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.<br /><br /><b>Planned Obsolescence Disguised as Innovation</b><br /><br />The article first discussed the brave new world of type 1 diabetes treatment.  The introductory theme was:<br /><br /><blockquote class="tr_bq">Today, the routine care costs of many chronic illnesses eclipse that of acute care because <i>new treatments that keep patients well have become a multibillion-dollar business opportunity</i> for device and drug makers and medical providers.</blockquote><br />Much of modern diabetes treatment seems to depend on medical devices and disposable medical supplies:<br /><br /><blockquote class="tr_bq">That captive audience of Type 1 diabetics has spawned lines of high-priced gadgets and disposable accouterments,<i> 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</i>.<br /><br />A steady stream of<i> new models and updates often offer dubious improvement</i>: 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><br />Of course, the device and supply manufacturers claim that the high prices reflect the value of the wondrous new innovations:<br /><br /><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><br />Yet now the Times reporter was able to find physicians who claim the "innovations" are really just the latest version of planned obsolescence:<br /><br /><blockquote class="tr_bq">Diabetes experts say<b><i> a good part of what companies label as innovation amounts to planned obsolescence</i></b>. 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,<br /><br /><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"><br /></div><div class="story-body-text story-content" data-para-count="109" data-total-count="4115" itemprop="articleBody">'<i>People don’t need a meter that talks to them</i>,' he added. 'There’s an incredible waste of money.'</div></blockquote><br /><br />Pharmaceutical companies have also discovered this model.<br /><br /><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><br />In particular,<br /><br /><blockquote class="tr_bq">Synthetic human insulin is safer for patients, who sometimes developed reactions to animal insulin. But it is <i>made by only three companies: Eli Lilly, Sanofi and Novo Nordisk</i>. 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.<br /><br /><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><br /><br />Of course, the pharmaceutical companies also claim that it's all about innnovation,<br /><br /><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,<br /><br /><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. <br /><br />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><br /><br />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,<br /><br /><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"><br /></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><br />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.  <br /><br /><br /><b>Oligopoly Disguised as a Free Market</b><br /><br />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,<br /><br /><blockquote class="tr_bq"><a href="http://www.medtronic.com/">Medtronic</a> is the dominant insulin pump manufacturer,<i> serving 65 percent of American patients and the majority of those worldwide.</i> <i>Though smaller companies sell cheaper pumps, it is hard to make inroads</i>: 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><br />Of course, Medtronic public relations will justify it all again based on innovation,<br /><br /><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><br />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,<br /><br /><blockquote class="tr_bq">Dr. Kivi was on high doses of steroids for debilitating joint pain that left him unable to walk at times.<br /><br />But when his last<i> three-hour infusion at NYU Langone Medical Center’s outpatient clinic generated a bill of $133,000</i> — 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><br />However,  this pricing appears to have been facilitated by the hospital's increasing market domination generated by its purchase of physician practices, <br /><br /><blockquote class="tr_bq">He had moved his care to NYU Langone to follow his longtime doctor, who had <i>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,</i> according to Medicare data.</blockquote><br />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.<br /><br /><b>Enrichment of the Oligarchs</b><br /><br />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?<br /><br />It does not appear to be the health care professionals,<br /><br /><blockquote class="tr_bq">Meanwhile, as the price of supplies rises,<i> endocrinologists remain among the lowest-paid specialists in American medicine,</i> meaning severe physician shortages in many areas and long waits to see a doctor.</blockquote><br />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.<br /><br /><u>Eli Lilly</u><br /><br />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<br /><br />- John C Lechleiter PhD, CEO                                     <b><i> $11,217,000</i></b><br /><br />- Derica W Rice, CFO                                                   <b><i>$5,176,822</i></b><br /><br />- Jan M Lundberg, PhD, EVP, Science and Technology   <b><i>$4,774,535</i></b><br /><br />- Michael J Harrington, General Counsel                         <b><i> $3,174,222</i></b><br /><br />- Erico A Conterno, President Lilly Diabetes                    <b><i>$3,009,041</i></b><br /><br />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.<br /><br />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,<br /><br />- Alfred G Gilman, MD, PhD, Regental Professor Emeritus, recent (until 2009) executive vice presdient, provost, and dean of medicine, University of Texas Southwestern  <br /><br />- William G Kaelin Jr, MD, Professor of Medicine, Associate Director of Basic Science, Dana-Farber Cancer Center, Harvard University<br /><br />- Marschall S Runge MD, Executive Dean and Chair of the Department of Medicine, University of North Carolina Medical School<br /><br />- 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).<br /><br />- Ellen R Marram, Trustee, New York-Presbyterian Hospital<br /><br />- Ralph Alvarez, President's Council, University of Miami<br /><br />- R David Hooper, Trustee, Children's Hospital of Colorado<br /><br />- Franklyn G Pendergast MD PhD, Professor, Mayo Medical School<br /><br />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.<br /><br /><br /><u>Medtronic</u><br /><br />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 <b><i>$8,975,866</i></b> 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.<br /><br />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).  <br /><br /><u>NYU Langone Medical Center</u><br /><br />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.    <br /><br />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.  <br /><br /><br /><b>Summary</b><br /><br />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. <br /><br />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.<br /><br />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 <br /><br />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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More Pharmaceutical Misadventures - Actelion Damages Upheld, Genzyme (Sanofi Subsidiary) Settled, Merck Fined

The march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> by large health care organizations goes on, albeit with ever more quiet footsteps as the number of journalists available to amplify their sounds declines.  Last week we <a href="http://hcrenewal.blogspot.com/2014/01/pharmalot-sent-down-memory-hole.html">noted</a> the shutdown of PharmaLot, a journalistic blog edited by Ed Silverman that was one of the few that reported fearlessly on the pharmaceutical industry, warts and all.<br /><br />So we dedicate this round up of legal settlements by pharmaceutical companies announced last month, December, 2013, to Ed Silverman, who reported on two of the cases below, and whose reports have been silenced by the shutdown of the PharmaLot web-site by its corporate owner. <br /><br />In alphabetical order by name of the pharmaceutical company, <br /><br /><b>Actelion $40.7 Million Damages for Keeping Possibly Competitive Drug Off the Market Upheld</b><br /><br />This story was reported by Ed Silverman on Pharmalot, and <a href="http://www.sfgate.com/business/article/Actelion-loses-appeal-in-lung-drug-case-5079481.php">by the San Francisco Chronicle</a>.  The basics, according to the latter article, were:<br /><br /><blockquote class="tr_bq">A state appeals court has upheld $407 million in damages against the Swiss biotechnology giant Actelion and its executives for buying a Bay Area company and using it to thwart another firm's plans to market a competing hypertension drug in the United States.<br /><br />The drug, Fasudil, is manufactured by Ashai Kasei Pharma Corp of  Japan<a href="http://www.sfgate.com/?controllerName=search&action=search&channel=business&search=1&inlineLink=1&query=%22Asahi+Kasei+Pharma+Corp.+of+Japan%22"></a> for treatment of pulmonary arterial hypertension, an often fatal disease of the lung arteries. In June 2006, Asahi signed a licensing agreement with the South San Francisco biotech firm CoTherix, which agreed to develop oral and inhaled versions of Fasudil and seek regulatory approval in the U.S. and Europe.<br /><br />Less than five months later, Actelion bought CoTherix, paying a premium price of more than $400 million, and <i>announced soon afterward that it was dropping plans to develop Fasudil. Actelion's own drug, Tracleer, dominates the U.S. market for treatment of the same disease and generates more than $1 billion in revenue a year.</i></blockquote><br />Note that the federal appeals court judge, Terence Bruiniers, found that the actions by Actelion were not only anti-competitive, but may have harmed patients,<br /><br /><blockquote class="tr_bq">'By impeding the development of Fasudil, Actelion not only sabotaged a competitive and foreseeably profitable commercial venture, but <i>prevented a drug with the potential for alleviating the suffering of patients with life-threatening and debilitating diseases from reaching the market</i>,' Bruiniers wrote.</blockquote><br />Further note that in this civil lawsuit, it appears that the top executives who engineered the anti-competitive actions that may have harmed patients will actually face negative consequences.  The judge also said,<br /><br /><blockquote class="tr_bq">the jury was entitled to conclude that <i>three Actelion executives - CEO Jean Paul Clozel, chief scientific officer Martine Clozel, and Simon Buckingham, director of corporate and business development - had shown a disregard for the rights of Asahi and its customers and were liable for $30 million in punitive damages,</i> about 10 percent of the executives' net worth.</blockquote><br /><br /><b>Sanofi Subsidiary Genzyme Settled Charges of Encouraging Unapproved Internal Use of SepraFilm for $22 Million</b><br /><br />The longest version of this story appeared <a href="http://www.tampabay.com/news/courts/civil/boston-biotech-firm-genzyme-agrees-to-pay-22-million-in-tampa/2158332">in the Tampa Bay Times</a>.  The basics were:  <br /><br /><blockquote class="tr_bq"> A Massachusetts-based biotechnology company has agreed to <i>pay $22.28 million</i> to resolve allegations brought by whistle-blowers in Tampa and Miami that it <i>marketed an inappropriate use for a surgery medication,</i> U.S. government attorneys said.<br /><br />Genzyme, a corporation known for its research into drugs for rare genetic diseases, is paying the settlement in a lawsuit over Seprafilm, a material it manufactures for use in the operating room. <br /><br />According to court documents, Genzyme <i>sales representatives encouraged doctors to use the product in a manner not approved </i>by the U.S. Food and Drug Administration, leading to improper claims for reimbursement from hospitals.</blockquote><br />The details were:<br /><br /><blockquote class="tr_bq"> According to court documents, Seprafilm is i<i>ntended to be applied during open surgery</i> to prevent organs and muscle tissue from sticking together. However, the whistle-blowers and lawyers for the federal government alleged that <i>Genzyme sales representatives taught doctors to use it in less invasive procedures — such as laparoscopic or 'keyhole' surgeries — by mixing it into a liquidlike 'slurry' that could be injected into the body.</i></blockquote><br />Apparently the sales representative who blew the whistle in this case "recognized that this was a potential danger."  It certainly seems possible that the unapproved use of this material modified to be injected within the body might have resulted in harm to patients, and that at least its harmfulness when used in this manner had had never been tested.  However, in this litigation as supported by the US Department of Justice the plaintiffs were "not required to prove ... that patients had been harmed."<br /><br />Note that unlike the civil case above, and as is typical of federal lawsuits against big health care organizations, those company employees who authorized or directed the questionable actions did not suffer any negative consequences.<br /><br />(Added on 19 January, 2013) - Further note that as the article implied, but did not emphasize, since 2011, Genzyme has been owned by Sanofi.  Sanofi's last three major settlements since 2007 were summarized <a href="http://hcrenewal.blogspot.com/2012/12/tis-season-for-legal-settlements.html">here</a>.  <br /><br /><b>Merck Fined 15.3 Million Euros for Smear Campaign Against Generic Competition</b><br /><br />This case was reported by Ed Silverman on PharmaLot, and briefly <a href="http://www.reuters.com/article/2013/12/19/france-fine-idUSL6N0JY2DE20131219">by Reuters</a>,<br /><br /><blockquote class="tr_bq"><span id="articleText"><span class="focusParagraph">The French competition authority said on Thursday it had <i>fined Schering-Plough, now owned by Merck, 15.3 million euros ($21 million)</i> over what it called <i>a smear campaign against generic competition to Subutex, its drug for opioid addiction.</i><br /><br /> </span><span id="midArticle_0"></span>It also handed out a fine of 414,000 euros to parent Merck and another of 318,000 euros to British supplier Reckitt Benckiser for <i>anti-competitive behaviour</i> in staging the campaign in late 2005.</span></blockquote><span id="articleText"></span><br /><br />Note that while this case did not involve any implications of physical harm to patients, it seemed to involve active deception. <br /><br /><b>Summary</b><br /><br />First, as we have <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">said for years</a>, legal actions like those listed above may or may not result in huge financial penalties, and rarely result in penalties for individuals who authorized, directed or implemented the actions in question, but do serve as markers of the extent of misbehavior by large health care organizations.  Such misbehavior may have adverse consequences for patients and for public health and the health care system.<br /><br />Second, also as we have said for years, such actions mark the problem, but are unlikely to deter future problems.  In fact, many large health care organizations have settled strings of cases since we started trying to keep track of them (and may not have done so completely).  For example, the Genzyme, hence Sanofi settlement this year is at least the fourth major settlement by this company since 2007. <br /><br />Settlements resulting in fines imposed on a company as a whole are diffused, paid by stockholders, employees, and patients, and hence are likely to be regarded as a cost of doing business by top  management.  Managers, however, often are given huge financial incentives for all actions that increase short term revenue.  So managers are likely to continue to enable or direct bad behavior as long as it can bring in lots of revenue at no personal risk.<br /><br />Third, while there has been a modest increase in discussion of ill-informed, mission-hostile, self-interested, conflicted, or even criminal or corrupt management since we started Health Care Renewal, the increasing plight of journalism seems to be making these issues more <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>.  The shutdown of PharmaLot and the silencing of its archives is another reminder of how public relations and marketing are now overwhelming disinterested reporting (see <a href="http://www.propublica.org/article/pr-industry-fills-vacuum-left-by-shrinking-newsrooms">this report</a> by Pro Publica).<br /><br />If we really want to reverse the downward spiral of our ever more expensive, less accessible, and lower quality health care system, we first have to preserve our ability to identify and loudly discuss its problems. <br /><br />Roy M. Poses MD for Health Care Renewal <br /><br /><br />

More Pharmaceutical Misadventures - Actelion Damages Upheld, Genzyme (Sanofi Subsidiary) Settled, Merck Fined

The march of legal settlements by large health care organizations goes on, albeit with ever more quiet footsteps as the number of journalists available to amplify their sounds declines.  Last week we …

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'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.<br /><br /><b>GlaxoSmithKline</b><br /><br />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:<br /><br /><br /><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.<br /><br />As the co-leader of the lawsuit, Oregon will receive $3.9 million of the settlement, according to the release.<br /><br />The 38 attorneys general claimed in lawsuits filed Nov. 15 that GlaxoSmithKline <i>misrepresented the cardiovascular risks posed by Avandia</i>. A negotiated consent judgment was filed shortly thereafter.<br /><br /> 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><br />Furthermore,<br /><br /><blockquote class="tr_bq"> Oregon and the 37 other states claim GlaxoSmithKline made<i> safety claims about Avandia not supported by the scientific evidence.</i><br /><br />The states allege the company <i>failed to disclose negative information about Avendia’s cardiovascular health effects.</i></blockquote><br />In addition to the monetary settlement, the agreement included all sorts of pledges by GSK:<br /><br /><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:<br /> • To refrain from making false, misleading, or deceptive claims about any diabetes drug;<br />• To refrain from making comparative safety claims not supported by substantial evidence or substantial clinical experience;<br />• To refrain from presenting favorable information previously thought of as valid but rendered invalid by contrary and more credible recent information;<br />•   To refrain from misusing statistics or otherwise misrepresenting the nature, applicability, or significance of clinical trials.<br /><br />The Consent Judgment also has the following terms that are effective for at least eight years:<br />• 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;<br />• The company post summaries of company-sponsored clinical trials of diabetes products within eight months of the primary completion date;<br />• GlaxoSmithKline must register and post all company-sponsored clinical trials as required by federal law.</blockquote><br />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):<br /><br /><blockquote class="tr_bq"> British drugmaker GlaxoSmithKline Plc has reached a $150 million preliminary settlement with U.S. drug wholesalers who claimed the company<i> improperly delayed entry to the market of generic alternatives to its nasal spray Flonase, </i>according to court documents.<br /><br />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><br />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.<br /><br />Again, these latter two settlements seem to just ice the cake of the $3 billion settlement earlier this year.<br /><br /> <b>Eli Lilly</b><br /><br />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,<br /><br /><br /><blockquote class="tr_bq"> Eli Lilly & Co. agreed to pay $29.4 million in a settlement of U.S. government <i>allegations that the drug maker's units made improper payments to foreign government officials to win business</i>.<br /><br />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><br />The colorful details were:<br /><br /><br /><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 <i>falsified expense reports to provide spa treatments, jewelry and other gifts and cash payments to government-employed doctors</i> between 2006 and 2009.<br /><br />The SEC also alleged: Lilly hired a drug distributor in 2007 that <i>paid bribes to health officials in a Brazilian state</i> to facilitate about $1.2 million in sales of a Lilly drug to the state; Lilly's Polish unit<i> paid $39,000 between 2000 and 2003 to a charitable foundation run by the head of a regional government health authority </i>and dedicated to restoring a castle in Chudow, Poland; and that its Russian unit <i>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' </i>to obtain business for the Lilly unit. <br /><br />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><br />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.<br /><br /><b>Orthofix</b><br /><br />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>, <br /><br /><br /><blockquote class="tr_bq">Orthofix International NV won court approval of a settlement of federal regulators’ claims that <i>the maker of bone-repair products defrauded Medicare through a kickback scheme involving doctors,</i> prosecutors said.<br /><br />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 <i>plead guilty to a felony count of obstructing an audit and pay a $7.6 million criminal fine</i>....</blockquote><br />This settlement like some of the previous ones involved allegations of payments to doctors to induce them to use Orthofix devices.<br /><br /><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><br />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).<br /><br /><blockquote class="tr_bq"><i>Five Orthofix employees have pleaded guilty</i> 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<i> violating the federal anti-kickback statute by setting up fake consulting agreements for doctors who used the company’s products. </i></blockquote><br /><b>Sanofi</b><br /><br />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>,<br /><br /><blockquote class="tr_bq"> Sanofi,  France’s biggest drugmaker, reached a settlement to pay $109 million over <i>allegations that its U.S. units gave doctors free doses of a medicine to win their business</i> and subvert Medicare’s drug reimbursement system. </blockquote><blockquote class="tr_bq">Sanofi sales representatives entered into 'illegal sampling arrangements' with physicians,<i> giving them the arthritis drug Hyalgan as kickbacks</i> 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.<br /><br /><i>'Kickback schemes</i> 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 <i>providing illegal incentives to influence the decision-making of health-care providers </i>in federal health-care programs.'</blockquote><br />Again, no individual suffered any negative consequences for authorizing, directing or implementing the bad behavior in this case.<br /><br /><b>Summary</b><br /><br />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. <br /><br />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.<br /><br />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.<br /><br />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

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 regist…

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"The 'Third Rail' that No One Wishes to Analyze" - Conflicts of Interest Affecting Health Care Foundations

On Health Care Renewal we discuss what we think are important issues affecting health care that seem to be rarely mentioned in the medical and health care literature and the "main-stream media."  In particular, we focus on problems in health care leadership and governance, how they threatened the core values of health care professionals, and how these threats contribute to rising costs, and declining access and quality.  <br /><br />One of our preoccupations has been why these problems remain so <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>.  A new article in PLoS Medicine [Stuckler D, Basu S, McKee M. Global health philanthropy and institutional relationships: how should conflicts of interest be addressed? PLoS Med 8(4): e1001020. doi:10.1371/journal.pmed.1001020.  Link <a href="http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.1001020#pmed.1001020-Robert1">here</a>. ] seems to have uncovered another missing link to the anechoic effect.  <br /><br /><strong>Private Foundations and Their Influence on Global Health</strong><br /><br />The article noted the importance of the influence of private foundations on global health:<br /><blockquote>While corporate involvement in and government aid for health has been extensively analyzed and critiqued in the public health literature,<em> less attention has been paid to the impact of private donors on public health.</em> Over the past decade, the bulk of new health aid designed to reach the Millennium Development Goals has come from individuals and corporations. <em>The influence of this private philanthropy on global health is profound and transformative.</em></blockquote><br />So,<br /><blockquote><em>Private foundations operate outside the typical boundaries of democracy; unlike government ministries, private foundations cannot be influenced in the same way by the communities affected by the foundations' actions</em>. In the interests of public health, and particularly because poor communities affected by foundations do not automatically have a feedback mechanism to influence the decisions of private funders, we argue that <em>it is appropriate to subject private foundations to the same scrutiny received by public institutions</em>.<br /><br />In this paper, we examine the scope of potential conflicts of interests that exist among the private foundations that are major funders of global health.</blockquote><br />I would add that private foundations may have an outsize influence not only on global public health policy, but also on health care policy within particular countries, including the US.   This may arise because of the perception that they are more independent and nearer the cutting edge than are government and industry sources of funding. For example, here in the US, the Kellogg and Robert Wood Johnson Foundations have been widely perceived by health care, services and policy researchers as especially influential and respectable sources of funding, possibly partially because of the perception that they have less self-serving agendas than do government agencies and for-profit health care corporations. <br /><br /><strong>The Possibility of Conflicts of Interest</strong><br /><br />The authors noted increasing concern about conflicts of interest affecting the activities of for-profit corporations involved in public health and health care:<br /><blockquote>because tensions can arise between the profit motives of corporations and the promotion of public health. Whereas corporations make products that can improve health (such as pharmaceuticals and vaccines) and relationships between public health institutions and for-profit corporations can be seen as positive opportunities for corporations to improve public health, corporations also make products that damage health (such as tobacco or unhealthy foods). And because some corporations have a vested interest in the activities of public health bodies, there have been documented attempts to influence the public health agenda by establishing associations with health care institutions</blockquote><br />Thus the authors thought it also made sense to address conflicts of interest affecting private foundations operating in the global health space. They performed a case-study of the largest global health foundation, the Bill & Melinda Gates Foundation, while also briefly discussing four other large global health foundations, the Ford Foundation, W. K. Kellogg Foundation, Robert Wood Johnson Foundation, and Rockefeller Foundation.<br /><br /><strong>Stock Holdings </strong><br /><br />The article noted that the Gates Foundation had substantial investments in food and pharmaceutical companies:<br /><blockquote>The Bill & Melinda Gates Foundation's corporate stock endowment is <em>heavily invested in food and pharmaceutical companies</em>, directly and indirectly .... The Foundation holds significant shares in McDonald's (9.4 million shares representing about 5% of the Gates' portfolio), and Coca-Cola (>15 million shares, over 7% of the Foundation's portfolio, not counting Berkshire Hathaway holdings). In 2009 the Bill & Melinda Gates Foundation sold extensive pharmaceutical holdings in Johnson & Johnson (2.5 million shares), Schering-Plough Corporation (14.9 million shares), Eli Lilly and Company (about 1 million shares), Merck & Co. (8.1 million shares), and Wyeth (3.7 million shares).</blockquote><br />Also, the Foundation indirectly invests in food and pharmaceutical companies through its holdings of Berkshire Hathaway:<br /><blockquote>Berkshire Hathaway's largest investment is in Coca-Cola. It owns an additional 8.7% of Coca-Cola (Warren Buffett's firm is the largest shareholder in Coca-Cola, having stock worth >$10 billion dollars) and 6.3% of Kraft (Buffett is also the largest shareholder of Kraft). Berkshire Hathaway also has significant ownership in <em><a href="http://hcrenewal.blogspot.com/search/label/GlaxoSmithKline">GlaxoSmithKline</a>, <a href="http://hcrenewal.blogspot.com/search/label/Sanofi-Aventis">Sanofi-Aventis</a>, <a href="http://hcrenewal.blogspot.com/search/label/Johnson%20and%20Johnson">Johnson & Johnson</a>, and <a href="http://hcrenewal.blogspot.com/search/label/Procter%20and%20Gamble">Procter & Gamble</a>, and is one of the main global investors in the latter two pharmaceutical companies. </em></blockquote><br />The article also noted that the Ford, Rockefeller, Kellogg and Robert Wood Johnson Foundation had significant holdings in Coca-Cola, Kellogg, PepsiCo, <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">Pfizer</a>, GlaxoSmithKline, McDonalds, Nestle, NovoNordisk, YumBrands, Pizza Hut, KFC, Johnson & Johnson, and Sanofi-Aventis, and that the Ford Foundation held shares in a tobacco company, Lorillard, and the Kellogg and Rockefeller Foundations "were indirectly invested in tobacco corporations through conglomerate equity funds...."<br /><br />This admittedly case-based data suggested that the major private foundations active in global health may have financial holdings that could possibly influence their actions in favor of the vested interests of food, pharmaceutical, and even tobacco companies. <br /><br /><strong>Conflicts Affecting Foundation Leadership</strong><br /><br />The article noted that:<br /><blockquote><em>Several of the [Gates] Foundation's members of the management committee, leadership teams, affiliates, and major funders are currently or were previously members of the boards or executive branches of several major food and pharmaceutical companies ... including Coca-Cola, Merck, Novartis, General Mills, Kraft, and Unilever</em>.... </blockquote><br />In addition, <br /><blockquote><em>Further overlaps between Bill & Melinda Gates Foundation leadership, other private foundations, and circular flows of personnel with food and pharmaceutical companies were observed .... Such patterns of interlinked board directorships, common among corporations and nonprofit organizations, were similarly found in the other private foundations studied</em>.</blockquote><br />Examples provided in an appendix were:<br /><blockquote>Anne Fudge, the chairman of the Gates Foundation’s US Program Advisory Panel is also on the board of directors of Rockefeller Foundation (in addition to General Electric, <em><a href="http://hcrenewal.blogspot.com/search/label/Novartis">Novartis</a></em>, Unilever, and Harvard University, among others).</blockquote><br />Furthermore,<br /><blockquote>Members of personnel also move between the Foundation and pharmaceutical companies. For example, in April 2010, <em>a former <a href="http://hcrenewal.blogspot.com/search/label/Merck">Merck</a> senior vice president, Richard Henriques, became the chief financial officer of the Gates Foundation</em>. <em>At least two other members of the Gates Foundation leadership have transferred from the leadership of GlaxoSmithKline to sit on the Foundation’s board of directors, including Kate James, the chief communications officer, and Tachi Yamada, until February 2011, the head of the Foundation’s global health program</em>. Similar patterns were observed with the other foundations studied. </blockquote><br />Again, this admittedly case-based data suggested that the major private foundations active in global health may have leaders who have financial relationships that could possibly influence their actions in favor of the vested interests of food and pharmaceutical companies.<br /><br /><strong>Program Initiatives Possibly Related to Conflicts</strong><br /><br />The article asserted:<br /><blockquote>The bulk of the Bill & Melinda Gates Foundation's financial transfers in global health have been to programs <em>developing medical technologies</em>....</blockquote><br />In particular,<br /><blockquote>Overall, about 42% of all funding was spent on health care delivery or<em> increasing access to drugs, vaccines, and medical commodities</em>, while an additional one-third was allocated to <em>technology development (mainly for vaccines and microbicides)</em> or basic science research.</blockquote><br />Specific programs were related to companies in which the the Gates Foundation or its leaders had financial interests:<br /><blockquote>The Foundation has established partnerships with the Coca-Cola Company, which, in the words of the Foundation, are intended to 'create new market opportunities for local farmers whose fruit will be used for Coca-Cola's locally-produced and sold fruit juices'.</blockquote><br />Also,<br /><blockquote><em>many of the Foundation's pharmaceutical development grants may benefit leading pharmaceutical companies such as Merck and GlaxoSmithKline</em>....</blockquote><br />and<br /><blockquote><em>Johnson & Johnson has entered a clinical partnership to develop new HIV-prevention technology</em>, noting 'the work between Johnson & Johnson and the Gates Foundation is a strong, strategic, comprehensive relationship'.</blockquote><br />While there are many needs in global health, and many approaches to addressing these needs, this limited case-based data suggested that a strong focus of the Gates Foundation was on approaches that revolve around drugs, devices and biotechnology, again which would tend to favor the vested interests of the pharmaceutical companies which the Foundation holds in its investment portfolio and with which some of its leaders have or had financial relationships. <br /><br /><strong>Discussion</strong><br /><br />While the data from this case-study were limited, they do suggest that major private foundations that support global health, and by extension, health care, services, and policy research may have institutional conflicts of interest, and their leaders may have personal conflicts of interest. It is possible that these conflicts have steered global health policy to favor vested interests, particularly towards approaches that depend on drugs and devices, perhaps instead of more effective ones using less technology.<br /><br />Furthermore, it is possible that that these conflicts of interest have helped create the anechoic effect.  Conflicts of interest could have pushed the foundations in directions that favored specific vested interests, and away from others that may threaten such interests.  Many of the issues we discuss on Health Care Renewal may threaten such interests.  Private health foundations have been notably uninterested in addressing how problems in leadership and governance of health care organizations can threaten core values, They have been particularly uninterested in addressing specific tactics used when leadership is ill-informed, incompetent, self-interested, conflicted, or even corrupt, e.g., deceptive practices used to promote products and services, and promote policies favorable to vested interests, including, of course, deliberate creation of conflicts of interest (such as the cultivation of key opinion leaders). <br /><br />In fact, a particular version of the anechoic effect surrounds the private foundations themselves, as described by Stuckler et al:<br /><blockquote>Although the philanthropic activities of wealthy individuals and corporations have attracted controversy in the past (Text S1), their charitable mission often means that <em>they face less scrutiny than governments; critical analysis of foundations can be seen as <strong>'biting the hand that feeds us.'</strong> As a result, within the global health community, private donors are sometimes viewed as the <strong>'third rail' that no one wishes to analyze</strong>. </em></blockquote><br />We have often commented on the pervasiveness of conflicts of interest in health care. Now we see them affecting even the most respected private health care foundations which were previously regarded as independent. The web of conflicts of interest may benefit those personally involved, but to the detriment of patients' and the public's health. Unfortunately, as the web has gotten more complex, it stifles awareness of the problem by the unconflicted, much less their ability to respond. <br /><br />At a minimum, I urge that private health care foundations fully disclose their institutional conflicts of interest, and the conflicts of interest of their leaders. If they wish to maintain their previously sterling reputations, they ought to consider divesting themselves of financial holdings that generate institutional conflicts, and of leaders who have financial relationships that generate personal conflicts. <br /><br />Hat tip: to Ed Silverman <a href="http://www.pharmalot.com/2011/04/foundations-conflicts-of-interest-and-drugmakers/">on the PharmaLot blog</a>.

"The 'Third Rail' that No One Wishes to Analyze" - Conflicts of Interest Affecting Health Care Foundations

On Health Care Renewal we discuss what we think are important issues affecting health care that seem to be rarely mentioned in the medical and health care literature and the "main-stream media."  In p…

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Former NIH Director Spins Through Revolving Door, Ends Up at Sanofi-Aventis

A bit of news that got little attention this month was a new job for the former head of the US National Institutes of Health (NIH).  Dr Elias Zerhouni had <a href="http://www.nature.com/news/2008/081001/full/455570a.html">left the NIH</a> in October, 2008.  Here is the <a href="http://www.reuters.com/article/idUSLDE6BD08Q20101214">Reuters version</a> of the story of his hew career:<br /><blockquote>French drugmaker <a href="http://hcrenewal.blogspot.com/search/label/Sanofi-Aventis">Sanofi-Aventis</a> (SASY.PA) <em>replaced its head of research and development with a leading academic and former top U.S. health official</em> on Tuesday to raise its game in medical innovations.<br /><br />The company said <em>Elias Zerhouni would lead R&D of drugs and bring R&D for vaccines under his control</em> too as Sanofi reshapes its portfolio and looks to vaccines as one area for growth to offset sales losses from mounting generic competition.<br /><br />The appointment of Zerhouni, a professor of radiology and biomedical engineering, comes as Sanofi battles to buy U.S. rare disease specialist Genzyme. <br /><br /><em>Chief executive Chris Viehbacher brought in Zerhouni in <strong>February 2009</strong> as his scientific adviser</em>, shortly after taking charge of the group which he has been transforming to include the development of drugs based on biotechnology.</blockquote><br /><strong>Zerhouni's Embrace of Corporate Health Care</strong><br /><br />Although Zerhouni ostensibly left the NIH to return to academia at Johns Hopkins University, note that by February, 2009, four months after his resignation was announced, Zerhouni was already advising the Sanofi CEO.  <br /><br />Soon after he joined the corporate health care world in earnest.  In April, 2009, he was <a href="http://www1.actelion.com/en/our-company/news-and-events/index.page?newsId=1301120">proposed </a>for membership on the board of directors of Actelion Ltd, a <a href="http://www1.actelion.com/en/our-company/index.page?">Swiss biotechnology company</a>.  On December 8, 2009, he was <a href="http://www.implu.com/releases/2009/20091211/33777/implu_viewer">elected</a> to the board of Danaher Corp, a diversified technology corporation which makes <a href="http://www.danaher.com/business/strategic_detail.asp?key=17">medical devices</a>.  At some time he had become <a href="http://www.zerhounigroup.com/about/index.php">President</a> of the Zerhouni Group, which <a href="http://www.zerhounigroup.com/expertise/index.php">advertised itself</a> as a resource to "pharmaceutical and biotechnology companies, trade organizations, sovereign wealth funds, government agencies, and research entities around the globe."<br /><br /><strong>Zerhouni at the NIH: His Response to the Conflict of Interest Scandal</strong><br /><br />There is more than a little irony inspired by Zerhouni's quick circuit through the revolving door. <br /><br />Zerhouni became director of the NIH in 2002, and announced his departure <a href="http://www.nature.com/news/2008/081001/full/455570a.html">in October, 2008</a>. In December, 2003, David Willman published his <a href="http://articles.latimes.com/2003/dec/07/nation/na-nih7">landmark article</a> in the Los Angeles Times on severe conflicts of interest affecting NIH scientists and leaders.  It revealed that formerly stringent conflict of interest policies at the Institutes were rescinded by then director Dr Harold Varmus in 1995, during the Clinton administration, and increasingly since 1998, disclosure of NIH personnel's conflicts of interest had been reduced.  Thus, in 2002, Zerhouni had taken charge of an agency already deeply affected by conflicts of interest affecting many of its leaders, even though that was not yet public.  He initially did nothing about the situation.  <br /><br />Willman published another <a href="http://www.latimes.com/news/nationworld/nation/la-na-nih22dec22,0,7519657.story?coll=la-home-headlines">series of articles</a> revealing even more breathtaking conflicts of interest in December, 2004.  (See our post <a href="http://hcrenewal.blogspot.com/2004/12/anechoic-effect-and-conflicts-of.html">here</a>.)   By then, a Los Angeles Times editorial said there was the "appearance of corruption" at the NIH, and called for Dr Zerhouni's resignation.  <br /><br />Only after the second series of articles did Dr Zerhouni swing into action (see post <a href="http://hcrenewal.blogspot.com/2004/12/few-echoes-from-allegations-of-nih.html">here</a>).  In February, 2005, he announced that he would now hold the NIH to a "<a href="http://hcrenewal.blogspot.com/2005/02/nih-seeks-higher-standard-better-late.html">higher standard</a>."  Yet new conflict of interest stories kept surfacing and their handling kept provoking concern (e.g., see this <a href="http://hcrenewal.blogspot.com/2007/07/ongoing-nih-conflicts-of-interest-story.html">post</a> from 2007, and this <a href="http://hcrenewal.blogspot.com/2008/10/nih-management-reprimanded-scientific.html">post</a> from 2008), and concerns about how NIH deals with conflicts of interest affecting the extramural researchers it funds persist to this day (e.g., see this <a href="http://hcrenewal.blogspot.com/2010/07/ethics-turnaround-sort-of-by-nih.html">post</a>).  <br /><br />By the late 1990s, the NIH, like many other government agencies, seemed to have become extremely cozy with the world of big corporations.  Dr Zerhouni did nothing to obvious to reduce the local version of this coziness until it had become a public scandal.  His actions let questions about the relationships of the NIH, once a pristine example of a government run biomedical research agency, with big health care business persist to this day.  <br /><br />So it should perhaps be no surprise that he so quickly transitioned from the government that is supposed to be"of the people, by the people, for the people" to top leadership positions in corporate health care.<br /><br /><strong>Other US Government Health Care Agency Leaders Transit the Revolving Door</strong><br /><br />Meanwhile, the previous commissioner of the US Food and Drug Administration, Dr Andrew von Eschenbach, is <a href="http://www.healthtransformation.net/cs/andrew_c_von_eschenbach_md">Senior Director for Strategic Initiatives</a> at the Center for Health Transformation, a group whose <a href="http://www.healthtransformation.net/cs/our_members">membership</a> includes some of the biggest health care organizations, many of which have had their own moments in the sun on Health Care Renewal.  For example, see Charter Members, <a href="http://hcrenewal.blogspot.com/search/label/AstraZeneca">AstraZeneca</a>, <a href="http://hcrenewal.blogspot.com/search/label/Sutter%20Health">Sutter Health</a>, and <a href="http://hcrenewal.blogspot.com/search/label/WellPoint">Wellpoint</a>; and Platinum Members, <a href="http://hcrenewal.blogspot.com/search/label/GlaxoSmithKline">GlaxoSmithKline</a> and <a href="http://hcrenewal.blogspot.com/search/label/Merck">Merck</a>.  Dr Eschenbach is also on the <a href="http://www.esplp.com/von-eschenbach-joins-histosonics-board.aspx">board of directors</a> of Histosonics Inc.  <br /><br />Also, the previous director of the Centers for Disease Control, Dr Julie Geberding, became <a href="http://www.merck.com/newsroom/news-release-archive/corporate/2009_1221.html">President</a> of Merck Vaccines in late 2009.  <br /><br /><strong>Conclusions</strong><br /><br />So the revolving door just keeps spinning, its revolutions suggesting how closely tied together big government and big corporations have become in what is now the health care business.  Whatever the motivations of Doctors Zerhouni, von Eschenbach, and Geberding were, the message to every person in a leadership position in health care in the US government has to still be: you too can earn big corporate compensation soon after you leave here.  Who knows how much that siren song will lead current government leaders to avoid antagonizing the leaders of big health care corporations during their government "service."  That is, of course, not what we want them to be thinking about if government agencies ae to serve the people, not the CEOs of big corporations.  <br /><br />I am sure that the career transitions of Doctors Zerhouni, von Eschenbach, and Geberding were perfectly legal.  If we want government health care agencies to put the peoples' interests ahead of those of the CEOs of big health care corporations, should not, however, the law be changed to at least slow down the revolving door?

Former NIH Director Spins Through Revolving Door, Ends Up at Sanofi-Aventis

A bit of news that got little attention this month was a new job for the former head of the US National Institutes of Health (NIH).  Dr Elias Zerhouni had left the NIH in October, 2008.  Here is the R…

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Sanofi-Funded Society of Hospital Medicine Stands Up for Lovenox

Here is another case to raise questions about the true goal of some medical societies.  As <a href="http://online.wsj.com/article/SB20001424052748703900004575325023225623274.html">reported</a> by Alicia Mundy in the Wall Street Journal in late June, <br /><blockquote>A medical researcher and <em>two medical groups with financial ties to Sanofi-Aventis SA have asked federal regulators to hold off on approving generic forms of a Sanofi blood-thinner</em>....<br /><br />Citing potential patient safety issues, the head of the Society of Hospital Medicine and a medical researcher at Duke University last month sent letters to the Food and Drug Administration contending that Lovenox is too complex for any generic maker to copy fully.<br /><br />Earlier this year, another Sanofi-sponsored medical group, the North American Thrombosis Forum, sent two letters in favor of Sanofi's position opposing generic Lovenox. None of the letters mentions the signer's financial support from Sanofi.<br /><br />Two small drug companies, Amphastar Pharmaceuticals Inc. and Momenta Pharmaceuticals Inc., filed applications to the FDA in 2003 and 2005 respectively seeking to sell generic Lovenox, called enoxaparin.</blockquote><br />Of course, the two medical societies involved denied that there was any relationship between their support from Sanofi-Aventis and their concerns about the safety of biogeneric medications that might compete with a Sanofi-Aventis product (which, as the WSJ article noted, "had global sales of $4.57 billion in 2009").<br /><blockquote>Laurence Wellikson, chief executive of The Society of Hospital Medicine, which represents doctors who coordinate patient care, said his letter to the agency 'was <em>based entirely on the best evidence-based medicine available and the collective experience of SHM's senior hospitalists</em>.'</blockquote>Also<br /><br /><blockquote>Ilene Sussman, executive director of the North American Thrombosis Forum, said the group's doctors are concerned about generic Lovenox, and its letter was independent of Sanofi.</blockquote><br />The CEO of the SHM denied even a responsibility to disclose the Society's support from Sanofi-Aventis:<br /><blockquote>Dr. Wellikson said <em>it wasn't necessary to disclose that the group receives financial support from Sanofi because its letter 'focused on providing the best, most effective care to the hospitalized patient.'</em></blockquote><br />In fact, the SHM web-site includes a <a href="http://www.hospitalmedicine.org/Files/PDF/cmss/Industry_Support_Disclosure.pdf">"disclosure of organizational support" page</a> which suggests Sanofi-Aventis provided somewhere between $200,000 to $800,000 for three projects of the Society's projects, "pharmacoeconomics," "improving glycemic control," and "preventing VTE." The latter presumably could have something to do with anti-coagulants such as Lovenox. (The numbers are vague because the statement only discloses the amount of support provided in broad ranges.) Thus, support by Sanofi-Aventis could provide as little as 2.7% or as much as 11.1% of the Society's total income, which was noted to be $7,203,596 in its <a href="http://www.guidestar.org/FinDocuments/2009/233/057/2009-233057353-05ac90cc-9.pdf">2009 Form 990 </a>filed with the IRS, and publicly available via Guidestar.<br /><br />Given the broad <a href="http://www.hospitalmedicine.org/Content/NavigationMenu/AboutSHM/GeneralInformation/General_Information.htm">mission of the SHM</a><br /><blockquote>SHM is dedicated to promoting the highest quality care for all hospitalized patients. SHM is committed to promoting excellence in the practice of hospital medicine through education, advocacy and research.</blockquote>one wonders why it would want to get officially entangled in the approval process for specific biogeneric drugs.  If the leadership of the Society is so concerned about the safety of anti-coagulants, one wonders why they did not speak up about the case of the lethal contaminated heparin, about which we have blogged extensively, most recently <a href="http://hcrenewal.blogspot.com/2010/05/more-questions-no-answers-about-case-of.html">here</a>.  (I can find nothing on the web to suggest the Society, or Dr Wellikson, ever noted any concerns about this issue.)  Of course, that case involved heparin sold by Baxter International, whose production was out-sourced to a questionable supply chain.  SHM also receives support, amounting to something between 0 and $100,000, according to its "disclosure of organizational support" page, from Baxter International.  <br /><br />Thus it appears that the leadership of SHM was very concerned about the safety of an anti-coagulant manufactured by a competitor of Sanofi-Aventis which could threaten that company's revenues from the drug, while Sanofi-Aventis is one of the Society's major financial supporters.  On the other hand, the leadership seemed unconcerned about the safety of an anti-coagulant sold under the Baxter International label, while Baxter-International is also one of the Society's major financial supporters.  So it is hard to tell whether the leadership is more concerned about the safety of anti-coagulants, or the financial interests of the drug companies that support it.  <br /><br />The problem with the funding of health care professional societies by health care corporations that sell products or services that doctors can prescribe or order is that it raises the suspicion that such societies may use their considerable influence to serve the corporations', not patients' interests, and so undermine the professional values of the societies' members.  For this reason, Rothman et al suggested that such societies sever most of their financial ties to such corporations.(1)  (See our blog post <a href="http://hcrenewal.blogspot.com/2009/07/again-logical-fallacies-in-defense-of.html">here</a>.)  As long as the SHM chooses to accept support from drug and device companies, questions will be asked about the effects of such support on how the Society uses its influence.  Furthermore, assertions that such support is so irrelevant that the Society need not even disclose it will only fuel more suspicion.<br /><br />If ostensibly mission-driven not-for-profit health care organizations, like health care professional societies, but also including medical schools, academic medical centers, and patient advocacy groups, want the public and health care professionals to believe that they really are mission-driven, they need to spurn funding from organizations with vested interests whose service might distort these missions.<br /><br />Hat tip to Steve Lucas for his comment <a href="https://www.blogger.com/comment.g?blogID=9551150&postID=7625518709680137413&isPopup=true">here</a>.<br /><br /><span style="font-size: x-small;">References</span><br /><br /><span style="font-size: x-small;">1. Rothman DJ, McDonald WJ, Berkowitz CD et al. Professional medical associations and their relationships with industry. JAMA 2009; 301: 1367-1372. (Link </span><a href="http://jama.ama-assn.org/cgi/content/full/301/13/1367"><span style="font-size: x-small;">here</span></a><span style="font-size: x-small;">.)</span>

Sanofi-Funded Society of Hospital Medicine Stands Up for Lovenox

Here is another case to raise questions about the true goal of some medical societies.  As reported by Alicia Mundy in the Wall Street Journal in late June, A medical researcher and two medical groups…

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Deja Vu All Over Again - Sheffield Researcher Under Threat for Trying to Present Data that Offends Research Sponsor

It's deja vu all over again.  A case <a href="http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=410419&c=2">reported</a> (so far only) in the UK Times Higher Education Supplement of a biomedical researcher apparently threatened because she tried to present data that did favor a particular commercial health care product. Here is the summary:<br /><blockquote>An academic has <em>risked the wrath of her university by submitting results to a forthcoming conference without permission</em>.<br /><br />The <em><strong><span style="background-color: magenta;">University of Sheffield</span></strong></em> has<em> claimed that the submission has been made in breach of a contract it has with a pharmaceutical company, which funds work in the scholar's field</em>.<br /><br />Guirong Jiang, a research radiologist who has worked at Sheffield for 13 years, is <em>due to face a disciplinary hearing</em> over her actions this week.<br /><br />Her findings - submitted to a symposium of the European Calcified Tissue Society (ECTS), to be held in Glasgow in June - add to the debate over what some have claimed is a distortion in the field of osteoporosis caused by the over-diagnosis of vertebral fractures.</blockquote><br />Here are more particulars:<br /><blockquote>Sheffield has censured her for <em>making the submission without the consent of her supervisor, <strong><span style="background-color: magenta;">Richard Eastell</span></strong>, head of Sheffield's Academic Unit of Bone Metabolism</em>.<br /><br />It said her actions <em>breached the terms of a 2007 contract the unit has with pharmaceutical manufacturer Sanofi-Aventis to conduct studies</em> relating to the osteoporosis treatment <em>risedronate, which is sold as the drug</em> <em><strong><span style="background-color: magenta;">Actonel.</span></strong></em><br /><br />It also said Dr Jiang failed to follow 'reasonable requests' to withdraw the submission.<br /><br />Dr Jiang said she believed her results should be published as they had not been reflected in the unit's previous output.<br /><br />She added that last December she was informed that her contract would not be renewed when it came to an end this March, which she said had prompted her to throw caution to the wind and publish without permission.<br /><br />She has queried whether her work is bound by Sheffield's Sanofi-Aventis contract, which stipulates that the company must be allowed to review manuscripts and abstracts prior to publication.<br /><br />She pointed out that the work was carried out in 2002 when the unit's risedronate work was funded by <em><strong><span style="background-color: magenta;">Procter & Gamble</span></strong></em> in partnership with Aventis. Dr Jiang added that she had not seen or signed the full Sanofi-Aventis contract.</blockquote><br />Dr Jiang is still under threat:<br /><blockquote>The disciplinary hearing, scheduled to take place on 18 February, will consider the allegation that Dr Jiang <em>'acted inappropriately in making a direct submission of an abstract to a journal outside unit protocol and in contravention of the terms of the research contract'</em>.<br /><br />It will also consider the charge that she 'failed to follow a request by her head of unit and head of department to rectify her actions', which 'aggravated a situation which otherwise could have been quickly resolved'.</blockquote><br />A long time ago, in a galaxy far, far away, academics had the expectation that they could publish or present their research without first acquiring the express approval of their academic superiors (at least as long as their work was original, the research project was under their control, and that they had properly protected the rights of any human subjects). Furthermore, in at least the US, academics are citizens who expect to have free speech.<br /><br />But as academic institutions became more enamored of and dependent on "external funding," faculty were increasingly pressured to do only sponsored research. The growing dependence on sponsored research allowed the sponsors to try to get more control over how research was done.<br /><br />In the 1990s, there were several important cases in North America in which academic researchers tried to present or publish results that clashed with their research sponsors' vested interests. Doing so resulted in lesser or greater threats to the faculty. Two of the classic cases of research suppression in the 1990's demonstrated this issue.<br /><br /><br />* In the "David Kern case," a textile manufacturer, Microfibres Inc., tried to prevent Dr. David Kern, a general internist and occupational medicine physicians at Memorial Hospital of Rhode Island and faculty member at Brown University, from presenting an abstract that described a case-series of a new pulmonary disease, flock-workers lung, that affected workers at Microfibres Inc. factories. Kern did present the abstract, but under a threat, never carried out, of law-suit, Memorial Hospital of Rhode Island removed Kern as head of the Occupational Medicine program, and refused to renew his contract, even though he was an Associate Professor. Brown University was unable to reverse these moves by the hospital, and Brown officials blamed Kern for signing an agreement to protect trade secrets, even though the agreement was unrelated to the research Kern did on the disease, and his research did not obviously reveal any trade secrets. [1-4]<br /><br />* In the "Nancy Olivieri case," Apotex, a pharmaceutical company, acted against Dr. Nancy Olivieri for revealing preliminary data from a trial of deferiprone, a chelating agent for the treatment of iron overload in thalassemia, suggesting that the drug was often ineffective in treating iron overload, and appeared to be associated with hepatic fibrosis. Ultimately, a report by the Canadian Association of University Teachers also held that her academic freedom was abridged, in the context of a negotiation between the University of Toronto and Apotex over a large donation, and that the hospital harassed Dr. Olivieri during her dispute with Apotex (link <a href="http://www.caut.ca/uploads/OlivieriInquiryReport.pdf">here</a> for report) <br />  <br />In the early 21st century, there was a case in the UK with spooky similarites to the present case: at the same university involved in the present case, and with at least one participant in common with that case.  About a year after we started <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, in late 2005, we wrote multiple posts about the complex and unfortunate case of Dr Aubrey Blumsohn's attempts to keep a research project honest. Our most recent summary of the case was <a href="http://hcrenewal.blogspot.com/2009/09/reappearance-of-ghost-of-seasons-past.html">here</a>. Dr Blumsohn was also doing clinical research on the drug <em><strong><span style="background-color: magenta;">Actonel</span></strong></em>, again at the <em><strong><span style="background-color: magenta;">University of Sheffield</span></strong></em>.  He was denied access to the very data he had collected, and to analyses of the data by <em><strong><span style="background-color: magenta;">Procter and Gamble</span></strong></em>, the then manufacturer of the drug and sponsor of the research.  Dr Blumsohn found that Procter and Gamble seemed to be arranging for ghost-writers to author abstracts about the research based on these hidden analyses.  After he complained to numerous officials at Sheffield, including <em><strong><span style="background-color: magenta;">Dr Richard Eastell</span></strong></em>, to no avail, he spoke to the press, and thereafter lost his academic position.  The case was just recapped in an interview of Dr Blumsohn published in the British Medical Journal(5). <br />  <br />So we seem to have made little progress.  Most clinical research at academic medical institutions is sponsored by firms that make drugs and devices.  The firms try to secure contracts that give them control over most aspects of the research.  Thus, they can determine how the research is designed, implemented, ana analyzed.  If the resulting <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulation</a> still does not yield results that make the firms' products look good, the sponsors can then just <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppress</a> them.  Academics who naively think it is their duty to find and disseminate the truth are in jeopardy when they attempt to present or publish results that challenge their research sponsors' vested interests. <br />  <br />Suppression of clinical research, however, is bad for patients and honest health care professionals, since it misleads about the benefits and harms of tests and treatments.  Suppression of clinical research dishonors research subjects who volunteer for studies, often at risk to themselves, thinking they may help to advance science and clinical care.  Suppression of clinical research undermines the fundamental mission of academia: to seek out and disseminate the truth. <br />  <br />Those who truly want better health care, here in the US and globally, should advocate for clinical research done without the influence of those with vested interests in how the research comes out.  <br />  <br />Thanks to an anonymous Health Care Renewal scout who located the Times article.  <br />  <br />References <br /><br /><br />1. DG Kern, RS Crausman, TH Durand et al. Flock worker's lung: chronic interstitial lung disease in the nylon flocking industry. Ann Intern Med 1998; 129: 261-272. (link <a href="http://www.annals.org/cgi/content/full/129/4/261">here</a>)<br />2. Shuchman M. Secrecy in science: the flock worker's lung investigation. Ann Intern Med 1998; 129: 341-344. (link <a href="http://www.annals.org/cgi/content/full/129/4/341">here</a>)<br />3. Marsh DJ. Intimidation of researchers by special interest groups. N Engl J Med 1997; 337: 1317-1318. (link here)<br />4. Shuchman M. Consequences of blowing the whistle in medical research. Ann Intern Med 2000; 132: 1013-1015. (link <a href="http://www.annals.org/cgi/content/full/132/12/1013">here</a>)<br />5.  Cyer C. Aubrey Blumsohn: academic who took on industry. Brit Med J 2009; 339:b5293. (link<a href="http://www.bmj.com/cgi/content/full/339/dec15_1/b5293"> here</a>)

Deja Vu All Over Again - Sheffield Researcher Under Threat for Trying to Present Data that Offends Research Sponsor

It's deja vu all over again.  A case reported (so far only) in the UK Times Higher Education Supplement of a biomedical researcher apparently threatened because she tried to present data that did favo…

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Sanofi-Aventis Settles

Here is another addition to the parade of multi-million dollar legal settlements by health care corporations. As <a href="http://www.google.com/hostednews/ap/article/ALeqM5iz-Iv0odwT89eHgHRlkwHSgLx5RwD98FB4T80">reported by the AP</a>:<br /><br /><blockquote><br /><span class="blsp-spelling-error" id="SPELLING_ERROR_0">Drugmaker</span> <span class="blsp-spelling-error" id="SPELLING_ERROR_1">Sanofi</span>-<span class="blsp-spelling-error" id="SPELLING_ERROR_2">Aventis</span> has agreed to pay nearly $100 million to settle allegations it cheated Medicaid on the cost of nasal sprays.<br /><br />The Justice Department said <span class="blsp-spelling-error" id="SPELLING_ERROR_3">Aventis</span> Pharmaceutical Inc., a wholly owned subsidiary of <span class="blsp-spelling-error" id="SPELLING_ERROR_4">Sanofi</span>-<span class="blsp-spelling-error" id="SPELLING_ERROR_5">Aventis</span> U.S. <span class="blsp-spelling-error" id="SPELLING_ERROR_6">LLC</span>, has agreed to pay the government $95.5 million to settle the charges.<br /><br />The government charged that between 1995 and 2000, <span class="blsp-spelling-error" id="SPELLING_ERROR_7">Aventis</span> and its corporate predecessors did not offer Medicaid the best prices for the sprays <span class="blsp-spelling-error" id="SPELLING_ERROR_8">Azmacort</span>, <span class="blsp-spelling-error" id="SPELLING_ERROR_9">Nasacort</span> and <span class="blsp-spelling-error" id="SPELLING_ERROR_10">Nasacort</span> <span class="blsp-spelling-error" id="SPELLING_ERROR_11">AQ</span>.<br /><br />In reaching the settlement, <span class="blsp-spelling-error" id="SPELLING_ERROR_12">Sanofi</span>-<span class="blsp-spelling-error" id="SPELLING_ERROR_13">Aventis</span> U.S. did not admit any wrongdoing. The company, based in <span class="blsp-spelling-error" id="SPELLING_ERROR_14">Bridgewater</span>, N.J., issued a statement saying it believed the old pricing system was legal.<br /><br />Under the law, the company was required to tell Medicaid the lowest price that it charged companies for those products, and offer state Medicaid programs rebates based on those prices.<br /><br />Prosecutors contend that in order to dodge that obligation, <span class="blsp-spelling-error" id="SPELLING_ERROR_15">Aventis</span> entered into a private deal with the HMO Kaiser <span class="blsp-spelling-error" id="SPELLING_ERROR_16">Permanente</span> that repackaged <span class="blsp-spelling-error" id="SPELLING_ERROR_17">Aventis</span> drugs under a new label, allowing them to overcharge Medicaid programs for the same product.<br /></blockquote><br /><br />It <span class="blsp-spelling-corrected" id="SPELLING_ERROR_18">seems</span> that scarcely a week goes by without a settlement of charges of unethical behavior by some major health care organization. The ongoing parade of such cases ought to inspire some worry about the ethics of the leaders of such organization. Given the current very public discussion of how expensive health care has become, one would think that there would be some discussion of how much of this expense is due to various kinds of deceptive and unethical behavior by some of the biggest, richest, and most powerful health care organizations. But perhaps that would be too upsetting for those who make so much money running these organizations.<br /><br />As we have <a href="http://hcrenewal.blogspot.com/2009/05/synthes-settles-agrees-to-stop-giving.html">said before</a>, most recently <a href="http://hcrenewal.blogspot.com/2009/05/novo-nordisk-accepts-deferred.html">here</a>, while human beings authorized or committed the acts that got the organization in trouble, rarely do these people seem to suffer any negative consequences. At most, the organization may pay a fine. In this case, the fine was, in corporate terms, of modest size. However, even a large fine, may come out of dividends or the stock price, dispersing the cost to stock-holders, or out of salaries across the board, dispersing the cost to all employees. Thus, those who got the organization into trouble are unlikely to feel pain from it. Perhaps because of reverence for all organizations related to health care, and fear that the bankruptcy of any health care organization will leave patients in the lurch, prosecutors do not seem inclined to actually prosecute such organizations. The net effect, though, seems to be that dishonest executives of health care organizations can continue to act with impunity.Until bad leadership of health care organizations leads to negative consequences for those practicing it, health care leadership can be expected to continuously degrade.<br /><br />ADDENDUM (2 June, 2009) - See <a href="http://scienceblogs.com/effectmeasure/2009/06/placing_a_vaccine_order_with_c.php#more">these comments </a>on the Effect Measure blog.

Sanofi-Aventis Settles

Here is another addition to the parade of multi-million dollar legal settlements by health care corporations. As reported by the AP:Drugmaker Sanofi-Aventis has agreed to pay nearly $100 million to se…

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