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BLOGSCAN: Corporate Characteristics that Lead to Fraud

BLOGSCAN: Corporate Characteristics that Lead to Fraud

Kurt Eichenwald on the corporate characteristics that lead to fraud: 1) huge positive incentives for achieving financial targets, huge negat...

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A Great Investment Opportunity? - Biotechnology Company Run by an Ex-Convict

A sad commentary on the current morality of the health care "business," as <a href="http://www.nytimes.com/2010/11/01/business/01waksal.html">provided </a>by the New York Times. Sam Waksal is back in the biotechnology business: <blockquote>Mr. Waksal says his new venture, Kadmon Pharmaceuticals, will be 'a fully integrated biopharmaceutical company from the get-go,' replete with everything, including its own research and products on the market or in clinical trials that it acquires from others. 'You’ll see a company that next year will be doing significant revenues in a growth area, with earnings, probably five Phase 3 programs and a couple of Phase 2 products,' Mr. Waksal said Sunday in a telephone interview. Phase 3 and Phase 2 are the late and middle stages, respectively, of clinical trials. Several of Mr. Waksal’s former colleagues from ImClone have joined him at Kadmon, a name from kabbalah, the Jewish mystical movement. He even looked into leasing the Lower Manhattan headquarters ImClone is vacating. Kadmon, which will focus on cancer, infections and autoimmune diseases, has started to make deals. On Monday it is expected to announce it has licensed an experimental hepatitis C drug from Valeant Pharmaceuticals International, a person close to the transaction said. That follows the disclosure last week that it had acquired Three Rivers Pharmaceuticals, a Pennsylvania company specializing in hepatitis drugs. Kadmon circulated a private placement memorandum in February to raise $50 million to $175 million. As of July, it had raised $10.8 million from 26 investors, a filing with the Securities and Exchange Commission said. But David Pitts, a spokesman for Kadmon, said that other debt and equity offerings had raised more than $200 million, with the biggest investor being SBI Holdings of Japan. </blockquote> Is there a catch? It might be Mr Waksal's record, criminal record. Mr Waksal's previous company was ImClone: <blockquote>That started to come undone in December 2001, when Mr. Waksal got word that the Food and Drug Administration was not going to approve Erbitux. Before the company announced the news, Mr. Waksal alerted relatives to sell their ImClone stock and tried to sell some of his. Martha Stewart sold her ImClone shares and was given a five-month prison sentence and five months of home confinement for lying to federal investigators about it. Mr. Waksal pleaded guilty to securities fraud, bank fraud, perjury, obstruction of justice and conspiracy. He is prohibited by a settlement with the S.E.C. from serving as an officer or director in a publicly traded company. </blockquote> Presumably, Kadmon is not publicly traded, so the SEC ban does not apply to his leadership of that company. Yet despite the ban and his criminal record, investors seem to be ready to throw money at him.  Maybe it has more to do with emotion than reason, much less morality, <blockquote>One investor in Kadmon, who also sits on its board, said Mr. Waksal’s energy and his acumen in spotting promising drugs far outweigh his past problems. 'He is irrepressible,' said this investor, who spoke on the condition that she not be named because her company has a policy against being quoted in the media. 'I don’t think what happened to Sam in the past is going to have a negative effect on my investment in this business.'  [Being convicted of 'securities fraud, bank fraud, perjury, obstruction of justice, conspiracy' is a good background for a company CEO? - Ed]</blockquote> Furthermore, <blockquote>prospective investors say his trademark exuberance and penchant for hyperbole remains. 'He hadn’t changed,' said a prospective investor who met with Mr. Waksal and spoke on the condition of anonymity to retain relations with him. 'He was spinning big stories about big money, big deals' Another prospective investor said Mr. Waksal had told him that Carl C. Icahn, the billionaire who is a friend of Mr. Waksal and had invested in ImClone, had committed $30 million to Kadmon. Marc Weitzen, a lawyer for the investor, said Mr. Icahn had evaluated Kadmon but 'decided to pass.'  [It sounds like Mr Waksal has not developed any new affinity for the truth - Ed.] The private placement memorandum circulated in February said Kadmon had 'a simple yet revolutionary plan for creating the pre-eminent 21st century biopharmaceutical company.' </blockquote>To make it even more explicit: <blockquote>Mr. Waksal, who earned a doctorate in immunology, is charming to the point of being seductive. He was a fixture in New York social circles, befriending celebrities and dating many women, including Alexis Stewart, daughter of his friend Martha Stewart. He lived in a spacious SoHo loft with millions of dollars in art, where he hosted extravagant parties and intellectual salons attended by leading lights in literature, art and science. </blockquote> In my humble opinion, an investor who throws money at an ex-con, apparently because he seems exuberant, irrepressible, even seductive, needs a brain transplant.  (But maybe some investors should read Snakes in Suits, see post<a href="http://hcrenewal.blogspot.com/2006/06/snakes-in-suits-book.html"> here</a>.) But this blog is not about giving advice to investors. If Mr Waksal invested in basically harmless products that had nothing to do with patients' health and safety, the foolishness of investment decisions about his company would have nothing to do with me. However, Mr Waksal is proposing to develop drugs to be given to patients: <blockquote>In its first big deal, Kadmon announced last Monday that it had acquired privately held Three Rivers for more than $100 million. Three Rivers, whose main products are drugs for hepatitis C, is meant to be the commercial base of Kadmon, its revenues helping to defray the cost of developing new drugs. The deal, an investor familiar with the structure said, is highly leveraged, to the extent that Three Rivers’ earnings might not be sufficient to cover the debt. But Mr. Waksal is betting that sales will soar because new pills being developed by other companies will make treatment more effective, enticing more people with hepatitis C to be treated. 'The hep C market is going to undergo a real sea change next year,' Mr. Waksal said. Three Rivers has a proprietary form of the drug ribavirin that requires two pills a day, instead of the standard six to eight. Even with new drugs coming, ribavirin will remain a mainstay of treatment. In fact, Mr. Waksal is increasing that bet. On Monday, Kadmon is expected to announce that it has obtained exclusive worldwide rights to taribavirin, a form of ribavirin that may have fewer side effects. Kadmon is paying $5 million initially, with other payments possible later, to Valeant Pharmaceuticals, which has been testing the drug in clinical trials, according to the person close the transaction. Valeant will pay $7.5 million for rights to sell Kadmon’s ribavirin in Eastern Europe. Kadmon has bought a tiny company started by Princeton professors that has a way to measure cell metabolism. Influencing a cell’s use of nutrients is emerging as a novel way to treat cancer and infectious diseases. </blockquote> So, we are not talking about merely foolish investment decisions, but amoral ones. The amorality of this brave new business world becomes relevant. <blockquote>For many investors, 'there are few judgments beyond whether you made me money,' said Samuel D. Isaly, managing partner at OrbiMed Advisors, a big investor in biotech companies that was not asked to invest in Kadmon. 'Sam Waksal made a lot of people a lot of money with ImClone.' </blockquote> There, in a nutshell seems to be the problem with running health care organizations not just in a business-like manner, but as businesses, businesses in a completely laissez faire environment, businesses in a new world run by new robber barons. Would you trust a company run by an ex-convict to product safe, effective, and unadulterated drugs? (After all, some very respected companies run by people who are certainly not ex-cons have proven to be unable to keep all of their products pure and <a href="http://hcrenewal.blogspot.com/search/label/adulterated%20drugs">unadulterated</a>.) This case vividly illustrates the need for assuring that the leaders of all health care organizations, including but not limited to pharmaceutical and biotechnology companies, have some knowledge of the health care context, some sympathy for the values of health care professionals, including putting patients' health and welfare first, and are externally accountable. But at a minimum, health care organizations should not be run by former felons. However, in our extremely laissez faire environment, in a country now increasingly dominated by new robber barons, ex-convicts can run biotechnology companies.

A Great Investment Opportunity? - Biotechnology Company Run by an Ex-Convict

A sad commentary on the current morality of the health care "business," as provided by the New York Times. Sam Waksal is back in t...

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BLOGSCAN: Florida Doctors Endorse Ex- Columbia/ HCA CEO for Governor

Rick Scott was the CEO of for-profit hospital chain Columbia/ HCA.  The company ended up settling civil and criminal charges for $1.7 billion.  Like many other examples in the march of legal settlements about which we have often posted, no individual who authorized, directed, or implemented the relevant bad behavior suffered any sort of negative consequence or paid any penalty.  Rick Scott left the company, but with a golden parachute.  Now he his running for Governor of Florida, using a substantial amount of his own money (but money that probably mostly came from Columbia / HCA). (See post <a href="http://www.healthbeatblog.com/2010/10/rick-scott-and-the-florida-gubernatorial-race-nurses-are-for-sink-doctors-are-for-scott-voters-still.html">here</a>.)  He may be in the lead.  And the Florida Medical Association has just endorsed him.  <a href="http://www.healthbeatblog.com/2010/10/rick-scott-and-the-florida-gubernatorial-race-nurses-are-for-sink-doctors-are-for-scott-voters-still.html">In the Health Beat blog</a>, Maggie Mahar is all over this story.  Read it and weep.  Remember another good reason for the people who lead health care organizations to be truly accountable for their actions.

BLOGSCAN: Florida Doctors Endorse Ex- Columbia/ HCA CEO for Governor

Rick Scott was the CEO of for-profit hospital chain Columbia/ HCA. The company ended up settling civil and criminal charges for $1.7 billio...

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Hoffman and Podgurski: A relatively lawless industry and "meaningful use" of health IT, with safety as an afterthought

In their article "Meaningful Use and Certification of Health Information Technology: What About Safety?" (free PDF <a href="http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1697587_code691672.pdf?abstractid=1697587&mirid=1">here</a>), Sharona Hoffman (Professor of Law and Bioethics and Co‐Director of the Law‐Medicine Center, Case Western Reserve University School of Law) and Andy Podgurski (Professor of Electrical Engineering and Computer Science, Case Western Reserve) make an important case for what I've previously described as "putting the cart before the horse." At my Oct. 1, 2010 post "<a href="http://hcrenewal.blogspot.com/2010/10/cart-before-horse-again-institute-of.html">Cart before the horse, again: IOM to study HIT patient safety for ONC</a>" I argued that the IOM was only called in to study HIT safety after plans for national rollout were put into law, and a "stimulus to adoption" (with penalties for refusniks) financed at the cost of tens of billions of dollars. I found this approach to HIT and the sequencing of events - the development of "meaningful use" criteria before usability and safety criteria - quite cavalier. Hoffman and Podgurski go a step further. They begin: <blockquote>In the summer of 2010, the Department of Health and Human Services (HHS) published three sets of regulations to implement ARRA. This article briefly describes and critiques the regulations, arguing that (1) they fail to appropriately address HIT safety and (2) further steps must be taken to protect patients and serve public health needs in the new digital era.</blockquote> After a brief review of the Meaningful Use and "Certification" (a.k.a. features qualification) regulations and programs, they go on to critique those regulations and programs as a "step towards comprehensive oversight", but a very deficient step considering the ambitions and timelines of the HITECH act and the federal government. They aptly note (along with with footnotes): <blockquote> ... While advocates argue that computerization will reduce errors, numerous recent reports have demonstrated that the opposite can be true. Hospitals have experienced incidents in which doctors’ orders were posted to the wrong patient charts and electronic drug orders were not delivered to nurses who needed to dispense them to patients. A published 2009 review of almost 56,000 CPOE prescriptions found that approximately 1% of them contained errors. Patients who do not receive needed medication or whose treatment is otherwise mismanaged because of software or usability problems can suffer catastrophic consequences. General system safety is a property that is attainable only through rigorous processes for development and evaluation. [Evaluations of the kind the healthcare IT industry seems to have steadfastly circumvented and avoided - ed.] However, the regulations do not address certification of EHR vendors’ software development processes or even require vendors to analyze and mitigate potential safety hazards. [In other words, they are essentially meaningless in terms of HIT safety - ed.] Furthermore, ATCBs [ONC 'Authorized Testing and Certification Bodies'] will use testing requirements developed by the National Institute of Standards and Technology (NIST) that are apparently intended only to determine whether systems include certain features. Passing such tests is not sufficient to ensure that those features function properly in the long term and under varied operating conditions. [In other words, a preflight checklist will be conducted of aircraft that have rarely or never actually flown, to declare them flight ready for the amateur pilot - ed.] </blockquote> They note the obvious: <blockquote> Meticulous testing of EHR products is critical to their safety. Because of the government’s lucrative incentive payments, many new vendors may attempt to enter the market and to quickly produce EHR systems whose quality is unproven and perhaps dubious.</blockquote> A key passage in this article is this: <blockquote> Admittedly, clinical evaluation of new products poses challenges for vendors who would need to find facilities willing to accept the administrative burdens of assessing systems that may ultimately fail. [In other words, it will cost them to improve the safety of their products, a core competency they should have developed decades ago - ed.] Such facilities would also experience delays in receiving incentive payments because they would use uncertified systems during the evaluation period. However, certification of HIT that has not been thoroughly evaluated is no more responsible than approval of medications or devices that have not been carefully scrutinized by the FDA </blockquote>"No more responsible than approval of medications not scrutinized by FDA" is quite on target. I personally would use a stronger term than deficient responsibility, however: deliberate reckless indifference to health IT safety seems more descriptive. The authors do note that: <blockquote> The delegation of EHR approval responsibilities to ATCBs will ease HHS’s regulatory burdens and likely supply an adequate pool of experts for HIT testing. HHS is authorized to monitor ATCBs through on‐site visits, reports, and review of documentation. It remains to be seen if these measures will ensure that ATCB members are qualified, competent, and free of conflict of interest. These issues will become more critical if HHS eventually requires rigorous clinical testing of EHR systems as described above.</blockquote> Considering the track record of the pharma and medical device industries as presented in many case examples at this blog, "qualified, competent, and free of conflict of interest" is a tall order indeed for the health IT industry and its "certifiers." The authors again state the obvious (albeit an "inconvenient truth"): <blockquote>... it is naive to assume that any use of HIT is better than no use of HIT. [This warning echoes the "use equals success" fallacy as described by Karsh et al. in their recent JAMIA article described <a href="http://hcrenewal.blogspot.com/2010/10/jamia-health-information-technology.html">here</a> - ed.] EHR systems constitute complex technology that can introduce errors as well as prevent them. Medical errors can occur because of computer bugs, computer shut‐downs, or user mistakes that may be attributable to a flawed user interface. Through communication tools, electronic ordering, decision support features, and data management, EHR systems will guide many aspects of patient care. Treatment success will often depend on their proper functioning. </blockquote> They conclude: <blockquote>HHS’ new regulations constitute positive first steps and a laudable reversal of a relatively lawless approach to EHR system design and deployment. Previously, the only certification program was offered by the Certification Commission for Health Information Technology, a private industry group that was not subject to regulation.</blockquote> I used terms such as "wild west", "out of control" and "pre-Flexnerian" to describe the HIT industry. That an attorney would use the term "lawless" seems quite fitting to describe similar observations. Finally, they state: <blockquote>Still, much more work must be done to protect public health in the digital era. We urge that future meaningful use and certification criteria and the post‐2011 permanent certification program be more attentive to safety issues. EHR system approval should be no less rigorous than the FDA’s process for drug and device approval because HIT is as safety‐critical for patients. A prime criterion for certification should be a documented history of safe operations in a number of clinical environments. The federal government would be wise to focus less on the speed of EHR adoption and more on product quality. Only through sufficient safeguards for EHR system safety can this technology fulfill its promise to dramatically improve individual and public health outcomes. </blockquote> In my opinion, the HITECH timelines are far too ambitious (I sense a similar sentiment "between the lines" in the above passage). Perhaps it's time for those timelines to be revisited. A new Congress should take that on, or defund HITECH and rewrite it to prevent patient harm and AHLTA and UK NPfIT-like debacles, to save billions of taxpayer dollars we really don't have to spare at the moment. -- SS

Hoffman and Podgurski: A relatively lawless industry and "meaningful use" of health IT, with safety as an afterthought

In their article " Meaningful Use and Certification of Health Information Technology: What About Safety? " (free PDF here ), Sharo...

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GlaxoSmithKline Subsidiary Pleads Guilty to Manufacturing Adulterated Drugs: Three Strikes and ...?

Paxil First there was Paxil (Seroxat in the UK, or paroxetine), the anti-depressant whose marketing lead GlaxoSmithKline (GSK) to settle allegations of fraud brought by then New York Attorney General Elliott Spitzer in 2004.  That case included allegations of suppression and manipulation of clinical research, and was discussed in great detail in the book <a href="http://www.alison-bass.com/books.html">Side Effects</a> by Alison Bass.  We posted about various aspects of this case, e.g., more recently <a href="http://hcrenewal.blogspot.com/2007/01/not-something-we-want-to-publicise-spin.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/03/british-government-concludes-gsk.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2008/09/brown-university-student-journalists.html">here</a>.  Avandia Then there was Avandia (rosiglitazone), the anti-diabetic drug whose use was just restricted by the US Food and Drug Administration.  This GlaxoSmithKline product inspired a <a href="http://hcrenewal.blogspot.com/2010/07/avandia-spin-cycle-continues-even-after.html">"spin cycle"</a> which provided us with endless grist for the Health Care Renewal mill.  A good summary of the case appeared in September in the British Medical Journal (Cohen D. Rosiglitazone: what went wrong: Brit Med J 2010; 341: 530-534.  Link <a href="http://www.bmj.com/content/341/bmj.c4848.fu%20%20ll">here</a>)  Once again, it appears that research was suppressed and manipulated (e.g., see <a href="http://hcrenewal.blogspot.com/2010/02/bring-back-dsi-avandia-case-as-spy.html">here</a>), Avandia critics were attacked by "experts" whose financial relationships with GSK were not always obvious (e.g., see <a href="http://hcrenewal.blogspot.com/2007/06/avandia-spin-cycle-continues.html">here</a>), and there were allegations that GSK executives tried to intimidate those who disagreed with them (e.g., see <a href="http://hcrenewal.blogspot.com/2010/02/bring-back-dsi-avandia-case-as-spy.html">here</a> and <a href="http://hcrenewal.blogspot.com/2007/11/more-about-who-called-dogs-out-on.html">here</a>).  Adulterated Drugs And now it is adulterated drugs.  Here is the <a href="http://www.bloomberg.com/news/2010-10-26/glaxo-said-to-settle-u-s-drug-manufacturing-lawsuit-for-750-million.html">version</a> from Bloomberg: <blockquote>GlaxoSmithKline Plc, the U.K.’s largest drugmaker, will pay $750 million to settle a U.S. whistleblower lawsuit over the sale of defective drugs. Glaxo and the U.S. Justice Department announced the agreement yesterday, resolving a false-claims lawsuit first filed in 2004 by Cheryl D. Eckard, a former global quality assurance manager for the London-based company. 'This is not something I wanted to do, but because of patient safety it was necessary,' Eckard, 51, told reporters following a Justice Department press conference in Boston. As a whistleblower, she will receive $96 million from the settlement money. Glaxo was accused in court papers of selling tainted drugs under false pretenses. The medicines, made at a Glaxo plant in Cidra, Puerto Rico, were misidentified as a result of product mix-ups, according to papers filed in federal court in Boston. The affected drugs included the antidepressant Paxil CR and the diabetes treatment Avandamet. [Note that this is a combination drug that includes Avandia - ed] The settlement includes a criminal fine and forfeiture totaling $150 million and a $600 million civil settlement under the False Claims Act and related state claims, the Justice Department said in a statement. 'We will not tolerate corporate attempts to profit at the expense of the ill and needy in our society -- or those who cut corners that result in potentially dangerous consequences to consumers,' Carmen M. Ortiz, the U.S. Attorney in Boston, said at yesterday’s news conference. SB Pharmco Puerto Rico Inc., a Glaxo unit, agreed to plead guilty to charges relating to the manufacture and distribution of adulterated drugs made at the now-shuttered plant, the Justice Department said. Glaxo said in July it had agreed in principle with the U.S. to pay 500 million pounds ($791 million) to resolve the investigation. 'We regret that we operated the Cidra facility in a manner that was inconsistent with current Good Manufacturing Practice requirements and with GSK’s commitment to manufacturing quality,' PD Villarreal, a Glaxo senior vice president, said in an e-mailed statement. Eckard’s take is the largest ever for a single whistleblower, said Patrick Burns, spokesman for Taxpayers Against Fraud, a nonprofit Washington group that publicizes the use of legal means to combat fraud against the U.S. The federal government will receive $436.4 million from the settlement and participating states will split as much as $163.6 million, the Justice Department said. Other drugs made at the plant include Kytril, an anti- nausea medication, and Bactroban, an ointment used to treat skin infections, the Justice Department said. 'The false claims arose out of chronic, serious deficiencies in the quality assurance function at the Cidra plant and the defendants’ ongoing serious violations of the laws and regulations designed to ensure the fitness of drug products for use,' the government said in court papers. The U.S. Food and Drug Administration in 2005 seized some Paxil CR lots after it was discovered that the pills sometimes split inappropriately, according to court papers. Some of the pills lacked an active ingredient. </blockquote>It seems that not only questions about GSK sponsored clinical research about and GSK marketing of Paxil and Avandia, but the company has problems even supplying tablets that contain the pure drugs at the right dose. Summary and Discussion First, this is another dreary marcher in the <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">parade of legal settlements</a> that we have now been chronicling for years. This case has some particular features. It included a guilty plea to a crime. Although the allegations included fraud, the fundamental problem seemed to be the selling of adulterated, impure drugs. So my first comment is that this is the latest instance of a major pharmaceutical company not being able to fulfill its most basic responsibility and reason for being, the manufacture of pure, unadulterated drugs. We previously discussed problems with adulterated drugs made by <a href="http://hcrenewal.blogspot.com/search/label/Baxter">Baxter International</a> and <a href="http://hcrenewal.blogspot.com/search/label/Johnson%20and%20Johnson">Johnson and Johnson</a>. We have discussed, seemingly endlessly, how big health care corporations, including but certainly not limited to pharmaceutical companies, have engaged in various sophisticated deceptions involving marketing and clinical research to sell more products at higher prices. Now it seems that while these companies have put so much of their resources into marketing and public relations, not necessarily in honest ways, they have neglected to put the necessary expertise and resources into their most basic manufacturing functions. So while drug industry sycophants prattle on endless about life-saving innovations, not only have industry marketing and research become less trustworthy, but now we cannot even trust the companies to supply the drug that is on the label in a pure form at the labelled dose. My next comment is that this is the third big case involving GlaxoSmithKline reported in the last few years. (Although, like the previous cases, the events that lead to recent relevations actually occurred over the last 10+ years.) This would suggest that there is a serious problem with the culture, leadership, and governance at this corporation. Maybe one reason such problems are allowed to fester is that in the current case, like the last two involving GSK, and as is typical for the legal settlements and crimes we have discussed before, no individuals who authorized, directed, or implemented the problematic behavior seem to have suffered any negative consequences or paid any penalty. In fact, the Guardian just <a href="http://www.guardian.co.uk/business/2010/oct/28/glaxosmithkline-executives-allegedly-ignored-eckard">pointed out</a>: <blockquote>Five of the six senior GlaxoSmithKline executives cited by a whistleblower as part of a cover-up of contamination problems at the group's Puerto Rico factory are understood to still be employed by the pharmaceuticals company. Cheryl Eckard, who was sacked by the company as a quality control manager in 2003 after repeatedly raising her concerns with a series of GSK executives, received a $96m (£61m) reward this week as part of a $750m criminal and civil settlement between US regulators and the company. Her evidence stated that she believed company executives refused to acknowledge the gravity of the production violations – which included the wrong strength of pills being shipped – because it would delay the approval of two new drugs by the US Food and Drug Administration. The court documents allege that Eckard, who had recommended the factory be shut until the issues were resolved, communicated the quality violations at the plant in Cidra to David Pulman, president of global manufacturing and supply; Janice Whitaker, senior vice president of global quality; Peter Savin, vice president of global quality assurance; Diane Sevigny, director of global quality assurance, risk management and compliance; and Jonathan Box, vice president of manufacturing and supply for North America. All five executives are believed to be still working for the London-listed company, while Pulman is also a member of the company's 18-strong corporate executive team, which includes chief executive Andrew Witty.</blockquote> As we have said endlessly, penalties that only appear to be (relatively small) costs of doing business are unlikely to deter future bad behavior. Until the people who actually authorized, directed and implemented the bad behavior have to suffer some negative consequences, expect the bad behavior to continue.  When it comes to health care's leadership, society seems to have acceded to defining deviancy down. Until we start holding health care leaders to high standards, expect their organizations not to uphold high standards.  Further, expect organizations that did not uphold high standards in one instance to fail to uphold them in other instances. See also comments on the <a href="http://postscript.communitycatalyst.org/?p=1832">Postscript blog</a>.

GlaxoSmithKline Subsidiary Pleads Guilty to Manufacturing Adulterated Drugs: Three Strikes and ...?

Paxil First there was Paxil (Seroxat in the UK, or paroxetine), the anti-depressant whose marketing lead GlaxoSmithKline (GSK) to settle all...

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THAT'S EDUCATION!

THAT’S EDUCATION! You can’t make this stuff up. This week I received a cheerful E-mail from a well known academic key opinion leader or KOL. Only the E-mail didn’t really come from Dr. Ian Cook at UCLA. It really came from a company called PeerView Institute for Medical Education. The E-mail offered on-line CME content with the topic Essential Aspects to Building a Therapeutic Alliance Between Patients and Practitioners for the Treatment of Mood Disorders. Whenever I see an anodyne title like that I know there’s trouble ahead. The content came in the form of a dialogue between Dr. Cook and another well known academic KOL, Dr. Michael Thase from Penn. Beneath two prominent corporate logos, a disclosure stated This activity is supported by educational grants from AstraZeneca LP and Lilly USA, LLC. Another disclosure stated This CME/CNE/CPE activity is jointly sponsored by Purdue University College of Pharmacy and PVI, PeerView Institute for Medical Education. The program also states This activity has been planned and implemented in accordance with the Essential Areas and policies of the Accreditation Council for Continuing Medical Education (ACCME) through the joint sponsorship of Purdue University College of Pharmacy and PVI, PeerView Institute for Medical Education. Purdue University College of Pharmacy, an equal access/equal opportunity institution, is accredited by the ACCME to provide continuing medical education for physicians. I happen to know Dr. Cook and Dr. Thase, so already I am thinking why are these productive academic researchers from first tier universities doing a yawner CME gig like this? Then I get it. Most academic physicians have been told by now that they may no longer speak for hire at dinners and events sponsored by Pharma. You know, the sort of thing that Charles Nemeroff tried to pass off as CME-like, only Senator Grassley <a href="http://www.pharmalot.com/2008/12/glaxo-nemeroff-and-cme-like-promotions/">wasn’t buying it</a>. So now the action has moved to commercial CME activities that carry the imprimatur of ACCME, thus confirming the principle that the flow of marketing money must find an outlet. My jaundiced view of ACCME’s performance and credibility is a <a href="http://hcrenewal.blogspot.com/2009/10/nemeroff-seroquel-and-accme.html">matter of record</a>. For that matter, I am on record with a jaundiced view of the entire CME business. Here is what I <a href="http://hcrenewal.blogspot.com/2008/01/variations-on-theme-of-sleaze.html">said</a> back in 2008. …Continuing Medical Education (CME) is a second front in the campaign to expand (drug markets). The standard formula calls for corporate sponsorship channeled through an “unrestricted educational grant” to a medical education communications company (MECC). The MECC employs writers to prepare the “educational content,” and academic KOLs are recruited to deliver this content. The KOLs are chosen for their willingness to be “on message” for the corporate sponsor. If they go “off message” they know they will not be invited back. The talk of “unrestricted grants” is window dressing. The MECC also secures the imprimatur of a nationally accredited CME sponsor, typically an academic institution. The sponsor is paid to certify that the CME program meets the standards of the Accreditation Council on Continuing Medical Education (ACCME). Everybody turns a buck: the MECC and its staff are handsomely paid (CME is now a multi-billion dollar business); the KOLs are generously rewarded with honoraria and perquisites; the academic sponsor is well paid by the MECC; the ACCME receives dues from the academic sponsor; the audience obtains free CME credits rather than having to pay for these required educational experiences; and the corporate sponsor gets what it considers value for its marketing dollar. So, I approached this free on-line CME offering with a good deal of skepticism. Most of the content was pedestrian and scripted – not because these KOLs couldn’t have done better but because someone at the MECC scripted it for them. Someone at the MECC also put the slides together, about which more in a moment. The material was formulaic, a succession of clinical banalities accompanied by Power Point slides that said everything and nothing. I cannot imagine that a physician would learn anything substantive from these educational tropes. The impresarios at PeerView Institute for Medical Education, funded by Lilly and AstraZeneca, came through with the desired spin. The corporate sponsors obtained the soft messaging they wanted. Their products olanzapine and quetiapine were not promoted overtly, but it was surely gratifying that the content emphasized the accepted place of such second generation antipsychotic drugs as a class in mood stabilization for bipolar disorder and in augmentation for nonresponsive major depression. This soft messaging was delivered with the appearance of authority, within a package of algorithms, strategies, Venn diagrams, and measurement tools that featured potential upsides but gave hardly a nod to the worrisome side effects of such drugs, especially <a href="http://ajp.psychiatryonline.org/cgi/content/full/167/2/216">in depressed patients </a>. And it surely was no accident that the sponsors’ drugs appeared as exemplars in slides and in the follow-up questions – another form of soft messaging. Finally, I came upon incontrovertible evidence that these KOLs did not prepare the educational content of the program. A slide that discussed antidepressant drug options contained a panel dealing with the MAO Inhibitors (MAOIs). This class of antidepressant drug appeared in the 1950s, and MAOIs still have a limited place in clinical practice. The information given about the MAOI drugs in the enduring material (slide) of this program, however, is dated, inaccurate, and dangerous. Here is the relevant section of the slide. CLASS MAOIs (eg, benmoxin, hydralazine phenelzine, pheniprazine) EFFICACY ↓ efficacy compared to TCAs 4 COMMON SIDE EFFECTS • Drowsiness, dizziness, loss of visual acuity, GI side effects, insomnia, irritability 4 What’s wrong with this? Plenty. Benmoxin has never been marketed in the US and was discontinued in Europe many years ago. Hydralazine is not an MAOI but an antihypertensive agent. Pheniprazine was discontinued many years ago due to marked toxicity. Meanwhile there is no mention of tranylcypromine or selegiline or moclobemide, which are in current use. The listing of hydralazine, which has no antidepressant activity, is especially dangerous. Likewise, the laundry list of side effects manages to omit the single most important problem with the MAOI class – potentially lethal dietary and drug interactions. There is only one way to say it – this educational content is incompetent, reckless, and dangerous. I know both the KOLs well enough to be certain they would never develop such educational content themselves. So, who did develop it? Some functionary at PeerView Institute for Medical Education, who had no clue what s/he was doing. Compounding the problem, the Purdue University College of Pharmacy waved through this incompetent material for CME credit. If the Purdue University College of Pharmacy wants to provide continuing education for pharmacists, fine. But I draw the line at allowing an institution that does not train physicians to provide continuing education for physicians. I do not understand why this is permitted by ACCME. On the evidence of this program, the Purdue University College of Pharmacy lacks the expertise to provide continuing education for physicians. The standard is simple. The standard is not ‘we try to ensure accuracy’… the standard is we get it right – that’s what our role models teach us in medical school and residency training. These KOLs are accountable for the reckless errors in this content because they allowed their names to be featured as the authorities. Plainly, they did not develop the educational content and they did not take the time to review the enduring materials as their accountability required. Why have the deans of US medical schools not banned academic physicians from participating in such commercial CME gigs? It is no secret how phony <a href="http://hcrenewal.blogspot.com/2009/10/nemeroff-seroquel-and-accme.html">these events </a>are. Why not help these busy academic clinical scientists to maintain their focus by limiting them to educational programs at academic medical centers and at meetings and functions genuinely sponsored by professional medical societies? As the present example shows, anything else is business as usual under cover of a fig leaf. I want to be clear that I have enjoyed friendly relationships with Ian Cook and Michael Thase for a long time. It’s not personal, it’s about standards and it’s about tradecraft. If academic KOLs are too busy to maintain standards and tradecraft then they should pass up these educational charades. For shame, guys. Bernard Carroll

THAT'S EDUCATION!

THAT’S EDUCATION! You can’t make this stuff up. This week I received a cheerful E-mail from a well known academic key opinion leader or KOL....

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RUC It Up - How the US Government Fixes Physicians' Payments Becomes Less Anechoic

We have frequently posted, first <a href="http://hcrenewal.blogspot.com/2007/03/on-disparities-between-reimbursement-of.html">here in 2007</a>, and most recently <a href="http://hcrenewal.blogspot.com/2010/07/primary-care-and-hc-renewal-ruc-kus.html">here</a> and <a href="http://hcrenewal.blogspot.com/2010/06/ruc-off-new-england-journal-once-again.html">here</a>, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.  Since 1991, Medicare as set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort the expend, and the resources they consume on particular patient care activities.  Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care, vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1)  A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, understanding patients' values and preferences, when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.  As we <a href="http://hcrenewal.blogspot.com/2009/02/what-ruc-again-one-of-worlds-most.html">wrote before</a>, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the <a href="http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/the-resource-based-relative-value-scale/the-rvs-update-committee.shtml">RBRVS Update Committee</a>. The RUC is a private committee of the AMA, <a href="http://www.ama-assn.org/ama1/pub/upload/mm/380/toptenthings.pdf">touted</a> as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments. However, the identities of RUC members are opaque, and the proceedings of the group are secret. To expand on the penultimate point, the <a href="http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/the-resource-based-relative-value-scale/the-rvs-update-committee.shtml">current page on the AMA web-site</a> that describes the RUC only lists its members in terms of their specialties and organizational affiliation. Their names do not appear. A <a href="http://www.ama-assn.org/ama1/pub/upload/mm/380/posesresponse.pdf">response</a> to a <a href="http://hcrenewal.blogspot.com/2009/02/what-ruc-again-one-of-worlds-most.html">previous post</a> by me on the subject by the then Chair and Chair-Elect of the RUC suggested that the RUC membership is not quite secret. They stated that "a list of the individual members of the RUC is published in the AMA publication, Medicare RBRVS 2009: The Physicians Guide." This publication is available from the AMA <a href="https://catalog.ama-assn.org/Catalog/product/product_detail.jsp?productId=prod1170041">here </a>for a mere $71.95. However, the book is not on the web, or in my local or university library, and I have no other way to easily access it. Thus, the RUC membership as at best relatively opaque. To expand on the ultimate point, as Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review." The fog surrounding the operations of the RUC seems to have affected many who write about. We have posted (<a href="http://hcrenewal.blogspot.com/2007/12/is-sustainable-growth-rate-main-problem.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/07/can-we-fix-medicare-while-pretending.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/12/no-such-ruc-new-england-journal-takes.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2010/06/ruc-off-new-england-journal-once-again.html">here</a>) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until now in 2010, after the US recent attempt at health care reform, the RUC seems to remain the great unmentionable. Even the leading US medical journal seems reluctant to even print its name. That has just changed.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser yielded two major articles about the RUC, <a href="http://online.wsj.com/article/SB10001424052748704657304575540440173772102.html">here</a> in the WSJ (also with two more spin-off articles), and <a href="http://www.publicintegrity.org/articles/entry/2571/">here</a> from the Center for Public Integrity (also <a href="http://www.kaiserhealthnews.org/Stories/2010/October/27/AMA-center-public-integrity.aspx">reprinted </a>by Kaiser Health News.)  The articles cover the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc. So the RUC has suddenly become less anechoic. However, despite the best efforts of some very good investigative reporters, there still are important unanswered questions, questions we have <a href="http://hcrenewal.blogspot.com/2010/06/ruc-off-new-england-journal-once-again.html">raised before</a>: <div></div><div></div><ul><li>How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry.</li><li>Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC?</li><li>How did the RUC become de facto in charge of this process?</li><li>Why does the AMA keep the membership on the RUC so opaque, and give no input into the RUC process to its general membership?</li><li>Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers?</li><li>Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures?</li></ul>Without discussing how the incentives for physicians became so unbalanced, do we really expect we can fix them?  If we do not fix them, do we really think we can "bend the cost curve?"  If we do not control our costs, do we really think that we will be able to make good health care accessible for all?  At least now I can say that the issue may really be in play for health care professionals, health care policy experts, and the public at large. See also comments on other blogs: <a href="http://www.medrants.com/archives/5895">DBs Medical Rants</a>, <a href="http://gooznews.com/?p=2012">GoozNews</a>, and <a href="http://www.joepaduda.com/archives/001948.html">Managed Care Matters</a>. ADDENDUM - Additionally, see comments on the <a href="http://mdredux.blogspot.com/2010/10/at-least-some-of-secrecy-of-mysterious.html">Retired Doc's Thoughts blog</a>, and the <a href="http://runningahospital.blogspot.com/2010/10/so-thats-how-rates-are-set.html">Running a Hospital blog</a>. References 1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link <a href="http://www.annals.org/content/146/4/301.full">here</a>.) 2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link <a href="http://jama.ama-assn.org/cgi/content/short/298/19/2308">here</a>.)

RUC It Up - How the US Government Fixes Physicians' Payments Becomes Less Anechoic

We have frequently posted, first here in 2007 , and most recently here and here , about the little-known group that controls how the US Med...

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