The presence of high-density objects remains an open problem in medical CT imaging. Data of projections passing through objects of high density, such as metal implants, are dominated by noise and are highly affected by beam hardening and scatter. Reconstructed images become less diagnostically conclusive because of pronounced artifacts that manifest as dark and bright streaks. A new reconstruction algorithm is proposed with the aim to reduce these artifacts by incorporating information about shape and known attenuation coefficients of a metal implant. Image reconstruction is considered as a variational optimization problem. The afore-mentioned prior knowledge is introduced in terms of equality constraints. An augmented Lagrangian approach is adapted in order to minimize the associated log-likelihood function for transmission CT. During iterations, temporally appearing artifacts are reduced with a bilateral filter and new projection values are calculated, which are used later on for the reconstruction. A detailed evaluation in cooperation with radiologists is performed on software and hardware phantoms, as well as on clinically relevant patient data of subjects with various metal implants. Results show that the proposed reconstruction algorithm is able to outperform contemporary metal artifact reduction methods such as normalized metal artifact reduction.