healthy4u: Celexa

Logical Fallacies to Defend CEOs from Responsibility for their Companies' Bad Actions

There is now quite a kerfuffle over the US Department of Health and Human Service's threat to to stop doing business with the CEO of Forest Laboratories.  As we noted <a href="http://hcrenewal.blogspot.com/2011/04/will-pharmaceutical-ceo-finally-be-held.html">here</a>, his company pleaded guilty to obstruction of justice and misbranding, and agreed to pay a $313 million fine.  The major allegations by the government were that the company marketed antidepressants to children when they had only previously been approved for adults. Their marketing tactics allegedly included suppressing negative studies, and paying physicians to prescribe the drugs. The kerfuffle involves a number of ostensible authorities and pundits defending the CEO, and challenging the government's attempts to hold him responsible for his company's actions.  The kerfuffle also provides some splendid examples of logical fallacies deployed in defense of the powers that be.  Double Standards: Avoiding Blame for Failures While Taking Credit for Successes The greatest angst seemed to be generated that Mr Solomon could be sanctioned for actions which he did not directly take.  First, the Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052748704123204576283283851626952.html">reported</a> that: <blockquote>Forest Labs representatives said they were shocked when the intent-to-ban notice was received a few weeks later, because Mr. Solomon wasn't accused by the government of misconduct. Forest is sticking by its chief. 'No one has ever alleged that Mr. Solomon did anything wrong, and excluding him [from the industry] is unjustified,' said general counsel Herschel Weinstein. 'It would also set an extremely troubling precedent that would create uncertainty throughout the industry and discourage regulatory settlements.'</blockquote> Later in the same article, there was more dismay that Mr Solomon should suffer any negative consequences for the actions of someone else: <blockquote>Lawyers not involved in the Forest case said the attempt to punish an executive who isn't accused of misconduct could tie up the industry's day-to-day work in legal knots. 'This 'gotcha' approach to enforcement runs the risk of creating a climate within organizations that is inconsistent with the spirit of innovation that is critical to the industry,' said Allen Waxman of Kaye Scholer LLP in New York, who was formerly an in-house counsel at a drug maker.</blockquote>However, Mr Solomon is not a janitor.  He was the company CEO, and was paid a fortune ostensibly because he was responsible for everything going on in the company. In fact, the most <a href="http://ir.frx.com/phoenix.zhtml?c=83198&p=IROL-secToc&TOC=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDAwMzgwNzQtMTAtMDAwMDE2L3RvYy9wYWdl&ListAll=1">recent (2010) company proxy statement</a> included this description of Mr Solomon: <blockquote>We believe that Mr. Solomon's experience as a senior executive in our industry, his in-depth knowledge of our Company and its day-to-day operations, and his strong strategic vision for the Company qualify him to serve on the board. [italics added for emphasis]</blockquote>These attributes presumably also justified his total compensation, which was $8,267,236 in 2010. If Mr. Solomon's outsize compensation was based on his strategic vision, informed by his "in-depth knowledge of ... [the] Company and its day-to-day operations," how could his defenders claim he knew nothing and had no responsibility for its detailed and in-depth efforts to deceptively market antidepressants to children and adolescents? (See posts <a href="http://hcrenewal.blogspot.com/2011/04/will-pharmaceutical-ceo-finally-be-held.html">here </a>and <a href="http://hcrenewal.blogspot.com/2009/09/lexapro-marketing-plan-was-meant-to.html">here</a> for details of that marketing scheme as revealed in court documents.)  This appears to be a double-standard (as found in <a href="http://www.iep.utm.edu/fallacy/">this alternative catalog</a> of logical fallacies). By the way, also note how Mr Waxman invoked the "innovation meme," i.e., that any regulation of the company or restrictions on its actions will prevent innovation. The same meme was invoked by a business school professor in one of the first attempts to defend this corporate executive from any attempts to hold him accountable for his company's bad behavior (see post <a href="http://hcrenewal.blogspot.com/2011/04/will-pharmaceutical-ceo-finally-be-held.html">here</a>).  As I noted earlier, "innovation" is used so often to excuse almost any action by large health care corporations that I suspect the meme was developed by  corporate public relations. Straw-Men and Double-Standards: Barring Mr Solomon vs "Imagined" Actions and Treatment of Foreign Leaders Another protest was that the government's actions were disproportionate, especially how they treated other cases, as <a href="http://spectator.org/archives/2011/05/03/hard-on-drug-execs-soft-on-dic">written</a> by Robert Goldberg in the Spectator: <blockquote>Now it turns out that Team O is tougher on drug company CEOs than it is on brutal dictators and a movement whose goal is wiping out Israel. The administration is applying a little used government approach to knee-capping executives it doesn't like by threatening that HHS won't allow Forest Laboratories to sell medications to Medicare, Medicaid, and other government health programs (which means every health plan under Obamacare) unless it tosses the company's CEO, Howard Solomon. According to news accounts, the action is being taken because government lawyers claim that just fining the company billions isn't stopping illegal behavior. But neither Mr. Solomon nor Forest has been found guilty of any wrongdoing.</blockquote> Mr Goldberg also asserted, as in the examples above, that Mr Solomon was not personally found guilty.  This may be so, but given that his company gave him credit for all the good resulting from the company's day-to-day actions, denying his responsibility for day-to-day actions gone bad is a double standard. Furthermore, Mr Goldberg's assertion that Forest was not found guilty is at best a quibble, and at worse, an untruth. As we noted above, the company pleaded (but was not "found) guilty to several charges, a felony and a misdemeanor. Mr Goldberg then developed another kind of fallacy, this time by comparing the government's treatment of Mr Solomon with some hypothetical actions: <blockquote>Can you imagine the administration using this tactic against health IT firms, unions, the New Black Panthers, ACORN, or investment banks? For different reasons for each, the answer is 'No.'</blockquote>This appears to be a compounded set of <a href="http://www.nizkor.org/features/fallacies/straw-man.html">straw men fallacies</a>.  No one knows whether the government would use these tactics in future hypothetical cases.  What one may imagine could occur in such hypothetical cases is not directly comparable to what has occurred in the current case.  Invoking these imagined future actions amounts to invoking straw men.    Mr Goldberg got even more imaginative, comparing the government's actions vis a vis Mr Solomon to its actions in the foreign policy realm: <blockquote>Meanwhile the threat against Forest and its CEO is more draconian than actions the Obama administration is taking against Assad. The dictator who has slaughtered his people, aided Iran, built a uranium-enrichment facility, staged the Hezbollah takeover of Lebanon, and whose country is soon to be part of the UN Human Rights Council has received a stern warning from the president but nothing more.</blockquote>Of course, it is one thing for a government agency to decide not to do business with an individual within the country whose company admitted to violating the law. It is another thing for a government to attempt to take "actions" against a foreign leader over whom the government has no legal authority.  So here is another kind of double-standard (see<a href="http://www.iep.utm.edu/fallacy/"> this alternative catalog</a> of logical fallacies.) Straw Man: The Case of Rituxan Meanwhile, in Forbes, Charles L Hooper and David R Henderson <a href="http://www.forbes.com/2011/05/05/forest-laboratories-profits-health.html">argued</a> that Forest Laboratories' actions do not merit any punishment at all, not of the company nor of Mr Solomon: <blockquote>But it's bad to market unapproved drugs and to promote drugs for unapproved uses, right? Not exactly.</blockquote> First, Hooper and Henderson argued that Forest Laboratories' off-label marketing of l-thyroxine (a thyroid hormone) was a mere technicality. This appears to be mainly a distraction, since most of the case involved marketing antidepressants.  In any case, they then argued that: <blockquote>The fact is that off-label uses of drugs have saved lives. Consider Genentech and Biogen Idec's Rituxan, which the FDA approved in 1997 for relapsed or refractory CD20-positive B-cell low-grade non-Hodgkin's lymphoma (NHL).</blockquote> Of course, the Forest Laboratory case did not involve punishing physicians for off-label uses of any drug. It involved punishing Forest Laboratories and possibly its CEO for the marketing of drugs for off-label uses. The drugs involved were obviously not Rituxan. They did include Celexa, an antidepressant, which no one ever claimed is a life-saving drug (but which is a member of a class of drugs that may be ineffective and may increase the risk of suicidal ideation or even action in children and adolescents, the groups for which it was marketed off-label by Forest Laboratories).   So the attempt to invoke Rituxan, as if someone was proposing restrictions on its off-label use, was another <a href="http://www.nizkor.org/features/fallacies/straw-man.html">straw man</a>.    Summary So once again we see how logical fallacies are used to defend the powers that be in health care.  Once again, note that the these logically challenged defenses come from those with financial ties to the same powers that be.  (In addition to the affiliations noted above, Mr Goldberg is <a href="http://www.cmpi.org/about-us/founders/">Vice President of the Center for Medicine in the Public Interest</a>, which SourceWatch <a href="http://www.sourcewatch.org/index.php/Center_for_Medicine_in_the_Public_Interest">describes</a> as a "pharmaceutical industry front group," while Charles L Hooper is "president of Objective Insights, a company that consults for pharmaceutical and biotech companies.") Let us see if anyone can offer a logical argument why health care corporate CEOs should not be held responsible for their corporations' misbehavior, or if anyone without financial ties to such corporations is willing to defend such lack of responsibility.  Meanwhile, to repeat again and again,  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.

Logical Fallacies to Defend CEOs from Responsibility for their Companies' Bad Actions

There is now quite a kerfuffle over the US Department of Health and Human Service's threat to to stop doing business with the CEO of Forest Laboratories. As we noted here, his company pleaded guilty …

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10 May 2011

Forest Pharmaceuticals Pleads Guilty to Obstruction of Justice, No Individual Pays Any Penalty

The parade of legal settlements marches on.  The latest story is about Forest Laboratories and its marketing of Celexa (citalopram ) and Levothyroid (l-thyroxin).  Here is the most <a href="http://www.nytimes.com/2010/09/16/health/16drug.html">complete version</a>, courtesy of Natasha Singer reporting for the New York Times. First, the lead sentence: <blockquote>A unit of Forest Laboratories, the maker of the antidepressant Celexa, agreed on Wednesday to pay more than $313 million to settle criminal and civil complaints, including a claim that it had illegally promoted the drug for use in children. </blockquote> Here are the charges: <blockquote>Among the criminal charges was one that the subsidiary, Forest Pharmaceuticals, marketed Celexa, which was approved only for adult depression, to treat children and adolescents. The government also claimed that, in conjunction with the company’s off-label promotion, Forest publicized the positive results of a study on Celexa in adolescents while failing to tell doctors about a similar study that had negative results. 'Forest Pharmaceuticals deliberately chose to pursue corporate profits over its obligations to the F.D.A. and the American public,' Carmen Ortiz, the United States attorney for the District of Massachusetts, said in a statement Wednesday. In addition, federal prosecutors accused Forest of paying doctors to induce them to prescribe Celexa and another antidepressant, Lexapro. The remuneration included 'cash payments disguised as grants or consulting fees, expensive meals and lavish entertainment, and other valuable goods and services,' the government said in its civil complaint. Among the items that Forest sales representatives gave to doctors from 1998 to 2005, the complaint said, were tickets to St. Louis Cardinal games, which were to be 'leveraged and sold as a reward for prescriptions'; a $1,000 gift certificate to Alain Ducasse, a gourmet French restaurant, for a high-prescribing child psychiatrist; a deep-sea fishing trip off Cape Cod for a doctor and his three sons; $400 in Broadway theater tickets for a doctor and his wife; and Red Sox tickets worth $2,276 to be used for doctors in the Boston area. </blockquote> So we not just off-label marketing, but suppression of clinical research (of course, a study whose results were not favorable to the product being marketed), and payments to doctors as an "inducement to prescribe." But wait, there is more: <blockquote>As part of the criminal settlement, Forest Pharmaceuticals, which is based in St. Louis, agreed to plead guilty to one felony count of obstructing justice, acknowledging that employees had lied to F.D.A. officials during a plant inspection in 2003. The company also agreed to plead guilty to two misdemeanors, one of which covers the company’s misbranding of Celexa by marketing the antidepressant for use in children from 1998 to 2002. The other misdemeanor covers the illegal distribution from 2001 to 2003 of an unapproved drug, Levothroid, to treat a thyroid hormone deficiency. Such thyroid pills, made by various drug makers, had been sold in the United States since the 1950s without F.D.A. approval. But in 2001, the agency told drug makers that they needed to reduce their distribution of such medications until the companies obtained agency approval to market the pills. The criminal charges accused Forest of making a deliberate decision to continue distributing the drug in quantities exceeding the F.D.A.’s directive. After the agency sent a warning letter to Forest, the company directed employees to work until 1 a.m. to continue shipping as much Levothroid as possible, according to the criminal complaint. </blockquote> So there was also obstruction of justice in the form of lying to the FDA, and selling drugs that the FDA had ordered not to be sold. So what are the penalties? <blockquote>The criminal settlement calls for the company to pay a $150 million fine and to forfeit an additional $14 million in assets. Forest will also pay more than $88 million to the federal government and more than $60 million to the states to resolve a civil complaint that its actions caused false claims to be submitted to federal health care programs. In addition, two whistle-blowers will split $14 million from the federal share of the settlement. Forest has also entered into a five-year corporate integrity agreement, requiring an independent expert to review the company’s compliance with drug marketing regulations.</blockquote> So here we go again. A large drug company was up to no good, suppressing research, paying doctors for their prescriptions, lying to the FDA, and disobeying its orders. The penalty seemed large, over $300 million. However, Celexa was a big revenue generator at the time the events above occurred, topping $1 billion in revenue first in 2002 (per Forbes <a href="http://www.forbes.com/2002/08/15/0815frx.html">here</a>). Furthermore, as <a href="http://www.pharmalot.com/2010/09/forest-labs-pays-313m-for-illegal-marketing">noted by Ed Silverman on Pharmalot</a>, it seems no individual will suffer any negative consequences for authorizing, directing, or implementing the conduct described above. Finally, as best I can tell, despite the fact that a Forest subsidiary will plead guilty to a felony, the company is not going to be barred from doing business with the government.  So, despite pleading guilty to a felony and three misdemeanors, neither Forest as a company nor any individual working for the company will really suffer very much.  On the other hand, the leaders of Forest have been doing very well.  The company's CEO, Howard Solomon, was number 18 on <a href="http://online.wsj.com/public/resources/documents/st_execpay1007_20100725.html">Wall Street Journal list</a> of the 25 highest paid CEOs over the last decade.  His total realized compensation was over $385 million over the last 10 years.  According to<a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDAzODA3NC0xMC0wMDAwMTYvZG9jL0ZvcmVzdExhYm9yYXRvcmllc0luYy5wZGYmdHlwZT0yJmZuPUZvcmVzdExhYm9yYXRvcmllc0luYy5wZGY="> the company's 2010 proxy statement</a>, his total compensation in 2009 was $8,267,236.  The four other highest paid executives made from just over $2.5 million to $5.3 million. So here we go again.  Another large health care organization has been found to have done wrong, but the only penalty is a fine that whose impact will be diffused across the whole company, and ultimately be paid by its employees, its customers, including patients, and its stockholders.  Meanwhile, the people who authorized, directed, or implemented the wrong doing apparently will pay nothing and receive no negative incentives.  Furthermore, the top leaders of the company, whose huge compensation in the past was increased by the results of the wrong doing, will continue to prosper. As we have said again and again,  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. By the way, the current case offers an avenue for those who do not like what Forest did to ask those who are supposed to be ultimately responsible for its behavior how this was allowed to happen.  The board of directors of the company is supposed to be ultimately accountable for the company's actions.  As we have noted before, these directors are supposed to "demonstrate unyielding loyalty to the company's shareholders." [Per Monks RAG, Minow N. <a href="http://www.amazon.com/Corporate-Governance-Robert-G-Monks/dp/1405116986">Corporate Governance</a>, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.] The current directors of Forest Laboratories, according to <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDAzODA3NC0xMC0wMDAwMTYvZG9jL0ZvcmVzdExhYm9yYXRvcmllc0luYy5wZGYmdHlwZT0yJmZuPUZvcmVzdExhYm9yYXRvcmllc0luYy5wZGY=">the company's 2010 proxy statement</a>, include <a href="http://connects.catalyst.harvard.edu/profiles/profile/person/24377">Dr Nesli Basgoz</a>, "Associate Chief for Clinical Affairs, Division of Infectious Diseases, Massachusetts General Hospital (MGH)," and "Associate Professor of Medicine at Harvard Medical School."  Also, it includes<a href="http://www.mountsinai.org/profiles/lester-b-salans?id=0000072500001497265082"> Dr Lester B Salans</a>, "Clinical Professor" at Mount Sinai Medical School, not to mention <a href="http://connects.catalyst.harvard.edu/profiles/profile/person/48486">Dr Peter J Zimetbaum</a>, "Director of Clinical Cardiology" at Beth Israel Deaconess Medical Center in Boston (BIDMC), and "Associate Professor of Medicine at Harvard Medical School."   Maybe some enterprising student journalist will get to ask the good doctors how they let things at Forest get so ethically out of hand.

Forest Pharmaceuticals Pleads Guilty to Obstruction of Justice, No Individual Pays Any Penalty

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17 Sep 2010

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