The Pervasiveness of Health Care Corruption as Shown by Another Roundup of Legal Settlements

Legal settlements are one way to document unethical and even corrupt behavior by large health care organizations, even if they may not deter bad behavior in the future.  It is time for another roundup of settlements by large pharmaceutical and device companies, presented in alphabetical order<br /><br /><b>Abbott Laboratories</b><br /><br />This one goes back to late December, 2013.  As <a href="http://www.chattanoogan.com/2013/12/27/266328/Abbott-Laboratories-To-Pay-5.475.aspx">described</a> in the Chattanoogan (from Tennessee):<br /><br /><blockquote class="tr_bq">Abbott Laboratories, a global healthcare company, has agreed to pay $5.475 million to settle alleged violations of the False Claims Act, and other federal laws and regulations in connection with the operation of its medical device business which manufactures, markets and supplies carotid, biliary, and peripheral vascular products.</blockquote><br />The US Justice Department accused Abbott of kickbacks to physicians,<br /><br /><blockquote class="tr_bq"> As alleged in the settlement agreement, between 2005 and 2010, through its employees and a third party continuing medical education providers, <i>Abbott offered physicians paid teaching and training assignments, consulting arrangements, speaking engagements, and/or sponsorship grants for physician conferences, for the purpose of inducing physicians to arrange for or recommend that the hospitals with which they were affiliated purchase or order Abbott’s carotid, biliary and peripheral vascular products.</i></blockquote><br />Note in particular that the kickbacks were disguised as payments for consulting or speaking. <br /><br />As is usual in such cases, no individual seems to have paid any penalty or been subject to any punishment.  Because this was a legal settlement, the company did not admit wrongdoing.<br /><br />Abbott's previous issues are discussed <a href="http://hcrenewal.blogspot.com/search/label/Abbott">here</a>, including a <a href="http://hcrenewal.blogspot.com/2012/05/abbott-pleads-guilty-settles-for-16.html">$1.6 billion settlement in 2012</a>.  <br /><br /><b>Baxter International</b><br /><br />This was <a href="http://www.modernhealthcare.com/article/20140421/INFO/304219992">reported</a> in April, 2014 by Modern Healthcare,<br /><br /><blockquote class="tr_bq"> Baxter International agreed to pay $64 million to settle a class-action lawsuit that alleged the Deerfield, Ill.-based company and some of its competitors <i>colluded to raise prices</i> of plasma-based therapies.</blockquote><br />Unlike the other cases above and below, this seemed to be a purely financial misadventure, although one that clearly increased health care costs,<br /><br /><blockquote class="tr_bq">Hospitals and drug distributors, saying they bought the plasma products at inflated prices, sued in 2009 Baxter; Victoria, Australia-based CSL; and the Plasma Protein Therapeutics Association, an Annapolis, Md.-based trade group.</blockquote><br />Once more, the company admitted no wrongdoing, and no individuals seemed to be subject to any negative consequences.   <br /><br />Baxter International's previous misadventures are <a href="http://hcrenewal.blogspot.com/search/label/Baxter">here</a>, including the <a href="http://hcrenewal.blogspot.com/2011/08/jama-article-begs-key-questions-about.html">striking case</a> of its marketing of contaminated and sometimes deadly heparin made from Chinese pigs.  <br /><br /><b>Endo Health Solutions</b><br /><br />This one is from February, 2014, as<a href="http://www.bloomberg.com/news/2014-02-21/endo-to-pay-193-million-in-lidoderm-marketing-probe.html"> reported</a> by Bloomberg<br /><br /><blockquote class="tr_bq">Endo Health Solutions entered a deferred-prosecution agreement and will pay $193 million to settle whistle-blower claims that it <i>marketed the shingles drug Lidoderm for unapproved purposes</i>, the U.S. said. <br />Endo will pay $20.8 million in forfeitures and $171.9 million in civil false claims settlements with the states and the U.S. government, the Justice Department said today in a statement. </blockquote><br />This one was all about marketing for uses not approved by the US Food an Drug Administration,<br /><br /><blockquote class="tr_bq">Between 2002 and 2006, Endo sales managers instructed some representatives on how to<i> expand 'sales conversations' with doctors beyond the treatment of shingles-related pain</i>, the U.S. said. Under the deferred-prosecution agreement, Endo admitted that it intended Lidoderm to be used for uses not approved by the U.S. Food and Drug Administration, the Justice Department said. </blockquote><br />Note that this case involves false claims, that is, fraud, because it is illegal to bill government programs for unapproved uses.<br /><br />Again, no individual suffered any consequences, and the company offered the usual kind of statement that admitted neither responsibility nor guilt,<br /><br /><blockquote class="tr_bq">'We are pleased to resolve this matter and are confident that we have robust programs in place to assist us in satisfying our legal and regulatory agreements,' Endo Chief Executive Officer Rajiv De Silva said in a statement.  </blockquote><br />One wonders, as usual, why a company would pay so much merely to avoid the legal expenses of a trial, unless of course the lawyers suspected the trail would not go well?<br /><br /><b>Hospira</b><br /><br />This one was about hiding quality problems due to cost-cutting from investors, as<a href="http://www.reuters.com/article/2014/03/27/hospira-lawsuit-idUSL1N0MO2BS20140327"> reported</a> by Reuters in March, 2014.   <br /><br /><blockquote class="tr_bq">Hospira Inc <span id="articleText"><span class="focusParagraph">has agreed to pay $60 million to resolve a class action lawsuit accusing the drug maker of misleading investors about <i>quality control problems that undermined an initiative to improve the company's margins and operations.</i></span></span></blockquote><br /><span id="articleText"><span class="focusParagraph">The details included,</span></span><br /><br /><blockquote class="tr_bq"><span id="articleText">As Hospira was promising to address issues raised by the U.S. Food and Drug Administration following inspections, the plaintiffs said the company was '<i>making the problems worse by gutting quality control efforts through cost cutting aimed at boosting short-term profitability</i>.'<br /><br /><span id="midArticle_7"></span>The lawsuit said those cost-cutting moves stemmed from a March 2009<i> initiative called 'Project Fuel' intended to increase shareholder value by eliminating underperforming and duplicative units and reducing its global workforce.</i><br /><br /><span id="midArticle_8"></span>Plaintiffs contended the <i>cuts in the budget and workforce hurt Hospira's quality control </i>efforts, particularly at Rocky Mount, the company's largest facility.<br /><br /><span id="midArticle_9"></span>An FDA inspection in January 2010 of the Rocky Mount facility found a number of <i>problems with the company's quality control and drug validation processes</i>, the lawsuit said, and the agency issued a warning letter that April.</span></blockquote><span id="articleText"></span><br /><br />Note that this involved quality control problems presumably in drug or device production, possibly leading to safety risks for patients.  Yet it was investors who brought the lawsuit.<br /><br />Note also that this seemed to be a clear case in which cost-cutting measures meant to improve short-term corporate revenue lead to problems that could have caused such risks.   <br /><br />One interesting feature of this case was that company executives were named as defendant (presumably again because it was investors, not patients or law-enforcement officials who initiated the suit.)<br /><br /><br /><blockquote class="tr_bq"><span id="articleText"><span id="articleText">The lawsuit ... also named executives including Chief Executive Officer Michael Ball as defendants,...</span></span></blockquote><span id="articleText"></span><br /><br /><span id="articleText">I cannot find any information about whether these executives were personally liable for any payments, however.   </span><br /><span id="articleText"><br /></span><b><span id="articleText">Pfizer</span></b><br /><span id="articleText"><br /></span><span id="articleText">This is yet another settlement involving the marketing of Neurontin, as <a href="http://www.bloomberg.com/news/2014-04-22/pfizer-agrees-to-pay-190-million-to-settle-neurontin-case-1-.html">reported</a> by Bloomberg in April, 2014,</span><br /><span id="articleText"><br /></span><br /><blockquote class="tr_bq"><span id="articleText"><span id="articleText">Pfizer Inc </span>the world’s biggest drugmaker, agreed to pay $190 million to end a lawsuit claiming it <i>violated federal antitrust laws by delaying generic versions of its Neurontin epilepsy drug. </i><br /></span></blockquote><blockquote>Pfizer agreed to settle the class-action litigation pending in federal court in Newark, New Jersey, according to a filing today. U.S. District Judge Faith Hochberg must approve the accord, which would cover purchasers of Neurontin from December 2002 to August 2008. </blockquote><br />Note that this settlement, like many others, is of matter from a long time ago.  When it comes to bad behavior by big health care corporations, any form of justice is not swift. <br /><br />Note also that this is only the latest chapter in the long saga of Neurontin, for whose mis-marketing Pfizer has already shelled out a lot of money (see<a href="http://hcrenewal.blogspot.com/2006/08/stealth-marketing-of-neurontin.html"> this post</a> to start, and <a href="http://hcrenewal.blogspot.com/search/label/Neurontin">here</a> for the collection).  Pfizer has an amazing record of bad behavior on view <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">here</a>.  In fact, it has had a conviction as a Racketeering Influenced Corrupt Organization (RICO) on the basis of its previous marketing of Neurontin (look <a href="http://hcrenewal.blogspot.com/2013/12/blogscan-us-supreme-court-turns-down.html">here</a>). <br /><br />This particular bad behavior involved included,<br /><br /><blockquote class="tr_bq"> improperly listing certain patents with the U.S. Food and Drug Administration, engaging in <i>illegal promotion</i> and sales of Neurontin for unapproved uses, filing and maintaining sham litigations with respect to certain patents, and making misrepresentations to the patent courts,</blockquote><br />Note that while much of this was legalistic, illegal marketing was in there too.<br /><br />Once more, I found nothing about any negative consequences for individuals who authorized, directed, or implemented questionable actions.<br /><br /><b>Summary</b><br /><br />So it is all drearily familiar.  Big health care organizations seem to repeatedly engage in deceptive marketing, providing kickbacks to health professionals, fraudulent billing, anti-competitive practices, etc, etc.  These practices increase health care costs, and may risk patients' health and safety.  Many of these practices are corrupt, at least according to the Transparency International definition of corruption, "abuse of entrusted power for private gain."  Drug and device companies, for example, are entrusted to provide safe and effective products.  Deceptive marketing, kickbacks to health professionals to encourage overuse, and cutting quality control to cut costs all seem to be examples of abuse of this entrusted power.  The private gain obviously goes to any managers and executives who score bigger bonuses due to the increases in revenue that result.  <br /><br />Yet there are very few examples of any individuals who gained ever being subject to any negative consequences.  Given that lack, and the lack of any requirement for corporate leaders to admit responsibility, much less guilt, is it any surprise that these practices go on and on.  The failure of current limp legal efforts against such corruption is evident by how many corporations have become ethical repeat offenders.   (Note that in fact, as noted above, one of the pharmaceutical companies above actually was convicted of being a RICO, racketeering influenced corrupt organization, yet that conviction seemed to have no real negative consequences for the organization or any of the people involved.) <br /><br />As I have said again and again, pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.<br /><br />So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue. <br />

The Pervasiveness of Health Care Corruption as Shown by Another Roundup of Legal Settlements

Legal settlements are one way to document unethical and even corrupt behavior by large health care organizations, even if they may not deter bad behavior in the future.  It is time for another roundup…

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Why Trust Drug Company Executives After One Admits Commercially Sponsored Clinical Research Is All About "Competitive Advantage?"

Mickey, the semi-anonymous blogger on 1BoringOldMan, wrote a <a href="http://1boringoldman.com/index.php/2013/09/12/right-on-the-money/">righteously angry post</a> in support of transparent clinical research.  As we have noted frequently, clinical trials done on human subjects are often <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulated</a> to increase the likelihood of results favorable to commercial sponsors, or <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppressed</a> when even such manipulation does not produce the desired results.<br /><br />Note that such suppression and manipulation degrade the scientific value of the studies, impede the <a href="http://hcrenewal.blogspot.com/search/label/evidence-based%20medicine">evidence-based medicine</a> process to rationally apply clinical research evidence to improve the health of patients and the public, and violate the trust of research subjects who volunteer to participate based on the assumption that clinical research is meant to improve patient care and public health, and contribute to science, not just secure commercial advantage.   <br /><br />A European initiative to combat suppression of clinical research has been opposed by a lawsuit from US pharmaceutical manufacturers AbbeVie, spun off from Abbott Laboratories, and Intermune.  The European Medicines Agency had been willing to to make public unpublished patient level data from commercially sponsored clinical trials.  The lawsuit has shut down the process, and is meant to shut it down permanently, claiming that the clinical data, obtained from volunteer research subjects, includes "trade secrets."<br /><br />As <a href="http://1boringoldman.com/index.php/2013/09/12/right-on-the-money/">summarized </a>by Mickey, their motivation seems to be to conceal how pharmaceutical manufacturers and other commercial sponsors of human research use this research for promotional, rather than scientific purposes.<br /><br />An AbbeVie lawyer asserted that some adverse effects data should be kept confidential, and that "<span style="color: #200020;">internal tactical decisions on how we are going to run a study, engage with regulators, and confront and solve problems and challenges we have uncovered during clinical trials</span><b><span style="color: #200020;">" </span></b>should also be kept secret because revealing them could "give other companies a tremendous competitive advantage," <i>never mind whether keeping secrets could undermine science, decrease the study's usefulness to aid clinical and policy decision making, and break the implicit contract between researchers and study subjects.</i><br /><br />It is becoming more obvious that many drug company executives, and other leaders of large health organizations, may care more about "competitive advantage" than patients, science or the public good, as Mickey points out.  So much for that advertising puffery  about drug development to improve patient health.  Thus it may be ridiculous to think that these executives they will negotiate to improve transparency of clinical research in good faith when doing so could decrease such advantage, again no matter what the effect on patients, public health, or science.<br /><br />On this case there is an opportunity to speak out, Dr David Healy has a <a href="http://www.change.org/petitions/richard-gonzalez-of-abbvie-and-daniel-welch-of-intermune-drop-your-legal-action-blocking-access-to-ema-clinical-trial-data?utm_source=guides&utm_medium=email&utm_campaign=petition_lonely">petition up on Change.org</a> to oppose the AbbeVie and Intermune lawsuit which might get some notice if there are enough signatures.

Why Trust Drug Company Executives After One Admits Commercially Sponsored Clinical Research Is All About "Competitive Advantage?"

Mickey, the semi-anonymous blogger on 1BoringOldMan, wrote a righteously angry post in support of transparent clinical research.  As we have noted frequently, clinical trials done on human subjects ar…

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Abbott Pleads Guilty, Settles for $1.6 Billion, but No Individuals Suffer Negative Consequences

Once again, another big US health care organization is set to make a (monetarily) huge <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlement</a>.  As <a href="http://www.businessweek.com/news/2012-05-07/abbott-to-pay-1-dot-6-billion-to-settle-depakote-marketing-claims">reported</a> by Bloomberg, Abbott Laboratories will settle allegations about its marketing of Depakote (valproic acid), nominally an anti-seizure medication:<br /><blockquote><em>Abbott Laboratories (ABT) (ABT) said it will pay <strong>$1.6 billion</strong></em> to settle federal and state claims resulting from an investigation into its epilepsy medication Depakote, the second-largest drug-marketing settlement in U.S. history.<br /><br />The company will pay $800 million to resolve civil allegations split among federal and state governments, <em>$700 million for a criminal penalty</em>, the Justice Department said in a statement. Abbott marketed the drug, approved for epilepsy, bipolar mania and migraine prevention, for unapproved uses including dementia, the U.S. said. </blockquote><br />Note that we discussed preliminary reports of this settlement <a href="http://hcrenewal.blogspot.com/2011/11/abbott-laboratories-to-settle-for-13.html">here</a>.<br /><br /><strong>Huge, but not Compared to Sales</strong><br /><br />The story included all the obligatory pieces. The settlement is huge, the second largest such financial settlement made by a drug company. However, compared to the money made by the product in question, it was not so large, as <a href="http://online.wsj.com/article/SB10001424052702304451104577390182002017146.html">noted</a> by the Wall Street Journal,<br /><blockquote>Depakote was once one of Abbott's best-selling drugs, <em>racking up $1.6 billion in sales for 2007, </em>before patent expirations cleared the way for cheaper generic copies.</blockquote><br /><strong>A Guilty Plea, of Sorts</strong><br /><br />The settlement did require the company to<br /><blockquote><em>plead guilty to a criminal misdemeanor violation of a federal drug law</em></blockquote>per the WSJ, but not to a felony. Nor did it appear that any individual would be charged with anything in connection with this settlement.<br /><br /><strong>Admitting to Deception, Covering Kickbacks</strong><br /><br />This was so even though the allegations involved more than "misbranding." In fact, the Bloomberg story stated that the company admitted to active deception of physicians and health professionals,<br /><blockquote>'Abbott admits that from 1998 through 2006, the company <em>maintained a specialized sales force trained to market Depakote in nursing homes for the control of agitation and aggression in elderly dementia patients, despite the absence of credible scientific evidence that Depakote was safe and effective for that use</em>,' the Justice Department said in its statement today.<br /><br />Abbott also <em>marketed the drug to be used with certain antipsychotic drugs to treat schizophrenia, 'even after its clinical trials failed to demonstrate that adding Depakote was any more effective than an atypical antipsychotic alone</em> for that use,' the Justice Department said. </blockquote><br />In addition, the settlement also "covers" allegations of what amounts to bribery.<br /><blockquote>The settlement also <em>covers allegations that Abbott paid kickbacks to health-care professionals and long-term care pharmacy providers to induce them to promote or prescribe Depakote</em>, the Justice Department said in its statement today. </blockquote><br /><strong>We Promise Not to Do Such Bad Things for Five Years</strong><br /><br />Yet despite these implications of massive deception and bribery of health care professionals, the only other punishment is a sort of probationary period during which the company promises not to do such things, per the WSJ.<br /><blockquote>Under the settlement, <em>Abbott agreed to a five-year probationary period</em>. During this term, Abbott will <em>report any probable violations</em> of the Food, Drug and Cosmetic Act to the probation office, according to the Justice Department. <br /><br />Also, its chief executive will <em>certify compliance with this reporting requirement</em>, and its board will report annually on the effectiveness of the company's compliance program. <br /><br />In addition, Abbott agreed <em>not to compensate sales reps for off-label sales and take other steps during the probationary period. </em></blockquote><br /><strong>A Bland Admission of Nothing</strong><br /><br />As is customary, an Abbott spokesperson provided a bland, positive statement that admitted no wrong-doing, per the WSJ,<br /><blockquote>'We are pleased to resolve this matter and are confident we have the programs in place to satisfy the requirements of this settlement,' Abbott General Counsel Laura Schumacher said in a news release. 'The company takes its responsibility to patients and health care providers seriously and has established robust compliance programs to ensure its marketing programs meet the needs of health care providers and legal requirements.'</blockquote><br /><strong>Previous Misbehavior</strong><br /><br />Apparently not taken account into stories about or the crafting of the current settlement was Abbott's previous record of legal misadventures:<br /><br /><u>Obstructing Justice</u> - In 2003, an Abbott subsidiary settled civil allegations and pleaded guilty to obstructing a federal criminal investigation of its marketing practices, resulting in fines of $614 million (mentioned in <a href="http://hcrenewal.blogspot.com/2010/12/abbott-laboratories-and-pig-roasts.html">this post</a>, and see <a href="http://articles.latimes.com/2003/jul/24/business/fi-abbott24">the Los Angeles Times</a>.)<br /><u>Suppressing Reports of Drug Contamination</u> - In 2009, the FDA charged that an Abbott subsidiary failed to report bacterial contamination of an optic product (see post <a href="http://hcrenewal.blogspot.com/2009/06/original-excuse.html">here</a>).<br /><u>Blocking Generic Competition</u> - In 2010, Abbott settled with the New York state Attorney General allegations that the company conspired to block generic competition for its lipid lowering drug TriCor (see <a href="http://www.reuters.com/article/2010/01/07/abbott-tricor-idUSN0720003720100107">Reuters</a> and our post <a href="http://hcrenewal.blogspot.com/2010/01/abbott-laboratories-settles.html">here</a>).<br /><u>Inflating Charges</u> - In 2010, Abbott also settled with the US Justice Department for $421 million charges that it defrauded Medicare and Medicaid (see post <a href="http://hcrenewal.blogspot.com/2010/12/abbott-laboratories-and-pig-roasts.html">here</a>).<br /><u>Paying Kickbacks to Doctors</u> - In 2010, an Abbott subsidiary also settled with the US government charges it paid kickbacks to physicians to prescribe other cholesterol lowering drugs (see post <a href="http://hcrenewal.blogspot.com/2010/12/abbott-laboratories-and-pig-roasts.html">here</a>).<br /><u>Anti-Competitive Pricing Practices</u> - In 2011, Abbott settled lawsuits alleging that its anti-competitive practices inflated prices of anti-viral drugs (see post <a href="http://hcrenewal.blogspot.com/2011/04/abbott-laboratories-settles-again.html">here</a>).<br /><br /><strong>More Richs for the CEO</strong><br /><br />Despite this now long record of ethical missteps, the Abbott CEO gets richer every year. In 2009, his total compensation was over $26 million (see <a href="http://hcrenewal.blogspot.com/2010/12/abbott-laboratories-and-pig-roasts.html">this post</a>). According to the company's <a href="http://media.corporate-ir.net/media_files/irol/94/94004/Proxy_Page/Proxy2012.pdf">2012 proxy statement</a>, his pay has gone down ever so slightly, from $25,564,283 in 2010 to $24,010,902 in 2011, but still approximately 480 times the median earning of a US family. <br /><br /><strong>Summary</strong><br /><br />The <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">march of legal settlements</a> progresses. Despite its showy finery of legal language, it fails to include meaningful negative consequences for any individuals, and particularly for those who authorized, directed or implemented unethical actions. It provides the illusion of financial punishment of the organizations involved. However, the amounts paid, albeit large, never approach how much money was brought in by the bad behavior. Furthermore, the costs are diffused among many employees, and for publicly held for-profit corporations, among the nominal owners, the stock-holders. Yet the top executives who personally gained the most almost never have had to answer for the misbehavior, and despite of, or perhaps because of the misbehavior continue to collect voluminous compensation.<br /><br />Despite promises of tougher action, nothing seems to be changing in this parade. However, without real penalties for individuals involved in bad behavior, expect to deterrent of future bad behavior. <br /><br />So once more,.... if we really want to reform health care, we must make the leaders of health care organizations accountable for their organizations' effects on patients' and the public's health, and make sure they get reasonable, not royal compensation reasonably related to their organizations' performance, including ethical performance.

Abbott Pleads Guilty, Settles for $1.6 Billion, but No Individuals Suffer Negative Consequences

Once again, another big US health care organization is set to make a (monetarily) huge legal settlement.  As reported by Bloomberg, Abbott Laboratories will settle allegations about its marketing of D…

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Abbott Laboratories to Settle for $1.3 Billion Allegations Including Giving Doctors Kick-Backs and Training Them to Make False Diagnoses

It looks like the march of billion dollar <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> by health care organizations is on its way again.  <br /><br /><strong>The Proposed Abbott Laboratories Settlement</strong><br /><br />Last month Bloomberg <a href="http://www.bloomberg.com/news/2011-10-21/abbott-said-to-agree-to-pay-1-3-billion-to-end-depakote-suits.html">reported</a>:<br /><blockquote><em>Abbott Laboratories (ABT) agreed to pay at least <strong>$1.3 billion</strong> to settle claims by the U.S. government and 24 states alleging the company illegally marketed its Depakote epilepsy drug</em>, people familiar with the accords said.<br /><br />Abbott executives, federal prosecutors and state officials reached a tentative agreement calling for the drugmaker to pay about $800 million to resolve civil claims over Depakote and about <em>$500 million in criminal penalties</em> for marketing the epilepsy medicine for unapproved uses, said three people familiar with the settlement who declined to be identified because the agreement hasn’t been made public. Abbott said earlier this week it was reserving $1.5 billion to cover costs of the potential settlement. </blockquote><br />A billion here, and billion there, it begins to add up:<br /><blockquote>The settlement would be the<em> third-largest illegal pharmaceutical marketing accord</em> in U.S. history, behind the $2.3 billion Pfizer paid in 2009 over the marketing of its Bextra painkiller and other drugs and the $1.4 billion Eli Lilly & Co. paid the same year over sales of its Zyprexa anti-psychotic medicine. </blockquote><br /><strong>Encouraging Dishonesty, Giving Kick-Backs</strong><br /><br />The Bloomberg report only briefly discussed the behavior by Abbott that lead to the settlement:<br /><blockquote>In February, the government joined cases brought by former Abbott employees alleging the company engaged in so-called off-label marketing starting in the late 1990s. The suits contend the illegal sales practices resulted in false claims being submitted to government health programs.<br /><br />The whistle-blowers claim the drugmaker marketed Depakote for unapproved uses including agitation and aggression in patients with dementia, autism, sexual compulsion and other disorders. </blockquote><br />However, an <a href="http://articles.chicagotribune.com/2011-11-13/business/ct-biz-1113-abbott-20111113_1_whistle-blower-epilepsy-drug-illegal-marketing">article</a> published last week in the Chicago Tribune further described the allegations made by the whistle-blowers. In summary,<br /><blockquote>The lawsuits against Abbott allege that the company encouraged and trained sales reps to market Depakote off-label to nursing home directors, geriatric doctors and other long-term care facilities. The company also gave doctors illegal kickbacks to talk about off-label uses of the drug in an effort to boost sales, according to the lawsuits, which were filed in federal courts in Virginia, Illinois and the District of Columbia.<br /><br />The FDA approved Depakote in 1983 to treat certain seizures in adults and children over 10. Since then, the drug has received approval for the treatment of other types of seizures, manic episodes of bipolar disorder and the prevention of migraine headaches.<br /><br />However, Depakote was never approved to treat Alzheimer's disease or other types of dementia or for general treatment of bipolar disorder.<br /><br />According to the whistle-blower lawsuits, though, Abbott sales reps specifically marketed Depakote to treat agitation and aggression associated with dementia.</blockquote><br />One whistle-blower alleged that Abbott encouraged doctors to make false diagnoses that would enable the government to pay for the use of Depakote:<br /><blockquote>During a nationwide conference call in 2007, an Abbott trainer allegedly coached sales reps on how to explain to doctors that they could <em>miscode a patient's illness in order to bypass federal regulations. For example, a physician could code a patient as having 'late onset of bipolar' or 'underlying seizure disorder' instead of 'agitation associated with dementia,' according to her complaint.</em><br /><br />Abbott held training sessions focused on off-label promotion but brought in outside consultants and held the training away from its North Chicago headquarters.<br /><br />At one training event, McCoyd and another sales representative <em>allegedly were asked to share their techniques for off-label marketing but were forbidden from preparing or distributing any written materials about the topic.</em><br /><br /><em>Upper-level management who attended the sales training purposely left the room when the off-label training sessions began</em>, according to the complaint.</blockquote><br />The whistle-blowers also alleged that Abbott gave kick-backs (presumably the same idea as bribes) to doctors for prescribing Depakote:<br /><blockquote>The complaints also allege that <em>doctors were given kickbacks to talk about off-label uses of Depakote.</em><br /><em><br /></em><br /><em>According to McCoyd's filing, Abbott salespeople were given about $20,000 to $30,000 each year to 'educate' physicians </em>and other heath care providers about off-label use of Depakote.<br /><br /><em>Abbott paid doctors who promoted the drug between $500 and $2000 per speech, the complaint states</em>. The money allegedly was funneled through intermediaries and associations, including the Alzheimer's Association, although the association told the Tribune it has 'no knowledge' of such activities.<br /><br /><em>Using the organizations to pay doctors was done to 'disguise the direct payments to doctors and Abbott's substantial and direct involvement' in the events</em>, the complaint alleges.</blockquote><br /><strong>Summary</strong><br /><br />So it appears that Abbott is about to settle a case involving some very serious allegations, including training physicians to make false diagnoses, and giving physicians kick-backs. These sort of actions seriously subvert physicians' core values (and any physicians who made such false diagnoses or accepted such kick-backs would have seriously violated core ethical principles.)<br /><br />These actions also may have directly harmed patients. There appears to be no good evidence that Depakote has benefits that exceed its harms for patients with dementia, autism, etc. So encouraging doctors to prescribe the medicine for these patients was likely to have subjected some patients to side-effects without providing them any benefit. That would contradict the physicians' obligations to put the interests of individual patients first, and to avoid harming them. As the Tribune article noted,<br /><blockquote>[Dr Adriane} Fugh-Berman, with PharmedOut, said companies put patients at risk when they promote drugs that haven't gone through the FDA's regulatory process.<br /><br />'These drugs are being promoted for conditions they have not been shown to be effective, and they might be dangerous,' she said.</blockquote><br />So a $1.3 billion penalty would actually be a cheap price to pay for such ethical offenses. Note that the Bloomberg report did mention "criminal penalties," so this may be one of the infrequent cases in which a big health care organization actually would plead guilty to some crime.<br /><br />Note however that neither article mentioned anything about any individual who authorized, directed, or implemented the conduct in question suffering any negative consequence or paying any penalty. These reports are preliminary, so it may be that such penalties are part of the final settlement. But it is also possible that this settlement becomes another, and particularly flagrant example of health care corporate executive impunity.<br /><br />If no one turns out to have to pay a penalty for training physicians to lie to the government, and giving them kick-backs to prescribe a possibly useless and likely harmful medicine, what will deter other executives from authorizing and directing such actions again to make more money? Note in the Bloomberg article:<br /><blockquote>Sales of Depakote 'rocketed to over $1.4 billion per year' as a result of improper marketing, according to a complaint filed in February by ex-Abbott sales representative Meredith McCoyd. <em>'Compensation for senior executives soared as well.' </em></blockquote><br />Furthermore, if no one turns out to have to pay a penalty for these actions, this case will just contribute to the ongoing demoralization of health care professionals. It will be another example of how insiders take advantage of the system for their personal gain, to the disadvantage of patients, and at further cost to an already overly expensive health care system that fails to provide adequate access and quality care.<br /><br />So I repeat, repeat, repeat... to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Abbott Laboratories to Settle for $1.3 Billion Allegations Including Giving Doctors Kick-Backs and Training Them to Make False Diagnoses

It looks like the march of billion dollar legal settlements by health care organizations is on its way again.  The Proposed Abbott Laboratories SettlementLast month Bloomberg reported:Abbott Laborator…

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Enabled by the Revolving Door, Corporatistic US Trade Policy Seems to Put US Drug Companies Ahead of Global Public Health

We just <a href="http://hcrenewal.blogspot.com/2011/10/exporting-us-health-ecosystem-and-its.html">discussed</a> how leaders of big health care corporations with histories of ethical and legal missteps want to export our supposedly "wonderful technology, wonderful approaches" to the rest of the world.  A <a href="http://www.huffingtonpost.com/2011/09/28/bill-daley-big-pharma-trans-pacific-partnership_n_981973.html">story</a> on the Huffington Post showed how big health care corporations, partnering with the US government, have already been doing that with not very pretty results.  The article discussed two cases, connected by a single person who transited the revolving door from government to the pharmaceutical industry and then back to government.<br /><br /><strong>The US Dispute with Brazil, on Behalf of Merck and Pfizer, About HIV Drugs</strong><br /><br /><blockquote>When [William] Daley was commerce secretary in the later years of the Clinton administration, Brazil rankled U.S. drug companies by opting to provide its citizens with a generic version of another HIV drug. Like Thailand, Brazil declared a public health emergency in an effort to lower the cost of treating roughly a half-million HIV infections. <em>The U.S. government responded by sending Daley to Brazil with executives from U.S. pharmaceutical giants Merck & Co. and Pfizer to try to pressure the Brazilian government into reversing its decision</em>.</blockquote>Thus the US government appeared to be putting the revenues of US corporations ahead of the public health, at least in Brazil.<br />Daley soon made the transition to the private sector:<br /><blockquote>In a speech at Johns Hopkins University before leaving for Brazil, <em>Daley encouraged students to enter the revolving door between big business and public policy-making. 'Let me say this: As one of the only members of the president's Cabinet to come from business, it's good when you mix both government and business in your careers,' he said. 'It makes better public servants, and <strong>it makes better businesspeople</strong>.'</em><br /><br />It has certainly been good for Daley's career. His effort to twist arms in Brazil failed, but drug companies apparently took note. It was after leaving the Clinton administration that <em>Daley was hired by Abbott, where he raked in more than $1.3 million as a board member from 2004 to 2010, according to Securities and Exchange Commission filings</em>. Over the same period, he served on Boeing's board and was a top lobbyist for JPMorgan Chase.</blockquote><strong>Abbot's Dispute, Supported by the US Government, with Thailand About Kaletra</strong><br /><br />Soon Abbot was involved in a similar dispute.<br /><br />The background is:<br /><blockquote>[HIV drug] Kaletra costs more than $10,000 a year for a patient living in the United States, a price that is reflective of the highly protective American patent system. The U.S. is the only country that grants long-term monopolies on life-saving medicine without regulating the price of monopolized drugs. </blockquote><br />In addition<br /><blockquote>In countries that negotiate with companies on drug prices, the cost of medicine is often far lower. But though American pharmaceutical companies do supply drugs to developing nations at rates below those charged in the U.S., those discounted prices are still too high for many poor or hard-hit nations to afford.<br /><br />'In many developing countries, it's a death sentence,'said Nobel Prize-winning economist Joseph Stiglitz, referring to high drug prices.</blockquote><br />The core of the dispute:<br /><blockquote>In 2007 negotiations with the Thai government, Abbott Labs wouldn't budge below a price of $2,200 per person, per year for Kaletra. At the time, Thailand was classified as a 'lower-middle income' country by the World Bank -- the second lowest of four categories. With more than a half-million citizens living with HIV, Thailand considered that price beyond its budgetary capacity. So it declared a public health emergency and began importing a vastly cheaper generic version of Kaletra from India.<br /><br />And then, by international trade standards, all hell broke loose.<br /><br /><em>'When countries declare the health emergency, they face a huge backlash, particularly from the USTR [US Trade Representative] and the drug companies</em>,'said Tim Boyd, policy research coordinator with the AIDS Healthcare Foundation, a U.S. nonprofit dedicated to eradicating HIV.<br /><br /><em>Abbott responded by withdrawing pending applications to register drugs in Thailand, cutting its citizens off from other medications</em>. The move was unprecedented: Never before had an American drug company attempted to punish a country during drug price negotiations by cutting off the supply of other medicines.<br /><br />At the time, Brook Baker, a law professor at Northeastern University and a member of the board at the Health Global Access Project, called the move a 'ruly appalling example of corporate hubris'that 'irectly violates any conceivable norm of corporate responsibility.'</blockquote><br />At that time, the US government went along with Abbott:<br /><blockquote><em>As for the USTR, it seemed to support the company, placing Thailand on its 'Priority Watch List 'of nations that do not respect U.S. intellectual property rights</em>. 'In late 2006 and early 2007, there were further indications of a weakening of respect for patents, as the Thai Government announced decisions to issue compulsory licenses for several patented pharmaceutical products,' wrote the agency in its report announcing that Thailand had been added to the priority list.<br /><br />Although the USTR blacklist is little known domestically, it is a major economic indicator abroad and can affect a country's ability to import everything from software to DVDs to automobiles. Thailand's new status as an international rogue sparked concern among the country's economic policy officials and corporate leaders. And <em>35 members of Congress wrote to the USTR to protest Thailand's blacklisting, noting, 'The move is being interpreted in the public health community as a warning and a threat to other countries</em>.'</blockquote><br />Note that:<br /><blockquote>Abbott Labs declined to detail Daley's involvement in the Thailand episode, but as a member of the board, he should have been well informed about the strategy.</blockquote><br /><strong>US Government Pressure to Protect Drug Companies' Patents</strong><br /><br />William Daley has transitioned the revolving door again in the other direction:<br /><blockquote>As commerce secretary under Bill Clinton, William Daley worked with U.S. pharmaceutical giants to curb the use of cheaper generic drugs abroad. As a board member for Abbott Laboratories, he had a front-row seat on a brutal clash between a major drug company and a developing nation over access to life-saving medication. And <em>as White House chief of staff</em> today, Daley has President Barack Obama’s ear.</blockquote><br />In his new government job,<br /><blockquote>Add up Daley’s power and experience, and experts who follow public health policy <em>suspect his influence in the U.S. stance in negotiations over a major international trade deal -</em>- a stance with hugely profitable implications for giant American drugmakers.<br /><br />The United States is in talks with eight other Pacific nations to establish the Trans-Pacific Partnership, which the administration hopes will serve as a template for other trade pacts. <em>According to leaked documents from the negotiations, the Obama administration is using the deal to push hard-line intellectual property standards that could drive up medicine prices overseas, boosting the bottom line for U.S. drugmakers like Abbott Labs at the expense of public health</em>.<br /><br />Public health advocates are worried. <em>'If the point of the trade policy is not just to protect the interests of our companies, but the public health benefit and burden of research, then [the United States] is doing this all wrong,'</em> said James Love, director of Knowledge Ecology International, a nonprofit that focuses on how patent laws affect the poor.<br /><br />A White House spokesman said only that the negotiations -- which are being conducted behind closed doors with input from corporate lobbyists -- are being 'ably led' by the United States Trade Representative (USTR) and that Daley is 'not directing or participating in those negotiations.'</blockquote><br />Note that the USTR leadership includes other travelers through the revolving door:<br /><blockquote>Daley's personal history with drug access is not unique among top-tier government officials with trade responsibilities. McCoy lobbied on intellectual property issues at the influential D.C. law firm Covington & Burling before moving to the USTR in 2006. His top deputy, Kira Alvarez, was a lobbyist for drugmaker Eli Lilly before joining the agency.</blockquote><br /><strong>Summary</strong><br /><br />Per Zach Carter, the author of the Huffington Post article:<br /><blockquote>Daley, who previously lobbied for JPMorgan Chase, is a prominent examplar of <em>a bipartisan phenomenon in American government in which corporate insiders, and the profit-driven perspective of the boardroom, have come to dominate formal and informal debate over public policy.</em></blockquote><br />Another way to describe this is corporatism. The corporatism in this case is partly enabled by the continuation of the revolving door, the free transit of individuals from leadership positions in top corporations and in government. The government and big corporations have teamed up to produce solutions that may seem beneficial to the people making the decisions, and may benefit their long term career strategies, but may not be good for the US public, for patients' and the public's health in this case, and for the ability of the country to conduct foreign policy based on some ethical and moral principles.<br /><br />By the way, note that combined with other cases we have discussed, this shows that the revolving door pheonomenon, and other aspects corporatism affecting health care are not linked with any one political party.<br /><br />So,<br /><blockquote>There is no evidence that any of these players, including Daley, have done anything illegal or explicitly corrupt during the Trans-Pacific trade negotiations. But public health doesn’t seem to be their first priority.<br /><br /><em>'The real concern is that the U.S. is using its international power and prestige to force poor countries to enforce our intellectual property standards, and the result of that is that access to medicine is denied and people are dying,'</em> said Joseph Stiglitz.</blockquote>Until we dispel the fog of corporatism that has spread over the government that was once supposed to be of the people, by the people, and for the people, expect no real health care reform, and expect continuing rising costs, declining access, and worsening patient care. Obviously, true health care reform would start with the government and its officials putting patients' and the public's health first, way ahead of the financial comfort of corporate leaders.<br />xx

Enabled by the Revolving Door, Corporatistic US Trade Policy Seems to Put US Drug Companies Ahead of Global Public Health

We just discussed how leaders of big health care corporations with histories of ethical and legal missteps want to export our supposedly "wonderful technology, wonderful approaches" to the rest of the…

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Abbott Laboratories Settles, Again

In 2007, we <a href="http://hcrenewal.blogspot.com/2007/01/suits-win-again-how-big-bad-greedy.html">discussed</a> a scheme that Abbott Laboratories seemed to be using to boost the price of Kaletra, a combination of two protease inhibitors it markets to treat HIV and AIDS. Kaletra is a combination of rinoavir (Norvir, sold by Abbott as a single drug), and leponavir. Kaletra was apparently losing sales to the combination of Norvir with Reyataz (atazanavir), made by Bristol-Myers-Squibb. So Abbott increased the price of Norvir by 400%.<br /><br />As <a href="http://www.businessweek.com/news/2011-04-15/abbott-agrees-to-pay-52-million-to-resolve-aids-drug-case.html">reported</a> so far only by Bloomberg, Abbott just settled a class-action lawsuit alleging that its price hike for Norvir was anti-competitive.<br /><blockquote>Abbott Laboratories <em>agreed to pay $52 million to resolve claims by direct drug buyers that it tried to harm competition when it quadrupled the price of its HIV medicine Norvir in 2003</em>.<br /><br />The settlement, which is subject to court approval, would resolve a class-action lawsuit filed on behalf of Abbott customers that purchased Norvir, a boosting agent for other HIV drugs, and a second medicine Kaletra, which includes Norvir, according to an April 8 filing in federal court in Oakland, California. Abbott denied wrongdoing, according to the accord.<br /><br /><em>Abbott increased the wholesale price of a Norvir capsule containing 100 milligrams to $8.57 from $1.71</em>, the Abbott Park, Illinois-based company said in court documents. GlaxoSmithKline Plc and drug retailers and distributors sued, claiming other drugmakers that used Norvir in their medicines couldn’t compete on price with Kaletra, and the price increase penalized drug customers that wanted to buy medicines that competed with Kaletra.</blockquote><br />Note that, as we discussed <a href="http://hcrenewal.blogspot.com/2010/12/abbott-laboratories-and-pig-roasts.html">here</a>, this is the third significant settlement by Abbott in the last six months. In December, 2010, the company settled claims that it defrauded Medicare and Medicaid for $421 million, and claims that a subsidiary paid kickbacks to doctors to sell its products for $41 million. For other discussion of Abbott's recent misbehavior, look <a href="http://hcrenewal.blogspot.com/search/label/Abbott">here</a>. <br /><br />So while we were discussing other issues, the parade of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> continued. It is beginning to seem like every major pharmaceutical/ device/ and biotechnology company has settled or pleaded guilty to multiple allegations of significantly bad behavior in the last few years. This suggests how bad the leadership of most of these companies has become.<br /><br />Nonetheless, in the current case, like nearly all others, the penalties were paid by the companies themselves, not the people who authorized, directed or implemented the bad behavior. We and others have commented repeatedly that the resulting relative impunity of leaders of health care organizations will hardly deter future bad behavior. (Note that this impunity seems similar to that employed by leaders of finance after the global financial collapse/ Great Recession.) Not only do the leaders not pay penalties, but they continue to become hugely rich at the expense of their companies. For example, Abbott CEO Miles D White enjoyed total compensation of $25,564,283 in 2010, down only slightly from the 26,213,996 he received in 2009, according to the 2011 Abbott proxy statement (available <a href="http://www.abbottinvestor.com/phoenix.zhtml?c=94004&p=irol-sec">here</a>). Threats by government officials to start to employ the "Responsible Corporate Officer Doctrine," (available since 1943) to hold individuals accountable for health care organizations' misdeeds so far appear to be empty (see <a href="http://hcrenewal.blogspot.com/2010/06/attempt-to-hold-health-care-leaders.html">this post</a>). <br /><br />So to repeat Cassandra-like,  we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Abbott Laboratories Settles, Again

In 2007, we discussed a scheme that Abbott Laboratories seemed to be using to boost the price of Kaletra, a combination of two protease inhibitors it markets to treat HIV and AIDS. Kaletra is a combin…

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On the Interconnectedness of the Leadership of Health Care Organizations: the Abbott Laboratories Case

We just <a href="http://hcrenewal.blogspot.com/2010/12/abbott-laboratories-and-pig-roasts.html">posted</a> about some misbehavior by Abbott Laboratories: a physician Abbott paid as a "key opinion leader" to help market its cardiac stents was accused of inserting stents in many patients who had no need for them; Abbott settled for over $400 million a lawsuit alleging the company defrauded Medicare and Medicaid; and it settled an unrelated suit for over $40 million alleging the company paid kickbacks to physicians for prescribing its drugs.  I thus thought it would be interesting to see how well paid are the corporate leaders who presided over these activities, and who are the board members who were supposed to be providing stewardship of this company.<br /><br />According to the company's <a href="http://www.abbottinvestor.com/phoenix.zhtml?c=94004&p=irol-sec">2010 proxy statement</a>, the five highest-paid executives were:<br /><br />Miles D White, Chairman of the Board and CEO - <em><strong>$26,213,966</strong></em> total compensation<br />Thomans C Freyman, Executive Vice President, Finance, and CFO - <em><strong>$9,561,227</strong></em><br />Olivier Bohuon, Executive Vice President, Abbott Pharmaceutica Group - <em><strong>$5,232,589</strong></em><br />Laura J Schumacher, Executive Vice President, General Counsel, and Secretary - <em><strong>$5,724,060</strong></em><br />James V Mazzo, Senior Vice President, Abbott Medical Optics - <em><strong>$10,394,085</strong></em><br /><br />Now, let us turn to the company's board of directors.  Note that I looked for board members who also held leadership positions in other health care organizations whose interests may not be aligned with the corporation.  I also looked for those who held leadership positions in the discredited financial services corporation who helped usher in the global financial collapse.  (I  used similar methodolgy <a href="http://hcrenewal.blogspot.com/2010/12/boards-who-ought-to-be-accountable-for.html">here</a>.)<br /><br />Abbott currently has 12 board members, including<br /><ul><li>Robert J Alpert MD - Ensign Professor of Medicine, Professor of Internal Medicine, and Dean of the <em>Yale School of Medicine</em>.  He also "serves as a Director on the Board of <em>Yale-New Haven Hospital</em>."</li><li>Roxanne S Austin - <u>President and Chief Executive Officer</u>, Move Networks Inc, and President, Austin Investment Advisors</li><li>William M Daley -"<u>Vice Chairman and Head of the Office of Corporate Responsibility and Chairman of the Midwest,</u> <em>JP Morgan Chase & Co</em>."  He is the board of directors of  "<em>Loyola University of Chicago</em> and <em>Northwestern University</em>."</li><li>W James Farrell - Retired <u>Chairman and Chief Executive Officer</u> of Illinois Tool Works Inc</li><li>H Laurence Fuller - Retired <u>Co-Chairman</u> of BP Amoco, former <u>chief executive officer</u> of Amoco</li><li>William A Osborne - Retired <u>Chairman and Chief Executive Officer</u> of Northern Trust Corporation and the Northern Trust Company.  He is "Chairman of the Board of Trustees of <em>Northwestern University</em>."</li><li>Rt Honorable Lord Owen - <u>Chairman</u> of Europe Steel Ltd</li><li>Roy S Roberts - <u>Managing Director</u>, Reliant Equity Investors.</li><li>Samuel C Scott III - Retired <u>Chairman,  President and Chief Executive Officer</u> of Corn Products International.  He "currently serves on the board of directors of <em>Bank of New York Mellon Corporation</em>."  He also is on the board of "<em>Northwestern Healthcare</em>."</li><li>William D Smithburg - Retired <u>Chairman, President and Chief Executive Officer</u> of Quaker Oats Company.  He is on the "board of trustees of <em>Northwestern University</em>."</li><li>Glenn F Tilton - <u>Chairman, President and Chief Executive Officer</u> of UAL Corporation and United Airlines Inc.  He is on the "board of directors of <em>Northwestern Memorial Hospital</em>."</li><li>Miles D White - <u>Chairman of the Board and Chief Executive Officer</u>, Abbott Laboratories, "is on the board of trustees of "<em>Northwestern University</em>."  </li></ul><br />Of Abbott's 12 directors, seven have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (Northwestern University, its medical school and teaching hospitals, in particular, are stewarded by six Abbott directors). <br /><br />Two have leadership positions in  financial services corporations that were implicated in the global financial collapse.  (Note that JP Morgan Chase staffers helped to invent some of the kinds of financial derivatives widely viewed as causative of the collapse, but the firm itself did not fail. [See Tett G. <a href="http://books.simonandschuster.com/Fool%27s-Gold/Gillian-Tett/9781439100134"><em>Fool's Gold</em></a>.]  Through TARP, the US government took preferred equity stakes in both JP Morgan Chase and Bank of New York Mellon.  [See Ritholtz B.  <a href="http://bailoutnation.net/"><em>Bailout Nation</em></a>. p. 222])  <br /><br />Two more are leaders of financial services firms.  All but one are current or former high-level hired executives (seven are or were CEOs), or chairpersons or co-chair persons of corporations (the one exception is a dean of a medical school.)  <br /><br />Note how similar our findings were here to those found after our perusal of the boards of Genzyme and Medtronic (see post <a href="http://hcrenewal.blogspot.com/2010/12/boards-who-ought-to-be-accountable-for.html">here</a>).   So we find again that executives of health care organizations who preside over various questionable activities not only rarely pay any penalty, but usually become extremely wealthy in the process.<br /><br />We also find how interconnected is the leadership of health care.  The boards and leadership of drug and device companies overlap with the boards and leadership of medical schools, teaching hospitals, and their parent universities.  <br /><br />Yet, as we have noted before, there are obvious conflicts.  In particular, teaching hospitals and medical schools are supposed to provide unbiased teaching, including about issues relevant to drug and device corporations, such as choice of diagnostic strategies and treatments, and relevant health policy.  They are supposed to perform unbiased research, including research that evaluates drugs and devices.  They are supposed to provide the best possible patient care at a reasonable cost, which relates to choices of and prices paid for drugs and devices.  <br /><br />On the other hand, drug and device companies are supposed to put making a profit for their share-holders first.  The directors of such companies, like the directors of all for-profit corporations, are supposed to show an unyielding loyalty to their companies' financial health and profits, although contemporary corporate directors have been accused of acting more like cronies of the hired management.  (See this <a href="http://hcrenewal.blogspot.com/2010/01/one-small-step-towards-reducing.html">post</a>.)<br /><br />Also, we note that the vast majority of people chosen as stewards of a given health care organization are current or former top hired executives of other corporations.  The board members, that is, stewards of health care organizations, to whom the top hired executives reports, are usually not people with large ownership interests in the organizations (in the case of public, for-profit corporations.)  For the most part, they also do not seem to be people with clearly demonstrated devotion to the values of health care, in particular, putting the care of individual patients first, and advancing health care teaching and research.  Instead, they seem to be people with the perspective of hired executives, who may be prone to putting the interests of hired executives, rather than patients, doctors, teachers, scientists or the public at large, first. <br /><br />So here is another admittedly limited case study of the board of directors, that is, the ostensible stewards of a health care corporation, selected this time because of its history of ethical missteps, which showed  - that the leadership of health care organizations is incredibly<strong><em> interrelated, interlocked, incestuous</em></strong>.  Again, it appears that top leaders of various health care organizations may be more familiar with and identify more with each other, and with other hired executives and managers, than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients.<br /><br />So to repeat-<br /><br />I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships. A few bloggers cannot do it all. Obviously, the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a> mitigates against medical and health care academics looking into their own leaders. However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience.<br /><br />Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. <br /><br />If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

On the Interconnectedness of the Leadership of Health Care Organizations: the Abbott Laboratories Case

We just posted about some misbehavior by Abbott Laboratories: a physician Abbott paid as a "key opinion leader" to help market its cardiac stents was accused of inserting stents in many patients who h…

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Abbott Laboratories and Pig Roasts, the "Philly Mob," and Legal Settlements

Help.... The health care muck is now being raked so fast I can't keep up.<br /><br /><strong>Abbott Laboratories, Prolific Stenters, Pig Barbecues, Etc</strong><br /><br />In the last week, multiple media outlets picked up the story of the cozy relationship between Abbott Laboratories and a doctor now accused of implanting too many cardiac stents for too much money.  The essentials were, as summarized from <a href="http://www.nytimes.com/2010/12/06/health/06stent.html">New York Times</a>, <a href="http://online.wsj.com/article/SB10001424052748704493004576001582557244592.html">Wall Street Journal</a>, and <a href="http://www.baltimoresun.com/health/bs-bz-hancock-stents-abbott-20101206,0,5226901.column">Baltimore Sun</a> articles -<br /><br />Dr Mark Midei was a prolific user of cardiac stents for patient with coronary artery disease (blocked cardiac arteries)<br /><blockquote>In the June deposition, Dr. Midei estimated that in 2005 — before research revealed that many stents were unnecessary — he performed about 800 stent procedures. Instead of dropping in subsequent years, however, the number of stents Dr. Midei inserted rose to as many as 1,200 annually, he estimated. In a 2007 internal document, Abbott Laboratories <em>ranked Dr. Midei’s use of stents behind only five other cardiologists in the Northeast, including those at hospitals four and five times St. Joseph’s size</em>. [NYT] </blockquote><br />Therefore, hospitals sought him out<br /><blockquote>He had been one of the <em>most sought-after clinicians in his region</em>. Trained at Johns Hopkins University, he was a co-founder of MidAtlantic, a practice with dozens of cardiologists that controlled much of the cardiac business in Baltimore’s private hospitals. Dr. Midei was one of the practice’s stars. When MidAtlantic negotiated a $25 million merger with Union Hospital in 2007, the deal was contingent on his continued employment. <br /><br />St. Joseph was so concerned about losing Dr. Midei’s business that <em>the hospital offered a $1.2 million salary</em> if he would leave MidAtlantic and join the hospital’s staff. [NYT]</blockquote><br />However, it appeared he performed the procedures on patients who would not benefit from them.<br /><blockquote>The hospital engaged a panel of experts who reviewed 1,878 cases from January 2007 to May 2009 and found that <em>585 patients might have received unnecessary stents</em>. <br /><br />When asked to review the cases himself, Dr. Midei found far less blockage than he had initially, according to the Maryland Board of Physicians. The hospital <em>suspended his privileges and eventually sent letters to all 585 patients. Hundreds of lawsuits against Dr. Midei and St. Joseph followed,</em> including from patients treated well before January 2007. [NYT]</blockquote><br />Nonetheless, Abbott Laboratories had been rewarding him for frequent use of their products<br /><blockquote>Word quickly reached top executives at Abbott Laboratories that a Baltimore cardiologist, Dr. Mark Midei, had inserted 30 of the company’s cardiac stents in a single day in August 2008, 'which is the biggest day I remember hearing about,' an executive wrote in a celebratory e-mail. <br /><br />Two days later, an Abbott sales representative <em>spent $2,159 to buy a whole, slow-smoked pig, peach cobbler and other fixings for a barbecue dinner at Dr. Midei’s home</em>, according to a report being released Monday by the Senate. The dinner was just a small part of the <em>millions in salary and perks showered on Dr. Midei for putting more stents in more patients than almost any other cardiologist in Baltimore.</em> [NYT]</blockquote><br />When his over-use was alleged, Abbott continued to use him as a key opinion leader.<br /><blockquote>Abbott <em>responded to the controversy by hiring Dr. Midei as a consultant. 'It’s the right thing to do because he helped us so many times over the years,'</em> an Abbott executive wrote in a January e-mail cited in the Senate report. [NYT]</blockquote><br />Also,<br /><blockquote>After St. Joseph barred Dr. Midei from practicing there in May 2009, Abbott arranged consultant work for him, according to emails released by the Senate committee.<br /><br />In December 2009, an Abbott senior vice president wrote in an email that he was 'very open' to having Dr. Midei do consulting 'to see how it might go—either <em>getting the word out in China/Japan, medical or safety work.'</em><br /><br />The following month, the Sun reported on the allegations against Dr. Midei and St. Joseph. According to the Senate report, an Abbott executive subsequently said in an internal company email, 'We recommend that we not use Dr. Midei in the U.S. at this time (the press is just too hot).'<br /><br />Charles Simonton, the medical director of Abbott's vascular division, said in another email cited by the report that Dr. Midei should 'clearly avoid' the Baltimore area, but Dr. Simonton encouraged colleagues to 'please <em>find key physicians or cath labs you'd like him to get in front of with our data.' Abbott wanted to hire Dr. Midei 'because he helped us so many times over the years,'</em> yet another Abbott executive said in an email. <br /><br />Dr. Simonton didn't return phone calls seeking comment. <br /><br />Abbott sent Dr. Midei to Japan to promote the Xience stent, but bad publicity caused that trip to be cut short in late January, the report says. In total, Abbott paid the doctor $30,623 to help market the Xience, the Senate investigators found. [WSJ]</blockquote><br />When the relationship was criticized, Abbott executives responded with threats, or were they jokes?<br /><blockquote>I called David Pacitti, vice president of global marketing for Abbott Laboratories' cardiac-plumbing division, to ask why he seems to want goons to beat me up in the newspaper parking lot.<br /><br />'Don't you have connections in Baltimore?????' Pacitti e-mailed a subordinate regarding a January column I wrote on heart-artery stents.<em><strong> 'Someone needs to take this writer outside and kick his ass! Do I need to send in the Philly mob?'</strong></em><br /><br />Pacitti and other Abbott execs apparently don't care for suggestions that their expensive vascular devices often do patients little good and that a star Baltimore doctor took their encouragement to be 'truly outstanding' a bit too much to heart. [Sun]</blockquote>Furthermore,<br /><blockquote>Pacitti didn't return my phone calls, but an Abbott flack got in touch on Monday.<br /><br />'We sincerely apologize if this caused you any concern or distress,' the company spokesman said. Pacitti's comment, he said, 'wasn't meant to be taken seriously.'<br /><br />Yeah, that's what King Henry II said after they whacked Thomas Becket. [Sun]</blockquote>So here is a particularly vivid case showing how big health care corporations make <a href="http://hcrenewal.blogspot.com/search/label/key%20opinion%20leaders">"key opinion leaders"</a> out of doctors apparently just because they use or prescribe a lot of the company's products, regardless of the doctors' expertise, or ethics.  As we noted before, "key opinion leaders" are seen by corporate marketing executives as fellow travelers or useful idiots (see posts <a href="http://hcrenewal.blogspot.com/2010/10/not-best-and-brightest-drug-marketers.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2008/06/key-opinion-leaders-were-sales-people.html">here</a>). It again appears is that all that health care corporate marketers care about is selling product. Whether their pitches are honest or ethical is besides the point. Those who get in their way are treated with contempt, and maybe, just maybe are threatened with violence<br /><br />The physicians who are flattered at being called "key opinion leaders," or "thought leaders" have got to realize that the marketers think they are chumps. If they think they are providing honest information, or education, they are deluded.<br /><br />This case has already been widely discussed in the blogsphere.  See, in particular, posts by Dr Howard Brody <a href="http://brodyhooked.blogspot.com/2010/12/embarrassing-light-on-unnecessary.html">on the Hooked: Ethics, Medicine and Pharma blog</a>, and Larry Husten <a href="http://cardiobrief.org/2010/12/06/senate-report-on-mark-midei-and-abbott-30-stents-in-1-day-pig-roasts-and-more/">on the CardioBrief blog</a>. <br /><br />But if that were not enough, on the heels of this story came several more about Abbott Laboratories<br /><br /><strong>Abbott Laboratories Settles, Twice</strong><br /><br />As <a href="http://www.latimes.com/news/nationworld/nation/wire/sc-dc-1208-drug-promotions-20101207,0,1770487.story">reported</a> by the Los Angeles Times, while Abbott was trying to hide Dr Midei overseas, it was also busily negotiating settlements of completely separate charges:<br /><blockquote><em>Abbott Laboratories and two other pharmaceutical firms agreed to pay more than $421 million to settle claims of defrauding Medicare and Medicaid</em> in the latest in a string of nine- and ten-figure health care fraud settlements announced by the Justice Department.<br /><br /><em>The drug companies charged one set of prices to doctors and pharmacies but reported another set of inflated figures that were used as benchmarks by government insurers reimbursing health care providers</em>. The spread, or difference, amounted to kickbacks to the companies' customers, according to Tony West, assistant attorney general for the Justice Department's civil division, who announced the settlements on Tuesday.</blockquote><br />In particular,<br /><blockquote><em>Abbott, of North Chicago, Ill, agreed to pay $126.5 million to settle accusations that it charged the government inflated prices for products ranging from sterile water and saline solution to vancomycin, an antibiotic.</em><br /><br />An Abbott spokesman said the company believes 'that we have complied with all laws and regulations' and settled the case to avoid 'the uncertainty associated with continued litigation.'</blockquote><br />At least he did not threaten the Department of Justice officials with an attack by the "Philly mob."<br /><br />But that is not all. The Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052748703296604576005674095414668.html">reported</a> that Abbott had to make a second, unrelated settlement:<br /><blockquote>Separately on Tuesday, the Justice Department announced <em>an unrelated $41 million settlement with Abbott subsidiary Kos Pharmaceuticals Inc. on charges that it paid kickbacks to doctors and other health professionals to encourage them to prescribe or recommend the cholesterol drugs Advicor and Niaspan.</em><br /><br />As part of that settlement, <em>Kos entered into an agreement that will allow it to avoid prosecution on criminal charges</em>. 'These actions occurred prior to Abbott's acquisition of Kos in 2006 and Abbott has not been accused of any wrongdoing,' an Abbott spokesman said.</blockquote><br />However, Abbott chose to acquire a company that allegedly chose to pay kickbacks of this sort. The apparent resemblance to Abbott's payments to Dr Midei in the case above are striking.<br /><br />By the way, the Los Angeles Times article also noted previous black marks on Abbott's record:<br /><blockquote><em>Abbott also paid $614 million in civil and criminal penalties in 2003 to end a federal investigation of the company's marketing practices and Medicaid and Medicare reimbursements.</em><br /><br /><em>In 2001, TAP Pharmaceutical Products Inc., of Lake Forest, Ill., an Abbott joint venture, agreed to pay $875 million and plead guilty to a criminal charge of conspiring with doctors to overbill Medicare.</em><br /><br />At the time, the TAP penalty was the largest health care fraud settlement in U.S. history, but it has since been eclipsed by at least two others.</blockquote><br />So we once again illustrate how punishing wrong doing by fining large corporations, when the fines are just seen as a cost of doing business, in the absence ofany negative consequences on the real people who authorized, directed, or implemented the bad behavior fails to deter future bad behavior.<br /><br />This remarkable confluence of cases suggest how rotten are the ethical foundations of even large and previously respected health care organizations. I imagine, though, that as long as these corporations richly reward their executives regardless of the ethics of their actions, and regardless of the long term effects on the organizations' reputations, and as long as their are no externally imposed negative consequences on these leaders, the practices will continue, and will get worse.<br /><br />Health care costs keep rising, access keeps declining, quality gets worse. We moan and wring our hands, but as long as we allow the rot to worsen, and the muck to grow, expect these trends to continue until the whole smelly mess collapses of its own weight (with all those rich executives escaping to their mansions.)<br /><br />If we really want high quality accessible, reasonably priced health care, we need true health care reform that reduces concentration of power in large organizations, and makes health care organizations' leadership accountable, ethical, and transparent. That will not be easy.<br /><br />ADDENDUM (8 December, 2010) - See also comments by Maggie Mahar <a href="http://www.healthbeatblog.com/2010/12/stent-scandal-a-shocking-story-but-not-news-.html#more">on the HealthBeat blog</a>, David Williams <a href="http://www.healthbusinessblog.com/?p=4072">on the Health Business Blog</a>, and Paul Thacker <a href="http://pogoblog.typepad.com/pogo/2010/12/digging-for-gold-a-nugget-from-senate-report-on-baltimore-cardiologist.html#more">on the Project on Government Oversight blog</a>.

Abbott Laboratories and Pig Roasts, the "Philly Mob," and Legal Settlements

Help.... The health care muck is now being raked so fast I can't keep up.Abbott Laboratories, Prolific Stenters, Pig Barbecues, EtcIn the last week, multiple media outlets picked up the story of the c…

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Abbott Laboratories Settles

Another day, another settlement, this time,as reported <a href="http://www.reuters.com/article/idUSN0720003720100107">by Reuters</a>:<br /><blockquote>New York Attorney General Andrew Cuomo said Abbott Laboratories (ABT.N) and French drugmaker Fournier have agreed to pay $22.5 million to settle a multistate lawsuit that accused them of conspiring to block generic forms of their TriCor treatment for triglycerides.<br /><br />The drugmakers will pay the money to New York, 22 other states and the District of Columbia, Cuomo said in a news release on Thursday. About $4.5 million goes to New York.<br /><br />The lawsuit, filed in Delaware federal court in March 2008, alleged Abbott and Fournier schemed to block generics when competitors started to develop versions of TriCor, used to treat a type of blood fat that increases the risk of heart disease.<br /><br />Cuomo said Abbott and Fournier made minor changes to TriCor that provided no clinical benefit, but were meant to prevent pharmacists from dispensing less-expensive generic versions of TriCor.<br /><br />The states alleged the drugmakers also thwarted generic competition by filing baseless patent-infringement suits against generic drugmakers, thereby securing a monopoly for blockbuster TriCor.<br /></blockquote>The ongoing march of legal settlements of charges of various kinds of wrongdoing by diverse health care organizations is a reminder of the pervasiveness of bad conduct by such organizations. We have commented repeatedly (see some posts<a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements"> here</a>) such settlements, including the "corporate integrity agreements" now frequently attached to them, seem to have done little to deter bad behavior. Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts will suffer any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior.<br /><br />While each new entry in the ongoing march of settlements merits a few lines in the business media,separately, or in the aggregate these settlements rarely get noticed by health services or health policy research, or receive attention in health policy circles.  Nor do the contrasts between the conduct revealed by such settlements and the rosy public relations of the settling companies attract much attention.  For example, Abbott Laboratories proclaims <a href="http://www.abbott.com/global/url/content/en_US/10.10:10/general_content/General_Content_00003.htm">its "promise</a>,"<br /><blockquote>We are here for the people we serve in their pursuit of healthy lives. This has been the way of Abbott for more than a century - passionately and thoughtfully translating science into lasting contributions to health.<br /><br />Our products encircle life, from newborns to aging adults, from nutrition and diagnostics through medical care and pharmaceutical therapy.<br /><br /><em>Caring is central to the work we do</em> and defines our responsibility to those we serve:<br /><br />We advance leading-edge science and technologies that hold the potential for significant improvements to health and to the practice of health care.<br /><br />We value our diversity - that of our products, technologies, markets and people - and believe that diverse perspectives combined with shared goals inspire new ideas and better ways of addressing changing health needs.<br /><br />We focus on exceptional performance, a hallmark of Abbott people - worldwide - demanding of ourselves and each other because our work impacts people's lives.<br /><br /><em>We strive to <strong>earn the trust </strong>of those we serve by committing to the highest standards of quality, excellence in personal relationships, and behavior characterized by <strong>honesty, fairness and integrity.</strong></em><br /><br />We sustain success - for our business and the people we serve - by staying true to key tenets upon which our company was founded over a century ago: innovative care and a desire to make a meaningful difference in all that we do.<br /><br />The promise of our company is in the promise that our work holds for health and life.<br /></blockquote>The settlement of allegations about a scheme to maintain a monopoly on a profitable drug raise doubts about the company's committment to "earn the trust of those we serve" through "behavior characterized by honesty, fairness and integrity."  Whether the disconnect between this settlement and the "Abbott Promise" will affect the stratospheric earnings of Abbott executives (for example, in 2008, the total compensation of Abbott CEO Miles D White was $28,335,494 per the company's <a href="http://www.abbottinvestor.com/phoenix.zhtml?c=94004&p=IROL-secToc&TOC=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvY29udGVudHMueG1sP2lwYWdlPTYyMDg3NjQmcmVwbz10ZW5r&ListAll=1">2009 proxy statement</a>) is a question that could be put to the company's Board of Directors.  Perhaps our readers at Yale University might want to ask Dr Robert J Alpern, Dean of the Yale  School of Medicine, who just joined the Abbott <a href="http://www.abbott.com/global/url/content/en_US/70.45.10:10/general_content/General_Content_00083.htm">Board of Directors</a> in 2008 about that.

Abbott Laboratories Settles

Another day, another settlement, this time,as reported by Reuters:New York Attorney General Andrew Cuomo said Abbott Laboratories (ABT.N) and French drugmaker Fournier have agreed to pay $22.5 million…

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An Original Excuse

The Associated Press just published <a href="http://www.google.com/hostednews/ap/article/ALeqM5iqRyDDIAJ4RAA-ImdqfMw4q86TcQD98UHT7G0">a story </a>about another company which apparently failed to report adverse events associated with its product:<br /><blockquote><br />Complaints about a contact lens solution linked to a 2007 outbreak of eye infections that blinded several people went unreported by the manufacturer for more than a year, government documents show.<br /><br />The documents show <em>Advanced Medical Optics received complaints about the solution more than a year before it was recalled, and failed to promptly report nine complaints as required by law</em>.<br /><br />The company <em>pulled its Complete MoisturePlus off the market in May 2007 after the Centers for Disease Control and Prevention linked the fluid to dozens of cases of a serious infection called Acanthamoeba keratitis</em>.<br /><br />Lawyers for customers suing AMO obtained the documents, which stem from a previously undisclosed inspection by the Food and Drug Administration, through a Freedom of Information Act request. The papers were obtained by The Associated Press.<br /><br />Of roughly 70 plaintiffs suing AMO and represented by the law firm Schmidt LLP, three had eyes removed, three others suffered blindness and about two dozen had at least one corneal transplant. The others suffered permanent vision damage.<br /><br /><em>Beginning in February 2006 and continuing through November, AMO received a series of complaints about users who were diagnosed with the Acanthamoeba infections. But those reports were not disclosed until June 2007</em>, when FDA inspectors came to investigate the company's headquarters following its product recall.<br /></blockquote><br /><br />What is most striking is the company's rationale for not reporting:<br /><blockquote><br />When questioned by FDA inspectors, company officials said <em><strong>they were not obligated to report the complaints because the product's labeling does not say it protects against Acanthamoeba</strong></em>, according to the FDA documents.<br /><br />Kelly Morrison, a spokeswoman for Abbott Laboratories, which acquired AMO in February, said the company 'believed it was reporting customer complaints in compliance with FDA regulations.' She declined to elaborate. Abbott Laboratories is based in North Chicago.<br /></blockquote><br /><br />That is an original excuse. Did the "company officials" really mean to imply that in the absence of a promise to protect against a specific microbiologic organism, patients and physicians should assume that the product could be contaminated with that organism? This completely ignores the company's basic responsibility to supply a product that is uncontaminated with any harmful organisms, and unadulterated with any harmful substances, and hence to be vigilant for any events that suggest that the product could have been contaminated or adulterated.<br /><br />The "company officials'" bizarre excuse suggest a fundamental lack of comprehension of their responsibilities for the health and safety of the patients using their products. This is a particularly weird example of how little many leaders of health care organizations understand about health care.

An Original Excuse

The Associated Press just published a story about another company which apparently failed to report adverse events associated with its product:Complaints about a contact lens solution linked to a 2007…

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