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Abbott Laboratories and Pig Roasts, the "Philly Mob," and Legal Settlements

Help.... The health care muck is now being raked so fast I can't keep up. Abbott Laboratories, Prolific Stenters, Pig Barbecues, Etc In the last week, multiple media outlets picked up the story of the cozy relationship between Abbott Laboratories and a doctor now accused of implanting too many cardiac stents for too much money.  The essentials were, as summarized from <a href="http://www.nytimes.com/2010/12/06/health/06stent.html">New York Times</a>, <a href="http://online.wsj.com/article/SB10001424052748704493004576001582557244592.html">Wall Street Journal</a>, and <a href="http://www.baltimoresun.com/health/bs-bz-hancock-stents-abbott-20101206,0,5226901.column">Baltimore Sun</a> articles - Dr Mark Midei was a prolific user of cardiac stents for patient with coronary artery disease (blocked cardiac arteries) <blockquote>In the June deposition, Dr. Midei estimated that in 2005 — before research revealed that many stents were unnecessary — he performed about 800 stent procedures. Instead of dropping in subsequent years, however, the number of stents Dr. Midei inserted rose to as many as 1,200 annually, he estimated. In a 2007 internal document, Abbott Laboratories ranked Dr. Midei’s use of stents behind only five other cardiologists in the Northeast, including those at hospitals four and five times St. Joseph’s size. [NYT] </blockquote> Therefore, hospitals sought him out <blockquote>He had been one of the most sought-after clinicians in his region. Trained at Johns Hopkins University, he was a co-founder of MidAtlantic, a practice with dozens of cardiologists that controlled much of the cardiac business in Baltimore’s private hospitals. Dr. Midei was one of the practice’s stars. When MidAtlantic negotiated a $25 million merger with Union Hospital in 2007, the deal was contingent on his continued employment. St. Joseph was so concerned about losing Dr. Midei’s business that the hospital offered a $1.2 million salary if he would leave MidAtlantic and join the hospital’s staff. [NYT]</blockquote> However, it appeared he performed the procedures on patients who would not benefit from them. <blockquote>The hospital engaged a panel of experts who reviewed 1,878 cases from January 2007 to May 2009 and found that 585 patients might have received unnecessary stents. When asked to review the cases himself, Dr. Midei found far less blockage than he had initially, according to the Maryland Board of Physicians. The hospital suspended his privileges and eventually sent letters to all 585 patients. Hundreds of lawsuits against Dr. Midei and St. Joseph followed, including from patients treated well before January 2007. [NYT]</blockquote> Nonetheless, Abbott Laboratories had been rewarding him for frequent use of their products <blockquote>Word quickly reached top executives at Abbott Laboratories that a Baltimore cardiologist, Dr. Mark Midei, had inserted 30 of the company’s cardiac stents in a single day in August 2008, 'which is the biggest day I remember hearing about,' an executive wrote in a celebratory e-mail. Two days later, an Abbott sales representative spent $2,159 to buy a whole, slow-smoked pig, peach cobbler and other fixings for a barbecue dinner at Dr. Midei’s home, according to a report being released Monday by the Senate. The dinner was just a small part of the millions in salary and perks showered on Dr. Midei for putting more stents in more patients than almost any other cardiologist in Baltimore. [NYT]</blockquote> When his over-use was alleged, Abbott continued to use him as a key opinion leader. <blockquote>Abbott responded to the controversy by hiring Dr. Midei as a consultant. 'It’s the right thing to do because he helped us so many times over the years,' an Abbott executive wrote in a January e-mail cited in the Senate report. [NYT]</blockquote> Also, <blockquote>After St. Joseph barred Dr. Midei from practicing there in May 2009, Abbott arranged consultant work for him, according to emails released by the Senate committee. In December 2009, an Abbott senior vice president wrote in an email that he was 'very open' to having Dr. Midei do consulting 'to see how it might go—either getting the word out in China/Japan, medical or safety work.' The following month, the Sun reported on the allegations against Dr. Midei and St. Joseph. According to the Senate report, an Abbott executive subsequently said in an internal company email, 'We recommend that we not use Dr. Midei in the U.S. at this time (the press is just too hot).' Charles Simonton, the medical director of Abbott's vascular division, said in another email cited by the report that Dr. Midei should 'clearly avoid' the Baltimore area, but Dr. Simonton encouraged colleagues to 'please find key physicians or cath labs you'd like him to get in front of with our data.' Abbott wanted to hire Dr. Midei 'because he helped us so many times over the years,' yet another Abbott executive said in an email. Dr. Simonton didn't return phone calls seeking comment. Abbott sent Dr. Midei to Japan to promote the Xience stent, but bad publicity caused that trip to be cut short in late January, the report says. In total, Abbott paid the doctor $30,623 to help market the Xience, the Senate investigators found. [WSJ]</blockquote> When the relationship was criticized, Abbott executives responded with threats, or were they jokes? <blockquote>I called David Pacitti, vice president of global marketing for Abbott Laboratories' cardiac-plumbing division, to ask why he seems to want goons to beat me up in the newspaper parking lot. 'Don't you have connections in Baltimore?????' Pacitti e-mailed a subordinate regarding a January column I wrote on heart-artery stents. 'Someone needs to take this writer outside and kick his ass! Do I need to send in the Philly mob?' Pacitti and other Abbott execs apparently don't care for suggestions that their expensive vascular devices often do patients little good and that a star Baltimore doctor took their encouragement to be 'truly outstanding' a bit too much to heart. [Sun]</blockquote>Furthermore, <blockquote>Pacitti didn't return my phone calls, but an Abbott flack got in touch on Monday. 'We sincerely apologize if this caused you any concern or distress,' the company spokesman said. Pacitti's comment, he said, 'wasn't meant to be taken seriously.' Yeah, that's what King Henry II said after they whacked Thomas Becket. [Sun]</blockquote>So here is a particularly vivid case showing how big health care corporations make <a href="http://hcrenewal.blogspot.com/search/label/key%20opinion%20leaders">"key opinion leaders"</a> out of doctors apparently just because they use or prescribe a lot of the company's products, regardless of the doctors' expertise, or ethics.  As we noted before, "key opinion leaders" are seen by corporate marketing executives as fellow travelers or useful idiots (see posts <a href="http://hcrenewal.blogspot.com/2010/10/not-best-and-brightest-drug-marketers.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2008/06/key-opinion-leaders-were-sales-people.html">here</a>). It again appears is that all that health care corporate marketers care about is selling product. Whether their pitches are honest or ethical is besides the point. Those who get in their way are treated with contempt, and maybe, just maybe are threatened with violence The physicians who are flattered at being called "key opinion leaders," or "thought leaders" have got to realize that the marketers think they are chumps. If they think they are providing honest information, or education, they are deluded. This case has already been widely discussed in the blogsphere.  See, in particular, posts by Dr Howard Brody <a href="http://brodyhooked.blogspot.com/2010/12/embarrassing-light-on-unnecessary.html">on the Hooked: Ethics, Medicine and Pharma blog</a>, and Larry Husten <a href="http://cardiobrief.org/2010/12/06/senate-report-on-mark-midei-and-abbott-30-stents-in-1-day-pig-roasts-and-more/">on the CardioBrief blog</a>. But if that were not enough, on the heels of this story came several more about Abbott Laboratories Abbott Laboratories Settles, Twice As <a href="http://www.latimes.com/news/nationworld/nation/wire/sc-dc-1208-drug-promotions-20101207,0,1770487.story">reported</a> by the Los Angeles Times, while Abbott was trying to hide Dr Midei overseas, it was also busily negotiating settlements of completely separate charges: <blockquote>Abbott Laboratories and two other pharmaceutical firms agreed to pay more than $421 million to settle claims of defrauding Medicare and Medicaid in the latest in a string of nine- and ten-figure health care fraud settlements announced by the Justice Department. The drug companies charged one set of prices to doctors and pharmacies but reported another set of inflated figures that were used as benchmarks by government insurers reimbursing health care providers. The spread, or difference, amounted to kickbacks to the companies' customers, according to Tony West, assistant attorney general for the Justice Department's civil division, who announced the settlements on Tuesday.</blockquote> In particular, <blockquote>Abbott, of North Chicago, Ill, agreed to pay $126.5 million to settle accusations that it charged the government inflated prices for products ranging from sterile water and saline solution to vancomycin, an antibiotic. An Abbott spokesman said the company believes 'that we have complied with all laws and regulations' and settled the case to avoid 'the uncertainty associated with continued litigation.'</blockquote> At least he did not threaten the Department of Justice officials with an attack by the "Philly mob." But that is not all. The Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052748703296604576005674095414668.html">reported</a> that Abbott had to make a second, unrelated settlement: <blockquote>Separately on Tuesday, the Justice Department announced an unrelated $41 million settlement with Abbott subsidiary Kos Pharmaceuticals Inc. on charges that it paid kickbacks to doctors and other health professionals to encourage them to prescribe or recommend the cholesterol drugs Advicor and Niaspan. As part of that settlement, Kos entered into an agreement that will allow it to avoid prosecution on criminal charges. 'These actions occurred prior to Abbott's acquisition of Kos in 2006 and Abbott has not been accused of any wrongdoing,' an Abbott spokesman said.</blockquote> However, Abbott chose to acquire a company that allegedly chose to pay kickbacks of this sort. The apparent resemblance to Abbott's payments to Dr Midei in the case above are striking. By the way, the Los Angeles Times article also noted previous black marks on Abbott's record: <blockquote>Abbott also paid $614 million in civil and criminal penalties in 2003 to end a federal investigation of the company's marketing practices and Medicaid and Medicare reimbursements. In 2001, TAP Pharmaceutical Products Inc., of Lake Forest, Ill., an Abbott joint venture, agreed to pay $875 million and plead guilty to a criminal charge of conspiring with doctors to overbill Medicare. At the time, the TAP penalty was the largest health care fraud settlement in U.S. history, but it has since been eclipsed by at least two others.</blockquote> So we once again illustrate how punishing wrong doing by fining large corporations, when the fines are just seen as a cost of doing business, in the absence ofany negative consequences on the real people who authorized, directed, or implemented the bad behavior fails to deter future bad behavior. This remarkable confluence of cases suggest how rotten are the ethical foundations of even large and previously respected health care organizations. I imagine, though, that as long as these corporations richly reward their executives regardless of the ethics of their actions, and regardless of the long term effects on the organizations' reputations, and as long as their are no externally imposed negative consequences on these leaders, the practices will continue, and will get worse. Health care costs keep rising, access keeps declining, quality gets worse. We moan and wring our hands, but as long as we allow the rot to worsen, and the muck to grow, expect these trends to continue until the whole smelly mess collapses of its own weight (with all those rich executives escaping to their mansions.) If we really want high quality accessible, reasonably priced health care, we need true health care reform that reduces concentration of power in large organizations, and makes health care organizations' leadership accountable, ethical, and transparent. That will not be easy. ADDENDUM (8 December, 2010) - See also comments by Maggie Mahar <a href="http://www.healthbeatblog.com/2010/12/stent-scandal-a-shocking-story-but-not-news-.html#more">on the HealthBeat blog</a>, David Williams <a href="http://www.healthbusinessblog.com/?p=4072">on the Health Business Blog</a>, and Paul Thacker <a href="http://pogoblog.typepad.com/pogo/2010/12/digging-for-gold-a-nugget-from-senate-report-on-baltimore-cardiologist.html#more">on the Project on Government Oversight blog</a>.

Abbott Laboratories and Pig Roasts, the "Philly Mob," and Legal Settlements

Help.... The health care muck is now being raked so fast I can't keep up. Abbott Laboratories, Prolific Stenters, Pig Barbecues, Etc In ...

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IMPEACHMENT: IT’S ABOUT THE INSTITUTION, NOT THE PERSON

IMPEACHMENT: IT’S ABOUT THE INSTITUTION, NOT THE PERSON The impeachment trial of Judge G. Thomas Porteous of Louisiana this week was a lesson in civic ethics. The lessons of the Porteous trial apply to academic medical centers, professional medical societies, medical journals, and granting agencies like NIH. The Porteous trial is a straightforward case of bribes, kickbacks and corruption involving a Federal judge. The most enlightening arguments came from prosecutor Rep. Adam Schiff, D-California, laying out the case for impeachment in the Senate. He gave a lucid presentation of the logic and the historical origins of the impeachment process. The key points are these: impeachment serves to protect the dignity, honor, and credibility of the office more than to punish the wayward office holder; and impeachment is a constitutionally sanctioned way to clean the Augean stables without necessarily having to prove criminal liability. It is sufficient to demonstrate that the bad actors have brought disgrace on their offices. What this means for us in medicine is that legalistic charges and defenses are not the right way to go in exposing and ejecting bad actors from our field. In the highly publicized cases of ethical compromise over the past few years, our group disapproval, when there was any at all, generally has run on two parallel tracks. The first is legalistic, and it favors the bad actors, who flaunt their constitutional protections with the taunt, prove it. The second ground of disapproval is esthetic, based on the tackiness of the bad actors’ behaviors – regardless of technical legalities, what they do is an affront and an insult to professional standards and mores. When we look at how recent incidents in medicine actually played out, however, we see a disconnect. The bad actors have narrowed the debate to the first ground of disapproval, while forcing the second off limits. In this strategy, they have received conscious or unconscious assistance from the professional establishment. The focus has been on legal technicalities involving the bad actors rather on preserving the dignity and credibility of high offices in academic medicine. For instance, when Charles Nemeroff was exposed by Senator Grassley for conflict of interest in his NIH grants, he came up with the contrived legalistic defense that his unreported payments from GlaxoSmithKline were for ‘CME-like’ presentations, and thus somehow exempt from disclosure. Nemeroff’s obfuscations finally collapsed of their own weight and Emory University took decisive action against him, even though they had sufficient evidence dating back at least 4-5 years. In the end, Emory had to go through the wringer to discipline Nemeroff, and the institution suffered grave damage to its reputation for a number of years as the price of delay. For instance, when Thomas Insel, the Director of NIMH, assured Pascal Goldschmidt, Dean of the School of Medicine at the University of Miami, that Nemeroff was absolutely in good standing for applying for new NIH grants if he left Emory for Miami, despite a 2-year ban at Emory, he hewed to the letter of the law while disregarding its spirit in order to help his friend. Moreover, when Insel appointed Nemeroff to two new NIH Research Review Committees, he established beyond any doubt that he was intent on trying to help Nemeroff get back into circulation, and that he failed to grasp the gravity of the dishonor that Nemeroff inflicted on the field. This obtuseness on Insel’s part damaged the credibility and reputation of NIMH. To his credit, NIH director Francis Collins finally ‘got it’ and forced a review of the NIH ethics rules that had been entrusted to Insel. For instance, when Pascal Goldschmidt, Dean of the School of Medicine at the University of Miami, claimed he had done due diligence in his recruitment of Nemeroff as chair of his psychiatry department in 2009, he focused on the legalistic aspects of Emory’s review of Nemeroff, while failing to understand the degree of negative publicity associated with Nemeroff’s name. He ended up hiring someone who is an object of ridicule, and he in turn is ridiculed by association. For instance, when Stanford University learned of Alan Schatzberg’s boundary violations vis a vis his NIH-funded projects and his personal corporation, they first pushed back on legalistic technical grounds. Only later did the Stanford administration get the message by removing Schatzberg from his Principal Investigator role with NIH grants, and eventually appointing a new chair of psychiatry. Meanwhile, the public image of Stanford suffered. For instance, when the American Psychiatric Association was warned that Alan Schatzberg was a problematic candidate for election as President of the association on account of his history of ethical compromise, they went ahead anyway and they have since had opportunity to regret that decision. Here again, the professional society appears to have lost sight of the ethical forest for the legal trees. The credibility and reputation of the APA have suffered because of the taint associated with Schatzberg’s presidency. For instance, when the New York Times recently exposed the ghostwriting associated with the 1999 textbook of Charles Nemeroff and Alan Schatzberg, the so-called authors responded with typical legalistic defenses. They and the University of Miami and the American Psychiatric Association Press (the publisher) again lost sight of the ethical forest for the legal trees. This stereotyped, public relations driven response ignores the visceral and esthetic distaste most observers felt on learning about the collusion between the ‘authors,’ the professional writing company and the sponsoring pharmaceutical corporation. Even the defense that it occurred a long time ago fails. In the Porteous trial, the prosecution established that dishonorable events in an officer’s past are grounds for impeachment, whether or not they also occurred during the person’s time in office. For instance, when Harvard Medical School planned a <a href="http://cme.hms.harvard.edu/cmeups/pdf/03124280.pdf">new CME program </a>on psychopharmacology in mid-2011, they engaged a number of compromised academic speakers, including Nemeroff and Schatzberg. What the hell was Harvard thinking? I told the Course Director, Carl Salzman, that this amounts to pandering. He replied defensively that Nemeroff and Schatzberg are well regarded speakers and that he would ensure that they gave unbiased presentations. That’s not the point. The point is that they have done serious damage to our field, and for Harvard Medical School to give them top billing amounts to denial of the elephant in the living room. It’s collusion in service of their public rehabilitation. I told Dr. Salzman that his logic amounts to compartmentalized thinking. I might have added that Adolf Hitler gave a lot of great speeches that received rave reviews and that compartmentalized thinking was widespread in the nation of Germany between 1928 and 1945. Meanwhile, Harvard Medical School gets a black eye through its association with these compromised individuals. So do the other speakers who will be on the panel. Who needs this kind of taint? Dr. Salzman can defend Nemeroff and Schatzberg all he wants on specious legalistic grounds, but who cares? Harvard Medical School could use some moral clarity. So, we come back to the impeachment trial of Judge Porteous. Impeachment protects the institution. When sleazebags get into positions of authority and trust they need to be dumped, and our professional and academic institutions need to have enough spine to dump them. At the very least, we don’t need to tolerate institutions like Harvard Medical School pandering to compromised academic bad actors. For shame.

IMPEACHMENT: IT’S ABOUT THE INSTITUTION, NOT THE PERSON

IMPEACHMENT: IT’S ABOUT THE INSTITUTION, NOT THE PERSON The impeachment trial of Judge G. Thomas Porteous of Louisiana this week was a lesso...

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BLOGSCAN - FDA don't need no smart old people 'round

<div style="color: rgb(0, 153, 0);" dir="ltr">We have posted numerous times about the requirement for seasoned expertise (the kind that only comes with age) in healthcare leadership. FDA, CDC and other HHS agencies may have different ideas: <a href="http://www.blogger.com/redir.aspx?C=418aac679f044cfda11d53292ee8adea&URL=http%3a%2f%2fgooznews.com%2f%3fp%3d2194" target="_blank"></a></div><blockquote style="color: rgb(0, 153, 0);"><div class="meta"><a href="http://www.blogger.com/redir.aspx?C=418aac679f044cfda11d53292ee8adea&URL=http%3a%2f%2fgooznews.com%2f%3fp%3d2194" target="_blank">http://gooznews.com/?p=2194</a> Age Purge in FDA Press Office? December 5, 2010 By <a title="Posts by GoozNews" href="http://www.blogger.com/redir.aspx?C=418aac679f044cfda11d53292ee8adea&URL=http%3a%2f%2fgooznews.com%2f%3fauthor%3d1" target="_blank">GoozNews</a> FDA Webview (subscription required) reports that the new FDA associate commissioner for external affairs, Beth Martino, 31, a former Kansas aide to HHS secretary Kathleen Sebelius, has conducted a purge of senior specialists, all aged over 50, in her office and in the press office. The abrupt removals were made to make room for younger people closer to Martino’s own age, the trade journal reports. “She’s uncomfortable with people who know more than she does,” a source told FDA Webview. Three of the displaced staffers, public affairs officers Elaine Gansz Bobo, 52, Dick Thompson, 65, a former Time magazine science editor, and Ira Allen, 62, a seasoned health care journalist, were offered the choice of being terminated as probationary hires for fabricated “incompetence” or resigning. Similar purges are reportedly occurring at other HHS agencies, including Centers for Disease Control. Neither Martino nor FDA senior deputy commissioner Joshua Sharfstein, whose duties include chairing the FDA’s transparency initiative, responded to FDAWebview’s request for comment.</div></blockquote><div dir="ltr"><div class="post" id="post-2194"><div class="entry"> If this story is true, it is not only illegal age discrimination under the Age Discrimination in Employment Act of 1967 (<a href="http://www.eeoc.gov/facts/age.html">ADEA</a>), it is deleterious to the appropriate functioning of federal agencies charged with safeguarding public health - via talent mismanagement.-- SS</div></div></div>

BLOGSCAN - FDA don't need no smart old people 'round

We have posted numerous times about the requirement for seasoned expertise (the kind that only comes with age) in healthcare leadership. FDA...

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The Boards Who Ought to be Accountable for the Misbehavior of Health Care Corporations

I recently <a href="http://hcrenewal.blogspot.com/2010/12/duke-divinity-students-protest-pay-of.html">posted</a> about the multiple conflicts of interest affecting a university health sciences leader.  While he was supposed to be running a medical school and an academic medical center, he was also responsible for the stewardship, as a board member, of three health major health care corporations, and a food and beverage corporation (whose products have bearing on nutrition and public health.)  . This one case suggested how pervasive are <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> affecting the people at the top of health care leadership in the US, and also how such conflicts may be associated with problems for all the organizations involved.  The story originally came to my attention because students were demonstrating against the lavish compensation given the health sciences leader at a time of university cutbacks, suggesting that university leaders were paying more attention to their own enrichment than to the mission of the university.  At the same time, one of the corporations which he was stewarding (<a href="http://hcrenewal.blogspot.com/search/label/Genzyme">Genzyme</a>) had to shut down a factory because the extremely expensive drug it was producing was found to be impure and adulterated, while its CEO continued to be compensated lavishly.  The other corporation (<a href="http://hcrenewal.blogspot.com/search/label/Medtronic">Medtronic</a>) had to settle litigation accusing it of manufacturing defective products for hundreds of millions of dollars, while its CEO again continued to be compensated lavishly.  So I thought it might be interesting to see who are the other stewards of these troubled corporations.  I consulted the official biographies of their board members from their 2010 proxy statements (Genzyme <a href="http://www.genzyme.com/corp/investors/GENZ_Proxy_2010.pdf">here</a>, Medtronic <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDk1MDEyMy0xMC0wNjU4NzYvZG9jL01lZHRyb25pY0luYy5wZGYmdHlwZT0yJmZuPU1lZHRyb25pY0luYy5wZGY=">here</a>).  I looked for board members who also held leadership positions in other health care organizations whose interests may not be aligned with the two corporations of interest.  I also looked for those who held leadership positions in the discredited financial services corporation who helped usher in the global financial collapse. The specifics of what I found follow. Genzyme Genzyme had 10 directors in 2010.  The following directors had relationships of interest: -  Douglas A Berthiaume is "Chairman of the Children's Hospital (Boston) Trust Board, a member of the Children's Hospital board of trustees, and a Trustee of the University of Massachusetts Amherst Foundation."  Children's Hospital is a teaching hospital.  The University of Massachusetts includes a medical school.  -  Robert J Bertolini "retired from Schering-Plough Corp following its merger with Merck & Co in November, 2009."  Schering-Plough was a large pharmaceutical company now combined with Merck to form an even larger company. -  Gail K Boudreaux "has served since May 2008 as an Executive Vice President of United Health Group Incorporated."  Also, "she serves on the board of directors of America's Health Insurance Plans...."  UnitedHealth is one of the US' largest health insurance/ managed care corporations.  Incidentally,it has frequently misbehaved, as can be seen in this set of posts.  AHIP is the health insurance corporations' trade associations. -  Robert J Carpenter "is Chairman of Hydra Biosciences Inc... He is also a trustee of the Immune Disease Institute, a non-profit institute affiliated with Children's Hospital in Boston...."  -  Charles L Cooney "is a director of India-based Biocon Limited, a biotechnology healthcare company." -  Victor J Dzau MD (discussed in the earlier post) is "Chancellor for Health Affairs and President and Chief Executive Officer of Duke University Health System...."  He "sits on the board of directors of Pepsico Inc, Anylam Inc, Medtronic Inc, and the Duke University Health System." -  Senator Connie Mack III is "Chairman Emeritus of the parent board of the H. Lee Moffitt Cancer Center and Research Institute...."  He also is director of "EXACT Sciences Corporation and Moody's Corp."  <a href="http://www.exactsciences.com/">EXACT Sciences</a> is a biotechnology company that develops diagnostic test technology.  Moody's Corp is a financial ratings agency whose lax ratings of financial derivatives, perhaps arising from conflicts of interest produced by payments from the producers of the derivatives, have been implicated as a major cause of the global financial collapse. -  Richard E Syron was from "January 2004 to September 8, 2008 ... Chairman and Chief Executive Officer of the Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac...."    Freddie Mac as bailed out and taken over by the US government when he departed, or was forced out.  Freddie Mac, was a "government-sponsored enterprise," (GSE) one of another group of companies whose enthusiastic participation in securitizing dubious mortgages was implicated as a major cause of the global financial collapse. - Henri A Termeer (CEO of Genzyme) is a "director of Massachusetts General Hospital, a board member of Partners HealthCare, and a member of the board of fellows of Harvard Medical School."  So the box score for Genzyme's 10 directors: six have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director).  Seven have leadership positions in other drug, device or biotechnology corporations.  One have leadership positions in health insurance/ managed care corporations.  Two had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse. Medtronic Medtronic had 11 directors in 2010.  The following directors had relationships of interest: - Richard H Anderson "was Executive Vice President of UnitedHealth Group Incorporated."  As above, UnitedHealth is a health insurance/ managed care corporation. - Victor J Dzau (see above) is "Chancellor for Health Affairs at Duke University and President and Chief Executive Officer of the Duke University Health System."  He is "a director of Alnylam Pharmaceuticals Inc, ... PepsiCo Inc, and Genzyme Corporation." (See discussion above.) - James T Lenahan "served as President of Johnson & Johnson from 2002 until June 2004...."  He is "director of Telecris Biotherapeutics Inc, Alton Pharma Inc and Imacor Inc."  Johnson & Johnson is a large drug, device, and biotechnology company.  <a href="http://www.talecris.com/">Telecris</a>, and <a href="http://www.atonrx.com/">Alton Pharma</a> are biotechnology pharmaceutical companies.  <a href="http://www.imacormonitoring.com/">Imacor</a> is a medical device company. - Denise M O'Leary "is a director of Lucille Packard Children's Hospital and Stanford Hospitals and Clinics."  Also, "she was a member of the Stanford University Board of Trustees from 1996 through 2006, where she chaired the Committee of the Medical Center...." -  Robert C Pozen is "an advisor to Gelesis Inc."  <a href="http://www.gelesis.com/">Gelesis</a> is a biotechnology company. -  Jack W Schuler "has been a director of Stericycle Inc since March 1990...."  He is a "director of Quidel Corporation and Elan Corporation plc...."    <a href="http://www.stericycle.com/">Stericycle</a> company disposes of medical waste, including that produced by medical devices.  <a href="http://www.quidel.com/">Quidel</a> is a biotechnology and (medical diagnostic) device company.  Elan is an multinational biotechnology and pharmaceutical company. So the box score for Genzyme's 11 directors is: Two have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Ten have leadership positions in other drug, device or biotechnology corporations. One has a leadership position in health insurance/ managed care corporations. None had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse. Summary Just to summarize the sorts of conflicting interests these relationships suggest.  Teaching hospitals and medical schools are supposed to provide unbiased teaching, including about issues relevant to drug and device corporations, such as choice of diagnostic strategies and treatments, and relevant health policy.  They are supposed to perform unbiased research, including research that evaluates drugs and devices.  They are supposed to provide the best possible patient care at a reasonable cost, which relates to choices of and prices paid for drugs and devices.  Other drug, device, and biotechnology corporations may be producing, or developing products that compete with those of the index corporations. Health insurance companies ostensibly try to control costs and improve quality in part by reducing excess utilization and bargaining down prices of drugs and devices.  So this limited case study of the boards of directors, that is, the ostensible stewards of two health care corporations, selected because they have a common member who is the leader of a large medical school and academic medical center, and which both have histories of poor management or ethical missteps showed  - that the leadership of health care organizations is incredibly interrelated, interlocked, incestuous.  This gave an example of how pervasive are the conflicts of interest that affect all kinds of health care organizations.  Companies that ought to be competing have interlocked directors.  Companies that ought to be negotiating at arms length have interlocked directors.  Not-for-profit academic medical institutions have leaders who are also directors of companies whose drugs their patients may take, whose devices their patients may receive, whose insurance their patients may buy, and whose products and services they may teach about and evaluate through clinical research and policy research.  This also gives an example of how the failed culture of finance may be linked to the culture of medicine and health care.  Some of the stewards of health care organizations were also the stewards of financial services corporations whose reckless, if not arrogant, greedy and amoral leadership is widely believed to have caused the global financial collapse and our ongoing economic problems.  Finally, this suggests how top leaders of various health care organizations may be more familiar with and identify more with each other than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients.  What is to be done? I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships.  A few bloggers cannot do it all.  Obviously, the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a> mitigates against medical and health care academics looking into their own leaders.  However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience. Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment.  Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.  If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

The Boards Who Ought to be Accountable for the Misbehavior of Health Care Corporations

I recently posted about the multiple conflicts of interest affecting a university health sciences leader. While he was supposed to be runn...

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Duke Divinity Students Protest Pay of Chancellor for Health Affairs

This may be a first.  A small group of Duke University divinity students publicly protested the compensation given to some top university leaders, specifically including the Chancellor for Health Affairs.  <a href="http://www.newsobserver.com/2010/12/03/840067/buddy-can-you-spare-729749.html">According</a> to the Raleigh-Durham News-Observer: <blockquote>Theo Luebke strolled the plaza outside Duke's Bryan Center on Thursday afternoon with a bucketful of apples and a tale of woe. 'Come on! Everyone's in this together! Get your apples!' he exhorted students passing by during the lunchtime rush. 'With all the cuts we have around here and all the bonuses we have to give to the big guys, we need to raise all the money we can.' Luebke isn't really the Depression-era fruit peddler his costume suggested. Luebke and a couple of other Duke divinity students hawked apples, ostensibly to raise money for the university, while others dressed as paperboys distributed a mock newspaper railing against bonuses paid to top officials within Duke's healthcare system and investment company. For Duke workers whose pay has been frozen of late, the bonuses appear staggering. A couple of examples: Neal Triplett, president of the management company, received a $729,749 bonus on top of his $413,603 salary; Victor Dzau, chancellor of the Duke health system, got a $983,654 bonus, bringing his total compensation to more than $2.2 million. Thursday's skit, which mostly drew befuddled looks, was the third in a series mocking executive pay.</blockquote> It turns out these munificent compensation amounts were paid at a time when Duke is in some financial difficulty: <blockquote>In recent years, Duke has frozen pay and eliminated jobs in an attempt to pare its annual operating budget by $100 million. Nearly 400 workers have accepted buyout offers since early 2009. Their jobs were then eliminated. 'During a time when the administration is saying we all needed to tighten our belts and make sacrifices...as it turns out, some of the folks who lost money for Duke were giving themselves bonuses,' said Amy Laura Hall, a tenured professor of Christian ethics. 'I think that's obscene.'</blockquote> I cannot recall a previous example of students demonstrating against the compensation of a leader of a medical school and/or university health care system.  Maybe these students have started something. In fact, we have frequently discussed executive compensation given by health care organizations that seems wildly out of proportion to the value of the health care they provide or the clinical value of their products.  Although compensation is even higher for executives of for-profit health care corporations, even leaders of not-for-profit organizations, including academic institutions, is now often in the millions per year range. Service on (Mostly Health Care) Corporate Boards Dr Dzau's compensation may appear even more extreme in the context of the money he brings in from outside work.  As Prof Margaret Soltan <a href="http://www.margaretsoltan.com/?p=27849">pointed out</a> on the University Diaries blog, Dr Dzau also serves on multiple corporate boards.  The multiplicity of his outside work is not fully acknowledged in the most complete official biography posted on the Duke web-site, <a href="http://www.dukemedicine.org/Leadership/Administration/DzauVictor">here</a>, which only notes service on the Genzyme board.  In fact, he also serves on the boards of Anylam Pharmaceuticals, Medtronic, and PepsiCo. According to the <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDk1MDEyMy0xMC0wMzYwNjgvZG9jL0FsbnlsYW1QaGFybWFjZXV0aWNhbHNfREVGMTRBXzIwMTAwNDIwLnBkZiZ0eXBlPTImZm49QWxueWxhbVBoYXJtYWNldXRpY2Fsc19ERUYxNEFfMjAxMDA0MjAucGRm">Alnylam Pharmaceuticals 2010 Proxy Statement</a>, Dr Dzau's compensation as a director in 2009 was $234,433.  In 2009, Dr Dzau owned the equivalent of 45,000 shares, worth $424,800 at <a href="http://www.google.com/finance?q=alnylam">today's $9.44 price</a> per share.  According to the <a href="http://www.genzyme.com/corp/investors/GENZ_Proxy_2010.pdf">Genzyme 2010 Proxy Statement</a>, Dr Dzau's compensation as a director in 2009 was $412,942.  In 2009, Dr Dzau owned the equivalent of 75,137shares, worth $5,312,937 at <a href="http://www.google.com/finance?q=NASDAQ%3AGENZ">today's $70.71 price per share.</a> According to the <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDk1MDEyMy0xMC0wNjU4NzYvZG9jL01lZHRyb25pY0luYy5wZGYmdHlwZT0yJmZuPU1lZHRyb25pY0luYy5wZGY=">Medtronic 2010 Proxy Statement</a>, Dr Dzau's compensation as a director in 2009 was $173,698.  In 2009, Dr Dzau owned the equivalent of 14,552 shares, worth $493,895 at <a href="http://www.google.com/finance?q=medtronic">today's $33.94 price</a>. According to the <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMC0wNjQ1MTYvZG9jL1BlcHNpQ29fREVGMTRBXzIwMTAwMzIzLnBkZiZ0eXBlPTImZm49UGVwc2lDb19ERUYxNEFfMjAxMDAzMjMucGRm">PepsiCo 2010 Proxy Statement</a>, Dr Dzau's compensation as a director in 2009 was $260,000.  In 2009, Dr Dzau owned the equivalent of 25,065 shares, worth $1,622,458 at <a href="http://www.google.com/finance?q=NYSE%3APEP">today's $64.73 price per share</a>. So, in summary, in 2009, Dr Dzau received  $1,081,073 in compensation to be a director of these four companies.  In 2009, Dr Dzau owned stock or equivalent in these four companies valued at $7,854,090.  He has become what most people would consider rich just from his work on these boards, in addition to the millions he has received from Duke. Conflicts of Interest and Other Questions So this raises even more questions.  The most obvious is how the good doctor has time to simultaneously fulfill his responsibilities at Duke and for the four corporations?  The next most obvious is why the university does not make a full disclosure of what appear to be severe conflicts of interest?  Anylam and Genzyme are biotechnology pharmaceutical companies.  Medtronics is a medical device company.  PepsiCo is a food and beverage company whose products affect nutrition and public health.  Dr Dzau's service on the board of each of these companies means he has fiduciary duties to each company, and is supposed to show unyielding loyalty to the companies' stockholders.  Of course, many business commentators have charged that most corporate directors are mainly chosen to be compliant with the top hired management's wishes, if not to be frank cronies of the management.  Even in the best case, showing unyielding loyalties to the stockholders of companies that make drugs, medical devices, and sugary drinks seems to be likely to influence a leader of an academic medical institution in ways that risk degrading the leader's responsibilities to uphold the institution's mission, i.e., to create severe conflicts of interest.  Dr Dzau has a fairly severe case of what we labeled as a <a href="http://hcrenewal.blogspot.com/2006/03/new-species-of-conflict-of-interest-in.html">"new species of conflict of interest"</a> in 2006.  Concerns about such conflicts affecting university presidents, but not specifically chancellors or vice presidents for health affairs, appeared in the New York Times last summer (see post <a href="http://hcrenewal.blogspot.com/2010/07/new-york-times-reports-university.html">here</a>).  Maybe some day student protesters will see such conflicts as a problem. However, should Dr Dzau make the usual defense of such conflicts, that they promote collaboration with industry needed for innovation, maybe Duke students or alumni might ask questions about the other side of the coin. The Other Side of the Conflict of Interest Coin Dr Dzau is supposed to be responsible for the stewardship of Genzyme.  We have recently <a href="http://hcrenewal.blogspot.com/search/label/Genzyme">posted</a> about the company's seeming recent inability to make pure, unadulterated pharmaceuticals, and while exhibiting such inability to perform such basic functions, its payment of extremely lucrative compensation to its hired CEO.  Maybe someone could ask Dr Dzau what he thought about such actions, and whether he would take any responsibility for them? Dr Dzau is supposed to be responsible for the stewardship of Medtronic.  Medtronic recently <a href="http://hcrenewal.blogspot.com/2010/10/last-weeks-scandals.html">settled</a> thousands of patients' lawsuits that alleged injuries due to a faulty lead on one model of a Medtronic implantable cardiac defibrillator for over $200 million. Medtronic has been the source of several alleged conflicts of interest involving influential physicians (see posts about Medtronic <a href="http://hcrenewal.blogspot.com/search/label/Medtronic">here</a>).   Maybe someone could ask Dr Dzau what he thought about such actions, and whether he would take any responsibility for them. Finally, a larger question is: is it good to have a leader of a medical school and academic medical center who has presided over such ethical lapses by health care corporations?  Let's see if anyone does get to ask Dr Dzau such questions.

Duke Divinity Students Protest Pay of Chancellor for Health Affairs

This may be a first. A small group of Duke University divinity students publicly protested the compensation given to some top university le...

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VCU President Rao's Previous Code of Silence

We recently <a href="http://hcrenewal.blogspot.com/2010/11/confidentiality-clause-or-oath-of.html">posted</a> about the code of silence imposed by Virginia Commonwealth University President Stephen Rao on his staff.  It turns out now that this was not his first exercise in imposing a code of silence. Before he was at Virginia Commonwealth University, Rao was President of Central Michigan University.  Central Michigan Life just <a href="http://www.cm-life.com/2010/12/03/rao-retracts-confidentiality-agreements-at-vcu-cmu-employees-not-in-same-circumstance-under-ross">reported</a>: <blockquote>While serving as CMU president, Rao required all office employees to sign a similar confidentiality agreement stating all names, places, dates or incidents that happened in his office were not to be shared with anyone or discussed outside the office. 'I understand that the information and all files, letters, projects, telephone calls and anything relating to the work performed in the President’s Office and in my capacity as an employee is highly confidential,' stated the agreement, which was obtained through a Freedom of Information Act request. 'I understand that it may not be discussed with anyone outside this office who does not have a need to know, which includes any other CMU employee, as well as my family members, friends, etc.' The CMU confidentiality agreement extended past any employee’s tenure at CMU, stating that the contract must not be broken past the term of employment. If an employee were to break the confidentiality agreement past employment, possible consequences included personal liability and potential lawsuits.</blockquote> Note that just as was the case in Virginia, this agreement placed employees at risk not only of losing their jobs, but of being sued were they to violate the agreement. By the way, while Central Michigan University does not include a medical school and academic medical center, as does VCU, it does have, and therefore the previous agreement affected the operations of multiple health related programs (see <a href="http://www.cmich.edu/Admissions/Academic_Programs/Health-related.htm">here</a>) including allied health, health administration, physical therapy, and psychology. As we wrote previously, such a code of silence subverts the university's central mission, and directly opposes the transparency I believe is necessary for good governance in health care.  The discovery of this previous confidentiality agreement at CMU suggests that such agreements may not be rare in health care.  We have long <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">discussed</a> the anechoic effect in health care, how certain topics and issues are just not to be discussed, especially those that might embarrass or oppose the personal interests of health care leaders.  We have postulated that the effect operates through fear of offending supervisors, colleagues, or those who provide one's pay.  It may be, however, that the anechoic effect has been codified through confidentiality clauses.  As noted above, such codification can mean whistle-blowers may risk lawsuits as well as job loss and ostracism. If there are other codes of silence operative in health care, I hope that sunlight soon shines upon them.  That sunlight may cause such codes to shrivel is suggested by President Rao's rescinding of the code at VCU soon after it was made public, as reported by the Richmond Times-Dispatch: <blockquote>With the board of visitors meeting yesterday to evaluate his performance, Virginia Commonwealth University President Michael Rao rescinded the confidentiality agreements he required employees working in his office to sign. Rao sent employees a letter Wednesday that said the confidentiality agreements were intended "to protect the privacy of my family, particularly my children, in my home." 'The confidentiality agreements have been the subject of recent scrutiny and criticism and, unfortunately, have been misinterpreted in terms of what I sought to be accomplished by these agreements,' he wrote. 'I sincerely regret any undue burden or ill will that these agreements may have caused. Therefore, I have decided to withdraw all such confidentiality agreements.'</blockquote>Such codes ought to be perceived as unethical, and perhaps should be made illegal.  Meanwhile, though, the anechoic effect continues.

VCU President Rao's Previous Code of Silence

We recently posted about the code of silence imposed by Virginia Commonwealth University President Stephen Rao on his staff. It turns out ...

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Annals of Electronic Information Security

Annals of Electronic Information Security

At The Hill , former House Speaker Newt Gingrich raises a good point about the leak of hundreds of thousands of diplomatic cables and other ...

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