Turnabout is Fair Play - Why University of Illinois Students, Faculty and Alumni Should Question the Dean of Medicine about Novartis' Ethical Misadventures

Since 2006, we have posted repeatedly about  what was then a new species of severe conflicts of interest.  This occurred when leaders of academic medical institutions or other health care non-profit organizations or non-governmental organizations (NGOs) also serve as members of <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20directors">boards of directors</a> of for-profit corporations  whose products and actions have major effects on health care.<br /><br />Most recently, we <a href="http://hcrenewal.blogspot.com/2014/03/american-board-of-internal-medicine.html">discussed </a>the cases of the current CEO of the National Quality Forum and past CEO of the American Board of Internal Medicine who was found to be on the board of for-profit hospital group purchasing organization Premier Inc, and had been on the board of its privately held but for-profit predecessors.  We also <a href="http://hcrenewal.blogspot.com/2014/02/incoming-president-of-iom-outed-as.html">discussed</a> the case of the incoming president of the US Institute of Medicine and former Chancellor of Health Affairs at Duke University who was on the boards of Alnylam Pharmaceuticals, Medtronic and Pepsico.<br /><br />We also recently <a href="http://hcrenewal.blogspot.com/2014/03/better-late-than-never-jama-article.html">posted</a> about the first time these sorts of severe conflicts of interest issue have been addressed in a large circulation medical journal.  A commentary in JAMA called for many such conflicts to be banned.<br /><br />The JAMA article, and much of the discussion surrounding the NQF and IOM cases focused on how loyalties to outside for-profit corporations could affect leaders of academic and other non-profit organizations.  However, we also noted (e.g., <a href="http://hcrenewal.blogspot.com/2014/02/the-carefusion-dr-denham-nqf-leapfrog.html">here</a> and <a href="http://hcrenewal.blogspot.com/2014/02/incoming-president-of-iom-outed-as.html">here</a>) how company directors should be accountable for the actions of their companies, even if they also happen to also be academic or non-profit leaders. <br /><br />Thus, academic and non-profit leaders may find themselves in the awkward position of being held accountable for unethical or even illegal actions of the companies on whose boards they sit.  Such corporate actions may contradict the mission of the institutions whose leadership is their primary job, and whose mission they are supposed to uphold.  <br /><br />While we were writing about these somewhat convoluted, but very important issues, a fellow blogger discovered yet another academic leader serving on the board of a health care corporation, while simultaneously the media reported multiple examples of that corporation's ethical misadventures on his watch.  Those who care about that academic institution ought to question whether a leader accountable for such misadventures is fit to continue to lead.  Yet so far, no one has publicly juxtaposed this leaders' responsibilities to his institution's mission and how the corporation over which he is supposed to exercise stewardship has been taking actions that contradict that mission<br /><br /><b>The Dean of the College of Medicine at the University of Illinois Is a Director of Novartis</b><br /><br />Paul Levy, blogging on Not Running a Hospital, <a href="http://runningahospital.blogspot.com/2014/01/time-to-fire-somebody.html">noted </a>a print advertisement for the Intuitive Surgical daVinci robot.  The advertisement implied endorsements by academic surgeons at the University of Illinois.  Levy suggested that surgical faculty acting as salespeople for a device company appeared to violate the university code of conduct.  This <a href="http://runningahospital.blogspot.com/2014/01/where-is-ui-board-of-trustees.html">concern was heightened</a> by the status of several of the surgeons in the advertisement as clinical and academic leaders.     <br /><br />Mr Levy then <a href="http://runningahospital.blogspot.com/2014/01/how-fish-rots.html">discovered</a> that the Dr Dimitri Azar, Dean of the University of Illinois College of Medicine, to whom these surgeon report, was on the board of Novartis, the multinational pharmaceutical and device company.  Dr Azar's position is easily verified by consulting the <a href="http://www.novartis.com/about-novartis/people/board-directors.shtml">Novartis web-site</a>.  Mr Levy further discussed the case <a href="http://runningahospital.blogspot.com/2014/02/how-much-should-dean-be-paid-who-should.html">here</a> and <a href="http://runningahospital.blogspot.com/2014/02/all-in-days-work-700000-450000.html">here</a>.  Then he  <a href="http://runningahospital.blogspot.com/2014/03/a-matter-of-public-trust.html">reviewed</a>  the extensive dealings between the University of Illinois and Novartis and its subsidiaries, raising suspicion that the Dean's known involvement with the company may have lead to its favorable treatment by the university.<br /><br />But wait, there is another major dimension to this problem.  <br /><br /><b>Novartis' Recent Ethical Misadventures</b><br /><br />Novartis, over which Dr Azar is supposed to be exerting stewardship, has made a series of ethical missteps according to recent media reports.  I will summarize them in chronological order according to the date of media publication.<br /><br /><u>Novartis, Roche Fined for Anti-Competitive and Deceptive Practices in Italy to Encourage Sales of Lucentis</u><br /><br />According to a March 5, 2014 <a href="http://www.nytimes.com/2014/03/06/business/international/italy-fines-novartis-and-roche-in-collusion-case.html">article</a> in the New York Times, Novartis was fined for anti-competitive and deceptive practices,  <br /><br /><blockquote class="tr_bq">Italian antitrust authorities said on Wednesday that they had fined two Swiss pharmaceutical companies, Novartis and Roche Holdings, a total of $250 million for <i>colluding to keep doctors from prescribing a relatively inexpensive eye treatment in favor of a more expensive drug.</i><br /><br /><div class="story-body-text story-content" data-para-count="436" data-total-count="723" itemprop="articleBody">The authorities said the two companies had sought to steer doctors away from Avastin, an anticancer drug developed by Genentech that has been used for years as an off-label treatment for common eye problems. Instead, they said, the companies had tried to 'channel demand toward the much more expensive drug Lucentis, through an artificial distinction between the two products,' essentially by <i>overstating the dangers of Avastin use.</i></div><div class="story-body-text story-content" data-para-count="235" data-total-count="958" itemprop="articleBody"><br /></div><div class="story-body-text story-content" data-para-count="235" data-total-count="958" itemprop="articleBody">It is not the first time such substitution efforts have brought an unwanted spotlight: Genentech got into trouble in the United States in 2010, when it was found to be offering doctors <a href="http://www.nytimes.com/2010/11/04/business/04eye.html?pagewanted=all" title="Previous coverage of the rebates.">secret rebates</a> to prescribe Lucentis over Avastin.</div><br />Novartis, which holds the rights to market the two drugs outside the United States, has been <i>fined 92 million euros by the Italian regulators. </i>And Roche, which acquired Genentech in 2009, was fined 90.5 million euros, for a total of about $250 million in the Italian case. </blockquote><br />Given that many drug companies have been cited for marketing their products for unapproved, or off-label uses, it is ironic that in this case, Novartis managers said they were shocked, shocked by the ruling because it could encourage off-label use:<br /><br /><blockquote class="tr_bq"> Novartis said in a statement that the Italian decision 'openly encourages and promotes the widespread unlicensed intravitreal use of Avastin contrary to the requirements of European and Italian regulatory law,' and 'undermines the European regulatory framework designed to protect patient safety.'</blockquote><br />The NY Times also reported that one method the two companies were alleged to use to encourage Lucentis rather than Avastin use was to launder their message through patient advocacy groups,<br /><br /><br /><blockquote class="tr_bq"><div class="story-body-text story-content" data-para-count="230" data-total-count="4756" itemprop="articleBody">The Italian authorities discovered numerous messages between Roche and Novartis in which the two companies discussed what kinds of communications would be needed to induce doctors and hospitals to adopt the more expensive product.</div><div class="story-body-text story-content" data-para-count="230" data-total-count="4756" itemprop="articleBody"><br /></div><div class="story-body-text story-content" data-para-count="313" data-total-count="5069" itemprop="articleBody">According to one such message from early 2013, cited in documents in the case released Wednesday, growing cost pressure in Italy and France to use Avastin had 'reinforced the political dimension of the debate,' and 'further reinforcement of the Lucentis value proposition to all stakeholders is critical.'</div><div class="story-body-text story-content" data-para-count="239" data-total-count="5308" itemprop="articleBody"><br /></div><div class="story-body-text story-content" data-para-count="239" data-total-count="5308" itemprop="articleBody">Another message called for the companies to '<i>work with diabetes patient groups to increase voiced concerns about safety risks of unlicensed therapies' — a reference to Avastin</i> — for an eye condition known as diabetic macular edema.</div></blockquote><div class="story-body-text story-content" data-para-count="239" data-total-count="5308" itemprop="articleBody"><br /></div><div class="story-body-text story-content" data-para-count="239" data-total-count="5308" itemprop="articleBody"><u>Novartis Paid Doctors to Act as Marketers for Starlix and Other Drug</u></div><div class="story-body-text story-content" data-para-count="239" data-total-count="5308" itemprop="articleBody"><br /></div>After the New York state attorney general filed suit against Novartis, a March 15, 2014 Newsday <a href="http://www.newsday.com/news/health/novartis-gave-doctors-thousands-to-prescribe-pills-feds-allege-1.7404245">article</a> included interviews with physicians that suggested how the company turned them into disguised marketers:<br /><br /><blockquote class="tr_bq">Dr. Howard Brand says he had <i>one goal</i> when he gave a speech at a Miami hotel in the early 2000s -- <i>to tout the diabetes pill Starlix for the pharmaceutical company Novartis. </i><br /><br />The giant Swiss drugmaker, which reported $57.9 billion in global sales in 2013, paid the Stony Brook endocrinologist $1,500 for his talk at a doctors' meeting, Brand said in an interview. Novartis also paid for Brand's airfare and his weekend hotel stay, he said.<br /><br />'<i>It was self-serving</i>, but I also thought it was a benefit to patients,' said Brand,...</blockquote><br />Furthermore,<br /><br /><blockquote class="tr_bq"> Brand, the Miami speaker, said in an interview that investigators had not approached him about the payments he accepted.<br /><br />He said Novartis paid him a total of $10,000 to $12,000 for speeches, mostly at restaurant dinners it sponsored. The payments, which Brand said he received before 2010, are not reflected on the Novartis website.<br />'<br />Even [with] the notion that <i>we were paid solicitors</i>, I think people really paid attention,' he said. 'Of course, a lot of doctors just enjoyed going to dinner.'<br /><br />Brand said he accepted more than $60,000 in speaker's fees from drugmakers, including Novartis, in one two-year period. </blockquote><br /><br />Another physician allowed that Novartis furnished the material for his "educational" talks,<br /><br /><blockquote class="tr_bq">Dr. Howard Hertz, a Babylon internist, confirmed that he had received $4,000 from Novartis in 2010 and 2011 for talking about its hypertension drugs to colleagues. Hertz said he <i>dealt with a Novartis sales rep who brought information about the company's pills to his office. 'He would educate me about the product, give me slides to study,</i>' he said.<br /><br />Hertz said the <i>slides were on CDs and made him an expert</i> on Novartis drugs such as Diovan, a blood pressure pill, Lotrel and Valturna. He said he spoke mostly about Diovan and Lotrel.<br /><br />'We had dinners whereby I would speak about the products and speak to the colleagues,' Hertz said. 'I became somewhat of an expert in these products.'</blockquote><br />Note that Dr Hertz's expertise seemed to come exclusively from information provided by a company salesperson, making it obvious that he was not hired for his prior expertise as a physician.<br /><br />The prosecutors allege that Novartis' payments of some $65 million amounted to illegal kickbacks.  This is only an allegation.  However, it seems obvious that Novartis paid physicians to act as salespeople.  Newsday asked bioethicist Arthur Caplan about these actions,<br /><br /><blockquote class="tr_bq">'To even hear about it just takes my breath away,' Caplan said. 'It sounds like <i>egregious, inexcusable violations of agreed upon legal and ethical standards </i>. . . with an inexcusably complicit group of physicians,' Caplan said.</blockquote><br /><u>Japanese Hospital Investigation Alleged Novartis Manipulated Research</u><br /><br />A March 17, 2014 <a href="http://www.fiercepharma.com/story/tokyo-hospital-exec-says-novartis-employees-deeply-involved-leukemia-drug-t/2014-03-17">article</a> in FiercePharma stated that Japanese investigators found that Novartis had manipulated clinical research to make its results appear more favorable to the company's products,<br /><br /><blockquote class="tr_bq">Novartis employees were more involved in a Japanese drug study than previously suspected, a Tokyo hospital official said. In an investigative report released last week, the University of Tokyo Hospital said doctors not only let Novartis  employees collect patient data from various trial sites but also allowed the Swiss drugmaker into its records on all 255 trial participants, Japanese media reports.<br /><br />Plus, at least one Novartis employee was involved in planning the trial, designed to compare side effects of multiple leukemia treatments, the hospital found, according to Japan's <i>Mainichi</i> news. Those treatments included Tasigna<a href="http://www.fiercepharma.com/tags/tasigna"></a>, the company's follow-up to the hugely successful Gleevec (imatinib).<br /><br />In fact, according to<i> NHK World</i>, hospital director Takashi Kadowaki said Friday that Novartis employees were 'virtually managing the study.' </blockquote><br /><a href="http://mainichi.jp/english/english/newsselect/news/20140315p2a00m0na006000c.html">According to Mainichi</a>, this sort of clinical research manipulation is taken very seriously in Japan,<br /><br /><blockquote class="tr_bq"> Senior Ministry of Health, Labor and Welfare officials called the case <i>a serious situation and said the researchers involved showed a lack of ethics. </i>They called for a detailed investigative report from the hospital and are <i>considering punitive measures</i>. The ministry will consider a new law to prevent <i>corruption in clinical tests </i>in the wake of a scandal involving the clinical trial of antihypertensive drug Valsartan.</blockquote><br />It is obvious this story is not from the US, because the drug company has already apologized,<br /><br /><blockquote class="tr_bq"> A representative for Novartis Pharma's PR division said, '<i>We want to apologize to patients and doctors</i>. We must refrain from comment on the investigation, which is being handled outside our company.'</blockquote><br /><u>Indian Regulator Cancels Import License Alleging Fraud by Novartis to Market Veterinary Drug</u><br /><br />A March 18, 2014 <a href="http://www.business-standard.com/article/companies/novartis-might-face-legal-action-penalty-for-faking-documents-114031800760_1.html">article</a> in the New Delhi Business Standard told how Indian regulators accused Novartis of fraud, opening with,<br /><br /><blockquote class="tr_bq">Swiss drug maker Novaris is likely to face legal action for allegedly <i>faking documents to seek registration of its veterinary product Tiamulin Hydrogen Fumarate (80 per cent granules) in India</i>. The drug regulator, Drugs Controller General of India (DCGI)), has <i>already cancelled the company’s import licences as well as existing registration certificate for the product.</i></blockquote><br /><b>Summary</b><br /><br />So in just the last few weeks, evidence appeared that Novartis engaged in collusive anti-competitive and deceptive practices marketing drugs in Italy, paid physicians to act as marketers in the US, manipulated drug studies in Japan, and lost an import license in India due to alleged fraud.  By the way, in 2013, Novartis was fined for anti-competitive practices in its marketing of Fentanyl by the European Commission (look <a href="http://hcrenewal.blogspot.com/2013/12/the-camels-aching-back-johnson-and.html">here</a>), and in 2011 its Sandoz subsidiary settled allegations of misreporting prices in the US for $150 million (look <a href="http://hcrenewal.blogspot.com/2011/12/legal-settlements-have-become-so-common.html">here</a>)   Other Novartis misadventures from 2010 and earlier appear <a href="http://hcrenewal.blogspot.com/search/label/Novartis">here</a>.  So Novartis has quite an impressive, if not infamous record of ethical failures.<br /><br />While he is Dean of medicine at the University of Illinois, Dr Dimitri Azar is also a director of Novartis, and hence has a fiduciary duty for the company's stewarship.  While questioning Dr Azar's role in the participation of his faculty in advertising for Intuitive Surgical, perhaps those who care about the reputation of the University of Illinois and its ability to fulfill its mission ought to ask how the poor ethical track record of the company Dr Azar is supposed to be overseeing reflects on his ability to defend the mission of the university and the medical school.<br /><br />While parties that enable or enter into arrangements that create conflicts of interest in health care may be thinking mainly of the advantages that they may accrue, many of these arrangements create accountability and obligations, even if they are honored mainly in the breach.  If leaders of academic medicine and health care non-profit organizations insist on becoming directors, and hence stewards of for-profit health care corporations, they ought to be held accountable for the actions of these corporations, and how these actions reflect on their primary obligations to the academic and non-profit organizations they have also pledged to serve.<br /><br />True health care reform would make health care leaders accountable for putting patients' and the public's health ahead of their own self-interest. <br /><br />

Turnabout is Fair Play - Why University of Illinois Students, Faculty and Alumni Should Question the Dean of Medicine about Novartis' Ethical Misadventures

Since 2006, we have posted repeatedly about  what was then a new species of severe conflicts of interest.  This occurred when leaders of academic medical institutions or other health care non-profit o…

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The Camel's Aching Back - Johnson and Johnson and Novartis Fined 16 Million Euro for "Anticompetitive" Scheme to Delay Generic Fentanyl

Legal and regulatory actions unfavorable for giant pharmaceutical, biotechnology and device company Johnson and Johnson just keep coming.  We last discussed such a story only two weeks ago <a href="http://hcrenewal.blogspot.com/2013/12/how-many-straws-johnson-and-johnson.html">here</a>. <br /><br /><b>The Latest Case </b><br /><br />This latest story got only desultory US coverage from the wire services.  The most complete version is in the European Commission <a href="http://europa.eu/rapid/press-release_IP-13-1233_en.htm">press release</a>.  <br /><br />The basics were:<br /><br /><blockquote class="tr_bq"><i>The European Commission has imposed fines of € 10 798 000 on the US pharmaceutical company Johnson & Johnson (J&J) and € 5 493 000 on Novartis of Switzerland. In July 2005, their respective Dutch subsidiaries concluded an anticompetitive agreement to delay the market entry of a cheaper generic version of the pain-killer fentanyl in the Netherlands, in breach of EU antitrust rules.</i></blockquote><br />In more detail,<br /><br /><br /><blockquote class="tr_bq"><div class="A_Standard__35__20_Normal">J&J initially developed Fentanyl and has commercialised it in different formats since the 1960s. In 2005, J&J's protection on the fentanyl depot patch had expired in the Netherlands and <i>Novartis' Dutch subsidiary, Sandoz, was on the verge of launching its generic fentanyl depot patch</i>. It had already produced the necessary packaging material. </div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">However, in July 2005, instead of actually starting to sell the generic version, <i>Sandoz concluded a so-called 'co-promotion agreement' with Janssen-Cilag, J&J's Dutch subsidiary.</i> <i>The<span class="A__T3"> agreement </span>provided strong incentives for Sandoz not to enter the market</i>. Indeed, the agreed monthly payments exceeded the profits that Sandoz expected to obtain from selling its generic product, for as long as there was no generic entry. <span class="A__T3">Consequently, <i>Sandoz did not offer its product on the market. The agreement was stopped in December 2006 when a third party was about to launch a generic fentanyl patch.</i></span> </div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal"><i>The agreement therefore delayed the entry of a cheaper generic medicine for seventeen months and kept prices for fentanyl in the Netherlands artificially high</i> - to the detriment of patients and taxpayers who finance the Dutch health system.</div></blockquote><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">The obligatory colorful bits,</div><div class="A_Standard__35__20_Normal"><br /></div><blockquote class="tr_bq"><div class="A_Standard__35__20_Normal"> Why did J&J and Novartis conclude that agreement? According to internal documents Sandoz would abstain from entering the Dutch market in exchange for '<span class="A__T2"><i>a part of [the] cake</i>'</span>. Instead of competing, Janssen-Cilag and Sandoz agreed on cooperation so as '<i><span class="A__T1">not to have a depot generic on the market and in that way to keep the high current price</span></i>'. Janssen-Cilag did not consider any other existing potential partners for the so-called 'co-promotion agreement' but just focused on its close competitor Sandoz. Sandoz engaged in very limited or no actual co-promotion activities.</div></blockquote><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">So, </div><div class="A_Standard__35__20_Normal"><br /></div><blockquote class="tr_bq"><div class="A_Standard__35__20_Normal"><i> The Commission therefore concluded that the object of this agreement was anticompetitive and infringed Article 101 of the Treaty on the functioning of the European Union (TFEU). </i></div></blockquote><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal"><b>Johnson and Johnson's Ever Lengthening Unhappy Legal History </b><br /><br />There have been so many settlements made by, fines assessed against, and other adverse legal actions affecting Johnson and Johnson in the recent past that we must make a major revision of our summary of such cases (see same appended at the end of this post.)</div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">Yet despite all these actions, there is no hint that anything will change at the company.  After all, it is extremely profitable, and all the fines, while they individually appear large, are not a big fraction of the money it brings in.  And, as we have noted far too often, not one of these actions actually provides any negative consequences, much less severely punishes anyone at the company who authorized, directed, or implemented the bad behavior.  </div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">Instead, the leadership of the company continues to make itself very rich. As we wrote <a href="http://hcrenewal.blogspot.com/2013/07/johnson-and-johnson-settles-suit.html">here</a>,  Mr William Weldon, the outgoing CEO on whose watch most of the misbehavior resulting in the legal actions listed in the appendix below occurred, retired with a huge retirement package, after receiving extremely generous compensation prior to that.  The new CEO as of April, 2012,  Mr  Alex Gorsky, per<a href="http://www.investor.jnj.com/common/download/download.cfm?companyid=JNJ&fileid=644762&filekey=44D6D309-4972-4DAE-97C5-60157E6C6CD1&filename=JNJ_2013_Proxy_Statement.PDF"> the company's 2013 proxy statement</a>, already owns more than 190,000 Johnson and Johnson shares,  and received $10,977,109  total compensation in 2012.  Mr Weldon received over $29 million in total compensation just for 2012, the year in which he retired.  Other top executives received from over $3.5 million to over $8 million. One can only imagine how much top executives are making this year.</div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">So Johnson and Johnson, once admired for proclaiming in its famous <a href="http://www.jnj.com/about-jnj/jnj-credo">credo</a> to "put the needs and well-being of the people we serve <i>first</i>," now seems to put its own hired managers first.  It boggles the mind that despite this amazing record of bad behavior, the executives who presided over it still have jobs, have made no obvious changes in how they manage the company, and in fact continue to get ridiculously rich.  The <a href="http://www.investor.jnj.com/governance/board.cfm">board of directors</a>, which includes the <a href="http://www.investor.jnj.com/governance/biodetail.cfm?bioid=4341">President of the University of Michigan</a>, a <a href="http://www.investor.jnj.com/governance/biodetail.cfm?bioid=4341">Professor and Emeritus Chancellor and Vice President of Health Affairs at Emory</a>, a <a href="http://www.investor.jnj.com/governance/biodetail.cfm?bioid=5191">Professor at MIT</a>, a <a href="http://www.investor.jnj.com/governance/biodetail.cfm?bioid=44646">former FDA Commissioner, and Senior Fellow at the Brookings Institute</a>, and the <a href="http://www.investor.jnj.com/governance/biodetail.cfm?bioid=40456">Vice Chancellor of Health Sciences, Dean of the David Geffen School of Medicine at the University of California, Los Angeles (UCLA); Chief Executive Officer of the UCLA Health System</a>, who seemingly ought to care about the integrity of evidence, protecting patients from harm, and the need for simple honesty, have not obviously done anything about the apparent massive violation of the company credo that has made its managers wealth.   Other than the stockholder lawsuit discussed below, the supposed owners of the company seem to be mute.</div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">When will the straws break the camel's back?  In the absence of such a fracture, I repeat like an old, broken record... </div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal">Many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved. <br /><br />These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look <a href="http://hcrenewal.blogspot.com/2012/08/duchess-of-wellpoint-abdicates-likely.html">here</a>). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that  matter) law enforcement to "<a href="http://www.washingtonpost.com/blogs/election-2012/wp/2012/09/04/patrick-it-is-time-for-democrats-to-grow-a-backbone/">grow a backbone</a>" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.<br /><br />Again, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.</div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal"><b>Appendix - Johnson and Johnson Recent Legal Record</b></div><div class="A_Standard__35__20_Normal"><br /></div><div class="A_Standard__35__20_Normal"></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;"><u>2010 </u></span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">- Convictions in two different states in 2010 for misleading marketing of Risperdal</span><br /><span style="background-color: #eeeeee;">- A guilty plea for misbranding Topamax in 2010</span><br /><span style="background-color: #eeeeee;"><u>2011</u></span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">- Guilty pleas to bribery in Europe in 2011 by Johnson and Johnson's DePuy subsidiary</span><br /><span style="background-color: #eeeeee;">- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see <a href="http://hcrenewal.blogspot.com/2011/08/why-cultivate-weldons-confidence-ceo.html">this link</a> for all of the above)</span><br /><span style="background-color: #eeeeee;">- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post <a href="http://hcrenewal.blogspot.com/2011/09/johnson-and-johnson-pleads-guilty.html">here</a>)</span><br /><span style="background-color: #eeeeee;"><u>2012 </u></span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">- In 2012, testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post <a href="http://hcrenewal.blogspot.com/2012/02/texas-tmap-trials-as-illustration-of.html">here</a>).</span><br /><span style="background-color: #eeeeee;">-  Also in 2012,  Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look <a href="http://hcrenewal.blogspot.com/2012/04/once-more-with-feeling-johnson-and.html">here</a>).</span><br /><span style="background-color: #eeeeee;">-  Also in 2012, Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this <a href="http://hcrenewal.blogspot.com/2012/09/how-many-legal-settlements-does-it-take.html">post</a>). </span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;"><u>2013</u></span> </div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">-  In 2013, Johnson & Johnson settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this <a href="http://hcrenewal.blogspot.com/2013/07/johnson-and-johnson-settles-suit.html">post</a>)</span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">-  In 2013, Johnson & Johnson Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this <a href="http://hcrenewal.blogspot.com/2013/11/another-and-huge-22-billion-settlement.html">post</a>).  </span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">-  In 2013, Johnson & Johnson DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .</span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">- In 2013, Johnson & Johnsonn Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this <a href="http://hcrenewal.blogspot.com/2013/11/there-they-go-again-again-johnson-and.html">post</a> for this and above case).</span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">- In 2013, Johnson & Johnson Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this <a href="http://hcrenewal.blogspot.com/2013/12/how-many-straws-johnson-and-johnson.html">post</a>). </span></div><div class="A_Standard__35__20_Normal"><span style="background-color: #eeeeee;">- In 2013, Johnson & Johnson fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (in the current post above).  </span></div>

The Camel's Aching Back - Johnson and Johnson and Novartis Fined 16 Million Euro for "Anticompetitive" Scheme to Delay Generic Fentanyl

Legal and regulatory actions unfavorable for giant pharmaceutical, biotechnology and device company Johnson and Johnson just keep coming.  We last discussed such a story only two weeks ago here. The L…

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More Cause for Hope - After Novartis Chairman's Rescinded Golden Parachute, Swiss Voters Give Control of Hired Executives' Salaries Back to Owners

Recently, we <a href="http://hcrenewal.blogspot.com/2013/02/reason-for-hope-novartis-rescinds.html">discussed</a> the latest stupefyingly big <a href="http://hcrenewal.blogspot.com/search/label/golden%20parachutes">golden parachute</a> given to a departing pharmaceutical executive.  Former Novartis CEO and outgoing chairman Daniel Vasella was to be given more than $75 million, after making multiple millions previously, ostensibly so he would not go to work for a competitor.  After a public outcry, the company cancelled the plan, and Vasella admitted a "mistake."  This was the only instance in recent memory in which a big health care organization pulled back some huge executive pay package due to public protest.<br /><br /><b>Swiss Voters Give Control of Pay of Hired Executives Back to Company Owners </b><br /><br />Now Swiss voters have approved a referendum which would actually let the owners of public companies, the stockholders, decide how much to pay hired executives.  As <a href="http://www.nytimes.com/2013/03/04/business/global/swiss-voters-tighten-countrys-limits-on-executive-pay.html">summarized</a> by the New York Times, <br /><br /><blockquote class="tr_bq"> Swiss citizens voted Sunday to impose some of the world’s most severe restrictions on executive compensation<a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/e/executive_pay/index.html?inline=nyt-classifier" title="More articles about executive pay."></a>, ignoring a warning from the business lobby that such curbs would undermine the country’s investor-friendly image.<br /><br /><div itemprop="articleBody"> The vote <i>gives shareholders of companies listed in Switzerland<a class="meta-loc" href="http://topics.nytimes.com/top/news/international/countriesandterritories/switzerland/index.html?inline=nyt-geo" title="More news and information about Switzerland."></a> a binding say on the overall pay packages for executives and directors. </i>Pension funds holding shares in a company would be obligated to take part in votes on compensation packages. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">In addition, companies would no longer be allowed to give bonuses to executives joining or leaving the business, or to executives when their company was taken over. Violations could result in fines equal to up to six years of salary and a prison sentence of up to three years. </div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody">The new rules in Switzerland would be unprecedented in the current era.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Those who are Ostensibly Pro-Business Defend Hired Executives, not Owners </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Despite the fact that the new rules would give control over one type of hired employees, hired executives, back to the shareholders, the owners of companies, spokespeople for big companies, but presumably really for their top executives, claimed that the rule would be bad for shareholders.</div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"> </div><blockquote class="tr_bq"><div itemprop="articleBody">Ahead of the vote, [the Swiss business federation] EconomieSuisse and Mr. Minder’s other opponents <i>warned of dire consequences if the referendum passed, notably in terms of keeping Switzerland attractive to foreign companies and investors. </i></div><div itemprop="articleBody"><br /></div>But [chief proponent of the new rules] Mr. Minder argued that Switzerland would benefit if it <i>gave shareholders control over the companies in which they invested.</i></blockquote><br />Furthermore, the Guardian <a href="http://www.guardian.co.uk/world/2013/mar/03/swiss-referendum-executive-pay">reported</a>,  <br /><br /><blockquote class="tr_bq">Minder says the massive sums demonstrate that <i>company boards have lost control of pay and prefer to fork out 'astronomical' salaries rather than pay dividends to shareholders</i>.<br /><br />Minder told the Swiss daily Le Temps that the only solution was to give shareholders the power to set pay.</blockquote><br /> A Bloomberg <a href="http://www.bloomberg.com/news/2013-03-04/angry-swiss-aren-t-done-slimming-the-fat-cats.html">article</a> suggested that driving the vote were how the Swiss are<br /><br /><blockquote class="tr_bq"> worried about how long they can fend off the crisis that has engulfed the rest of Europe, and <b><i>dissatisfied with a feeling of being ripped off by their elites.</i></b><br /><br />'It is scandalous. No one deserves to be paid such monstrously high salaries, especially when their employees get paid not much in comparison,' Marianne Lecoultre, a pensioner who lives in a modest flat on the outskirts of Geneva, told me.  </blockquote><br /><b>The Germans are Thinking of Making Hired Executives More Accountable </b><br /><br />The German media outlet Deutsche Welle <a href="http://www.dw.de/swiss-referendum-fans-executive-pay-debate-in-germany/a-16643835">reported</a> that there is now more interest in returning control of hired executive pay to company owners there as well.<br /><br /><blockquote class="tr_bq"> After Swiss citizens voted Sunday to impose controls on executive pay, a similar debate has started in Germany. </blockquote><br />Furthermore,<br /><br /><br /><blockquote class="tr_bq">Joachim Poß, the parliamentary leader of the opposition Social Democratic Party, told the daily Neue Osnabrücker Zeitung that the outcome of the referendum was an important step towards <i>restricting the money-grabbing prevalent in corporate management,</i><br /><br /> He noted that the referendum was encouragement for an initiative at the EU level, and added that '<i>people do no longer accept perverted bonus systems, neither in banks nor in the real economy</i>.'</blockquote><br /><b>Summary: Ripped Off by Health Care Elites</b><br /><br />I can start to imagine how supposedly pro-business people in the US will dismiss actions taken by European countries as anti-business and probably "job killing," even though these actions actually gave more control of publicly held business to their owners, not to government, which would seem to be fully in support of capitalism.  Again, maybe some people making the loudest pro-business noises are really sympathetic to, if not paid by, the hired managers of businesses who have put their enrichment ahead of the interests of other employees, customers, clients or patients, the business owners (stockholders, that is), and the public at large. <br /><br />Enormous compensation of hired health care executives, out of all proportion, if related at all to whether their work had any positive effect on patients' or the public's health, has long been a <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">concern</a> on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>.  For example, back in 2006, we posted repeatedly (look <a href="http://hcrenewal.blogspot.com/2006/10/another-really-big-one-bites-dust-ceo.html">here</a> for links) about the billion dollar plus fortune amassed by the then CEO of UnitedHealthcare which vividly contrasted with the company's avowal to "make health care more affordable."  That seemed to be an example back then of a rip off by a member of the health care elite.  Now the notion that our top elites have been generally ripping us off is becoming more widespread. <br /><br />In my humble opinion, the perverse incentives generated by a system that allows top executives to make almost unlimited amounts, regardless of all other considerations, has been a major reason for US and global health care dysfunction.  Making executive compensation less perverse, and ultimately making health care leaders accountable for the effects of what they do on patients' and the public's health may be an absolutely necessary step to make our health care system more functional.  Now at least there is some precedent, admittedly from Europe, for making top hired managers more accountable. <br /><br /><br />As Pierre Briancon<a href="http://blogs.reuters.com/breakingviews/2013/03/04/swiss-may-show-the-way-on-pay/"> wrote</a> in Reuters,<br /><br /><blockquote class="tr_bq"> Corporate boards had better take notice: <i>public outrage at what looks like persistent and unapologetic greed in the most severe economic slump in decades is forcing governments to step in</i>. Throughout Europe, <i>indignation at private excess has become a policy problem for administrations trying to explain the need to cut public spending.</i></blockquote><br />In addition,<br /><br /><br /><blockquote class="tr_bq"><i>Self-moderation doesn’t work and self-interest continues to prevail.</i> Throughout the Western world, <i>corporate boards have paid lip service to the need to take into account public opinion, and nothing much has changed either in the banking industry – the symbol of immoderation – or in the wider corporate world. </i>In desperation, governments are taking more forceful action – sometimes reluctantly: the Swiss referendum followed a failure by the country’s parliament to heed to public indignation.<br /><br /> Government intervention can often be clumsy, and it is fraught with the risk of unintended consequences. But <i>it is the right of governments to legislate on social ills – and excessive and provocative private-sector pay has become one. </i>Meanwhile the lobbies promising economic apocalypse have failed to make their case – and to scare anyone with warnings that 'talent' – as they call it – may relocate to friendlier countries. It would be in the interest of all if they stopped turning a deaf ear to calls for decency emanating even from countries like Switzerland, which is hardly a hotbed of Soviet-style command economics.</blockquote><br />Even though the final impetus for the overwhelming majority vote on the Swiss referendum came from a ridiculous golden parachute from a pharmaceutical company, the discussion so far has not centered on health care.  So I get to close with something I have repeated on and on, now with a little hope that it may not be considered so extreme....<br /><br /> Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.<br /><br />If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses. <br /><br /><br /><br />

More Cause for Hope - After Novartis Chairman's Rescinded Golden Parachute, Swiss Voters Give Control of Hired Executives' Salaries Back to Owners

Recently, we discussed the latest stupefyingly big golden parachute given to a departing pharmaceutical executive.  Former Novartis CEO and outgoing chairman Daniel Vasella was to be given more than $…

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Reason for Hope? - Novartis Rescinds Vasella's Golden Parachute

Enormous compensation of hired health care executives, out of all proportion, if related at all to whether their work had any positive effect on patients' or the public's health, has long been a <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">concern</a> on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>.  For example, back in 2006, we posted repeatedly (look <a href="http://hcrenewal.blogspot.com/2006/10/another-really-big-one-bites-dust-ceo.html">here</a> for links) about the billion dollar plus fortune amassed by the then CEO of UnitedHealthcare which vividly contrasted with the company's avowal to "make health care more affordable."<br /><br />We have posted many such stories.  Yet maybe there is a whiff of change in the air.  For the first time that I can recall, a gigantic pay package to a top health care executives has been rescinded after public protest.<br /><br /><b>Novartis' Golden Parachute for Vasella </b><br /><br />This is how the New York Times <a href="http://www.nytimes.com/2013/02/19/business/global/for-daniel-vasella-of-novartis-78-million-to-keep-secrets.html">described</a> the huge golden parachute that was initially proposed: <br /><br /><blockquote class="tr_bq"><i>A plan by Novartis<a class="meta-org" href="http://topics.nytimes.com/top/news/business/companies/novartis_ag/index.html?inline=nyt-org" title="More information about Novartis A.G"></a>, one of Switzerland’s biggest drug makers, to pay its departing chairman $78 million to keep him from sharing his knowledge with competitors</i> has added fuel to an already heated debate about executive pay.<br /><br /><div itemprop="articleBody">The announcement of the payment to the chairman, Daniel Vasella, was made last Friday, just two weeks before a Swiss referendum to give shareholders more power to determine executive compensation. Mr. Vasella, who had previously said that he would step down as chairman at Novartis’s annual shareholder meeting on Friday, <i>is to receive the sum, <b>72 million Swiss francs</b>, over six years. </i></div><div itemprop="articleBody"><br /></div>In a statement, Mr. Vasella said that 'it has been very important to Novartis that I refrain from making my knowledge and know-how available to competitors and to take advantage of my experience with the company.'</blockquote><br /><b>Unprecedented Resistance by Shareholders, Politicians and the Public </b><br /><br />The plan to provide this "golden parachute" met stunning resistance from Swiss citizens and company shareholders.  As the Times reported,<br /><br /><blockquote class="tr_bq"><div itemprop="articleBody">Swiss lawmakers and shareholder activists criticized the company over the weekend for not making the amount public earlier. They also contended that the planned payment was just the latest of several bad decisions by Novartis on executive pay. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Ethos, a Swiss group of investors, on Monday <i>called on Novartis to immediately cancel the contract with Mr. Vasella and take back any money already paid</i>. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Christophe Darbellay, president of the Christian Democratic People’s Party, told a Swiss newspaper, SonntagsZeitung, that <i>Mr. Vasella’s compensation was 'beyond evil.'</i> Simonetta Sommaruga, the Swiss federal justice minister, told another newspaper, SonntagsBlick, that <i>the payment was an 'enormous blow for the social cohesion of our country'</i> and that such 'help-yourself mentality' was damaging confidence in the economy. </div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Even Swiss identified as pro-business or right-wing joined in the criticism.  As <a href="http://www.swissinfo.ch/eng/swiss_news/Vasella_s_extra_pay_stirs_up_emotions.html?cid=35006618">reported</a> by the Swiss Broadcasting Company, </div><div itemprop="articleBody"><br /></div><blockquote class="tr_bq"><div itemprop="articleBody">Philipp Müller, president of the centre-right Radical Party which traditionally has close links with the business community, is quoted as saying <i>Vasella was 'taking liberal Switzerland to the henchman'.</i><br /><br />Other politicians described the latest figure as <i>'disgusting' and denounced the recklessness of top managers.</i><br /><br />The director of the Swiss Business Federation, which has been leading the fight against the initiative, said he was surprised by the 'dimension of the payment' to Vasella.</div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody"><b>A Golden Parachute Despite a Past Record of Misadventures </b></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Maybe there would have been even more outrage if those in Switzerland had known about Novartis' track record of misadventures, at least in the US, while Vasella had been leading it.  In particular,</div><div itemprop="articleBody">-  In 2011, as we noted <a href="http://hcrenewal.blogspot.com/2011/12/legal-settlements-have-become-so-common.html">here</a>, a company subsidiary paid $150 million to settle charges by several US states that it had misrepresented pricing information</div><div itemprop="articleBody">-  In 2010, as we noted <a href="http://hcrenewal.blogspot.com/2010/10/novartis-settles-but-wait-theres-more.html">here</a>, the company settled US federal civil and criminal charges in connection with its marketing of multiple drugs for $422.5 million.  The charges included giving kickbacks to physicians disguised as speakers' honorariums and fees for serving on advisory boards.  </div><div itemprop="articleBody">-  In 2010, as we noted <a href="http://hcrenewal.blogspot.com/2010/05/novartis-settles-again.html">here</a>, the company settled separate US charges that it made false claims to support off-label marketing of its drug tobramycin for cystic fibrosis for $72.5 million.  </div><div itemprop="articleBody">- In 2008, as we noted <a href="http://hcrenewal.blogspot.com/2008/07/bad-week-in-court-for-us-health-care.html">here</a>, the company settled charges in the US state of Alabama that it defrauded Medicaid for $33.7 million.<br /><br />However, these legal escapades were not mentioned in the recent media coverage of the proffered and then withdrawn parachute.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"><b>The Company Backs Down. </b></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Nonetheless, what was really surprising was that the outrage made the company back down.  <a href="http://online.wsj.com/article/SB10001424127887323495104578313670408396876.html">Per</a> the Wall Street Journal, </div><div itemprop="articleBody"><br /></div><blockquote class="tr_bq"><div itemprop="articleBody">Novartis AG on Tuesday <i>abandoned a 72-million-Swiss-franc ($78 million) exit package for its chairman, bowing to pressure from shareholders and Swiss politicians after four days of increasing criticism.</i></div><div itemprop="articleBody"><br /></div>The Swiss drug maker said its board and Chairman Daniel Vasella<a class="topicLink" href="http://topics.wsj.com/person/V/Daniel-Vasella/4329"></a> agreed to cancel a six-year noncompete and related-compensation agreement designed to prevent him from joining or advising rivals and which would have paid him 12 million francs a year.<br /><br />The agreement was scheduled to take effect on Friday, when Dr. Vasella, 59 years old, is planning to leave the Basel-based company at its annual shareholder meeting</blockquote><br />Furthermore,<br /><br /><blockquote class="tr_bq">In the Novartis statement on Tuesday, Dr. Vasella acknowledged that his offer hadn't soothed public opinion: <i>'I have understood that many people in Switzerland find the amount of the compensation linked to the noncompete agreement unreasonably high,'</i> he said. </blockquote><br />In addition, as Reuters noted, Vasella actually admitted he made "mistakes,"<br /><br /><blockquote class="tr_bq"><span id="articleText">'The fierce reaction and reproaches that were made as a consequence of the many-sided discussions about my compensation did leave its mark on me,' 59-year-old Vasella said in his opening address to 2,688 shareholders gathered at Novartis's annual general meeting in Basel.<br /><br /><span id="midArticle_3"></span>'<i>I made two avoidable mistakes: the first was to even negotiate this contract.</i> And the second to believe that giving up this individual payment to charities would be considered as something positive by society.'</span></blockquote><span id="articleText"></span><br /><br />Of course, it is hard to believe that Novartis had previously paid him as lavishly as it did  - the New York Times had reported that his pay just prior to resignation was 12.4 million francs, "about $13.4 million a year" -  without securing an agreement to protect trade secrets.  Many businesses routinely add confidentiality clauses, trade secret protection, and non-compete clauses to contracts of many employees.  Thus adding a $78 million golden parachute ostensibly just to protect trade secrets and defection to the competition seems like impossibly gilding the lily.  Furthermore, if Novartis really thought that Vasella was likely to run to another firm at the drop of a hat, it would have made no sense to entrust someone thought to be at risk of such disloyalty with top leadership positions. <br /><br /><b>Reason for Hope </b><br /><br />At least Chairman Vasella admitted "mistakes," and at least the ridiculous pay package was rescinded. This incident does show that it is possible for public and shareholder outrage over gargantuan payments to executives to have some effect.  That seems like real progress, and a reason to hope.  <br /><br />Of course, executives of public for-profit corporations are supposed to be working for shareholders.  Thus their general impunity from shareholders' control up to now remains inexplicable.  Furthermore, executives of pharmaceutical companies and other health care corporations seemingly should be responsible for putting patients' and the public's health ahead of their own enrichment.  Thus their ability up to now to ignore public concern about their companies' actions, and to avoid personal responsibility for their companies' bad actions also remains inexplicable. <br /><br />But progress may now be possible.  In and outside of Switzerland, shareholders of publicly-held for-profit health care corporations should demand accountability from the executives who are supposed to be working for them.  In and outside of Switzerland, health care professionals, policymakers, and the public at large should demand accountability from leaders of health care organizations for the effects of their organizations on patients' and the public's health.  <br /><br /><br />

Reason for Hope? - Novartis Rescinds Vasella's Golden Parachute

Enormous compensation of hired health care executives, out of all proportion, if related at all to whether their work had any positive effect on patients' or the public's health, has long been a conce…

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Legal Settlements Have Become So Common that They are Barely News

<a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">Legal settlements</a> by big health care organizations have become so common that those of less than blockbuster size barely seem to qualify as news.  They have become "dog bites man" stories.  For example, the following stories barely got noticed in the media (presented chronologically).<br /><br /><strong>Novartis Settles Price Misrepresentation Suit for $150 Million</strong><br /><br />This story was mentioned as an aside in a a <a href="http://www.businessweek.com/news/2011-09-15/watson-sandoz-pay-145-million-to-settle-drug-price-case.html">news story</a> covering a settlement by Watson Pharmaceuticals in September.  In slightly more detail, it has only appeared <a href="http://www.pharmalot.com/2011/11/novartis-pays-150m-to-settle-pricing-fraud">in PharmaLot</a> in November.  In a very small nutshell,<br /><blockquote>the Sandoz unit of Novartis earlier this week<em> agreed to pay $150 million to settle lawsuits</em> filed by the states of Florida and California, as well as a whistleblower, to settle <em>charges that it deliberately misreported pricing information in order to hike reimbursements from Medicaid</em>.</blockquote><br />By the way, per <a href="http://freepdfhosting.com/0885cf397f.pdf">the settlement document</a>, the allegations were that Novartis' subsidiary knowingly maintained, set or reported "false,<em><strong> fraudulent</strong></em>, and/or inflated Reported Prices," yet, as is typical of nearly all settlements, the settlement "shall not constitute or be construed as an admission of fault, liability, or unlawful conduct." <br /><br /><strong>Roche Settles Off-Label Promotion, Physician Kickback Suit for $20 Million</strong><br /><br />This story was reported briefly in some blogs, including again PharmaLot, and in the most detail <a href="http://www.bizjournals.com/sanfrancisco/blog/biotech/2011/12/genentech-roche-rituxan-whistleblower.html">in the San Francisco Business Times</a>. The basics of it were:<br /><blockquote><em>Genentech Inc. will pay $20 million to settle a whistleblower lawsuit around off-label marketing of the cancer-fighting drug Rituxan</em>.</blockquote><br />It only took eight years since a whistle-blower raised the issue:<br /><blockquote>John Underwood, ... was a senior manager of sales development from the start of Genentech’s oncology franchise in 1997.<br /><br />When Underwood filed the suit in July 2003 in U.S. District Court for the Eastern District of Pennsylvania, he was a senior hospital systems specialist for Genentech.</blockquote><br />This suit is actually of particular interest because it was not just about off-label promotion,<br /><blockquote>Genentech, the suit claimed, <em>retained doctors to act as independent speakers on behalf of Rituxan and its off-label uses, paid <strong>kickbacks</strong> to doctors that were disguised as consulting payments</em>, 'exerted significant pressure' on sales reps to increase off-label uses of Rituxan, and devised and conducted 'selling skills workshops' for sales reps devoted to non-label uses,<br /><br />What’s more, the suit claimed, Genentech <em>invited doctors to attend “medical education seminars” at 'luxurious locations'</em> and gave financial incentives to sales reps to get doctors who sold the most Rituxan to attend the events.</blockquote><br />These were serious allegations, involving allegedly direct efforts by the company to subvert physicians' ethics by tying their decisions for individual patients to payments for prescribing specific products whatever the benefits and risks of those products for those patients.  The allegations suggested that "consulting payments" to physicians may be nothing more than disguised bribes, and that the companies making these payments may be quite conscious of this.  <br /><br />Nonetheless, as usual,<br /><blockquote>Genentech, the South San Francisco-based U.S. subsidiary of Swiss drug giant Roche, <em>did not admit wrongdoing....</em></blockquote><br />So, as in the famous recent Citigroup case (see <a href="http://hcrenewal.blogspot.com/2011/11/will-citigroup-ruling-challenge-health.html">this post</a>), the settlement obfuscates the crucial question, did the corporation involved commit illegal acts? It seems likely that what they did was in some sense unethical, since they were willing to pay millions not make the matter go away. <br /><br />By the way, one member of the Executive Committee of Genentech at the time these events were allegedly occurring is now the <a href="http://ucsfchancellor.ucsf.edu/leadership/susan-desmond-hellmann-md-mph">Chancellor of the University of California - San Francisco</a> (See our post <a href="http://hcrenewal.blogspot.com/2009/05/bio-tech-u.html">here</a>). Maybe concerned students or faculty might ask her what really went on. <br /><br /><strong>CVS Caremark Settles Fraud Suit for about $20 Million</strong><br /><br />As <a href="http://latimesblogs.latimes.com/money_co/2011/12/cvs-caremark-to-pay-20m-to-three-states-over-fraud-allegations.html">reported</a> briefly in the Los Angeles Times,<br /><blockquote>Pharmacy and prescription drug management company <em>CVS Caremark Corp. has agreed to pay nearly $20 million to settle three lawsuits involving allegations that the company <strong>defrauded</strong> pension systems</em> in three states, including California’s giant pension fund, attorneys said.<br /><br />The whistleblower lawsuits, filed by two former CVS Caremark pharmacists, accused the company of reselling returned drugs, changing prescription orders to make them more expensive and submitting false reports about how long it took to fill prescriptions.</blockquote><br />Not the least bit surprisingly, the company did not admit liability in the settlement, and had no comment for the Times. Ho, hum, another big company paying millions to make allegations of fraud go away... nothing to see here, so we will just move on.<br /><br /><strong>Merck Settles Fraud Suit for $24 Million</strong><br /><br />This story was picked up by AP, so a very brief version of it did appear in a variety of locations. A longer version was <a href="http://bostonglobe.com/business/2011/12/21/merck-pay-overcharging-case/05zJqmztpJGuD3elBs0HkM/story.html">published</a> by the Boston Globe,<br /><br />At this point, it should be no surprise that it took a long time to get to this settlement, eight years in fact, just as in the case above,<br /><blockquote><em>Merck & Co. has agreed to pay $24 million to the state Medicaid program to settle long-running civil charges that it charged too much for some drugs, in the largest single-case Medicaid <strong>fraud</strong> settlement </em>in Massachusetts history.<br /><br />The agreement, unveiled yesterday by Attorney General Martha Coakley’s office, closes out a 2003 lawsuit....</blockquote><br />Again, the allegations were of fraud,<br /><blockquote>Coakley said her office’s Medicaid fraud division wanted to <em>hold accountable drug companies that <strong>defraud</strong> taxpayers. </em></blockquote><br />Again, "hold accountable" did not translate into establish the allegations as true,<br /><blockquote>Ron Rogers, a spokesman at Merck corporate headquarters, said <em>the drug company did not admit liability or wrongdoing in the settlement.</em> He said Merck agreed to resolve the claims to put the matter behind it.</blockquote>Nothing more to see here, so we will move on again.<br /><strong>Summary</strong><br /><br />Every month, it seems that<a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements"> more settlements</a> are announced of cases alleging all sorts of wrongdoing by major health care organizations. Very often, the allegations are of wrongdoing that appears serious to the uninitiated. For example, most of the above cases involved allegations of fraud, and one involved allegations of kickbacks, that is, bribes to doctors. <br /><br />Yet, in every one of these cases -<br />- The monetary penalties were barely more than pocket change for the corporations involved.<br />- The payments were made by the organization as a whole, and hence would disadvantage many people who were not involved in and did not benefit from the specific actions alleged. Such de facto victims of the settlement included company shareholders, employees, and probably patients (who may have paid prices raised to pay for settlements), and the public (who may have indirectly paid these higher prices through insurance premiums or taxes.)<br />- The organization did not have to admit any facts, leaving the record foggy, and clouding the chances for any people who might have been hurt by the actions to take legal action.<br />- No people who actually authorized, directed, or implemented the apparent bad behavior suffered any negative consequences.<br /><br />Thus, these settlements, like many others we have discussed, did not appear to be any major deterrent of future bad behavior. <br /><br />These settlements do provide a public, if largely ignored, record that suggests how a miasma of sleazy behavior, if not outright corruption has settled over health care. These settlements do provide the context for many pithy questions that could be asked of health care organizational leaders, if anyone dared to do so. The settlements do suggest a need for wholesale, real health care reform that would make health care leaders accountable for what their organizations do, particularly when these organizations misbehave.

Legal Settlements Have Become So Common that They are Barely News

Legal settlements by big health care organizations have become so common that those of less than blockbuster size barely seem to qualify as news.  They have become "dog bites man" stories.  For exampl…

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Novartis Settles..., But Wait, There's More

Back in January, 2010, we <a href="http://hcrenewal.blogspot.com/2010/01/drowning-our-sorrows-in-ketchup.html">posted</a> about Novartis' settlement of charges that it promoted its anti-seizure drug, Trileptal, (Oxcarbazepine) for off-label uses, agreeing to plead guilty to one charge of violating the US Food, Drug and Cosmetic Act.  This week, the full story of the settlement just came out, and yes, but wait, there's more.  Per the New York Times <a href="http://www.nytimes.com/2010/10/01/health/policy/01novartis.html">article</a> by Duff Wilson, the story is not only about Trileptal:<br /><blockquote>The Swiss drug giant Novartis is paying $422.5 million to settle criminal and civil investigations into the marketing of the antiseizure medicine Trileptal <em>and five other drugs</em>, federal officials said on Thursday.</blockquote>The other drugs were:<br /><blockquote><em>Diovan</em>, a hypertension drug that is the company’s top-selling product, at $6 billion last year; <em>Sandostatin</em>, a drug to treat a growth hormone disorder that had worldwide sales of $1.2 billion last year; <em>Exforge</em>, a hypertension drug that sold $671 million; <em>Tekturna</em>, a blood pressure medicine that sold $290 million; and <em>Zelnorm</em>, a medicine for irritable bowel syndrome and constipation that was later withdrawn from the United States market. </blockquote><br />And the issue was not solely off-label marketing:<br /><blockquote>Federal prosecutors accused Novartis of <em>paying illegal kickbacks to health care professionals through speaker programs, advisory boards, entertainment, travel and meals</em>. But aside from pleading guilty to one misdemeanor charge of mislabeling in an agreement that Novartis announced in February, the company denied wrongdoing. </blockquote><br />While the allegations were much more broad than those originally announced, the penalties were the usual suspects:<br /><blockquote>The settlement includes a $170 million criminal fine and $15 million in criminal forfeiture by Novartis Pharmaceuticals, its United States subsidiary.</blockquote><br />Also,<br /><blockquote>Novartis settled the investigation into the other drugs for $237.5 million. </blockquote><br />However, <br /><blockquote>Prosecutors said <em>top management at Novartis had approved illegal marketing from July 2000 to June 2004. No individual, however, was named or charged</em>.</blockquote><br />Back in June, we <a href="http://hcrenewal.blogspot.com/2010/06/attempt-to-hold-health-care-leaders.html">posted</a> about how US law enforcement was supposedly going to start getting tougher with the people who authorized, directed or implemented wrong doing by health care organizations. Back then, federal officials said that executives would be held accountable, and forced to leave their jobs or even be disbarred from working in the industry. <br /><br />However, here we are, four months later, and even a case that mushroomed from involving allegations of off-label promotion of one drug to off-label promotion of six drugs, allegations of kickbacks to physicians, and allegations that top management knew about what was going on results in no negative consequences to any individuals.<br /><br />So it still seems that if misdeeds, such as promotion of drugs for off-label uses, and giving kickbacks to doctors disguised as honoraria for talks, consulting fees, and meals and travel payments, are done under the auspices of a large health care organization, no one is ultimately responsible for them.  The organization may have to pay what appears to be a big fine, but one that pales against the profits to be made from the misdeeds.<br /><br />So, if an ordinary person commits fraud, he or she is likely to have to pay a big fine and go to jail.  If a physician commits fraud, he or she is likely to have to pay a big fine and go to jail, and incidentally to lose his or her medical license.  But if a corporate executive authorizes a fraudulant practice, he or she is likely not to pay any penalty (but may well have already collected a big bonus).<br /><br />We have repeated endlessly that by limiting penalties to only modest increases in the costs of doing business for organizational malfeasance in health care, we just encourage more bad behavior.  But with each new example like this, I agree more that the fundamental problem has become corporatism, (or <a href="http://www.amazon.com/Corpocracy-Business-Roundtable-Hijacked-Greatest/dp/0470145099"><em>Corpocracy</em></a>, as Robert A G Monks put it).  Government and corporate leaders find that they have more in common with each other than with the little people.  Or as Barry Ritholtz just <a href="http://www.ritholtz.com/blog/2010/09/you-vs-corporations/">blogged</a>:<br /><blockquote>The new dynamic, however, has moved past the old Left Right paradigm. We now live in an era defined by <em>increasing Corporate influence and authority over the individual</em>. These two 'interest groups' – I can barely suppress snorting derisively over that phrase – have been on a headlong collision course for decades, which came to a head with the financial collapse and bailouts. <em>Where there is massive concentrations of wealth and influence, there will be abuse of power.</em> The Individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights.<br /><br />This may not be a brilliant insight, but it is surely an overlooked one. <em>It is now an Individual vs. Corporate debate – <strong>and the Humans are losing</strong>.</em></blockquote><br />Furthermore,<br /><blockquote>There is some pushback already taking place against the concentration of corporate power: Mainstream corporate media has been increasingly replaced with user created content – YouTube and Blogs are increasingly important to news consumers (especially younger users). Independent voters are an increasingly larger share of the US electorate. And I suspect that much of the pushback against the Elizabeth Warren’s concept of a Financial Consumer Protection Agency plays directly into this Corporate vs. Individual fight.<br /><br />But the battle lines between the two groups have barely been drawn. I expect this fight will define American politics over the next decade.<br /><br />Keynes vs Hayek? Friedman vs Krugman? Those are the wrong intellectual debates.<em> Its you vs. Tony Hayward, BP CEO, You vs. Lloyd Blankfein, Goldman Sachs CEO. And you are losing . . .</em></blockquote>

Novartis Settles..., But Wait, There's More

Back in January, 2010, we posted about Novartis' settlement of charges that it promoted its anti-seizure drug, Trileptal, (Oxcarbazepine) for off-label uses, agreeing to plead guilty to one charge of …

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Novartis Settles, Again

We certainly could not go another week without discussing another settlement of charges of unethical behavior by a major health care organization.  This time, as <a href="http://online.wsj.com/article/SB10001424052748703866704575224662623128150.html">reported</a> by the Wall Street Journal, it was Swiss pharmaceutical company Novartis:<br /><blockquote><br /><em>Novartis AG will pay $72.5 million to settle U.S. Justice Department allegations it submitted false claims for off-label uses of a cystic-fibrosis drug</em>. <br /><br />The drug, tobramycin or TOBI, joined the Novartis portfolio as part of its 2005 takeover of biotechnology firm Chiron Corp. <br /><br />In a release Tuesday, <em>the Justice Department said that, between 2001 and 2006, Chiron, and then Novartis, marketed unapproved uses for TOBI</em>, which the Food and Drug Administration approved as an inhaled antibiotic for treating certain cystic-fibrosis patients. </blockquote><br />This is not even the first US legal settlement this year for Novartis:<br /><blockquote>Earlier this year, Novartis said its U.S. subsidiary struck an agreement with the U.S. Attorney's Office in Pennsylvania to settle a criminal investigation of the company's marketing of the epilepsy drug Trileptal. Novartis agreed to plead guilty to violating the U.S. Food, Drug and Cosmetic Act, and to pay a $185 million fine.</blockquote><br />We had posted on that previous settlement <a href="http://hcrenewal.blogspot.com/2010/01/drowning-our-sorrows-in-ketchup.html">here</a>.<br /><br />So the march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> continues.  It seems that practically every major pharmaceutical corporation has participated in multiple settlements since we started Health Care Renewal.  Yet the process does not seem to deter continuing bad behavior.  <br /><br />In the current case, like nearly all the others, the corporation will pay what seems to be a huge fine. However, the amount is a pittance compared to the corporation's revenue, and is likely to be viewed as only a small cost of doing a very lucrative business by corporate executives. In very few cases does any individual suffer any negative consequence for approving, ordering or implementing the unethical behavior.  A large fine's impact can be spread among share-holders, employees, and clients/ customers/ patients, and hence poses no threat to executives planning the next bit of unethical behavior. <br />As I have said before, endlessly, 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.

Novartis Settles, Again

We certainly could not go another week without discussing another settlement of charges of unethical behavior by a major health care organization.  This time, as reported by the Wall Street Journal, i…

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Cardinal Health Settles, Novartis Settles

And the march of settlements continues....<br /><br />As reported <a href="http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20100220_11_A8_Acompa624488">by the Tulsa (Oklahoma) World</a>,<br /><blockquote>A company that provides hospital pharmacy management services in Tulsa has <em>agreed to pay $1 million in civil penalties for failing to account for large amounts of missing prescription drugs</em>, the U.S. Attorney's Office in Tulsa announced Friday.<br /><br />Cardinal Health Pharmacy Services agreed to settle allegations with the federal prosecutors' office, which <em>alleged that the company's two Tulsa pharmacies were negligent and violated several provisions of the Controlled Substances Act</em>.<br /><br />An audit showed that nearly 400,000 dosage units of hydrocodone, a painkiller, and 234,000 units of alprazolam, an anti-anxiety drug, were unaccounted for at the Hillcrest Medical Center pharmacy from October 2005 through June 2007, according to a news release.<br /><br />The investigation also revealed that more than 30,000 doses of drugs at the Oklahoma State University Medical Center pharmacy were unaccounted for between April 2007 and July 2008. </blockquote><br />Meanwhile, as reported by Associated Press (<a href="http://www.nj.com/business/index.ssf/2010/02/novartis_subsidiary_to_pay_35.html">via Nj.com</a>),<br /><blockquote>Federal prosecutors say a Princeton-based pharmaceutical company has agreed to pay $3.5 million to settle allegations that it claimed its heart drug was eligible for Medicaid reimbursement.<br /><br />The U.S. attorney's office in Boston said Monday that Eon Labs Inc., a subsidiary of Swiss company Novartis AG, submitted false reports to the government between April 1999 and September 2008 that misrepresented Nitroglycerin SR's regulatory status and failed to advise that the drug did not qualify for Medicaid coverage.<br /><br />Prosecutors say Eon Labs did so even after the Food and Drug Administration determined that there was a lack of evidence that Nitroglycerin SR was effective.</blockquote><br />Note that we most recently <a href="http://hcrenewal.blogspot.com/2010/01/drowning-our-sorrows-in-ketchup.html">discussed</a> a settlement by Novartis last month (January, 2010).  <br /><br />The march of settlements continues. To repeat, seemingly ad infinitum, these are just the latest in a now long <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">parade of settlements</a> that serve as reminders of poor behavior by myriad health care organizations. As we have previously noted, these settlements seem to have little deterrent effect on future bad behavior. (Note that many large health care organizations have settled or plead guilty in several major cases since we started commenting on such settlements.)  Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts will suffer any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior. Until the people who approve, direct, and perform unethical or illegal acts pay some penalties, expect such acts to continue. I again suggest that to truly reform health care, we need rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health.

Cardinal Health Settles, Novartis Settles

And the march of settlements continues....As reported by the Tulsa (Oklahoma) World,A company that provides hospital pharmacy management services in Tulsa has agreed to pay $1 million in civil penalti…

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Green Ketchup for Novartis?

We recently <a href="http://hcrenewal.blogspot.com/2010/01/drowning-our-sorrows-in-ketchup.html">commented</a> on the challenges facing the large, Swiss based multinational pharmaceutical company Novartis.  <a href="http://www.businessweek.com/magazine/content/10_07/b4166058305717.htm">From Business Week</a> came an interview with the new CEO of Novartis, in which he revealed why he thinks he is especially qualified for the job:<br /><blockquote>Joe Jimenez says that <em>more than 20 years selling Clorox (CLX) bleach and Heinz ketchup taught him to make decisions quickly</em>. Now, as CEO of Novartis (NVS), Europe's second-largest drugmaker, he'll try to prove that speed can also make a difference in the pharmaceutical business. <br /><br />Jimenez, an American with degrees from Stanford and the University of California at Berkeley, <em>believes his consumer-products background will help</em>. <em>He started his career at Clorox, the world's largest maker of bleach, ran two divisions of ConAgra Foods (CAG), and oversaw H.J. Heinz' (HNZ) European operations. </em>With consumer packaged goods, 'Decisions have to be made quickly because the market moves quickly,' he says. But pharmaceutical businesses have long development lead times, which 'tends to slow decision-making in areas where it doesn't need to.'<br /><br /><em><strong>Jimenez oversaw the introduction of kid-friendly green ketchup when he was Heinz' North America chief executive</strong></em>,....</blockquote>Further explanation of why supervising the selling of cleaning or food products would be good experience for the chief executive of a pharmaceutical company, which faces technical, regulatory, and clinical issues very different from the challenges of selling bleach or ketchup, was not forthcoming.<br /><br />The reason for citing Jiminez's responsibility for green ketchup was more obscure.  According to the authoritative medical journal, <a href="http://www.womansday.com/Articles/Food/The-Biggest-Food-Product-Duds-of-All-Time.html">Woman's Day magazine</a>, Heinz's green ketchup was one of the <em><strong>"7 Biggest Food Product Duds," in the US, and was discontinued in 2006.</strong></em><br /><br />As we have <a href="http://hcrenewal.blogspot.com/2009/12/on-automobile-and-health-care-companies.html">discussed before</a>, the current culture of US and global business includes the belief that someone trained in finance or marketing is the most suitable leader of every type of organization.  Such leadership has lead the US biggest automobile manufacturer into bankruptcy.  We have discussed numerous examples of leaders of health care organizations with no health background or experience who seem to be most expert at making sure their compensation is hugely larger than that of most of their employees.<br /><br />We hope Novartis does not end up trying to sell the pharmaceutical equivalent of green ketchup.  <br /><br />I say again, to really reform health care, we need to have leaders of health care organizations who actually understand health care and share its values.

Green Ketchup for Novartis?

We recently commented on the challenges facing the large, Swiss based multinational pharmaceutical company Novartis.  From Business Week came an interview with the new CEO of Novartis, in which he rev…

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Drowning our Sorrows in Ketchup: Novartis Settles, Appoints Former Heinz Executive CEO

Here's the latest corporate health care marcher in the legal settlement parade, as <a href="http://online.wsj.com/article/SB10001424052748703906204575026963160833710.html">reported in the Wall Street Journal</a>.<br /><blockquote>Swiss drug giant Novartis AG said its U.S. subsidiary <em>struck a plea agreement with U.S. investigators to resolve criminal allegations regarding the company's promotion of the epilepsy drug Trileptal, and agreed to pay a $185 million fine.</em><br /><br />Federal investigators have been carrying out civil and criminal investigations of Novartis' marketing of the drug, including <em>allegations that it promoted the drug for uses for which it is not approved by the Food and Drug Administration, an illegal practice known as 'off-label' marketing,</em> Novartis said in a statement Tuesday as it announced fourth-quarter results. <br /><br />To resolve criminal allegations, <em>Novartis said it agreed to plead guilty to a violation of the U.S. Food, Drug and Cosmetic Act,</em> and to pay a fine of $185 million.</blockquote><br />It has become a drearily familiar ritual. We have now <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">discussed</a> numerous instances of large health care corporations pleading guilty to criminal charges and/or settling civil allegations of unethical behavior.  In the current case, like nearly all the others, the corporation will pay what seems to be a huge fine.  However, the amount is a pittance compared to the corporation's revenue, and is likely to be viewed as only a small cost of doing a very lucrative business by corporate executives.  In very few cases does any individual suffer any negative consequence for approving, ordering or implementing the unethical behavior.  <br /><br />Thus, I would argue that these cases remind us how unethical the health care "business" has become, but the way they have been resolved will fail to deter future bad behavior.  A large fine's impact can be spread among share-holders, employees, and clients/ customers/ patients, and hence poses no threat to executives planning the next bit of unethical behavior.  <br /><br />In fact, the most notable aspect of the current case is that the corporation involved in not run out of the US, but rather out of Switzerland, showing that this pattern is not exclusively an American one.<br /><br />There is an interesting juxtaposition to this case, however.  At the same time this settlement was announced, Novartis <a href="http://blogs.wsj.com/health/2010/01/26/new-novartis-ceo-cafepharma-reader-former-heinz-exec/">disclosed</a> its new CEO.  A Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052748703906204575027083891374688.html">commentary</a> opined, that the " New Novartis Chief Needs Surgery Skills."  Ironically, the new CEO is hardly a surgeon.  <a href="http://www.novartis.com/downloads/newsroom/corporate-press-kit/7j_CV_Joe_Jimenez_EN.pdf">Here</a> is a summary of his background.<br /><blockquote>Mr. Jimenez began his career in the United States at The Clorox Company, and later served as president of two operating divisions at ConAgra. <em>In 1998, he joined the H.J. Heinz Company, and was named President and Chief Executive Officer of the North America business. From 2002 to 2006, he served as President and Chief Executive Officer of Heinz in Europe.</em><br /><br />Before joining Novartis, he was a NonExecutive Director of Astra-Zeneca plc, United Kingdom, from 2002 to 2007; and was an advisor for the private equity organization Blackstone Group, United States. Mr. Jimenez joined Novartis in April 2007 as Head of the Consumer Health Division and was appointed to his present position in October 2007.<br /><br />Mr. Jimenez graduated with a bachelor’s degree from Stanford University in 1982 and with an M.B.A. from the University of California, Berkeley, in 1984.</blockquote><br />I would guess that all that expertise marketing ketchup will come in handly preventing the need for more settlements of illegal marketing practices.  Seriously, we have <a href="http://hcrenewal.blogspot.com/2009/12/on-automobile-and-health-care-companies.html">discussed</a> the logic and evidence behind the assertion that health care corporations ought to be run by people with relevant experience and values.  We wish Mr Jimenez well, but hope that he realizes that if he is to prevent future events that could throw his company into disrepute, he ought to lean heavily on people who understand medicine and biomedical science, and who support physicians' core values.<br /><br />More broadly, I again suggest that real US health care reform would need to deal with both these issues.  We need to have rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health.  We need to have leaders of health care organizations who actually understand health care and share its values.  <br /><br />Two hat tips to the PharmaGossip blog (<a href="http://pharmagossip.blogspot.com/2010/01/meet-joe-jimenez-new-ceo-at-novartis.html">here</a> and <a href="http://pharmagossip.blogspot.com/2010/01/novartis-says-us-unit-to-pay-fine.html">here</a>).

Drowning our Sorrows in Ketchup: Novartis Settles, Appoints Former Heinz Executive CEO

Here's the latest corporate health care marcher in the legal settlement parade, as reported in the Wall Street Journal.Swiss drug giant Novartis AG said its U.S. subsidiary struck a plea agreement wit…

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