Friday, January 18, 2019

Return of the Anechoic Effect - Rest in Peace, Health Wonk Review

Introduction: Blogging About Taboo Topics in Health Care

We started Health Care Renewal in 2004 to discuss the causes of health care dysfunction that rarely were mentioned in polite conversation at the time.  When we started Health Care Renewal, such issues as suppression and manipulation of research, and health care professionals' conflicts of interests rarely appeared in the media or in medical and health care scholarly literature.  While these issues are now more often publicly discussed, many other topics, such as  deceptive marketing of health care products and services; distortion of health care regulation and policy making through propaganda and disinformation,  regulatory capture, and the revolving door; ill-informed. mission-hostile, conflicted  corrupt or criminal leadership; etc, etc, etc; still rarely appear in the media or scholarly literature, and certainly seem to appear much less frequently than their importance would warrant (see this post).  For example, a survey by Transparency International showed that 43% of US resondents thought that American health care is corrupt.  It was covered by this blog, but not by any major US media outlet or medical or health care journal.  We have termed the failure of such issues to create any echoes of public discussion the anechoic effect.

Public discussion of the issues above might discomfit those who personally profit from the status quo in health care.  As we noted above, the people who profit the most, those involved in the leadership and governance of health care organizations and their cronies, also have considerable power to damp down any public discussion that might cause them displeasure. In particular, we have seen how those who attempt to blow the whistle on what really causes health care dysfunction may be persecuted.  But, if we cannot even discuss what is really wrong with health care, how are we going to fix it?

In the early 2000s, new internet based platforms appeared that allowed us and others to publish facts and opinions about health care dysfunction that otherwise were taboo.

The Darkness Gathers

Unfortunately, now the world of incisive medical and health care policy discussion is contracting again. Health Wonk Review, a compendium of the best blogging in health care policy, is closing down.  The email from its founders and blog-meisters read:

After a baker’s dozen years  and more than 280 issues, we’ve decided to call it a day.

It’s become a bit more of a heavy lift to get varied hosts.

We moved to a monthly issue to address that, but it’s still been slow going.

Submissions are down too as more people abandon blogs in favor of social channels like Twitter and LinkedIn.

Readership and cross posting appears to have waned, too. 

Going forward, we may host an ad hoc issue occasionally under the HWR banner and invite your participation when health policy issues rise to the surface, but the regular issues will cease.

So it joins the many medical and health care blogs I used to follow to help learn about what was really going on in health care, including items that it was considered impolite to discuss too loudly, lest they offend the powers that be. Some worthy blogs now gone are,  in alphabetical order:

1BoringOldMan - since 2017, after the death of its revered blogger, Dr Mickey Nardo

Carlat Psychiatry Blog - 2017, by Dr Daniel Carlat

HealthBeat - 2015, by journalist Maggie Mahar

HealthNewsReview - 2018, by journalist Gary Schwitzer

Hooked: Ethics, Medicine and Pharma - 2014, by Dr Howard Brody

Not Running a Hospital - 2016, by former hospital CEO Paul Levy

PharmaGossip - 2016, by an anonymous blogger

Scientific Misconduct Blog - 2010, by Dr Aubrey Blumsohn

Side Effects- by journalist Alison Bass

Note that the content of blogs with links above is still available, but the bloggers are not posting any more.

What Next?

Blogs, which were seen as a big innovation in the early 2000s, now of course seem a bit old fashioned and stuffy only a few years later.  However, blogs then served an important purpose.  They provided publication platforms which were immediate, and not subject to external editing, publication delays, or the worries of publishers' attorneys or corporate leaders.

Many of us went to blogging to discuss anechoic issues because it was so difficult to inject these discussions into the media, or medical or health care scholarly publications, at least without long delays, and editing that was not always helpful, and at times took not only the edge off, but much of the content as well. 

However, as the leaders of Health Wonk Review indicated above, social media is now all the rage. But social media has weaknesses, and social media platforms may not replace blogs.

Blogs can be as immediate as Twitter, for example (and I confess I do have a Twitter feed.)  But they allow longer form posts that can include nuance, complex arguments, analytic approaches, etc.  Anyone can read most blogs.  They do not push people to identify as followers.  They do not necessarily come with advertisements, with atttempts to profile readers for marketing purposes. They do not only supply thoughts selected for similarity with what one has read before, and hence can take a reader out of his or her algorithmically developed bubble.

However, I fear that in losing blogs such as these, we lose important voices that have helped challenge our pre-existing beliefs, illuminated what has gone wrong with health care, and showed us the way forward.

So rest in peace, Health Wonk Review.  I hope that there will be some way to continue the vigor of discussion that characterized it, and other health care blogs which are now defunct.

Tuesday, January 08, 2019

The Mysteries Surrounding Rhodes Pharmaceuticals, the Sackler Family's Second Opioid Company

 Mysteries still abound in the not so wonderful world of health care dysfunction, so, quick, the game's afoot...

Today's mysteries involve beneficial ownership.  Beneficial ownership questions are important to anti-corruption campaigners.  Beneficial ownership simply refers to "anyone who enjoys the benefits of ownership of a security or property, without being on the record as being the owner." (per Wikipedia). Concealing who really owns a company enables concealing sources of funds (as in money laundering), market power (when the owner also owns competitors), and sources of political influence, and enables those benefiting from the actions of the company to escape responsibility for their consequences.

A few months ago, a big question about the beneficial ownership of a local (to me) company suggested important local and national health care implications, and yet the case has remained anechoic.  The case has some mysterious aspects.

The  Mystery of the Ownership of Rhodes Technologies and Hence Rhodes Pharmaceuticals Solved

In September, the UK based Financial Times reported,

The billionaire Sackler family, which has been blamed for fuelling the US opioid addiction epidemic, owns a second drugmaker that churns out millions of addictive painkiller pills every year, the Financial Times can reveal.

The Sacklers are best known as the owners of Purdue Pharma, the privately held drugmaker that makes the now infamous opioid painkiller OxyContin, which has been described as 'heroin in a pill'.

However, an FT analysis of company registration documents has established that the family also owns Rhodes Pharma, a little-known Rhode Island-based drugmaker that is among the largest producers of off-patent generic opioids in the US.


Rhodes Pharmaceuticals was set up in 2007, four months after Purdue pleaded guilty to federal criminal charges that it had mis-marketed OxyContin over the previous decade.

The little-known company now makes several opioid-based products containing highly-addictive drugs such as oxycodone, morphine and hydrocodone, according to a US Food and Drug Administration database. Many of its drugs are made in factories owned by Purdue.

The Mystery of the Mysteriousness of the Rhodes Companies and Facility

The FT report was noted by our local on-line news site, GoLocalProv, which tried to find out more about the company. It reported,

And tucked away in Coventry, Rhode Island, along a country road, is Rhodes Technology — surrounded by massive security. The company’s website has been under -reconstruction for the past few years -- all an effort to keep a low profile.

A 2005 version of the Rhodes Technologies’ website GoLocal uncovered said, 'We have very broad capabilities in developing sophisticated chemicals and offer confidential production of high purity APIs and finished dosage forms of innovative pharmaceuticals, as well as marketing and sales services. A multi-million dollar investment in a new cGMP facility completed in 2002 added controlled substances to our manufacturing capabilities. Rhodes is a diversified, dependable firm well positioned for partnerships.'

The marketing arm of the Rhodes Technologies is Rhodes Pharmaceuticals and it self-describes itself as 'a privately held company headquartered in picturesque Rhode Island....developing and distributing quality pharmaceutical products since 2008.'

Emails and requests for an interview were not responded to by Rhodes Pharmaceuticals.

GoLocalProv article included a blurry picture of a large factory building apparently copied from an old website.  I could find no pictures or descriptions of the Rhodes facility on the web other than the picture below from Google Satellite:

The satellite picture does suggest that the Rhodes facility is apparently massive.  However, I could find nothing, at least via web searching, to otherwise describe it.  Despite its size, I could find no coverage of the company, the facility, the buidling of the facility (which likely was quite a project), or anything else relevant in local media, or on the web.

The reasons to keep the ownership of this company mysterious are not hard to fathom.  But the reasons for the company itself to maintain such a "low profile," and for its facilities to be so well hidden, and to have such "massive security" (not otherwise described by GoLocalProv), are ongoing mysteries.

The Mystery of the Sackler Family's Opioid Market Power Partly Solved

It appears that the Sackler's previously secret ownership of Rhodes enabled them to conceal their market power. Per the FT,

Purdue Pharma has always insisted that its drug OxyContin cannot be considered a prime culprit in the crisis because it accounts for only 1.7 per cent of overall opioid prescriptions in the US.

However, Rhodes and Purdue combined accounted for 14.4m opioid prescriptions in 2016, according to figures seen by the FT, giving them a total share of 6 per cent of the US opioid market.

That puts the combined Rhodes-Purdue in seventh place among opioid makers by market share, behind Teva, the generic drugmaking giant, and well ahead of other pharma groups that have been named in lawsuits, such as Johnson & Johnson and Endo.

'This further debunks the Sackler family’s whole claim that they are not responsible for the crisis,' said Andrew Kolodny, a professor at Brandeis University who is one of the foremost experts on the US addiction epidemic.

He added: 'They have always said, ‘Why is everyone picking on us, we’re only 2 per cent of prescriptions?' A spokesperson for the family declined to comment.

A second GoLocalProv article also revealed that

The billionaire family whose company is being sued by states and cities across the country for their role in creating the opioid crisis is now launching a new recently patented antidote for the drug known as ‘heroine in a pill.’

Both oxycodone and the new drug will be produced side-by-side at the Rhodes Technologies plant -- an affiliate company of Purdue Pharma -- in Coventry, Rhode Island.

To corroborate that,

The U.S. Patent and Trademakr [sic] Office information shows the Rhodes Technologies’ plant in Coventry, RI is assigned the patent for the new drug. Rhodes Technologies is the subsidiary of Purdue Pharma owned by the Sackler family.

Calls and emails to Rhodes Technologies and its affiliated marketing company Rhodes Pharma have not been responded to.

Note that the "new drug" that is considered an "antidote" to oxycodone is simply a minor modification of an old drug, buprenorphine, already used to treat opioid addiction.  Per Stat News,

The patent concerns a new formulation of buprenorphine, one of the medications shown to help people with opioid addiction. It is already approved by the Food and Drug Administration in tablet and film form, but the patent describes a wafer that could dissolve even faster than existing forms when put under the tongue.

The patent says that the faster the treatment dissolves, the less risk there is for diversion.

So now we know more about the power of the Sackler family in the opioid market.

The Mystery of Accountability for Deceptive Marketing of Opioids Partly Solved

Purdue Pharma has a long and sorry history of deceptive marketing of its narcotics, and has been accused of being a major driver of the ongoing opioid (narcotic) epidemic.  The case has recently been very well covered in the media.  (Our latest discussion is here, our discussion of Purdue Pharma's first legal troubles, which were fairly anechoic at the time, is here, and all our Purdue Pharma related posts are here.)

It appears that the Sackler's concealed ownership of Rhodes Technologies/ Pharma also put them in a position to generate more financial conflicts of interest among physicians which could be used to enable more deceptive marketing.  A search of the ProPublica "Dollars for Docs" data base revealed that Rhodes paid $1.43M to physicians from August, 2013, to December, 2016.  They paid the most, $121K, to a single physician in Saint Charles, MO.

Admittedly, their contribution to physicians' conflicts of interest was modest compared to that of the Sackler's better known Purdue Pharma, $27.9M over the same time period, but it should not be overlooked.

So we now know a bit more about the extent Sackler family owned opioid manufacturers enlisted physicians to market their products, at times deceptively. 

The Mystery of the Sackler Family's Political Influence

This is admittedly speculation, but it is possible that Rhodes Technologies/ Pharma was also used as a vehicle for political influence to affect policy making relevant to the Sackler's interests.  Purdue Pharma certainly has a track record of such influence.

For example, we noted here that Purdue Pharma donated money to the Washington Legal Foundation in support of its efforts to weaken enforcement of laws that could have penalized the company's misbehavior.   In particular, the Washington Legal Foundation challenged the responsible corporate officer doctrine that allowed legal action against corporate executives for company wrong-doing that occurred on their watches.  Perhaps corporate leaders were worried that its executives could again face penalties, given the Purdue Pharma executives had previously pled guilty to misbranding Oxycontin (look here).  Purdue Pharma had also worked with the Washington Legal Foundation to push against guidelines from the Centers for Disease Control that would have potentially reduced opioid prescribing.

Furthermore, we noted here that Rudolf Giuliani, now President Donald Trump's lawyer, and previously and probably currently highly influential in the Trump regime, formerly represented Purdue Pharma and had helped mitigate the company's punishment for past mischief, an interesting example of the revolving door from the pharmaceutical industry to government.

So I think it is reasonable to say that whether Sackler-owned Rhodes Technologies/ Pharma was also used as a tool to conceal political influence remains a mystery.


So we now know that the Sackler Family, owner of Purdue Pharma, also owns a generic pharmaceutical company that manufacturers an important portion of the narcotics sold in the US.  Thus the share of the opioid market held by the Sackler family is likely four times larger than was previously apparent .  The Sackler's generic drug company is now known to have paid physicians a small but important amount to assist in its marketing of opioids.  It is also possible that the generic company also has been used to increase the family's influence over politics and policy that increased opioid sales and hence its responsibility for the opioid epidemic.  Thus, it is likely that the Sackler family's responsibility for the ongoing opioid epidemic is larger than was previously appreciated.

Why the Sackler's may have concealed their ownership of the company seems obvious.  Why the company and its physical plant were so secretive is not so clear.  

It is unknown whether the family owns similar companies that have not been discovered.  It is unknown whether big pharmaceutical and other big health care corporations similarly have concealed beneficial ownership of other companies that could be used to conceal all manners of mischief.

Anti-corruption campaigner have pushed to reveal the beneficial ownership of all corporate entities.  (Look here for the relevant report from Transparency International.) They have made little headway, so far.  The case of the mysteries surrounding Rhodes Technologies/ Pharma should be another impetus to support this campaign. 

True health care reform requires all sorts of transparency, now particularly including transparency about corporate beneficial ownership.  

Wednesday, January 02, 2019

For the Years of Investigation to Come: a Guide to Resources for Challenging Health Care Corruption

The Enduring Problem of Health Care Corruption

Now arrives the years of investigation.  Here in the US, a new majority in the US House of Representatives promises multi-pronged investigations of, among other topics, the corruption that now seems pervasive at the highest reaches of the US government, corruption that has badly affected efforts to truly reform US health care (look here).  Meanwhile, similar investigations are likely to get underway in various US states.  We can only hope that this flurry of activity will end up with some positive steps to reduce US health care corruption, an enduring problem about which we often write.

As we wrote in August, 2017, Transparency International (TI) defines corruption as

Abuse of entrusted power for private gain

In 2006, TI published a report on health care corruption, which asserted that corruption is widespread throughout the world, serious, and causes severe harm to patients and society.
the scale of corruption is vast in both rich and poor countries.

Corruption might mean the difference between life and death for those in need of urgent care. It is invariably the poor in society who are affected most by corruption because they often cannot afford bribes or private health care. But corruption in the richest parts of the world also has its costs.

The report got little attention.  Health care corruption has been nearly a taboo topic in the US, anechoic, presumably because its discussion would offend the people it makes rich and powerful. As suggested by the recent Transparency International report on corruption in the pharmaceutical industry,
However, strong control over key processes combined with huge resources and big profits to be made make the pharmaceutical industry particularly vulnerable to corruption. Pharmaceutical companies have the opportunity to use their influence and resources to exploit weak governance structures and divert policy and institutions away from public health objectives and towards their own profit maximising interests.

Presumably the leaders of other kinds of corrupt organizations can do the same. 

When health care corruption is discussed in English speaking developed countries, it is almost always in terms of a problem that affects some other places, mainly  presumably benighted less developed countries.  At best, the corruption in developed countries that gets discussed is at low levels.  In the US, frequent examples are the "pill mills"  and various cheating of government and private insurance programs by practitioners and patients.  Lately these have gotten even more attention as they are decried as a cause of the narcotics (opioids) crisis (e.g., look here).  In contrast, the US government has been less inclined to address the activities of the leaders of the pharmaceutical companies who have pushed legal narcotics (e.g., see this post). 

However, Health Care Renewal has stressed "grand corruption," or the corruption of health care leaders.  We have noted the continuing impunity of top health care corporate managers.  Health care corporations have allegedly used kickbacks and fraud to enhance their revenue, but at best such corporations have been able to make legal settlements that result in fines that small relative to their  multi-billion revenues without admitting guilt.  Almost never are top corporate managers subject to any negative consequences.

We have been posting about this for years at Health Care Renewal, while seeing little progress on this issue.

Things only seem to be getting worse given the increasing evidence that the Trump administration is corrupt at the highest levels.   In January, 2018, we first raised the question about how health care corruption could be pursued under a corrupt regime.  We noted sources that summarized Trump's. the Trump family's, and the Trump administration's corruption..  These included a website, entitled "Tracking Trump's Conflicts of Interest" published by the Sunlight Foundation, and two articles published in the Washington Monthly in January, 2018. "Commander-in-Thief," categorized Mr Trump's conflicted and corrupt behavior.  A Year in Trump Corruption," was a catalog of the most salient cases in these categories in 2017.

In July, 2018, we addressed the Trump regime's corruption again  By then, more summaries of Trump et al corruption had appeared.   In April, 2018, New York Magazine published "501 Days in Swampland," a time-line of  starting just after the 2016 presidential election. In June, 2018, ProPublica reviewed questionable spending amounting to $16.1 million since the beginning of Trump's candidacy for president at Trump properties by the US government, and by Trump's campaign, and by state and local governments. Meanwhile, Public Citizen released a report on money spent at Trump's hospitality properties.  Meanwhile, the voluminous Tracking Corruption and Conflicts of Interest in the Trump Administration summary appearing in the Global Anti-Corruption Blog has grown and grown. 

 So the driver of US health care corruption may now be the executive branch of government and its relationship with the Trump family and cronies, trumping even the influence of health care corporate corruption.  

However, in our work we have been heartened to find some useful resources (although unfortunately none specifically targeted at health care corruption in the US).  To inspire others to join the fight against health care corruption and related ills, I take this opportunity to post an idiosyncratic list of some of the most helpful resources I have found (including one very new one).  In alphabetical order:

Basel Institute on Governance

Located in Basel, Switzerland,

an independent not-for-profit competence centre working around the world with the public and private sectors to counter corruption and other financial crimes and to improve the quality of governance.

The Institute does not have a specific health care focus, but focuses on broad issues with applicability to health care: asset recovery, public governance, corporate governance and compliance, collective action, and public finance management.

Curbing Corruption

This is a new website staffed by anti-corruption experts mainly based in the UK, meant

to appeal widely to people who want to take action to reduce corruption within their sector of society, and/or within their organisation. This includes Members of Parliament, the private sector, civil society organisations, professional associations, the media and the judiciary.

However, their main focus now are politicians and public officials.

The website includes sector specific resources, including a very extensive review document on the health sector.

Global Anti-Corruption Blog

A multi-author US based blog

devoted to promoting analysis and discussion of the problem of corruption around the world. This blog is intended to provide a forum for exchanging information and ideas across disciplinary and professional boundaries, and to foster rigorous, vigorous, and constructive debate about corruption’s causes, consequences, and potential remedies.

It includes an extensive list of international anti-corruption resources (much bigger than this idiosyncratic list), but which tellingly has no organization specifically focused on health care, and no organization specifically focused on US corruption.

Transparency International

Perhaps the best known international anti-corruption NGO (non-governmental organization), based in Berlin, Germany.  It proclaims 
From villages in rural India to the corridors of power in Brussels, Transparency International gives voice to the victims and witnesses of corruption. We work together with governments, businesses and citizens to stop the abuse of power, bribery and secret deals.

As a global movement with one vision, we want a world free of corruption. Through chapters in more than 100 countries and an international secretariat in Berlin, we are leading the fight against corruption to turn this vision into reality.

Its website is extensive.  It hosts more or less biannual International Anti-Corruption Conferences.  It provides many resources, including a well known annual international survey of corruption perceptions.  It has chapters in multiple countries (although, tellingly, its US chapter was dis-accredited in 2017, look here).

The TI UK chapter has a specific health care initiative focusing on the pharmaceutical industry.

U4 Anti-Corruption Resource Centre

Located in Bergen, Norway,

 U4 is a permanent centre at the Chr. Michelsen Institute (CMI) in Norway. CMI is a non-profit, multi-disciplinary research institute with social scientists specialising in development studies.

Its introductory statement

At U4, we work to reduce the harmful impact of corruption on society. We share research and evidence to help international development actors get sustainable results.

U4 provides publications and resources for various sectors, including health care.


Corruption in health care is a daunting problem, but 2018 showed us in the US that when people get upset enough about problems, things happen (albeit, not always great things).  So we urge all concerned about health care corruption to make things happen.  The resources above may help them do so.

Monday, December 31, 2018

Dander Up, Down, and All Around

Today's topics: VA health care politics; a clear-eyed and sane report from a bastion of managerialism, with related observations on innovators trying to create real bottom-up value.

It's the last day of the year, so let's get this done. Owing to various largely unforeseen challenges, happily now largely behind us, this "Dander" series was interrupted for some time. Apologies to anyone who noticed. In any case, to refresh: as Chief Blogger and FIRM president Dr. Poses has indicated often enough in these pages, health care developments raising our dander are still everywhere, all the time, and on the increase. Nothing particularly new here. Certainly not new since the 2016 election.

Except that in our current situation--inter-woven social (read: inequality) and political (read: everything inside the Beltway morphing from mere swamp to crazed greased pig trough)--the health sector is triply hard-hit. Really, it gets old to keep on playing nay-saying Cassandra. It's not normal.

Thus today in America the patient can't catch a break. It's probably true here more than in any other first world country. Others' budgets are as overstretched as ours, not to mention much lower as %GDP; their technology is just as uncooperative. Will yellow-vests to come out on the streets over it here, as they recently did over social engineering whence we got our Freedom Fries? (That may be up to just three guys: John Roberts and Trump's two new USSC nominees, as ACA makes its way to them yet again.)

No need to hyperlink the following examples. Everyone's immersed in them.
  • Obamacare imperiled by twisted politics and jurisprudence, even though its recent mild decline in enrollments probably means little or nothing and the body politic wants it.
  • Ultra-right wingnuts flexing muscle by urging the dismissal of the capable (and quite religious) head of the National Institutes of Health. Why? Stem cell research, a promising technology that's run afoul of some ideological right wing evangelical cant.
  • Net-net, IT's impact on health care, coming as much from the well meaning elitist left as from the elitist right, still negative. It enriches tech- and health-organizational CEOs while patient satisfaction, provider satisfaction and life expectancy all three tank. (I know, it's complicated--we also got that opiate crisis.)
  • Corruption in government, tech, hospitals and big pharma: can you spell "conflict of interest"? Read pretty much any recent posting in Health Care Renewal.
I could waffle on and on. But instead of that let me focus today on one thing that's got my dander up and another that's actually tamped it down a bit.

The VA, yet again. No doubt, forever. Or, Why's the VA Such a Punching Bag?

Dr. Poses has been feeding me troves of data and news about the VA. I'm happy now to report just a few highlights. Oh, wait: more like lowlights. Dreary as ever. Ever since the capable David Shulkin was fired, the question rings louder, "how bad can it get?" We now know the answer: bottomless pit.

Here are some of the lowlights. Bear in mind that, rightly or wrongly (we think mostly wrongly), Shulkin is now being blamed for all these deficiencies at the VA. Despite the facts that he was hamstrung from the get and that the VA was, like the EPA and others, one of the places where tge White House allowed chaotic privatization to run amok. We're in a fun-house mirror version of Ronald Reagan's "government is the problem."
  1. Suicide Watch. Under this administration, while suicality remains rampant among veterans of recent Forever Wars, the VA has fallen down grievously on the job of addressing it. Last month's report from the government's own GAO confirms this.
  2. Privatization Writ Large. Privatization initiatives, so dear to the hearts of cronies and lobbyists, are already in big trouble. Trump's own hand-picked successor to Shulkin recently had to admit to Contress the “The [VA] was taken advantage of because of the hasty nature that took place when the program was put together." Not budget dust, either: the agency paid out nearly $2B-with-a-'B' in unnecessary fees for these private booking "services."

    (In fairness let's put a little parenthetical note in here. As a former employee I know the VA itself causes unnecessary care delays. Service-connected disability ratings impede scheduling, as do salaried physicians' myriad ploys for putting the brakes on their own performance.)
  3. Privatization Writ Small. Still, this privatization thing is a great example of two-wrongs-don't- make-a-right. ProPublica informs us that what's "actually happened in the four years since the government began sending more veterans to private care: longer waits for appointments and, a new analysis of VA claims data by ProPublica and PolitiFact shows, higher costs for taxpayers." Can the VA claim better outcomes using any parameter at all? I think not.
  4. Mar-A-Lago. Lots more VA stories are leaking out. None are especially edifying. But in some ways the most alarming and tawdry among them is that surrounding the troika of unelected Florida golfing buddies. For months or more now they've been calling a lot of that agency's shots. Direct line to the White House, demonstrable responsiveness on the part of VA apparat. Maybe the crowning glory in this administration's reputation for cronyism, this group--comics mogul Ike Perlmutter (you can't make this stuff up), Palm Beach MD Bruce Moskowitz and lawyer Marc Sherman, collectively known as the "shadow rulers"--have pushed a lot of policies and expenditures for the VA with zero expertise.

    Unless a lousy golf handicap counts as expertise. Democrats have vowed a response in the new Congress, and we can only hope Speaker Pelosi prioritizes that. I think when it comes to Pelosi versus Ike's Marvel Avengers, the lady wins hands down. The conservative (and probably still somewhat Moonie) Washington Times reports this will happen in the first half of 2019--both from the GAO and the House Oversight Committee. These guys are super bad COI news, having weighed in with their scant expertise on way too much down to VA job candidates.
  5. The worst-of-the-worst for this poor agency is how the Shadow Rulers have gummed up its use of technology, especially IT. A little background: the VA was the one organization within the entire US Government that developed, back in the day with its VISTA technology, a fairly creditable in-house electronic medical record. VISTA, along with DOD's AHLTA (get it?) were supposed to play nice together but, despite billions in earlier expenditures, never did. VISTA might have survived but, starting with Shulkin (and probably predecessors) got deep-sixed by the bogus attractiveness of private-side EMRs.

    GE had its hands in there for a while: it deserves what it got (with AHLTA). Now since ~2015, thus pre-dating the current White House, it's Cerner. The main vendor rival to the privately-held Wisconsin cult vendor Epic, Cerner got the inside track to craft a workable EMR for the VA and DOD. But the Boys from Mar-A-Lago want to micro-manage this? Why? Earlier this month ProPublica disclosed part of the reason based upon FOIA-obtained emails. The doc among the troika has his own mobile app. Here's how it went down.
[N]ewly released emails also detail Moskowitz’s effort to get the VA and Apple to adapt his app. As a VA IT official described it in a May 2017 email, 'We are utilizing the native iOS mobile app, Emergency Medical Center Tracker, that Dr. Moskowitz developed.' VA health officials offered their own ideas for how a collaboration with Apple could benefit veterans, such as working on credentialing, data exchange and analytics, and suicide prevention research. But Moskowitz rejected the VA doctors’ ideas in favor of his own. 'These are good areas but not the emergency ones which my group of experts have identified,' he said in a May 2017 email. 'I sent an email to outline the recommendations.'
 'Nuff said. As someone who cared for thousands of veterans, I can't begin to describe how galling this is, even if the new guy, Wilkie, says he's trying to right the ship. While blaming his predecessors.

If these gentlemen from Florida--that bastion of fair elections and cost effective medicine--were instead gumming up Medicare, threatening the health of parents and grand-parents of business leaders, dot-commers, millennials and trust-funders, we'd have heard a lot more hue and cry about the VA and its shadow rulers.

Now I Pat Down my Dander. Soothing Words from Unlikely Places. 

Oddly enough, the worlds of IT--absent the shameful events described above in connection with the VA--and management are beginning to pull themselves out of their torpor. Under the dual impact of the HITECH and ACA enactments, the IT and management communities strove for years to accommodate to this brave new world of individual mandates and EMR meaningful use.

The result was rather anechoic. Unless you were right down there in the trenches, you heard little complaining about the baleful effects of the IT pall dropped into the doctor-patient relationship. Typical statement from EMR vendor CEOs: "my job is change management." (Ram it down their throats.) Typical statement from provider CMOs and CMIOs: "I only get to play with the Lego Blocks they give me."

That's changing now, and the signs are everywhere, though sometimes hard to parse. Nailing down the how and why of this change can be difficult, but the effects of "unusability" are emerging into a vocal majority consensus. Folks known as "thought leaders," such as Robert Wachter and Donald Berwick, have exerted part of this impulse to call a spade a spade in the interest of QI, citing, among other things, generational change. Smartphone users and tech-savvy students and house staff are much less likely to tolerate the

Some of those properly impatient young innovators--and I don't mean the septuagenarian Moskowitz--went on to found start-up companies that are starting to move tecnology out of its old, enormously dreary meaningful-use rut. They're bringing patients--"engagement" the new meme--back into the narrative.

What is this new narrative? The rather staid and managerialist health IT society, HIMSS, has this to say, couched in classic bureau-speak jargon, in its 2019 conference agenda, "6 Health Information and Technology Topics to Immerse Yourself in at HIMSS19." Translations into English follow each bullet.
  • Strategic Patient Experience Improvement (help the doctor with her workflow)
  • Aim for Secure Accessibility (make everything more secure)
  • Mapping a Vision to the New Consumer Landscape (improve revenue cycles)
  • Moving Precision Medicine into Primary Care (make "precision" medicine, whatever that is, or at least AI, work better--maybe with smart guidelines--for primary care providers)
  • Contextualizing AI for Healthcare (ok, we know that AI is really important)
  • Exploring the Pharma-Provider-Payer Relationship: the Last Step to True Value-Based Care (get everybody working together better now that fee-for-service care is giving way to bundling)
Stripping away the cant, however, these are actually pretty lofty goals. They show HIMSS coming into its own. Charge capture, upcoding, and dashboards for managers watching 30-day readmission tallies begin to sound so 20th century. Care coordination from the bottom up, not just the top down, begins to appear more attractive as studies start to show that top down doesn't always work all that well. (Caveat: find a way to read the whole JAMA piece, not just the online abstract. The journal's behind a paywall.) Leadership for such shifts is coming in many cases from outside classic health IT vendor-land, notably in innovation centers cropping up among many providers and payers.

Meanwhile, on just about a daily basis I learn about a new start-up addressing these issues, often based on newer concepts and approaches to workflow as ecological reflection of a unified community-wide integrated health care system.

Let's now move from specific health care realities and IT start-ups to the more general and philosophical matter of why it's taken so long to get to this place. Let me conclude by drawing the reader's attention to some recently emerging, and highly salutary, public intolerance to bullshit. (Can this be a result more broadly speaking of an emerging disgust toward insufferable politicians ?)

The recognition of obfuscation through bullshit goes well back into the mid-20th century. It was perhaps most famously addressed well over a decade ago in the elegant short book On Bullshit by emeritus Princeton philosopher Harry Frankfurt. But a much more recent vocal objection to nonsense in health care comes from a source that some might've considered heretofore unlikely: a couple of senior Wharton management professors. Though Lawton Burns and Mark Pauly barely mention their Princeton forebear in a secondary footnote, they nonetheless deserve an enormous shout-out for bringing attention to Detecting BS in Health Care. No paywall: use the link and download it now.

Burns and Pauly bring out all the other B's: to start with, buzzwords, bullets (silver), best (practices) and bandwidth. Lots of others. There's one B, however, that they espouse: bottom-up. Hard to know how firmly the Burns and Pauly tongues were planted in the Burns and Pauly cheeks, but for heaven's sake they know they're right about this. Common sense solutions so clearly and frequently give way to self-dealing and managerialist me-tooism in health care. Those who benefit from such nonsense have been called out often in this blog. But we can hope they now know not only are a few doctors now on to them, but some clear-headed individuals from the management establishment as well.

Saturday, December 22, 2018

The Demise of the Trump Foundation, an Extreme Example of Elite "Do-Gooding" to Prop Up the "Broken System" that Benefits Them

Big foundations often claim that they are out to improve society.  For example, the Robert Wood Johnson Foundation claims to be

the nation’s largest philanthropy dedicated solely to health.

Its goal is to improve health care for all, that is,

help raise the health of everyone in the United States to the level that a great nation deserves, by placing well-being at the center of every aspect of life.

Yet, as we discussed here, large foundations with an interest in health rarely address the sorts of issues we discuss on Health Care Renewal, particularly problems with health care organizational leadership and governance, most particularly leadership that is ill-informed, incompetent, self-interested, conflicted, or even corrupt.  One explanation was provided by Anand Giridharadas, author of  Winner Take All: Elite Charade of Changing the World, as summarized in an August, 2018, op-ed ine New York Times.

His thesis was that society has handed over the responsibility for reform to those who benefit most from the status quo. Thus,charitable foundations, one vehicle for reform, are now largely run by people with business management background, and financial ties to big corporations.  The foundations thus largely propose minimal, if not fake reforms, representing change "the powerful can tolerate." So, 

American elites generally seek to maintain the system that causes many of the problems they try to fix — and their helpfulness is part of how they pull it off. Thus their do-gooding is an accomplice to greater, if more invisible, harm.

What their 'change' leaves undisturbed is our winners-take-all economy, which siphons the gains from progress upward.

In a recent interview with the Guardian, Giridharadas explained how his concerns evolved while he was a fellow of the Aspen Institute,

a thinktank that organizes exclusive ideas conferences for the wealthy and powerful, as part of a program designed to raise up a 'new breed of leaders' and solve 'the world’s most intractable problems'.

Aftr being selected as a fellow, along with a bunch of corporate leaders, he realized that the Institute was carrying out its view that

the people best-equipped to protect the interests of the poor are the rich and rich adjacent.

In a 2015 talk to an Institute audience, he

delivered an electrifying critique, arguing the 'change makers' and 'thought leaders' in America’s winners-take-all economy – once again, the very people he was speaking to – are less helping the world through their various philanthropic efforts than propping up the broken system that made them.

The 2015 audience was apparently "aghast," but it is not clear whether Giridharadas' insight led them to change their ways.   Instead, foundations continue to prop up the "broken system," but in often subtle ways.   It is likely that those that benefit from the current status quo continue to promote little reforms around the edges, while failing to face the real issues, because doing so could "could implicate powerful people, or perhaps even themselves."

Foundations may continue to fund projects that promote small incremental changes, while avoiding those that could lead to questions about aspects of the system that benefit its current top leaders, or suggest changes in the policies that allow this.  For example, as we wrote here, the Bill and Melinda Gates Foundation's is currently led by a former top pharmaceutical executive who had defended extremely high drug prices which presumably helped fuel her extravagant compensation.   Meanwhile, the Foundation has been accused of "ideological commitment to promote neoliberal economic policies and corporate globalisation."

Example: the Demise of the Trump Foundation

Now in 2018, three years after Giridharadas confronted the Aspen Institute with little effect, we witness a truly extreme example of a non-profit foundation supposedly set up to do good for society, instead propping up the system, and specifically the supposedly generous philanthropists who founded it.  However, rather than funding marginal reforms, this example demonstrates much more direct, crude efforts to prop up the system which supported the founders of the "charity" in question, that being the Trump Foundation, the creature of our current US dear leader.

Major questions were first raised about the Foundation in 2016, when the Washington Post published an article by David Farenthold entitled, "Trump Boasts About His Philanthropy.  But his Giving Falls Short of his Words."  The Post continued its investigation of the topic, leading to an investigation by the New York Attorney General.  This week, that investigation resulted in an agreement to shut down the Trump Foundation, as again reported Farenthold in the Washington Post.  In announcing this agreement, Barbara Underwood, the New York AG, said the investigation found

a shocking pattern of illegality involving the Trump Foundation — including unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more.

Transactions Benefiting Trump and Family

Basically, the Foundation was alleged to have made transactions that resulted in direct personal benefit to Donald Trump and his family.  For example,

The largest donation in the charity’s history — a $264,231 gift to the Central Park Conservancy in 1989 — appeared to benefit Trump’s business: It paid to restore a fountain outside Trump’s Plaza Hotel. The smallest, a $7 foundation gift to the Boy Scouts that same year, appeared to benefit Trump’s family. It matched the amount required to enroll a boy in the Scouts the year that his son Donald Trump Jr. was 11.

One suspicious transaction could be construed as a bribe meant to forestall investigation of another shady Trump venture, Trump University.  Per an opinion piece in USAToday, the Foundation made a "donation" to

Florida Attorney General Pam Bondi's re-election campaign in September 2013, years before Trump decided to run for office. According to Florida campaign finance records, the Trump Foundation contributed $25,000 to And Justice for All, a section 527 political organization associated with Bondi.

Charitable foundations like the Trump Foundation, however, are prohibited from political activity. On its tax forms, the Trump Foundation claimed it did not transfer any money to a 527 organization or engage in any political activity, and did not report any contribution to And Justice for All. Instead, it reported a contribution to a similarly named nonprofit organization. The foundation cited 'coincidences and errors,' but it looked like a ham-handed attempt to hide the illegal political contribution.

In fact, something more sinister than improper political activity may have been going on. The Trump Foundation made its contribution three days after it was widely reported that Bondi's office was reviewing joining the New York attorney general's lawsuit against Trump University. Following the donation, Bondi's office decided not to join the suit or open an investigation. It is possible the contribution was meant to influence Bondi's decision, and it is possible that it worked. Whatever the intent, the payment was illegal, and the IRS ultimately sanctioned the foundation, levying a fine for the violation.

After the shut down of the Foundation was announced, Trump boasted on Twitter that at least his charity had not paid him directly, as reported by Politico,

The Trump Foundation has done great work and given away lots of money, both mine and others, to great charities over the years - with me taking NO fees, rent, salaries etc.

It seems like a distinction without a difference  

The Foundation Functioned as an Arm of the Trump Campaign

In recent years, the Foundation mainly worked to benefit Trump's presidential campaign. Per the Washington Post,

In 2016, state investigators allege, Trump effectively 'ceded control' of his charity to his political campaign. He raised more than $2 million at a fundraiser in Iowa that flowed into the foundation. Then, the state said, Trump campaign manager Corey Lewandowski determined when and where it would be given away.

'Is there any way we can make some disbursements . . . this week while in Iowa?' Lewandowski wrote in an email cited in Underwood’s lawsuit.

Trump gave away oversize checks from the foundation at campaign events in the key early-voting states of Iowa and New Hampshire, pausing his campaign rallies to donate to local veterans’ groups.

Federal law prohibits charities from participating in political campaigns. As president, Trump has called repeatedly for that law to be repealed.

Again, the Foundation was acting directly to promote Donald Trump's interests.

The Foundation Had No Meaningful Governance Structure Beyond Trump's Whims

Finally, the Foundation seemed to have no meaningful governance structure that could counter its use as a family "piggy bank"

The attorney general’s investigation turned up evidence that Donald Trump Jr., Eric Trump and Ivanka Trump — all listed as officers of the charity — had never held a board meeting. The board hadn’t met since 1999. The charity’s official treasurer, Trump Organization executive Allen Weisselberg, told investigators that he wasn’t aware that he was on the board.

State investigators asked him what the foundation’s policies were to determine whether its payments were proper.

'There’s no policy, just so you understand,' Weisselberg said.

So, thanks to the investigations that have swirled around Donald Trump and company since he began his campaign for the presidency, we have seen an amazingly blatant example of a non-profit charitable foundation used not to improve society, but to support the "broken system," and particularly the advantageous position of the charity's founder within the system.

Further Discussion

This example may be extreme, but it may not be unique.  Vox just published an opinion piece entitled,"The Trump Foundation shows just how preposterously light our oversight of charity is." It noted,

As the political theorist Rob Reich explains in his new book Just Giving, we really don’t expect much from foundations as a matter of public policy.

They don’t have to have a website or some other way for interested charities to contact them about funding. They don’t have to make their giving strategy publicly available or accessible in any way. They do have to fill out 990-F tax forms, which are public and provide some information on their assets, spending, and grant recipients. But those take the form of long, difficult-to-parse tax documents, and crafty philanthropists can get around these requirements by starting up offshore foundations. And there are basically no requirements to speak of beyond filing a 990-F and spending at least 5 percent of assets every year.

'Foundations are often black boxes, stewarding and distributing private assets for public purposes, as identified and defined by the donor, about which the public knows very little and can find out very little,' Reich writes.

Maybe the revelations about the Trump Foundation will inspire a more skeptical look at "do-gooder" foundations.  We need to know the extent to which they are devoted to the interests of rich insiders rather than of society at large.  Per Giridharadas, shining more light on their obscure operations might inspire them to start

listening to more of society’s losers, and fewer winners. 'The powerful are very good at disseminating their own bullshit,” he says. 'They don’t need the intellectual reputation laundering of ideas festivals to make their heavily marketed bullshit smell even sweeter.'

'I sincerely believe,' he says, 'that had more of the institutions of this country – and particularly those involved in thinking and ideas, not just conferences but all kinds of things – been more skeptical of elite fantasies and more mindful of what was actually going on in other people’s lives in this country, I think it’s very possible we wouldn’t have orange Mussolini in the White House.

We also could have had real health care reform.

Saturday, December 15, 2018

Johnson and Johnson's Latest Ethical Misadventures: Settled Kickback Allegations, Reportedly Concealed Knowledge of Adverse Effects of a "Sacred Cow" Product

Giant pharmaceutical/ biotechnology/ device company Johnson & Johnson has its famous "credo" which starts with

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.  In meeting their needs everything we do must be of high quality..
Nonetheless, the company has a long history of ethical misadventures (look here, and see appendix below).  Now late in 2018,  we note two more Johnson & Johnson misadventures. In chronological order,

$360 Million Settlement of Allegations of Kickbacks to Medicare/ Medicaid Patients to Support Use of Extremely Expensive Drug

The story, per the New York Times, was that Actelion, a drug maker purchased by Johnson & Johnson in 2017, in 2014-2015 had

raised the price of its main drug, Tracleer, by nearly 30 times the rate of inflation. Tracleer, which is prescribed to treat pulmonary arterial hypertension, sells in pharmacies for an average cash price of about $14,500 for 60 tablets, according to the website GoodRx.

But to facilitate charging such high prices, pharmaceutical companies

often help patients pay their out-of-pocket costs through coupons or other financial assistance. These payments are not just about benevolence — they also help blunt the outrage over rising drug prices by limiting how much patients have to pay. Insurers then cover most of the cost.

But federal anti-kickback laws prohibit companies from giving such financial assistance to Medicare and Medicaid beneficiaries because doing so is considered an inducement to buy their drugs. For years, drug makers have skirted those laws by instead donating to nonprofit charities, which then give the money to Medicare patients. Such arrangements are legal as long as there is no direct coordination between the pharmaceutical company and the nonprofit organization.


Federal prosecutors said Actelion violated the law by collecting detailed data in 2014 and 2015 about the patients receiving help from a nonprofit, the Caring Voice Coalition, and using the data to budget for future donations. As a result, Actelion ensured that the money it donated would be used only to assist patients who used its drugs, and not competing companies’ treatments for the pulmonary condition.

Prosecutors said Actelion kept up the practice even after the charity itself warned the company against it.

Actelion also steered Medicare patients to the Caring Voice Coalition who would have otherwise qualified financially for the company’s free drug program. By directing them to the nonprofit, the company avoided having to provide the drug to eligible patients and left Medicare to cover the cost instead, prosecutors said.


Actelion Pharmaceuticals has agreed to a $360 million settlement stemming from an investigation into whether the company illegally funneled kickbacks through a patient-assistance charity, federal prosecutors said Thursday.

But keep in mind that Actelion is now a Johnson & Johnson subsidiary, and by buying it, Johnson & Johnson bought its financial, and ethical and legal liabilities.. So ultimately it will be Johnson & Johnson which pays the settlement.

Johnson & Johnson Alleged to Have Concealed Knowledge that its Baby Powder Contains Asbestos

The first reporting on this story was a lengthy investigative report from Reuters published December 14, 2018, based on newly released documents produced during a variety of lawsuits.  The report stated

that from at least 1971 to the early 2000s, the company’s raw talc and finished powders sometimes tested positive for small amounts of asbestos, and that company executives, mine managers, scientists, doctors and lawyers fretted over the problem and how to address it while failing to disclose it to regulators or the public.

The documents also depict successful efforts to influence U.S. regulators’ plans to limit asbestos in cosmetic talc products and scientific research on the health effects of talc.

Note that since the 1970s, exposure to asbestos has been recognized as an important health hazard.  In 1972, the US agency OSHA limited occupational exposure to asbestos.  Also,

The World Health Organization and other authorities recognize no safe level of exposure to asbestos.

Johnson & Johnson has been sued by

11,700 plaintiffs now claiming that the company’s talc caused their cancers — including thousands of women with ovarian cancer.

After three major jury verdicts that found Johnson & Johnson liable for cancers caused by asbestos in its baby power,

J&J has said it will appeal the recent verdicts against it. It has maintained in public statements that its talc is safe, as shown for years by the best tests available, and that the information it has been required to divulge in recent litigation shows the care the company takes to ensure its products are asbestos-free. It has blamed its losses on juror confusion, 'junk' science, unfair court rules and overzealous lawyers looking for a fresh pool of asbestos plaintiffs

However, there now seems to be substantial evidence that the company's public posturing is a smokescreen. While in the past Johnson & Johnson internal documents about its management decision making related to talc and asbestos were used in litigation,

Many were shielded from public view by court orders that allowed J&J to turn over thousands of documents it designated as confidential. [But] Much of their contents is reported here for the first time.

These showed,

The earliest mentions of tainted J&J talc that Reuters found come from 1957 and 1958 reports by a consulting lab. They describe contaminants in talc from J&J’s Italian supplier as fibrous and 'acicular,' or needle-like, tremolite. That’s one of the six minerals that in their naturally occurring fibrous form are classified as asbestos.

At various times from then into the early 2000s, reports by scientists at J&J, outside labs and J&J’s supplier yielded similar findings. The reports identify contaminants in talc and finished powder products as asbestos or describe them in terms typically applied to asbestos, such as 'fiberform' and 'rods.'

In 1976, as the U.S. Food and Drug Administration (FDA) was weighing limits on asbestos in cosmetic talc products, J&J assured the regulator that no asbestos was 'detected in any sample' of talc produced between December 1972 and October 1973. It didn’t tell the agency that at least three tests by three different labs from 1972 to 1975 had found asbestos in its talc – in one case at levels reported as 'rather high.'

The article shows that the company repeatedly found evidence that asbestos was present in the raw talc that went into its baby powder, first in 1957, and could be found at times in samples of the finished product since 1971.  Since the 1970s, Johnson & Johnson managers realized that the asbestos was a problem.  For example,

J&J research director DeWitt Petterson visited the company’s Vermont mining operation. 'Occasionally, sub-trace quantities of tremolite or actinolite are identifiable,' he wrote in an April 1973 report on the visit. 'And these might be classified as asbestos fiber.'

J&J should 'protect our powder franchise' by eliminating as many tiny fibers that can be inhaled in airborne talc dust as possible, Petterson wrote. He warned, however, that 'no final product will ever be made which will be totally free from respirable particles.' Introducing a cornstarch version of Baby Powder, he noted, 'is obviously another answer.'
Slightly later on December 14, 2018, the New York Times published its own story on asbestos in Johnson & Johnson talcum powder.  It corroborated the Reuters report while adding informative detail.  It started with:

An executive at Johnson & Johnson said the main ingredient in its best-selling baby powder could potentially be contaminated by asbestos, the dangerous mineral that can cause cancer. He recommended to senior staff in 1971 that the company 'upgrade' its quality control of talc.

Two years later, another executive raised a red flag, saying the company should no longer assume that its talc mines were asbestos-free. The powder, he said, sometimes contained materials that “might be classified as asbestos fiber.”

The carcinogen, which often appears underground near talc, has been a concern inside the company for decades. In hundreds of pages of memos, executives worried about a potential government ban of talc, the safety of the product and a public backlash over Johnson’s Baby Powder, a brand built on a reputation for trustworthiness and health.

Executives proposed new testing procedures or replacing talc outright, while trying to discredit research suggesting that the powder could be contaminated with asbestos, according to corporate documents unearthed by litigation, government records obtained by The New York Times through the Freedom of Information Act, and interviews with scientists and lawyers.

In one instance, Johnson & Johnson demanded that the government block unfavorable findings from being made public. An executive ultimately won assurances from an official at the Food and Drug Administration that the findings would be issued only 'over my dead body,' a memo summarizing the meeting said.

Thus, despite these warnings of asbestos in talcum powder, Johnson & Johnson continued to sell it.  There is certainly now strong reason to suspect that for decades Johnson & Johnson management has been denying its own fears about asbestos contamination of its baby powder, and doing its best to hide evidence of its hazards, thus benefiting the corporate bottom line, but allowing continued exposure of large number of people to a potentially hazardous, even fatal product.

The Business World Tries to Shrug It Off

Responding to the Reuters and New York Times story, many business pundits stated their confidence in Johnson & Johnson as an investment.  For example, Charley Grant wrote in the Wall Street Journal,

But while investors should be wary, they needn’t panic. J&J’s strong finances and diverse revenue base are good coping mechanisms.

Wells Fargo, per CNBC, opined

the selling based purely on the outcomes of any talc litigation is likely overstated.

But does Johnson & Johnson's management really act on its belief that its "first responsibility is to "doctors, nurses, and patients, to mothers and fathers?" On CNBC,  Bill George wrote,

It is not plausible that these leaders knew nearly five decades ago that their iconic baby powder caused cancer and continued to market the product. This is a company whose leaders consistently try to do the right thing, admit their mistakes, and continue to develop life-saving products that restore the health of millions of people around the world.

While the plaintiffs' attorneys may continue to pursue their cases, I feel confident that J&J will be shown to put the interests of its customers first, and maintain its reputation for the highest integrity.

I wonder if Mr George's confidence was boosted by his previous work as a paid speaker for Johnson & Johnson, and former chairman and CEO of Medtronic, a company which has had its own share of ethical misadventures (look here)?  In any case, some recent history calls into question Johnson & Johnson's "reputation for the highest integrity."

Johnson & Johnson's Long History of Ethical Misadventures

So, recent reports suggested that Johnson & Johnson willfully acquired a company that appears to have provided kickbacks to patients in apparent violation of US law in an effort to support high drug prices.  Furthermore, Johnson& Johnson appears to have concealed considerable evidence that one of its primary products might be dangerous in order to support the sales of a "'sacred cow,' as one internal email put it (per the Reuters report).

These are but  the latest in a long string of misadventures by the company, as we have been documenting over years.  (Our collected posts on Johnson & Johnson are here.  An updated version of their legal record since 2010 is at the end of this post.)

Perusing the list suggests that this giant company (with about $70 billion in yearly revenue) is a poster child for bad behavior by health care organizations.  It has faced a multitude of allegations leading to settlements, and sometimes findings of guilt.  The charges included many instances of deceptive and unethical marketing, some that promoted drugs or devices for use in situations in which they may have had harms outweighing their benefit, some that involved concealing knowledge of their risks, and some of selling adulterated drugs or defective products. 

So the new allegations of deceptive marketing meant to conceal a hazardous product are just the latest in the series.

What is striking is that the company and its management have not faced more consequences for this sorry track record.

Although the company has paid multiple fines and made numerous monetary settlements over the years, none have been big enough to affect its immense revenues.  Furthermore, ultimately the monies used to pay them came from all Johnson & Johnson employees in the form of smaller paychecks; customers, patients and the public at large in the form of higher prices; and only to some extent by investors in the form of slightly lower profits.  Meanwhile, it appears that the company's top managers made an awful lot of money, possibly in part as rewards for the revenues produced by the misadeventures.

Former Johnson & Johnson CEO William Weldon, upon his retirement in 2014, was to receive a retirement package estimated to be worth from $143 to $197 million (look here).  In 2010, his total compensation was $29 million (look here).   According to the 2012 Johnson and Johnson proxy statement, his 2011 total compensation was greater than $26 million. As far as I can tell, Mr Weldon never suffered any negative consequences for his company's sorry record, and retired a very rich man. (look here).

Current CEO Alex Gorsky received  $25 million total compensation in 2014 (look here).  More recently, the New York Times reported his 2017 total pay was $22.8 million, making him the seventh highest paid health care executive in that year, by their accounting. 

While management made so much money, very rarely has anyone at the company who was involved in authorizing, directing, or implementing any of the bad behavior had to suffer any negative consequences, therefore appearing to enjoy impunity.

So what was to deter management from embarking on further misadventures, as long as the results might be enlarging management's personal wealth?  

This is all in line with what we have been discussing for years.  In general, we have seen many legal settlements made by health care organizations of alllegations like fraud, bribery, and kickbacks.  Despite the unsavory nature of the behaviors revealed by most settlements, which often appeared to risk patient harms, the companies involved usually have had to pay fines that were tiny relative to their multi-billion dollar revenues.  They companies only seldom have had to admit responsibility, and almost never did a settlement cause company managers and leaders to  suffer any negative consequences for enabling, authorizing, directing or implementing the bad behavior.

This adds to the evidence suggesting that US health care is rigged to benefit top insiders and their cronies, and as such, is part of a larger rigged system.  We have previously discussed how market fundamentalism (or neoliberalism) led to deregulation, which enabled deception, fraud, bribery, and intimidation to become standard business practices, and allowed increasing concentration of power by large corporations. Managerialism allowed the top leaders of these corporations and their insider cronies to amass increasing power and money. Everyone else, other employees, stockholders of public corporations, customers, vendors and suppliers, and the public at large lost out.   In health care, these changes led to an increasingly costly system which produced increasingly bad results for patients and the public. 
We have called for true health care reform to derig the system. Unfortunately, despite our hopes, perceptions of a rigged system may not always inspire honest reform. Instead, they can enable the rise of demagogues and wouldbe dictators who promise only they can solve the problem.  Donald Trump cried out that only he could fix our problems and drain our swamps.  However, at least in terms of policing white-collar crime, particularly in health care, he seems to be letting the swamp waters rise.  And now he seems to have had his own record of impunity (look here).  

While we thus have bigger problems to solve than the impunity of health care leaders, let us remember the need for wholesale, real health care reform that would make health care leaders accountable for what their organizations do, particularly when these organizations misbehave.

Appendix - Johnson and Johnson Legal Record since 2010

- Convictions in two different states for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax

- Guilty pleas to bribery in Europe  by Johnson and Johnson's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses  (see this link for all of the above)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)

  - Testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
-  Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
-  Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post).

-  Johnson & Johnson settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this post)
-  Johnson & Johnson Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this post).
 -  Johnson & Johnson DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .
- Johnson & Johnsonn Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this post for this and above case).
- Johnson & Johnson Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this post).
- Johnson & Johnson fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (see this post).

- Johnson & Johnson DePuy subsidiary settled Oregan state charges that it marketed the ASR XL metal-on-metal hip joint prosthesis without disclosing its high failure rate (see this post).

-  Johnson & Johnson found by jury to have concealed harms of Risperdal.
-  Johnson & Johnson Ethicon subsidiary found by jury to have concealed harms of its vaginal mesh device.
-  Johnson & Johnson McNeil subsidiary pleaded guilty to marketing adulterated Tylenol. (see this post for three items above.)

- Johnson & Johnson subsidiary Aclarent settled allegations that it sold its Stratus device for unapproved uses.  Two former executives of that subsidiary also were found guilty of distributing misbranded and adulterated devices (see this post