The Continuing Mystery of the Fugitive Founder and Missing Money - What it Says About the Opacity of Offshore Medical Schools

The next chapter in the bizarre tale of the fugitive founder of an off-shore (from the US and Canada) Caribbean medical school, and his now convicted spouse, do not solve any mysteries, but raise larger concerns about the accountability, or lack thereof, of leaders of important health care organizations.<br /><br /><b>Introduction: the Fugitive Founder and Convicted Spouse</b><br /><br />As we <a href="http://hcrenewal.blogspot.com/2013/10/the-mystery-of-fugitive-founder-and.html">posted</a> in October, 2013, drawing an amazing for us number of comments, the couple who founded two Caribbean medical schools which catered almost entirely to US and Canadian students ran into significant legal trouble.  Founder David Leon Fredrick and his wife, Dr Patricia Lynn Hough were indicted for tax evasion for failing to report income from the two medical schools they allegedly owned, and later sold.<br /><br />The schools were Saba University School of Medicine, on Saba, and the Medical University of the Americas, on Nevis.  The initial legal proceedings revealed that while Saba University School of Medicine was apparently first set up by a non-profit foundation (or NGO) run by the couple, somehow it became for-profit owned by Mr Fredrick and Dr Hough, and Saba and the Medical University of the Americas were subsequently sold to a private equity group, Equinox Capital.<br /><br />Before jury selection started, Mr Fredrick disappeared.  Dr Hough was eventually convicted of defrauding the US Internal Revenue Service, and income tax evasion, after trial testimony to the effect that the couple concealed money in a Swiss bank, got $36 million from the sale of the schools, and bought an airplane, two houses, and a condominium.<br /><br />Left mysterious at that time were Mr Fredrick's whereabouts, where the money that the couple derived from the sale of the medical schools went, and how a school that began as a non-profit organization became a for-profit corporation owned by the couple.  The case should have lead to some concerns about the leadership and governance of the off-shore medical schools that now train increasing numbers of would be US and Canadian physicians.<br /><br />However, after Dr Hough was convicted, there was little public discussion of these issues, at least until Dr Hough's recent sentencing.  (There were some interesting comments made on our blog post, many from anonymous erswhile defenders of Saba University and/or Mr Fredrick and Dr Hough.  While they expressed some interesting opinions, in my humble opinion they did not add any substantive facts to the discussion.)<br /><br /><b>Latest Developments in the Case </b><br /><br />In the past few weeks the case got a little more public notice in terms of reporting of the legal proceedings leading to the sentencing of Dr Hough   They brought to light some additional contentions by the prosecution, which deserve some attention because after all, they won their case. <br /><br /><u>The Amount of Money the Couple Made</u><br /><br /><br />As <a href="http://www.heraldtribune.com/article/20140509/ARTICLE/140509637">reported</a> by the Sarasota (FL) Herald-Tribune,  Dr Hough was sentenced to two years in federal prison, three years of supervised release, and to repay $15 million to the IRS.  In addition, <br /><br /><blockquote class="tr_bq"> Prosecutors say Hough and Fredrick sold the schools and associated real estate in April 2007 for <i>more than $35 million. </i>An IRS agent testified last Thursday that Hough also made <i>more than $12 million</i> in income from the two schools from 2003 until 2007.</blockquote><br />How much Mr Fredrick made was not discussed since it was not relevant to Dr Hough's sentencing.  <br /><br /><u>The Effort that Went into the Plot</u><br /><br />According to <a href="http://www.businessweek.com/news/2014-05-09/caribbean-medical-school-founder-hough-gets-2-years-in-tax-case">Bloomberg</a>,<br /><br /><blockquote class="tr_bq">'Hough’s crimes were neither impulsive nor isolated but required sophisticated transactions, coordination with foreign bankers, annual lies to the federal government, and by her own admissions, trips to Switzerland,' prosecutors wrote in a sentencing memo on April 14. '<i>Hough made calculated decisions to cheat, over and over again</i>.'</blockquote><br />Also,<br /><br /><blockquote class="tr_bq">Prosecutors accused the couple of crafting their scheme with UBS AG (UBSN) banker Dieter Luetolf and Swiss financial adviser Beda Singenberger, both unindicted co-conspirators.<br /><br />Singenberger, who was separately charged with helping 60 U.S. clients hide $184 million in offshore accounts, hasn’t responded in federal court in New York.</blockquote><br />In more detail,<br /><br /><blockquote class="tr_bq">Prosecutors said the couple used an array of accounts in the names of businesses to hide their money and employed 'e-mails, telephone calls and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS.' </blockquote><br /><b>The Mysteries Remain</b><br /><br /><br /><br /><u>Where Did the Money Go?</u><br /><br />As noted above, the sale of the two medical schools netted Mr Fredrick and Dr Hough about $35 million.  Where that went is still unclear.<br /><br /><u>How Did Mr Fredrick and Dr Hough Become Owners of a Previously Non-Profit Medical School?</u><br /><br />As noted above and in our previous post, Saba University School of Medicine began as a non-profit managed by Mr Fredrick and Dr Hough.  Somewhere along the way, the couple assumed ownership of the school.  There seems to be no record and no discussion of how this happened.  In the US, a conversion of a substantial non-profit, like a medical school, to a for-profit, ordinarily would require some regulatory approval and public discussion.  Furthermore, in most cases, non-profit conversions to for-profit would require some sort of protection of the assets of the former non-profit, often leading to a spin-off of a new non-profit foundation.   None of this apparently happened in this case (which admittedly did not occur in the US.)  How did Mr Fredrick and Dr Hough just take over a non-profit, sell it, and keep all the money involved?<br /><br /><u>Where is Mr Fredrick and Why did He Flee?</u> <br /><br />We need Sherlock Holmes for this. <br /><br /><br /><b>What Does This Case Say About the Leadership and Governance of Offshore Medical Schools? </b><br /><br />So the latest details revealed suggest a fairly intricate plot by the American couple who founded two Caribbean medical schools.  The plot allegedly netted them millions, and now resulted in one of the couple remaining a fugitive, and the other convicted of federal crimes.<br /><br />The biggest issue raised by this case, in my humble opinion, is not about financial crimes, tax-evasion, or the hiding of assets in Swiss banks.  It is about the leadership and governance of offshore Caribbean medical schools, and by extension, of academic medicine and health care.  In 2010, Eckhert documented that the number of offshore medical schools, "for-profit institutions whose purpose is to train U.S. and Canadian students who intend to return home to practice," but not to train physicians to practice in the countries in which these schools are located, was rapidly growing.(1)  By 2010, there were 33 such schools, 20 of which were new since 2000.<br /><br />These offshore medical schools are not accredited in the US or Canada, and such accreditation is currently not required for individual graduates of such schools to be admitted to US house-staff programs or for US licensure.  So perhaps it is not surprising that little is known about these schools.<br /><br />How they choose students, the qualifications, or even names of their faculty, their curriculum, how they supervise clinical training (which is mostly done by affiliated North American hospitals), and what happens to their graduates are boscure.  Eckhert attempted to describe what is known, but noted "variability exists in the availability of information on faculty; where data exists, it is noted that most of the permanent on-site basic science faculty are internationally trained, many have no documented medical education experience in the United States, and it is not uncommon for them to be OMS [offshore medical school] alumni."<br /><br />Even less is known about who leads these schools, who if anyone is responsible for their stewardship, and even who owns them.  The current case suggests that Saba University School of Medicine was run by couple who mysteriously assumed ownership of the school after leading it as a non-profit organization, then sold it to private equity for millions in a transaction that eventually left one a convicted criminal and the other a fugitive.  Yet none of this came to light until the federal government launched an investigation not of offshore medical schools, but of offshore money laundering and happened to catch the couple in the investigational web. No regulatory process, no watchdog organization in the US or Canada, or on Saba apparently found this out until it was revealed in an investigation by the US federal government that had nothing specifically to do with health care or offshore medical schools.  This suggests that offshore medical schools now can be lead and run by anyone, qualified or not, honest or criminal, without any oversight or accountability.   <br /><br />For example, even today little is known about the leadership of Saba University School of Medicine.  The school currently <a href="http://www.saba.edu/faculty/administration">provides</a> only minimal biographical information on its administration.  Its President is listed as Joseph Chu MD MPH, who appears to have the same educational credentials (MD from Georgetown, MPH from University as Washington) as one <a href="http://depts.washington.edu/epidem/fac/facBio.shtml?Chu_Joseph">Joseph Chu</a> who is apparently a Clinical Associate Professor of Epidemiology at the University of Washington.   Dr Chu's specialty and previous experience are not apparent.  Whether the Dr Chu at University of Washington is the same as the President of Saba is unclear.  If they are the same, how Dr Chu holds down these two jobs is not clear.<br /><br />For comparison, most US schools provide extensive information about their leadership.  Just as an example, see the <a href="http://www.uwmedicine.org/about/administration/paul-ramsey">introductory page</a> on the Dean of the University Washington medical school. <br /><br />Even less is known about the stewardship or governance of Saba University School of Medicine.  Many US medical schools have their own boards of trustees who are supposed to provide stewardship. For example, the UW board is <a href="http://www.uwmedicine.org/about/board">here</a>.  Their membership is generally known.  Furthermore, most US medical schools report to university leadership, again whose identity is known, and are subject to governance by a university board of trustees.  We have certainly criticized the leadership and governance of US academic medicine.  At least, however, it is possible to find out the names of the people responsible.  <br /><br />However, while Saba University School of Medicine is still apparently owned by Equinox Capital according to the latter's <a href="http://www.equinox-capital.com/index.php/select-transactions">website</a>, to whom Dr Chu reports at Equinox Capital is unclear.  Whether Saba has a board of trustees, or any such similar stewardship mechanism, is unclear.  So who is ultimately accountable for Saba is unclear.  Probably just as unclear is who leads, who stewards, and who is accountable for the leadership of most other offshore medical schools. <br /><br />While Eckhert wrote in 2010 that the increasing presence of offshore medical graduates in the US "obligates U.S. medicine to take a closer look at these educational programs," no such scrutiny has occurred since then.  While offshore medical schools account for the training of an increasing proportion of US (and presumably Canadian) physicians, we know next to nothing about their leadership and governance.  This seems to be just another part of the decreasing accountability of the leadership of US health care, and the increasing opacity of the governance and stewardship of US health care organizations.  True US health care reform would make leadership transparent and accountable.          <br /><br /><b>Reference</b><br /> 1.  Eckhert NL.  Private schools of the Caribbean: outsourcing medical education.  Acad Med 1010; 85: 622-630.  Link <a href="http://www.ncbi.nlm.nih.gov/pubmed/20354377">here</a>. 

The Continuing Mystery of the Fugitive Founder and Missing Money - What it Says About the Opacity of Offshore Medical Schools

The next chapter in the bizarre tale of the fugitive founder of an off-shore (from the US and Canada) Caribbean medical school, and his now convicted spouse, do not solve any mysteries, but raise larg…

Đọc thêm »

BLOGSCAN - US Supreme Court Turns Down Pfizer Appeal of RICO Conviction

<span style="color: #38761d;">Pfizer Inc, which boasts of being the world's largest research based pharmaceutical company, also seems to be one of the world's largest examples of health care corporations that have withstood an amazing number of settlements, fines, and at times convictions for misbehavior without major apologies, significant changes in leadership or corporate culture, or bankruptcy.  (Look <a href="http://hcrenewal.blogspot.com/2013/07/pfizers-umpteenth-settlement-for-491.html">here</a> for a list of the cases, and <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">here</a> for all we have written about Pfizer).  </span><br /><br /><span style="color: #38761d;">Pfizer, amazingly, has the malodorous distinction of having been convicted by a US jury as a RICO - a racketeering influenced corrupt organization in 2010 (look <a href="http://hcrenewal.blogspot.com/2010/03/settlement-and-conviction-round-up.html">here</a>).  Pfizer executives, of course, kept their office of counsel busy by appealing the conviction, all the way up to the US Supreme Court.</span><br /><br /><span style="color: #38761d;">As <a href="http://1boringoldman.com/index.php/2013/12/11/r-i-c-o/">discussed</a> on the 1BoringOldMan blog, the court has now turned down the appeal and let the conviction, which had been affirmed by lower federal court, stand.   So Pfizer is now officially a racketeering influenced corrupt organization.  </span><br /><br /><span style="color: #38761d;">Yet although the description of the RICO statute that 1BoringOldMan quoted notes the law can be used to go after the leaders of organized crime, no individual at Pfizer who authorized, directed, or implemented the relevant misbehavior, which was in this case the promotion of Neurontin for off-label uses, for which its benefits were at best unproven, at worse nonexistent, even if its harms are well-documented.  Thus even this RICO conviction has not affected the impunity of top health care corporate leaders. </span><br /><br /><span style="color: #38761d;">As we have said endlessly, true health care reform will not occur until the leaders of large health care organizations are made accountable for their actions, and are prevented from becoming amazingly rich while their organizations repeatedly commit unethical or illegal acts that harm patients' and the public's health.   </span><br /><br /><span style="color: #38761d;">ADDENDUM (14 December,2013) - The <a href="http://hcrenewal.blogspot.com/2013/12/blogscan-us-supreme-court-turns-down.html">followup post</a> at 1BoringOldMan on this topic includes some optimism that now that the validity of the RICO concept applied to a large health care corporation has been affirmed, more stringent law enforcement may follow.   </span><br /><span style="color: #38761d;"><br /></span><span style="color: #38761d;">Roy M. Poses MD for Health Care Renewal </span>

BLOGSCAN - US Supreme Court Turns Down Pfizer Appeal of RICO Conviction

Pfizer Inc, which boasts of being the world's largest research based pharmaceutical company, also seems to be one of the world's largest examples of health care corporations that have withstood an ama…

Đọc thêm »

A New, and Huge ($2.2 Billion) Settlement for Johnson and Johnson, but "No Individuals were Charged with Wrongdoing"

The march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements </a>made by big health care organizations has resumed with a bang.  As reported in most major media outlets, giant drug/ device/ biotechnology company Johnson and Johnson has made a big settlement with the US Department of Justice.<br /><br /><b>The Basics of the Settlement</b><br /><br />As <a href="http://www.businessweek.com/news/2013-11-04/j-and-j-settlement-over-risperdal-said-to-be-announced-later-today">reported</a> by Bloomberg / Businessweek, <br /><br /><blockquote class="tr_bq"><div class=""><i>Johnson & Johnson agreed to resolve criminal and civil probes into the marketing of Risperdal, an antipsychotic drug, and other medicines by paying more than <b>$2.2 billion</b></i>, one of the largest U.S. health-fraud penalties. </div><div class=""><br /></div><i>J&J’s Janssen unit will plead guilty to a misdemeanor criminal charge over misbranding Risperdal for uses not approved by the Food and Drug Administration, including treating elderly patients with dementia.</i> Under a plea agreement announced today, Janssen will pay a $334 million fine and forfeit $66 million.<br /><br />Janssen also settled civil claims that it marketed Risperdal without approval for the elderly, children and the mentally disabled, and that it paid kickbacks to physicians and to Omnicare Inc., the largest pharmacy for nursing homes. The civil accord covered off-label marketing of Risperdal; Invega, another antipsychotic; and Natrecor, a heart drug.</blockquote><br />This settlement covered conduct that health care professionals ought to find particularly disturbing, including marketing Risperdal for elderly people with dementia without an approved indication, despite evidence that it could be particularly harmful to those patients; marketing Risperdal to adolescent boys without an indication, again despite evidence that it could be particularly harmful to those patients; and using kickbacks to market Risperdal. <br /><br /><b>Promoting Risperdal for Dementia Despite Increased Risk of Death</b><br /><br />This issue was best <a href="http://online.wsj.com/news/articles/SB10001424052702303936904579177630737380104">summarized</a> by the Wall Street Journal,<br /><br /><br /><blockquote class="tr_bq">Prosecutors alleged that J&J's Janssen Pharmaceuticals unit <i>promoted Risperdal to elderly patients suffering from dementia, despite no approval for that use. </i>Prosecutors also alleged that J&J's 'ElderCare' sales force <i>pushed Risperdal for use in these elderly patients, and sales representatives' bonus awards failed to distinguish prescriptions for schizophrenia or the unapproved dementia use</i>. <br /><br />In 2005, the FDA required the label warn that elderly patients suffering from dementia-related psychosis were at <i>a higher risk of death.</i></blockquote><br />The New York Times <a href="http://www.nytimes.com/2013/11/05/business/johnson-johnson-to-settle-risperdal-improper-marketing-case.html">added</a>,<br /><br /><blockquote class="tr_bq"><div itemprop="articleBody"> Johnson & Johnson officials <i>tried to expand the market for Risperdal to older dementia patients</i> soon after the drug was approved in 1993 to treat symptoms of psychiatric disorders, <a href="http://www.justice.gov/opa/documents/jj/janssen-info.pdf" title="The Justice Department filing (PDF). ">according to federal court filings</a>. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">The drug, whose generic name is risperidone, was primarily tested in schizophrenia patients, and the <i>Federal Drug Administration repeatedly rejected efforts by the company to expand the drug’s use to older dementia patients, </i>according to the filings. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">But Johnson & Johnson, federal officials said, actively pursued the market for geriatric patients. <i>The company created a dedicated sales force, ElderCare, to promote the drug and others to doctors who primarily treated older patients. </i></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"><i>The drug, the company claimed, could address symptoms that made treating these patients a challenge, especially in a nursing home setting</i>, including agitation, confusion, hostility and impulsiveness. The company’s sales brochures highlighted these symptoms and <i>minimized the fact that the drug was approved to treat schizophrenia, </i>according to federal documents.</div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"> Federal officials said <i>the company knew that Risperdal posed serious health risks for older adults, like an increased risk of strokes, but it played them down.</i> The drug’s label was later updated to warn against the use of the drug in older patients with dementia.</div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody">So the allegations were that the company pursued an elaborate and deceptive strategy to promote the drug for elderly dementia patients despite knowledge that the drug was particularly risky for such patients. </div><br /><b>Promoting Risperdal for Adolescent Boys Despite Increased Risk of Gynecomastia</b><br /><br />Again, per the WSJ,<br /><br /><blockquote class="tr_bq">Prosecutors also alleged that J&J <i>promoted Risperdal for use by boys suffering from mental disabilities despite knowing that use could raise levels of a hormone stimulating breast development.</i></blockquote><br />The NYT added,<br /><br /><br /><blockquote class="tr_bq"><div itemprop="articleBody">Federal prosecutors also say, as part of the civil settlement, that <i>Johnson & Johnson promoted the use of Risperdal in people with mental disabilities and children, even though the company did not receive F.D.A. approval to market to children until 2006.</i> Janssen told its sales representatives to visit child psychologists and mental health facilities that mainly focused on children, promoting the drug as a safe treatment for disorders like attention deficit hyperactivity disorder and obsessive-compulsive disorder, the government said. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"><i>Johnson & Johnson knew that children were susceptible to certain health risks from taking Risperdal, including the possibility that boys could develop breasts</i> through elevated production of the hormone prolactin, federal officials said. </div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Again, the allegations were that the company pursued an elaborate deceptive strategy to market the drug for children despite knowledge that the drug was particularly risky for such patients.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"><b>No Executives were Discomfited by the Disposition of This Case</b></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">The company took pains to emphasize that the settlement only required a single guilty plea to a misdemeanor by a company subsidiary, and did not involve any other admissions of guilt, or any penalties to specific human beings.  For example, per Bloomberg/ Business Week,</div><div itemprop="articleBody"><br /></div><blockquote class="tr_bq">'Today we reached closure on complex legal matters spanning almost a decade,' Michael Ullmann, J&J’s general counsel, said in a statement. 'This resolution allows us to move forward and continue to focus on delivering innovative solutions that improve and enhance the health and well-being of patients around the world.'<br /><br />While Janssen 'accepts accountability' for the actions described in the misdemeanor plea, <i>the civil settlement 'is not an admission of any liability or wrongdoing, and the company expressly denies the government’s civil allegations,' J&J said.</i></blockquote><br />So why give up a perfectly good $2.2 billion (minus $400 million fine and forfeiture by the Janssen subsidiary for the single misdemeanor)?  Was "closure" all that valuable?<br /><br />In addition, in the NY Times we found ,<br /><br /><br /><blockquote class="tr_bq">Ernie Knewitz, a spokesman for Johnson & Johnson, noted that the misdemeanor charge was being entered on behalf of the company and <i>no individuals were charged with wrongdoing</i>. '<i>Mr. Gorsky [current CEO] has been an outstanding Johnson & Johnson leader for more than 20 years</i>,' he said. </blockquote>Would you expect someone who works for Mr Gorsky to say otherwise?  Yet it was on Mr Gorsky's watch that much of the alleged bad conduct actually happened.  <br /><br /><blockquote class="tr_bq">Alex Gorsky was promoted to chief executive officer of J&J in April 2012, in part <i>because of his record of generating sales as leader of Janssen Pharmaceuticals. </i></blockquote><br />Furthermore, the Inquirer noted that Mr Gorsky was deposed in one of the many civil lawsuits filed by patients against Johnson and Johnson. <br /><br /><blockquote class="tr_bq"><i>The 60-page transcript of Gorsky's deposition</i> in one of the Philadelphia suits was part of the publicly available court record. In the transcript, McCormick walks Gorsky through discussions from 2001 with Joseph Biederman, a Harvard medical school professor and a Massachusetts General Hospital pediatric psychiatrist who gained fame - and criticism - for advocating the use of pharmaceuticals to treat children with perceived mental illness. That was before the U.S. Food and Drug Administration approved, in still-limited ways, drugs such as Risperdal for children. <br /><br />In a one-page letter dated Dec. 7, 2001, Biederman requested $500,000 to start what became the Johnson & Johnson Center for the Study of Pediatric Psychopathology. Gorsky said in the deposition that he approved that payment. <br /><br /><i>Gorsky was asked whether he had been hoping Biederman and, by extension, Massachusetts General Hospital and Harvard, would help J&J to get wider diagnosis and treatment for child and adolescent mental disorders. </i><br /><i><br /></i><i>'I think our goal was to, yes, have better diagnostic criteria for children who are in need of treatment and to have better therapeutic options for children who are in need of treatment,' Gorsky said. </i><br /><br />Also in the transcript, McCormick discussed with Gorsky a document called the 'Annual Report 2002: The Johnson & Johnson Center for Pediatric Psychopathology at Massachusetts General Hospital.' Biederman was the director of the center, and <i>one of the goals of its research, according to the report, was that 'it will move forward the commercial goals of J&J.'</i></blockquote><br />Thus this testimony seems to imply that current Johnson and Johnson CEO Gorsky was involved in making large payments to an important key opinion leader (KOL) who was supposed to use his academic gravitas to "move forward the commercial goals" of Johnson and Johnson, specifically by promoting Risperdal for children.<br /><br />Yet, as we discussed above, neither Mr Gorsky nor any other person at Johnson and Johnson who might have authorized, directed, or implemented the alleged conduct which was the subject of the settlement, conduct which Johnson and Johnson of course denies was misconduct, suffered any negative consequences. <br /><br />Mr Gorsky's total compensation as CEO in 2012 was <b><i>$10,977,109</i></b> according too the <a href="http://www.investor.jnj.com/secfiling.cfm?filingID=1193125-13-104341">company's 2013 proxy statement</a>. The retiring CEO, William Weldon, on whose overall watch the alleged events occurred, received <b><i>$29,838,259</i></b> that year.  We last discussed their compensation and its contrast with the company's ethical track record <a href="http://hcrenewal.blogspot.com/2013/07/johnson-and-johnson-settles-suit.html">here</a>.<br /><br />These payments also occurred despite all the other settlements Johnson and Johnson has had to make because of allegations about its marketing of Risperdal.  As described by Bloomberg/ Businessweek,<br /><br /><blockquote class="tr_bq">The settlement won’t resolve suits brought by attorneys general in Arkansas, Louisiana and South Carolina, where the company has appealed or has said it will appeal judgments over Risperdal sales. <br /><br />Judges or juries in those states have ordered J&J to pay a total of about $1.8 billion in damages and fines over Risperdal marketing campaigns that were found to have misled doctors and patients about the drug’s health risks and effectiveness. <br /><br />In 2012, a judge in Arkansas ordered the drugmaker to pay $1.2 billion in fines over Risperdal marketing. That verdict came three months after J&J decided to end a trial in Texas over the drug’s sales with a $158 million settlement. The Arkansas judge also awarded the state $180 million in attorney fees, J&J said in an August regulatory filing. The company is appealing the judgment. <br /><br />In June 2011, a judge in South Carolina ordered J&J to pay $327 million in penalties for deceptively marketing the medicine. Ten months earlier, jurors in Louisiana ordered the drugmaker to pay almost $258 million to state officials over J&J’s Risperdal marketing campaign in the state. A Louisiana judge later ordered the drugmaker to pay an additional $73.3 million in attorney fees and costs. </blockquote><br />The payments further occurred despite a previous settlement involving another drug whose marketing was at issue in the current settlement, according to Bloomberg / Businessweek, <br /><br /><blockquote class="tr_bq">In October 2011, J&J’s Scios unit pleaded guilty to a misdemeanor violation over Natrecor and paid an $85 million criminal fine. </blockquote><br />Finally, the compensation was given despite other legal actions not having to do with Risperdal, Invega or Natrecor, as we most recently summarized,<br />- A guilty plea for misbranding Topamax in 2010 (look <a href="http://hcrenewal.blogspot.com/2010/05/sunday-settlement-and-guilty-plea.html">here</a>)<br />- Guilty pleas to bribery in Europe in 2011 by J+J's DePuy subsidiary (look <a href="http://hcrenewal.blogspot.com/2011/04/johnson-and-johnson-runs-afoul-of.html">here</a>)<br /> - Accusations that the company, which makes smoking cessation products, participated along with tobacco companies in efforts to lobby state legislators (see post <a href="http://hcrenewal.blogspot.com/2011/09/smart-alecs-strange-bedfellows.html">here</a>)<br /><br /><b>Summary</b><br /><br />The latest settlement in the parade is another marker of the sort of conduct that big health care organizations have exhibited to increase revenue, and to use that revenue as a rationale for making their top insiders very rich.  The particular conduct alleged here could have put patients at risk, partly by deceiving health care professionals.  Yet in their wisdom, top US law enforcement saw fit not to try to hold any individuals accountable for this conduct, and allowed the company to deny any misconduct other than a single misdemeanor by a subsidiary.  This occurred despite the company's history of multiple legal settlements and findings of guilt in various courtrooms.<br /><br />Yet none of these actions has resulted in any negative consequences for any individual within the company.  No one who authorized, directed, or implemented bad behavior will pay any penalty, even were the bad behavior to have lead to significant personal enrichment.<br /><br />As we have said ad infinitum, and <a href="http://hcrenewal.blogspot.com/2012/09/how-many-legal-settlements-does-it-take.html">on the occasion of a previous Johnson and Johnson settlement</a>, many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved. <br /><br />These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look <a href="http://hcrenewal.blogspot.com/2012/08/duchess-of-wellpoint-abdicates-likely.html">here</a>). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that  matter) law enforcement to "<a href="http://www.washingtonpost.com/blogs/election-2012/wp/2012/09/04/patrick-it-is-time-for-democrats-to-grow-a-backbone/">grow a backbone</a>" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.<br /><br />As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.<br /><br /><b>Addendum - Other Comments </b><br /><br />See also similar sentiments <a href="http://1boringoldman.com/index.php/2013/11/04/an-ending/">from 1BoringOldMan</a>,<br /><br /><blockquote class="tr_bq"> J&J closes out the escrow fund set aside for this settlement. Alex Gorsky goes to his West Point Anniversaries and Boy Scout Board meetings an ongoing success story [<a href="http://1boringoldman.com/index.php/2012/09/18/shoveling/" target="_blank">shoveling…</a>]. And what was this all about? </blockquote><div><blockquote><div align="right"><i>This is the way the world ends</i></div><div align="right"><i> This is the way the world ends</i></div><div align="right"><i> This is the way the world ends</i></div><div align="right"><i> Not with a bang but a whimper</i></div></blockquote></div><br />and in a <a href="http://www.citizen.org/pressroom/pressroomredirect.cfm?ID=4012">press release from Public Citizen</a>,<br /><br /><blockquote class="tr_bq">Until more meaningful penalties and the prospect of jail time for company heads who are responsible for such activity become common, companies will continue defrauding the government and putting patients’ lives in danger.</blockquote>

A New, and Huge ($2.2 Billion) Settlement for Johnson and Johnson, but "No Individuals were Charged with Wrongdoing"

The march of legal settlements made by big health care organizations has resumed with a bang.  As reported in most major media outlets, giant drug/ device/ biotechnology company Johnson and Johnson ha…

Đọc thêm »

Pfizer's Umpteenth Settlement (for $491 Million Plus a Guilty Plea), but No Person Held Responsible

The world's largest research based pharmaceutical company was in court again, as <a href="http://www.nytimes.com/2013/07/31/business/pfizer-settles-a-drug-marketing-case-for-491-million.html">reported</a> by the New York Times,<br /><br /><blockquote class="tr_bq"> The drug maker Pfizer<a class="meta-org" href="http://topics.nytimes.com/top/news/business/companies/pfizer_inc/index.html?inline=nyt-org" title="More information about Pfizer Inc"></a><i> agreed to pay $491 million to settle criminal and civil charges over the illegal marketing of the kidney-transplant drug Rapamune,</i> the Justice Department <a href="http://www.justice.gov/opa/pr/2013/July/13-civ-860.html" title="The announcement.">announced on Tuesday</a>. </blockquote><br />In particular,<br /><br /><blockquote class="tr_bq"> The recent case centers on the practices of Wyeth Pharmaceuticals, which Pfizer acquired in 2009.<br /><br /><div itemprop="articleBody">Rapamune, which prevents the body’s immune system from rejecting a transplanted organ, was approved by the Food and Drug Administration in 1999 for use in patients receiving a kidney transplant. However, federal officials said <i>Wyeth aggressively promoted the drug for use in patients receiving other organ transplants, even offering financial incentives to its sales force to do so</i>. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Accusations of Wyeth’s practices became public in 2010 after <i>a whistle-blower lawsuit</i> filed by two former employees was unsealed. </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">After lawmakers <a href="http://democrats.oversight.house.gov/index.php?option=com_content&task=view&id=4973&Itemid=49" title="A press release about the inquiry.">announced a Congressional inquiry</a>, the Justice Department <a href="http://www.nytimes.com/2010/09/22/business/22drug.html" title="From the archives.">opted to join the lawsuit</a>. The settlement announced Tuesday, which also resolves a second, similar whistle-blower suit, includes a criminal fine and forfeiture of $233.5 million, and a civil settlement of $257.4 million with the federal government, all 50 states and the District of Columbia. </div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody">The case did not get much media coverage.  So far, the only other somewhat detailed <a href="http://www.bloomberg.com/news/2013-07-30/pfizer-unit-pleads-guilty-pays-491-million-over-drug.html">article</a> on it was put out by Bloomberg.   In fact, the lawyer for two of the whistle-blowers who alerted federal authorities to what Wyeth was doing had to say</div><div itemprop="articleBody"><br /></div><blockquote class="tr_bq"><div itemprop="articleBody">the spate of pharmaceutical settlements in recent years had <i>blunted reaction to what he said were shameful practices.</i> 'Everybody’s been asking me why this case is different than any other,' he said. <i>'We used to trust these companies. You can’t trust these companies anymore.'</i></div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody">However, we should not be too blase.  This case was not only about money.  The over-promotion of a potentially dangerous drug likely lead to patients being harmed in the absence of any benefits.  Rapamune suppresses the immune system and increases risks of serious infections and malignancy.  Specific serious adverse events have been reported when it is used in transplants of organs other than the kidney (e.g., lung and liver transplants).  (See full prescribing information <a href="http://labeling.pfizer.com/showlabeling.aspx?id=139">here</a>.)  Bloomberg reported that 90% of Wyeth's revenues from Rapamune came from off-label uses, suggesting that quite a few people may have been adversely affected by its excess use.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">As in most other members of the march of legal settlements by big health care organizations, this case involved no negative consequences for anybody who authorized, directed, or implemented the improper marketing practices.  While such people must have existed, they were not even named in the press coverage.  At least this settlement involved a guilty plea to a crime, albeit a misdemeanor (misbranding as reported by Bloomberg), so the company did have to admit some wrongdoing.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">A Pfizer manager, however, tried to disavow responsibility, as noted by Bloomberg,</div><div itemprop="articleBody"><br /></div><blockquote class="tr_bq"><div itemprop="articleBody">'Pfizer was not a subject or target of this matter, and cooperated fully with the government from the time it learned of this investigation in October 2009,' Chris Loder, a Pfizer spokesman,...</div></blockquote><div itemprop="articleBody"><br /></div><div itemprop="articleBody">But Pfizer had purchased Wyeth, and in doing so got not only assets and profits, but responsibility for actions.</div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">Also, neither the settlement nor the criminal plea seemed to take into account Pfizer's amazingly sorry recent track record.  I am losing count of all of Pfizer's settlements and/or guilty plea or convictions since 2000.  (The updated list of previous legal results is in the Appendix.)  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">People found guilty of small-time Medicaid or Medicare fraud often forfeit all their assets and go to jail.  Yet actions by large pharmaceutical companies that may harm patients and cost many millions of dollars almost never result in any individual facing any negative consequences, or even being named and shamed.  Meanwhile, the managers of these companies may make gargantuan amounts of money partially rationalized by the revenues produced by such recurrent misbehavior.  In 2012, according to the company's 2013 proxy filing, Pfizer CEO Ian Reed's total compensation was  <b><i>$25,634,136</i></b>, and the four next most highly paid executives all made more than <b><i>$5,000,000</i></b>.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">So the Kabuki play that is regulation of and law enforcement for large health care organizations goes on.  As our society is being increasingly divided into a huge majority in increasingly difficult economic circumstances and a small and  increasingly rich minority, it also seems to be increasingly divided into little people who may be ruined by lawsuits, and imprisoned for even minor infractions, and big people who have impunity.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">True health care reform would need to start by making leaders of big health care organizations accountable for their organizations' misbehavior.  </div><div itemprop="articleBody"><br /></div><div itemprop="articleBody"><b>APPENDIX - Pfizer's Settlements</b><br /><br /></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;">In the beginning of the 21st century, <a href="http://articles.philly.com/2009-09-03/business/25267571_1_pfizer-employee-pfizer-sales-representatives-zyvox">according to the Philadelphia Inquirer</a>, Pfizer made three major settlements,</span> <br /><blockquote><span style="background-color: #fff2cc;">October 2002: Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.</span></blockquote><blockquote><span style="background-color: #fff2cc;">May 2004: Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.</span> </blockquote><blockquote><span style="background-color: #fff2cc;">April 2007: Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.</span></blockquote><span style="background-color: #fff2cc;"><br />Thereafter, Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post <a href="http://hcrenewal.blogspot.com/2009/09/pfour-legal-settlements-for-pfizer-why.html">here</a>). </span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;"> Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post <a href="http://hcrenewal.blogspot.com/2010/03/settlement-and-conviction-round-up.html">here</a>).  </span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;">The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post <a href="http://hcrenewal.blogspot.com/2010/12/drug-companies-are-now-no-1-when-it.html">here</a>).  </span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;">Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post <a href="http://hcrenewal.blogspot.com/2011/02/pharmacia-or-maybe-pfizer-settles-only.html">here</a>).   </span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;">In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see <a href="http://www.bloomberg.com/news/2011-03-22/pfizer-reaches-asbestos-settlement-that-may-end-quigley-unit-s-bankruptcy.html">this story</a> in Bloomberg).  </span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;">In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this <a href="http://hcrenewal.blogspot.com/2011/10/what-pfizer-v-few-consequences-for-long.html">post</a>). </span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;">In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this <a href="http://hcrenewal.blogspot.com/2012/08/pfizers-pforeign-pfiasco.html">post</a>).</span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;">In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this <a href="http://hcrenewal.blogspot.com/2012/12/pfizers-13th-legal-settlement-will-it.html">post</a>).  </span></div><div style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><span style="background-color: #fff2cc;"> In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this <a href="http://hcrenewal.blogspot.com/2013/01/pfizers-pfourteenth-settlement-small.html">post</a>).  </span></div><div itemprop="articleBody"><br /></div><br />

Pfizer's Umpteenth Settlement (for $491 Million Plus a Guilty Plea), but No Person Held Responsible

The world's largest research based pharmaceutical company was in court again, as reported by the New York Times, The drug maker Pfizer agreed to pay $491 million to settle criminal and civil charges o…

Đọc thêm »

A "Simply Outstanding," "Superb" Hospital CEO Cops a Plea to Two Felonies

In all the discussions of what is wrong with US health care, very rarely is the quality of the leadership of health care organizations questioned.  In fact, no major US health care organization seems to have leadership that is anything short of brilliant.  The amazing brilliance of these leaders serves as a rationale for the ever increasing <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">compensation </a>that they receive.  Yet while subordinates, friendly members of boards of trustees, and hard working public relations flacks may stress their leaders' wondrous qualities, there rarely is an opportunity to compare their proclamations with results.<br /><br />A few small items in the New York media provide us one case study of how these proclamations may not square with reality.<br /><br /><b>Background</b><br /><br />In 2005, the CEO of New York's renowned Hospital for Special Surgery announced his retirement.  In a <a href="http://www.hss.edu/newsroom_hss-president-ceo-john-reynolds-succession-plan.asp">hospital news release</a>, we find these pronouncements about outgoing President and CEO John Reynolds,<br /><br /><blockquote class="tr_bq">HSS board Co-Chairman Aldo Papone said, 'John's guidance and devotion to the Hospital for Special Surgery these last two decades have been <b><i>simply outstanding</i></b>. Under his watch, t<i>he quality of care, fiscal health and scope of treatment for musculoskeletal disease at the hospital have reached the highest level in its history</i>.  While we regret his decision, we can only offer a most grateful expression of thanks...'</blockquote><br />Also, HSS board Co-Chairman Dean R. O'Hare said,<br /><br /><blockquote class="tr_bq">He is a <b><i>superb leader</i></b> and we appreciate his thoughtful approach to succession which is emblematic of his service to HSS.</blockquote><br />I cannot find anything on the internet about Mr Reynolds' compensation prior to his retirement, but in 2006, after he took on the position of Co-CEO during the transition, a copy of the hospital's 2006 990 form filed with the US Internal Revenue service, (and still available <a href="https://bulk.resource.org/irs.gov/eo/2008_02_EO/13-1624135_990_200612.pdf">here,</a> note though that rather confusingly, the Hospital still files under its archaic original name, "The New York Society for the Relief of the Ruptured and Crippled,") showed that <i>Mr Renynolds' total compensation was <b>$1,310,603</b></i><br /><br /><b>The CEO as Crook </b><br /><br />Nothing publicly appeared to challenge the notion that Mr Reynolds' leadership was less that "outstanding" and "superb" until a Bloomberg <a href="http://www.bloomberg.com/news/2012-09-26/ex-n-y-hospital-ceo-charged-with-taking-vendor-kickbacks.html">article</a> in September, 2012,<br /><br />.<br /><blockquote class="tr_bq">John R. Reynolds, former chief executive officer of New York's Hospital for Special Surgery, was <i>charged by federal prosecutors with taking $1.4 million in a decade-long illegal-kickback scheme.</i><br /><br />Reynolds, 63, was <i>arrested at his home</i> in Massachusetts this morning, according to a statement from the office of U.S. Attorney Preet Bharara. An indictment unsealed today in Manhattan federal court charges Reynolds with <i>racketeering and making false statements to the government. He faces as long as 25 years in prison if convicted.</i><br /><br />Prosecutors claim that, from 1996 to 2007, Reynolds <i>took money from at least two hospital vendors, a hospital employee and an unidentified health-care organization in the U.K.</i></blockquote><br />Furthermore,<br /><br /><blockquote class="tr_bq"> The government <i>claims Reynolds took a total of $420,000 in kickbacks from at least two hospital vendors, from 1996 to 2002, in exchange for steering hospital business to them. From 2000 to 2005, he extorted an additional $298,500 from a subordinate at the hospital after negotiating an annual bonus for the employee, </i>according to the charges. <i>Reynolds also received $670,000 for approving a clinical partnership between his hospital and the U.K. health-care organization</i>, prosecutors claim.<br /><br /><br />Reynolds is also charged with <i>lying in 2008 to an agent of the U.S. Department of Health and Human Services inspector general’s office. </i><br /><br />'By allegedly exploiting his position at the helm of a world renowned hospital for his own personal gain, John Reynolds tarnished the hospital’s reputation and did a disservice to its employees,' Bharara said in the statement.</blockquote><br />Not surprisingly,<br /><br /><blockquote class="tr_bq"> 'Obviously, it was a shock to us,' said Deborah Sale, a hospital spokeswoman, referring to the charges.</blockquote><br />Of course, in the US, people accused of crimes are assumed to be innocent until proven guilty.  So I am now writing about this case because yesterday Bloomberg published the <a href="http://www.businessweek.com/news/2013-07-11/ex-hospital-ceo-reynolds-pleads-guilty-in-kickback-case-1">follow up story</a>,<br /><br /><br /><blockquote class="tr_bq"><div class="">The former chief executive officer of New York’s <span class="ticker_wrap">Hospital for Special Surgery</span>, <i>charged by federal prosecutors with taking $1.4 million in kickbacks, pleaded guilty to two felonies.</i> </div><div class=""><br /></div>John R. Reynolds, 64, today pleaded guilty to <i>wire fraud and making false statements, admitting that he took payments from a hospital employee and lied to investigators about it.</i></blockquote><br />He will be subject to a stiff fine, although less than what he was charged with extracting through his scheme, and may be imprisoned,<br /><br /><blockquote class="tr_bq"> Under a plea agreement with the government, Reynolds will <i>forfeit $718,500</i>. Both sides agreed that federal sentencing guidelines, which are advisory, call for him to <i>serve 27 to 33 months in prison.</i></blockquote><br />The story so far has also been covered briefly by two tabloids, the <a href="http://www.nypost.com/p/news/local/manhattan/special_surgery_ex_boss_in_kickback_4chuFeWsk9Hf9yKfiP8lXL">New York Post</a>, and the <a href="http://www.nydailynews.com/new-york/ex-hospital-ceo-pleads-guilty-1-4m-scheme-article-1.1396279">Daily News</a>.  To date, the Hospital for Special Surgery has <a href="http://www.hss.edu/newsroom.asp">not issued a news bulletin</a> on this. <br /><br /><b>Summary</b><br /><br />So yet another "outstanding," "superb" multimillion dollar CEO turned out to be something rather less, in  fact, to be a criminal. <br /><br /><br />We have frequently discussed how the leaders of large US health care organizations are often hailed as brilliant, and <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">compensated hugely </a>for their brilliance, but rarely publicly subject to any objective assessment of their performance.  In many cases, they seem unaccountable for leadership that may be <a href="http://hcrenewal.blogspot.com/search/label/ill-informed%20management">ill-informed</a>, <a href="http://hcrenewal.blogspot.com/search/label/mission-hostile%20management">hostile to the health care mission</a>, or even <a href="http://hcrenewal.blogspot.com/search/label/crime">criminal</a> or <a href="http://hcrenewal.blogspot.com/search/label/health%20care%20corruption">corrupt</a>.<br /><br /> The good news is that this criminal was eventually caught.  The bad news is that it only happened 18 years after he began acting criminally, hardly an example of swift justice.  One wonders how many other brilliant health care leaders will years later turn out not to be so, and how many others' performance will never be publicly assessed.   <br /><br />While we breathlessly await the rigorous prospective study that assesses public assessments of the leaders of large health care organizations against objective results, we are stuck with case studies as a means to do so.  This case study shows a particularly stark contrast between the public relations puffery and the sordid reality. <br /><br /><br />Instead of "brilliant" leaders paid like royalty, we would do better with competently collegial leaders rewarded reasonably as part of a team all focused on the health care mission, which puts service to patients first.  As long as health care organizations appear to be a path to riches for their leaders, expect the people who want to lead them to be more interested in their own fortunes than patients' and the public's health.  As long as health care professionals, policy makers and the public assume that those who lead health care organizations are fully qualified, fairly paid, and always do what is right, expect the insiders to continue to run things for their own profit.  <br /><br />The qualifications of those who would lead health care, how much they are paid, what they are doing and what the results of their work are ought to be publicly known and publicly discussed.  Health care professionals, policy makers, and the public should demand nothing less.  .  <br /><br /><br />

A "Simply Outstanding," "Superb" Hospital CEO Cops a Plea to Two Felonies

In all the discussions of what is wrong with US health care, very rarely is the quality of the leadership of health care organizations questioned.  In fact, no major US health care organization seems …

Đọc thêm »

Ghosts in the Criminal Machine - How a Drug Company Can Plead Guilty to Federal Fraud, Yet No One is Held Responsible

We have often discussed how leaders of health care organizations have become increasingly unaccountable for their actions.  A recent, slightly obscure story shows how a corporate admission of guilt to a felony can be used to prevent anyone, including anyone in corporate management, from being held responsible for that fraud.<br /><br /><b>Basics of the Settlement</b><br /><br />The case was that of ISTA Pharmaceuticals.  The basics appeared in brief wire service articles, like <a href="http://www.foxbusiness.com/industries/2013/05/24/bausch-lomb-ista-admits-to-kickbacks/">this one</a> from Rueters (via Fox News):<br /><br /><br /><blockquote class="tr_bq"><i>Ista Pharmaceuticals pleaded guilty on Friday to charges it used kickbacks and improper marketing to boost sales of a drug </i>meant to treat eye pain and agreed to<i> pay $33.5 million to settle criminal and civil liability</i>, the U.S. Department of Justice said.<br /><br /> The unit of eye care company Bausch & Lomb <i>pleaded guilty to conspiracy to offer kickbacks to induce physicians to prescribe Xibrom,</i> a drug meant to treat pain after cataract surgery, and <i>conspiracy to promote that drug for unapproved uses</i>, including after Lasik and glaucoma surgeries.<br /><br /> Ista agreed as part of a criminal settlement to a $16.63 million fine and an $1.85 million asset forfeiture. It also agreed to a $15 million civil settlement to resolve allegations that its marketing of Xibrom caused false claims to be submitted to government health care programs.</blockquote><br /><b>Kickbacks Disguised as Honoraria and Consulting Fees </b><br /><br />Note that unlike many such legal settlements involving large health care organizations, this one involved admissions of guilt to felonious criminal offenses.  The severity of the charges apparently arose out of the egregious conduct of company executives.  Colorful details were <a href="http://www.buffalonews.com/apps/pbcs.dll/article?AID=/20130524/CITYANDREGION/130529545/1005">supplied</a> by the Buffalo (NY) News:<br /><br /><blockquote class="tr_bq">ISTA, which is based in California, <i>admitted using kickbacks to doctors and an illegal marketing campaign </i>as part of an elaborate scheme to increase its sales of Xibrom.<br /><br />The scheme, outlined in detail in newly released court papers, ranged from company-provided instruction sheets for doctors to continuing medical education programs to promote the drug.<br /><br />In many cases, <i>ISTA employees were told not to leave printed materials behind in doctors’ offices or to keep records of their meetings with doctors in order to avoid detection </i>by others.<br /><br />The company went so far as to <i>offer speaking engagements and consulting appearances to doctors in hopes that they might use Xibrom</i> for non-authorized treatments.<br /><br />Doctors can legally prescribe drugs for non-FDA approved treatments, but drugmakers are prohibited from promoting their products for those uses.<br /><br />'Essentially <i>they entered into consulting arrangements to induce physicians to prescribe their drug</i>,' said Jeffrey I. Steger, a lawyer in the Consumer Protection Branch of the U.S. Department of Justice.<br /><br />When [US District Judge Richard J] Arcara asked if money was the doctors’ motivation, Steger said yes.<br /><br />'Thousands of dollars,' he told the judge. </blockquote><br />So here we have a company admitting that it bribed doctors to prescribe its drug, and its techniques of administering bribes included paying the doctors honoraria to give talks, and paying the doctors as consultants.  As an aside, note that many defenders of "collaboration" among doctors and industry sign the praises of doctors "consulting" for industry, and often see nothing wrong with industry paying doctors for "educational" speeches.  Yet here is more evidence that such paid talks and consulting assignments may be nothing more than marketing, and at times are merely disguised bribery. <br /><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><b>An Apparently Tough Penalty</b></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">An unusual feature of this settlement was that (per Reuters):</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq">As part of the settlement, <i>Ista will be barred from participating in Medicare and Medicaid,</i>...</blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div></div><br /><br />That would appear to be the death knell for the company, as reported by Reuters, <br /><br /><blockquote class="tr_bq">Bausch & Lomb, which is based in Rochester, New York, said it was pleased to settle the matter, which involved conduct between January 2006 and March 2011, and that it knew of the government probe well before it purchased Ista.<br /><br /> That purchase closed in June 2012 and Bausch and Lomb <i>plans to wind down the Ista corporate entity by year end.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div>So Bausch and Lomb bought a company that turned out to be valueless?  But wait,...  there's a trick. <br /><br />As <a href="http://www.fiercepharma.com/story/ista-excluded-medicare-335m-label-settlement/2013-05-28">detailed</a> in FiercePharma,<br /><br /><blockquote class="tr_bq"> ISTA will be barred from doing business with Medicare, Medicaid, et al, for 15 years. Luckily for Bausch + Lomb, however, it bought ISTA in June 2012,  late enough in the game to actually escape the ramifications of exclusion. <i>The exclusion won't begin until 6 months after the settlement date, giving Bausch + Lomb time to transfer ISTA's products out of that subsidiary and shift the drugs over to the Bausch + Lomb label.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /><b>A Crime Committed by... No One?</b></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">So Bausch and Lomb gets ISTA's drugs, and essentially can resolve the company's felony convictions by relatively small fines, and through management sleight of hand, can finesse ISTA's disbarment from federal programs..  This will occur despite admissions that someone within ISTA, presumably within ISTA management, perhaps high up in ISTA management, per FiercePharma, </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq"><i>instructed reps to avoid leaving a paper trail of their off-label discussions with doctors. </i>Prosecutors had enough evidence of this to <i>persuade ISTA to plead guilty to a felony fraud charge.</i> 'These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others, the Justice Department said. 'ISTA agreed that this conduct represented an intent to defraud under the law.'</blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br />So felony fraud was committed, but no person apparently committed it.  It was as if a ghost committed the crime.</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Not only was a crime committed, but apparently by nobody, the corporation within which the crime was committed also becomes obscure.  ISTA became responsible, but by being bought out by Bausch and Lomb, the more severe penalty directed against ISTA will be meaningless.  </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Should Bausch and Lomb be responsible?  Of course, they claim they should not.  As <a href="http://www.bloomberg.com/news/2013-05-24/bausch-lomb-unit-pays-33-5-million-in-misbranding-case.html">reporte</a>d by Bloomberg, </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><blockquote class="tr_bq"><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> Rochester, New York-based Bausch & Lomb said the actions occurred 'well before' it acquired Ista in 2012. </div></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote><br />'Bausch & Lomb is committed to earning trust in everything that we do and is pleased to have resolved this pre-acquisition issue,' Bob Bailey, a Bausch & Lomb spokesman, said in a statement. </blockquote><br />In fact, The Hill<a href="http://thehill.com/blogs/regwatch/healthcare/301949-drug-company-pleads-guilty-to-felony-kickback-scheme-pays-335m"> reported</a> that the bad behavior took place from 2005 to 2010: <br /><br />But consider that while ISTA recently became part of Bausch and Lomb, since 2007, Bausch and Lomb has been wholly owned by private equity firm Warburg Pincus.  In fact, as we <a href="http://hcrenewal.blogspot.com/2009/06/was-private-equity-takeover-of-bausch.html">discussed</a> in in 2009, some people suspected that this maneuver would have allowed Baush and Lomb to settle multiple suits alleging that its products were faulty and dangerous out of the public eye.  So while ISTA is now really Bausch and Lomb is now really Warburg Pincus, no one in the management of ISTA, Bausch and Lomb, or Warburg Pincus apparently will be held responsible for criminal fraud and kickbacks to doctors, even though guilty pleas for these felonies have been made.  So somehow we have admissions that crimes were committed, crimes that compromised the integrity of doctors, and exposed patients to needless side effects, yet these crimes were apparently committed by ... nobody, by a ghost, and even the machine that ghost was in - was it ISTA, Bausch and Lomb, or Warburg Pincus? - becomes a mystery.  Where is Sherlock Holmes when we need him most?.<br /><br /><b>Summary</b><br /><br />This case thus becomes a really striking example of the impunity of health care corporate managers.  They can commit crimes, even felonies, yet the company, but no human beings, is held responsible.  But the company being a company, it cannot go to jail.  And through the magic of obfuscatory corporate take-overs, which company is guilty is not even apparent. <br /><br />As we have said ad infinitum, <br /><br /> We will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich. </div></div>

Ghosts in the Criminal Machine - How a Drug Company Can Plead Guilty to Federal Fraud, Yet No One is Held Responsible

We have often discussed how leaders of health care organizations have become increasingly unaccountable for their actions.  A recent, slightly obscure story shows how a corporate admission of guilt to…

Đọc thêm »

Six Years Later, Ranbaxy - Oops, Daiichi Sankyo - Pleads Guilty to Adulteration, Pays $500 Million

It only took until 2013, but the US Food and Drug Administration finally secured guilty pleas and fines.  The basics are in an Associated Press story (<a href="http://www.washingtonpost.com/business/subsidiary-of-indian-drug-maker-agrees-to-pay-record-500-million-us-penalty-for-impure-drugs/2013/05/13/2d586104-bc33-11e2-b537-ab47f0325f7c_story.html">via the Washington Post</a>):<br /><br /><blockquote class="tr_bq"> A subsidiary of India’s largest pharmaceutical company has <i>agreed to pay a record $500 million in fines and penalties for selling adulterated drugs and lying to federal regulators</i> in a case that is part of an ongoing crackdown on the quality of generic drugs flowing into the U.S.<br /><br />Federal prosecutors say the guilty plea by Ranbaxy USA Inc. represents the <i>largest financial penalty against a generic drug company for violations of the Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.</i></blockquote><br />Note that the company pleaded guilty to criminal charges. <br /><br /><blockquote class="tr_bq"> The subsidiary of Ranbaxy Laboratories Limited <i>pleaded guilty to federal criminal charges </i>and the company separately agreed to resolve civil claims with all 50 states and the District of Columbia. The company had earlier set aside $500 million to cover potential criminal and civil liability stemming from the Justice Department investigation.<br /><br />It admitted as part of the deal that it sold adulterated batches of drugs — including an antibiotic and generic versions of medications used to treat severe acne, epilepsy and nerve pain — that were developed at two manufacturing sites in India. </blockquote><br /><b>Ironies</b><br /><br />Note that this resolution has certain ironies.<br /><br /><u>Lateness</u><br /><br />There is a saying that justice delayed is justice denied.  Note that it took six years to obtain the guilty pleas.  As noted by the AP,<br /><br /><blockquote class="tr_bq"> The problems were largely<i> revealed by a whistleblower in a federal lawsuit filed in Maryland in 2007.</i> </blockquote><br /><u>Ambiguities about Responsibility</u><br /><br />First, note that while all the headlines are about Ranbaxy, Ranbaxy is not really an independent company.  As<a href="http://www.reuters.com/article/2013/05/13/us-ranbaxy-settlement-idUSBRE94C0PT20130513"> reported</a> by Reuters (and only by Reuters so far as I can tell at this time),<br /><br /><blockquote class="tr_bq"><i>Ranbaxy ... [is] majority-owned by Japan's Daiichi Sankyo.</i></blockquote><br />Second, as per the AP, see the comment made by the Ranbaxy CEO,<br /><br /><blockquote class="tr_bq">'While <i>we are disappointed by the conduct of the past </i>that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy’s stakeholders; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance,' Ranbaxy CEO and managing director Arun Sawhney said in a statement.</blockquote><br />Maybe there was something lost in translation, but the CEO certainly spoke as if someone else was responsible for the "conduct of the past."  Incidentally, it does not appear that so far any journalist has even sought comment from the people really in charge, at Daiichi Sankyo.<br /><br />Third, just like many other cases we have reported before, no individual, especially anyone who authorized, directed, or implemented the bad behavior, was held legally responsible.  The cost of the fines will no doubt be spread among the corporate structures involved.  Since a company pleaded guilty, no individual pays a fine, much less goes to jail. <br /><br />It does appear that when the settlement was first announced in 2011, a cut in compensation for top executives of Daiichi Sankyo was announced, but the cuts were temporary, and apparently in response to the immediate financial consequences of the settlement, not any larger implications.  See Bloomberg's <a href="http://www.bloomberg.com/news/2011-12-21/daiichi-sankyo-lowers-executive-pay-after-500-million-ranbaxy-settlement.html">report</a>:<br /><br /><blockquote class="tr_bq"> Chief Executive Officer Joji Nakayama and board members will receive <i>5 percent to 30 percent less compensation for six months</i> in response to the cut in the earnings forecast, Daiichi Sankyo said today. The company has lost about half its market value since agreeing to buy a majority stake in Ranbaxy, India's largest drugmaker, in June 2008. </blockquote><br /> <u>The Contrast with the Case of the Adulterated Heparin</u><br /><br />Note that in this case, there have been no allegations that patients were harmed by the admitted adulteration,  Per the AP:<br /><br /><blockquote class="tr_bq"> It’s not known whether the problems with the drugs led to any health issues.... The government’s allegations against the company make no claims that the drugs, whose strength, purity or quality differed from the specifications, harmed anyone.</blockquote><br /><br />In 2008, we <a href="http://hcrenewal.blogspot.com/2008/02/heparin-made-out-of-pigs-from-elsewhere.html">began </a>blogging about how  US patients started to get sick and die after being infused with heparin, the common anti-coagulant drug. As we have discussed repeatedly  (look <a href="http://hcrenewal.blogspot.com/search/label/heparin">here</a>, and see the summary at the end of the post), Baxter International was selling contaminated heparin under its label which was made in unregulated workshops in China, and then transmitted through a complex chain of Chinese and US companies. <br /><br />The AP article stated,<br /><br /><blockquote class="tr_bq"> The case comes as federal regulators and prosecutors focus attention on the quality of ingredients of generics and other drugs manufactured overseas, said Allan Coukell, an expert on drug safety at The Pew Charitable Trusts. He said the <i>2008 deaths linked to tainted batches of the blood-thinner heparin that were imported from China </i>served as a 'wake up call' about just how much of the nation’s drug supply comes from overseas.</blockquote><br />So perhaps this wake up call helped propel the current case against Ranbaxy, that is, Daiichi Sankyo.  However, since 2008, if there has been a criminal investigation of the tainted heparin, which appears to have been much more consequential, sometimes fatally so, to patients, the results have not been made public.  A cynic might note that the contaminated heparin was sold by a US based manufacturer of branded pharmaceuticals, not a foreign based manufacturer of generic drugs. <br /><br /><b>Summary </b><br /><br />The most fundamental obligation of a drug company is to produce pure, unadulterated drugs.  The first attempts to regulate the drug industry in the US were meant to ensure that these companies fulfilled this obligation.  Yet now there is increasing evidence that the contemporary pharmaceutical industry has trouble with this most basic responsibility. <br /><br />As we discussed <a href="http://hcrenewal.blogspot.com/2012/09/who-really-makes-brand-name.html">here</a>, the managers of pharmaceutical companies have been swept up in a dominant business management fad, <a href="http://hcrenewal.blogspot.com/search/label/outsourcing">outsourcing</a>, as a means to cut costs to the bone.  (It seems that most health care managers are also caught up in the larger rage for <a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>, to emphasize short term revenue over all other concerns, including patients' and the public's health.)  As the New York Times <a href="http://www.nytimes.com/2013/05/14/business/global/ranbaxy-in-500-million-settlement-of-generic-drug-case.html">reported  </a>re the Ranbaxy case,<br /><br /><br /><blockquote class="tr_bq"><div itemprop="articleBody">Others say the company’s problems highlight how <i>little oversight federal drug safety officials have of overseas plants.</i> Studies that have shown the F.D.A. inspects foreign generic manufacturing plants about <a href="http://www.fda.gov/RegulatoryInformation/Legislation/FederalFoodDrugandCosmeticActFDCAct/SignificantAmendmentstotheFDCAct/FDASIA/ucm310992.htm" title="The F.D.A.’s statement on the issue.">once every seven to 13 years</a>, compared with once every two years for domestic manufacturers. A law passed last year will eventually require the F.D.A. to apply the same standards when inspecting all manufacturing plants, regardless of location. But some worry that <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/f/federal_budget_us/index.html?inline=nyt-classifier" title="Recent and archival news about the federal budget.">federal budget</a> cuts are <i>slowing the adoption of that law. </i></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">'They just happened to stumble across the Ranbaxy problem at those two plants in India,' said Joe Graedon, a pharmacologist who runs a consumer Web site, <a href="http://www.peoplespharmacy.com/" title="The Web site.">the People’s Pharmacy</a>, which has raised questions about the safety of generic drugs. 'Ranbaxy was the biggest and one of the best in India. What about all the smaller ones? What does that say about them?' </div></blockquote><br /><a href="http://hcrenewal.blogspot.com/2012/09/who-really-makes-brand-name.html">Again,</a> all pharmaceutical companies, not just generic drug manufacturers, have seen fit to outsource much, if not most of their production.<br /><br />In our rush to market fundamentalism, we seem to have deregulated, at least de facto, most aspects of health care.  We now cannot trust the drugs we take to have been made by the companies whose labels they bear, or to be pure.  We now cannot trust that regulators will find that out, or having found that out, will do anything about it in a timely manner.  <br /><br />To repeatedly reiterate, as long as the leaders of health care organizations are not held accountable for the results of their decisions on health care quality, cost, and access (even in such extreme quality violations as those resulting in multiple patient deaths), we can expect continuing decisions that sacrifice quality, increase costs, and worsen access, but that are in the self-interest of the people making them.<br /> <br />To really reform health care, we must hold health care organizations and their leaders accountable (and not blame all the problems on doctors, other health care professionals, patients, and society at large).<br /><br />- Roy M. Poses MD for Health Care Renewal  <br /><br /><br /><span style="color: blue; font-size: xx-small;">Appendix - Heparin Case Summary</span><br /><br /><span style="color: blue; font-size: xx-small;">- We have posted several times, recently <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a></span><span style="color: blue; font-size: xx-small;"> about the tragic case of suddenly allergenic heparin. Although heparin, an intravenous biologic anti-coagulant, has been in use for over 70 years, serious allergic reactions to it had heretofore been rare. Starting late in 2007, hundreds of such reactions, and 21 deaths were reported in the US after intravenous heparin infusions.All the heparin related to these events in the US was made by Baxter International.</span><br /><br /><span style="color: blue; font-size: xx-small;">- We then learned that although the heparin carried the Baxter label, it was not really made by Baxter. The company had outsourced production of the active ingredient to a long, and ultimately mysterious supply chain. Baxter got the active ingredient from a US company, Scientific Protein Laboratories LLC, which in turn obtained it from a factory in China operated by Changzhou SPL, which in turn was owned by Scientific Protein Laboratories and by Changzhou Techpool Pharmaceutical Co. Changzhou SPL, in turn, got it from several consolidators or wholesalers, who in turn got it from numerous small, unidentified "workshops," which seemed to produce the product in often primitive and unsanitary conditions. None of the stops in the Chinese supply chain had apparently been inspected by the US Food and Drug Administration nor its Chinese counterpart. (See posts <a href="http://hcrenewal.blogspot.com/2008/02/in-middle-of-all-those-pigs-in-china.html">here</a> and <a href="http://hcrenewal.blogspot.com/2008/03/heparin-in-era-of-hogwash.html">here</a>.)</span><br /><br /><span style="color: blue; font-size: xx-small;">- We found out that the Baxter International labelled heparin was contaminated with over-sulfated chondroitin sulfate, a substance not found in nature, but which mimics heparin according to the simple laboratory tests used in the Chinese facilities to check incoming heparin. (See post </span><a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.) Further testing revealed that the contamination seemed to have taken place in China prior to the provision of the heparin to Changzhou SPL. (See post </span><a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.) It is not clear whether Baxter International or Scientific Protein Laboratories had inspected most of the steps in the supply chain, or even knew what went on there.</span><br /><br /><span style="color: blue; font-size: xx-small;">- The Baxter and Scientific Protein Laboratories CEOs did not seem aware of where they got the heparin on which the Baxter International label was eventually affixed. But one report in the New York Times alleged that Scientific Protein Laboratories would not pay enough for heparin to satisfy any sources other than the small "workshops."</span><br /><span style="font-size: xx-small;"><br /><span style="color: blue;"></span></span> <span style="color: blue; font-size: xx-small;">- Leaders of all organizations involved, Baxter International, Scientific Protein Laboratories, Changzhou SPL, the Chinese government, and the US Food and Drug Administration, and the US Congress assigned blame to each other, but none took individual or organizational responsibility. (See post </span><a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post </span><a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).</span><br /><br /><span style="color: blue; font-size: xx-small;">- Researchers (who turned out to have financial ties to a company which is developing an anti-coagulant drug that could compete with the heparin made by Baxter International) investigated the biological mechanisms by which the contamination of the heparin lead to adverse effects, but no one investigated further how the contamination occurred, or who was responsible. (See post </span><a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post </span><a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post </span><a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).</span><br /><br /><span style="color: blue; font-size: xx-small;">- A government report which attracted little attention warned of the dangers of pharmaceutical ingredients made in China and subject to virtually no oversight. (See post </span><a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post </span><a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  In February, 2011, a congressional investigation of the case was announced, but results are so far unavailable (see post <a href="http://hcrenewal.blogspot.com/2011/02/three-years-later-congressional.html">here</a>.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  In June, 2011, a jury returned the first verdict in a civil case about the contaminated heparin, awarding money from Baxter International and Scientific Protein Laboratories to the estate of a man who apparently died due to tainted heparin (see post <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a>).</span><br /><br /><span style="color: blue; font-size: xx-small;">-  If there was a criminal investigation of the case, its results have not yet appeared.  </span>

Six Years Later, Ranbaxy - Oops, Daiichi Sankyo - Pleads Guilty to Adulteration, Pays $500 Million

It only took until 2013, but the US Food and Drug Administration finally secured guilty pleas and fines.  The basics are in an Associated Press story (via the Washington Post): A subsidiary of India’s…

Đọc thêm »

The Dangers of Big Corporate Health Care: Deceptive Marketing of Cancer Treatments

A series of articles over the last few months, culminating in an <a href="http://www.reuters.com/article/2013/03/06/us-usa-cancer-ctca-idUSBRE9250L820130306">investigative report </a>by Reuters, provided the newest example of what can go wrong when corporations provide direct care to vulnerable patients.  In this case, the vulnerable patients had cancer, and the corporation that provided them care was the Cancer Treatment Centers of America (CTCA).  I will try to go through the case chronologically.<br /><br />As Rueters reported, CTCA "was founded in 1988 by Richard J. Stephenson, who has been chairman ever since."<br /><br /><b>The Founder's Checkered Past</b><br /><br /><u>A Misdemeanor </u><br /><br />As Reuters noted,<br /><br /><blockquote class="tr_bq">A graduate of Northwestern University Law School, Stephenson started out as an investment banker. In 1966 he became a trustee of Americans Building Constitutionally, an organization that helped wealthy individuals set up not-for-profit corporations and personal trusts to avoid paying federal income and inheritance taxes.<br /><br /><span id="midArticle_9"></span>In 1969, <i>a California state court found the group's top official and six others guilty of grand theft or conspiring to commit grand theft. Stephenson had pleaded no contest to false advertising, a misdemeanor</i>, and testified for the state, according to media reports at the time.</blockquote><br /><u>Allegations of Use of Unproven Cancer Treatments</u><br /><br />Stephenson seemingly stayed out of trouble until 1975, but<br /><br /><blockquote class="tr_bq"><span id="articleText">Stephenson ventured into healthcare in 1975, when he and partners bought Zion-Benton Hospital in Zion, Illinois, renaming it American International Hospital. By the late 1980s, American International was <i>facing financial problems and its 'reputation had been severely damaged' by local press reports about its use of unproven cancer treatments</i>, according to a 2004 court opinion on a successful petition by a former CTCA president seeking an increased valuation for his share of the company.</span></blockquote><br /><b>CTCA: No More Unsubstantiated Claims</b><br /><br />Apparently around the time American International Hospital starting having major troubles, Stephenson branched out,<br /><br /><blockquote class="tr_bq"><span id="articleText">In 1988, Stephenson founded CTCA. He was motivated, said CEO Bonner, by the difficulty he had identifying and obtaining the best therapies for his mother after she developed bladder cancer. She died in 1982.</span></blockquote><br /><span id="articleText">By 1996, CTCA got into trouble too,</span><br /><span id="articleText"></span><br /><span id="articleText"> </span><br /><blockquote class="tr_bq"><span id="articleText">Cancer Treatment Centers of America got in trouble with regulators in 1996, when the Federal Trade Commission accused it of, among other things, <i>presenting survival claims it couldn't support.</i> The company <i>entered into a consent decree with the FTC and, without admitting any of the allegations, agreed not to make unsubstantiated outcomes claims.</i></span></blockquote><br /><b><span id="articleText">"Unscientific Therapies" </span></b><br /><span id="articleText"><br /></span><span id="articleText">As far as I can tell, all was then quiet until 2012.  Late that year, a Forbes columnist <a href="http://www.forbes.com/sites/stevensalzberg/2012/12/31/making-a-profit-from-offering-ineffective-therapies-to-cancer-patients/">wrote</a>,</span><br /><blockquote class="tr_bq"><span id="articleText"> </span>Alongside standard, science-based cancer therapies, CTCA also offers an array of questionable, unscientific therapies, which it proudly labels as part of its 'integrative cancer treatment.'  <a href="http://www.cancercenter.com/cancer-treatments.cfm">CTCA advertises many such treatments</a>, including: <br /><div style="padding-left: 30px;">* Acupuncture<br /> * Acupressure<br /> * Chiropractic<br /> * <a href="http://www.cancercenter.com/complementary-alternative-medicine/naturopathic-medicine.cfm">Naturopathy</a><br /> * <a href="http://www.cancercenter.com/complementary-alternative-medicine/naturopathic-medicine.cfm">Homeopathy</a><br /> * Mind-Body medicine (including Reiki and Qi Gong)</div><br /><i>None of the treatments in this list has any scientific support showing that they provide a benefit to cancer patients.</i>  Some of them carry a real risk of harm, as I’ve written about previously.</blockquote><br />He further charged,<br /><br /><blockquote class="tr_bq">CTCA makes <i>multiple unsupported, unscientific claims for its alternative treatments</i>, such as:<br /> <ul><li>'<a href="http://www.cancercenter.com/brain-cancer/naturopathic-medicine.cfm">Naturopathic medicine can help</a> reduce these [cancer-related] symptoms, strengthen the immune system and support the healing process throughout your brain cancer treatment.'</li><li>'<a href="http://www.cancercenter.com/complementary-alternative-medicine/acupuncture.cfm">Acupuncture may help</a> to alleviate [cancer] treatment-related side effects, such as nausea and vomiting.'</li><li>'<a href="http://www.cancercenter.com/leukemia/chiropractic-care.cfm">When used during your leukemia treatment</a>, our chiropractic care services can help correct bone, muscle and joint problems and restore nerve function.' </li></ul>These are just a few examples. These claims, and CTCA’s marketing of the therapies involved, present a huge ethical problem. </blockquote><br /><b>Manipulated Survival Statistics</b><br /><br />Then, in March 2012, the Reuters investigative reporters <a href="http://www.reuters.com/article/2013/03/06/us-usa-cancer-ctca-idUSBRE9250L820130306">charged</a> that CTCA manipulated its survival statistics to make its results look better.<br /><br /><blockquote class="tr_bq">CTCA reports on its website that the percentage of its patients who are alive after six months, a year, 18 months and longer regularly tops national figures. For instance, 60 percent of its non-small-cell lung cancer patients are alive at six months, CTCA says, compared to 38 percent nationally. And 64 percent of its prostate cancer patients are alive at three years, versus 38 percent nationally.<br /><br /><span id="midArticle_13"></span>Such claims are misleading, according to nine experts in cancer and medical statistics whom Reuters asked to review CTCA's survival numbers and its statistical methodology.<br /><span id="midArticle_14"></span><br />The experts were unanimous that <i>CTCA's patients are different from the patients the company compares them to, in a way that skews their survival data</i>. It has relatively few elderly patients, even though cancer is a disease of the aged. It has almost none who are uninsured or covered by Medicaid - patients who tend to die sooner if they develop cancer and who are comparatively numerous in national statistics.<br /><span id="midArticle_15"></span><br />Carolyn Holmes, a former CTCA oncology information specialist in Tulsa, Oklahoma, said she and others <i>routinely tried to turn away people who 'were the wrong demographic' because they were less likely to have an insurance policy that CTCA preferred</i>. Holmes said she would try to 'let those people down easy.'<br /><br /><span id="midArticle_0"></span>Equally significant, CTCA includes in its outcomes data only those patients 'who received treatment at CTCA for the duration of their illness' - patients who have the ability to travel to CTCA locations from the get-go, without seeking local treatment first. That means excluding, for example, those who have exhausted treatment options closer to home and arrive at a CTCA facility with advanced disease.<br /><br /><span id="midArticle_1"></span><i>Accepting only selected patients and calculating survival outcomes from only some of them 'is a huge bias and gives an enormous advantage to CTCA,</i>' said biostatistician Donald Berry of MD Anderson Cancer Center in Houston.</blockquote><br />Furthermore,<br /><br /><span id="articleText"></span><br /><br /><br /><blockquote class="tr_bq"><i>CTCA also appears to exclude the vast majority of its patients when it calculates survival data. In survival results from 2004 to 2008 posted on its website, CTCA reported 61 patients with advanced prostate cancer, 97 with advanced breast cancer, 434 with advanced lung cancer, and 165 with advanced colon or rectal cancer. These are the four most common solid tumors. In the same period, CTCA treated thousands of patients at its Zion facility alone</i>, according to filings with state regulators.<br /><br /><span id="midArticle_8"></span>'We agree that some of our sample sizes' are small 'and have always stated this as a limitation of our study,' said Xiong, the consultant to CTCA.<br /><br /><span id="midArticle_9"></span>'I'd have some concerns about why and <i>wonder if some cherry-picking was going on</i>,' said Spectrum Health's Campbell.<br /><br /><span id="midArticle_10"></span>Moreover, while the standard reporting period for cancer survival is five years after diagnosis, CTCA on its website doesn't go that far; for the four most common tumors, it<i> reports survival up to four years at most.</i> And as Reuters found, the company's advantage often diminishes as the five-year mark approaches </blockquote>  <br /><b>The Founder's Checkered Present</b><br /><br />By the way, also in the last few months, watchdog groups have asked for an investigation of CTCA's founder for possible deceptive actions that might have violated US election laws.  In December, 2012, the Washington Post <a href="http://www.washingtonpost.com/politics/freedomworks-tea-party-group-nearly-falls-apart-in-fight-between-old-and-new-guard/2012/12/25/dd095b68-4545-11e2-8061-253bccfc7532_story.html">reported </a><br /><br /><blockquote class="tr_bq">In the weeks before the election, more than $12 million in donations was funneled through two Tennessee corporations to the FreedomWorks super PAC after negotiations with [CTCA Founder Richard J] Stephenson over a preelection gift of the same size, according to three current and former employees with knowledge of the arrangement.<br /></blockquote>Then,<br /><br /><blockquote class="tr_bq"> Two watchdog groups last week asked the Federal Election Commission and the Justice Department to investigate the donations from the two Tennessee companies. The groups, Democracy 21 and the Campaign Legal Center, say <i>the arrangement could violate federal laws that prohibit attempting to hide the true source of a political contribution by giving it under another name</i>.</blockquote><br /><br /><b>Summary</b><br /><br />In summary, there are now charges in the media that Cancer Treatment Centers of America manipulated its survival data to makes its advertised results appear better, while it also advertises unproven complementary and alternative medicine treatments  as effective.  In the past the company had signed a consent decree not to make (presumably any more) unsubstantiated claims.  Meanwhile, the company's founder, who has a past history of a no contest plea to false advertising, and who had previously run a hospital system also charged with making unsupported survival claims, has been accused of hiding political donations.<br /><br />Thus this organization, run by someone who has his own history of deception, has been found to make exaggerated and/or unsubstantiated advertising claims of several types and at different times.  These claims could attract vulnerable patients who perhaps could get better care elsewhere, possibly leading to excess morbidity and even early mortality.  <br /><br />So Cancer Treatment Centers of America seems to be the latest reason to worry about the laissez faire US system which allows lightly regulated for-profit corporations to provide direct "care" to our most vulnerable patients.   We have recently discussed how a for-profit hospital chain may have been over treating some patients and under treating others, possibly risking patients' health to increase revenues (look <a href="http://hcrenewal.blogspot.com/2012/08/paging-doctor-ebdita-how-private-equity.html">here</a>);  how for-profit hospice corporations by enrolling patients who do not actually have terminal illness for palliative care only  could be denying potentially curative treatment to curable patients (look<a href="http://hcrenewal.blogspot.com/search/label/hospices"> here</a>); and how for-profit mental health clinics and drug treatment centers could be providing shoddy, and potentially dangerous care to boost revenues (look <a href="http://hcrenewal.blogspot.com/2012/07/private-equity-vs-patient-care-bainful.html">here</a> and <a href="http://hcrenewal.blogspot.com/2013/03/deadly-over-doses-and-private-equity.html">here</a>). <br /><br />We will see if the newest part of the pattern of news reports about CTCA and its founder, coupled with reports about other for-profit health care corporations that provide direct care to vulnerable patients provoke any official action.  However, the pattern is substantial enough so that it should make all health care professionals and all patients  reconsider whether ever to trust a for-profit hospital system, hospital, clinic or other site providing direct health care to patients.<br /><br />On a policy level, as I have said before,....   In my humble opinion, before the health care bubble bursts, we need to challenge the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. Before market fundamentalism became so prominent, many states prohibited the corporate practice of medicine, and the American Medical Association <a href="http://hcrenewal.blogspot.com/2007/12/relman-in-jama-on-threats-to-physicians.html">forbade the commercialization of medicine.</a><br /><br /> It is time to heed that wisdom. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.<br />

The Dangers of Big Corporate Health Care: Deceptive Marketing of Cancer Treatments

A series of articles over the last few months, culminating in an investigative report by Reuters, provided the newest example of what can go wrong when corporations provide direct care to vulnerable p…

Đọc thêm »