Sunday, September 19, 2010

Should the President of the University of Michigan be Held Accountable for Johnson and Johnson's Adulterated Drugs and Defective Devices?

We first started to discuss the intense conflicts of interest generated when leaders of academic medicine are also members of boards of directors of for-profit health care corporations in 2006.

The issue really made the big time in 2010 when the New York Times published a front page article in its Sunday Business section about whether university presidents who also were corporate directors were part of an "academic-industrial complex."

University of Michigan President Mary Sue Coleman as a Director of Johnson and Johnson

One such director we discussed this year is Mary Sue Coleman, President of the University of Michigan, and hence leader of a prestigious medical school and academic medical center, who is also Director of the large health care conglomerate, Johnson and Johnson. This relationship became locally controversial when President Coleman supported a smoking ban on campus, and critics pointed out that Johnson and Johnson is a prominent maker of smoking cessation products.

Now President Coleman's role on the Johnson and Johnson board made it into the national media, as the topic of an editorial in the Detroit News:
Should public officials moonlight as corporate operatives? This is a question being raised at the University of Michigan in the wake of the administration's decision to ban smoking on campus.

While some students have criticized the ban, many take issue with the priorities of the administrators who backed it: Specifically, U-M President Mary Sue Coleman, whose decision-making may have been influenced by her membership on the board of Johnson & Johnson, a private company. The right thing for Coleman to do would be to resign from her corporate position, or, at the very least, refuse to accept payment.
(Not to toot my own horn, but I thank the editorial writer for quoting me as a "high-profile" ethicist.)
The issue in this editorial, and in the earlier discussion of President Coleman's responsibilities for Johnson and Johnson, was whether the latter could influence specific decisions made in the former role.

However, events since our original posts on this case should create a new set of concerns.

Johnson and Johnson's Recall of Over-the-Counter Childrens' Medications

Johnson and Johnson has been dealing with a series of crises generated by revelations of problems in how it manufactures many of its marquee drugs and devices.

We posted here about problems in the manufacture of well known over-the-counter childrens' medications, such as childrens' Tylenol (acetaminophen) and Motrin (ibuprofen), by Johnson and Johnson's McNeil Consumer Healthcare subsidiary. Medications were found to be contaminated, and the plant making them was shut down.

Stringent Cost Cutting, Merger Mania, and Executives Who Don't Understand their Company's Business

Since then, investigative reporting by Fortune suggested that quality control problems were the result of that tactic popular among corporate executives to boost profits and hence their own over-stuffed pay checks, stringent cost cutting:
McNeil's quality-control department thrived for a few years. Then, not long after Larsen retired in 2002, it began to slowly weaken. The culprit was a familiar one -- cost cutting -- but in a subtler form. There were no wholesale layoffs in quality control. Instead experienced staffers were repeatedly laid off and replaced with newbies who mostly lacked technical pharmaceutical experience. By 2008 the analytical laboratory, formerly staffed almost entirely by full-time scientists, was half-full of contract workers, according to a former manager there.

Once stricter than a schoolmarm, the department grew lax. The team that tested the production lines was dubbed the 'EZ Pass system,' according to a former quality-control employee.

Quality problems also appeared to be products of another familiar tactic that "brilliant" CEOs use to quickly boost the bottom line, mergers and acquisitions:
At the end of 2006, J&J, on the hunt for growth amid slowing sales and profits, completed the $16.6 billion acquisition of Pfizer's (PFE, Fortune 500) consumer health care division....

The merger dramatically altered McNeil's position. It had previously been part of the pharma unit, but after the deal it was folded, along with the Pfizer group, into J&J's consumer sector, headed by Colleen Goggins. According to former executives, the difference between divisions was both cultural and financial. 'The people who ran pharma understood the requirements associated with [regulatory] compliance and the investments required to keep that up,' says a former executive. Consumer relied more on marketing, or 'smoke and mirrors,' as an ex-McNeil director scoffs. Perhaps the most striking difference was in profit margins. Companies in the consumer group typically had margins around 10%; McNeil generated more than twice that.

So,
Their new consumer bosses were now in charge of reducing McNeil's spending so that the company could meet the merger targets. Goggins looked to squeeze every cost, former employees say, and her team leaned heavily on McNeil, with its juicy margins, to absorb the cutbacks. 'I was given savings goals that were mind-boggling, unheard-of,' says one former executive.

And the merger brought out another common feature of contemporary management, executives with plenty of power, but almost no knowledge about or experience in the sort of work done by their subordinates:
Because the consumer executives lacked pharmaceutical experience, former McNeil employees say, they demanded ill-advised operational reductions. One VP remembers arguing with one of Goggins's

A Growing List of Recalls and Mistakes

While we learned about how Johnson and Johnson executives pursued all the currently fashionable management techniques to make more money, but likely to the detriment of the quality and safety of their products, we also learned that the problems at the company were not limited to a single factory, the specific products listed above, or a single unit of the company.

The company also recalled some contact lenses made by Johnson and Johnson Vision Care, as reported by the Associated Press,
Health giant Johnson & Johnson has issued its ninth recall of a consumer health product in a year, this time covering millions of 1 Day Acuvue contact lenses sold in Japan and two dozen other countries in Asia and Europe.

The affected contact lenses were mostly sold in Japan and none were sold in the U.S. or Canada, the company said.

Johnson & Johnson said Monday it had received a limited number of complaints from customers in Japan that they experienced an unusual stinging or pain when inserting the Acuvue TruEye Brand contact lenses.

Then it recalled prosthetic hips made by its DePuy orthopedic unit, as reported by Medscape,
An orthopaedic unit of Johnson & Johnson (J&J) is voluntarily withdrawing 2 implant systems for hip replacement after learning that roughly 1 of 8 patients in England and Wales who received the implants needed a second hip replacement operation.

The 2 devices under recall are the ASR XL Acetabular System, a metal cup fitted into the pelvis and the corresponding metal ball that replaces the femoral head, and the ASR Hip Resurfacing System, which is similar except that a metal cap is fastened to the femoral head. Both devices are manufactured by DePuy Orthopaedics of J&J.

Then the US Food and Drug Administration (FDA) warned Johson and Johnson's DePuy unit about its marketing of some different joint replacement products, as reported by the Wall Street Journal,
A Johnson & Johnson (JNJ) unit is marketing joint-replacement products without the required approval from federal regulators, the U.S. Food and Drug Administration said in a warning letter recently made public.

In the letter, the FDA said J&J unit DePuy Orthopaedics Inc. is illegally marketing its TruMatch Personalized Solutions system because it hasn't received appropriate clearance to sell the product. Additionally, the FDA found that DePuy is promoting another system--its Corail Hip System--for uses that haven't yet been approved.

'A review of our records reveals that you have not obtained marketing approval or clearance before you began offering the TruMatch Personalized Solutions System for sale, which is a violation of the law,' the FDA said in the letter.

The FDA added that the Corail Hip System has been misbranded and asked DePuy to immediately stop marketing the Corail system for unapproved uses.

And a few days ago, the now embattled head of the Johnson and Johnson consumer products unit, which was central to some of the earlier recalls, but not to some of the later problems, announced her resignation, as reported by Natasha Singer and Reed Abelson writing for the New York Times,
A longtime senior executive at Johnson & Johnson in charge of the consumer products division is leaving the company early next year, signaling a shake-up after a troubling series of recalls, including of children’s Tylenol, tarnished the company’s reputation in the last year.

The company said Thursday that the executive, Colleen A. Goggins, who testified this spring before a Congressional committee investigating the recalls, would retire in March. Ms. Goggins, 56, has worked at Johnson & Johnson since 1981 and was a member of the company’s senior leadership.

Who Will Be Accountable for a Company in Disarray?

Johnson and Johnson was one of the most trusted names in health care for a long time, perhaps partially because of its forthright response to the apparently external contamination of its Tylenol products in the 1980s. Now it appears to be a company in disarray, battered by numerous recalls of apparently contaminated, adulterated, or defective products, both drugs and devices, allegations that its conventional management wisdom lead to these quality and safety problems, and now with at least one key senior manager leaving.

All that went wrong is not exactly clear yet. Clearly, however, top managers, and the board of directors to whom they report ought to be accountable.

Here is where we return to the case of University of Michigan President Mary Sue Coleman. She is, after all, well-paid to be a director of Johnson and Johnson. Therefore, she ought to be accountable for the type of people hired as top managers, and the general direction of their management. She ought to be accountable for letting Johnson and Johnson CEO William Weldon and consumer products head Colleen Goggins continue in office, and receive outsized compensation, ($19,847,026 and $5,345,737  total compensation respectively last year, see here). She also ought to be accountable for the general thrust of their management, including excess cost-cutting, seeking mergers without clear plans for assimilating them, and putting people who did not understand pharmaceuticals in charge of pharmaceutical production.

The original controversy about President Coleman's role on the Johnson and Johnson board focused on whether her decision to promote a smoke free campus resulted from her conflict of interest.  Then, one defense mounted by President Coleman's spokesperson was:
'It's essential that U-M have a voice and interact with the business world,' said Rick Fitzgerald, a U-M spokesman. 'She thinks it's her duty to understand what the commercial world is doing.'

Now President Coleman has had a chance to have a voice and interact with Johnson and Johnson, and understand what it is doing by assuming a position that gives her ultimate responsibility for the company's top leadership and the direction they took. Now it appears the leadership may have been faulty, and their direction ill-advised.

Will President Coleman take responsibility for that? Maybe some enterprising student journalists at the university should ask her.

Meanwhile, this case now illustrates another important facet of the problems created when leaders of academic medicine serve on boards of directors of health care corporations. The mission of the University of Michigan's medical school and academic medical center includes taking the best possible care of individual patients. Taking the best possible care of individual patients cannot be done when the drugs physicians recommend or prescribe in good faith turn out to be adulterated, or when the devices they employ in good faith turn out to be faulty.

President Coleman's primary interests and entrusted responsibilities include upholding the best possible care for individual patients. Presiding over a company whose sloppy and ill-informed leadership, and misplaced priorities lead to the production of adulterated medicines and defective devices seems to conflict with this primary interest and entrusted responsibility.

Maybe all those academic leaders who accepted apparently cushy jobs on corporate boards will reconsider their decisions when they start being held responsible for their companies' poor leadership and poor decisions leading to poor health care outcomes of the use of their companies' products. They may really start to reconsider when journalists learn that academic leaders are more accessible than the current and ex-CEOs who also populate corporate boards.

Meanwhile, academic medicine ought to really rethink whether continuing to defend the "new species of conflicts of interest" will soon become counter-productive.

7 comments:

Rob said...

I think despite many mandatory written declarations about conflict of interest sometimes it's quite hard to find people not involved in the past or in the nearest future in cooperation with pharma companies. So it's a question what is worse: lack of experts or experts with some pharma connotations.

Anonymous said...

Ultimately we need to look at what has become of our major academic centers, and their goals. Duke has made the news in a number of areas. Certainly their publication of a marketing plan formulated by Cerner employees raises questions. Using their lobbying ability to raise standards above needed and only certifying their products goes beyond simple competition.

Back in my state an article a few weeks ago highlighted that after, often decades of support, people were being asked to increase their financial support to The Ohio State University in order to maintain their coveted tail gating access. The economics were simple: We can sell your spot for more money than you have given.

The September 17th Akron Beacon Journal in a reprint of a Columbus Dispatch article by Encamacion Pyle titled OSU aims for $2.5 billion highlights how:

“Ohio State wants to double its number of annual donors to 240,000, become America’s No. 1 public university in total private financial support by 2020 (it is currently tanked 11th), and generally elevate people’s opinion of the school.

And that’s on top of raising a record $2.5 billion in the university’s first major fundraising campaign since 2002.

The school recently hired two polling firms to interview more than 2,000 people across the nation through 11 focus groups, 28 in-depth interviews and three surveys. The goal: to find out what alumni, donors, politicians and others really thought of Ohio State.”

The article goes on to lament how Ohio State is not looked upon as the great university the board feels it is and their desire to raise the profile of the university. It then goes on to discuss a new arrangement designed to remedy this situation.

“Under the new arrangement, the alumni association works with OSU’s communication and development offices to better coordinate joint activities for the school’s 470,000 living alumni worldwide.”

The ultimate goal?

“OSU wants to see yearly increases in number of volunteers actively serving the campus and to increase the “very satisfied” rating for alumni for providing opportunities to be or stay involved with the school to 50 percent by 2016.”

Nowhere in the article did it address educational opportunities or reaching out to less fortunate areas of society. It did note that OSU wants to become know as a leader in solving world issues, which would probably mean research grants. Income not outflows.

The focus is on money. Friends whose children have recently graduated joke they should include the alumni letter with the diploma to save postage

Where does this start? With the president, whose pay package exceeds $1,000,000.00. The problem in defining that package is that anything printed electronically is soon edited or truncated to remove specifics concerning travel allowances or outside income.

Per Forbes we learn that the Dean of The Ohio State Fisher School of Business is Christine A. Poon:

“Former Vice Chairman of Johnson & Johnson’s Board of Directors and Worldwide Chairman of the Pharmaceuticals Group. Currently dean of Ohio State University’s Fisher College of Business.”

She also sits on other corporate boards.

From my perspective education at our largest institutions has little to do with learning, but everything to do with generating income. Every department, no matter the social status, is driven to generate money.

Graduates demand large salary packages out of a sense of entitlement and the real need to pay very large student loans. With various requirements OSU cost $25,000 per year as an undergraduate. Undergraduates now stay in suites and have constant wireless access while on campus. No wonder they are disappointed when they move into the real world where this is not the norm.

There are no longer any lines between the business and academic world. Education is simply another corporate ladder to climb with outsized rewards for those lucky few able to rise to the top.

Steve Lucas

Roy M. Poses MD said...

Rob,
Your comment seems to be a non sequitur.

This post was not about finding experts for government (or other non-commercial) review panels.

Scot M Silverstein MD said...

I think Rob's comment might have reflected a belief that 'they're all conflicted', so we might as well give the leadership roles to conflicted 'experts' as opposed to unconflicted amateurs.

NOTE:

As an expert in my field, I actually worked for pharma as a mid level Director (Merck) and was Director of The [world-renowned] Merck Index. I had (and have) no COI's with pharma or other medical industries whatsoever.

However I would not be named to a board or other high level post.

Might have something to do with my lack of good hair and my ethical writings, but mostly the latter.

Anonymous said...

Scot makes a good point: We need to look at past relationships as just that, in the past. In the case of Dean Poon, she is the Dean of a large recognized business school. There is an expectation that she would have a business background and continue to associate with business leaders.

We do not know if she left J&J due to:

A lack of advancement opportunities.

She saw the changes coming in the corporate culture.

Genuine family issues mandated a change in work environment.

From my perspective the board work posted on Forbes did not appear to represent a conflict.

We need to be aware of the true conflicts presented and not chase shadows. Sadly many of those in the academic community view their work as above reproach and do not see the very real conflicts they are presented with on a daily basis.

Steve Lucas

Anonymous said...

For another interesting angle on Mary Sue Coleman's conflicts of interest - check her ties to son, Jonathan Coleman's active trading of J&J. Dr. Coleman's website mentions that her son is a fund manager. Turns out at Janus Funds, a heavy and active trader in J&J stock.

jaasie@zimmer hip class action said...

If that is case, then the president should be held liable for the recalling of Hip Implants.