Embattled scope maker Olympus Corp., already under federal investigation for its role in superbug outbreaks, has agreed to pay $646 million to resolve criminal and civil probes into illegal kickbacks and bribes to doctors and hospitals.
Federal prosecutors said Tuesday that the company’s settlement is the largest ever for violations of the U.S. anti-kickback law. A portion of the company’s payout, $22.8 million, will resolve foreign bribery allegations in Latin America.
U.S. investigators said the company’s “greed-fueled kickback scheme” from 2006 to 2011 used grants, consulting deals, trips to Japan, lavish gifts, and free equipment to induce influential doctors to order more Olympus devices at prominent hospitals and keep out competitors.
After a key doctor for a Midwest hospital system took a week-long trip to Japan and received a company grant, an Olympus vice president wrote an internal email in 2006 that said, “We have received all of the orders expected and have kept (a competitor) completely out of the (Midwestern hospital) system. Hooray!”
The federal complaint against Olympus mentioned similar scenarios at a prominent California institution and a New York medical center, but the exact names were redacted.
The violations produced about $600 million in sales and $230 million in gross profits for Olympus, federal officials said.
Federal prosecutors credited the help of a former compliance officer at Olympus, John Slowik, who filed a whistle-blower case against the company under seal in 2010.
Olympus agreed to a corporate-integrity agreement and the appointment of an independent monitor.
“Olympus leadership acknowledges the company’s responsibility for the past conduct, which does not represent the values of Olympus or its employees,” Nacho Abia, chief executive of the Olympus Corp. of the Americas unit in Center Valley, Pa., said in a statement. “Olympus is committed to complying with all laws and regulations and to adhering to our own rigorous code of conduct.”
Olympus has come under fire for failing to alert U.S. regulators and hospitals sooner about the risks of infection from its duodenoscopes, a gastrointestinal scope that has proven difficult to clean of dangerous bacteria because of its intricate design.
A Senate investigation released in January identified 19 scope-related outbreaks at U.S. medical centers during 2012-2015 that sickened nearly 200 patients with drug-resistant infections.
Olympus announced in January it would recall its duodenoscopes nationwide and make repairs to improve patient safety. The company controls 85% of the U.S. market for gastrointestinal scopes.
Last year, the Tokyo company disclosed it had received a subpoena from federal prosecutors in March 2015 seeking “information relating to duodenoscopes that Olympus manufactures and sells.”
This article was originally published by Kaiser Health News, a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.
