Pfizer's Latest International Pfiascos - Charges of Anti-Competitive Practices, Inflated Prices, Deception and Secrecy

Many big health care organizations seem to just be unable to keep out of trouble, and the bigger they are, the more kinds of trouble.  Pfizer Inc, considered to be one of the world's largest pharmaceutical companies, has supplied us with plenty of stories.  Enough new stories about Pfizer have accumulated since last year to do a roundup.   

Presented in chronological order....

Italy Demands Damages from Pfizer for Anti-Trust Violations

This story came out in May, 2014, via Reuters,

Italy said on Wednesday it was seeking more than a billion euros in damages from multinational drug companies following a ruling by the country's antitrust authority that their policies had been detrimental to Italy's national health service.

The health ministry said in a statement it was requesting a total 1.2 billion euros ($1.6 billion) from Novartis and Roche for the damages incurred in 2012-2014, and was requesting 14 million euros from Pfizer.

It cited several recent antitrust rulings that the companies' repeated anti-competitive actions had caused the national health service 'considerable damage'.

The specific charges against Pfizer were:

Italy's state council, the highest administrative court, in February ruled that Pfizer had abused its dominant position relating to the glaucoma drug Xalatan 'with a clear and persistent intention to suppress competition'.

At least in English language news sources, I have not seen how this turned out, but note that this was apparently an administrative court finding, not just a prosecutor's allegation.

Pfizer Accused of Overcharging for Pediatric Vaccines

This appeared in January, 2015, here via Ed Silverman's PharmaLot blog (when it was affiliated with the Wall Street Journal),

In a bid to widen access to vaccines, Doctors Without Borders is calling on Pfizer and GlaxoSmithKline to lower the prices for their pneumococcal vaccines to $5 per child in developing countries. The non-profit claims the drug makers are 'overcharging' donors and developing countries for vaccines that 'already earn them billions of dollars in wealthy countries.'

The non-profit, which regularly advocates for lower prices for medicines, maintains that, in general, the price to vaccinate a child against several diseases is now a 'colossal' 68 times more expensive than in 2001. In a new report, Doctors Without Borders attributes 45% of that increased cost to the price tags for pneumococcal vaccines sold by the drug makers. Pneumococcal disease, by the way, kills about 1 million children per year, mostly in poor and developing nations.

Think about the children.

The non-profit maintains that the current price tag makes it difficult to supply the vaccine to large numbers of children, and the drug makers have already received $1 billion in incentives to manufacturer the vaccine for developing countries. 'We think it’s time for Glaxo and Pfizer to do their part to make vaccines more affordable for countries in the long term, because the discounts the companies are offering today are just not good enough,' says Malpani in a statement.

Moreover, Doctors Without Borders warns that pricing may eventually make it harder for a growing number of middle-income countries to afford vaccines. Over time, some of these countries will eventually ‘graduate’ from the subsidized vaccine pricing established by Gavi and, when that happens, Doctors Without Borders estimates costs may rise up to six times what is the countries pay today.

The post included a statement from Pfizer about how hard it is to manufacture the vaccine, and an update to the post included a statement from Pfizer that it was already selling its pneumococcal vaccine, Prevenar 13, below cost to GAVI, which buys up vaccines and provides them to poor countries. A week later, again via (the old version of) PharmaLot, Pfizer announced an additional 6% price cut. Furthermore, Bill Gates, whose foundation supports GAVI, insisted that cutting vaccine prices would discourage pharmaceutical companies from investing in vaccine research and supplying products to poor countries, according to the Guardian.

However, neither Pfizer nor Mr Gates acknowledged how much money Pfizer already is making from Prevenar in developed countries, amounts which likely do far more than offset any losses in poorer countries. Specifically, in July, 2015 FierceVaccines reported that

The world's biggest vaccine by sales--Prevnar 13--just keeps getting bigger. And in doing so, the shot helped Pfizer notch 44% vaccines growth for the second quarter as the unit saw sales grow from $1.09 billion in last year's Q2 to $1.58 billion during the period this year.

For the quarter, the superstar pneumococcal disease-blocker notched a U.S. sales increase of 87% versus the same period last year, a jump Pfizer CEO Ian Read attributed to 'continued strong uptake' in U.S. adults.

Also,

Prevnar 13, which reeled in $4.29 billion in sales last year, is expected to grow to $5.83 billion in 2020 and remain atop the vaccines sales charts.

And,

The company is also working 'country by country' to broaden the vaccine's reach in G7 countries....

So there seems to be some evidence in support of the Doctors Without Borders claim that Pfizer could easily afford some small losses selling vaccines for use by poor children in less developed countries while it makes billions of dollars from vaccine sales in developed countries.  


Pfizer Settles Shareholder Suit for $400M

This settlement was just the latest that has resulted from allegations of illegal drug marketing by Pfizer.  As reported again by the redoubtable Ed Silverman in the old version of PharmaLot,

Pfizer has reached an agreement in principle to pay $400 million to settle a class-action securities lawsuit that alleged the drug maker illegally marketed several medicines and, subsequently, caused investors to lose money, according to a filing with the U.S. Securities and Exchange Commission.

The lawsuit alleged that, between January 2006 and January 2009, Pfizer marketed several drugs on an off-label basis. The medicines included the Bextra painkiller that was withdrawn from the market in 2005; the Geodon antipsychotic; the Zyvox antibiotic and the Lyrica epilepsy treatment.

The lawsuit, which was filed in federal court in 2010, alleged that the sales boost the drug maker received from the marketing prompted Pfizer executives to make 'false and misleading statements about Pfizer’s financial performance and sales practices [that] caused Pfizer stock to trade at artificially inflated prices.'

This settlement followed an even larger one back in 2009 when,

the drug maker revealed plans to pay $2.3 billion to resolve criminal and civil allegations that these drugs were marketed illegally.

We discussed that settlement in 2009 here, here, and here.  Note that the 2009 settlement included a guilty plea to a criminal charge (albeit to a misdemeanor), and was of allegations including paying kickbacks to doctors for use of Pfizer drugs.  So this additional settlement of deceiving investors just ices that cake. 

UK Competition and Markets Authority Stated Pfizer Abused Market Dominance

This story appeared in August, 2015, via the Telegraph,

The Competition and Markets Authority (CMA) has issued a statement of objections alleging the companies breached UK and EU law by raising the prices they charged for phenytoin sodium sold to the NHS.

In particular,

The CMA says that for years industry giant Pfizer, which is listed in the US, and Flynn, a Stevenage-based company, between them sold the drug at a price up to 27 times higher than it had been previously priced.

Before September 2012, Pfizer manufactured and sold phenytoin sodium capsules to UK wholesalers and pharmacies under the brand name Epanutin.

Pfizer then sold the UK distribution rights for Epanutin to Flynn, which 'de-branded' the drug and started selling its version in September 2012. Pfizer continued to manufacture the drug, which it sold to Flynn at prices the CMA says were 'significantly higher' than those at which it had previously sold Epanutin.

The CMA claims Pfizer sold the drug at between 8 and 17 times its historic prices to Flynn, which then sold on phenytoin sodium at between 25 to 27 times more than the prices previously charged by Pfizer.

Before Flynn bought the rights for Epanutin, the NHS spent about £2.3m on phenytoin sodium capsules a year, according to the CMA. After the deal this spend rose to just over £50m in 2013 and more than £40m in 2014.

While the CMA findings were apparently "provisional," but the agency has the power to find that the law has been breached and "has the power to fine then up to 10pc of their global annual turnover - last year Pfizer had revenue of almost $50bn."  So this is the second government finding of anti-competitive behavior by Pfizer in a little over one year.

Pfizer Resists AllTrials Calls for Transparency

Late in August, 2014, per the Guardian,

Pfizer, one of the world’s largest pharmaceutical groups, has said it will resist demands from investors and transparency campaigners that it disclose results from all historical drug trials.

We have been discussing how pharmaceutical, biotechnology, and device companies have manipulated the clinical trials they sponsor to increase the likelihood that the results make their products look good, and may suppress trials whose results cannot be made to look good enough. This clinical research suppression and manipulation can lead to poor clinical decisions, may harm patients, and abuses the trust of patients who volunteer to participate in clinical research. This situation has led to the AllTrials campaign to make clinical research transparent (look here). However,

Pfizer said it had a 'longstanding commitment to clinical trial transparency' and it already published data for trials from 2007. Requests for earlier data are considered on an individual basis. But it added: 'We don’t believe that further investment beyond this would offer value to patients, health services or to our shareholders.'

This despite arguments above about the harms of research suppression.  Given how much money Pfizer has spent on lawsuits, including one above about allegations of its management's deception of shareholders, one might think it would be worth it for management to make a little investment in transparency.

Pfizer Found to Have Withheld Reports of Adverse Drug Events in Japan

Finally, reported in September, 2015 by in-PharmaTechnologist.com,

Pfizer failed to report hundreds of serious adverse drug reactions (ADRs) in the required timeframes according to Japan’s Ministry of Health, Labor and Welfare (MHLW) which has issued the US firm with a business improvement order. 

That website has copy protection so I cannot quote further, but the order involved 11 drugs, including Enbrel and Lyrica.  So here is yet another example of a government agency finding that Pfizer was less than transparent, if not overtly deceptive.

Summary

So in a little more than a year, Pfizer has been accused of anti-competitive practices raising drug costs in Italy, excess pricing of vaccines for use by poor children in undeveloped countries, deceiving its own investors about illegal marketing activities in the US, abuse of market dominance leading to excessive drug costs in the UK, stonewalling clinical trial transparency measures globally, and failing to disclose adverse drug effects in a timely manner in Japan.  This is on top of an already impressive record of misbehavior (See our summary of Pfizer mischief at the end of the post.)

However, as seems usual these days, no one at Pfizer who might have authorized, directed or implemented any of this bad behavior has ever seemingly paid any sort of penalty for it.  Instead, while this was going on, the top leadership of Pfizer just gets richer faster and faster.  In fact, in March, 2015, the Wall Street Journal reported the current Pfizer CEO's total compensation in 2014,

Pfizer Inc. said Thursday that Chief Executive Ian Read’s total compensation rose 23% last year, lifted by an increase in pension value that offset a reduced annual bonus and equity award.

Furthermore,

Mr. Read’s 2014 pay package totaled $23.3 million. The board raised the CEO’s salary to $1.83 million from $1.79 million but decreased his annual bonus by $400,000 and his equity award by nearly $1 million despite concluding that Mr. Read’s leadership during the year was 'outstanding.'

[Even though] Over the course of 2014, shares in the New York-based pharmaceutical company gained about 2% amid a 4% decrease in revenue.

It is not obvious that the rise in CEO pay is even remotely correlated to any rise in share-holder value.  Moreover, there seems to be a total disconnect between the rewards given the CEO and the ethical record of the company he leads, especially since Pfizer, which calls itself "one of the world's premier pharmaceutical" corporations, announces its aspirations thus,

we at Pfizer are committed to applying science and our global resources to improve health and well-being at every stage of life. We strive to provide access to safe, effective and affordable medicines and related health care services to the people who need them.

Never mind all those pesky allegations of overpricing, anti-competitive practices, deception and opaqueness, and never mind that current executives are becoming exceedingly risk in part from the continuation of such practices.  So it seems the board of Pfizer will just continue handing its executives piles of money, despite, or for all I know, because of the company's continuing bad behavior.  Given these incentives, is it any wonder that the bad behavior continues?  Pfizer seems to be just another example - albeit a big one - of how health care is dominated by an oligarchy of unaccountable leaders who continue to demonstrate their impunity hidden by aspirational but hollow public relations and marketing.

Of course, it is doubtful such bad behavior would continue if there risks of external penalties, e.g., from law enforcement.  But there never seem to be any.

In the past, US law enforcement authorities have announced they would use the responsible corporate officer doctrine, a legally tested rationale for prosecuting corporate managers for bad behavior by those who report to them (e.g., in 2010, look here),  But it seems they have never done so, at least in cases involving large health care organizations.  Last week, the US Department of Justice announced it would start going after executives of companies that misbehave, and would press the companies to give up the name of responsible executives in exchange for more lenient treatment of the companies themselves (e.g., see this report in the NY Times).  Meanwhile, however, the march of legal settlements for bad behavior in health care continues, absent any penalties for organizational leaders who might have authorized or directed it, much less for those who simply put incentives in place to foster bad behavior while looking away from what those incentives inspired.    

I hope these current promises by law enforcement officials are not as hollow as earlier ones, because continuing our society's continuing failure to rein in corrupt business practices via law enforcement and regulation may lead a desperate populace to more radical approaches. The UK Labor Party just elected a Marxist leader (see this Reuters report.)  One wonders how long it will be before anger at the larger oligarchy, of which health care leadership is merely a part, boils over in other countries, and in more radical ways.

Instead, we continue to advocate for true health care reform with the immediate priority of changing how health care organizations are led, and ensuring leadership that upholds health care values, is willing to be accountable, and is open, honest, transparent and ethical.  We still may have time to reform.  But the reform will have to be big and true.  If not, moderate voices may be drowned out, and the results may be worse than anyone could imagine.

Appendix - Pfizer's Previous Settlements


For all our posts on Pfizer, look here.

In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,
- In 2002, Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.
- In 2004, Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.
- In 2007, Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

Thereafter,
- Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).
- Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).
- The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here). 
- In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).
- In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
- In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).
- In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).
- In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this post).
- In July, 2013, Pfizer settled charges of illegal marketing of Rapamune (see this post.)
- In April, 2014, Pfizer settled allegations of anti-trust law violations for delaying generic versions of Neurontin( see this post).
- In June, 2014, Pfizer settled another lawsuit alleging illegal marketing of Neurontin (see this post).

1:43 PM

Same Old, Same Old - Johnson and Johnson Settles Charges it Concealed Adverse Effects of Risperdal, Vaginal Mesh Device, Pleads Guilty to Selling Adulterated Tylenol, Announces CEO Got 48% Raise to $25 Million

We have devoted a lot of bytes over the years to the stream of allegations and ethical questions about Johnson and Johnson, the giant pharmaceutical/ biotechnology/ device company, and resulting legal actions.  Meanwhile, the company has bestowed a gushing stream of money on its top executives.  Its almost spring, 2015, and it seems nothing has changed.

Johnson and Johnson's Latest Legal Misadventures

Jury Verdict that Company Concealed Harms of Risperdal

Let us start with the latest legal news about J&J.  In late February, 2015, as reported on the PharmaLot blog by Ed Silverman,

In a setback to Johnson & Johnson , a Philadelphia jury decided the health care giant must pay $2.5 million in damages for failing to warn that its Risperdal antipsychotic could cause gynecomastia, which is abnormal development of breasts in males. The lawsuit was brought by the family of an autistic boy who took the drug in 2002 and later developed size 46 DD breasts, according to a lawyer for the family.

The case has drawn attention for a few reasons. For one, this was the first lawsuit claiming J&J hid the risks of gynecomastia to go to trial after a handful of cases were settled in recent years. The trial also served as a reminder that J&J paid $2.2 billion two years ago to resolve criminal and civil allegations of illegally marketing Risperdal to children and the elderly.

Moreover, former FDA commissioner David Kessler served as a paid expert witness for the family and testified that J&J knew about the risks associated with Risperdal, but failed to disclose the data showing the extent to which youngsters may develop gynecomastia. In a report prepared for a 2012 case that was settled, Kessler wrote that J&J’s Janssen unit, which marketed the drug, had violated the law.

Note that the central allegation in this case was not simply that the drug had adverse effects, but that the company knew about these effects, and hid them.  In my humble opinion, since we entrust pharmaceutical companies to provide safe and effective products, withholding information about adverse effects is a fundamental violation of this trust. 

As noted above, this follows on another case with a much bigger financial settlement about questionable marketing of Risperdal. In addition, as the PharmaLot post noted, there are many more individual cases like this one waiting in the wings, "J&J says there are about 1,200 such lawsuits filed in courts around the country,..."

Jury Verdict that Company Concealed Harms of  Vaginal Mesh Device

Similarly, as reported by Reuters in early March, 2015,

A California jury on Thursday ordered Johnson & Johnson's Ethicon Inc unit to pay $5.7 million in the first trial over injuries blamed on the TVT Abbrevo, one of numerous transvaginal mesh products that are the subject of thousands of lawsuits.

Following more than three days of deliberations in Kern County, California, jurors found Ethicon liable for problems with the TVT Abbrevo's design and for failing to warn about its risks, according to a lawyer for plaintiff Coleen Perry.

Perry was awarded $700,000 in compensatory damages and an additional $5 million in punitive damages after jurors in the Bakersfield court found Ethicon's conduct amounted to 'malice,' her lawyer said.

Again, note that this lawsuit was not merely about the adverse effects of, in this case, a device, but about allegations that the company knew about these effects, but hid them.  My comments about violation of a fundamental trust above apply. 

Again, this is but one of the earlier cases of a cohort that may number 36,000.

Company Pleads Guilty to Selling Adulterated Tylenol

Finally, as reported in mid-March, 2015, by Reuters,

A Johnson & Johnson subsidiary pleaded guilty on Tuesday to selling liquid medicine contaminated with metal and agreed to pay $25 million to resolve the case, the U.S. Department of Justice said on Tuesday.

The subsidiary, McNeil Consumer Healthcare, pleaded guilty to one federal criminal charge in the case.

In 2010, the company launched mass recalls of certain children's over-the-counter-medicines, including Infants' Tylenol and Children's Motrin, made at its Fort Washington, Pennsylvania plant.

It was the latest in a series of recalls at the time. There were far-reaching multiple recalls from 2008 to 2010 involving hundreds of millions of bottles and packages of consumer brands such as Tylenol, Motrin, Rolaids, Benadryl and other products due to faulty manufacturing. The recalls kept widely used products such as Children's Tylenol off pharmacy shelves and seriously tarnished J&J's once-sterling reputation.

In addition to metal particles getting into liquid medicines, there were moldy odors and labeling problems.

Furthermore, as emphasized in a report in the Philadelphia Business Journal, this case also involved allegations that the company seemed to conceal the problem.

McNeil, after receiving the consumer complaint, did not initiate or complete a 'corrective action preventive action' plan as required by the federal government.

The federal government also alleged other instances in which McNeil found metal particles in bottles of infants' Tylenol at its Fort Washington facility, but failed to initiate or complete a corrective action plan.

Note that in this case, the company pleaded guilty and so could not claim it was merely settling to put the case behind it.  Furthermore, note that this was not the first case arising from charges that the company sold adulterated products made in the Pennsylvania and other factories (for example, see this post.)   We posted frequently about a long string of recalls of presumed defective or adulterated Johnson and Johnson products (here, here, here and here).  Again, in my humble opinion, we we trust drug companies to sell pure, unadulterated products.  Selling adulterated products again fundamentally violates this trust.

Unfortunately, these three cases, like many of the legal settlements we discuss, involved relatively small penalties that only accrued to the company as a whole.  The monetary penalties, while they may seem large to regular citizens, could appear as relatively trivial costs of doing business to company management.  Furthermore, no individual who authorized, directed, or implemented the behavior identified in these cases suffered any kind of penalty.  So these cases added to the many examples of the impunity of managers of large corporations who almost never seem to bear any legal responsibility for their actions.  In the case of Johnson and Johnson managers, this is all the more striking, since the current cases are just the latest in a very long string.  (See Appendix below for a list of Johnson and Johnson legal misadventures we have discussed since 2010.)


Johnson and Johnson CEO's Latest Raise


Finally, a day later, the Wall Street Journal reported on the continuing good fortune of the Johnson and Johnson CEO, to be contrasted with the company's poor fortunes in the courts of law.

Johnson & Johnson said Chairman and Chief Executive Alex Gorsky’s total compensation jumped 48% to $25 million last year, lifted by an increase in stock and option awards. Mr. Gorsky’s stock and option awards rose to a total value of $13.6 million from $8.7 million a year earlier. The board also raised Mr. Gorsky’s base salary to $1.5 million from $1.45 million in 2013, and the CEO also benefited from a jump in pension value.

In a filing Wednesday, the pharmaceutical giant said Mr. Gorsky’s compensation increase was based on the board’s conclusion that J&J successfully executed near-term priorities, exceeded financial goals and built on momentum in its pharmaceutical business.

As a result, J&J awarded Mr. Gorsky an annual performance bonus of 135% of target and long-term incentives at 130% of target. Awards at J&J are capped at 200% of target.

The article noted that at least one other top Johnson and Johnson manager also was raking it in.

Paulus Stoffels, world-wide chairman of Pharmaceuticals, made $18.3 million last year, more than double his 2013 total compensation, boosted by a stock award of $10.7 million.

Funny, the board's rosy view of Mr Gorsky's performance seemed totally uninformed by the company's latest legal misadventures.

(By the way, to anyone who would argue that many of these misadventures were the results of behavior that occurred before Mr Gorsky became CEO, note that his official company biography stated that he joined the company's Executive Committee in 2009, implying some shared responsibility for overall company management since then.)

Same Old, Same Old

A few weeks back, one of our commentators complained that our posts have a certain sameness.  Unfortunately, we agree.  We keep seeing variants of the same sorts of outrageous stories in the news media that we began to post about in 2004.   The problems are not getting better.  Perhaps they are getting worse.

In particular, we have previously contrasted this particular company's recurrent legal and ethical problems with its top managers' accumulating wealth.  In 2011 we posted about the contrast between previous Johnson and Johnson CEO William Weldon's enlarging fortune and political influence with some of the earlier legal cases that raised questions about the trustworthiness of the company.

But the point of this blog is not to come up with titillating stories to make people chuckle.  The point is to challenge the continuing, severe problems afflicting the leadership and governance of health care, the resulting incompetent, unethical, and sometimes criminal behavior, and the downstream effects on patients' and the public's health.  Do not blame the messenger for the sameness of the problem.  Blame those who are getting wealthy and powerful from the ongoing decline in health care. 

If we truly want to see more accessible, more effective, less costly health care in our life times, we need to first call out the bad leadership that has kept such aspirations at bay for so long, and second start to hold current leadership accountable for the mess they have made.


Appendix - Johnson and Johnson Legal Record since 2010-
2010
- Convictions in two different states for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax
2011
- Guilty pleas to bribery in Europe  by Johnson and Johnson's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses  (see this link for all of the above)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
2012 
 - Testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
-  Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
-  Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post).
2013
-  Johnson & Johnson settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this post)
-  Johnson & Johnson Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this post).
 -  Johnson & Johnson DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .
- Johnson & Johnsonn Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this post for this and above case).
- Johnson & Johnson Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this post).
- Johnson & Johnson fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (see this post).
2014 
- Johnson & Johnson DePuy subsidiary settled Oregan state charges that it marketed the ASR XL metal-on-metal hip joint prosthesis without disclosing its high failure rate (see this post). 

12:11 PM

How the Anechoic Effect Persists: The Case of the Continued Punishment of Dr Elliott

We have frequently discussed the anechoic effect, how evidence and opinions that challenge the dysfunctional status quo in health care, and that might discomfit those in power in benefit from it, have few echoes.  One major reason for the anechoic effect is that people are afraid to speak up because thus disturbing the powers that be may have bad consequences for the speakers.   

A December 21, 2014 article in the Minneapolis Star-Tribune updated an ongoing example of how the leaders of health care may seek to silence their critics.  The article updated the career trajectory of Dr Carl Elliott, a psychiatrist physician and bioethicist at the University of Minnesota who dared challenge the university's handling of the untimely death of a patient in a university run clinical trial.

Background - the Dan Markingson Case

We first blogged about this case in 2011.  The case itself dates from 2003, and first got media attention in 2008.  A good quick summary appeared in the Center for Law and Bioscience blog out of the Stanford Law School. 

Dan Markingson – a vulnerable, psychotic young man – was forced to choose between enrolling in a Pharma-funded drug study or being involuntarily committed (in other words, locked up).  A UMN [University of Minnesota]  doctor enrolled him in the study despite having just determined that Dan 'lack[ed] the capacity to make decisions regarding [his] treatment,' rendering it highly unlikely that Dan could have given valid informed consent to participate.  As Dan's mother, Mary Weiss, observed his mental condition deteriorating, she repeatedly tried to have Dan removed from the trial – at one point asking  'Do we have to wait until he kills himself or someone else before anyone does anything?'  But the UMN co-investigators in the drug study refused to terminate his participation.  Shortly after Ms. Weiss made her desperate plea, Dan Markingson killed himself by cutting his own throat.

Dr Elliott, an expert in bioethics who had concentrated on issues such as the effect of conflicts of interest and commercial influences on clinical research, started probing the death of Mr Markingson after the 2008 media reports.

Some of what Dr Elliott found appeared in a May 23, 2014 article in Science. He concluded that previous efforts to investigate the death of Mr Markingson were flawed.

 Elliott came to believe that every investigation—not only by FDA but also by the Minnesota Board of Medical Practice, the university's IRB, and its general counsel's office—had been flawed or incomplete. FDA did not seek Weiss's perspective, the views of Markingson's caseworker, or interview staff at the halfway house who had interacted with Markingson, for instance. (FDA would not comment on the Markingson case for this story.) Nor did the agency examine conflicts of interest. Weiss's lawsuit was dismissed not on its merits, but because the university's IRB and Board of Regents were deemed immune from liability thanks their role as state employees. (The judge did argue that informed consent was obtained appropriately, because Markingson had signed the consent form and had not been declared mentally incompetent by a court.)

Furthermore, he found reasons to think that the problems with the trial in which Mr Markingson died were not unique.  He and a colleague

heard from other individuals who insisted that they had been harmed in UMN psychiatric drug trials or had witnessed others' mistreatment. One man said he had worked in the psychiatric units of the hospital where Markingson was treated. Another identified herself as a counselor for teenagers. Elliott heard from parents, who said their son or daughter had enrolled in a study under pressure.

Thus, Dr Elliott and others concluded that the university should do a thorough investigation of the case,

In November 2010, eight faculty members, including Elliott and [McGill University bioethicist Leigh] Turner, wrote a letter to the university's Board of Regents, requesting an independent, university-commissioned investigation into the Markingson case.

The Punishment of a Dissident

As the Science article noted, former Minnesota Governor Arne Carlson said that the

university hired Elliott because it 'found him to be one of America's most outstanding bioethicists. The moment he comes up with something that is sensitive to them, he becomes the village idiot.'

In fact, as we noted in 2013, in a 2012 post in the Center for Law and Bioscience blog, not only did university officials rebuff the call for a new, thorough investigation of the untimely death of Mr Markingson, but the university general counsel, who had been operating at the heart of this case, appeared to threaten the leading bioethicist dissident, Dr Carl Elliott:

 After Carl Elliott, the University of Minnesota bioethicist, refused to drop the matter, [university chief counsel] Rotenberg asked the university’s Academic Freedom and Tenure Committee to take up the question of '[w]hat is the faculty[’s] collective role in addressing factually incorrect attacks on particular university faculty research activities?' – a question that appeared both to accuse Elliott of 'factually incorrect attacks' and to call for some unspecified action to 'address' them.  Other faculty, including the president of the Minnesota chapter of the American Association of University Professors, viewed this as an attempt to intimidate Elliott into silence.  If so, it backfired.  The story ended up in the press, putting the Markingson case back in the public eye and once again making the University of Minnesota look really bad.

The December 21, 2014 Star-Tribune article reported that university administrators seem to be out to get Dr Elliott once again. First, it interviewed the university's chair of psychiatry,

[Dr S Charles] Schulz, the department chair, says he can’t even bear to read Elliott’s published accounts anymore. 'It’s too painful,' he said.

Both he and Olson say that Elliott gives only one side of the story and that he ignores the facts that don’t support his case.

'I think [people] believe that because Carl Elliott is a professor of bioethics and a member of the Center for Bioethics, that he must be telling the truth,' said Olson. But 'he’s not pursuing this in an academic way. I don’t think it’s conduct that becomes a faculty member and a peer.'

What is not academic or unbecoming about investigating the death of a vulnerable psychiatric patient during a clinical trial is not clear. Then,

University officials have not been amused. They accuse Elliott of whipping up hysteria with 'false and unfounded' allegations, and undermining research efforts in the process. And while the university hasn’t tried to fire him, it has reprimanded him for 'unprofessional conduct,' a move that he’s now challenging under the tenure code.

Again, rather than investigating the death of Mr Markingson, or at least responding to specific allegations, university administrators have set about to punish their own distinguished faculty member who wondered why a vulnerable patient died during a university run clinical trial. 

Finally,

So far, academic freedom has protected Elliott’s job. But last winter, the university claims, he crossed a line. It accused him of using a 'fabricated letter' in a speech about the Markingson case at Hamline University and demanded that he issue a retraction.

The 2004 letter, addressed to Weiss, Markingson’s mother, appears to be from a university lawyer disputing her right to her son’s medical records. The U says it’s a forgery; Elliott says he doesn’t believe it, and he refused to issue a retraction. He called it an attempt to discredit Weiss, adding: 'I won’t be part of it.'

Elliott received a letter of reprimand in August from Dr. Brooks Jackson, the current dean of the Medical School, citing him for 'significant acts of unprofessional conduct.' The reprimand is on appeal.

The evidence that the letter was a forgery was not apparent.  Yet while they pursue their own faculty member for his investigation of Mr Markingson's death, university managers still apparently have not addressed the many problems in the university's version of the story of Mr Markingson's death, from the fragmentary nature of previous investigations to the problems just revealed in a Scientific American blog with the knowledge of an expert witness for the university in the lawsuit brought by Mr Markingson's mother against it.  

Summary

Dr Carl Elliott is a respected physician bioethicist who has uncovered problems with commercial contract research organizations doing human research (see our blog posts here and here), and has written a critically acclaimed book, White Coat, Black Hat (reviewed here by Dr Howard Brody on his blog.)  Yet his previous work counted for naught when he dared look into possibly unethical clinical research done at his own university.  As noted in the Star-Tribune article,

Within the U’s Center for Bioethics, where he has worked since 1997, he says the tension is so palpable that he dreads setting foot in his office. He does most of his work from coffee shops.

In my humble opinion, it appears that top university managers have put their personal interests ahead of the mission of their university, the role of their faculty members in upholding that mission, and even the welfare of patients who put their trust in the university's academic medical center.  The hard life that Dr Elliott has lead since he started to challenge his own university's administrators show how the anechoic effect is generated.  As long as leaders of academic medical institutions, and other health care organizations can put their own interests ahead of the mission, health care professionals and other academics who object are likely to have their lives made miserable, possibly lose their jobs, or worse.  How many will have both the courage, and the resources to stand up for what is right under such a threat.

True health care reform would turn leadership of health care organizations over the people who understand and are willing to uphold the mission of health care, and particularly willing to put patients' and the public's health, and the integrity of medical education and research when applicable, ahead of the leaders' personal interests and financial gain.

ADDENDUM (30 December, 2014) - Post corrected.  Dr Elliott trained as a physician but is not a psychiatrist.

ADDENDUM (30 December, 2014) - also see comments on the 1BoringOldMan blog. 

1:02 PM

The Bigger They Come, the Softer They Fall - the Size of Pharma Companies and How Vigorously they are Prosecuted

After we found lessons to be learned from even  relatively small legal cases involving medical device companies, we reviewed some relatively small cases involving pharmaceutical companies made public in 2014.  Again, we had an index case that linked to larger issues

Merck Settled Fraud Allegations for $31 Million

This case got very little coverage in October, 2014.  A very short story by Reuters included these essentials,

A subsidiary of Merck & Co has agreed to pay U.S. states $31 million to settle claims that it overcharged their Medicaid programs for an antidepressant it had sold at a discount to pharmacy companies, attorney generals from three states said on Wednesday.

The officials from Idaho, New York and Florida said Organon USA Inc offered the drug, Remeron, to nursing home pharmacies at a discount to encourage its use over competitors. At the same time, the company reported the full cost of the drug when seeking reimbursements from state Medicaid programs, the states claimed.

New Jersey-based Organon, which did not admit any wrongdoing, also was accused of improperly promoting use of the drug by children and teens.

The agreement, which includes Washington, D.C., and every state besides Arizona, settled whistleblower lawsuits filed in 2007 in federal courts in Massachusetts and Texas.

That was the main content of the article.

Kickbacks to Promote Use of a Dangerous Drug

However, on the PharmaLot blog, Ed Silverman added important nuance,

Organon also allegedly offered kickbacks to nursing home pharmacies to encourage use of the Remeron antidepressant. The drug maker also allegedly promoted the medicine for uses not approved by the FDA. The marketing included targeting children and teenagers, according to a statement from New York Attorney General Eric Schneiderman.

So this was not merely financial fraud, but involved kickbacks to encourage excess use of a medicine for patients for whom it may have an enhanced risk of severe adverse effects.  In particular, Remeron (mirtazapine) may lead to higher risks of suicide attempts, including successful ones, by adolescents (look here for its official label).  So this case was not only about a company allegedly over-charging the government, but promoting a medicine that might be dangerous for vulnerable patients taking it. 


Merck's Track Record

Merck in some ways is the poster child for health care companies once renowned, but now troubled.  Merck's own voluminous Values and Standards document starts with this famous quote by founder George W Merck,

We try never to forget that medicine is for the people. It is not for the profits. The profits follow ,and if we have remembered that, they have never failed to appear.

Yet Merck was one of the first big multinational pharmaceutical companies to be tripped up by a big scandal in the 21st century.  As we wrote here, 

In summary, Vioxx (rofecoxib, Merck) a Cox-2 inhibitor non-steroidal anti-inflammatory drug used for pain, and touted for its ostensibly low risk of gastrointestinal side-effects, was withdrawn from the market in 2004 because of its cardiac risks.  The Vioxx case is flush with examples of how the company used deception to market a very profitable drug without regard to its risks to patients. 

A longer summary of the Vioxx scandal is in the Appendix below.

Furthermore, Merck also seems to have a chronic problem with honest discussion of another of its products, Zetia (look here).   Merck was also fined by the French government for a "smear campaign" against generic competitors (look here) and this month got a very poor rating for its global corporate transparency from Transparency International (look here). 

So this relatively small case reminds us that when a very large health care company is accused of misbehavior, including deceptive behavior that could have led to patient harms, not only are no individuals who might have authorized, directed or implemented the bad behavior held accountable, but the case is likely resolved in a seeming vacuum, totally uninformed about the company's previous record of similar problems.

Sheffield Pharmaceuticals CEO Pleaded Guilty of Felony for Discharge of Wastewater Without Permit

An interesting contrast is the case of one Mr Thomas Faria, as described by the New London (CT) Day in July, 2014,

Thomas H. Faria, who resigned in March as president and chief executive officer of Sheffield Pharmaceuticals, pleaded guilty in U.S. District Court Tuesday to a felony violation of the Clean Water Act for knowingly discharging untreated industrial wastewater to the New London sewage treatment plant from 1986 to 2011.

His penalty does not yet seem to be public, but could go considerably beyond loss of his job,

Faria pleaded guilty to one count of knowingly violating, or causing to be violated, the Clean Water Act, an offense that carries a maximum penalty of three years of imprisonment and a fine of not less than $5,000 but not more than $50,000 per day of the violation.

Yet the harms produced by the company's actions are not so clear,

The environmental impact of the violation over a 25-year-period is unknown, though Special Assistant U.S. Attorney Peter Kenyon from the Environmental Protection Agency said the EPA is unaware of any fish kills or direct harm suffered by humans.

'The possibility of impact from this type of discharge certainly exists,' Kenyon said during a conference call Tuesday.

So in this case, the offense was environmental, and had nothing directly to do with the over the counter drugs manufactured by the company, or their effects on patients.  The impact of the offense on the environment was unclear.  Nonetheless, the CEO of this small, privately held company lost his job, had a felony on his record, and is liable for large fines or up to three years in jail, pending sentencing.

Jury Found Takeda and Eli Lilly Concealed Cancer Risks of Actos, Company Subject to Punitive Damages of $36.8 Million

The basics of the case were reported by Medscape in April, 2014, and were also covered by Reuters and Bloomberg,

Drugmakers Takeda Pharmaceutical Co. and Eli Lilly and Co. promised to appeal an award of $9 billion in punitive damages — one of the largest in US history — after a federal jury found they had concealed the cancer risks for their type 2 diabetes drug pioglitazone (Actos).

In addition, the jury ordered the payment of $1.475 million in compensatory damages.

Pioglitazone is associated with an increased risk for bladder cancer among persons with type 2 diabetes, according to a 2012 study in BMJ, as reported by Medscape Medical News.  The US Food and Drug Administration in 2011 updated the pioglitazone label to warn against starting the drug in patients with active bladder cancer and to use caution if starting it in patients with a prior history of bladder cancer,...

In addition, the judge ruled that the company destroyed relevant documents to prevent their use in court proceedings,

attorney Mark Lanier said Takeda officials intentionally destroyed documents about the drug.

US District Judge Rebecca Doherty agreed and penalized the company, telling jurors they could infer that the files may have supported Allen's claims that the company wrongfully concealed the medication's health risks. 'The breadth of Takeda leadership whose files have been lost, deleted or destroyed is, in and of itself, disturbing,' Doherty wrote in a January ruling.

In late October, 2014, the judge reduced the award for punitive damages, per Reuters,

In her ruling, Doherty said the original $9 billion damages award was 'excessive' and violated the companies' constitutional rights to due process.

She ordered Takeda to pay $27.6 million and Eli Lilly to pay $9.2 million for a total of $36.8 million. Doherty said that, while far smaller than the jury's original award, the reduced punitive damages were still 'large enough to accomplish the jury's clear aim: to send a message to the defendants that their wrongdoing must stop...'>

I should note that apparently the judge found the amount excessive given the size of the compensatory award to the single plaintiff.  However, the judge reiterated her concerns about the companies' deceptive conduct,

The companies also had sought a new trial, arguing that the court had made prejudicial rulings on evidence and jury instructions that tainted the trial's outcome.

Doherty rejected that request Monday, writing that the evidence during the trial showed that the companies 'disregarded, denied, obfuscated and concealed' for more than a decade that Actos could increase patients' risk for bladder cancer.  

Note that in this civil case, a jury found the companies' deceptive conduct reprehensible, and a judge agreed that they "disregarded, denied, obfuscated and concealed" the truth.  No government prosecutors seemed to care to get involved with this particular case.  Because it was a civil case in which the companies were defendants, I am not sure whether any penalties affecting individuals were a possible outcome.  The results seem to suggest, at least in my humble opinion, that both ordinary people, like those sitting on juries, and judges may take greater exception to deceptive conduct that could harm patients than may government law enforcers and regulators.

Teva Pharmaceutical Industries Made $27.6 Million Settlement of Charges that it Induced Physicians' Excessive Prescriptions


This was well summarized by ProPublica in March, 2014,

Teva Pharmaceutical Industries Ltd. has agreed to pay more than $27.6 million to settle state and federal allegations that it induced Chicago psychiatrist Michael Reinstein to overprescribe clozapine, a powerful antipsychotic drug.

Reinstein has twice figured into ProPublica investigations.


Four years ago, ProPublica and the Chicago Tribune spotlighted Reinstein's prescribing pattern, finding that in 2007 he had prescribed more clozapine to patients in Medicaid's Illinois program than all of the doctors in the Medicaid programs of Texas, Florida and North Carolina combined. At least three of Reinstein's patients died of clozapine intoxication. At that time, Reinstein defended his prescription record, arguing that clozapine is effective and underprescribed.

Then, last spring, ProPublica reported that Reinstein prescribed even more of the drug in Medicare's prescription drug program for seniors and the disabled. ProPublica cited Reinstein in an investigation about how Medicare fails to monitor problem prescribers,...

Illinois Attorney General Lisa Madigan and the U.S. Justice Department claimed that IVAX, a Teva Pharmaceuticals subsidiary, paid Reinstein to overprescribe clozapine to Medicare and Medicaid patients. Yesterday Teva agreed to pay almost $15.5 million to the federal government and more than $12.1 million to Illinois to settle those allegations out of court.

Note that the government case seemed to be about how the government had to pay too much, not about harms to patients, despite the patient deaths described above.  Furthermore, the prosecutors, as they usually now do, allowed the case to be settled without any findings of wrongdoing,

Teva spokeswoman Denise Bradley told Reuters that the settlement does not mean that the company has admitted any liability.

It is interesting that the government is apparently pursuing a case against the physician as an individual, but not any cases against corporate managers who might have authorized, directed, or implemented the "inducements" to that physician,

In November 2012, federal prosecutors also filed suit against Reinstein, alleging that IVAX hadpaid him $50,000 a year to work as a consultant, paid his nurse to promote the drug and funded a study at an affiliated research institute. After the payments, Reinstein began overprescribing clozapine. The company also allegedly paid for trips and entertainment for Reinstein and his friends.

Otherwise, this case is typical of many US government and state prosecutors have pursued against big health care corporations.  There was a monetary settlement that might appear big to the public, but was tiny given the size of the company.  (According to Yahoo Finance, Teva's annual revenue is about $20 billion.)  The settlement did not involve any admission of wrongful behavior.  No one in the company who may have been involved with the wrongdoing that was not admitted suffered any negative consequences.  But, as is not usual, the government is pursuing a case against one individual, the physician who allegedly was paid as a "consultant," by maybe actually just to prescribe the company's product.

Summary

These cases add to the march of legal settlements about which we have often written.  These settlements and other legal cases suggest how frequently big health care organizations are involved in practices that may be unethical, illegal, and/or harmful to the patients they proclaim to serve.  Yet almost never do cases that involve US state and particularly federal law enforcement ever impose monetary penalties that are more than costs of doing business for the companies involved.  Almost never do they impose any negative consequences on any individuals within the companies who might have authorized, directed or implemented unethical, illegal, or harmful behavior.  

However, as we saw before, when the government asserts its law enforcement power against small organizations, small companies, or individuals, people may lose their livelihoods or go to jail.

The leniency of the government towards big health care corporations is very similar to the leniency shown towards big financial corporations.  A recent review of the book "Too Big to Jail" in the Washington Monthly noted that Mr Eric Holder, the current US Attorney General has urged leniency for big, and hence economically powerful corporations,

a memo written by Holder in 1999, during his stint as deputy U.S. attorney general. The document, 'Bringing Criminal Charges Against Corporations,' urged prosecutors to take into account 'collateral consequences' when pursuing cases against companies, lest they topple and take the economy down with them. Holder also raised the possibility of deferring prosecution against corporations in an effort to spur greater cooperation and reforms—a policy, unsurprisingly, later supported by the Bush administration.

The attorney general angered many last year when he reiterated those concerns at a congressional hearing, admitting 'that the size of some of these institutions becomes so large that it does become difficult for us to prosecute' because of the potential nasty economic effects of a major company failure.

Furthermore, the book provided some essentially epidemiological evidence that the government in fact has been more lenient towards bigger corporations, at least in the finance sphere,

There’s some compelling evidence that the largest, most established companies are more likely to win leniency with a delayed or canceled prosecution: 58 percent of the companies awarded such deals are public firms listed on a U.S. stock exchange, while publicly traded firms make up just 6 percent of those against whom the Department of Justice obtained convictions.

Yet there seems to be no evidence that this policy produces social good.  In particular, there seems to be no evidence that corporations treated leniently behave any better.

Finally, there is a question of essential fairness, and equal treatment under the laws.  It appears that executives of large finance, and likely health care corporations have virtual impunity.  Yet little people in health care, or finance, who do something wrong may go to jail.

True health care reform would establish a level playing field.  True health care reform would deter unethical behavior, especially when it harms patients.  True health care reform would make leaders of health care organizations accountable for putting patients' and the peoples' health first.   


Appendix- Vioxx Case

There is evidence is that the company knew about the cardiac risks of Vioxx since 2000, but suppressed the clinical research evidence until 2003.(1)  In particular, in 2005, the editors of the New England Journal of Medicine raised concerns that an article published in that journal in 2000 about the results of the VIGOR study of rofecoxib sponsored by Merck failed to report data that would have suggested that the drug caused excess cardiovascular risks.(2) In 2007, the company paid more than $4.9 billion to settle patient lawsuits alleging harm due to Vioxx.(3)  Also in 2008, the company made a $58 million settlement of claims its advertising of Vioxx deceptively minimized its risks.(4) In 2008, it became clear that at least one apparently clinical trial of Vioxx, the ADVANTAGE trial, was merely a "seeding trial,' that is, a marketing exercise.(5)

On Health Care Renewal, we starting writing about Vioxx in 2005, including,
- here about ghost-writing of a Vioxx research publication;
- here, and here about allegations that Merck executives tried to intimidate Vioxx critics;
- here about how advocates of an extreme laissez faire approach to regulation of health care corporations used illogical arguments about the Vioxx case;
- here about the ADVANTAGE "seeding trial," that is, a study really meant to recruit supposed physician-researchers as prescribers; and
- here about how one once prominent Vioxx researcher pleaded guilty to fraud in connection with his research on other drugs.
-  here about how in settling a shareholder lawsuit Merck vowed to improve its scientific and academic integrity, and refrain from manipulating and suppressing clinical research.

In 2010, we summarized the Vioxx case thus, " the Vioxx case provides a good lesson about some of the tactics used to deceptively and unethically promote health care products (pharmaceuticals in this case)." 

In case there are any doubts about the harms patients suffered as a result of using Vioxx as a pain reliever, in 2004, a cumulative meta-analysis of published trials of Vioxx known by then estimated the risk of myocardial infarction (heart attack) due to Vioxx compared with placebo or other non-steroidal anti-inflammatory drugs was 2.3 times the baseline rate.(6)  That analysis suggested that there was data by 2000 that Vioxx increased the risk of bad cardiovascular events.  A cumulative meta-analysis from 2009 suggested that the risk of death due to Vioxx was 1.7 times the baseline rate.(7)   That analysis suggested there was data by 2001 that Vioxx increased the risk of bad cardiovascular events.  Graham and colleagues' nested case-control study of Vioxx use in a large managed care organization lead them to estimate that "88 000 - 140 000 excess cases of serious coronary heart disease probably occurred in the USA over the market-life of rofecoxib."(8).

References

1. Topol EJ. Failing the public health - rofecoxib, Merck and the FDA. N Engl J Med 2004; 351: 1707-1709.  Link here.
2. Curfman GD, Morrisey S, Drazen JM et al.  Expression of concern reaffirmed. N Engl J Med 2006; 354:1193. Link here.
3. Charatan F. Merck to pay $5bn in rofecoxib claims. Brit Med J 2007; 335: 1011. Link here.
4. Charatan F. Merck to pay $58m in settlements over rofecoxib advertising. Brit Med J 2008; 336: 1208-1209. Link here.
5. Hill KP, Ross JS, Egilman DS, Krumholz HM. The ADVANTAGE seeding trial: a review of internal documents. Ann Int Med 2008; 149: 251-258. Link here.
6.  Juni P, Nartey L, Reichenbach S et al. Risk of cardiovascular events and rofecoxib: cumulative meta-analysis.  Lancet 2004; 364: 2021-2029.  Link here.
7.  Ross JS, Madigan D, Hill KP et al.  Pooled analysis of rofecoxib placebo-controlled clinical trial data: lessons for postmarket pharmaceutical safety surveillance.  Arch Intern Med 2009; 169: 1976-1984.  Link here.
8.  Graham DM, Campen D, Hui R et al.  Risk of acute myocardial infarction and sudden cardiac death in patients treated with cyclo-oxygenase 2 selective and non-selective non-steroidal anti-inflammatory drugs: nested case-control study.  Lancet 2005; 365: 475-481.  Link here.

9:40 AM

Back to the Future - Another Medical Device Company Accused of Hiding ICD Defects

Suppression of data about defects in and failures of implantable cardiac defibrillators (ICDs) was one of the big issues we featured in the early days of Health Care Renewal (2005-06). 

At that time, Guidant, later acquired by Boston Scientific, was accused of hiding data that certain of its defibrillator models failed, possibly leading to preventable patient deaths (see this post and follow links backward).  Boston Scientific, which acquired Guidant, settled a civil lawsuit and was put on probation in 2011 after it pleaded guilty to misdemeanor charges of failing to file required reports with the US Food and Drug Administration (see post here).   Similarly, in 2010, Medtronic settled multiple patients' lawsuits charging that it knowingly marketed a faulty ICD (see post here).

St Jude and the Obscure Riata Data

Now in 2012, A Wall Street Journal article suggested that St Jude Medical Inc hid problems with its Riata implanted cardiac defibrillator (ICD) for years.   

In December, 2010, St Jude Medical Inc issued a warning letter to doctors: Wires inside Riata defibrillator leads—cables that connect the heart to implantable defibrillators—were sometimes breaking through their insulation from the inside out.


The problem, which ultimately led to a recall last year, could cause defibrillators to send unnecessary jolts to the heart or fail to deliver lifesaving shocks to return chaotic heart rhythms back to normal. The company said it had identified dozens of cases with visible signs of the problem, and pulled Riata from the market.

For many doctors, this was the first notice of a problem with Riata.

But before that 2010 warning, physicians including Alan Cheng, director of Johns Hopkins Medicine's arrhythmia service; Samir Saba, chief of electrophysiology at the University of Pittsburgh Medical Center; and Ernest Lau at the Royal Victoria Hospital in Belfast, Ireland, say they had encountered this so-called "inside-out abrasion" in their own practices between 2006 and 2009. When these doctors brought the incidents to the attention of St. Jude they say they were told by company officials and field representatives that the incidents were isolated. The malfunctions described by the doctors didn't result in deaths.

St. Jude had been tracking the problem for several years, according to company documents collected by the Food and Drug Administration and reviewed by The Wall Street Journal. Cases involving the so-called inside-out abrasion date to at least October 2005, the documents show. Inside-out abrasion became a focus of an internal St. Jude audit, which examined multiple cases of the failure before April 2008.

The Journal article noted that more transparency about device failures might allow physicians to spot problems earlier and prevent harm to patients.

more than a dozen physicians and device-safety experts say that if St. Jude had acknowledged the inside-out failure earlier, physicians might have identified the scope of the problem sooner.


In some cases, doctors concede that they, too, believed the failures were isolated and therefore didn't act quickly to report problems to St. Jude or the FDA, which may have made it harder to spot the growing trend of failures. The leads were implanted in more than 13,000 patients since July 2008.

'Every time you have a failed lead, you assume it's an isolated event, but, you start to string together isolated events, and then you have a recall,' said Dr. Saba.

Summary

So, for Health Care Renewal, this is a straightforward case, at least so far.  Yet another health care organization, this time, a medical device company, failed to reveal data that might have reflected unfavorably on one of its products, and hence lead to decreases in short-term revenue.  However, by suppressing the information, the company may have allowed doctors to keep implanting a potentially faulty device, and exposed patients to risk, possibly of fatality. 

We have discussed many at least somewhat parallel cases of suppression of research (here), and many cases of other kinds of deception by health care organizations (here).  Yet these cases continue to occur, physicians and other health care professionals continue to be fooled by secrecy and data suppression, and patients continue to be harmed by drugs, devices, or other interventions made by people who knew, or ought to have known that they were more dangerous than they appeared to be. 

One problem may be that the people with the most influence on medical practice and health policy continue to cheer lead for the veracity of information about drugs, devices, and other health care interventions supplied by the people who most stand to gain from selling same.  A few weeks ago, the editor of the august New England Journal of Medicine, Dr Jeffrey M Drazen MD, scoffed at physicians' skepticism of pharmaceutical industry funded clinical research, claiming that there were only "a few examples of industry misuse of publications...." [Drazen JM. Believe the data. N Engl J Med 2012;  367:1152-1153.  Link here.]  In doing so, Dr Drazen seemed to ignore all the stories about suppression of medical research (some of which we have discussed here), manipulation of medical research (some discussed here), and deception (some discussed here) and secrecy (some discussed here) practiced by large health care organizations, including but not limited to drug, device, biotechnology, and health care information technology companies.

Instead, the possibility that St Jude kept hidden data about the failings of one of its ICD models reminds us how skeptical we ought to be about the information provided, or not provided by those with vested interests in selling health care goods or services.  Physicians, health care professionals, those interested in health policy, and the public at large need to collectively exert pressure on the leaders of health care organizations to promote greater transparency, especially about data reflecting on benefits and harms of health care goods and services.  . 

11:45 AM

More Hospices Pretending Patients are Terminally Ill

In the US, we have been engaged in an experiment involving handing over an ever increasing proportion of direct patient care to for-profit corporations, and non-profit organizations that act increasingly like for-profit corporations (as opposed to mission oriented non-profit organizations or individual health care professionals).  The results have been particularly striking for the care of one of the most vulnerable patient groups, the chronically ill. 

Over the last months, a number of stories about the hospices enrolling patients who are not terminally ill have accumulated.  Keep in mind that hospices are supposed to provide compassionate palliative care to the terminally ill.  While they are supposed to make such patients as comfortable and free of pain as is possible, they are not supposed to otherwise aggressively treat other medical problems (based on the assumption that such treatment would benefit dying patients.)  However, such treatments could benefit, or even save the life of patients who are not dying.  (See posts here and here.)

Hospice of the Bluegrass

Back in March, there was very brief report on Kentucky.com that the non-profit Hospice of the Bluegrass "agreed to pay the federal government $685,000 for submitting claims to Medicare to receive reimbursements for services it provided patients who did not qualify for Medicare services,..."  Note that the main requirement for Medicare payments for hospice services is that the patients receiving these services have no more than six months of survival expected.

However, then in June a detailed investigative report also on Kentucky.com recounted numerous conflicts of interest affecting that hospice's board,

The non-profit Hospice of the Bluegrass has spent more than $1.82 million since 2005 on business deals with several of its board members and the spouses of its executives.

In particular,

On its tax returns from 2005 to 2010, Hospice reported paying at least:

■ $540,178 for political lobbying and legal representation to the law firm of McBrayer, McGinnis, Leslie & Kirkland. One of the firm's partners and co-owners, Lisa English Hinkle, was a Hospice board member and a former board chairwoman. Hinkle rotated off the board at the end of 2011. She was preceded on the board by another partner in the firm, James Frazier.

■ $837,999 for insurance to the firm of Powell-Walton-Milward, whose managing director, John Milward, is a Hospice board member. His brother Greg Milward, who also works at the insurance firm, previously was on the Hospice board and was board chairman in 2007.

■ $392,042 for printing to Pat Byrne Printing, owned by the husband of Deede Byrne, Hospice's chief clinical officer.

■ $22,506 for heating and air conditioning to Gary Merckle, husband of Carol Ruggles, Hospice's chief financial officer.

■ $28,577 for advertising to the Lexington Herald-Leader while then-editor Marilyn Thompson sat on the board.

The article also noted that the hospice CEO seems very well-paid given the context,

CEO Gretchen Marcum Brown, whose 2010 compensation was $238,650 in base pay, $10,570 in bonus pay and $84,978 in other reportable compensation. The other compensation included Hospice's payment into Brown's deferred-compensation account, from which she can draw in the future.

Hospice also paid for a membership in Brown's name at The Club at Spindletop Hall, which offers swimming, tennis and dining.

Such a pay package may provide incentives to maximize revenue by maximizing enrollment, regardless of whether enrolled patients really should be in hospice.
Hospice Family Care

As reported by the Phoenix Business Journal in May,

Hospice Family Care Inc. has agreed to pay the federal government $3.7 million to settle civil allegations that the Mesa-based company violated the False Claims Act by submitting false bills to Medicare.

Also,

The U.S. Attorney’s Office had alleged that Hospice Family Care submitted claims for payment to Medicare for patients who were either completely or partially ineligible for hospice,...

So this settlement is partly for charges that the hospice enrolled patients who were not terminally ill.

Note that in this particular case, the government made an effort to punish the owners of the company, who found a way to evade such punishment:

However, on the day the U.S. Attorney’s Office announced that settlement, Hospice Family Care’s owners closed on a deal to sell the company.

So,

Neither the company’s attorney, Frederick Petti, nor government officials would disclose the name of the buyer.

“Unfortunately, I can’t provide that information because it’s not in the public domain,” said Assistant U.S. Attorney Bill Solomon.

The company’s co-owners, Nancy Smith and Nancy Turner, deferred all comments to Petti.

'Believe me, if my clients weren’t in the process of selling this company, we would have fought this to the bitter end,' Petti said. 'We would have prevailed. This is a business decision.'

He emphasized that the settlement agreement was not an admission of guilt.

Smith and Turner agreed to be excluded from Medicare and Medicaid and all other federal health care programs for seven years, effective immediately. However, Petti said the company’s new owners will not be affected by that settlement agreement and will be free to accept reimbursement from government payers.

Such maneuvers obviously reduce any deterrent effect of settlements like this on bad behavior, and particularly on the behavior of enrolling patients who are not terminally ill in hospice.
Harden Healthcare

Then in June the Wichita (Kansas) Eagle reported,

A Kansas hospice care provider and its Texas-based parent company will pay $6.1 million to resolve allegations that they submitted false claims to the federal Medicare program. The case arose from a whistleblower lawsuit filed by a nurse more than six years ago, the U.S. Justice Department said Thursday.

Justice officials said in a news release that they hope the settlement with Wichita-based Hospice Care of Kansas LLC and Fort Worth-based Voyager HospiceCare Inc. will serve as a warning to other hospice providers.

Prosecutors alleged the companies submitted false claims to the federal health care program for the elderly and disabled between 2004 and 2008 for patients who weren’t expected to die in less than six months, a requirement for the benefits in question.

Note that this report makes very explicit the allegation that the hospice was enrolling patients who were not terminally ill. Further note that while the beginning of the report makes it appear that the company that owns the hospice is regional, it actually is larger

The agreement includes no admission or determination of wrongdoing, Harden Healthcare, the owner of Voyager HospiceCare and Hospice of Kansas, said in a statement.

Harden Healthcare, according to the Austin (Texas) Business Journal, is the largest private employer in that city, with over 3800 employees and revenues of over $810 million.

Hospice of the Comforter

The Orlando Sentinel reported in late August,

The federal government is taking over a whistleblower lawsuit against the Altamonte Springs-based Hospice of the Comforter — a suit that alleges the nonprofit routinely over-billed Medicare for patients who didn't qualify as terminally ill, sometimes keeping them in hospice care for as long as five years.

These are allegations of course, but it turns out that both sides of the action agree on certain facts of interest,

Both sides agree that Hospice of the Comforter officials discharged a large number of Medicare patients after the federal government began scrutinizing the ballooning number of hospice patients nationwide.

In fact, Stone said, the initial sampling by government auditors showed Hospice of the Comforter had an error rate of 18 percent, just slightly over the 15-percent rate the government allowed and therefore triggering a second, more intense review.

That phase, in January 2010, revealed a troubling 77 percent denial rate, Stone said — meaning that Medicare officials believed the hospice was improperly billing the government in 77 percent of the cases it reviewed. According to the government, hospice care should be limited to patients certified by a hospice physician as having six months or less to live.

Meanwhile, though, an internal hospice committee did its own review of patients, discharging more than 133 of them and noting they were, 'no longer terminally ill,' the lawsuit states. Some had been designated 'FOB' for 'Friends of Bob [Wilson, the CEO of the hopsice],' and Wilson later insisted some be readmitted and their care billed to Medicare, the lawsuit says.

Let me just note that for someone truly terminally ill, the way to become no longer terminally ill is to die.

A column in the Orlando Sentinel suggested that the hospice CEO had a strong personal incentive to enroll patients who were not terminally ill,

there are facts not in dispute — such as Wilson's financial incentive to keep his patient counts high: bonuses of $50,000 every three months on top of his base salary of $120,000.

Again, maintaining lucrative compensation could be an inducement for hospice executives to sanction enrollment of patients who were not really terminally ill.
Summary

Hospices arose to provide compassionate care for among the most vulnerable of patients, the terminally ill.  Hospices began as mission oriented non-profit organizations, often affiliated with hospitals or religious groups.  However, the generous payments for hospice care provided by Medicare and commercial insurance, and the increasingly laissez faire supposedly "market-based" health care context lead to the growth of for-profit hospices, and the emulation of their management by ostensibly non-profit organizations.  In the Orlando Sentinel, Scott Maxwell used the example of the Hospice of the Comforter to assert

you've been duped when it comes to waste, fraud and abuse in America's health-care system.

Politicians love to rant about it. They often do so when explaining why they're about to cut your benefits.

They're right that fraud happens. But the individual scammers they portray as the problem are nothing compared to the systemic white-collar fraud perpetrated by corporations — and, yes, faith-based nonprofits.

This is America's dirty little health-care secret.

We all know health-care costs are soaring. But we have done little to address the organized fleecing — often because the fleecers are either campaign donors or nonprofits wrapped in a cloak of altruism.

In this country, you can go to prison for stealing a TV. But if companies get caught stealing millions from taxpayers, the fines are simply viewed as the cost of doing business.

We have made similar assertions about systemic misbehavior in the US health care system, and how failure of local through national government to impose any penalties on the individuals who authorize, direct or implement bad behavior just allow the problem to get worse. However, the consequences of increasing hospice enrollment (hence short-term revenue, and hence the compensation of top hospice executives) by enrolling patients who are not terminally ill go well beyond just increasing health care costs. As we have said before, enrolling patients into hospice who are not already really doomed to die soon denies them the possibility of treatment for new acute illnesses and worsening of chronic illnesses, which then could hasten their deaths. (Pretending those patients were terminally ill could have fooled their relatives into thinking those deaths were inevitable, instead of results of bad practice and potentially fraud.)

So the pattern of fraud now increasingly documented to be taking place in for-profit and even non-profit hospices is particularly reprehensible. It preys on vulnerable patients, and may cost some patients their lives who otherwise might have lived for a long time. This is a prime example of what goes wrong when our main health care policy seems to be based on letting the good times roll.

I hope that the realization that enrollment of patients who are not terminally ill into hospices can result in their untimely death may lead to some reconsideration of our experiment in lightly regulated, "market based" health care. Those who directly care for patients ought to be motivated by professional values, not short-term revenue.

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