Ghosts in the Criminal Machine - How a Drug Company Can Plead Guilty to Federal Fraud, Yet No One is Held Responsible

We have often discussed how leaders of health care organizations have become increasingly unaccountable for their actions.  A recent, slightly obscure story shows how a corporate admission of guilt to a felony can be used to prevent anyone, including anyone in corporate management, from being held responsible for that fraud.<br /><br /><b>Basics of the Settlement</b><br /><br />The case was that of ISTA Pharmaceuticals.  The basics appeared in brief wire service articles, like <a href="http://www.foxbusiness.com/industries/2013/05/24/bausch-lomb-ista-admits-to-kickbacks/">this one</a> from Rueters (via Fox News):<br /><br /><br /><blockquote class="tr_bq"><i>Ista Pharmaceuticals pleaded guilty on Friday to charges it used kickbacks and improper marketing to boost sales of a drug </i>meant to treat eye pain and agreed to<i> pay $33.5 million to settle criminal and civil liability</i>, the U.S. Department of Justice said.<br /><br /> The unit of eye care company Bausch & Lomb <i>pleaded guilty to conspiracy to offer kickbacks to induce physicians to prescribe Xibrom,</i> a drug meant to treat pain after cataract surgery, and <i>conspiracy to promote that drug for unapproved uses</i>, including after Lasik and glaucoma surgeries.<br /><br /> Ista agreed as part of a criminal settlement to a $16.63 million fine and an $1.85 million asset forfeiture. It also agreed to a $15 million civil settlement to resolve allegations that its marketing of Xibrom caused false claims to be submitted to government health care programs.</blockquote><br /><b>Kickbacks Disguised as Honoraria and Consulting Fees </b><br /><br />Note that unlike many such legal settlements involving large health care organizations, this one involved admissions of guilt to felonious criminal offenses.  The severity of the charges apparently arose out of the egregious conduct of company executives.  Colorful details were <a href="http://www.buffalonews.com/apps/pbcs.dll/article?AID=/20130524/CITYANDREGION/130529545/1005">supplied</a> by the Buffalo (NY) News:<br /><br /><blockquote class="tr_bq">ISTA, which is based in California, <i>admitted using kickbacks to doctors and an illegal marketing campaign </i>as part of an elaborate scheme to increase its sales of Xibrom.<br /><br />The scheme, outlined in detail in newly released court papers, ranged from company-provided instruction sheets for doctors to continuing medical education programs to promote the drug.<br /><br />In many cases, <i>ISTA employees were told not to leave printed materials behind in doctors’ offices or to keep records of their meetings with doctors in order to avoid detection </i>by others.<br /><br />The company went so far as to <i>offer speaking engagements and consulting appearances to doctors in hopes that they might use Xibrom</i> for non-authorized treatments.<br /><br />Doctors can legally prescribe drugs for non-FDA approved treatments, but drugmakers are prohibited from promoting their products for those uses.<br /><br />'Essentially <i>they entered into consulting arrangements to induce physicians to prescribe their drug</i>,' said Jeffrey I. Steger, a lawyer in the Consumer Protection Branch of the U.S. Department of Justice.<br /><br />When [US District Judge Richard J] Arcara asked if money was the doctors’ motivation, Steger said yes.<br /><br />'Thousands of dollars,' he told the judge. </blockquote><br />So here we have a company admitting that it bribed doctors to prescribe its drug, and its techniques of administering bribes included paying the doctors honoraria to give talks, and paying the doctors as consultants.  As an aside, note that many defenders of "collaboration" among doctors and industry sign the praises of doctors "consulting" for industry, and often see nothing wrong with industry paying doctors for "educational" speeches.  Yet here is more evidence that such paid talks and consulting assignments may be nothing more than marketing, and at times are merely disguised bribery. <br /><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><b>An Apparently Tough Penalty</b></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">An unusual feature of this settlement was that (per Reuters):</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq">As part of the settlement, <i>Ista will be barred from participating in Medicare and Medicaid,</i>...</blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div></div><br /><br />That would appear to be the death knell for the company, as reported by Reuters, <br /><br /><blockquote class="tr_bq">Bausch & Lomb, which is based in Rochester, New York, said it was pleased to settle the matter, which involved conduct between January 2006 and March 2011, and that it knew of the government probe well before it purchased Ista.<br /><br /> That purchase closed in June 2012 and Bausch and Lomb <i>plans to wind down the Ista corporate entity by year end.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div>So Bausch and Lomb bought a company that turned out to be valueless?  But wait,...  there's a trick. <br /><br />As <a href="http://www.fiercepharma.com/story/ista-excluded-medicare-335m-label-settlement/2013-05-28">detailed</a> in FiercePharma,<br /><br /><blockquote class="tr_bq"> ISTA will be barred from doing business with Medicare, Medicaid, et al, for 15 years. Luckily for Bausch + Lomb, however, it bought ISTA in June 2012,  late enough in the game to actually escape the ramifications of exclusion. <i>The exclusion won't begin until 6 months after the settlement date, giving Bausch + Lomb time to transfer ISTA's products out of that subsidiary and shift the drugs over to the Bausch + Lomb label.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /><b>A Crime Committed by... No One?</b></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">So Bausch and Lomb gets ISTA's drugs, and essentially can resolve the company's felony convictions by relatively small fines, and through management sleight of hand, can finesse ISTA's disbarment from federal programs..  This will occur despite admissions that someone within ISTA, presumably within ISTA management, perhaps high up in ISTA management, per FiercePharma, </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq"><i>instructed reps to avoid leaving a paper trail of their off-label discussions with doctors. </i>Prosecutors had enough evidence of this to <i>persuade ISTA to plead guilty to a felony fraud charge.</i> 'These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others, the Justice Department said. 'ISTA agreed that this conduct represented an intent to defraud under the law.'</blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br />So felony fraud was committed, but no person apparently committed it.  It was as if a ghost committed the crime.</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Not only was a crime committed, but apparently by nobody, the corporation within which the crime was committed also becomes obscure.  ISTA became responsible, but by being bought out by Bausch and Lomb, the more severe penalty directed against ISTA will be meaningless.  </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Should Bausch and Lomb be responsible?  Of course, they claim they should not.  As <a href="http://www.bloomberg.com/news/2013-05-24/bausch-lomb-unit-pays-33-5-million-in-misbranding-case.html">reporte</a>d by Bloomberg, </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><blockquote class="tr_bq"><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> Rochester, New York-based Bausch & Lomb said the actions occurred 'well before' it acquired Ista in 2012. </div></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote><br />'Bausch & Lomb is committed to earning trust in everything that we do and is pleased to have resolved this pre-acquisition issue,' Bob Bailey, a Bausch & Lomb spokesman, said in a statement. </blockquote><br />In fact, The Hill<a href="http://thehill.com/blogs/regwatch/healthcare/301949-drug-company-pleads-guilty-to-felony-kickback-scheme-pays-335m"> reported</a> that the bad behavior took place from 2005 to 2010: <br /><br />But consider that while ISTA recently became part of Bausch and Lomb, since 2007, Bausch and Lomb has been wholly owned by private equity firm Warburg Pincus.  In fact, as we <a href="http://hcrenewal.blogspot.com/2009/06/was-private-equity-takeover-of-bausch.html">discussed</a> in in 2009, some people suspected that this maneuver would have allowed Baush and Lomb to settle multiple suits alleging that its products were faulty and dangerous out of the public eye.  So while ISTA is now really Bausch and Lomb is now really Warburg Pincus, no one in the management of ISTA, Bausch and Lomb, or Warburg Pincus apparently will be held responsible for criminal fraud and kickbacks to doctors, even though guilty pleas for these felonies have been made.  So somehow we have admissions that crimes were committed, crimes that compromised the integrity of doctors, and exposed patients to needless side effects, yet these crimes were apparently committed by ... nobody, by a ghost, and even the machine that ghost was in - was it ISTA, Bausch and Lomb, or Warburg Pincus? - becomes a mystery.  Where is Sherlock Holmes when we need him most?.<br /><br /><b>Summary</b><br /><br />This case thus becomes a really striking example of the impunity of health care corporate managers.  They can commit crimes, even felonies, yet the company, but no human beings, is held responsible.  But the company being a company, it cannot go to jail.  And through the magic of obfuscatory corporate take-overs, which company is guilty is not even apparent. <br /><br />As we have said ad infinitum, <br /><br /> We will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich. </div></div>

Ghosts in the Criminal Machine - How a Drug Company Can Plead Guilty to Federal Fraud, Yet No One is Held Responsible

We have often discussed how leaders of health care organizations have become increasingly unaccountable for their actions.  A recent, slight...

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The Best Governance for Medicines ... is in Thailand

<b>The Best Health Care System in the World?  </b><br /><br />Here in the US, a lot of people have been convinced that we have the best health care system in the world.  For example, during the 2012 US presidential campaign, Politi-Fact <a href="http://www.politifact.com/truth-o-meter/statements/2012/jul/05/john-boehner/john-boehner-says-us-health-care-system-best-world/">reported</a>,<br /><br /><br /><blockquote class="tr_bq">House Speaker John Boehner, R-Ohio, says the health care law signed by President Barack Obama -- and upheld by the U.S. Supreme Court -- imperiled the nation’s health care system.<br /><br />'Gov. Romney understands that Obamacare will bankrupt our country and <i>ruin the best health care delivery system in the world,</i>' Boehner said, during the July 1, 2012, edition of <a href="http://www.cbsnews.com/8301-3460_162-57464563/face-the-nation-transcripts-july-1-2012-speaker-boehner-senators-schumer-and-coburn-governors-walker-and-omalley/?pageNum=2&tag=contentMain;contentBody">CBS’ <i>Face the Nation</i></a>.<br /><br />Boehner wasn’t the only one making that claim on the Sunday talk-show circuit. On <i><a href="http://www.foxnews.com/on-air/fox-news-sunday/2012/07/02/white-house-ready-move-and-implement-health-care-law-mcconnell-we-can-defeat-obamacare-no?page=4">Fox News Sunday</a></i>, Senate Minority Leader Mitch McConnell, R-Ky., added that the U.S. has '<i>the finest health care system in the world</i>.'</blockquote><br />More recently, as the Huffington Post<a href="http://maddowblog.msnbc.com/_news/2013/03/25/17455963-the-greatest-health-care-system-the-world-has-ever-known?"> reported</a>,<br /><br /><br /><blockquote class="tr_bq">Sen. Jeff Sessions (R-Ala.) charged Thursday that Obamacare is destroying the '<i>greatest health care system the world has ever known</i>' and that it was 'horrible' for anyone to suggest Americans receive anything less than the best care, even though they die younger on average than people in many other countries.<br /><br />'This is just one example of what happens in this country when people in Washington take on the arrogant view that they know how to fix the health care system -- one of <i>the most massive, complex, marvelous systems the world has ever known</i>,' Sessions said on the Senate floor.</blockquote><br />One would expect that the greatest health care system in the world would have the greatest pharmaceutical industry in the world too.  In fact, as noted by Politi-Fact,  that is pretty much what Congressman Boehner asserted,<br /><br /><blockquote class="tr_bq"> Boehner’s office also noted that wealthy foreigners flock to the U.S. to receive care because of its cutting-edge facilities, and that the U.S. is <i>among the leaders, if not No. 1, in medical research and pharmaceutical development.</i></blockquote><br /><b>Not the Best Governance for Medicines in the World </b><br /><br />A recent <a href="http://www.bernama.com.my/bernama/v7/wn/newsworld.php?id=951522">article</a> from the National News Agency of Malaysia will probably not get a lot of attention in the US, or other developed countries, but it does suggest another reason to be very skeptical about shouts of "USA Number 1" at least applied to health care.  The article's main point was:<br /><br /><blockquote class="tr_bq">The World Health Organisation (WHO) has <i>praised Thailand for the world's best governance for medicine</i>, Thai News Agency (TNA) reported.<br /><br />Public Health Minister Dr. Pradit Sintawanarong, who is attending the 66th World Health Assembly in Geneva, Switzerland, from May 20-28, told journalists on Wednesday that the <i>WHO has asked Thailand to co-organise a meeting on good governance for medicine, as the Thai Kingdom is considered the world's most advance in governance for medicine and should be a good example for other countries.</i><br /><br />Dr. Pradit, who was invited by the WHO to open a meeting on Thailand's governance for medicine and health systems, held as part of the 66th World Health Assembly, acknowledged that the WHO has also asked Thailand to share experiences in another side meeting on 'Good Governance in the Pharmaceutical Sector:The Case of Thailand and Malawi'.</blockquote><br /><br />Again, a lot of people think of the US health care system as a model of the rest of the world.  Here is one little bit of data that maybe it should not be the model for "governance for medicine."  Of course, that phrase itself is almost never used here.  Its definition, however, should be instructive.<br /><br />The World Health Organization has had a small "Good Governance for Medicines" program since 2004.  We first discussed it <a href="http://hcrenewal.blogspot.com/2008/12/two-important-resources.html">here</a> in 2008  On the <a href="http://www.who.int/medicines/ggm/en/">program web-site</a>, its goal is defined: <br /><br /><blockquote class="tr_bq">contributing to <i>health systems strengthening and preventing corruption</i> by promoting good governance in the pharmaceutical sector.<br /><br />Specifically the programme aims:<br />-To <i>raise awareness on the impact of corruption in the pharmaceutical sector and bring this to the national health policy agenda</i><br />- To <i>increase transparency and accountability in medicine regulatory and supply management systems </i> - To promote <i>individual and institutional integrity</i> in the pharmaceutical sector<br />- To<i> institutionalize good governance in pharmaceutical systems</i> by building national capacity and leadership. </blockquote><br />So if Thailand received recognition for having the best governance for medicines, the implication is that the US does not.<br /><br />In fact, we and other dissidents have documented a host of problems with individual and institutional integrity in the pharmaceutical sector, lack of transparency and accountability in medicine regulatory and supply management systems, and actual corruption in the pharmaceutical sector.  Some of the most recent big examples on Health Care Renewal since December, 2012, include:<br />-  the CEO of drug and biotechnology company Amgen collected tens of millions of dollars while his company settled lawsuits alleging it gave kickbacks to doctors, pharmacists and others to use potentially dangerous medicines (post <a href="http://hcrenewal.blogspot.com/2013/05/amgen-ceos-prosper-despite-or-because.html">here</a>)<br />-  Pfizer's 14 legal settlements since 2000, including settlements of allegations of fraud, illegal promotion of hazardous drugs, kickbacks given to physicians, bribery of foreign officials, etc.  The biggest was for $2.3 billion.  In one case, the company was convicted of being a racketeering influenced corrupt organization (RICO) (post <a href="http://hcrenewal.blogspot.com/2013/01/pfizers-pfourteenth-settlement-small.html">here</a>).<br />- Three settlements in the US by GlaxoSmithKline in 2012, of allegations including deceptive marketing to hide drugs' adverse effects, improperly preventing generic competition, and a $3 billion settlement for deceptive marketing and improper promotion of multiple drugs (post <a href="http://hcrenewal.blogspot.com/2012/12/tis-season-for-legal-settlements.html">here</a>). <br />- Eli Lilly settled allegations that it bribed foreign officials.  (In 2009 it pleaded guilty to criminal charges arising from deceptive marketing of Zyprexa) (post <a href="http://hcrenewal.blogspot.com/2012/12/tis-season-for-legal-settlements.html">here</a>)<br />- After making two settlements of overcharging the US government in 2007 and 2009, Sanofi settled US allegations of giving kickbacks to doctors (post <a href="http://hcrenewal.blogspot.com/2012/12/tis-season-for-legal-settlements.html">here</a>)..<br />-  The pharmaceutical paid "key opinion leader" who was most influential in promoting widespread use, and probably overuse of opiates, admitted it was all "misinformation" (post <a href="http://hcrenewal.blogspot.com/2012/12/the-king-of-pain-recants-pharmaceutical.html">here</a>).<br /><br />See also our posts on <a href="http://hcrenewal.blogspot.com/search/label/bribery">bribery</a>, <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a>, <a href="http://hcrenewal.blogspot.com/search/label/fraud">fraud</a>, <a href="http://hcrenewal.blogspot.com/search/label/crime">crime</a>, and <a href="http://hcrenewal.blogspot.com/search/label/health%20care%20corruption">corruption</a>, not to mention <a href="http://hcrenewal.blogspot.com/search/label/deception">deception</a>, <a href="http://hcrenewal.blogspot.com/search/label/stealth%20marketing">stealth marketing</a>, <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a>, <a href="http://hcrenewal.blogspot.com/search/label/institutional%20conflicts%20of%20interest">institutional conflicts of interest</a>, etc. <br /><br /><b>Participatory Democracy in Health Care </b><br /><br /><br />So good for the Thais for apparently doing much better with far fewer resources.  One reason seems to be that the government has made good governance for medicines, defined as above, a big priority:<br /><br /><blockquote class="tr_bq">According to the public health minister, the <i>Thai government and his ministry have adhered great importance to good governance for medicine (GGM) and health systems</i> and Thailand has also joined the WHO's campaigns on the GGM from the first stage, concerning the assessment of the situation and the installation of relevant systems.</blockquote><br /><br />I can also speculate that one reason they have done better is their conscious effort to enlist the public at large in discussing and setting the direction of their health care system.  For example, as we <a href="http://hcrenewal.blogspot.com/2009/09/making-health-care-more-representative.html">discussed</a> in 2009,  Thailand has set up by law a National Health Assembly, with its <a href="http://en.nationalhealth.or.th/Health_Assembly">stated goal</a> to be:<br /><br /><blockquote class="tr_bq"><span style="font-family: Times,"Times New Roman",serif;"><span style="font-size: small;"><span style="color: #333333;">an instrument as well as a learning process to develop <i>participatory public polices on health and pushing for practicability.</i></span></span></span></blockquote><br />Assemblies have been held yearly since 2008.  A detailed report on the 2008 assembly is <a href="http://www.who.int/sdhconference/resources/rasanathan_healthexpectations.pdf">here</a>. [Rasanathan K, Posayanonda T, Birminghan M et al.  Innovation and participation in the first National Health Assembly in Thailand. Health Expectations 2012; 15: 87-96].  The most recent was in December, 2012 (look <a href="http://en.nationalhealth.or.th/nha2012">here</a>.)   <br /><br />Such a mechanism for broad public input into health care does not obviously occur in the US.  Instead, we have corporations spending billions on <a href="http://hcrenewal.blogspot.com/search/label/stealth%20lobbying">lobbying</a>, <a href="http://hcrenewal.blogspot.com/search/label/public%20relations">public relations</a>, <a href="http://hcrenewal.blogspot.com/search/label/stealth%20health%20policy%20advocacy">stealth advocacy</a>, and campaign contributions.  We have the constant interchange of top government and corporate health care leaders via the <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>.<br /><br />We do not have any significant public discussion of good governance for medicines, or anything like it.  (The few, rare exceptions about which I know are the recent Healthy Skepticism meeting on <a href="http://sellingsickness.com/">Selling Sickness</a>, and the now yearly meetings organized by <a href="http://pharmedout.org/">PharmedOut.org</a>)  Discussion of deception, conflicts of interest, crime and corruption affecting large health care organizations is muted and <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>.  I know of precisely one course on health care corruption in any US medical, public health, or health administration school (look<a href="http://hcrenewal.blogspot.com/2009/12/how-to-give-course-on-corruption-in.html"> here</a>, and its focus is on developing countries.)<br /><br />Time to head to Bangkok?....  But if we all cannot...  <br /><br />In the US, we will not have a chance of meaningfully improving our health care system until we start listening to unbiased health care professionals and academics (in particular, who have not been paid off by vested interests),  civil society organizations, and people and patients at large, and stop getting all our insight from corporate executives, their cronies, and their paid experts.  We will not have a chance until we allow discussion of all the problems, including bad leadership and governance, dishonest and deceptive practices, conflicts of interests, and outright crime and corruption.  We will not have a chance until we put our priority on patients' and the public's health, not the vested interests of those who have gotten rich off the current dysfunctional system.  <br /><br /><br />.

The Best Governance for Medicines ... is in Thailand

The Best Health Care System in the World?  Here in the US, a lot of people have been convinced that we have the best health care system in t...

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Executive Compensation as "Legal Corruption" - and the Continuing Example of the Troubles of Wake Forest Baptist

"Legal corruption" was the description of current <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">executive compensation</a> practices <a href="http://online.wsj.com/article/SB10001424052970203922804578080670062571256.html">appearing</a>, of all places, in the Wall Street Journal.  The arguments, by Henry Mintzer of the Desautels Faculty of Management at McGill University, apply to health care, and provide a counterpoint to the usual talking points that are trotted out whenever a top health care manager, or his cronies, feels the need to justify his or her compensation. <br /><br /><b>A Rigged Game with Other Peoples' Money </b><br /><br />Prof Mintzer's arguments start with the assertion that executive bonuses are hopelessly rigged in favor of the managers who receive them.  In particular:<br /><ul><li> They represent gambling with "other people's money," in this case, "the stockholders [of large public corporations] not to mention the livelihoods of their employees and the sustainability of their institutions"</li></ul><ul><li>Bonuses are given just based on the appearance of winning, for example, when a company's stock goes up short term, regardless of long-term results.</li></ul><ul><li>Bonuses are given even when the company may lose, for example, the "golden parachute," or severance package that even executives forced to resign or retire may receive.</li></ul><ul><li>Bonuses are given for actions that at best only provide potential gains for the company, for example prior to a merger, but before it is known that the merger will be successful</li></ul><ul><li>Bonuses are given just for showing up, that is, "retention bonuses."</li></ul><br />Thus he contended that bonuses inspire executives to be gamblers in a game rigged in their favor.<br /><br /><b>Based on False Assumptions </b><br /><br />Furthermore, he argued that the current system of executive compensation is based on false assumptions.  These include:<br /><br /><u>"A company's health is represented by its financial measures alone - even better, the price of its stock."</u> <br /><br />However, as Prof Mintzer noted:<br /><br /><blockquote class="tr_bq">Companies are a lot more complicated than that. Their health is significantly represented by what accountants call goodwill, which in its basic sense means a company's intrinsic value beyond its tangible assets: the quality of its brands, its overall reputation in the marketplace, the depth of its culture, the commitment of its people, and so on.  </blockquote><br />I would note that this applies especially in health care, and more especially to organizations that provide direct patient care.  No hospital system, for example, could function at all without a corps of dedicated health professionals, physicians, nurses, therapists, etc. <br /><br />Furthermore, Prof Mintzer wrote,<br /><br /><blockquote class="tr_bq">All too often, financial measures are a convenient substitute used by disconnected executives who don't know what else to do—including how to manage more deeply.  Or worse, <i>such measures encourage abuse from impatient CEOs</i>, who can have a field day cashing in that goodwill by cutting back on maintenance and customer service, 'downsizing' experienced employees while others are left to 'burn out,' trashing valued brands, and so on. Quickly the measured costs are reduced while slowly the institution deteriorates </blockquote><br />This is obviously particularly pernicious in health care, a field in which institutions are complicated, and dependent on the efforts of some very highly trained and specialized people well beyond the management suite. <br /><br /><u>"Performance measures, whether short or long term, represent the true strength of the company."</u> <br /><br />Prof Mintzer pointed out the lack of accurate measures of the overall performance of a company or organization. <br /><br /><br /><u>"The CEO, with a few other senior executives, is primarily responsible for the company's performance."  </u><br /><br />Prof Mintzer asked,<br /><br /><blockquote class="tr_bq">In something as complex as the contemporary large corporation, <i>how can success over three or even 10 years possibly be attributed to a single individual?</i> Where is teamwork and all that talk about people being 'our most important asset?' <br /><br />More important, should any company even try to attribute success to one person? <i>A robust enterprise is not a collection of 'human resources'; it's a community of human beings. </i>All kinds of people are responsible for its performance. <i>Focusing on a few—indeed, only one, who may have parachuted into the most senior post from the outside—just discourages everyone else in the company.</i></blockquote><br />Again, this is obviously particularly the case in health care organizations, especially those that provide direct patient care. <br /><br /><b>Leading to the Worst Possible Leaders and Leadership</b><br /><br />Finally, Prof Mintzer argued that the current system is designed to promote the worst possible leadership, leading likely to the worst possible outcomes.  He opened with<br /><br /><blockquote class="tr_bq"> Executive bonuses—especially in the form of stock and option grants—represent<i> the most prominent form of <b>legal corruption</b> that has been undermining our large corporations and bringing down the global economy. </i></blockquote><br />Our argument has been that the current leadership of health care is similarly bringing down our health care system.<br /><br />He later noted that current compensation practices mainly function to select out the worst possible leaders:<br /><br /><blockquote class="tr_bq"> executive compensation these days <i>reinforces a class structure within the enterprise that is antithetical to its effective functioning</i>. Because of its symbolic nature, executive compensation as currently practiced sends out the worst possible signal to everyone in the enterprise.</blockquote><br />Furthermore,<br /><br /><blockquote class="tr_bq">bonuses can serve one purpose. It has been claimed that if you don't pay them, you don't get the right person in the CEO chair. I believe that <i>if you do pay bonuses, you get the wrong person in that chair. At the worst, you get a self-centered narcissist</i>. [Or even a full-fledged, if non-violent, psychopath, as noted <a href="http://hcrenewal.blogspot.com/2012/01/corporate-psychopaths-theory-of-health.html">here</a> - Ed] At the best, you get someone who is willing to be singled out from everyone else by virtue of the compensation plan. Is this any way to build community within an enterprise, even to foster the very sense of enterprise that is so fundamental to economic strength?<br /><br />Accordingly, executive bonuses provide the perfect tool to screen candidates for the CEO job. <i>Anyone who insists on them should be dismissed out of hand</i>, because he or she has demonstrated an absence of the leadership attitude required for a sustainable enterprise.<br /> <br />Of course, this might thin the roster of candidates. Good. Most need to be thinned, in order to be refilled with <i>people who don't allow their own needs to take precedence over those of the community they wish to lead.</i></blockquote><br />It will be interesting to see if anyone attempts a logical refutation of Prof Mintzer's arguments.  My guess is that we will see little response, based on the usual public relations dictum that it is best not to acknowledge one's detractors, even if they are right.  Furthermore, I predict that what responses there are will partake heavily of logical fallacies. <br /><br />Finally, it is worthwhile to think about Prof Mintzer's points when assessing the arguments made in favor of particular executives' outsized remuneration. <br /><br /><b>An Example - Continued Riches for Wake Forest Baptist Executives</b><br /><br /><u>Outsize Executive Compensation Continues </u><br /><br />A few weeks ago, we <a href="http://hcrenewal.blogspot.com/2013/05/clouded-visionary-leadership-wake.html">noted</a> that the leaders of this large medical center, while previously proclaimed as visionaries, and enjoying enlarging compensation, seemed to have lead the institution to a financial crisis due to difficulties with a poorly chosen or implemented electronic health record system. <br /><br />One follow up story updated compensation information and provided the official management rationale for the ongoing largess.  The redoubtable Richard Craver <a href="http://www.journalnow.com/business/business_news/local/article_5da8b354-bda0-11e2-b691-001a4bcf6878.html">wrote</a> in the Winston-Salem Journal,<br /><br /><span class="paragraph-0"> </span><br /><blockquote class="tr_bq"><span class="paragraph-0">Wake Forest Baptist Medical Center provided its top executive, Dr. John McConnell, an 11.9 percent raise in salary during 2011 to $983,777, although his total compensation dropped 18 percent, the center reported Wednesday as part of an annual regulatory filing.<br /><br /> </span> <span class="paragraph-1"> <i>McConnell was paid <b>$2.04 million</b> in total compensation,</i> compared with almost $2.5 million for 2010. Although Wake Forest Baptist operates on fiscal years that end on June 30, the pay for its top executives is required to be listed on a calendar-year basis.<br /><br /> </span> </blockquote><blockquote>The main difference between the 2010 and 2011 compensation totals for McConnell was $461,575 he received as a one-time payment that replaced the retirement benefits he forfeited upon leaving the University of Texas Southwestern Medical Center in Dallas. McConnell was required to work at Wake Forest Baptist for two years to receive the one-time payment.</blockquote><br />Keep in mind that in 2008-9x, Dr McConnell made a total of just over $700,000, so his compensation in 2011 was about three times that.<br /><br />The benevolent board of the medical center saw to it that Dr McConnell got money for all sorts of reasons:<br /><br /><blockquote class="tr_bq">McConnell received <i>$384,203 in bonus and incentives</i> in fiscal 2010-11. The center said the amount reflects the achievement of clinical quality, academic and financial goals set by the board of directors. The bonus was down $115,797 from fiscal 2009-10 primarily because the center reduced the potential percentage of the incentive compensation from 75 percent of his base salary to 53 percent.<br /><br /> McConnell received $38,511 in other reportable compensation, which the center listed: as <i>$8,797 in annual dues for Forsyth Country Club and Rotary Club membership</i>, defined as for business purposes; $16,500 qualified deferred compensation; $3,612 in after-tax life-insurance deduction; and <i>$9,602 in an automobile allowance.</i><br /><br /> He also received<i> $619,002 in contributions to retirement plans,</i> including a supplemental executive retirement plan solely for McConnell’s benefit.</blockquote><br />One wonders why, given his salary and bonus, Dr McConnell could not afford to pay dues to the country club and rotary on his own, or for his own car expenses, or to provide for his own retirement, for that matter?<br /><br />Other executives also continued to do very well:<br /><br /><blockquote class="tr_bq">Donny Lambeth, former president of N.C. Baptist Hospital, <i>received <b>$2.47 million</b> in total compensation.</i> Lambeth served as president of Davie County Hospital and Lexington Medical Center before retiring last year. He is now serving as an N.C. House representative.<br /><br /> Lambeth’s $495,595 in base salary represented an 8 percent decrease related to his reduced job responsibilities. His bonus and incentive compensation was down 2 percent to $181,988. The bulk of Lambeth’s compensation was $1.62 million related to a fully vested deferred compensation upon his retirement.<br /><br /> Dr. Thomas Sibert, president of Wake Forest Baptist Health and chief operating officer, received a 14 percent increase in <i>total compensation to <b>$1.13 million</b></i>, including $631,297 in salary (up 15.7 percent) and $234,540 in bonus and incentive compensation (up 41.3 percent). Sibert took over his role in September 2010.<br /><br /> Edward Chadwick, chief financial officer, received a less than 1 percent increase in <i>total compensation to <b>$979,420</b></i>. His salary rose 4.6 percent to $527,216, while his bonus and incentive compensation fell 5 percent to $189,929.<br /><br /> Russell Howerton, chief medical officer, was paid $295,714 in salary, $300,786 in bonus and incentive compensation and<i> <b>$657,025</b> in total compensation</i>. Doug Edgeton, former president of Piedmont Triad Research Park (recently renamed as Wake Forest Innovation Quarter), received $490,485 in salary, $162,367 in bonus and incentive compensation and <i><b>$710,729</b> in total compensation</i>.</blockquote><br /><b>The Chief Information Quietly Departs, with Some More Money </b><br /><br />Meanwhile, Mr Craver also <a href="http://www.journalnow.com/business/business_news/local/article_de6ed88a-bf47-11e2-b05e-0019bb30f31a.html">reported</a> the quiet departure of the executive who presided over the troubled implementation of the EHR,<br /><br /><span class="paragraph-0"> </span><br /><blockquote class="tr_bq"><span class="paragraph-0">The chief information officer for Wake Forest Baptist Medical Center is stepping down, effective May 31, the center confirmed Friday.<br /><br /> </span> <span class="paragraph-1"> Sheila Sanders has served in that role, as well as vice president of information technology, since being hired in 2009 to direct the center’s overhaul of its IT system.<br /> </span></blockquote><blockquote><div class="p402_hide"><div id="in-story"> </div></div><br />She is leaving at a time when the center is struggling financially and operationally with implementing the Epic electronic health records system — one of the largest overall projects Wake Forest Baptist and most health care systems have undertaken in recent years.</blockquote><br />Note that Ms Sanders was well rewarded for her questionable efforts,<br /><br /><br /><blockquote class="tr_bq">Sanders was paid $333,961 in salary, $89,145 in bonus and incentive compensation and <i><b>$464,543</b> in total compensation in 2011</i>, according to a regulatory filing that Wake Forest Baptist made public Wednesday. The center’s executive-compensation data typically is about 18 months old when released.<br /><br /> In terms of salary, Sanders <i>ranked sixth among the center’s 27 listed management officials.</i> </blockquote><br />It was clear that Ms Sanders ought to have been directly responsible for the EHR implementation,<br /><br /><blockquote class="tr_bq"> The center said Sanders’ duties included clinical information, administrative, business, academic and research support systems, as well as core IT functions that include a central IT help desk, email, computer desktop support, IT security and telecommunications.</blockquote><br />Nonetheless, the extremely well-paid top leadership did not seem to have hard feelings.<br /><br /><br /><blockquote class="tr_bq">Dr. John McConnell, the center’s chief executive, said in a statement that Sanders decided in January to <i>take 'a brief career break' </i>after completing major portions of the overhaul. He said Sanders is relocating to Florida to spend more time with her family.<br /><br /> Wake Forest Baptist spokesman Chad Campbell stressed it was Sanders’ decision to leave her positions, and it was not related to Epic, which went live in September on the center’s main campus.</blockquote><br />Also,<br /><br /><blockquote class="tr_bq">'We are deeply grateful to Sheila for her numerous contributions that will serve the medical center for years to come,' McConnell said. McConnell said senior IT officials will manage day-to-day IT operations with his oversight while the center conducts a national search for her replacement.</blockquote><br />But to reiterate,<br /><br /><blockquote class="tr_bq"> The center said May 2 it had launched another round of 'multi-million dollar' cost-cutting measures that will last through at least June 30, the end of its 2012-13 fiscal year, related to fixing Epic revenue issues.</blockquote><br /> Perhaps any attempt to saddle the chief information officer with responsibility would point out the lack of responsibility imposed on even higher level and better paid executives for apparently approving and authorizing her previous work.<br /><br /><u>The Usual Talking Points </u><br /><br />Instead, the official statement from hospital system management about top <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">executives' compensation</a> trotted out the usual talking points in defense of all this lavish pay,<br /><br /><blockquote class="tr_bq">Wake Forest Baptist said in a statement explaining its executive compensation packages that as an academic medical center, it requires management with '<i>a special set of skills and experience</i> to manage relationships with physicians and researchers, the university, its patients and community. … It takes <i>proven talents</i> possessed by a small group of health care executives.'<br /><br /> 'Compensating executives, as we do all of our employees, <i>competitively and appropriately</i>, is crucial to the success of Wake Forest Baptist and to Northwest North Carolina.'</blockquote><br />In addition,<br /><br /><blockquote class="tr_bq"> Baptist said its executive compensation is based<i> primarily on comparisons </i>with 32 academic medical centers, including Duke University Hospital and UNC Hospitals. </blockquote><br />With regard to Dr McConnell's special retirement plan,<br /><br /><blockquote class="tr_bq">'This is a common benefit for executives at academic medical centers and health systems to <i>encourage retention and provide competitive retirement benefits</i>,' the center said in its statement.</blockquote><br />We first listed the talking points <a href="http://hcrenewal.blogspot.com/2011/09/talking-points-sans-original-thought-to.html">here</a>, and then provided additional examples of their use <a href="http://hcrenewal.blogspot.com/2011/09/more-repeats-of-talking-points.html">here</a>, <a href="http://hcrenewal.blogspot.com/2012/03/example-of-how-complex-takes-control.html">here</a> and <a href="http://hcrenewal.blogspot.com/2012/12/health-care-hired-managers-not-playing.html">here</a>.   The official administration discussion above does seem to include: <br />- We have to pay competitive rates<br />-  We have to pay enough to retain at least competent executives, given how hard it is to be an executive<br />-  Our executives are not merely competitive, but brilliant.<br /><br />Left out was any evidence about the executives' performance, much less their degree of responsibility for their institution's performance.  Why the few top paid executives should continue to get credit for the institutions' supposed, but unspecified successes, while escaping any accountability for its failures (including the looming problems with its commercial health care information technology) was of course not mentioned.  <br /><br />So here is a great, current example of how top health care executives are gambling with other peoples' money, in a game rigged so that they always win.  As long as we continue such perverse incentives in health care, they will continue to inspire leaders to line their own pockets at the expense of our health care institutions, and ultimately to the detriment of patients' and the public's health. <br /><br /><b>Conclusion </b><br /><br />So let me conclude with Prof Mintzer's conclusion,<br /><br /><blockquote class="tr_bq">All this compensation madness is not about markets or talents or incentives, but rather about <i>insiders hijacking established institutions for their personal benefit.</i><br /><br />Too many large corporations today are starved for leadership—true leadership, meaning engaged leadership embedded in concerned management. And the global economy desperately needs renewed enterprise, embedded in the belief that companies are communities. Getting rid of executive bonuses, and the gambling games that accompany them, is the place to start.</blockquote><br /><br />

Executive Compensation as "Legal Corruption" - and the Continuing Example of the Troubles of Wake Forest Baptist

"Legal corruption" was the description of current executive compensation practices appearing , of all places, in the Wall Street ...

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Marin General Hospital nurses warn that new computer system is causing errors, call for time out

<div style="text-align: center;">- Posted on the Healthcare Renewal Blog May 17, 2013 -</div><br />Of course, the ever-present euphemism for life-threatening EHR malfunctions and defects, i.e., "<b>glitches</b>" are the cause (<a href="http://hcrenewal.blogspot.com/search/label/glitch">http://hcrenewal.blogspot.com/search/label/glitch</a>):<br /><a href="http://www.marinij.com/rosskentfieldgreenbrae/ci_23251638/marin-general-hospital-nurses-warn-that-new-computer"><br /></a><br /><blockquote class="tr_bq"><a href="http://www.marinij.com/rosskentfieldgreenbrae/ci_23251638/marin-general-hospital-nurses-warn-that-new-computer">Marin General Hospital nurses warn that new computer system is causing errors, call for time out</a><br /><br />By Richard Halstead<br />Marin Independent Journal<br />Posted:   05/15/2013 04:07:49 PM PDT<br /><br />Nurses at Marin General Hospital have asked administrators to put implementation of a new computerized physician order entry system on hold until <b>glitches </b>can be worked out and more training provided to nurses and doctors who use it.<br /><br />Nearly a dozen nurses attended the regularly scheduled meeting of the Marin Healthcare District board Tuesday night at Marin General to voice their concerns. The district board oversees Marin General, but it does not involve itself in the hospital's day-to-day operations.<br /><b><br />"Orders are being inadvertently passed to the wrong patients</b>. <b>People have gotten meds when they've been allergic to them</b>. This is dangerous," said Barbara Ryan, a Marin General registered nurse, who works in pediatrics and the intensive care nursery. "We're not asking you to get rid of it. We're asking you to place it on hold."</blockquote><br /><br />Orders passed to wrong patients?  No problem, just a glitch!  Meds people are allergic to?  Just a glitch.  Dangerous?  No way.  It's just a glitch!<br /><br /><blockquote class="tr_bq">But Lee Domanico, who serves as the CEO of both Marin General and the Marin Healthcare District, said, "I'm confident that in spite of the implementation issues,<b> we have a system today that is safer for patients than our old paper system</b>, and it will get even safer as we gain experience with it and work to fix some of the glitches we've experienced."</blockquote><br />Where's the data backing up that assertion, I ask?  The actual risks of paper records don't seem to be robustly documented anywhere.<br /><blockquote class="tr_bq"><br />Ryan, who serves as the California Nurses Association/National Nurses United representative, was one of four Marin General nurses who spoke during the public comment portion of the meeting. Ryan said the <b>nurses warned in advance </b>of the system's roll-out on May 7 that nurses and doctors had insufficient knowledge of the system. Ryan said due to problems with the software <b>nurses had been unable to open the program at home to practice using it.</b></blockquote><br />And yet the rollout happened anyway?  That seems to me to be reckless indifference to the concerns of clinicians.<br /><br /><blockquote class="tr_bq">"Lo and behold the problems that we were worried about have happened," Ryan said. "We're looking at <b>two-hour preps for surgery and two- to three-hour discharges; </b>skilled nursing facilities calling back saying, this really doesn't make sense; <b>the wrong meds ordered on the wrong patients </b>and then given to the wrong patients; the inability for nurses to be able to see what the doctor ordered and double-check it."</blockquote><br />Of course, I might add, patient safety was not compromised, the other common refrain of EHR glitch-excusers ... see below.<br /><br /><blockquote class="tr_bq">Ryan said nurses have and will continue to file "assignment despite objection" forms due to the system. Nurses file the forms to document formal objections to what they consider an unsafe, or potentially unsafe, patient care assignment.<br /><br />"We will take patients but we will object to the assignment because it is unsafe," Ryan said. "This system is making it unsafe."</blockquote><br />These will be exceptionally helpful in court to any patients injured or killed as a result of these "glitches" and EHR rollout that occurred despite direct warnings from clinical experts.<br /><br /><blockquote class="tr_bq">Marin General nurse Susan Degan said, <b>"This is not about resistance to change</b>. It's about accountability. My most important role is that of patient advocate. I am held accountable when errors are made."<br /><br />Domanico acknowledged there have been some technical problems with the Paragon system, including making it possible for nurses to open from home. <b>And he said the software is not faster than the old paper system.</b>  <span style="color: red;"><i><b>[Considering it's acknowledged all the way up to the highest levels of HHS that current EHR's slow physicians down, one wonders if anyone in this organization thought an EHR would actually increase speed? - ed.]</b></i></span></blockquote><br />About the "resistance to change" canard, see my essay "<b>Doctors and EHRs: Reframing the 'Modernists v. Luddites' Canard to The Accurate 'Ardent Technophiles vs. Pragmatists' Reality"</b> at <a href="http://hcrenewal.blogspot.com/2012/03/doctors-and-ehrs-reframing-modernists-v.html">http://hcrenewal.blogspot.com/2012/03/doctors-and-ehrs-reframing-modernists-v.html</a> .<br /><blockquote class="tr_bq"><br />"So yes," Domanico said, "it is causing stress for nurses who have heavy workloads, who are learning how to use it, particularly in areas where we need to speed up the computer."</blockquote><br />What?  <b>"Speed up the computer?" </b> They've spent tens if not hundreds of millions for an EHR, and the computer's too slow?<br /><br />Actually, I think what this CEO in an obvious display of health IT ignorance is trying to say is that we have to do something about the system's poor usability, which sort of mimics what the Board Chair of the American Medical Assocation just said (<a href="http://hcrenewal.blogspot.com/2013/05/ama-finally-on-board-with-ehr-views.html">http://hcrenewal.blogspot.com/2013/05/ama-finally-on-board-with-ehr-views.html</a>).<br /><br />Also - clinician stress promotes error.<br /><br /><blockquote class="tr_bq">But Domanico challenged the suggestion that patient safety at Marin General had been compromised.</blockquote><br /><b>In fact, there is no way the issues described above cannot be compromising patient safety, on its face. </b>(<a href="http://hcrenewal.blogspot.com/search/label/Patient%20care%20has%20not%20been%20compromised">http://hcrenewal.blogspot.com/search/label/Patient%20care%20has%20not%20been%20compromised</a>)<b>.</b><br /><br /><blockquote class="tr_bq">"I would have no hesitation about entering this hospital tonight," he said.</blockquote><br />As a VIP, of course, this CEO would get special treatment.  Thanks a lot.<br /><br />I would NOT want to be a patient there under these conditions, unless perhaps I had a 24x7 medically-skilled advocate/bodyguard.<br /><br /><blockquote class="tr_bq">Board member Ann Sparkman, who previously served as in-house counsel at Kaiser Permanente, said nurses at Kaiser struggled at first when a new computer system was introduced there.<br /><br />Sparkman said, <b>"It's just to be expected."</b></blockquote><br />This seems a rather bizarre appeal to common practice (<a href="http://www.nizkor.org/features/fallacies/appeal-to-common-practice.html">http://www.nizkor.org/features/fallacies/appeal-to-common-practice.html</a>).<br /><br />The stunning ignorance of this board member about proper mission-critical IT safety testing and implementation, such as performed in pharma, aerospace, etc. is, quite frankly, shocking.<br /><br />Further, an attitude that life-threatening "glitches" are "just to be expected" by a member of the Board of Directors, with fiduciary responsibilities regarding hospital operations, is grossly negligent in my opinion, and completely ignores patient's rights.<br /><br />Unbelievable. <br /><br />One wonders if any formally-trained medical informatics experts were in leadership roles in this project. <br /><br />-- SS

Marin General Hospital nurses warn that new computer system is causing errors, call for time out

- Posted on the Healthcare Renewal Blog May 17, 2013 - Of course, the ever-present euphemism for life-threatening EHR malfunctions and defec...

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American Medical Association finally on board with EHR views expressed on this blog since 2004

<div style="text-align: center;">- Posted on the Healthcare Renewal Blog May 17, 2013 -</div><br />It seems to have taken awhile, but organized medicine seems to finally be recognizing that today's commercial health IT is not quite the revolutionizing, transformative, plug-and-play panacea to healthcare's ills it is often touted as:<br /><br /><blockquote class="tr_bq"><b>AMA Wire</b><br /><b>May 15, 2013 </b><br /><b><a href="http://www.ama-assn.org/ams/pub/amawire/2013-may-15/2013-may-15-general_news1.shtml">AMA board chair: HHS should address EHR usability issues immediately</a></b><br /><br />The government needs to act quickly to remedy the impaired usability of electronic health records (EHR) if the technology's touted benefits are to be realized, AMA Board of Trustees Chair Steven J. Stack, MD (left), told officials during a federal hearing last week.<br /><br /><b>"The AMA and most physicians believe that, done well, EHRs have the potential to improve patient care,"</b> Dr. Stack, an emergency physician in Lexington, Ky., said during his 30-minute <a class="pdf" href="http://www.ama-assn.org/resources/doc/washington/ehr-meaningful-use-testimony-03may2013.pdf" target="_blank">testimony</a>. "At present, however, these EHRs <b>present substantial challenges</b> to the physicians and other clinicians now required to use them."<br /><br />He emphasized that many of today's EHR systems require <b>significant changes</b> before they can deliver the promised outcomes. Referring to Medicare's meaningful use program, he pointed to <b>undesired consequences of pushing EHR systems on physicians before the technology was completely ready for prime time.</b></blockquote><br />"Immediately" is strong language. <br /><br />I note that the phrase <b>"health IT done well"</b> is a term I've been using since 1998 at my now-Drexel-based health IT teaching website at <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases">http://www.ischool.drexel.edu/faculty/ssilverstein/cases</a>, as well as at this blog.<br /><br />Penned by me at my aforementioned Drexel graduate teaching site, originally housed on AOL, in 1998 and still appearing in its main essay:<br /><br /><blockquote class="tr_bq"><div class="MsoNormal"><span style="font-size: small;"><span style="font-family: Arial;">... While clinical IT is now potentially capable of achieving many of the benefits long claimed for it such as improved medical quality and efficiency, reduced costs, better medical research and drugs, earlier disease detection, and so forth, there is a major caveat and essential precondition<b>:</b>  the benefits will be realized only if clinical IT is <b><i>done well</i></b>.  For if clinical IT is <b>not</b> done well, as often occurs in today’s environment of medical quick fixes and seemingly unquestioning exuberance about IT, the technology can be injurious to medical practice and biomedical R&D, and highly wasteful of scarce healthcare capital and resources.  </span></span></div><div class="MsoNormal"><br /></div><span style="font-size: small;"><span style="font-family: Arial;">Those two short words “<b><i>done well</i></b>” mask an underlying, profound, and, as yet, largely unrecognized (or ignored) complexity.  This website is about the meaning of "<i>done well</i>" in the context of clinical computing, a computing subspecialty with issues and required expertise quite distinct from traditional MIS (management information systems, or business-related) computing.</span></span></blockquote><br />(I have more recently switched to the easier-to-parse terminology of "good health IT" vs. "bad health IT" after discussions with Dr Jon Patrick at U. Sydney during my visit Down Under last summer, <a href="http://hcrenewal.blogspot.com/2012/08/my-presentation-to-health-informatics.html">http://hcrenewal.blogspot.com/2012/08/my-presentation-to-health-informatics.html</a>.)<br /><br />I've also heard "<i>not ready for prime time</i>" before.  It is a phrase I used in speaking with a New York Times reporter that then appeared in the Oct. 8, 2012 NYT article <b>"The Ups and Downs of Electronic Medical Records"</b> (<a href="http://www.nytimes.com/2012/10/09/health/the-ups-and-downs-of-electronic-medical-records-the-digital-doctor.html?pagewanted=2">http://www.nytimes.com/2012/10/09/health/the-ups-and-downs-of-electronic-medical-records-the-digital-doctor.html?pagewanted=2</a>) by Milt Freudenheim, October 8, 2012, where I am quoted and this blog cited:<br /><br /><blockquote class="tr_bq">... <b>Critics are deeply skeptical that electronic records are ready for prime time. </b>“The technology is being pushed, with no good scientific basis,” said Dr. Scot M. Silverstein, a health I.T. expert at Drexel University who reports on medical records problems on the blog <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>. He says testing these systems on patients without their consent “raises ethical questions.” </blockquote><br />The AMA Board chair went on to opine:<br /><br /><blockquote class="tr_bq">"Attempting to transform the entire health system in such a rapid and proscriptive manner has compelled providers to purchase tools not yet optimized to the end-user's needs and that often impeded, rather than enable, efficient clinical care," he said.<br /><br />He noted that physicians are "prolific technology adopters" but that adoption of EHR systems has required federal incentives because t<b>he technology still is "at an immature stage of development."</b></blockquote><br />My near-exact terminology has been that the technology is still experimental.<br /><br /><blockquote class="tr_bq">"EHRs have been and largely remain <b>clunky, confusing and complex</b>," he said.</blockquote><br />Perhaps he read my ten-part series on the health IT mission hostile user experience at this blog, at <a href="http://www.tinyurl.com/hostileuserexper">http://www.tinyurl.com/hostileuserexper</a>.<br /><br /><blockquote class="tr_bq">According to a <a class="external" href="http://www.americanehr.com/blog/2013/03/himss13-ehr-satisfaction-diminishing/" target="_blank">recent survey</a> by AmericanEHR Partners, physician dissatisfaction with EHR systems has increased. Nearly one-third of those surveyed in 2012 said they were "very dissatisfied" with their system, and 39 percent said they would not recommend their EHR system to a colleague—up from 24 percent in 2010.</blockquote><br />A survey I posted about in Jan. 2010 is here:  "<b>An Honest Physician Survey on EHR's</b>", <a href="http://hcrenewal.blogspot.com/2010/01/honest-physician-survey-on-ehrs.html">http://hcrenewal.blogspot.com/2010/01/honest-physician-survey-on-ehrs.html</a><br /><br /><blockquote class="tr_bq">Dr. Stack spoke at a "listening session" hosted by the Centers for Medicare & Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC), a division of the U.S. Department of Health and Human Services (HHS). The agencies coordinated the session to examine how a marked increase in code levels billed for some Medicare services might be tied to the increased use of EHRs.<br /><br />Dr. Stack noted that some Medicare carriers have begun denying payment for charts that are too similar to other records.<br /><br />"In this instance, even when clinicians are appropriately using the EHR, a tool with which they are frustrated and the use of which the federal government has<b> mandated under threat of financial penalty</b>, they are now being accused of inappropriate behavior, being economically penalized, and being instructed ‘de facto' to re‐engineer non‐value‐added variation into their clinical notes," he said. "This is an appalling Catch‐22 for physicians."</blockquote><br /><i>"Mandated under threat of financial penalty</i>" has been one of my stated "cart before the horse" issues with HITECH (e.g., <a href="http://hcrenewal.blogspot.com/2010/10/cart-before-horse-again-institute-of.html">http://hcrenewal.blogspot.com/2010/10/cart-before-horse-again-institute-of.html</a>). <br /><br /><blockquote class="tr_bq">Dr. Stack advised officials that three key actions are necessary to rectify these issues with EHR systems:<br /><ul type="disc"><li>The <b>ONC promptly should address EHR usability concerns raised by physicians and add usability criteria to the EHR certification process.</b></li><li>CMS should provide clear and direct guidance to physicians concerning use of EHRs for documentation, coding and billing. </li><li>Stage 2 of the meaningful use program should allow more flexibility for physicians to meet requirements as EHR systems are improved. </li></ul>The AMA will continue to work with federal agencies to improve EHR systems and the Medicare meaningful use program.</blockquote><br />I've been calling for usability evaluation to be added to the certification process, including in comments during public comment periods to HHS, for some time.<br /><br />What the AMA Board Chair is apparently missing, though, is <b>health IT safety</b>.  They should perhaps read my post on the recent ECRI Institute Deep Dive Study on health IT risk - itself based on a report in their own <span style="font-size: small;">AMNews (<a href="http://amednews.com/" target="_blank">amednews.com)</a> </span>publication ("<b>Peering Underneath the Iceberg's Water Level: AMNews on the New ECRI Deep Dive Study of Health IT Events</b>", <a href="http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html">http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html</a>).<br /><br />I don't think any prudent person would consider a 9-week study of 36 hospitals with volunteered reports of 171 health information technology-related problems, where eight of the incidents reported involved patient harm and three may have contributed to patient deaths, information to ignore.<br /><br />-- SS

American Medical Association finally on board with EHR views expressed on this blog since 2004

- Posted on the Healthcare Renewal Blog May 17, 2013 - It seems to have taken awhile, but organized medicine seems to finally be recognizing...

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C R Bard Settles Allegations of Kickbacks to Promote Radiation Treatment for Prostate Cancer

Screening for and aggressive treatment of prostate cancer has become an enormously lucrative business, if not necessarily a life-saving medical strategy.  The minimal media coverage of a recent settlement suggests that at least to some degree, it has been fueled by some questionable practices.<br /><br /><b>The CR Bard Settlement</b><br /><br />As <a href="http://www.ajc.com/news/business/bard-agrees-to-48-million-whistle-blower-settlemen/">reported</a> by the Atlanta Journal Constitution,<br /><br /><br /><blockquote class="tr_bq">A medical device company on Monday agreed to<i> pay a $48.2 million settlement to resolve claims by a Georgia employee that it paid kickbacks to doctors and customers who bought radiation treatment for prostate cancer.</i><br /><br />C.R. Bard Inc., which is headquartered in New Jersey and has offices in Covington, resolved a whistle-blower suit filed by the employee in 2006. The suit <i>alleged that the company paid off doctors and hospitals to induce them to prescribe brachytherapy seeds, which are implanted in the prostate and deliver a dose of radiation to cancer cells.</i></blockquote><br />Another <a href="http://www.macon.com/2013/05/14/2478611/medical-company-agrees-to-pay.html">brief report</a> in the Macon (GA) Telegraph gave a tiny bit more detail about what was given to physicians to get them to use Bard's radiation therapy products,<br /><br /><blockquote class="tr_bq"> Customers could order the seeds, used in brachytherapy to deliver a prescribed dose of radiation directly to cancer cells, from multiple companies. But <i>Bard allegedly offered doctors grant money, rebates, free medical equipment and advertising campaigns to entice them to buy their product at inflated prices,</i> according to a news release issued by [whistle-blower Julie] Darity’s legal team....</blockquote><b>The Usual Elements of Legal Settlements of Allegations of Health Care Corporate Bad Behavior </b><br /><br />The story, briefly told as it was, included many of the usual elements of stories of legal settlements of wrong-doing by large health care corporations. <br /><br /><u>Slow Justice </u><br /><br />The settlement, hence justice, as it were, took a long time, about 7 years since the most recent behavior, and 15 years since its start.  Per the AJC,<br /><br /><blockquote class="tr_bq"> Bard employed its kickback scheme from 1998 to 2006, federal prosecutors said.</blockquote> <u>Penalties Not as Big as They Appeared</u><br /><br />The penalties were not as big as they seemed.  There was the seemingly large fine, $48.2 million dollars.  However, that should be compared to the company's net sales of over $2.95 billion and net income of $530 million in 2012, according to the company's <a href="http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTc1OTY0fENoaWxkSUQ9LTF8VHlwZT0z&t=1">annual report</a>.  It should also be compared to the total compensation of the company's chairman and CEO in 2012, over $8.7 million, and to that of its president and chief operating officer, over $6.0 million, according to the company's <a href="http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTc3OTA0fENoaWxkSUQ9LTF8VHlwZT0z&t=1">2012 proxy statement</a>.   Apparently, the fine came out of the company's treasury, so its impact was diffused among all shareholders, employees, customers, and patients, not directed to those who may have authorized, directed or implemented the kickbacks to physicians. <br /><br /><u>No Penalties for Individuals, No Acknowledgement of Wrong-Doing </u><br /><br />The settlement did not involve any sort of direct penalties to those who authorized, directed, or implemented the kickbacks.<br /><br />The corporation did not even acknowledge any bad behavior.  As per the AJC,<br /><br /><br /><blockquote class="tr_bq">Bard is pleased to settle the claims, Scott Lowry, a company spokesman, said in a statement.<br /><br />'This resolution allows the company to put this matter behind it and continue to focus on delivering life-enhancing medical devices and technologies to patients around the world,' he said. 'We remain committed to continuously enhancing and improving our compliance programs in accordance with industry standards.'</blockquote><b>Suppression of Whistle-Blowing </b><br /><br />It may not be part of all such settlements, but note that in this case there seemed to be an attempt to shut up the whistle-blower.  So, there is reason to think that justice, such as it was, was delayed because the company seemingly tried to punish the whistle-blower, rather than listen to what she had to say.  Per the Macon Telegraph,<br /><br /><blockquote class="tr_bq"> Darity, 56, said she first reported what she suspected as questionable activities to her supervisors.<br /><br />'I did exactly what was outlined in the company ethics policy,' she said. 'I wanted to think things were being corrected.'<br />In time, she realized nothing had changed. She filed an internal whistle-blower complaint.<br /><br />Her job was eliminated in November 2005, soon after an investigation was launched into her whistle-blower complaint, she said.<br /><br />Darity had worked for Bard, which has an office in Covington, for more than 18 years. When her job was eliminated, she was a manager in the Brachytherapy Contracts Administration division.<br /><br />Out of a job, Darity filed the lawsuit in U.S. District Court for the Northern District of Georgia in January 2006.</blockquote><div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"><br />Read more here: http://www.macon.com/2013/05/14/2478611/medical-company-agrees-to-pay.html#storylink=cpy</div><br />Nonetheless, the government seemingly trusted C R Bard to fix its own behavior going forward, <a href="http://online.wsj.com/article/SB10001424127887323716304578482953550885568.html">per the Wall Street Journal</a>,<br /><br /><blockquote class="tr_bq"> As part of a non-prosecution agreement, C.R. Bard agreed to pay an additional $2.2 million and take remedial steps to enhance compliance. The company had said in a regulatory filing last year that it expected the settlement to include a corporate integrity agreement, which typically require companies to obey restrictions on their sales and marketing practices, but no such agreement was announced Monday. </blockquote>Note that <a href="http://hcrenewal.blogspot.com/2012/06/administrators-at-pepper-spray-u-found.html">here</a> we discussed a case in which an academic medical institution seemingly tried to punish faculty members who questioned that organization's overly enthusiastic approach to prostate cancer. <br /><br /><b>Summary - the Profitable but Unsubstantiated Aggressive Approach to Prostate Cancer </b><br /><br />So its just another day at the office. This was a typical <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">settlement</a> of allegations of unethical behavior by a large health care organization.    A large health care company allegedly bribed doctors to use its products.  It seemingly tried to shut up a whistle-blower.  Seven years later, the company got a financial slap on the wrist, but no one directly involved in the alleged kickbacks, and no one whose compensation may have been enlarged due to such apparently unethical activity paid a price.  Never mind that the alleged kickbacks may have induced doctors to use treatments that provided no overall benefit, but could have harmed patients.  <br /><br />Before ending with our usual fulmination, I should note that this case appears to be one small piece in the puzzle of our national infatuation with an aggressive approach to prostate cancer, despite a lack of essentially any good evidence that this approach does any good.  Brachytherapy, the treatment pushed allegedly by kickbacks, is one kind of aggressive treatment for prostate cancer.  Yet there is no good evidence from randomized controlled trials that is prolongs life.  In fact, a recent (and the only major) randomized controlled trial of aggressive treatment of prostate cancer on initial diagnosis failed to show any overall survival benefit.(1)  There has been a huge push to screen all men of a certain age for prostate cancer.  Yet now two new trials also failed to show any overall survival benefit from screening.(2,3)    <br /><br />But the prostate cancer business is very lucrative.  On the Reforming Health blog, <a href="http://reforminghealth.org/2012/04/25/on-prostate-cancer-screening-warren-buffet-and-ignoring-science/">a post</a> summarized a lecture given by Dr Otis Brawley, chief medical officer of the American Cancer Society in which Dr Brawley described the financial scheme underlying the aggressive approach to prostate cancer,<br /><br /><br /><blockquote class="tr_bq">Brawley recounts an experience he had on a site visit to a hospital in 1998 while an Assistant Director at the National Cancer Institute. During the visit a marketing executive explains to Brawley the publicity value and financial rewards of a free prostate screening program offered by the hospital at a local mall. The plan is to screen the first 1,000 men over 50 who come to the mall for testing. I’ve transcribed Brawley’s recollections from the video and they provide a great explanation for the profit-driven practices that continue to occur today, 14 years later:<br /><br /> <em>'If they screen 1,000 men they’re going to have 145 abnormals. They’re going to charge about $3,000 to figure out what is abnormal about these abnormals, that’s how they pay for the free screening. About 10 of the 145 won’t come to this hospital so that’s business for their competitors, but they’ll get 135 times $3,500 on average. Of the 135, 45 are going to die of prostate cancer and the other percentage are going to get radical prostatectomy at about $30-40,000 a case; there’s a percentage that’s going to get seeds at about $30,000 a case; a percentage were going to get radiation therapy that (at the time) was about $60,000. Then [the marketing executive’s] business plan goes further, he knows how many guys are going to have so much incontinence that diapers aren’t going to do it so he had in his business plan how many artificial sphincters urologists were going to implant. And then he was a little apologetic because there was this new thing called Viagra that screwed up his estimates for how many penile implants he was going to sell because guys were upset about impotence related to prostate cancer treatment.'</em><br /> <br /><em>Brawley says, 'this is 1998, I ask him, if you screen 1,000 people how many lives are you going to save? He took off his glasses and looked at me like I was some kind of fool and said, ‘Don’t you know, nobody’s ever shown that prostate cancer screening saves lives, I can’t give you an estimate on that.’'</em></blockquote><br />Presumably because he was a marketing executive, the manager whom Brawley quoted did not have to feel doubt about all the men subjected to needless procedures, and who would be at risk of serious and unpleasant adverse effects of these procedures, all to make money but not to prolong their lives.  Of course, not only the hospitals make money, but also quite obviously the companies that sell them the drugs and devices needed for all this medical aggression make money, as do the doctors who go along with it all. <br /><br />Now we suspect that one small reason the doctors have gone along with it is that they may have gotten inducements from those companies.<br /><br />Time to fulminate,...<br /><br />We will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich. <br /><br /><b>References</b><br /><br />1.  Wilt TJ, Brewer MK, Jones KM et al.  Radical prostatectomy versus observation for localized prostate cancer.  N Engl J Med 2012; 367: 203-13.  [Link <a href="http://www.nejm.org/doi/full/10.1056/NEJMoa1113162">here</a>]<br />2.  Andriole GL, Crawford ED, Grubb RL et al.  Mortality results from a randomized prostate-cancer screening trial.  N Engl J Med 2009; 360: 1310-9. [Link <a href="http://www.nejm.org/doi/full/10.1056/NEJMoa0810696">here</a>]<br />3.  Schroder FH, Gugosson J, Roobl MJ et al.  Screening and prostate-cancer mortality in a randomized European study.  N Engl J Med 2009: 360: 1320-8.[Link <a href="http://www.nejm.org/doi/full/10.1056/NEJMoa0810084">here</a>]<br /><br /><br /><br /><div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"><br />Read more here: http://www.macon.com/2013/05/14/2478611/medical-company-agrees-to-pay.html#storylink=cp</div><br />

C R Bard Settles Allegations of Kickbacks to Promote Radiation Treatment for Prostate Cancer

Screening for and aggressive treatment of prostate cancer has become an enormously lucrative business, if not necessarily a life-saving medi...

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Six Years Later, Ranbaxy - Oops, Daiichi Sankyo - Pleads Guilty to Adulteration, Pays $500 Million

It only took until 2013, but the US Food and Drug Administration finally secured guilty pleas and fines.  The basics are in an Associated Press story (<a href="http://www.washingtonpost.com/business/subsidiary-of-indian-drug-maker-agrees-to-pay-record-500-million-us-penalty-for-impure-drugs/2013/05/13/2d586104-bc33-11e2-b537-ab47f0325f7c_story.html">via the Washington Post</a>):<br /><br /><blockquote class="tr_bq"> A subsidiary of India’s largest pharmaceutical company has <i>agreed to pay a record $500 million in fines and penalties for selling adulterated drugs and lying to federal regulators</i> in a case that is part of an ongoing crackdown on the quality of generic drugs flowing into the U.S.<br /><br />Federal prosecutors say the guilty plea by Ranbaxy USA Inc. represents the <i>largest financial penalty against a generic drug company for violations of the Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.</i></blockquote><br />Note that the company pleaded guilty to criminal charges. <br /><br /><blockquote class="tr_bq"> The subsidiary of Ranbaxy Laboratories Limited <i>pleaded guilty to federal criminal charges </i>and the company separately agreed to resolve civil claims with all 50 states and the District of Columbia. The company had earlier set aside $500 million to cover potential criminal and civil liability stemming from the Justice Department investigation.<br /><br />It admitted as part of the deal that it sold adulterated batches of drugs — including an antibiotic and generic versions of medications used to treat severe acne, epilepsy and nerve pain — that were developed at two manufacturing sites in India. </blockquote><br /><b>Ironies</b><br /><br />Note that this resolution has certain ironies.<br /><br /><u>Lateness</u><br /><br />There is a saying that justice delayed is justice denied.  Note that it took six years to obtain the guilty pleas.  As noted by the AP,<br /><br /><blockquote class="tr_bq"> The problems were largely<i> revealed by a whistleblower in a federal lawsuit filed in Maryland in 2007.</i> </blockquote><br /><u>Ambiguities about Responsibility</u><br /><br />First, note that while all the headlines are about Ranbaxy, Ranbaxy is not really an independent company.  As<a href="http://www.reuters.com/article/2013/05/13/us-ranbaxy-settlement-idUSBRE94C0PT20130513"> reported</a> by Reuters (and only by Reuters so far as I can tell at this time),<br /><br /><blockquote class="tr_bq"><i>Ranbaxy ... [is] majority-owned by Japan's Daiichi Sankyo.</i></blockquote><br />Second, as per the AP, see the comment made by the Ranbaxy CEO,<br /><br /><blockquote class="tr_bq">'While <i>we are disappointed by the conduct of the past </i>that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy’s stakeholders; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance,' Ranbaxy CEO and managing director Arun Sawhney said in a statement.</blockquote><br />Maybe there was something lost in translation, but the CEO certainly spoke as if someone else was responsible for the "conduct of the past."  Incidentally, it does not appear that so far any journalist has even sought comment from the people really in charge, at Daiichi Sankyo.<br /><br />Third, just like many other cases we have reported before, no individual, especially anyone who authorized, directed, or implemented the bad behavior, was held legally responsible.  The cost of the fines will no doubt be spread among the corporate structures involved.  Since a company pleaded guilty, no individual pays a fine, much less goes to jail. <br /><br />It does appear that when the settlement was first announced in 2011, a cut in compensation for top executives of Daiichi Sankyo was announced, but the cuts were temporary, and apparently in response to the immediate financial consequences of the settlement, not any larger implications.  See Bloomberg's <a href="http://www.bloomberg.com/news/2011-12-21/daiichi-sankyo-lowers-executive-pay-after-500-million-ranbaxy-settlement.html">report</a>:<br /><br /><blockquote class="tr_bq"> Chief Executive Officer Joji Nakayama and board members will receive <i>5 percent to 30 percent less compensation for six months</i> in response to the cut in the earnings forecast, Daiichi Sankyo said today. The company has lost about half its market value since agreeing to buy a majority stake in Ranbaxy, India's largest drugmaker, in June 2008. </blockquote><br /> <u>The Contrast with the Case of the Adulterated Heparin</u><br /><br />Note that in this case, there have been no allegations that patients were harmed by the admitted adulteration,  Per the AP:<br /><br /><blockquote class="tr_bq"> It’s not known whether the problems with the drugs led to any health issues.... The government’s allegations against the company make no claims that the drugs, whose strength, purity or quality differed from the specifications, harmed anyone.</blockquote><br /><br />In 2008, we <a href="http://hcrenewal.blogspot.com/2008/02/heparin-made-out-of-pigs-from-elsewhere.html">began </a>blogging about how  US patients started to get sick and die after being infused with heparin, the common anti-coagulant drug. As we have discussed repeatedly  (look <a href="http://hcrenewal.blogspot.com/search/label/heparin">here</a>, and see the summary at the end of the post), Baxter International was selling contaminated heparin under its label which was made in unregulated workshops in China, and then transmitted through a complex chain of Chinese and US companies. <br /><br />The AP article stated,<br /><br /><blockquote class="tr_bq"> The case comes as federal regulators and prosecutors focus attention on the quality of ingredients of generics and other drugs manufactured overseas, said Allan Coukell, an expert on drug safety at The Pew Charitable Trusts. He said the <i>2008 deaths linked to tainted batches of the blood-thinner heparin that were imported from China </i>served as a 'wake up call' about just how much of the nation’s drug supply comes from overseas.</blockquote><br />So perhaps this wake up call helped propel the current case against Ranbaxy, that is, Daiichi Sankyo.  However, since 2008, if there has been a criminal investigation of the tainted heparin, which appears to have been much more consequential, sometimes fatally so, to patients, the results have not been made public.  A cynic might note that the contaminated heparin was sold by a US based manufacturer of branded pharmaceuticals, not a foreign based manufacturer of generic drugs. <br /><br /><b>Summary </b><br /><br />The most fundamental obligation of a drug company is to produce pure, unadulterated drugs.  The first attempts to regulate the drug industry in the US were meant to ensure that these companies fulfilled this obligation.  Yet now there is increasing evidence that the contemporary pharmaceutical industry has trouble with this most basic responsibility. <br /><br />As we discussed <a href="http://hcrenewal.blogspot.com/2012/09/who-really-makes-brand-name.html">here</a>, the managers of pharmaceutical companies have been swept up in a dominant business management fad, <a href="http://hcrenewal.blogspot.com/search/label/outsourcing">outsourcing</a>, as a means to cut costs to the bone.  (It seems that most health care managers are also caught up in the larger rage for <a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>, to emphasize short term revenue over all other concerns, including patients' and the public's health.)  As the New York Times <a href="http://www.nytimes.com/2013/05/14/business/global/ranbaxy-in-500-million-settlement-of-generic-drug-case.html">reported  </a>re the Ranbaxy case,<br /><br /><br /><blockquote class="tr_bq"><div itemprop="articleBody">Others say the company’s problems highlight how <i>little oversight federal drug safety officials have of overseas plants.</i> Studies that have shown the F.D.A. inspects foreign generic manufacturing plants about <a href="http://www.fda.gov/RegulatoryInformation/Legislation/FederalFoodDrugandCosmeticActFDCAct/SignificantAmendmentstotheFDCAct/FDASIA/ucm310992.htm" title="The F.D.A.’s statement on the issue.">once every seven to 13 years</a>, compared with once every two years for domestic manufacturers. A law passed last year will eventually require the F.D.A. to apply the same standards when inspecting all manufacturing plants, regardless of location. But some worry that <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/f/federal_budget_us/index.html?inline=nyt-classifier" title="Recent and archival news about the federal budget.">federal budget</a> cuts are <i>slowing the adoption of that law. </i></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">'They just happened to stumble across the Ranbaxy problem at those two plants in India,' said Joe Graedon, a pharmacologist who runs a consumer Web site, <a href="http://www.peoplespharmacy.com/" title="The Web site.">the People’s Pharmacy</a>, which has raised questions about the safety of generic drugs. 'Ranbaxy was the biggest and one of the best in India. What about all the smaller ones? What does that say about them?' </div></blockquote><br /><a href="http://hcrenewal.blogspot.com/2012/09/who-really-makes-brand-name.html">Again,</a> all pharmaceutical companies, not just generic drug manufacturers, have seen fit to outsource much, if not most of their production.<br /><br />In our rush to market fundamentalism, we seem to have deregulated, at least de facto, most aspects of health care.  We now cannot trust the drugs we take to have been made by the companies whose labels they bear, or to be pure.  We now cannot trust that regulators will find that out, or having found that out, will do anything about it in a timely manner.  <br /><br />To repeatedly reiterate, as long as the leaders of health care organizations are not held accountable for the results of their decisions on health care quality, cost, and access (even in such extreme quality violations as those resulting in multiple patient deaths), we can expect continuing decisions that sacrifice quality, increase costs, and worsen access, but that are in the self-interest of the people making them.<br /> <br />To really reform health care, we must hold health care organizations and their leaders accountable (and not blame all the problems on doctors, other health care professionals, patients, and society at large).<br /><br />- Roy M. Poses MD for Health Care Renewal  <br /><br /><br /><span style="color: blue; font-size: xx-small;">Appendix - Heparin Case Summary</span><br /><br /><span style="color: blue; font-size: xx-small;">- We have posted several times, recently <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a></span><span style="color: blue; font-size: xx-small;"> about the tragic case of suddenly allergenic heparin. Although heparin, an intravenous biologic anti-coagulant, has been in use for over 70 years, serious allergic reactions to it had heretofore been rare. Starting late in 2007, hundreds of such reactions, and 21 deaths were reported in the US after intravenous heparin infusions.All the heparin related to these events in the US was made by Baxter International.</span><br /><br /><span style="color: blue; font-size: xx-small;">- We then learned that although the heparin carried the Baxter label, it was not really made by Baxter. The company had outsourced production of the active ingredient to a long, and ultimately mysterious supply chain. Baxter got the active ingredient from a US company, Scientific Protein Laboratories LLC, which in turn obtained it from a factory in China operated by Changzhou SPL, which in turn was owned by Scientific Protein Laboratories and by Changzhou Techpool Pharmaceutical Co. Changzhou SPL, in turn, got it from several consolidators or wholesalers, who in turn got it from numerous small, unidentified "workshops," which seemed to produce the product in often primitive and unsanitary conditions. None of the stops in the Chinese supply chain had apparently been inspected by the US Food and Drug Administration nor its Chinese counterpart. (See posts <a href="http://hcrenewal.blogspot.com/2008/02/in-middle-of-all-those-pigs-in-china.html">here</a> and <a href="http://hcrenewal.blogspot.com/2008/03/heparin-in-era-of-hogwash.html">here</a>.)</span><br /><br /><span style="color: blue; font-size: xx-small;">- We found out that the Baxter International labelled heparin was contaminated with over-sulfated chondroitin sulfate, a substance not found in nature, but which mimics heparin according to the simple laboratory tests used in the Chinese facilities to check incoming heparin. (See post </span><a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.) Further testing revealed that the contamination seemed to have taken place in China prior to the provision of the heparin to Changzhou SPL. (See post </span><a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.) It is not clear whether Baxter International or Scientific Protein Laboratories had inspected most of the steps in the supply chain, or even knew what went on there.</span><br /><br /><span style="color: blue; font-size: xx-small;">- The Baxter and Scientific Protein Laboratories CEOs did not seem aware of where they got the heparin on which the Baxter International label was eventually affixed. But one report in the New York Times alleged that Scientific Protein Laboratories would not pay enough for heparin to satisfy any sources other than the small "workshops."</span><br /><span style="font-size: xx-small;"><br /><span style="color: blue;"></span></span> <span style="color: blue; font-size: xx-small;">- Leaders of all organizations involved, Baxter International, Scientific Protein Laboratories, Changzhou SPL, the Chinese government, and the US Food and Drug Administration, and the US Congress assigned blame to each other, but none took individual or organizational responsibility. (See post </span><a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post </span><a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).</span><br /><br /><span style="color: blue; font-size: xx-small;">- Researchers (who turned out to have financial ties to a company which is developing an anti-coagulant drug that could compete with the heparin made by Baxter International) investigated the biological mechanisms by which the contamination of the heparin lead to adverse effects, but no one investigated further how the contamination occurred, or who was responsible. (See post </span><a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post </span><a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post </span><a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).</span><br /><br /><span style="color: blue; font-size: xx-small;">- A government report which attracted little attention warned of the dangers of pharmaceutical ingredients made in China and subject to virtually no oversight. (See post </span><a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post </span><a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  In February, 2011, a congressional investigation of the case was announced, but results are so far unavailable (see post <a href="http://hcrenewal.blogspot.com/2011/02/three-years-later-congressional.html">here</a>.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  In June, 2011, a jury returned the first verdict in a civil case about the contaminated heparin, awarding money from Baxter International and Scientific Protein Laboratories to the estate of a man who apparently died due to tainted heparin (see post <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a>).</span><br /><br /><span style="color: blue; font-size: xx-small;">-  If there was a criminal investigation of the case, its results have not yet appeared.  </span>

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