indian Express has revealed a range of alleged irregularities: from corruption of doctors via promos and freebies, to ensnaring unsuspecting patients who didn’t need these products; from spending crores on conferences and seminars to push products, to screening patients and prescribing devices under the same roof.
Indeed, the company’s scale was ambitious.
According to an internal document of 2013 accessed by The Indian Express, Medtronic envisaged partnerships with 88 hospitals, including Delhi and Punjab (11 hospitals), Gujarat and Mumbai (9), Coimbatore and Kerala (4), Hyderabad, Bengaluru and Chennai (6), and Kolkata and Durgapur (7). These hospitals were chosen with the target on paper: “keeping in mind 20-50 implants were to be done per month”.
To sweeten its pitch, Medtronic “estimated” a 7.5 per cent increase in revenue for doctors: “seven per cent” due to increase in footfall and 0.5 per cent from diagnostics tests. And 17 per cent for hospitals: “7 per cent” in increased footfalls and 10 per cent from “financing and tiered services”.
The increase in revenue for doctors came along with crores for conferences and seminars: Rs 36 crore in 2013 and then steadily rising, Rs 43 crore 2014. Rs 48 crore in 2015, Rs 49 crore in 2016. And Rs 26 crore in 2017.
The Indian Express investigation is part of Implant Files, a global project by the International Consortium of Investigative Journalists (ICIJ) involving more than 250 journalists in 36 countries that tracks the indiscriminate use of medical devices and a dubious nexus between companies, doctors and hospitals.
The heart hardsell
Healthy Heart was launched in September 2010, at Mission Hospital, a 360-bed private facility in Durgapur, the Tier II steel town in West Bengal. “Initially our motto was health care to all,” said Satyajit Bose, the hospital’s chairman. “But no lunch comes for free.”
Medtronic offered to help the hospital attract new patients with a financing programme, backed by marketing campaigns. Working with a consulting firm hired by Medtronic, the hospital published ads in newspapers promoting Healthy Heart and organised promotional events in downtown Durgapur.
The first patient was a 45-year old single mother. Her smiling face was plastered on billboards around the city. “Pacemaker surgery now at affordable prices for those below the poverty line,” one billboard claimed.
The hospital set up free heart screenings within a 700-km radius. Hundreds lined up for tests to diagnose heart problems. About one in 10 was referred to the hospital for additional tests or for a Medtronic pacemaker, coronary stent or defibrillator, according to Dr Bose and company reports.
At the hospital, patients could apply for loans, which were offered by Matrika Foundation, an NGO based in an apartment building in Mumbai. Kiran More, a trustee of the foundation, said Medtronic provided funds for the loans.
Records show that as the programme was scaled up, Medtronic roped in Arogya Finance, a Non Banking Financial Company (NBFC), to provide loans. They show that Medtronic itself funded the NBFC by providing “unsecured borrowings” worth Rs 3.61 crore. Jose Peter, co-founder of Arogya Finance said, “…HHFA by Medtronic has moved out of the financing model. It is only confined to creating awareness now.”
A year later, the Maharashtra FDA, while investigating prices of various medical devices, indicted Medtronic. The state FDA report said that Medtronics pacemakers, also used in HHFA, were being offered for free to distributors who allegedly sold them to patients at “exhorbitantly high” prices. For instance, the report reveals, that a patient paid 200 per cent more than the import cost for Medtronic’s flagship pacemaker Relia RED.
By 2014, Medtronic, in an internal document, said that more 14,600 have been screened and 9,186 patients received treatment — and that in four years, hospitals adopting the programme had jumped to 100 in 25 cities.
At the time, Dr Sanjay Tarlekar, director of Shushrusha Hospital’s Heart Care Center, a Medtronic partner in Mumbai, called Healthy Heart “a relief for patients and hospitals alike”.
The scheme turns sour
However, Shushrusha Heart Care and Mission Hospital in Durgapur severed ties to the heart programme after the price-gouging allegations, according to their directors. Tarlekar says Medtronic didn’t keep its promise to help doctors treat needy patients with low-cost devices. “They cheated us,” he said.
“They were offering finance only to those who purchased Medtronic products. This was not the model that this hospital engages in, and it was not acceptable to us. Hence, we discontinued the partnership in 2013-14,” said a senior official at Mission Hospital.
“Our purchase team alerted us that we were getting Medtronic products at inflated prices. A stent that cost around Rs 30,000 in the market was being sold for Rs 1.2-1.5 lakh. We did not want the patient to suffer. There were other companies offering the same products at a reasonable price,” said another official at the hospital.
Both the officials spoke to The Indian Express on the condition of anonymity. But a 65-year-old heart patient from Durgapur was clear about why he “enrolled” under HFFA in 2011 — “getting an angiogram done for a cheaper price” — and why he opted out after the first step at Mission Hospital.
An angiogram is an X-ray procedure for evaluating blockages in the arterial system. “The test cost Rs 14,000 in other hospitals but I paid only Rs 7,000 under HHFA. But later, I was told that I would require a surgery that could cost Rs 1.5-2.5 lakh. I was also offered financing. Even then, the price was too much for me to afford, and I left the hospital,” said Samir Roy, a former canteen employee at the Mining and Allied Machinery Corporation in Durgapur.
The relatives of another patient said that he died in December 2011, months after undergoing a stent implant surgery to remove blockages in the heart. “The hospital enrolled us under the programme, and we did what the doctor asked us to do. We were charged Rs 1.2 lakh for the stent. Since, the patient has died, we don’t have the documents of the surgery,” says Shibir Das, son-in-law of Mintu Chandra, a businessman who died at the age of 56.
At Mission Hospital, the partnership with Medtronic had a bitter fallout. “To achieve its targets, the company’s representatives started giving gifts and freebies to our doctors. Finally, we stepped in to stop this practice. A few months later, these doctors left the hospital,” said the hospital official.
To doctors, with freebies and favours
As Medtronic was giving out freebies to doctors — worth over Rs 50 crore in four years as “product giveaways” — its internal systems detected corruption within. Audit reports show how its distributors aggressively marketed devices, many of them “forging documents” on promotion and conferences.
“Top doctors are very conscious of their image, they don’t deal with the companies directly. But the cozy relationship between companies and doctors is seen in these conferences,” said a top executive of a device firm on the condition of anonymity.
The standard modus operandi: the company pays crores to be the main sponsor of a particular association and, in return, the doctors become the brand ambassadors of its products at these conferences.
For instance, Medtronic was the “platinum sponsor” and has continued to sponsor Asia’s most awaited annual interventional cardiology conference, India Live.
“Being a platinum sponsor of India Live means, you have the country’s top cardiologists conducting live surgeries. Associations make money through registration and sponsorships, and the company gets doctors to use the products,” said an industry insider.
An internal Medtronic note admits how India Live 2016 “spelled a huge success” across all areas. “Medtronic’s products Onyx and Euphora catheters were implanted, demonstrated and discussed…to an audience of 150-200 Interventional Cardiologists at the conference, giving a strong brand visibility…”
Medtronic’s response: Over 175,000 at-risk screened free of cost
Medtronic’s response to a questionnaire from The Indian Express on the Healthy Heart for All programme:
Medical devices play a significant role across each stage of the health care continuum from screening, diagnosing, and treating patients to restoring patients to normal lives and regularly monitoring health indicators to prevent diseases. Despite high patient interface with medical devices, the penetration of devices in India is negligible at less than 2%.
For nearly 70 years, Medtronic has been improving the lives of patients and consistently has been recognized as one of the most admired and reputable companies in the world. Every day we hear from patients and their physicians, recounting how our innovative therapies have dramatically improved health and saved lives. Our reputation is the result of our commitment to patient safety, transparency, compliance, and ethical business practices. Thus, it would be inexcusable to ignore the overwhelming majority of instances in which our thousands of products performed exactly as intended, and the overwhelming majority of our employees who every day serve our customers with care, honesty, and integrity.
Programs to improve patient access
Cardiovascular diseases (CVD) have evolved to become a major disease burden in India. The share of non-communicable disease in total disease burden has increased from 31% in 1990 to 45% in 2010. In India, more than 10.5 million deaths occur annually and it was reported that CVD led to 20.3% of these deaths in men and 16.9% of all deaths in women.
While the disease burden is huge, the penetration of advanced medical care is low in India. This is primarily due to the barriers of 3 As — Awareness, Access and Affordability hindering patients receiving the treatment when they need it. To address these barriers of the three As, the Healthy Heart for All program was conceptualised in 2008 and was launched in India in 2010.
The program included free screening and education on heart conditions and financial assistance to those who would otherwise be constrained to use alternate unorganised money lenders for funding the procedure at extremely high interest rates.
As mentioned on our website, since the inception, over 175,000 at-risk and not de novo patients have been screened by hospitals and cardiologists free of cost and over 15,200 patients gained access to the appropriate therapy (these are brand agnostic i.e. all Medtech company products). Since the launch of the program, Healthy Heart for All has provided financial assistance to nearly 700 patients.
Due to changing dynamics of the healthcare sector, and low visibility of the program, in 2017 we have phased out the HHFA program, that was launched in 2010.
Responsible promotion and compliance
Medtronic is a global healthcare company whose products are sold in more than 150 countries. As needed to enable delivery of our products to patients living in these countries, Medtronic’s employees work with local distributors, agents, and affiliates, who are familiar with the business and regulatory considerations specific to that region.
Medtronic’s Code of Conduct (“The Compass”) and Global Anti-Corruption Policy mandate that our employees, agents, and other third parties comply with all legal, ethical and regulatory standards in all activities conducted on our behalf. Medtronic trains all customer-facing employees and agents on our policies prohibiting employees and affiliates from promoting products off-label, performing unlicensed procedures, engaging in unfair trade practices, and offering kickbacks or bribes.
While there have been a few instances where individuals or affiliates did not comply with Medtronic’s policies, we acted to remedy the situation in each case once discovered and to correct any misconduct.
Such exceptions notwithstanding, we stand behind the integrity of our corporate governance systems and our unwavering commitment to ethical business practices, as reflected in our Global Ethics & Compliance program and Quality organization.
Just last year, our Global Chief Ethics and Compliance Officer was honored with the prestigious PricewaterhouseCoopers (PwC) Award for Leadership in the Advancement of Ethics in the Medical Device Industry. This award reflects Medtronic’s continued leadership in this important area and recognizes our focus on ensuring ethical and compliant conduct in our activities across the globe.
Pricing Medtronic is closely working with the Government to create an ecosystem where innovation is rewarded, and patients have a choice of advanced technologies for better clinical outcomes. As recommended in a study conducted by AdvaMed — IQVIA, we should focus on alternate pricing models factoring in clinical performance/ technological innovation, safety and effectiveness of the device. Also, we believe that the trade channel margin rationalization that provides guidance on the fair and transparent margins across the value-chain will help to make therapies more affordable for patients.