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How Industry Views the Research It Sponsors

We have posted frequently about threats to the integrity of the clinical evidence-based, and to the practice of evidence-based medicine.  In particular, we have discussed how research may be <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulated</a> in favor of vested interests, or <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppressed</a> when the results do not favor such interests. Last week, the British Medical Journal electronically published a set of guidelines for how industry sponsored clinical research ought to be published, sponsored by the International Society for Medical Publication Professionals.  The authors came from pharmaceutical companies (Johnson & Johnson, AstraZeneca, Pfizer and Cephalon), medical device companies (LifeScan), and medical publishing and medical education and communication companies (John Wiley & Sons, Excerpta Medica, Field Advantage Medical Communications, PharmaWrite, and Knowledgepoint 360 Group).  [Graf C, Battisti WP, Bruce-Winkler V et al. Good publication practice for communicating company sponsored medical research: the GPP2 guidelines.  Brit Med J 2009; 339:b4430.  Link <a href="http://www.bmj.com/cgi/content/full/339/nov27_1/b4330">here</a>.] These guidelines are remarkable for the questions they raise about how people from industry view clinical research and how it should be reported in medical journals.  Who's in Charge? Nowhere does the article acknowledge that any one person has overall responsibility for a research project.  Clinical research projects funded by the US National Institutes of Health, Agency for Healthcare Quality and Research, and other federal agencies must have "principal investigators," who are the people who take overall scientific responsibility for the project.  The Graf et al article does not use this or an equivalent term.   There is no sense that they expect anyone to be in completely in charge of industry sponsored research.  Particularly confusing is the following passage: <blockquote>Before writing begins one author (a lead author, who may also be guarantor) should take the lead for writing and managing each publication or presentation. One author (identified as guarantor) should take overall responsibility for the integrity of a study and its report. </blockquote> Here are some questions it raises.  If the guarantor could be chosen only when writing a paper is contemplated, which presumably could be years after the study that the paper would report was designed and implemented, who then would have been responsible for study "integrity" before the guarantor was chosen? Who would chose the guarantor for a particular paper? If a study generates more than one paper, could they each have a guarantor, and then how could they share responsibility for study "integrity?"  If the guarantor and lead author of a paper are different people, how would they share responsibilities, what would happen if they were not to agree, and who would be finally accountable? So the guidelines seem to completely diffuse accountability for research projects, and the reports written about them. Who is an Author? In my experience with US federally and foundation funded research, research papers are written by the investigators, the people who actually did the research project.  However, in the guidelines by Graf et al, the concept of authorship is also ambiguous.  They suggest that "recognised criteria should be used to determine which of the contributors to an article should be identified as authors."  This is already confusing, since how could one be a "contributor" to an article without authoring it?  A later discussion of "contributors" as "investigators, sponsor employees, and individuals contracted by the sponsor" was not very helpful.  Why should a "sponsor employee" who was not an "investigator" be a "contributor" or an "author," whatever the distinction is between them?  So the guidelines blur distinctions among people who do research, and people employed by companies that may have vested interests in the research favoring their products or services. What do Professional Medical Writers Do? There has been considerable recent controversy, not directly acknowledged by Graf et al, about the role of professional medical writers in the reporting of research and the writing of ostensibly scholarly medical publications, particularly in cases where the writers were paid by and reported to corporate sponsors, but were not recognized as such in the publications they wrote (a type of <a href="http://hcrenewal.blogspot.com/search/label/ghost%20writing">ghost-writing</a>).  The guidelines by Graf et al do not clearly explain what the roles of professional medical writers ought to be: <blockquote>Professional medical writers must be directed by the lead author from the earliest possible stage (for example, when the outline is written), and all authors must be aware of the medical writer’s involvement. The medical writer should remain in frequent contact with the authors throughout development of the article or presentation. The authors must critically review and comment on the outline and drafts, approve the final version of the article or presentation before it is submitted to the journal or congress, approve changes made during the peer review process, and approve the final version before it is published or accepted for presentation. </blockquote> Note that this would not prevent a professional medical writer from writing an initial outline, the first draft, and all subsequent drafts. including the final draft of a paper. (The role of an "author" above might be restricted to simply commenting on and accepting the outline and all drafts.) Thus, the "authors" could function as distant editors, and the professional writer would assume authorship, as most people would define it. (Merriam-Webster: "1. one that originates or creates 2. the writer of a literary work.") Furthermore, while the professional writer could take one the role of authorship, the guidelines do not require him or her to publicly acknowledge this role: <blockquote>Professional medical writers, depending on the contributions they make, may qualify for authorship. For example, if a medical writer contributed extensive literature searches and summarised the literature discovered, and by doing so helped define the scope of a review article, and if he or she is willing to 'take public responsibility for relevant portions of the content' then he or she may be in a position to meet the remaining ICMJE criteria for authorship. </blockquote> Presumably, a professional writer could dodge authorship by simply being "unwilling" to take such public responsibility. So the guidelines apparently condone nearly all functions commonly assumed to be those of an author to be performed by a professional writer paid directly by the sponsor, without the writer being listed as an author.  The guidelines thus appear to condone ghost-writing in its most pernicious form. Who Owns and Analyzes the Data? Cases in which various the implementation and analysis of clinical research seems to have been <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulated</a> to favor vested interests have raised concerns about the integrity of the data collected in the course of a research project, and how it is analyzed.  This is what Graf et al say about the ownership and use of the data: <blockquote>Sponsors have a responsibility to share the data and the analyses with the investigators who participated in the study. Sponsors must provide authors and other contributors (for example, members of a publication steering committee or professional medical writers) with full access to study data and should do so before the manuscript writing process begins or before the first external presentation of the data. Information provided to the authors should include study protocols, statistical analysis plans, statistical reports, data tables, clinical study reports, and results intended for posting on clinical trial results websites. Sufficient time should be allowed for authors and contributors to review and interpret the data provided and to seek further information if they wish (for example, access to raw data tables or the study database). </blockquote> The guidelines by Graf et al suggest that the company that sponsors the research should own the data. The investigators who collected the data and implemented the research project should not. At best, the company should "share" summaries, analyses, or pieces of the data, but at best investigators could have only "sufficient time" to "seek ... access to raw data tables or the study database." So the guidelines would allow corporate research sponsors to analyze the data from studies evaluating their own products and services as they see fit, and the scientists who implemented the study and collected the data could only ask for access to it.  Summary The guidelines by Graf et al seem based on a very strange conceptualization of clinical research. In their view, no individual may be responsible for a clinical research project. Research data is controlled by the company that paid for the project, not scientists who implemented the research and collected the data. Research papers may be written by anonymous professional writers while the scientists who did the research only need to review and approve what they have written. So why should anyone give credence to industry sponsored research? We have discussed numerous instances in which clinical research was <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulated</a> in favor of vested interests, and when clinical research whose results did not favor vested interests was <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppressed</a>. In most cases, the vested interests were held by for-profit pharmaceutical, biotechnology or device anufacturers acting as research sponsors. The guidelines by Graf et al seem to have been cleverly written to to employ comforting platitudes while licensing manipulation and suppression.  They should inspire no confidence in the integrity of industry sponsored research.

How Industry Views the Research It Sponsors

We have posted frequently about threats to the integrity of the clinical evidence-based, and to the practice of evidence-based medicine. In...

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More Evidence for Suppression of Research: the Case of Lamictal for Depression

We recently <a href="http://hcrenewal.blogspot.com/2009/11/editorial-that-wasnt-evidence-for.html">discussed</a> the severe challenges to evidence-based medicine presented by <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulation</a> and <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppression</a> of clinical research to serve vested interests.  I recently (and unfortunately belatedly) came upon yet another example of suppression of research that was unfavorable to a research sponsor's vested interests, suggesting that such suppression may be more prevalent than heretofore believed.  This example appeared in the journal Evidence-Based Mental Health [Gahemi SN. The failure to know what isn't known: negative publication bias with lamotrigine and a glimpse inside peer review.  Evidence Based Mental Health 2009; 12: 65-68.  Link <a href="http://ebmh.bmj.com/content/12/3/65.full">here</a>.] The author was able to use the database of clinical trials provided by GlaxoSmithKline as part of a settlement of a suit by former New York state Attorney General Elliot Spitzer that charged that the company had suppressed information about the selective serotonin reuptake inhibitor paroxetine (Paxil).  His interest was the use of lamotrigine (Lamictal) in depression.  His main findings were: <blockquote>Of the nine lamotrigine related bipolar disorder studies posted on the website (see table 1), two were positive and published supporting the FDA approved indication for delay of relapse in the long term treatment for bipolar disorder patients. A negative study in rapid cycling bipolar disorder and another in acute bipolar depression were published but both emphasised positive secondary outcomes as opposed to the negative primary outcomes. Five other negative studies involving rapid cycling bipolar disorder, acute bipolar depression and acute mania have not been published and are only available on the GSK website. Failure to adequately publish these negative studies led to the creation of a clinical impression that lamotrigine is an 'antidepressant,' a view innocently expressed to me as recently as last week by an academic colleague. This mistaken impression occurred partly because the prophylactic benefits of lamotrigine for depressive episodes were confused with a presumed acute benefit. Partly it was due to the publication of one apparently positive study, and the non-publication of several negative studies. The clinical relevance of the lamotrigine studies is notable: taking the negative outcomes into account, as of now, one might say that this agent is reasonably effective in maintenance treatment of bipolar disorder, particularly in prevention of depression. It is proven ineffective in acute mania, rapid cycling disorder and acute bipolar depression. </blockquote> Note that Dr Ghaemi and colleagues had published a summary of the suppressed negative articles in Medscape Journal of Medicine in late 2008.  [Ghaemi SN, Shirzadi AA, Filkowski M. Publication bias and the pharmaceutical industry: the case of lamotrigine in bipolar disorder. Medscape J Med 2008; 10(9):211.  Link <a href="http://www.medscape.com/viewarticle/579046_1">here</a>.]  That earlier article also documented the group's failed attempts to discover whether negative trials of other drugs for depression had been suppressed. Dr Ghaemi's newer made some additional important points about suppression of clinical research.  The first is that it is occurring with the acquiescence of government regulators. In particular, <blockquote>It is worth mentioning that the [US] FDA [Food and Drug Administration] has encouraged this state of affairs, by viewing negative studies as uninformative, due to the possibility of being 'failed' rather than truly negative (ie, the sample may have simply been unresponsive, or dosing might have been too low and so on). Thus drugs could have two positive studies, and 10 or so negative ones (as did a number of selective serotonin reuptake inhibitors),8 and the FDA not only allowed approval but it did not require that the pharmaceutical industry publish its negative results. The pharmaceutical industry did the minimum necessary; the FDA set the minimum far below what should have been the acceptable scientific standard. Furthermore, even though the FDA is supposed to allow access to information about all studies for drugs for which it provides an indication, in fact it still does not allow access to raw data from industry sponsored studies, which are viewed as confidential and proprietary. Rather, in my experience and those of colleagues who have attempted to access such studies, Freedom of Information Act requests are met with abstracted summary results. While summary results are better than no results, full access to scientific data should be the standard at the FDA. </blockquote> The second is that medical journal reviewers and editors do not seem enthused about publishing articles about how research has been suppressed (an apparent example of the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a>, or perhaps the anechoic effect squared, i.e., discussion of our failure to discuss research studies whose results did not please their sponsors is simply not done.) <blockquote>In the course of trying to investigate and publicise these negative findings, we ran into numerous roadblocks, as I discussed in an interview for the Carlat Report last year </blockquote> Instead of repeating what I have said before about the evils of suppressing clinical research, I will offer some concluding quotes from Dr Ghaemi. <blockquote>Evidence based medicine—or, more simply put, the science of medicine—cannot be taken seriously, and is certainly not valid, if the evidence base is only partial. The scientific literature currently is like an under cooked meal which we think is ready to eat. We never know whether what we see in the evidence is correct or biased in one direction or the other. Meta-analyses of large published datasets are not as meaningful as they seem when unpublished data languish elsewhere. </blockquote>Manipulation and suppression of clinical research has likely misled doctors and patients into using and paying too much for minimally effective, ineffective, or even harmful drugs and devices.  Manipulation and suppression of research is thus probably a major reason that health care costs much more than its value and accessibility warrants.  To truly reform health care, we should not let those with vested interests in selling health care products or services control the clinical research that purports to evaluate what they are selling.

More Evidence for Suppression of Research: the Case of Lamictal for Depression

We recently discussed the severe challenges to evidence-based medicine presented by manipulation and suppression of clinical research to ...

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What is the "Worst Biotech CEO" Worth?

Recently, we <a href="http://hcrenewal.blogspot.com/2009/11/genzymes-remarkable-businessstrategy.html">posted</a> about misadventures of the leadership of biotechnology giant Genzyme.  Although the company has long priced its drug Cerezyme for the rare Gaucher's disease at a stratospheric level, it did not sufficiently reinvest money in its manufacturing facility for the drug.  Deferred maintenance at a production facility running at maximum capacity has apparently lead to two different kinds of contamination problems, forcing a shut-down of the plant, and now a shortage of the drug.  For this, Genzyme CEO Henri Termeer was just labeled the "Worst Biotech CEO of '09" <a href="http://www.thestreet.com/story/10627877/genzymes-termeer-worst-biotech-ceo-of-09.html">by TheStreet.com</a>. It was not always thus.  A 2008 <a href="http://www.bostonmagazine.com/articles/so_this_is_what_a_biotech_tycoon_looks_like/">profile</a> of Mr Termeer in Boston Magazine chronicled the rise of Genzyme from a "startup [which] operated 15 stories above the Combat Zone in an old garment building on a dodgy stretch of Kneeland Street."  Termeer pushed the company to develop a practical way to manufacture Cerezyme, and had the vision that the company could make money selling the drug to a relatively small number of patients.   Of course, his solution was to price the drug so high as to "drop jaws."  However, perhaps that was what was needed to get a innovative drug to a small number of patients. Furthermore, Termeer posited that the revenues derived from drugs such as Cerezyme would lead to innovations that would help many more people. <blockquote>The biotech tycoon's immodest goal is to change healthcare. That is what he's trying to do, after all. That's part of why he doesn't sweat the bad press, which he regards as the penance of the innovator. His therapies for ultrarare diseases, he says, point the way forward, toward a day when very targeted drugs cure ailments perfectly, precisely. Don't think of his niche therapies as being used by tiny, statistically inconsequential groups; think of them as being deployed in ways that get results every time. Now contrast this with the trial-and-error approach that dominates medicine as it's practiced today, in which doctors pick and choose from the menu of drugs available and calibrate dosages until finally, hopefully, they land on what works best for that particular person. What if instead every condition had a drug that was the smart bomb that Cerezyme is for Gaucher's? </blockquote> While we wait for these marvelous new innovations, however, patients with Gaucher's disease must wait for their effective but amazingly expensive drug apparently because Mr Termeer presided over the failure to pay enough attention to mundane issues like manufacturing plant maintenance while he touted his vision of the future. Whether that vision is realistic depends on one's view of Mr Termeer's predictive abilities. The Boston Magazine article suggested he is not a good fortune teller.  In 1994, Mr Termeer "suggested to the [New York] Times that the cost [of Cerezyme] would soon drop. 'Once we have the new plant running and approved, we will start to see some economies of scale,' Termeer told the paper in 1994. 'We can start to pass on some of these economies to the marketplace while at the same time improving the financial results of the company.' Fourteen years later, the price of Cerezyme has never come down. In my humble opinion, the tale of Henri Termeer's and Genzyme's current woes tells a lot about the culture of leadership now prevalent in health care. On one hand, it seems that some of the business-people who took over leadership of health care organizations had administrative skills that turned innovative ideas into reality. This success may have derived from real vision about the possibilities of high-technology medicine and health care. On the other hand, as their administrative abilities and vision lead to success, their judgment was liable to become over-confident, if not arrogant. This may have been fueled by the a business ethos that celebrates executives and managers, and their administrative skills and vision, beyond all else. However, Mr Termeer's success was dependent on the painstaking and often thankless work of physicians and scientists, particularly those who first developed the drug that became Cerezyme, the initial funding of this work by the US National Institutes of Health, and the work by scientists and engineers to develop a practical way to manufacture this drug. Termeer also benefited from the Orphan Drug Act which "allowed companies that brought drugs to market seven years of monopoly sales." Without federal research money, favorable laws, and multiple dedicated scientists, physicians, and engineers, Mr Termeer's administrative skills and vision would have yielded nothing. Nonetheless, it was Mr Termeer who was so richly rewarded. In 2006, Boston Magazine <a href="http://www.bostonmagazine.com/articles/the_50_wealthiest_bostonians/">listed</a> him as among the 50 wealthiest Bostonians, with an estimate worth of $342 million.  The 2008 profile noted "Over the past three years, Termeer has earned more than $50 million in total compensation, and thanks to the performance of Genzyme's stock, his stake in the company is now worth about $260 million."  He was interviewed at his waterfront home in tony Marblehead, Massachusetts.  He skippers his (only) "36-foot Hickley Pilot" which is "docked near the new home he's built outside Kennebunkport [Maine]..." the town in which former US President George HW Bush keeps a summer home.  The US (and global) health care business culture disproportionately rewards managers and executives for "innovation," as opposed to the scientists and professionals who actually developed the innovation, or the other people whose money funded these efforts.  These leaders are rewarded them sufficiently to make them into a sort of pseudo-aristocracy.  I hypothesize that such rewards make them believe that they have actually done things worthy of them, breeding over-confidence, arrogance, and a sense of entitlement that puts them beyond the usual rules of society.  The result is leadership that may be ignorant of physicians' values, self-interested, and even corrupt, and health care that is too expensive, inaccessible, and that fails to deliver quality and value commensurate with its cost.  To truly reform health care, we need to reform how health care oganizations' culture and leadership.

What is the "Worst Biotech CEO" Worth?

Recently, we posted about misadventures of the leadership of biotechnology giant Genzyme. Although the company has long priced its drug Ce...

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No Free Speech for Comparative Effectiveness Researchers?

We have repeatedly argued why comparative effectiveness research, under ideal circumstances, would be a good idea.  As I <a href="http://hcrenewal.blogspot.com/2007/09/comparative-effectiveness-kerfuffle.html">said before</a>: <blockquote>Physicians spend a lot of time trying to figure out the best treatments for particular patients' problems. Doing so is often hard. In many situations, there are many plausible treatments, but the trick is picking the one most likely to do the most good and least harm for a particular patient. Ideally, this is where evidence based medicine comes in. But the biggest problem with using the EBM approach is that often the best available evidence does not help much. In particular, for many clinical problems, and for many sorts of patients, no one has ever done a good quality study that compares the plausible treatments for those problems and those patients. When the only studies done compared individual treatments to placebos, and when even those were restricted to narrow patient populations unlike those patient usually seen in daily practice, physicians are left juggling oranges, tomatoes, and carburetors. Comparative effectiveness studies are simply studies that compare plausible treatments that could be used for patients with particular problems, and which are designed to be generalizable to the sorts of patients usually seen in practice. As a physician, I welcome such studies, because they may provide very useful information that could help me select the optimal treatments for individual patients. Because I believe that comparative effectiveness studies could be very useful to improve patient care, it upsets me to see this particular kind of clinical study get caught in political, ideological, and economic battles. </blockquote>However, when comparative effectiveness research was proposed as an element of US health care reform, it was attacked as a vehicle for the dreaded rationing of health care (even though in the US health care is already rationed, especially to those without generous insurance or the means to pay for expensive tests and treatments), using arguments based more on emotions, or outright fallacies than on logic and evidence. For example, see our blog posts <a href="http://hcrenewal.blogspot.com/2007/09/over-top-denunciation-of-comparative.html">here</a>, <a href="http://hcrenewal.blogspot.com/2007/09/comparative-effectiveness-kerfuffle.html">here</a>, <a href="http://hcrenewal.blogspot.com/2007/10/whose-opinions-did-new-york-times.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2009/02/attack-on-government-funded-comparative.html">here</a>. Those opposed to the sort of comparative effectiveness research I described above then seemingly decided, "if you can't beat 'em, join 'em."  Thus, a provision appeared in a recent version of health care reform legislation proposed in the US Senate for comparative effectiveness research to be sponsored by an "independent" institute whose board of directors would have to include a substantial minority of representatives of industry (that is, drug, biotechnology, device, health insurance corporations, and other corporations as "payers.")  This would seems to be a fairly shameless form of "regulatory capture," that is, an instance in which a government agency whose mission seems to be to improve health care is "captured" by those with vested interests in promoting certain health care products and services.  (See post <a href="http://hcrenewal.blogspot.com/2009/10/who-should-sponsor-comparative.html">here</a>.) My concern has now seemingly gone mainstream, in that it was addressed in a commentary published on-line in the prestigious New England Journal of Medicine.  [Selker HP, Wood AJJ.  Industry influence on comparative-effectiveness research funded through health care reform.  N Engl J Med 2009.  Link <a href="http://healthcarereform.nejm.org/?p=2364&query=home">here</a>.] Selker and Wood addressed the issue of regulatory capture thus. <blockquote>Although most observers agree on the value of funding CER, many are unaware that embedded in the legislation are provisions ceding substantial influence to the medical products industries that have a major interest in the outcomes of such research. The Senate Finance Committee bill mandates the creation of an entirely new private–public research entity and, owing to industry lobbying, guarantees industry three seats on this entity’s 15-member governing board, as well as representation on its methodology committee </blockquote> Note that the situation is worse considering that the insurance industry and other "payers" also have seats on the board. However, Selker and Wood discovered an even more outrageous provision: <blockquote>The Finance Committee bill also includes language requested by industry lobbyists (pages 1138–1139) that threatens to withdraw federal funding for 5 years from any investigator who publishes a report on research funded by the proposed institute that is not within the bounds of and entirely consistent with the evidence.' Determinations regarding such consistency would be made by the newly created research entity, which would have industry involvement both in its governance and in study design. To allow scientists — and their institutions, which receive the support for the conduct of research — to be punished for the publication of work that is not approved by this entity is essentially to cede authority over the dissemination of government-funded research to a body that is at least partially controlled by persons with a potential commercial interest in its outcome. </blockquote> As Selker and Wood noted, it is unprecedented for a US government agency that is meant to sponsor science to be empowered to punish researchers for conclusions or opinions with which the agency disagrees. This suggests that the new agency would be meant to produce only results that support the vested interests of its leadership, that is, that favor the latest, and most expensive drugs and devices. The research sponsored by such an agency would not only be biased, it would likely be of poor quality, because researchers of integrity would likely avoid sponsorship by an agency that would be so threatening to their scientific independence. This part of the bill does not promote health reform, but blatantly attempts to serve health care corporations while sacrificing the interests of patients and doctors. As Selker and Wood politely put it: <blockquote>If health care reform legislation does not promote CER that is free of the potential taint of commercial and political meddling, the public will have little confidence in the results of such research. This outcome would be extremely unfortunate, since such research has the potential to improve patients’ lives by leading to more effective medical care. The U.S. biomedical research enterprise has a long and storied history that has made it a model for other countries. It would be a tragedy if we were to squander its achievements for political expediency, in the service of short-term commercial interests. The current proposals for controlling CER in a manner unlike anything we have seen in federally sponsored biomedical research therefore should be rejected. </blockquote> It seems to be almost gilding the lilly to note that the provision cited above seems to violate the free speech and free press provisions of the 1st amendment of the US Constitution, since they threaten government punishment of private citizens (e.g., by withdrawal of existing funding) purely for speech that the government does not like. So I ask the anonymous Senate aide who drafted this provision, and the anonymous lobbyist(s) who influenced him or her, have they no shame?  Finally, I have yet to see coverage of the Selker and Wood article in the mainstream media.  I hope they will eventually conclude that this attempt to co-opt clinical science and mock the 1st amendment is actually news and comment worthy.

No Free Speech for Comparative Effectiveness Researchers?

We have repeatedly argued why comparative effectiveness research, under ideal circumstances, would be a good idea. As I said before : Physi...

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Former McKesson CEO and Board Chairman Convicted of Fraud

Continuing with our annals of health care crime, Bloomberg.com <a href="http://www.bloomberg.com/apps/news?pid=20601103&sid=aU0Sd1_0uEjk">reported</a> a new verdict on a very old case: <blockquote>Former McKesson Corp. Chairman Charles McCall was convicted in a second trial of participating in a fraud 10 years ago that cost investors $8.6 billion, one of the largest white-collar crimes at the time. A federal jury in San Francisco yesterday found McCall guilty of five of six counts of securities fraud and circumventing accounting rules. He was acquitted of falsifying records. Sentencing is set for March 2. Ex-McKesson General Counsel Jay Lapine was found not guilty of three charges. McCall and Lapine were accused of hiding backdated sales contracts from auditors and other conduct that improperly inflated revenue figures at San Francisco-based McKesson, the biggest U.S. drug distributor, and HBO & Co., a software maker led by McCall that was acquired by McKesson in 1999. The McCall verdict was a victory for prosecutors who lost a 2006 trial of the ex-chairman. Assistant U.S. Attorney David Anderson told jurors in the three-week trial that McCall learned of the practices a few months before HBO was to be acquired. Instead of blowing the whistle, McCall covered up the fraud and was named chairman of the merged company, Anderson said. When McKesson disclosed in April 1999 that sales had been prematurely booked, leading to a restatement, the shares lost 47 percent of their value. McCall and Lapine were fired that year. A federal investigation followed, and five former McKesson executives pleaded guilty. McCall and Lapine were indicted in 2003. McKesson, which wasn’t named in the U.S. criminal cases, agreed to pay $960 million in 2005 to settle investor lawsuits. </blockquote> On Health Care Renewal, we often seem to get caught up in the details of the moment. This case is a reminder that the problems we have been discussing have been going on for a long time, certainly long before we started to use the new-fangled medium of a blog to write about them. The case also is a rare example of health care leaders actually suffering negative consequences for bad behavior.  We have noted many examples (see some <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">here</a>) in which bad behavior by health care organizations results only in a penalty for the organization as a whole, whose impact may be diffused among employees, stock-holders, and customers or clients.  Those who authorized, directed, or implemented the behavior often suffer no negative consequences.  In the current case, some of the responsible leaders have already paid a penalty, and now the most senior responsible leader also appears to be on the verge of also paying a penalty.  On the other hand, it took 10 years from the time the bad behavior was recognized for the penalty to be decided.  Meanwhile, Mr McCall likely continued to enjoy the wealth he had amassed in his position of leadership.  The <a href="http://www.sec.gov/Archives/edgar/data/927653/0000929624-99-001275.txt">1999 McKesson HBOC proxy statement</a>, which included a statement that McCall was forced to resign his positions as Chairman of the Board and employee, noted that Mr McCall had already received a salary and bonus of greater than $2 million (in 1999 dollars) that year, and was the proud possessor of 2,879,677 shares of common stock, more than 1% of shares outstanding, after his resignation.  I say again, meaningful health care reform is unlikely unless we deal with the problem of conflicted, unethical, and sometimes corrupt leadership of health care organizations.

Former McKesson CEO and Board Chairman Convicted of Fraud

Continuing with our annals of health care crime, Bloomberg.com reported a new verdict on a very old case: Former McKesson Corp. Chairman Ch...

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Aetna Government Contract Discredited

Last week, the Sacramento Business Journal <a href="http://sacramento.bizjournals.com/sacramento/stories/2009/11/16/daily37.html">reported</a> on irregularities in how health insurance/ managed care giant Aetna obtained a contract with the US military health plan Tricare: <blockquote>Aetna Inc. hired a former high-level Tricare employee with access to proprietary information about Health Net Inc.’s performance that could have given Aetna a competitive edge in its bid for a lucrative military health care contract, the U.S. Government Accountability Office has concluded. The GAO details six flaws in the procurement process in new documents posted online Tuesday and recommends that Aetna should be excluded from the competition, leaving Health Net 'as the only viable awardee.' The agency recommends Tricare officials perform a thorough review of what sensitive information the former Tricare employee had access to and decide what action to take to address the problem. The GAO also recommends that Health Net be reimbursed the cost of filing the protest, including attorneys fees. </blockquote> The Business Journal described the details of the irregularities: <blockquote>The GAO decision pointed to six flaws in the in the bid evaluation process, including: * The agency credited Aetna with past performance of its parent and corporate affiliates but did not record which entities were involved or establish the roles they would play in the contract * The evaluation gave Aetna the highest past performance rating without considering that its past performance was small compared with the size of the Tricare contract * The price evaluation did not consider whether Aetna’s proposed staffing reflected a lack of understanding of the technical requirements of the contract — or showed a willingness to take a risk on the business * The agency failed to consider the risk involved with Aetna’s proposed plan to hire large percentages of Health Net’s work force at lower pay rates * The agency did not consider Health Net’s network provider discounts when assessing its pricing information for the program and * The agency failed to protest Aetna’s hiring a former Tricare official with inside knowledge of Health Net’s performance on the previous contract. 'The contracting officer never considered the matter — because the awardee did not bring it to his attention— and the record shows that the individual had access to non-public proprietary information,' the decision states. </blockquote> The Montgomery Advertiser <a href="http://www.montgomeryadvertiser.com/article/20091122/NEWS02/91122011/1009/Errors-ethics-issues-surface-in-Aetna-TRICARE-contract">added</a>: <blockquote>Though it doesn’t allege that procurement integrity law was broken, the GAO said contracting agencies like TMA have an obligation 'to avoid even the appearance of impropriety' in government procurement. This time it failed. </blockquote> It's been only about nine months since we discussed legal or regulatory issues for Aetna.  In February, 2009 we <a href="http://hcrenewal.blogspot.com/2009/02/aetna-settles.html">discussed</a> its settlement of accusations it underpaid claims in part through its use of a now discredited database marketed by Ingenix, a subsidiary of its supposed competitor, UnitedHealth Group. Aetna <a href="http://www.aetna.com/about-aetna-insurance/index.html">boasts</a> that it is <blockquote>Helping to manage health care, one of the most important things in life We believe we can help create a better health care system. This belief drives our daily decisions as one of the nation's leading health care benefits companies. We work hard to provide our members with information and resources to help them make informed decisions about their health. </blockquote> Furthemore, it boasts of its mission <blockquote>We help people achieve health and financial security by providing easy access to cost-effective, high-quality health care. And we continue to be a leader in building a stronger, more effective health care system by working with doctors, hospitals, employers, patients, public officials and others. </blockquote> It seems one way in which Aetna works with public officials is to hire those that might have some inside knowledge of specific government contracting processes, and then take advantage of that to boost their chances of obtaining lucrative contracts, if I am reading the summary of the GAO findings correctly.  Maybe most people have grown cynical about health care organizations', especially commercial health care insurance companies' mission statements, and may dismiss them as marketing fluff, if not complete balderdash.  However, to improve health care quality while controlling costs, facilitating access, and restoring professionalism, would be health care reformers need to make health care organizational leaders live up to their noble-sounding proclamations of corporate social responsibility.

Aetna Government Contract Discredited

Last week, the Sacramento Business Journal reported on irregularities in how health insurance/ managed care giant Aetna obtained a contract...

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Genzyme's "Remarkable Business'Strategy" and Contaminated Drugs

In June, 2009, <a href="http://www.boston.com/news/world/latinamerica/articles/2009/06/14/one_girls_hope_a_nations_dilemma/">an article</a> in the Boston Globe described how the Boston area based biotechnology company Genzyme sold some astonishlingly expensive drugs, using <blockquote>a remarkable business strategy: In countries from Colombia to Taiwan to Libya, the Cambridge firm has compiled an extraordinary track record of searching out patients like Tania, providing desperately needed treatment, and then successfully pressing their governments, even poor ones, to pay full price for the most expensive drugs in the world. </blockquote> The article focused on how Genzyme marketed Cerezyme for Gaucher's disease. <blockquote>When Genzyme Corp. first introduced a bioengineered drug for Gaucher (pronounced GO-shay) disease in the 1990s, the very idea seemed almost absurd to most people in the pharmaceutical industry. It was expensive to manufacture, there were vanishingly few known patients, and it wasn't clear how you could sell enough of it to recoup research costs, never mind make a profit. Genzyme's solution, elegant in its way, was to set a price high enough to earn a substantial profit no matter how small its pool of patients. Then the company surprised the medical world - and its investors on Wall Street - by showing that American health insurers could be persuaded to pay the six-figure price tag. And with the only effective treatment for Gaucher disease, Genzyme never needed to lower the price, even as production efficiencies raised profit margins on the drug to as much as 90 percent. The drug started to bring in tens of millions of dollars a year, then hundreds of millions. Today this one drug, prescribed for about 5,000 patients, has transformed Genzyme and its chief executive, Henri Termeer, into one of the great success stories of biotechnology, fueling its expansion into a $16 billion company with offices and factories worldwide. By the early 2000s, Genzyme had reached most of the known Gaucher patients in the United States, so it had begun pushing outward to new markets. Genzyme created divisions within the company to find overseas patients; it hired experts to cajole balky governments into paying for the patients' Cerezyme doses. Some of the company's successes were extraordinary: hundreds of patients in Brazil. Patients in Taiwan, Kuwait, and Bulgaria. The government of Libya's Colonel Moammar Khadafy pays for Cerezyme for a handful of patients. As it notched these successes, the company stayed largely under the radar of public health activists who were pushing drugmakers to discount AIDS drugs and other lifesaving medications whose retail prices were financially out of reach to many governments. Biotechnology drugs like Genzyme's, though crushingly expensive for each patient, were so rarely prescribed that they did not attract the same attention, and Genzyme followed an extremely disciplined 'one price' strategy: find patients; donate the drug at first if necessary, but press constantly to be paid full retail price. </blockquote> The "one price" for Cerezyme in Costa Rica was $160,000 per year of therapy. I thought about posting about this story when it came out, focusing, of course, on the amazing price of Cerezyme. However, then I wondered: while the price of Cerezyme seemed extremely high, could anyone say that it was outrageously and unfairly high? After all, the drug was expensive to develop and produce, could not be sold in volume, and provided apparently very effective treatment for an otherwise untreatable disease. So I put the article in a file, and did not post about it. Then a few days later, <a href="http://www.boston.com/business/healthcare/articles/2009/06/17/genzyme_temporarily_halts_production_on_2_key_drugs/">another story</a> ran in the Globe, this time about problems in the Genzyme plant that produces Cerezyme: <blockquote>n an unprecedented move for Genzyme Corp., the state’s largest biotechnology company has halted production of two drugs for rare genetic disorders after a virus was discovered in production equipment at its Allston plant. The drugs are used by 8,000 people worldwide and cost about $200,000 per patient annually. While the virus has the ability to taint the drugs, it is not considered harmful to humans, officials said. The manufacturing plant will remain shut through July while it is decontaminated as a precaution. Shipments of the drugs, Cerezyme and Fabrazyme, have been put on hold while the US Food and Drug Administration seeks assurance from the company that none of its inventory is compromised. Genzyme officials believe the inventory was not affected. The current supply will need to be rationed, Genzyme said. </blockquote> My first thought was that if Genzyme can charge so much for Cerezyme, at least it ought to be able to afford a pristine production process. On the other hand, I also realized that manufacturing processes in biotechnology are complex and difficult, perfection is not always possible, and the contamination in question did not appear harmful. So I put this article in the file too, and did not post about it either. Four days ago, the Boston Globe <a href="http://www.boston.com/yourtown/framingham/articles/2009/11/14/more_contamination_troubles_for_genzyme/">published yet again</a> about troubles in same manufacturing plant. <blockquote>Genzyme Corp., the Cambridge biotechnology giant that has spent five months scrambling to regain its footing after detecting a virus at its Allston plant, is facing a new contamination problem: bits of steel, rubber, and fiber found in drugs made by the company and shipped from the same site. Federal regulators yesterday warned doctors to look for foreign particles in five Genzyme drugs used to treat rare genetic disorders, including two - Cerezyme and Fabrazyme - that have been rationed because of the viral contamination detected in the Allston Landing plant last summer. The five drugs represent roughly half of Genzyme’s $4.6 billion in annual sales. Particles are believed to have been found in less than 1 percent of the Genzyme drugs based on product lots examined, according to a statement from the Food and Drug Administration. The FDA warned physicians, however, to carefully examine vials of the products and filter them before they are given to patients - steps that are considered standard procedure within the industry. If they find particles, the FDA asked for the vials to be returned to the manufacturer. The agency warned that ingesting the particles could have effects that include allergic reactions and blood clotting. FDA inspectors arrived at the Allston plant last month to begin an investigation into Genzyme’s production operations. </blockquote> In addition, a New York Times <a href="http://www.nytimes.com/2009/11/14/business/14drug.html">article</a> noted: <blockquote>'Biological manufacturing is extremely complex and prone to problems,' including contamination, said Jean-Jacques Bienaime, chief executive of BioMarin Pharmaceuticals, a biotech company that also makes drugs for rare diseases, including one it co-developed with Genzyme. Mr. Bienaime said his company always maintained at least a year’s worth of inventory in case of a production outage. But Genzyme did not have such an inventory of Cerezyme and Fabrazyme. </blockquote> Finally, today the In Vivo blog <a href="http://invivoblog.blogspot.com/2009/11/genzyme-contents-under-pressure.html">posted </a>a discussion of Genzyme's production woes which suggested that the two different types of contamination at the plant, and the failure of the company to reliably ship pure, unadulterated drug to patients were not simply the results of bad luck or failure to attain unattainable perfection. <blockquote>Friday's announcement that bits of rubber and other detritus were found in vials of five different drugs manufactured at Genzyme's beleaguered Allston Landing plant was worthy of the satirical publication "The Onion"--except that it was true. The picture grew murkier over the weekend, with the arrival of another Form 483 missive from FDA about ongoing manufacturing issues and a complete response for Lumizyme, Genzyme's enzyme replacement therapy for Pompe disease has been subject of more regulatory twists and turns than the plot of a Dan Brown novel. The origin of the problem goes back three years, to the original approval of Myozyme, basically the same drug as Lumizyme only manufactured on a much smaller scale, at a 160-liter scale facility in Framingham. Genzyme underestimated the demand for the drug, and plans to shore up capacity with a 4000-liter facility in Belgium were put in place. Only as a stop gap, the company also decided to devote 1/6th of its manufacturing capacity at Allston to the making of the drug. And that decision has proved problematic. The stress of running an aging plant full tilt meant there was no time for necessary facility upgrades that might threaten the inventory of drugs manufactured at Allston, among them Cerezyme for Gaucher disease and Fabrazyme for Fabry disease. Genzyme CEO Henri Termeer admitted as much in the Nov. 16 investor call, noting '"the introduction of the production of Myozyme in Allston was a very significant factor in the complications we have experienced there.' Too bad that realization didn't happen one year ago. That's when regulators started sending warning letters outlining concerns related to what sound like bread-and-butter manufacturing issues: microbial monitoring, equipment maintenance, and process controls. What's most amazing is that problems are ongoing. Recall that six-week interlude this summer when the firm took the entire plant offline to sterilize it after discovering yet another unrelated problem--several bioreactors contaminated with a non-lethal to humans but problematic Vesivirus. On the company's Nov. 16 call to investors, management confirmed that the latest 483 letter relates not to a new problem created by Genzyme's decontamination efforts but arising because of 'an older piece of equipment'. As Genzyme's EVP of Therapeutics, Biosurgery, and Corporate Operations said during a Q&Asession with analysts, '"There was a number of issues there that they [regulators] highlighted and many of which we were very aware of and working to address.' Management's solution? Take the plant off line again for a few weeks to, as Meeker puts it, 'allow us to move more quickly to address those issues.' Does everyone feel better now? In some strange way, the very minor nature of these gaffes is the most damning element of the story. It throws management's judgment into question and again casts doubt on the ability of the current team to resolve a situation that should never have escalated to this level. </blockquote> So now it is time to discuss Genzyme's production woes on Health Care Renewal.  For $160,000 a year, it seems reasonable to expect that patients could expect a reasonably well-thought out, conservatively planned production process that would be able to reliably produce sufficient quantities of pure, unadulterated drug.  Instead, Genzyme's "remarkable business strategy" did not seem to include adequate maintenance of production facilities with adequate capacities, or even keeping an adequate reserve supply of product in anticipation that over-working a single aging facility with aging equipment might lead to something breaking down.  By the way, for overseeing this "remarkable business strategy," Genzyme paid its CEO, Henri A Termeer, $13,773,782 in total compensation last year (per the <a href="http://www.sec.gov/Archives/edgar/data/732485/000104746909004080/a2192147zdef14a.htm">2009 proxy statement</a>).  Presumably mainly from the stock and option awards he has accumulated over the year, Mr Termeer now owns 4,080,387 shares of Genzyme stock, 1.5% of total outstanding shares.  For that money, patients, share-holders, and line employees ought to expect "remarkable business strategies" that include attention to such basics as good maintenance of production facilities.  Maybe the company's well compensated (more than $400,000 a year) directors should have been more vigilant about overseeing the management's "remarkable business strategy."  The board  included Gail K Boudreaux, an Executive Vice President of UnitedHealth Group, Charles L Cooney PhD, the Haslam Professor of Chemical and Biochemical Engineering at the Massachusetts Institute of Technology, and Dr Victor J Dzau, Chancellor of Health Affairs at Duke University and CEO of Duke University Health Systems, who seemingly have some relevant expertise, although the board also included Richard F Syron PhD, the former CEO of the Federal Home Loan Mortgage Corporation, (Freddie Mac), who resigned in 2008 after the failure of the company which was later bailed out by the US government.    So once again we see how leaders of health care organizations, in this case perhaps blinded by the prodigious amounts of money they were making, failed to exercise rigorous oversight over how their company produced its product.  The actual production part of biotechnology may seem far less glamorous than other aspects of the company.  Yet, if a drug company cannot reliably produce pure, unadulterated drugs, all its advanced research, cutting edge finance, and glitzy marketing may be for nought.  This case is another argument for finding health care corporate leaders who remember that long term success comes from putting patients, not dollars, not glitz,  first.

Genzyme's "Remarkable Business'Strategy" and Contaminated Drugs

In June, 2009, an article in the Boston Globe described how the Boston area based biotechnology company Genzyme sold some astonishlingly ex...

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