S&N embroiled in price-fixing inquiry

Smith & Nephew, the maker of artificial hips and knees, has been ordered to hand over documents amid a criminal investigation into price-fixing in the US.

The company admitted yesterday it had become involved in a widening Department of Justice inquiry into the way that implants are made and sold.

The orthopaedics industry, worth $7bn (£3.8bn) a year, has enjoyed sales growth of between 6 and 8 per cent for most of the past decade, leading to friction with health insurers. Now, subpoenas served on Smith & Nephew and its rivals in the past week show that federal prosecutors believe the companies may be violating competition rules to inflate their sales.

S&N said it would not comment beyond confirming it had been served the subpoena. It said the subpoena requests "documents for the period beginning January 2001 through to the present relating to possible violations of US antitrust laws, in respect of the manufacture and sale of orthopaedic implant devices. Similar enquiries have been directed to a number of Smith & Nephew's US competitors".

Johnson & Johnson, Zimmer, Biomet and Stryker have also been subpoenaed, while J&J was additionally raided by officers from the DoJ. It appears the antitrust investigation might have grown out of an inquiry last year into the relationships orthopaedics companies have with surgeons. It is not uncommon for sales representatives to accompany surgeons into the operating theatre to give training, while surgeons are providefeedback on new products.