healthy4u: Eli Lilly

Planned Obsolescence Disguised as Innovation, Oligopoly Disguised as a Free Market, and the Enrichment of Oligarchs

The New York Times published another<a href="http://www.nytimes.com/2014/04/06/health/even-small-medical-advances-can-mean-big-jumps-in-bills.html"> article</a> in its series on the high cost of US health care.  This one, focused on the care of type 1 diabetes mellitus and other chronic diseases, shines some light on the business management practices that now determine how our health care system functions, or not, and implies who benefits the most from them. Planned Obsolescence Disguised as Innovation The article first discussed the brave new world of type 1 diabetes treatment.  The introductory theme was: <blockquote class="tr_bq">Today, the routine care costs of many chronic illnesses eclipse that of acute care because new treatments that keep patients well have become a multibillion-dollar business opportunity for device and drug makers and medical providers.</blockquote> Much of modern diabetes treatment seems to depend on medical devices and disposable medical supplies: <blockquote class="tr_bq">That captive audience of Type 1 diabetics has spawned lines of high-priced gadgets and disposable accouterments, borrowing business models from technology companies like Apple: Each pump and monitor requires the separate purchase of an array of items that are often brand and model specific. A steady stream of new models and updates often offer dubious improvement: colored pumps; talking, bilingual meters; sensors reporting minute-by-minute sugar readouts. [Diabetes patient] Ms. Hayley’s new pump will cost $7,350 (she will pay $2,500 under the terms of her insurance). But she will also need to pay her part for supplies, including $100 monitor probes that must be replaced every week, disposable tubing that she must change every three days and 10 or so test strips every day.</blockquote> Of course, the device and supply manufacturers claim that the high prices reflect the value of the wondrous new innovations: <blockquote class="tr_bq">Companies that produce the treatments say the higher costs reflect medical advances and the need to recoup money spent on research.</blockquote> Yet now the Times reporter was able to find physicians who claim the "innovations" are really just the latest version of planned obsolescence: <blockquote class="tr_bq">Diabetes experts say a good part of what companies label as innovation amounts to planned obsolescence. Just as Apple customers can no longer buy an iPhone 3 even if they were content with it, diabetics are nudged to keep up with the latest model.</blockquote>For example, <blockquote class="tr_bq"><div class="story-body-text story-content" data-para-count="410" data-total-count="4006" id="story-continues-3" itemprop="articleBody">Those companies spend millions of dollars recruiting patients at health fairs, through physicians’ offices and with aggressive advertising — often urging them to get devices and treatments that are not necessary, doctors say. 'They may be better in some abstract sense, but the clinical relevance is minor,' said Dr. Joel Zonszein, director of the Clinical Diabetes Center at Montefiore Medical Center.</div><div class="story-body-text story-content" data-para-count="410" data-total-count="4006" id="story-continues-3" itemprop="articleBody"> </div><div class="story-body-text story-content" data-para-count="109" data-total-count="4115" itemprop="articleBody">'People don’t need a meter that talks to them,' he added. 'There’s an incredible waste of money.'</div></blockquote> Pharmaceutical companies have also discovered this model. <blockquote class="tr_bq">insulin ... has been produced with genetic engineering and protected by patents, so that a medicine that cost a few dollars when Ms. Hayley was a child now often sells for more than $200 a vial, meaning some patients must pay more than $4,000 a year.</blockquote> In particular, <blockquote class="tr_bq">Synthetic human insulin is safer for patients, who sometimes developed reactions to animal insulin. But it is made by only three companies: Eli Lilly, Sanofi and Novo Nordisk. Manufactured in microbes, each one’s product has minor dissimilarities that reflect the type of cell in which it was made. Since the companies owned the cell lines, it is nearly impossible for other companies to make exact copies or even similar versions that would be cheaper, even once the patents expire. And the pharmaceutical companies defend the patents ferociously. <div class="story-body-text story-content" data-para-count="270" data-total-count="12681" itemprop="articleBody">What’s more, the three companies continued to refine their product, adding chemical groups that made the insulin absorb somewhat more quickly or evenly, for example. They are called insulin analogues, and their benefits are promoted tirelessly to doctors and patients.</div></blockquote> Of course, the pharmaceutical companies also claim that it's all about innnovation, <blockquote class="tr_bq">Dr. Todd Hobbs, chief medical officer of Novo Nordisk, defended the rising prices of insulin, linking them to medical benefits. 'The cost to develop these new insulin products has been enormous, and the cost of the insulin to the consumer in developed countries has risen to enable these and future advancements to occur,' he wrote in an email.</blockquote> Not everyone is convinced, <blockquote class="tr_bq">'The insulins are tweaked for minor benefits that may help a small number of patients with difficult-to-control diabetes, and result in major price increases for all,' [Kings College, London, UK Professor] Dr. Pickup said. Because of analogues, he added, Britain’s National Health Service has had to spend 130 percent more on insulin in the past five years. In the United States, said Dr. Zonszein at Montefiore, the price of Humalog, Lilly’s analogue insulin, was typically two to four times that of its older human insulin line, called Humulin. 'There is not a lot of difference between Humulin and analogues,' he said, but he noted that Humulin was getting 'hard to find.' Sanofi Aventis has stopped selling its older product in the United States, and Mr. Kliff, the financial analyst, said other companies were likely to follow suit, effectively forcing patients to use the costlier versions.</blockquote> The arguments about valuable innovation also do not explain why the prognosis of diabetes in the US does not seem to reflect all the money we spend on the disease, <blockquote class="tr_bq"><div class="story-body-text story-content" data-para-count="306" data-total-count="4993" itemprop="articleBody">Complication rates from diabetes in the United States are generally higher than in other developed countries. That is true even though the United States <a href="http://www.cdc.gov/diabetes/statistics/complications_national.htm">spends more</a> per patient and per capita treating diabetes than elsewhere, said Ping Zhang, an economist at the Centers for Disease Control and Prevention.</div><div class="story-body-text story-content" data-para-count="306" data-total-count="4993" itemprop="articleBody"> </div><div class="story-body-text story-content" data-para-count="280" data-total-count="5273" itemprop="articleBody">The high costs are taking their toll on public coffers, since 62 percent of that treatment money comes from government insurers. The cumulative outlays for treating Type 1 and Type 2 diabetes <a href="http://www.diabetes.org/advocacy/news-events/cost-of-diabetes.html">reached nearly $200 billion</a> in 2012, or about 7 percent of America’s health care bill.</div></blockquote> So to summarize, there is considerable evidence that companies that make drugs and devices to manage type 1 diabetes constantly provide "innovations," yet most are minor changes that encourage obsolescence of previous products, but do not provide important increases in benefits or reductions in harm for patients.  Oligopoly Disguised as a Free Market Many in the US sing the praises of our supposed free-market health care system.  As noted above however, the insulin market is an oligopoly, dominated by three companies.  The diabetes device market is also dominated by a few companies, and in particular, the insulin pump market is dominated by a single company, <blockquote class="tr_bq"><a href="http://www.medtronic.com/">Medtronic</a> is the dominant insulin pump manufacturer, serving 65 percent of American patients and the majority of those worldwide. Though smaller companies sell cheaper pumps, it is hard to make inroads: Once familiar with the Medtronic system and its extensive support network for troubleshooting problems, patients are reluctant to switch. Doctors are leery of prescribing equipment from a new company that may be out of business in a year; their office computer may not sync with the new software anyway.</blockquote> Of course, Medtronic public relations will justify it all again based on innovation, <blockquote class="tr_bq">Medtronic declined to talk about specific prices, but said a core tenet was to make only 'a fair profit.' Amanda Sheldon, a spokeswoman, added: 'We are committed to reinvesting in research and development of new technologies to improve the lives of people with diabetes, and our current pricing structure ensures that we can bring new products to market.' </blockquote> The article also discussed the prices of treating chronic diseases other than diabetes.  For example, see how a nominally non-profit hospital priced treatments for chronic diseases, <blockquote class="tr_bq">Dr. Kivi was on high doses of steroids for debilitating joint pain that left him unable to walk at times. But when his last three-hour infusion at NYU Langone Medical Center’s outpatient clinic generated a bill of $133,000 — and his insurer paid $99,593 — Dr. Kivi was so outraged that he decided to risk switching to another drug that he could inject by himself at home. </blockquote> However,  this pricing appears to have been facilitated by the hospital's increasing market domination generated by its purchase of physician practices, <blockquote class="tr_bq">He had moved his care to NYU Langone to follow his longtime doctor, who had moved her practice from a nearby hospital where the same infusion had been billed at $19,000. The average price that hospitals paid for Dr. Kivi’s dose of Remicade late last year was about $1,200, according to Medicare data.</blockquote> So in summary, a few companies now dominate the production of drugs and devices for the management of diabetes, and a few large hospitals may increasingly dominate the treatment of particular chronic diseases.  Such oligopolists are able to increase prices without improving treatment to or outcomes of patients. Enrichment of the Oligarchs This example shows how the current US health care system is dominated by huge organizations, mostly for-profit corporations but including some nominally non-profit corporations that act similarly.  They loudly proclaim innovation, but much of that innovation seems to provide few benefits to patients, and actually appears to be planned obsolescence.  The result is high and ever-rising prices. So if patients do not benefit from this, who does? It does not appear to be the health care professionals, <blockquote class="tr_bq">Meanwhile, as the price of supplies rises, endocrinologists remain among the lowest-paid specialists in American medicine, meaning severe physician shortages in many areas and long waits to see a doctor.</blockquote> We  have seen other examples of how leaders of the big health care organizations have become as<a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation"> rich as royalty</a>.  Therefore, let us consider the pay of the leaders of the organizations mentioned above.  I will focus on the two US based corporations, Eli Lilly and Medtronic, and the New York hospital, NYU Langone Medical Center. Eli Lilly According to the company's <a href="http://investor.lilly.com/secfiling.cfm?filingID=59478-14-90&CIK=59478">2014 proxy statement</a>, the 2013 total compensation of its five highest paid hired executives was - John C Lechleiter PhD, CEO                                      $11,217,000 - Derica W Rice, CFO                                                   $5,176,822 - Jan M Lundberg, PhD, EVP, Science and Technology   $4,774,535 - Michael J Harrington, General Counsel                          $3,174,222 - Erico A Conterno, President Lilly Diabetes                    $3,009,041 Note that all of these executives save Mr Harrington have also amassed more than 100,000 shares of company stock, and Dr Lechleiter has amassed more than 1,000,000. It should be no surprise, given our recent discussion (e.g., <a href="http://hcrenewal.blogspot.com/2014/04/finally-article-in-large-circulation.html">here</a>) of the currently symbiotic relationship among top health care corporations and academic medicine, that several of the members of the Lilly board of directors that has exercised stewardship over the company, and is thus responsible for these gargantuan compensation packages and the business practices discussed above are top academic leaders.  These include, - Alfred G Gilman, MD, PhD, Regental Professor Emeritus, recent (until 2009) executive vice presdient, provost, and dean of medicine, University of Texas Southwestern  - William G Kaelin Jr, MD, Professor of Medicine, Associate Director of Basic Science, Dana-Farber Cancer Center, Harvard University - Marschall S Runge MD, Executive Dean and Chair of the Department of Medicine, University of North Carolina Medical School - Katherine Baicker PhD, Professor of Health Economics, Harvard University School of Public Health  (I must note that Prof Baicker is also - amazingly - on the Medicare Payment Advisory Committee, MEDPAC). - Ellen R Marram, Trustee, New York-Presbyterian Hospital - Ralph Alvarez, President's Council, University of Miami - R David Hooper, Trustee, Children's Hospital of Colorado - Franklyn G Pendergast MD PhD, Professor, Mayo Medical School All but the newest directors were paid at least $250,000 a year by the company (and thus by the executives the directors are supposed to supervise), and all but the newest directors had accumulated tens of thousands of shares of stock or the equivalent as pay for their services. Medtronic Similarly, according to the company's<a href="http://phx.corporate-ir.net/phoenix.zhtml?c=76126&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTkwMjY0MzAmRFNFUT0wJlNFUT0wJlNRREVTQz1TRUNUSU9OX0VOVElSRSZzdWJzaWQ9NTc%3d"> 2013 proxy</a> (the latest now available), CEO Omar Ishrak made $8,975,866 in 2013, and the next four highest paid executives all made over $2,500,000 each.   Mr Ishrak owned or could acquire the equivalent of more than 500,000 shares of stock, and the other top paid executives owned of could acquire from over 100,000 to over 1,000,000 shares of stock. Again, the executives were nominally supervised by a board of directors that included an academic and non-profit leader, Dr Victor J Dzau, MD former chancellor for health affairs at Duke University, and president-elect of the Institute of Medicine (note that we discussed Dr Dzau's conflicts of interest most recently <a href="http://hcrenewal.blogspot.com/2014/02/incoming-president-of-iom-outed-as.html">here</a>).  It also included a former government leader, Michael O Leavitt, former US Secretary of Health and Human Services; and a hospital leader, Preetha Reddy, Managing Director of Apollo Hospitals Enterprise Limited (India).  NYU Langone Medical Center The Medical Center's<a href="http://www.guidestar.org/FinDocuments/2012/133/971/2012-133971298-09798bbc-9.pdf"> 2011 US form 990</a> is old, but the latest available, and is remarkably obscure, omitting, for example, mentioning the titles of any of the people listed as highest paid officers and employees.  The current CEO, was listed as receiving total compensation of just over $2.000,000.  Four individuals then received over $1,000,000.  The 990 form also mentioned that the Medical Center provided some individuals with first class travel, tax gross-up payments, housing allowances, and reimbursement for personal services.  Neither the 990, nor the center's <a href="http://www.med.nyu.edu/about-us/who-we-are/medical-center-leadership/trustees">web-site</a> makes all the possible conflicts of interest of its trustees obvious.    So in summary, the large organizations, for-profit and non-profit, that are able to greatly increase their prices through planned obsolescence disguised as innovation, and oligopoly disguised as free markets, are able to make their top executives very rich, and also enrich those who are supposed to exercise stewardship over them.  Summary An extensive journalistic investigation revealed how certain aspects of chronic care in the US health care system are dominated by a few large organizations.  These organizations are able to charge very high prices, mainly through market domination, and with the aid of marketing and public relations that tout planned obsolescence as valuable innovation.  The leaders of these organizations have become wealthy, often fabulously so.  This state of affairs has not been challenged by those who are supposed to provide stewardship, including many prominent academics. The US health care system is the most expensive, on a per capita basis, in the world, and far more expensive than that in any other developed country.  Yet there is no evidence that its results are superior to those of other countries.  What evidence there is suggests in fact that our results are mediocre at best. The current example suggests how the US system differs from those of other countries.  It has an ostensible free market focus.  Yet the system appears more to be an oligopoly, with most of its market components dominated by a few large organizations, run as an oligarchy, by a small, overlapping in-group of managers, executives and their cronies, with elements of corporatism, that is with the cooperation of, rather than regulation by government entities and leaders A real free market health care system would include a level playing field.  This could only be achieved by the government acting as a fair umpire, not a crony.  Anti-competitive practices would have to end.  Oligopolies would have to be broken.  Deceptive marketing and public relations would have to be exposed.  Leaders would have to be made accountable, especially for putting patients' and the public's health ahead of their own enrichment.  All this would be horribly difficult, as the oligarchs have amassed much money and control, and would oppose, possibly violently, any effort to challenge them.  If we do not challenge them in the US, however, not only will our health care continue to become ever more expensive, less accessible, and less beneficial to patients, but we will all cease to be citizens of one of the first real democracies, and end up serfs instead.

Planned Obsolescence Disguised as Innovation, Oligopoly Disguised as a Free Market, and the Enrichment of Oligarchs

The New York Times published another article in its series on the high cost of US health care. This one, focused on the care of type 1 diabetes mellitus and other chronic diseases, shines some light …

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14 Apr 2014

As the Door Turns - The Ongoing Interchange of Leaders Among Large Health Care Corporations, Those who Represent Them, and Government

The revolving door is the two-way conduit between leadership positions in government and industry that helps to enable health care, and maybe all of society, to be run by a group of insiders who can move easily between large or influential health care organizations and the government bodies that are supposed to regulate, oversee, and enforce laws relevant to them. It has been three months since our last <a href="http://hcrenewal.blogspot.com/2013/12/for-whom-door-revolves-from-for-profit.html">update</a> on the <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a> as it applies to health care, so here is our latest effort, according to the chronological order of the initial media coverage.  Foundation Leader with Ties to Eli Lilly and to Former Synthes CEO to the White House As <a href="http://www.nytimes.com/2013/12/13/us/politics/new-obama-adviser-brings-corporate-ties.html">reported </a>by the New York Times in December, 2013, new White House senior adviser John D Podesta, who founded and ran the nominally non-profit organization Center for American Progress, had multiple ties to health care corporations and their leaders, e.g., to pharmaceutical maker Eli Lilly, <blockquote class="tr_bq">The pharmaceutical giant Eli Lilly was also a donor because of what it said was the Center for American Progress’s advocacy for patients’ rights — and just as the debate heated up in Washington over potential cuts to the Medicare program that covers Lilly’s most profitable drugs.</blockquote> Although, for the record, <blockquote class="tr_bq">Neera Tanden, the president of the Center for American Progress, said in an interview that the group frequently takes positions that conflict with the corporate agendas of its donors, including companies like Eli Lilly. </blockquote> Also an important but somewhat less obvious linkage was described thus by the Times,  <blockquote class="tr_bq"> In addition, he earned $90,000 as a consultant to the HJW Foundation of West Chester, Pa, according to an aide working with him on the disclosure report he is preparing. HJW is a nonprofit group run by Hansjörg Wyss, a billionaire businessman and major contributor to the Center for American Progress.</blockquote> What the Times did not say about Mr Wyss was that he is the former CEO of Synthes, a Swiss based medical device company, since merged into Johnson and Johnson   As we <a href="http://hcrenewal.blogspot.com/2011/12/it-was-best-of-times-it-was-worst-of.html">wrote</a> in 2011, <blockquote class="tr_bq"> Synthes USA, the American branch of a Swiss based device company, first settled charges that it had been paying surgeons with company stock to use its products in its clinical trials in 2009 (see <a href="http://hcrenewal.blogspot.com/2009/05/synthes-settles-agrees-to-stop-giving.html">this post</a>).  Then prosecutors alleged that these were not really rigorous trials. Instead, for marketing purposes, executives of Synthes subsidiary Norian persuaded surgeons to use its Norian XR product in a case series of spine surgery patients and then publish the results.  Three patients who received the product for this 'off-label' use died.  This scheme was alleged to have been directed by "person no. 7," whom journalists identified as the company CEO, Hansjorg Wyss (see post <a href="http://hcrenewal.blogspot.com/2009/06/synthes-indicted.html">here</a>.)   In an unusual move, the prosecutors indicted four company executives, who then pleaded guilty.  They did not take any further action against Wyss, who turns out to be one of the world's richest men (see post <a href="http://hcrenewal.blogspot.com/2009/12/person-no-7-also-known-as-83rd-richest.html">here</a>).</blockquote> However, at the time the former executives were sentenced, one of the executive's attorney's claimed, <blockquote class="tr_bq">Wyss was the undisputed leader of the company. 'He made some of the very critical decisions that put the trials on the ultimate pathway,' Gurney said. 'The culture of an organization is set at the top.'</blockquote> Former Deputy White House Press Secretary to Global Strategy Group, Whose Clients Include Pfizer, Purdue Pharma, and WellPoint As reported by the National Journal in December, 2013, <blockquote class="tr_bq">Bill Burton Old gig: Deputy White House press secretary New gig: Formed and ran Priorities USA Action, a super PAC that raked in more than $75 million during the 2012 campaign; recently joined the public affairs firm Global Strategy Group as a managing director. Clients <a href="http://globalstrategygroup.com/about/#our-clients">include</a> GE, Cisco, American Express, Comcast, and Pfizer.</blockquote> Other health care clients include health insurance company Empire BCBS, pharmaceutical company Purdue Pharma, and for-profit health insurance company WellPoint Former National Health Information Technology Coordinator to Get Real Health As <a href="http://www.govhealthit.com/news/former-national-coordinator-lends-credo-vision-patient-engagement-company">reported</a> by Government HealthIT in February, 2014, <blockquote class="tr_bq">Three months after leaving the federal government, [former National Coordinator for Health Information Technology] Farzad Mostashari, MD, is joining the board of directors at the patient engagement company Get Real Health. The big-thinking, bow-tied public health veteran is currently studying accountable care policies full-time at the Brookings Institution, and said he’s joining the Get Real Health board to help it '‘stay’ real as it innovates and serves patients and providers.' The Rockville, Maryland-based company was founded in 2000, starting out as a connected health consulting outfit and then, after working with Microsoft’s HealthVault in 2007, launching its own health technology in 2012, the InstantPHR patient engagement platform.</blockquote> From CareScience Inc to National Coordinator for Health Information Technology to Health Evolution Partners The <a href="http://www.govhealthit.com/news/former-national-coordinator-lends-credo-vision-patient-engagement-company">article</a> about Dr Mostashari also mentioned in passing a more complicated set of transitions involving an earlier national coordinator for health care information technology.    <blockquote class="tr_bq">Mostashari is not the only former national coordinators to step into the health IT private sector after federal service. David Brailer, MD, the first appointee to the role of the national coordinator for health IT, is now running the San Francisco private equity firm Health Evolution Partners.</blockquote> But in fact, according to his rather glowing Wikipedia <a href="http://en.wikipedia.org/wiki/David_Brailer">entry</a>, Dr Brailer also came from the commercial health care IT industry, <blockquote class="tr_bq"> In 1992, Brailer left academia and founded a company spun out of his Ph.D. thesis, inventing ways to measure health-care quality. This became CareScience Inc., a Philadelphia software firm that helped hospitals improve efficiency and prevent errors. Under Brailer, CareScience established the nation's first health care Application Service Provider (ASP). Brailer led the company through several financings, strategic partnerships, an initial public offering in 2000, and sale to global software firm Quovadx in 2003.</blockquote> <a href="http://en.wikipedia.org/wiki/David_Brailer#cite_note-11"></a> Then, in 2004, <blockquote class="tr_bq">Brailer was appointed as the first National Health Information Technology Coordinator, pursuant to an executive order by President George W. Bush on April 27, 2004, which called for widespread deployment of health information technology within 10 years.</blockquote> According to his Health Evolution Partners <a href="http://www.healthevolutionpartners.com/david-j-brailer-md-phd/">biography</a>, Dr Brailer is also now a member of the boards of directors of American Optical Services, CenseoHealth, Optimal Radiology, and Walgreen Co. From Aide to Congressman Young to a Lobbying Firm with Health Care Clients Then to Congress According to the <a href="http://www.tampabay.com/news/politics/elections/david-jolly-elected-to-represent-pinellas-county-in-congress/2169727">Tampa Bay Times</a>, yesterday Republican David Jolly won a special election to a congressional seat for Florida.  The article noted that Mr Jolly was "once an obscure aide to the late Republican U.S. Rep. C.W. Bill Young and then a Washington lobbyist,..." His past work was described in more detail in a <a href="http://www.republicreport.org/2014/jolly/">post</a> on the Republic Report blog, <blockquote class="tr_bq">David Jolly, the Republican congressional candidate vying for the special election in Florida next week, has not only made a career out of lobbying. Records reviewed by Republic Report show that Jolly’s clients won millions of dollars in taxpayer earmarks from his old boss, the late Rep. C.W. 'Bill' Young (R-FL), an appropriator known for his lavish use of the earmarking process. </blockquote> Futhermore, <blockquote class="tr_bq">Two of the firms that hired Jolly as a lobbyist - BayCare Health Systems and Alakai Defense Systmes - won lucrative earmarks from Young while paying Jolly to influence the committee where Young was a senior member. In 2009, BayCare Health Sytems retained Jolly and another former Young staffer named Douglas Gregory.  Later that year, Young secured a $1 million earmark for BayCare Health Systems for 'facilities and improvements.'</blockquote> Summary Note that the revolving door does not seem to discriminate according to political party or ideology.  The cases above involved both Republicans and Democrats. But the revolving door does discriminate against the not well connected, because it seems to provided preferred posts in the upper echelons of government for industry insiders, and preferred posts in the upper echelons of industry for government insiders.  As we have said many times before, the constant interchange of health care insiders among government, large health care corporations, and the lobbying and legal firms which represent them certainly suggests that health care, like many other sectors, seems to be run by an amorphous group of insiders who owe allegiance neither to government nor industry. However, those who work in government are supposed to be working for the people, and those who work on health care within government are supposed to be working for patients' and the public health.  If they are constantly looking over their shoulders at potential private employers who might offer big checks, who indeed are they working for? <div itemprop="articleBody"></div>Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door. Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.

As the Door Turns - The Ongoing Interchange of Leaders Among Large Health Care Corporations, Those who Represent Them, and Government

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13 Mar 2014

'Tis the Season for Legal Settlements: GlaxoSmithKline, Eli Lilly, Orthofix, Sanofi all Settle

Reports of legal settlements by big health care organizations tend to dribble out towards the end of the year, maybe in a rush to finalize the year's accounting, maybe because the news will not register as well at times when people are distracted by holidays.  Here is a round-up in alphabetical order of some recent settlements of interest made by drug and device companies. GlaxoSmithKline Earlier this year GSK made the largest settlement, in monetary terms, ever by a pharmaceutical company (see <a href="http://hcrenewal.blogspot.com/2012/07/giant-gsk-settlement-provides-reminder.html">this post</a>).  At the end of the year it made two more.  Neither got much media attention.  The first was related to the earlier $3 billion settlement.  As <a href="http://lebanon-express.com/news/glaxosmithkline-pays-to-settle-avandia-lawsuit/article_59b5a4fe-3426-11e2-ae3b-001a4bcf887a.html">reported</a> by the [Great] Lebanon [Oregon] Express: <blockquote class="tr_bq">Oregon Attorney General Ellen Rosenblum announced in a press release that pharmaceutical giant GlaxoSmithKline has agreed to pay $90 million to Oregon and 37 other states to settle claims that it unlawfully promoted its diabetes drug, Avandia. As the co-leader of the lawsuit, Oregon will receive $3.9 million of the settlement, according to the release. The 38 attorneys general claimed in lawsuits filed Nov. 15 that GlaxoSmithKline misrepresented the cardiovascular risks posed by Avandia. A negotiated consent judgment was filed shortly thereafter.  Avandia was a blockbuster drug for GlaxoSmithKline. First approved by the Food and Drug Administration in 1999, annual sales peaked at more than $2.5 billion in 2006.</blockquote> Furthermore, <blockquote class="tr_bq"> Oregon and the 37 other states claim GlaxoSmithKline made safety claims about Avandia not supported by the scientific evidence. The states allege the company failed to disclose negative information about Avendia’s cardiovascular health effects.</blockquote> In addition to the monetary settlement, the agreement included all sorts of pledges by GSK: <blockquote class="tr_bq">As part of the consent judgment between the parties, GlaxoSmithKline agreed to reform how it markets and promotes diabetes drugs. It agreed to several conditions:  • To refrain from making false, misleading, or deceptive claims about any diabetes drug; • To refrain from making comparative safety claims not supported by substantial evidence or substantial clinical experience; • To refrain from presenting favorable information previously thought of as valid but rendered invalid by contrary and more credible recent information; •   To refrain from misusing statistics or otherwise misrepresenting the nature, applicability, or significance of clinical trials. The Consent Judgment also has the following terms that are effective for at least eight years: • GlaxoSmithKline must post summaries of all company sponsored observational studies or meta-analyses conducted by the company that are designed to inform the effective, safe, and/or appropriate use of its diabetes drugs; • The company post summaries of company-sponsored clinical trials of diabetes products within eight months of the primary completion date; • GlaxoSmithKline must register and post all company-sponsored clinical trials as required by federal law.</blockquote> Even more under the radar was a second, unrelated settlement, only briefly chronicled by Reuters (here <a href="http://www.chicagotribune.com/business/sns-rt-us-glaxosmithkline-settlementbre8bi14f-20121219,0,2970904.story">via</a> the Chicago Tribune): <blockquote class="tr_bq"> British drugmaker GlaxoSmithKline Plc has reached a $150 million preliminary settlement with U.S. drug wholesalers who claimed the company improperly delayed entry to the market of generic alternatives to its nasal spray Flonase, according to court documents. The settlement was reached with, among others, AmerisourceBergen Corp, Cardinal Health Inc, and McKesson Corp, who maintained that Glaxo had abused the citizen's petition process to maintain a market monopoly and overcharge for the spray by restricting access to less expensive generic versions.</blockquote> Note that while the first settlement was clearly about misleading, deceptive marketing of a relatively dangerous drug as safe, a practice that likely lead to suffering and death of some patients, the second settlement which involved an unfair business practice that likely increased the cost of care to some patients, and decreased the profits of some competitors, lead to a monetarily larger settlement. Again, these latter two settlements seem to just ice the cake of the $3 billion settlement earlier this year.  Eli Lilly Eli Lilly pleaded guilty to a misdemeanor charges and settled allegations about questionable marketing practices for its anti-psychotic drug Zyprexa for over $1 billion in 2009 (see post <a href="http://hcrenewal.blogspot.com/2009/01/what-me-worry-lilly-fined-over-zyprexa.html">here</a>).  The settlement provided some instructive information about how big pharmaceutical companies employ ghost writing to sell product (see <a href="http://hcrenewal.blogspot.com/2009/06/handbook-for-ghost-writing.html">this post</a>).  Now at the end of 2012, Eli Lilly has settled charges that it bribed government officials in countries outside of the US.  The most colorful version of this story <a href="http://online.wsj.com/article/SB10001424127887324461604578191550218188808.html">appeared</a> in the Wall Street Journal.  In summary, <blockquote class="tr_bq"> Eli Lilly & Co. agreed to pay $29.4 million in a settlement of U.S. government allegations that the drug maker's units made improper payments to foreign government officials to win business. Indianapolis-based Lilly didn't admit or deny the allegations, but agreed to have an outside consultant review the company's internal controls and its measures to comply with the U.S. Foreign Corrupt Practices Act, or FCPA. </blockquote> The colorful details were: <blockquote class="tr_bq">The SEC said in a civil complaint filed in U.S. District Court for the District of Columbia that employees of Lilly's China unit falsified expense reports to provide spa treatments, jewelry and other gifts and cash payments to government-employed doctors between 2006 and 2009. The SEC also alleged: Lilly hired a drug distributor in 2007 that paid bribes to health officials in a Brazilian state to facilitate about $1.2 million in sales of a Lilly drug to the state; Lilly's Polish unit paid $39,000 between 2000 and 2003 to a charitable foundation run by the head of a regional government health authority and dedicated to restoring a castle in Chudow, Poland; and that its Russian unit paid millions of dollars between 1994 and 2005 to offshore entities that the SEC said 'appear to have been used to funnel money to government officials' to obtain business for the Lilly unit. The SEC said Lilly didn't curtail the activities of its Russian unit for several years, even after an internal Lilly review raised questions about its use of these offshore arrangements. </blockquote> As in the previous set of settlements, no individual was charged or had to pay any penalty for authorizing, directing, or implementing any unethical actions.  Note that the alleged bribery went on in multiple different countries, suggesting a systemic problem with the operations of the company.  Note also that the allegations involved bribing doctors as well as bureaucrats. Orthofix We <a href="http://hcrenewal.blogspot.com/2012/11/phony-consulting-and-royalty-agreements.html">discussed</a> three settlements made by medical device company Orthofix only a month ago.  These involved various vivid details including bribes to physicians disguised as consulting and royalty agreements, bribes of foreign government officials disguised as chocolate, and a device sales representative turned stripper.  As best as I can tell, Orthofix just made yet another settlement, maybe not quite so picaresque.  As<a href="http://www.bloomberg.com/news/2012-12-15/orthofix-medicare-probe-settlement-accepted-by-u-s-judge-1-.html"> per Bloomberg</a>, <blockquote class="tr_bq">Orthofix International NV won court approval of a settlement of federal regulators’ claims that the maker of bone-repair products defrauded Medicare through a kickback scheme involving doctors, prosecutors said. U.S. District Judge William G. Young in Boston<a href="http://topics.bloomberg.com/boston/"></a> yesterday accepted an Orthofix unit’s offer to plead guilty to a felony count of obstructing an audit and pay a $7.6 million criminal fine....</blockquote> This settlement like some of the previous ones involved allegations of payments to doctors to induce them to use Orthofix devices. <blockquote class="tr_bq">As part of the agreement, Orthofix also will pay $32.3 million plus interest to resolve civil claims first raised in a whistle-blower’s lawsuit that the company defrauded the federal Medicare program through payments to doctors who used its bone-growth stimulators....</blockquote> This series of cases is unusual because they resulted in a guilty plea to a felony (but by a subsidiary of the company, not the company itself), and in guilty pleas by some company employees (but not apparently any penalties to top management). <blockquote class="tr_bq">Five Orthofix employees have pleaded guilty in connection with the probe, the U.S. Justice Department<a href="http://topics.bloomberg.com/justice-department/"></a> said. Thomas Guerrieri<a href="http://www.justice.gov/usao/ma/news/2012/April/GuerrieriThomasPleaPR.html" rel="external" title="Open Web Site"></a>, a company vice president, pleaded guilty to violating the federal anti-kickback statute by setting up fake consulting agreements for doctors who used the company’s products. </blockquote> Sanofi French multinational pharmaceutical corporation Sanofi-Aventis settled charges of overcharging the US Medicaid system in 2009 for over $90 million  (see post<a href="http://hcrenewal.blogspot.com/2009/05/sanofi-aventis-settles.html"> here</a>),  and of overcharging the US Medicare system in 2007 for over $190 million (see post <a href="http://hcrenewal.blogspot.com/2007/09/190-million-settlement-for-sanofi.html">here</a>).  Now it just settled charges that it gave kickbacks to doctors to induce them to prescribe its product.  <a href="http://www.bloomberg.com/news/2012-12-19/sanofi-to-pay-109-million-to-settle-false-claims-case.html">Per Bloomberg</a>, <blockquote class="tr_bq"> Sanofi,  France’s biggest drugmaker, reached a settlement to pay $109 million over allegations that its U.S. units gave doctors free doses of a medicine to win their business and subvert Medicare’s drug reimbursement system. </blockquote><blockquote class="tr_bq">Sanofi sales representatives entered into 'illegal sampling arrangements' with physicians, giving them the arthritis drug Hyalgan as kickbacks and 'promising to provide negotiated' amounts of the medication to lower its effective price in violation of the False Claims Act, the U.S. Justice Department said yesterday in a statement. 'Kickback schemes subvert the health-care marketplace and undermine the integrity of public health-care programs,” Stuart Delery,  who heads the department’s civil division, said in the statement. 'We will continue to hold accountable those who we allege are providing illegal incentives to influence the decision-making of health-care providers in federal health-care programs.'</blockquote> Again, no individual suffered any negative consequences for authorizing, directing or implementing the bad behavior in this case. Summary So here we go again, four more settlements by large, rich, well known pharmaceutical and device companies.  Most of the companies involved now have a history of recent settlements for a variety of ethical misadventures.  Most of the new settlements involved allegations of deceiving and bribing physicians. As we have noted endlessly before, <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> like this are useful to provide documentation of how unethical the practices, particularly marketing practices of large health care organizations have become.  However, the increasing number of repeat settlers suggest that the settlements are not deterring bad behavior.  Since the fines involved are usually small compared to the revenues that can be generated by deceptive and unethical marketing of expensive drugs, and the fines are paid out of company coffers, and are thus spread out in their impact over employees and stockholders alike, they usually have no more impact than a lash with a wet noodle, maybe at best a slap on the wrist.  Since the people involved in authorizing, directing and implementing the bad behavior can likely greatly improve their "numbers" and hence generate big salaries and bonuses, but face a minimal risk of any individual negative consequences, they are likely to continue unethical practices. Given that so many of these cases involve deception and/or bribery of health care professionals, I still hope that some will get upset at the effect on their professional values to take action. Meanwhile, I repeat until blue in the face....   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.

'Tis the Season for Legal Settlements: GlaxoSmithKline, Eli Lilly, Orthofix, Sanofi all Settle

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26 Dec 2012

"I'm Not Here to Sell Drugs" - Then Why Use Company Provided "Correct" Slides?

In October, 2010, we <a href="http://hcrenewal.blogspot.com/2010/10/not-best-and-brightest-drug-marketers.html">discussed</a> a series of reports by Pro Publica and multiple other respected news organizations about payments by seven pharmaceutical companies to thousands of doctors.  Industry often claims that they only pay the best and the brightest physicians and academics to provide education relevant to their products.  However, the ProPublica et al report suggested that they mainly recruited physicians who already showed their favor to their products by prescribing them often, but soothed their consciences by dubbing them "thought leaders" or "key opinion leaders."  While some of the physicians were well-known academics, others had notably blemished records.  Since then, news media around the US have looked into interactions among local physicians and academic medical institutions and the seven pharmaceutical companies.  In November, 2010, <a href="http://hcrenewal.blogspot.com/2010/11/of-drug-talks-deception-and-denial.html">here</a> we discussed cases that suggested that pharmaceutical companies like physician speakers because they are more "believable" than pharmaceutical representatives, and choose physicians who already are prolific prescribers of the drug to be promoted, and that suggested that some physicians realized that speaking for pharmaceutical companies influenced their own prescribing. Since then, more investigations of local physicians' interactions with pharmaceutical companies have appeared that reinforced contrasts between rationalizations that physicians and drug companies use to support continued payments for "drug talks," and what these talks are really about. "Leaders in Their Field" vs Sanctions and Crimes  Many pharmaceutical (and other health care corporations) have repeated the mantra that the physicians they hire to give talks are the best and the brightest.  The physicians who give the talks sometimes get to believe this.  For example, a ProPublica follow-up report[1] on discrepancies between data the pharmaceutical companies put on the web and gave to state regulators noted: <blockquote>Pfizer, for example, told the state it paid Dr. Randy Schapiro $1,770 last year. But on the firm’s website, it reported spending $43,827 on him in the second half of 2009 alone.</blockquote>It then quoted Dr Schapiro: <blockquote>Schapiro said the doctors paid by pharmaceutical companies are 'leaders in their fields,' and patients should want to see their physician among them. 'If their doctor is not on the list,' he said, 'maybe they should look for a different doctor.'</blockquote> On the other hand, several of the local news articles focused on physicians who were paid drug company speakers despite having chequered backgrounds, shall we say. In the Elmira Star Gazette[2]: <blockquote>Tulio Ortega, a Rochester psychiatrist who made $144,548 from Eli Lilly and AstraZeneca for speaking to groups of peers during the last two years - was put of [sic] probation for two years in 2008 and ordered to pay a $7,500 fine after being sanctioned for negligence and incompetence.</blockquote>Also, <blockquote>Lilly also paid Yonkers physician Ali Sherzoy $4,334 in the first two quarter of this year, even though he had his license suspended in New York and New Jersey earlier this year after pleading guilty to a count of criminal sexual contact in 2008. Sherzoy told ProPublica the incident involted his family's nanny and had nothing to do with his ability to practice medicine. Other New York doctors were sanctioned for incidents ranging from deficiencies in handling controlled substances to being convicted of tax evasion.</blockquote> Another article by the same author[3] noted two more cases: <blockquote>In 1991, Johnson City doctor Louis Mateya was charged with professional misconduct after a 22-year-old woman accused him of unzipping his pants and fondling himself during an examination. Mateya admitted guilt to the charge. The State Board for Professional Medical Conduct suspended his license for two months, followed by a 58-month probationary period, during which he was monitored by a psychiatrist and a health professional selected by the board. During the last nine months of 2009, GlaxoSmithKline paid Mateya, an internist at United Health Services, $1,750 to speak on behalf of Lovaza, Glaxo's prescription omega 3 fish oil, according to an e-mail from a United Health Services spokeswoman.</blockquote> Also, <blockquote>A second Southern Tier physician, Robert Douenias, of Corning, was also paid by Glaxo: $20,000 during the same time frame to deliver speeches, even though he received sanctions in 1992. According to the Office for Professional Medical Conduct (OPMC) records, Douenias lied about a previous criminal conviction on his application for a New York medical license. He received a censure and reprimand from the OPMC, was ordered to perform 200 hours of public service and was placed on probation for two years. Douenias said on his application he had never been convicted of a crime in any state or country, even though he had a previous conviction, according to OPMC records.</blockquote> Note that the original ProPublica reporting from their database emphasized cases of physicians paid to speak by pharmaceutical companies who also had been sanctioned by medical boards or the criminal justice system (see post <a href="http://hcrenewal.blogspot.com/2010/10/not-best-and-brightest-drug-marketers.html">here</a>). Although drug marketers like to tell physicians they are selected as "thought leaders" because of their brilliance, it appears that the selection of such "key opinion leaders" is not necessarily based on sterling character. "I'm Not There to Sell a Drug," But Then Why Use the Company's Slides? A number of the reports featured physicians who asserted their independence, at least from marketing goals.  For example, as reported by the Duluth (MN) News Tribune[4], <blockquote>A Duluth psychiatrist has received more than $525,000 since 2002 in payments from pharmaceutical companies, far more than any other Northland doctor, an analysis by the News Tribune shows. Dr. Tracy Tomac of St. Luke’s hospital was paid by the companies to give presentations on health and drug issues.</blockquote> Furthermore, <blockquote>'I’m there as an educator and resource,' she said. 'I’m not in business to do a sales pitch. I’m not a salesperson.'</blockquote> Also, <blockquote>In 2007, [Dr] Tomac said her presentations included content that was screened and approved by the FDA,....</blockquote> However, other reporting suggested that content "screened and approved by the FDA" was content provided by the pharmaceutical companies. For example, The Tennessean noted[5]: <blockquote>Dr. Jan Brandes heads the Nashville Neuroscience Group, a clinic that's now part of Nashville-based Saint Thomas Health Services. She made $111,150 in outside income over the past two years, largely in speaker fees paid by drug company GlaxoSmithKline, which markets a wide array of brand-name drugs, literally from A to Z.</blockquote> Dr Brandes also asserted, <blockquote>'The real point is I'm not there to sell a drug,' Brandes said. 'I'm there to interpret trial results, talk about disease states and help physicians understand where this research might fit in the context of their practice.'</blockquote> However, <blockquote>Most drug companies now require physicians to use the company's slides and presentations if they pay them to speak at an event. The industry says that is to ensure that all U.S. Food and Drug Administration rules are met and that physicians don't wander off into discussing uses for a particular product that haven't been approved by regulators.</blockquote> Also, an article in the Alexandria (VA) Gazette Packet[6] noted: <blockquote>Whistleblower lawsuits filed in recent years have accused firms of using doctors to push pills for unapproved uses during dinnertime talks, prompting at least 10 firms to settle cases for nearly $7 billion in the last three years. Since that time, pharmaceutical companies have tightened control over what happens during presentations given on their dime. Last year, for example, GlaxoSmithKline instituted a new policy prohibiting doctors from using their own slides during presentations. Starting in 2010, all doctors giving speeches sponsored by GlaxoSmithKline must use slides presented by the pharmaceutical company in the order specified. 'We want to make sure that everything is correct,' said Mary Anne Rhyne, a spokeswoman for GlaxoSmithKline. 'The best way to do that is to have our team prepare the slide.'</blockquote>Note that Dr Brandes above was paid mainly by GlaxoSmithKline, who presumably also provided all her slides and made sure that everything she said was "correct," at least in terms of what GlaxoSmithKline thought was correct. And one more example per MyFoxAtlanta[7]: <blockquote>Some of Georgia's highest paid physicians? .... and Roswell psychiatrist Dr. Michael Banov: over $68,000, also from Lilly.</blockquote>Dr Banov asserted: <blockquote>We don't sell medications. We simply educate physicians about data, and they make their own mind up.</blockquote>However, <blockquote>Banov says, the drug company - not him - creates the materials used in his speeches, and he says there's a reason for that. 'We are only able to present the data. We're not able to present our personal opinions. Our personal preferences, how we use the medication off label. any of that. So we're held to a very tight standard by the FDA,' said Banov.</blockquote>Drug companies may say they make their paid physician speakers use slides provided by the company to prevent them from talking about "off-label" uses.  However, there is no reason for a physician-educator not to talk about "off-label" uses, and physicians can prescribe any legal drug for whatever purpose they see fit, whether or not the drug is on or "off label."  But drug companies are prohibited by law from promoting off-label uses.  Requiring physicians to use drug companies' slides and preventing them from talking about "off-label" uses demonstrates that the physicians are functioning as marketers, not educators.  Summary As local reporters look into more cases, it becomes increasingly clear that up to now, pharmaceutical companies have been none too fussy about which physicians they pay to speak about their products. It is self-serving, but inaccurate for both sets of parties to assert that the companies choose only the "best and the brightest."  Furthermore, it has now become glaringly obvious that the purpose of "drug talks" is, well, to sell drugs.  Some physicians paid by drug companies to speak may bluster about their independence, but if they are using company provided slides, who can deny they are influenced  by the company.  Furthermore, when companies insist not merely on providing slides, but on ensuring that "everything is correct," then it is clear that it is the companies' talks that the physicians are giving.  Physicians giving company talks cannot be speaking independently, and hence must be regarded as company sales personnel, whose disguises as independent doctors or medical academics are now in tatters. Doctors who still choose to go to "drug talks" should have no illusions that they are being exposed to anything other than marketing.  Thus, I urge my colleagues to forgo the nice meals and the company prepared "correct" slides, and spend the time trying to more critically assess the clinical evidence.  References 1.  Ornstein C, Weber T. In Minnesota, drug company reports of payments to doctors arrive riddled with mistakes.  ProPublica, Dec 10, 2010.  Link <a href="http://www.propublica.org/article/in-minnesota-drug-company-reports-of-payments-to-doctors-mistaken">here</a>. 2. Hunter J. Rochester psychiatrist, sanctioned for incompetence, made $144K from drug companies. Elmira Star-Gazette, Dec 4, 2010. 3. Hunter J. Despite sanctions, physicians hired as drug company pitchmen. PressConnects.com, Dec 4, 2010. Link <a href="http://www.pressconnects.com/article/20101204/NEWS01/12040345/Despite-sanctions-physicians-hired-as-drug-company-pitchmen">here</a>. 4. Stahl B. Duluth doctor denies payments from drug companies sway decisions.  Duluth News Tribune, Dec 20, 2010.  Link <a href="http://www.duluthnewstribune.com/event/article/id/186841/">here</a>. 5. Ward G. They say they prescribe based on patients, not Big Pharma. Tennessean, Dec 19, 2010. Link <a href="http://www.tennessean.com/article/20101219/BUSINESS01/12190355/TN-doctors-get-big-bucks-from-drugmakers">here</a>. 6. Pope ML. Conflict of interest? - Alexandria doctors receive thousands of dollars from Big Pharma.  Alexandia Gazette Packet, Jan 13, 2010.  Link <a href="http://www.connectionnewspapers.com/article.asp?article=347442&paper=59&cat=104">here</a>. 7. Galvin B. Health watch: doctors and drug companies. MyFoxAtlanta, Dec 29, 2010. Link <a href="http://www.myfoxatlanta.com/dpp/health/Health-Watch%3A-Doctors-and-Drug-Companies-20101229-gda-sd">here</a>.

"I'm Not Here to Sell Drugs" - Then Why Use Company Provided "Correct" Slides?

In October, 2010, we discussed a series of reports by Pro Publica and multiple other respected news organizations about payments by seven pharmaceutical companies to thousands of doctors. Industry of…

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18 Jan 2011

Eli Lilly CEO on “America’s Growing Innovation Gap”

In “<a style="font-weight: bold;" href="http://online.wsj.com/article/SB10001424052748704111704575354863772223910.html">America’s Growing Innovation Gap</a>”, WSJ, July 9, 2010, Eli Lilly CEO John C. Lechleiter, Ph.D. writes that: <blockquote> “…the most important elements are the seeds of innovation, which equate to talented people and their ideas.” </blockquote> He then suggests these people are “highly skilled immigrants” abroad. In my own circle of friends, I know American pharma industry cast-offs who are both brilliant and talented. One with dual MS degrees in mathematics and computer science from a major university, one a skilled bioinformaticist I've had teach my healthcare informatics students as guest lecturer, one a brilliant programmer who could be considered the grandfather of computer image manipulation, another with years of expertise in pharma knowledge discovery. Then there's me – former Director of a Merck R&D support group and of The Merck Index - with degrees in medicine and post-doctoral specialization in biomedical informatics and information science, plus I'm an extra-class amateur radio licensee who understands complex technology at a level far beyond that of the usual pharmaceutical company worker.Yet no donuts for us. In recent years the pharmaceutical industry won’t grant any of us the courtesy even of an interview. However, in Mar. 2009 as I documented <a href="http://hcrenewal.blogspot.com/2009/03/lilly-i-were-referred-to-me-as-person.html">here</a>, I did receive an email solicitation from Lilly that read as follows ("sic's" are mine): <blockquote>“Your Help Is Requested for a Eli Lilly Career Opportunity! (sic) I am a member of the Staffing Team at Eli Lilly. I were referred to me (sic) as person who specializes in pharmaceutical based informatics. I wanted to reach out to me (sic), to see if you maybe able (sic) to recommend anyone that could qualify for the below position (sic)." </blockquote> I was not exactly inspired by this solicitation, perhaps written by one of the "highly skilled immigrants" Lechleiter covets.Nor was I inspired by the earlier solicitation I documented at my Jan. 2009 post "<a href="http://hcrenewal.blogspot.com/2009/01/what-me-worry-lilly-fined-over-zyprexa.html">What, Me Worry? Lilly Fined Over Zyprexa, Should Be Fined For eRecruitment Inanity As Well?</a>" I suggest if Mr. Lechleiter wishes to close America’s purported "innovation gap", he spend some time away from the executive castle and perhaps review some resumes – and the job solicitations his company proffers – in his HR department. A cause of the "innovation gap" may be leadership <a href="http://www.thefreedictionary.com/xenophilia">xenophilia</a>, at the expense of the American born-and-raised scientists the pharma industry is so fond of discarding. -- SS

Eli Lilly CEO on “America’s Growing Innovation Gap”

In “America’s Growing Innovation Gap”, WSJ, July 9, 2010, Eli Lilly CEO John C. Lechleiter, Ph.D. writes that:“…the most important elements are the seeds of innovation, which equate to talent…

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14 Jul 2010

Leaders of Discredited Financial Rating Agencies as Leaders of Health Care

This is the latest in our informal series on the cross-linkages between the thinking and leadership that lead to the global financial collapse/ great recession and that current in health care.  Last month, a US Senate sub-committee held hearings on the role of the rating agencies, actually for-profit corporations that evaluated securities, including derivatives, in the collapse.  The Fundamentally Conflicted Rating Agencies To briefly provide some background, these agencies were hired by the firms that created these securities to evaluate them.  Because the securities were complex, they were hard for investors to evaluate.  Investors had become used to using the rating agencies' evaluations as benchmarks for the quality and riskiness of complex securities.  Many did not seem to realize that the agencies themselves were for-profit corporations, or subsidiaries thereof, which made more money the more securities they rated.  The rating agencies gave many of their highest ratings (AAA) to securities that later failed.  (See an informal video discussion by corporate governance expert Robert A G Monks <a href="http://ragmonks.blogspot.com/2010/04/bob-monks-discusses-ratings-agencies.html">here</a>.) Some key quotes from the news coverage follow. <blockquote>Former credit rating agency officials said on Friday that the quest for market share fueled a drive for short-term profits, sacrificing credit quality in the process. Eric Kolchinsky, who was in charge of the Moody's (MCO.N) unit that rated subprime CDOs, or collateralized debt obligations, said that people 'across the financial food chain, from the mortgage broker to the CDO banker, were compensated based on quantity rather than quality,' according to testimony prepared for a Senate panel. 'The situation was no different at the rating agencies.'</blockquote><a href="http://www.reuters.com/article/idUSN2315396020100423?type=marketsNews">from Reuters</a> <blockquote>Former Moody’s Investors Service and Standard & Poor’s employees said they were excluded from assessing mortgage bonds if they questioned Wall Street’s conclusions and that credit-rating companies focused on protecting business at the expense of accurate grading. Richard Michalek, a former managing director in Moody’s structured products derivatives group, told the Senate Permanent Subcommittee on Investigations at a hearing today that managers said he was 'not welcome on deals' involving certain banks. Eric Kolchinsky, who led the Moody’s group that rated collateralized debt obligations made up of mortgage bonds, said he was berated by his boss when the company lost business after implementing more conservative ratings. S&P wrongly concluded that its increasing profits amid an inflated U.S. housing market was based on 'superior management skill and insight,' said Frank Raiter, a former managing director at the company. In reality, regulators had made the firm part of 'an oligopoly' by requiring investors to hold assets it rated, Raiter said.</blockquote><a href="http://www.businessweek.com/news/2010-04-23/moody-s-s-p-influenced-by-wall-street-senate-finds-update1-.html">per Bloomberg</a> <blockquote>The documents show, sometimes in excruciating detail, the conflicts of interest that many claim lie at the heart of the ratings business model and the concerns of employees about what was happening inside the companies well before the crisis broke. One employee at Standard & Poor's, the world's largest rating agency, said its handling of awkward questions in the summer of 2007 made it 'sound like the Nixon White House'.</blockquote> And, <blockquote>As one Moody's managing director wrote to his superiors in 2007, the company's errors, made it look 'either incompetent at credit analysis, or like we sold our soul to the devil for revenue, or a little bit of both'.</blockquote><a href="http://www.ft.com/cms/s/0/a3a9900e-4f39-11df-b8f4-00144feab49a.html">per the Financial Times</a> The two companies targeted by these hearings were Moodys, and Standard & Poors (a subsidiary of McGraw-Hill Inc). Overlaps with Health Care Leadership: Moody's Corporation Perusal of the roster of the Moody's board of directors in 2008, per that year's <a href="http://ir.moodys.com/secfiling.cfm?filingID=950123-07-4224">proxy statement</a>, reveals the following overlaps with health care leadership, of its 8 directors. Connie Mack - is also on the boards of EXACT Sciences Corporation (a biotechnology company), and <a href="http://hcrenewal.blogspot.com/search/label/Genzyme">Genzyme</a>.  He is the chair of the <a href="http://hcrenewal.blogspot.com/2010/02/hospital-executive-pay-in-land-where.html">H. Lee Moffitt Cancer Center</a>. Henry A McKinnell Jr - was chairman of the board and CEO from 2001-06 of <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">Pfizer Inc</a>. Basil L Anderson - is a member of the board of directors of <a href="http://hcrenewal.blogspot.com/search/label/Becton%20Dickinson">Becton Dickinson</a>. Overlaps with Health Care Leadership: McGraw-Hill Inc Via the company's 2008<a href="http://www.mcgraw-hill.com/2008mhpproxy/statement.pdf"> proxy statement</a>, of 12 directors: Sir Winfried Bischoff - is a director of <a href="http://hcrenewal.blogspot.com/search/label/Eli%20Lilly">Eli Lilly and Company</a>. Linda Koch Lorimer - is Vice President and Secretary of <a href="http://hcrenewal.blogspot.com/search/label/Yale">Yale University</a>, and a Director of Yale-New Haven Hospital. Kurt L Schmoke - is a Trustee of the Howard Hughes Medical Institute Sidney Taurel - was chairman and CEO of <a href="http://hcrenewal.blogspot.com/search/label/Eli%20Lilly">Eli Lilly and Company</a>. Summary So, in summary, the 20 board members of one for-profit "ratings agency," and of the corporation of which the other major "ratings agency" was a subsidiary, served on the boards of 2 biotechnology corporations (EXACT Sciences Corporation and Genzyme), one medical device company (Becton-Dickinson), one pharmaceutical company (Eli Lilly) , 2 major academic medical centers (Moffitt Cancer Center and Yale-New Haven), and one medical research institution (Howard Hughes).  Two were recent former CEOs and chairmen of the boards of 2 of the world's largest pharmaceutical companies (Pfizer and Eli Lilly).  Most of these health care organizations have been involved with cases we have discussed on Health Care Renewal (see links above). Given the serious concerns about the conflicts of interest that became the core of these corporations' business models, and their central role in the global financial collapse, one has to wonder why so many of the directors who presided over them still have such influential positions in health care organizations? As we have <a href="http://hcrenewal.blogspot.com/2010/02/university-president-but-no-longer.html">pointed out</a>, as the world economy was driven to near ruin by "masters of the universe," some of the same also became leaders of academia and academic medicine in their spare time. Maybe this made sense 10 or 20 years ago, but why does it still make sense? On the other hand, now that we understand how bad the leadership of finance really was, it is a little easier to understand why the leadership of health care has become so bad. It seems reasonable to hypothesize that some of the problems of academia, and particularly the problems of medical academia, may have been at least enabled by leadership more used to working in an increasingly amoral marketplace than to upholding the academic mission. The failures of the leadership and governance of finance thus suggest we need to re-examine the leadership of health care.

Leaders of Discredited Financial Rating Agencies as Leaders of Health Care

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10 May 2010

Quintiles to More Heavily Directly Invest in the Drugs Which it Evaluates - But Not to Worry, Says an Expert?

The Associated Press just <a href="http://www.google.com/hostednews/ap/article/ALeqM5jbIAnadjVl8lbQLqzQgrd0T3mPzwD9DSRKEO0">reported </a>on the latest trend in commercially sponsored clinical research, direct investment by contract research organizations (CROs) in the development of specific drugs by particular pharmaceutical or biotechnology companies. Here is the background in the article: <blockquote>Pharmaceutical companies previously did all their own research and testing and submitted the results to the Food and Drug Administration for approval to put a medication on the market. Since the 1990s or so, Big Pharma has farmed out more and more of that testing to companies like Quintiles Transnational Corp., which grew quickly to meet the demand.</blockquote>Now Quintiles is branching out... <blockquote>Now Durham, N.C.-based Quintiles is the world's biggest contract research organization, and more than ever, it's using its deep pockets to entwine itself with the pharmaceutical companies, fronting them cash and services for a piece of the profits once a drug is approved. Quintiles, which was created in 1982, upped the ante last month, saying it wants to invest even more in potential drugs as pharmaceutical companies grapple with the down economy. Quintiles is hoping its new investments will produce enormous payoffs in the future,.... Quintiles' decision to become more aggressive in taking investment risks comes at a time it's betting drug makers can use the resources it can offer, both cash and services. 'They're both currency for managing risk and having skin in the game,' said Ron Wooten, a Quintiles executive vice president who heads the company's capital investment group. Controversy over creating the drug investment unit in 2000 was key in pushing Quintiles founder Dennis Gilling and several private-equity firms to buy out shareholders for $1.75 billion and take the company private again in 2003. Wall Street analysts complained they couldn't estimate what the drug investments were worth, prompting Gilling and others to decide the company's stock was undervalued. The private company no longer publishes its profits. It claims revenues of about $3 billion a year. That's also about what Quintiles has invested in other drug companies.</blockquote>Furthermore, <blockquote>Quintiles appears to be uniquely positioned to both invest in and test potential medications. None of the half-dozen major shareholder-owned contract research organizations will have a drug-investment division after Wilmington, N.C.-based Pharmaceutical Product Development Inc. spins off its unit in a few months, Coldwell said. The payoffs for the risk of developing a drug can be huge. In 2002, Quintiles took a chance on Eli Lilly and Co.'s antidepressant Cymbalta. Quintiles said it invested $125 million in cash, then spent another $400 million on a sales force of more than 550 after the product launch. Cymbalta is now Lilly's second-biggest drug. Quintiles said it's brought in more than $700 million so far for a stream of royalties lasting to 2012. Japan's Eisai Co. is hoping Quintiles' money and experience helps it double the number of potential treatments it can put through testing simultaneously</blockquote> The article raised a concern that "the buffer between drug makers and testers are again blurred." But not to worry.... Here is the response from Quintiles, <blockquote>Wooten, the Quintiles executive, doesn't see his company's increased interest in bringing drugs to the market affecting its testing objectivity. Instead Quintiles is the outsider turning a hard eye on which pharmaceuticals will become profitable. 'It allows you to really get to the essence of the data that you're looking at instead of what you hope it says,' he said. There isn't 'the natural bias that you would have with your own babies.'</blockquote> Furthermore, the AP reporter got reassurances from a noted academic expert in the area, <blockquote>The FDA preserves the integrity of testing in a landscape already pockmarked with potential conflicts of interest that include company-sponsored academic research and investigators testing drugs while owning shares in companies that own the drug, said Kenneth Getz, a senior fellow at Tufts University's Center for the Study of Drug Development. The FDA's view is that any company with a financial stake in a potential drug will face similar scrutiny from the agency. 'It's assumed,' FDA spokeswoman Karen Riley wrote in an e-mail, 'that drug/device/biologic companies who sponsor trials of pending products have a conflict because they will gain if the product is approved.' Besides, pharmaceutical companies have navigated the tricky territory that comes with testing, Getz said. So have the companies like Quintiles that have taken on the outsourced work, he said. 'These potential conflicts of interest are ever-present, and the real question is how do companies manage these potential conflicts effectively,' he said. 'These are massive, massive companies that have thousands of staff that are not generally aware of a conflict of interest at a corporate level. They are paid to do a quality job that meets internal and regulatory guidelines or they are not going to keep their jobs.'</blockquote> Here on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, we have discussed how the <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> that are now pervasive in health care can adversely affect clinical care, teaching, and research.  We have looked at how clinical research sponsors, who have a vested interest in having the results favor the products and services they sell, may <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulate</a> the design, implementation, analysis, and dissemination of research, and when all else fails, <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppress</a> unfavorable results.  We have also looked at problems with the ethics and quality of research done by <a href="http://hcrenewal.blogspot.com/search/label/contract%20research%20organizations">contract research organizations</a>, who are, after all, paid by companies again with vested interests in selling particular products or services. Given all that, one may argue that having contract research organizations invest in particular drugs or devices which they are also evaluating through clinical research may not make things much worse.  However, at the least, it seems to me that it further obfuscates conflicts of interest that may lead to biased research results, dishonoring the patients who volunteered for the trials, and biasing the information on which patients and physicians make decisions. Finally, I should note how Quintiles new investments in specific drugs was defended in the article.  The article quoted Quintiles executive vice president Ron Wooten suggesting that Quintiles might be able to be objective in making the original decision to invest in a drug. He conveniently did not address what might happen after the investment was made, when Quintiles was performing, analyzing, and reporting clinical research on a drug or device in which it had invested. The article also quoted Kenneth Getz, the Senior Fellow at Tufts, who seemed unconcerned about the issue.  What the article did not mention is that the Tufts Center for the Study of Drug Development, at which Mr Getz is based, <blockquote>receives unrestricted grants from pharmaceutical and biotechnology firms, as well as companies that provide related services to the research-based industry (e.g., contract research, consulting, and technology firms). These grants represent approximately 40% of Tufts CSDD’s operating expenses. </blockquote>per the Center's <a href="http://csdd.tufts.edu/about/financial_disclosure">web-site</a>. Another <a href="http://70.42.48.93/printpage.asp?ref=http://70.42.48.93%2FAbout%2FResearchStaff.asp">page on the web-site</a> lists Mr Getz's qualifications, <blockquote>Kenneth A. Getz is a senior research fellow at the Tufts CSDD. Considered an expert on the investigative site and CRO markets, R& D management, ECT solutions adoption and clinical research volunteerism,.... Mr. Getz is the founder and chairman of CISCRP .... He holds an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University and a bachelor's degree, Phi Beta Kappa, from Brandeis University. Mr. Getz worked for over seven years in management consulting, where he assisted biopharmaceutical companies in planning and implementing drug development strategies. He is also the founder and former CEO of CenterWatch.</blockquote> Note that Mr Getz seems to have no training in biomedical science, medicine, or health care.  Furthermore, CISCRP (the Center for Information and Study on Clinical Research Participation), has an advisory board (see their web-site <a href="http://www.ciscrp.org/patient/who.html">here</a>) that includes representatives of pharmaceutical companies (Vertex Pharmaceuticals, Biogen Idec, and Roche), and contract research organizations, (PPD Inc, and particularly, in this case, Quintiles). The vast <a href="http://www.ciscrp.org/patient/supporters.html">list</a> of the Center's "supporters" include a catalog of drug and biotechnology companies (including Abbott Vascular, Amgen, AstraZeneca, Biogen Idec, Daiichi Sankyo Pharmaceutical Development, Eli Lilly, Forest Laboratories, Genentech, Genzyme, GlaxoSmithKline, Janssen, Johnson and Johnson, Merck, Novo Nordisk, Novartis, Ortho-McNeil, Pfizer, Roche, Sankyo, Sanofi-Aventis, Serono, Shire, Takeda, and Wyeth), and contract research organizations, (including Covance, Parexel, PPDI, and notably again, Quintiles.) So the other lesson from this bit of news is how the information the public, health care professionals, and policy makers  receive about health care policy is frequently shaped by people with horses in the race, but that such influences are rarely disclosed.  This article included an interview with a single apparently academic expert who provided reassurance that the conflicts of interest discussed in the article were not really so worrisome.  This expert, however, failed to disclose his own extensive, albeit somewhat indirect ties to a variety of corporations that might benefit from the conflicts discussed as the main topic of the article, including corporations that were directly involved in them (Quintiles and Eli Lilly).  Maybe because the reporter thought that the expert was unbiased, there was no attempt to find a contrasting opinion. So I say again, again, again, health care professionals, policy  makers, and people in general need to be extremely skeptical of most of the apparently unbiased pronouncements made about medical and health care policy issues in the media.  It would be a small step toward a more transparent discussion if those who expressed opinions would also fully disclose in detail their relevant conflicts of interest.

Quintiles to More Heavily Directly Invest in the Drugs Which it Evaluates - But Not to Worry, Says an Expert?

The Associated Press just reported on the latest trend in commercially sponsored clinical research, direct investment by contract research organizations (CROs) in the development of specific drugs by …

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17 Feb 2010

Pharmacy Benefit Managers as Pharmaceutical Marketers

We posted a number of times about questionable practices Eli Lilly used to market its atypical anti-psychotic drug Zyprexa (olanzapine). A post from 2007, with links backward, is <a href="http://hcrenewal.blogspot.com/2007/02/more-on-zyprexa-memos.html">here</a>, and our most recent post is <a href="http://hcrenewal.blogspot.com/2009/06/handbook-for-ghost-writing.html">here</a>. The company remains entangled in litigation over its marketing of this drug. That litigation has lead to the release of numerous internal documents that provide quite a view of Lilly's marketing practices. Bloomberg continued its reporting on these documents, with its latest effort <a href="http://www.boston.com/business/healthcare/articles/2009/06/14/zyprexa_suit_highlights_cvs_links_to_lilly/">here</a> via the Boston Globe, describing yet another surprising way this drug was sold: <blockquote> A unit of CVS Caremark Corp. used its access to doctors to market Eli Lilly & Co.'s Zyprexa antipsychotic while it was under contract to bargain with the drug maker on behalf of health insurers, internal Lilly files disclosed in a multibillion-dollar lawsuit by insurers show. The subsidiary of CVS, the largest US drugstore chain, touted Zyprexa starting in 2003, according to e-mails made public by lawyers suing Lilly for overpayment. CVS's AdvancePCS, a pharmacy benefit manager, or PBM, offered to send 120,000 letters to doctors promoting the drug, Lilly's top-seller with $4.7 billion in sales last year, according to a confidential 2004 proposal. The CVS unit said it would charge $5 per letter. AdvancePCS, acquired by Woonsocket, R.I.-based CVS in 2007, said in the documents that the direct-mail campaign was 'designed to influence key prescribers' as part of a 'tactical plan for Zyprexa.' </blockquote> Furthermore, <blockquote> In AdvancePCS's 2004 pitch to Lilly offering to send out letters promoting Zyprexa, Kevin Aholt, the company's assistant vice president in charge of strategic alliances, said he could target physicians based 'on the most recent AdvancePCS claims data,' according to the unsealed documents. Aholt also said that one of the 'key issues' in the market for antipsychotic drugs was finding ways to 'accelerate the growth of new patient starts,' according to the proposal. </blockquote> Also, <blockquote> Steven Fuchs, an official at the PBM, asked Lilly officials in an April 2004 e-mail whether he should include information about Zyprexa's ability to calm agitated patients in the next round of letters to doctors. 'Would a discussion of that be something you would want to include?' Fuchs asked, according to the document. Lilly marketing executive Scott Dell responded in an e-mail that officials at the drug maker had discussed asking AdvancePCS to include material highlighting 'the new bipolar maintenance indication for Zyprexa.' </blockquote> AdvancePCS was not the only pharmacy benefits manager (PBM) that offered to help sell Zyprexa. <blockquote> CVS rival Express Scripts Inc. also sent out Zyprexa marketing letters, according to the unsealed documents and also isn't named as a defendant in the suits. </blockquote> So here we have at least two pharmacy benefit managers (PBMs) offering to help market a particular drug, for money, of course. What is the problem here? <blockquote> CVS's contracts with insurers and pensions meanwhile place it in an adversarial posture with Lilly, requiring it to use its buying power as leverage in drug-price negotiations. 'The problem is that PBMs are negotiating these hidden deals while at the same time telling employers that they represent them at the negotiating table,' said Gerry Purcell, a former PBM executive who advises companies on their drug plans. 'These documents will add fuel to the perception that the companies and the PBMs are in cahoots with each other.' </blockquote> Also, <blockquote> While PBMs negotiate on behalf of insurers, most states don't designate them as agents of the benefit plans, said Robert Garis, a pharmacy professor at Creighton University in Omaha who studies the industry. As a result, they aren't legally required to act only in the best interest of their clients, he said. Maine is one of a few states that have specified PBMs as fiduciaries, or agents, he noted. 'The companies have gotten around that by adding language to their contracts that exclude them from having to meet those fiduciary duties,' Garis said. </blockquote> Apparently, in this case, one PBM said it disclosed its relationship to the drug company to physicians, but it is not clear whether it was disclosed to the health care insurers and managed care organizations which paid the PBM to reduce the costs of drugs: <blockquote> CVS, which isn't a defendant in the Lilly suit, said that it tells doctors when it has 'financial relationships' with drug makers and that they are free to opt out of mailings. 'To engage in a point/counterpoint in a media outlet rather than in court would not be productive,' said Lilly spokeswoman Marni Lemons. Lemons declined to answer specific queries about the CVS or Express Scripts letters, whether Lilly paid for the practice, or other questions raised by the unsealed documents.... CVS said in its e-mailed statement that it has 'no active educational programs' related to Zyprexa. 'CVS Caremark discloses to its PBM clients that it may have financial relationships with pharmaceutical manufacturers in connection with these educational programs,' said Christine Cramer, a spokeswoman for the chain. 'CVS Caremark's PBM clients are aware of these programs and have the opportunity to opt out.' Maria Palumbo, a spokeswoman for Express Scripts, didn't respond to eight telephone and e-mail requests seeking comment. CVS covers 82 million people, with a market share of 12 percent, and is the largest pharmacy benefit manager, according to Atlantic Information Services. Express Scripts, which covers 55 million people, is the fifth largest. PBMs process about 75 percent of the retail prescriptions written annually in the United States, according to the insurance plans. The insurance plans sued the drug maker in 2005, contending it used researchers, pharmacy benefit managers, advocacy groups, and public agencies to promote Zyprexa. </blockquote> Whether or not the PBMs disclosed their relationships to the pharmaceutical company to everyone who might be interested, it does seem that having PBMs who are supposed to help insurers and managed care organizations control drug costs be paid by pharmaceutical companies to market drugs is yet another new species of institutional conflict of interest. Like the many other conflicts of interest, individual and institutional, we have discussed, this one appears to be mutually advantageous to the parties involved. However, it could have adverse consequences for physicians, patients, and the health care system. If the organizations that are supposed to be controlling drug costs are also promoting expensive drugs, the likely result would be excess prescription of expensive drugs to patients who may not derive benefits from the drugs outweighing their harms. This is another reminder how much we need more sunshine shone on the multitudinous conflicts of interest affecting just about every type of actor within the current US health care system.

Pharmacy Benefit Managers as Pharmaceutical Marketers

We posted a number of times about questionable practices Eli Lilly used to market its atypical anti-psychotic drug Zyprexa (olanzapine). A post from 2007, with links backward, is here, and our most re…

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16 Jun 2009

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