The chief executive of medical device maker Medtronic Inc. was forced during the company's annual meeting yesterday to defend his company's million-dollar deals with university professors and other researchers hired as consultants.
At the annual shareholder meeting of Medtronic Inc. Thursday, CEO Bill Hawkins defended the company's longstanding practice of collaborating with physicians, although he acknowledged these paid relationships could pose a conflict of interest.
Working with doctors to improve devices and commercialize inventions is crucial to advancing medical technology, Hawkins said before a crowd of about 400 people at the company's Fridley headquarters.
Yet these relationships have triggered inquiries by Congress and the Department of Justice, prompting a pointed question from one shareholder who said he was shocked at the amount of money paid to Medtronic's doctor consultants.
Recent reports have focused on the consulting relationship between Medtronic and Dr. David Polly, the head of spine surgery at the University of Minnesota. Between 2003 and 2007, Medtronic paid Polly $1.2 million for consulting, expenses and honoraria.
The shareholder, 77-year-old John Burbidge of Edina, Minnesota, said that while he understood the need for input from physician consultants, he was "taken aback" by the sums of money involved.
Is it really necessary to pay that kind of money to doctors in order to get good information?" he asked.
"Can you rely on information that you pay that much money for?" added Burbidge, who said he is a longtime Medtronic shareholder.
"Obviously, nobody is going to want to tell you anything you don't want to hear and jeopardize his relationship with the company."
The university of Minnesota is investigating Polly's links to Medtronic to see if they violate school policy.
Meanwhile, it would seem that quarterly profits at the company dropped almost 40 per cent do to leagal costs, and the price of its shares fell.