Thursday, September 08, 2016

Oh So Quietly, Evidence of Bad Health Care Corporate Leadership Accumulates - Three AstraZeneca Settlements

While the news media is distracted by seemingly more spectacular issues, we hear the steady drip, drip, drip of legal cases suggesting just how systemically bad the leadership of big health care organizations is.  From February 2015 to now, for example, there have been three cases involving multinational pharmaceutical giant AstraZeneca.

Settlement of Allegations of Kickbacks to Give AZ Drugs Preferred Status in Formularies

First, in February 2015, reported in most detail by Ed Silverman in the Wall Street Journal,

AstraZeneca has agreed to pay the federal government $7.9 million to settle allegations the drug maker paid kickbacks to a large pharmacy benefits manager to ensure that its blockbuster Nexium heartburn medication was given the best status on formularies, which are the list of drugs that received preferred coverage.

In exchange for maintaining 'sole and exclusive' status, AstraZeneca allegedly provided discounts to Medco Health Services, which was bought by Express Scripts, on other drugs, such as Prilosec, another heartburn medication and Toprol, a blood pressure drug.

As is usual in such cases, the government allowed the drug company to make the settlement without ever admitting any wrongdoing (and of course begging the question of why the company was willing to pay if it did no wrong):

An AstraZeneca spokeswoman sends us a note to say the drug maker denies the allegations. 'It is in the best interest of the company to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines, while avoiding the delay, uncertainty and expense of protracted litigation,' she writes us.

Furthermore, as detailed in the US Department of Justice announcement, the settlement was not made by AstraZeneca proper,which is based in the UK, but by a US subsidiary, perhaps allowing some plausible deniability by the leadership of the parent corporation.

AstraZeneca LP, a pharmaceutical manufacturer based in Delaware, has agreed to pay the government $7.9 million to settle allegations that it engaged in a kickback scheme in violation of the False Claims Act, the Justice Department announced today. AstraZeneca markets and sells pharmaceutical products in the United States,...

Also, inexplicably, the settlement did not address a previous corporate integrity agreement made by the very same AstraZeneca subsidiary, begging another question of what the point of these agreements might be. (Note that such agreements were once touted by former US Attorney, current New Jersey governor, and crony of Donald J Trump as the cutting edge way to deal with bad corporate behavior, look here.)

The former execs also alleged that, by entering into this arrangement with Medco, AstraZeneca violated a corporate integrity agreement that was signed in connection with a 2003 settlement to resolve civil and criminal charges for illegally promoting a cancer medicine. However, the statement from the U.S. Department of Justice does not mention any violation.

Finally, as is also usual in such settlements, no manager of AstraZeneca who might have enabled, authorized, or directed the bad behavior, or whose pay may have increased due to the revenue increase created by this behavior, had to suffer any negative consequences.

Note, however, that this settlement involved allegations of bribery to encourage excess use of AZ products. By giving such products preferred status on formularies, health care professionals would likely have been encouraged to use them preferentially, even though for some patients, other treatments might have been more effective or safer. Thus the alleged actions would have potentially disturbed the integrity of medical care.

Settlement of Allegations of Financially Cheating the US Medicaid Program

This settlement, in July, 2015, involved allegations of financial misbehavior.  As again reported by Ed Silverman in the Wall Street Journal,

Two big drug makers have settled allegations they underpaid rebates owed under the Medicaid prescription drug programs. In one case, AstraZenecareed to pay $46.5 million to the U.S. government and two dozen states,...

The AstraZeneca products involved "included the Crestor cholesterol pill and the Seroquel antipsychotic." Again, the company was allowed to make the settlement without admitting it actually did anything that merited the government action.

An AstraZeneca spokesman writes us that the drug maker 'makes no concessions or admissions of fault in the settlement agreement and its price reporting decisions were undertaken in good faith. We continue to believe that those decisions reflect a reasonable interpretation of the applicable laws and regulations.'

Again, why they were willing to pay so much if they did nothing wrong was unclear.

Once again, no AZ executive who might have enabled, authorized, or directed the scheme in question apparently had to pay any penalty.

Settlement of Allegations of Bribing Foreign Health Care Providers

Finally, again according to the redoubtable Ed Silverman now writing for Stat in August, 2016,

AstraZeneca agreed to pay $5.5 million to settle charges of violating the Foreign Corrupt Practices Act, making it the latest global drug maker to face such accusations as part of a long-running probe by US authorities into companies that paid bribes in order to boost sales of their medicines.

In this instance, the company had been accused of making improper payments to health care providers in Russia and China, according to a cease-and-desist order released Tuesday by the US Securities and Exchange Commission.

Here are some details about the allegations:

The feds charged that AstraZeneca sales and marketing staff, along with 'multiple levels' of company managers at the subsidiaries, 'designed and authorized several schemes' to convey gifts, conference expenses, travel, and cash, among other things, in order to influence purchases of AstraZeneca drugs.

At various times, AstraZeneca sales staff in China sales submitted — and managers approved — fake tax receipts for fraudulent reimbursements to generate cash that was used to bribe health care providers. The employees also established bank accounts in the names of some doctors names as part of their scheme, the SEC alleged.

Like the allegations in the February, 2015, settlement, these were of frank kickbacks or bribes designed to promote the use of AZ products even for patients who might have had better outcomes were they to have been treated in some other way. Despite the possibility that these actions thus harmed patients, yet again, AstraZeneca escaped without having to admit anyone at the company did anything wrong.

An AstraZeneca spokeswoman wrote us that the company is 'pleased to have resolution of these matters. The SEC has acknowledged our cooperation during the entire course of the inquiry, and the US Department of Justice has closed its investigation. … We began enhancing our compliance program prior to the start of the investigation. Strong ethics and acting with integrity are central to AstraZeneca’s code of conduct, which is reinforced through ongoing training and monitoring.'

If "strong ethics and acting with integrity" are so important to the company, one wonders why on earth they are faced with so many allegations about unethical actions that appear to violate the integrity of health care?

Of course, again, no individual who might have enabled, authorized, or directed any kickbacks or bribes felt even the lash of a wet noodle.


AstraZeneca is one of the largest multinational pharmaceutical companies.  According to Google Finance, in 2015 its total revenue exceeded $24 billion.  In 2015, according to the Times (UK), its CEO, Pascal Soriot, received £8.4 million. One might think that thus entrusted by millions of patients around the world to make safe and efffective products, the company would be held to a higher standard.  Yet not only did the company make these three settlements, two of which involved allegations of bribery to promote its drugs even to patients who might have been harmed by these results, but it has a record of previous bad behavior.

In particular, AstraZeneca paid a comparatively large settlement ($520 million) in 2010 to resolve allegations that the company gave kickbacks, and manipulated and suppressed evidence from clinical research to promote the use of its anti-psychotic Seroquel (look here).  The company allegedly covered up information about the adverse effects of its drug, which likely led to its over-prescription for patients who were ultimately harmed by these effects.  Other apparent misbehavior by the company can be seen here.  Despite this track record, the latest round of settlements only provided for financial penalties on the company that were chump change compared to its revenues, and still failed to provide any disincentive to company managers whose bonuses may have been fueled by the revenues generated by bad behavior.

The Transparency International definition of corruption is "abuse of entrusted power for private gain."  Is there any doubt that for a pharmaceutical company entrusted to provide safe and effective drugs,  repeatedly giving kickbacks and using deception to promote its products is an abuse of power?  Is there any doubt that some of the multi-million dollar (or pounds Sterling) compensation of the top executives of companies alleged to use kickbacks and deception might be private gain produced by these actions?  

Here is more evidence of how corrupt the US (and global) health care system has become.  Large health care organizations repeatedly have been involved in bribery, kickbacks, fraud, and various kinds of corrupt behavior.  Yet there is no pushback.  Health care executives have effective impunity, and in fact are seen as leaders of our great capitalist societies.  With such leadership, is it any wonder that our health care system is increasingly expensive and simultaneously increasingly ineffective?  It is any wonder that our citizens, and patients, think the system is rigged against them?

 So to repeat an ending to one of my previous posts on health care corruption....  if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.  Yet such action cannot begin until we acknowledge and freely discuss the problem.  The first step against health care corruption is to be able to say or write the words, health care corruption.

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