healthy4u: biotechnology

Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a <a href="http://www.latimes.com/news/nationworld/nation/la-na-anthrax-resistant-20130519-dto,0,3192936.htmlstory">story</a> of a somewhat new variant on the conflict of interest theme, one that has not gotten a lot of attention, but should. The issue was medical, with a twist, - how to best treat a bioterror attack with anthrax engineered to be resistant to multiple drugs, an event that luckily is not known to ever have occurred.  The story came from the bad old days of the "war on terror," but only has now come to light years later. The Alarm Raiser The story opened thus, <blockquote class="tr_bq">Over the last decade, former Navy Secretary Richard J. Danzig, a prominent lawyer, presidential advisor and biowarfare consultant to the Pentagon and the Department of Homeland Security, has urged the government to counter what he called a major threat to national security. Terrorists, he warned, could easily engineer a devastating killer germ: a form of anthrax resistant to common antibiotics.</blockquote> In particular, <blockquote class="tr_bq">Danzig began warning about antibiotic-resistant anthrax after the terrorist attacks of Sept. 11, 2001, and the mailings of anthrax-laced letters that fall. The powdered anthrax in the letters killed five people but was not resistant to common antibiotics. Asked what gave rise to his concern about resistant strains, Danzig cited conversations with 'people whose technical skills exceed mine.' One of them, Dr. Robert P. Kadlec, a bioterrorism advisor in the Bush White House, said he and others were concerned that terrorists could develop such a weapon. Danzig has sounded the alarm in published papers and in private briefings and seminars for biodefense and intelligence officials. In a 2003 report funded by the Pentagon, "<a href="http://documents.latimes.com/catastrophic-bioterrorism-what-be-done/" target="_blank">Catastrophic Bioterrorism — What Is To Be Done?</a>" he wrote that it would be 'quite easy' for terrorists to produce antibiotic-resistant anthrax. He has expanded on that theme over the years, including in a 2009 paper for the Pentagon. In the 2003 report, published while raxi [raxibacumab, an anthrax anti-toxin] was in development at Human Genome, Danzig said a drug to combat resistant strains of anthrax should be produced 'as soon as possible' and that stockpiling such a treatment, 'even if expensive and in limited supply' would deter an attack. John Vitko Jr., a top Homeland Security official during the Bush and Obama administrations, said he turned frequently to Danzig for advice on biodefense matters — and read and 'paid attention to' his 'Catastrophic Bioterrorism' report.</blockquote> Note that while Danzig is a lawyer, and certainly not a physician or biomedical researcher, he had major credibility in the defense field, particularly in anti-terrorism, so his recommendations had great influence. <blockquote class="tr_bq">He served as a Pentagon appointee during the Carter administration and as undersecretary and then secretary of the Navy under President Clinton. He has a long-standing interest in biowarfare. During the 2008 presidential campaign, Danzig advised then-Sen. Barack Obama on national security and bioterrorism. After Obama's election, Danzig was named to the Pentagon's Defense Policy Board and the President's Intelligence Advisory Board, in addition to his consulting positions with the Defense Department and Homeland Security.</blockquote> So apparently at least partly due to Mr Danzig's persistent warnings, the government took action, <blockquote class="tr_bq"> In 2004, President Bush signed into law Project BioShield, which provided billions of dollars for biodefense drugs. The contracts are administered by the Department of Health and Human Services, based on advice from federal agencies and consultants. Homeland Security must certify the need for a drug before the government can buy it.  Danzig, through his seminars, writings and consulting duties, has helped frame the discussion over whether a given biological threat is 'material' and whether the government should stockpile medicines to defend against it.</blockquote> Also, <blockquote class="tr_bq">Speaking of Danzig's broader role as a government advisor, Vitko said: 'Richard's got incredible insights into this and I think has made major contributions' He called Danzig one of 'the major bio player' and said his views had informed a range of policy considerations, including 'how many countermeasures do you need, of what kind.' It was in response to advice from Vitko and his staff that Homeland Security Secretary Tom Ridge in 2004 declared anthrax a 'material threat,' the certification required for the government to buy drugs to fight it. The drug the government bought was raxibacumab, or raxi, an anthrax anti-toxin made by Human Genome Sciences Inc.   In 2006, the Department of Health and Human Services finalized its first order of raxi — 20,000 doses at a cost of $174 million. That year, Ridge's successor, Michael Chertoff, signed a second, more specific declaration, adding 'multi-drug-resistant' anthrax to the government's list of material threats. Asked the basis for the second declaration, Vitko said: 'I think the concern was more forward-looking, and saying, 'How could the threat evolve, and are we prepared for that?'' Since 2009, the Obama administration has ordered an additional 45,000 doses of raxi for $160 million.</blockquote> There was just one catch. The Undisclosed Conflict Mr Danzig had a largely undisclosed conflict of interest.  He was on the board of directors of Human Genome Sciences Inc, the company whose drug his constant warnings and exhortations lead the government to buy. <blockquote class="tr_bq">When Human Genome named Danzig to its board on May 24, 2001, the company's chief executive said his high-level federal experience would 'serve us well.'</blockquote> He thus was on the board on September 11, 2001, and later when the events on that day and soon after apparently induced him to start sounding the alarm about resistant anthrax, and he stayed on the board as he continued sounding alarms, and after the government started buying his company's drug. <blockquote class="tr_bq">During his 11-year tenure on the board, which ended in August, Danzig collected at least $1,054,255 in director's fees and by cashing in grants of Human Genome stock and stock options, according to Fred Whittlesey of Compensation Venture Group, who reviewed the company's Securities and Exchange Commission filings for The Times. Nearly half of Danzig's compensation came from the stock options, of which he had been granted 184,000 by the end of 2011, Whittlesey said.</blockquote> Danzig did not seem to think that serving on the board of the company which made the primary drug directed at the perhaps hypothetical disease about which Danzig was sounding the warning constituted any sort of conflict of interest. <blockquote class="tr_bq">Danzig said in an interview that he believed his position at Human Genome posed no conflict. He said he had tried to improve policymakers' understanding of biodefense issues, including the threat of antibiotic-resistant anthrax, but never lobbied the government to purchase raxi. 'My view was I'm not going to get involved in selling that,' Danzig said. 'But at the same time now, should I not say what I think is right in the government circles with regard to this? And my answer was, 'If I have occasion to comment on this, it ought to be in general, as a policy matter, not as a particular procurement.' 'I feel that I've acted very properly with regard to this'' he said.</blockquote> He also apparently did not feel he needed to disclose his board membership to most of the people he was trying to persuade to be alarmed about resistant anthrax, and to pursue a treatment, such as that made by the company on whose board he sat. <blockquote class="tr_bq"> A number of senior federal officials whom Danzig advised on the threat of bioterrorism and what to do about it said they were unaware of his role at Human Genome. Dr. Philip K. Russell, a biodefense official in the George W. Bush administration who attended invitation-only seminars on bioterrorism led by Danzig, said he did not know about Danzig's tie to the biotech company until The Times asked him about it.</blockquote> Also, <blockquote class="tr_bq"> Vitko said he knew nothing of Danzig's involvement with Human Genome until a Times reporter asked him about it. 'I'm surprised I didn't,' Vitko said. 'I'm not aware of it.' Five other present or former biodefense officials who conferred with Danzig said they, too, had been unaware of his position with the company. Danzig, they said, made no mention of it in their presence during group discussions he led or in smaller meetings.</blockquote> Furthermore, <blockquote class="tr_bq">A Times search found seven papers Danzig had written on bioterrorism since 2001. In only one of those did he disclose his tie to Human Genome. As an advisor to the federal government, Danzig is required to file confidential forms annually, revealing any outside affiliations but not his related compensation. Danzig said he had noted his position with the biotech firm on the forms. Asked whether he mentioned his corporate role during contacts with government officials, Danzig replied: 'If I thought any of it posed a potential conflict that might cause somebody who knew about it to discount my views, I would tell them.'</blockquote> Some people disagreed with Danzig's failure to perceive a conflict of interest <blockquote class="tr_bq"> 'Holy smoke—that was a horrible conflict of interest,' said Russell, a physician and retired Army major general who helped lead the government's efforts to prepare for biological attacks.</blockquote> The Take-Over by a Familiar Corporation By the way, Human Genome Science was eventually bought out by a bigger company which has had its own sets of issues regarding conflicts of interest, GlaxoSmithKline, <blockquote class="tr_bq"> Human Genome was acquired by GlaxoSmithKline in August [presumably 2012] for $3.6 billion.</blockquote> It may yet stand to make even more money from raxi, <blockquote class="tr_bq"> Because raxi loses its potency after three years in storage, the government's supply will expire as of 2015, according to federal documents and people familiar with the matter. </blockquote> Summary This appears to be a variant on the "key opinion leader" (KOL) theme writ large.  Mr Danzig clearly functioned as a very major key opinion leader about bioterrorism.  Like many KOLs we have previously discussed, he had financial interests that favored the company whose drugs his key opinion leadership seemed to be favoring.  His influence seems to have lead to huge purchases of these drugs. Like many KOLs who are physicians or health care academics, Mr Danzig seems utterly blind to the possibility that his multiple efforts to emphasize the importance of the supposed disease for which his company made a drug could somehow be viewed as a conflict of interest, or to why failure to tell his audiences about his major relationship to this company might have appeared just a small bit dishonest.  We have seen many medical/ health care KOLs who deny that somehow their opinions could have been influenced by their financial relationships, or that their audiences deserved at least to be aware of these relationships.  Yet, of course, Mr Danzig is not a doctor, and he was trying to influence government purchasers of drugs, not physician prescribers of it. It does seem that the leadership of health care organizations, particularly but certainly not limited to pharmaceutical and biotechnology companies, have no lack of imagination about how to construct financial relationships with influential people who could help sell their products, whether or not they acknowledge what amounts to their marketing roles. Given that this story involved influencing the government, it will be interesting to see at this late date whether it results in any legal action.  After all, as David Willman pointed out, <blockquote class="tr_bq"> Federal law bars U.S. officials, including consultants, from giving advice on matters in which they or a company on whose board they serve have 'a financial interest.'</blockquote>It will also be interesting to see if it gets any more attention.  Only a few blogs have noted it, but at least they included <a href="http://www.the-scientist.com/?articles.view/articleNo/35639/title/Selling-an-Anthrax-Scare-/">The Scientist</a>. Yet our country has an unfortunately very long history of corporate leaders getting close to political leaders who then may overlook the legal niceties when their friends' interests are at stake.  Nonetheless, true health care reform would require all those who have decision making power over patients, health policy, or the public health to be completely transparent about their conflicts of interest, and would ban the more serious variants of conflicts of interest, even if that might cost some already rich people a bit of money.  I am not holding my breath, however, about when this might happen.

Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a story of a somewhat new variant on the conflict of interest theme, one that...

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"Conspiracy Theory" Proven - Taking UCSF Private

Students and faculty at the University of California have come up with a vivid, and prescient example of how the hired executives and bureaucrats have taken over higher and health care education.  "Run in the Interests of the Administration" Two weeks ago, the Orange County Register <a href="http://www.ocregister.com/news/faculty-334335-tuition-system.html">reported</a>: <blockquote>Over the past few months, the University of California has raised undergraduate tuition by 18 percent, awarded raises of as much as 23 percent to a dozen high-ranking administrators and announced a possible 81 percent tuition increase over the next three years. Students haven't taken the news well. At campus rallies across the state, thousands of students and their faculty supporters have decried the actions, staging raucous rallies and 'Occupy'-style sit-ins that in some cases have ended in clashes with law enforcement. They've also descended en masse on UC regents' meetings, disrupting proceedings and even forcing officials to retreat to a private room. Behind the angry chanting and acts of civil disobedience is a growing sense that the 10-campus UC system is no longer a public institution accessible to the middle class, but rather a sprawling bureaucracy of hospitals and auxiliary research institutions buffeted by an ever-expanding roster of administrators. The problem, as the student activists see it, is that none of these functions translates directly into expanded course offerings or improved student-to-faculty ratios, even as their tuition dollars help sustain the system. 'The university is now being run in the interest of the administration,' said UC Irvine student activist Anne Kelly, a Ph.D. candidate in earth system science. 'They're promoting their own internal growth, asking us to sacrifice with higher tuition – but administrators have had raises.'</blockquote> In higher education, as well as in health care education and in health care in general, the pattern is the same: rising costs without any obvious increase in quality or quantity of services. As in health care, however, the pain never seems to extend to administrators/ managers/ bureaucrats/ executives. Worse, as their numbers grow, these insiders seem to run organizations more for their own benefit, and less for the mission. One Manager Per Faculty Member Furthermore, UC faculty have data: <blockquote>The students' growing frustration is fueled by UC employment data that show that almost three-fourths of UC's 152,500 employees last year were designated 'non-academic personnel,' according to an annual UC employment report. In the report, UC characterizes the growth in its non-academic staff as the inevitable byproduct of 'an increasingly complex university system that 'requires greater professionalization of its staff, who must meet higher technical and competency standards.' Non-academic personnel includes everyone from custodians and food-service workers to accountants and plant operators. [The question begged is whether it was the managers and executives that caused this complexity - Ed.] UC Davis horticulture researcher Richard Evans, who has independently analyzed UC personnel data, offered a different take on the data, publishing a tongue-in-cheek piece for UC faculty in 2010 entitled 'Soon every faculty member will have a personal senior manager: Is this a good way to spend money?' 'Data available from the UC Office of the President shows that there were 2.5 faculty members for each senior manager in the UC system in 1993,' Evans wrote in his piece. 'Now there are as many senior managers as faculty. Just think: Each professor could have his or her personal senior manager.' In his analysis, Evans compared the number of UC employees classified as either 'senior management' or 'managers and senior professionals' with the number of tenure-track UC faculty members. As of spring 2011, UC employed 8,144 senior managers, managers and senior professionals, and 8,521 tenure-track faculty members, according to the latest available UC data.</blockquote> This pattern is similar to that seen in some data we discussed a long time ago about the ever rising numbers of administrators/ managers/ bureaucrats/ executives in health care.  In 1988, Alain Enthoven advocated in <a href="http://www.amazon.com/gp/product/0444703594/102-6581115-0444916?n=283155">Theory and Practice of Managed Competition in Health Care Finance</a>, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post <a href="http://hcrenewal.blogspot.com/2006/03/consequences-of-breaking-physicians.html">here</a>). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post <a href="http://hcrenewal.blogspot.com/2005/04/growing-proliferation-of-managers.html">here</a>). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved. A "Conspiracy Theory" About the Privatization of the University At the University of California, the Register reported that there is a "conspiracy theory" about the next step to increase the domination of the managers: <blockquote>The salaries and size of UC's administrative staff, in particular, have fueled conspiracy theories among students and faculty that the system has deliberately sought to 'privatize' itself – in other words, to compete with private universities on all fronts, from the scope of its non-instructional programs to executive compensation to the amount of tuition that students pay. Three years ago, the head of a UC faculty group advanced the privatization theory in a multi-part series called 'They Pledged Your Tuition.'</blockquote> Of course, the administrators denied, sort of, anything so far-fetched: <blockquote>For its part, UC denies all such allegations, saying that while the university has arguably become privatized, outside influences beyond its control are entirely to blame. "It is not something we advocate, not something we want,' Klein said. But, 'he added, 'times have changed; the economic model has changed.'</blockquote> Not Just a "Conspiracy Theory" - UCSF Chancellor Advocates Privatization It only took two weeks, however, for the notion of administrators taking the university private to go from "conspiracy theory" to official plan. Yesterday, the San Francisco Chronicle <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/19/MNF11MR2KE.DTL">reported</a>, <blockquote>UCSF Chancellor Susan Desmond-Hellmann told the regents, delicately, that she wants out. Under her proposal, UCSF's medical school, hospital, clinics and research facilities would remain a public university connected to UC, the chancellor assured the regents. But the tendrils connecting the two entities should be thinner than they are today. Desmond-Hellmann said she envisions a relationship like those of UC Hastings College of the Law, Lawrence Livermore National Laboratory and Lawrence Berkeley National Laboratory, which contract with UC for health and pension services. While ultimately accountable to the regents, they are autonomous with their own boards of directors. Referring to 'alternative governance models' and 'examining UCSF's financial relationship with UC,' the chancellor and campus executives talked of their ambition to become the world's leading innovator in the health field - a goal better achieved, they hinted, without the rest of the university weighing it down.</blockquote> To <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> readers, that UCSF would be proposed as the first part of the University of California to privatize should not come as a shock. After all, Chancellor Desmond Hellmann came not from academia, but from the world of for-profit biotechnology. She was a former president for drug development for Genentech. Two and one half years ago I <a href="http://hcrenewal.blogspot.com/2009/05/bio-tech-u.html">suggested</a> that "hiring a lavishly compensated top executive from a biotech firm known for its high drug prices to run a public health sciences university does considerably blur the line between academic medicine and the health care industry." Furthermore, three months ago I <a href="http://hcrenewal.blogspot.com/2011/10/logical-fallacies-to-support-putting.html">noted</a> that Dr Desmond Hellmann seemed be advocating that the university's focus turn to product development, so that it would start to emulate a contract research organization. Now it appears that Dr Desmond Hellmann wants to traverse the line between government and the private sector, so that the organization could "make a ton of money," and "focus on spinning innovations into business deals," according to the San Francisco Chronicle. What any of this has to do with the university's fundamental mission to discover and disseminate knowledge, and with this health care university's mission to take the best possible care of its patients is not clear. Summary Turning UCSF into a private, quasi contract research organization might conceivably yield some good research and drug development. Why a formerly academic organization would be better at this than a purpose-built CRO is hardly proven. Whether UCSF recast as a CRO would yield better research, leading to better patient outcomes than would have resulted if it continued as a state government sponsored health care university is also hardly proven. Turning UCSF into a quasi CRO, however, would likely be very much in the self-interest of its administrators/ managers/ bureaucrats/ executives who would be freed from any constraints on their incomes, and the disclosure of same that were previously obligated by the messy representative democracy to which they formerly had to answer. On the other hand, it is hard to conceive of how such a privatization would be good for students or patients. In fact, it is not the least bit clear why a medical, nursing, or other health professional student would want to study within what would basically be a contract research organization. It is also unclear whether patients seeking care from such an organization could trust it to put their interests, rather than the organization's revenue and the self-interest of its administrators/ managers/ bureaucrats/ executives first. We are now a good 30+ years into our ill-fated American experiment about the effects of turning medicine commercial and making health care a commodity. So far, it has yielded the highest costs in the world, but declining access, mediocre quality, and demoralized professionals. Turning one of our once proud and  prestigious state government sponsored academic medical institutions into a private contract research organization would be a powerful symbol of our final national health care decline. Let us hope that the students and faculty whose "conspiracy theory" about privatization proved true will now mount a more effective protest before UCSF falls into the muck.

"Conspiracy Theory" Proven - Taking UCSF Private

Students and faculty at the University of California have come up with a vivid, and prescient example of how the hired executives and bureau...

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Director of Bristol-Myers-Squibb to Run Weill Cornell Medical School

How the New York Times reported on a change in leadership at one New York medical school has made one issue of interest to Health Care Renewal a bit less <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>. Here is the beginning of the <a href="http://www.nytimes.com/2011/09/08/nyregion/laurie-h-glimcher-named-dean-of-weill-cornell-medical-college.html">story</a>: <blockquote>A Harvard University researcher and professor with strong ties to the pharmaceutical industry has been selected as the new dean of Weill Cornell Medical College in Manhattan, as Cornell University seeks to greatly expand its research programs and obtain more federal and private financing, college officials said Wednesday. The new dean, Dr. Laurie H. Glimcher, 60, who has ties to the pharmaceutical giants Merck and Bristol-Myers Squibb as well as to scientific and biotechnology companies, said she wanted to use her experience to forge partnerships with both the public and private sectors. </blockquote> Dr Glimcher's "ties" to Bristol-Myers-Squibb are particularly striking: <blockquote>Bristol-Myers Squibb, where she has been on the board since 1997, paid her $244,500 in compensation in 2010, including fees and stock awards, according to its 2011 proxy statement. She received $1.4 million in deferred share units, by far the most of any director. </blockquote>A "New Species" of Conflicts of Interest A long time ago, in 2006, we first blogged about a "<a href="http://hcrenewal.blogspot.com/2006/03/new-species-of-conflict-of-interest-in.html">new species of conflict of interest</a>" which we thought might prove to be even more important than other conflicts of interest afflicting health care that were then starting to be discussed.  This new species  involved health care organizational leaders who were simultaneously members of the boards of directors of for-profit health care corporations.  We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. <a href="http://www.amazon.com/Corporate-Governance-Robert-G-Monks/dp/1405116986">Corporate Governance</a>, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]   Thus, for example, the conflict posed by the president of a university, to whom a medical school and academic medical center report, who also is the director of a pharmaceutical company, would be extreme. In 2006, these apparently major conflicts of interest were highly anechoic, and generally otherwise not considered to be newsworthy or fit for discussion in the medical and health care literature.  This, however, is starting to change.  By 2010, the New York Times published a report, albeit in one of their blogs, on a controversy at the Unviersity of Michigan about whether its president's position on the Johnson and Johnson board had influenced her backing of anti-smoking measures, given that Johnson and Johnson makes smoking cessation products (see post <a href="http://hcrenewal.blogspot.com/2010/07/new-york-times-reports-university.html">here</a>). Now, mention of this sort of particularly intense conflict of interest went into the lead paragraph of a story in one of the world's most respected newspapers. A Conflict Cutting Both Ways: The Bristol-Myers-Squibb Settlement In addition, the Times story connected another dot: <blockquote>While she has been on the board, the company has paid hundreds of millions of dollars to settle federal and shareholder complaints that it had inflated sales figures, although Dr. Glimcher herself was not found liable. </blockquote> That underlines the point that people who simultaneously are leaders of both non-profit health care institutions (like medical schools and hospitals) and for-profit health care corporations ought to simultaneously be held accountable for the actions of both, which may put them in uncomfortable positions. Actually, the Times article seemed to soft-pedal what the 2007 Bristol-Myers-Squibb settlement was actually about. As we discussed in <a href="http://hcrenewal.blogspot.com/2007/10/bristol-myers-squibb-settles-enters.html">this post</a>, the settlement was actually in the amount of $515 million, and the government allegations that lead to the settlement were actually about more than inflated sales figures. From the 2007 Department of Justice <a href="http://www.justice.gov/opa/pr/2007/September/07_civ_782.html">news release</a>: <blockquote>First, the Government alleged that, from approximately 2000 through mid-2003, BMS knowingly and willfully paid illegal remuneration to physicians and other health care providers to induce them to purchase BMS drugs.</blockquote><blockquote>Second, the Government alleged that, from 2002 through the end of 2005, BMS knowingly promoted the sale and use of Abilify, an atypical antipsychotic drug, for pediatric use and to treat dementia-related psychosis, both 'off-label' uses. The Food and Drug Administration has approved Abilify to treat adult schizophrenia and bi-polar disorder, but has not approved the use of Abilify for children and adolescents or for geriatric patients suffering from dementia-related psychosis. Indeed, the FDA has mandated that the package for Abilify carry a 'black box' warning concerning its use in the treatment of dementia-related psychosis.</blockquote><blockquote>Third, the Government alleged that both BMS and Apothecon set and maintained fraudulent and inflated prices for a wide assortment of oncology and generic drug products with the knowledge that federal health care programs established reimbursement rates based on those prices. By reporting false and fraudulent prices that were substantially higher than commonly and widely available prices in the marketplace, BMS and Apothecon created a 'spread' between the reimbursement rates for federal health care providers and the actual prices for the drugs charged to its customers. The larger the spread on a drug, the larger the profit or return on investment for the provider. Because reimbursement from federal programs was based on the fraudulent, inflated prices, the United States alleged that BMS and Apothecon caused false and fraudulent claims to be submitted to federal health care programs.</blockquote><blockquote>Finally, the Government alleged that BMS knowingly misreported its best price for the anti-depression drug, Serzone.  </blockquote> Dr Glimcher has been on the BMS board since 1997, so the actions that lead to these allegations and then the settlement clearly occurred on her watch. Nonetheless, the Times noted: <blockquote>Dr. Glimcher, an immunologist with a strong interest in osteoporosis, defended her outside interests, saying they presented no conflict as long as they were transparent. She said she wanted to 'leverage the strengths of everyone,' whether scientists, pharmaceutical companies or biotechnology companies. 'There should be no silos between all of these different strengths,' she said. </blockquote> How simple transparency would remove a conflict created by a fiduciary duty to the Bristol-Myers-Squibb stockholders, and reinforced by a yearly pay-check of $244,500, she did not say.  Neither did she say how transparency about her service on the board would eliminate her responsibility for actions taken by the BMS management that occurred on her watch. Dubious Enthusiasm from the Former Chairman of Bailed-Out Citigroup The conflict did not seemingly dim the enthusiasm of the Weill Cornell board for her candidacy. As the Times reported: <blockquote>Sanford I. Weill, the former chairman of Citigroup who with his wife was the benefactor for whom the college was named in 1998, said Wednesday that Dr. Glimcher had come to his attention through a good friend, Jim Robinson, a co-founder of the technology venture-capital firm RRE Ventures and a former chairman of Bristol-Myers Squibb and chairman and chief executive of American Express. 'He recommended that I meet Laurie Glimcher when he heard we were going to look for a new dean,' Mr. Weill said.</blockquote> That would be the Sanford Weill who built up Citigroup into a bank that was too large to fail, and which was prevented from failing by a huge government bailout (see this post). In his epic, <a href="http://www.harpercollins.com/books/9780061892486/The_Sellout/index.aspx">The Sellout</a>, about the global financial collapse, this is how Charles Gasparino described Weill (p. 144): <blockquote>But in reality, Will never really ran anything. He was a visionary, to be sure, but one whose vision was so myopically focused on building the empire had lusted for for so long and on its share price that he ignored just about everything else.</blockquote>Weill's record would suggest that his judgment about Dr Glimcher may be open to question. Even More Conflicts of Interest To add a bit more icing to the conflict of interest cake, Dr Glimcher has other financial relationships to which the Times vaguely alluded. The latest (2011) Bristol-Myers-Squibb <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMS0wNzI0NTcvZG9jL0JyaXN0b2xNeWVyc1NxdWliYl9ERUYxNEFfMjAxMTAzMjEucGRmJnR5cGU9MiZmbj1CcmlzdG9sTXllcnNTcXVpYmJfREVGMTRBXzIwMTEwMzIxLnBkZg==">proxy statement</a> listed the following: - scientific advisory board memberships: <a href="http://www.hcven.com/">Health Care Ventures</a>, Inc, (which invests in new pharmaceutical and biotechnology companies) <a href="http://www.nodality.com/">Nodality Inc</a>, (which develops diagnostics and pharmaceuticals), <a href="http://www.abpro-labs.com/">Abpro Inc</a> (which makes antibodies and proteins), and <a href="http://theraclone-sciences.com/home.php">Theraclone Sciences Inc</a>, (which also is developing antibodies for therapeutic purposes) - board of directors membership: <a href="http://www.waters.com/waters/home.htm?locale=en_US">Waters Corporation </a>(maker of laboratory equipment used in life sciences and pharmaceutical discovery, research and development, and commercialization.) One hardly knows how she would find the time to do anything besides fulfill these responsibilities. No wonder that the Times article said: <blockquote>Cornell University’s president, Dr. David J. Skorton, said he believed Dr. Glimcher had the skills to carry out the medical school’s plan to double its research capacity and to help the university compete to develop a new high-tech campus proposed by the Bloomberg administration. </blockquote> Dr Glimcher certainly seems as tied into the world of commercial pharmaceuticals and biotechnology as much as any ostensible academic might be. Indeed, as posted <a href="http://hcrenewal.blogspot.com/2009/03/harvard-medical-students-against.html">here</a>, Dr Glimcher was quoted in a defense of the then current policy and conflicts of interest at Harvard: <blockquote>Dr. Glimcher says industry money is not only appropriate but necessary. 'Without the support of the private sector, we would not have been able to develop what I call our ‘bone team’ in our lab,' she said at a recent student and faculty forum to discuss industry relationships. Merck is counting on her team to help come up with a successor to Fosamax, the formerly $3 billion-a-year bone drug that went generic last year.</blockquote>So at that time Dr Glimcher thought it was perfectly proper and appropriate for her to be paid by Merck to develop new drugs for that company while she was ostensibly a full-time faculty member at the Harvard Medical School (not to mention a full-time board member of one of Merck's competitors.) Summary and Some Questions So to summarize, Cornell Weill Medical School just named a new dean who has been a leader (as member of the board of directors) of Bristol-Myers-Squib for 14 years, on whose watch there the company paid a huge settlement and entered a corporate integrity agreement for allegations of kickbacks and fraud, and who has also been a leader of a biotechnology company, and advisor to a biotechnology and pharmaceutical venture capital fund and to three other biotechnology companies.  She declared she has no conflicts because she has revealed these relationships, and seemingly has been hired mainly to raise money from the pharmaceutical and biotechnology industry. So maybe some intrepid journalist and/or student will ask her: - Given that they now will be reporting to a member of the board of Bristol-Myers-Squibb, should Cornell students and faculty favor its products or policies that it supports?  Should they worry if they do not?  Should they worry about saying or writing anything that might not be seen as supportive of it?  Should they consider themselves to be now in the Bristol-Myers-Squibb medical school? On the other hand, - Does Dr Glimcher feel responsible for the actions of BMS management that lead to its settlement and corporate integrity agreement?  If not, how can she have a fiduciary responsibility to its stockholders? But I will not hold my breath waiting for answers. At least one hopes that putting these issues in the New York Times will provoke some discussion about whether academic institutions should knowingly seek leaders who must serve so many masters.  Maybe they would do better if they sought leaders who would be notable for their whole-hearted devotion to patient's interests and to the integrity of teaching and research rather than for their cozy ties to other top health care leaders.

Director of Bristol-Myers-Squibb to Run Weill Cornell Medical School

How the New York Times reported on a change in leadership at one New York medical school has made one issue of interest to Health Care Renew...

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Say It Ain't So - Howard Dean Runs Through Revolving Door to Become Biotechnology Booster

The revolving door now accommodates the whole political spectrum.  A Salon <a href="http://www.salon.com/news/politics/war_room/2011/09/01/howard_dean_paid_advocate">article</a> documented the transit of one Howard Dean, former darling of the left-wing of the Democratic party: <blockquote>Howard Dean has long cultivated an image as the plainspoken doctor who speaks for the left wing of the Democratic Party, a role he still plays as a pugnacious pundit on TV. But since his term as chairman of the Democratic National Committee ended in January 2009, Dr. Dean has taken on a less-noticed role: paid advocate for interest groups that would find few fans among the progressive voters once energized by Dean's 2004 presidential bid. Dean may not be the worst of the 'buckrakers,' those prototypical capital characters who exploit their name and connections without regard for principle. But his recent political forays seem to have diverged from his trailblazing left-liberal past. As senior strategic advisor at McKenna Long & Aldridge, a heavyweight Washington lobbying firm, Dean played a prominent role representing the biotech industry during the healthcare bill debate, staking out a position on biopharmaceutical drugs that was decried by consumer groups. 'Gov. Dean was very helpful to us,' biotech CEO Jim Greenwood told a trade publication 'As a physician clearly focused on healthcare, a Democrat leader and clearly to left of center, his efforts were impactful.' Greenwood is the head of the Biotechnology Industry Organization (BIO), a trade group that lobbies for the industry in Washington.</blockquote> In particular, <blockquote>Dean arrived in the comfortable K Street offices of McKenna Long & Aldridge shortly after his term as DNC chair ended in January 2009. He had been passed over by President Obama for the secretary of health and human services Cabinet post, and he needed a paying job. In announcing his appointment, the firm said Dean would 'provide guidance to clients, particularly in the areas of healthcare and alternative energy resources.' Dean has been careful not to register as a lobbyist, a designation that would prompt legal disclosure requirements. Both McKenna and the governor's spokeswoman declined to reveal which clients he has worked for. Dean took on a very public role during the 2009 healthcare reform battle, specifically going to bat for the biotech industry -- whose trade association is a client of McKenna. At stake was how the government would regulate a growing class of drugs called biologics or biopharmaceuticals and their generic competitors. The industry argued for a longer period -- at least 12 years -- in which expensive brand-name biologics would face no competition from less costly generics. Consumer groups argued that, to keep costs down, the period of exclusivity should be just five years. Dean jumped into the fight on the side of the industry, writing an Op-Ed in the Hill in 2009 arguing that a 'commonsense and fair approach' would be to bar generics for 'at least 12 years.' 'If we discourage investment, we jeopardize the development of the next generation of breakthrough medicines and cures,' he wrote, echoing a key industry talking point.</blockquote> Dr Dean also apparently did some paid health policy advocacy on behalf of other clients: <blockquote>In January, he waded into another high-stakes healthcare fight, this one being waged in New York state between foreign medical schools and their American competitors. The issue was whether foreign-trained doctors would have access to hospitals in New York for their residencies. Dean wrote an Op-Ed in the Albany Times-Union, 'N.Y. needs its foreign-trained doctors,' that repeated talking points of foreign medical schools, which, Dean's bio blurb noted, are clients of McKenna Long & Aldridge. While the firm won't say whom Dean has worked for, his bio page on McKenna's website offers some clues.</blockquote> Dean also took on a few other jobs for corporate health care. For example, <blockquote>He currently serves on the board of advisors at Vatera Health Partners, a New York-based venture capital fund whose mission is 'to support and grow emerging biopharmaceutical companies.' It's not clear from the public record how long he has served in the position. But his presence on the Vatera board indicates that he has a personal financial stake in the biopharmaceutical industry.</blockquote> Also, he is now <blockquote>serving on the board of Extendicare, a Canadian long-term care company.</blockquote> Dr Dean's new job did not sit well with a former colleagues on the left side of the US political spectrum who had a distinctly different position on the issue of biologic exclusivity: <blockquote>'It was devastating to have him involved because of his reputation,' says James Love, director of Knowledge Ecology International, a public interest group that fought for a shorter period of exclusivity. 'He's considered to be independent of industry and on the left, so it was really shocking to us when we first saw this. But there it was.'</blockquote> The Salon article ended on this disillusioned note: <blockquote>Dean is indeed uniquely positioned: Between his former followers and his current clients, between his idealist liberal past and the cynical culture of K Street, between independence and cooptation.</blockquote> We have discussed how other government officials and political leaders transited the revolving door to work for corporate health care (e.g., starting <a href="http://hcrenewal.blogspot.com/2010/12/former-nih-director-spins-trhough.html">here</a>, and more lately <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">here</a>). However, this most recent case seems to present the most vivid contrast between previous reputation and later employment.  Actually, while Dr Dean was clearly an advocate for changing health care, he was not a supporter of some ideas usually labeled left-wing," such as a single payer system (see <a href="http://www.ontheissues.org/2008/Howard_Dean_Health_Care.htm">here</a>).  However, the Washington Times <a href="http://www.washingtontimes.com/news/2004/jan/5/20040105-103754-1355r">reported</a> that when he was running for President in 2004, the Club for Growth Political Action committee ran an television advertisement calling him the proprietor of a: <blockquote>tax-hiking, government-expanding, latte-drinking, sushi-eating, Volvo-driving, New York Times-reading … Hollywood-loving, left-wing freak show </blockquote> The transformation of Dr Howard Dean from a target of the Club for Growth to a paid helper and talking points echoer of the Biotechnology Industry Organization illustrates that nowadays the revolving door accommodates all kinds of politicians. The door remains legal, but its continuing rapid spin raises more and more concern that even the ostensibly most left-wing politicians may act to avoid offending any future lucrative corporate employer. So the coziness between government and the medical-industrial complex is increasingly revealed, and the ability of current government officials and politicians to represent the people rather than corporate CEOs is increasingly in doubt. True health care reform would have to somehow reduce the resultant corporatism.

Say It Ain't So - Howard Dean Runs Through Revolving Door to Become Biotechnology Booster

The revolving door now accommodates the whole political spectrum. A Salon article documented the transit of one Howard Dean, former darlin...

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RUCing About - Conflicts of Interest Affecting the Members of the RBRVS Update Committee

Since 2007, we have been <a href="http://hcrenewal.blogspot.com/search/label/RUC">writing</a> about the secretive RUC (RBRVS Update Committee), the private AMA committee that somehow has managed to get effective control over how Medicare pays physicians. The RUC has been accused of setting up incentives that strongly favor invasive, high technology procedures while disfavoring primary care and other "cognitive medicine." Despite the central role of (perverse) incentives in raising health care costs while limiting access and degrading quality, there was surprisingly little discussion about the pivotal role played by the RUC until the formation of the "<a href="http://replacetheruc.org/">Replace the RUC</a>" movement (see post <a href="http://hcrenewal.blogspot.com/2011/03/getting-out-of-our-ruc-open-letter-to.html">here</a>).  Recently, the leaders of Replace the RUC scored a journalistic coup by putting the current list of RUC members publicly on-line.  As we have <a href="http://hcrenewal.blogspot.com/2011/02/replace-ruc.html">discussed</a>, previously the membership of this committee was kept very obscure, although the committee argued it was not exactly secret.  Some Google searching suggests one possible reason that the RUC was in no hurry to disclose its own membership.  It appears that many of the RUC members have significant conflicts of interest with respect to their roles as de facto setters of the rates at which physicians are paid by the government. The RUC Members and Their Financial Relationships Below is the list of the current RUC membership (from<a href="http://careandcost.files.wordpress.com/2011/04/ruc-composition.xlsx"> this link</a>), and relevant conflicts of interest obtained by Google searching.  Note that for each member, I first give the name, affiliation relevant to the RUC, location, and first year of membership as provided by the link above.  Then I list relevant financial relationships that appear to present conflicts of interest. - Barbara Levy, MD Chair, RVS Update Committee Federal Way, WA 2000 Consultant/Advisory Boards: Conceptus; AMS; Covidien; Halt Medical; Gynesonics; Idoman Medical (hysteroscopic surgery and sterilization, endometrial ablation, electrosurgery, vaginal hysterectomy) per <a href="http://www.uptodate.com/contents/obstetrics-gynecology-and-womens-health/peer-reviewers?topicId=226">UptoDate</a> - Bibb Allen, Jr., MD American College of Radiology (ACR) Birmingham, AL 2006 - Michael D. Bishop, MD American College of Emergency Physicians (ACEP) Bloomington, IN 2003 - James Blankenship, MD American College of Cardiology (ACC) Danville, PA 2000 Lecture fees from Sanofi-Aventis per <a href="http://www.nejm.org/doi/full/10.1056/nejmoa0802944#t=article">New England Journal of Medicine</a> - Robert Dale Blasier, MD American Academy of Orthopaedic Surgeons (AAOS) Little Rock, AK 2008 - Joel Bradley, MD American Academy of Pediatrics (AAP) Brentwood, TN 2008 Medical Director, Americhoice by UnitedHealthcare, per <a href="http://www.acopeds.org/meetings/2009fop/2009FoP.pdf">AAP conference brochure</a> - Ronald Burd, MD American Psychiatric Association (APA) Fargo, ND 2006 - William F. Gee, MD American Urological Association (AUA) Lexington, KY 2010 Member, Physician Advisory Board, Aetna <a href="http://www.aetna.com/about-aetna-insurance/initiatives/physician-advisory-board/physician-advisory-current-board-members.html">per Aetna</a> - John O. Gage, MD American College of Surgeons (ACS) Pensacola, FL 1991 - David F. Hitzeman, DO American Osteopathic Association (AOA) Tulsa, OK 1996 - Peter A. Hollmann, MD CPT Editorial Panel (AMA/CPT) Providence, RI 2003 Medical Director, Blue Cross and Blue Shield of Rhode Island, per <a href="http://www.rimed.org/bio-hollmann.asp">RI Medical Society</a> - Charles F. Koopmann, Jr., MD American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS) Ann Arbor, MI 1996 - Robert Kossmann, MD Renal Physicians Association (RPA) Santa Fe, NM 2009 Member of Advanced Renal Technologies Advisory Board, Network 15 Medical Advisory Board, Baxter Home Dialysis Advisory Board, Fresenius Medical Advisory Board per <a href="http://www.renalmd.org/page.aspx?id=1408">Renal Physicians Association</a> - Walter Larimore, MD American Academy of Family Physicians (AAFP) Colorado Springs, CO 2009 - Brenda Lewis, DO American Society of Anesthesiologists (ASA) Cleveland, OH 2009 - J. Leonard Lichtenfeld, MD American College of Physicians (ACP) Atlanta, GA 1994 Member, Physician Advisory Board, Aetna per <a href="http://www.aetna.com/about-aetna-insurance/initiatives/physician-advisory-board/physician-advisory-current-board-members.html">Aetna </a> - Scott Manaker, MD, PhD American College of Chest Physicians (ACCP) Philadelphia, PA 2010 Consultant to Pfizer and Johnson and Johnson. Owns stock in Neose Technologies, Pfizer, Johnson & Johnson, and Rohm and Haas per <a href="http://chestjournal.chestpubs.org/content/134/4/680.full.pdf">Chest</a> - Bill Moran, MD Practice Expense Review Committee Oklahoma City, OK 2000 - Guy Orangio, MD American Society of Colon & Rectal Surgeons (ASCRS) Atlanta, GA 2009 - Gregory Przybylski, MD American Association of Neurological Surgeons (AANS) Edison, NJ 2001 Stock Ownership: United Healthcare (300 shares);  ...  Scientific Advisory Board: United Health Group (B, Spine Advisory Board) per <a href="http://www.nassannualmeeting.org/Documents/AM11_Prelim.pdf">NASS meeting</a> - Marc Raphaelson, MD American Academy of Neurology (AAN) Leesburg, VA 2009 personal compensation for activities with Jazz Pharmaceuticals and Medtronics as a speakers bureau member or consultant per <a href="http://www.marathonmultimedia.com/store/products_pdfs/disclosures/aan10/1FC.001.pdf">AAN</a> - Sandra Reed, MD American College of Obstetricians and Gynecologists (ACOG) Thomasville, GA 2009 GlaxoSmithKline Consulting, $1750 in 2009, $1500 in 2010 per ProPublica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> - Daniel Mark Siegel, MD American Academy of Dermatology (AAD) Brooklyn, NY 2003 Vivacare Dermatology Advisory Board, 2006 – present. Photomedex Scientific Advisory Board, 2006-present, Ad Hoc consultant to ClickDiagnostics, per<a href="http://www.encite.us/pdf/dansiegel_cv.pdf"> Encite CV</a> DermFirst-Shareholder, Logical Image – Consultant, Vivacare - Consultant per <a href="http://www.mohssurgery.org/files/conf/papers/2009%20ACS%20Physician%20Session/SIEGEL-EHR%202014%20is%20Closer%20Than%20You%20Think.pdf">MOHS Surgery</a> - Lloyd S. Smith, DPM Health Care Professionals Advisory Committee Bethesda, MD 2007 - Peter Smith, MD Society of Thoracic Surgeons (STS) Durham, NC 2006 Eli Lilly, Consulting, $1500 in 2009, $1990 in 2010 per Pro Publica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> Advisor or consultant to Bayer per <a href="http://www.medscape.org/viewprogram/7877">Medscape</a> - Susan Spires, MD College of American Pathologists (CAP) Lexington, KY 2007 - Arthur Traugott, MD American Medical Association (AMA) Champaign, IL 2006 - James Waldorf, MD American Society of Plastic Surgeons (ASPS) Jacksonville, FL 2008 - George Williams, MD American Academy of Ophthalmology (AAO) Royal Oak, MI 2009 Advisory Team, <a href="http://www.retro-sense.com/advisors.html">RetroSense Therapeutics</a> Shareholder and consultant for ThromboGenics Ltd. and holds intellectual property on the use of plasmin per <a href="http://www.revophth.com/content/d/retinal_insider/c/26258/">Review of Opthamology</a> Alcon Laboratories, consultant, lecturer; Allergan, consultant, lecturer; Macusight, consultant, equity owner; Neurotech, consultant; Nu-Vue Technologies, equity owner, patent/ royalties; OMIC- Ophthalmic Mutual Insurance Company, employee; Optimedica, consultant, equity owner; Thrombogenics, consultant, equity owner per <a href="http://www.aao.org/meetings/annual_meeting/subspecialty/upload/09-Financial-Disclosures-Subspecialty-Day.pdf">AAO meeting</a> Pfizer, “Professional Advising,” $5534 in 2009 per Pro Publica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> Summary There you have it.  A substantial proportion, almost half, 14 of 29 members of the RUC have financial relationships with pharmaceutical companies, biotechnology companies, device companies, companies that directly provide health care, and health care insurance companies.  As we have noted in our <a href="http://hcrenewal.blogspot.com/search/label/RUC">previous discussions</a> of the RUC, that committee has been accused of being the de facto controller of how the US government pays physicians.  In that role, it has been accused of favoring procedural care rather than cognitive or primary care by increasing the relative financial incentives for the former over the latter.  This may be one of the most important reasons for the expensive, high-technology, procedural-heavy style of care in the US, which has likely been a major driver for increasing costs, declining access and stagnant quality. It seemed obvious that a committee dominated by a majority of physicians who perform procedures would tend to favor bigger financial incentives for procedures.  But now it appears the committee also includes a substantial number of people who work part-time or have ownership interests in companies that also stand to benefit from increasing use of procedures.  Procedures drive increased consumption of drugs, supplies and devices, and lead to larger revenue for hospitals and clinics.  Thus these financial relationships could reasonably be suspected of even further distorting the committee's decision-making in favor of procedures. I was surprised how many RUC members have financial ties to health care insurance companies.  Such companies are not usually thought of as beneficiaries of high-technology, procedural care.  However, if one conceives of their revenue as a percentage of health care costs, perhaps they are.  Furthermore, one can only wonder if the links between the RUC and health care insurance companies have anything to do with how such companies have apparently unquestioningly adapted the RBRVS system controlled by the RUC? The prevalence of conflicts of interest among RUC members highlight the need for a more accountable, transparent and honest system to manage how the government pays physicians, and a need for more transparency and accountability in the relationship among the government, health care insurance, and physicians.  As we have previously <a href="http://hcrenewal.blogspot.com/2011/02/replace-ruc.html">noted</a>,  there are still many unanswered questions about the RUC: - How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry. - Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC? - How did the RUC become de facto in charge of this process? - Why does the AMA [keep the membership of the RUC so opaque, and] give no input into the RUC process to its general membership? - Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers? - Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures? Stay tuned, maybe these will be answered in our life-times....

RUCing About - Conflicts of Interest Affecting the Members of the RBRVS Update Committee

Since 2007, we have been writing about the secretive RUC (RBRVS Update Committee), the private AMA committee that somehow has managed to ge...

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Those Big Doors Keep Revolving

A few months ago, we <a href="http://hcrenewal.blogspot.com/2010/12/former-nih-director-spins-trhough.html">discussed</a> the revolving door that seems to connect US government leadership positions and leadership positions of commercial health care firms. There are other such revolving doors, like two recently discovered just north of here. State Government to For-Profit Hospitals As <a href="http://www.bostonherald.com/business/healthcare/view.bg?articleid=1321146&format=text">reported</a> by the Boston Herald: <blockquote>David Morales, a longtime trusted adviser to [Massachusetts] Gov. Deval Patrick, became the latest official to leave the administration as he stepped down from a top health-care post for a private sector gig. Morales resigned abruptly yesterday to take a position with Steward Health Care System.</blockquote> Furthermore, <blockquote>Morales worked as a top adviser during the governor’s first term before taking a $128,000-a-year post in 2009 as commissioner of the Division of Health Care Finance and Policy. His resignation was effective yesterday.</blockquote> Note that we have previously <a href="http://hcrenewal.blogspot.com/2011/02/send-mercenaries-guns-and-money.html">discussed</a> the Steward Health Care System, the new name given to the Caritas Christi system after it was bought out by private equity firm Cerberus Capital Management. Steward's aggressive plan to stamp out "leakage" raised concerns that the new movement to make practicing physicians employees could push them to do what is best for the company's bottom line rather than for patients. We previously suggested that deals that turn previously non-profit health systems and physicians' practices into for-profit corporations deserve considerable scrutiny. After Caritas became Steward, state government officials promised close oversight. Now Steward has acquired a new executive who has friends in state government. Non-Profit Health Insurance/ Managed Care by Way of a Political Campaign to Health Care Venture Capital This story also <a href="http://www.bostonherald.com/jobfind/news/healthcare/view/2011_0302charlie_baker_a_health-care_catalyst_for_cambridge_vc_firm/srvc=home&position=also">came from</a> the Boston Herald: <blockquote>Four months after his failed Massachusetts gubernatorial bid, Charlie Baker has landed a private-sector job at a Cambridge venture capital firm. The former Harvard Pilgrim Health Care CEO is now an 'executive in residence' for General Catalyst Partners. He’ll focus on working with small and midsize health-care services companies for the VC firm, which has $1.7 billion under management across five funds.</blockquote> In addition, <blockquote>Health-related companies already in General Catalyst’s portfolio include iWalk, a Cambridge developer of orthotic and prosthetic devices, and North Carolina-based TearScience, which specializes in diagnostic and treatment devices for evaporative dry eye in addition to several still in stealth mode.</blockquote> Note that managed care was originally touted as a way to control health care costs, and that the commercial health care insurance companies/ managed care organizations claim to be doing all they can to control costs. Such a focus on cost control would imply that they ought to be able to vigorously negotiate at arms' length with health care providers and drug and device companies.  Now some device companies have acquired a new venture capital overseer who has friends in insurance and managed care. Summary Not only are there revolving doors connecting the national government and large commercial health firms, but also connecting state government and regional hospital systems, and non-profit health care insurers/ managed care organizations and device companies. This is just some more evidence that people in the leadership of large health care organizations have more in common with each other, even if their organizations are supposed to be competing or negotiating at arms length, than they have with patients, clients, customers and the public at large.  The various revolving doors appear not to align the interests of leaders of health care organizations with their organizations' stated missions, or with promoting the health of patients.  To truly reform health care, we need to expose these doors to more sunlight, and then think about retarding their spin or even locking them in place.

Those Big Doors Keep Revolving

A few months ago, we discussed the revolving door that seems to connect US government leadership positions and leadership positions of comm...

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Why Would Directors of Health Care Corporations Push for Bigger Pensions for Academic Administrators?

We recently <a href="http://hcrenewal.blogspot.com/2011/01/some-call-it-tyranny-top-leaders-of.html">posted</a> about 36 well-paid top executives in the University of California system, including leaders of medical schools, academic medical centers, and public health, who threatened a lawsuit if their pensions were not increased according to what they claim was a promise made to them in 1999. Riddle me this: why would a group of directors of for-profit corporations that provide health care goods and services. plus a director of a leading biotechnology trade group, and the director of a leading mutual fund family band together to support this demand, thus to push for bigger pensions for these top managers of the University of California system? Here is a list of the directors, and their corporations: -  Mark R Laret, director of <a href="http://investors.varian.com/file.php/2678/Proxy+Statement+2010.pdf">Varian Medical Systems</a> and <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDk1MDEyMy0xMC0xMTE4NjkvZG9jL051YW5jZUNvbW11bmljYXRpb25zSW5jLnBkZiZ0eXBlPTImZm49TnVhbmNlQ29tbXVuaWNhdGlvbnNJbmMucGRm">Nuance Communications Inc</a>, which provides numerous <a href="http://www.nuance.com/for-healthcare/index.htm">health care products </a> - Dr David Feinberg, director of <a href="http://investors.osi-systems.com/directors.cfm">OSI Systems</a>, whose <a href="http://osi-systems.com/bus_spacelabs.asp">Spacelabs Healthcare</a> subsidiary manufactures medical devices - Steven C Currall, <a href="http://www.gsm.ucdavis.edu/currall/">director of Leadership in Medicine Inc</a>, which <a href="http://www.leadershipinmedicine.com/">claims</a> to be a leading provider of intelligence about <a href="http://hcrenewal.blogspot.com/search/label/key%20opinion%20leaders">key opinion leaders</a> (KOLs) in medicine and health care.  Its web-site asserts, "IF YOU NEED TO KNOW who are the most prominent, admired, and influential actors in healthcare, how they are interconnected, and why, you need our expertise.  Given how vastly complex are the relationships among providers, researchers, and other significant actors in healthcare, it is vital to focus on key opinion leaders (KOLs) at local, regional, and global levels, and to understand the ties among them."  (Note that we have often <a href="http://hcrenewal.blogspot.com/search/label/key%20opinion%20leaders">discussed</a> how KOLs function as stealth marketers for pharmaceuticals and devices.) They joined: -  Robert S Sullivan, PhD - <a href="http://www.biocom.org/about_biocom/biocom_board_of_directors/">director of BIOCOM</a>, whose web-site <a href="http://www.biocom.org/about_biocom/">asserts</a> it is the" largest regional life science association in the world, representing more than 550 member companies in Southern California." -  Richard K Lyons, <a href="http://www2.haas.berkeley.edu/Faculty/lyons_rich.aspx">director of iShares</a>, a leading <a href="http://us.ishares.com/home.htm">provider of mutual funds</a>. The answer is simple.  All the corporate directors listed above are also members of the group of 36 litigious executives.  See their name on the list of 36 <a href="http://articles.sfgate.com/2010-12-29/news/26349177_1_uc-employees-uc-system-higher-pensions">here</a> in the San Francisco Chronicle. - Mark R Laret, director of Varian Medical Systems and Nuance Communications Inc, which provides numerous health care products, is also CEO of UCSF Medical Center. - Dr David Feinberg, director of OSI Systems, whose Spacelabs Healthcare subsidiary manufactures medical devices, is also CEO of the UCLA Hospital System - Steven C Currall, director of Leadership in Medicine Inc, which claims to be a leading provider of intelligence about key opinion leaders (KOLs) in medicine and health care, is also Dean, and Professor of Management of the University of California - Davis Graduate School of Management. Robert S Sullivan, PhD - director of BIOCOM, whose web-site asserts it is the" largest regional life science association in the world, representing more than 550 member companies in Southern California, is also Dean of the University of California - San Diego Rady School of Management. - Richard K Lyons, director of iShares, a leading provider of mutual funds, is also Bank of America Dean and Professor of Business, University of California - Berkeley Haas School of Business. Their inclusion within the larger group seems ironic, at best.  As corporate directors, they have outside income and have accumulated assets that will likely keep them out of poverty in their old age.  For example, Mr Laret had accumulated the equivalent of 37,168 shares of Varian, and was paid $267,300 a year for his services according to the company's <a href="http://investors.varian.com/file.php/2678/Proxy+Statement+2010.pdf">2010 proxy statement</a>. Furthermore, for those who directly lead health care institutions, Mr Laret and Dr Feinberg, their memberships on the boards of health care corporations, which imply fiduciary responsibilities to the companies and their stock-holders, conflict with their duties as leaders of academic health care to uphold teaching, research and patient care.  Dean Currall's responsibilities to an organization which seems entirely dedicated to helping drug, device, and biotechnology companies turn health care professionals and academics into stealth marketers at least seems unseemly given that his school is part of a university which also includes a medical school and academic medical center.  Since our earlier post, it appears that the University of California president will not accede to the demands of the 36, as <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=%2Fc%2Fa%2F2011%2F01%2F04%2FBAF71H3L67.DTL">noted</a> in the San Francisco Chronicle.  Their demands have continued to provoke outrage.  A recent <a href="http://www.insidehighered.com/news/2011/01/05/california_pension_fight_politically_tough_for_yudof">discussion</a> in Inside Higher Ed interviewed Emeritus Professor Helen Henry, a member of the University's Academic Senate, who posited: <blockquote>the debate as part of a fundamental philosophical disagreement within the university. The signatories to the letter, many of whom are based in medicine or management, have a different view of the university than faculty from other disciplines, she said. 'I don’t think there’s any question but that there are these two different mindsets that are fighting for what the university should be. It’s transparent in this letter,' said Henry, a professor emeritus of biochemistry at the Riverside campus. 'They are running businesses. But there are those of us that don’t feel this is what the university should be.' 'This is absolutely a manifestation of that clash between the people who see UC as their business … and the people who see UC’s mission as teaching, and research and service to the state. That’s a dual personality that the university always has to live with.'</blockquote> Five of the university leaders demanding higher pensions for themselves have responsibilities as directors of corporations that may conflict with their academic institutions' missions, while these corporate positions ought to insulate them from financial concerns about their retirement. This corroborates Prof Henry's notion that they see themselves as businesspeople whose role is separate from, and not necessarily supportive of the university mission. I disagree, however, with Prof Henry's implication that the University has to live with such a split among its leadership. People who lead academic institutions have a primary responsibility to support the academic mission. Their goals should not be to maximize profits, much less to enrich themselves. Letting academia, and academic medicine be lead by leaders out to make money and line their own pockets will lead to just that, but hardly better teaching, research, and patient care.

Why Would Directors of Health Care Corporations Push for Bigger Pensions for Academic Administrators?

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The Boards Who Ought to be Accountable for the Misbehavior of Health Care Corporations

I recently <a href="http://hcrenewal.blogspot.com/2010/12/duke-divinity-students-protest-pay-of.html">posted</a> about the multiple conflicts of interest affecting a university health sciences leader.  While he was supposed to be running a medical school and an academic medical center, he was also responsible for the stewardship, as a board member, of three health major health care corporations, and a food and beverage corporation (whose products have bearing on nutrition and public health.)  . This one case suggested how pervasive are <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> affecting the people at the top of health care leadership in the US, and also how such conflicts may be associated with problems for all the organizations involved.  The story originally came to my attention because students were demonstrating against the lavish compensation given the health sciences leader at a time of university cutbacks, suggesting that university leaders were paying more attention to their own enrichment than to the mission of the university.  At the same time, one of the corporations which he was stewarding (<a href="http://hcrenewal.blogspot.com/search/label/Genzyme">Genzyme</a>) had to shut down a factory because the extremely expensive drug it was producing was found to be impure and adulterated, while its CEO continued to be compensated lavishly.  The other corporation (<a href="http://hcrenewal.blogspot.com/search/label/Medtronic">Medtronic</a>) had to settle litigation accusing it of manufacturing defective products for hundreds of millions of dollars, while its CEO again continued to be compensated lavishly.  So I thought it might be interesting to see who are the other stewards of these troubled corporations.  I consulted the official biographies of their board members from their 2010 proxy statements (Genzyme <a href="http://www.genzyme.com/corp/investors/GENZ_Proxy_2010.pdf">here</a>, Medtronic <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDk1MDEyMy0xMC0wNjU4NzYvZG9jL01lZHRyb25pY0luYy5wZGYmdHlwZT0yJmZuPU1lZHRyb25pY0luYy5wZGY=">here</a>).  I looked for board members who also held leadership positions in other health care organizations whose interests may not be aligned with the two corporations of interest.  I also looked for those who held leadership positions in the discredited financial services corporation who helped usher in the global financial collapse. The specifics of what I found follow. Genzyme Genzyme had 10 directors in 2010.  The following directors had relationships of interest: -  Douglas A Berthiaume is "Chairman of the Children's Hospital (Boston) Trust Board, a member of the Children's Hospital board of trustees, and a Trustee of the University of Massachusetts Amherst Foundation."  Children's Hospital is a teaching hospital.  The University of Massachusetts includes a medical school.  -  Robert J Bertolini "retired from Schering-Plough Corp following its merger with Merck & Co in November, 2009."  Schering-Plough was a large pharmaceutical company now combined with Merck to form an even larger company. -  Gail K Boudreaux "has served since May 2008 as an Executive Vice President of United Health Group Incorporated."  Also, "she serves on the board of directors of America's Health Insurance Plans...."  UnitedHealth is one of the US' largest health insurance/ managed care corporations.  Incidentally,it has frequently misbehaved, as can be seen in this set of posts.  AHIP is the health insurance corporations' trade associations. -  Robert J Carpenter "is Chairman of Hydra Biosciences Inc... He is also a trustee of the Immune Disease Institute, a non-profit institute affiliated with Children's Hospital in Boston...."  -  Charles L Cooney "is a director of India-based Biocon Limited, a biotechnology healthcare company." -  Victor J Dzau MD (discussed in the earlier post) is "Chancellor for Health Affairs and President and Chief Executive Officer of Duke University Health System...."  He "sits on the board of directors of Pepsico Inc, Anylam Inc, Medtronic Inc, and the Duke University Health System." -  Senator Connie Mack III is "Chairman Emeritus of the parent board of the H. Lee Moffitt Cancer Center and Research Institute...."  He also is director of "EXACT Sciences Corporation and Moody's Corp."  <a href="http://www.exactsciences.com/">EXACT Sciences</a> is a biotechnology company that develops diagnostic test technology.  Moody's Corp is a financial ratings agency whose lax ratings of financial derivatives, perhaps arising from conflicts of interest produced by payments from the producers of the derivatives, have been implicated as a major cause of the global financial collapse. -  Richard E Syron was from "January 2004 to September 8, 2008 ... Chairman and Chief Executive Officer of the Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac...."    Freddie Mac as bailed out and taken over by the US government when he departed, or was forced out.  Freddie Mac, was a "government-sponsored enterprise," (GSE) one of another group of companies whose enthusiastic participation in securitizing dubious mortgages was implicated as a major cause of the global financial collapse. - Henri A Termeer (CEO of Genzyme) is a "director of Massachusetts General Hospital, a board member of Partners HealthCare, and a member of the board of fellows of Harvard Medical School."  So the box score for Genzyme's 10 directors: six have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director).  Seven have leadership positions in other drug, device or biotechnology corporations.  One have leadership positions in health insurance/ managed care corporations.  Two had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse. Medtronic Medtronic had 11 directors in 2010.  The following directors had relationships of interest: - Richard H Anderson "was Executive Vice President of UnitedHealth Group Incorporated."  As above, UnitedHealth is a health insurance/ managed care corporation. - Victor J Dzau (see above) is "Chancellor for Health Affairs at Duke University and President and Chief Executive Officer of the Duke University Health System."  He is "a director of Alnylam Pharmaceuticals Inc, ... PepsiCo Inc, and Genzyme Corporation." (See discussion above.) - James T Lenahan "served as President of Johnson & Johnson from 2002 until June 2004...."  He is "director of Telecris Biotherapeutics Inc, Alton Pharma Inc and Imacor Inc."  Johnson & Johnson is a large drug, device, and biotechnology company.  <a href="http://www.talecris.com/">Telecris</a>, and <a href="http://www.atonrx.com/">Alton Pharma</a> are biotechnology pharmaceutical companies.  <a href="http://www.imacormonitoring.com/">Imacor</a> is a medical device company. - Denise M O'Leary "is a director of Lucille Packard Children's Hospital and Stanford Hospitals and Clinics."  Also, "she was a member of the Stanford University Board of Trustees from 1996 through 2006, where she chaired the Committee of the Medical Center...." -  Robert C Pozen is "an advisor to Gelesis Inc."  <a href="http://www.gelesis.com/">Gelesis</a> is a biotechnology company. -  Jack W Schuler "has been a director of Stericycle Inc since March 1990...."  He is a "director of Quidel Corporation and Elan Corporation plc...."    <a href="http://www.stericycle.com/">Stericycle</a> company disposes of medical waste, including that produced by medical devices.  <a href="http://www.quidel.com/">Quidel</a> is a biotechnology and (medical diagnostic) device company.  Elan is an multinational biotechnology and pharmaceutical company. So the box score for Genzyme's 11 directors is: Two have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Ten have leadership positions in other drug, device or biotechnology corporations. One has a leadership position in health insurance/ managed care corporations. None had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse. Summary Just to summarize the sorts of conflicting interests these relationships suggest.  Teaching hospitals and medical schools are supposed to provide unbiased teaching, including about issues relevant to drug and device corporations, such as choice of diagnostic strategies and treatments, and relevant health policy.  They are supposed to perform unbiased research, including research that evaluates drugs and devices.  They are supposed to provide the best possible patient care at a reasonable cost, which relates to choices of and prices paid for drugs and devices.  Other drug, device, and biotechnology corporations may be producing, or developing products that compete with those of the index corporations. Health insurance companies ostensibly try to control costs and improve quality in part by reducing excess utilization and bargaining down prices of drugs and devices.  So this limited case study of the boards of directors, that is, the ostensible stewards of two health care corporations, selected because they have a common member who is the leader of a large medical school and academic medical center, and which both have histories of poor management or ethical missteps showed  - that the leadership of health care organizations is incredibly interrelated, interlocked, incestuous.  This gave an example of how pervasive are the conflicts of interest that affect all kinds of health care organizations.  Companies that ought to be competing have interlocked directors.  Companies that ought to be negotiating at arms length have interlocked directors.  Not-for-profit academic medical institutions have leaders who are also directors of companies whose drugs their patients may take, whose devices their patients may receive, whose insurance their patients may buy, and whose products and services they may teach about and evaluate through clinical research and policy research.  This also gives an example of how the failed culture of finance may be linked to the culture of medicine and health care.  Some of the stewards of health care organizations were also the stewards of financial services corporations whose reckless, if not arrogant, greedy and amoral leadership is widely believed to have caused the global financial collapse and our ongoing economic problems.  Finally, this suggests how top leaders of various health care organizations may be more familiar with and identify more with each other than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients.  What is to be done? I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships.  A few bloggers cannot do it all.  Obviously, the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a> mitigates against medical and health care academics looking into their own leaders.  However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience. Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment.  Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.  If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

The Boards Who Ought to be Accountable for the Misbehavior of Health Care Corporations

I recently posted about the multiple conflicts of interest affecting a university health sciences leader. While he was supposed to be runn...

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A Great Investment Opportunity? - Biotechnology Company Run by an Ex-Convict

A sad commentary on the current morality of the health care "business," as <a href="http://www.nytimes.com/2010/11/01/business/01waksal.html">provided </a>by the New York Times. Sam Waksal is back in the biotechnology business: <blockquote>Mr. Waksal says his new venture, Kadmon Pharmaceuticals, will be 'a fully integrated biopharmaceutical company from the get-go,' replete with everything, including its own research and products on the market or in clinical trials that it acquires from others. 'You’ll see a company that next year will be doing significant revenues in a growth area, with earnings, probably five Phase 3 programs and a couple of Phase 2 products,' Mr. Waksal said Sunday in a telephone interview. Phase 3 and Phase 2 are the late and middle stages, respectively, of clinical trials. Several of Mr. Waksal’s former colleagues from ImClone have joined him at Kadmon, a name from kabbalah, the Jewish mystical movement. He even looked into leasing the Lower Manhattan headquarters ImClone is vacating. Kadmon, which will focus on cancer, infections and autoimmune diseases, has started to make deals. On Monday it is expected to announce it has licensed an experimental hepatitis C drug from Valeant Pharmaceuticals International, a person close to the transaction said. That follows the disclosure last week that it had acquired Three Rivers Pharmaceuticals, a Pennsylvania company specializing in hepatitis drugs. Kadmon circulated a private placement memorandum in February to raise $50 million to $175 million. As of July, it had raised $10.8 million from 26 investors, a filing with the Securities and Exchange Commission said. But David Pitts, a spokesman for Kadmon, said that other debt and equity offerings had raised more than $200 million, with the biggest investor being SBI Holdings of Japan. </blockquote> Is there a catch? It might be Mr Waksal's record, criminal record. Mr Waksal's previous company was ImClone: <blockquote>That started to come undone in December 2001, when Mr. Waksal got word that the Food and Drug Administration was not going to approve Erbitux. Before the company announced the news, Mr. Waksal alerted relatives to sell their ImClone stock and tried to sell some of his. Martha Stewart sold her ImClone shares and was given a five-month prison sentence and five months of home confinement for lying to federal investigators about it. Mr. Waksal pleaded guilty to securities fraud, bank fraud, perjury, obstruction of justice and conspiracy. He is prohibited by a settlement with the S.E.C. from serving as an officer or director in a publicly traded company. </blockquote> Presumably, Kadmon is not publicly traded, so the SEC ban does not apply to his leadership of that company. Yet despite the ban and his criminal record, investors seem to be ready to throw money at him.  Maybe it has more to do with emotion than reason, much less morality, <blockquote>One investor in Kadmon, who also sits on its board, said Mr. Waksal’s energy and his acumen in spotting promising drugs far outweigh his past problems. 'He is irrepressible,' said this investor, who spoke on the condition that she not be named because her company has a policy against being quoted in the media. 'I don’t think what happened to Sam in the past is going to have a negative effect on my investment in this business.'  [Being convicted of 'securities fraud, bank fraud, perjury, obstruction of justice, conspiracy' is a good background for a company CEO? - Ed]</blockquote> Furthermore, <blockquote>prospective investors say his trademark exuberance and penchant for hyperbole remains. 'He hadn’t changed,' said a prospective investor who met with Mr. Waksal and spoke on the condition of anonymity to retain relations with him. 'He was spinning big stories about big money, big deals' Another prospective investor said Mr. Waksal had told him that Carl C. Icahn, the billionaire who is a friend of Mr. Waksal and had invested in ImClone, had committed $30 million to Kadmon. Marc Weitzen, a lawyer for the investor, said Mr. Icahn had evaluated Kadmon but 'decided to pass.'  [It sounds like Mr Waksal has not developed any new affinity for the truth - Ed.] The private placement memorandum circulated in February said Kadmon had 'a simple yet revolutionary plan for creating the pre-eminent 21st century biopharmaceutical company.' </blockquote>To make it even more explicit: <blockquote>Mr. Waksal, who earned a doctorate in immunology, is charming to the point of being seductive. He was a fixture in New York social circles, befriending celebrities and dating many women, including Alexis Stewart, daughter of his friend Martha Stewart. He lived in a spacious SoHo loft with millions of dollars in art, where he hosted extravagant parties and intellectual salons attended by leading lights in literature, art and science. </blockquote> In my humble opinion, an investor who throws money at an ex-con, apparently because he seems exuberant, irrepressible, even seductive, needs a brain transplant.  (But maybe some investors should read Snakes in Suits, see post<a href="http://hcrenewal.blogspot.com/2006/06/snakes-in-suits-book.html"> here</a>.) But this blog is not about giving advice to investors. If Mr Waksal invested in basically harmless products that had nothing to do with patients' health and safety, the foolishness of investment decisions about his company would have nothing to do with me. However, Mr Waksal is proposing to develop drugs to be given to patients: <blockquote>In its first big deal, Kadmon announced last Monday that it had acquired privately held Three Rivers for more than $100 million. Three Rivers, whose main products are drugs for hepatitis C, is meant to be the commercial base of Kadmon, its revenues helping to defray the cost of developing new drugs. The deal, an investor familiar with the structure said, is highly leveraged, to the extent that Three Rivers’ earnings might not be sufficient to cover the debt. But Mr. Waksal is betting that sales will soar because new pills being developed by other companies will make treatment more effective, enticing more people with hepatitis C to be treated. 'The hep C market is going to undergo a real sea change next year,' Mr. Waksal said. Three Rivers has a proprietary form of the drug ribavirin that requires two pills a day, instead of the standard six to eight. Even with new drugs coming, ribavirin will remain a mainstay of treatment. In fact, Mr. Waksal is increasing that bet. On Monday, Kadmon is expected to announce that it has obtained exclusive worldwide rights to taribavirin, a form of ribavirin that may have fewer side effects. Kadmon is paying $5 million initially, with other payments possible later, to Valeant Pharmaceuticals, which has been testing the drug in clinical trials, according to the person close the transaction. Valeant will pay $7.5 million for rights to sell Kadmon’s ribavirin in Eastern Europe. Kadmon has bought a tiny company started by Princeton professors that has a way to measure cell metabolism. Influencing a cell’s use of nutrients is emerging as a novel way to treat cancer and infectious diseases. </blockquote> So, we are not talking about merely foolish investment decisions, but amoral ones. The amorality of this brave new business world becomes relevant. <blockquote>For many investors, 'there are few judgments beyond whether you made me money,' said Samuel D. Isaly, managing partner at OrbiMed Advisors, a big investor in biotech companies that was not asked to invest in Kadmon. 'Sam Waksal made a lot of people a lot of money with ImClone.' </blockquote> There, in a nutshell seems to be the problem with running health care organizations not just in a business-like manner, but as businesses, businesses in a completely laissez faire environment, businesses in a new world run by new robber barons. Would you trust a company run by an ex-convict to product safe, effective, and unadulterated drugs? (After all, some very respected companies run by people who are certainly not ex-cons have proven to be unable to keep all of their products pure and <a href="http://hcrenewal.blogspot.com/search/label/adulterated%20drugs">unadulterated</a>.) This case vividly illustrates the need for assuring that the leaders of all health care organizations, including but not limited to pharmaceutical and biotechnology companies, have some knowledge of the health care context, some sympathy for the values of health care professionals, including putting patients' health and welfare first, and are externally accountable. But at a minimum, health care organizations should not be run by former felons. However, in our extremely laissez faire environment, in a country now increasingly dominated by new robber barons, ex-convicts can run biotechnology companies.

A Great Investment Opportunity? - Biotechnology Company Run by an Ex-Convict

A sad commentary on the current morality of the health care "business," as provided by the New York Times. Sam Waksal is back in t...

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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, <blockquote>A medical researcher and 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.... 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. 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. 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> 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"). <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 based entirely on the best evidence-based medicine available and the collective experience of SHM's senior hospitalists.'</blockquote>Also <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> The CEO of the SHM denied even a responsibility to disclose the Society's support from Sanofi-Aventis: <blockquote>Dr. Wellikson said 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.'</blockquote> 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. Given the broad <a href="http://www.hospitalmedicine.org/Content/NavigationMenu/AboutSHM/GeneralInformation/General_Information.htm">mission of the SHM</a> <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.  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.  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. 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. Hat tip to Steve Lucas for his comment <a href="https://www.blogger.com/comment.g?blogID=9551150&postID=7625518709680137413&isPopup=true">here</a>. References 1. Rothman DJ, McDonald WJ, Berkowitz CD et al. Professional medical associations and their relationships with industry. JAMA 2009; 301: 1367-1372. (Link <a href="http://jama.ama-assn.org/cgi/content/full/301/13/1367">here</a>.)

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 Jour...

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