As just reported by Bloomberg,
Novartis AG said it agreed to pay $25 million to settle a U.S. Securities and Exchange Commission case that claimed the Swiss drugmaker paid bribes to health professionals in China to increase sales from 2009 to 2013.
The SEC detailed a number of Foreign Corrupt Practices Act violations where Novartis employees provided items of value to health-care professionals in China, under the supervision of complicit managers. It also cited examples of how the company improperly recorded as legitimate expenses payments employees made for travel and entertainment, conferences, lecture fees, marketing events, educational seminars and medical studies.
For some vivid examples,
In one example cited in the SEC order on Novartis, a sales representative at the drugmaker’s Sandoz China subsidiary submitted a $1,154 receipt to buy holiday gifts for 25 health-care professionals, which was instead used to pay for their spa and sauna sessions. A regional sales manager approved the purchase, the SEC said.
The SEC order also cited how Sandoz China sponsored 20 health-care professionals to attend a 2009 medical conference in Chicago. During the trip, the company paid for the group’s recreational activities such as a Niagara Falls excursions, $150 in 'walking around' money for their spouses, and cover charges to a strip club. The group was accompanied by a Sandoz China senior manager and other staff, according to the SEC.
So, thus far, the allegations were that Novaris bribed Chinese physicians to use their products, and the bribes includes gifts, travel money, and admission to a strip club. It is likely that these bribes induced the physicians to unnecessarily or excssively prescribe Sandoz drugs to patients, leading to excess expenses, overtreatment, and quite likely adverse effects that should have been prevented.
As per the Wall Street Journal, and as usually happens in such cases, Novartis was allowed to settle without "admitting or denying the findigs." In the Bloomberg article, a Novartis spokesperson gave the usual vague response,
'The issues raised by the SEC, which relate to our subsidiaries in China and go back as far as 2009, largely pre-date many of the compliance-related measures introduced by Novartis across its global organization in recent years,' Novartis spokesman Eric Althoff said in an e-mailed statement Thursday.
The implication was that the company no longer does these bad things, but did not include a promise not to do them. And, of course, just like in many, many other health care cases, and in many, many other cases involving big, powerful, or influential organizations, no one at a top management level went to jail, or even suffered any negative consequences, even for such sleazy allegations as those in this case. Finally, partially because the amount of this settlement was so small related to the financial bulk of the company involved, this case was relatively anechoic, only reported in the small items in the business press.
As we are distracted by bloviating billionaires and other spectacles on the US 2016 campaign trail, we continue to accumulate evidence of the corruption of large health care organizations and the impunity of their leaders. Yet this evidence remains anechoic, even given the apparent recidivism involved. For example, it was only in last November that we discussed what were then the latest misadventures by Novartis and its leadership. At that time, our post included these section headings covering 2014-15:
- Japanese Health, Labor and Welfare Ministry Found that Novartis Concealed Serious Adverse Effects
- Novartis Executive Pleads Guilty to Bribing Polish Official
- Novartis Subsidiary Sandoz Settles Allegations that it Misrepresented Pricing Data to US Medicaid
- Express Scripts Settles Allegations that it Accepted Kickbacks from Novartis
- Novartis Settles US Allegations of Kickbacks to Enhance Sales of Multiple Drugs
Furthermore, in that post we also documented Novartis' previous record. In March, 2014, we had noted:
- Italian authorities had fined Novartis and Roche for colluding to promote the use of an expensive opthamologic treatment
- the NY Times published interviews with physicians ostensibly showing how Novartis turned them into marketers for the drug Starlix
- Japanese investigators charged Novartis with manipulating clinical research
- Indian regulators canceled a Novartis import license, charging the company with fraud.
Also, in 2013, Novartis was fined for anti-competitive practices in its marketing of Fentanyl by the European Commission (look here), and in 2011 its Sandoz subsidiary settled allegations of misreporting prices in the US for $150 million (look here) Other Novartis misadventures from 2010 and earlier appear here. So Novartis has quite an impressive, if not infamous record of ethical failures.
Yet no Novartis top manager suffered any negative consequences then (although one apparent mid-level company manager at the Polish subsidiary did plead guilty), and all these previous episodes apparently did not suggest a pattern of recidivism to US authorities this time sufficient to attempt to impose any negative consequences on higher level managers. Meanwhile, Novartis executives continue to be paid handsomely. The 2015 Novartis executive compensation report listed over 51 million Swiss francs paid
Also, this goes on while large health care companies continue to pay out dizzying amounts to physicians, health care professionals, hospitals and academic institutions, which partially may secure their loyalty. Novartis, for example, which ProPublica lists as only the 28th biggest payer to physicians, paid out $31.7 million in 2013-14 just to US physicians. The 2015 Novartis board of directors included Dr Nancy C Andrews, the Dean of the Duke Medical School and Vice-Chancellor for Academic Affairs at Duke University, Dr Dimitri Azar, Dean of the College of Medicine at the University of Chicago, Illinois, and Dr Charles L Sawyers, a professor and department chair at Weill-Cornell Medical School. I am unaware that anyone of them have publicly raised any concerns about Novartis' recent misadventures, although I am also unaware whether anyone has publicly asked them such questions.
No wonder that ordinary US (and other countries' citizens) feel that they are trapped in a hopeless economic situation by rigged systems designed to benefit from the corrupt insiders. No wonder that someone of them are seeking the protection of some of those powerful insiders. But I digress...
In terms of health care, as we have said like a broken record (if anyone remembers what that means), or, if you prefer, where every verse is same as the first...
There seems to be increasing recognition that the continuing rise in US health care costs is unsustainable, and that these costs are not buying us good health care. There are calls to avoid unnecessary, and sometimes harmful care. Yet there is a persistent disconnect between how continuing dishonest behavior by health care organizations, impunity of their leaders, and lack of accountability by their board members fuel rising costs, shrinking access, and bad outcomes for patients.
To truly reform health care, we will have to at least recognize the causes of the current dysfunction. Recognizing how health care dysfunction is created by unaccountable, dishonest leadership should lead to true reform that would promote well-informed, honest, accountable leadership that puts patients' and the public's health ahead of personal gain.
Our musical interlude ("second verse, same as the first,") Herman's Hermits, Henry VIII