What Revolving Door? - An Unprecedented Endorsement of a Political Appointment by the "Gold Standard" Medical Journal

An Unprecedented Endorsement 

It's deja vu all over again.  In the spring of 2015, the New England Journal, the most prestigious US medical journal, published a remarkable series of opinion pieces extrolling physician-industry collaborations, and minimizing the significance of resulting conflicts of interest.  More remarkable was the extent that the articles' argument were bolstered by logical fallacies (look here).

Doubling down, the New England Journal of Medicine appeared to make its first ever endorsement of a nominee for federal office.  On October 28, 2015, the NEJM published an editorial with the almost campaign slogan like title, "Califf for the FDA," which enthusiastically endorsed the current presidential nominee to be Commissioner of the US Food and Drug Administration (FDA). (1)   It began, [with italics added for emphasis]

Robert M. Califf, M.D., has been nominated to be the next head of the Food and Drug Administration (FDA); he currently serves as Deputy Commissioner for the Office of Medical Products and Tobacco. We think his confirmation as commissioner should proceed as quickly as possible. Because the FDA oversees the safety and, in some spheres, the efficacy of products that constitute about 25% of our economy, the country needs a strong and experienced leader who can keep the FDA focused on its mission.

And the editorial concluded,

Califf's experience, his proven leadership abilities, his record of robust research to guide clinical practice, and his unwavering dedication to improving patient outcomes are unsurpased qualifications for the post of commissioner of the FDA; we strongly endorse his nomination and urge the Senate to act favorably on it. 

I have never seen this journal, known primarily for publishing research and scholarly opinion on medicine and health care, publicly render an opinion about a nomination for a federal position, let alone such an enthusiastic one.  A quick search of the journal revealed that it had taken no position and made no comment about the nominations of the last three US FDA Commissioners, (Dr Margaret Hamburg, Dr Andrew von Eschenbach, Dr Lester Crawford, and Dr Mark McClellan, look here) who were nominated by one Democratic and one Republican President.

Dismissing Concerns about Conflicts of Interest

This fervid endorsement came in the face of some controversy about the nomination, particularly about Dr Califf's previous ties to industry (see this post ).  He has participated in many industry sponsored clinical research projects.  For example, a 2013 JAMA disclosure statement included 13 commercial research sponsors of his work.  It also noted his consultative relationships with 32 commercial firms.  We discovered he also had a "board level" conflict of interest, having been a director of Portola Pharmaceuticals, for which he received over $250,000 in 2014 (see this proxy statement).  He also had been paid for "educational activities" in previous years, possibly including "drug talks," at least per one blogger.  So in my humble opinion, the nomination of Dr Califf could potentially become one of the most significant health care revolving door cases to affect US government.


Such consideration may have influenced Senator Bernie Sanders (I - Vermont), who is currently running for President.  In early October he announced he would oppose the Califf nomination.

Furthermore, since our post but before the publication of the NEJM editorial, there have been new revelations.   Dr Califf twithdrew as authors from several papers that had been accepted for publication, seemingly violating norms for declaring authorship of scholarly works, (see the Boston Globe here).   Dr Califf was revealed to have been a board member of and consultant to Faculty Connection LLC, which advises academic researchers "who want to work with industry" about regulatory submissions (see Intercept.com here)

Yet the Editor of the New England Journal of Medicine dismissed concerns about Dr Califf's industry relationships,

a few concerns have been expressed about his associations with industry, and these concerns may have caused some to withhold support for his nomination.

Like Califf, we believe that our actions should be driven by data, not innuendo. Since 2005, Califf has reported, as an investigator, the outcomes of seven clinical trials sponsored solely by industry in primary publications in major general medical journals. Of these trials, four had a negative outcome (i.e., not favoring the intervention), two favored the intervention, and one, with a factorial design, had a mixed outcome. Given this performance, it is impossible to argue that Califf has a pro-industry bias.

This opinion may yet carry the day.  The New York Times reported that

Dr Robert M Califf ... coasted through a confirmation hearing on Tuesday, with  most members of a Senate committee - including some who have been skeptical about his ties to the pharmaceutical industry - seeming set to support his candidacy.

This occurred despite one more major revelation that appeared since the editorial was published, but before the hearing.  A large pharmaceutical company clinical trial which Dr Califf ran had been criticized as biased in favor of the company's drug by the FDA's own staff and consultants. (see POGO here).  And it occurred despite calls by various organizations for the nomination to be turned down, including by Public Citizen and the AIDS Healthcare Foundation (see Medscape here).

Missing the Main Point

However, the NEJM editorial seemed to miss the main point.  It revolved around the claim that

It is impossible to argue that Califf has a pro-industry bias.

This was based apparently on an informal evaluation by Dr Drazen of seven of Dr Califf's 1200 publications.  So at best this was about the question of pro-industry bias in research publications. 

However, the controversy is about Dr Califf's nomination as the head of the US government agency that oversees the pharmaceutical, device and biotechnology industries, among others, and tries to assure the safety and effectiveness of drugs, biologics and medical devices, among other responsibilities.  The overriding issue is about the risk that his decision making in these capacities could be biased.  The real issue is the revolving door, not bias in research.

As we have repeated very recently, the revolving door can be veiwed as a species of conflict of interest.   Government officials who can look forward to extremely lucrative employment in health care industry may be much more inclined to seem friendly to the industry while in office.  Government officials who were previously paid by industry, and who benefited from financial interactions with industry, are likely to maintain their industry mindset and be mindful of their industry friends.  But the concern here is not that this risks biasing future research.  The risk is that a person who previously enjoyed close ties, including close financial ties to industry is at risk of putting the interests of industry over those of citizens and patients while running a US government agency charged with regulating that industry and protecting the health and safety of those citizens and patients.

Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

  Dr Drazen's editorial never directly addressed that issue.  It is one that should still be a concern.

Mission-Hostile Management?

Finally, the effect of the Califf nomination on the FDA has generated considerable public comment.  The effect of the New England Journal of Medicine's unprecendented editorial endorsement of the nomination has generated almost no discussion.  Only on the 1BoringOldMan blog was there note of the past industry ties of the current NEJM editor inspired their own controversies, and asked "since when is the editorship of the NEJM a position from which to weigh in on such matters?" (look here).

Using the editorship to so weigh in could not only obfuscate the debate about the nomination.  It could threaten the mission of a proud medical institution. The NEJM claims a

reputation as the 'gold standard' for quality biomedical research and for the best practices in clinical medicine.

It claims its editorials are

thoughtful, carefully reasoned analyses and interpretations [which] help you crystallize your own opinions on current topics and findings

Yet the blanket and unprecedented endorsement of the current FDA nominee appears otherwise.  We have previously argued that the earlier NEJM opinion pieces on conflicts of interest were based on logical fallacies more than "thoughtful, carefully reasoned analyses and interpretation."  In the Editor's apparent haste to defend industry-physician relationships, he risks the reputation and mission of once what was really a gold standard.

 Reference

1.  Drazen JM. Califf for the FDA.  N Engl J Med 2015;  DOI: 10.1056/NEJMe1513828 (link here)  

9:02 AM

Turn That Door Around - A Physician Substantially Tied to the Pharmaceutical Industry Nominated to Run the FDA

It seems to be the season of the revolving door in health care.  The latest version got some media attention, because it involves one of the most important health care leadership positions in the US government, the Director of the Food and Drug Administration (FDA).  However, the case actually seems much more serious than what the media has recently reported.

The Basics

For an introduction, we turn to the Wall Street Journal from September 15, 2015:

President Barack Obama plans to nominate the prominent cardiologist and medical researcher Robert Califf as the next commissioner of the Food and Drug Administration, the White House said Tuesday.

Dr. Califf had been named the FDA’s deputy commissioner for medical products and tobacco—effectively the No. 2 post—in February. He joined the FDA from Duke University, where he had served as a professor of medicine, a leading pharmaceutical researcher and the vice chancellor for clinical and translational research.

The new nomination got some rave reviews. For example, from the WSJ article,

Francis Collins, director of the National Institutes of Health and a scientist who has worked with Dr. Califf for years, called this 'a fantastic nomination.'

Then this in the NY Times (Sept 15, 2015):

'He’s never forgotten that at his core he’s a doctor, and he cares deeply about providing evidence to help people take better care of patients,' said Dr. Robert Harrington, professor and chairman of the department of medicine at the Stanford University School of Medicine, who worked with Dr. Califf at Duke.

Also, a MedPage Today article was entitled, "Califf Nomination for FDA Chief Gets Most High Marks," and included such testimonials as,

'He has a very good understanding of industry and academia, and think that will serve him well,' Caleb Alexander, MD, co-director of the Johns Hopkins Center for Drug Safety and Effectiveness in Baltimore, told MedPage Today....

Also, this from Dr Harlan Krumholz,

He's a broad thinker and a very creative and visionary individual. He will be an outstanding choice.

And this from Dr Sanjay Kaul,

I can't think of a more qualified person than Dr. Califf to lead the FDA at the present time. He is an accomplished leader in cardiovascular disease research whose work has resulted in therapies that save lives and improve the quality of life for millions of patients.

Is it time to break out the confetti yet?

Conflicts of Interest a Fly in the Ointment?

The only fly in the ointment was the matter of Dr Califf's ties to industry. The WSJ article included,

Diana Zuckerman, president of the National Center for Health Research, a Washington-based group focusing on medical-product safety, questioned his ties to the drug industry.

'Dr. Califf’s expertise and his close ties to the pharmaceutical industry are both well-known,' she said. 'His ties to industry have been a source of great concern to public-health experts when he was previously considered for FDA commissioner, and those ties raise important questions about this nomination.'

The MedPage Today article noted that Public Citizen's Health Research Group stated,

'During his tenure at Duke University, Califf racked up a long history of extensive financial ties to multiple drug and device companies, including Amgen, Astra-Zeneca, Eli Lilly, Johnson & Johnson, Merck Sharpe & Dohme and Sanofi-Aventis, to name a few,' Michael Carome, MD, the group's director, said in a statement. 'Strikingly, no FDA commissioner has had such close financial relationships with industries regulated by the agency prior to being appointed.'

The MedPage Today article, however, then went on to undermine those concerns, implying that only fringe people like those at Public Citizen were really worried. 

Most experts contacted by MedPage Today seemed to think Califf would not have a problem getting Senate confirmation. 'I expect him to be confirmed," said [Dr. Steven] Nissen. 'He is very well liked by people ... in both parties, and I would expect the nomination to go well.'

'All signals suggest that Dr. Califf is well-respected on both sides of the political aisle,' Jay Wolfson, DrPH, JD, senior associate dean at the University of South Florida's Morsani College of Medicine, in Tampa, said in an email.

'There are some who believe his relationship with [the drug industry] may be a problem, but most see it as a value-added factor in building a functional, more streamlined relationship with the industry in order to improve the speed with which truly effective and quality drugs and devices are made available, mitigate the excessive costs associated with pharmaceuticals, and influence policies and practices intended to improve health status.'

Note that the experts were not all named, or their expertise described, the first two paragraphs were really about Dr Califf's political support, and the third paragraph clearly reflected the views of someone who thought that the FDA needs to have a lighter regulatory touch. 

There was additional reporting about Dr Califf's conflicts of interest, but again with the effect of minimizing their importance.  The Wall Street Journal published a second article on September 18, 2015 which first reported,

From 2009 through early 2015, Dr. Califf received consulting fees of roughly $205,000 from companies including Johnson & Johnson, Merck & Co., GlaxoSmithKline PLC and one medical-device maker, records show. The payments are documented by the federal Open Payments database, and PharmaShine, a database of pharmaceutical disclosures operated by Obsidian Healthcare Disclosure Services LLC. Drug makers spent an additional $21,000 on travel, meals and other expenses for Dr. Califf, data show.

But the article provided this counterpoint,

Kevin Griffis, a spokesman for the Department of Health and Human Services, said Dr. Califf had ceased all work with drug makers once he was hired by the FDA and that he has gone through a rigorous screening process for potential conflicts of interest. Mr. Griffis said Dr. Califf had donated all the consulting fees he has received since the mid-2000s to nonprofit groups.

'Dr. Robert Califf’s professional career has been dedicated to advancing biomedical research, including the rigorous evaluation of the safety, efficacy and appropriate use of both new medical products and those already on the market,' said Mr. Griffis, assistant secretary for public affairs at HHS.

Note that Dr Califf already is at the FDA, in a position that I do not believe required Senate confirmation.  It is striking, however, how the agency's own public relations people have jumped to his defense now as a nominee who has to be confirmed by the Senate.  However, I suppose that had Dr Califf donated all this fees to a local soup kitchen, they could not be called much of a conflict of interest.  But Mr Griffis said "nonprofit groups," without specification, not "soup kitchens." And continue reading to find out more. 

A simultaneous NY Times article enlarged a bit on Dr Califf's industry relationships,

He has written scientific papers with pharmaceutical company researchers, and his financial disclosure form last year listed seven drug companies and a device maker that paid him for consulting and six others that partly supported his university salary, including Merck, Novartis and Eli Lilly. A conflict-of-interest section at the end of an article he wrote in the European Heart Journal last year declared financial support from more than 20 companies.

However the NYT article also quoted Mr Griffis about the donations to "nonprofits," and added,

A résumé studded with industry funding is not unusual in academic medicine, Dr. Califf’s supporters note. Doctors are paid consulting fees all the time, and universities routinely conduct clinical trials on behalf of companies. Those contracts help support university researchers’ salaries, a standard practice. Many emphasize that it does not imply an inherent conflict.

His supporters contend that Dr. Califf’s vast experience in the clinical science world could be a major asset in his new post.

Furthermore,

Supporters and former colleagues say Dr. Califf’s background makes him perfectly suited to the job of commissioner. He has spent years improving the way clinical trials are conducted, coming up with groundbreaking trial designs for medicines against blood clots.

'His integrity in scientific matters is impeccable, and his innovation in clinical trial design is legendary,' said Dr. Steven Nissen, a cardiologist at the Cleveland Clinic, who has been an outspoken critic of both the F.D.A. and drug companies.

Even better,

Dr. Califf is often in the gym on the StairMaster before 6 a.m., said a former colleague at Duke, Dr. Adrian Hernandez. He often invites younger doctors to join him in golf and has a passion for Duke basketball that he expresses by wearing the team colors on game days.

How could anyone criticize a man who is at the gym at 6 AM?

More seriously, note that while the recent reporting may bring up questions about Dr Califf's conflicts of interest in terms of financial relationships with drug, device and biotechnology companies when he was on the Duke faculty, all the reporting also included passages minimizing the importance of these conflicts.  To minimize the issue of conflicts of interest, articles cited unnamed experts, suggesting the logical fallacy of an appeal to authority; noted that the financial ties that were criticized are standard practice in academic health care, suggesting the logical fallacy of an appeal to common practice.  The articles also cited Dr Califf's positive attributes which may have been relevant to his work at the FDA, like knowledge of research, but were not related to the question of conflicts of interest. This suggests another appeal to authority, or something of a reverse ad hominem (pro hominem?) fallacy.  It seems odd that what appear to be straightforward journalistic reports of a presidential nomination included such attempts to defend the candidate.  Note further that many of these logical fallacies appeared not in quotes from Dr Califf's supporters, but in text apparently written by journalists (e.g., "industry funding is not unusual," "in the gym on the Stairmaster," etc.)

Nonetheless, this is the state of play as of this moment.  The thrust of the media coverage suggested that Dr Califf is a brilliant physician and researcher, and while he as some ties to industry, they do not amount to much of a problem, except in the eyes of the likes of Public Citizen.


If one digs deeper, however, there is more. When Dr Califf was appointed to his current FDA position in February, 2015, and years earlier when his name was first mentioned as a possible candidate to run the FDA, evidence appeared that his ties to pharmaceutical, biotechnology and device companies were much more serious than what the recent accounts suggested.  

Where Does the Money from Industry Sponsored Research Grants Go? 

The recent coverage of Dr Califf's nomination in the NY Times dismissed his multiple corporate research grants as common practice.  Yet in the TIME coverage of  his original appointment to the FDA in February, 2015, this reminder of the significance of corporate sponsored research grants appeared.

Califf says his salary is contractually underwritten in part by several large pharmaceutical companies, including Merck, Bristol-Myers Squibb, Eli Lilly and Novartis.

Note that apologists for physician and academician interaction with industry often claim that industry funding of research grants that does not go directly to individuals does not cause important conflicts of interest. In one sentence, however, this article underlined how these grants support academic salaries, and hence lead to the dependency that is at the heart of conflicted relationships.

As we posted in 2007, academic medical institutions now depend on "external," including corporate research funding to support their research faculty's salaries, and via "overhead," their overall budgets.  Dr Lee Goldman, then Dean and Executive Vice President at Columbia University, called faculty who bring in a lot of grant money "tax payers," who earn gratitude, and likely bonuses and perks.  Thus Dr Califf's multiple large corporate research grants cannot be completely dismissed as conflicts of interest. 


A More Extensive List of Industry Relationships

Furthermore, a relatively obscure February, 2015, report from MDDIOnline noted that Dr Califf had more industry relationships than were reported this month,

Conflict of interest disclosures dating back to 2007 made public by the DCRI show that Califf has been paid for consulting or other services provided to a number of medical device pharmaceutical, and biotech companies, including Medtronic, Acumed, Bayer Healthcare, Merck, Novartis, Roche, GlaxoSmithKline, Bristol-Myers Squibb, Sanofi-Aventis, and Eli Lilly & Co. Califf also disclosed that he held equity in two pharmaceutical companies—Boulder-based N30 Pharmaceuticals and South San Francisco, CA-based Portola Pharmaceuticals—as recently as 2014. Califf retired from Portola’s board of directors January 26, according to a press release from the company.

A somewhat more obscure commentary by Martha Rosenberg in OpEdNews provided even more extensive listings of Dr Califf's industry relationships. And it suggested having a look at the disclosures he has made in the past in medical journal articles. A statement in a 2013 JAMA commentary was particularly telling,

Dr Califf receives research grants that partially support his salary from Amylin, Johnson & Johnson, Scios, Merck/Schering-Plough, Schering-Plough Research Institute, Novartis Pharma, Bristol-Myers Squibb Foundation, Aterovax, Bayer, Roche, and Lilly; all grants are paid to Duke University. Dr Califf also consults for TheHeart.org, Johnson & Johnson, Scios, Kowa Research Institute, Nile, Parkview, Orexigen Therapeutics, Pozen, WebMD, Bristol-Myers Squibb Foundation, AstraZeneca, Bayer/Ortho-McNeil, Bristol-Myers Squibb, Boehringer Ingelheim, Daiichi Sankyo, Gilead, GlaxoSmithKline, Li Ka Shing Knowledge Institute, Medtronic, Merck, Novartis, sanofi-aventis, XOMA, University of Florida, Pfizer, Roche, Servier International, DSI-Lilly, Janssen R&D, CV Sight, Regeneron, and Gambro; all income from these consultancies is donated to nonprofit organizations, with most going to the clinical research fellowship fund of the Duke Clinical Research Institute. Dr Califf holds equity in Nitrox LLC, N30 Pharma, and Portola.

These lists of corporations from which Dr Califf got salary support and consulting fees are much longer than previous lists.  He acknowledged 13 commercial research sponsors, and consulted for 32 organizations, most of which were pharmaceutical companies.  Again, given that the salary support and overhead likely supplied by corporate research grants do suggest conflicts of interest, Dr Califf may have had many more of these sorts of conflicts than current reports implied  

A Seat on a Pharmaceutical Company Board of Directors

Note that the MDDIOnline article mentioned that Dr Califf was a member of the board of directors of Portola Pharmaceuticals. That was a significant source of income.  According to the Portola Pharmaceuticals 2015 proxy statement, Dr Califf received $259,623 in cash and stock options from the company in 2014.  I cannot find anything to suggest that this payment did not go directly to him.  This position, and the money it paid were not mentioned in the recent coverage. That payment alone seems to represent a major conflict of interest.

However, being on the board of directors of a health care corporation presents a deeper conflict than that produced by a simple payment of money or stock options, no matter how large. In 2006, we discussed corporate directorships as a new and important species of conflict of interest for medical academics.  As we have previously posted, corporate directors have fiduciary responsibilities to the company and its shareholders to support its financial success.  They are supposed to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]   Thus corporate directors have a much more significant commitment to the corporation than do corporate consultants, or researchers supported by corporate grants. 

Where Did Those Donated Consulting Payments Go?

Also note that the disclosure statement in the JAMA article mentioned that most of the consulting payments Dr Califf received went to the clinical research fellowship of the Duke Clinical Research Institute (DCRI).  Dr Califf was the first director of DCRI, 

So, while Dr Califf apparently did donate the consulting fees to a non-profit organization, that organization actually was part of Duke, and an organization that Dr Califf once led. It appears likely that Dr Califf benefited at least indirectly in terms of institutional gratitude and reputation from these consulting fees that he donated to his own institution.  So it appears that Dr Califf's donations of his consulting fees did not reduce the conflicts of interest generated by these fees to the extent suggested by the current FDA spokesperson and current media reports. 

Payments for "Educational Activities" 

Finally, perusal of disclosures of Dr Califf's commercial relationships made by the Duke Clinical Research Institute for the years 2010-2015 showed that he received payments for "educational activities" in 2011 from Amylin.  Information about earlier years is not available on this site, but in 2009, Dr Daniel Carlat wrote this about Dr Califf's then rumored candidacy for leadership of the FDA in the Carlat Psychiatry Blog,

look at these industry disclosures. He took money—lots of money--from 18 different pharmaceutical or device firms. Most of this was not for research, but for consulting and speaking, including CME. If Dr. Califf believes that it is ethical for physicians to help drug companies market their products, that’s his own business. But to elevate him to a position in which he is the country’s chief watchdog over unsafe medications and foods seems a dangerous move. With money from 18 drug companies padding his bank account, he will presumably spend most of his FDA career recusing himself from crucial decisions. Not a good idea.

There has been no mention of Dr Califf being a paid speaker for pharmaceutical companies in any of the recent reporting.  Dr Carlat implied that Dr Califf was paid to speak to further marketing objectives of pharmaceutical companies, that is, was giving "drug talks."  Since the publication of "Dr Drug Rep" in the New York Times in 2007, authored by Dr Carlat, the public has learned that such talks mainly include content provided by the pharmaceutical companies, and are meant by the companies as 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.)

Paid speakers may be regarded by pharmaceutical companies as paid "key opinion leaders," KOLs, who serve a marketing function in the guise of academics. As noted here and here, the companies buying their services may believe they have bought the services of 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 company keaders view key opinion leaders as marketers.

So the revelation that Dr Califf received corporate payments for "education" suggests a bigger commitment to corporate marketing objectives than has previously been revealed.  

Summary

So, looking at not only current media reports, but media reports from earlier this year, and also proxy statements, the fine print of journal articles, and old blog posts, it appears that Dr Robert Califf really did have very substantial financial interactions with the drug, device and biotechnology industry.  These interactions likely underwrote his salary and his standing with the leaders of his former employer, Duke University.  Dr Califf seemed to be a paid speaker for drug companies on at least two occasions, suggesting that the companies may have put him in a covert marketing role, or viewed him as a paid key opinion leader.  Finally,  Dr Califf served on the board of directors of one drug company, a much deeper commitment than being a sponsored researcher or consultant.

Thus Dr Califf really appears to be one of the most, if not the most drug, device and biotechnology industry connected individual ever nominated to lead the agency that is the most important regulator of the US drug, device and biotechnology industry.  Some of his connections, particularly his previous membership on a pharmaceutical company board, and his previous roles as a paid pharmaceutical speaker, suggested not only financial relationships, but commitments to companies' financial and marketing goals.  These appear to be major conflicts of interest vis a vis Dr Califf's current leadership position at the FDA, and his nomination to be the ultimate leader of this regulatory agency.  This is the revolving door writ large.

As we have said very recently,  the revolving door can be veiwed as a species of conflict of interest.  Government officials who can look forward to extremely lucrative employment in health care industry may be much more inclined to seem friendly to the industry while in office.  Government officials who just came from industry are likely to maintain their industry mindset and be mindful of their industry friends.

Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

Furthermore, the ongoing and increasing revolving door phenomenon clearly suggests excess coziness between industry and government, now to the extent that industry and government leaders of health care are becoming interchangeable.  This suggests that health care is increasingly run by this cozy ingroup, who very likely put their own interests ahead of those of patients and the public.

The continuing egregiousness of the revolving door in health care shows how health care leadership can play mutually beneficial games, regardless of the their effects on patients' and the public's health.  Once again, true health care reform would cut the ties between government and corporate leaders and their cronies that have lead to government of, for and by corporate executives rather than the people at large.

ADDENDUM (28 September, 2015) - This post has been republished on the Naked Capitalism blog,  and OpEdNews.

ADDENDUM (28 September, 2015) - See also more detail on Dr Califf's activities on the Portola board on the PEU Report blog. 

5:28 PM

A Quiet Turn of the Revolving Door - Director of NIMH to Go Directly to Google Life Sciences

Amidst a lot of health care news, the job plans of Dr Thomas Insel, currently the director of the National Institute of Mental Health (part of the US National Institute of Health) made a very small splash.  The most comprehensive account was in the New York Times.

Dr. Thomas R. Insel, the director of the National Institute of Mental Health, announced on Tuesday that he planned to step down in November, ending his 13-year tenure at the helm of the world’s leading funder of behavioral-health research to join Google Life Sciences, which seeks to develop technologies for early detection and treatment of health problems.

As noted in the NYT article, Dr Insel had great influence over the direction of mental health research and policy,

Dr. Insel took over the N.I.M.H. in 2002 and steered funding toward the most severe mental disorders, like schizophrenia, and into basic biological studies, at the expense of psychosocial research, like new talk therapies. His critics — and there were plenty — often noted that biological psychiatry had contributed nothing useful yet to diagnosis or treatment, and that Dr. Insel’s commitment to basic science was a costly bet, with uncertain payoffs.

A Modern Healthcare article documented Dr Insel's specific organizational roles beyond his directorship that could have influenced research and policy,

Insel chaired the Interagency Autism Coordinating Committee, which is a federal advisory committee that coordinates autism research and services and was established by Congress.

Insel also co-chaired the Blueprint for Neuroscience Research, which supported the pioneering Human Connectome Project, a project to map the human brain, and the NIH Brain Research through Advancing Innovative Neurotechnologies program, which aims to accelerate the development and application of innovative technologies to map brain circuits.

Insel also headed up the Common Fund efforts in Molecular Libraries, Single Cell Biology, and Genotype-Tissue Expression.

Comment

So Dr Insel clearly helped steer current US government mental health care research and policy towards its current course.  Now he is going directly, not with any sort of delay or waiting period, to a commercial firm poised to take advantage of the current direction of US mental health care research and policy.

Although more subtle than, say, a leader of a government regulatory agency departing for a position at a company regulated by that agency, this, in my humble opinion, appears to be an example of the revolving door.  Certainly it fits the broad 2011 Transparency International definition,

The term ‘revolving door’ refers to the movement of individuals between positions of public office and jobs in the private sector, in either direction.

Despite this, as far as I can tell, no one else so far has referred to this job transfer as an example of the revolving door.

Furthermore, as we noted here, the revolving door can be veiwed as a species of conflict of interest.  Government officials who can look forward to extremely lucrative employment in health care industry may be much more inclined to seem friendly to the industry while in office.  Government officials who just came from industry are likely to maintain their industry mindset and be mindful of their industry friends.

Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

We have discussed Dr Insel's approach to conflicts of interest before.  Note that Dr Bernard Carroll, posting on this blog, has written extensively about Dr Insel's apparently rather lax approach to conflict of interest issues while he was at NIH raised by the case of Dr Charles Nemeroff.  Look here,  here, here, and here.  Recapping these, I noted that Dr Insel later confessed that his statements about these issues "may be viewed as misleading."

Nonetheless, as far as I can tell, no one else so far has used the term conflict of interest in discussing Dr Insel's new job.  The anechoic effect continues.

As we have said endlessly, most recently here, the ongoing and increasing revolving door phenomenon clearly suggests excess coziness between industry and government, now to the extent that industry and government leaders of health care are becoming interchangeable.  This suggests that health care is increasingly run by this cozy ingroup, who very likely put their own interests ahead of those of patients and the public.

The continuing egregiousness of the revolving door in health care shows how health care leadership can play mutually beneficial games, regardless of the their effects on patients' and the public's health.  Once again, true health care reform would cut the ties between government and corporate leaders that have lead to government of, for and by corporate executives rather than the people at large

ADDENDUM (24 October, 2015) - This post was republished in OpEdNews.

9:14 AM

Round and Round It Goes - Former US Secretary of Health and Human Services Joins Humacyte Board

The latest example of the health care revolving door was made barely public just before the US Labor Day holiday.  Per the Triangle Business Journal,

Humacyte Inc., a biotechnology company based in Research Triangle Park, has beefed up its board of directors by adding former U.S. Secretary of Health and Human Services Kathleen Sebelius and life sciences industry veteran Dale Sander.

The 11-year-old Humacyte develops novel human tissue-based investigational products that are being developed for potential commercialization for applications in regenerative medicine and vascular surgery. Sebelius adds a significant amount of heft to the company’s now eight-person board.

From 2009 to 2014, she served as the 21st Secretary of the HHS, leading the effort to pass and implement the Affordable Care Act. She’s also been named by Forbes as one of the 100 most powerful women in the world.

Prior to serving as secretary of HHS, Sebelius served as governor of Kansas, two terms as the Kansas insurance commissioner and four terms in the Kansas legislature.

'Secretary Sebelius is undoubtedly one of the most distinguished health care industry leaders of our time and we are honored to have her join our organization,' said Carrie Cox, chair and chief executive officer of Humacyte, in a statement. 'Her tenure in the public sector, and deep understanding of the rigors of the regulatory process and policy will provide unique perspective and insight to support our goals to improve care for Humacyte’s first application for patients with End Stage Renal Disease.'

Comments

I will just raise a tired, ironic eyebrow in response to a lawyer, politician, and government leader with no direct biomedical or health care training or experience, and no apparent health care industry experience being called a "distinguished health care industry leader."

The big issue here is, of course, the revolving door.

It now seems that any randomly selected top US government official who has responsibilities directly related to health care could turn out to be a past or future health care corporate lobbyist, consultant, board member, or executive.  The revolving door is now well established between the US government and the country's huge and growing corporate health care sector.  Recent (2015) examples include:
-  a former Director of the Center for Medicare and Medicaid Services who was a Columbia/ HCA executive and who became the CEO of America's Health Insurance Plans (a trade and lobbying group) (look here)
-  various officials involved trade agreements (that heavily affect health care) who came from or went to industry (look here).
-  some US Food and Drug Administration officials who were involved in the lax regulation of amphetamines in "natural" products who came from or went to the "natural" supplements industry (look here).
- Etc, etc, etc

But the latest example is a big one, since it involves the top US health care official, the Secretary of the DHHS.

As we have said endlessly, the ongoing and increasing revolving door phenomenon clearly suggests excess coziness between industry and government, now to the extent that industry and government leaders of health care are becoming interchangeable.  This suggests that health care is increasingly run by this cozy ingroup, who very likely put their own interests ahead of those of patients and the public.

This is at best crony capitalism, and makes a mockery of that famous sentence in President Lincoln's Gettysburg Address:

government of the people, by the people, for the people, shall not perish from the earth.

The revolving door is clearly a kind of conflict of interest.  Government officials who can look forward to extremely lucrative employment in health care industry (regardless of their actual experience in health care or the health care industry) may be much more inclined to seem friendly to the industry while in office.  Government officials who just came from industry are likely to maintain their industry mindset and be mindful of their industry friends.

Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

Finally, the revolving door on its currently massive scale starts to look like corporatism (or corpocracy), "the organization of society by major interest groups."  One variant of corporatism prominent in the last century was fascism (on the model of Mussolini in Italy).  Of course, many of us in the US ought to see corporatism as antithetical to how our government and society is supposed to function - supposed to function.

Thus, the revolving door in health care seems like it ought to bear scrutiny.    Yet most examples of the revolving door are very anechoic, being noted mainly in the business media, and usually barely there.  I have seen almost no notice of it in the health care, health policy, or medical literature.  (For example, so far Ms Sebelius' new job has appeared in a corporate press release and a single article in a local business newspaper, as far as I can tell.)

So once more with feeling...  The continuing egregiousness of the revolving door in health care shows how health care leadership can play mutually beneficial games, regardless of the their effects on patients' and the public's health.  Once again, true health care reform would cut the ties between government and corporate leaders that have lead to government of, for and by corporate executives rather than the people at large

9:17 AM

Turn, Turn, Turn - from Columbia/ HCA Executive, to Virginia Secretary of Health and Human Resources, to Director of the Center for Medicare and Medicaid Services (CMS), to America's Healt Insurance Plans (AHIP)

Marilyn Tavenner's career continues to revolve, er, evolve.

Columbia/ HCA

Marilyn Tavenner worked for Columbia / HCA, now HCA, although details of her job there are sketchy.  Apparently she worked there for a long time, according to a 2015 article in the Nashville Business Journal,

Tavenner work [sic] in a variety of roles for Nashville-based HCA Holdings Inc for 25 years.

She worked long enough to earn a fairly generous pension.  As a 2012 a Washington Times article stated,

In a recent filing with the U.S. Office of Government Ethics, she reported that through a supplemental executive retirement plan at HCA, 'I will continue to receive $162,524 for life.'

There are only sketchy accounts available about what she did at HCA.  The same Washington Times article noted she left in 2006, and

'Ms. Tavenner was a senior executive at HCA who retired from the company over six years ago,' said HCA spokesman Ed Fishbough.

The only description I could find of her duties there was in a Forbes blog post by Bruce Jepsen in 2015,

Tavenner, ... had experience working for investor-owned hospitals and with insurers when she was at HCA....

What does seem certain is that her career at Columbia / HCA overlapped that of CEO Rick Scott, and included some of the time when the company performed actions that led to some serious charges.  In a 2011 Boston Globe blog post, Suzanne Gordon wrote,

While Tavenner worked for HCA, the company was busily enhancing its profit margin by defrauding the Medicare, Medicaid, and TRICARE systems. Terry Leap’s new book, '"Phantom Billing, Fake Prescriptions, and the High Cost of Medicine: Health Care Fraud and What To Do About It,' details HCA’s sorry history. In 2000, for example, HCA paid fines of $840 million for improperly billing the government and in 2003 HCA had to fork over another $631 million.

We discussed the billion dollar plus Columbia / HCA fraud case, which did involve corporate guilty pleas, but like most other legal settlements between the government and big health care organizations, no consequences for any individuals who authorized, planned, or implemented the bad behavior.  There were many allegations that then Columbia / HCA Rick Scott, who is now the Republican Governor of the great state of Florida, created a business culture that enabled the fraud, and even knew about it, but he was never charged with a crime.

Ms Tavenner's role in Columbia / HCA when this was happening was never clear.


Virginia Department of Health and Human Resources

After her work at Columbia / HCA, Ms Tavenner became Secretary of Health and Human Resources for the great state of Virginia.  I could find little news coverage of her time there, much less any suggestion that her previous role with Columbia / HCA might have been viewed as a problem. 

Center for Medicare and Medicaid Services (CMS)

In 2010, Ms Tavenner went to work for the US Department of Health and Human Services.  In 2011, Ms Tavenner became acting administrator of CMS.


The only concerns raised about Ms Tavenner's former work with Columbia / HCA at the time she was appointed to run CMS came from the Boston Globe blog post noted above.

Although Tavenner may not have been personally involved in these scandals, it hardly seems wise to put her in charge of the government system her company helped defraud.

Nonetheless she got the position.  In 2014, a Wall Street Journal article from 2014 suggested Ms Tavenner remained cozy with here former boss, former Columbia / HCA CEO,  and now Florida Governor Rick Scott.  It recounted that a CMS contractor had been investigating a Florida nursing home chain,

Medicare investigators began looking into Florida skilled-nursing facilities in 2011 and found what they considered suspicious billing patterns at 33 homes. CMS contractor SafeGuard Services LLC was concerned about how often Florida nursing facilities were charging for the costliest physical and occupational-therapy services, according to documents. About a quarter of the 33 facilities were paid at least 20% more a day than their local rivals, a Journal analysis of Medicare data found.

Three of the 33 are owned by Plaza Health Network. Plaza Chief Executive William Zubkoff previously ran a hospital that was barred in 2006 from billing Medicare and other federal health-care programs following fraud allegations.

But then,

Some of the nursing homes contacted the Florida Health Care Association, a trade group. It asked lawmakers and Florida Governor Rick Scott, a Republican, for assistance, according to the group’s director and emails.

Gov. Scott contacted Ms. Tavenner, according to a person familiar with the investigation. The two had once worked together at hospital operator HCA Holdings Inc., where both had been executives. The governor’s office connected CMS to the Florida Health Care Association. The trade group put an owner of two of the nursing homes, William Kelsey, on the phone with Ms. Tavenner.

Mr. Kelsey told her the prepayment reviews were 'creating a real hardship on the business, staff and residents,' he recalled recently.

On Aug. 22, 2012, Ms. Tavenner ordered the agency’s antifraud officials to release payments for the 33 homes, including the two operated by Mr. Kelsey, according to emails.

A CMS spokesman said Ms. Tavenner got involved to ensure the agency was 'preserving access and quality of care.' The spokesman said Ms. Tavenner 'often discusses issues and concerns with elected officials…including Gov. Scott.'

Of course, Ms Tavenner had a previous relationship with Governor Scott due to their shared time at Columbia / HCA which probably was not like her relationships with other elected officials.  In any case, I could find no real echoes from this story, but Ms Tavenner resigned from CMS in 2015, not completely covered in glory.  A Bloomberg account of her resignation included,

 Marilyn Tavenner, the U.S. official who directed the stumbling roll-out of Obamacare as well as its recovery in recent months, will resign as head of the Centers for Medicare and Medicaid Services.

Tavenner said in an e-mail to staff that she’ll step down at the end of next month. She didn’t give her reasons for leaving.

The article suggested that she had her troubles in her role as head of CMS,

 As head of the agency, Tavenner was arguably the person most responsible for construction of healthcare.gov, the federal health insurance website that collapsed when it opened for business in October 2013. A UnitedHealth Group unit -- then run by Slavitt -- was hired to lead repairs.

In November of last year, Tavenner also acknowledged that her agency had made a mistake in its calculation of the number of people enrolled under Obamacare for 2014. About 393,000 individuals with both health and dental coverage were 'inadvertently counted twice,' she said in a letter to Representative Darrell Issa, a California Republican whose committee discovered the error.

'Tavenner had to go,' Issa said in a statement today. 'She presided over HHS as it deceptively padded the Obamacare enrollment numbers.'

On the other hand, Forbes blogger Jepsen did suggest that some in industry thought better of her than did Representative Issa.

 Tavenner, who had experience working for investor-owned hospitals and with insurers when she was at HCA, was seen as friendly to the health insurance industry and medical care providers. She had respect among lobbies and among both Democrats and Republicans on Capitol Hill....

The for-profit health insurance industry seemed to particularly like here,

'Marilyn leaves behind a legacy of leadership at a time of unprecedented change in our health care system,' said Karen Ignagni, chief executive of America’s Health Insurance Plans, the health insurance lobby....  'She was a thoughtful strategist and balanced manager who time and time again rolled up her sleeves to work with all stakeholders on solutions to advance patient care.'

One wonders whether some stakeholders, like AHIP, thought that she was treating them particularly well.  What the average Medicare patient or health care professional thought of her was not explored.


America's Health Insurance Plans (AHIP) (and LifePoint)

This suspicion was bolstered when Ms Tavenner, despite the negative opinions of people, even Republican people like Representative Issa, was named to be Ms Ignangni's successor.   That was announced just yesterday, July 15, 2015.  In Modern Healthcare we saw,

Marilyn Tavenner, the former head of the CMS who stepped down just six months ago, will now lead the country's dominant health insurance lobbying group.

The board of America's Health Insurance Plans on Wednesday named Tavenner as the group's next president and CEO. She replaces Karen Ignagni, who served as AHIP's top lobbyist for 22 years....

This job transition was covered in media outlets, but so far, only Modern Healthcare raised any doubts,

Her decision to head to AHIP raises uncomfortable questions about the dynamics between Washington politics and business. Tavenner will now be representing and lobbying on behalf of some of the country's largest health insurers—the same companies who are regulated by the CMS and are devoting more of their business to Medicare and Medicaid in the form of privatized managed care.

For her role in these dynamics, she likely will be well paid,

Tavenner is primed for a big pay raise as the top leader of AHIP. Ignagni made more than $2 million as AHIP's CEO in 2013. Tavenner made $165,300 last year, according to government records. She is also expected to make more than $300,000 in cash and stock as a board member of LifePoint Health, a for-profit hospital chain based in Brentwood, Tenn. Tavenner joined LifePoint's board in April.

Conclusions

So now Marilyn Tavenner shows she is securely within that club of insiders that run health care in the US.  Some celebrate the US health care "free market," in which one might expect for-profit insurers will fight with provider organizations, like for-profit hospital chains, over payment policies, overseen by government's impartial regulators.  Yet it appears that many of these organizations' leaders come out of the same pool of insider managers, and that individuals can lead or govern organizations that are supposed to be negotiating at arm's length.  For example, note that now Ms Tavenner is leading a for-profit insurance lobbbying group while governing a for-profit hospital chain.

One might think that such arrangements might not be good for the organizations that are supposed to be at arm's length.  One might think such arrangements might be worse for patients, health care professionals and the public at large.  If the large organizations that are supposed to be competing and negotiating in the market are led out of a single cozy in group, maybe instead of competing and negotiating they will mainly be about benefiting their leaders.

As we wrote before,...

 the constant interchange of health care insiders among government, large health care corporations, and the lobbying and legal firms which represent them certainly suggests that health care, like many other sectors, seems to be run by an amorphous group of insiders who owe allegiance neither to government nor industry.

However, those who work in government are supposed to be working for the people, and those who work on health care within government are supposed to be working for patients' and the public health.  If they are constantly looking over their shoulders at potential private employers who might offer big checks, who indeed are they working for?

Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.

Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.

But real reform might spoil the party for those who transit the revolving door, so don't expect such reform to come easily.... 

12:51 PM

The US' Multinational Trade Negotiations - Trading Away Its Own and Other Countries' Current and Future Restraints on Drug Prices?

Trade Agreements More about Deregulation than Trade

International trade negotiations, especially their more technical aspects, seem far removed from health care and health policy, and unrelated to health care dysfunction.  However, it seems that such trade negotiations have become a back door route to affect health policy, especially national efforts to regulate health care intended to improve patients' and the public's health.  

We recently discussed how current multinational trade negotiations seem to be more about changing regulation in favor of big corporations than broadly advancing trade.  Some of the effects of the proposed trade pacts could have bad effects on patients' and the public's health, particularly by allowing corporations to challenge particular countries' public health policies outside of these countries' judicial systems, in kangarooish courts seemingly designed to favor corporate interests.  Also, the trade pacts' focus on intellectual property could lead to longer patent protection on drugs, biologics, and devices, raising health care costs.  However, attempts to figure out how proposed trade agreements could affect health care and public health were hindered by the secrecy surrounding the negotiations.

"Procedural Fairness" for Pharmaceutical Companies, not You and Me

Earlier in June, 2015, a part of the current draft of the Trans-Pacific Partnership (TPP) appeared on  Wikileaks, revealing yet another set of concerns about how the agreement could affect health care.  It was entitled "Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices," and hence was specifically about health care.

The bulk of the annex seemed to be about improving the treatment of drug, device and biotechnology companies by national agencies that make decisions about payments for their products. The annex apparently proposed establishing the companies' rights to rapid reviews, access to applicable procedures and guidelines, access to written decisions, company appeals of the agencies' decisions, and protection of corporate confidential information. On the other hand, there was nothing I could see in the annex about the rights of, say, patients or health care professionals.

We have noted the concern that international trade agreements may make government regulation subject to corporate appeal in "investor-state dispute settlement" (ISDS) processes, essentially international quasi-courts that are not subject to national judicial systems, may not provide for any input by parties other than governments and corporations (that is, by, for example citizens, patients or health professionals), and may not allow appeal.  Thus, by specifically incorporating new protections for corporations seeking favorable payments for their new products from national agencies, the annex could make it possible for the corporations to appeal to ISDS, going around national court systems.  As reported in the Huffington Post,

According to an analysis of the leaked document by Jane Kelsey, a law professor at the University of Auckland in New Zealand, these rules are enough to expose national health authorities to legal challenges under TPP’s investor-state dispute settlement process, or ISDS. ISDS empowers companies to challenge countries’ domestic laws before a tribunal of international judges if they believe the laws unfairly limit investment. The tribunals have the power to impose significant fines on countries if their laws are found responsible for the investment hardship in question. While pharmaceutical companies could not challenge national health programs’ policies through ISDS, their grievances would be eligible for ISDS if the companies claimed the policies hindered investment.

In fact, the Huffington Post article noted suspicions that the US Trade Representative (USTR) has been negotiating on behalf of big US drug, device and biotechnology companies to target price regulations in Australia and New Zealand,

Among the United States’ TPP negotiating partners, pharmaceutical provisions have faced the greatest opposition from Australia and New Zealand, which have national health authorities that provide prescription drugs to their citizens at heavily discounted rates. The U.S. Trade Representative and U.S. pharmaceutical companies have targeted the cost containment measures in those countries’ prescription drug programs for years. Pharmaceutical companies also claim that New Zealand’s drug approval process is opaque and difficult to navigate.

Why Explicitly Include the US Center for Medicare and Medicaid Services (CMS)?

However, anyone in the US who thinks that all the burden from the trade pact is only on other countries, particularly those down under, should think again. The draft trade pact annex also seemed designed to prevent any future attempts by the US government to control drug and device costs, especially for the US Medicare program, even though the current US President has proposed such attempts. 

Note that when the US program was extended to cover drugs, the legislation specifically forbade the government from negotiating prices, a provision that seemed more about protecting corporate revenues than the federal budget.  So, as reported by the New York Times,

The newly leaked annex, dated Dec. 17, 2014, lists Medicare and the Centers for Medicare and Medicaid Services as falling under its strictures.

The USTR pooh poohed any concerns about that,

Officials at the United States trade representative’s office, while declining to comment on a leak they would not acknowledge, said rules in the Pacific accord would have no impact on the United States because Medicare already adhered to them. The trade representative’s office helped develop the proposals.

'Already, transparency and procedural fairness are integral parts of the U.S. legal system and as such are principles reflected in U.S. trade agreements,' the representative’s office said in a statement.

Maybe preventing any government negotiation about, much less control of drug and device prices may be part of what the USTR called "procedural fairness."  In any case, if the US, and specifically CMS are doing so well, why bother giving this trade pact jurisdiction over them, unless to prevent any uppity future US government from daring to negotiate with the pharmaceutical industry?

The Huffington Post noted that

In an earlier statement, [Director of Public Citizen's Global Access to Medicine Project Peter]  Maybarduk expressed concern that the rules would 'limit Congress’ ability to enact policy reforms that would reduce prescription drug costs for Americans –- and might even open to challenge aspects of our health care system today.'

He expanded on that in a commentary for The Hill,

Earlier this week, WikiLeaks published the draft TPP 'Annex' on healthcare technologies. In the five-page document, the U.S. government commits Medicare to rules and procedures that would make it difficult — if not impossible — to implement a national formulary that would provide leverage for proposed negotiations with drugmakers under Medicare Part D.

Medicare costs are expected to more than double from $77 billion in 2015 to about $174 billion in the next decade. In February, the president called for giving Medicare the power to negotiate prices with drug manufacturers to ameliorate this cost burden. Americans support giving Medicare negotiating power by wide margins and across party lines.

Negotiations are most effective if the U.S. government has leverage. Experts suggest that key leverage in Medicare negotiations should come from developing a national drug formulary — a list of drugs that Medicare would cover. A formulary would stimulate competition, reduce prices and lead to healthier outcomes for patients and the healthcare system.

But the leaked TPP 'Annex' shows that the pact would impose procedural requirements on formulary decisions, exact significant administrative costs and open up the drug review process to increased corporate influence. Medicare would have to live by these rules. The result could be a toothless negotiator, and a formulary filled with expensive drugs that have questionable public health benefits, if any.

Summary

So why did the US Trade Representative acquiesce to, if not actively promote, a trade pact that would limit the ability of the US government, specifically, CMS to try to put a damper on the ever rising health care prices that threaten to bankrupt individuals and maybe eventually the Medicare program itself? And why, incidentally did it do so when this appeared to contradict the current US President's own stated goal to have Medicare negotiate the prices it pays for drugs?  (And why, incidentally, did it promote a pact that would give international tribunals jurisdiction over US government actions when that may be unconstitutional according to an increasing number of experts?) 

The best speculation we offered before was that the USTR has been "captured" by industry, in part through the conflicts of interest generated by multiple passages through the revolving door by current and former USTR personnel. 

At the moment, the TPP has stalled again in the US Congress.  However, do not underestimate the ability of its proponents to get it moving again.  The now intermittent drip of secrets from the ongoing trade negotiations showing how little they have to do with trade, and how much they have to do with advancing corporate interests suggest the need for much more vigilance in defense of patients' and the public's health.

Meanwhile, I repeat again that we need to do a lot more to undo regulatory capture that affects health care, and stop the incessantly spinning revolving door.    Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.

Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.

11:48 AM

All the President's Trade Negotiators - Revolving Doors, Regulatory Capture, and Health Care Corporate Friendly Trade Agreements

This week's spectacle in Washington, DC was a nearly unanimous Democratic minority in the Senate blocking a proposal for expedited consideration of multinational trade agreements favored by the Republican majority, but also by the Democratic President and his trade negotiators (look here).  Democrats mainly based their actions on perceptions that the trade agreements favored multinational corporations  over people.

While trade agreements may seem to be another, albeit international species of wonkery, these agreements could have major effects on patients' and the public's health.  Since these concerns have been essentially ignored by the US medical and health care literature, (although they have appeared in UK journals, Australian, and New Zealand journals in English), they I will discuss them below. Worthy of further discussion is the possibility that these potential threats to health care and public health may arise not just from ideological disagreements, but also from health care corporations' increasing capture of government, facilitated by the conflicts of interest generated by the revolving door. 

Corporate Friendly Trade Agreements

The US has been negotiating two major multinational trade agreements, the Trans-Pacific Partnership (TPP) and the Transatlantic  Trade and Investment Partnership (TTIP) for years. 

In a March, 2014, commentary, renowned economist Joseph E Stiglitz summarized the objections to the these proposed trade agreements.  His greatest fears were that such agreements

will benefit the wealthiest sliver of the American and global elite at the expense of everyone else.

This seems surprising, since most people think of trade agreements solely in terms of their effects on tariffs, not a big concern for health care and public health professionals.  However, Stiglitz noted

Tariffs around the world are already low. The focus has shifted to 'nontariff barriers,' and the most important of these — for the corporate interests pushing agreements — are regulations. Huge multinational corporations complain that inconsistent regulations make business costly. But most of the regulations, even if they are imperfect, are there for a reason: to protect workers, consumers, the economy and the environment.

What’s more, those regulations were often put in place by governments responding to the democratic demands of their citizens. Trade agreements’ new boosters euphemistically claim that they are simply after regulatory harmonization, a clean-sounding phrase that implies an innocent plan to promote efficiency. One could, of course, get regulatory harmonization by strengthening regulations to the highest standards everywhere. But when corporations call for harmonization, what they really mean is a race to the bottom.

 In the US, and other developed countries, there are lots of regulations that have major effects on health care and public health.  Changes in these regulations, or their implementation, could have major effects again on health care and the public health.  So those interested in health care and public health ought to be concerned about how such trade agreements could affect such regulation.

International Tribunals Could Trump National Law
One of Stiglitz's concerns was  that the trade agreement would allow international tribunals that could override national law, particularly law promoting public health:

What we know of ... particulars [of the TTP] only makes it more unpalatable. One of the worst is that it allows corporations to seek restitution in an international tribunal, not only for unjust expropriation, but also for alleged diminution of their potential profits as a result of regulation. This is not a theoretical problem. Philip Morris has already tried this tactic against Uruguay, claiming that its antismoking regulations, which have won accolades from the World Health Organization, unfairly hurt profits, violating a bilateral trade treaty between Switzerland and Uruguay.

In fact, Philip Morris has also used such tribunals to overturn Australian laws meant to discourage smoking for public health purposes.  The details of the Philip Morris case summarized in May, 2015 in an article by Lauren Carasik in  Foreign Policy, show the major public health implications of such trade tribunals,

In 2011, Australia passed a tobacco-control law to discourage smoking. It required cigarettes to be sold in plain packages with prominent warnings, with brand information relegated to the bottom of the box. Touted as 'one of the most momentous public health measures in Australia’s history' by the country’s health minister, the law was meant to deter a habit that will ultimately kill 1.8 million current Australian smokers, according to a recent study. After the country’s highest court upheld the constitutionality of the anti-smoking law, tobacco giant Philip Morris claimed that it violated the company’s corporate rights and launched a suit using a little-known provision called investor-state dispute settlement (ISDS). The case is pending, as is a similar case against Uruguay. A similar tobacco-control measure in New Zealand is on hold pending the outcome of these cases.

So these examples suggest that national laws meant to promote the public health could be challenged in these trade tribunals by multinational corporations based on these laws' postulated effects on corporate profits, regardless of the laws' public health rationale or legality in their own countries. 


Furthermore, a letter to the Lancet(1) noted,

Investor state dispute settlement (ISDS) provisions allow investors to sue governments if policy changes or even court rulings substantially affect the value of their investment, yet do not allow governments to sue investors for breaching the right to health.   ISDS processes constrain governments' abilities to regulate on the basis of the precautionary principle, or even to implement health policies on the basis of established evidence. These processes can have a chilling effect on efforts to address key health issues, such as alcohol, the obesity epidemic, and climate change. In New Zealand, the fear of costly ISDS litigation is already constraining government regulation on tobacco plain packaging.

Thus, creation of such international tribunals could favor financial concerns of multinational corporations over individual countries' governments' attempts to promote health care or public health. So, while these undemocratic tribunals are touted as a way to reduce non-tariff trade barriers, an editorial in the British Medical Journal(2) asserted,

Yet these barriers are some of our most prized social and environmental standards, including regulations on food safety, pesticide residues, and toxic chemicals....

Not only would these tribunals we able to override national laws, their operation would lack procedural safeguards.  Demonstrating that opposition to these trade agreements is also multinational, an article in the UK Independent in October, 2014, noted,

Critics say the tribunals, held under the so-called Investor-State Dispute Settlement (ISDS) system, subvert democratic justice, giving power over foreign citizens to big companies. Hearings are held in private, in international courts at the World Bank in Washington DC, bypassing the legal system of the country being sued, meaning details are often impossible to uncover. In some cases the very existence of the case is not made public.

In addition, per the article in Foreign Policy,

Critics like Global Trade Watch, a division of Public Citizen, a consumer advocacy organization, say the ISDS system is anti-democratic. Sen. Elizabeth Warren (D-Mass.) called for the ISDS language to be stripped out of the deal, writing in the Washington Post in February, 'If a final TPP agreement includes Investor-State Dispute Settlement, the only winners will be multinational corporations.' The problem is that the ISDS system lacks many procedural safeguards fundamental to the rule of law. The tribunals, run by the World Bank and the United Nations, are three-judge panels composed of highly paid private lawyers picked from a limited pool by states and corporations; individual lawyers can switch between serving as judges and advocates on behalf of corporations in different cases. And there is no comprehensive code of judicial conduct guiding the panelists on matters such as conflicts of interest.

Although the panels adjudicate disputes worth millions or even billions of dollars, they are not accountable to any elected body. Moreover, there is no system of precedent binding judges to an established body of decision-making, making it difficult for the parties to discern the applicable standards and their likelihood of success. And finally, there are no appeals, either within the ISDS system or externally, on the merits of decisions. An annulment is only possible for limited procedural errors, and those proceedings are heard before a different panel drawn from the same pool of professionals.

Under the system, states are deprived of the right to resolve these disputes since corporations can proceed directly to the tribunals without exhausting domestic remedies. But this privilege is not reciprocal: Corporations are not subject to suit in the tribunals by those harmed by their actions. Foreign companies are thus granted expanded rights without corresponding responsibilities.

Finally, in May, 2015, the United Nations special rapporteur on promotion of a democratic and equitable international order suggested that the proposed international tribunals would undermine human rights and violate the UN charter (per this Guardian article).

Further criticism of the tribunals came from the UK Labour party Shadow Health Secretary (as of April, 2014) who felt it would leave British general practitioners "powerless to resist legal challenges from US health giants with huge financial resources in the event of a contractual dispute (per the Independent).

To summarize thus far:  international trade agreements being pushed by the US government could set up trade tribunals that could reverse national laws meant to protect health and safety.  Such tribunals would not follow the procedures used, for example, in US courts, and could not be held accountable by individual governments.  Various aspects of these tribunals, and recent actions involving tribunals already set up by earlier trade agreements suggest the process may be heavily biased in favor of the financial interests of multinational corporation, and against patients' and the public's health.  Thus, health care and public health professionals ought to be alarmed about new agreements that could set up new tribunals, or expand the reach of existing tribunals.


Intellectual Property Rights vs Access to Health Care

Another set of problems affecting patients' and the public's health  are provisions in trade agreements favoring corporate "intellectual property" over access to drugs, devices and health care.  Stiglitz wrote in 2014,

America has been fighting to lower the cost of health care. But the TPP would make the introduction of generic drugs more difficult, and thus raise the price of medicines. In the poorest countries, this is not just about moving money into corporate coffers: thousands would die unnecessarily. Of course, those who do research have to be compensated. That’s why we have a patent system. But the patent system is supposed to carefully balance the benefits of intellectual protection with another worthy goal: making access to knowledge more available. I’ve written before about how the system has been abused by those seeking patents for the genes that predispose women to breast cancer. The Supreme Court ended up rejecting those patents, but not before many women suffered unnecessarily. Trade agreements provide even more opportunities for patent abuse.

To date, most of the details of the proposed trade agreements have been kept secret, but as noted on the PLoS Medicine blog in December, 2013, by Reshma Ramachandran and David Carroll,

Last month, Wikileaks posted the complete Intellectual Property (IP) Chapter of the secretly-negotiated Trans-Pacific Partnership Agreement (TPP) confirming public health advocates’ worst fears of the agreement’s impact on patients worldwide.

In particular,

The Wikileaks posted text revealed that the USTR and Obama Administration have decided to aggressively prioritize the interests of multinational pharmaceutical and medical companies over patients worldwide and at home. In fact, according to emails submitted to Intellectual Property-Watch under the Freedom of Information Act, the USTR has actively solicited the input of industry groups, giving them special access to the negotiating text while consumer and health groups have had to resort to requesting special meetings with negotiators. 

So,

Indeed, the recently leaked TPP chapter reflect these corporate interests as evidenced by the still-included provisions. In the text, the USTR has proposed a number of provisions that will further strengthen patents and data exclusivity for pharmaceuticals. Such provisions will bar the entry of generic competition into the market allowing for brand-name drug companies to retain their monopoly market and set drug prices at exorbitantly high prices. These provisions include:

- Lowering patent standards allowing for “evergreening” or the granting of patents for newer forms of existing medicines including new formulations or minor modifications even in the absence of a therapeutic benefit

- Mandating that surgical, therapeutic, and diagnostic methods must be patented making medical practitioners in TPP member states liable for infringement and restricting their choices for treatment

- Imposing data exclusivity on all pharmaceuticals, including biologics with the minimum period for this class to be set at 12 years (despite the fact that the White House is publicly in favor of a 7 year data exclusivity period and the FTC has stated that there is no need for any data exclusivity period at all) thereby not allowing drug safety regulators from accessing clinical data to grant market approval for generic and biosimilar drugs

-  Adjusting patent term periods to account for “unreasonable delays” including patent prosecution periods ranging from two years to more than four years extra further delaying generic drug entry into the market

- Adjusting patent term periods for regulatory approval periods allowing for patent extensions for both new pharmaceutical products as well as methods for producing or using new pharmaceutical products halting any potential innovation

- Linking patent status and drug marketing approval causing drug regulatory authorities to take on the additional task of early patent enforcement, allowing for bogus patents to be a barrier to generic drug registration Such proposals go beyond current U.S. and international law including the World Trade Organization’s Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

Additionally, the TPP has the potential to jeopardize millions of lives in the participating countries by driving up the costs of medicines significantly. Even in the United States, there has been a public outcry from physicians regarding the high cost of medicines. Earlier this year, over 100 oncologists came together to write a perspective piece in the journal Blood calling the prices of brand-name cancer drugs “astronomical, unsustainable, and perhaps even immoral.” The United States health care system has in fact greatly benefited from the entry of generic competition. On May 9, IMS Health released a report entitled Declining Medicine Use and Costs: For Better or Worse?, which found that many Americans had forsaken much needed doctor visits, medicines, and other treatments as they struggled to afford health care. In light of this, it is appalling that U.S. negotiators would continue to push provisions that would further exacerbate the cost burden of healthcare for patients not only abroad, but at home. 

Public Citizen particularly criticized the provision for patenting procedures,

Medical procedure patents raise healthcare costs. Health providers, including surgeons, could be liable for the methods they use to treat patients. Essentially, except for when a surgeon uses her bare hands, surgical methods would be patent eligible subject matter under the U.S. proposal.

Additional concerns about the potential of new trade agreements to increase the price of medicines and health care, and limit access to them, came, per Ramachandran and Carroll, from Doctors Without Borders, the American Association of Retired Person, and the International Federation of Medical Students.  More recently, such concerns were stated by amfAR re access to and costs of HIV medications (reported on Vox), and were restated by Doctors Without Borders (reported by the National Journal).

Perhaps more US health care professionals and public health advocates would be speaking out if they understood the problem.  However, concerns about how new proposed trade agreements could affect health care and public health have been notably anechoic in the US.  I could find absolutely no discussion of them in any moderate or large circulation US health care or medical journal.  There has been discussion in English language medical and and health care journals, but in journals that are relatively obscure, or published outside of the US, for example, see articles by Greenberg and Shiau(3), and Thow et al(4).  Note that the former wrote,

academic public health has failed to appreciate the serious risks of the TPP[A] and has not responded to its threats. 

Keeping concerns that the new trade agreements could threaten patients' and the public's health out of public discussion may be just the latest example of what we have called the anechoic effect, because it looks like it may be no accident that these proposed trade agreements favor multinational corporations over patients' and the public's health.  There is evidence that at least the US governmental process for negotiating these agreements was heavily influenced by the interests of these corporations, but not by the interests of patients or citizens. 

Revolving Doors, Regulatory Capture Generate the Momentum

There are thus strong reasons for health care and public health professionals to oppose the rush to approve the new trade agreements (the TTIP and TPP).  Despite these concerns, and the increasingly vocal opposition from many US legislators, the current administration has forged ahead with its proposal to "fast-track" their approval, only to be suddenly blocked, and by its supposed compatriots in the Democratic party.  There are lots of explanations for this, but two that got only a little notice but seem particularly germane to Health Care Renewal are the influences of the revolving door and cultural regulatory capture.

The case for these was best made by a November, 2013 article in the Washington Post by Timothy B Lee,

the U.S. negotiating position also had an unmistakeable bias toward expanding the rights of copyright and patent holders.

Those positions are great for Hollywood and the pharmaceutical industry, but it's not obvious that they are in the interests of the broader U.S. economy. To the contrary, critics contend that the rights of copyright and patent holders have been expanded too much. Those concerns do not seem to have swayed the trade negotiators in the Obama administration.

Two major factors contribute to the USTR's strong pro-rightsholder slant. An obvious one is the revolving door between USTR and private industry. Since the turn of the century, at least a dozen USTR officials have taken jobs with pharmaceutical companies, filmmakers, record labels, and technology companies that favor stronger patent and copyright protection.

A more subtle factor is the structure and culture of USTR itself. In its role as a promoter of global trade, USTR has always worked closely with U.S. exporters. That exporter-focused culture isn't a problem when USTR is merely seeking to remove barriers to selling U.S. goods overseas, but it becomes problematic on issues like copyright and patent law where exporters' interests may run directly counter to those of American consumers.

Lee provided extensive examples of how US trade officials transited the revolving door to and/or from the pharmaceutical industry.

On May 3, 2004, the United States and Australia signed a bilateral trade agreement. The agreement included a section on intellectual property that had numerous provisions favorable to pharmaceutical manufacturers. For example, it barred generic drug makers seeking approval for their drugs from citing safety or efficacy information originally submitted by brand-name drug makers for a period of five years after the information is submitted, making it more difficult for generic drug makers to enter the market.

The lead American negotiator was Ralph Ives, who was promoted to Assistant USTR for Pharmaceutical Policy soon after the negotiations concluded. He was aided by Claude Burcky, Deputy Assistant USTR for Intellectual Property. Less than three months after the Australia agreement was signed, the Sydney Morning Herald reported that both men would take jobs at pharmaceutical or medical device companies. Their new employers stood to benefit from some of the pro-patent-holder provisions of the treaty. Ives took a job at AdvaMed, a trade group representing medical device manufacturers. Burcky moved to the pharmaceutical and medical device company Abbott Labs.

Since then, Abbott has hired two other USTR veterans, Andrea Durkin and Karen Hauda, according to the women's LinkedIn pages. Another USTR official, Kira Alvarez, has gone through the revolving door twice over the last 15 years. Her LinkedIn profile indicates that she served at USTR from 2000 to 2003, spent four years at the pharmaceutical giant Eli Lilly, and then returned to USTR in 2008 as Deputy Assistant USTR for Intellectual Property Enforcement. She was there for five years before she took a job at AbbVie, a pharmaceutical firm that spun off from Abbott earlier this year.

According to his official biography at the site of the Biotechnology Industry Associaiton, Joseph Damond 'was chief negotiator of the historic U.S.-Vietnam Bilateral Trade agreement' during his 12 years at USTR. He then spent five years at the Pharmaceutical Research and Manufacturers of America before moving to BIO. Justin McCarthy went through the revolving door in the other direction. According to a USTR press release, McCarthy was responsible for intellectual property issues at the pharmaceutical company Pfizer from 2003 to 2005 before he was hired at USTR. He now works at a lobbying firm.

Lee also suggested that the US Trade Representative has been culturally captured by industry through its use of advisory panels made up of industry members, but not, for example, clinicians, public health advocates, or interested members of the public.

The agency has established 16 industry trade advisory committees to provide advice about the complex issues USTR deals with in the course of its negotiations. As the name suggests, the ITACs are designed to gather feedback from industry groups. There are no public interest groups, academics, or other non-industry experts on ITAC 15, which focuses on "intellectual property" issues.

And that matters because groups with ITAC seats have access to confidential information about the U.S. negotiating position that isn't available to the public. Sherwin Siy, an attorney at the advocacy organization Public Knowledge, has had multiple meetings with USTR representatives during the course of the TPP negotiations. But he says it was difficult to give USTR meaningful feedback because he didn't know what positions U.S. negotiators were advocating.

'They're willing to sit in a room with us and listen to our objections and our issues and be very polite,' Siy says. But 'whether or not that actually means anything is at best a black box.'

When USTR wants technical advice on transposing U.S. law into international agreements, it naturally turns to the industry representatives on the ITACs. And it stands to reason that the advice the agency receives in response would be a bit one-sided. Where U.S. law is ambiguous, industry groups naturally gravitate toward interpretations of U.S. law that favor their employers' interests. And because public interest groups and independent experts aren't allowed to see proposed language (aside from occasional leaks), the agency may not even realize that it is exporting a warped interpretation of U.S. law.

The pro-industry cultural bias has caused consternation among even well-known libertarians, as Lee noted,

'USTR sees itself as an advocate for U.S. exporter interests,' says Bill Watson, a trade expert at the Cato Institute. 'It's trying to negotiate market access for particular U.S. industries that ask for it. That bias leads USTR to think that because U.S. companies want more IP protection abroad, it's in their interest to negotiate that.'

So it seems quite clear that the US agency that negotiates the new international trade agreements may be staffed by people who came from affected industries, including pharmaceutical, device and biotechnology companies, and privileges advice from such companies.  Thus the agency appears to suffer from conflicts of interest due to the revolving door, and from regulatory capture induced by its bias in favor of advice from industry over that from clinicians, public health advocates, or interested members of the public.  This suggests why it appears that this government agency has actively been promoting trade agreements that favor industry interests over patients' and the public's health.

It may be that top US executive branch officials, all the way up to the President of the US, have been very ill-served by relying on an agency subject to such conflicts of interest and regulatory capture.

Summary

We have frequently written about the revolving door phenomenon, and its effect on government agencies and officials who regulate and control many aspects of health care. Recently, we wrote about how the revolving door risks corruption, and can lead to regulatory, and even state capture.

In 2011, we even wrote about how the revolving door may affect US trade negotiations, and thus important aspects of aspects of global health care.

Government officials affiliated with all major political parties have been known to transit the revolving door.  The recent cases we have documented have tended to be more about the party that currently controls the executive branch, of course.  But now, we seem to have documented how the revolving door has lead to a supposedly liberal president proposing trade agreements that seemed heavily biased towards corporate rather than popular interests, and thus suffered an embarrassing defeat at the hands of his party compatriots in the legislature.  The president seems to have been particularly ill-served by employees of the executive branch whose previous or potential revolving door transits have made them sing the tunes of industry rather than of the people they are supposed to be serving.  This suggests that in the long run, nobody but the participants in the revolving door ultimately benefits from their rotary transitions.

Instead, as we have said many times before, the constant interchange of health care insiders among government, large health care corporations, and the lobbying and legal firms which represent them certainly suggests that health care, like many other sectors, seems to be run by an amorphous group of insiders who owe allegiance neither to government nor industry.

However, those who work in government are supposed to be working for the people, and those who work on health care within government are supposed to be working for patients' and the public health.  If they are constantly looking over their shoulders at potential private employers who might offer big checks, who indeed are they working for?

Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.

Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.

ADDENDUM (19 May, 2015) - This post was republished in OpEdNews.

ADDENDUM (29 May, 2015) - This post was republished in OpenHealth News.

References

1.  Freeman J, Keating G, Monasterio E at al.  Call for transparency in new generation trade deals. Lancet 2015; 385: 605-605, link here.
2.   Hilary J.  The Transatlantic Trade and Investment Partnership and UK healthcare.  Brit Med J 2014; 349: g6552, link here.
3.  Greenberg H, Shiau S. The vulnerability of being ill-informed: the Trans-Pacific Partnership agreement and global public health.  J Pub Health 2014; 36: 355-357, link here. 
4.  Thow AMT, Gleeson DH, Friel S. What doctors should know about the Trans-Pacific Partnership agreement.  Med J Aust 2015; 202: 165-167, link here.

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