Stryker Subsidiary Pleads Guilty to Selling Adulterated Devices, Former CEO of Subsidiary Pleads Guilty to Fraud, Stryker's Track Record Goes Unremarked

The US Thanksgiving Day parade is over, so it must be time for the march of legal settlements to begin again. Our next example was best described by Bloomberg and by NJcom, but brief articles from the Associated Press, Reuters, and the Wall Street Journal have also appeared.

The Basic Facts

The Bloomberg lede was,

Stryker Corp. OtisMed unit pleaded guilty to selling devices used in knee-replacement surgeries in September 2009 without regulatory approval and will pay more than $80 million to resolve the case.

The conduct in question was,

The company admitted it never obtained U.S. Food and Drug Administration approval to sell 18,000 custom-built devices used by surgeons from 2006 to 2009 to make accurate bone cuts to implant prosthetic knees. OtisMed applied for FDA approval in October 2008, and the agency said 13 months later the company hadn’t shown it was safe and effective. [OtisMed CEO Charlie] Chi then shipped 218 devices to surgeons, overruling his advisers and board.

Furthermore, in this case, there was some information about who actually did what,

After a conference call with OtisMed directors on Sept. 9, 2009, Chi talked to two employees about ways to hide the shipments from the FDA, including taking them to an off-site shipping location, using Chi’s personal Federal Express account, and backdating shipping documents, court records show.

The NJ.com report clarified to what charges the guilty pleas referred,

Charlie Chi, 45, pleaded guilty to three misdemeanor counts of fraud linked to the September 2009 shipment of 218 OtisMed devices to surgeons throughout the U.S., including 16 in New Jersey.

Also,

OtisMed, which was acquired by Stryker Corp., pleaded guilty to a felony charge of distributing adulterated medical devices into interstate commerce.... 

So, a company acquired by large medical device manufacturer Stryker admitted and pleaded guilty to charges that it fraudulantly marketed an unapproved device, and that this marketing was lead and facilitated by the company's CEO.  The CEO pleaded guilty to misdemeanor fraud charges.

The Penalties

Per Bloomberg,

OtisMed will pay a fine of $34.4 million and forfeit $5.16 million in a criminal case, while paying a civil fine of $41.2 million. The company pleaded guilty today in federal court in Newark, New Jersey, where former Chief Executive Officer Charlie Chi also pleaded guilty.

Chi has not yet been sentenced, but according to NJ.com,

Chi, of San Francisco, faces up to three years in prison when he’s sentenced on March 18, 2015.

Bloomberg noted that,

The $80 million payment is almost three times the total revenue that OtisMed got for all of the knees the company sold, according to Fishman.

However, the amount could also be compared to the approximate annual revenue of Stryker Corp, which was most recently about $8 billion per Google Finance, or its net income, about $1 billion.

Furthermore,

OtisMed was barred from Medicare, Medicaid and all other federal health-care programs for 20 years. Stryker, based in Kalamazoo, Michigan, wasn’t barred.

This case was unusual in that a health care corporate CEO was actually charged and pleaded guilty to crimes connected to illegal marketing practices, and in that his company not only admitted wrongdoing and pleaded guilty, but also agreed to disbarment from federal programs.  However, by the time the case was thus decided, the CEO was no longer CEO, his company had been acquired by a larger health care corporation, and that corporation, while letting its new subsidiary agree to a fine and disbarment, was not itself disbarred from anything. 

Stryker's Track Record 

The Bloomberg noted that Stryker did not have unblemished track record,

In 2007, New Jersey’s U.S. attorney at the time, Chris Christie, reached an agreement with four makers of hip- and knee-implants that paid $310 million to settle U.S. claims they paid kickbacks to surgeons who used their products. Stryker, a fifth company, received a non-prosecution deal. Christie, a possible Republican presidential candidate in 2016, is now governor.

In fact, that year, we posted (here, here, here, and here) about the payments, often huge, that five manufacturers of prosthetic joints (Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew) revealed they made to orthopedic surgeons and various academic and other organizations. We also noted that some of the leadership of the major orthopedic societies have received substantial amounts from these companies, as have the societies themselves.

However, there is much more to the Stryker track record,

In 2013, we noted that Stryker paid $13.2 million to settle charges that it bribed doctors in various countries to use its devices, violating the US Foreign Corrupt Practices Act (FCPA) (look here).

In 2012, we noted that Stryker paid a $15 million fine after pleading guilty to a federal count of misbranding a medical device. Government prosecutors alleged the company conspired to defraud surgeons into combining two of its products, contrary to their labeled usage, and possibly harming patients (look here).

In 2010, we noted that Stryker paid $1.35 million to settle charges that it marketed bone growth products without FDA approval (look here).

In 2009, we noted that two Stryker sales representatives pleaded guilty to charges they promoted off-label use of Stryker bone growth products although they knew such use could endanger patients (look here).  

So the larger corporation that paid fines that appeared large, but were actually small given its size, and that let its subsidiary and its subsidiary's former CEO otherwise take the raps, had a long track record of similarly questionable behavior.  That track record did not apparently inform the resolution of the current case.


Summary

So here we go again. A large medical device company resolved charges of wrongdoing by paying a fine that appears large to the common person, but in fact was small compared to its revenue.  The case was unusual in that the company did admit wrongdoing, but in a way that seemed to reflect the blame onto one of its subsidiaries.  The case was further unusual in that a CEO was charged and pleaded guilty, but it was not the CEO of the large corporation, but the former CEO of the acquired company.  The case was yet further unusual in that a company was disbarred from transactions with the federal government, but the company was just the subsidiary of the larger company, which otherwise could continue business as usual. 

Thus while the penalties meted out in this case seemed more severe than usual, on examination they left the big parent corporation relatively unscathed.  No one still in management at that corporation, including anyone involved in the acquisition of the wayward subsidiary, apparently will suffer any negative consequences.  Furthermore, that larger corporation turns out to have a substantial track record of previous misbehavior.  Yet that did not apparently affect the outcome of this case, and little of this track record was even reflected in the reporting of the current case.

While we have often - some might say ad infinitum - discussed the march of legal settlements by large health care organizations, and how these settlements seem to impose relatively small penalties on the corporations, and leave their hired managers untouched, these settlements seem to produce few echoes.  Like many other examples of unpleasantness that might reflect badly on the leaders of large health care organizations, even those who may have personally profited from the unpleasantness, they remain largely anechoic.  So we would urge the reporters who cover the next settlements by big health care organizations at least look to see if the organizations had been involved in similar settlements in the past

Finally, as we have said all to often,...   The failure of the current limp legal efforts against such corruption is evident by how many corporations have become ethical repeat offenders.  Pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.  So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue.

1:42 PM

Even Crazy Eddie Knows "Corporations Don't Commit Crimes, People Commit Crimes" - But Biotronik Settles

The deals the government gives are INSANE!!!  Just ask Crazy Eddie's former Chief Financial Officer.

The Former Crazy Eddie CFO on Impunity

Those of a certain age who were in or near the New York area remember Crazy Eddie, a discount appliance and electronics retailer with insane advertisements.




As reported by CNN, Sam F Antar, the former Chief Financial Officer of Crazy Eddie, was a speaker on a conference on financial fraud,

The U.S. government is losing the war against white collar crime.

That's the message from Sam E. Antar, one of the masterminds of the massive Crazy Eddie fraud of the 1980s.

'We are in the golden era of white-collar crime. My biggest regret is I should've been a criminal today rather than 20 years ago,' Antar told CNNMoney on the sidelines of a New Jersey securities fraud summit.

Antar drew a big round of applause when he pointed out that no one from Wall Street went to prison because of crimes that led to the financial crisis.

'We are devoting far less resources to combating crooks like myself today than back in my day,' he said.

Antar knows a thing or two about corporate fraud. He served as Chief Financial Officer of Crazy Eddie, the electronics retailer that became one of the symbols of white-collar crime in the 1980s.

Known for its loud commercials promising "INSAAAANE" prices, Crazy Eddie got into trouble for understating income to avoid taxes and then committing securities fraud once it decided to go public.

'Crazy Eddie was from Day One planned to be a criminal enterprise. We committed our crimes simply because we could,' said Antar, whose cousin Eddie Antar founded the chain.

Because he 'showed the feds where the bodies were buried,' Antar got off with only six months of house arrest, community service and tens of thousands of dollars in civil penalties. Crazy Eddie co-founder Eddie Antar served more than six years in prison.

Today, the convicted felon is advising the government and private companies about white-collar crime. Antar expressed frustration with the government's failure to put Wall Street bankers behind bars.

'We have turned prosecutors into tax collectors,' he said. 'Corporations don't commit crimes, people commit crimes.'

While the focus of this conference was corporate fraud and crime in the financial sector, we have frequently discussed corporate crime and corruption in the health care sector.  We have noted, especially in our posts on the march of legal settlements, that most wrongdoing by big health care organizations is punished - if it is punished at all - only by fines assessed against the organization, and perhaps a lightly enforced corporate integrity or deferred prosecution agreement.  Rarely does the organization admit wrongdoing.  Rarely are criminal charges involved (the settlements are usually civil).  Almost never do any individuals who authorized, directed or planned the wrongdoing suffer any negative consequences.

However, in health care, corporations do not do wrong.  People do wrong.

This brings us to our latest example.


Biotronik Settles Kickback Allegations for $4.9 Million

This story barely rippled the media waters, getting its most extensive coverage in the (Portland) Oregonian.

Biotronik, Inc, the Lake Oswego medical device manufacturing firm, will pay $4.9 million to the federal government to resolve allegations that the firm paid kickbacks to doctors in Nevada and Arizona to use its products.

In particular, the Department of Justice charged,

The settlement resolves allegations that Biotronik, through the payment of kickbacks to physicians, caused hospitals and ambulatory surgery centers to submit false claims to Medicare and Medicaid for the implantation of Biotronik pacemakers, defibrillators and cardiac resynchronization therapy devices.

Biotronik allegedly induced electrophysiologists and cardiologists practicing in Nevada and Arizona to continue using Biotronik devices, or to convert to Biotronik devices, by paying the implanting physician in the form of repeated meals at expensive restaurants and inflated payments for membership on a physician advisory board.

So the issue was not only defrauding the government, but giving kickbacks to doctors to induce them to use Biotronik devices, presumably whether or not such devices were the best treatments for their individual patients. Thus, the alleged conduct could have resulted in the unnecessary or inappropriate implantation of devices, leading to patient risks in the absence of benefits.

Nonetheless, as is usual in such cases, Biotronik did not admit any guilt, and in fact refused to talk to the reporter.  Furthermore, no one at Biotronik who authorized, directed or implemented the conduct in question suffered any negative consequence.

The light touch of the law on Biotronik was striking considering the company's track record.

Biotronik's Track Record: 2011 - 2013

Physicians Settle Allegations They Concealed Payments from Biotronik

In fact, the 2014 settlement was actually the second settlement resulting from allegations that Biotronik paid physicians to get them to use its devices.  As the Oregonian reported in 2013,

The state recently concluded a court case against two Salem doctors who put heart implants into patients without telling them that a manufacturer's training program put a sales representative into the operating room. The [Oregon] DOJ accused the doctors in the civil case of having 'misrepresented' their services as 'for the exclusive benefit of the patient' and 'concealing' from patients payments that created a potential "incentive" to use Biotronik implants -- defibrillators and pacemakers. The surgeons received between $400 and $1,250 for implant surgeries when a trainee was present.

This case was unusual in that the prosecutors, from the state of Oregon here, not the US Department of Justice, targeted the physicians who received the money rather than the corporation that provided it. So these individuals actually suffered some negative consequences, albeit rather minor,

cardiologists Matthew Fedor and Kyong Turk admitted no wrongdoing but agreed to pay $25,000 each and inform future patients of any payments from a drug or device maker in connection with their services to that patient and when admitting sales representative trainees to the operating room.

At the time,

At Biotronik's U.S. headquarters in Lake Oswego, president Jake Langer called the state's case unfair and detrimental to good health care.

'We are really clean when it comes to our relationships with physicians,' he said. He blamed the first-of-its-kind case on overzealous prosecutors trying 'to set up a new law' without going to the Legislature.

In 2011, Documents Revealed Biotronik's Marketing Tactics

Furthermore, the relatively meager penalties provided for by the 2014 and 2013 settlements were more incongruous given the colorful evidence provided by a disgruntled Biotronik employee reported in a 2011 New York Times article, about which we posted here.  The article suggested that Biotronik attempted to boost sales through "seeding trials," which are more about recruiting doctors than clinical research, paying "consulting fees" to doctors who wanted their patients implanted with Biotronik products, and  who actually implanted such products, and finally currying physicians' favor by hiring their spouses.

Summary

Those government settlements really are INSAAANE.


The Biotronik settlements followed a familiar pattern.  Now that we have been following organizational misbehavior in health care for some years, we see that organizations that get into trouble once are very likely to get into trouble again.

This may be enabled by how government regulators and law enforcement give large health care organizations such  gentle treatment.  We have talked about the march of legal settlements by such organizations before.  Allegations are usually resolved with legal settlements that involve no admissions of guilt, small monetary penalties (compared with these organizations' total revenues), and sometimes apparently toothless corporate integrity agreements.  Settlements get desultory public notice, rarely informed by previous settlements or other evidence of previous misbehavior.  No individual who may have authorized, encouraged, directed, or implemented the bad behavior is likely to suffer any negative consequences.   It does not help that while nominally public, these settlements get little press, and what coverage there is usually fails to put the whole pattern together.

So we would urge the reporters who cover the next settlements by big health care organizations at least look to see if the organizations had been involved in similar settlements in the past.

Furthermore, as we have said all to often,...   The failure of the current limp legal efforts against such corruption is evident by how many corporations have become ethical repeat offenders.  Pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.  So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue.

1:02 PM

Department of Justice Throws (at Least a Small Paperback) Book at Bio-Rad Laboratories - $55 Million Settlement, Admission of Wrongdoing, Employees Fired

Hard on the heels of our recent roundup of legal cases involving medical device companies comes a notable settlement by Bio-Rad Laboratories Inc, a company that makes equipment and supplies for clinical diagnostic testing. 

The Basics

As reported by Reuters,

Bio-Rad Laboratories Inc will pay $55 million to end U.S. investigations into whether it failed to prevent bribery of government officials in Russia and other countries, and falsified records to conceal payments, U.S. authorities said on Monday.


The company, which makes medical diagnostics products, entered a non-prosecution agreement with the U.S. Justice Department to resolve charges that it violated the Foreign Corrupt Practices Act by recording fake payments in connection with sales in Russia.

It also entered a civil settlement with the U.S. Securities and Exchange Commission, which said units of the Hercules, California-based company made $7.5 million in improper payments to officials in Russia, Vietnam and Thailand to win business.

Some Sordid Details
 
Some details of the unseemly conduct were reported by the San Jose, California, Mercury News,

The Department of Justice and the SEC said Bio-Rad subsidiaries in Europe and Asia bribed government officials from 2005-10 with payments to phony middleman companies. Bio-Rad executives ignored the payments, which were so obvious that they should have spotted them, the federal investigators said. One Russian middleman company even used a phony address that was actually the address of a Russian government building, according to the SEC.

Large commissions to companies that didn't have the resources to perform any of the contracted services should have raised an alarm, the complaints said. Also, the payments were made through banks in Latvia and Lithuania, another alleged red flag. Yet several 'high level' Bio-Rad managers approved the payments, the Justice Department said.


In Vietnam, a sales representative of Bio-Rad authorized payment of bribes to government officials, including the hiring of a middleman to pay the bribes, according to the SEC. Bio-Rad's sales manager agreed to the practice fearing that the company would lose 80 percent of its sales if it stopped paying bribes, the SEC's complaint said.

In Thailand, Bio-Rad invested in a local company in 2007 that had an ongoing bribery scheme. An agent of the company received inflated commissions which were split with Thai government officials, the complaint said.  

 Admissions of Wrongdoing, Firing of Employees

Note that the $55 million was not just a civil fine, according to Reuters,

 

Bio-Rad's payout includes a $14.35 million criminal fine to the Justice Department, and $40.7 million representing illegal profit and interest to the SEC....

Moreover, the penalties could have been worse,

The Justice Department said the criminal sanctions were not more severe because Bio-Rad disclosed the misconduct and fully cooperated in its probe, including by making employees available for interviews and producing documents from overseas.

Bio-Rad also bolstered its internal compliance processes, and said it fired employees responsible for the misconduct.

If the company disclosed the misconduct, that meant they acknowledged there was misconduct.  Furthermore, in this case, the company at least indirectly admitted the wrongdoing,

'The actions that we discovered were completely contrary to Bio-Rad's culture and values and ethical standards for conducting business,' Bio-Rad Chief Executive Norman Schwartz said in a statement.

Summary

In summary, employees of Bio-Rad Laboratories bribed officials in various countries to induce more sales.  Upper level managers seemed to disregard fairly obvious signs that this was happening, but eventually someone in upper level management discovered what was going on and reported it to authorities.  The activities were unethical, but the crimes were financial and did not appear to directly risk patients.  The company paid a moderate sized fine, but part of the fine was criminal.  Top management acknowledged wrongdoing, and apparently some employees involved suffered negative consequences: they were fired.

So this case appears a bit different from the majority of the settlements we have discussed.  Bad behavior was acknowledged by managers, and some individuals involved in the bad behavior suffered modest negative consequences.  However, after reviewing the last set of cases we discussed, it does confirm the pattern.  The bigger the company, the proportionately SMALLER the penalties to the company, and the LOWER the likelihood and severity of any negative consequences to an individual.  (This was a moderate sized company, so the penalties were moderate.)  Also, financial misadventures lead to harsher penalties than actions that primarily harm patients.

At least this case shows that the US Department of Justice is capable of making a settlement of a case involving unethical behavior by a health care organization that does not allow the organization to deny misbehavior, and leads to at least some negative consequences for individuals who authorized, directed or implemented the bad behavior.

The question remains, though: why are cases involving really big organizations, and hence often lots of money, and/or cases that involve clinical rather than financial risks treated so leniently?  

The usual pattern, at least for large companies, is: settlements that involve fines that appear large, but are not proportionate to the size and revenue of the company; fines that are imposed on the company as a whole, but no penalties for the people who authorized, directed, or implemented the bad behavior, and likely personally profited from it; and no findings of guilt or acknowledgement of wrong doing.  This lenient approach allows large health care organizations to treat such settlements as costs of doing business.  Hence, it is unlikely to deter future bad behavior, especially given that the people most likely to make the most money from it can expect impunity.  

Note that the pattern of law enforcement and regulation for health care in the US is similar to the pattern of law enforcement and regulation of the finance sector.  And that helped bring us the global financial collapse.  Meanwhile, our health care system has become the most expensive, but clearly not the best in the world.

To repeat, the Kabuki play that is regulation of and law enforcement for large health care organizations goes on.  As our society is being increasingly divided into a huge majority in increasingly difficult economic circumstances and a small and  increasingly rich minority, it also seems to be increasingly divided into little people who may be ruined by lawsuits, and imprisoned for even minor infractions, and big people who have impunity. 

True health care reform would hold leaders of health care organizations accountable for their organizations' behavior, and its effects on patients and health care professionals. 

8:53 AM

Drip, Drip, Drip - the Steady Accumulation of Little Cases Pointing to Big Problems

Sometimes an apparently insignificant noise can signal a big problem, like the sound of dripping water in a room with no visible plumbing.

Today, I noticed a few short stories in the media about one relatively small legal settlement involving a medical device company.  It initially seemed to be too insignificant a settlement to merit a comment.  A closer look, however, suggested links to to other larger issues.  This story reminded me about other apparently small cases that are mostly ignored, but remind us of bigger problems.

Biomet Settles Kickback Allegations for $6 Million - the Index Case

Here are the main points from the Fort Wayne, Indiana Journal-Gazette,

Biomet Inc. has agreed to pay more than $6 million to resolve allegations that it paid kickbacks to encourage doctors to use its bone growth stimulators, the U.S. Justice Department announced Wednesday.

The Warsaw-based orthopedic devices company signed the agreement along with its subsidiary, EBI LLC, which is doing business as Biomet Spine and Bone Healing Technologies. EBI, based in Parsippany, New Jersey, sells bone growth stimulators, which are used to repair slow-healing fractures without surgery.

Federal official allege that from 2001 to 2008, EBI bribed staffers in physicians' offices to persuade them to use the products.

The story also included the usual tough quotes from law enforcement, including this from US Attorney for the Massachusetts district Carmen Ortiz,

This settlement demonstrates our resolve in ensuring that patients receive, and the government pays for, health care that is based on sound medical judgment, not compromised by kickbacks....

That was it.  A mere $6 million was the charge to settle allegations that the device company gave kickbacks to physicians' office staff to induce the doctors to use the company's product.  As is usually the case, no individuals who authorized, directed or implemented the questionable activities were named, much less suffered any consequences.

And hardly anyone seemed to notice Biomet's latest case. 

It appears to be a small case, but wait. 

Biomet's Previous Record

Wasn't Biomet involved in some other, bigger cases?  A quick look at Health Care Renewal revealed

-  Starting in 2007, we posted (here, here, here, here and here) about the payments, often huge, that five manufacturers of prosthetic joints, Biomet, DePuy Orthopaedics,a unit of Johnson & Johnson, Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew, revealed they made to orthopedic surgeons and various academic and other organizations in the US. All companies except Stryker were charged with "criminal conspiracy to violate anti-kickback laws," and all were subject to deferred prosecution agreements.
-  In 2012, we posted about how Biomet paid nearly $23 million, including a $17.3 million criminal fine, which appears to imply a guilty plea, to charges that it gave kickbacks to foreign physicians, thus violating the US Foreign Corrupt Practices Act

So this tiny case, that is, in a monetary sense, suggests that Biomet is another recidivist corporation, and that the deferred prosecution agreement it signed in 2007 was useless, since it did not deter activities that occurred in 2008 and perhaps later.

Carmen Ortiz's Previous Treatment of Large Health Care Corporations Versus Her Treatment of Aaron Swartz

Furthermore, haven't we heard of Carmen Ortiz before?  In 2013, we posted that Ms Ortiz was involved in settling three big cases, involving allegations that Forest Pharmaceuticals promoted Celexa in adolescents despite the drug's likely dangers to them, GlaxoSmithKline used misleading drug packaging, also likely endangering patients, and St Jude Medical gave kickbacks to doctors to induce them to implant medical devices.  All cases were settled with fines, but again no individuals suffered any negative consequences.  However, in contrast, Ms Ortiz was also the prosecutor who proved how tough she was when she threatened activist Aaron Swartz with serious prison time for alleged computer fraud, driving Mr Swartz to suicide.

Biomet and Zimmer

Finally, Biomet is slated to merge with Zimmer Holdings Inc, another large medical device company. Zimmer was also involved in the 2007 prosthetic hips and knees settlement, charged with criminal conspiracy to violate kickback laws, and subject to a deferred prosecution agreement (see summary in this post).  So the combined company, whose formation is now subject to a European Union inquiry due to concerns about potentially anti-competitive aspects (see the Wall Street Journal article), would end up with quite a concerning track record.   

So this little case reminds us that when a big health care organization is accused of kickbacks or similar unethical activities that may endanger patients, even supposedly tough law enforcers almost never try to hold any individuals accountable, and that absent such accountability, such organizations often become serial legal settlers, accused again and again of unethical or criminal acts that are bad for patients and the public health.

Yet again, nobody seemed to notice this case.  

Little Cases that Add Up


While this case was small, it had some links to bigger past issues.  It reminded me that I have seen lots of other small cases, which often seemed to small to discuss at the time they occurred.

Thus, it also inspired me to finally pull from my dusty files a host of media reports of little cases which I put away because they seemed to small to individually merit comment at the times they appeared.  I quickly summarize some of them below.  To make the list manageable, I limited it to cases since 2012 involving medical device companies.  In alphabetical order....

Arthrocare Executives Guilty of Securities Fraud (2014)

This case was unusual since it actually involved serious jail time for individual, but perhaps that was because this was a financial crime that did not endanger patients (see the Bloomberg article).   The prosecutor called it an "epic tale of greed"  after the CEO and CFO were convicted.  In 2013, two Vice Presidents, including the head of Strategic Business Units, had also pleaded guilty (see this Bloomberg article).

Baxano Surgical Settled Allegations of Medicare Fraud and Kickbacks to Physicians (2013)

This was standard issue, including a fine of $6 million, allegations of kickbacks, some in the form of speakers' or consulting fees to surgeons for use of the company's back surgery devices, but not admissions of wrongdoing and no penalties for individuals, per the AP. 

EndoGastric Solutions Settled Allegations of Kickbacks to Physicians (2014)

This was another standard issue settlement involving a fine of $5.25 million, allegations of kickbacks to physicians to encourage them to use the company's devices, and a corporate integrity agreement,  but no admissions of wrongdoing and no penalties for individuals, per the AP via the Billings (Montana) Gazette. 

Globus Medical Inc and its CEO Fined for Selling Unapproved Devices (2012)

The only media outlet to report this small case was Reuters.  The company, which was then privately held, and its CEO combined paid $1 million to settle US Food and Drug Administration charges it sold unapproved devices.  Now the company is apparently public, and its most recent proxy statement disclosed its CEO is currently in the million dollar plus club.

Home Diagnostics Inc Ex-CEO Pleaded Guilty to Insider Trading (2012)

He pleaded guilty to SEC charges that he tipped two people about the company's impending buyout by Nipro Corp, per Bloomberg.  His sentence was three years of probation and a fine of $260,000, again per Bloomberg.

Johnson and Johnson DePuy Subsidiary Settled Allegations of Deceptive Marketing of Metal on Metal Prosthetic Hip Joint (2014)

As reported by the Portland (Oregon) Business Journal, the Johnson and Johnson subsidiary settled state claims for $4 million that it marketed its ASR XL metal on metal hip joint without disclosing its known high rate of failure.  The company did not admit wrongdoing, and no individual paid a penalty.  Note that Bloomberg reported, "While the sum is dwarfed by J&J’s earlier settlement of patient lawsuits linked to the ASR hip, the agreement may lead the way for additional accords as federal and multi-state probes continue into the company’s sales of the device."  So it is quite possible there will be more and/or bigger settlements involving the marketing of this device.  Johnson and Johnson has quite an extensive record of mischief (look here).  Johnson and Johnson's DePuy subsidiary, along with Biomet and Zimmer, settled charges of criminal conspiracies to violate anti-kickback laws in the hips and knees settlements of 2007. 

Summary


Note that the summary of little cases suggested that the bigger the company, the less likely is any individual to be held responsible.  Those cases that included individual penalties were all of relatively small companies.  One of those was privately held at the time the case was made public.  One individual who paid a penalty was the leader of a previously small company who held that position prior to the buyout of his company by a larger one.   Furthermore, note that insider trading seems to be treated more severely than actions that violate professional ethics, like kickbacks to doctors, or might harm patients.   The only individuals who went to prison or put on probation were company leaders who committed securities fraud or insider trading.  No one involved in giving kickbacks to physicians, deceptive marketing, etc paid any penalties.  

The impunity of managers of big companies, especially in cases in which the charges involved actions that likely endangered patients and violated health care professionals values, is underlined by our look at "little cases."  Yet this impunity remains unexplained, and has certainly not been addressed by law enforcement authorities. 

 So the Kabuki play that is regulation of and law enforcement for large health care organizations goes on.  As our society is being increasingly divided into a huge majority in increasingly difficult economic circumstances and a small and  increasingly rich minority, it also seems to be increasingly divided into little people who may be ruined by lawsuits, and imprisoned for even minor infractions, and big people who have impunity. 

True health care reform would hold leaders of health care organizations accountable for their organizations' behavior, and its effects on patients and health care professionals. 

10:58 AM

A Little Sunshine Peeking Through the Clouds? - the Sunshine Act is Finally Implemented, Sort of

"Conflicts of interest" is probably the most frequently used Health Care Renewal tag.  We believe conflicts of interest are a major causes of health care dysfunction.  Therefore, I felt that one of the truly reformative aspects of the US Accountable Care Act (ACA, "Obamacare") could be the "Sunshine Act," a provision championed by Iowa Senator Grassley (R) and his staff investigator, Paul Thacker, that would require public reporting of most financial interactions among health care corporations and health care professionals and hospitals.

The roll-out of Sunshine Act implementation occurred this week, and not unexpectedly, was very rocky.   As reported by the Wall Street Journal,

it hasn't been a smooth process. First, CMS delayed the public reporting of the data by a year to give companies more time to prepare. The Open Payments online system has experienced technical problems, including a data mix-up that resulted in some doctors being linked to payment records for other doctors with the same surname. The preview function for doctors had a cumbersome registration process, some doctors said, and was taken offline at times in recent weeks.

The first batch of data is incomplete. CMS in August said it removed about one-third of the payment records from the physician-preview database because it said some of the state medical-license numbers that companies reported for doctors didn't match a database that the agency was using for verification, among other problems. CMS now is releasing those records but without identifying the physicians tied to them. It will update the database to include the physicians' names for those records next year. Also, CMS isn't immediately releasing payments related to proprietary research-and-development; those will be reported at a later date.

 But why should we have expected anything else, given the parties involved?

Drug, Device and Biotechnology Companies

As reported by the NY Times,

all manufacturers of drugs, medical devices and medical supplies that have at least one product covered by Medicare or Medicaid must report payments or gifts they make to doctors and teaching hospitals. This can be as seemingly trivial as a bag of bagels — all payments above $10 are included — or as lofty as a research grant. It also includes meals, travel expenses and speakers’ fees. Group-purchasing organizations, which serve as middlemen between health care providers and manufacturers, also must disclose doctors’ ownership and investment interests in their companies.

Presumably such reporting actually was quite burdensome to the companies.

Furthermore,company executives might not be exactly thrilled about putting all this information out there.  As we have frequently discussed, to serve their own interests, such companies make all sorts of payments to physicians, other health care professional, and hospitals and other non-profit health care organizations.  In particular, payments to health care professionals may foster companies' marketing and public relations goals.

While some payments are made for technical and clinical consulting, many are to support "education" that may serve marketing or public relations.  In particular, many payments are for "drug talks," that is, talks sponsored by the drug companies, usually through speakers' bureaus, and given probably not as part of formal, accredited continuing medical education.  Since the publication of "Dr Drug Rep" in the New York Times in 2007, it became evident that such talks emphasize content provided by the pharmaceutical companies, and are intended to be corporate marketing exercises.  From that case we also learned that physicians who deviate from the marketing message do not last long on speakers' bureaus.  (See posts here and here.)

In addition, pharmaceutical companies often pay physicians deemed to be "key opinion leaders," whose opinions are promoted supposedly for their brilliance and erudition.  However, as noted here and here, the companies buying their services think of KOLs as sales people.    Evidence about key opinion leaders actually performing like marketers has come from documents revealed during litigation (e.g., see this recent example of a huge monetary settlement made of charges that GlaxoSmithKline, a major multinational drug company committed fraud among other things, and in the course of its unethical activities used key opinion leaders as marketers).   Also, see the Neurontin marketing plan (see post here), and the Lexapro marketing plan (see post here) for examples of how corporate managers view key opinion leaders as marketers.

Pharmaceutical, biotechnology, and device companies protest that much of the money they pay goes to support research.  But the clinical research they sponsor has been shown to be frequently subject to manipulation designed to increase the likelihood of results favorable to these companies' products.  When manipulation fails to provide sufficiently favorable results, corporations may simply  suppress it.  Academic institutions desperate for more external funding, and physicians whose continued gainful employment at such institutions requires external funding may not be too quick to protest manipulation and suppression by those paying the bills.

Vox just summarized some of the relevant evidence:

Research for decades has shown that relations with industry — from industry-sponsored education to encounters with pharmaceutical-company sales representatives, and even drug samples provided by those companies — can bias a doctor's judgment in all sorts of ways. It can color the medical education they give to future doctors, cause them to inappropriately prescribe drugs, to push for the FDA approval of medicine, or for drugs to be included on their hospital formularies. Industry-funded studies are also four times more likely to lead to favorable and positive results than independent research.

The side-effects of this 'Bad Pharma' behavior range from waste in the health system, to mistreatment of patients, and even avoidable patient death.

So is it any surprise that industry may not have been enthused or comfortable about complying with the Sunshine Act?  Instead of admitting that, of course, they have complained, as reported by the NY Times,

the website is being questioned by the industry, which says that technical problems and data inaccuracies limit its value.

But it seems that industry may have created the sorts of data problems about which they now complain.  Note that when ProPublica made this first assessment of the database,

Many drug and device companies attributed payments to multiple subsidiaries, rather than reporting them under the name of a single parent company. Johnson & Johnson, for instance, submitted payments under at least 15 subsidiaries. The device maker Medtronic reported payments by at least six subsidiaries. So did the drug maker Novartis. On first blush, that makes it tough to calculate how much each company spent overall.

Similarly, companies reported payments associated with particular drugs in different ways. The expensive drug Acthar, which is marketed for a variety of different conditions, is listed under at least eight different name variations. The diabetes drug Januvia is reported as both 'Januvia' and 'Januvia Diabetes.' There is one drug simply listed as 'KNEES' and another as 'Foot and Ankle.'

So it appears that the companies reported data in a confusing, perhaps deliberately confusing manner, obfuscating the relationships between companies and subsidiaries, and between essentially similar drugs with different names.  It is hard to believe that all, or even most of these problems were due to mishandling by the government.  So it is a little hard to take the companies' criticisms of the quality of the data seriously.

Physicians and Organized Medicine

"We have met the enemy and he is us." - Pogo

On the other hand, news articles suggested some physicians were also unhappy with the data release.  For example, per the WSJ article,

Some doctors disputed details of the payment data. The database shows John LeDonne, a surgeon from Baltimore, as having received about $78,200 in payments for food and beverage for the five-month period from medical-device maker Dr. LeDonne acknowledged he performs paid consulting work for health-care companies including Teleflex, but that he rarely received free meals. He said the total payment amount was in the right 'ballpark,' but should not have been classified in the food-and-beverage category. 

That seems to be a bit of quibble.  The amount he received, and its source, seem more important than whether it was labelled "consulting," or "food and beverage" payments.

More importantly, a few doctors were worried, as reported by the Minneapolis Star-Tribune, that the information may reflect negatively on them,

 'Overwhelmingly, the interaction between industry and physicians is positive,' said Dr. Robert Harbaugh, chairman of neurosurgery at Penn State and president of the American Association of Neurological Surgeons.

Maybe Dr Harbaugh should realize that there already are a lot of reasons to think about the negative aspects of physician - industry paid interactions, as summarized above. And Vox reported,

 Dr. Thomas Stossel, known as Harvard's 'pro-industry professor,' says 'doctors' work with industry is necessary and beneficial.' He worries that the Sunshine Act could make it embarrassing and difficult for doctors to do work like developing medical devices or designing clinical trials, and that industry may start avoiding working with American doctors because of the time and investment disclosure will require.  

Dr Stossel did not provide evidence to explain the necessity or benefits of the work for industry, nor why doctors could not design clinical trials outside of industry relationships. 
Doctors also complained about data quality, but I am not aware that the medical profession rushed to help with improving the data for the Sunshine Act.  Obviously, there are some physicians who have personally profited quite a lot from their relationships with drug, device, and biotechnology companies but who may not be comfortable having the figures booted around in public, e.g., per the WSJ,

Among individual physicians, Stephen Burkhart was one of the top recipients of non-research payments from industry. The San Antonio orthopedic surgeon received $7.4 million in non-research payments or transfers of value for the five-month period, mostly from device manufacturer Arthrex Inc. for payments identified as 'royalty or license.'

Dr. Burkhart couldn't be reached for comment. Arthrex said in a statement that it has 'financial relationships with a number of orthopedic surgeons and teaching hospitals,' like many manufacturers, for their advice and expertise.

Chitranjan Ranawat,a New York orthopedic surgeon, received about $4 million in nonresearch payments or transfers of value, mostly from DePuy Synthes unit for 'royalty or license,' according to the database. 

 Dr. Ranawat couldn't be reached for comment.

And those were payments made in a five month period.  Maybe the doctors have a reason to be uncomfortable.

Furthermore, ProPublica reported that 21% of the $3.5 billion in payments, approximately $735 million, reported by the system were for "promotional talks," a la "drug talks" as noted above.  Since "Dr Drug Rep," such talks have gotten something of a bad reputation, but are obviously lucrative, so those who got paid to give them may not be happy with their detailed disclosure.

The US Department of Health and Human Services

The Sunshine Act was but a small part of the huge ACA, most of which the US DHHS, and particularly the Center for Medicare and Medicaid Services (CMS) was charged with implementing, but probably with proportionately insufficient funding and time.  So no wonder that the Sunshine Act never seemed to find a vocal champion within DHHS.

Most likely money concerns, and the constant din of outside criticism of "government bureaucrats" by those demanding more "business-like" government lead CMS to outsource the work on the Sunshine Act database, as described by another ProPublica article,

While the payments database is a far cry from Healthcare.gov — and less complex – it's reasonable to expect some glitches. CGI Federal, the company that led what turned out to be the botched launch of Healthcare.gov, is also responsible for the release of the payment data.

Massachusetts also outsourced operation of its Health Connector to CGI Federal, with equally bad results.  The state had to terminate the contract (look here.)

So if lackadaisical bureaucrats outsourced the Sunshine Act to contractors of questionable competence, what result should have been expected?

Why the present administration, and the bureaucrats it supposedly commands, seemed so uninterested in this particular aspect of the ACA is not clear, but perhaps we should peer around some revolving doors for the answer.  (For example,  John Podesta, a current White House adviser, worked for non-profits funded by drug company Eli Lilly and device company Synthes [look here]; and Nancy-Ann DeParle, former White House "health czar," had previously served on the boards of of Boston Scientific, Cerner and Medco [look here], and now is involved in health care investments made by private equity, and is on the board of CVS [look here]).

Of course, the sort of conflicts of interest that were supposed to be revealed by the Sunshine Act are highly beneficial to the parties directly involved, whatever embarrassment they may cause.  Given the power of those parties, plus the lukewarm, outsourced effort by government perhaps influenced by government officials with their own "revolving door" conflicts of interest, is it any wonder that the Sunshine Act implementation was "rocky?"

Summary

Nonetheless, because of the Sunshine Act, we do now know a bit more about conflicts of interest involving drug, device, biotechnology and related companies on one hand, and physicians, other health care professionals and hospitals on the other.

Maybe throwing even veiled sunshine on some of these relationships will inspire some people to rethink whether they want to continue them.  There are other reasons they should do so.

We have called endlessly for full, detailed disclosures of all conflicts of interest, for honesty's sake if for no other reason.  We have also called for severe curtailment of all conflicts affecting clinical decision making, health care education, clinical and health care research, and health policy making.  But Health Care Renewal can easily be dismissed as a voice crying out in the wilderness.  However, we are really not alone.

The 2009 Institute of Medicine report set relatively tough standards for managing conflicts of interest affecting clinical research and teaching, which unfortunately since have largely been ignored.  It did call for senior institutional officials to disclose their conflicts of interest, and for institutional boards of trustees to form conflicts of interest committees that would exclude conflicted individuals, but otherwise did not address conflicts of interest affecting academic leaders or institutional trustees.  The 2013 Pew Charitable Trusts Conflicts-of-Interest Policies for Academic Medical Centers suggested restrictions on conflicts affecting faculty, trainees, and students, but again did not mention senior institutional leaders or boards of trustees.  Implementing even some of these recommendations would be true health care reform.

Maybe more publicity about the web of conflicts of interest that drapes of over health care will lead to some further steps in the needed direction. 

9:02 AM

Computer Viruses Are "Rampant" on Medical Devices in Hospitals

As if there weren't enough problems with hospitals as computing backwaters, now there's this:

Computer Viruses Are "Rampant" on Medical Devices in Hospitals

A meeting of government officials reveals that medical equipment is becoming riddled with malware.

Technology Review
Published by MIT
David Talbot
Wednesday, October 17, 2012

Computerized hospital equipment is increasingly vulnerable to malware infections, according to participants in a recent government panel. These infections can clog patient-monitoring equipment and other software systems, at times rendering the devices temporarily inoperable.

While no injuries have been reported, the malware problem at hospitals is clearly rising nationwide, says Kevin Fu, a leading expert on medical-device security and a computer scientist at the University of Michigan and the University of Massachusetts, Amherst, who took part in the panel discussion.

I note the seemingly universal refrain "no injuries have been reported" once more (see this query link to similar statements regarding IT malfunctions), which is irrelevant since reporting mechanisms for medical errors are noted to be deficient.

Software-controlled medical equipment has become increasingly interconnected in recent years, and many systems run on variants of Windows, a common target for hackers elsewhere. The devices are usually connected to an internal network that is itself connected to the Internet, and they are also vulnerable to infections from laptops or other device brought into hospitals.  [I note that it should be impermissible to connect "alien" machines to a hospital's network without authorization, and that attaining that level of security protection is not difficult - ed.]  The problem is exacerbated by the fact that manufacturers often will not allow their equipment to be modified, even to add security features.

In a typical example, at Beth Israel Deaconess Medical Center in Boston, 664 pieces of medical equipment are running on older Windows operating systems that manufactures will not modify or allow the hospital to change—even to add antivirus software—because of disagreements over whether modifications could run afoul of U.S. Food and Drug Administration regulatory reviews, Fu says.

In other words, let's run at high risk if it avoids the time and expense of FDA reviews that would ensure the equipment is safe and operates as expected with the software updates.

As a result, these computers are frequently infected with malware, and one or two have to be taken offline each week for cleaning, says Mark Olson, chief information security officer at Beth Israel.

It is unclear how the servers running the hospital information system, electronic health records systems, physician order entry systems etc. are immune to spread of the malware.

"I find this mind-boggling," Fu says. "Conventional malware is rampant in hospitals because of medical devices using unpatched operating systems. There's little recourse for hospitals when a manufacturer refuses to allow OS updates or security patches."

The worries over possible consequences for patients were described last Thursday at a meeting of a medical-device panel at the National Institute of Standards and Technology Information Security and Privacy Advisory Board, of which Fu is a member, in Washington, D.C. At the meeting, Olson described how malware at one point slowed down fetal monitors used on women with high-risk pregnancies being treated in intensive-care wards.

In its face, that is potentially catastrophic depending on the degree of "slowdown" and whether data is lost.

"It's not unusual for those devices, for reasons we don't fully understand, to become compromised to the point where they can't record and track the data," Olson said during the meeting, referring to high-risk pregnancy monitors. "Fortunately, we have a fallback model because they are high-risk [patients]. They are in an IC unit—there's someone physically there to watch. But if they are stepping away to another patient, there is a window of time for things to go in the wrong direction."

The reasons seem obvious to anyone who's had a serious malware infection on their PC.  I've only had one - a computer I bought at a fleamarket for $7 was so severely infected it was unusable for even basic tasks, and was resistant to virus removal.  I solved that problem by installing a fresh copy of the OS, immediately followed by all patches and the latest anti-malware software.

The computer systems at fault in the monitors were replaced several months ago by the manufacturer, Philips; the new systems, based on Windows XP, have better protections and the problem has been solved, Olson said in a subsequent interview.

This implies the older systems were running on Win 98 or earlier or an old version of Win NT.  Amazing.

At the meeting, Olson also said similar problems threatened a wide variety of devices, ranging from compounders, which prepare intravenous drugs and intravenous nutrition, to picture-archiving systems associated with diagnostic equipment, including massive $500,000 magnetic resonance imaging devices.

Olson told the panel that infections have stricken many kinds of equipment, raising fears that someday a patient could be harmed. "We also worry about situations where blood gas analyzers, compounders, radiology equipment, nuclear-medical delivery systems, could become compromised to where they can't be used, or they become compromised to the point where their values are adjusted without the software knowing," he said. He explained that when a machine becomes clogged with malware, it could in theory "miss a couple of readings off of a sensor [and] erroneously report a value, which now can cause harm."

I opine that harm could already have occurred; it just may not been recognized as such nor reported.  Disappearing data and other EHR failure modes known to have caused harm and/or deaths could be related to malware, for example.

... Malware problems on hospital devices are rarely reported to state or federal regulators, both Olson and Fu said. This is partly because hospitals believe they have little recourse. Despite FDA guidance issued in 2009 to hospitals and manufacturers—encouraging them to work together and stressing that eliminating security risks does not always require regulatory review—many manufacturers interpret the fine print in other ways and don't offer updates, Fu says. And such reporting is not required unless a patient is harmed. "Maybe that's a failing on our part, that we aren't trying to raise the visibility of the threat," Olson said. "But I think we all feel the threat gets higher and higher."

I note that health IT related problems are also rarely reported, with only one vendor being the exception (see my post on the FDA MAUDE voluntary reporting database here).  The reasons likely are not because "hospitals believe they have little recourse" - the real reasons may be fear, complacency and/or incompetence.

Speaking at the meeting, Brian Fitzgerald, an FDA deputy director, said that in visiting hospitals around the nation, he has found Beth Israel's problems to be widely shared. "This is a very common profile," he said. The FDA is now reviewing its regulatory stance on software, Fitzgerald told the panel. "This will have to be a gradual process, because it involves changing the culture, changing the technology, bringing in new staff, and making a systematic approach to this," he said.

Changing the culture would be nice, considering we are now entering a national rollout of complex enterprise clinical resource and workflow control systems anachronistically known as "electronic medical records."

In an interview Monday, Tam Woodrum, a software executive at the device maker GE Healthcare, said manufacturers are in a tough spot, and the problems are amplified as hospitals expect more and more interconnectedness. He added that despite the FDA's 2009 guidance, regulations make system changes difficult to accomplish: "In order to go back and update the OS, with updated software to run on the next version, it's an onerous regulatory process."

My comment is, if you can't take the heat of work in the real-world medical setting, if you cannot be part of the medical team, then get out of the clinic.  You're likely to do more harm than good.

John Halamka, Beth Israel's CIO and a Harvard Medical School professor, said he began asking manufacturers for help in isolating their devices from the networks after trouble arose in 2009: the Conficker worm caused problems with a Philips obstetrical care workstation, a GE radiology workstation, and nuclear medical applications that "could not be patched due to [regulatory] restrictions." He said, "No one was harmed, but we had to shut down the systems, clean them, and then isolate them from the Internet/local network."

He added: "Many CTOs [chief technology officers - ed.] are not aware of how to protect their own products with restrictive firewalls. All said they are working to improve security but have not yet produced the necessary enhancements."

Then why are they CTO's?  Is this the phenomenon of generic or underqualified managers rearing its head?

Fu says that medical devices need to stop using insecure, unsupported operating systems. "More hospitals and manufacturers need to speak up about the importance of medical-device security," he said after the meeting. "Executives at a few leading manufacturers are beginning to commit engineering resources to get security right, but there are thousands of software-based medical devices out there."

One can only wonder if others have done a Ford Pinto cost-benefit analysis and decided the costs of settlement from injured and dead patients is less than the cost of remediation.

-- SS

10:15 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

FDA: Software Failures Responsible for 24% Of All Medical Device Recalls

At "FDA: Software Failures Responsible for 24% Of All Medical Device Recalls" via Kapersky Labs, a software security company, it is observed (emphases mine):

Software failures were behind 24 percent of all the medical device recalls in 2011, according to data from the U.S. Food and Drug Administration, which said it is gearing up its labs to spend more time analyzing the quality and security of software-based medical instruments and equipment.

The FDA's Office of Science and Engineering Laboratories (OSEL) released the data in its 2011 Annual Report on June 15, amid reports of a compromise of a Web site used to distribute software updates for hospital respirators. The absence of solid architecture and "principled engineering practices" in software development affects a wide range of medical devices, with potentially life-threatening consequences, the Agency said. In response, FDA told Threatpost that it is developing tools to disassemble and test medical device software and locate security problems and weak design.

... "Manufacturers are responsible for identifying risks and hazards associated with medical device software (or) firmware, including risks related to security, and are responsible for putting appropriate mitigations in place to address patient safety," the agency said in an e-mail statement.

Health IT medical devices are the exception, of course.  A health IT virtual medical device is always of rock-solid architecture, always uses "principled engineering practices" in software development, and never has life-threatening consequences, of course.

Hence its special regulatory accommodations over non-virtual (tangible) medical devices.

-- SS

6:09 PM

Improving Patient Safety In The EU: HIT Should Be Classified As Medical Devices. And, Can We Drop the "Massive Cost Savings" Fable?

Here is some sense on healthcare IT from the European Union, echoing a number of themes I've written about at Healthcare Renewal and my academic site on HIT difficulties and failures.

These themes revolve around the consideration of healthcare information systems (increasingly used to mediate many aspects of medical care delivery) as medical devices requiring regulation by transparent and impartial authorities - i.e., without conflicts of interest; the importance of regulation due to the adverse consequences caused by ill designed and/or poorly implemented HIT; the need for validation and postmarketing surveillance of the performance of these systems; and vendor accountability.

From the Swedish Medical Products Agency:

Improving patient safety in the EU: Many Medical Information Systems should be classified as Medical Devices

Thursday, June 18, 2009

Correctly functioning Information Technology (IT) systems for health care is a prerequisite for ensuring patient safety. However, applicable regulation is rarely applied, mainly due to the lack of useful guidelines on how to classify the IT-systems [guidelines whose formulation has been resisted for many years by the HIT industry, I might add - ed.] A national working group in Sweden has prepared a guidance report that will help increase compliance with the Medical Device regulation in the EU, thus improving patient safety.

An increasing number of serious incidents, with IT-systems involved, have been reported from the health care sector in recent years [but largely covered up in part due to contractual gag clauses on HIT sales and resultant violations of healthcare leadership fiduciary responsibilities - see this link - ed.] In most of these cases, existing regulatory regimes have not been applied, either by manufacturers or by health care providers. As a result, the assessment of safety issues has become unclear because the manufacturer’s responsibility is vague. [It's not vague; it's contractually absent - ed.]

For this reason, in 2008 the Swedish Medical Products Agency (MPA) initiated a national working group with the aim of providing guidelines for the classification of IT-systems intended to be used in health care. The working group has now prepared a report, intended to serve as guidance for both manufacturers and end-users. At present, there are no guidelines of this kind in Sweden, or the rest of Europe.

“Many parties, including the European Commission, have expressed interest in our work. We believe that it will improve the quality and safety of medical information systems. [Finally -ed.] A common approach to product classification is key” says Lennart Philipson, Scientific Director.

One important conclusion from the working group is that the Medical Device Directives is the most suitable regulation to be applied.

“Our market surveillance of medical information systems will be based on the conclusions in the report from now on. If a system falls within the definition of a medical device, the requirements for CE-marking [Conformité Européene, a branding mark - ed.] shall be applied” says Mats Ohlson, Chairman of the working group.

Manufacturers need to adapt to applicable standards when it comes to quality systems, risk management and usability. They will also need to establish post-market surveillance routines to regularly assess products on the market.

The working group consisted of members from the Swedish Medical Products Agency, the National Board of Health and Welfare, the Swedish Association of Local Authorities and Regions, Swedish Medtech, the Swedish Standards Institute, Swedish Electrical Standardization and notified bodies through Intertek Semko.

A report entitled "The Medical Products Agency’s Working Group on Medical Information Systems: Project summary" is available in English translation at this link (PDF).

Download and read the entire report.

Highlights:

A general opinion of the health care providers represented in this Working group is that from a patient safety point of view, it is desirable that stand alone software and systems intended to, directly or indirectly, affect diagnosis, health care and treatment of an individual patient [what I have referred to a "mediating aspects of care" - ed.] shall be regulated under a Product Safety Regulation.

The Working group has not been able to define any other appropriate regulation than the Medical Device Directive when it comes to the definition of such systems. Adherence to the Medical Device Directive is important so that manufacturers and clients can work with the same intentions. [I would add that the intentions are not exactly the same; the manufacturers' intentions are, by necessity, to maximize profits - ed.] This project report serves as one step towards the clarification regarding which conditions that shall apply.

The Working group believes that software intended for a medical purpose must be regarded as a "device" [indeed - ed.] and expressions such as "project", "service" and similar must be avoided describing a Medical Information System. This approach has advantages since a product safety regulation, such as the Medical Device Directive, can be applied and the product will have:

• a defined intended use
• defined and documented specifications
• a manufacturer with a clear responsibility until the delivery is accepted
• a controlled ”Post Market” surveillance

Furthermore, the Working group believes:

• that the Medical Device Directive shall be applicable for software and systems that fulfills the definition of a medical device
• that the manufacturer of the intended systems shall follow the appropriate validation method [e.g., as in the pharma industry's IT - ed.] in the Medical Device Directive
• that the level of risk shall be assessed, motivated and control the classification and verification method
• that applicable standards shall be followed for design, verification and validation regarding software and information systems that are medical devices
• that there is no legal requirement that manufacturers of devices in the lowest device classes must have certification for their operational processes to fulfill the Medical Device Directive. The Medical Products Agency has in these cases no mandate to formally demand certification, such as for instance ISO 13485. However, in reality it is still necessary to have some form of a functional quality management system to manage a proper design process for software systems [due to the fact that patients, ethical issues, and human rights issues are involved - ed.] as well as the necessity to fulfill the Post Market Requirements including Vigilance reporting.
• that the prerequisite for a successful and fair application of the regulation assumes that health care providers demands that such systems shall be CE‐marked and be regarded as medical devices
• that a controlled and standardised verification method when performing installation work in a user’s network, supported by the manufacturer, is an essential supplement to the manufacturer’s CE‐marking and a prerequisite for an acceptable safety level when using the device.

This section gets to the heart of the matter regarding electronic medical records:

8.2.3 Electronic patient records

Electronic patient record systems are more than an archive for just documents, they also have features for compiling and transferring information to be used for decision making. Patient records are the basis for documentation and planning of diagnosis, therapy and follow‐up, especially when it comes to drug prescriptions and recommendations. [These caveats include CPOE systems as well - ed.]

It is becoming more common that electronic patient record systems and other systems are interconnected, for instance imaging systems or laboratory systems. It is obvious that such systems should not be regarded as “purely administrative”; instead they have the characteristic features that are typical for medical devices. They sort, compile and present information on patients’ treatments and should therefore be regarded as medical devices in accordance to the definition.

Since the electronic patient record system often replaces/constitutes the user interface of “traditional” medical device systems, the call for 100% accuracy of the presented information is increased. Patient record systems have crucial impact on patient safety, and this has been proven to be the case after a series of incidents that has been reported to the Swedish National Board of Health and Welfare. [It would be interesting to know more about this "series of incidents" - ed.]

Finally, in the June 20, 2009 Wall Street Journal article "The Myth of Prevention", Abraham Verghese, Professor and Senior Associate Chair for the Theory and Practice of Medicine at Stanford, echoed several Wharton professor's doubts about the cost savings and ultimate value of electronic medical records, touted as the cybernetic savior of healthcare:

... I have similar problems with the way President Obama hopes to pay for the huge and costly health reform package he has in mind that will cover all Americans; he is counting on the “savings” that will come as a result of investing in preventive care and investing in the electronic medical record among other things. It’s a dangerous and probably an incorrect projection.

HIT can be a facilitator (not a replacement or revolutionary tool) to physicians, if done well, and not overdone to the point of costing far more than entire new hospitals or hospital wings. There is no replacement for a physician with a strong background in the preclinical and clinical sciences, ethics, critical thinking, and the scientific method. Computers are not a miracle. They can help provide facts, but cannot fundamentally turn a poor physician into a Marcus Welby. Verghese on that issue:

To come back to my favorite painting: a computer cannot take the place of the doctor in Fildes’s painting ["The Doctor", 1891, see below - ed.]; an electronic medical record (EMR) may or may not save money (it won’t be anywhere as much as is projected) but what it will do is ensure that we doctors, nurses, therapists, particularly in hospitals will be spending more and more time focused on the computer, communicating with each other, ordering and getting tests, buffing and caring for our virtual patient—the iPatient is my term for this phenomenon—while the patient in the bed wonders where everybody is. Having worked exclusively for the last seven years or so in hospitals that have electronic medical records (EMR), I have felt for some time that the patient in the bed has become an icon for the real focus of our attention, the iPatient. Yes, electronic medical records help prevent medication errors [only when done well, see Koppel - ed.] and are a blessing in so many ways, but they won’t hold the patient’s hand for you, they won’t explain to the family what is going on.

"The Doctor", 1891 (Sir Luke Fildes, 1843-1927)

I will go a step further. It is now clear that the promises of massive savings from electronic medical records, usually originating from vendors based on hearsay or cherry-picked, favorable but flawed studies that dismiss a growing body of other literature (such as in Cerner CEO Neil Patterson's hyper-ebullient piece here), have been deliberately manufactured by a lobby of industry pundits.

It is only now that I more fully comprehend the origins of and motivations behind the "we will revolutionize medicine" fervor exhibited by HIT company CEO's, such as I experienced and wrote about starting back in the 1990's. From my 1999 essay "What is Medical Informatics, and Why is it an Important Specialty":

... A letter I had written [in Feb. 1999 - ed.], "Broken Chord" published in the journal Healthcare Informatics, further amplifies the skills and experience issue. The letter addressed issues of skills, insights, and roles of MIS personnel in healthcare settings. I described a Microsoft Healthcare Users Group conference attended predominantly by healthcare MIS staff and vendors, where I observed a panel discussion moderated by the CEO of HBOC [before he was found to be cooking the books - ed.] and composed of several other industry CEO's. The panel was discussing how they would revolutionize healthcare through their leadership in information technology.

During the Q&A period I asked the audience how many really felt they would revolutionize medicine through their leadership in IT. Several hundred--almost all in the audience--raised their hands. I then asked how many had ever taken care of patients or examined any textbook of medicine, such as Harrison's Textbook of Internal Medicine or the Merck Manual. A minority of hands went up. This suggested, in my view, a striking deficiency of knowledge, experience and insight on the part of the de facto clinical information technology leadership, complicated by rather cavalier attitudes regarding the essential role of clinical expertise.

I believed what I was hearing to be irrational exuberance, not manufactured exuberance.

Quality improvements are possible under the most controlled of environments, such as here (such projects are not easily portable, unfortunately). Massive cost savings? When organizations are spending upwards of $100 million just for system implementation, not including ongoing lifecycle costs, massive savings projections from HIT are risible.

One would think that after Madoff, Stanford and other recent financial confidence scandals, that bright people would be more skeptical of "massive returns, always and forever" promises, but that does not appear to be the case. With regard to mass savings, I make the prediction that in 2014, as in the UK today, our government, healthcare management, and medical professionals will realize, Madoff style, that they've been had.

So, Health IT Industry executives, pundits, and consultants, can we drop the grandiose "we will revolutionize medicine!" and "massive savings" myths, and focus on facilitating clinicians and on quality improvement, please?

-- SS

6/22/09 Addendum

The U.S. Food and Drug Administration (FDA) and Sweden's Medical Products Agency are no strangers.

8:39 AM