Turn, Turn, Turn - Another Health Care Revolving Door Update

It has been a while since our last revolving door update, so it's time to take another spin.


Summary of the Revolving Door Phenomenon

Before we get to some cases, though, let me summarize an important article on the revolving door that came out since.  This was published by U4, the "anti-corruption resource center" NGO based in lovely Bergen, Norway.  The title was "The Revolving Door Indicator: Estimating the distortionary power of the revolving door."  Although it's main point was to summarize a new measure the importance of the revolving door in a particular economic sector, it started with a very useful summary of the revolving door phenomenon.  It included a useful definition

According to Transparency International UK, the term 'revolving door' refers to 'the movement of   individuals between positions of public office and jobs in the private sector, in either direction.'

To expand,

The revolving door involves two distinct types of movement.  The first is from the public to the private sector, as regulators (ministers, cabinet secretaries, legislators, high-level officials, advisers) leave the public sector to enter the private sector they have regulated. The second is from the private to the public sector, as high-level executives of regulated companies enter the executive branch, the legislature, or key regulatory agencies.

It also included some idea of prevalence

The revolving door is particularly common in countries where explicit bribes cannot be paid safely, and thus regulators look forward to future employment with the regulated firms

We will discuss what the U4 report said about the implications of the revolving door after a quick review of the cases we have run across since May, 2014, involving the US government.  They will be listed in order of their appearance in the news.

Former National Coordinator for Health Information Technology and Colleague at ONC to Aledade (Company Supporting Accountable Care Organizations)

In June, 2014, various versions of this story appeared.  The Modern Healthcare version stated,

Dr. Farzad Mostashari, former head of the Office of the National Coordinator for Health Information Technology, is starting a new firm, Aledade, to help independent primary-care physicians form accountable care organizations. The startup has $4.5 million in seed funding from venture capital firm Venrock.

Independent practices looking to form ACOs have to expend money 'to hire the people, to get the agreements, to get the licenses, to do the legal work, to hire the executive director, and a medical director, practice transformation, the analytics software, the data warehousing, the EHR interfaces,' he said. 'All of that takes money,' often $1 million to $2 million.

Note that the current concept of the "accountable care organization" [ACO] includes heavy dependence on the electronic health records (EHRs) and other health information technology that Dr Mostashari had been so vigorously promoting as head of the ONC, so this transition seems to fit the revolving door rubric.

It also turns out that one of Dr Mostashari's former ONC colleagues was already at Aledade  

Mostashari will be joined by Mat Kendall, a former leader with the regional extension center program at ONC, who will be executive vice president

Former US Senators to Lobby for Medtronic and Covidien

In August, 2014, per Bloomberg,

Former U.S. Senators Trent Lott and John Breaux are part of a lobbying effort by companies that want to preserve the option of reducing their corporate taxes by moving their legal addresses overseas.

Nine U.S. companies that have sought cross-border mergers for tax reasons, are considering doing so or are targets of such deals have been pressuring lawmakers since April on legislation to stop the practice, federal disclosure reports show.

They include Medtronic Inc., the Minneapolis-based company that is seeking to acquire Dublin-based Covidien Plc. Medtronic paid Breaux-Lott Leadership Group $200,000 in June to block legislation from moving forward. Breaux, a Democrat, was once a member of the Senate Finance Committee. Lott, a Republican, is a former Senate majority leader.

Note that as Senator, Breaux had an important role in health policy, particularly the passage of the Affordable Care Act (ACA).

Former Assistant Secretary of Health and Human Services to Drinker Biddle & Reath (Lobbying Firm)

In August, 2014, per the Washington Post,

District Policy Group, the lobbying unit of law firm Drinker Biddle & Reath, is experimenting with a new model of using outside consultants to capture new business in the health-care field.

The group, which lobbies primarily on health-care policy, has taken the unusual step of forming an advisory board that includes external consultants. The outside advisers are not employees of the firm and instead receive a consultant’s fee, which means the firm does not have to pay their salary or benefits, but can still tout their services to clients.

The board was formed in July and is made up of four Drinker Biddle attorneys and two outside consultants, Tracy Sefl, a Democratic communications strategist, and Michael O’Grady, a health economics specialist and former Health and Human Services assistant secretary under President George W. Bush. Both Sefl and O’Grady have day jobs running their own consulting shops.

This seems to require no further comment.

Former Federal Trade Commissioner to Herbalife

In October, 2014, per the Hill,

Herbalife has hired a former federal regulator to run its compliance program as it deals with allegations of running a pyramid scheme.

Pamela Jones Harbour, who served at the Federal Trade Commission (FTC) from 2003 to 2010, has been named the company’s senior vice president of global member compliance and privacy, according to media reports.

The FTC opened a probe into Herbalife’s business practices earlier this year after lobbyists, interest groups and policymakers asked for a review.

Shortly after the FTC announced its investigation, the FBI began looking into how the direct-selling company recruits new distributors.

Herbalife is best known for its meal-replacement shakes and dietary supplement products. Harbour says she has been a Herbalife customer since 2004, according to Reuters, favoring the company’s Formula 1 shake mix.

Note that the FTC devotes considerable energy to health care issues, and Herbalife styles itself a "a global nutrition company" which makes "weight management" and "energy and fitness" products.

Director of US Centers for Disease Control and Prevention (CDC) to Merck as President of Merck Vaccines, then Executive Vice President for Strategic Communications, Global Public Policy and Population Health

In December, 2014, per a news release on BusinessWire,

Merck (NYSE:MRK), known as MSD outside the United States and Canada, today announced the appointment of Dr. Julie Gerberding, 59, as executive vice president for strategic communications, global public policy and population health, effective Dec. 15. In this newly created Executive Committee position, Gerberding, who most recently served as president of Merck Vaccines, will be responsible for Merck’s global public policy, corporate responsibility and communications functions, as well as the Merck Foundation and the Merck for Mothers program.

Note that

Prior to joining Merck, Gerberding served as director of the U.S. Centers for Disease Control and Prevention (CDC) from 2002-2009 and before that served as director of the Division of Healthcare Quality Promotion.

From UnitedHealth (Optum Subsidiary) Executive to Administrator of the Center for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services

In January, 2015, per the Business Journals,

Marilyn Tavenner's replacement at the Center for Medicare and Medicaid Services is a former executive at one of the contractors for the initially botched HealthCare.gov insurance exchange.

Andy Slavitt, former group executive vice president of United Health Group's Optum unit, joined CMS last June to help fix HealthCare.gov. Now he'll be acting administrator of CMS.

An Optum subsidiary, Quality Software Services Inc., was one of the original contractors for HealthCare.gov. QSSI developed the exchange's data services hub and a registration tool that allows users to create secure accounts.

Apparently nothing succeeds like failure.


Discussion

I apologize for the somewhat desultory way I have been summarizing health care revolving door cases.  My excuse is that such cases are almost never publicized as such.  Most of the stories above were found when looking for something else.  Despite its potential importance, the revolving door phenomenon gets little consistent coverage in the news media, and the particular issue of the revolving door affecting health care is particularly anechoic.  (If one searches for "'health care revolving door," one finds discussion of patients who are frequently re-admitted to the hospital.)  There is one website devoted to the revolving door affecting the US government, (OpenSecrets.org has a database here.)   However, it is not searchable by sector, and seems not to be complete (that is, for example, it fails to contain most of the cases I listed above). 

None of the cases above got more than minimal media coverage, yet they all involved people who at one time held high government positions, including US Senators, director of the Centers for Disease Control and Prevention (CDC), a Federal Trade Commission (FTC) commissioner, the director of Center for Medicare and Medicaid Services (CMS) within the US Department of Health and Human Services (DHHS), an Assistant Secretary of DHHS, and the National Coordinator for Healthcare Information Technology. So the anechoic effect persists regarding this issue.

Yet the revolving door is a significant issue.  As discussed in the U4 article, 

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.

Also, the principal way the revolving door can benefit a company is...

The rent-seeking channel: The revolving door is used to capture public resources, through legal and illegal means, rather than to increase production or efficiency.  Transparency International UK (2011) and the OECD (2009) point out that the revolving door may lead to various schemes involving conflicts of interest, both during and after a regulator’s term in public office. This in turn generates undue bureaucratic and political power for firms using such schemes

Furthermore,

The revolving door is also related to lawful behaviours (Brezis 2013), termed 'legal corruption' by Kaufmann and Vicente (2011). This phrase refers to 'efforts by companies and individuals to shape law or policies to their advantage, often done quasi-legally, via campaign finance, lobbying or exchange of favors to politicians, regulators and other government officials. […] In its more extreme form, legal corruption can lead to control of entire states, through the phenomenon dubbed ‘state capture,’ and result in enormous losses for societies'

So,

Firms connected through the revolving door may therefore derive undue advantages by legally and illegally influencing the formulation, adoption, and implementation of laws, regulations, and public policies. For example, when firms are connected to (former) members of Parliament [or the legislature], they may influence the enactment of laws and regulations in their favour. When firms are connected to (former) ministers [or in the US, cabinet secretaries] and their advisers, they may influence the upstream formulation and implementation of policies and regulations in their favour. When firms are connected to (former) high-level officials, they may influence the downstream implementation of regulations in their favour.

Finally,

Empirical studies suggest that the revolving door gives firms political and bureaucratic power that enables them to divert state resources by biasing public procurement processes (Goldman, Rocholl, and So 2013; Cingano and Pinotti 2013), obtaining preferential access to public finance (Faccio, Masulis, and McConnell 2006; Boubakri et al. 2012), and unduly benefiting from tax exemption, arrears, and subsidies (Faccio 2010; Slinko, Yakovlev, and Zhuravskaya 2005; Johnson and Mitton 2003).

Therefore, firms politically connected through the revolving door tend to shape laws and regulations in their favour and to divert state resources to their own benefit. They are unlikely to gain a productivity advantage, and indeed may reduce productivity in the private and the public sectors. The literature on state capture and political influence (Hellman and Kaufmann 2004; Hellman, Jones, and Kaufmann 2003; Slinko, Yakovlev, and Zhuravskaya 2005) supports the thesis that such distortions result from the high concentration of political and bureaucratic power among a few powerful firms.

That all suggests that the revolving door in health care ought to get attention beyond posts in Health Care Renewal, but so far there has been precious little of that.  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

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

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

Merck Settled Fraud Allegations for $31 Million

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

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

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

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

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

That was the main content of the article.

Kickbacks to Promote Use of a Dangerous Drug

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

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

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


Merck's Track Record

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


This was well summarized by ProPublica in March, 2014,

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

Reinstein has twice figured into ProPublica investigations.


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

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

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

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

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

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

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

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

Summary

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

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

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

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

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

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

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

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

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

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


Appendix- Vioxx Case

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

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

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

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

References

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

What Big Drug and Biotechnology Companies Will Not Tell Us - Transparency International on Corporate Reporting

Drug companies are entrusted to provide pure, unadulterated medicines.  Increasingly drug companies are now entrusted with doing research, including experimental studies, on human beings, and providing education to doctors and patients.  Ordinarily, trust requires confidence in transparency. However, a new report suggests that large multinational drug and biotechnology companies are not very transparent.

Transparency International just released a report on the transparency, or lack thereof, of the 124 biggest multinational corporations.  The report detailed how well these companies disclosed their internal anti-corruption programs, their subsidiaries, affiliates, and joint ventures, and their financial data broken down by the countries in which they operate.  In summary, the overall results for disclosing anti-corruption programs were mediocre, and for disclosing organizational structure and country-by-country financial data, they were dismal.

The report is highly relevant to health care.  It included the biggest multinational health care corporations, all drug and/or biotechnology companies: Abbott Laboratories, (based in the US), Amgen (US), AstraZeneca (UK), Gilead Sciences (US), GlaxoSmithKline (UK), Johnson and Johnson (US), Merck and Co (US), Novartis (Switzerland), Novo Nordisk (Denmark), Pfizer (US), Roche Holding (Switzerland), Sanofi (France), Teva Pharmaceutical Industries (Israel).

The report has so far received little media coverage.  In the US, several news services provided brief  summaries.  Somewhat more substantial articles came from Reuters, the Wall Street Journal's Risk and Compliance Journal, and CNBC.  None gave specifics about health care.  Coverage from other countries, e.g., Germany by Deutsche Welle, and the UK by the Guardian, was more detailed but also did not specifically mention health care.

Therefore, I will summarize the rationale and assessment methods used by Transparency International for its three dimensions of transparency, and then show results from the 13 health care corporations.

Disclosure of Anti-Corruption Programs

The rationale for addressing this area was:

Global companies have legal and ethical obligations to conduct their business honestly. This requires
commitment, resources and the ongoing management of a range of risks – legal, political and reputational – including those associated with corruption. The implementation of a comprehensive range of anticorruption policies and management systems is fundamental to efforts to prevent and remediate corruption within organisations.

Transparency International believes that public reporting by companies on their anti-corruption programmes allows for increased monitoring by stakeholders and the public at large, thereby making companies more accountable

Evaluation of disclosure of anti-corruption programs was

based on 13 questions, which are derived from the UN Global Compact and Transparency International Reporting Guidance on the 10th Principle against Corruption. This tool, based on the Business Principles for Countering Bribery, which were developed by Transparency International in collaboration with a multi-stakeholder group, includes recommendations for companies on how to publicly report on their anticorruption programmes.

Note that the project addressed only reporting of anti-corruption programs, not their implementation or effectiveness.

For this and the other two dimensions of transparency, responses were converted into a 0% to 100% scale, with 100% being the best possible result.

Organizational Transparency

The rationale was:

As many of the recent corporate scandals have shown, acts of corruption are very often aided by the use of opaque company structures and secrecy jurisdictions.  But the use of offshore companies and their lack of transparency are posing increasing risks for global companies as well as for their shareholders, employees and local communities.

So,

Companies can mitigate the risks posed by lack of transparency and ownership arrangements by shedding more light on their corporate structures and by making basic financial information public on a country-by-country basis. This allows stakeholders to have a clearer understanding of the extent of a company’s operations and makes the company more accountable for its activities in a given country, including assessing whether it contributes financially in a manner appropriate to its level of activity.

The measurement strategy was,

Transparency International researchers consulted publicly available documents such as annual reports and stock exchange filings for information about company subsidiaries, affiliates, joint ventures and other holdings. The information sought included corporate names, percentages of ownership by the parent company, countries of incorporation and the countries in which the companies operate.

Country-by-Country Reporting

The rationale included:

The importance of country-by-country reporting was first recognised in the extractive sector as a way to ensure that revenues from natural resources are used to foster economic and social development rather than line the pockets of kleptocratic elites.

So,

country-by-country reporting ... [is] a recognised building block for corporate transparency and as a tool for countering tax avoidance.

In addition, country-by-country reporting provides investors with more comprehensive financial information about companies and helps them address investment risk more effectively.

The items measured were disclosure of revenue/sales, capital expenditures, pre-tax income, income tax, and community contribution in each country in which the company operated.

Results for Health Care Corporations

Company                      Total  Anti-Corruption P  Org Structure  by-Country

Abbott Laboratories    40             81                           38                3
Amgen                          37             85                           25                0
AstraZeneca                37             88                           19                3
Gilead Sciences           26             54                           25                0
GlaxoSmithKline          52            96                           50               11
Johnson and Johnson  26           65                           13                0
Merck and Co               42           77                            50                0
Novartis                        38            77                           38                1
Novo Nordisk               39            81                           38                0
Pfizer                             35            92                           13                0
Roche Holding              33            62                           38                1
Sanofi                            38            77                           38                0
Teva Pharmaceutical  35            85                            19                0

Again, only one company, GlaxoSmithKline, achieved an overall score of barely better than 50%.  All the others had lower scores.  Only two companies achieved a 50% score on disclosure of organizational structure, and only one achieved a score of better than 10% for disclosing country-by-country results.  The Transparency International report noted that the health care companies got particularly bad scores for disclosing organizational structure, averaging 31%, the third worst performance by economic sector.


Summary

 The drug and biotechnology companies generally did a fairly good job disclosing what their anti-corruption programs were supposed to do.  However, note that the Transparency International report did not assess how well these programs were implemented or enforced.  That this concern is not academic is underscored by some of these companies disreputable track records.  Some have long histories of legal actions, including billion dollar plus legal settlements, some of which were of allegations of fraud or kickbacks, and some have been convicted of crimes.  See the records of, for example: Abbott Laboratories (look here and here), Amgen (here), AstraZeneca (here), GlaxoSmithKline (here), Johnson and Johnson (here), Merck (here), Novartis (here), Novo Nordisk (here), Pfizer (here), Roche (here), Sanofi (here), and Teva (here).

Moreover, the companies did not do a good job disclosing their organizational structures, and hardly any bothered to report any financial results broken down by country.

We have frequently discussed health care corporations' deceptive marketing, induction of conflicts of interest, including those of supposed "key opinion leaders" who often are marketers in academic or professional clothing, and manipulation and suppression of clinical research.  There has been an ongoing procession of legal settlements involving health care corporations, often involving allegations of, and sometimes convictions for fraud, kickbacks, bribery, or other crimes.  There have even been some cases in which drug companies have failed to assure that their products are pure and unadulterated, their most basic mission.  Thus many are distrustful of drug and biotechnology companies, and large health care organizations in general.

So, as Transparency International's report noted, to rebuild trust,

integrity must be central to these efforts. Those efforts, in turn, can only become fully credible if they are undertaken with a sustained commitment to ethical behaviour and transparency across companies’ operations.

In my humble opinion, a basic premise of true health care reform would be that health care organizations become sufficiently transparent to restore basic trust in them.