A Legal Settlement of One Aspect of the Fall of AHERF, Only 15 Years Later

It only took 15 years, but litigation related to one of the most important, but obscure cases of bad health care leadership and governance from the 1990s was finally settled.   <br /><br /><b>Background </b><br /><br />The Allegheny Health Education and Research Foundation (AHERF) was a large integrated health care system formed out of multiple mergers.  AHERF went bankrupt in 1998, leading to massive layoffs, hospital closures, and the near dissolution of a medical school (which ended up taken over by Drexel University).  We last discussed the case in 2012 <a href="http://hcrenewal.blogspot.com/2012/04/pittsburgh-experiment-ii-another-echo.html">here</a>.. A summary of other important points about it is appended below.  <br /><br />As we <a href="http://hcrenewal.blogspot.com/2008/07/10-years-later-eerie-echo-of-fall-of.html">noted</a> in 2008, although the AHERF bankruptcy appears to be the largest failure of a not-for-profit health care corporation in US history, its story has produced remarkably few echoes for doctors, other health care professionals, health care researchers, and health policy makers. I often use the fall of AHERF as an example in talks, at least the few talks I am allowed to give on such unpleasant subjects. Rarely have more than a few people in the audience heard of AHERF prior to my discussion of it.<br /><br />I only could locate <a href="http://content.healthaffairs.org/cgi/reprint/19/1/7.pdf">one article </a>in a medical or health care journal that discussed the case in detail, but was written too early to address it very completely [Burns LR, Cacciamani J, Clement J, Aquino W. The fall of the house of AHERF: the Allegheny bankruptcy. Health Aff (Millwood) 2000; 19: 7-41.]  I doubt the case is used for teaching in most medical or public health schools, although it.was a formative influence on my <a href="http://www.ncbi.nlm.nih.gov/pubmed/12719032">2003 article</a> on health care dysfunction [Poses RM. A cautionary tale: the dysfunction of American health care. Eur J Int Med 2003; 14: 123-130] and on this <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> blog.  (A book about the case, Merger Games, by Judith Swazey, was published in 2012, and is available <a href="http://muse.jhu.edu/books/9781439907191">here</a> as  a set of PDF files from Project Muse for those with the proper password, but it has not yet had much of an impact, and I confess I have not yet read it.)  The lack of discussion of such a significant case is a prime example of the <a href="http://hcrenewal.blogspot.com/2007/08/bling-bling-poltical-correctness-and.html">anechoic effect</a>.  <br /><br /><b>One Legal Settlement, 15 Years Later, for a Secret Amount</b><br /><br />But a brief echo of the case did appear in a brief <a href="http://triblive.com/news/allegheny/3875012-74/aherf-settlement-creditors">article</a> in the Pittsburgh Tribune Review published in April, 2013: <br /><br /><blockquote class="tr_bq"><div class="News-body-text"> Lawyers would not say Tuesday how much money an accounting firm will pay to <i>settle a 13-year-old lawsuit claiming it helped destroy one of the state's largest health care systems</i>. </div><div class="News-body-text"><br /></div><div class="News-body-text"> 'It will result in a very significant recovery,' James Jones, one of the lawyers representing the unsecured creditor of the Allegheny Health Education and Research Foundation, said during a settlement hearing in Pittsburgh federal court. </div><div class="News-body-text"><br /></div><div class="News-body-text"><i>The creditors in 2000 sued Coopers & Lybrand LLP, the predecessor of PricewaterhouseCoopers LLP, claiming that if auditors in 1996 and 1997 had informed AHERF's board about the foundation's true financial condition, it would have acted to avoid a bankruptcy that resulted in huge losses.</i> The foundation's assets included the Allegheny General Hospital system. </div></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br />It seems only fitting, given how anechoic this case has been, that much about this settlement remains obscure,</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"><div class="News-body-text"> U.S. District Judge David Cercone, in a joint session with U.S. Bankruptcy Judge Judith Fitzgerald, approved the settlement with PricewaterhouseCoopers. </div><div class="News-body-text"><br /></div><div class="News-body-text"> The company disputes the method the committee used to calculate losses and denies liability in the settlement. </div><div class="News-body-text"><br /></div><div class="News-body-text">Joseph McDonough, a lawyer for PricewaterhouseCoopers, agreed the settlement amount is significant. He and Jones declined comment. </div><div class="News-body-text"><br /></div><div class="News-body-text">Jones said during the hearing that a trial could have lasted 40 days. Preparation for the case generated more than 200 depositions, 19 expert opinions and more than a million documents, he said. </div><div class="News-body-text"><br /></div><div class="News-body-text">The committee sent more than 3,500 notices to creditors about the proposed settlement, and none objected, he said. </div><div class="News-body-text"><br /></div><div class="News-body-text"><i>Both sides agreed to keep the amount secret</i>, and they discussed with Fitzgerald how to avoid releasing the amount in filings for related bankruptcy action. </div></blockquote><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;"></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Maybe if the case had somehow generated more echoes, health care professionals and policy makers, and patients and the public at large might have learned some of its lessons.  The story of AHERF is not merely that of an unlucky bankruptcy. It shows what can go wrong when health care is taken over by <a href="http://hcrenewal.blogspot.com/search/label/generic%20managers">generic managers</a> who adapt the latest management fads, and health care decision making is ruled by <a href="http://hcrenewal.blogspot.com/search/label/marketing">marketing</a>, <a href="http://hcrenewal.blogspot.com/search/label/public%20relations">public relations</a> and <a href="http://hcrenewal.blogspot.com/search/label/propaganda">propaganda</a> instead of evidence and logic, and allows power to be <a href="http://hcrenewal.blogspot.com/search/label/concentration%20of%20power">concentrated</a> in organizations run by<a href="http://hcrenewal.blogspot.com/search/label/imperial%20CEO"> imperial CEOs</a>.  .</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;">We did not get a chance to learn this history, so we seem bound to repeat it.   </div></div><br /><span style="font-size: x-small;"><b>Appendix</b></span><br /><span style="font-size: x-small;"><br /></span><span style="font-size: x-small;">Some important points about AHERF not found above (see also <a href="http://www.acponline.org/chapters/ri/nl-fall04.pdf">this narrative</a>, starting on page 5):</span><span style="font-size: x-small;"><br /></span><br /><ul><li><span style="font-size: x-small;">AHERF, one of the largest health care systems of its day, was built by the poster-boy for health care imperial CEOs, Sherif Abdelhak.</span></li><li><span style="font-size: x-small;">Abdelhak, who <a href="http://www.post-gazette.com/aherf/part2.asp">started as food services purchasing manager </a>at Allegeheny General Hospital, was repeatedly hailed as a "<em>visionary</em>" (<a href="http://www.acponline.org/journals/news/mar97/phillymc.htm">in the March, 1997, ACP Observer</a>) a "genius," and the like. His plans to create a huge integrated health care system were part of the wave of the future. Abdelhak was even invited to give the prestigious John D Cooper lecture at the annual meeting of the American Association of Medical Colleges (AAMC), which was published in Academic Medicine [Abdelhak SS. How one academic health center is successfully facing the future. Acad Med 1996; 71: 329-336.] He proclaimed that "we will need to create new forms of organization that are more flexible, more adaptive, and more agile than ever before." And he announced that "my aim as chief executive has been to unleash the creativity and productive potential of every individual and to provide an environment that encourages teamwork" </span></li><li><span style="font-size: x-small;">While Abdelhak was making these grandiose promises, he paid himself and his associates very well. For example, he received $1.2 million in the mid-1990s, more than three times the average then for a hospital system CEO. He lived in a hospital supplied mansion worth almost $900,000 in 1989. Five of AHERF's top executives were in the top 10 best paid hospital executives in Philadelphia.</span></li><li><span style="font-size: x-small;">Although Abdelhak talked of teamwork, he warned the combined faculty of the new Allegheny University of the Health Sciences (AUHS): <a href="http://www.post-gazette.com/aherf/part6.asp">"Don’t cross me or you will live to regret it."</a></span></li><li><span style="font-size: x-small;">As AHERF was hemorrhaging money, Abdelhak continued to pay himself and his cronies lavishly.</span></li><li><span style="font-size: x-small;">After the AHERF bankruptcy, which was at the time the second largest bankruptcy recorded in the US, Abdelhak was charged with numerous felonies involving receiving charitable assets. In a plea bargain, <a href="http://www.post-gazette.com/localnews/20020830abdelhak0830p4.asp">he pleaded no contest </a>to misusing charitable funds, a misdemeanor, and was sentenced to more than 11 months in county prison.</span></li></ul>Posted by Roy M. Poses MD to the Health Care Renewal blog

A Legal Settlement of One Aspect of the Fall of AHERF, Only 15 Years Later

It only took 15 years, but litigation related to one of the most important, but obscure cases of bad health care leadership and governance f...

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Is the Cystic Fibrosis Foundation a Charity or a Venture Capital Firm?

We have often discussed how health care organizations now seem prone to diversion from their stated missions, often when money is the object.  While the organizations in question are frequently academic, teaching hospitals, academic medical centers, or medical schools in particular, in May, the Milwaukee Journal Sentinel <a href="http://www.jsonline.com/watchdog/watchdogreports/charitys-investment-a-prescription-for-profits-for-drug-maker-p79tfc9-208027961.html">presented</a> an example of a disease specific charity.  This article deserves considerably more attention than it apparently initially received.<br /><br /><b>Background </b><br /><br />The background was,<br /><br /><blockquote class="tr_bq">What happens when <i>a disease-fighting charity dives into venture capitalism</i>?<br /><br />In the first case of its kind, <i>the results include one of the planet's most expensive pills, huge sales projections for a drug company and windfalls for executives</i> who sold stock in the glow of enthusiastic news releases about the drug.<br /><br />Kalydeco is a breakthrough drug designed from knowledge of the genetic roots of cystic fibrosis, a lung disease that kills most victims before they reach middle age. Developed by Vertex Pharmaceuticals with a $75 million investment from the Cystic Fibrosis Foundation, it is an early example of '<i>venture philanthropy,' where a nonprofit helps finance development of a treatment in return for a cut of sales.</i></blockquote><br />Remember that while disease specific charities often sponsor basic and clinical research, in this case, the CFF sponsored drug development.  In fact, much of the research on which this development was based was sponsored by charities and the US National Institutes of Health:<br /><br /><br /><blockquote class="tr_bq">In the 1980s, Francis Collins, now director of the National Institutes of Health, was a researcher at the University of Michigan and on his way to becoming a renowned gene hunter.<br /><br />Collins and a team headed up by Lap-Chee Tsui at the Hospital for Sick Children in Toronto collaborated to identify the gene responsible for cystic fibrosis. That breakthrough involved funding from the NIH, the Cystic Fibrosis Foundation and the Howard Hughes Medical Institute, said Collins.<br /><br />Another decade of intense basic science followed, much of it funded by NIH.</blockquote><br /><b>The Price to Patients</b>  <br /><br />Despite, or perhaps because of the funding provided by CFF, Vertex chose a stratospheric price for its new drug.<br /><br /><blockquote class="tr_bq"> Yet<i> it costs each patient $307,000 a year to take two Kalydeco pills a day</i> - a price borne by taxpayers through Medicaid and other government programs and by the workers and companies who finance employee health insurance plans.<br /><br />In 2012, with less than a full-year on the market, Vertex sold $172 million worth of Kalydeco....</blockquote><br />To put that in perspective, the yearly cost of Kalydeco is approximately six times the median family income in the US. <br /><br /><br /><b>Minimizing the Harms</b> <br /><br />To put it further into perspective, keep in mind that for the moment, the data from the single best published clinical trial on Kalydeco suggests that while the drug seems to help the average patient, it is not without risks, and it is certainly not a cure. <br /><br />The largest published trial that followed patients for a reasonable amount of time appeared in 2011 in the New England Journal of Medicine.  [Ramsey BW, Davies J, McElvaney G et al.  A CFTR potentiator in patients with cystic fibrosis and the G551D mutation. N Engl J Med 2011; 365: 1663-1672.  Link <a href="http://www.nejm.org/doi/full/10.1056/NEJMoa1105185">here</a>.]  The study followed 161 patients for 48 weeks.  The patients treated with Kalydeco on average showed improved lung function (increase of FEV1 [forced expiratory volume in one second] of 10% compared to essentially no change (-0.2 percent) in the placebo group.  Treated patients were less likely to have an exacerbation of their pulmonary disease requiring hospitalization (31% vs 49%).  So the drug certainly seems to have benefits at least in the short term.  The number needed to treat to prevent one exacerbation requiring hospitalization in one year is five, which seems quite respectable.<br /><br />On the other hand, the drug may have significant harms, even thought the report of the study seems to have attempted to minimize them.  The article stated<br /><br /><blockquote class="tr_bq">there was a lower rate of serious adverse events in the ivacaftor [Kalydeco] group than in the placebo group (24% vs 42%).   </blockquote><br />However, this statement depended on a rather peculiar definition of severe adverse events.  In particular, pulmonary exacerbations of cystic fibrosis were included among severe adverse events.  Yet these are, as the term suggests, manifestations of the disease that is being treated.  Reduction of pulmonary adverse events should be and was considered a measure of efficacy.  So placing exacerbations within the definition of adverse events essentially double counts these incidents.  <br /><br />Furthermore, the presence of these within the category of adverse events swamps out other events which may in fact be adverse results of the study drug.  If one subtracts pulmonary exacerbations and hemoptysis from the counts of serious adverse events, what remains is that patients on Kalydeco were more likely to have a serious adverse event (10%) than those on placebo (4%).  Thus the apparent number needed to harm was 17.  Thus, using this peculiar definition of adverse events appears to be a way to <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulate the analysis</a> to minimize the apparent harmfulness of the drug. <br /><br />While the study did appear to show that more patient received the benefit of avoiding a hospitalization due to a pulmonary exacerbation of cystic fibrosis than had a serious adverse event, the study did not show that the drug had overwhelming efficacy, or tremendous safety.   The study did not last long enough to show long term advantages, or to rule out rare but severe side effects.<br /><br />This is the only drug available of this type, and it may well provide benefits that outweigh harms, at least over the short-term, but it is not a wonder drug, and the rationale to charge so much money for it, other than that is what the market will bear, is not obvious.   <br /><br /><b>A Windfall for Corporate Executives, and a Question of Insider Trading</b><br /><br />The drug's approval has lead to a lot of financial success for stock holders, particularly Vertex executives:<br /><br /><blockquote class="tr_bq"> Last month, news about success of the drug sent Vertex stock soaring more than $6 billion in a single day. That surge and a similar one last May <i>allowed top executives and directors of the company to sell stock and options worth more than $100 million</i>.</blockquote><br />The executives' lavish windfall occurred in somewhat questionable circumstances:<br /><br /><blockquote class="tr_bq">Vertex and its executives have benefited greatly from Kalydeco and foundation funding.<br /><br />Last May, when <a href="http://investors.vrtx.com/releasedetail.cfm?ReleaseID=670755" target="_blank">Vertex</a> and the <a href="http://www.cff.org/aboutCFFoundation/NewsEvents/2012NewsArchive/5-7-Phase-2-Kalydeco-VX-809-Interim-Data-Results.cfm" target="_blank">foundation</a> reported positive results from a clinical trial involving Kalydeco and whether it could be combined with another drug to treat more patients, the company's stock jumped more than 70%, from $37.41 to $64.85 a share.<br /><br /><i>Five executives and two directors sold off more than <b>$35 million</b> in shares,</i> mainly at prices from about $55 to $64 a share. Many of the options were priced between $16 and $40 a share.<br /><br />Three weeks later, the <a href="http://investors.vrtx.com/releasedetail.cfm?ReleaseID=677520" target="_blank">company said it overstated</a> the effectiveness of the drug in that trial and the stock dropped about $7 a share, ultimately falling back under $40 by December.<br /><br />Vertex spokeswoman Nikki Levy said in an email the company does not comment on individual stock sales.  She said the executive stock sales either were part of pre-existing 10b5-1 plans or followed the company's internal stock trading policy. A 10b5-1 plan is an automatic trading tool in which executives specify timing or pricing of sales to avoid questions about inside information the seller had at the time.<br /><br />U.S. Sen. Chuck Grassley (R-Iowa) <a href="http://www.grassley.senate.gov/about/upload/2012-06-07-CEG-to-SEC-Vertex.pdf" target="_blank">wrote a letter</a> to the U.S. Securities and Exchange Commission, saying<i> it could appear that Vertex executives took advantage of the situation, knowing the overstated clinical trial results would eventually be made public and cause the stock price to drop.</i><br /><br />The letter said the stock sales were troubling for industry investors and the federal government, which pays billions of dollars a year for drugs through Medicaid and Medicare.<br /><br />Judith Burns, a spokeswoman for the SEC, declined to comment on the Grassley letter.<br /><br />Last month, the company's stock shot up more than 60% again, from $52.87 to $85.60, after <a href="http://investors.vrtx.com/releasedetail.cfm?ReleaseID=757597" target="_blank">positive early data</a> from a clinical trial of Kalydeco and another drug it is developing with funding from the foundation. On April 19, the day after the news was released, the company's market value jumped by more than $6 billion.<br /><br />That same day, <i>two company executives sold huge chunks of stock options. Executive Vice President and Chief Financial Officer Ian Smith alone sold 745,685 shares worth more than <b>$60 million</b>.</i> Most shares were sold at $81.50, with options purchased from $29 to $39.</blockquote><br />So at least Senator Grassley raised the question of whether Vertex executives may have taken advantage of their insider knowledge to personally profit even more from this useful but not miraculous drug meant to be used on vulnerable patients.<br /><br />Keep in mind that those huge trading gains were layered on top of already lavish compensation.  The 2013 Vertex <a href="http://investors.vrtx.com/secfiling.cfm?filingID=875320-13-13&CIK=875320">proxy statement</a>, the total compensation and stock holdings of its top executives in 2012 was:<br /><br />Jeffrey M Leiden, CEO                               <b><i> $</i></b><span style="font-family: INHERIT; font-size: 8PT;"><b><i>5,656,684 </i></b>     441,160 shares</span><br /><span style="font-family: INHERIT; font-size: 8PT;">Ian F Smith, CFO                                          <b><i> $3,109,193</i></b>      795,434</span><br /><span style="font-family: INHERIT; font-size: 8PT;">Stuart A Arbuckle, Chief Commercial Officer   <b><i>$4,808,697</i></b>         66,477</span><br /><span style="font-family: INHERIT; font-size: 8PT;">Kenneth L Horton, Chief Legal Officer             <b><i>$2,802,735</i></b>         41,161</span><br /><span style="font-family: INHERIT; font-size: 8PT;">Peter Mueller, Chief Scientific Officer              <b><i>$3,614,890</i></b>        997,651</span><br /><span style="font-family: INHERIT; font-size: 8PT;">Matthew W Emmens, Former CEO                  <b><i>$6,896,029</i></b>    1,486,748</span><br /><span style="font-family: INHERIT; font-size: 8PT;">David T Howton Jr, Fomer Chief Legal Officer <b><i>$3,447,898</i></b>           3,105</span><br /><span style="font-family: INHERIT; font-size: 10PT;"></span><br /><br /><br />So the top executives of Vertex, while their company got $75 million from an ostensible charity to develop what became an extremely expensive drug, got very rich in the process, although how they got rich may yet attract attention from the SEC.<br /><br /><b>A Windfall for the Cystic Fibrosis Foundation and its Executives</b><br /><br />Furthermore, it appears that the supposedly charitable Cystic Fibrosis Foundation also made quite a bit of money, and its executives, while not getting quite as rich as their associates in Vertex, did not do at all badly.<br /><br />As the Journal Sentinel noted,<br /><br /><blockquote class="tr_bq"><i>the foundation cashed in by selling future royalties</i> from the drug to an undisclosed firm for <i><b>$150 million</b>.</i></blockquote>Keep in mind that since the CFF was to receive royalties, the money it gave for drug development was not a grant, but an investment.<br /><br />Furthermore, according to the Foundation's 2011 form 990 (the latest available), its executives received the following total compensation from the foundation and its affiliated organizations:<br /><br />Robert J Beall, CEO                                                      <b><i>$1,073,725</i></b><br />C Richard Mattingly, COO                                              <b><i>$759,799</i></b><br />Preston W Campbell MD, Exec VP of Medical Affairs     <b><i>$736,031</i></b><br />Vera H Twigg, CFO                                                         <b><i>$445,183</i></b><br />Ann Palmer, Senior VP                                                     <b><i>$276,029</i></b>  <br />Daniel Klein, Senior VP                                                    <b><i>$277,300</i></b><br />Gregory August, CIO                                                       <b><i>$262,698</i></b><br />David McLoughlin, Senior VP                                          <b><i>$316,122</i></b><br />Glen Goldmark, VP                                                          <b><i>$253,215</i></b><br />Amy DeMaria, Senior VP                                                 <b><i>$241,672</i></b><br />Mary Dwight, Senior VP                                                   <b><i>$246,232</i></b><br /><br />These compensation amounts may be much lower than the gargantuan pay dealt out to for-profit health care corporate executives, but they are very high for those who are managing a supposed charity meant to help vulnerable patients.<br /><br /><b>A More Complex Web</b><br /><br />While profiting from its underwriting of the development of Kalydeco, the CFF also sponsored guidelines about the treatment of cystic fibrosis, with not unexpected results.<br /><br /><blockquote class="tr_bq">Last month, new treatment guidelines for doctors who handle cystic fibrosis patients strongly recommended use of Kalydeco. The guidelines were funded by the Cystic Fibrosis Foundation.<br /><br /><i>Three of the 10 authors of the guidelines were employees of the foundation and four others worked for institutions that received grants from the foundation</i>. The chairman, Peter Mogayzel, is a professor of pediatrics at Johns Hopkins University, which foundation tax records show received more than $2 million in grants from 2009 through 2011.</blockquote>These guidelines hardly look like they would be deemed trustworthy according to the Institute of Medicine's standards (look <a href="http://hcrenewal.blogspot.com/2012/11/what-if-institute-of-medicine-wrote.html">here</a>).  However, they certainly look like they might help sell ivacaftor, and hence help justify higher pay for the executives listed above.<br /><br /><b>Criticism of Venture Philanthropy</b><br /><br />Merriam-Webster online <a href="http://www.merriam-webster.com/dictionary/charity">suggests</a> one definition of a charity is an institution funded by a gift for public benevolent purposes.<br /><br />The Cystic Fibrosis Foundation appears to be such a charity, but now one that functions more as a venture capitalist.  In this case, it did provide venture capital to develop a new drug for its disease of interest.  However, the foundation appeared to have done so not to provide public benevolence, but to generate a  return on its investment.  It is using that return not for public benevolence, but to provide more venture capital to other drug companies, presumably with the goal of getting further returns.  Meanwhile, its executives make generous compensation for people who are supposed to be running a charity.  Finally, the drug has an astronomical price, and its pricing has helped make investors in and executives of the company supported by the CFF very rich. <br /><br />This has not been lost on some dissidents, per the Journal Sentinel,<br /><br /><blockquote class="tr_bq">'The concept of a charitable, not-for-profit taking on the role of a venture capitalist is new and difficult to digest at the moment,' said Paul Quinton, a cystic fibrosis researcher at the University of California, Riverside and the University California, San Diego.<br /><br />Quinton, who has cystic fibrosis, is one of 28 doctors and scientists who sent a <a href="http://media.jsonline.com/documents/CFletteruse.pdf">letter</a> to Vertex <i>calling the price of Kalydeco 'unconscionable.'</i> A copy of the letter was provided to the Journal Sentinel and MedPage Today. Kalydeco, the doctors wrote, costs 10 times more than what a typical cystic fibrosis patient pays in total drug costs.<br /><br />'This action could appear to be <i>leveraging pain and suffering into huge financial gain for speculators, some of whom were your top executives who reportedly made millions of dollars in a single day,' </i>the doctors wrote.</blockquote><br />Vertex responded with seeming contempt,<br /><br /><blockquote class="tr_bq"> Since receiving the letter last July, Vertex has <i>raised the annual price of Kalydeco another $13,000.</i></blockquote><br /><br />The funding by the supposedly charitable CFF of guidelines that promote the drug it financed has also drawn criticism,<br /><br /><blockquote class="tr_bq"> 'It is <i>definitely a conflict of interest,</i>' said Eric Campbell, an associate professor at Harvard Medical School who has researched conflicts of interest in patient treatment guidelines.<br /><br />In the past, drug companies have been criticized for funding treatment guidelines that recommend their drugs. It is no different if the guidelines are funded by a foundation that gets royalties from drug sales, Campbell said.</blockquote><br />Also,<br /><br /><blockquote class="tr_bq">'It is concerning that the organization now stands to profit when patients choose to use the drug,' ... [Prof Lisa Schwartz of Dartmouth Medical School] said. 'Financial entanglement with industry, even with the best of intentions, creates a conflict of interest.' </blockquote><br />However, the very well paid CEO of the CFF pooh poohed concerns about conflicts of interest, <br /><br /><br /><blockquote class="tr_bq">Robert Beall, president of the Cystic Fibrosis Foundation, said that without its financial support, drugs such as Kalydeco would never get to patients. Neither insurance companies nor patients have voiced any concern to him about conflicts of interest, he said.<br /><br />'They applaud the decision and our business model to the utmost,' Beall said. 'The patients are excited.'<br /><br />He rejected the idea of using the royalty money to help patients pay for the medical care, noting that the foundation needed the money to entice drug companies to get involved in risky cystic fibrosis drug research.</blockquote><br /><br />One wonders when patients would ever have the opportunity to voice any "concerns" to Mr Beall, who also disdained any restraints on the price of the drug,<br /><br /><blockquote class="tr_bq">.Beall said the foundation did not ask Vertex to price the drug more affordably. <br /><br />'That would have been a deal-breaker,' he said.</blockquote>That seems to put making money ahead of patients' needs.  Was this venture philanthropy, or vulture philanthropy?  <br /><br /><b> Summary</b><br /><br />We have discussed numerous cases in which non-profit health care organizations seem to put short term revenue ahead of their missions to further patients' and the public's health.  In this case, a disease specific charity seems to have foregone its mission to directly support patient care, teaching, or research to provide venture capital, an action which lead to a profit for the organization, huge profits for a drug company, large rewards for the charity's executives, and even greater wealth for the drug company's executives.  It did also lead to the marketing of a beneficial drug, but at a breathtaking price that no middle-class patient without exceedingly good insurance could afford.   <br /><br />Where is the public benevolence here?  Where is the charity?  How much is about patients and how much is about  making insider executives wealthy?  <br /><br />As we have said until blue in the face, true health care reform would ensure health care organizational leadership that upholds the health care mission, not their personal finances.  

Is the Cystic Fibrosis Foundation a Charity or a Venture Capital Firm?

We have often discussed how health care organizations now seem prone to diversion from their stated missions, often when money is the object...

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Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a <a href="http://www.latimes.com/news/nationworld/nation/la-na-anthrax-resistant-20130519-dto,0,3192936.htmlstory">story</a> of a somewhat new variant on the conflict of interest theme, one that has not gotten a lot of attention, but should.<br /><br />The issue was medical, with a twist, - how to best treat a bioterror attack with anthrax engineered to be resistant to multiple drugs, an event that luckily is not known to ever have occurred.  The story came from the bad old days of the "war on terror," but only has now come to light years later. <br /><br /><b>The Alarm Raiser</b><br /><br />The story opened thus,<br /><br /><blockquote class="tr_bq">Over the last decade, <i>former Navy Secretary Richard J. Danzig, a prominent lawyer, presidential advisor and biowarfare consultant to the Pentagon and the Department of Homeland Security, has urged the government to counter what he called a major threat to national security. </i><br /><br /><i>Terrorists, he warned, could easily engineer a devastating killer germ: a form of anthrax resistant to common antibiotics.</i></blockquote><br />In particular,<br /><br /><br /><blockquote class="tr_bq">Danzig began warning about antibiotic-resistant anthrax after the terrorist attacks of Sept. 11, 2001, and the mailings of anthrax-laced letters that fall.<br /><br />The powdered anthrax in the letters killed five people but was not resistant to common antibiotics. Asked what gave rise to his <i>concern about resistant strains,</i> Danzig cited conversations with 'people whose technical skills exceed mine.' One of them, Dr. Robert P. Kadlec, a bioterrorism advisor in the Bush White House, said he and others were concerned that terrorists could develop such a weapon.<br /><br />Danzig has s<i>ounded the alarm in published papers and in private briefings and seminars for biodefense and intelligence officials.</i><br /><br />In a 2003 report funded by the Pentagon, "<a href="http://documents.latimes.com/catastrophic-bioterrorism-what-be-done/" target="_blank">Catastrophic Bioterrorism — What Is To Be Done?</a>" he wrote that it would be '<i>quite easy' for terrorists to produce antibiotic-resistant anthrax.</i> He has expanded on that theme over the years, including in a 2009 paper for the Pentagon.<br /><br />In the 2003 report, published while raxi [raxibacumab, an anthrax anti-toxin] was in development at Human Genome, Danzig said<i> a drug to combat resistant strains of anthrax should be produced 'as soon as possible' and that stockpiling such a treatment, 'even if expensive and in limited supply' would deter an attack</i>.<br /><br />John Vitko Jr., a top Homeland Security official during the Bush and Obama administrations, said he turned frequently to Danzig for advice on biodefense matters — and<i> read and 'paid attention to' his 'Catastrophic Bioterrorism' report.</i></blockquote><br />Note that while Danzig is a lawyer, and certainly not a physician or biomedical researcher, he had major credibility in the defense field, particularly in anti-terrorism, so his recommendations had great influence.<br /><br /><blockquote class="tr_bq">He served as a Pentagon appointee during the Carter administration and as undersecretary and then secretary of the Navy under President Clinton. He has a long-standing interest in biowarfare.<br /><br />During the 2008 presidential campaign, Danzig advised then-Sen. Barack Obama on national security and bioterrorism. After Obama's election, Danzig was named to the Pentagon's Defense Policy Board and the President's Intelligence Advisory Board, in addition to his consulting positions with the Defense Department and Homeland Security.</blockquote><br />So apparently at least partly due to Mr Danzig's persistent warnings, the government took action,<br /><br /><blockquote class="tr_bq"> In 2004, President Bush signed into law Project BioShield, which provided billions of dollars for biodefense drugs.<br /><br />The contracts are administered by the Department of Health and Human Services, based on advice from federal agencies and consultants. Homeland Security must certify the need for a drug before the government can buy it.<br /><br /> <i>Danzig, through his seminars, writings and consulting duties, has helped frame the discussion over whether a given biological threat is 'material' </i>and whether the government should stockpile medicines to defend against it.</blockquote><br />Also,<br /><br /><br /><blockquote class="tr_bq">Speaking of Danzig's broader role as a government advisor, Vitko said:<i> 'Richard's got incredible insights into this and I think has made major contributions'</i><br /><br />He called Danzig one of '<i>the major bio player'</i> and said his views had informed a range of policy considerations, including 'how many countermeasures do you need, of what kind.'<br /><br />It was in response to advice from Vitko and his staff that Homeland Security Secretary Tom Ridge in 2004 <i>declared anthrax a 'material threat,'</i> the certification required for the government to buy drugs to fight it.<br /><br /><i>The drug the government bought was raxibacumab, or raxi, an anthrax anti-toxin made by Human Genome Sciences Inc.  </i><br /><i><br /></i><i>In 2006, the Department of Health and Human Services finalized its first order of raxi — 20,000 doses at a cost of $174 million.</i><br /><br />That year, Ridge's successor, Michael Chertoff, signed a second, more specific declaration, <i>adding 'multi-drug-resistant' anthrax to the government's list of material threats.</i><br /><br />Asked the basis for the second declaration, Vitko said: 'I think the concern was more forward-looking, and saying, 'How could the threat evolve, and are we prepared for that?''<br /><br />Since 2009, the Obama administration has ordered an additional 45,000 doses of raxi for $160 million.</blockquote><br />There was just one catch.<br /><br /><b>The Undisclosed Conflict</b><br /><br />Mr Danzig had a largely undisclosed conflict of interest.  He was on the board of directors of Human Genome Sciences Inc, the company whose drug his constant warnings and exhortations lead the government to buy.<br /><br /><blockquote class="tr_bq">When <i>Human Genome named Danzig to its board on May 24, 2001,</i> the company's chief executive said his high-level federal experience would 'serve us well.'</blockquote><br />He thus was on the board on September 11, 2001, and later when the events on that day and soon after apparently induced him to start sounding the alarm about resistant anthrax, and he stayed on the board as he continued sounding alarms, and after the government started buying his company's drug.<br /><br /><br /><blockquote class="tr_bq">During his 11-year tenure on the board, which ended in August, <i>Danzig collected at least $1,054,255 in director's fees and by cashing in grants of Human Genome stock and stock options,</i> according to Fred Whittlesey of Compensation Venture Group, who reviewed the company's Securities and Exchange Commission filings for The Times.<br /><br />Nearly half of Danzig's compensation came from the stock options, of which he had been granted 184,000 by the end of 2011, Whittlesey said.</blockquote><br />Danzig did not seem to think that serving on the board of the company which made the primary drug directed at the perhaps hypothetical disease about which Danzig was sounding the warning constituted any sort of conflict of interest.<br /><br /><br /><blockquote class="tr_bq">Danzig said in an interview that he believed his position at Human Genome<i> posed no conflict.</i><br /><br />He said he had tried to improve policymakers' understanding of biodefense issues, including the threat of antibiotic-resistant anthrax, but <i>never lobbied the government to purchase raxi.</i><br /><br />'My view was I'm not going to get involved in selling that,' Danzig said. 'But at the same time now, should I not say what I think is right in the government circles with regard to this? And my answer was, 'If I have occasion to comment on this, it ought to be<i> in general, as a policy matter, not as a particular procurement.'</i><br /><br />'I feel that I've acted very properly with regard to this'' he said.</blockquote><br />He also apparently did not feel he needed to disclose his board membership to most of the people he was trying to persuade to be alarmed about resistant anthrax, and to pursue a treatment, such as that made by the company on whose board he sat.<br /><br /><blockquote class="tr_bq"> A number of senior federal officials whom Danzig advised on the threat of bioterrorism and what to do about it said they were unaware of his role at Human Genome.<br /><br />Dr. Philip K. Russell, a biodefense official in the George W. Bush administration who attended invitation-only seminars on bioterrorism led by Danzig, said<i> he did not know about Danzig's tie to the biotech company until The Times asked him about it.</i></blockquote><br />Also,<br /><br /><blockquote class="tr_bq"> <i>Vitko said he knew nothing of Danzig's involvement with Human Genome until a Times reporter asked him about it.</i><br /><br />'I'm surprised I didn't,' Vitko said. 'I'm not aware of it.'<br /><br />Five other present or former biodefense officials who conferred with Danzig said they, too, had been unaware of his position with the company. Danzig, they said, made no mention of it in their presence during group discussions he led or in smaller meetings.</blockquote><br />Furthermore,<br /><br /><br /><blockquote class="tr_bq">A Times search found seven papers Danzig had written on bioterrorism since 2001. <i>In only one of those did he disclose his tie to Human Genome.</i><br /><br />As an advisor to the federal government, Danzig is required to file confidential forms annually, revealing any outside affiliations but not his related compensation. Danzig said he had noted his position with the biotech firm on the forms.<br /><br />Asked whether he mentioned his corporate role during contacts with government officials, Danzig replied: 'If I thought any of it posed a potential conflict that might cause somebody who knew about it to discount my views, I would tell them.'</blockquote><br />Some people disagreed with Danzig's failure to perceive a conflict of interest<br /><br /><blockquote class="tr_bq"><i> 'Holy smoke—that was a horrible conflict of interest,' </i>said Russell, a physician and retired Army major general who helped lead the government's efforts to prepare for biological attacks.</blockquote><br /><br /><b>The Take-Over by a Familiar Corporation</b><br /><br />By the way, Human Genome Science was eventually bought out by a bigger company which has had its own sets of issues regarding conflicts of interest, GlaxoSmithKline,<br /><br /><blockquote class="tr_bq"> Human Genome was acquired by GlaxoSmithKline in August [presumably 2012] for $3.6 billion.</blockquote><br />It may yet stand to make even more money from raxi,<br /><br /><blockquote class="tr_bq"> Because raxi loses its potency after three years in storage, the government's supply will expire as of 2015, according to federal documents and people familiar with the matter. </blockquote><br /><b>Summary</b><br /><br />This appears to be a variant on the "key opinion leader" (KOL) theme writ large.  Mr Danzig clearly functioned as a very major key opinion leader about bioterrorism.  Like many KOLs we have previously discussed, he had financial interests that favored the company whose drugs his key opinion leadership seemed to be favoring.  His influence seems to have lead to huge purchases of these drugs. Like many KOLs who are physicians or health care academics, Mr Danzig seems utterly blind to the possibility that his multiple efforts to emphasize the importance of the supposed disease for which his company made a drug could somehow be viewed as a conflict of interest, or to why failure to tell his audiences about his major relationship to this company might have appeared just a small bit dishonest.  We have seen many medical/ health care KOLs who deny that somehow their opinions could have been influenced by their financial relationships, or that their audiences deserved at least to be aware of these relationships.  Yet, of course, Mr Danzig is not a doctor, and he was trying to influence government purchasers of drugs, not physician prescribers of it.<br /><br />It does seem that the leadership of health care organizations, particularly but certainly not limited to pharmaceutical and biotechnology companies, have no lack of imagination about how to construct financial relationships with influential people who could help sell their products, whether or not they acknowledge what amounts to their marketing roles. <br /><br />Given that this story involved influencing the government, it will be interesting to see at this late date whether it results in any legal action.  After all, as David Willman pointed out,<br /><br /><blockquote class="tr_bq"> Federal law bars U.S. officials, including consultants, from giving advice on matters in which they or a company on whose board they serve have 'a financial interest.'</blockquote>It will also be interesting to see if it gets any more attention.  Only a few blogs have noted it, but at least they included <a href="http://www.the-scientist.com/?articles.view/articleNo/35639/title/Selling-an-Anthrax-Scare-/">The Scientist</a>.<br /><br /><br />Yet our country has an unfortunately very long history of corporate leaders getting close to political leaders who then may overlook the legal niceties when their friends' interests are at stake.  Nonetheless, true health care reform would require all those who have decision making power over patients, health policy, or the public health to be completely transparent about their conflicts of interest, and would ban the more serious variants of conflicts of interest, even if that might cost some already rich people a bit of money.  I am not holding my breath, however, about when this might happen.<br /><br />

Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a story of a somewhat new variant on the conflict of interest theme, one that...

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Want to help a hospital go bankrupt? Get a bad EHR - Westchester hospitals' sale price over $54 million, Hospitals' debt about $200M

<div style="text-align: center;">- Posted at the Healthcare Renewal Blog on June 3, 2013 -  </div><br /><a href="http://www.ssmc.org/homepagess.cfm">Sound Shore Medical Center</a> (New Rochelle, NY) is filing for bankruptcy protection:<br /><br /><blockquote class="tr_bq">Montefiore Medical Center is offering to buy Sound Shore Health System for $54 million plus furniture and equipment, according to the latter’s bankruptcy filing — which also reveals just how far the troubled Westchester health network had fallen into the red. <br /><br />Sound Shore Medical Center in New Rochelle, Mount Vernon Hospital and five related entities have about $200 million in debts owed to more than 3,000 creditors, while possessing only $159.6 million in assets, the U.S. Bankruptcy Court documents show. <b>Sound Shore filed for Chapter 11 bankruptcy protection Wednesday as the first step in discharging its debts and selling itself to the Montefiore system.</b></blockquote><br />Why were they in the red?<br /><br />You can read the full article "<b>Westchester hospitals' sale price over $54 million; Hospitals' debt about $200M</b>" in The Journal News for yourself at this link: <a href="http://www.lohud.com/article/20130530/NEWS/305300081/Westchester-hospitals-sale-price-over-54-million?odyssey=tab|topnews|text|News&gcheck=1">http://www.lohud.com/article/20130530/NEWS/305300081/Westchester-hospitals-sale-price-over-54-million?odyssey=tab|topnews|text|News&gcheck=1</a>, but there's this interesting passage:<br /><br /><blockquote class="tr_bq">... Beginning in 2006, the hospitals saw falling patient volume and a change in their case mix. That led to “significant” losses in recent years, negative cash book balances and bills paid more than 225 days late. <b>A 2011 electronic medical record and billing system conversion caused major delays in billing and cash collection that still haven’t been fully solved. </b></blockquote><br />(This passage has a familiar ring to it; e.g., see SEC Count 9 at "<b>Florida Hospital gets an 'F' on Informatics</b>" at  <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=miami">http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=miami</a>.)<br /><br />A 2011 EHR and billing conversion?  It's now 2013.<br /><br />How many hospital IT personnel does it take to <strike>screw in</strike> implement a <strike>light bulb</strike> new EHR?<br /><br />-- SS<br /><br />

Want to help a hospital go bankrupt? Get a bad EHR - Westchester hospitals' sale price over $54 million, Hospitals' debt about $200M

- Posted at the Healthcare Renewal Blog on June 3, 2013 -  Sound Shore Medical Center (New Rochelle, NY) is filing for bankruptcy protectio...

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Is the Patient Centered Outcomes Research Institute Really More Industry-Centered?

One of the biggest reasons our health care system seems so dysfunctional is that clinicians and patients have great difficulty determining what might be the appropriate management of particular clinical problems.  Due to endless and sometimes <a href="http://hcrenewal.blogspot.com/search/label/deception">deceptive</a> marketing,<a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest"> conflicts of interest</a> affecting health care professionals and academics, and <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulation</a> and <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppression </a>of clinical research, making truly evidence based decisions that put individual patients interests first has become very difficult.  Instead, we may end up using excessively expensive, relatively ineffective, and more dangerous than anticipated drugs, devices, and diagnostic and therapeutic strategies, thus leading to poor patient outcomes and high costs.<br /><br /><b>Background - the Patient-Centered Outcomes Research Institute (PCORI)</b><br /><br />One lingering hope has been that better clinical research, particularly focusing on the outcomes that are most important to patients (patient-centered outcomes), and comparing clinical strategies that may be widely used but poorly evaluated (<a href="http://hcrenewal.blogspot.com/search/label/comparative%20effectiveness%20research">comparative effectiveness research</a>) would help dissipate the fog.  An attempt to promote such research in the US appeared in our recent health reform legislation, the Affordable Care Act.  It authorized the creation of the <a href="http://www.pcori.org/">Patient Centered Outcomes Research Institute </a>(PCORI).<br /><br />However, as we <a href="http://hcrenewal.blogspot.com/2010/03/health-care-reform-bill-and-health-care.html">observed</a>, how good a solution this would be would depend on the details.  Our concerns were that PCORI, which is an independent although government sponsored institute, not a government agency, might be too beholden to "stake-holders" including the large organizations, device and pharmaceutical companies, insurance companies, hospital systems, etc, that already dominate health care and may promote their and particularly their executives' interests ahead of patients.<br /><br />Recently, Merrill Goozner, the editor of Modern Healthcare, <a href="http://www.modernhealthcare.com/article/20130427/MAGAZINE/304279990">raised similar concerns</a>,<br /><br /><blockquote class="tr_bq">there is the law's requirement for stakeholder boards to set PCORI research priorities. They must include representatives of researchers, clinicians, patients, providers, insurers, employers and industry. <i>The interests of those groups are not the same. Priority-setting by stakeholder boards could turn into a prescription for steering clear of the most controversial, and therefore most significant, questions.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br />So,</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">There is no shortage of drug and device firms, specialty hospitals and medical specialty societies with a vested interest in leaving certain questions unasked or muddying the waters with methodological quibbles. <i>They shouldn't be allowed to hijack or soften the agenda.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div></div><br />PCORI is now in operation, but has seemingly not gotten a lot of scrutiny. What scrutiny it has received as not allayed these concerns.<br /><br /><b>The PCORI Advisory Panels</b><br /><br />Recently, the publication of the membership of four key advisory panels for PCORI got the attention of  Michael Millenson, <a href="http://thehealthcareblog.com/blog/2013/04/05/why-the-pcori-picks-matter/">blogging on</a> the Health Care Blog.  He noted that initially the members of the panels were identified only by name and city of residence, without any information on their other affiliations or characteristics.  He suggested,<br /><br /><blockquote class="tr_bq"> PCORI isn’t a church, where all are created equal in the eyes of God, but <i>a politically created, politically governed, controversial dispenser of a very large amount of money that a host of interest groups would like to control.</i> PCORI staff chose the panel members in part by looking at their affiliations, and those connections (or lack of them) should be an immediate part of the public record when the appointments are announced. <i>By being vague, PCORI obfuscates political and power relationships and makes it more difficult for the public and industry stakeholders to either approve of or criticize those choices.</i></blockquote><br />Eventually, PCORI did release somewhat more information on membership of these panels, on <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-addressing-disparities/">Addressing Disparities</a>, <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-assessment-of-prevention-diagnosis-and-treatment-options/">Assessment of Prevention, Diagnosis, and Treatment Options</a>, <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-improving-healthcare-systems/">Improving Healthcare Systems</a>, and <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-patient-engagement/">Patient Engagement</a>.  Mr Millenson was able to review the membership of one panel, and noted some strange anomalies in a comment to his original blog post. <br /><br />One panel member who supposedly represents "patients, caregivers, and patient advocates" had a full time position with a pharmaceutical company.  Another worked for a big consumer organization which is heavily funded by the pharmaceutical industry. <br /><br />This raised concerns that PCORI may get guidance from people whose interests are actually different from those they are supposed to represent. <br /><br />Therefore, I attempted to review the stated affiliations of all PCORI advisory panels.<br /><br />Review of the what was made public about the membership of the advisory panels revealed several additional important anomalies.  Members said to be representing "patients, caregivers, and patient advocates" appeared to have positions working for organizations who might have their own, and different interests from the group they were supposed to be representing.  <br /><br />Let me summarize the apparent anomalies by advisory panel.  In each case, in alphabetical order by panel,  I will list the panelists name, supposed representation, and affiliation, with my comments.  <br /><br /><u>Addressing Disparities</u><br /><br />Monique Carter MS - Dallas, TX<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Senior Research Scientist, AROG Pharmaceuticals Inc</i><br /><br />So this person would appear to be more of an industry (pharmaceuticals) representative.<br /><br />Venus Gines, MA, P/CHWI - Manvel, TX<br />representing: patients, caregiver, and patient advocates<br />affiliation: <i>Instructor, Chronic Disease Prevention and Control Research Center, Department of Medicine, Baylor College of Medicine</i><br /><br />So this person appears to be more of a clinician, or health system representative<br /><br />Doriane C Miller MD - Chicago, IL<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Director, Center for Community Health and Vitality, University of Chicago Medical Center</i><br /><br />So this person also appears to be more of a clinician, or health system representative.<br /><br />Carmen E Reyes, MA - Whittier, CA<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Center and Community Relations Manager, Los Angeles Community Academic Partnership in Research in Again, UCLA</i><br /><br />So this person appears to be more of a health system representative.<br /><br />Mary Ann Sander, MHA, MBA, NHA - Pittsuburgh, PA<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Vice President, Aging  and Disability Services, UPMC Community Provider Services</i><br /><br />So this person appears to be more of a health system representative<br /><br />Deborah Steward, MD, MBA - Jacksonville, FL<br />representing: clinicians<br />affiliation: <i>Florida Blue</i><br /><br />So in summary, this panel included five people who ostensibly represent patients, caregivers, and patient advocates but who actually work for large academic medical centers or health systems, and one who was there to ostensibly represent patients, caregivers, and patient advocates who works for a pharmaceutical firm.  (In addition, one person supposedly representing clinicians apparently works full time for a health insurance company.)<br /><br /><u>Assessment of Prevention, Diagnosis, and Treatment Options</u><br /><br />Karen Chesbrough, MPH - Annandale, VA<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Scientific Program Administrator, Foundation for Physical Therapy.</i><br /><br />Note that the <a href="http://foundation4pt.org/get-involved/about/">stated mission</a> of the Foundation for Physical Therapy is that it "supp<span style="font-size: small;"><span>orts the physical therapy profession’s research needs," and the foundation is funded in part by companies that make physical therapy devices and supplies  (look <a href="http://foundation4pt.org/get-involved/partners/">here</a>).  Therefore, this person appears to be more of a representative of clinicians, or perhaps industry (devices).</span></span><br /><br /><span style="font-size: small;"><span>Bettye Green RN - South Bend, IN</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Community Outreach Nurse and Associate Director of Advocacy, Alliance for Clinical Trials in Oncology, Saint Joseph Regional Medical Center</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a health system representative.</span></span><br /><br /><span style="font-size: small;"><span>Debra Madden - Newtown, CT</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation:<i> Clinical Applications Systems Analyst, Associated Neurologists</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician representative.</span></span><br /><br /><span style="font-size: small;"><span>Daniel Wall - Spencer, WI</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Analyst, Biomedical Informatics Research Center, Marshfield Clinic Foundation</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician or health system representative</span></span><br /><br /><span style="font-size: small;"><span>So in summary, this panel included four people who ostensibly represent patients, caregivers, and patient advocates but who actually work for health systems or clinician organizations, and one of the latter organizations appears to be heavily funded by the medical device and supplies industry.</span></span><br /><br /><span style="font-size: small;"><u><span>Improving Healthcare Systems</span></u></span><br /><br /><span style="font-size: small;"><span>Susan Diaz MPAS, PA-C - Jacksonville, FL</span></span><br /><span style="font-size: small;"><span>representing patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Physician Assistant in Liver Transplant, Mayo Clinic in Florida</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician, or health system representative.</span></span><br /><br /><span style="font-size: small;"><span>Anne Sales PhD-  Ann Arbor, MI</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Professor, School of Nursing, University of Michigan</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician, or health system representative.</span></span><br /><br /><span style="font-size: small;"><span>Jamie Sullivan MPH - Silver Spring, MD</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Director of Public Policy, COPD Foundation.</i></span></span><br /><br /><span style="font-size: small;"><span>Note that the COPD Foundation receives support at least from "</span>Boehringer-Ingelheim/Pfizer Inc. and Grifols" (look <a href="http://www.copdfoundation.org/Home/AboutUs/PartnersSponsors.aspx">here</a>).  .</span><br /><br /><span style="font-size: small;">So this person appears to be at least somewhat an industry (pharmaceutical) representative. </span><br /><br /><span style="font-size: small;">So in summary, this panel includes three people who ostensibly represent patients, caregivers, and patient advocates, two of whom actually work for large health system, and one who works for a foundation with significant pharmaceutical industry support.  </span><br /><br /><span style="font-size: small;"><u>Patient Engagement</u></span><br /><br /><span style="font-size: small;">Stephen Arcona MA PhD - East Hanover, NJ</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation:<i> Executive Director, Outcomes Research Methods & Analytics, Department of Health Economics and Outcomes Research, Novartis Pharmaceuticals Corporation</i></span><br /><br /><span style="font-size: small;">So this person appears to be more of a researcher, and industry (pharmaceutical) representative. </span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Marc Boutin JD - Washington, DC</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Executive Vice President and Chief Operating Officer, National Health Council </i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Note that while the National Health Council <a href="http://www.nationalhealthcouncil.org/pages/page-content.php?pageid=53">claims</a> to be an advocate for people with chronic disease and disability, its core membership includes "<span><span style="font-family: Verdana;"><span style="font-family: Times,"Times New Roman",serif;">major pharmaceutical, medical device, health insurance, and biotechnology companies</span>." </span></span>and it receives considerable industry support.  For example, it <a href="http://www.nationalhealthcouncil.org/pages/corporate-partners.php">disclosed</a> contributions in the $100,000 - $300,000 range from Amgen, Astra-Zeneca, Eli Lilly, Novartis, Pfizer, and the Pharmaceutical Research and Manufacturers of America (PhRMA), and smaller but still significant contributions from other pharmaceutical companies and other industry associations.  So this person appears to be at least somewhat of an industry (pharmaceutical) representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Charlotte W Collins JD - Elkridge, MD</span><br /><span style="font-size: small;">representing patients, caregivers, and patient adovcates</span><br /><span style="font-size: small;">affiliation: <i>Vice President of Policy and Programs, Asthma and Allergy Foundation of America</i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Note that while the Asthma and Allergy Foundation of America claims to be a patient advocacy organization, it <a href="http://www.aafa.org/display.cfm?id=10&sub=27&cont=250">disclosed</a> financial support from many pharmaceutical, device, and health insurance companies, and from major health care systems</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">So this person appears to be at least somewhat an industry, health insurance, and/or health system representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Amy Gibson, RN MS - Washington, DC</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Chief Operating Officer, Patient-Centered Primary Care Collaborative (PCPCC)</i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Note that the PCPCC has an <a href="http://www.pcpcc.net/executive-members">executive committee</a> that includes multiple pharmaceutical, device, and health insurance companies, and health systems.  So this person appears to be at least somewhat an industry, health insurance, and/or health system representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Julie Ginn Moretz - Augusta, GA</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Associate Vice Chancellor, Patient- and Family-Centered Care, University of Arkansas for Medical Sciences</i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">So this person appears to be more of health system representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Sara Triagle van Geertruyden - Washington, DC</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Executive Director, Partnership to Improve Patient Care (PIPC)</i></span><br /><span style="font-size: small;">(Note: this affiliation appears incomplete.  Sara van Geertruyden is <a href="http://thornrun.com/contact">listed</a> as <i>a <a href="http://thornrun.com/sara-van-geertruyden">current partner </a>of Thorn Run Partners,</i> a <a href="http://thornrun.com/">lobbying firm</a>, with a major <a href="http://thornrun.com/practice-areas">practice area</a> in health care, boasting, "Thorn Run Partners offers one of Washington, DC’s most comprehensive, competent and effective health policy practices."</span><br /><br /><br /><span style="font-size: small;">Note also that PIPC has <a href="http://www.improvepatientcare.org/pipc-member-list-0">membership</a> that includes many specialty physician societies, and a <a href="http://www.improvepatientcare.org/steering-committee">steering committee</a> that includes the Biotechnology Industry Organization, and PhRMA.  </span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;"><span>So this person appears to be more of an industry (pharmaceutical and biotechnology) representative.</span></span><br /><br /><span style="font-size: small;"><span>So in summary this panel includes six members who ostensibly represent patients, caregivers, and patient advocates, but who work for either patient advocacy organizations that get considerable industry support, or a health system, or a pharmaceutical company.  One person whose affiliation was listed as a patient advocacy organization also somehow appears to be a full-time lobbyist.   </span></span><br /><br /><span style="font-size: small;"><span><b>Summary </b></span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: small;"><span>While PCORI has set up advisory panels that seem to strongly emphasize representation of patients, caregivers, and patient advocates, a substantial fraction of the people who are supposed to provide this representation seem to work for patient advocacy groups with considerable industry support, or directly for industry or health care systems.  Some of them may work as clinicians or researchers, but many appear to have high level executive positions with these organizations.  One appears to be a full-time lobbyist at a firm that has a strong health care practice.  </span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: small;"><span>Thus it appears that PCORI advisory panels actually may be as much about the interests of big health care organizations, including pharmaceutical and device companies, health insurance companies, and large hospital systems, as they are about patients, caregivers, or patient advocates.  </span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: small;"><span>I am afraid my and Merrill Goozner's original fears that PCORI may end up being more about industry-centered interests than patient-centered outcomes may not be paranoid.  I do hope that PCORI leadership manages to put improving patients' and the public's health ahead of making industry executives happy.  </span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: x-small;"><span style="font-size: small;">by Roy M. Poses MD, for Health Care Renewal</span></span>

Is the Patient Centered Outcomes Research Institute Really More Industry-Centered?

One of the biggest reasons our health care system seems so dysfunctional is that clinicians and patients have great difficulty determining w...

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Marin General Hospital's Nurses are Afraid a Defective EMR Implementation Will Harm or Kill Patients .. CEO Cites Defective HHS Paper and Red Herrings As Excuse Why He Knowingly Allows This To Continue

<div style="text-align: center;">- Posted at the Healthcare Renewal Blog on May 30, 2013 - </div><br />The following appeared in the Marin County Independent Journal about an EHR system so bad the nurses at Marin General Hospital were publicly complaining, putting their careers at risk (see my May 17, 2013 post "<a href="http://hcrenewal.blogspot.com/2013/05/marin-general-hospital-nurses-warn-that.html">Marin General Hospital nurses warn that new computer system is causing errors, call for time out</a>"):<br /><br /><blockquote class="tr_bq"><b>National critic of health care information technology says Marin General should heed nurses' advice</b><br /><div class="articleByline" id="articleByline"><a class="articleByline" href="mailto:rhalstead@marinij.com?subject=Marin%20Independent%20Journal:"><span class="author vcard"><span class="fn"></span></span></a><br /><div class="Byline"><a class="articleByline" href="mailto:rhalstead@marinij.com?subject=Marin%20Independent%20Journal:">By Richard Halstead<br />Marin Independent Journal<span class="source-org vcard"></span></a></div></div><div class="articleDate" id="articleDate">Posted:   05/27/2013 04:03:00 PM PDT</div></blockquote><br />The critic is me.   I spoke to the reporter but did not know he would publish:<br /><blockquote class="tr_bq"><span id="rds_global"></span><br /><div class="bodytext">A nationally known critic of electronic health records has harshly criticized managers at Marin General Hospital for their response to a plea by nurses to hold off on a new computer system to prevent potentially dangerous errors.</div><br />"The executives at the hospital should be taking out extra insurance policies because they're setting themselves up for a massive corporate negligence lawsuit," said Dr. Scot Silverstein, an adjunct professor of health care informatics at Drexel University in Philadelphia.<br /><br />Silverstein, who contacted the Independent Journal after reading about the Marin General situation, doesn't dispute the potential of digital records; but he believes implementation has been rushed. He thinks electronic health records should be regulated by the federal Food and Drug Administration, much like medical hardware or pharmaceuticals. </blockquote><br />Or regulated by someone with experience in similar mission critical software, and with regulatory teeth.  Paper tigers and bad health IT are a very poor mix where patients' rights are concerned IMO.<br /><br /><blockquote class="tr_bq"><span id="rds_global"></span><br />At issue is a new computerized physician order entry system, known as CPOE; doctors place medication orders for patients directly into the system.<br /><br />At a meeting of the Marin Healthcare District board on May 14, a group of Marin General <b>nurses told the board problems with the new computer system were diverting them from their patients and causing errors, such as sending orders to the wrong patients. One nurse reported that a patient had received a medication to which he was allergic. </b></blockquote><br />That is a very direct calling out of the potential for harm and death by front line clinical personnel.  To ignore it is grossly if not criminally negligent.<br /><br /><span id="rds_global"></span><br /><table border="0" cellpadding="0" cellspacing="0" style="width: 100%px;"><tbody><tr><td class="articleBox" style="width: 100%;"><a href="https://www.blogger.com/null" name="top"></a><span class="articleFooterLinks"></span></td></tr></tbody></table><blockquote class="tr_bq"><span id="rds_global">Lee Domanico, who serves as the CEO of both Marin General and the Marin Healthcare District, assured the board <b>that </b></span><span id="rds_global"><b>the hospital was safe, despite "glitches" in the new system. </b>Domanico said he was working to fix the problem.</span></blockquote><br /><span id="rds_global">Glitches = safe?  The Board must be highly gullible if they believe this  See </span><a href="http://hcrenewal.blogspot.com/search/label/glitch">http://hcrenewal.blogspot.com/search/label/glitch</a> for more on "safe" glitches.<br /><br /><blockquote class="tr_bq">Silverstein said, "Glitches are a euphemism for life-threatening electronic health record malfunctions and defects."<br /><br /><span id="rds_global"></span><br />"What they need to do is exactly what the nurses are asking for," Silverstein said. "They need to turn the system off and put it through rigorous testing and confirm the thing is going to work properly with no glitches before they use it on patients."</blockquote><br />That's not rocket science - its common sense - unless they think their own nurses are lying.<br /><br />Of course, as computers have more rights than patients, and bonuses might be affected, the system will likely continue in full operation, with patients as guinea pigs, and the nurses punished for informing the public that perhaps they should consider other hospitals while the "glitches" in this enterprise clinician command-and-control system are worked out.<br /><blockquote class="tr_bq"><br /><span id="rds_global"></span><br />Two days after the Marin Healthcare District meeting, Domanico issued a press release stating, "We have not received any medication error incident reports resulting from the implementation of computerized physician order entry."<br /><br />On Friday, however, Barbara Ryan, a Marin General registered nurse who serves as the California Nurses Association/National Nurses United representative, said, <b>"I can't understand why that statement was made."</b><br /><br />Ryan said <b>nurses have told her of errors, and information about errors appears in "Assignment Despite Objection" forms that nurses have filed since implementation of the computerized order system began on May 7. Nurses file the forms to document formal objections to an unsafe, or potentially unsafe, patient care assignment. </b></blockquote><br /><span id="rds_global">The statement's reason and purpose seems fairly obvious. </span><br /><br /><blockquote class="tr_bq"><span id="rds_global"><span id="rds_global">Ryan said Marin General nurses have filed close to <b>50 such forms so far this month; she said typically 10 to 20 such forms are filed per month at the hospital.</b><br /><br />"There are still problems with the system," she said. "There are still mistakes being made." Ryan <b>said the hospital needs to boost nurse staffing ratios during the implementation.</b></span></span></blockquote><br /><span id="rds_global">That would increase costs (and probably decrease the pool of money for bonuses).</span><br /><br /><blockquote class="tr_bq"><span id="rds_global"><span id="rds_global">Jon Friedenberg, Marin General's chief fund and business development officer, said the hospital is in the process of upgrading computer servers and adding memory to work stations to increase the speed of the new computerized order system.<br /><br />"<b>We completed an upgrade of memory to 200 of the work stations</b>, and 120 of the work stations have been replaced," Friedenberg said.</span></span></blockquote><br /><span id="rds_global">This reminds me of a similar IT fiasco I faced some years ago, when the brilliance of IT personnel really shone through regarding an ICU monitoring system that crashed regularly.  Their solution?  Add more RAM.  (See "<b>Serious clinical computing problems in the worst of places: an ICU</b>" at <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=clinical%20computing%20problems%20in%20ICU">http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=clinical%20computing%20problems%20in%20ICU</a>).</span><br /><br /><blockquote class="tr_bq"><span id="rds_global">... Silverstein earned a medical degree from Boston University and subsequently completed a two-year fellowship in medical informatics at Yale University School of Medicine. He served as Merck Research Laboratories' director of scientific information in the early 2000s before serving for a time as a full-time professor at Drexel University. Today, in addition to teaching part-time, Silverstein works on <span style="color: red;"><i><b>[EHR-related - ed.] </b></i></span>medical liability cases for plaintiff attorneys. <span style="color: red;"><i><b>[And the defense too</b></i></span></span><span style="color: red;"><i><b>, when asked; I'd rather advise on how to prevent mistakes, in fact, than get involved after the fact when someone's been injured or killed - ed.] </b></i></span></blockquote><span id="rds_global"></span><br /><br />What was not mentioned was that I was a CMIO in a major hospital in the mid to late 1990s.<br /><br />But of course, I - and similarly trained Medical Informatics experts - "don't have enough experience" to lead (as opposed to being an 'internal consultant') health IT projects, a refrain I've often heard from hospital executives.<br /><br /><br /><blockquote class="tr_bq"><span id="rds_global">Silverstein said he started assisting on the liability cases after his mother died as the result of an electronic health care record error that resulted in her not being given the proper heart medicine. Silverstein said his mother's case was not an anomaly. </span></blockquote><blockquote><span id="rds_global"><span id="rds_global">For example, he pointed to the results of a recent Emergency Care Research Institute study of 36 hospitals conducted over a nine-week period. Asked to report electronic record problems on a volunteer basis, Silverstein said the hospitals reported <b>170 malfunctions, including eight incidents that resulted in patient harm, three of which may have contributed to patients' deaths. </b> </span></span><span id="rds_global"><span id="rds_global"><span id="rds_global">Although the federal Food and Drug Administration does not regulate health care information technology, some manufacturers have voluntarily supplied data to the FDA. In February 2010, the F<b>DA reported it had been notified of 260 problem events involving health care information technology in the previous two years that were linked with 44 injuries and six deaths.</b></span></span> </span></blockquote><br /><span id="rds_global">See my Feb. 28, 2013 post "</span><b>Peering Underneath the Iceberg's Water Level: AMNews on the New ECRI Deep Dive Study of Health IT Events</b>" at <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>.  Also see my Aug. 5, 2010 post "<b>Internal FDA memorandum of Feb. 23, 2010 to Jeffrey Shuren on HIT risks. Smoking gun? I report, you decide</b>" at <a href="http://hcrenewal.blogspot.com/2010/08/smoking-gun-internal-fda-memorandum-of.html">http://hcrenewal.blogspot.com/2010/08/smoking-gun-internal-fda-memorandum-of.html</a>. I merely report what ECRI, AMA and FDA have reported.<br /><br />Finally:<br /><br /><blockquote class="tr_bq"><span id="rds_global">In his press release, however, [CEO] Domanico stated that "more than 150 studies conducted since 2007 have confirmed that organizations using health information technology, like CPOE, have seen positive outcomes."</span> </blockquote><br />I believe he's referring to a highly biased and scientifically defective ONC paper of 154 selected studies: "<b>The Benefits Of Health Information Technology: A Review Of The Recent Literature Shows Predominantly Positive Results</b>."<br /><br />What an unbelievably cavalier attitude.<br /><br />My colleagues and I refuted (dare I say trashed) that paper pretty thoroughly here: <br /><a href="http://hcrenewal.blogspot.com/2011/03/benefits-of-health-information.html" rel="nofollow nofollow" target="_blank">http://<wbr></wbr>hcrenewal.blogspot.com/<wbr></wbr>2011/03/<wbr></wbr>benefits-of-health-informat<wbr></wbr>ion.html.</a><br /><br />Even worse, the mention of that paper, or EHR benefits in general, is a diversion, an in-your-face <b>red herring</b> (at best; an inability to reason logically at worst), steering away from the real issue:  an EHR implementation about which nurses are complaining ... in the now.<br /><br /><blockquote class="tr_bq"><span style="font-family: Arial Black; font-size: medium;"><span style="font-family: arial; font-size: small;"><a href="http://www.nizkor.org/features/fallacies/red-herring.html">http://www.nizkor.org/features/fallacies/red-herring.html</a>:  A Red Herring is a fallacy in which an irrelevant topic is presented in order to divert attention from the original issue. </span></span></blockquote><span id="rds_global"><br /></span><span id="rds_global">That a CEO of a major hospital relies on one defective paper - one that he most likely lacks the experience and expertise to understand, let alone critically evaluate - and red herrings is a poster example of why medical and medical informatics amateurs should not be running hospitals or clinical IT projects.</span><br /><span id="rds_global"><br /></span><span id="rds_global">-- SS</span>

Marin General Hospital's Nurses are Afraid a Defective EMR Implementation Will Harm or Kill Patients .. CEO Cites Defective HHS Paper and Red Herrings As Excuse Why He Knowingly Allows This To Continue

- Posted at the Healthcare Renewal Blog on May 30, 2013 - The following appeared in the Marin County Independent Journal about an EHR system...

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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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