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Sunday Settlement and Guilty Plea Roundup

Here we go again.  AstraZeneca / Seroquel We have posted frequently about allegations of devious marketing techniques used by AstraZeneca to promote its blockbuster atypical anti-psychotic drug Seroquel (quetiapine.)  See our posts <a href="http://hcrenewal.blogspot.com/2009/02/buried-data-smoke-and-mirrors-job-and.html">here</a>, <a href="http://hcrenewal.blogspot.com/2009/03/blogscan-over-selling-of-seroquel.html">here</a>, <a href="http://hcrenewal.blogspot.com/2009/05/more-documents-about-selling-of.html">here</a>, <a href="http://hcrenewal.blogspot.com/2009/10/more-on-misleading-promotion-of.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2009/10/nemeroff-seroquel-and-accme.html">here</a>.  Now, as <a href="http://www.nytimes.com/2010/04/28/business/28drug.html">reported</a> by the New York Times, it is time for AZ to settle with the US government. <blockquote>AstraZeneca has completed a deal to pay $520 million to settle federal investigations into marketing practices for its blockbuster schizophrenia drug, Seroquel, the Attorney General, Eric Holder, said at a news conference Tuesday afternoon. 'AstraZeneca paid kickbacks to doctors as part of an illegal scheme to market drugs for unapproved uses,' Kathleen Sebelius, secretary of health and human services, said at the event in Washington. She said the company promoted drugs for unapproved uses by children, the elderly, veterans and prisoners. AstraZeneca agreed to sign a corporate integrity agreement with the federal government over its marketing of Seroquel for unapproved uses, but will not face criminal charges, company and federal officials said. The company, based in London, has been accused of misleading doctors and patients by playing up favorable research and not adequately disclosing studies that show Seroquel increases the risk of diabetes. </blockquote> Of course, an AZ spokesperson had a different take on it. <blockquote>Glenn Engelmann, AstraZeneca’s U.S. general counsel, released a statement saying the company denies the allegations but settled the investigation with the payment. 'It is in the best interest of AstraZeneca to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines — while avoiding the delay, uncertainty, and expense of protracted litigation,' Mr. Engelmann said. </blockquote> Johnson and Johnson / Topamax On the other hand, the issue of how Johnson and Johnson marketed Topamax (topiramate), a drug approved for treating seizures, is a new one for Health Care Renewal.  Here is the story, <a href="http://www.businessweek.com/news/2010-04-29/j-j-to-pay-81-million-end-federal-cases-on-topamax-update2-.html">via Bloomberg</a>. <blockquote>Two units of Johnson & Johnson will pay more than $81 million to resolve criminal and civil claims over illegal promotion of the epilepsy drug Topamax, the U.S. Justice Department said. Ortho-McNeil Pharmaceutical LLC agreed to plead guilty to a misdemeanor and pay a $6.14 million criminal fine for misbranding the drug, the government said. Ortho-McNeil-Janssen Pharmaceuticals also will pay $75.37 million to resolve civil allegations that it illegally marketed Topamax and caused false claims to be submitted to government health programs. While the Food and Drug Administration approved Topamax for the treatment of partial onset seizures, Ortho-McNeil Pharmaceutical promoted the drug for unapproved psychiatric uses, the government said. The company hired physicians through its 'Doctor-for-a-Day' program to join sales representatives in visiting doctors and to speak to colleagues about unapproved uses and doses, according to the government.</blockquote> In this case, the company admitted wrong-doing as part of the specific plea agreement. <blockquote>Under the plea agreement, Ortho-McNeil Pharmaceutical will admit that from 2001 to 2003 it promoted Topamax 'for certain uses not approved' by the FDA, according to a statement by Ortho-McNeil-Janssen. The company 'voluntarily discontinued the program at issue before receiving the government’s first subpoena in the investigation,' according to the statement. Ortho-McNeil-Janssen also will sign a five-year corporate integrity agreement with the U.S. Health and Human Services Department. </blockquote> Summary Once more, with feeling ....  We have discussed a series of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> and <a href="http://hcrenewal.blogspot.com/search/label/crime">criminal convictions</a> and guilty pleas resolving cases of alleged wrong-doing by health care organizations. Almost none included any penalties for people who authorized, directed or implemented the bad behavior. None of the financial penalties were so big as to be more than another cost of doing business for the organizations involved. Corporate entities, but very rarely people have pleaded guilty or been convicted (almost always of misdemeanors), Some of the cases included gimmicks, like a subsidiary constructed only to plead guilty, that otherwise seemed to lessen accountability. If we truly want health care that is accessible, of high quality, at a fair price, and more importantly, if we want health care that is honest and focused on patients, we need to provide health care leaders with clear, rational incentives in these directions, and make them fully accountable for their actions, and the courses of their organizations under their leadership. ADDENDUM (2 May,2010) - See also <a href="http://brodyhooked.blogspot.com/2010/04/cost-of-doing-business-same-song-83rd.html">comments </a>on the Hooked: Ethics, Medicine, and Pharma blog by Dr Howard Brody on the AZ settlement.

Sunday Settlement and Guilty Plea Roundup

Here we go again. AstraZeneca / Seroquel We have posted frequently about allegations of devious marketing techniques used by AstraZeneca to...

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Investigations, Indictments and Guilty Pleas at Famous US Teaching Hospitals

Some of the US most prestigious academic medical centers have been receiving unusual scrutiny lately. Mount Sinai Medical Center and New York - Presbyterian Hospital. As <a href="http://online.wsj.com/article/SB10001424052748704464704575208374268651564.html">reported</a> first by the Wall Street Journal, <blockquote>Federal prosecutors are investigating allegations that bid rigging and fraud at Mount Sinai Medical Center and New York-Presbyterian Hospital resulted in the hospitals awarding contracts worth tens of millions of dollars to outside contractors. Purchasing officials at the hospitals, two of the city's largest and most prestigious, are alleged to have gotten more than a million dollars in payments from companies that were then given lucrative contracts to perform work such as re-insulating pipes and removing asbestos, according to documents filed in the Southern District of New York. Nine contractors are involved in the case. So far, eight people and three companies supplying the hospitals have pleaded guilty to charges including bid-rigging, mail fraud and tax fraud. Three more people have been indicted on similar charges. The Federal Bureau of Investigation and Internal Revenue Service have been investigating and the Justice Department's Antitrust Division is prosecuting the allegations in the case.</blockquote> Some relevant specifics: <blockquote>The most recent indictment, handed up by a federal grand jury April 6, involved the alleged awarding of more than $195,000 in maintenance and insulation contracts. Mario Perciavalle, associate director of plant services at Mount Sinai, is accused of taking at least $20,500 in cash from a Long Island City company in 2004 and 2005 in exchange for the company, unnamed in documents, winning the deals. Prosecutors also are pursuing a case involving a former official at New York-Presbyterian, Salvatore Scotto-DiVetta, a supervisor at the hospital's Facilities Operations department. He pleaded guilty in March to rigging bids for re-insulation contracts, the Department of Justice said.</blockquote> The next day, the Journal <a href="http://online.wsj.com/article/SB10001424052748704471204575210560835140390.html">reported</a>: <blockquote>Two New York-Presbyterian Hospital officials and two contractors who did business with the prestigious hospital were indicted on fraud charges Tuesday in the latest cases stemming from a federal investigation into bid-rigging and fraud. The indictment alleges that the hospital officials—Santo Saglimbeni of Armonk, N.Y., and Emilio Figueroa, whose hometown wasn't given—received payments and gifts in exchange for awarding contracts to certain companies. </blockquote> And already the box score for this investigation increased: <blockquote>As a result of the investigation, a total of five hospital employees, 10 people outside the hospitals and six companies have either pleaded guilty or face charges.</blockquote> The comments by hospital officials had a familiar ring to anyone who has been following the hearings in Washington on the global financial collapse. From the first article: <blockquote>A Mount Sinai spokesman said the hospital notified the Justice Department 'about the possibility of impropriety immediately after it was identified in an internal audit' and is cooperating with the investigation. The spokesman said the hospital dismissed the employee under investigation and instituted tougher contracting systems.</blockquote> From the second: <blockquote>New York-Presbyterian was an 'unknowing victim of these alleged crimes,' a hospital spokeswoman said. She also said that the staffers named in the indictment no longer work at the hospital, and it is cooperating with the investigation.</blockquote> Partners Healthcare System <a href="http://www.boston.com/business/healthcare/articles/2010/04/29/justice_department_launches_antitrust_review_of_partners_healthcare/">Just out</a> today in the Boston Globe: <blockquote>The US Department of Justice has opened a civil investigation into possible anticompetitive behavior by Partners HealthCare System Inc., the region’s most powerful hospital and physician network. In a letter sent to Partners and the state’s three largest health insurers on April 19, investigators from the Justice Department’s antitrust division demanded documents relating to Partners’ 'contracting and other practices in health care markets in Eastern Massachusetts.' The letter, obtained by the Globe, said the probe sought to determine whether the practices violated the Sherman Antitrust Act, which bars companies from using their market power to limit trade or artificially raise prices. </blockquote> The background is: <blockquote>Boston-based Partners has been under growing scrutiny because of its market power and ability to draw high prices from insurers. The company employs about 5,500 physicians and operates a half dozen smaller hospitals, in addition to their prestigious Harvard-affiliated Boston teaching hospitals, Mass. General and the Brigham. Earlier this year, Attorney General Martha Coakley issued a report documenting that Massachusetts insurance companies pay some hospitals and doctors, including those in the Partners network, twice as much money as others for essentially the same patient care. The report pointed to the market clout of the best-paid providers as a main driver of the state’s spiraling health care costs. A 2008 Globe Spotlight Team series focused on the Boston market found that hospitals such as Mass. General and the Brigham typically are paid 15 to 60 percent more for essentially the same work as other hospitals. Soon after that series, Coakley launched her investigation into whether Partners and Blue Cross-Blue Shield, the state’s largest health insurer, may have illegally colluded to increase the price of health insurance statewide over the last decade, according to several legal and government sources.</blockquote> And again, the official response had a familiarly evasive ring: <blockquote>Partners spokesman Rich Copp yesterday noted that the hospital network already has supplied similar information to investigators from the state attorney general’s office, which launched its own review of Partners’ contracting practices last year. He noted in Partners’ defense that it vies with other providers in the area’s 'highly competitive' health care market. 'The Department of Justice has requested the same information that we have provided to the attorney general’s office,' said Copp. 'We will continue to cooperate with both government agencies during this ongoing analysis of health care in Massachusetts.'</blockquote> Summary So there it is.  Multiple indictments for and guilty pleas to charges of bid-rigging and fraud at two New York academic medical centers, and state collusion and federal anti-trust investigations of a Massachusetts hospital system.  The issues involve four of the most prestigious teaching hospitals in the US. Of course, not all the indictments may result in convictions, and the investigations may not result in charges.  But this involves some institutions that at one time would have appeared beyond reproach.  The lack of clear denials from the inevitable official spokespeople, and attempts to deny responsibility for the actions of employees elsewhere identified as "officials" do not provide much reassurance. Of course, readers of Health Care Renewal would have known that questions could be raised about leadership and governance of these once-revered institutions.  Questions could be raised about the incentives implied by the <a href="http://hcrenewal.blogspot.com/2009/12/98-million-dollar-man.html">huge compensation</a> given to the top hired executives at New York - Presbyterian, awarded by a <a href="http://hcrenewal.blogspot.com/2009/12/with-leaders-like-these.html">board of trustees</a> that includes some of the leaders of the more prominent failed finance corporations involved in the global financial collapse.  <a href="http://hcrenewal.blogspot.com/2009/01/to-whom-did-scorpions-in-bottle-owe.html">Questions</a> could be raised about the dominant presence of finance leaders and possibly <a href="http://hcrenewal.blogspot.com/2009/06/mans-best-hospital-run-by-boss-of-mecc.html">conflicted</a> individuals on the Partners board, and apparent interlocks among Partners leadership and the leadership of the largest health insurer in Massachusetts, which was willing to <a href="http://hcrenewal.blogspot.com/2009/01/scorpions-in-bottle-shook-hands-secret.html">pay that system so much.</a> Maybe, instead of <a href="http://hcrenewal.blogspot.com/2010/04/pondering-leadership.html">lecturing</a> the more lowly among us about our responsibilities to improve health care, the leaders of our previously most august health care institutions need to introspect more about their own responsibility to address the metastasis of "greed and incompetence" in health care from the financial sector.

Investigations, Indictments and Guilty Pleas at Famous US Teaching Hospitals

Some of the US most prestigious academic medical centers have been receiving unusual scrutiny lately. Mount Sinai Medical Center and New Yor...

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Judge Rejects Prosecutors' Lenient Settlement of the Case of the Hidden Defibrillator Defects

We <a href="http://hcrenewal.blogspot.com/2010/04/explaining-health-care-executives.html">just discussed</a> the proposed settlement of a case in which the Guidant subsidiary of Boston Scientific was alleged to have withheld information about defects in its implantable cardiac defibrillators that were associated with six patient deaths (see next most recent post <a href="http://hcrenewal.blogspot.com/2010/04/who-guards-guardians-case-of-boston.html">here</a> with more complete summary).  The devices were manufactured in 2000-02, and the issue first became public in 2005.  The proposed settlement included a seemingly large fine for the company.  Now the New York Times has <a href="http://www.nytimes.com/2010/04/28/health/28device.html">reported</a> that the presiding judge has rejected the settlement as too lenient. <blockquote>A federal judge in Minnesota on Tuesday rejected a plea agreement between the federal government and the Guidant Corporation, saying that the deal did not hold the company sufficiently accountable for an episode in which it sold potentially flawed heart defibrillators. The ruling was a setback for the Justice Department, which had characterized the agreement as a demonstration of its get-tough approach to corporate crime. The deal called on Guidant to plead guilty to two misdemeanors and pay a $296 million fine, described as the largest by a medical device company. But in his opinion, the judge, Donovan W. Frank of United States District Court said the provisions of the agreement were 'not in the best interest of justice and do not serve the public’s interest because they do not adequately address Guidant’s history and the criminal conduct at issue.'</blockquote> The story brought several peculiar aspects of the settlement to light. - The settlement seemed to ignore the most egregious misconduct alleged: <blockquote>Recently, prosecutors charged in court papers that Guidant had knowingly sold potentially flawed defibrillators. But that issue was not addressed in the plea agreement. Instead, the company agreed to plead guilty to two misdemeanor charges that related to the completeness and accuracy of its filings with the Food and Drug Administration.</blockquote> - It was not really the Guidant subsidiary that was going to plead guilty, but a new entity apparently constructed solely to "take the rap." <blockquote>The company created to enter Guidant’s plea, Guidant LLC, existed only on paper. In his ruling, Judge Frank took direct aim at that argument, suggesting it contradicted the Justice Department’s own public statements about the case. He noted that a department news release said Guidant’s plea deal was 'about accountability.' Judge Frank wrote, 'The interests of justice are not served by allowing a company to avoid probation simply by changing their corporate form.' </blockquote> So, the judge demanded that at least the company be put on probation, and possibly be required to do some good works: <blockquote>Judge Frank said that prosecutors should have sought probation for Guidant and its parent, Boston Scientific. Probation would have required the companies to take certain steps, like helping to rebuild public confidence in the safety of heart devices, in addition to paying a fine. The judge also outlined other provisions that might be suitable in a new plea deal, including charitable activities by Guidant to improve heart device safety and improve medical care among minority patients. Daniel R. Margolis, a lawyer in New York who works on medical product cases, said that probation is effectively a way for a court to maintain some control over a company’s activities after it pays a financial penalty. </blockquote> However, the judge felt he could not require prosecution of the actual people who authorized, directed, or implemented the misbehavior at issue. <blockquote>After a hearing this month, several doctors and patients wrote to Judge Frank urging him to reject the deal and arguing that former Guidant executives should be criminally charged in the case. But Judge Frank noted in his ruling that it was up to prosecutors, not a court, to decide who should be prosecuted. </blockquote> We have discussed a series of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">settlements</a> and <a href="http://hcrenewal.blogspot.com/search/label/crime">convictions</a> resolving cases of alleged wrong-doing by health care organizations.  Almost none included any penalties for people who authorized, directed or implemented the bad behavior.  None of the financial penalties were so big as to be more than another cost of doing business for the organizations involved.  Some of the cases included gimmicks, like a subsidiary constructed only to plead guilty, that otherwise seemed to lessen accountability.  Despite the US Justice Department's assertion of a new "get-tough" approach, this new settlement did not seem like any more of a deterrent to bad behavior than the parade of settlements that cam before, that is, until Judge Frank acted.  We applaud the judge for trying to hold at least one large health care organization accountable for its misdeeds.  However, I again suggest that to truly reform health care, we need rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health.

Judge Rejects Prosecutors' Lenient Settlement of the Case of the Hidden Defibrillator Defects

We just discussed the proposed settlement of a case in which the Guidant subsidiary of Boston Scientific was alleged to have withheld infor...

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Pondering Leadership

This blog often talks about the failure of leaders in health care. The <a href="http://hbr.org/archive-toc/BR1004">April, 2010, issue</a> of Harvard Business Review boasts an entire "Spotlight" Section on this subject. Perhaps the two most interesting articles in this section, both by big names--<a href="http://www.hsph.harvard.edu/faculty/atul-gawande/">Atul Gawande</a> and <a href="http://www.hsph.harvard.edu/faculty/thomas-lee/">Tom Lee</a>--among today's medical chattering classes, are entitled, respectively, "Health care needs a new kind of hero," and "Turning doctors into leaders." The first, an interview, first touts the good doctor's vaunted emphasis on <a href="http://www.usatoday.com/news/health/2010-01-27-checklist27_st_N.htm">checklists</a>, then goes on to plead for improved training in team-play: "we don't train physicians how to lead teams or be team members." The second, by Dr. Lee, is more substantive. The network president of Boston's Partners Healthcare System and CEO of Partners Community HealthCare, formed quite a while back by Brigham and Women's and MGH joining forces, Lee makes a longer version of the same argument which boils down, essentially to, "docs need to learn to play nice." He <a href="http://hbr.org/2010/04/turning-doctors-into-leaders/ar/1">starts</a> with the plea we've heard so often before, it sounds like elevator music: <blockquote>The problem with health care is people like me—doctors (mostly men) in our fifties and beyond, who learned medicine when it was more art and less finance. We were taught to go to the hospital before dawn, stay until our patients were stable, focus on the needs of each patient before us, and not worry about costs. We were taught to review every test result with our own eyes—to depend on no one. The only way to ensure quality was to adopt high personal standards for ourselves and then meet them. Now, at many health care institutions and practices, we are in charge. And that’s a problem, because health care today needs a fundamentally different approach—and a new breed of leaders.</blockquote>Seems unexceptionable, as far as it goes. Maybe I'm just a crank who preceded Dr. Lee at his alma mater by, oh, say, a decade or so, but I'm feeling just a wee bit brassed off at hearing, yet again, <a href="http://macleans.files.wordpress.com/2009/04/pogo-enemy-21.jpg?w=512&h=294">Pogo</a>'s same tired old "we have met the enemy and he is us" plaint. Here it is, from Dr. Lee himself: <blockquote>The usual suspects have surprisingly small roles. Greed and incompetence surely exist, but economists agree that they don’t account for double-digit annual cost increases on their own. </blockquote>Oh really? So let me see here, what we really need is more folks like Tom Lee, folks who are willing to apply "Tough Medicine" and understand that "Performance Matters." A whiff of the self-serving here. Being "tough" here means being a good measurement wonk, holding doctors to "results" standards. While one could never wholly disagree with this sentiment, or conviction, or whatever it is, what's missing is the big picture. For starters, the problem of executives with purely technocratic solutions. Which is partly why, in this observer's humble view, we continue to have this "anechoic effect." That's the one critics of the larger defects in the health care system don't just get drowned out by technocratic Pogo-talk. They really aren't much heard at all. The defects include rotten information technology, corrupt hospital and insurance leaders, and insurance companies cocky enough to crow, eleven days after <a href="http://docs.house.gov/rules/hr4872/111_hr4872_amndsub.pdf">HR 4872</a>, and now <a href="http://http//www.healthreform.gov/newsroom/children_preexisting.html">quoting </a>Secretary Sebelius, they're "allowed to insure a child, but exclude treatments for that child’s pre-existing condition." Why don't the self-professed next-gen leaders ever talk about this stuff? A recent New York Times op-ed <a href="http://www.nytimes.com/2010/04/19/opinion/19mon4.html?pagewanted=print">piece</a> suggested one answer. I read it and slapped my forehead, "of caws!" Adam Cohen, the author, is describing why the Cassandras--hey, there are a few of those in this blog, eh wot?--don't get heard. Why they disappear into the anechoic chamber. In this case, on the topic of the 2008-2009 meltdown in the broader economy. <blockquote>Incompetence often plays a role. So does ideology: one reason [Federal Reserve governor Edward] Gramlich, a Democratic nominee, was ignored was that his warnings clashed with the antiregulatory convictions of the Bush administration. In other cases, to borrow Al Gore’s phrase, an “inconvenient truth” imposes burdens that people don’t want or threatens powerful interests. </blockquote>Cassandras warning about the Catholic Church's abuses, about Bernie Madoff, about 9-11: you can find 'em all. But Cohen's is not a rant. It's a reasoned explanation of why warnings don't get listened to. So here are a couple warnings. Neither Tom Lee-style technocratic "let's pull up our socks" answers, nor HR 4872, get anywhere near solving the problems that continue to plague this country's bloated health care system. Primary care continues to <a href="http://www.annals.org/content/150/4/272.full">circle the drain</a>. Health care leaders continue to line their own pockets, basically betting against the system's ability to sustain this percentage of the GDP [this blog, passim]. I guess it's just the old dance. Leaders in lofty positions in Harvard organizations learn to measure their words and advance their own "be like me" agendas, while the Cassandras sit out there in the blogosphere and thump their chests. But wouldn't it be grand if just occasionally, the Tom Lees of the world grew some cojones and really stood up to those who're milking our system for everything it's worth? Or are they too busy <a href="http://hcrenewal.blogspot.com/search/label/Partners%20Healthcare">managing </a>their own conflicts of interest and sweetheart <a href="http://www.boston.com/business/healthcare/articles/2010/04/29/justice_department_launches_antitrust_review_of_partners_healthcare?mode=PF">deals</a>?

Pondering Leadership

This blog often talks about the failure of leaders in health care. The April, 2010, issue of Harvard Business Review boasts an entire ...

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Oh, the Prices We Pay, Reloaded - Celgene Balks at Explaining High Price of Thalidomide

A brief <a href="http://preview.bloomberg.com/news/2010-04-22/celgene-to-get-hearing-before-canada-s-supreme-court-over-thalomid-pricing.html">article</a> on Bloomberg.com implied that Celgene has been fighting efforts by the Canadian Patented Medicine Prices Review Board to get pricing data about the drug Thalidomid (thalidomide): <blockquote>Celgene Corp., the biotechnology company specializing in blood-cancer medicines, will get a hearing before Canada’s highest court over the country’s demands to provide pricing information for the drug Thalomid. The Supreme Court of Canada today agreed to hear Celgene’s appeal of a Federal Court of Appeal ruling that said Canada’s Patented Medicine Prices Review Board was entitled to information about the pricing of the drug. The high court gave no reason for its decision. Celgene’s two top-selling drugs are Revlimid and Thalomid, for a form of blood-cancer called multiple myeloma. They brought in more than 80 percent of the company’s total $2.25 billion in 2008 revenue.</blockquote> It should be no surprise that Celgene may be sensitive about the price of Thalidomid. We <a href="http://hcrenewal.blogspot.com/2005/07/oh-prices-we-pay-thalidomide-for.html">posted</a> back in 2005 about the stratospheric prices of new drugs that seemed disproportionate to manufacturing and development costs on one hand, and the value of the drugs for patients on the other. We noted that thalidomide, a very old drug that notoriously was found to cause birth defects when it was given to pregnant women, but that then showed promise as an anti-cancer drug, was being marketed in the US for $29 per capsule (approximately $25,000 a year), while a generic form sold in Brazil for $0.07 per capsule.   The amount Celgene manages to make from this very old (and demonstrably cheap to produce) molecule is vivid, albeit anecdotal evidence about what has gone wrong with health care prices in the US.  Despite health care insurance companies' protestations that their goal is to provide reasonably priced health care, they seem utterly incapable of negotiating down the prices of even the most obviously over-priced drugs.  And the US government Medicare program so far is prohibited by law from negotiating prices.  How our supposed free market health care system has tilted so far in favor of pharmaceuticals is a reason to wonder, but ought to be reason to investigate.    Meanwhile, <a href="http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzcyNzkwfENoaWxkSUQ9MzcwMzAxfFR5cGU9MQ==&t=1">Celgene's 2010 annual report</a> shows that the company has sold more than $400 million worth of Thalidomid yearly since 2007. The company's total sales in 2009 were $2.567 billion, while it spent $795 million on research and development, and $754 million on general, sales, and administrative expenses. According to the company's <a href="http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6278317&format=PDF">2009 proxy statement</a>, in 2008 its CEO received over $8.5 million, its COO over $5.1 million, its CFO over $2.1 million in compensation, and a senior vice president over $3.0 million. The total compensation of its five highest-paid hired managers (compare to a total of 2813 full-time employees in 2009), approximately $20.5 million 2008, was was approximately 2.6% of the company's net income in 2009, and just under 1% of its total sales.   As we have <a href="http://hcrenewal.blogspot.com/2009/12/more-air-into-health-care-bubble-30000.html">said previously</a>, so the <a href="http://hcrenewal.blogspot.com/2009/12/health-care-bubble-parallels-with.html">health care bubble</a> continues to inflate.  One cause is"<a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">compensation madness</a>," including "insiders hijacking established institutions for their personal benefit."  Another is the amazing acquiescence of those who pay bills at all levels, from the individuals who ultimately fund health care through salary dollars not earned, health insurance premiums, co-pays and the like, and tax payments, through the health care insurers and government agencies who did not balk at paying $25,000 a year for thalidomide in 2005.  If we really want to provide accessible health care of good quality and a reasonable cost, we will need to develop mechanisms to pay more reasonable amounts for health care goods and services. This will require some courage facing down the corporate and organizational insiders who have made themselves very rich from the current craziness.

Oh, the Prices We Pay, Reloaded - Celgene Balks at Explaining High Price of Thalidomide

A brief article on Bloomberg.com implied that Celgene has been fighting efforts by the Canadian Patented Medicine Prices Review Board to ge...

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BLOGSCAN: CMSS New Ethics Code Analyzed

BLOGSCAN: CMSS New Ethics Code Analyzed

The Council of Medical Specialty Societies got some good press for its new code of ethics regarding medical associations' interaction wi...

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Explaining Health Care Executives' Impunity - the (Unexplained) Leniency of Prosecutors

On Health Care Renewal, we noted many <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> and <a href="http://hcrenewal.blogspot.com/search/label/crime">criminal</a> convictions in cases alleging unethical behavior by health care organizations.  Some organizations have settled, and/or pleaded guilty, and/or been convicted numerous times.  And we have said repeatedly, (e.g., <a href="http://hcrenewal.blogspot.com/2010/04/who-guards-guardians-case-of-boston.html">here</a>) such legal actions will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Relatively small fines imposed on large corporations pain workers on the line and stockholders while sparing the richly paid top hired management and the boards that will not reign them in. A recent <a href="http://www.nytimes.com/2010/04/21/business/21device.html">article</a> in the New York Times about a plea agreement in a case in which the Guidant subsidiary of Boston Scientific was alleged to have withheld information about defects in its implantable cardiac defibrillators that were associated with six patient deaths (see most recent post <a href="http://hcrenewal.blogspot.com/2010/04/who-guards-guardians-case-of-boston.html">here</a>) throws some light onto the apparent impunity of top health care leaders.  The article reiterated: <blockquote>In recent years, the Justice Department has won hundreds of millions of dollars in fines from drug and device makers, including a string of cases in which the companies have pleaded guilty to violating federal laws. But corporate executives rarely face criminal charges in such actions....</blockquote> The article noted: <blockquote>“Prosecutors want the money,” said Mr. Fleder, of Hyman, Phelps & McNamara. “And at least in the big money settlements they have had in pharma cases, it appears that prosecutors are willing to settle even if it means forgoing prosecutions against individuals.” </blockquote> Yet, as we have said, <blockquote>Short of executives facing prosecution, companies see the hefty financial settlements demanded by the Justice Department as another price of doing business, industry critics say.</blockquote> There does not seem to be a legal barrier to holding these executives accountable: <blockquote>... they can be held liable under federal law for regulatory violations that occur on their watch — whether or not prosecutors can prove the executives participated in the wrongdoing or even knew about it. </blockquote> But if this is so, why have corporate leaders not faced such penalties before? An experienced prosecutor explained it at one level: <blockquote>A former prosecutor in many drug and medical device-related cases, Michael K. Loucks, said he never charged corporate executives with misdemeanors — which apply in cases when the violations are deemed unintentional — because he believed that being barred from the industry was too harsh a consequence. “I think that if you are going to take actions that take away someone’s liberty or livelihood, you should have to prove felony conduct,” said Mr. Loucks, who spent over 20 years as an assistant United States attorney in Boston. </blockquote> This ends up as a very disturbing response. Professionals who hold positions of trust in society, most particularly health care professionals, can lose their livelihood for unprofessional conduct or unethical actions that are not felonies, or even criminal. In health care (and in some other fields, like law), professionals are held to a higher standard that merely avoiding conviction for felonies. (For examples, peruse the lists of doctors and other health care professionals whose licenses were suspended or revoked by state medical boards.) In our current world of commercialized health care, leaders of large health care organizations can take actions that have as important consequences for peoples' health and safety as the individual actions of doctors and nurses. Why should they not be at risk of the loss of their current livelihood for actions that risk peoples' health and safety? I do not know why an experienced prosecutor felt that health care executives deserved so much more leniency than health care professionals may receive from medical boards. Maybe in the future we will begin to hold those who authorized or directed unethical actions that risk health and safety accountable.

Explaining Health Care Executives' Impunity - the (Unexplained) Leniency of Prosecutors

On Health Care Renewal, we noted many legal settlements and criminal convictions in cases alleging unethical behavior by health care organ...

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