Wednesday, April 02, 2008

Everything that Rises Must Converge: University of Texas High Living Executives and Eli Lilly's Marketing of Zyprexa

Recently we posted about some dubious practices at the University of Texas Southwestern Medical Center that seemed to contradict this proud academic medical institution's mission. First, there was the case of the "A-list" of local notables who were to have special access, including enhanced access to physicians (see posts here and here). Then, there was the report of how medical center executives seemed to be living the high life funded by charitable donors (see post here).

Also, more than a year ago, we posted about how Eli Lilly and Co. was alleged to have marketed its atypical anti-psychotic Zyprexa (olanzapine) to minimize its major side-effects, including frequent weight gain and the development of diabetes, and how the company was accused of marketing the drug "off-label" for medical problems and in situations for which the drug had not been approved by the US Food and Drug Administration. Since this story has since got a lot of coverage in the media and blogs, we have not returned to it for a while.

Now I have appeared to be guilty of a non sequitur. What is the possible connection between these two issues, other than they both seem to involve questionable decisions by leaders of large health care organizations?

Just wait...

Many media outlets have reported how Eli Lilly is under fire for its marketing of Zyprexa. Last month the NY Times reported on a memo that suggested the company's incoming president "appears to have encouraged Lilly to promote its schizophrenia medicine Zyprexa for a use not approved by federal drug regulators." That article noted that the company is also "under federal criminal investigation for the way it promoted Zyprexa and played down the drug's risks to doctors." Many media outlets reported late last month that the company settled a lawsuit by the state of Alaska that again charged that the company minimized Zyprexa's side-effects (e.g., see the Wall Street Journal here.)

The Wall Street Journal just reported that one large Eli Lilly shareholder was increasingly discontented by the company's current management, presumably at least in part due to how it marketed Zyprexa. Now read closely, and you will see that my hands never leave my arms...

California's public-employee pension fund plans to withhold votes for three Eli Lilly & Co. directors up for re-election next month, citing a lagging stock price and poor corporate governance.

The California Public Employees' Retirement System, or Calpers, said Thursday it will withhold votes for John Lechleiter, a long-time Lilly executive who is set to become chief executive next week. He has been on the drug maker's board since 2005.

In addition, Calpers will withhold votes for directors Alfred Gilman, provost at University of Texas Southwestern Medical Center in Dallas; and Karen Horn, a retired executive with Marsh Inc. Mr. Gilman has been a Lilly director since 1995 and Ms. Horn has been director since 1987.

'It was on their watch that Eli Lilly experienced severe stock underperformance, poor corporate governance practices, and was unresponsive to shareowners,' Russell Read, Calpers' chief investment officer, said in a press release.

Lilly said in a written statement it disagreed with Calpers' assessment of the three directors as unsupportive of and unresponsive to shareholders.


So a director of Eli Lilly that was accused of responsibility for the company's poor performance, poor performance which presumably included its mis-marketing of Zyprexa, also turns out to be responsible for the management of the University of Texas Southwestern Medical Center, currently under fire for maintaining an "A-list" of favored patients, and letting its top executives live the high life on donated funds, practices that go against its mission.

This seems like a good illustration of how conflicts of interest affecting health care leaders may not be good for any of the organizations to which these leaders simultaneously owe allegiance. An academic medical institutional leader who is also a director of a public for-profit company may not be a particularly good guardian of share-holders' interests. A director of a for-profit health care corporation who also is the leader of an academic medical institution may not be a particularly good guardian of that institution's values.

Of course, conflicts like these benefit the conflicted individual, who gets power and prestige from both allegiances, plus, of course, a lot of money. (Note that according to Eli Lilly's 2008 proxy statement, Dr Gilman got $281,448 total compensation in 2007 to serve as director. In addition, Dr Gilman now owns 17,159 shares of Eli Lilly stock, currently valued at $51.76 per share, see Google Finance, for a total value of $888,150.) The conflicted individual in such a situation might well feel himself or herself to be among the power elite. And the conflicted individual in a case like this might be in a good position to help out his or her buddies in both the corporate and academic medical hierarchies.

But in my humble opinion, such conflicted leaders are not good for patients, for academia, for physicians, or for stock-holders, for that matter.

If we are really worried about the conflicts of interest created when physician trainees get pens or coffee mugs with company logos from drug companies, or practicing physicians get pizza lunches for their office staffs from pharmaceutical representatives, (see post here) then we should really worry when leaders of academic medical institutions serve on the board of directors of large health care corporations.

1 comment:

Anonymous said...

Zyptexa kills. It killed my only son. The Lilly lying leaders need to be in prison. Keep your eye on Connecticut's AG RICO case. A criminal case, AG Blumenthal is , I hope and pray, aiming to send them there forever.