healthy4u: corporatism

Former FDA Commissioner, CMS Administrator McClellan adds Johnson and Johnson Board Membership to Positions with General Atlantic LLC, Capital Royalty, Castlight Health, and AvivReit

Our latest example of the interchangeability of top insiders within corporate health care and the government agencies that are supposed to regulate corporate health care comes via an <a href="http://www.investor.jnj.com/releaseDetail.cfm?ReleaseID=796836&year=2013">announcement</a> from Johnson and Johnson, <blockquote class="tr_bq">Johnson & Johnson (NYSE: JNJ) announced today that Mark B. McClellan, M.D., Ph.D., Senior Fellow in Economic Studies, and Director of the Initiative on Value and Innovation in Health Care, Brookings Institution, will join the Board of Directors on October 15, 2013.  Dr. McClellan will serve on the Regulatory, Compliance & Government Affairs Committee and the Science, Technology & Sustainability Committee of the Board. As former commissioner of the U.S. Food and Drug Administration (FDA) from 2002 to 2004, and as the former administrator of the Centers for Medicare & Medicaid Services for the U.S. Department of Health and Human Services from 2004 to 2006, Dr. McClellan has more than two decades of public service and academic research experience. From 2001 to 2002, he served as a member of the President's Council of Economic Advisers and senior director for health care policy at the White House. During President William J. Clinton's administration, Dr. McClellan held the position of deputy assistant secretary of the Treasury for economic policy.</blockquote> So Dr McClellan has gone from running the US Food and Drug Administration, the primary government regulator of the pharmaceutical industry, to stewardship of one of the biggest pharmaceutical (and biotechnology and device) companies. Not noted in that announcement was that Dr McClellan has been collecting positions in health care corporations since at least 2009.  The examples I found included in chronological order: 2009 - General Atlantic LLC This appears to be a private equity firm which <a href="http://www.generalatlantic.com/about-us/a-proud-legacy/">claims</a> to be a "leading global investment firm." From a 2010 a Mergers & Acquisitions <a href="http://www.themiddlemarket.com/news/General-Atlantic-Adds-Healthcare-Vet-201877-1.html">article</a>, <blockquote class="tr_bq">A year ago, the firm hired Dr Mark McClellan, previously a commissioner of the Food & Drug Administration, to its healthcare practice as a special advisor.</blockquote> According to the firm's <a href="http://www.generalatlantic.com/people/special-advisors/">current website</a>, he is still a special advisor.   2010 - Capital Royalty LP In a 2010 <a href="http://www.capitalroyalty.com/news/item/firm-news/capital-royalty-establishes-strategic-advisory-committee/">press release</a>, this apparently private equity firm claimed to be <blockquote class="tr_bq">a market pioneer and innovator in healthcare investing with a focus on intellectual property investments in FDA-approved biopharmaceutical assets</blockquote> In that release, it announced the creation of a Strategic Advisory Committee that included Dr Mark McClellan.  He <a href="http://www.capitalroyalty.com/about-us/strategic-advisory-committee/dr.-mark-mcclellan-md-phd/">still sits</a> on that committee.  2012 - Castlight Health In a 2012 <a href="http://www.castlighthealth.com/2012/mark-mcclellan-joins-castlight-health%E2%80%99s-advisory-board/">press release</a>, this firm claimed to be <blockquote class="tr_bq">developer of a personalized health care shopping portal offering unbiased information about health care cost and quality</blockquote> That press release announced the addition of Dr McClellan to the firm's Advisory Board, <a href="http://www.castlighthealth.com/company/advisory-board/">on which</a> he still sits.  2013 - AvivReit This firm "specializes in the ownership and triple-net leasing of post-acute and long-term care skilled nursing facilities (SNFs)" per its <a href="http://www.avivreit.com/about-aviv/">website</a>. Dr McClellan is currently on its <a href="http://ir.avivreit.com/od.aspx?iid=4328838">board of directors</a>.  He apparently was appointed in 2013.  Notably, I did not see anything in any of these firms' announcements about Dr McClellan or their biographies of him that noted his board or advisory committee positions with other firms. Summary Dr Mark McClellan rose through the ranks in the US executive branch ending with positions as FDA commissioner and administrator of the Center for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (DHHS).  He served under two presidents, Clinton and George W Bush.  Within 3 years of exiting DHHS, he picked up his first important commercial position, at General Atlantic LLC, and then added other positions with Capital Royalty, Castlight Health, AvivReit, and now the biggest of all, Johnson and Johnson.  Meanwhile he apparently continues at the Brookings Institution.  He must be one very busy man. This case could be lumped with those of another former FDA commissioner and Secretary of Health and Human Services who ended up as a Director of Medtronic (see <a href="http://hcrenewal.blogspot.com/2011/10/former-us-secretary-of-health-and-human.html">this post</a>),  another Secretary of DHHS who ended up on the boards of multiple health care corporations (see <a href="http://hcrenewal.blogspot.com/2011/06/embedded-networks-of-influence-in.html">this post</a>), a director of the National Institutes of Health (NIH) who became a Sanofi executive, etc, etc (see <a href="http://hcrenewal.blogspot.com/2010/12/former-nih-director-spins-trhough.html">this post</a>). While some might argue whether his acquisition of a leading advisory position with a private equity firm three years after he left DHHS technically constituted a spin through the <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>, Dr McClellan's cumulative acquisition of four more such positions within the following four years certainly demonstrates how our corporate dominated health care system and the government agencies which are supposed to be regulating it to assure the health and safety of patients, and the maintenance of the public health seem to be run by an interchangeable cast of insiders.  We have asked before whether we can trust federal regulators to put patients' and the public's health first when they know they could easily become  candidates for lucrative private positions in the companies they regulate, or which are affected by their regulations, presumably assuming they have not done too much during their time in government to offend the leaders of such companies. We have noted that the system in which government and big corporations largely overlap in terms of their leadership and presumably goals is called <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatism</a>.  One can argue that such systems end up being run primarily for the benefit of corporate and government insiders.  Until we dispel the fog of corporatism that has spread over the government that was once supposed to be of the people, by the people, and for the people, expect no real health care reform, and expect continuing rising costs, declining access, and worsening patient care. Obviously, true health care reform would start with the government and its officials putting patients' and the public's health first, way ahead of the financial comfort of corporate leaders. I would note that neither the currently controversial and now operational Affordable Care Act, nor any of its opponents schemes for alternatives addresses this issue. by Roy M. Poses MD for Health Care Renewal

Former FDA Commissioner, CMS Administrator McClellan adds Johnson and Johnson Board Membership to Positions with General Atlantic LLC, Capital Royalty, Castlight Health, and AvivReit

Our latest example of the interchangeability of top insiders within corporate health care and the government agencies that are supposed to r...

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Another Revolving Door Variant: From Academia with Millions in Medtronic Royalties, to the White House, to the Health Care Service Corp

The revolving door spins, and where it will stop, nobody knows... In October, 2010, we noted questions about how Dr Stephen Ondra got to be a <a href="https://www.va.gov/opa/bios/docs/ondra.pdf">Senior Policy Adviser for the US Department of Veterans Affairs</a>. A veteran who was a neurosurgery professor at Northwestern University, Dr Ondra had received millions of dollars in royalties from device manufacturer Medtronic, whose CEO supported his appointment to the government position  (see this <a href="http://hcrenewal.blogspot.com/2010/10/toxic-and-dangerous-watchdog-vs.html">post</a>).  As soon as he was appointed, he publicly opposed a nominee for US Surgeon General who had been critical of the medical device industry, and its financial ties to doctors. After going to Washington, Dr Ondra apparently also served in the Executive Office of the President, in the White House, but <a href="http://triblocal.com/lake-forest/community/stories/2012/04/northwestern-memorial-hospital-names-stephen-l-ondra-chief-medical-officer/">returned</a> to Northwestern University in 2012.  However, he did not stay there for long. This month, a <a href="http://www.forbes.com/sites/brucejapsen/2013/02/07/obama-advisor-ondra-hired-as-top-doc-at-blue-cross-plan/">post</a> on Forbes indicated he is moving on again, and back to the corporate side of health care. <blockquote class="tr_bq">the nation’s fourth-largest health insurance company is naming a key former health advisor to President Obama as its top doctor. Dr. Stephen Ondra, will become senior vice president and chief medical officer at Health Care Service Corp., the Chicago-based parent company of Blue Cross plans in Illinois, Texas, Oklahoma and New Mexico. The plan has more than 13 million health plan members and is looking to grow even more, announcing last year a proposed partnership with the Blue Cross plan in Montana.</blockquote> Health Care Service Corp is a mutual insurance company, that is, a company owned by its policy-holders rather than stock holders.  However, that does apparently not make it any more ascetic than a typical for-profit insurance company, at least in terms of generosity towards its top hired executives.  As Crain's Chicago Business <a href="http://www.chicagobusiness.com/article/20120515/NEWS03/120519922/blue-cross-parents-ceo-pay-climbs-to-12-9-million">reported</a> in 2012, <blockquote class="tr_bq">New federal regulations intended to force health insurers to spend less on administration didn't keep the parent of Blue Cross & Blue Shield of Illinois from paying CEO Patricia Hemingway Hall more than $12.9 million in 2011, a 61 percent raise. The Health Care Service Corp. chief executive's total compensation last year dwarfed the $8 million she received in 2010, according to a filing with the Illinois Department of Insurance. The 2011 increase was fueled by an $11.8 million bonus, which was 69 percent above her 2010 bonus of $7 million. Ms. Hall wasn't alone in getting a big raise at Health Care Service, whose insurance business booked net income of more than $1 billion in 2011, for the second straight year. The 10 highest-paid executives at the Chicago-based mutual company — which operates Blue Cross plans in Illinois and three other states — earned a collective $41.7 million, 65 percent more than the $25.3 million they were paid in 2010.</blockquote>  If Dr Ondra's new position puts him among the latter group of executives, he too stands to make millions a year.  So to recap Dr Ondra's career so far, in 2010 he was a medical school professor who had earned millions in royalties from Medtronic.  He then went to top leadership positions in the US Veterans Department and Executive Office of the President.  He returned briefly to Northwestern University, only to leave again for a top executive position in for-profit insurance company Health Care Service Corp, where he is likely to make millions more. Thus Dr Ondra is our latest interesting example of the "<a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>" phenomenon in health care.  He started as an erstwhile academic physician but with a very major financial relationship with a medical device company.  He then went through the door the first time into the US government, and then a second time from the government to a for-profit insurance company, with just a brief stop-over in academia. By the way, it appears that all of this is quite legal.  It does again raise questions about whether health care leaders in government with previous relationships with industry might still feel undue sympathy to the interests of industry, as might government leaders who can expect future jobs in industry. Moreover, this case, like previous cases we have discussed,  indicates how leadership in academic health care, corporate health care, and the government tend to blend together.  Leaders of one type of organization have more and more in common with leaders of the other types of organizations than they do with their lesser ranked colleagues, and certainly than with other health care constituencies.  So the more the revolving door revolves, the more we wonder about the <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatism</a> of health care, about how health care seems to be increasingly run by an amorphous group of academic/ corporate/ government leaders whose loyalties may be more to each other than to academic and professional values, patients' and the public's health, and government of, by and for the people.

Another Revolving Door Variant: From Academia with Millions in Medtronic Royalties, to the White House, to the Health Care Service Corp

The revolving door spins, and where it will stop, nobody knows... In October, 2010, we noted questions about how Dr Stephen Ondra got to be ...

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How the "Revolving Door" and Other Aspects of Corporatism Benefited Amgen Just After its Settlement and Guilty Plea

At least here in these United States, our health care corporatism is bipartisan.  Here we present a sorry story of how a company that should have been shamed by dishonest behavior that likely harmed patients instead apparently was awarded special treatment through its cozy relationships with top government leaders   Accusations of Kickbacks and Deceptive Marketing of Aranesp  Last month, biotechnology giant pleaded guilty to a charge of misbranding and settled civil charges with the US government for $762 million (look <a href="http://hcrenewal.blogspot.com/2012/12/amgen-settles-pleads-guilty-to.html">here</a>).  Soon after, New York Times <a href="http://www.nytimes.com/2012/12/20/business/amgen-workers-helped-us-in-aranesp-marketing-inquiry.html">article</a> described the unethical practices the company was alleged to have performed.  It opened with a vivid anecdote: <blockquote class="tr_bq">'I hope no one is taping this,' the Amgen<a class="meta-org" href="http://topics.nytimes.com/top/news/business/companies/amgen_inc/index.html?inline=nyt-org" title="More information about Amgen Inc"></a> manager remarked at a company sales meeting in 2005. The manager then boasted of how she had given a $10,000 unrestricted grant to a pet project of a doctor who was an adviser to the local  Medicare contractor. In turn, she said, the doctor would help persuade the contractor to provide reimbursement for an unapproved use of Amgen’s anemia drug, Aranesp.  </blockquote> Since that account appeared to be of a quid pro quo, it did sound like some a kickback or bribery.  In addition, <blockquote class="tr_bq">Amgen is also accused of offering kickbacks to doctors and clinics to induce them to use its drugs. These reportedly came as cash, rebates, free samples, educational and research grants, dinners and travel, and other inducements.   </blockquote> Of course, since this was the usual sort of settlement we see of health care corporate wrongdoing, in which the reason the company is paying what appears to be a large fine remains ambiguous, <blockquote class="tr_bq"><div itemprop="articleBody">Except for those in the criminal count, Amgen denied the other accusations, though it did issue a statement on Wednesday acknowledging the settlement. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">'The government raised important concerns in the criminal prosecution,' Cynthia M. Patton, chief compliance officer at Amgen, said in the statement. 'Amgen acknowledges that mistakes were made, and we did not live up to our standards.'</div></blockquote><div itemprop="articleBody"> "Mistakes were made," what a handy phrase to avoid acknowledging that a real person or person made those mistakes.  Why government prosecutors did not leverage instances in which the mistakes were made by an identifiable person, for example, the manager in the anecdote above, to find out who ultimately authorized and directed the kickbacks and deceptive marketing, and then seek to indict them is a mystery.  The US Department of Justice now seems to be disinclined to ever pursue top  health care corporate executives who may have done wrong, while they exuberantly pursue fines from the companies they direct, fines which have almost no personal impact on those who authorized, directed or implemented the bad behavior.    The Times article also included a telling allegation that behind this apparent misbehavior was a changed corporate culture that put short-term revenue ahead of all other considerations.  </div><div itemprop="articleBody"> </div><blockquote class="tr_bq"><div itemprop="articleBody">the corporate culture changed starting around 2000. That was when new management came in and Aranesp was approved, setting up a fierce marketing battle with Johnson & Johnson and its rival anemia drug, Procrit. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">'It was more important to make your numbers than to follow the rules,' said [former Amgen sales representative and now whistle-blower Jill] ...Osiecki, who was based in Milwaukee and sold Aranesp. </div></blockquote><div itemprop="articleBody"> </div><div itemprop="articleBody">We have discussed how the "make your numbers" culture seems to have resulted from an over-generalization of the prevalent belief in business schools that "maximizing shareholder value," which usually seems to mean maximizing short-term revenue and/or doing whatever it takes to boost stock prices in the short-term (look <a href="http://hcrenewal.blogspot.com/2012/04/health-care-dysfunction-explained-by.html">here</a>).  In companies which make potentially beneficial but also potentially hazardous drugs, the risks of "make your numbers" are obvious.</div><div itemprop="articleBody"> </div><div itemprop="articleBody">Shameful Consequences for Patients  </div><div itemprop="articleBody"> </div><div itemprop="articleBody">These were disconcerting revelations.  They showed that some unidentified employees, probably including top leaders of a major health care corporation seemed to use kickbacks and lies to deceptively market a drug just to "make their numbers," and thus most likely score healthy bonuses.  Yet this drug is clearly dangerous.  The <a href="http://www.accessdata.fda.gov/drugsatfda_docs/label/2011/103951Orig1s5173_103951Orig1s5258lbl.pdf">official Aranesp label</a> states (in a black box warning, in capital letters): <blockquote class="tr_bq"> ESAs INCREASE THE RISK OF DEATH, MYOCARDIAL INFARCTION, STROKE, VENOUS THROMBOEMBOLISM, THROMBOSIS OF VASCULAR ACCESS AND TUMOR PROGRESSION OR RECURRENCE</blockquote> Thus deceptive and unethical marketing practices likely lead to overuse of the drug, and overuse of the drug likely lead to sick (via myocardial infarction [heart attack], stroke, venous thromboembolism or thrombosis of vascular access [drug clots], or tumor progression) or dead patients. One would think that the consequences of the particular bad behavior alleged in this case would have lead to more zealous prosecution and to the pursuit of actual people who authorized, directed or implemented the bad behavior.  However, it did not. One would also think that the nature and consequences of this bad behavior would harm the reputation of the company and its leadership.  Instead, it appears that soon after the settlement was announced, top US elected leaders were fawning over this company and its leadership, and rushing to legislate special treatment for it. Special Treatment from Legislators Yet soon after these disconcerting revelations that should have shamed Amgen and its leadership, it appears that the company benefited from legislation narrowly crafted mainly just for to suit its interests, and with the aid of allies from both parties within the US government.  That story was again just <a href="http://www.nytimes.com/2013/01/20/us/medicare-pricing-delay-is-political-win-for-amgen-drug-maker.html">reported </a>by the New York Times.  The basics are:</div><div itemprop="articleBody"> </div><blockquote class="tr_bq"><div itemprop="articleBody">Just two weeks after pleading guilty in a major federal fraud case, Amgen, the world’s largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the "fiscal cliff"  bill that did not mention the company by name but strongly favored one of its drugs. </div><div itemprop="articleBody">  </div><div itemprop="articleBody">The language buried in Section 632 of the law<a href="http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf" title="American Taxpayer Relief Act"> </a>delays a set of Medicare price restraints on a class of drugs that includes Sensipar, a lucrative Amgen pill used by kidney dialysis patients. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">The provision gives Amgen an additional two years to sell Sensipar without government controls. The news was so welcome that the company’s chief executive quickly relayed it to investment analysts.  But it is projected to cost Medicare up to $500 million over that period.[That would almost make up for the fine the company had to pay for illegal marketing and to settle kickback charges - Ed]</div><div itemprop="articleBody"> </div><div itemprop="articleBody">Amgen, which has a small army of 74 lobbyists<a href="http://www.opensecrets.org/lobby/clientlbs.php?id=D000000391&year=2012" title="Amgen’s lobbyists as of 2012"> </a>in the capital, was the only company to argue aggressively for the delay, according to several Congressional aides of both parties. </div></blockquote><div itemprop="articleBody"> </div><div itemprop="articleBody">But the Times article noted that it was not just the size of its army of lobbyists that did it.  </div><div itemprop="articleBody"> </div><blockquote class="tr_bq"><div itemprop="articleBody"> Amgen has deep financial and political ties to lawmakers like Senate Minority Leader Mitch McConnell, Republican of Kentucky, and Senators Max Baucus, Democrat of Montana, and Orrin G Hatch, Republican of Utah, who hold heavy sway over Medicare payment policy as the leaders of the Finance Committee. </div></blockquote><div itemprop="articleBody"> </div><div itemprop="articleBody">In particular, Amgen</div><div itemprop="articleBody"> </div><blockquote class="tr_bq"><div itemprop="articleBody">has a deep bench of Washington lobbyists that includes Jeff Forbes, the former chief of staff to Mr. Baucus; Hunter Bates, the former chief of staff for Mr. McConnell; and Tony Podesta, whose fast-growing lobbying firm has unusually close ties to the White House. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">Amgen’s employees and political action committee have distributed nearly $5 million in contributions to political candidates and committees since 2007, including $67,750<a href="http://www.opensecrets.org/politicians/contrib.php?cycle=2012&cid=N00004643&type=C"> </a>to Mr. Baucus, the Finance Committee chairman, and $59,000 to Mr. Hatch, the committee’s ranking Republican. They gave an additional $73,000 to Mr. McConnell, some of it at a fund-raising event for him that it helped sponsor in December while the debate over the fiscal legislation was under way. More than $141,000 has also gone from Amgen employees to President Obama’s campaigns. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">What distinguishes the company’s efforts in Washington is the diversity and intensity of its public policy campaigns. Amgen and its foundation have directed hundreds of thousands of dollars in charitable contributions to influential groups like the Congressional Black Caucus and to lesser-known groups like the Utah Families Foundation, which was founded by Mr. Hatch and brings the senator positive coverage in his state’s news media. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">Amgen has sent large donations to Glacier PAC, sponsored by Mr. Baucus in Montana, and OrrinPAc, a political action committee controlled by Mr. Hatch in Utah. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">And when Mr. Hatch faced a rare primary challenge last year, a nonprofit group calling itself Freedom Path<a href="http://images.nictusa.com/cgi-bin/fecimg/?C00492504" title="Freedom Path FEC filings"></a> sponsored advertisements in Utah that attacked his opponent, an effort that tax records released in November show was financed in large part by the Pharmaceutical Research and Manufacturers of America<a href="http://www.phrma.org/" title="PhRMA’s Web site"></a>, a trade group that includes Amgen. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">In some cases, the company’s former employees have found important posts inside the Capitol. They include Dan Todd, one of Mr. Hatch’s top Finance Committee staff members on health and Medicare policy, who worked as a health policy analyst for Amgen’s government affairs office from 2005 to 2009. Mr. Todd, who joined Mr. Hatch’s staff in 2011, was directly involved in negotiating the dialysis components of the fiscal bill, and he met with 'all the stakeholders,' Mr. Hatch’s spokeswoman said, not disputing when asked that this included Amgen lobbyists.</div></blockquote><div itemprop="articleBody"> In addition, a NY Times <a href="http://www.nytimes.com/2013/01/23/opinion/amgen-gets-a-gift-from-congress.html">editorial</a> today pointed out that Mitch McConnell, the Senate Minority Leader, (Republican - Kentucky) who "exerted great influence over the fiscal negotiations and praised the Medicare provisions" presumably including the specific provision that helped Amgen, also has "political and financial ties to Amgen."  Furthermore, Senator McConnell's willingness to use taxpayer's money to pay Amgen more seemed to contradict his "public statements [which] usually emphasize the need to cut federal spending on entitlement programs, <a href="http://www.lanereport.com/17882/2013/01/entitlement-spending-fix-will-require-medicare-eligibility-age-hike-means-testing-and-cpi-formula-change-mcconnell-says/?utm_source=Faster%20Lane%20Newsletter&utm_medium=Email&utm_campaign=jan-21-2013" target="_blank">as they did in Lexington Friday</a>," as <a href="http://www.weku.fm/post/mcconnell-helped-amgen-delay-price-limits-dialysis-drug">reported</a> by WEKU (the National Public Radio Station at Eastern Kentucky University ).   </div><div itemprop="articleBody">Can We Reform Health Care in the Corporatist States of America?    In summary, Amgen seems to have leveraged its use of former legislative aides affiliated with both political parties as lobbyists, and its presumed influence over former employees who are currently legislative aides, that is, to people who have transited <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving doors</a> in both directions, to influence policy in its corporate favor.  It has also leveraged its contributions directly to politicians, to political action committees (PACs), and to non-profit advocacy groups to influence policy in its direction for this purpose.  All this leverage apparently resulted in continuing government favoritism to a company the government had just convicted of a crime, and to a company whose actions likely led to sick and dead patients.  Furthermore, legislators who publicly deplore excess government spending and enlarging government deficits supported spending more taxpayer money to favor a particular company that they ought to have shunned.  The New York Times <a href="http://www.nytimes.com/2013/01/23/opinion/amgen-gets-a-gift-from-congress.html">editorial</a> deplored this case first as <blockquote class="tr_bq">a disheartening example of how intense lobbying and financial contributions can distort the legislative process in Washington</blockquote></div><div itemprop="articleBody"> and second as <blockquote class="tr_bq">a classic example of the power of special interests to shape legislation and shows how hard it may be to carry out the reforms needed to cut health care costs. </blockquote> But it was really much worse than that.   This case certainly shows the ongoing coziness between big health care organizations and government (this time, mainly legislative) leaders, facilitated by the apparently very common "<a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>" interchange of influential people between corporate management and government.  Note that this coziness has now become bipartisan.  However, this was not merely expensive favoritism.  It was hypocritical expensive favoritism that benefited a corporation that ought to have been shamed and shunned for behavior that did not merely cost the government money, but likely harmed patients, sometimes even fatally.  </div><div itemprop="articleBody"> </div><div itemprop="articleBody"></div><div itemprop="articleBody">President Theodore Roosevelt <a href="http://www.theodoreroosevelt.org/TR%20Web%20Book/TR_CD_to_HTML364.html">condemned</a> malefactors of great wealth.  Our current political leaders in both parties seem to put their ties to corporate insiders who work for executives of great wealth ahead of any consideration of what might be good for patients, public health, or the citizenry at large.  </div><div itemprop="articleBody"> </div><div itemprop="articleBody">So the US now seems to be run by a soft, informal version of <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatism</a>, the system in which government and big corporations overlap and jointly rule the people.  Since these days big corporations are run largely without accountability by increasingly rich executives, this ends up meaning government by the oligarchs, for the oligarchs, and of the oligarchs.  President Lincoln and President Theodore Roosevelt might be rolling in their graves.  </div><div itemprop="articleBody"> </div><div itemprop="articleBody">To meaningfully reform health care, it seems like we need to meaningfully reform our entire political system, and both make leaders of health care organizations accountable, and make government again of the people, by the people, and for the people.  </div>

How the "Revolving Door" and Other Aspects of Corporatism Benefited Amgen Just After its Settlement and Guilty Plea

At least here in these United States, our health care corporatism is bipartisan. Here we present a sorry story of how a company that should...

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Head of Lobbying Firm with Health Care Clients Walks Through Revolving Door into Executive Branch

A Washington Post <a href="http://www.washingtonpost.com/opinions/obama-embraces-k-street/2012/03/06/gIQAR4ChvR_story.html">op-ed</a> described the latest case of a revolving door frequent flier, or perhaps frequent revolver, with health care connections. I will try to piece it together chronologically. The story revolves around one Steven Ricchetti. His earlier career trajectory was: <blockquote>Blue Cross Blue Shield, then the Democratic Senatorial Campaign Committee, then the Clinton White House, then lobbying, then back to the Clinton White House, then more lobbying, this time starting Ricchetti Inc. with his brother, Jeff. (A call seeking comment from Ricchetti Inc. wasn’t returned.) </blockquote> Most recently, he "was tapped to be counselor to Vice President [Joseph] Biden." His recent clients were"Fannie Mae, General Motors, the American Hospital Association, and <a href="http://hcrenewal.blogspot.com/search/label/Eli%20Lilly">Eli Lilly</a>," obviously includeingtwo prominent health care organizations. Previously he had represented <blockquote>AT&T, Reed Elsevier, <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">Pfizer</a>, <a href="http://hcrenewal.blogspot.com/search/label/Sanofi-Aventis">Sanofi-Aventis</a>, <a href="http://hcrenewal.blogspot.com/search/label/Siemens">Siemens</a>, Sirius XM, <a href="http://hcrenewal.blogspot.com/search/label/Amgen">Amgen</a>, <a href="http://hcrenewal.blogspot.com/search/label/Boston%20Scientific">Boston Scientific</a>, America’s Health Insurance Plans, eBay, Dow Chemical, the U.S. Conference of Catholic Bishops, among others, according to the Center for Responsive Politics. Cumulatively, they paid Ricchetti and his firms millions.</blockquote> Eli Lilly, Pfizer, Sanofi-Aventis, Amgen, and Boston Scientific are obviously "pure" health care corporations. Reed Elsevier has a publishing subsidiary with important medical titles. <a href="http://hcrenewal.blogspot.com/search/label/Siemens%20Healthcare">Siemens Healthcare</a> is an important part of that company. The links above are to our relevant posts about these firms, some of which describe various ethically questionable behavior. Note that Mr Ricchetti's appointment apparently circumvented the President's previous statement that "lobbyists 'will not run my White House.'" He <blockquote>achieved this feat — getting around the ban on lobbyists serving in the administration — by using one of Washington’s most-honored traditions: the loophole. Just as Obama won the presidency, Ricchetti de-registered as a lobbyist for his various clients. But he remained president of the lobbying firm that continued to work for many of those same clients, as well as a few more, such as the American Bankers Association. </blockquote> While Mr Ricchetti is no doubt an intelligent and hard-working man, could not someone who was not so strongly financially tied to the leadership of some of the US' most ppowerful health care corporations be found who was well-qualified for this position? Pending the answer to that question, which I do not expect to receive, this story becomes our latest example of the coziness between political and government leadership on one hand, and the leadership of large health care organizations, and those they choose as representatives. We have seen all sorts of permutations of revolving door stories involving people with strong ties to the largest health care organizations. The implication is that both health care's private sector and the government functions meant to provide or regulate health care do not operate at arms' length, and in fact seem to be run by a group of insiders who overlap both, and may be more attuned to their self-interest and patients' and the public's health. Health policy in the US has become an insiders' game. Unless it is redirected to reflect patients' and the public's health, facilitated by the knowledge of unbiased clinical and policy experts rather than corporate public relations, expect our efforts at health care reform to just increase health care dysfunction. Physicians, public health advocates, whatever unbiased health policy experts remain must educate the public about how health policy has been turned into a corporate sandbox. We must try to somehow activate the public to call for health care policy of the people, by the people, and for the people.

Head of Lobbying Firm with Health Care Clients Walks Through Revolving Door into Executive Branch

A Washington Post op-ed described the latest case of a revolving door frequent flier, or perhaps frequent revolver, with health care connec...

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Unequal Justice Under Law - Comparing Cases of Alleged Misbehavior by Large Health Care Organizations and Individuals

How the wealthy and powerful have become able to play by a different set of rules than those affecting ordinary people may be the defining issue of our time.  Yesterday, President Obama's State of the Union message asked for an economy in which "everyone plays by the same set of rule."  We posted about how this issue, which got national attention due to the Occupy movement, affects health care <a href="http://hcrenewal.blogspot.com/2011/11/health-care-also-needs-to-challenge.html">here</a>. We have previously posted again and again about how the penalties for misbehavior by large US health care organizations seem to be so minimal as to be incapable of deterring future bad behavior (e.g., see <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">posts</a> about legal settlements).  At most, corporations often pay fines that are no more than a cost of doing business.  They rarely have to admit guilt, and when they do, it is usually to a relatively trivial charge.  The people who authorized, directed, or implemented the bad behavior almost never suffer any negative consequences.  Thus, the leaders of large US health care organizations seem to have <a href="http://hcrenewal.blogspot.com/search/label/impunity">impunity</a>. Similar complaints have been made about the lack of accountability of the leaders of the finance firms that lead us into the global financial crisis, or great recession.  However, while I have reviewed now hundreds of stories about such minimal organizational punishments, I have also seen hundreds of stories discovered by my automatic news searches of much more severe penalties paid by individuals who have been accused of similar misbehavior.  I have never previously made an explicit comparison of how health care corporate and individual misbehavior are handled. A recent set of examples of organizational misbehavior invites such a comparison.  Here they are, in chronological order. KV Pharmaceutical On December 6, 2011, the St Louis Post Dispatch <a href="http://www.stltoday.com/business/local/kv-pharmaceutical-agrees-to-million-settlement-with-doj/article_3c947aee-2054-11e1-8c50-001a4bcf6878.html">reported</a>: <blockquote>KV Pharmaceutical Co. has agreed to pay $17 million to federal and state authorities to settle Justice Department allegations that it defrauded federal health care programs. The settlement resolves allegations that KV, as the Bridgeton-based parent company of now-defunct Ethex Corp., misrepresented the regulatory status of two of its drugs that did not qualify for coverage under federal health care programs, the Justice Department said today. The Justice Department alleges that Ethex submitted false quarterly reports to the federal Centers for Medicare and Medicaid Services related to the two drugs: nitroglycerin extended release capsules and hyoscyamine sulfate extended release capsules.</blockquote> Company leadership made the usual sort of comment. CEO Greg Divis said: <blockquote>The closure of this matter is another step forward as KV moves ahead as a women's healthcare focused branded specialty pharmaceutical company.</blockquote>Corporate leaders seem to love putting such unpleasantness in the past and moving on, especially when they personally are not held accountable for the previous misbehvior. Note that this is just the latest settlement for KV Pharmaceutical: <blockquote>KV shut down Ethex after the subsidiary pleaded guilty in March 2010 to two felony counts of criminal fraud for failing to report to the Food and Drug Administration that it was making oversize drugs - and drew $27.6 million in fines and restitution.</blockquote> Catholic Healthcare West, Sutter Health On December 8, the Sacramento Bee <a href="http://www.sacbee.com/2011/12/08/4107855/chw-sutter-pay-23-million-to-settle.html">reported</a>: <blockquote>Two of Sacramento's biggest health care players paid a combined $2.3 million to the federal government to settle allegations that 61 of their hospitals double-billed Medicare for therapies and services, U.S. Department of Justice officials announced Wednesday. Catholic Healthcare West paid more than $875,000 and Sutter Health nearly twice that – more than $1.43 million – for alleged duplicate charges for infusion therapies and treatments to break up kidney and bladder stones, in what Lauren Horwood, a spokeswoman in the Sacramento U.S. attorney's office, called 'a significant settlement.'</blockquote> As usual, <blockquote>Officials at the two health networks admitted no wrongdoing in agreeing to the settlement, Horwood said. No charges will be filed.</blockquote> Again, however, this was not the first such issue to affect these large non-profit organizations: <blockquote>In 2006, Sutter Health agreed to grant discounts and refunds to uninsured patients the network was accused of overcharging, stemming from a 2004 class-action lawsuit.</blockquote> Blue Shield (California) On December 29, 2011, the Los Angeles Times <a href="http://articles.latimes.com/2011/dec/29/local/la-me-blue-shield-20111229">reported</a>: <blockquote>More than a year after the healthcare reform law sought to prevent sick patients from losing medical coverage, insurers are still paying for their alleged abuses. Blue Shield has agreed to pay $2 million to resolve accusations that the company improperly dropped policyholders after they got sick and needed expensive treatment. The settlement, announced Wednesday by Los Angeles City Atty. Carmen Trutanich, ends an investigation into more than 1,000 so-called rescissions by Blue Shield, a San Francisco-based not-for-profit company.</blockquote> As usual, there was no admission of guilt, and a company spokesperson claimed that while the company decided to pay out the money in response to the allegations, it, of course, was blameless: <blockquote>Blue Shield spokesman Steve Shivinsky said the firm settled to avoid litigation. 'Our process meets or exceeds all legal and regulatory requirements,' Shivinsky said in a statement. 'In every instance, we provide immediate notice, ensure multiple layers of review, involve a medical director in the decision, give members an opportunity to provide additional information before we take any action, and follow the guidance of an independent third party review.'</blockquote> Note that rescission is now against US federal law: <blockquote>President Obama made rescission a central theme in his push for a healthcare overhaul. In September 2010, a ban on rescissions for unintentional application errors became one of the first pieces of the healthcare law to take effect.</blockquote> GE Healthcare On December 29, 2011, the Detroit Free Press reported (<a href="http://www.usatoday.com/money/industries/health/story/2011-12-29/ge-healthcare-settlement-30-million-dollars/52268818/1">via</a> USA Today): <blockquote>Pharmaceutical giant GE Healthcare will pay $30 million to the U.S. Department of Justice to settle claims in a case filed by a Michigan salesman, alleging one of its companies marketed a diagnostic drug used in cardiology tests as one that could be diluted and stretched to more patients than intended.</blockquote> Not surprisingly, <blockquote>GE admitted no wrongdoing in the settlement. </blockquote> This was despite the fact that the actions alleged may have harmed patients as well as defrauding the government: <blockquote>For patients, the diluted product resulted in more false positives during cardiology tests and exposed them to additional and unnecessary testing....</blockquote>We have <a href="http://hcrenewal.blogspot.com/search/label/General%20Electric">posted previously</a> about some previous questionable behavior by GE in the health care sphere. Actavis On January 3, 2012, Bloomberg <a href="http://www.businessweek.com/news/2012-01-03/actavis-to-pay-84-million-to-end-medicaid-drug-pricing-suit.html">reported</a>: <blockquote>Two units of Actavis Group Hf will pay $84 million to settle a lawsuit over drug pricing, Texas officials said, less than half the amount an Austin jury said the company should pay. The state accused Actavis Mid-Atlantic LLC and Actavis Elizabeth LLC, subsidiaries of the Iceland-based company’s U.S. division, of inflating billings to the Texas Medicaid program by falsely reporting drug prices. The state court jury in February ordered the units to pay the state $170 million. The settlement resolves that litigation, Texas Attorney General Greg Abbott said today in a statement.</blockquote> Note that Medicaid is a joint federal-state insurance program for the poor. The company's statement had a familiar ring to it: <blockquote>'Actavis denies any and all wrongdoing, and denies that it has any liability relating to the Texas judgment,' the company and the state said in the settlement agreement. The parties reached a settlement 'to avoid the delay, uncertainty, inconvenience and expense of continuing the litigation.'</blockquote> Nothing to see here, just move along. Denver Health Medical Center On January 5, 2012, the Denver Post <a href="http://www.denverpost.com/breakingnews/ci_19680861">reported</a>: <blockquote>Denver Health Medical Center will pay $6.3 million to federal and state officials for overbilling Medicare and Medicaid, state and U.S. attorneys said. After investigating a whistleblower's lawsuit, government officials said Denver Health was classifying patients with an "inpatient" status when it should have been listing them as 'outpatient' or under 'observation' status, which paid less under government rules.</blockquote> Oops, missing from this story was the pro forma denial of blame, wrongdoing, misconduct by organizational leadership. However, the Denver Business Journal was <a href="http://www.bizjournals.com/denver/news/2012/01/05/denver-health-settles-medicare.html">able to add that</a>: <blockquote>Denver Health, in a statement, said it and the government agreed to the settlement to avoid 'protracted litigation' over the allegations. It did not admit guilt in agreeing to the settlement.</blockquote> Of course, again despite having to pay millions, the organization asserted that it is fine and upstanding: <blockquote>'Denver Health has, and will continue to, strive to ensure that its billing systems are accurate,' the hospital said in a statement, adding that the hospital has implemented a system to correct and improve billing accuracy.</blockquote> Whoever wrote the statement seemed to overlook the implication that flowed from the need to "correct" the system. CVS Caremark On January 12, 2012, the Baltimore Sun <a href="http://articles.baltimoresun.com/2012-01-12/business/bal-consuming-interests-cvs-caremark-settles-deceptive-pricing-charge-for-5-million-20120112_1_cvs-caremark-drug-pricing-information-drug-plan">reported</a>: <blockquote>The Federal Trade Commission announced that CVS Caremark Corp. agreed to pay $5 million to settle a complaint that it misinformed seniors about the price of certain Medicare Part D prescription drugs sold through CVS and Walgreens pharmacies. The action by the company, according to the FTC, caused seniors and consumers with disabilities to pay significantly more for drugs. It also pushed them more quickly into the so-called 'doughnut hole,' in which drug costs aren’t covered by the federal program.</blockquote> Despite its multimillion dollar payment, the company admitted no guilt, of course, and asserted its exemplary corporate citizenship: <blockquote>CVS Caremark released a statement: 'During the course of this two year investigation, our company cooperated fully with the FTC and provided to the government millions of documents as well as access to numerous members of our management team who participated in voluntary interviews and depositions,' said Douglas A. Sgarro, Executive Vice President and Chief Legal Officer of CVS Caremark.</blockquote> He also took comfort from the fact that there were not even more charges: <blockquote>It is important to note that, at the conclusion of this comprehensive investigation, the FTC made no allegations of antitrust law violations or anti-competitive behavior associated with any of our business practices, products or service offerings.</blockquote> Stryker Corp On January 18, 2012, Bloomberg <a href="http://www.bloomberg.com/news/2012-01-18/stryker-biotech-pleads-guilty-to-misbranding-charge-pays-15-million-fine.html">reported</a>: <blockquote>A Stryker Corp. (SYK) unit agreed to plead guilty and pay a $15 million fine while the medical-device maker was on trial on charges it marketed an unapproved mixture of products for strengthening human bone growth. The unit, Stryker Biotech, and three Stryker sales representatives were on trial in federal court in Boston on a 13-count criminal indictment claiming conspiracy and wire fraud. The trial began Jan. 9 with jury selection. Stryker Biotech agreed to plead to one misdemeanor count of misbranding a medical device, according to a letter dated yesterday from the U.S. Attorney’s Office in Boston and filed with the federal court. </blockquote> This did involve an admission of guilt, but to what amounts to a financial violation when there were allegations that patients may have been harmed: <blockquote>The U.S. had charged Stryker Biotech with misbranding and its sales force with conspiring to defraud surgeons into combining the company’s OP-1 and OP-1 Putty with the bone filler Calstrux. Some patients suffered adverse side effects and required more surgery, the U.S. said. 'That mixture was never studied clinically,' Assistant U.S. Attorney Susan Winkler told the jury in her opening statement on Jan. 12. 'They did not know if it worked. They did not know if it was safe, and they marketed it to doctors anyway.' </blockquote> Interval Summary We have presented eight cases in which  major US health care organizations settled cases involving allegations of financial gain under false pretenses. Nearly all involved US federal charges, and the others included alleged misbehavior that affected a federal program or that now would be illegal under federal law. All the cases were resolved with fines over $1 million. However, while these fines may seem big to most people, they were trivial compared to the revenues of the organizations. None of the settlements involved any penalties to actual people who authorized, directed, or implemented the misbehavior. No individuals at any of the involved organizations admitted any mistakes, much less wrong doing. While the volume of such settlements indicates the prevalence of misbehavior by large health care organizations, it is not clear that their results, which amount to slaps on corporate wrists, have any deterrent effect. In comparison, see what happens when little people obtain money from the government under false pretenses. I found a convenience sample of such cases reported in the last month through a Google search. Vasquez On January 9, the San Francisco Chronicle <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2012/01/09/state/n193158S68.DTL">reported</a>: <blockquote>A Los Angeles woman who pleaded guilty to committing $6.2 million in Medicare fraud has been sentenced to 5 years in prison. Federal Health and Human Services officials say 47-year-old Carolyn Ann Vasquez has also been ordered to pay $6.2 million in restitution. Vasquez admitted to conspiring with others to use a series of fraudulent Los Angeles-area medical clinics to defraud the federal health care insurance program for people over age 65 and the disabled. Between 2007 and 2008, Vasquez obtained a physician's personal information and Medicare provider number and used it to print prescription pads. She then had a physician's assistant, David Garrison, write fraudulent prescriptions for pricey medical equipment.</blockquote> Curtis On January 7, 2012, the [Jacksonville] Florida Times-Union <a href="http://jacksonville.com/news/georgia/2012-01-07/story/leader-medicare-fraud-scheme-gets-3-years-6-months-prison">reported</a>: <blockquote>A federal judge sentenced the would-be owner of a Brunswick prosthetic business to three years and six months in prison for his organization and leadership of a scheme that defrauded Medicare of more than $250,000.</blockquote> Also, <blockquote>In addition to prison, Wood sentenced Curtis to repay $254,750.94 to Health and Human Services and serve three years’ probation. She dismissed eight other counts as part of his plea agreement.</blockquote> In stark contrast to the stories above about cases of fraud involving large health care organizations: <blockquote>Samuel Curtis III, who had submitted false claims from Preferred Prosthetics and Orthotics in Brunswick and Team Orthotics and Prosthetics of Houston, had pleaded guilty in July to conspiring to commit health care fraud. Curtis, 38, apologized and asked U.S. District Judge Lisa Godbey Wood for leniency during his sentencing hearing Friday.</blockquote> Popov On January 12, 2012, the Sacramento Bee <a href="http://blogs.sacbee.com/crime/archives/2012/01/doctor-posing-as-sacramento-clinic-owner-sentenced-in-scam.html">reported</a>: <blockquote>A Los Angeles physician who assumed the role as co-owner of a Sacramento medical clinic has been sentenced to federal prison for his participation in a Medicare fraud scam. Alexander Popov, 47, was sentenced today by U.S. District Judge Morrison C.England Jr. to eight years and one month in prison for committing health care fraud and conspiring to commit health care fraud, according to a federal Department of Justice news release. He was found guilty by a jury in July. In sentencing, Judge England found that Popov was responsible for more than a million dollars in fraudulent billings submitted to Medicare and more than $600,000 in payments made on false claims. Evidence at trial showed that Popov gave false testimony and manufactured evidence at trial, amounting to an obstruction of justice, officials said.</blockquote> Also, <blockquote>Vardges Egiazarian previously pleaded guilty in the case and is serving 78 months in prison. </blockquote> Applebaum On January 20, 2012, Medscape <a href="http://www.medscape.com/viewarticle/757251">reported</a>: <blockquote>A former Idaho psychiatrist was ordered to pay nearly $95,000 in a legal judgment this week, adding to a prison sentence of up to 5 years, which he received in November for obstruction and falsifying records relating to Medicaid fraud. The judgment, obtained by the US Attorney's Office against Michael Applebaum, MD, of Nampa, Idaho, involved a civil lawsuit in which he was accused of submitting false Medicare and Medicaid claims for undocumented and ineligible services from 2004 through 2009. Prosecutors claimed Dr. Applebaum failed to properly document services for approximately 502 claims, including falsifying service dates on 49 claims to make them appear eligible for reimbursement under Medicaid's rule of submitting claims within 12 months of the date of service.</blockquote> Summary As we noted above, if a large organization, such as a hospital system, pharmaceutical company, or health insurance company is accused of fraud against the government, the outcome is likely to be a large fine that is nonetheless small compared with the organization's revenue, no admission of guilt or responsibility, and no penalties for any individuals who authorized, directed or implemented the misbehavior. However, if an individual or small business is accused of such fraud, the results are likely to include fines sufficient to bankrupt either, admissions of guilt, and years of jail time. Yet such actions by large organizations are likely to be more harmful to individuals and society than those of individuals or small businesses. This seems like a glaring, stark example of unequal justice in health care. If an individual does something bad in a health care context, the punishment is likely to be severe and life altering. If an individual who is a leader of a large health care organization does something equally bad, he or she is likely to receive no punishment at all. This is an example that ought to unite the left and the right, liberals and libertarians in outrage. Liberals are supposed to believe in the rights of the individual and economic justice. Libertarians are supposed to believe in economic freedom and the economic rights of the individual. In this example, the government and large corporations seem to have gotten together to let corporate leaders play by different rules than individuals. Corporate leaders seem to be above the law, the same law that can ruin individuals who violate it. If we really want to reform health care, we need to make sure that its rules apply equally to all individuals, whether humble or rich, whether they are individual professionals of corporate CEOs. As long as the rich and powerful can play by different rules, we only fuel cynicism and anger. Down that road lies disaster.

Unequal Justice Under Law - Comparing Cases of Alleged Misbehavior by Large Health Care Organizations and Individuals

How the wealthy and powerful have become able to play by a different set of rules than those affecting ordinary people may be the defining i...

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The Center for Medicare and Medicaid Services' Quiet Coziness with Wall Street

An <a href="http://www.pogo.org/pogo-files/alerts/government-corruption/wall-street-in-washington-gc-ii-20111208.html">article</a> from the Project on Government Oversight (POGO) reveals a new aspect of the growing coziness between the US government and big corporations with obvious relevance to health care. CMS' Coziness with Leaders of the "Capital Markets" Here is the introduction and the example most relevant to health care: <blockquote>Nearly a dozen senior staff at the Centers for Medicare and Medicaid Services (CMS), the giant agency that administers hundreds of billions in federal health care dollars, had been called to a meeting. After a discussion with five Wall Street professionals that lasted nearly two hours, one senior CMS analyst filed an ethics complaint that later went to the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS). His beef: that a handful of deep-pocketed investors had won a private hearing to probe whether the agency would allow Medicare reimbursement for specific medical devices manufactured by companies in which they already held a stake or might put new money. The market for one device, already approved for Medicare, was rapidly heading toward $1 billion annually; the agency’s impending decision to reimburse competing devices could have major market impact, a shift potentially worth hundreds of millions of dollars. 'This meeting forced agency staff to redirect their attention toward a select group from Wall Street, when neither competing investors nor patient-oriented stakeholders were present,' the whistleblower told the Project On Government Oversight (POGO). 'They got to probe us for hours in private about what we planned to do and how we approached procedures for reimbursing medical devices, the mechanics and psychology of CMS decision-making, in general and with respect to these specific devices.' The meeting was set up by a former CMS employee working for the Marwood Group, an asset manager that counsels big health-care industry investors, the whistleblower says. The firm’s president is Edward 'Ted' Kennedy Jr., son of the late Massachusetts senator and a major supporter of President Obama’s health care reforms, and includes Kennedy cousins Robert F. Kennedy, Jr. and Stephen E. Smith, Jr., as senior advisors. The firm’s website highlights its staff recruitment among Congressional aides, the Executive Office of the President and CMS. One CMS veteran who joined Marwood after the 2009 meeting with Wall Streeters is Barry Straub, the agency's former Chief Medical Officer, who is also an expert on Medicare reimbursement, the website says. A company spokesman had no comment. A supervisor at CMS’s Coverage Advisory Group, which decides which services the agency will pay for, also helped organize the session with investors. The whistleblower says he was told by a supervisor that such get-togethers are 'a routine practice at CMS.' At the time, in 2009, CMS’s top administrator had an aide with the title, 'capital markets advisor,' tasked with tracking investment community activity in Washington and elsewhere. At the investor meeting, Wall Streeters asked a range of questions 'about confidential CMS information.' The whistle blower says he does not believe they received illegal disclosures, though they peppered CMS analysts with queries about the agency’s decision-making process and other sensitive matters which, if answered, could have violated the law or related regulations that bar the sharing of internal deliberations and decisions. The whistleblower first filed his complaint in April 2009. He was terminated in 2011 for being disloyal to the agency mission after he made a series of internal protests, including the objection to what he calls a pattern and practice of unfettered access to CMS staff by Wall Street investors. He says he is currently fighting his dismissal through all available legal and administrative channels. </blockquote>Implications and Summary As the POGO article put it, <blockquote>CMS does have a set of 'Open Door' policies and affords a variety of avenues for public access. The disclosure of payments to physicians and teaching hospitals by pharmaceutical companies and other interests are required under President Obama’s health reform. In practice, however, the public, not to mention competing investors and stakeholders, rarely get the kind of information and insight available in meetings like the whistleblower described.</blockquote> In general, <blockquote>A balance is necessary between the danger of too much insider access, and imposing excessive limitations. Indeed, the biggest problem with special access for Wall Street insiders is not just that they seem to get meetings and acquire information that may be privileged and non-public, but that others, including other investors, do not get a crack at the same material.</blockquote>The activities above have all the usual elements of excess corporate - government coziness.  These include enhanced access for corporate leaders beyond what any ordinary members of the public might achieve; the <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a> between government service and corporate leadership; the participation of well-connected inside the beltway types, etc, etc.  It also includes the apparent formalization of representation of corporate interests, e.g., the "Capital Markets Advisor," with no parallel formalization of the public's or patients' interests.  Even more worrisome is that an effort to make this all less <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a> resulted in alleged intimidation of a <a href="http://hcrenewal.blogspot.com/search/label/whistle-blowers">whistle-blower</a>. So, let's see, CMS, the Center for Medicare and Medicaid Services, the US Department of Health and Human Services (DHHS) branch which controls the Medicare and Medicaid programs, the government run single-payer programs for the elderly, the disabled, and the poor, does not seem to be able to afford to figure out in-house how to pay physicians for specific services.  Instead, it has effectively farmed out this task to a private committee, the American Medical Association's <a href="http://hcrenewal.blogspot.com/search/label/RUC">RBRVS Update Committee (RUC</a>).  As we have <a href="http://hcrenewal.blogspot.com/search/label/RUC">discussed many times</a>, this obscure and secretive committee likely had a major role in structuring the financial incentives that favor procedures and disfavor primary care. leading to excess costs, declining access, and degrading quality.  However, CMS can afford to have a "Capital Markets Adviser" and to use up staff time briefing wealthy investors and hedge fund types.  What is wrong with this picture? In my humble opinion, government health care agencies ought to put the public's and patient's health first. They should not give special consideration to the rich, the powerful, the well-connected, whom some now call the one percent. Yet in the US we seem to have an increasingly <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatist</a> state in which government and the plutocrats work together for their mutual interests, regulatory capture writ large. We need to restore government, and our health care agencies to being of the people, by the people, and for the people.  Obviously, true health care reform would start with the government and its officials putting patients' and the public's health first, way ahead of the financial comfort of corporate leaders.

The Center for Medicare and Medicaid Services' Quiet Coziness with Wall Street

An article from the Project on Government Oversight (POGO) reveals a new aspect of the growing coziness between the US government and big c...

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Health Care Also Needs to Challenge "Crony Capitalism," the "New Gilded Age, and "the Idolatry of the Market"

The increasing size and scope of the "Occupy Wall Street" movement, and continuing instability in the finance system, most recently due to the threatened default of Greece, and resulting problems with the Euro, and now the bankruptcy of yet another prominent financial firm, MF Global, has lead to renewed discussion of what has gone wrong with the greater political economy. As I have perused some of it, I noted distinct parallels with the some of the discussion we have had about what has gone wrong with health care.  In fact, at the root of health care dysfunction appear to be the dysfunction of the greater political economy. Few in the One Percent Deserved the Money A dominant slogan of the "Occupy" movement is "we are the 99 percent," that is <blockquote>'We are the 99 percent,' is the continuing chant of the protesters, who are now in their seventh week of marching through the streets of Manhattan. And, surprisingly, they have hit upon the crux of America's problems with precisely this sentence. Indeed, they have given shape to a development in the country that has been growing more acute for decades, one that numerous academics and experts have tried to analyze elsewhere in lengthy books and essays. It's a development so profound and revolutionary that it has shaken the world's most powerful nation to its core. Inequality in America is greater than it has been in almost a century. Those fortunate enough to belong to the 1 percent, made up of the super-rich, stand on one side of the divide; the remaining 99 percent on the other. Even for a country that has always accepted opposite extremes as part of its identity, the chasm has simply grown too vast.</blockquote>[Schulz T] The One Percent are Mostly Salaried Corporate Executives Contrary to some propaganda, many in the one percent are not entrepreneurs, but corporate employees, albeit special ones. <blockquote>Also cited as factors contributing to the rapid growth of income at the top were the structure of executive compensation....</blockquote>[Pear R] In Health Care - We have frequently discussed the outsized compensation given to a few top executives. CEOs of for-profit health care corporations may make tens of millions of dollars a year (<a href="http://hcrenewal.blogspot.com/2011/10/peer-benchmarking-lake-wobegone-effect.html">here</a> is a recent example, and many similar stories can be found <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">here</a>.) Even CEOs of non-profit hospital systems can make millions of dollars a year. (See <a href="http://hcrenewal.blogspot.com/2011/09/highly-paid-skilled-executives-and.html">this recent example</a>, then go <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">here</a> for more.) Thus, a fair number of the one percent are likely to be from health care, and most of those at the top are likely to be current or former top hired executives. The One Percent's Wealth May be More Due to Luck than Skill, Intelligence, or Creativity According to a recent simulation study, <blockquote>by the 'inexorable effect of chance,' and chance alone, 'a small proportion of entrepreneurs come to possess essentially all of the wealth. ... The concentration of wealth occurs merely because some individuals are lucky by randomly receiving a series of high growth rates, and once they are ahead with exponentially growing capital, they tend to stay ahead.' According to Fargione, greater variation in rates of return hastened the concentration of wealth. Inequality grows with time. Wealth concentration continues despite periods of recession and depression.</blockquote>[Breining G] In Health Care-No similar study has been done in health care. However, we have documented many cases in which top health care executives' compensation seemed to have nothing to do with their skill, originality, or ability to uphold the health care mission. How "peer benchmarking," and the "Lake Woebegone Effect" account for immense compensation despite bad results was discussed <a href="http://hcrenewal.blogspot.com/2011/10/peer-benchmarking-lake-wobegone-effect.html">here</a>. A recent series of cases (with links to others) of hospital CEOs who prospered while their institutions' finances decayed was <a href="http://hcrenewal.blogspot.com/2011/08/more-executives-prospering-despite.html">here</a>. The One Percent Gamed the System, and Personally Profited from Perverse Incentives <blockquote>Most fundamentally, what protest groups on the left and the right share with less activist middle-class Americans -- the apolitical voters who often decide elections -- is an abiding sense that the bond between work and reward has been broken. Huge financial rewards are given to executives who fail miserably and get fired. Debt relief programs help not only those who have fallen behind through no fault of their own, but also the profligate who lived beyond their means. The list goes on: What’s inflaming voters isn’t so much inequality per se, though that’s certainly a symptom of the problem. It’s the fact that the rewards in our economic system seem increasingly divorced from American values of hard work, risk taking and innovation. Instead, these benefits are more and more likely to be awarded on the basis of connections and political power. </blockquote>[Klain R] In Health Care-We have seen not merely cases of top health care leaders paid a lot of money for mediocre financial results. We have seen cases in which leaders got outsize pay despite evidence of organizational misconduct, or even crime. For example, see posts <a href="http://hcrenewal.blogspot.com/2011/09/johnson-and-johnson-pleads-guilty.html">here</a>, <a href="http://hcrenewal.blogspot.com/2011/08/why-cultivate-weldons-confidence-ceo.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/03/despite-recalls-legal-settlements.html">here</a> that contrast one company's multiple legal settlements and guilty pleas and its CEO's eight-figure compensation. The One Percent Deny Accountablity While Blaming Others for the Problems They Produce Based on a as yet unpublished survey of top finance leaders in London, its leader, Rev Andrew Studdert-Kennedy, <blockquote>said he had been 'astonished' by the attitudes of some City workers displayed towards the financial crisis. He said, 'I did speak to many people about morality. I was amazed by how many banking crises there had been and how sanguine people were about them. A number of people said 'this is just what happens - it's the nature of banking, it's the nature of capitalism.' 'It's one thing having historical perspective, but I was astonished that people didn't try to learn a bit more. There is a recognition that there is something wrong, but a reluctance to admit they are part of the problem.'</blockquote>[Brady et al] In addition, <blockquote>Talk to most bank executives and they’ll still place the blame for the 2008 financial crisis on 'irresponsible consumers' who took out mortgages they couldn’t afford; dishonest mortgage brokers; and—at the top of the list—the government, which used Fannie Mae and Freddie Mac to finance mortgage lending to 'people who shouldn’t own homes,' as one senior New York bank executive put it to me recently. All of which is partly true but omits the enthusiasm with which Wall Street feasted on that market, and the fact, as Warren puts it, 'that Wall Street made tens of billions of dollars' from it. In short, there is no remorse, let alone a sense of obligation, because bank executives generally do not believe they were the cause of the financial collapse. As Neil Barofsky, Treasury’s former inspector general charged with oversight of TARP, the $700 billion government bailout of the banks, recalls from his interviews with bankers, the attitude instead was that 'shit happens.' The state of denial has been massive. On Wall Street today, says the vice-chairman of a private-equity firm, 'there is this enormous persecution complex in the banking industry about Dodd-Frank, that everyone is going after the banks.'</blockquote>[Andrews S] In Health Care-Health care leaders and their apologists sometimes cite their awesome responsibility as a rationale for their outrageous compensation. Yet while health care leaders often decry the state of the health care system, I have yet to hear one take any responsibility for what has gone wrong. Meanwhile, Wendell Potter has described how the leaders of one part of health care, health insurance and managed care, set up elaborate but stealthy public relations campaigns to blame the problems of health care mainly on patients and doctors, but certainly not the health insurance or managed care (see post <a href="http://hcrenewal.blogspot.com/2011/03/millions-to-health-insurance-ceos-but.html">here</a>). This echoes how top finance leaders blame their industry's problems on feckless consumers. The One Percent are Not Held Accountable, and Have De Facto Impunity <blockquote>So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives. </blockquote>[Kristof ND] <blockquote>In our article in the last issue,1 we showed that, contrary to the claims of some analysts, the federally regulated mortgage agencies, Fannie Mae and Freddie Mac, were not central causes of the crisis. Rather, private financial firms on Wall Street and around the country unambiguously and overwhelmingly created the conditions that led to catastrophe. The risk of losses from the loans and mortgages these firms routinely bought and sold, particularly the subprime mortgages sold to low-income borrowers with poor credit, was significantly greater than regulators realized and was often hidden from investors. Wall Street bankers made personal fortunes all the while, in substantial part based on profits from selling the same subprime mortgages in repackaged securities to investors throughout the world. Yet thus far, federal agencies have launched few serious lawsuits against the major financial firms that participated in the collapse, and not a single criminal charge has been filed against anyone at a major bank. The federal government has been far more active in rescuing bankers than prosecuting them.</blockquote>[Madrick J et al] In Health Care-We have gone on endlessly how despite numerous examples of unethical or even criminal behavior by health care organizations, almost never has any individual who authorized, directed or implemented the bad behavior suffered any negative consequences. (Look <a href="http://hcrenewal.blogspot.com/search/label/crime">here</a> and <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">here</a>.) The One Percent Have Captured Government The most important reason for the unaccountability of the one percent is regulatory capture, leading to corporatism: <blockquote>much as the economic giants of the Gilded Age developed such enormous influence that they could dictate basic political conditions, today's Wall Street bosses and CEOs have successfully arranged extensive deregulation for their industries. Indeed, he argues that this is the only thing that can explain how hedge fund managers suddenly started making billions of dollars a year. Former Citigroup CEO Sanford Weill, for example, kept a framed pen in his office as a symbol of his influence. It was the pen President Bill Clinton -- at Weill's instigation -- used in 1999 to sign into law legislation repealing the provisions in the Glass-Steagall Act of 1933 that separated the transactions of investment and commercial banks. At the same time, Bartels writes, the wealthy receive enormous tax breaks worth hundreds of billions of dollars. </blockquote>[Schulz T] In Health Care- We have discussed <a href="http://hcrenewal.blogspot.com/search/label/regulatory%20capture">regulatory capture</a>, <a href="http://hcrenewal.blogspot.com/search/label/embedded%20networks%20of%20influence">embedded networks of influence</a>, and <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatism</a> in health care. Summary The articles I summarized above called for the need to "save capitalism from crony capitalists," [Kristof ND], and to seize "the high political ground" by "reform that lessens the influence of money in politics and government," and to strengthen "the bonds between work and reward," [Klain], and to end the impunity of the wealthy [Madrick et al]. A Vatican Council has <a href="http://www.zenit.org/article-33718?l=english">called</a> for the end of the "idolatry of the market," the "ethic of solidarity," and the "primacy of the spiritual and the ethical," and of "politics - which is responsible for the common good - over the economy and finance." This has also been supported by the Archbishop Of Canterbury. In parallel, as we have said again and again, true health care reform requires competent, ethical leadership that upholds health care's core values within a governance structure of accountability, integrity, transparency, and honesty. Tackling the deep problems in health care will require tackling the deeper problems in the global political economy which helped to generate them. References Andrews S. The woman who knew too much. Vanity Fair, November, 2011. Link <a href="http://www.vanityfair.com/politics/features/2011/11/elizabeth-warren-201111">here</a>. Brady B, Merrick J. Exclusive: cover-up at St Paul's. The Independent, Oct 30, 2011. Link <a href="http://www.independent.co.uk/news/uk/home-news/exclusive-coverup-at-st-pauls-2377923.html">here</a>. Breining G. The 1 percent: how lucy they are. Minneapolis Star-Tribune, Oct 29, 2011. Link <a href="http://www.startribune.com/opinion/132819963.html">here</a>. Klain R. Americans want a government that ties rewards to work. Bloomberg, Oct 31, 2011. Link <a href="http://www.bloomberg.com/news/2011-10-31/americans-want-a-government-that-ties-rewards-to-work-ron-klain.html">here</a>. Kristof ND. Crony capitalism comes home. NY Times, Oct 28, 2011. Link <a href="http://www.nytimes.com/2011/10/27/opinion/kristof-crony-capitalism-comes-homes.html">here</a>. Madrick J, Portnoy F. Should some bankers be prosecuted? NY Review of Books, November 10, 2011. Link <a href="http://www.nybooks.com/articles/archives/2011/nov/10/should-some-bankers-be-prosecuted/">here</a>. Pear R. Top earners doubled share of nation's income, study finds. NY Times, Oct 25, 2011. Link <a href="http://www.nytimes.com/2011/10/26/us/politics/top-earners-doubled-share-of-nations-income-cbo-says.html">here</a>. Schulz T. The second gilded age: has America become an oligarchy? Spiegel Online, Oct 28, 2011. Link <a href="http://www.spiegel.de/international/spiegel/0,1518,793896,00.html">here</a>.

Health Care Also Needs to Challenge "Crony Capitalism," the "New Gilded Age, and "the Idolatry of the Market"

The increasing size and scope of the "Occupy Wall Street" movement, and continuing instability in the finance system, most recentl...

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Former US Secretary of Health and Human Services Saunters Through Revolving Door, Ends Up as Director of Medtronic

There they go again.  Another US government health care leader, this time the top health care leader at the end of the previous George W Bush administration, has wound up in a leadership position in a big, for-profit health care corporation.  As per the press release <a href="http://www.bizjournals.com/twincities/news/2011/10/17/medtronic-board-leavitt-fda.html">published</a> in the Minneapolis-St Paul Business journal, <blockquote>Mike Leavitt, the former Governor of Utah who also oversaw the Food and Drug Administration for four years, has been elected to the board of Medtronic Inc. Leavitt is the founder and chairman of Leavitt Partners, which advices clients in the healthcare and food safety sectors, according to a news release from Fridley-based Medtronic (NYSE: MDT). He served as governor of Utah from 1993 through 2003. Former President George W. Bush appointed Leavitt administrator of the Environmental Protection Agency in late 2003 and secretary of Health and Human Services in January 2005. Leavitt served in that position into January 2009. At Health and Human Services, he oversaw the FDA and the Center for Medicare and Medicaid Services — two agencies that are important to Medtronic, which makes medical devices.</blockquote> Mr Leavitt's full-time job is to chair <a href="http://leavittpartners.com/">Leavitt Partners</a>, which advertises that it "advises clients that invest in health care and food safety." It does not publicize its client list, but that list apparently includes Alliance Health Networks, whose press release noted that Leavitt Partners "will help it expand its presence in the US health industry and beyond "(look <a href="http://www.healthcareitnews.com/news/alliance-health-networks-gets-boost-leavitt-partners">here</a>); and Connextions, Inc, whose press release noted that it would work with Leavitt Partners to " refine existing health insurance exchange models for federal and state governments, as well as private sector organizations that are navigating health care reform law," (look <a href="http://www.businesswire.com/news/home/20110614005331/en/Connextions-Leavitt-Partners-Enter-Agreement-Bring-Health">here.</a>) Note that Mr Leavitt's official Department of Health and Human Services <a href="http://www.hhs.gov/secretary/dhhssec.html">biography</a> listed no training or experience in direct health care (or in biomedical sciences or the engineering of health care devices, for that matter.) Before he was Secretary of HHS, he was Governor of Utah, and before then, he was the CEO of an insurance company.  Since I very much doubt Mr Leavitt is a large Medtronic shareholder, it would appear that the rationale for his position on its board is his conectedness with other powerful health care insiders. Summary: the Revolving Door Mr Leavitt did not transit the revolving door as quickly as did other health care leaders from that administration.  We <a href="http://hcrenewal.blogspot.com/2010/12/former-nih-director-spins-trhough.html">noted</a> in 2010 that the leaders of the US Food and Drug Administration (FDA), US National Institute of Health (NIH), and US Centers for Disease Control (CDC) at the end of the Bush administration had already gotten powerful positions in the health care corporate world.  Mr Leavitt is not the first recent former Secretary of HHS to become the director of a big health care corporation whose fortunes may be affected by what HHS does.  We <a href="http://hcrenewal.blogspot.com/2011/06/embedded-networks-of-influence-in.html">noted</a> in 2011 how rapidly the Secretary of HHS at the end of the William Clinton administration, Donna Shalala, signed up as a director for UnitedHealth.  We have also noted a variety of <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">other examples</a> of the revolving door phenomenon. These examples suggest how the leaders of government health care agencies and health care corporations are becoming interchangeable, forming a giant embedded network of influence.  Furthermore, they suggest how top government health care leaders can now expect a cushy corporate position to open up as soon as they can legally accept it.  Whether government leaders who expect such future job opportunities will avoid offending possible corporate employers while in office, even if giving such offense would be good for patients' or the public's health, is an open question.  The answer, I fear, may be obvious.    These examples suggest that the US is becoming increasingly corporatist, a country dominated by an unholy alliance between top leaders of government and of large corporations, who are becoming increasingly interchangeable.  Another way of putting it is the country is increasingly dominated by an insider elite that manipulates the system for its own benefit.  A recent <a href="http://www.theatlantic.com/politics/archive/2011/10/can-an-overpaid-ceo-and-2-sleazy-union-lobbyists-unite-us/247302/">article</a> in the Atlantic juxtaposed two cases, one that of a CEO given a golden retirement package after presiding over the decline of his media company, and two union lobbyists who gamed the system to get outsized pensions.  While the first example would commonly draw condemnation from the left wing, and the second from the right, they are similar, and similar to those of  revolving doors we have discussed.   Author Conor Friedersdorf summarized the cases thus <blockquote>neither the CEO nor the lobbyists were paid what they earned, nor were they compensated in a way that made the relevant stakeholders better off. Instead they were taken care of in a way that reflected their elite insider status and their ability to take advantage of wrinkles in the system while breaking no laws. In both cases, less politically connected people -- other Gannett employees, Gannett shareholders, readers of Gannett newspapers, Illinois school teachers, and Illinois taxpayers -- were unjustly made worse off by what transpired. And isn't the overlapping ethic that guided the behavior of these people a big part of what's wrong with America? Behavior like theirs is one reason Americans on the right and left have recently taken to the streets. Ours is a society that has always tolerated inequality of wealth; and so long as some imperfect degree of fairness is maintained in the getting of material goods, the system functions smoothly. But if people feel that wealth they struggled to earn is being taken from them to pad the nest eggs of dishonorable union lobbyists; or that they're at risk of being fired from their $14 an hour job if they're ten minutes late, whereas their ultimate boss retires with an eight-figure package after presiding over plummeting stock prices and massive layoffs; people put in situations like that eventually revolt, if they've concluded that injustice is the norm rather than an aberration. </blockquote> I would propose that the fundamental injustice of having an insider elite run health care so as to put their self-interest first is the basis of what has gone wrong with health care (and the rest of the country, and maybe the world.) If we do not have the courage to first say this out loud, and then restore some rationality and justice to the structure and leadership of health care, the spiral will continue downward. Additional Thought I expect if any of the insider elite's defenders bother to read this, one argument they might propose is it was always thus.  How can one expect people who work as government leaders for a short time not to take advantage of the best possible job offers when they leave?  My answer is that an admittedly cursory look at history suggests it has not always been thus.  Using Wikipedia as an imperfect but quick source, I found that <a href="http://en.wikipedia.org/wiki/Joseph_A._Califano,_Jr.">Joseph A Califano Jr</a>, the last Secretary of Health, Education and Welfare under President Carter worked at a law firm, founded the National Center for Addiction and Substance Abuse, and wrote books after he left office.  He did serve on a corporate board (CBS), but not for a health care corporation.  <a href="http://en.wikipedia.org/wiki/Patricia_Roberts_Harris">Patricia Roberts Harris</a>, the first Secretary of HHS under President Carter, became a law professor.  <a href="http://en.wikipedia.org/wiki/Otis_R._Bowen">Dr Otis R Bowen</a>, the last Secretary of HHS under President Reagan, retired after that, but served on some non-profit boards and government committees.

Former US Secretary of Health and Human Services Saunters Through Revolving Door, Ends Up as Director of Medtronic

There they go again. Another US government health care leader, this time the top health care leader at the end of the previous George W Bus...

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Enabled by the Revolving Door, Corporatistic US Trade Policy Seems to Put US Drug Companies Ahead of Global Public Health

We just <a href="http://hcrenewal.blogspot.com/2011/10/exporting-us-health-ecosystem-and-its.html">discussed</a> how leaders of big health care corporations with histories of ethical and legal missteps want to export our supposedly "wonderful technology, wonderful approaches" to the rest of the world.  A <a href="http://www.huffingtonpost.com/2011/09/28/bill-daley-big-pharma-trans-pacific-partnership_n_981973.html">story</a> on the Huffington Post showed how big health care corporations, partnering with the US government, have already been doing that with not very pretty results.  The article discussed two cases, connected by a single person who transited the revolving door from government to the pharmaceutical industry and then back to government. The US Dispute with Brazil, on Behalf of Merck and Pfizer, About HIV Drugs <blockquote>When [William] Daley was commerce secretary in the later years of the Clinton administration, Brazil rankled U.S. drug companies by opting to provide its citizens with a generic version of another HIV drug. Like Thailand, Brazil declared a public health emergency in an effort to lower the cost of treating roughly a half-million HIV infections. The U.S. government responded by sending Daley to Brazil with executives from U.S. pharmaceutical giants Merck & Co. and Pfizer to try to pressure the Brazilian government into reversing its decision.</blockquote>Thus the US government appeared to be putting the revenues of US corporations ahead of the public health, at least in Brazil. Daley soon made the transition to the private sector: <blockquote>In a speech at Johns Hopkins University before leaving for Brazil, Daley encouraged students to enter the revolving door between big business and public policy-making. 'Let me say this: As one of the only members of the president's Cabinet to come from business, it's good when you mix both government and business in your careers,' he said. 'It makes better public servants, and it makes better businesspeople.' It has certainly been good for Daley's career. His effort to twist arms in Brazil failed, but drug companies apparently took note. It was after leaving the Clinton administration that Daley was hired by Abbott, where he raked in more than $1.3 million as a board member from 2004 to 2010, according to Securities and Exchange Commission filings. Over the same period, he served on Boeing's board and was a top lobbyist for JPMorgan Chase.</blockquote>Abbot's Dispute, Supported by the US Government, with Thailand About Kaletra Soon Abbot was involved in a similar dispute. The background is: <blockquote>[HIV drug] Kaletra costs more than $10,000 a year for a patient living in the United States, a price that is reflective of the highly protective American patent system. The U.S. is the only country that grants long-term monopolies on life-saving medicine without regulating the price of monopolized drugs. </blockquote> In addition <blockquote>In countries that negotiate with companies on drug prices, the cost of medicine is often far lower. But though American pharmaceutical companies do supply drugs to developing nations at rates below those charged in the U.S., those discounted prices are still too high for many poor or hard-hit nations to afford. 'In many developing countries, it's a death sentence,'said Nobel Prize-winning economist Joseph Stiglitz, referring to high drug prices.</blockquote> The core of the dispute: <blockquote>In 2007 negotiations with the Thai government, Abbott Labs wouldn't budge below a price of $2,200 per person, per year for Kaletra. At the time, Thailand was classified as a 'lower-middle income' country by the World Bank -- the second lowest of four categories. With more than a half-million citizens living with HIV, Thailand considered that price beyond its budgetary capacity. So it declared a public health emergency and began importing a vastly cheaper generic version of Kaletra from India. And then, by international trade standards, all hell broke loose. 'When countries declare the health emergency, they face a huge backlash, particularly from the USTR [US Trade Representative] and the drug companies,'said Tim Boyd, policy research coordinator with the AIDS Healthcare Foundation, a U.S. nonprofit dedicated to eradicating HIV. Abbott responded by withdrawing pending applications to register drugs in Thailand, cutting its citizens off from other medications. The move was unprecedented: Never before had an American drug company attempted to punish a country during drug price negotiations by cutting off the supply of other medicines. At the time, Brook Baker, a law professor at Northeastern University and a member of the board at the Health Global Access Project, called the move a 'ruly appalling example of corporate hubris'that 'irectly violates any conceivable norm of corporate responsibility.'</blockquote> At that time, the US government went along with Abbott: <blockquote>As for the USTR, it seemed to support the company, placing Thailand on its 'Priority Watch List 'of nations that do not respect U.S. intellectual property rights. 'In late 2006 and early 2007, there were further indications of a weakening of respect for patents, as the Thai Government announced decisions to issue compulsory licenses for several patented pharmaceutical products,' wrote the agency in its report announcing that Thailand had been added to the priority list. Although the USTR blacklist is little known domestically, it is a major economic indicator abroad and can affect a country's ability to import everything from software to DVDs to automobiles. Thailand's new status as an international rogue sparked concern among the country's economic policy officials and corporate leaders. And 35 members of Congress wrote to the USTR to protest Thailand's blacklisting, noting, 'The move is being interpreted in the public health community as a warning and a threat to other countries.'</blockquote> Note that: <blockquote>Abbott Labs declined to detail Daley's involvement in the Thailand episode, but as a member of the board, he should have been well informed about the strategy.</blockquote> US Government Pressure to Protect Drug Companies' Patents William Daley has transitioned the revolving door again in the other direction: <blockquote>As commerce secretary under Bill Clinton, William Daley worked with U.S. pharmaceutical giants to curb the use of cheaper generic drugs abroad. As a board member for Abbott Laboratories, he had a front-row seat on a brutal clash between a major drug company and a developing nation over access to life-saving medication. And as White House chief of staff today, Daley has President Barack Obama’s ear.</blockquote> In his new government job, <blockquote>Add up Daley’s power and experience, and experts who follow public health policy suspect his influence in the U.S. stance in negotiations over a major international trade deal -- a stance with hugely profitable implications for giant American drugmakers. The United States is in talks with eight other Pacific nations to establish the Trans-Pacific Partnership, which the administration hopes will serve as a template for other trade pacts. According to leaked documents from the negotiations, the Obama administration is using the deal to push hard-line intellectual property standards that could drive up medicine prices overseas, boosting the bottom line for U.S. drugmakers like Abbott Labs at the expense of public health. Public health advocates are worried. 'If the point of the trade policy is not just to protect the interests of our companies, but the public health benefit and burden of research, then [the United States] is doing this all wrong,' said James Love, director of Knowledge Ecology International, a nonprofit that focuses on how patent laws affect the poor. A White House spokesman said only that the negotiations -- which are being conducted behind closed doors with input from corporate lobbyists -- are being 'ably led' by the United States Trade Representative (USTR) and that Daley is 'not directing or participating in those negotiations.'</blockquote> Note that the USTR leadership includes other travelers through the revolving door: <blockquote>Daley's personal history with drug access is not unique among top-tier government officials with trade responsibilities. McCoy lobbied on intellectual property issues at the influential D.C. law firm Covington & Burling before moving to the USTR in 2006. His top deputy, Kira Alvarez, was a lobbyist for drugmaker Eli Lilly before joining the agency.</blockquote> Summary Per Zach Carter, the author of the Huffington Post article: <blockquote>Daley, who previously lobbied for JPMorgan Chase, is a prominent examplar of a bipartisan phenomenon in American government in which corporate insiders, and the profit-driven perspective of the boardroom, have come to dominate formal and informal debate over public policy.</blockquote> Another way to describe this is corporatism. The corporatism in this case is partly enabled by the continuation of the revolving door, the free transit of individuals from leadership positions in top corporations and in government. The government and big corporations have teamed up to produce solutions that may seem beneficial to the people making the decisions, and may benefit their long term career strategies, but may not be good for the US public, for patients' and the public's health in this case, and for the ability of the country to conduct foreign policy based on some ethical and moral principles. By the way, note that combined with other cases we have discussed, this shows that the revolving door pheonomenon, and other aspects corporatism affecting health care are not linked with any one political party. So, <blockquote>There is no evidence that any of these players, including Daley, have done anything illegal or explicitly corrupt during the Trans-Pacific trade negotiations. But public health doesn’t seem to be their first priority. 'The real concern is that the U.S. is using its international power and prestige to force poor countries to enforce our intellectual property standards, and the result of that is that access to medicine is denied and people are dying,' said Joseph Stiglitz.</blockquote>Until we dispel the fog of corporatism that has spread over the government that was once supposed to be of the people, by the people, and for the people, expect no real health care reform, and expect continuing rising costs, declining access, and worsening patient care. Obviously, true health care reform would start with the government and its officials putting patients' and the public's health first, way ahead of the financial comfort of corporate leaders. xx

Enabled by the Revolving Door, Corporatistic US Trade Policy Seems to Put US Drug Companies Ahead of Global Public Health

We just discussed how leaders of big health care corporations with histories of ethical and legal missteps want to export our supposedly &q...

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