Thursday, June 29, 2006
The letter by three of us Health Care Renewal bloggers, mirroring my previous blog posting, noted that physicians may be affected by conflicts of interest involving organizations other than pharmaceutical and device manufacturers, particularly managed care organizations. In addition, we noted a variety of conflicts of interest could affect health care decision makers other than physicians, notably, leaders of AMCs. Thus, we called for a broad code of conduct for all health care decisionmakers that would address all kinds of conflicts of interest.
Other letters also pointed out the spectrum of conflicts of interest is larger than that discussed by Brennan et al. They noted other sources of conflicts including: clinical income, NIH grants, advertisements in medical journals, and grants to AMCs and mediacal scientific societies (Meader); pharmaceutical advertising directed at physicians (Gozum) and other pharmaceutical promotional practices so directed (Ting); and pharmaceutical company financing of graduate medical education (Goldblum and Franzblau, and Watson and colleagues). They noted other barriers to implementing the reforms suggested by Brennan et al: a culture of entitlement among faculty physicians; (Watson and colleagues); and AMCs need for funding (Watson and colleagues, and Brody). Finally, Angell noted that Brennan and colleagues' estimates of the amount of money pharmaceutical companies spend on marketing may have actually been very low.
Not to toot our own horn too much, we hope that this set of letters has enlarged the scope of discussion of conflicts of interest affecting not only physicians but also the leaders of health care organizations.
Wednesday, June 28, 2006
I feel I should've been aware of this new-ish wrinkle on double-dipping, but I wasn't. Were you?
The first example cited is that of a cardiology group in Lombard, Illinois who brag, on their Foundation Website, that they give "patients access to medical advances before they come to market." Like Natrecor, a drug that's great fun to Google to see plaintiffs' lawyers duking it out with shills, and for which "Outpatient use of Natrecor around the country has fallen precipitously,"
What such sources often fail to mention, and what their leaders may fail to mention at scientific conferences, is that the non-profit they establish, for purposes of clinical trials investigation, is funded by the drug- and device-makers.
Many other examples follow. Both the Philadelphia US Attorney, Patrick Meehan (a wonderful figure to many upstanding Philadelphians), and the Inspector General's Office at HHS, seem to detect a whiff of something a bit off here, according to the article.
To me, what's most interesting is the Pogo Effect. The money is good, and those lured to this easy money rush quickly to defend their practices. "Strict internal controls" and assumption of integrity seem to be all it takes. These monies help fund fellowships, which of course specialists, receiving these funds, have come to expect. And lots else.
Oh, and the Illinois cardiology group "has been involved in major multi-site studies with some of the biggest names in research, including Mayo Clinic, Brigham & Woman's Hospital at Harvard Medical school, Cleveland Clinic, and Duke Clinical Research Institute."
So, gentlemen (and ladies--the cardiologist was a lady!), start your foundations. Decide if you think you're susceptible to bias. If you decide you're not, why, go right ahead--how could this tidy little, extra source of support ever bias little old irreproachable me? And look at the great company you'll keep, as you fall in with the Big Boys.
In this blog our Editor, Dr. Poses, has shown, time and again, how the Big Boys are interlocking directorates that include Big ... well, Big Everything. In another way, then, going after a few cardons in Lombard, Illinois feels like a cheap shot. What about the Big Guys. Irreproachable one and all.
Drug companies use unscrupulous and unethical marketing tactics not only to influence doctors to prescribe their products but also subtly to persuade consumers that they need them, a report claims today.The full report includes an appendix, stratified by company, listing instances of questionable marketing practices contrasted with each company's relevant ethical codes, and comments on any discrepancies. The incidents listed are international in scope, mostly, but not exclusively European, including a few which have appeared on Health Care Renewal, but many which are new to me.
Consumers should be concerned because time and again the companies violate their own industry's ethical marketing codes.
The report examines the marketing practices of 20 of the world's biggest drug companies. It alleges that:
· Drug companies are promoting their products through patients groups, students and internet chatrooms to bypass the ban on advertising except to doctors.
· They offer information to the public on "modern" lifestyle diseases, such as stress and poor eating habits, to encourage people to ask their doctors for medicines.
· They make inaccurate claims about the safety and efficacy of their drugs.
· Doctors are offered incentives to prescribe and promote drugs including kickbacks, gifts, free samples and consulting agreements.
· Many companies have been implicated in anti-competitive strategies, including cartels and price hikes.
Drug companies are not permitted to advertise products to the public. But companies are increasingly looking to influence consumers directly through funding patient groups and launching 'disease awareness campaigns', which do not name a product but are likely to encourage patients to seek treatment.
'This type of 'nice-and-friendly' marketing is often disguised as corporate social responsibility and has been shown to create a subtle need among consumers to demand drugs for the conditions, while giving consumers a sense of trust in the pharmaceutical companies,' says Consumers International.
Best placed to persuade doctors of the merits of a new drug are other doctors. Drug companies often pay specialised medical communication agencies to recruit and train leading doctors, specialists and academics as 'key opinion leaders', or KOLs, as they are known in the business. These people will be paid to promote drugs to other doctors through presentations, research papers, discussions and debates.
'The relationship between companies and KOLs is not explicitly transparent,' says the report. 'As a consequence, consumers and patients, and in some cases health professionals, may not always be aware how motivation for individual profit could play into the drug information they receive via the KOLs.'
Violations of industry-wide drug promotion codes occur with regular frequency, says the report. The 20 companies were involved in 972 breaches of the ABPI's rules on ethical drug practices between 2002 and 2005. More than 35% of those breaches, the largest category, had to do with misleading drug information.
More than half of the 20 companies whose marketing practices are examined in the report have been implicated in controversies regarding free samples, kickbacks and gifts to medical professionals, it says. Half have breached the ABPI code of practice on the conduct of the medical representatives who visit doctors.
Most of them - 17 out of 20 - have been involved in publicising irresponsible or controversial promotional materials. Only two companies, GSK and Novartis, are transparent in reporting the number of confirmed breaches of marketing codes and any sanctions imposed.
This record raises questions about the efficacy of self-regulation.
As an aside, we have posted about how some leaders of US health care for-profit corporations are now under fire from their own stock-holders for compensation that seems exaggerated compared to their companies' financial performance. One of these leaders was the CEO of Pfizer, Henry McKinnell (see post here). Recently, as reported by Reuters, McKinnell defended his compensation because it was based on his total performance, not just the stock price: "So what is performance? Is it current share price? I don't think so. It's long term value." Furthermore, McKinnell asserted that only the Pfizer board of directors is competent to judge that value because it "knows about the business, sets tough standards for the CEO and rigorously evaluates that performance."
I wonder if the board was aware of the list of questionable marketing practices attributed to Pfizer in the CI report when it assessed McKinnell's performance. They included:
- In 2004 Pfizer pleaded guilty on charges of falsely marketing its epilepsy drug Neurontin for off-label uses.If not, they should have been. See the CI web-site for more details.
- The Dutch Code Commission granted a complaint by a doctor against Pfizer in 2004. The doctor had filled a complaint about an invitation that he had received from Pfizer for a informational meeting about Celebrex. Pfizer promised to cover expenses by giving 200 euro for doctors signing up to the meeting.
- In two advertisement for Norvasc (amlodipin) in Germany in 2004, Pfizer left out important findings from the ALLHAT-study that was referred to. It claimed 'equal value' of Norvasc when compared to diuretics, whereas this could not be concluded on the basis of the research findings. The American College of Cardiology (ACC) cooperated with Pfizer and issued a statement urging doctors to stop the use of the competing drug Cardura.
- Published data on Pfizer's anti-depressant Zoloft has claimed that it reduces the likelihood that people will harm themselves. However, data from clinical trials indicated the opposite, namely that people continue to harm themselves.
- The MHRA ruled that in a promotional letter, sent to healthcare professionals in the UK in November 2004, information about Celebrex was not balanced or accurate. The MHRA required that Pfizer would send a corrective statement, but after a publication by the MHRA on the use of selective COX-2 inhibitors in general, this requirement was dropped.'
- Pfizer has sponsored an Impotence Association campaign in which the logo of Pfizer figured prominently on the advertisements. The UK Prescription Medicines Code of Practice Authority (PMCPA) ruled that this was inappropriate and could encourage patients to ask doctors specifically for Viagra.
- In 2004, Pfizer was criticized by the Federation of German Consumer Organizations for illegal direct-to-consumer advertisements in newspapers. According to the NGO, Pfizer claimed in advertisements targeting market German drug regulations that Sortis is the best cholesterol-lowering medicine available.
- In 2005, the Dutch Code Commission (CGR) ordered Pfizer to shut down a website about erectile dysfunction that it sponsored, because the company was promoting of its prescription drug Viagra to the general public.
- In Spain, Autocontrol judged in 2005 that Pfizer had violated articles 3.8 and 7 of the Farmindustria Code. It had made an unfair comparison between its drug Viagra and Eli Lilly's Cialis and illegally promoted the drug to the general public. The company was fined €90.000.
- In September 2005, the Prescription Access Litigation project (PAL) filed a class-action lawsuit in the US, accusing Pfizer of a deceptive advertising campaign for Lipitor.
The articles asserted some major problems afflict current training programs:
- Residents do not deal with the broad spectrum of patients whom real internists must treat. "Teaching service tends to be composed of the sickest patients, many with multiple acute and chronic medical problems and complex, frustrating discharge-planning issues." "The inability to provide patient-centered care because of inadequate resources and poor continuity also drives away patients with less complex conditions, narrowing residents' breadth of experience."(1)
- Residents often work in dysfunctional environments, particularly out-patient clinics. "Clinics often have inadequate number of personnel and inadequate physical resources and can be frustrating, chaotic places to practice." (1) "Ambulatory training experiences frequently take place in teaching clinics with many dysfunctional components...." (2)
- Residents still must spend too many hours providing direct patient care, are not always adequately supervised, and have little time for thinking and reflection. "The educational value of inpatient teaching services can be recaptured only if services are reconfigured to ensure that residents have ...adequate time for reflection."(1) "Service needs of the training institution rather than the educational needs of the trainee have often driven the design of residency training programs. These service needs may be translated into excessive resident workloads or patient care responsibilities that do not contribute to the resident's education or career development. Excessive resident workloads, typically driven by service needs and reflected in excess duty hours or excess patient loads, have adverse effects on many aspects of the trainees' development...."(2)
Below are my attempts to summarize these obstacles more directly, with accompanying quotes from the articles in support:
- Residency training programs are under financial pressure from the teaching hospitals in which they reside. "Financial pressure on teaching hospitals has intensified, encouraging the pursuit of clinical and grant revenue at the expense of resident education."(1) "During the past 3 decades, the environment of internal medicine residency programs has been increasingly driven by service needs and financial presures of teaching institutions." (1)
- Faculty are distracted by the need to generate money from clinical practice and research grants. "Faculty face pressures to increase clinical productivity, compete for external funding.... Such pressures discourage faculty members from assuming teaching activities and educational leadership roles." (1) "The number of full-time fauclty has grown nearly 10-fold in the past 4 decades, not for educational purposes, but principally to provide clinical services."(1)
- Residencies are funded by the federal government, but the money goes to hospital administrators who decide how to use it, and often use it for purposes other than education. "Although funding of graduate medical education is linked to patient care services provided by residents, federal funds do not flow directly to training programs. Instead, the affiliated teaching hospital receives and distributes the money to each training program. This system places an emphasis on inpatient clinical service rather than the quality of education, regardless of where the teaching occurs."(1) "Control of graduate medical education means control of its financial support and accreditation. The sponsoring hospitals receive funds for residency stipends and teaching salaries largely from the Centers for Medicare & Medicaid Services (CMS). The hospital controls the flow of dollars to the training programs. The formulas for distributing money seem arcane at the federal level and mysterious at the local level." (3)
- Hospital administrators force trainees to perform service to the hospital to the detriment of their education. "Hospital administrators, reacting to fiscal pressures, have used the resident workforce to accomplish tasks that could be performed just as well by other health care practitioners. Hospitals have also expanded residency programs to meet increasing service demands without considering the untoward effects on resident education"(1)
- Physicians and educators do not control residency programs, hospital executives do. "Internists do not control the resources needed to effect change in residency education. Hospital executives and accrediting institutions wield the power to effect change."(3)
To put it politely, these articles suggest that there is a widespread failure by teaching hospital administrators and executives to fulfill their "duty of obedience," their obligation as leaders of not-f0r-profit organizations to fulfill their primary mission, which is to teach as well as provide patient care.
Here is how Fitzgibbons et al suggest a solution, also politely:
"The allocation of graduate medical education funding should be transparent, with a portion specifically designated for direct support of residency training programs. Program directors should work with hospital leadership to ensure that residents' time is well utilized from an educational perspective. Teaching hospitals must demonstrate institutional competence, which includes appropriate distribution of educational funds, mechanisms to resolve the conflicts between service and educational needs, and a commitment to supporting efforts to enhance the learning environment. "(1)
To put it more directly, in my humble opinion, administrators and executives of teaching hospitals should uphold their organizations' mission. If they fail to do so, they need new jobs, and to perhaps suffer other disincentives. Fitzgibbons et al above suggest that some teaching hospitals have shown institutional incompetence. That is a disgrace. But things will not change until they are held accountable. Physicians, especially those who are supposed to be training the next generation of physicians, should be the first to call for their accountability.
1. Fitzgibbons JP et al. Redesigning residency education in internal medicine: a position paper from the Association of Program Directors in Internal Medicine. Ann Intern Med 2006; 144: 920-926. (Link here.)
2. Weinberger SE et al. Redesigning training for internal medicine. Ann Intern Med 2006; 144: 927-932. (Link here.)
3. Schroeder SA, Sox HC. Internal medicine training: putt or get off the green. Ann Intern Med 2006: 144: 938-939. (Link here.)
Friday, June 23, 2006
This is the pension squeeze companies aren't talking about: Even as many reduce, freeze or eliminate pensions for workers -- complaining of the costs -- their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon.In summary, note that the obligations UnitedHealth Group Inc. has to pay its current CEO Dr William McGuire's pension, and Pfizer Inc. has to pay its current CEO Henry McKinnell are substantial protions of the companies' total pension obligations and constitute an important drain on the companies' earnings.
Companies disclose little about any of this. But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America's pensions. Among the findings:
• Boosted by surging pay and rich formulas, executive pension obligations exceed $1 billion at some companies. [For example,] Pfizer Inc. (about $1.1 billion ...).
• Benefits for executives now account for a significant share of pension obligations in the U.S., an average of 8% at the companies above. Sometimes a company's obligation for a single executive's pension approaches $100 million.
• These liabilities are largely hidden, because corporations don't distinguish them from overall pension obligations in their federal financial filings.
• As a result, the savings that companies make by curtailing pensions for regular retirees -- which have totaled billions of dollars in recent years -- can mask a rising cost of benefits for executives.
• Executive pensions, even when they won't be paid till years from now, drag down earnings today. And they do so in a way that's disproportionate to their size, because they aren't funded with dedicated assets.
One reason executive pensions have grown so large is that they are linked to ballooning overall executive compensation. Companies often design retirement payouts to replace a percentage of what a person earns while active.
But for executives, the percentage of pay replaced is itself higher. Compensation committees often aim for a pension that replaces 60% to 100% of a top executive's compensation. It's 20% to 35% for lower-level employees.
In percentage of pay replaced, Pfizer's chairman and CEO, Henry McKinnell, does best of all. His future $6.5 million-a-year pension will replace 100% of his current salary and bonus.
Even as executives' pensions grow, many companies are curtailing those for the rank and file.
Some employers have added pensions for executives at about the same time as they limited those for others. McKesson Corp. established a special pension plan for its executives in 1995 and froze those of other workers two years later. McKesson didn't respond to requests for comment.
The promise of any pension becomes a corporate obligation. Although the payments are in the future, the promise means the company has a liability now. And a number can be put on it.
Pfizer's promise to pay Mr. McKinnell $6.5 million a year for life in retirement equals an $83 million liability for Pfizer today, federal filings by the drug maker show. Pfizer defends Mr. McKinnell's pension as fair.
UnitedHealth Group Inc. Chairman and CEO William McGuire will get a $5.1 million annual pension after he retires, plus a further $6.4 million at retirement. The result is a UnitedHealth liability of about $90 million, according to two actuaries. UnitedHealth declined to comment on their estimate. In the wake of recent criticism of Dr. McGuire's pay -- which includes $1.6 billion in unrealized stock-option gains as of the end of last year -- the managed-care company has capped his pension benefit, a spokeswoman said.
A result of these trends is that executive pensions make up a significant portion of total pension liabilities at many companies: 12% at Exxon Mobil and Pfizer....
Companies' retirement liabilities for their executives have also grown through another little-noticed trend: Over recent years, an increasing portion of executives' pay has been postponed, via pension and deferred-compensation plans, rather than given in current paychecks.
Even if a company's liability for executives' pensions totals hundreds of millions of dollars, its employees and shareholders may never know. Companies don't have to report this obligation separately in federal financial filings. A few specify it in a footnote, and some provide clues that make it possible to derive the figure.
The minimal disclosure dates from the late 1980s, when companies first were required to report pension liabilities but were allowed to aggregate all of them. At the time, distinguishing executive pensions was less of an issue because they were smaller. When they ballooned along with executive pay in the 1990s and 2000s, the rules didn't change. Most employers have continued to blend pension figures together.
Perhaps the most significant effect of the limited disclosure is to make it difficult, or impossible, to evaluate company statements about their retirement burdens and the need to cut benefits.
Pension plans, whether for executives or for others, are obligations to pay. In other words, they're debts. And like any debt, they have what amounts to a carrying cost. That carrying cost is part of a company's pension expense.
In the case of pensions for regular employees, the expense is partly or wholly offset by investment returns on money the company set aside in the pension plan when it 'funded' it.
Executive pension plans are different. They're normally left unfunded. They have no assets set aside in them. That means there is no investment income to blunt the expense. The result is that obligations for executive pensions create far more expense for an employer, dollar-for-dollar, than pensions for regular workers.
Further note that both companies withstood share-holder revolts this year inspired by the staggering amounts of compensation given to these CEOs. In the case of UnitedHealth, although the company was doing well financially, the focus was on the $1.6 billion that CEO McGuire had received in stock options (see our post here). In the case of Pfizer, the focus was on the size of McKinnell's compensation package compared with the relatively poor performance of the company's stock (see our post here). Now we discover that both CEOs will also receive amazingly luxurious pension benefits, so large as to constitute a significant drain on their companies' earnings.
UnitedHealth Group's CEO McGuire's lavish salary and benefits (including his pension) should be contrasted with the company's mission statement which includes the goal to "make health care more affordable."
Pfizer Inc. CEO McKinnell's rising salary and lavish pension should be contrasted with the company's stated mission to "greater access to healthcare for people," and "global leadership in corporate responsibility."
Health care in the US (and globally) is afflicted with rapidly increasing costs, declining access, stagnant quality, and demoralized health care professionals. Could health care organizations more focussed on rewarding their top executives then fulfilling their missions have something to do with it? It's not a topic often discussed in health care research and policy circles - but the explanation seems increasingly plausible where I sit.
Thursday, June 22, 2006
So why is this news? Health care costs in the use now approach $1.9 trillion. Health care cost increases have exceeded inflation for the last 25 years. Pharmaceuticals account for an ever-increasing proportion of that ever rising cost. (See the statistics here, courtesy the Kaiser Family Foundation.)
The mission of managed care companies is to control costs. UnitedHealth's mission statement includes the goal to "make health care more affordable." "Humana is committed to helping employers moderate their health care costs," according to its web-site. And Wellpoint seeks to "to improve health and health care costs." Why are they just now getting around to negotiating drug prices?
Instead of negotiating hard with pharmaceutical companies, insurers, managed care organizations, and Medicare mainly seem to have targeted physicians, particularly primary care physicians. A new report by the Center for Studying Health System Change showed that "between 1995 and 2003, average physician net income from the practice of medicine declined about 7 percent after adjusting for inflation...." Furthermore, "primary care physicians - already the lowest earning of all physicians - have lost substantial ground (-10.2%) to inflation since the mid-1990s." The reason seemed to be "flat or declining fees from both public and private payers [which] appear to be a major factor underlying declining or stagnating real incomes for physicians. Medicare payment rate increases for physicians amounted to 13 percent from 1995 to 2003, lagging substantially behind inflation, which totaled 21 percent during this eight-year period. While Medicare fees have declined in real terms since the mid-1990s, the trend for private insurer payments has lagged even more. "
It remains a mystery why managed care and Medicare have centered their cost reduction efforts for so long on physicians, and particularly on the least well paid physicians, while apparently willingly paying out ever more for pharmaceuticals, and other health care services. Conspiracy theorists are welcome to have at this. But it might have something to do with leadership of insurers, managed care organizations, and government agencies not really understanding the reality of health care on the ground, and not being rewarded for making it better?
However, the effects of continuing decreases in primary care physicians' reimbursements have not been mysterious. Fewer medical school graduates are going into primary care. Primary care physicians are retiring early. The overall supply of primary care physicians is dropping. As the CHSC report put it, "downward pressure on incomes is also likely linked to the movement of physicians away from primary care." So if this trend continues, soon we will have a health care system that will pay for patients' expensive drugs, but those patients will not have personal physicians who could prescribe them. What sense does that make?
Wednesday, June 21, 2006
In this report, NPR focussed on the role of the data safety monitoring board (DSMB) in the conduct of the trial. NPR found that prior to the conclusion of the trial, the DSMB saw data that showed an increasing divergence as the trial went along between adverse events experienced by patients who took Vioxx (rofecoxib) and those who took the non-steroidal anti-inflammatory drug (NSAID) naproxen. Several experts interviewed by NPR, including Dr Eric Topol (previously of the Cleveland Clinic), Dr Paul Armstrong of the University of Alberta, and Professor Curt Furberg of Wake Forest University, thought in retrospect that the rising adverse event rate in the rofecoxib group should have lead to the early termination of the trial.
In a written statement, the DSMB replied to NPR that "the DSMB was unable to determine whether the difference was due to some adverse effect of Vioxx, the lack of protective anti-platelet effects of naproxen, or some combination of these factors." Yet Furberg pointed out the lack of evidence that naproxen has any beneficial anti-platelet effect.
Furthermore, NPR alleged that potential conflicts of interests affected members of the DSMB.
In 1999, Merck appointed rheumatologist Michael Weinblatt of Brigham & Women's Hospital in Boston to head the safety panel for the Vioxx study called VIGOR. When he became chair of the safety panel, Weinblatt and his wife owned $73,000 of Merck stock.Additionally, NPR found that a Merck employee sat on the DSMB, and took its minutes.
[Weinblatt replied in writing] At all times, I exercised my independent medical judgment on the issues presented to the board, uninfluenced by any other considerations or interests. I also believe I complied to the best of my ability with all applicable regulations and standards regarding financial disclosures and conflicts.
David Bjorkman, now dean of the University of Utah School of Medicine, also served on the five-member safety panel. In a written statement to NPR, Bjorkman backed up Weinblatt's assertion. Bjorkman also told NPR he didn't own any Merck stock. He added that he didn't advise or speak for Merck while he was on the safety panel, or in the following year. But Merck documents obtained by NPR show that Bjorkman did consult for Merck in that period.
[Bjorkman replied in writing] In reviewing my records for 1999, I discovered that I participated in the Merck speakers bureau and gave presentations in the summer of 1999 that I did not recall at the time of my prior email.
At its last meeting, in December 1999, when the safety panel decided the heart problems weren't serious enough to stop the study, it also said that the problems merited analysis. The panel asked Merck to do that as soon as possible. Merck sent back word that it wanted to wait.
When the safety panel's chairman Michael Weinblatt insisted, Merck proposed a plan. The company would analyze heart problems it was told about by a "cutoff" date -- one month before the study ended. Weinblatt agreed.
As a result of that cut-off date, three of the 20 heart attacks among Vioxx patients weren't included when Merck wrote up the study in the New England Journal of Medicine. And, Vioxx looked safer than it really was.
Soon after agreeing to Merck's plan, Weinblatt signed a new consulting contract to sit on a Merck advisory board. Merck agreed to pay him $5,000 a day for 12 days over a two-year period. Weinblatt received an initial check for $15,000 a few weeks later.
[At that time] The safety panel's formal meetings were done, but the study wasn't. Some patients were still taking their drugs when Weinblatt signed the new contract.
[Weinblatt's written reply] I deeply resent the suggestion that there was any conflict of interest between my brief service on the advisory board and my work as chair of the VIGOR DSMB. The DSMB had completed its task.
Curt Furberg of Wake Forest says the consulting deal calls into further question Weinblatt's independence from Merck. 'I mean you can see it as a payback for being a loyal, supportive investigator. It just looks bad.'
Experts NPR consulted say the safety panel's capacity to protect patients in the study was compromised, not just by these financial conflicts of interest, but by the presence of a Merck employee. The employee attended all the panel's meetings -- including its private deliberations. She even wrote the meetings' minutes.This NPR report adds another piece to the complicated jigsaw puzzle of the history of the Vioxx controversy. It illustrates again how conflicts of interest became increasingly pervasive in health care in the late 20th century, and how they raise questions about how all sorts of important decisions were made.
Lawyer Jim Fitzpatrick represents Merck in lawsuits brought by former Vioxx users. He says the presence of the Merck employee didn't stifle the safety panel's discussions.
The lessons for the 21st century are
- At a minimum, conflicts of interest affecting anyone who makes health care decisions need to be disclosed to all who may be affected by these decisions.
- Ideally, health care decision makers, whether they be physicians, researchers, executives, etc need to make every effort to divest themselves of financial relationships that could possible conflict with making the best possible decisions on behalf of patients and the public, even though, as we posted earlier, the resulting independence may be painful.
WHO Obesity Task Force Linked to Pharmaceutical Companies
The main points of this article [ Moynihan R. Obesity task force linked to WHO takes "millions from drug firms. Br Med J 2006; 332: 1412.] were:
The International Obesity Task Force has relied heavily on funding from the drug industry for a decade, despite being widely seen as an independent think tank and having ties to the World Health Organization.My comment is that ideally, organizations that claim to speak with the authority of the WHO ideally should be free from conflicts of interest, but practically, at a minimum should fully disclose all potential and actual conflicts of interest. Thus, the International Obesity Task Force (IOTF) ideally should operate without financial ties to organizations and firms that might financially or ideologically benefit from promotion of certain anti-obesity measures. If it must continue such ties, they should be clearly revealed, so those reading the IOTF pronouncements may know where they come from.
Set up in the mid-1990s with help from grants from three drug companies, the task force aims to portray obesity as a 'serious medical condition' and to promote better prevention and management strategies.
It has a high media profile and is highly influential. A senior US member and a well respected authority on obesity, William Dietz, is currently one of the driving forces behind a controversial change in definitions of childhood overweight and obesity, which some researchers believe may exaggerate the problem and unnecessarily label children as diseased.
Although the task force has at times disclosed the names of drug company sponsors, the exact amount of that sponsorship remains secret.
In 2002 the International Obesity Task Force officially merged with another group called the International Association for the Study of Obesity. The most recent annual report of the newly merged group highlights close ties with WHO but also shows that two drug companies, Roche and Abbott, are primary sponsors, supplying around two thirds of its total funding. Roche makes the antiobesity drug orlistat (Xenical), and Abbott makes sibutramine hydrocholoride (Reductil).
A senior member of the merged group who has seen funding documents but did not want to be identified told the BMJ that over recent years sponsorship from drug companies is likely to have amounted to 'millions.'
Tim Gill, a representative of the task force and executive officer of the Australasian Society for the Study of Obesity, said that although the task force focused mainly on prevention rather than treatment, drug companies benefited anyway from raised public awareness....
Any readers who know someone on the WHO Executive Board should consider contacting them suggesting a more rigorous policy to govern conflicts of interest that may affect WHO affiliate organizations.
Conflicts of Interest and Journal Editors and Publishers
A commentary discussed how editors and owners of medical journals may be affected by conflicts of interest [Lexchin J, Light DW. Commercial influence and the content of medical journals. Br Med J 2006; 332: 1444-7.] Its main points were:
- Although government and organizations may influence medical journals, "we think the greatest potential for biases comes from commercial influences."
- A minority of major journals have stated policies on editors' conflicts of interest.
- Income that could constitute institutional conflicts of interest for journals may come from publishing supplements, which are often heavily supported by pharmaceutical companies; selling reprints, which journals may heavily market to pharmaceutical companies; and from advertising.
- Journals rarely report their sources of revenue.
- There is anecdotal evidence that journals' publishing decisions may be affected by concerns about effects on advertising.
- Recommendations for change included disclosure of all sources of funding; adherence to international guidelines on conflicts of interest; editorial disclosure of personal conflicts of interest; banning editors from having any financial ties to companies that advertise in the journal; development of a classification of all possible financial ties among authors and commercial firms, which should then be fully disclosed using this system; publishing manuscript drafts and reviewers' comments on the internet; and a thorough external independent investigation of the issues.
A personal essay by Joe Collier [Collier J. The price of independence. Br Med J 2006; 332: 1447-9.] focussed on independence, a positive term for the absence of conflicts of interest and external influence. Collier made a strong plea for the importance of independence for journal editors.
What has emerged over the years is that my views have needed to be much more than independent. To be of real value, they have needed to be delivered in a way that the message was clear, pertinent, honest, and unambiguous. Advice that can be misinterpreted or leaves room for misunderstanding is often unusable and may be dangerous. In my experience, people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult.Collier's statement about the personal cost of being independent was striking:
Independence in itself does not make the advice right, and, conversely, partisan advice is not necessarily wrong. Similarly, an adviser's bias will not necessarily colour all of their judgments adversely. A chief executive of a large drug company could give unbiased and invaluable guidance on how to increase business success. But the same executive's advice on the best drug for headache is unlikely to be helpful. What independence does is to improve clarity.
I attempt to live in a way that is consistent with the Nolan principles, which were developed as a set of standards of behaviour for ministers, members of parliament, civil servants, and other senior public servants. But even these are incomplete and would benefit from strengthening by the addition of sections of the recently introduced Duties of an Expert Witness:
Selflessness—No advice should be influenced by the possibility that it might result in financial gain or other material benefits for the advisers, their families, their friends, or other interested third parties.
Integrity—Independent advisers should not place themselves under any financial or other obligation to outside persons or organisations that might influence them inappropriately.
Objectivity and openness—Independent advisers must be able to explain why they have reached their conclusion and what reasoning led to their opinion.
Accountability—Independent advisers must be fully accountable for the advice they give and be prepared for their advice and their methods to be scrutinised.
Honesty—Independent advisers must declare each and every one of their competing interests that might have a bearing on the advice. It is for the recipient of the advice, not the adviser, to decide what that bearing might be.
But even these principles and the notion of proportionality are not enough. There are two additional requirements: advisers should respond if their position is challenged—silence is not a real option—and if an error has been made, the adviser is duty bound to point it out (preferably being the first to do so) and offer an apology and a correction.
For me, independence has meant saying what I mean and often being seen as rude and uncaring; holding no favours; deciding on each issue on the basis of the evidence rather than blindly following the majority; risking being seen as inconsistent (a loose cannon); not necessarily being able to support friends and colleagues; giving advice that runs counter to my personal interest; and criticising employers or senior members of the establishment. Perhaps predictably, the positions I have taken have often caused me difficulties. I have lost friends, been ostracised by the establishment, and had my career advancement undermined.Much of this must seem familiar to those who have blown the whistle about health care mismanagement, conflicts of interest, and corruption.
But there is an up-side:
But the freedoms and intellectual satisfaction gained by being allowed to be an independent thinker giving unfettered advice have far outweighed these burdens. Moreover, for each of the friends I have lost, I believe I have gained professional colleagues who value and trust my judgments. My career progression is not necessarily what one would advise for someone starting out in medicine, but for those who put independence of thought high in their hierarchy of values, the stance is worthwhile and rewarding.Summary
Finally, there was a nice editorial summary [Godlee F. What price integrity? Br Med J 2006; 332: ], which included an assertion that the BMJ is currently following most of the reccomendations set forth by Lexchin and Light, and may consider full disclosure of all sources of revenue.
It's nice to report some positive news now and then. The increasing emphasis by major medical journals on the problems causes by conflicts of interest has to be a positive development.
Monday, June 19, 2006
I confess to not having read the book, which so far has been reviewed mainly in Canada. However, quoting from a recent review on from the Saskatoon Star Phoenix should give a sense of what it's about:
Snakes in Suits (Regan Books/Harper- Collins) examines the phenomenon of white-collar psychopaths.
Most people associate psychopathy with serial murder and other violent crimes, but the majority of psychopaths are non-violent. Psychopathic executives do share common characteristics with thrill-killers, however.
They are manipulative and controlling, lack emotional depth, and care nothing about harm done to others as they go about their business. Often they are charming and likeable, although they're more likely to turn the charm around those who in positions of power, and act ruthlessly to those who are not.
'Think of a psychopath as a social predator who's attracted to areas where there is some sort of advantage to be obtained,' says Hare in an interview.
They go where the action is, and the action is where you can get power and prestige and control.
'If you have somebody who has all the social skills, is fairly intelligent, attractive and raised in the right environment, this person isn't going to rob a bank, he's going to get in the bank.' Hare, professor emeritus of psychology at the University of British Columbia and president of Darkstone Research Group, states that about one per cent of the general population fit the psychopathy profile.
'It's almost certainly higher than one per cent in the corporate world,' says Hare.
'Many of these psychopathic traits can actually be advantageous and useful in business.'
A psychopath with proper social skills and intelligence and who's reasonably good-looking can easily fake out any personnel manager. It's not very difficult to get in.
'We go by first impressions, and quite often if the impression is very favourable we don't go beyond that.' Psychopaths thrive in chaotic situations.
In business, they do well in companies that have upsized or downsized or restructured, where the rules fall into a grey area.
'When things are changing so rapidly, nobody has a chance to keep track of someone,' says Hare. 'In the old days, you had a stable corporate structure where everyone knew everyone else and you worked your way up. Nowadays, people are parachuted in. There are corporate takeovers. You don't know who's doing what. That's a good environment for (psychopaths).' We hear of those with psychopathic tendencies who have crashed and burned -- Enron executives, for example -- but too often psychopaths continue to thrive.
The chronic instability, chaos and ambiguity of many health care organizations are thus likely to act as a magnet for psychopathic managers. And a high prevalence of psychopathic managers could explain the prevalence of mismanagement, conflicts of interest, and corruption in the leadership of health care organizations that we have often discussed on Health Care Renewal.
The question is whether Hare and Babiak's analyses can help us fix things. I intend to buy the book and find out. If anyone has read it and wants to comment, please feel free.
Friday, June 16, 2006
The Washington Post just reported on the failed efforts of US Senator Charles Grassley, (R-Iowa), Chair of the Senate Finance Committee, to get more information about how the US Food and Drug Administration (FDA) approved Ketek. The story is certainly colorful:
The agency acknowledges that there were major improprieties in a 25,000-patient clinical trial done for the drug's developer, Aventis. One person has gone to prison for fraud in connection with that trial, data from several other trial sites have been discarded because basic standards were not met, and the agency told the company it could not say anything about the trial results on its product label.It is noteworthy how this story has evolved. Originally, it seemed to be about sloppily supervised research whose unpublished results still had influence. Now the story seems to be morphing into one that includes allegations of government cover-ups of information about how questionable commercially sponsored clinical research may be. The moral is that patients and physicians need to be extremely skeptical about the results of commercially sponsored clinical research.
Nonetheless, the FDA allowed Aventis to use much of the data to support the company's contention that the drug is safe. It also allowed Aventis to present the data to an FDA advisory panel without telling its members of the widespread fraud allegations clouding the trial. Documents show that some FDA employees argued that the trial should have been discarded because of the company's inadequate oversight.
Grassley has pressed to speak with an agent in the FDA's Division of Scientific Investigations who, he said, 'is key to understanding what the FDA did when it became clear that the safety study required by the FDA in order to approve the drug was fraudulent and faulty. Did FDA managers turn a blind eye and let the drug maker off too easy, or did the FDA do the right thing?'
In reply, FDA spokeswoman Susan Bro said: 'We would like to do whatever we can to help [Grassley] fulfill his constitutional duty as well as ours to the American people. However, we will not compromise an ongoing investigation.'
After months of trying to get firsthand information from a government official familiar with a controversial new antibiotic, Sen. Charles E. Grassley (R-Iowa) marched into the Department of Health and Human Services headquarters yesterday asserting his congressional right to receive the data.
After a brief meeting with senior HHS and Food and Drug Administration officials, Grassley departed empty-handed and angry.
'This is extraordinary for me,' the senior Republican said outside the headquarters. 'I haven't had to go to an agency like this since 1983 to get information I requested.'
'I smell a coverup.'
'I'm tired of the runaround,' he said after leaving the HHS headquarters. He said that he told the agencies' officials that 'I know it's probably not your intent to protect companies, to cover for companies.'
'But I said that every time that you stand in the way of information getting out that ought to be public, that's the impression you give the American people.'
As we have said before, doctors and patients ought to base choices of tests or treatments on honestly done, honestly reported clinical research. Depending on poorly executed or misleadingly reported research will lead to bad decisions and bad outcomes. Furthermore, failure to honestly report the results of clinical research betrays the trust of the human volunteers who willingly participated in the research partly to help add to scientific knowledge and improve clinical care.
Thursday, June 15, 2006
"Leavitt said it would have been impossible to complete the 'breathaking challenge' of signing up millions of senior citizens for the drug benefit without using the jet." That's funny, I had not heard that it was Leavitt's job to personally sign up beneficiaries. Representative John Lewis (D-Georgia) felt strongly, saying, "I think this is unbelievably irresponsible and just dead wrong."
How undignified would it be for a cabinet secretary to fly around the country in commercial airliners, mixed in with ordinary tourists, middle managers, and physicians going to conferences. Some of those fellow passengers might even be eligible for Medicare. He might also actually have to eat some of those little pretzels out of the plastic bags, what an indignity. Shouldn't the Secretary of HHS feel entitled to live the luxury life-style? Remember, health care leaders are different from you and me, or so they would like to think.
Questioned About Receiving Consulting Fees from and Giving Tissue Samples to Pfizer, NIH Leader Takes the Fifth
More news articles provide more details. The Boston Globe raised the estimate of the amount of money Sunderland got from Pfizer, and provided an estimate of how much the samples given to Pfizer were worth:
According to congressional investigators, the National Institutes of Health's Dr. Trey Sunderland agreed to collaborate with Pfizer Inc. , the world's largest drug company. Sunderland, chief of the geriatric psychiatry branch of the National Institute for Mental Health , sent Pfizer 3,200 tubes of spinal fluid and 388 tubes of plasma collected for Alzheimer's research.The Washington Post reported that Sunderland "asserted his Fifth Amendment rights [to avoid self-incrimination] Wednesday and refused to testify before congress about allegations that he profited from sharing human tissue samples with a drug company." Sunderland was quoted: "I respectfully decline to answer this question and any other questions based on my constitutional rights." Commented Representative Ed Whitfield (R-Kentucky), Chair of the investigation and oversight subcommittee of the Energy and Commerce Committee, "federal laws and policies do not permit NIH scientists to profit personally from their jobs, and thier patients by providing irreplaceable government assets." Furthermore, the Director of the NIMH, Dr Thomas Insel, "said he would have fired Sunderland but did not have the authority because the scientist, though tasked to the institute, was employed by the public health Commissioned Corps. Insel said he had recommended to the Commissioned Corps in November 2005 that Sunderland be terminated."
The government spent $6.4 million to obtain the 3,500 samples that showed how Alzheimer's disease progressed in 538 subjects.
Pfizer paid Sunderland $285,000 in consulting fees related to the samples, investigators said. In total, Pfizer paid him more than $600,000 from 1998 to 2004 for outside consulting and speaking fees.
'Contrary to the House committee report, Dr. Sunderland did not receive any payments from Pfizer for human tissue samples,' said Robert F. Muse, the scientist's Washington, D.C., attorney. 'He acted properly, ethically, and legally in his relationship with Pfizer.'
It is another sad day for the once proud NIH when one of its top leaders refuses to testify in a case like this. The good news is that last year, the NIH tightened its restrictions on outside consulting work done by NIH scientists and managers. The bad news is that the scope of the conflicts of interest at the agency seems even larger than earlier reports indicated. Finally, it remains odd that the discussion of this case remains focused on Sunderland taking money from Pfizer and providing Pfizer with tissue samples, but not on Pfizer giving Sunderland money and receiving tissue samples.
Tuesday, June 13, 2006
Now this issue has surfaced again. The Wall Street Journal just reported (link here - requires subscription) that "investigators for the House Committee on Energy and Commerce, in a 26-page report, said a branch chief at the National Institute of Mental Health, Trey Sunderland, had provided to Pfizer more than 3,000 samples of human spinal fluid and plasma, beginning with a 1998 agreement between the NIH scientist and the company." Since this article is not yet available without a subscription, I will quote a bit of it. (A brief United Press International summary is here.)
According to the House report, the samples were NIH property, but 'records and interviews provide reasonable grounds to believe that Dr. Sunderland personally received $285,000 in compensation from Pfizer' for providing the company with access to the samples.Yet another strand of the web of conflicts of interest comes to light. More may be revealed at upcoming hearings of the House committee during which several NIH staff are expected to testify. Perhaps the hearings will reveal where those who received the samples at Pfizer thought they were coming from, given that they knew where Dr Sunderland worked?
The House staff said it had no evidence that Pfizer knew of the 'questionable conduct' of Dr. Sunderland.
A Pfizer spokeswoman said the New York company has been cooperating with the investigation 'because we fully embrace the ideals of transparency and compliance with ethical and business standards. She said, 'We're not aware of any allegations that Pfizer violated any laws, rules or regulations in its relationship with Dr. Sunderland.'
She said the consulting fees paid to Dr. Sunderland were 'reasonable and customary' for a doctor of his 'stature and experience and reflect the fair market value of his services. The payments were also permitted under NIH rules in place at the time.' He no longer consults for Pfizer, she said.
The article described the hospitals as "sacred ground in New Jersey." "Hospitals enjoy unique political clout in New Jersey. Just about every lawmaker has some kind of connection to a hospital, whether it's sitting on an advisory board, having an employed relative, doing legal or insurance work, or remembering where a sick parent was treated." So, "lawmakers' deep ties to hospitals can become an obstacle, keeping health-care problems from being discussed, Sen. Joseph Vitale (D., Middlesex) said. Hospitals, Vitale said, have 'a strange degree of influence, and it can be conflicting for someone who is trying to do the right thing but has a built-in bias.'" "Veteran lobbyist Dale Florio, who counts several hospitals as clients, said hospitals' strong support system 'makes it very tough for state government to do battle with them.'"
Some examples of law-makers' ties to hospitals included:
- "'Hospitals can't afford a thing, not a penny,' said Assemblywoman Joan Quigley (D., Hudson), an administrator at St. Mary Hospital in Hoboken, N.J., and a member of the Budget Committee. "
- "The board of South Jersey's major hospital, Cooper University Hospital in Camden, is chaired by the region's most powerful political figure, Democratic power broker George E. Norcross III."
- "Assemblyman Herb Conaway (D., Burlington), who chairs the Assembly Health and Senior Services Committee, is employed by Cooper, as is his wife."
- "Farther north, former Gov. Richard J. Codey - who as president of the Senate remains a key budget gatekeeper - sells insurance to St. Barnabas Health Care System in Essex County."
- "The twin brother of Senate Minority Leader Leonard Lance (R., Hunterdon) sits on the board of Hunterdon Medical Center, and Assembly Budget Committee Chairman Lou Greenwald's wife used to work at Cooper."
- "Sen. Robert Singer, vice president of corporate relations at Kimball Medical Center, said he had carefully walked a line during the debate over the bed tax."
We posted a while back about the growing movement to have doctors sever all ties with pharmaceutical and device corporations that could raise the slightest question of conflicts of interest. The authors of a prominent article advocating this position in JAMA (Brennan TA et al. Health industry practices that create conflicts of interest: a policy proposal for academic medical centers. JAMA 2006; 295: 429-433) argued that even minimal financial relationships between corporations and physicians, e.g., small gifts such as pens, coffee mugs, or lunch sponsored by a drug company etc, could influence physicians' professional decision-making: "social science research demonstrates that the impulse to reciprocate for even small gifts is a powerful influence on people's behavior. Individuals receiving gifts are often unable to remain objective; they reweigh information and choices in light of the gift." Thus they proposed that such relationships should be banned.
If small gifts can influence physicians' professional behavior as the evidence suggests, how much more could relationships such as working full-time for a hospital, or sitting on a hospital's board of directors influence the decision-making of state legislators?
The Philadelphia Inquirer article provides more evidence that a web of conflicts of interest, whose strands are often very strong, pervades health care, and links the leaders of all sorts of health care and related organizations together. This web likely has profound effects on health care policy throughout the country. It is likely an important reason that important health care problems never seem to be addressed, that we seem impotent to address ever rising costs, declining access, stagnant quality, and dissatisfied health care professionals.
Parenthetically, the web of conflicts of interest is likely also a cause of what we have called the "anechoic effect," the lack of pubic discussion of health care mismanagement, conflicts of interest and corruption.
I applaud the Philadelphia Inquirer's reporters, and the other investigative journalists who have revealed some strands of the web of conflict of interest in health care. I wonder when more medical journals will have the courage to join them? Regardless, we physicians need to educate themselves about how the web of conflicts compromises our professional values, and then take up our brooms and pull the web apart.
Monday, June 12, 2006
The writer was Ellen Lutch Bender, CEO of Bender Strategies LLC, a “healthcare consulting firm,”whose goals are “to enhance bottom line performance and increased market position for our health care clients as they plan for the future,” and a self-proclaimed “visionary.”
She advocated “hiring a strong, visionary, business-minded CEO ... [as] crucial to Caritas's long-term stability.” She asserted that hiring such a leader would be essential to support Caritas’ “healing mission,” but “that mission must be examined for what it is: a sprawling business in a complex, increasingly competitive, capacity-strained environment.” Furthermore, “the healthcare business demands specialized leadership and an organizational structure that supports innovative thinking and fearless decisions. Hospital CEOs must seize business opportunities when they arise.” Particularly, “the next CEO must possess exceptional fiscal management skills....” So, “the challenges facing Caritas argue for a CEO search beyond the traditional physician candidates.” And, “the church, the board, and the new CEO must craft a guiding philosophy balancing religious tenets, sensible business practices, and executive independence.”
Bender’s prescription never once acknowledges the real mission of hospitals, taking care of (mainly sick) people. To her, a hospital is only a “business” in a “competitive environment.” Her description of the ideal leader of a hospital requires no knowledge of health care, nor any commitment to the values of health care. In fact, Bender warned that a sufficiently “quick and nimble” leader would not be attracted “by a constraining, bureaucratic reporting system,” presumably one that actually required that leader to conform to a code of ethics, or put patients ahead of making “bold, foundational changes.”
This commentary makes very clear what sort of thinking pervades the current leadership of health care. Health care is a business, like any other, without any particular values or ideals that set it apart from manufacturing automobiles, or hauling trash.
This thinking has been going on at least since the 1980's, when Einthoven, one of the leaders of the managed care movement, called for breaking up the “physicians guild” and putting managers and bureaucrats in charge of health care in order to constrain health care costs. (See post here.)
Doing that, of course, has not constrained costs, not improved access, and not improved quality. It has lead to a huge increase in the number of health care managers, who now out-number physicians (see post here.) It has let top health care executives make a tremendous amount of money (see post here). It has given health care a few leaders hailed as “visionaries,” some of whom have been monumental flops. (See for example the case of the “visionary” CEO of Allegheny Health Education and Research Foundation, who ended up in federal prison, and whose health care system ended in the second-largest bankruptcy at the time in US history, here on pages 5-7.)
Maybe it’s time to get health care leaders who understand something about taking care of patients, and who put the mission first (and then let them hire savvy business-people to keep the finances in order).
ADDENDUM (July 16, 2006) Ms Bender also urged Caritas to follow the example of Catholic Healthcare West, which she described as "enormously succesful." Yesterday, the San Francisco Chronicle reported that Catholic Healthcare West just settled a lawsuit which alleged that the system "charged excessive and unfair amounts to the small percentage of patients who were not covered by Medicare, Medicaid, or private insurance, and then set aggressive collection agencies on them when they couldn't pay." These practices seemed to directly contradict part of Catholic Healthcare West's stated mission: "serving and advocating for our sisters and brothers who are poor and disenfranchised." Again, what may look like an "enormously succesful" organization to a businessperson may not appear to succesful to patients and physicians. I repeat: maybe it's time to get health care leaders who understand something about taking care of patients, and who put the mission first.
Friday, June 09, 2006
The Wall Street Journal article "Resistant Strain: Research Chief Stirs Up Merck By Seeking Aid From Outsiders", Jun 7, 2006 (at WSJ by subscription only), or here without subscription at Post-gazette.com, only amplifies my concerns about why the pharma industry is in trouble.
For decades, Merck & Co.'s research laboratories pioneered many of the world's best-selling drugs, ranging from lifesaving vaccines to treatments for blood pressure, high cholesterol and AIDS. The company's scientists considered themselves the best in the industry -- a pride that often came across as arrogance.
These days, Merck's scientists swallow their pride under research chief Peter Kim, who spent most of his career in academia. Dr. Kim took over amid a string of drug-development failures at Merck and has made it clear he thinks the company's own labs aren't sufficient to replenish its pipeline. He says Merck needs to turn to other companies, both for new drugs and new means of discovering them.
"Merck has outstanding science and scientists -- and it did when I came," says Dr. Kim. But, "in some areas, I knew that there were some scientists on the outside who were better."
The grass is always greener across the street, and those from afar are always experts. This philosophy is common in industry, especially regarding huge, expensive consultant engagements. What's lacking is faith in, and development of, one's own assets. Perhaps there are better scientists than what Merck hires internally - whose fault might that be? - but how can this really be judged objectively when you, for example, tie your own people's hands behind their backs via rationing of modern cheminformatics tools?
Dr. Kim has hired other outsiders for top posts. Staffers have undergone training to improve their interpersonal skills when dealing with outside scientists. Some have reacted with anger to the initiatives and jumped ship.
Taking with them countless years of scientific expertise and corporate knowledge, no doubt. Why is this frequently viewed as good for a company?
The 48-year-old Dr. Kim, who holds a Ph.D. in biochemistry from Stanford University, came to Merck with a top academic reputation but without experience in commercial drug development.
I have commented on the issue of biomedicine and relevant expertise here and here. In fact, other officers at this company lack any clinical and biomedical credentials, such as the CIO who in fact came from a paper manufacturer, as well as the former head of R&D computing who now works for a computer gaming company. This is a common problem in healthcare.
Dr. Kim says he was drawn to Merck by its "aura of excellence." But he says he quickly realized that Merck's research culture had become too insular. "A quote I heard a lot was: 'Well, that's not how we do things at Merck,' " he recalls. "My answer would be: 'OK, but that doesn't necessarily make it the best way to do things.' "
Nor does it automatically make it wrong. Perhaps fine tuning is needed, not throwing out the baby with the bathwater.
Back home, some Merck scientists became resentful that Dr. Kim, who had never himself developed a drug, was telling them how to go about their business.
Soon after he arrived, he angered Emilio Emini, Merck's senior vice president of vaccine research. During his 20 years at the company, Dr. Emini had done some seminal AIDS work. Dr. Kim wanted to hire another accomplished but controversial AIDS researcher, David Ho, to oversee him. Dr. Emini strongly objected, and Dr. Ho ended up not coming to Merck. But the episode strained the relationship between Dr. Kim and Dr. Emini, according to people familiar with the matter. Dr. Emini left Merck in early 2004. He now works for rival Wyeth. He declined to comment.
Losing talent of Emini's stature is no small negative accomplishment. One angers such a person at their own peril.
Dr. Kim hired other academic scientists who enjoyed good reputations but, like him, had never developed a drug. Among them was Stephen Friend, a cancer researcher who knew Dr. Kim from Whitehead ... Merck researchers were also inefficient, Dr. Friend says. They spent hours checking and rechecking their work for minor errors, he says. One of Dr. Friend's early moves was to scrap a version of the human-genome map Merck had needlessly developed in-house and use the more up-to-date publicly available version.
Here is why I won't be investing in pharma where these "process-driven" reforms are often led by people without real drug-development or clinical experience. Short of the fact that I am skeptical about bioinformaticist's beliefs that they alone will "revolutionize medicine" in a test tube (or in silico), this passage about the "inefficiency of checking and rechecking work" is stunning:
Recently published in the NYT was "Merck admits a data error on VIOXX":
In an admission that could undermine one of its core defenses in Vioxx-related lawsuits, Merck said yesterday that it had erred when it reported in early 2005 that a crucial statistical test showed that Vioxx caused heart problems only after 18 months of continuous use.That statistical analysis test does not support Merck's 18-month theory about Vioxx, the company acknowledged yesterday. (My comments about this with reference to medical informatics are here).
This "error" will likely be very costly in the courtroom. "Checking and rechecking work repeatedly" for errors in high-risk pharma R&D isn't exactly unhelpful behavior in my mind. I cannot envision how an infusion of people who think it is will benefit the industry. The statement that doing so is "inefficient" is a bon mot the public certainly won't like to hear.
Also, regarding the "publically-available" genome map vs. the in-house one generated before the internal bioinformatics department was dissolved (and the area taken over by Friend) as part of the mass layoffs in Nov. 2003, how exactly was comparative quality measured?
I have my concerns about any jump to "free" information in such a complex field vs. information established with internal controls, especially in a field as new and tenuous as bioinformatics ("Friend's company Rosetta has yet to produce a drug that is close to making it to market", the WSJ points out).
"This is a high-risk business and you have to place your bets," Dr. Kim says. "Sometimes you're going to lose."
It helps to play the game as best as one can...
Industry attitudes such as the above are not limited to any one company. I've seen them elsewhere, and worse. Combined with the conflicts of interest, corruption, etc. as pointed out by many other postings on Healthcare Renewal, I am not sanguine about the long term prospects for the pharmaceutical industry in its current form, especially where leadership philosophies are concerned.
We then posted about an ongoing investigation by the US Senate Finance Committee that showed how an FDA official approved the device against the advice of staff scientists, who emphasized the device's known adverse effects versus uncertainty about any benefits.
Now, Cyberonics is back in the news again. Yesterday, the Associated Press, and today, the New York Times reported questions about Cyberonics awarded stock options to its top executives. According to the Times,
[Stock analyst Amit] Hazan, who said he was surveying all the companies he follows for potential backdating issues, focused on Cyberonics options that were granted at a special board meeting on the evening of June 15, 2004. That was only hours after a Food and Drug Administration advisory panel recommended that the agency approve Cyberonics's request to market its implantable nerve stimulator as a treatment for severe chronic depression.
Mr. Cummins received options on 150,000 shares at an exercise price of $19.58, the closing price the day before the F.D.A. panel's recommendation. The chief medical officer, Dr. Richard L. Rudolph, and the vice president for regulatory affairs, Alan D. Totah, who played pivotal roles in winning the panel's backing, each received options on 10,000 shares at that price.
The shares soared when trading resumed the next day, June 16, closing at $34.81, as investors bet that Cyberonics might soon be selling a new approach to treating the most severe forms of depression, a condition that affects millions of Americans annually.
'The board acted on an event before investors were able to do so,' Mr. Hazan said yesterday in an interview. 'It's a perfect example of an abusive option. Options are supposed to be an incentive to align executives' interests with shareholders. This was just a reward.'
Mr. Hazan said that because the options were priced below what would become the market value the instant that trading resumed, they should have been accounted for as compensation in that quarter. Because the company did not do so, it might have to restate its earnings for that fiscal year, he said.
Today, Reuters reported that "the chief financial officer of Cyberonics ... denied allegations that certain stock options were timed to create a windfall for executives.... CFO Pam Westbrook said the allegations were 'inaccurate and without merit' and that the company fully followed securities laws in granting the options."
Now that we have been publishing Health Care Renewal for a while, it's fascinating to see how organizations that appear on the blog for one particular management problem often show up again, and sometimes again and again for other management problems. So now, not only should physicians be skeptical about the evidence on which proponents of Cyberonics' vagus nerve stimulator base their advocacy, but also stock holders should be skeptical about the priorities of the company's top leaders.
ADDENDUM (June 12, 2006): The US Securities and Exchange Commission (SEC) is now investigating Cyberonics' stock option grants to executives (see Reuters).
Thursday, June 08, 2006
Specific trips included 16 staffers traveling to a GlaxoSmithKline facility in Belgium, three legislators to Brazil also sponsored by GSK, and a trip by one law-maker to Puerto Rico sponsored by GSK, Pfizer and Lilly. Legislators who traveled on drug company money included those especially involved in the Medicare Part D bill, including Senator John Breaux (Democrat - Louisiana), former Representative Billy Tauzin, who is now the CEO of the pharmaceutical trade group PhRMA, and former Representative Jim Greenwood, who is now President of the Biotechnology Industry Group.
"By organizing the trips, drug companies can help lawmakers and their staffs take 'the mystery out of complicated technology and specialized research,' Ken Johnson, vice president of communications at Pharmaceutical Research & Manufacturers of America (PhRMA), said in a statement. But consumer groups and government watchdogs feel otherwise, believing it gives corporate officials access to lawmakers that ordinary voters can't get. 'They're designed to give company lobbyists time with congressional staff and cement relationships,' said Allison Allina of the National Women's Health Network. "
There is a growing movement, with which I agree, against physician acceptance of even small gifts (including travel) from pharmaceutical companies. There is evidence that even such small conflicts of interest can affect physicians' decision making. (See post here. Unfortunately, that same movement sometimes ignores the other conflicts of interest that can affect physicians, and the conflicts of interest that can affect others with the power to make decisions about health care.)
But a gift to a law-maker responsible for health care legislation can have a much larger effect on the health care system than a similar gift to a particular physician. Gifts to legislators, while currently legal, should generate as much, if not more concern than gifts to physicians.
If you are in the US, write your Congresspeople and suggest much more rigorous regulations of their own conflicts of interest.
Wednesday, June 07, 2006
An article last month in the New York Times discussed several contenders in the field. These include RediClinics, run by CEO Stephen M Case, who used to be chairman of AOL, and Take Care Health Systems, run by Hal Rosenbluth, who used to run a chain of travel agencies. This raises a concern that such chains may be run by people with no obvious background in health care, who may not fully understand the clinical issues involved, or share the values of health care practitioners.
Speaking of values, though, the most interesting example in the Times article was a company called Solantic, whose CEO is Richard L Scott. Solantic is a bit of a variation on the theme, since its clinics will be staffed by physicians, and be thus somewhat more pricy than its competitors, although still offering limited services.
CEO Scott does has previous experience in health care, albeit not hands on. He is the former CEO of Columbia, which became Columbia/HCA Healthcare Corp. An article in the Business Journal of Jacksonville narrated his rise and fall.
After working on health-care mergers and acquisitions as an attorney, Scott began Columbia in 1988 by buying two hospitals in El Paso, Texas. In less than a decade, the company grew so large that it had 285,000 employees working in 343 hospitals and more than 700 surgery centers and home health-care offices.Although Scott was never the subject of a law-suit, and never convicted of a crime, clearly major things went wrong at Columbia/HCA on his watch. Yet he left with a golden parachute, and now is a leader in the latest health care trend, in-store clinic chains.
‘In a field supposedly fueled by humanitarian desires to heal, objectives devoted to financial gain are rarely applauded’ the trade publication Medical Laboratory Observer reported in 1997. ‘His aggressive management style, high growth targets and quest for market share made enemies.’
The accusations against Columbia that would eventually lead to Scott's ouster were detailed in numerous New York Times stories, starting in 1996, that scrutinized the company's business and Medicare billing practices.
In the spring of 1997, as federal agents began conducting document raids on several Columbia facilities, Scott did not admit any wrongdoing. 'Mr. Scott's grudging responses apparently contributed to his downfall,' noted a story that ran five days after Scott and Chief Operating Officer David Vandewater resigned.
Scott left with a $10 million severance package and 10 million shares of stock, most of which were from his initial investment before the company was taken public. At the time, those shares would have been valued at more than $300 million.
In 2001, HCA reached a plea agreement with the government that avoided criminal charges against the company and included $95 million in fines. Four mid-level executives were brought to trial but two were acquitted and two more had guilty verdicts overturned.
Scott said prosecutors never attempted to question him.
Civil suits have cost HCA more than $1.7 billion, said attorney Peter Chatfield, a partner with Phillips and Cohen in Washington, D.C., who spent seven years working on a Columbia-HCA civil case brought by two whistleblowers.
There is a striking contrast between the ethical standards to which nurses and physicians, including those working in in-store clinics, are held, and those to which the managers and executives of health care organizations are held. For the latter, the standard appears to be anything goes, as long as it does not result in serious jail time.
Maybe, given the mess that the leadership of large health care organizations has made of health care, we ought to rethink who should lead such organizations, and to what standards they ought to be held.
Thanks to the Health Care Blog for the tip!