FOREWORD
In the early 1930s a brilliant, ambitious, and Yankee-raised J. Don Richards was the southern sales representative for DePuy, the world’s first orthopaedic product company based in Warsaw, Indiana. While traveling through Brookhaven, Mississippi, he met a beautiful southern belle named Euna Brister, and they fell in love. He asked her to marry him and told her his dream to someday start his own orthopaedic manufacturing company up north. Even though the country was in the midst of a depression, she readily agreed to marriage and encouraged him to follow his dream with the stipulation that she would move only “as far north as Memphis.”
This encounter between these two young people had enormous consequences for the bustling city of Memphis, thousands of employees and their families, and hundreds of thousands of patients worldwide. The reason is that the fledgling company Richards started in Memphis next door to the Campbell Clinic would grow into teams of engineers collaborating with many leading orthopaedic surgeons to become one of three international hubs of orthopaedic device research and manufacturing.
The success of Richards Manufacturing spawned other companies and caused suppliers and people to move to Memphis, Tennessee. Richards Manufacturing, although maintaining its core function with orthopaedic devices, branched out into otology (ear) implants in collaboration with Dr. John Shea of Memphis and later developed prototypes for new devices in ophthalmology (eye). The medical device industry was one of the first to need products shipped overnight, and in the early days of a local struggling company called Federal Express, Richards Manufacturing was their largest customer.
Major industries do not just happen, and this book describes the heretofore little known and untold work of talented key people who grew into executive positions by being in the right place at the right time. The authors of this book deserve thanks for compiling an oral history of, and writing about, this unique era in the advancement of medicine and business in Memphis, America, and around the world—all the more amazing to think this story started all because one woman from Brookhaven, Mississippi, would not move any farther north than Memphis.
Jerre Minor Freeman, M.D.: Physician and entrepreneur, Dr. Jerre Freeman, is Founder of Memphis Eye and Cataract Associates (MECA), former Chairman of EagleVision, and Founder of the World Cataract Foundation.
Richard W. Treharne, Ph.D., M.B.A.: Vice President of Clinical and Regulatory Affairs, Active Implants. Former vice president of regulatory affairs at Medtronic Sofamor Danek, now Medtronic Spine and Biologics.
INTRODUCTION
The history of orthopaedic implants is a recent one, but the events that comprise that history have profoundly changed the lives of millions of people. Individuals with bone fractures that once would have been permanently incapacitating can now look toward complete recovery, and older Americans who otherwise would not be able to walk or even sit without severe pain can live full and active lives. For them, orthopaedic implant surgery is little short of a miracle.
Nor is the procedure rare. According to a recent study, between twenty and twenty-five million Americans have had at least one medical device surgically implanted in their bodies. This estimate includes everything from cosmetic implants to dental implants to temporary ear tubes and semi-permanent Cochlear hearing implants to corneas, artificial joints, and pacemakers. In short, a medical procedure that was virtually unknown a half-century ago is now commonplace.
How this all came about is not a tale of one narrow field of endeavor, let alone that of a single discovery. Although the advent of safe and successful orthopaedic implants revolutionized orthopaedic medicine, it was a revolution spread out over decades and involved individuals with diverse expertise. In one sense, science—or, more precisely, the scientific method—was the recurrent theme: theories were developed and evaluated, and advances often occurred through trial and error, for not every theory worked. But that explanation is far from complete. The larger history of orthopaedic implants is also a story of technology, medicine, business ventures and entrepreneurship, and individuals. And this is especially true of the Memphis chapter of that story.
Patients and physicians throughout the country are familiar with the role and contributions of Dr. John Shea, founder of the Shea Ear Clinic. The bone that he replaced with a manmade implant is tiny and does not have to carry any weight, as a hip or knee must, but it is one that is essential for hearing. Its development is also typical of the interaction of medicine and manufacturing that has become commonplace in medical implant technology.
Another Memphis medical center, Campbell Clinic, is widely known as a leader in orthopaedic surgery, including the use of implants. Founded in 1920, the Clinic was already in the forefront of orthopaedic surgery when major advances in total hip replacement began to take hold in Britain and the United States in the early 1960s. A few years later, Dr. Harold B. Boyd, who had joined Dr. Campbell’s staff in the late 1930s and later became head of the University of Tennessee’s orthopaedic department, was a pioneer in the introduction of the Charnley total hip replacement procedure to the U.S. in the late 1960s. Other eminent surgeons have only added to the Clinic’s reputation.
But orthopaedic surgery is only half of the Memphis story. The other half began in the midst of the Great Depression with the founding of Richards Manufacturing, and it was a Richards’ designer, Harry Treace, who some twenty years later made that first Teflon implant used by Dr. Shea. In time, Memphis became the second center of the orthopaedic implant industry, after Warsaw, Indiana, and the economic impact on the area has been profound. Richards would eventually become a division of Smith & Nephew; another former Richards employee would create the company now known as Wright Medical Technology, Inc., also headquartered in Memphis; and a third man—one who started at Richards as a shipping clerk and rose to top management there—would start a company that eventually merged into Medtronic. Together, these three companies now employ more than 4,000 workers in their Memphis facilities.
CHAPTER ONE: “You’re served.”
In December 1993, Memphis-based orthopaedic manufacturer Sofamor-Danek Group, Inc., was closing out an exceptionally good year. The company had nearly doubled in size the previous June when it acquired French orthopaedic company Sofamor S.A.—staff and management were still getting used to their company’s new name and its first-time listing on the New York Stock Exchange—and the future looked unbelievably bright. Demand for hip, knee, and spinal implant devices was continuing to increase at a dizzying rate, and the company’s normal inventory had quadrupled since 1991 just to keep up with orders. During the same two-year period, Sofamor Danek’s net sales had jumped from just under $75 million to nearly $162 million.[i] Times were good indeed, both for shareholders and for employees.
True, the corporation had a relatively new president and CEO, Ron Pickard, but he was cast in the same mold as the company’s first CEO, L. D. Beard. L. D., as his friends called him, was one of the company’s cofounders and still chairman of the board, and the similarity between them was no coincidence. Both men had begun their professional careers at Richards Manufacturing in Memphis—each had worked his way up from the bottom rungs at Richards to company president—and Beard had been instrumental in Pickard’s selection as vice president of manufacturing there.[ii] Years later, when Beard had needed a chief operating officer for his own company, he knew exactly the man he wanted, and Pickard had jumped at the chance, primarily to work with his mentor. That was in 1990, and Pickard had rapidly moved up to company CEO.
Yet even now, despite heading a major orthopaedic company, Pickard still called the board chairman “Mr. Beard,” a habit that would not change until both men retired. No doubt part of his deference was the age difference—Beard was sixteen years Pickard’s senior—but most of it was their history together at Richards. Beard had been a top manager there while Pickard was still cleaning floors. Beard would later joke, “He tells people that he’s known me since 1967, but I’d only known him since 1972. That’s about right.”[iii]
At Sofamor-Danek they made a formidable team and usually saw eye to eye on major issues. Together they had overseen Danek’s first public offering, on the NASDAQ in 1991, and now they had brought about the merger with Sofamor S.A. and moved the corporation to the Big Board. In short, they had good reason to celebrate at the annual Christmas party.
This company-wide event carried over a tradition that Beard had brought with him from Richards. It was a modest but sincere effort to reward employees and to maintain a sense of “family” among the staff despite the company’s rapid growth. To make the occasion a bit more special, the affair was always held away from the company offices, usually at an upscale hotel in the Memphis area. The actual location might change from year to year, but the basic structure remained the same: an evening “dress-up” party and dance attended by employees and their spouses or dates, along with top management and their spouses.
In most ways, the 1993 party was typical. The company rented a ballroom at the Marriott Hotel in southeast Memphis, and secretaries and staff from customer service took care of the decorations. Silver foil streamers were hung from the ceiling, brightly colored cloths were placed on the tables, and a bar (wine and beer only) was set up. A disk jockey with a turntable and amplifier provided the music. But in another sense, not known to most of the employees, this particular Christmas party would be anything but typical.
Pickard and other senior staff were aware of a potential, but minor, public relations problem. They had learned that 20/20, a long-running ABC television “news magazine,” was working on a segment about the inappropriate surgical use of spinal bone screws manufactured by AcroMed, a Cleveland orthopaedic implant manufacturer.[iv] Some weeks earlier an ABC affiliate in Los Angeles had run a brief story about health problems associated with these screws, but that had not attracted much attention.
However, ABC News had now picked up on recent newspaper accounts in New Orleans about Louisiana lawsuits that alleged misuse of bone screws by doctors in spinal surgery, and 20/20 was reportedly preparing a major story about the litigation and the use of spinal screws in general. Beyond that, Sofamor Danek executives knew nothing about the upcoming program except that it was scheduled to air on December 17, 1993, the same night as the Christmas party.
Not that they were particularly concerned. No one from 20/20 had contacted the company, and there was no reason to expect a negative report even if Sofamor Danek were to be mentioned. But at the same time, it was not the kind of attention the company wanted, and those at the senior management were understandably apprehensive.
Like AcroMed, Sofamor Danek manufactured bone screws, with full Food and Drug Administration knowledge about their use in general. The previous August the FDA had sent letters to Sofamor Danek along with six other companies, cautioning them to avoid any reference in their promotional literature to “medical education programs” that might appear to encourage the use of these screws in spinal surgery—a procedure which did not yet have FDA clearance.[v]
In fact, Sofamor Danek had never recommended the use of its bone screws in spinal surgery, and it considered itself in full compliance with both the FDA letter and FDA regulations.
On the other hand, nothing prevented surgeons from using any devices “off-label” if they deemed them medically appropriate for the health of their patients. It was always possible that this might occur with Sofamor Danek products as well, but the notion that a manufacturer should be considered responsible for a doctor’s own independent medical judgment seemed a stretch.
Nonetheless, it was certainly a situation worth monitoring, and Pickard had quietly reserved a suite at the Marriott, one with a large-screen television so that he and other members of senior management could view the program. Eight or ten would probably want to watch the broadcast, and he did not want everyone “huddled down” in a little room trying to see and hear what was going on. Always careful with company funds, he persuaded the hotel to “comp” the suite.[vi]
The weather in Memphis on December 17 was mild, reaching 55 degrees by mid-afternoon, and the Christmas party began as planned at seven o’clock. Besides the beer and wine, there were “heavy” hors-d’oeuvres, and very quickly the attendees—some 100-125 in all—were having a great time.[vii]
The 20/20 telecast would not start until nine o’clock, so there was plenty of opportunity beforehand to mingle and celebrate. Of course, those who knew about the program and the reserved suite kept an eye on the time and beginning about a half hour before airtime they began to quietly leave the ballroom—”snuck out,” Pickard would later say. One by one they made their way to the suite; Pickard having reminded them to make sure they did not all leave at the same time.
At least one departure was not without irony: years later Pickard would still remember the song being played as he headed out the ballroom door: Elvis Presley’s version of “Blue Christmas.”
Those who arrived at the suite early were able to watch the last few minutes of “Hangin’ with Mr. Cooper,” an ABC sit-com about a high school gym coach. But soon enough—in fact, it was 20/20‘s lead story—an off-screen announcer was promising “a shocking expose” about a surgical technique that had ruined the lives of many people.[viii] Moments later ABC News’ medical editor Dr. Timothy Johnson began his report on Lake Charles, Louisiana, patients who had undergone spinal surgery and “ended up with canes and braces and ruined lives after screws and plates were implanted in their backs.” The reason, he said, was because “the screws that were supposed to help them, broke.”
A series of patients then described their suffering in on-screen interviews. “[I]t felt like somebody had a knife in my back.” “My back felt like it was being pulled apart.” “I put my wife and child through hell every day, every day, because of this.” “Sometimes a leg will go out and I would fall.” Others spoke of terrible pain and embarrassment in heartbreaking stories, all of which Dr. Johnson attributed to the improper use of orthopaedic screws.
The program also featured short interviews with FDA commissioner Dr. David Kessler, with medical sales personnel, with surgeons, and with the creator of the surgical technique that used the bone screws. Accusations and denials swirled back and forth.
Both the content and the thrust of the report struck the Sofamor Danek men as one-sided and manifestly unfair. They knew that many of the patients interviewed surely had chosen to undergo risky spinal surgery precisely because they were already experiencing excruciating and intractable pain. They also knew that no doctor would ever, nor could ever, guarantee that any spinal surgery would be fully successful or that it was free of all risk.
But 20/20‘s account was particularly galling for another reason: it concluded that the fault lay not only with the surgeons’ alleged misuse of the screws but with the manufacturers themselves. The unmistakable implication was that manufacturers were actively and wrongfully, perhaps even recklessly, promoting the use of bone screws in spinal surgery. Those who were watching the program in the Marriott suite knew otherwise, at least with regard to Sofamor Danek, and the 20/20 account had them shaking their heads. “Poor AcroMed” was the sentiment voiced most often, and Pickard believed the feeling was sincere: “We didn’t say that in a mean way. It was ‘How terrible it was’ because we knew that what they had portrayed in the show was totally wrong.”[ix]
Even so, when the segment finally ended everyone felt a sense of relief. Not one allegation had been directed specifically at Sofamor Danek. Nor for that matter had the company even been mentioned by name, although 20/20 had briefly displayed an image of a Sofamor Danek booth at an orthopaedic convention. It was AcroMed and the doctor who had helped create the device that were the main targets of the piece, and they had already been sued. In contrast, Sofamor Danek had been named a defendant in a lawsuit only once in its history, and that litigation had not involved implants at all.
But it was relief constrained by caution, and Pickard remembers sharing with Beard his own uncertainty, “I don’t know whether it’s going to lead to anything or not.”[x]
At any rate, this was clearly not the place to speculate on what might or might not happen. Now much less anxious—at least the uncertainty was over—the group rejoined the celebration, which broke up around eleven o’clock.
In the days immediately following the telecast, Beard and Pickard attempted to assess any potential impact the 20/20 story might have on Sofamor Danek. This began in earnest on Saturday morning, the day after the telecast, when Pickard and a few other members of management met with Mike Cody, a Memphis attorney and former Tennessee Attorney General. Pickard had scheduled the meeting before the 20/20 program—just in case, he said—but it ended up being more of a “chat” than a legal consultation.[xi] They all agreed that it was possible, even likely, that there would be no impact at all, so nothing specific came out of the meeting.
Although Beard was no longer involved in day-to-day operations at Sofamor Danek, he still maintained an office there, and several times during the next week he and Pickard discussed the matter at length. They reached no final conclusion, but each continued to believe there was no cause for alarm. Besides, at this point all they could do was wait and see. The whole thing might just blow over, at least as far as Sofamor Danek was concerned.
Pickard was further reassured when he spoke by phone with several independent financial analysts who had been following Sofamor Danek stock. These consultants had been developing reports so they could advise potential investors in the company, and most of the feedback was good, along the lines of “Well, you guys probably don’t have anything to worry about. You weren’t mentioned.”[xii] This added to what Pickard later acknowledged was a false sense of security on his part, and he began to enjoy the holidays.
Business was always slow at Sofamor-Danek in late December, what with Christmas and New Year’s, and the year ground to a close without disruption. January also began quietly enough—at least until a deputy sheriff showed up at Pickard’s home. The event would remain clear in his memory.
“It had to be well into the night. I woke up to somebody banging on the door, and I saw the blue lights. We lived in a little cove in Germantown. Anyway, I woke up and these lights were flashing, and I jumped up, put my pants on, and ran to the door. And there’s this sheriff’s guy, and he asked me if I was Ron Pickard. I said ‘Yeah,’ and he said, ‘You’re served!’”[xiii]
Tennessee law requires every corporation doing business in the state to designate a registered agent for service of process, and Pickard was Sofamor-Danek’s registered agent. Still half asleep, he took the papers and read them. The company was being sued for injuries allegedly resulting from the use of the company’s screws in spinal surgeries. The issue had clearly not blown over after all.
In fact, the summons that the officer handed Pickard turned out to be only the first of what would become a tsunami of lawsuits against Sofamor Danek, eventually numbering more than 6,000 before the litigation was finally concluded. And for the company, the stakes could hardly have been higher. No investor wants that level of uncertainty, and in the next 12 months alone the value of Sofamor Danek stock would slide from around $33 a share to one-third that level.[xiv] Not that either Beard or Pickard needed that long to understand the seriousness of the situation they were facing: before the month was out, both knew they were in a war for the future of the company.
Assuming it had one.
[i]Sofamor Danek Group Inc. Murphy v. Sofamor Danek Group Inc., 123 F3d 394 (Sixth Cir. 1997). citing company’s 10-K report
[ii]L. D. Beard recorded interview with authors
[iii]Ibid
[iv]Ron Pickard, recorded interview with authors
[v]Sofamor Danek Group Inc. Murphy v. Sofamor Danek Group Inc., 123 F3d 394 (Sixth Cir. 1997)
[vi]Pickard, interview
[vii]Ibid
[viii]Transcript of 20/20 program
[ix]Pickard, interview
[x]Ibid
[xi]Ibid
[xii]Ibid
[xiii]Ibid
[xiv]L. Stuart Ditzen, “The Bone Screw Files,” The Philadelphia Inquirer
