healthy4u: legal settlements

There They Go Again - Merck Threatened Legal Action Against Italian Doctor who Criticized Zetia

It seems that when confronted with unfavorable facts or opinions, Merck executives like to threaten legal action, rather than just argue their side of the case.  Last month we <a href="http://hcrenewal.blogspot.com/2014/06/at-mercks-urging-federal-judge.html">discussed</a> how Merck officials used the US court system to try to prevent a physician from publicizing evidence uncovered in prior litigation that suggested Merck employees had concealed the risks of Vioxx from research subjects. Legal Threats to Shut Up a Critic Recently, a <a href="http://www.bmj.com/content/349/bmj.g4441">British Medical Journal news article</a> explained how Merck tried to shut up an Italian physician who dared criticize another of its drugs, Zetia (ezetimibe). <blockquote class="tr_bq"><div id="p-1">The Italian branch of the drug company Merck Sharp and Dohme (MSD) has stopped a leading public health doctor and administrator from circulating texts to GPs advising them about the use of one of the company’s drugs. </div><div id="p-1"> </div><div id="p-2">In the texts, Alberto Donzelli—the head of education, appropriateness, and evidence based medicine at the public health authority of Milan (Milan Healthcare)—had analysed the published evidence on the cholesterol lowering drug ezetimibe and discouraged its prescription in addition to statins.</div> A letter telling Donzelli to 'cease and desist' was sent in February by MSD’s medical director, Patrizia Nardini, and was cosigned by the company’s director of legal affairs. They accused Donzelli of serious misconduct and a breach of medical ethics and threatened to sue him and Milan Healthcare for as much as €1.3m (£1m; $1.78m).</blockquote> Dr Donzelli was defended by Dr Roberto Carlo Rossi, the Director of the Order of Physicians of Milan, the local regulatory body, <blockquote class="tr_bq"> Rossi replied in April, declaring that the medical commission had analysed and discussed the issue in depth and concluding that there was no reason to object on ethical grounds to Donzelli’s behaviour.</blockquote> But, <blockquote class="tr_bq">in late May the company sent a second 'cease and desist' letter to Donzelli </blockquote> So, <blockquote class="tr_bq">In mid-June, Donzelli bowed to the request and removed the relevant material from his website....</blockquote> The Anechoic Effect Trumped Up to then, the story line was familiar.  We have often noted the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a>, that facts or ideas that offend the rich and powerful in health care often get little circulation, have few echoes.  Health care professionals' may fear that speaking out may lead to great unpleasantness.  Self-censorship may be reinforced by knowledge that the pervasiveness of <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> in health care means that one's friends, colleagues, family members, or more particularly supervisors are likely to have financial relationships with big health care corporations.  Similarly, those in the media and in the medical and health care scholarly literature may have similar fears, knowing that advertising revenue often comes from health care corporations, and their executives and boards may have their own conflicts of interest. But in this case, Dr Donzelli was not cowed at first.  Furthermore, neither was the BMJ, and then some people in the media.  Instead of quieting the issue, Merck's legal threats resulted in the BMJ news article.  Then, in short order, the story was picked up by Larry Husten <a href="http://www.forbes.com/sites/larryhusten/2014/07/06/merck-uses-legal-threats-to-stifle-negative-advice-about-zetia-and-vytorin-in-italy/">blogging for Forbes</a>, and by Ed Silverman's <a href="http://blogs.wsj.com/pharmalot/2014/07/07/merck-threatened-to-sue-doc-over-prescribing-advice/">PharmaLot blog</a> for the Wall Street Journal.  Amazingly, this time it only took Merck one day after this negative publicity to change its position.  Per Matthew Herper, again <a href="http://www.forbes.com/sites/matthewherper/2014/07/07/merck-says-it-regrets-strong-arming-italian-researcher/">in Forbes</a>, <blockquote class="tr_bq">Merck says that it 'regrets' using legal threats to push a leading Italian researcher to muffle his public critiques of one of the company’s cholesterol drugs.</blockquote> Herper was able to get confirmation from Merck spokesman Steve Cragle who said <blockquote class="tr_bq">the physician would be able to post his arguments about the drug, ezetimibe, on his web site again without fear of legal reprisal coming from Merck.</blockquote>So in this case, sunlight was an effective disinfectant.  Perhaps if some of  the health care professionals who have silently acquiesced to pressure to maintain the anechoic effect decided they would not take it any more, there could be a lot more disinfection. Note that Merck seems to have a chronic problem with honest discussion about Zetia (as well as Vioxx).  In 2007, we first <a href="http://hcrenewal.blogspot.com/2007/12/data-about-ezetimibe-adverse-effects.html">blogged</a> about reports that Merck had suppressed results of clinical research that showed the drug could cause adverse effects on the liver.  Eventually in 2013, a Reuters article that somehow got by us at the time, but was<a href="http://www.fiercepharma.com/story/merck-attacks-italian-critic-cholesterol-fighter-zetia-then-backs/2014-07-08"> summarized in FiercePharma</a>, announced that Merck would "n">pay $688 million to settle two U.S. class-action lawsuits by shareholders who said they lost money because the company concealed the poor results of a clinical trial of the anti-cholesterol drug Vytorin [a combination drug that included ezetimibe]."  Although, "the settlements include no admission of liability or wrongdoing.  'There's probably some merit (to the claims) or they wouldn't have settled for such a large amount,' Judson Clark, a health care analyst with Edward Jones,..."   Merck managers, like many other health care leaders, got away with making facts and opinions they did not like taboo as topics of conversation for a long time.  Maybe if the health care leaders who are used to producing the anechoic effect for their own benefit saw that doing so will not be so easy in the future, the fog that obscures honest discussion of health care dysfunction might start to lift.  True health care reform would enable such honest discussion, no matter who among the powerful it might offend.   ADDENDUM (8 July, 2014) - See also comments <a href="http://shearlingsplowed.blogspot.com/2014/07/is-sanity-making-comeback-matt-herper.html">in the Shearlings Got Plowed blog</a>.

There They Go Again - Merck Threatened Legal Action Against Italian Doctor who Criticized Zetia

It seems that when confronted with unfavorable facts or opinions, Merck executives like to threaten legal action, rather than just argue their side of the case. Last month we discussed how Merck offi…

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08 Jul 2014

At Merck's Urging, a Federal Judge Threatens to Sanction a Lone Professor for Trying to Reveal Evidence about Vioxx

We have written often, and most recently<a href="http://hcrenewal.blogspot.com/2014/06/justice-delayed-is-justice-denied.html"> this week,</a> about the limp posture taken by US law enforcement and regulatory agencies in the face of misbehavior by large health care organizations.  At best, official action often results in<a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements"> legal settlements</a> which let companies pay fines, sometimes large, while the individuals who profited most from the alleged wrongdoing do not suffer any negative consequences.  Worse, the legal settlements often allow the companies to continue to deny any culpability, and the legal evidence underlying the settlement, which might let the public at least estimate culpability, is often kept sealed, or confidential.  As Judge Rakoff wrote in turning down such a settlement involving a financial, not health care company, sealing evidence hides "any proven or admitted facts upon which to exercise even a modest degree of independent judgment,"  and prevents courts and presumably anyone else from trying to determine whether the government endorsement of such a settlement serves any public purpose (look <a href="http://hcrenewal.blogspot.com/2011/11/will-citigroup-ruling-challenge-health.html">here</a>). Keeping Evidence from the Latest Vioxx Case Secret But Ed Silverman, <a href="http://blogs.wsj.com/pharmalot/2014/06/16/merck-seeks-sanctions-against-expert-witness-for-talking-to-a-journalist/">posting</a> to the revived PharmaLot blog, found an example of how far big health care organizations will go to try to keep secret evidence uncovered during litigation that lead to legal settlements, and how judges other than Judge Rakoff may let them do so. <blockquote class="tr_bq">A federal judge may sanction a physician who served as an expert witness in the ongoing litigation over the Vioxx painkiller for describing confidential documents to The Wall Street Journal. Earlier this month, U.S. District Court Judge Eldon Fallon issued a <a data-ls-seen="1" href="http://freepdfhosting.com/56538c8069.pdf">restraining order</a> saying David Egilman, who is a Brown University clinical professor of family medicine, 'may have acted in derogation of his responsibilities.'  Egilman was an expert witness with access to documents in litigation over the Merck pill that took place in various courts around the country. Vioxx was withdrawn a decade ago over links to heart attacks and strokes. Fallon, who presides over Vioxx litigation that was consolidated in federal court in New Orleans, had issued an order in 2005 that marked swaths of documents as confidential. Much of the documentation was filed as evidence in litigation in both state and federal courts.</blockquote> The Nature of the Information to be Kept Secret The post is vague about what secret information Dr Egilman was accused of making public.  Apparently, it had to do with his work as <blockquote class="tr_bq">a paid expert witness for plaintiffs in a lawsuit that had been filed by the Kentucky Attorney General, who alleged Merck violated consumer protection laws by failing to disclose to doctors and patients that taking Vioxx significantly raised the risk of a heart attack. The lawsuit was settled last November for $23 million, although the drug maker did not admit to any wrongdoing. Egilman maintains that some documents demonstrated a failure to properly inform research subjects of side effects and risks, and thus he believes the information should be publicly available. 'In general, there’s information on the toxicity of the drug that’s not been previously published by Merck and there is information that Merck published that misrepresents the health effects of the drug,' he told us three months ago, which prompted the drug maker to complain to the federal judge.</blockquote> So apparently the information had to do with the possibility that Merck withheld or misrepresented information about the toxicity and health effects of Vioxx.  Also, apparently another judge thought that there was at least an argument that this evidence should be public. What About the Public's Interest? <blockquote class="tr_bq">Three months ago, though, a Kentucky state judge permitted Egilman to challenge the confidentiality of the documents, since he had standing as an expert witness which gave him previous access to the materials. <a data-ls-seen="1" href="http://blogs.wsj.com/corporate-intelligence/2014/03/26/more-disclosure-coming-in-mercks-decade-long-vioxx-nightmare/?KEYWORDS=silverman+egilman">As we noted at the time</a>, the judge wrote that 'important public policy questions regarding consumer protection and public health have been raised. The public has an interest in evaluating Dr. Egilman’s opinions and the documents on which they were based.'</blockquote> Merck appears to be squirming in response to the prospect that this information could become public, and that the public might have an interest, in any sense, in it. <blockquote class="tr_bq"> Merck continues to decline comment about the content of the documents and the legal fight with Egilman. But the drug maker argued at a recent hearing that, by virtue of describing the documents to The Wall Street Journal, Egilman violated the 2005 protective order. Moreover, <a data-ls-seen="1" href="http://freepdfhosting.com/359c9a7427.pdf">the drug maker maintained</a> that it would be harmed if the documents were disclosed, and Fallon agreed.</blockquote> While the judge seemed very concerned that Merck somehow might be harmed were to truth to be revealed, it is not obvious either the judge or Merck were at all concerned about the public interest in this truth, if for no other reason than it would say something about what appointed and elected government law enforcement officials are willing to keep secret.  Nor did the judge seem concerned about the imbalance for forces obvious when a huge drug company and US law enforcement are on one side, and a single physician is on the other. Merck's Track Record Vis a Vis Vioxx By the way, while past results do not guarantee future performance, as financial reports are wont to say, past results suggest that Merck was up to no good on a grand scale in its promotion of Vioxx. As we noted <a href="http://hcrenewal.blogspot.com/2011/12/merck-admits-little-while-settling.html">here</a>, all these settlements  arose out of what was called the "Vioxx scandal." In summary, Vioxx (rofecoxib, Merck) a Cox-2 inhibitor non-steroidal anti-inflammatory drug used for pain, and touted for its ostensibly low risk of gastrointestinal side-effects, was withdrawn from the market in 2004 because of its cardiac risks.  The Vioxx case is flush with examples of how the company used deception to market a very profitable drug without regard to its risks to patients.  There is evidence is that the company knew about these effects since 2000, but suppressed the clinical research evidence until 2003.(1)  In particular, in 2005, the editors of the New England Journal of Medicine raised concerns that an article published in that journal in 2000 about the results of the VIGOR study of rofecoxib sponsored by Merck failed to report data that would have suggested that the drug caused excess cardiovascular risks.(2) In 2007, the company paid more than $4.9 billion to settle patient lawsuits alleging harm due to Vioxx.(3)  Also in 2008, the company made a $58 million settlement of claims its advertising of Vioxx deceptively minimized its risks.(4) In 2008, it became clear that at least one apparently clinical trial of Vioxx, the ADVANTAGE trial, was merely a "seeding trial,' that is, a marketing exercise.(5) On Health Care Renewal, we starting <a href="http://hcrenewal.blogspot.com/search/label/Vioxx">writing about Vioxx</a> in 2005, including, - <a href="http://hcrenewal.blogspot.com/2005/04/more-evidence-of-ghostwriting.html">here</a> about ghost-writing of a Vioxx research publication; - <a href="http://hcrenewal.blogspot.com/2005/06/allegations-that-merck-threatened.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2005/12/more-allegations-that-merck-executives.html">here</a> about allegations that Merck executives tried to intimidate Vioxx critics; - <a href="http://hcrenewal.blogspot.com/2007/03/drug-crazy.html">here</a> about how advocates of an extreme laissez faire approach to regulation of health care corporations used illogical arguments about the Vioxx case; - <a href="http://hcrenewal.blogspot.com/2008/08/article-in-annals-of-internal-medicine.html">here</a> about the ADVANTAGE "seeding trial," that is, a study really meant to recruit supposed physician-researchers as prescribers; and - <a href="http://hcrenewal.blogspot.com/2010/01/physician-pleads-guilty-to-fraud-for.html">here</a> about how one once prominent Vioxx researcher pleaded guilty to fraud in connection with his research on other drugs. -  <a href="http://hcrenewal.blogspot.com/2010/02/merck-settles-another-vioxx-case.html">here</a> about how in settling a shareholder lawsuit Merck vowed to improve its scientific and academic integrity, and refrain from manipulating and suppressing clinical research. In 2010, we <a href="http://hcrenewal.blogspot.com/2010/02/merck-settles-another-vioxx-case.html">summarized </a>the Vioxx case thus, " the Vioxx case provides a good lesson about some of the tactics used to deceptively and unethically promote health care products (pharmaceuticals in this case)."  In case there are any doubts about the harms patients suffered as a result of using Vioxx as a pain reliever, in 2004, a cumulative meta-analysis of published trials of Vioxx known by then estimated the risk of myocardial infarction (heart attack) due to Vioxx compared with placebo or other non-steroidal anti-inflammatory drugs was 2.3 times the baseline rate.(6)  That analysis suggested that there was data by 2000 that Vioxx increased the risk of bad cardiovascular events.  A cumulative meta-analysis from 2009 suggested that the risk of death due to Vioxx was 1.7 times the baseline rate.(7)   That analysis suggested there was data by 2001 that Vioxx increased the risk of bad cardiovascular events.  Graham and colleagues' nested case-control study of Vioxx use in a large managed care organization lead them to estimate that "88 000 - 140 000 excess cases of serious coronary heart disease probably occurred in the USA over the market-life of rofecoxib."(8). Yet after all that, Merck is still trying to hide evidence from Vioxx litigation, and a federal judge and apparently federal prosecutors are willing to go along, opposed only by Dr David Egilman  Summary We have long talked about what we have called the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a>, how inconvenient truths that might reflect badly on the current health care status quo and especially those insiders who are making so much money from it are treated as recent unpleasantness that one just should not talk about.  The anechoic effect does not arise merely from politeness, or desire not to discomfit the powerful, but from active measures the powerful take to keep dissent down.  Here we have an example of a huge drug company, apparently helped by US law enforcement and US courts trying to keep truths about how it marketed a drug out of the public eye, even after so much information suggesting that its marketing was deceptive and unethical, and lead to patients dying has come out. As we have said endlessly, until health care professionals, policy makers, and the public can obtain and openly discuss information about health care dysfunction, even if that information and its discussion may threaten those who lead health care and make so much money doing so, health care dysfunction will continue.  True health care reform would improve transparency and put an end to the anechoic effect. Disclosure Note that both Dr Egilman and I are voluntary faculty at Brown, although we do not directly work together.  References 1. Topol EJ. Failing the public health - rofecoxib, Merck and the FDA. N Engl J Med 2004; 351: 1707-1709.  Link <a href="http://www.nejm.org/doi/full/10.1056/NEJMp048286">here</a>. 2. Curfman GD, Morrisey S, Drazen JM et al.  Expression of concern reaffirmed. N Engl J Med 2006; 354:1193. Link <a href="http://www.nejm.org/doi/full/10.1056/NEJMe068054">here</a>. 3. Charatan F. Merck to pay $5bn in rofecoxib claims. Brit Med J 2007; 335: 1011. Link <a href="http://www.bmj.com/content/335/7628/1011.1.full">here</a>. 4. Charatan F. Merck to pay $58m in settlements over rofecoxib advertising. Brit Med J 2008; 336: 1208-1209. Link <a href="http://www.bmj.com/content/336/7655/1208.2.full">here</a>. 5. Hill KP, Ross JS, Egilman DS, Krumholz HM. The ADVANTAGE seeding trial: a review of internal documents. Ann Int Med 2008; 149: 251-258. Link<a href="http://www.annals.org/content/149/4/251.full"> here</a>. 6.  Juni P, Nartey L, Reichenbach S et al. Risk of cardiovascular events and rofecoxib: cumulative meta-analysis.  Lancet 2004; 364: 2021-2029.  Link <a href="http://www.sciencedirect.com/science/article/pii/S0140673604175144">here</a>. 7.  Ross JS, Madigan D, Hill KP et al.  Pooled analysis of rofecoxib placebo-controlled clinical trial data: lessons for postmarket pharmaceutical safety surveillance.  Arch Intern Med 2009; 169: 1976-1984.  Link <a href="http://archinte.ama-assn.org/cgi/content/full/169/21/1976">here</a>. 8.  Graham DM, Campen D, Hui R et al.  Risk of acute myocardial infarction and sudden cardiac death in patients treated with cyclo-oxygenase 2 selective and non-selective non-steroidal anti-inflammatory drugs: nested case-control study.  Lancet 2005; 365: 475-481.  Link <a href="http://www.sciencedirect.com/science/article/pii/S0140673605178647">here</a>. ADDENDUM (19 June, 2014) - See also <a href="http://1boringoldman.com/index.php/2014/06/19/first-order-solution/">comments</a> on the 1BoringOldMan blog.

At Merck's Urging, a Federal Judge Threatens to Sanction a Lone Professor for Trying to Reveal Evidence about Vioxx

We have written often, and most recently this week, about the limp posture taken by US law enforcement and regulatory agencies in the face of misbehavior by large health care organizations. At best, …

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17 Jun 2014

Justice Delayed is Justice Denied? - Another Neurontin Settlement by Pfizer 20 Years After the Alleged Events

We have argued repeatedly against the strategy used by US government authorities to address allegations of bad behavior in health care (and elsewhere) by pursuing monetary <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">settlements</a> against the companies involved, rather than trying to impose penalties on the people who may have done wrong.  There are many apparent things wrong with this approach (which we will rant about again below), but one aspect that deserves more attention is its slowness. The Latest Pfizer Settlement For example, Bloomberg <a href="http://www.bloomberg.com/news/2014-06-02/pfizer-agrees-to-325-million-settlment-over-neurontin.html">reported</a> in early June about yet another settlement by Pfizer of allegations about the marketing of the drug Neurontin (gabapentin, made by its Parke-Davis subsidiary): <blockquote class="tr_bq">Pfizer Inc agreed to pay $325 million to settle a lawsuit brought by health-care benefit providers who claimed the drugmaker marketed the epilepsy drug Neurontin for unapproved uses. The settlement, which needs approval from a federal judge in Boston<a href="http://topics.bloomberg.com/boston/"></a>, would end a case over claims that the company’s Parke-Davis unit schemed to market the drug for unapproved conditions as early as 1994. </blockquote> Thus this settlement occurred 20 years after the first actions were alleged to have occurred. Officially, "Pfizer Didn't Admit Wrongdoing" Despite Allegations of Kickbacks Otherwise, this particular settlement appears unremarkable.  As is typical, the federal authorities and the judge allowed a settlement which obscures what really happened, because, <blockquote class="tr_bq">The Boston accord will resolve 'all third-party payer claims regarding off-label promotion' and state antitrust claims over Neurontin sales, Steve Danehy, a company spokesman, said in a statement. Pfizer didn’t admit wrongdoing, he said. </blockquote> Nonetheless, the allegations were about kickbacks to physicians, a behavior that ought to concern ethical health care professionals. <blockquote class="tr_bq">The companies alleged that Parke-Davis, part of Warner-Lambert Co., paid kickbacks to doctors to encourage them to prescribe the anti-seizure drug for unapproved uses such as bipolar and panic disorders. Pfizer acquired Warner-Lambert in 2000 and 'deliberately expanded the promotion of off-label uses,' lawyers for the benefits firms said in an amended complaint filed in 2011. </blockquote> So Why Pay $325 Million? So Pfizer appears to have paid another $325 million to allow the company to claim again that these allegations were never proven.  Yet if these allegations were really entirely false, one might think it would have cost the company less than that to take the case to trial? As Judge Rakoff noted in rejecting a settlement between the US Department of Justice and Citigroup of allegations of financial misbehavior (look <a href="http://hcrenewal.blogspot.com/2011/11/will-citigroup-ruling-challenge-health.html">here</a>), <blockquote class="tr_bq">As for common experience, a consent judgment that does not involve any admissions and that results in only very modest penalties is just as frequently viewed, particularly in the business community, as a cost of doing business imposed by having to maintain a working relationship with a regulatory agency, rather than as any indication of where the real truth lies.</blockquote> Yet the latest Pfizer Neurontin settlement, occurring 20 years after the events in question, officially gives no indication of where the real truth lies. No Admitted Wrongdoing, Despite Past Evidence, Including a RICO Conviction These very late denials of admission of wrongdoing seem hollow when they are compared to the revelations that have appeared over the years from various legal actions about Neurontin marketing.  As we have discussed <a href="http://hcrenewal.blogspot.com/search/label/Neurontin">here</a>, documents revealed by previous Neurontin litigation have uncovered a catalog of deceptive marketing practices, including <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulation of clinical research</a>, including its design and the analysis and dissemination of its results,  (look <a href="http://hcrenewal.blogspot.com/2012/10/when-clinical-trials-are-meant-for.html">here</a> and <a href="http://hcrenewal.blogspot.com/2009/11/editorial-that-wasnt-evidence-for.html">here</a>), the <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppression of clinical research</a> (look <a href="http://hcrenewal.blogspot.com/2008/10/did-pfizer-marketers-suppress-and.html">here</a>), and <a href="http://hcrenewal.blogspot.com/search/label/stealth%20marketing">stealth marketing campaigns</a>, including manipulation of <a href="http://hcrenewal.blogspot.com/search/label/CME">continuing medical education</a> through "unrestricted educational grants," captive speakers bureaus, docile and well-paid academics and physicians on advisory boards and consultants, the use of <a href="http://hcrenewal.blogspot.com/search/label/key%20opinion%20leaders">key opinion leaders</a> as marketers, and publications strategies including <a href="http://hcrenewal.blogspot.com/search/label/ghost%20writing">ghost writing</a> (look <a href="http://hcrenewal.blogspot.com/2006/08/stealth-marketing-of-neurontin.html">here</a>).   Note also that this is only the latest chapter in the long saga of Neurontin, for whose mismarketing Pfizer has already shelled out a lot of money (for the most recent example look <a href="http://hcrenewal.blogspot.com/2014/04/the-pervasiveness-of-health-care.html">here</a>, then see<a href="http://hcrenewal.blogspot.com/2006/08/stealth-marketing-of-neurontin.html"> this post</a>, and look <a href="http://hcrenewal.blogspot.com/search/label/Neurontin">here</a> for the collection).  Pfizer has an amazing record of bad behavior on view <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">here</a>.  In fact, it has had a conviction as a Racketeering Influenced Corrupt Organization (RICO) on the basis of its previous marketing of Neurontin (look <a href="http://hcrenewal.blogspot.com/2013/12/blogscan-us-supreme-court-turns-down.html">here</a>), which was recently upheld on appeal (look <a href="http://hcrenewal.blogspot.com/2013/12/blogscan-us-supreme-court-turns-down.html">here</a>).   Yet Pfizer, convicted as a racketeering influenced corrupt organization, gets to officially deny wrong-doing once again.  And through all this, no Pfizer executive who authorized or directed any of this conduct, or who got a big bonus based on Neurontin revenues hiked by deception, has apparently had to suffer any negative consequences. Summary: the Usual Rant So here we go again,...  The failure of the current limp legal efforts against such corruption is evident by how many corporations have become ethical repeat offenders.  Pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.  So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue. True health care reform would include much more vigorous enforcement of existing laws to make sure health care organizations and their leaders actually put health, rather than personal enrichment, first.

Justice Delayed is Justice Denied? - Another Neurontin Settlement by Pfizer 20 Years After the Alleged Events

We have argued repeatedly against the strategy used by US government authorities to address allegations of bad behavior in health care (and elsewhere) by pursuing monetary settlements against the comp…

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16 Jun 2014

Fool Me Twice? - Boehringer Ingelheim, Medtronic Settle Lawsuits Alleging Deceptive Marketing

It seems like it has been really quiet on the legal settlement front in the US, but maybe corporate executives wanted to wait until things calmed down after the unofficial start of summer to let out news that some people might not think reflected well on them.  So this week it was time to announce two new legal settlements of allegations of bad behavior by corporate health were announced, as we will list in alphabetical order.... Boehringer Ingelheim Settles Suits Alleging it Hid Data About Pradaxa Harms As <a href="http://www.bloomberg.com/news/2014-05-28/boehringer-pays-650-million-to-end-blood-thinner-cases.html">per Bloomberg</a>, <blockquote class="tr_bq">Boehringer Ingelheim GmbH, the German family-owned drugmaker, agreed to pay $650 million to settle the majority of lawsuits filed over its blood thinner Pradaxa, which has been linked to more than 500 patient deaths.</blockquote> The major allegations were about deception, <blockquote class="tr_bq"> Patients and their families alleged Boehringer executives knew Pradaxa posed a deadly risk to some consumers when they brought it to the U.S. market in October 2010.</blockquote> In particular, as we <a href="http://hcrenewal.blogspot.com/2014/02/cant-this-be-avoided-how-corporate.html">discussed</a> in more detail in February, 2014, <blockquote class="tr_bq">Documents made public as part of patients’ Pradaxa suits showed Boehringer officials didn’t disclose to U.S. regulators a data analysis that indicated the blood-thinning drug may have caused more fatal bleeding after it was cleared for sale than in a study used to win approval.  </blockquote> <a href="http://www.nytimes.com/2014/05/29/business/international/german-drug-company-to-pay-650-million-to-settle-blood-thinner-lawsuits.html">Per </a>the New York Times, Boehringer Ingelheim executives continued to maintain <blockquote class="tr_bq">that it stood behind the safety and efficacy of Pradaxa and continued to believe that the lawsuits lacked merit, but that settling the case allowed the company to move on. 'Time and again, the benefits and safety of Pradaxa have been confirmed,' said Desiree Ralls-Morrison, senior vice president and general counsel of Boehringer Ingelheim USA.</blockquote> This is typical of most legal settlements involving large health care organizations, whether they end lawsuits brought by private parties or by the US government.  The settlements often allow the parties to continue to disagree, do not establish guilt or innocence, but leave one to wonder why executives would pay so much of admittedly other peoples' money just to "move on" without upholding their or their companies' honor, especially when documents revealed and legal findings made in cases prior to settlement remain unchallenged. So this settlement also comes after December, 2013, as we discussed <a href="http://hcrenewal.blogspot.com/2013/12/a-second-order-cover-up-judge-finds.html">here</a>, December, when a judge <blockquote class="tr_bq">ordered Boehringer to pay a $931,000 fine in December for failing to preserve 'countless' files on Pradaxa’s development and marketing. Patients’ lawyers say Boehringer should have placed an effective 'litigation hold' on the documents, forcing employees to preserve them.</blockquote> (The above <a href="http://www.bloomberg.com/news/2014-05-28/boehringer-pays-650-million-to-end-blood-thinner-cases.html">per Bloomberg</a>.)  That finding, which the settlement does not dispute, does not fill one with confidence about the openness and transparency of Boehringer Ingelheim managers. Also the settlement does not refute documents released during this litigation which suggested that Boehringer Ingelheim personnel tried to influence, or manipulate a company sponsored research paper to prevent it from contradicting the company's official marketing message that Pradaxa administration does not require monitoring of patients with blood tests (as we discussed <a href="http://hcrenewal.blogspot.com/2014/02/cant-this-be-avoided-how-corporate.html">here</a>).     Note further that this case comes only a few years after a case in which Boehringer Ingelheim settled allegations of deceptive marketing of drugs other than Pradaxa, as we discussed <a href="http://hcrenewal.blogspot.com/2012/10/just-another-day-at-office-boehringer.html">here</a>. Medtronic Settles Suit Alleging Kickbacks to Physicians The most extensive and colorful <a href="http://www.startribune.com/business/260978651.html">report</a> was in the Minneapolis Star-Tribune, <blockquote class="tr_bq">Medtronic Inc. will pay the U.S. Justice Department $9.9 million to settle a whistleblower lawsuit that accused the company of paying kickbacks to doctors for using its defibrillators and pacemakers. The alleged kickbacks, according to the newly unsealed suit, included 'gifts of wine and alcohol' and 'trips to strip clubs' paid for by the Fridley-based company. The lawsuit also says Medtronic paid to fly doctors to events in San Francisco, Las Vegas, New Orleans, New York, Minneapolis and other cities that some physicians used as 'a free vacation.'</blockquote> More colorful details, <blockquote class="tr_bq">The lawsuit, whose details remained secret until Tuesday, describes Medtronic business plans with names such as 'Project Wildfire' that had sales representatives offer 'cash payments, expensive trips and meals, expensive gifts and entertainment to physicians as kickbacks in exchange for the physicians’ agreement to implant Medtronic devices.' The lawsuit alleged that Medtronic 'funneled millions of dollars in unrestricted grant money to physicians' to get them to encourage the use of Medtronic defibrillators and pacemakers in patients whose 'mild heart failure symptoms did not meet [Food and Drug Administration] criteria for an implantable device.' Those procedures were not only unnecessary, the suit alleged, but potentially dangerous. The suit describes payments of thousands of dollars in speaking fees to doctors for attending dinners at which they spoke for only a few minutes, if at all. In other cases, Medtronic allegedly prepared entire presentations that physicians offered almost verbatim. The suit talks of a plan that 'instructed sales representatives to personally review patient charts in friendly doctor’s offices' and to flag those patients the sales representative 'felt should receive an implant.'</blockquote> Note that commercially supplied "unrestricted grant money" is now the lifeblood of many ostensibly academic continuing medical education (CME) programs, but this case suggests that corporate executives may believe they are paying such money to get doctors to use their products.  Note further that many physicians defend their receipt of money in payment of talks they have given on behalf of commercial firms as fair payment for providing unbiased education, but this case suggests that corporate executives may believe they are paying such money for marketing, and/or to get the supposedly unbiased physician speakers to use their products.  Once again, the settlement did not resolve the allegations. <blockquote class="tr_bq"> Medtronic said it did not admit that any of its activities were improper or illegal and that the settlement would bring to a close a long-running review of events dating from 2001 to 2009.</blockquote> Also, <blockquote class="tr_bq"> Asked to comment specifically on the strip club allegations and the accusation that it financially facilitated unnecessary implantations, Medtronic reiterated that its $9.9 million payment was not an admission that it had done anything illegal or improper.</blockquote> See my comments above.  Why would executives with even the slightest ability to feel shame not contest such allegations if they were untrue?  But maybe many of today's corporate health care executives are not capable of feeling shame, and of course they get to pay off these lawsuits with other peoples' money. By the way, this is just one of many Medtronic settlements.  As Bloomberg <a href="http://www.bloomberg.com/news/2014-05-28/medtronic-settles-suit-over-heart-device-kickback-claims.html">summarized</a>, <blockquote class="tr_bq"> Medtronic agreed in 2007 to pay about $130 million to settle consumer suits accusing the device maker of hiding defects in its defibrillators. The company agreed to a $268 million settlement of suits in 2010 over allegations that fractured wires in another line of defibrillators caused at least 13 patient deaths.</blockquote> In fact, Medtronic has provided our blog with <a href="http://hcrenewal.blogspot.com/search/label/Medtronic">lots of material</a>.  We first <a href="http://hcrenewal.blogspot.com/2006/01/medtronics-payments-to-doctors-too.html">discussed</a> detailed and vivid allegations that Medtronic had been paying off doctors starting in 2003 here in 2006.  Medtronic has been involved in other lawsuits alleging various kinds of deception. -  In 2011, it settled for $23.5 million two other federal lawsuits alleging it paid kickbacks to encourage physicians to implant its devices (look <a href="http://hcrenewal.blogspot.com/2011/12/medtronic-settles-yet-again.html">here</a>).   - In 2008, Medtronic subsidiary Kyphon settled a suit for $75 million and signed a corporate integrity agreement for allegations that it defrauded Medicare through a scheme that lead to excessive hospitalization for patients who received the company's spine surgery device (link <a href="http://hcrenewal.blogspot.com/2008/05/corporate-integrity-agreement-for.html">here</a>) - In 2006, Medtronic subsidiary Sofamor Danek settled for $40 million allegations that it gave kickbacks to doctors in the form of sham consulting fees and lavish trips (look <a href="http://hcrenewal.blogspot.com/2011/12/medtronic-settles-yet-again.html">here</a>). Yet we are now writing at the end of May, 2014, and Medtronic is still settling lawsuits involving vivid allegations of payoffs to physicians, and its executives are still saying nothing to see here, move on. Summary These sorts of cases provide evidence that large health care corporations, including not just pharmaceutical companies, but biotechnology and medical device companies, commonly use deceptive and unethical practices to market their products.  Such marketing lets them charge high, even outrageous prices and sometimes results in patients getting expensive treatments that do them no good, or worse, that do more harm than good.  Some of the executives of these companies doubtless got large bonuses, and may have gotten millions in compensation partially because of the sales generated by these practices.  However, they get to walk away from such lawsuits without any personal accountability, just by paying out a few millions, or billions, of the company's, that is, other peoples' money.  They get do pay that money without any other explanation that it eliminates distractions and allows them to move on (with whatever they have already made). The more this goes on, the more health care dysfunction continues, and the more the health care oligarchy prospers.  As we have written many times, <blockquote class="tr_bq">penalties that only appear to be (relatively small) costs of doing business are unlikely to deter future bad behavior. Until the people who actually authorized, directed and implemented the bad behavior have to suffer some negative consequences, expect the bad behavior to continue.  Note that each of the companies discussed above have had their previous ethical lapses discussed in previous Health Care Renewal posts. The continuing march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">settlements</a>, and sometimes <a href="http://hcrenewal.blogspot.com/search/label/crime">criminal</a> convictions involving major health care organizations should be regarded merely as providing a floor to estimates of the extent of bad behavior by large health care organizations. Bad behavior may not be reported, or lead to legal action, and legal action may not lead to settlements or convictions. However, it is amazing how many organizations that were once regarded as exemplary have had to settle, or plead guilty, or been convicted. When it comes to health care's leadership, society seems to have acceded to defining deviancy down. Until we start holding health care leaders to high standards, expect their organizations not to uphold high standards.</blockquote> (That version was from 2010, posted <a href="http://hcrenewal.blogspot.com/2010/10/last-weeks-scandals.html">here</a> re Medtronic's 2010 settlement. You heard it here first.  Medtronic is still settling, and according to its <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=76126&p=IROL-secToc&TOC=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9vdXRsaW5lLnhtbD9yZXBvPXRlbmsmaXBhZ2U9OTAwMDI5NiZzdWJzaWQ9NTc%3d&ListAll=1">most recent proxy</a>, from 2013, the annual total compensation of its CEO was last reported to be $8,975,886.)

Fool Me Twice? - Boehringer Ingelheim, Medtronic Settle Lawsuits Alleging Deceptive Marketing

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03 Jun 2014

The Pervasiveness of Health Care Corruption as Shown by Another Roundup of Legal Settlements

Legal settlements are one way to document unethical and even corrupt behavior by large health care organizations, even if they may not deter bad behavior in the future.  It is time for another roundup of settlements by large pharmaceutical and device companies, presented in alphabetical order Abbott Laboratories This one goes back to late December, 2013.  As <a href="http://www.chattanoogan.com/2013/12/27/266328/Abbott-Laboratories-To-Pay-5.475.aspx">described</a> in the Chattanoogan (from Tennessee): <blockquote class="tr_bq">Abbott Laboratories, a global healthcare company, has agreed to pay $5.475 million to settle alleged violations of the False Claims Act, and other federal laws and regulations in connection with the operation of its medical device business which manufactures, markets and supplies carotid, biliary, and peripheral vascular products.</blockquote> The US Justice Department accused Abbott of kickbacks to physicians, <blockquote class="tr_bq"> As alleged in the settlement agreement, between 2005 and 2010, through its employees and a third party continuing medical education providers, Abbott offered physicians paid teaching and training assignments, consulting arrangements, speaking engagements, and/or sponsorship grants for physician conferences, for the purpose of inducing physicians to arrange for or recommend that the hospitals with which they were affiliated purchase or order Abbott’s carotid, biliary and peripheral vascular products.</blockquote> Note in particular that the kickbacks were disguised as payments for consulting or speaking.  As is usual in such cases, no individual seems to have paid any penalty or been subject to any punishment.  Because this was a legal settlement, the company did not admit wrongdoing. Abbott's previous issues are discussed <a href="http://hcrenewal.blogspot.com/search/label/Abbott">here</a>, including a <a href="http://hcrenewal.blogspot.com/2012/05/abbott-pleads-guilty-settles-for-16.html">$1.6 billion settlement in 2012</a>.  Baxter International This was <a href="http://www.modernhealthcare.com/article/20140421/INFO/304219992">reported</a> in April, 2014 by Modern Healthcare, <blockquote class="tr_bq"> Baxter International agreed to pay $64 million to settle a class-action lawsuit that alleged the Deerfield, Ill.-based company and some of its competitors colluded to raise prices of plasma-based therapies.</blockquote> Unlike the other cases above and below, this seemed to be a purely financial misadventure, although one that clearly increased health care costs, <blockquote class="tr_bq">Hospitals and drug distributors, saying they bought the plasma products at inflated prices, sued in 2009 Baxter; Victoria, Australia-based CSL; and the Plasma Protein Therapeutics Association, an Annapolis, Md.-based trade group.</blockquote> Once more, the company admitted no wrongdoing, and no individuals seemed to be subject to any negative consequences.   Baxter International's previous misadventures are <a href="http://hcrenewal.blogspot.com/search/label/Baxter">here</a>, including the <a href="http://hcrenewal.blogspot.com/2011/08/jama-article-begs-key-questions-about.html">striking case</a> of its marketing of contaminated and sometimes deadly heparin made from Chinese pigs.  Endo Health Solutions This one is from February, 2014, as<a href="http://www.bloomberg.com/news/2014-02-21/endo-to-pay-193-million-in-lidoderm-marketing-probe.html"> reported</a> by Bloomberg <blockquote class="tr_bq">Endo Health Solutions entered a deferred-prosecution agreement and will pay $193 million to settle whistle-blower claims that it marketed the shingles drug Lidoderm for unapproved purposes, the U.S. said. Endo will pay $20.8 million in forfeitures and $171.9 million in civil false claims settlements with the states and the U.S. government, the Justice Department said today in a statement. </blockquote> This one was all about marketing for uses not approved by the US Food an Drug Administration, <blockquote class="tr_bq">Between 2002 and 2006, Endo sales managers instructed some representatives on how to expand 'sales conversations' with doctors beyond the treatment of shingles-related pain, the U.S. said. Under the deferred-prosecution agreement, Endo admitted that it intended Lidoderm to be used for uses not approved by the U.S. Food and Drug Administration, the Justice Department said. </blockquote> Note that this case involves false claims, that is, fraud, because it is illegal to bill government programs for unapproved uses. Again, no individual suffered any consequences, and the company offered the usual kind of statement that admitted neither responsibility nor guilt, <blockquote class="tr_bq">'We are pleased to resolve this matter and are confident that we have robust programs in place to assist us in satisfying our legal and regulatory agreements,' Endo Chief Executive Officer Rajiv De Silva said in a statement.  </blockquote> One wonders, as usual, why a company would pay so much merely to avoid the legal expenses of a trial, unless of course the lawyers suspected the trail would not go well? Hospira This one was about hiding quality problems due to cost-cutting from investors, as<a href="http://www.reuters.com/article/2014/03/27/hospira-lawsuit-idUSL1N0MO2BS20140327"> reported</a> by Reuters in March, 2014.   <blockquote class="tr_bq">Hospira Inc has agreed to pay $60 million to resolve a class action lawsuit accusing the drug maker of misleading investors about quality control problems that undermined an initiative to improve the company's margins and operations.</blockquote> The details included, <blockquote class="tr_bq">As Hospira was promising to address issues raised by the U.S. Food and Drug Administration following inspections, the plaintiffs said the company was 'making the problems worse by gutting quality control efforts through cost cutting aimed at boosting short-term profitability.' The lawsuit said those cost-cutting moves stemmed from a March 2009 initiative called 'Project Fuel' intended to increase shareholder value by eliminating underperforming and duplicative units and reducing its global workforce. Plaintiffs contended the cuts in the budget and workforce hurt Hospira's quality control efforts, particularly at Rocky Mount, the company's largest facility. An FDA inspection in January 2010 of the Rocky Mount facility found a number of problems with the company's quality control and drug validation processes, the lawsuit said, and the agency issued a warning letter that April.</blockquote> Note that this involved quality control problems presumably in drug or device production, possibly leading to safety risks for patients.  Yet it was investors who brought the lawsuit. Note also that this seemed to be a clear case in which cost-cutting measures meant to improve short-term corporate revenue lead to problems that could have caused such risks.   One interesting feature of this case was that company executives were named as defendant (presumably again because it was investors, not patients or law-enforcement officials who initiated the suit.) <blockquote class="tr_bq">The lawsuit ... also named executives including Chief Executive Officer Michael Ball as defendants,...</blockquote> I cannot find any information about whether these executives were personally liable for any payments, however.    Pfizer This is yet another settlement involving the marketing of Neurontin, as <a href="http://www.bloomberg.com/news/2014-04-22/pfizer-agrees-to-pay-190-million-to-settle-neurontin-case-1-.html">reported</a> by Bloomberg in April, 2014, <blockquote class="tr_bq">Pfizer Inc the world’s biggest drugmaker, agreed to pay $190 million to end a lawsuit claiming it violated federal antitrust laws by delaying generic versions of its Neurontin epilepsy drug.  </blockquote><blockquote>Pfizer agreed to settle the class-action litigation pending in federal court in Newark, New Jersey, according to a filing today. U.S. District Judge Faith Hochberg must approve the accord, which would cover purchasers of Neurontin from December 2002 to August 2008. </blockquote> Note that this settlement, like many others, is of matter from a long time ago.  When it comes to bad behavior by big health care corporations, any form of justice is not swift. Note also that this is only the latest chapter in the long saga of Neurontin, for whose mis-marketing Pfizer has already shelled out a lot of money (see<a href="http://hcrenewal.blogspot.com/2006/08/stealth-marketing-of-neurontin.html"> this post</a> to start, and <a href="http://hcrenewal.blogspot.com/search/label/Neurontin">here</a> for the collection).  Pfizer has an amazing record of bad behavior on view <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">here</a>.  In fact, it has had a conviction as a Racketeering Influenced Corrupt Organization (RICO) on the basis of its previous marketing of Neurontin (look <a href="http://hcrenewal.blogspot.com/2013/12/blogscan-us-supreme-court-turns-down.html">here</a>). This particular bad behavior involved included, <blockquote class="tr_bq"> improperly listing certain patents with the U.S. Food and Drug Administration, engaging in illegal promotion and sales of Neurontin for unapproved uses, filing and maintaining sham litigations with respect to certain patents, and making misrepresentations to the patent courts,</blockquote> Note that while much of this was legalistic, illegal marketing was in there too. Once more, I found nothing about any negative consequences for individuals who authorized, directed, or implemented questionable actions. Summary So it is all drearily familiar.  Big health care organizations seem to repeatedly engage in deceptive marketing, providing kickbacks to health professionals, fraudulent billing, anti-competitive practices, etc, etc.  These practices increase health care costs, and may risk patients' health and safety.  Many of these practices are corrupt, at least according to the Transparency International definition of corruption, "abuse of entrusted power for private gain."  Drug and device companies, for example, are entrusted to provide safe and effective products.  Deceptive marketing, kickbacks to health professionals to encourage overuse, and cutting quality control to cut costs all seem to be examples of abuse of this entrusted power.  The private gain obviously goes to any managers and executives who score bigger bonuses due to the increases in revenue that result.  Yet there are very few examples of any individuals who gained ever being subject to any negative consequences.  Given that lack, and the lack of any requirement for corporate leaders to admit responsibility, much less guilt, is it any surprise that these practices go on and on.  The failure of current limp legal efforts against such corruption is evident by how many corporations have become ethical repeat offenders.   (Note that in fact, as noted above, one of the pharmaceutical companies above actually was convicted of being a RICO, racketeering influenced corrupt organization, yet that conviction seemed to have no real negative consequences for the organization or any of the people involved.) As I have said again and again, pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction. So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue.

The Pervasiveness of Health Care Corruption as Shown by Another Roundup of Legal Settlements

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30 Apr 2014

The Greedy Leading the Greedy - Multimillionaire Former Johnson and Johnson CEO Approved Huge Compensation for JP Morgan Chase CEO After Company Paid $20 Billion in Legal Settlements

JP Morgan Chase CEO Got Huge Raise Despite Company's Recent Huge Legal Settlements The current compensation set by the board of directors of JP Morgan Chase for CEO Jamie Dimon, $20 million a year, has attracted some attention (e.g., see <a href="http://www.rollingstone.com/politics/blogs/taibblog/jamie-dimons-raise-proves-u-s-regulatory-strategy-is-a-joke-20140130">this commentary</a> by Matt Taibbi), especially given the contrast between his raise and the $20 billion or so the company had to pay out last year in settlements of allegations of unethical practices.  A New York Times <a href="http://www.nytimes.com/2014/02/01/business/accounting-for-jamie-dimons-big-pay-raise.html">opinion piece</a> rushed to Mr Dimon's defense <blockquote class="tr_bq">in the world of executive compensation, especially when viewed from the rarefied perspective of other chief executives, and more broadly on Wall Street, Mr. Dimon’s pay — and how it was determined — is not only defensible, but laudable.</blockquote> Also, <blockquote class="tr_bq">I spoke this week to several people with direct knowledge of the board’s discussions about Mr. Dimon’s pay. They said that the compensation committee went through an exhaustive process to determine the right level and that the board considered the likely negative reaction. 'We were mindful of it, but it didn’t influence our decision,' said one, who like the others, spoke only on condition of anonymity. 'Some people were going to criticize us unless we paid him nothing. We were trying to do the right thing.' </blockquote> The author did conclude with a quote from Rep Peter Welch (D - Vermont), <blockquote class="tr_bq">This isn’t really about Jamie Dimon. It’s about a whole culture of immunity for the consequences of your actions. </blockquote>A Retired Pharmaceutical CEO Who Also was Hugely Compensated Despite his Company's Troubles Set Dimon's Pay We have frequently discussed how the culture of immunity, or <a href="http://hcrenewal.blogspot.com/search/label/impunity">impunity</a> found in <a href="http://hcrenewal.blogspot.com/search/label/finance">finance</a> may carry over into health care, since now many extremely rich  leaders of finance firms sit on boards of trustees of health care institutions like hospitals and hospital systems, universities and their associated medical schools and teaching hospitals, and health related foundations, and boards of trustees of health care corporations. In this case, maybe the culture carried over from health care to finance. The NY Times article noted <blockquote class="tr_bq"> The compensation and management development committee of JPMorgan Chase’s board has three members, all seasoned business luminaries in their own right. Lee R. Raymond, the chairman, is the former long-serving chairman and chief executive of Exxon Mobil. Stephen B. Burke is chief executive of NBCUniversal. William C. Weldon is the former chairman and chief executive of Johnson & Johnson.</blockquote> Mr Weldon is the former pharmaceutical representative who rose to CEO of giant pharmaceutical/ biotechnology/ device company Johnson and Johnson.  Despite the appellation of business luminary above bestowed by the author of the NYT article, we noted <a href="http://hcrenewal.blogspot.com/2013/12/the-camels-aching-back-johnson-and.html">here</a> how many settlements have been made by, fines assessed against, and other adverse legal actions affecting Johnson and Johnson in the recent past.  Our lengthy summary of such cases is appended at the end of this post. Yet Mr William Weldon, the outgoing CEO on whose watch most of the misbehavior resulting in the legal actions listed in the appendix below occurred, retired with a huge retirement package, after receiving extremely generous compensation prior to that.   The retirement package was estimated to be worth from $143 to $197 million (look <a href="http://hcrenewal.blogspot.com/2012/03/despite-recalls-legal-settlements-and.html">here</a>).  In 2010, his total compensation was $29 million (look <a href="http://hcrenewal.blogspot.com/2012/02/semi-retirement-of-salesman-weldon-to.html">here</a>).   According to the <a href="http://www.investor.jnj.com/secfiling.cfm?filingID=1193125-12-113826">2012 Johnson and Johnson proxy statement</a>, his 2011 total compensation was greater than $26 million. As far as I can tell, Mr Weldon never suffered any negative consequences for his company's sorry record, and retired a very rich man. Yet the luminous Mr Weldon got to make the decision about how much to pay Mr Jamie Dimond after his company's recent sorry record. Summary So it appears that the top hired executives of health care and finance organizations, and the so-called stewards sitting on their boards of directors are all blending together.  Together they are in charge of assuring that top hired executives get richer and richer even while the companies they lead commit seemingly endless strings of ethical and sometimes legal offenses. Is this any way to run health care, or the economy? As I have repeated ad nauseum, <div class="A_Standard__35__20_Normal">Many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved. 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. Again, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.</div> <div class="A_Standard__35__20_Normal">Appendix - Johnson and Johnson Recent Legal Record</div><div class="A_Standard__35__20_Normal"></div><div class="A_Standard__35__20_Normal"></div><div class="A_Standard__35__20_Normal">2010 </div><div class="A_Standard__35__20_Normal">- Convictions in two different states in 2010 for misleading marketing of Risperdal - A guilty plea for misbranding Topamax in 2010 2011</div><div class="A_Standard__35__20_Normal">- Guilty pleas to bribery in Europe in 2011 by Johnson and Johnson's DePuy subsidiary - A guilty plea for marketing Risperdal for unapproved uses in 2011 (see <a href="http://hcrenewal.blogspot.com/2011/08/why-cultivate-weldons-confidence-ceo.html">this link</a> for all of the above) - A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post <a href="http://hcrenewal.blogspot.com/2011/09/johnson-and-johnson-pleads-guilty.html">here</a>) 2012 </div><div class="A_Standard__35__20_Normal">- In 2012, testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post <a href="http://hcrenewal.blogspot.com/2012/02/texas-tmap-trials-as-illustration-of.html">here</a>). -  Also in 2012,  Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look <a href="http://hcrenewal.blogspot.com/2012/04/once-more-with-feeling-johnson-and.html">here</a>). -  Also in 2012, Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this <a href="http://hcrenewal.blogspot.com/2012/09/how-many-legal-settlements-does-it-take.html">post</a>). </div><div class="A_Standard__35__20_Normal">2013 </div><div class="A_Standard__35__20_Normal">-  In 2013, Johnson & Johnson settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this <a href="http://hcrenewal.blogspot.com/2013/07/johnson-and-johnson-settles-suit.html">post</a>)</div><div class="A_Standard__35__20_Normal">-  In 2013, Johnson & Johnson Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this <a href="http://hcrenewal.blogspot.com/2013/11/another-and-huge-22-billion-settlement.html">post</a>).  </div><div class="A_Standard__35__20_Normal">-  In 2013, Johnson & Johnson DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .</div><div class="A_Standard__35__20_Normal">- In 2013, Johnson & Johnsonn Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this <a href="http://hcrenewal.blogspot.com/2013/11/there-they-go-again-again-johnson-and.html">post</a> for this and above case).</div><div class="A_Standard__35__20_Normal">- In 2013, Johnson & Johnson Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this <a href="http://hcrenewal.blogspot.com/2013/12/how-many-straws-johnson-and-johnson.html">post</a>). </div><div class="A_Standard__35__20_Normal">- In 2013, Johnson & Johnson fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (see this <a href="http://hcrenewal.blogspot.com/2013/12/the-camels-aching-back-johnson-and.html">post</a>).  </div>

The Greedy Leading the Greedy - Multimillionaire Former Johnson and Johnson CEO Approved Huge Compensation for JP Morgan Chase CEO After Company Paid $20 Billion in Legal Settlements

JP Morgan Chase CEO Got Huge Raise Despite Company's Recent Huge Legal Settlements The current compensation set by the board of directors of JP Morgan Chase for CEO Jamie Dimon, $20 million a year, ha…

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31 Jan 2014

Our Man in the NQF? - CareFusion Settles Kickback Allegations for $40.1 Million and Government Alleges They Meant to Manipulate National Quality Forum Standards

What appeared to be yet another entry in the <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">march of legal settlements</a> turns out to be more interesting than it first appeared. The Basic Story: Off-Label Marketing  The story was initially briefly reported in the media.  A <a href="http://blog.seattlepi.com/boomerconsumer/2014/01/09/company-to-pay-40-1-million-to-settle-medicaid-fraud-kickback-charges/">report</a> in the Seattle Post-Intelligencer on 9 January, 2014, was perhaps the most complete, <blockquote class="tr_bq">CareFusion, a manufacturer of medical and surgical supplies and medical devices, has agreed to settle charges of illegal marketing practices and kickback payments for promoting sales of the company’s surgical preparation solution, Chloraprep. Under the terms of the settlement with Washington, other states, and the federal government, CareFusion will pay a total of $40.1 million.</blockquote> In particular,   <blockquote class="tr_bq">When the FDA approves a surgical solution such as Chloraprep as safe and effective, its manufacturer can’t market or promote it for an 'off-label' use – any use not approved by the FDA. Chloraprep was approved for specific inpatient hospital procedures, including the preparation of a patient’s skin prior to surgery or an injection. The FDA rejected its use for prepping the skin prior to inserting catheters into veins for administering medications, or cleaning the skin as part of closing wounds. The lawsuit alleges that from Sept. 1, 2009 to Aug. 31, 2011, CareFusion promoted Chloraprep for improper uses. CareFusion also allegedly publicized unverified information about Chloraprep during the same time period, Ferguson said.</blockquote> So this follows a template we have seen before, most recently <a href="http://hcrenewal.blogspot.com/2014/01/more-pharmaceutical-misadventures.html">here</a>.  A company promotes a drug or device for "off-label" uses.  While physicians are legally allowed to prescribe a drug or use a device for reasons other than its official indications, companies are not legally allowed to promote such uses.  Sometimes it turns out that the drug has benefits that outweigh its harms when used off-label, in which case the violation could be considered technical.  In other cases, the drug might turn out to be useless or even net harmful when used off-label, so the violation indicates putting revenue ahead of patients' welfare.   The reporting on the CareFusion Chloraprep settlement did not clearly suggest that the off-label use was harmful to patients. Allegations of Kickbacks to Promote Off-Label Use, but How? It gets more interesting.  The Post-Intelligencer also noted, <blockquote class="tr_bq">The states also contend that in 2008 CareFusion’s predecessor corporation entered into agreements that CareFusion assumed legal and financial responsibility for. This included payments to Health Care Concepts Inc., payments that were allegedly made to hide kickbacks to the physician-owner of HCC for promoting and influencing providers to use Chloraprep, he said. This violates federal and state anti-kickback laws.</blockquote> Now the allegations also include kickbacks to the "physician-owner" of a company to facilitate off-label promotion.  So the issue goes beyond a technical violation of the law.  The Post-Intelligence report, however, did not make clear what Health Care Concepts Inc actually did to contribute to off-label promotion. A quick attempt to find out more about this company via the web was not fruitful.  There are lots of companies/ organizations called Health Care Concepts or some variant.  The most relevant may be<a href="http://www.hcc1.com/"> this one</a>, which lists CareFusion as a "partner" on its main web-page.  What this company actually does is a bit unclear.  Its business model is <a href="http://www.hcc1.com/node/3">described</a> as "a private incubator of early products, services, and technologies, as well as an accelerator of mature solutions that will be taken to scale." What that has to do with off-label promotion of a product of a big established company like CareFusion is not clear.  How this company could have influenced providers is not clear, given that it is not an advertising firm, public relations firm, or medical education and communication company (MECC). So what is going on here?   Allegations of a $11.6 Million Payment to Manipulate the National Quality Forum Standards Yesterday, 21 January, 2014, Modern Healthcare began to <a href="http://www.modernhealthcare.com/article/20140120/NEWS/301209952/nqf-committee-member-paid-11-6m-by-carefusion-to-influence-panels">explain</a> the mystery.    <blockquote class="tr_bq">Many healthcare companies have been accused of paying kickbacks to influence physicians' medical decisions, but one major supplier allegedly tried to steer an entire industry by influencing the recommendations of the National Quality Forum The NQF, which reviews medical evidence and makes recommendations for improving healthcare, acknowledges that a well-known patient safety advocate is alleged to have received millions of dollars to promote a surgical sterilization product while co-chairing an NQF committee that suggested hospitals use that product.  Federal officials say Dr. Charles Denham, co-chair of NQF's Safe Practices Committee in 2010, received $11.6 million from San Diego-based CareFusion to promote the company's ChloraPrep line of skin-preparation products. Denham's committee at the NQF also recommended surgeons use ChloraPrep products to prevent surgical infections, the NQF said. </blockquote> The allegations about the role of Dr Denham in the NQF also did appear in the the official US Department of Justice <a href="http://www.justice.gov/opa/pr/2014/January/14-civ-021.html">press release</a>. Allegations of Bogus Contracts, and Non-Denial Denials The allegations produced some <a href="http://en.wikipedia.org/wiki/Non-denial_denial">non-denial denials</a> (in the phrase found in All the President's Men). Dr Denham responded, but through a lawyer: <blockquote class="tr_bq">A statement from Denham's attorney, Larry Gondelman of Powers Pyles Sutter & Verville in Washington, said reports that the underlying lawsuit involved Dr. Denham were 'blatantly false.' Denham was not accused of wrong-doing in the whistleblower lawsuit, and Gondelman said Denham has and continues to cooperate with investigators in the case.</blockquote> Note that while the attorney denied that Dr Denham was named in the underlying lawsuit, he did not apparently specifically deny the allegations. The NQF also reponded, <blockquote class="tr_bq"> An NQF review committee removed the reference to the specific product before final publication of '<a href="http://www.qualityforum.org/Publications/2010/04/Safe_Practices_for_Better_Healthcare_%E2%80%93_2010_Update.aspx">Safe Practices for Better Healthcare</a>' in 2010. 'An NQF ad hoc review did not find sufficient evidence to support one skin preparation over another,' <a href="http://www.qualityforum.org/News_And_Resources/Press_Releases/2014/NQF_Statement_on_Department_of_Justice_Settlement.aspx">a statement from the organization said</a>. 'The ad hoc review effectively served its role of rapidly responding when a potential issue is identified.'</blockquote> Note that the <a href="http://www.qualityforum.org/News_And_Resources/Press_Releases/2014/NQF_Statement_on_Department_of_Justice_Settlement.aspx">NQF press release</a> did not deny that the CareFusion money was given to Dr Denham's organization, nor that the NQF report might have promoted the use of a class of products in which CareFusion's Chloraprep resides. A <a href="http://www.modernhealthcare.com/article/20140121/NEWS/301219952/nqf-panel-member-admits-he-got-11m-from-carefusion-but-calls">follow-up story</a> in Modern Healthcare noted that Dr Denham confirmed the payment of the money to his company, but not its purpose, <blockquote class="tr_bq"> Renowned quality expert Dr. Charles Denham confirms that CareFusion paid his company more than $11 million, but Denham says he was surprised to see the U.S. Justice Department describe the money as kickbacks intended to influence national quality-of-care guidelines published by the National Quality Forum.</blockquote> Dr Denham's lawyer confirmed the payment, but did not further explain it: <blockquote class="tr_bq">Denham's lawyer, Larry Gondelman of Powers Pyles Sutter & Verville in Washington, acknowledged that CareFusion did pay Denham's company under two contracts. </blockquote> And, <blockquote class="tr_bq">Gondelman said the $11.6 million paid to Denham's company covered 'an array of services' and that he could not elaborate.</blockquote> Again, note that Mr Gondelman did not specifically deny that the money served as a kickback. Meanwhile, the Department of Justice alleged something more elaborate, and nefarious,  <blockquote class="tr_bq">The Justice Department, though, says the contracts were written to look as though CareFusion was buying consulting, software development and strategic marketing services, as well as the completion of three unnamed projects. The value of the deals, the government alleges, far exceeded the fair-market costs of those services, and that one of the actual purposes of the deals was to conceal kickbacks to Denham while he served on the National Quality Forum.</blockquote> Interval Summary So what is clear so far is that: -  CareFusion agreed to a $40.1 million settlement of allegations that it provided kickbacks to promote off-label use of its product. -  CareFusion paid $11.6 million to Health Care Concepts -  Health Care Concepts is run (and possibly owned) by Dr Charles Denham, who chaired a National Quality Forum committee that recommended use of CareFusion's product ChloraPrep in a performance standard and the final version of the NQF standard recommended use of a group of products including ChloraPrep We have frequently discussed how health care corporations may promote goods, particularly drugs and devices and services through <a href="http://hcrenewal.blogspot.com/search/label/deception">deceptive</a> and unethical practices, including inducements ranging form creation of <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> to outright <a href="http://hcrenewal.blogspot.com/search/label/bribery">bribes </a>and <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a>.   We have also discussed the influence of individual and <a href="http://hcrenewal.blogspot.com/search/label/institutional%20conflicts%20of%20interest">institutional conflicts of interest</a> on <a href="http://hcrenewal.blogspot.com/search/label/guidelines">clinical practice guidelines</a>.  This has become an important enough problem for the US Institute of Medicine to weigh in with <a href="http://www.iom.edu/Reports/2011/Clinical-Practice-Guidelines-We-Can-Trust.aspx">standards for trustworthy guidelines</a> that markedly limit such conflicts of interest.  This case seems notable because it may link the problems of <a href="http://hcrenewal.blogspot.com/search/label/deception">deceptive</a> and unethical promotion with the influencing of clinical practice guidelines.  It is particularly notable because the organization generating the guidelines in question, the National Quality Forum, has become large, influential, and authoritative.  Re the latter point, the latest Modern Healthcare article affirmed, <blockquote class="tr_bq">The NQF is a standards-setting organization for the healthcare provider industry. It holds the exclusive contract to provide Medicare and Medicaid with recommendations on a national quality-of-care strategy and the measures used to gauge improvements.</blockquote> In fact, while the NQF performance standards can function as guidelines, they also may be bases for <a href="http://hcrenewal.blogspot.com/search/label/pay%20for%20performance">pay for performance</a> schemes that attach real incentives to guidelines, which could become <a href="http://hcrenewal.blogspot.com/search/label/perverse%20incentives">perverse</a> if the guidelines have been manipulated. Can the NQF Defend Against Conflicts, and If Not, Should it Remain So Authoritative? So the big question is whether the NQF, given its unique influence, has any meaningful approach to prevent its standards from being influenced by conflicts of interest? The NQF does have a <a href="http://www.qualityforum.org/docs/CDP_Conflict_of_Interest_Policy.aspx">recent conflicts of interest policy</a>. However, according to my reading, it neither bans committee members with conflicts of interest, nor even requires public disclosure of conflicts of interest.  All it seems to require is that committee members disclose conflicts internally and <strike>voluntarily</strike> recuse themselves from deliberations which may be affected by them.  Although the policy states that conflicts of interest may be made public, I could find nothing in the <a href="http://www.qualityforum.org/Publications/2010/04/Safe_Practices_for_Better_Healthcare_%E2%80%93_2010_Update.aspx">report</a> which Dr Denham co-authored about conflicts of interest or competing interests affecting any of the authors, including Dr Denham Furthermore, a very quick look at information publicly available on the NQF web-site suggests the organization itself may have major institutional conflicts of interest.  The NQF is one of those "public-private partnerships" that have become all the rage.  Several members of its <a href="http://www.qualityforum.org/About_NQF/Board/Board_of_Directors_Roster.aspx">board of directors</a> have leadership positions in large health corporations, financial firms with large health care interests, or trade associations for large health care corporations:  <a href="http://www.qualityforum.org/About_NQF/Board/Elizabeth_Fowler.aspx">- Elizabeth J. Fowler</a>, PhD, JD, is Vice President, Global Health Policy, in the Government Affairs & Policy group at Johnson & Johnson. - <a href="http://www.qualityforum.org/About_NQF/Board/Robert_Galvin.aspx">Robert Galvin</a>, MD, is Chief Executive Officer, Equity Healthcare, at The Blackstone Group.  - <a href="http://www.qualityforum.org/About_NQF/Board/Karen_Ignagni.aspx">Karen Ignagni</a>, President and Chief Executive Officer of America’s Health Insurance Plans (AHIP), is the voice of health insurance plans.... - <a href="http://usa.healthcare.siemens.com/infrastructure-it/healthcare-it/about-health-services/leadership-profile-healthcare-it">J Mark Overhage</a> MD, PhD,  Chief Medical Informatics Officer, Health Services, Siemens Healthcare Thus it is conceivable that they could personally profit, and that their organizations could institutionally profit from standards that favor their organizations' interests.   Furthermore, NQF receives <a href="http://www.qualityforum.org/About_NQF/Funding.aspx">funding</a> from the US government and private foundations, but also from pharmaceutical companies and their in-house foundations: <blockquote class="tr_bq">the Bristol-Myers Squibb Foundation, the Cardinal Health Foundation, Pfizer Inc., Sanofi-aventis,...</blockquote> Unless the current case leads to big changes in the prevalence of conflicts of interest among the NQF board, the continuation of its institutional conflicts of interest generated by its sources of funding, and its weak policy on conflicts affecting committee members, the question becomes whether it should continue to have such an authoritative role? As we have said over and over, pervasive conflicts of interest affect health care decision-makers and policy makers and the organizations within which they function.  Such conflicts threaten to put various private interests way ahead of patients' and the public's health.  If we really want health care that will put patients' and the public's health first, we need to end such arrangements that favor private gain.    Roy M. Poses MD on Health Care Renewal ADDENDUM (23 January, 2014) - A closer re-reading of the NQF conflict of interest policy made it clear that recusal is not voluntary, and that conflicts of interest may be revealed publicly, but that such disclosure is not mandatory.  The paragraph above dealing with these issues was revised accordingly.

Our Man in the NQF? - CareFusion Settles Kickback Allegations for $40.1 Million and Government Alleges They Meant to Manipulate National Quality Forum Standards

What appeared to be yet another entry in the march of legal settlements turns out to be more interesting than it first appeared.The Basic Story: Off-Label Marketing The story was initially briefly re…

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22 Jan 2014

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

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

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

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

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18 Jan 2014

How Many Straws? - Johnson and Johnson Settles Again, Again, Again...

It seems like a minor case, but is another straw for the camel. The Latest Settlement <a href="http://www.modernhealthcare.com/article/20131205/NEWS/312059936/two-jj-executives-agree-to-50000-in-fines-over-mislabeled-products">Reported</a> in most detail by Modern Healthcare, <blockquote class="tr_bq">Two executives at a subsidiary of Johnson & Johnson have agreed to pay a total of $50,000 to resolve allegations that they knowingly sold mislabeled products used in the sterilization of gastrointestinal scopes and surgical drills.  The settlement also calls for the J&J subsidiary, Advanced Sterilization Products, to pay $1.25 million to resolve a civil complaint filed by the Food and Drug Administration. ASP President Bernard Zovighian will pay $30,000, while Richard Alberti, quality and compliance vice president, will pay $20,000. None admitted wrongdoing. 'ASP's actions violated the law and put patients at unnecessary risk for infection,' Steve Silberman, director of compliance at the FDA Center for Devices and Radiological Health, said in a statement. Last year, ASP announced two recalls affecting a product called the Cyclesure 24 Biological Indicator, which is used to make sure that medical equipment sterilized using ASP's Sterrad low-temperature cleaning machines is free of bacteria, fungi and viruses. FDA inspectors, according to a civil complaint last July, uncovered evidence that the company sold the Cyclesure 24 tests with 15-month expiration dates even though ASP's internal studies had not established the product's safe shelf life was that long. After the issue was discovered, ASP shortened the shelf life of the Cyclesure indicators to six months. The company also recalled all lots of the products manufactured between February 2008 and December 2011. Dirty endoscopes used during colon cancer screenings, for example, have been implicated in the transmission of hepatitis C and many types of bacteria, according to ASP's own website. </blockquote>Note that this case involves not just legal technicalities, but failures of disclosure that could have put real patients at risk of significant harm. The Context This case comes only one week after we <a href="http://hcrenewal.blogspot.com/2013/11/there-they-go-again-again-johnson-and.html">discussed</a> a huge ($2.5 billion) settlement by Johnson and Johnson of allegations that it withheld data about major safety problems affecting metal-on-metal hip prostheses, and two smaller settlements of allegations that it withheld safety data about the drug Topamax. It is noteworthy that in this much smaller current settlement, two admittedly relatively low-level executives had to pay fines amounting to 4% of what the company had to pay. This is unusual.  Usually corporate executives escape any negative consequences, even in cases involving large amounts of money or possible harm to many patients.  If last week's settlement were to have imposed proportionate fines on executives, those fines would have totaled $100 million The latest settlement does seem to follow the usual pattern: relatively small time individual offenders pay a penalty, while very rich and powerful individual offenders avoid all penalties. (For example, look <a href="http://hcrenewal.blogspot.com/2013/01/the-tragic-case-of-aaron-swartz-unequal.html">here</a> to see how one US prosecutor handled the case of Aaron Swartz versus the cases of misdeeds by big corporations)   <a href="http://hcrenewal.blogspot.com/search/label/impunity">Impunity</a> by rich and powerful leaders of big organizations, and failure to enforce laws broken by such people is a very old story in American history, but that pattern was interrupted briefly after the great depression through the 1970s.  Now impunity for the rich and powerful is back, and maybe that is why 43% of the American population think our health care system is corrupt (look <a href="http://hcrenewal.blogspot.com/2013/07/43-believe-that-us-health-care-corrupt.html">here</a>). Of course, the current settlement involved no admissions of wrongdoing.  Like most <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal actions against big health care organizations</a>, it is thus paradoxical.  Fines are paid, but at least on paper, not because of any wrongdoing.  So what were the penalties for?  Who knows?  But allowing a settlement without an admission of wrongdoing allows the next settlement to be made as if it were dealing with an isolated problem.  As we mentioned in our <a href="http://hcrenewal.blogspot.com/2013/11/there-they-go-again-again-johnson-and.html">last post</a> on Johnson and Johnson, the latest settlement should be added to an increasingly  long list of the company's legal woes, often involving allegations and evidence of other unethical actions, sometimes involving guilty pleas to charges of such actions (see compilation of the record through July, 2013 <a href="http://hcrenewal.blogspot.com/2013/07/johnson-and-johnson-settles-suit.html">here</a>.)  Yet each settlement or action seems to take place in a vacuum, with no attention to what appears to be the company's record of ethical recidivism.  Of course, since nearly every action eschewed admissions of wrongdoing, on paper, there was no legal record of recidivism.  The whole situation is becoming so absurd that Jon Stewart on the Daily Show <a href="http://www.thewrap.com/daily-show-jon-stewart-johnson-grand-theft-auto">parodied</a> the ability of Johnson and Johnson, and other big corporations, to escape any meaningful negative consequences of their actions. <div style="background-color: black; width: 368px;"><div style="padding: 4px;"><iframe frameborder="0" height="293" src="http://media.mtvnservices.com/embed/mgid:cms:video:thedailyshow.com:430976" width="360"></iframe> <div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 12px; margin-bottom: 0px; margin-top: 4px; padding: 4px; text-align: left;">The Daily Show Get More: <a href="http://www.thedailyshow.com/full-episodes/">Daily Show Full Episodes</a>,<a href="http://www.facebook.com/thedailyshow">The Daily Show on Facebook</a></div></div></div> As quoted on the Wrap <blockquote class="tr_bq">'Holy sh**t. They knowingly bribed doctors to give useless drugs to old people, the disabled and babies,' a stunned Stewart said. 'You’re not even allowed to do that in ‘Grand Theft Auto.''</blockquote> When these issues start becoming subjects of popular parody, maybe I can entertain a tiny hope that something might be done.  Conclusion So I get to say again, again again...  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. 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. As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior. Roy M. Poses MD on Health Care Renewal

How Many Straws? - Johnson and Johnson Settles Again, Again, Again...

It seems like a minor case, but is another straw for the camel. The Latest Settlement Reported in most detail by Modern Healthcare, Two executives at a subsidiary of Johnson & Johnson have agreed to p…

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06 Dec 2013

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