Health Science

The academic health IT community has spent the past decade (at least) burying their collective ostrich heads in the sand about the crappy software that is called health IT.

A few, though, have taken on the health IT industry at the heart of bad health IT design (including yours truly, which sadly was not enough to save my own mother from health IT design defects).

Probably the bravest soul on these issues, however, is Penn sociologist Ross Koppel.  In a critique of the latest from the medical informatics academic community on reigning in the hazards of this technology, an article by Sittig and Singh at U. Texas, he wrote the following piece in the BMJ:

The health information technology safety framework: building great structures on vast voids
http://m.qualitysafety.bmj.com/content/early/2015/11/19/bmjqs-2015-004746.full.pdf

Download it and read it in its entirety.  It makes the point that the solutions to these problems (which I increasingly believe just might be an insoluble, wicked problem without major scope and ambition reductions regarding the use of health IT) must be based on reality.

The reality must start from a firm response not to end users being flummoxed by bad rollouts or by carelessness (user error), but to the issue of products poorly designed from the get-go by their sellers whose primary interest is to make money come hell or high water.

Koppel makes the point that one will not get good results driving a car if that car is designed poorly, with hidden and confusing controls, defective brakes and an engine that overheats and explodes without warning, no matter what post-design interventions take place.

The issues of design flaws and fundamental fitness for purpose need to be blown open in a manner similar to the manner in which drugs and other medical devices are evaluated and regulated.  Academia needs to lead the charge, not suggest band aids, however well intentioned those band aids might be.

Koppel writes:

 ... In essence, I suggest that these two eminent colleagues tell us to look under the lamppost even though, as the old saying goes, the keys were dropped 70 feet away from the lamppost in the dark. Both Singh and Sittig, of course, are fully aware of the errors listed above,3 4 but (1) they expect that we can detect and understand these problems with error reporting, although many potentially serious errors go undetected (thus, unreported), and when detected, the poor design features that contributed to the error may not be readily apparent. (2) Singh and Sittig tend to attribute those sorts of problems to poor implementation, user errors or lack of access to the technology. They do not seriously question if the software is fit for its purpose.

And this:

 ... In fact, their assumption that HIT software is well designed runs throughout their work. They write about: misused software, unavailable software, poorly
implemented software and malfunctioning software (emphasis added), but what of badly designed software—neither user friendly nor interoperable with systems holding needed patient data? That failure is
not in their purview. They don’t challenge HIT vendors who design the software, or the regulators, who so often serve primarily as HIT industry promoters. Here’s what they write we need to address (my
italics): ‘1) concerns that are unique and specific to technology (e.g., to address unsafe health IT related to unavailable or malfunctioning hardware or software);
2) concerns created by the failure to use health IT appropriately or by misuse of health IT.

I add that such articles tend to confuse policy makers about what truly is needed to solve problems with HIT.

I've had the guts to take on these issues via the legal route after the death of my mother, something that led a number of academic zealots to intone that the incident, in 2010, a decade after my writings on bad health IT began, caused me to lose my objectivity.  That puerile, perverse reasoning passes for wisdom in certain academic informatics circles.  Yet it appears their objectivity about health IT never existed.

I lack respect for paper writers who in effect become apologists for products birthed as dangerous right out of the gate by opportunistic health IT companies.  Perhaps the health IT-mediated death of one of their loved ones would wake them up, but I sometimes doubt even that.

This is no mere academic spat. In this case, patient risk and harm worldwide is at issue.

The root of any software problem in healthcare, as I've written before, is at the design level.  Trying to work around bad design without facing reality leads to and perpetuates risk, patient harm, clinician disillusionment (e.g., the Medical Societies letter to ONC) and impairment of clinicians trying to take care of patients.

Kudos to Koppel. I hope the repercussions of his challenge to the usual academic fecklessness and special accommodations afforded this unregulated industry are not too severe.

Academics can be feckless towards possible sources of funding, but quite mean to internecine challenges, as Sittig, one of the authors of the challenged piece, was with me in an incident I found out about only because he did not know one of the people to whom he badmouthed me had been a former student I'd mentored.

-- SS

A Huge, but Sketchy Merger

The announced merger and "tax inversion" of Pfizer and Allergan would be one of the largest corporate marriages in US history.  It has drawn more than its share of criticism.  For example, per the Los Angeles Times, former US Senator and Secretary of State, and current presidential candidate Hilary Clinton said "this proposed merger, and so-called inversions by other companies, will leave U.S. taxpayers holding the bag."

By creating the world's largest drug company, it could certainly further consolidate the US and global pharmaceutical market and raise already high drug prices.  While Pfizer in particular has benefited from US funding of biomedical research, including training of researchers and development of research infrastructure, (see this New Yorker article by John Cassidy) making the company pseudo-Irish may be "unpatriotic," as President Obama said with regard to tax inversions in general (per the Washington Post).

The nature of the merger, creating a company that would be Irish for tax purposes, but effectively run out of the US seems at least intellectually dishonest.  (Note that the CEO of its supposedly Irish component, Allergan, works out of Parsippany, NJ (per Bloomberg, here.)

The main beneficiaries of the merger appear not to be patients, or health care providers, or US taxpayers, but top company executives.  As John Cassidy wrote,

It's hard to avoid seeing the merger as a cynical move designed to boost Pfizer's stock price and generate a windfall for the company's senior managers....

But the latest settlement by Allergan, which I was just about to write about before the merger was officially announced, is a reminder that the companies are a good fit in one sense.  Both have long histories of shady behavior as marked by many legal settlements, and in some cases corporate guilty pleas and convictions.

The Latest Allergan Settlement

The beginnings of the latest Allergan settlement were noted back in July, 2015, but first not even connected to Allergan.  According to the US Federal Bureau of Investigation (FBI),

A former district manager of Warner Chilcott Sales U.S., LLC (Warner Chilcott), a pharmaceutical company based in Rockaway, N.J., pleaded guilty today in U.S. District Court in Boston in connection with a scheme to deceive insurance companies and Medicare so that they would cover the costs of Warner Chilcott’s osteoporosis medications, Actonel and Atelvia.

The idea was to promote two of Warner-Chilcott's products, osteoporosis medicines Actonel and Atelvia, by evading insurance company requirements for physicians to justify their use, given questions about their benefits versus harms, and availability of generic treatments for osteoporosis.

Beginning in 2010 and throughout 2011, Podolsky directed the sales representatives in his district to fill out prior authorizations for physicians who prescribed Actonel and Atelvia using false clinical justifications as to why the patient needed Warner Chilcott drugs and submit them to health insurance companies. In some instances, Podolsky’s sales representatives reviewed patients’ medical charts to get the information necessary to fill out the prior authorizations, in violation of the Health Insurance Portability and Accountability Act (HIPAA). Podolsky also directed sales representatives to utilize a website to submit prior authorizations to insurance companies to disguise their identity as pharmaceutical sales representatives. Podolsky and the sales representatives that he supervised knew that they should not be involved in the preparation or submission of prior authorizations.

But Podolsky was not a lone wolf. At the end of October, 2015, the Boston Globe reported more fully on the scheme, and the large settlement made by Allergan, of which Warner-Chilcott was merely a subsidiary. US Department of Justice allegations involved top leaders of Allergan.

The drug reps bought the doctors lunches, dinners, drinks. They paid for speeches the doctors never made. And in exchange, the doctors prescribed drugs that boosted their sales.

Warner Chilcott, a unit of pharmaceutical giant Allergan PLC, will pay $125 million to settle these and other charges in an agreement announced Thursday by US Attorney Carmen M. Ortiz in Boston.

Ortiz said the company ran an elaborate scheme to prod doctors — including in Massachusetts — to prescribe its drugs in exchange for kickbacks.

Warner Chilcott’s former president, W. Carl Reichel, was charged in federal court for allegedly conspiring to pay kickbacks to physicians, and a Massachusetts physician, Dr. Rita Luthra of Longmeadow, was indicted for allegedly accepting payments.

Warner Chilcott illegally promoted at least seven drugs, including the osteoporosis treatments Actonel and Atelvia.

Court documents show that Warner Chilcott representatives promoted their drugs by wining and dining physicians and giving them money and gifts for participating in medical education events. These events often were held at 'upscale restaurants' and contained 'minimal or no educational component.'

The company made fraudulent requests to the federal government and to insurance companies to boost sales of their drugs, the US attorney’s office said, and employees also made unsubstantiated claims about the drugs’ benefits.

Note that the charges were of actions that went well beyond financial fraud. They included dishonest marketing and kickbacks to physicians. The alleged actions could have harmed patients, by inducing physicians to prescribe unneeded drugs with known adverse effects.

Note further that unlike many other legal settlements about which we have written in the past, this one did not allow the company to escape by just paying some money and then claim that it did not confirm or deny the charges.  In this case, the company pleaded guilty.

Warner Chilcott has agreed to plead guilty to health care fraud. It will pay a $23 million criminal fine and $102 million to resolve false claims with state and federal governments. The case was brought by two whistle-blowers.

And as noted above, unlike many other legal settlements which did not entail any negative consequences for those who authorized, directed, or implemented the bad behavior, in this case a top executive (although not the highest executive in the overall corporate structure, and not a current executve) was charged with a crime and apparently actually physically arrested (although he has not been convicted of it, yet.)

Meanwhile, Reichel, the former Warner Chilcott president, was arrested in Boston on Thursday.

Prosecutors say in their indictment that Reichel designed a sales and marketing strategy to entice doctors to prescribe his company’s drugs with free dinners and bogus speaking fees. The physicians paid to give speeches often did not speak at all, and instead enjoyed expensive dinners with sales representatives, the indictment says.

Reichel left Warner Chilcott in 2011, according to a news release.

Furthermore, per a Forbes column, Mr Reichel was allegedly involved up to his proverbial eyeballs.

The Reichel indictment says that, while president of Warner Chilcott’s pharmaceuticals divisions from 2009 to 2011, he directed company sales staff to push physicians’ to prescribe its drugs by throwing money at doctors’ in various ways, such as expensive dinners for doctors and their spouses and 'speaker' fees to attend informal dinners without educational content.

Reichel also allegedly provided sales reps with a separate expense account to buy food and drinks for employees of physicians who prepared prior authorization forms certain insurers required to pay for patients’ drugs.

Reichel hired 'Type A crazy' sales representatives, as he called them, who were provided with 'limited training concerning compliance with health care laws and otherwise de-emphasized the importance of compliance to the sales force,' the indictment says.

Of course, the top executive in the overall corporate structure said the usual, as likely written by his public relations spin doctors,

Brent Saunders, the chief executive of Dublin-based Allergan, said in a statement: 'We take seriously our responsibility and commitment to abide by all US and international laws that govern the sales, marketing, education, and promotion of our products, and recognize the tremendous impact that this responsibility has on the customers and patients we serve.'

Finally, two other middle managers involved in the case entered guilty pleas, according to the Department of Justice.

Thus this settlement may be regarded as much tougher than many previous legal settlements involving big health care organizations.

However, its bearing on the huge Prizer-Allergan merger has apparently not so far been publicly discussed.

Allergan's Previous Track Record

It is not that the new Allergan settlement is a one-off.   It needs to be viewed in the context of Allergan's previous history of misbehavior.

That history may be a bit obscure, especially because of Allergan's complex corporate structure.  However, a Wall Street Journal article on the merger provided a bit of Allergan's corporate back story,

Allergan itself is the result of a number of mergers in quick succession. It started off as a generic-drug company called Watson Pharmaceuticals Inc. In 2012, Watson acquired Swiss rival Actavis Group and adopted that name. It also absorbed Warner Chilcott PLC and Forest Laboratories Inc. in multibillion-dollar deals.

Mr. Saunders was CEO of Forest Labs, and became CEO of Actavis after that deal. Shortly after, Allergan’s predecessor was put into play when Valeant Pharmaceuticals International Inc. made an unsolicited offer to buy the California company.

Actavis then stepped in as a white knight and bought Allergan, taking the company’s name.

Allergan and its predecessor companies have an interesting record of misbehavior.  Just perusing Health Care Renewal one can find:

-  Actavis was convicted and fined more than $170 million in 2011 by a Texas jury of misrepresenting prices to the state's Medicaid program (see this post.)

-  In 2010, in case which included allegations that it paid kickbacks to physicians to promote its product, Allergan pleaded guilty to to federal charges of misbranding of Botox and agreed to penalties of about $600 million (see this post).

-  In 2010, Forest Laboratories settled allegations that it deceptively promoted drugs, particularly that it promoted anti-depressant Celexa for children by partially by covering up negative trial results about it.  This likely hurt patients, since anti-depressants like Celexa have been shown to have severe adverse effects, including suicidal ideation, for children.  The company also was charged with giving kickbacks to physicians to promote drugs.  The company pleaded guilty to a felony charge of obstructing justice, and two misdemeanors, including misbranding Celexa and illegal distribution of Synthroid.  The company paid over $300 million in penalties and submitted to a corporate integrity agreement.  (See this post)  The Department of Justice threatened to disbar the CEO of Forest Laboratories, but then inexplicably backed off (see this post). 

So the latest settlement by Allergan subsidiary Warner Chilcott is the fourth major settlement since 2010.  The company and its predecessors have pleaded guilty to crimes, at least once to a felony, and settled cases involving allegations of kickbacks and deceptive marketing practices. 

Pfizer's Previous Track Record

And things really get interesting when one considers Pfizer's track record, which seems much sorrier than Allergan's.  Our latest post, about Pfizer misbehavior was only one month ago (October, 2015).  A  UK judge found that the company threatened health care professionals for using a generic competitor.

Many posts on Pfizer can be found here.   The latest update of Pfizer's troubles since 2000 follows.

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

Thereafter,
- Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).
- Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).
- The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).
- In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).
- In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
- In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).
- In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).
- In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this post).
- In July, 2013, Pfizer settled charges of illegal marketing of Rapamune (see this post.)
- In April, 2014, Pfizer settled allegations of anti-trust law violations for delaying generic versions of Neurontin( see this post).
- In June, 2014, Pfizer settled another lawsuit alleging illegal marketing of Neurontin (see this post).
- In 2015, a settlement by Pfizer of a shareholders' lawsuit stemming from charges of illegal marketing was announced (see this post).

Summary

So the proposed merger of Pfizer and Allergan would truly create a behemouth of bad behavior.  The combined company would have a staggering record of legal settlements, guilty pleas and convictions involving deceptive marketing, fraud, kickbacks, bribes and anti-trust violations, and even an obstruction of justice plea and a RICO conviction.  Yet the managers in charge of the two companies when the bad behavior occurred never had to suffer any negative consequences (although in one current case there is the possibility one executive might be convicted).  Many of these managers have become amazingly rich during the course of their leadership.  Is there any reason to think, absent any unexpected increase in the courage and resolve of government law enforcement, or any unexpected public protest, that the new company will not continue to misbehave as long as its executives are making money from the process?

The Pfizer Allergan merger is the true poster child for the amorality, and consequent dysfunction and decline of modern US and now global health care. As long as top managers of big health care organizations can act with impunity, can avoid all responsibility for their organizations' bad behaviors, and can personally profit wildly from their companies actions, the health care death spiral will continue.  Will we continue to cry out in the wilderness, or will anyone else see the writing on the wall?

A musical moment to partially alleviate the gloom. "Your Cheatin Heart" sung by Hank Williams Jr.



 

In the last post, we saw that carbohydrate and particularly sugar intake have been declining in the US since 1999, even as our obesity rate has continued to climb.

In this post, let's look at another putative driver of obesity: our fat intake, and especially our intake of added fats like seed oils, butter, and olive oil.  Like the graphs in the last post, the data underlying the following graphs come from USDA food disappearance records (not self-reported), and NHANES survey data (1, 2).  Also like the last post, the graph of total fat intake is not adjusted for waste (non-eaten food), while the graph of added fat intake is*.  As a consequence, the figures for total carbohydrate and total fat intake are higher than actual intakes, but still good for illustrating trends.

Here we go.  First, total fat:
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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)  

Not to toot our own horn too loudly, but in the last week, Health Care Renewal bloggers have appeared in print three times.

Prevalence of Board Level Conflicts of Interest

We recently posted on a British Medical Journal article on the prevalence of what we originally termed "a new species of conflicts of interest," that is, conflicts of interest involving membership in boards of directors of for-profit health care corporations.  A shortened version of this just appeared as a (not very) "rapid response" in the BMJ here.  (Note though that the official date of the response was October 3.)

The New England Journal Series Calling for Rethinking the Problem of Conflicts of Interest

After the New England Journal of Medicine published an editorial and three commentaries earlier this year suggesting that concerns about conflicts of interest in health care may have been overblown, we pointed out that many of their arguments were supported by logical fallacies.  The Canadian Medical Association Journal has been publishing a series of news articles about the issue.  The latest one, published on November 17, 2015, ended by quoting HCR blogger Roy M Poses MD.

Health Care Corruption

On November 16, 2015, the Corporate Crime Reporter published a front page interview, "Roy Poses on Corruption in American Healthcare,"  The interview is listed here,  and summarized here but the full transcript apparently is not available online, but only in print and via subscription.  (Link to interview updated on 19 November, 2015).  

We like explanations that are simple, easy to understand, and explain everything.  One example of this is the idea that eating carbohydrate, or sugar, is the primary cause of obesity.  This lets us point our finger at something concrete and change our behavior accordingly.  And it's true enough that it has practical value.  But the world around us often turns out to be more complex than we'd like it to be.

The CDC recently released its latest data on the prevalence of obesity in the US, spanning the years 2013-2014 (1).  These data come from its periodic National Health and Nutrition Examination Surveys (NHANES).  Contrary to what many of us had hoped for after a slight decline in obesity in the last survey, the prevalence has once again increased.  Today, roughly 38 percent of US adults have obesity.  As a nation, we're continuing to gain fat, which is extremely concerning.

I decided to examine the relationship between obesity prevalence and our intake of carbohydrate and sugar over the years.  The food intake data come from the USDA's Economic Research Service (2).  For some reason, the data on carbohydrate don't extend beyond 2010.  This probably relates to funding cuts at the USDA*.

Let's have a look at the data for carbohydrate:

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On Health Care Renewal, we have posted story after story about amazingly well paid leaders of big organizations presiding over amazingly bad organizational behavior (including subversion of mission, conflicts of interest, deception, fraud, kickbacks, various other crimes and outright corruption).  Yet the leaders often seem curiously disconnected from what occurs on their watches, while they are sometimes hailed as "visionaries," and at times exude messianic confidence.

Medtronic's Founder on its Sacred Mission

A recent article appearing in an unexpected place provides an example of leaders' excess confidence in their own righteousness.  In the IEEE (Institute of Electrical and Electronics Engineers) Institute was a commentary by Earl Bakken, the founder of medical device/ biotechnology giant Medtronic, modestly proclaiming the "secrets of corporate success."

Keep in mind that while Mr Bakken founded the company, at age 91, while no longer its leader, he proclaimed, " I stay involved with my company."  As such, he remains proud of its mission statement,

In 1960, when corporate mission statements were rare, I wrote one that has never changed. It remains the company’s guiding principle. There are six tenets, but the first one is the most important: To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.

Starting in the 1970s, I met with all new employees, explained our history and mission, and in each of their hands I placed a medallion imprinted with the mission statement. I encouraged them to live by it—at work and at home.

Note that the official mission also includes,

To strive without reserve for the greatest possible reliability and quality in our products; to be the unsurpassed standard of comparison and to be recognized as a company of dedication, honesty, integrity, and service. [ital added]

Apparently, he believes that under the "visionary leadership" and "astute direction" of the current, this mission remains central to the organization.

At Medtronic, we live our mission. It’s the basis for how we behave in relationship to our stakeholders, each other, our communities, and the world. But it also guides our relationships with ourselves. We live the Medtronic Mission every day in truly genuine ways by serving others. I am proud to have a mission that is so deeply woven into the fabric of this company that improves millions of lives throughout the world.

Here’s to dreaming on.

Honesty? Integrity? - the Company's 10 Year Track Record 

I hate to disillusion a 91-year old, but in light of the company's last 10 year track record, as discussed on Health Care Renewal, he does appear to be in a dream world.


Medtronic has provided our blog with lots of material, including some amazing stories about conflicts of interest (starting in 2006, here, here, here, here, here, here, here, here, nad here,) and revolving doors  (here, here, here, and here). 

The company has also made a series of legal settlements of various allegations of infamous behavior, in chronological order...
 
2006

- We discussed detailed and vivid allegations that Medtronic had been paying off doctors starting in 2003.
 - Medtronic subsidiary Sofamor Danek settled for $40 million allegations that it gave kickbacks to doctors in the form of sham consulting fees and lavish trips (look here).

2007

As Bloomberg summarized in 2014,

Medtronic agreed in 2007 to pay about $130 million to settle consumer suits accusing the device maker of hiding defects in its defibrillators.

 2008

- Medtronic subsidiary Kyphon settled a suit for $75 million and signed a corporate integrity agreement for allegations that it defrauded Medicare through a scheme that lead to excessive hospitalization for patients who received the company's spine surgery device (link here)

2010

Per the Bloomberg 2014 summary again,

The company agreed to a $268 million settlement of suits in 2010 over allegations that fractured wires in another line of defibrillators caused at least 13 patient deaths.

2011

-  Medtroinic settled for $23.5 million two other federal lawsuits alleging it paid kickbacks to encourage physicians to implant its devices (look here).

2014  

In June, we discussed a settlement Medtronic made of allegations that  Medtronic gave kickbacks (that is, bribes) to doctors to get them to use its cardiac devices.

2015

In April, 2015 we discussed three settlements made by Medtronic:
- Its subsidiary EV3 settled old allegations that it coached hospitals how to overbill the US government for procedures using its products
- The company settled allegations it gave kickbacks to physicians to induce them to use its neuromodulation devices.
- The company settled allegations it lied to the US military about US origins of its devices.

(And by the way, we will not belabor the contrast between the statement's committment to "recognize the personal worth of employees," and the gargantuan payments made to certain employees, that is, the top managers, all who got over $3.5 million in 2014, and the "visionary" CEO, who got over $12 million, look here. )

Summary

Someone needs to wake up Mr Bakken.  He may still believe in the mission statement, and wish that it is central to his company.  However, the track record seems to suggest that the mission statement has been honored often in the breach.

Perhaps the problem is that Mr Bakken is really much more detached from the company he founded than he now admits.  However, I worry that this immensely positive spin suggests that he, like many other health care oragnizational leaders, live in some sort of bubble into which no negative karma is allowed to penetrate.  Thus convinced of their own innate goodness, they can provide no check on continuing manifestations of corporate greed, most likely with the solace of the own fortunes they build up. 

IMHO, we need to break up these huge health care organizations which have become so big that those who run them cannot be in touch with what really goes on.  We need to reestablish the accountablity of leaders, and no longer allow them to get credit for all the good that happens, and dodge responsibility for all the bad.  True health care reform would entirely transform health care leadership, so that it can become well-informed, supportive of the mission, unconflicted, less self-interested, honest, and certainly law abiding. 

The huge corporations which now dominate global health care are creating amazing records of repeated ethical misadventures.  We last discussed multinational Swiss based pharmaceutical manufacturer Novartis' escapades in early 2014.   Since then, the legal settlements and other legal findings just keep on coming, capped with a big one in late October, 2015.

We will summarize them in chronological order.


Japanese Health, Labor and Welfare Ministry Found that Novartis Concealed Serious Adverse Effects

In August, 2014, per the Japan Times, but apparently not reported widely outside of that country.

Novartis Pharma K.K. said it has failed to report at least 2,579 cases of serious side effects to the health ministry, including one that was fatal, related to its drugs for leukemia and other diseases, although employees were aware of the problems.

Of the total, 1,313 cases were related to Glivec and 514 to Tasigna, both drugs for leukemia treatment. Another 261 cases involved Afinitor, a cancer drug, the Japanese unit Swiss drug giant Novartis AG said Friday.

The findings were reported to the Health, Labor and Welfare Ministry the same day.

The marketing staff at Novartis Pharma recognized the side effects but failed to report them to the division in charge, breaking the drug firm’s internal rules, Novartis Pharma said. They were not fully aware of the importance of the problem and higher-ranking officials failed to supervise them properly, it said.

In February, per the PharmaLot blog, the Ministry decided to suspend the company for 15 days, after having issued a business improvement order to it.  More details of Novartis' problems in Japan can be found in the Japan Times.  I cannot find anything to suggest any one in a position of leadership at Novartis faced any negative consequences as a result, however.

Note that by allegedly hiding adverse effects of its drugs, it is possible that the company's alleged actions led doctors and patients to believe the drugs were safer than they really are, possibly leading to overuse of the drugs and resulting in even more adverse effects.  I did not see a discussion of possible patient harm in the discussion of this case.


Novartis Executive Pleads Guilty to Bribing Polish Official

In October, 2014, per a short Reuters (UK) article, and apparently not mentioned elsewhere,

An executive at a pharmaceutical company in Poland who pleaded guilty in a bribery case involving improper payment, works for Novartis, the Swiss drugmaker said on Thursday.

Poland's anti-corruption bureau said on Tuesday two women had appeared in court in a case in which a health fund official was given a tourist trip worth more than $1,000 (620.67 pounds) in exchange for backing the sale of a particular drug.

Both defendants pleaded guilty....

The drug involved was not clear, and the company suggested this was an individual act ("the enquiry relates to an individual and the company is not part of the enquiry.")  Why an individual would do something like this if not to advance her career is not clear, however.  I cannot find any followup coverage of this, nor anything to suggest the supervisors of the executives involved faced any negative consequences.

Again, by bribing an official to promote a particular drug, this case could have led to overuse of the drug, and potentially to patient harm from the drug's adverse effects. 

Novartis Subsidiary Sandoz Settles Allegations that it Misrepresented Pricing Data to US Medicaid

In March, 2015, per the PharmaLot blog,

In what the federal government says is the largest such settlement ever reached, Sandoz has agreed to pay $12.64 million to resolve allegations that it misrepresented pricing data on medicines that were provided to the Centers for Medicare & Medicaid Services.

Sandoz, which is owned by Novartis and markets hundreds of generic drugs in the U.S., allegedly misrepresented the average sales price data to Medicare between January 2010 and March 2012, according to a statement from the Office of the Inspector General of the U.S. Department of Health & Human Services.

A Novartis spokeswoman writes that the drug maker did not admit to any liability or wrongdoing. 'Sandoz continues to be committed to providing high-quality, affordable medicines to U.S. patients and conducting business with customers and the government with integrity.' As part of the settlement, Sandoz agreed to provide certification that it established a government pricing compliance program.

As the OIG explains, Medicare uses the pricing data to set payments for most drugs covered under Medicare Part B....

Again, no one who authorized, directed or implemented any price misrepresentation faced any negative consequences.  Futhermore, as often occurs in US cases, the company did not admit any wrongdoing, and provided the usual public relations boilerplate about upholding the highest principles, the allegations leading to the settlement notwithstanding.

Express Scripts Settles Allegations that it Accepted Kickbacks from Novartis

In May, 2015, also per the PharmaLot blog,

Express Scripts  has agreed to pay $60 million to resolve allegations by U.S. authorities that a business unit participated in a kickback scheme with Novartis that caused federal health care programs to pay for a medicine based on false claims, according to court documents and a regulatory filing.

The U.S. Department of Justice alleged that Novartis offered patient referrals to Accredo Health Group, which is a specialty pharmacy run by Express Scripts, in exchange for bolstering refills of Exjade, a drug used for reducing excess iron in patients who undergo blood transfusions....

Apparently other lawsuits involving allegations of Novartis payments to other pharmacies are pending. Note that the events alleged in some of these proceedings may have occurred while Novartis was already subject to a so-called corporate integrity agreement,

a key issue to watch is the extent to which a so-called Corporate Integrity Agreement that Novartis signed in 2010 factors into the proceedings. These agreements typically run for five years and require a company to establish an internal compliance program and report violations.

At the time that Preet Bharara, the U.S. Attorney in New York, announced the lawsuits against Novartis two years ago, he called the drug maker a 'repeat offender,' and the lawsuits noted that the violations alleged in the litigation took place before and after the CIA was signed.

Note that the settlement was with Express Scripts, although it involved allegations of misbehavior by Novartis.  Note also that this settlement throws into doubt one mechanism now widely used by law enforcement in the US to settle cases involving big corporations, the corporate integrity agreement or defererred prosecution agreement.  These are agreements made by corporations not to behave badly again.  Yet this case may yet demonstrate that these agreements do not deter future bad behavior.

Again, so far, this settlement did not involve any negative consequences for who may have authorized, directed or implemented the bad behavior either at Express Scripts or Novartis.

Novartis Settles US Allegations of Kickbacks to Enhance Sales of Multiple Drugs

In late October, 2015, a larger settlement, at least in monetary terms, of related issues was announced, per Reuters,

Novartis agreed in principle to pay $390 million to settle U.S. allegations that it used kickbacks to speciality pharmacies to push sales of some drugs, the Swiss company said on Tuesday, hitting third-quarter earnings.

Since this case involved hundreds of millions dollars, it got a bit more coverage than the others.  For example, Bloomberg provided some more specifics,

The payment covers all claims related to the medicines Myfortic, Exjade, Tasigna, Gleevec and TOBI, the company said. The U.S. had sought as much as $3.3 billion from Novartis for Exjade and Myfortic claims, claiming it had referred patients to specialty pharmacies and paid kickbacks in the form of rebates to get those pharmacies to recommend the drugs to patients and to increase sales.

It is customary in such settlements for them to allow the accused corporation to avoid any admission of guilt, often with some statement that the corporation neither confirms or denies the allegations.  In this latest cast, however, while the company issued the usual "neither confirm nor deny" statement, the Novartis CEO appeared to want to deny the allegations despite his willingness to pay so many millions to get them behind him, as per Reuters,

Chief Executive Joe Jimenez told reporters Novartis had made the disputed payments to ensure patients took their drugs, including treatments to prevent rejection of transplanted organs, but U.S. government attorneys disagreed.

'It's something we just believe we want to put behind us,' Jimenez said. Novartis said it neither admitted nor denied liability as part of the settlement.

How the payments or rebates to the pharmacies had anything to do with improving patient adherence is not clear.  Mr Jiminez's expertise in improving patient adherence is similarly not clear.  Per his official company biograpphy, his education was limited to business school, and before becoming a Novartis executive, he ran the Heinz company, makers of the famous ketchup (look here and here).  

Note that if, despite the protestations of the CEO to the contrary, the effect of the company's alleged actions was to over-promote use of the drugs, the results could have been excess adverse effects for patients. 

Furthermore, and despite this possibility, per the Wall Street Journal, the CEO also seemed unwilling to agree that the company would change any of its practices beyond paying the money,

Chief Executive Joe Jimenez said the rebates were designed to induce specialty pharmacies to ensure that patients completed a course of medicine. He added that Novartis still used this 'quite common' practice at specialty pharmacies in the U.S.

'We continue to maintain that specialty pharmacies must continue to play a role in ensuring patient adherence,' he said. 'How that is going to play out as to whether we change our behavior or not remains to be seen.'

This suggests that CEO Jiminez really thinks that the company should pay the money and then continue doing what it pleases, based on the rationale that the payments to or discounts given pharmacies were meant to improve patient adherence, not oversell the drugs.  This may reflect what he really thinks of what his company ought to be doing for, or to us, that is to or for the patients who take the drugs it manufactures. 

 Nonetheless, a public relations release tried to make those comments inoperative.

Some media coverage did not accurately reflect our position and the seriousness of the Company's commitment to working with the government to ensure our behaviors and interactions with specialty pharmacies meet the highest ethical standards. As such, we want to emphasize the following points:

Novartis will make detailed admissions of fact concerning the Government’s allegations as part of the final settlement.

Any reports suggesting that we are not addressing the Government’s concerns or the particular issues on which the litigation focused was not intended by the Company.

We remain committed to working with the government on corporate integrity obligations, including those relating to specialty pharmacies, and conducting our business in an ethical manner that is fully compliant with the law.

We await the statement of facts.  Maybe this statement will prove true, but given that the original statement came from the CEO, to whom the PR people who wrote the satement report, perhaps CEO and former purveyor of ketchup Jiminez meant what he said.  As noted in the Modern Healthcare blog,

Patrick Burns, co-director of the Taxpayers Against Fraud Education Fund, a not-for-profit funded by whistle-blowers and law firms that represent them, said he remains skeptical of the company's intentions.

Burns said Jimenez's original statements smack of disrespect for the U.S. Justice Department and the U.S. attorney general.

'It's a level of arrogance and ignorance which is jaw-dropping,' Burns said. 'You have the CEO coming out and brazenly saying we will not even change our practice. I think this really is the time for the attorney general to show her teeth.'

We also await any such dental findings. 


Summary

This set of misadventures are just the latest in a long series by Novartis.  In March, 2014, we noted:
- Italian authorities had fined Novartis and Roche for colluding to promote the use of an expensive opthamologic treatment
- the NY Times published interviews with physicians ostensibly showing how Novartis turned them into marketers for the drug Starlix
- Japanese investigators charged Novartis with manipulating clinical research
- Indian regulators canceled a Novartis import license, charging the company with fraud.

Also,  in 2013, Novartis was fined for anti-competitive practices in its marketing of Fentanyl by the European Commission (look here), and in 2011 its Sandoz subsidiary settled allegations of misreporting prices in the US for $150 million (look here)   Other Novartis misadventures from 2010 and earlier appear here.  So Novartis has quite an impressive, if not infamous record of ethical failures.

Nonetheless, the march of its legal cases continues.  Furthermore, after the latest case, the Novartis CEO suggested that he saw no clear need for the company to change its ways, even though his PR people later tried to recast his statements.

So we see that the big health care organizations which now dominate health care globally continue to misbehave, and current legal efforts centering on settlements and fines seem to do nothing to deter continued misbehavior.  Maybe it is time to end the impunity of the corporate managers who have become rich while such behavior continues on their watch.  Modern Healthcare quoted Mr Burns as saying

the financial penalty in this case didn't seem to be enough to fix the problem. He believes the government needs to begin excluding executives such as Jimenez from federal healthcare programs in order to better get its message across that such behavior won't be tolerated.

In the new PharmaLot blog, Ed Silverman was hopeful that things may really be getting ready to change. He first noted, as we have done many times previously,

Over the years, a parade of drug companies has reached settlements, mostly for paying physicians to favor their medicines or illegally marketing products. Rarely, though, do executives suffer any consequences.

Also,

Mostly, the federal government resorts to large fines, even though countless people may have been prescribed medicines unnecessarily — at great expense and sometimes great harm. And drug makers simply treat these penalties as a cost of doing business. The failure to come down harder is sadly reminiscent of the recent financial crisis in which most heads of the biggest banks escaped unscathed.

Lately, however, there are signs the government might be changing its approach toward recalcitrant executives, and such a move is long overdue. After all, if individuals are not held accountable, the senior officials who run these companies have little incentive to play by the rules.

One can only hope, I suppose.  But to conclude as I have so many times before....

There seems to be increasing recognition that the continuing rise in US health care costs is unsustainable, and that these costs are not buying us good health care.  There are calls to avoid unnecessary, and sometimes harmful care.  Yet there is a persistent disconnect between how continuing dishonest behavior by health care organizations, impunity of their leaders, and lack of accountability by their board members fuel rising costs, shrinking access, and bad outcomes for patients.

To truly reform health care, we will have to at least recognize the causes of the current dysfunction.  Recognizing how health care dysfunction is created by unaccountable, dishonest leadership should lead to true reform that would promote well-informed, honest, accountable leadership that puts patients' and the public's health ahead of personal gain.  

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Physicians are sworn to provide the best possible care to each individual patient.  Yet in the US, physicians increasingly practice as employees of large organizations, sometime for-profit corporations.  Physicians may be in a bind when their bosses pressure them to make patient level decisions so as to increase revenue, regardless of their effects on the patients.

In particular, physicians' oaths may suggest that patients who require referrals for consultation, diagnosis or treatment should go to the professionals and facilities best suited to their particular problems.  However, physicians bosses may want physicians to refer patients within their organizations.

Three recent cases illustrate this sort of bind for corporate physicians.  All cases involved large monetary settlements by hospital systems of allegations that they paid physicians incentives to refer patients within the system, apparently without regard to patients' needs.  They are discussed in roughly   chronological order of media coverage.

Broward Health  (North Broward Hospital District)

The reports of the settlement appeared in mid-September, 2015.

The Actual Settlement

According to the Miami, FL, Sun-Sentinel,

Broward Health, the taxpayer-financed system of hospitals and health care facilities, will pay $69.5 million to settle federal charges that it made illegal payments to staff physicians, using a secret compensation system that rewarded doctors for patient referrals and penalized them for accepting charity cases.

In addition, according to the Miami Herald,

Broward Health Chief Executive Dr. Nabil El Sanadi signed a 46-page Corporate Integrity Agreement with the Department of Health and Human Services (HHS) that requires the district to establish a compliance program. Among other things, the agreement imposes new duties on both commissioners and staff to monitor, report and certify that its financial arrangements with physicians and vendors meet federal requirements.

Note, however, that the Adventist system admitted only to "oversights."

Physicians' Incentives

According to the Sun-Sentinel, the filing by whistle-blower Dr Michael Reilly stated,

the hospital district maintained secret compensation records called Contribution Margin Reports for cardiologists, oncologists and orthopedic surgeons, who collected salaries of $1 million and higher. These records rewarded physicians for referrals to hospital services, such as radiology and physical therapy, and penalized them for taking on low-paying charity cases. Tying compensation to referrals could raise medical costs by generating unnecessary work and could compromise patient care, the lawsuit stated.

In one case, the lawsuit stated, orthopedic surgeons expressed concern about the quality of the hospital district's radiology and MRI services and tried to refer patients to outside providers. But they were pressured by the district's financial officials to keep the referrals within the district.

'Broward Health's scheme to overcompensate physicians in exchange for referrals over the last eight years has been a deliberate strategic plan to boost hospital admissions and outpatient visits for all paying patients, including patients with Medicare and Medicaid coverage,' the lawsuit states. 'Broward Health's financial strategists have personally profited from bonus payments based in part on hospital revenues.'

Furthermore, according to a later Sun-Sentinel article,

The title of medical director brought salary increases to several cardiologists at Broward Health, topping off pay packages that often went north of $1 million.

But according to a whistleblower's lawsuit that led to a $69.5 million settlement with the federal government this week, these doctors did little work for their extra compensation from the tax-supported hospital system.

The medical directors' contracts provided hourly compensation for work done in that position and required them to submit time records. One physician counted his personal exercise routine as his medical director's time, according to the lawsuit. Another double-dipped by counting time spent performing medical procedures that would have been performed anyway. Such 'medical director' jobs, the lawsuit said, were 'largely sham arrangements designed to boost physician compensation with little or no substantive work required in return.'

 Failure of Oversight

Also according to the Sun-Sentinel,

Reilly said he first learned of the compensation agreements when he considered taking a job with the district. When his lawyer saw the proposed contract, he told him to tear it up and stay away from such compensation schemes.

He said he brought up the issue in two public meetings and in a private conversation with the district's then-CEO, and was brushed off. He blamed 'the ignorance that made them interpret the law to fit their financial interests and the arrogance to think they could get away with it.'

Adventist Health System

This case came to light a few days later, as reported by the Orlando Sentinel, and was conceptually similar,

The Actual Settlement

In what's considered one of the largest health-care-fraud settlements involving physician referrals to hospitals, Adventist Health System is paying the U.S. government and four states, including Florida, a $118.7 million settlement.

A large portion of the settlement amount — $47 million — is based on allegations involving Florida Hospital Medical Group, which is owned by Adventist, and nearly three dozen Florida Hospitals in the state. That includes the Florida Hospitals in Orlando, Altamonte, Apopka, Celebration, east Orlando, Kissimmee and Winter Park.

Physicians' Incentives

Again from the Orlando Sentinel,

The complaints allege that Adventist initiated a corporate policy that directed its hospitals to purchase physician practices and group practices or employ physicians in their surrounding areas in order to control all patient referrals in those locations.

'To convince doctors to sell their practices to Adventist hospitals or to become hospital employees, Adventist hospitals allegedly provided excessive compensation, perks and benefits to the physicians,' according to the Phillips & Cohen complaint. 'The hospitals were willing to pay doctors more compensation than considered fair market value and absorb persistent losses in those deals because of the revenue the doctors' stream of referrals generated for Adventist from government healthcare programs and elsewhere.'

The complaint listed a number of ways Adventist allegedly rewarded doctors, including leasing a BMW and a Mustang for a surgeon; a $366,000 base salary for a family physician because of his high level of referrals for X-rays and blood tests; and a bonus of $368,000 for a dermatologist who worked only three days a week.

 To conceal this and avoid refunding payments, the health system then falsely said that the services identified in its annual cost reports were in compliance with the federal law, the lawsuits allege.

Failure of Oversight

Sherry Dorsey, who joined Adventist in 2012, was a corporate vice president whose responsibilities included oversight of physician compensation, and she found widespread problems with how the nonprofit health system compensated doctors who referred patients to Adventist hospitals, according to a statement by Marlan Wilbanks of Wilbanks & Gouinlock in Atlanta who represented Dorsey.

She complained to top health-system officials 'to no avail,' said Wilbanks.

More details  about the goings on at the local Adventist owned Park Ridge Hospital were reported by the Asheville (NC) Citizen-Times,

Hospital executives knew about serious billing and miscoding problems on Medicare and Medicaid cases, as well as overcompensation of doctors, and one executive even expressed concerns about possible jail time, terming as 'insane' the amount of money Park Ridge would owe the federal government if overbilling came to light.

Tuomey Healthcare System

This case has been in the works for years, but an apparently final outcome was announced in October, 2015.

The Actual Settlement

 As reported by the Charleston (SC) Regional Business Journal,

The Justice Department said it has resolved a $237 million judgment against Sumter-based Tuomey Healthcare System for illegally billing the Medicare program for services referred by physicians with whom the hospital had improper financial relationships.

Under the terms of the agreement, the United States will receive $72.4 million....

Unlike the other two cases, this one involved a jury finding of guilt,

On May 8, 2013, after a month-long trial, a South Carolina jury determined that the [hospital's contracts with physicians]  ... violated the Stark Law. The jury also concluded that between 2005 and 2009 Tuomey had submitted 21,730 false claims to Medicare with a total value of $39,313,065.

On Oct. 2, 2013, the district court trebled the actual damages and assessed an additional civil penalty under the False Claims Act in favor of the United States for a total of $237 million.

The United States Court of Appeals for the Fourth Circuit affirmed the judgment on July 2.

Having to pay the $237 million fine would force it to file for bankruptcy, Tuomey officials said.

The Physicians' Incentives

 The case arose from a lawsuit filed on Oct. 4, 2005, by Michael K. Drakeford, an orthopedic surgeon who was offered, but refused to sign, one of the illegal contracts.

So,

 The government argued that Tuomey, fearing that it could lose lucrative outpatient procedure referrals to a new freestanding surgery center, entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures.

Failure of Oversight

The government argued that Tuomey ignored and suppressed warnings from one of its attorneys that the physician contracts were 'risky' and raised 'red flags.'

Summary

In the US, physicians increasingly practice medicine as employees, often of large organizations, rather than as individual professionals or within professional groups.  Such employed practitioners must answer to leaders who are now usually generic managers rather than health care professionals.

In three recent legal cases, there was evidence that a hospital system provided financial incentives for employed physicians to refer patients within the system, apparently without regard to the appropriateness of such referrals to individual patients.  In several cases, hospital management ignored physicians' protests, or lawyers' or even their own middle managements' warnings.  In one case, hospital middle managers seemed to acknowledge the problematic nature of physician's incentives, but seemed powerless to protest to higher managers.   In one case, there was a jury finding of violation of US law.

These three cases, all announced within a few weeks, suggest that US hospital system management may frequently push employed physicians to keep referrals within the system , regardless of  individual patients' conditions or needs.  The reason may be to increase system revenue, and sometimes to increase the managers' own compensation.

This is another reason to think that the corporate practice of medicine, which was once banned in the US, is an increasing threat to physicians' values and an increasing cause of health care dysfunction.

Dr Arnold Relman reminded us that physicians used to shun the commercial practice of medicine (look here).  Physicians and other health professionals who sign on as full-time employees of large corporate entities have to realize that they are now beholden to managers and executives who may be hostile to their professional values, and who are subject to perverse incentives that support such hostility, including the potential for huge executive compensation. 

Neoliberals promised us that treating health care like a business, and an unregulated one at that, would lead to a new golden age.  The age has been golden, but mainly for the top managers of corporate medicine. 

The recent flurry of cases alleging that corporate physicians may be pushed by management into inappropriate referrals to make more money for their employees is another reason to rethink whether corporate practice of medicine should again be banned