The North American Market for Endoscopes

Olympus Corp. of the Americas (OCA) controls roughly three-quarters of the $23.8 billion North American endoscope market.  An endoscope is a medical device with a light at the end used to look inside a body cavity or organ. Now, maybe I should say that again: OCA controls roughly three-quarters of the $23.8 billion North American endoscope market. And, yet, OCA apparently still found it necessary to build or maintain market share in the North American endoscope market by paying physicians and hospitals kickbacks in the form of consulting payments, foreign travel, lavish meals, high dollar grants, and free endoscopes between 2006 and 2011. Endoscopes are lucrative, $600 million in kickback induced sales during this period producing $230 million in profit in the U.S. alone. 

The scale of the recently announced three year deferred prosecution agreement (DPA) between Olympus and DOJ is remarkable in itself but what really caught my eye was the claim that it was OCA's failure to develop appropriate compliance programs (training, staffing, appointing an experienced professional compliance officer) until well into the offense period that singled it out. And so because it was, at least in part, an organizational wrong, a corporate integrity agreement is part of the solution requiring, among other things, that OCA adopt an executive recoupment program requiring that executives engaging in misconduct forfeit up to three years of performance pay.  All of this begs the question of why only three years of performance pay? And why were no medical centers or doctors named in the complaint — a complaint replete with remarkable accounts of lavish overseas travel producing OCA product zealots with apparent success in influencing selection and sales of endoscopes at prominent large medical centers?

It has not been a good year for OCA endoscopes, particularly with regard to those used for colonoscopies. The problems with designing and manufacturing a scope that will not serve as a disease transmitter are now well known to OCA.  But I can't help but wonder about the intersection of these two trajectories.  Is there any evidence that, as disease and infection transmission data built up on scope problems apparently related to OCA scopes (as well as, to a different degree, other brands) that individual practitioners or medical centers were reluctant to either engage in searching root cause analysis or to discontinue use of the OCA scopes pending root cause analysis because, in whole of in part,  of the extremely lucrative compensated referral arrangements or kickback agreements in place?

Inquiring minds would like to know. 

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