Tuesday, November 29, 2005

Washington Hospital wasting advertising dollars?

Speaking of healthcare marketing and advertising and the waste it represents:

This past weekend I received a glossy multi-page brochure from the Washington Hospital Center promoting their excellent cardiac surgery outcomes statistics. This mailing had a machine-generated mailing label, presumably sent to a list of physicians in my home town and likely other geographic areas outside Washington, D.C. This is not the first time I've received such glossy mailings from this organization.

I offer genuine compliments on their excellence in cardiac surgery. Their excellence in invasive cardiology is known to me from clinical IT-related site visits there a number of years ago. However...

Being that I'm living in the northern suburbs of Philadelphia, appx. 150 miles from D.C. and surrounded by nearby, excellent cardiac surgery centers (University of Pennsylvania, Jefferson, Temple University, Drexel University/Hahnemann, Christiana Care, to name just a few locals), and that patients are unlikely to travel to Washington, D.C., far from family and friends for heart surgery, I find this marketing brochure wasteful.

Also considering that I have not practiced medicine for a number of years after completing a postdoctoral fellowship in Medical Informatics and holding management positions in that field, this makes the mailing even more questionable. It's not as if such information is unavailable as to who might be likely to refer patients, and who might not.

Healthcare disparities being a professional interest, I also can imagine that there are disadvantaged children and adults with heart disease in the proximity of Washington Hospital Center. How many of these patients could have been served with the money spent for composing, printing and mailing these glossy brochures?

Finally, it's ironic that a senior executive at Washington Hospital Center is someone I worked with in the past at another large healthcare system. This person made a project I led, the development of an information system for cardiac outcomes in invasive cardiology and cardiac surgery, a nightmare.

In part due to the fact that he had been overseeing the I.S. department that had been struggling for several years to bring up a failed commercial system, and in part due to the fact that he did not play well with the Sr. VP for Medical Affairs (who happened to be the person who hired me to rectify the cardiology IT problems), the political dysfunction that resulted made the system's success far more difficult to achieve than it should have been.

Success was achieved anyway, despite the executive's politics, and recognition for IT excellence by national cardiology figures who came to inspect the facility was in fact obtained. The facility saved almost $1 million in the system's first year of operation as well, due to the improved operations and materials procurement the new computer system facilitated. However, I left this organization shortly afterward in large part due to these political dysfunction issues.

It's ironic that I now receive costly brochures touting excellent outcomes in cardiology from another institution with the same executive in a leadership role.

Being an optimist, the least I can say is that I'm glad this executive may have learned something about "the value of the data" from Medical Informatics, although apparently not much about thrift.

-- SS

Monday, November 28, 2005

Are You Ready for Some Football?

When I first heard about this one, I thought it was a joke, but...
The New York Times reported today that pharmaceutical companies seem to be going out of their way to hire former or current college or professional (US) football cheerleaders as pharmaceutical representatives.
It provided two examples. Ms. Cassie Napier, former cheerleader for the University of Kentucky, "now plies doctors' office selling the antacid [actually, the proton pump inhibitor] Prevacid [lansoprazole] for TAP Pharmaceutical Products." Ms. Onya [last name not printed by the Times] is currently is a cheer leader for the Washington Redskins, and "weekdays find her urging gynecologists to prescribe a treatment for vaginal yeast infections."
"Known for their athleticism, postage-stamp size skirts, and persuasive enthuisiams, cheerleaders have many qualities the drug industry looks for in a sales force." "T. Lynn Williamson, Ms. Napier's cheering adviser at Kentucky, says he regularly gets calls from recruiters looking for talent, mainly from pharmaceutical companies." "They don't ask what the major is," he said. "Exaggerated motions, exaggerated smiles, exaggerated enthuisaism - they learn those things, and they can get people to do what they want." There is now at least one employment firm, Spirited Sales Leaders, that specializes in recruiting cheer-leaders. The article reported that quite a few former University of Kentucky and some current Washington Redskin cheer-leaders are now pharma reps.
Lamberto Andreotti, MS, Executive Vice President, and President, Worldwide Pharmaceuticals for Bristol-Myers-Squibb rationalized the interest in cheer-leaders as pharma reps thus, "Obviously, people hired for the work have to be extroverts, a good conversationalist, a pleasant person to talk to; but this has nothing to do with looks, it's the personality. However, industry critic Dr. Thomas Carli of the University of Michigan charged that "seduction appeared to be a deliberate industry strategy."
You just can't make this stuff up.
Obviously, there is nothing wrong with hiring current or former cheer-leaders as pharmaceutical representatives per se. What is dismaying is the pharmaceutical companies' emphasis on hiring people, regardless of their academic background or knowledge of pharmacology or medicine, mainly because they are attractive, have "exaggerated" mannerisms, and perhaps even imply "seduction."
This emphasis on short-term, superficial marketing rather than serious science, integrity, and focus on the welfare of patients seems already to have gotten big segments of the pharmaceutical industry in trouble.
One explanation for the continuing unraveling of once highly-respected Merck (for example, see this article in the Washington Post on the latest budget cuts and layoffs there) is its shift in emphasis from science, integrity, and patient welfare to marketing glitz.
You would think the leadership of the pharmaceutical industry would put down their pom-poms and pay attention.
[See widely ranging blog-sphere coverage of this at Dr. Sanity, Health Business Blog, Medical Rants, and PharmaGossip.]

Did Wyeth attempt to discredit an FDA employee?

Did Wyeth attempt to discredit an FDA employee who came out against a Wyeth drug?

See letter below from Sen. Grassley, from http://www.medadnews.com/News/Index.cfm?articleid=292534 and a related post on Pharmawatch.blogspot.com .

Note the extensive "instructions" at the end of Grassley's letter. Great boilerplate for an inquiry or for legal discovery. This senator knows how to avoid the strategies of semantic gamesmanship, feigned confusion, stonewalling and obfuscation utilized by large organization legal departments.

-- SS

November 17, 2005
Mr. Robert Essner
Chairman, President, and CEO
North America and Global Business
Wyeth Pharmaceuticals
500 Arcola Road
Collegeville, PA 19426

Dear Mr. Essner:

As a senior member of the United States Senate and as Chairman of the Committee on Finance (Committee), it is my duty under the Constitution to conduct oversight into the actions of the government and companies that do business with the government. Over the past year, the Committee has reviewed various matters relating to the pharmaceutical industry and its relationship with the Food and Drug Administration (FDA). In previous letters to you, the Committee sought your assistance with inquiries into nominal pricing, educational grants, as well as employer sponsored education of the False Claims Act. I write today seeking your continued cooperation with a matter concerning Wyeth Pharmaceuticals (Wyeth) and FDA’s Center for Veterinary Medicine (CVM).

Recently, the Committee received allegations regarding Wyeth and events surrounding the recall of the heartworm medication ProHeart 6. Information and documents reviewed by the Committee appear to support allegations that Wyeth investigated an employee of the FDA involved in the safety review of ProHeart 6. It appears that the express purpose of the investigation was to discredit the employee and have the employee reassigned. Further, following the investigation conducted by Wyeth, the FDA initiated an internal criminal investigation into the same FDA employee. The Committee’s review of these allegations raises serious questions regarding, among other things, the appropriateness of the actions taken by both the FDA and Wyeth.

Wyeth manufactures and distributes a number of animal health care products through its division Fort Dodge Animal Health (FDAH), including at one time, the heartworm preventative drug called ProHeart 6. Originally approved in 2001 by the FDA, ProHeart 6 was a novel heartworm prevention drug for dogs. It was an injectable sustained-release drug that provided six months of coverage and was administered only by a veterinarian. As part of the FDA’s postmarket review of ProHeart 6, the FDA assigned Dr. Victoria Hampshire, V.M.D., as the Adverse Drug Event Coordinator, to monitor adverse events sent in by both consumers and veterinarians. From 2003 to 2005, Dr. Hampshire compiled the results of over 5500 adverse drug event reports (ADEs) related to ProHeart 6, including nearly 500 canine deaths. Responding to the numerous adverse drug reports, Dr. Hampshire urged the FDA to take action on ProHeart 6 in November of 2003. While this initial call to action garnered little attention within the FDA, a subsequent effort by distraught consumers in July 2004 caught the attention of Dr. Sundlof, the Director of CVM. Dr. Hampshire presented this information and subsequently brought the matter to the attention of former Commissioner Dr. Lester Crawford. Dr. Crawford, a veterinarian himself, agreed with the findings and on September 1, 2004, the FDA organized a meeting with Wyeth to review the adverse event data.

Following the presentation, CVM, the Acting Commissioner and FDA Legal Counsel agreed to recall ProHeart 6 from the market. After two days of negotiating with the FDA, Wyeth voluntarily recalled ProHeart 6 from the market on September 4, 2004.

Shortly after the recall of ProHeart 6, Wyeth sought a review of the recall decision through a meeting of the Veterinary Medicine Advisory Committee (VMAC). The FDA granted the request for a VMAC meeting and scheduled it for January 2005. It appears the timing of the VMAC would have allowed Wyeth a chance to reintroduce ProHeart 6 for the spring heartworm season if the VMAC voted to support its return to the market. In preparation for the VMAC meeting, Dr. Hampshire prepared a presentation regarding the thousands of ADEs received and worked to ensure that the advisory committee would have complete information regarding these events.

Documents obtained and reviewed by the Committee, coupled with interviews conducted by Committee staff, appear to support allegations that Wyeth investigated Dr. Hampshire and presented its findings to Dr. Crawford. Following Wyeth’s presentation, Dr. Hampshire was removed from the review of ProHeart 6 and subjected to a criminal investigation by the FDA. FDA Investigators advised Committee staff that the criminal investigation resulted in no action taken against Dr. Hampshire. Furthermore, the FDA recently gave Dr. Hampshire an award for her job performance related to ProHeart 6.

Information available to the Committee appears to support allegations that Wyeth’s efforts to discredit Dr. Hampshire were not limited to the FDA. More specifically, it appears that Wyeth’s efforts to reintroduce ProHeart 6 to the market included a Wyeth sales representative presenting information to the veterinary community in an apparent effort to discredit Dr. Hampshire. Attached is a two-page letter from a veterinarian and former commissioned officer in the United States Public Health Service. According to the letter, a Wyeth sales representative in Alabama stated that Dr. Victoria Hampshire was the sole reason for the recall of ProHeart 6.

Further, the Wyeth representative stated that Wyeth investigated Dr. Hampshire and said that she pursued the withdrawal of ProHeart 6 for personal financial gain. Finally, the Wyeth representative added that once “[Dr. Hampshire] was taken care of” the number of adverse event reports being submitted for ProHeart 6 dropped significantly. As Chairman of the Committee, I request that Wyeth provide the following records and information to the Committee:

(1) State how Wyeth concluded that Dr. Hampshire had an “apparent conflict of interest.” In complying with this request, describe in detail the actions taken by Wyeth, including but not limited to whether or not Wyeth subsidized, either directly or indirectly, an investigation of Dr. Hampshire. Additionally, provide copies of all communications, documents, and records related to Wyeth’s conclusion that Dr. Hampshire had an “apparent conflict of interest,” including but not limited to, payments associated with one or more investigation(s) of Dr. Hampshire.

(2) Identify all individual(s) and/or agent(s) (including full name, title, and contact information) employed by and/or associated with Wyeth, either directly or indirectly, who were involved in any way with an investigation(s) of Dr. Hampshire. In the event that any individual(s) and/or agent(s) is/are no longer associated with Wyeth, identify that individual(s) and/or agent(s) as well.

(3) Identify all individual(s) and/or agent(s) (including full name, title, and contact information) employed by and/or associated with Wyeth, either directly or indirectly, who were involved in any way with the research supporting and the preparation of the Power Point presentation entitled, “ProHeart 6 Apparent Conflict of Interest,” dated November 19, 2004. In the event that any individual(s) and/or agent(s) is/are no longer associated with Wyeth, identify that individual(s) and/or agent(s) as well.

(4) Provide copies of all documents and records, including but not limited to communications and email, related to the Wyeth Power Point presentation entitled, “ProHeart 6 Apparent Conflict of Interest,” dated November 19, 2004.

(5) State whether or not Wyeth provided notice to the FDA that it was initiating or conducting a private investigation into an FDA employee? If so, provide the name(s) of any individual at the FDA who received notice prior to the initiation of the investigation. Provide copies of all records, including but not limited to communications and emails between Wyeth and the FDA related to the investigation of Dr. Hampshire.

(6) How many times has Wyeth investigated an FDA employee(s) and/or presented information to the FDA related to an FDA employee’s apparent conflict of interest? Additionally, describe in detail the facts associated with each investigation and/or presentation.

(7) Provide complete contact information for Mr. Clint “C.T.” Newsum, Vice President for Wyeth Pharmaceuticals. Additionally, please make Mr. Newsum available for an interview with my staff to take place no later than December 23, 2005.

(8) Provide complete contact information for Mr. Glen Kimmorely, a Senior Territory Manager for Fort Dodge Animal Health, a division of Wyeth Pharmaceuticals. Additionally, please make Mr. Kimmorely available for an interview with my staff to take place no later than December 23, 2005.

(9) Provide complete contact information for Mr. Tom O’Hare of Copiague, New York. Identify the relationship Mr. O’Hare has with Wyeth Pharmaceuticals, including but not limited to, any financial relationship. State whether or not Wyeth is able to make Mr. O’Hare available for an interview, and if so, please make Mr. O’Hare available for an interview with my staff to take place no later than December 23, 2005.

Thank you in advance for providing the name and contact information, including an email address, for a person who will act as the point of contact for Wyeth Pharmaceuticals during the Committee’s review by November 22, 2005, unless it is available sooner. All requests for communications, documents, records and written responses to questions should be received no later than December 16, 2005. In cooperating with the Committee’s review, no documents, records, data or information related to these matters shall be destroyed, modified, removed or otherwise made inaccessible to the Committee.


Charles E. Grassley
United States Senator


1. Please note that, for purposes of responding to this document request, the terms “document” and “record” should be interpreted in accordance with the general definitions attached to this letter.

2. In complying with this document request, produce all responsive documents that are in your possession, custody, or control, whether held by you or your past or present agents, employees, and representatives acting on your behalf. In addition, produce documents that you have a legal right to obtain, documents that you have a right to copy or have access to, and documents that you have placed in the temporary possession, custody, or control of any third party.

3. No documents, records, data or information requested by the Committee shall be destroyed, modified, removed or otherwise made inaccessible to the Committee.

4. If the document request cannot be complied with in full, it shall be complied with to the extent possible, which shall include an explanation of why full compliance is not possible.

5. In complying with this document request, respond to each enumerated request by repeating the enumerated request and identifying the responsive document(s).

6. Each document produced shall be produced in a form that renders the document susceptible of copying.

7. If any document responsive to this request was, but no longer is, in your possession, custody, or control, identify the document (stating its date, author, subject and recipients) and explain the circumstances by which the document ceased to be in your possession, or control.

8. This request is continuing in nature. Any document, record, compilation of data or information, not produced because it has not been located or discovered by the return date, shall be produced immediately upon location or discovery subsequent thereto.


1. The term “Wyeth” means Wyeth Pharmaceuticals, its corporation, its board of directors, or one or more of its divisions, subsidiaries or affiliates, or related entities, including, but not limited to, Fort Dodge Animal Health.

2. The term “document” means any written, recorded, or graphic matter of any nature whatsoever, regardless of how recorded, and whether original or copy, including, but not limited to the following: memoranda, reports, statistical or analytical reports, books, manuals, instructions, financial reports, working papers, records notes, letters, notices, confirmations, telegrams, receipts, appraisals, pamphlets, magazines, newspapers, prospectuses, interoffice and intra office communications, electronic mail (E-mail), contracts, cables, notations of any type of conversation, telephone call, meeting or other communication, bulletins, printed matter, computer printouts, teletypes, invoices, transcripts, diaries, analyses, returns, summaries, minutes, bills, accounts, estimates, projections, comparisons, messages, correspondence, press releases, circulars, financial statements, reviews, opinions, offers, studies and investigations, questionnaires and surveys, and work sheets (and all drafts, preliminary versions, alterations, modifications, revisions, changes, and amendments of any of the foregoing, as well as any attachments or appendices thereto), and graphic or oral records or representations of any kind (including without limitation, photographs, charts, graphs, microfiche, microfilm, videotape, recordings and motion pictures), and electronic, mechanical, and electric records or representations of any kind (including, without limitation, tapes, cassettes, discs, and recordings) and other written, printed, typed, or other graphic or recorded matter of any kind or nature, however produced or reproduced, and whether preserved in writing, film, tape, disc, or videotape. A document bearing any notation not a part of the original text is to be considered a separate document. A draft or non-identical copy is a separate document within the meaning of this term.

3. The term “records” is to be construed in the broadest sense and shall mean any written or graphic material, however produced or reproduced, of any kind or description, consisting of the original and any non-identical copy (whether different from the original because of notes made on or attached to such copy or otherwise) and drafts and both sides thereof, whether printed or recorded electronically or magnetically or stored in any type of data bank, including, but not limited to, the following: correspondence, memoranda, records, summaries of personal conversations or interviews, minutes or records of meetings or conferences, opinions or reports of consultants, projections, statistical statements, drafts, contracts, agreements, purchase orders, invoices, confirmations, telegraphs, telexes, agendas, books, notes, pamphlets, periodicals, reports, studies, evaluations, opinions, logs, diaries, desk calendars, appointment books, tape recordings, video recordings, e-mails, voice mails, computer tapes, or other computer stored matter, magnetic tapes, microfilm, microfiche, punch cards, all other records kept by electronic, photographic, or mechanical means, charts, photographs, notebooks, drawings, plans, inter-office communications, intra-office and intra-departmental communications, transcripts, checks and canceled checks, bank statements, ledgers, books, records or statements of accounts, and papers and things similar to any of the foregoing, however denominated.

4. The terms “relate,” “related,” “relating,” or “regarding” as to any given subject means anything that discusses, concerns, reflects, constitutes, contains, embodies, identifies, deals with, or is any manner whatsoever pertinent to that subject, including but not limited to documents concerning the preparation of other documents.

5. The terms “and” and “or” shall be construed broadly and either conjunctively or disjunctively to bring within the scope of this document request any information which might otherwise be construed to be outside its scope. The singular includes plural number, and vice versa to bring within the scope of this document request any information which might otherwise be construed to be outside its scope.

6. The term “communication” means each manner or means of disclosure or exchange of information, regardless of means utilized, whether oral, written, electronic, by document or otherwise, and whether face to face, in a meeting, by telephone, mail, telexes, discussions, releases, personal delivery, or otherwise. Documents that typically reflect a “communication” include handwritten notes, telephone memoranda slips, daily appointment books and diaries, bills, checks, correspondence and memoranda, and includes all drafts of such documents.

Sunday, November 27, 2005

Flu Shots at Wal-Mart But Not in Physicians' Offices

The San Diego Union-Tribune reported on the troubling state of influenza vaccination this season. Physicians in California are having great difficulty getting the stocks of vaccine that they ordered. "Three in four doctors responding to a California Medical Association survey had not received their full vaccine supplies as of Nov. 3. More than half of them had not obtained any vaccine, and 70 percent had to reject high-risk patients' requests for flu shots. The article quoted the CEO of the Medical Association, Dr. Jack Lewin:

Despite being assured each year that supplies will be adequate and delivered to physicians on time, here we are again. We have high-risk, sick and elderly patients left unvaccinated. This is intolerable."

What went wrong? According to the Union-Tribune article, vaccine manufacturers preferentially shipped supplies of vaccine to high-volume customers, like big-box stores such as Costco, Wal-Mart, and Albertsons on the west coast of the US. Quoting Dr. Wayne True, a physician in La Mesa, "This year's vaccines are going to where the money is - to the 'big box' customers first." Physicians often "go through pharmaceutical distributors for their vaccine supplies, while some big retailers are able to place bulk orders directly from vaccine manufacturers."

Neither the vaccine manufacturers, distributors, nor "big-box" stores seem to want to take responsibility for this situation.

  • Alison Marquiss, a spokeswoman for Chiron, one of the three remaining US vaccine suppliers, admitted that "its priority shipments were earmarked for high-volume customers, as standard practice for all manufacturers of vaccine, according to the Union-Tribune. Marquiss said, "there are different contractual terms for different orders. It would be a bit naive not to realize that."
  • David Aguilar, of Physicians Sales and Service, a distributor of vaccines, accused, "Physicians are panicking." Furthermore, "there are a lot of sales reps here that don't want to deal with the flu (shots) because of what's been happening.... It's a headache for everyone."
  • Michael Mastormonica, coordinator of Costco' influenza program, said it should be up to the government, and that the Center for Disease Control (CDC) should "step in and stipulate distribution, saying these providers take priority over others." But a spokesman for the CDC noted that the agency "has no regulatory authority whatsoever to mandate anything when it comes to supply and demand of influenza vaccine."
As a physician, it seems to me that the true measure of a health care system is how it takes care of the sickest and neediest patients. Here we have a system that can supply influenza vaccine to relatively healthy people who show up at big-box stores, but not to sick, high-risk patients in doctors' offices.
The system for distributing influenza vaccine has been taken over by large organizations, vaccine manufacturers, distributors, and large retailers, none of whom apparently put the needs of sick patients first, and seem very good at avoiding any responsibility for doing so. Note that the distributors' sales reps were complaining they were getting a headache from the situation, but an elderly, high-risk patient may get far more than a headache should they acquire influenza. To reiterate what Dr. Lewin said, "This is intolerable. We need a fair, equitable, and efficient delivery system."
And just to add insult to injury, some of the more credible proposals to make physicians subject to "pay-for-performance" would measure such performance by, among other criteria, the proportion of a physicians' high-risk patients who get influenza vaccine (see, for example, the recommended "starter set" of measures here.) Were California physicians to be subject to these measures this year, and perhaps some of them are, physicians whose suppliers failed to send them enough influenza vaccine would be rated as performing poorly. No wonder many of us physicians are skeptical that such measures will fail to deal with the real shortcomings of the health system's performance, and will perversely penalize some physicians who may be trying the hardest to take care of the sickest patients.

Friday, November 25, 2005

The Investigation of Novation

The Fort Worth Weekly has an investigative report on the curious world of hospital group purchasing organizations, focusing on Texas based Novation.

Novation, and other group purchasing organizations (GPOs), were originally intended to help hospitals save money by banding together to negotiate better prices for hospital supplies and equipment. There are currently about 600 GPOs, "wielding control over $66 billion in healthcare supplies every year. Only about 30 have the size to negotiate significant volumes of sales, and the largest of them all is Irving-based Novation, a for-profit cooperative that claims to broker $24 billion in sales annually. Novation and Premier, the second-place company, together control about 54 percent of all hospital purchases."

"Novation came into existence in 1998, when two hospital networks — VHA of Irving and the University HealthSystem Consortium based in Illinois — set it up as a joint venture. VHA is a network of around 2,200 nonprofit hospitals and care organizations, including large hospitals like Baylor and Yale-New Haven. UHC has only about 200 members, but they include prestigious teaching and research hospitals like Parkland in Dallas."

Novation's business model is peculiar, to say the least. "In 1986, Congress passed legislation regulating GPOs, including the so-called 'safe-harbor' agreement that exempts GPOs from federal laws against kickbacks." Thus, although one might expect that a GPO's administrative expenses would come from its participating hospitals, instead, GPOs collect fees from the suppliers who wish to sell their wares to its hospitals.

Furthermore, "Since GPOs are set as up as cooperatives, their revenue from administrative fees is shared with member hospitals. Several sources told the Weekly that most hospitals bill insurance companies and Medicare or Medicaid for the full price of supplies bought through GPOs. When the hospitals later receive the fee income that provides a substantial discount on those prices, the resulting cost reductions are not passed through to those who were charged full price. Some question whether that practice constitutes insurance and Medicare and Medicaid fraud."

"With 2,400 hospitals as members, Novation controls access to close to a third of hospitals nationwide and claims to have saved its members $1 billion in 2003. But the company does not release information on its revenue. In fact, Novation’s reputation is one of extreme secrecy."

The Fort Worth Weekly documented several cases in which Novation's actions seemed to have denied hospitals access to the best products, or have increased, rather than ratcheted down the cost s of supplies and equipment.
  • An engineer named Tom Shaw developed a needle and syringe to reduce the likelihood of needle-stick injury to hospital personnel, "a syringe in which a spring mechanism retracts the needle into the barrel once the plunger is depressed, making reuse — and accidental pokes — impossible. He started Retractable Technologies to market the invention." But when Shaw tried to market his product, he found he " couldn’t even get in the door to show the products to hospitals, despite some clear advantages over competing products and the preference expressed by healthcare workers who had tried them. The reason, it turned out, was that the hospitals he tried to sell to were on GPO contracts — and were required to purchase from the large manufacturers that sold through the GPO, like $5 billion-a-year syringe giant Becton Dickinson, which controls 90 percent of the syringe market in this country." " 'If you pay anybody any fee, administrative or otherwise, to try to influence a purchase, that would put you in prison in any other industry,' he said. 'With the safe harbor [provision], the major manufacturers can pay GPOs to keep [other companies] out of the hospitals, and the GPOs make a lot of money.' When Novation finally looked at another of Retractable’s products — a safer device for taking blood samples — the GPO suggested to Shaw that it could carry his company’s product under its private label, Novaplus. Novation officials told him that by labeling the product as Novaplus, they could raise the price per unit to $1 from the 27-cent bid that Retractable had submitted, and the two companies would share the profits from the huge markup. According to the lawsuit Retractable eventually filed, a similar offer came from Premier, the second-largest GPO, which invited Retractable to attend a conference for suppliers, where $25,000 would buy Shaw not only advertising but also a 'private dinner' with Premier executives and a small-group meeting with hospitals." "Shaw and others said that his company’s experience makes it clear that the basic problem with GPOs won’t be fixed until the organizations are forced to stop taking fees from manufacturers. 'You work for the man who pays you,' Shaw said. GPOs aren’t really group purchasing organizations, working to help the buyer, he said — 'They’re group sales organizations. They’re moving sales for major manufacturers, who pay bribes they call administrative fees. Becton Dickinson pays to keep us out of hospitals — and that would put them in prison if they didn’t have a safe harbor provision.'" Retractable Technologies sued Novation, Premier, Becton Dickinson and Tyco, charging that they conspired to lessen competition and maintain monopoly power. Novation, Premier, and Tyco settled with retractable for an undisclosed sum.
  • Joe Kiani developed a pulse oximeter (oxygen measuring device that does not require drawing blood) for monitoring newborn babies, and founded a company called Masimo to market it. "Like Shaw, Kiani found that hospitals would not buy his product because Masimo did not have a contract with a GPO. According to court filings, when Masimo approached Premier, the GPO’s own product-review process concluded that the new oximeter was superior to Nellcor’s [a company owned by Tyco]. Nonetheless, Premier’s contract for pulse oximetry went to Nellcor — which, along with its parent company, was paying millions of dollars in fees to Premier and even investing in Premier’s 'Innovation Institute.' Nellcor also got a multi-year contract with Novation." Masimo sued Tyco for anti-competitive practices. "Masimo also alleged that Novation’s contract with Tyco gave larger discounts to hospitals that purchased at least 95 percent of their oximeters from Tyco. 'The most favorable price discounts,' the complaint stated, 'are not linked to sales volume, but ... to the exclusion of competition.' The complaint also alleged that Novation offered additional incentives to hospitals that purchased bundles of products from Tyco, leaving Masimo, which sold only oximeters, in an uncompetitive position while giving Tyco larger sales for many different supplies." "In March of this year, a jury concluded that Tyco owed Masimo $140 million in damages. Tyco has appealed this verdict."
  • Novation invested in Neoforma, a dot.com that would allow hospitals to order supplies online, whose fortunes had plunged after the dot.com bubble burst. "In 2000, Novation invested its member hospitals’ money in a deal that made Neoforma into Novation’s e-commerce partner for 10 years. UHC and VHA, the two hospital consortia that formed Novation, came to own 50 percent of a company that has bled more than $700 million in red ink since it came into existence." Neoforma continued to lose money. "Some Novation executives also owned shares of Neoforma — which hospital officials pointed to as a conflict of interest. Curt Nonomaque, chief executive officer of VHA and a board member of Novation, had personally invested $150,000 in Neoforma, although he sold that stock in 2001. When congressional pressures for reform caused GPOs to institute an informal code of conduct, GPO board members had to declare conflicts of interest, including investments in companies that did business with the GPOs. This resulted in several board members at Novation leaving the company rather than selling their stock. And Neoforma didn’t just hemorrhage money — it infuriated suppliers who alleged that forcing them to pay for Neoforma’s service was a double-dip by Novation." " Last month, Neoforma announced a merger with Global Healthcare Exchange, its only remaining competitor in healthcare e-commerce." "GHX is a privately owned enterprise belonging to Premier and 80 of the largest medical supply manufacturers, including Becton Dickinson and Tyco. The merger means Novation has jumped in bed with its largest rival. " One expert interviewed by the Weekly charged, "This is just another opportunity for Novation and Premier to get together along with all the large manufacturers and have meetings behind closed doors. By having GHX come and buy Neoforma, Novation executives look like geniuses to their member hospitals, although they’re really creating a monopoly. The GPOs are supposed to be fighting the manufacturers, but instead they’re openly getting in business with them." A law-suit, by Medical Supply Chain, "alleges that Novation and Neoforma, in conspiracy with manufacturers, distributors, and suppliers, have charged $100 billion in excess costs to hospitals since 2002."
Novation is now the subject of several investigations. Federal prosecutors in Dallas, TX, opened a criminal investigation of the medical supply industry, "with Novation at the center of it." The focus seems to be on rebates hospitals receive from GPOs. "'Hospitals get a big fat check once or twice a year from the GPOs,' explained one expert who is close to the investigation. 'No other deal gives free money to a hospital. And they can report checks not as a reduction in cost, but as miscellaneous income. This allows them to be reimbursed ... for the original price before they account for the money they get from GPOs and manufacturers. That’s what the investigation is about.'" The investigation has gone slowly, in part because two of the prosecutors involved died unexpectedly.
Novation also "came under scrutiny from Connecticut Attorney General Richard Blumenthal, whose office, he said, was 'very interested in potential undue influence exerted by vendors and manufacturers on individuals in positions to make healthcare purchasing decisions.'"
In summary, although GPOs were ostensibly set up simply to save hospitals money when purchasing supplies and equipment, these organizations have turned into huge, complicated and opaque entities whose actions are hidden, but which seem to be conveying large amounts of money back and forth among suppliers, hospitals, and the GPOs themselves. It is not at all clear that the GPOs save the hospitals money, nor get them the best possible supplies for the money they spend.
The leaders of the hospitals, including some of the countries most prestigious teaching hospitals, that own Novation and other GPOs ought to explain what these organizations really are doing, and particularly how they are supporting the hospitals' missions.
Again, this is another example of how opaque and unaccountable hospital leadership may be. But, the less transparent and accountable are health care leaders, the more the health care mission is at risk.

ADDENDUM (1 January, 2010) - In fact, questions were raised about Novation in 2002 in the New York Times:
Hospital Group's Link To Company Is Criticized, April 27, 2002.
Questioning $1 Million Dollar Fee in a Needle Deal, July 19, 2002.
Buying Group for Hospitals Vows Change, August 9, 2002.
It is a measure of the anechoic effect that I had not heard of this when I wrote the post above in 2005. 

More Trouble at UMDNJ

There are new developments in the continuing, sorry story of the University of Medicine and Dentistry of New Jersey (UMDNJ). This year, there have been allegations that UMDNJ had offered no-bid contracts, at times requiring no work, to the politically connected; had paid for lobbyists and made political contributions, even though UMDNJ is a state institution; and seemed to be run by political bosses rather than health care professionals. (See previous post.) Then, there were reports of a series of mysterious burglaries at the central administrative offices of the university, in which nothing of monetary value was taken, but various records were rifled, at a time when these offices had been notified of a US Federal Bureau of Investigation (FBI) subpeona of their records. (See previous post.) And then there were reports that five members of the University's Board of Trustees had potential conflicts of interest. (See post here.)
The latest developments are:
  • The current acting Governor of the state just issued an executive order requiring top officials of all New Jersey state colleges and universities to list their employment history and financial ties to other organizations, and to resign if they continue to be "employed, [are] receiving compensation from, or own or control more than one percent of profits or assets of a firm, association or partnership doing business with the college or university." (See the article in Newsday.) This standard is tougher than many commonly in place at state and private universities, which commonly only require leaders with conflicts to recuse themselves from decisions involving the entities involved in such conflicts.
  • Meanwhile, the FBI raided the UMDNJ administrative offices, and wound up "taking computer hard drives belonging to at least a half-dozen top administrators, including the current and former presidents...." "Terminals belonging to UMDNJ President John Petillo, former president Stuart Cook, and vice president for legal management Vivian Sanks-King were among those searched...." "Investigators also seized information from computers used by University Hospital administrators, including James Lawler, the hospital's chief financial officer." "The raid was the fourth time UMDNJ has been subpoenased by federal investigators in recent months." (See the article in the Newark Star-Ledger.)
The problems at UMDNJ have received considerable attention in the local media, but not in the national media, nor in medical and health care publications. Yet, when the case of UMDNJ is added to the numerous other cases that have appeared on Health Care Renewal, the problem is revealed to be not local to the state of New Jersey, but national, and probably global.
Clearly, health care leaders who may be thinking more of their personal business and political interests than the mission of their health care institution are unlikely to be effective in pursuing that mission. Once again, until we ensure that health care organizations' governance is representative, accountable, transparent, and ethical, we will not get accessible, fairly priced, high-quality health care.
And such a revolution in health care will only be achieved by grass-roots action, by physicians and other health care professionals, and ultimately by the public. Bad leaders will not reform themselves.

Wednesday, November 23, 2005

Strange Bedfellows: Pharmaceutical Companies and Identity Politics

The New York Times reported on the high costs of New York State's Medicaid program related to its payments for prescription drugs, with most surprising results.

The New York State Medicaid program until recently had virtually no cost controls on prescription drugs. Its spending on drugs had gone from $1.7 billion in 1999 to $3.8 billion in 2004. Between 2002 and 2004, it spent $157 million on the drug Nexium, esomeprazole (AstraZeneca), which is chemically very similar to, and has no clinical advantage over generic omeprazole. The program spent more on specific drugs than did programs in other states, for example, it paid $18.70 per cannister of generic albuterol, while the Texas program paid $6.63, and $3.67 per capsule of omeprazole, while California paid $1.44.

The Times noted that New York Governor Pataki, a conservative Republican, had sought various ways to control Medicaid spending on drugs. He asked to cut reimbursement rates to pharmacies for specific drugs, require prior authorization for specific drugs, and develop a preferred drug program. Opposing all these moves was the Democratic majority in the state legislature. According to the Times, "the most pivotal opponents to the [preferred drug] program were Hispanic lawmakers in the Democratic majority in the State Assembly, along with Hispanic advocacy groups, who wanted to retain an unlimited choice of drugs for Medicaid recipients. The Hispanic Federation, a coalition of health and social service agencies in the New York region, held repeated events in Albany to denounce the proposal, saying it endangered patients." "Assemblyman Peter M. Rivera, a Bronx Democrat and Chairman of the Assembly's Puerto Rican/Hispanic Taks Force, helped lead the opposition to the drug list." "Last spring, Mr. Rivera circulated a report among his colleagues saying that Hispanics as a group can react differently to drugs than others. As a result, the report said, pharmaceutical plans should cover a wide range of drugs because restricting them could force Hispanics to take some that are not appropriate for them."

Hold the phone, here. This is all very strange. A conservative Republican fighting to restrict payments for pharmaceuticals? Left-wing Hispanic Democrats leading the charge for practically unlimited spending on pharmaceuticals? None of this fits the usual US political mold.

The Times suggests some answers.
  • One of the Board of Directors of the Hispanic Federation is Sylvia M. Montero, Senior Vice President, Human Resources at Pfizer Inc . "The federation has received contributions from Pfizer since the mid-1990s, including a $50,000 donation las year.... The group also receives contributions from other drug companies...."
  • Assemblyman Rivera "has received more than $20,000 in campaign donations from drug company interests, among the highest total for state lawmakers." Although he asserted, "I am not doing this because I am in the pocket of the pharmaceutical companies. I am doing it because it's the right thing. The governor is trying to balance the budget on the backs of poor people."
  • The report circulated by Mr. Rivera was written by the National Alliance for Hispanic Health, "an advocacy group in Washington that is heavily financed by pharmaceutical companies and has a corporate advisory board whose members are mostly pharmaceutical executives, according to the group's records. The alliance worked on the report with the National Pharmaceutical Council, a trade group of major pharmaceutical companies."
  • "Overall, pharmaceutical companies and trade groups, including Pfizer, Merck, Bristol-Myers Squibb and Eli Lilly, are among the biggest contributors to state politicians in Albany. Since 2002, they have given roughly $2.5 million to New York candidates and committees 0n the state level, channeling most of it to the majorities in the State Assembly and Senate."
  • "Pfizer, which fought the drug list most vigorously, gave about $300,000 in campaign contributions last year alone, up from $100,000 in 2002."
Big pharma companies seem to have spent considerable money and effort ingratiating themselves with people and organizations who promote the politics of ethnic identity. (This has occurred even though the interests of large corporations, including pharmaceutical corporations, stereotypically are linked to the right wing, and the promotion of ethnic identity is usually linked to the left wing, or at least the academic and cultural left.) And now those who promote the politics of ethnic identity seem to be promoting policies that benefit big pharma more obviously than they benefit their ethnic constituencies. Such policies, however, may be very costly to the public as a whole, siphoning off money that could be spent on health care for all, including the disadvantaged.
You really can't tell the players any more without a score card.

National Cancer Institute Cancels Subscription to Cancer Letter: "Strictly a Budget Issue"

The Washington Post reported on a new "cost-cutting move" by the National Cancer Institute (NCI). The NCI, which has a budget of approximately $4.8 billion, canceled its electronic site license for a publication called the Cancer Letter, thereby saving a whopping $48,083. NCI spokesperson Peggy Rhoades said this was "strictly a budget issue" by "budget folks." The NCI also dropped one other subscription, for a total saving of $80,000, about 0.00167% of its budget.
On the other hand, Ellen L. Stovall, President of the National Coalition for Cancer Survivorship, said "The Cancer Letter shines the light of day on the politicization of cancer issues." An anonymous senior NCI investigator said that NCI Director (and acting Food and Drug Administration [FDA]) Director Andrew C. von Eschenbach "clearly did not care for the cancer letter." The Post noted that the Cancer Letter "had been a thorn in the side of von Eschenbach...."
Of course, closing one's ears to criticism doesn't make it any less valid.

Monday, November 21, 2005

Impending Scandal Involving FDA’s Decision on Plan B by Frank A Sonnenberg MD

What follows is a guest blog by Dr. Frank A. Sonnenberg....

On November 15, 2005 The New York Times reported on a Government Accountability Office (GAO) investigation of the controversial and highly irregular decision by the FDA to reject over-the-counter (OTC) status for Plan B (the “morning after pill”). According to the GAO report, there is evidence that the decision was made before the agency’s own scientific review had been completed. The decision has always been considered by Plan B’s proponents to have been made on political grounds. Plan B, which consists of two oral doses of levonorgestrel (a previously available contraceptive), was originally developed by Women's Capital Corporation, which won approval from the FDA. in 1999 to sell the drug by prescription. In April 2003, Women’s Capital applied for OTC status for Plan B. In December 2003, the FDA’s advisory committee voted 23-4 in favor of granting OTC status. However, despite the fact that the scientific review was not completed until April, 2004, shortly after the December committee vote, Dr. Janet Woodcock, the FDA's acting deputy commissioner of operations, and Dr. Steven Galson, acting director of its drug center, told four top staff members that the application would be rejected. Dr. Galson justified the decision by noting that the studies included an insufficient number of adolescents. A decision was promised by last summer, but on August 26, 2005, the FDA postponed the decision indefinitely. (Science October 7, 2005).

There were a number of other irregularities in the decision. First, the NY Times reported that the FDA considered 23 applications for OTC status in the 10 years from 1994 to 2004. Plan B was the only application to be rejected. Second, according to the GAO, the rationale offered by Dr. Galson was at odds with the FDA’s previous assertion that contraception is the same in all women of childbearing age. In fact, this assertion was previously used to deny a request by oral contraceptive makers for “pediatric exclusivity” patent extensions(Couzin 2005). Finally, and perhaps of most concern, as reported in today’s New Jersey Star Ledger, attempts to determine the role of former FDA administrator Mark McClelland, now head of the Centers for Medicare & Medicaid Services (CMS) revealed that key documentation and e-mail messages had been destroyed, possibly in violation of federal records laws.

Dr. Galson said younger teenagers might act differently than older ones and might engage in riskier sex if they knew an emergency contraceptive was easily available. However, there is a plethora of data showing that the availability of Plan B does not increase risky behavior among adolescents. A major study performed in the US, published in January of this year, showed that while women 15-24 years of age were twice as likely to use emergency contraception if it was provided in-advance, they showed no differences in sexual behavior or in the use of contraception. Moreover, as detailed in Science (Couzin 2005) Plan B meets all the criteria for approval of an OTC approval; minimal side effects, lack of abuse potential, easily diagnosable condition (unprotected intercourse) and no requirement for special monitoring of treatment. OTC status for Plan B has been endorsed by a number of professional societies including the American College of Obstetrics and Gynecology.

It is obvious that the decision on Plan B has been influenced by political considerations. It is known that conservatives in Congress and conservative organizations had lobbied against the approval before the FDA’s decision (Steinbrook 2004). Because some in the “family values” movement consider Plan B to be a form of abortion [the FDA considers it to be contraception], the obvious inference is that the FDA is bowing to political pressure not to permit it to go OTC for that reason. The irony is that approximately half of unwanted teenage pregnancies result in abortion and Plan B, with its estimated 85% effectiveness, could prevent a large number of those. Since the US has one of the highest teenage pregnancy rates in the world, this seems to be a case of ideology trumping practical outcomes.

The entire episode is reminiscent of the Bush administration’s promotion of abstinence-only sex education based on the premise that sex education and contraception encourage irresponsible behavior. In fact, a wealth of data demonstrates just the opposite; that adolescents who are exposed to abstinence-only education and those who take abstinence pledges are just as likely to engage in sexual intercourse and are less likely to use contraception when they do (Planned Parenthood), (Sather and Zinn 2002), (DiCenso, Guyatt et al. 2002).

The dangers resulting from subverting sciences for political purposes are very great. In an editorial in April, 2004 (Drazen, Greene et al. 2004), New England Journal of Medicine editor Jeffrey Drazen pointed out that politicization and subversion of science will harm the credibility of the FDA, once considered to be impeccable. In the future, patients and physicians will wonder whether approval decisions will be based on scientific efficacy and safety grounds or on political considerations. The NJ Star-Ledger editorial urged Congress to press the White House on the reasons for the Plan B irregularities.

[Editor's note. The Star-Ledger also noted that "the politics of plan B, however, are only part of the FDA's problem. In crises like vaccine shortages, in addressing safety concerns for medicine like Vioxx and antidepressants and more, the FDA has been clumsy, impotent, too cozy with the drug industry and far from a trustworthy apolitical voice of science it must be if it to protect the public."]

Couzin, J. (2005). "Drug regulation. Plan B: A collision of science and politics." Science 310(5745): 38-9.
DiCenso, A., G. Guyatt, et al. (2002). "Interventions to reduce unintended pregnancies among adolescents: systematic review of randomised controlled trials." Bmj 324(7351): 1426.
Drazen, J. M., M. F. Greene, et al. (2004). "The FDA, politics, and plan B." N Engl J Med 350(15): 1561-2.
Sather, L. and K. Zinn (2002). "Effects of abstinence-only education on adolescent attitudes and values concerning premarital sexual intercourse." Fam Community Health 25(2): 1-15.
Steinbrook, R. (2004). "Waiting for plan B--the FDA and nonprescription use of emergency contraception." N Engl J Med 350(23): 2327-9.

Reinventing the wheel, with a touch of deja vu all over again

In 1998, I authored a website that described the real-world problems of implementing electronic medical records, up to and including outright failures, in clinical settings. These problems included software design issues due to leadership of design processes by non-clinical personnel, conflicts requiring flexible leadership styles fitting the scenario, territorial problems, unhappiness that software only made clinicians' jobs harder, etc.

I am unhappy to report that things have not changed much in the past seven years. In the BMJ article "Kaiser Permanente's experience of implementing an electronic medical record: a qualitative study", the findings are as follows:

Seven key findings emerged: users perceived the decision to adopt the electronic medical record system as flawed; software design problems increased resistance; the system reduced doctors' productivity, especially during initial implementation, which fuelled resistance; the system required clarification of clinical roles and responsibilities, which was traumatic for some individuals; a cooperative culture created trade-offs at varying points in the implementation; no single leadership style was optimal--a participatory, consensus-building style may lead to more effective adoption decisions, whereas decisive leadership could help resolve barriers and resistance during implementation; the process fostered a counter climate of conflict, which was resolved by withdrawal of the initial system.

Shall we accept this as a non-preventable model (which includes significant wasted capital, ultimately, although one person's wasted capital is another's profit) for the thousands of hospitals and hundreds of thousands of clinicians who are supposed to adopt EMR over the next decade or two? Or is someone going to identify the problems and do something about it?

I am not hopeful.

-- SS

The Development and Marketing of Zegerid - And How AstraZeneca Didn't "Want To Do a Study in Sick People"

The San Diego Union-Tribune has weighed in with its own investigative reporting on "me-too drugs." We previously posted on me-too drugs here.

The story focuses on the marketing of Zegerid by San Diego pharmaceutical company Santarus. Zegerid is simply a combination of omeprazole, a generic proton pump inhibitor (PPI), i.e., a drug used to decrease stomach acid, and sodium bicarbonate, a simple chemical used for years as an antacid. Because this combination is treated by the US Food and Drug Administration (FDA) as a new drug, even it simply combines an old and an ancient generic drug, Santarus can market it as a brand-name product. Although 42 doses of over-the counter omeperazole costs about $25 at retail, Santurus is selling 30 doses of Zegerid for about $140. Santurus is marketing the combination product, in the form of a powder that is dissolved in water, as the "first and only immediate release oral PPI."

Clinically, the advantages of an "immediate release oral PPI" are not obvious. Extended release PPIs are used (as are H2-blockers, which are available generically and over the counter) to treat indigestion, gastro-esophageal reflux disease (GERD), and peptic ulcer disease. Drugs that work for a fairly long time are useful to prevent symptoms throughout the day (or night). If one needs immediate release, simple antacids work quite well.

The story of Zegerid's development is instructive. The combination of omeperazole and sodium bicarbonate was developed by Jeffrey Phillips, a pharmacologist in the Department of Surgery at the University of Missouri. A comatose patient in the intensive care unit (ICU) had developed a bleeding ulcer despite intravenous therapy with an H2-blocker. Phillips tried to figure out how to administer a PPI to her, but the extended release coating on Prilosec (omeprazole) clogged the patient's nasogastric tube. But Phillips found that by dissolving the Prilosec in water and adding sodium bicarbonate, he produced a solution he could give through the tube, and the patient's bleeding stopped.

Phillips tried to interest some large drug companies in developing the combination for use in critical care, but without success. Finally, Santarus acquired the rights to it for $1 million.

Although pharmaceutical companies tout their high prices as necessary to support cutting edge research to develop life-saving drugs, Santarus paid relatively little on research on Zegerid ($44 million), compared to the amount it has already spent on administration and marketing, $48 million in 2004 to hire a 400 person sales team.

Dr. John Santa, of the Oregon Health and Science University Center for Evidence-Based Policy, commented,

When a company can get a patent for turning an existing drug into a powder and use clever marketing and tiny differences in study results to sell it, the tail is wagging the dog.
In fact, most of the marketing for Zegerid turns on a single article [ Castell, D., Bagin, R., Goldlust, B., Major, J. & Hepburn, B. (2005)Comparison of the effects of immediate-release omeprazole powder for oral suspension and pantoprazole delayed-release tablets on nocturnal acid breakthrough in patients with symptomatic gastro-oesophageal reflux disease.Alimentary Pharmacology & Therapeutics 21 (12), 1467-1474. ] that showed the combination produced a higher (more normal gastric pH) than did a PPI alone. However, the study was too small to determine if that different in test results translated to any improvement in symptoms or other outcomes. Thus Santa also commented,

This is a perfect example of an issue that advertisers can promote that in fact is not meaningful for patients and doctors. We need to ask why we should pay for something that costs twice as much, or 10 times as much, when there is only a tiny difference - and the difference doesn't translate into less pain or something that matters.
Finally, Phillips' pursuit of a company willing to develop his drug combination to treat critically ill patients produced an important insight into the minds of those who now lead large health care organizations. Phillips approached AstraZeneca, the maker of Prilosec (omeprazole). According to the Union-Tribune, "the company didn't want to do a study involving ICU patients, fearing that deaths and adverse events would tarnish Prilosec's safety record." According to Phillips, one "bigwig" said,
We don't want to do a study in sick people.
Phillips responded,
Dude, these patients are dying because they are bleeding from these ulcers.
The bigwig replied,

Well, what if they die while on the drug.
Phillips' last riposte was,

What if they die and it's a Friday? No one thinks Friday made them die.
In summary, this showed pharma leadership who seemed utterly uninterested in helping really sick patients, and utterly ignorant of the basic premises of clinical research. Such leadership, of course, is not likely to produce products that really benefit the patients who need the most help, and hence seems unworthy of the huge compensation that top pharma leaders now seem to command. What sort of health care are we going to have when "bigwigs" don't want to deal with "sick people?"

Friday, November 18, 2005

The Exorbitant Costs of Orphan Drugs

The Wall Street Journal ran an article this week on the unintended consequences of the Orphan Drug Act of 1983. (Now available free on the web here. )

The Orphan Drug Act was meant to facilitate production of drugs for rare diseases. A product granted orphan drug status by the US Food and Drug Administration (FDA) gets seven years of patent-like protection, without the need to go through the patent application process. Orphan drug status can be given to a product already on the market. Orphan drug status also gives companies tax credits for research and development, grant money for drug testing, and assistance in getting products approved. Furthermore, it is harder for generic drug companies to gain approval to market generic versions of former orphan drugs than of drugs that go off patent.

Although the law was envisioned as likely to apply to only a few products, there are now 260 orphan drugs on the US market, with 1400 in development. "Today, nearly half of all drugs produced by biotech companies are for orphan diseases."

The Wall Street Journal showed that the protections afforded by the Orphan Drug Act enabled pharmaceutical and biotechnology companies to make huge profits off orphan drugs, often by charging staggering prices for them.
  • "Last year, Genzyme Corp. a Cambridge, Mass. biotech firm, posted sales of $840 million on its drug for Gaucher disease, which affects fewer than 10,000 people world-wide. Treating the average patient costs $200,000 annually, the company says. But the price of the drug, dosed by weight, can run as high as $600,000 a year for adults on the higher of the two recommended doses." The Journal documented how this drug was first developed at the US National Institutes of Health (NIH), and a contract to manufacture the drug was given to Genzyme. Genzyme first justified the drug's price because it was produced with difficulty, from human placentas, of which 22,000 were required to make one adult's yearly supply. However, an Office of Technology Assessment study estimated that Genzyme only spent $29.4 million on drug development, because most of the initial work was done by the NIH. Furthermore, in 1994, Genzyme began making the drug using genetically modified cells. The CEO of Genzyme, Henri Termeer "declines to say what the production cost is today." When asked why the price is not lower, he responded, "What's the difference between charging $200,000 or charging $175,000 to a patient? No one can afford it without insurance." The current director of the FDA Office of Orphan Products, Marlene Haffner, commented, "I just find it unconscionable that someone can charge that much."
  • "Genentech received orphan-drug protection in 1985 for its first drug, human growth hormone, to treat children who weren't growing properly because of a hormone deficiency - a population of about 20,000 in the US. Revenue grew rapidly as the drug became more widely used. Last year, 19 years after the first version came to market, the drug yielded Genentech revenue of $354 million."
  • "In 1999, BioMarin Pharmaceutical Inc., a California firm, raised $67 million in an initial public offering based mostly on the promise of a single orphan drug still in clinical trials - a potential treatment for a rare genetic disease called mucopolysaccaridosis I. Fewer than 4,000 people in the developed world are estimated to suffer from the disease...." "BioMarin, in a joint venture with Genzyme, Inc., brought the treatment to market in 2003 at an average cost of $175,000 per patient each year. The joint venture is expected to have sales of about $70 million this year."
  • "Orphan-drug status can also be given to older medicines, if they are being used in new ways." "Calgene Corp. brought a thalidomide pill to market at the price of $6 a pill in 1998 and has since raised the price to about $53. Though thalidomide has been around for decades, it received orphan-drug status for its use in treating a side-effect of leprosy, then later for a certain kind of cancer [multiple myeloma]. The drug is so inexpensive to make that it is sold by other companies in Brazil for seven cents a pill." "The company's chief executive, John Jackson, raised the price - not because it cost more to make or market, but because, he says, many cancer drugs were priced much higher." "A new orphan drug, Velcade, came to market for the same cancer in 2003. Millennium Pharmaceuticals Inc., of Cambridge, Mass., which says it spent many years and millions of dollars developing Velcade, priced it at about $4,400 a month. Mr. Jackson saw the price of Velcade as an opportunity to raise the price of his company's drug further." (See our previous post on thalidomide here.)
"All we wanted to do was make products available for patient who had these rare diseases," said Marion Finkel, former head of the FDA Office of New Drug Evaluation, who wrote to recommend incentives for orphan drugs in 1979. Representative Harvey Waxman, who supported the Orphan Drug Act, said "we did not expect to see thie high cost of orphan drugs."
The article noted that the cost of orphan drugs is now an important part of the huge and growing national cost of health care. For example, "annual spending on specialty pharmaceuticals - the term health-insurance providers use for biotech medicines that treat smaller patient populations, including orphan drugs - rose 23% per member from 2002 to 2003, according to a study funded by the Blue Cross and Blue Shield Foundation on Health Care."
"These companies try to bargain with biotech companies, as insurers do, to get discounts by buying in volume or buying several products. But because there isn't much competition and the markets aren't big, there's less room to negotiate discounts."
The high cost of orphan drugs can be devastating for small businesses who can see their total health insurance bills soar when a single employee starts requiring one of these drugs. A health insurance consultant "says he often hears from people who say they have been targeted for layoffs because of the high cost of their medicines. It's illegal to fire a person because of health costs, but ... it can be hard to prove that was the reason a worker was terminated."
The exorbitant prices of some orphan drugs seems to be an unintended consequence of the way the Orphan Drug Act was written. Although the current director of the FDA Office of Orphan Drug Products noted, "we live in a free country," the Orphan Drug Act clearly did not lead to anything resembling a free market in the products it protected. But it has taken over 20 years for the unintended consequences of this well-intentioned but badly designed law to be noticed. We'll see how long it takes for it to be changed.
This should be a cautionary tale for those who advocate more direct intervention by governments in health care markets.

Commercial Clinical Research Firm Accused of Intimidating Study Subjects Who Talked to Reporters

Bloomberg News has published another article on the commercial clinical research industry, this time focused entirely on the firm SFBC International. We had posted here about a previous report by Bloomberg that alleged conduct of clinical research by such commercial firm was sloppy and shoddy, with minimal oversight by commercial institutional review boards (IRBs).

The new report begins by quoting SFBC International Chairman Lisa Krinsky MD, who completely contradicted allegations made in the first article, "Approximately 99 percent of the information that was documented regarding SFBC is a total fabrication, and the remaining 1 percent was entirely misquoted."
The report then alleged that SFBC International intimidated study subjects who may have provided material to Bloomberg for its first article.
  • "When the two [study subjects] arrived and identified themselves, they were taken to an office, where they were met by [SFBC International CEO Arnold] Hantman [CPA] and other SFBC officials, the drug test participants says. CEO Hantman asked the participant if he was an illegal alien, and then threatened to call immigration officials who could arrest and deport him, the participant says. The test participant says he first told Hantman the truth: that the reporter had properly identified himself and had told him he was researching an article about clinical trials. The drug trial participant says Hantman asked that he sign a statement saying the reporter hadn't clearly said he would publish an article or use his photograph. In a taped interview, the drug test participant says he agreed to say what Hantman wanted because the CEO told him that was the only way to prevent him from being arrested and deported. "
  • "The drug test participant says that that when he returned to SFBC for part of a clinical trial, a person at SFBC asked him to sign another version of the statement. The second piece of paper said the reporter never identified himself as a journalist and didn't say he was preparing an article. The participant says he signed the second statement because he would have signed anything just so he would be allowed to leave. The second paper was false, he says."
  • "Another test subject says an AFBC executive told him that SFBC wouldn't pay him for a clinical trial he had participated in and would alert immmigration officials if he didn't sign a statement saying the reported hadn't told him he would publish an article or use his photo. He says the executive said SFBC would pay him for the clinical trial if he signed the paper. The test participant says he agreed to endorse the false information because he thought it was the only way he could leave the test center and avoid being turned over to immigration officials."
  • "A third drug test participant says he went to SFBC 10 days ago to try to enroll in a clinical trial because he needed the money. He says that after he identified himself, a man who said he worked for SFBC security told him to wait in an office. Eventually [CEO] Hantman came into the room and screamed at him with curse words, the participant says. A group of SFBC employees joined Hantman in questioning about how he knew the reporter. Hantman said he would never allow him to be paid for a clinical trial again.... Hantman also threatened to investigate the participant's immigration status, he says. The CEO also said he many look into whether the participant was paying his taxes to the Internal Revenue Service, the participant says."
What a way to run clinical research projects.
In an article in the South Florida Business Journal, SFBC said, "The assertions from 'anonymous sources' concerning coercion and threats by SFBC employees, including contacting immigration authorities, are basesless. In fact, Arnold Hantman, chief executive officer of SFBC International, has never met with any of the participants contrary to the reporting in the article, and, to the best of his knowledge, none of the participants have ever met him." Furthermore, "the company said that it told participants they will not be allowed to take part in further SFBC trials, but that was because the participants told Bloomberg they falsified forms and presented false government identification. The participants also violated the confidentiality agreement that is part of the consent form process, SFBC added."
So at the moment, we have two completely different versions of what happened. Bloomberg reported that SFBC International intimidated its study subjects into signing false documents about their discussions with news reporters. SFBC International completely denies these accusations, but in doing so acknowledged that they were using study subjects who had falsified data forms, and that they had required study subjects to sign confidentiality agreements, and practice almost unheard of in clinical research done in academic settings.
The new Bloomberg article also included strong condemnations of the alleged way SFBC International conducts research. For example, from Arthur Caplan, from the Center for Bioethics at the University of Pennsylvania:
It's clearly beyond the pale to bully and coerce people because they reported ethical violations. It's simply heinous to try and cover up misdeeds with these actions.
From Senator Charles Grassley, Chair of the Senate Finance Committee:
The process which some of these companties are going through to test drugs on human beings is putting in jeopardy the life, and sometimes even taking the life, of some of these people.
From Adil Shamoo, Professor of Biochemistry at the University of Maryland Medical School, and co-founder of Citizens for Responsible Care and Research:
If this happened, it's awful, unethical, and inappropriate. Oversight and monitoring of clinical trials is very poor. This is further evidence that the system for human subject protection is very broken.
Again, even if one accepts the SFBC International version, major questions have been raised about how commercial firms carry out clinical research. This suggests that physicians and patients need to exercise extreme skepticism about the results of such research and how, or whether it should be applied to clinical care.

Wednesday, November 16, 2005

The University of California -Irvine Shuts Down Liver Transplants

While the San Francisco Chronicle was looking into lavish salaries, benefits, and perks paid to top management in the University of California system (see previous post here), the Los Angeles Times has been busy uncovering problems at one of its campuses, the University of California-Irvine (UCI).

The problems became apparent when the US Center for Medicare and Medicaid Services (CMS) announced it would stop paying for liver transplants at UCI. The transplant program had been performing very few transplants, refusing livers for transplant at a high rate, and had an unusually low survival rate for its transplant recipients. Therefore, patients had remained on the transplant waiting list for long periods of time. (See this link.)

The hospital then announced that the program would be closed. Chief Executive Officer (CEO) Dr. Ralph Cygan announced that the problems would be investigated, noting, “However disappointing this is, our first commitment is to our patients.” (See this link.)

Investigation by the Times revealed that liver transplantation problems at UCI actually started as early as 2001. Through 2000, the program had three full-time transplant surgeons. But in 2001, one left, and its director, Dr. David Imagawa “suffered a heart attack. He returned to work but stopped performing transplants. This left Dr. Sean Cao as the only full-time liver transplant surgeon.” However, Cao “appeared focused on liver and pancreas surgeries that could be scheduled - and not transplants.” An attempt to bring in another surgeon failed after he clashed with Cao. A review by two outside surgeons suggested procedural changed, but these did not affect the refusal rate. Only eight transplants were conducted yearly in 2002 and 2003. In 2004, hospital CEO Cygan admitted trouble recruiting transplant services. Nonetheless, the hospital kept recruiting patients for the transplant waiting list. Later that year California ended its certification of the program, so that the state Medicaid program would no longer pay for transplants there. Cao then left UCI. Since then, the only liver transplant surgeons available at UCI were two based 90 miles away at University of California - San Diego. After the closure of the program, UCI Chancellor Dr. Michael V. Drake commented, “If we look back now, it’s easy to see that plans put in place turned out not to be successful. It’s harder to see that in the present than to see it in hindsight.”

The first lawsuits against UCI, alleging negligence, fraud, and conspiracy, have already been filed. (See this link.)

UCI Chancellor Drake held a meeting with faculty and confessed his prior ignorance of the transplant unit problems, “I was surprised. And I am extremely disappointed I was surprised. I don’t like it at all.” UCI CEO Cygan, on the other hand, offered, “Our goal was to build the best liver transplant program in the West. We felt we were this close to achieving those goals.” (See this link.)

UPDATE (11/17): Again according to the LA Times, UCI CEO Cygan was just put on paid administrative leave. UCI Chancellor Drake announced the formation of a "blue ribbon committee" to investigate the failure of the transplant unit. In reference to Cygan, Drake announced, "this happened on his watch. The buck had to stop someplace."

The Times noted that the transplant debacle was hardly the first scandal at UCI. In 1995, a team of fertility doctors were accused of transplanting eggs without patients’ consent, conducting research without informed consent, and prescribing unapproved drugs. Two fled the country, and one was convicted of fraud. In 1997, a UCI research laboratory was found to have violated federal and university regulations by charging Medicare for experimental drugs. The laboratory closed and its director resigned. In 1998, a researcher was charged with using blood samples with patients’ consent. In 1999, the director of the medical school’s Willed Body Program was found to have sold parts of cadavers, misappropriated money, conducted unauthorized autopsies, and used inappropriate procedures on laboratory animals. He was fired, and the program was taken over by the UC Office of the President. In 2004, a cancer researcher was accused of mis-spending funds. The matter is still under investigation.

Thus, it appears that the UCI liver transplant program was badly managed and run, probably unnecessarily delaying patients’ transplants. Although UCI administrators seemed to be aware of the programs failings, their efforts to improve matters were, at best, ineffectual. The problems in the management of this program come after a series of other controversies that also seem plausibly related to poor management.

Yet, top managers of UCI seem not to have suffered financially for their apparent poor management abilities. Based on the San Francisco Chronicle’s data-base of the highest-paid UC employees, in 2004, the previous Chancellor of UCI made $477,278. Presumably, current UCI Chancellor Drake makes more. In 2004, the UCI hospital director, Ralph W. Cygan, made $404, 649. Furthermore, the Chronicle’s investigation suggested that most top administrators have luxurious perks on top of their salaries. For example, most chancellors live in fully-staffed mansion, rent-free. (See this link.)

UPDATE ( 11/17): I have to note that Cygan has paid a penalty, at least to his reputation, by being suspended with pay. He has not yet paid a financial penalty. And Drake, the top official at UCI, has determined that "the buck has to stop someplace," but not on his desk. Thus, I have to give credit to UCI for establishing some management accountability, but that accountability does not appear to extend to the highest levels of management.

So let us consider the comments made by University of California Regent John Moore to justify the luxurious salaries, benefits, and perks dished out to top UC managers (reported by the San Francisco Chronicle).

The senior folks at UC are under market, and there are a lot of bad things that can happen from that. You don’t get to look at the best people in the market. It is almost like there is a Marxist notion that it is bad that we give raises to bring people to the market rate.
Despite the lavish spending on top management, however, “a lot of bad things” did happen. Well-paid managers at UC- Irvine presided over a series of scandals and controversies since 1995, culminating in the latest, the shut-down of the liver transplant program.

A California State Senator, Jackie Speier, charged,

What we see here is a lack of transparency, a lack of candor, and a sense of entitlement that really troubles me. There are gross inequities that need to be addressed.
(See this link.)

Moore also likened his critics to “Marxists,” yet by constructing a system in which the top managers of the University of California, a government institution, have become the nomenklatura, living in luxury, apparently at the expense of faculty, students, patients, lower-paid staff, and tax-payers.

Monday, November 14, 2005

Leadership Living Large at the University of California

The San Francisco Chronicle published a series on how the leaders of the University of California (UC) system are compensated. (Links to the multiple articles are below).

In general, the proportion of system employees who made the largest salaries grew faster than total system employment. Total employment grew about 1% a year for the last two years. The number of employees with salaries greater than $200,000 grew 14.4% in 2004 (compared to the previous year), and 13.4% in 2005. Meanwhile, employees with the lowest salaries endured a pay freeze.

A report by Mercer Human Resource Consulting showed that UC pay for administrators was 15% lower than that at peer organizations. A University regent used the Mercer report to argue that "the senior folks at UC are under market, and there are a lot of bad things that can happen from that. You don't get a look at the best people in the market. It is almost like there is a Marxist notion that it is bad that we give raises to people to bring people to market rate."

However, the Mercer comparison only took into account salaries, not other monetary and non-monetary compensation. Yet, the Chronicle reporters noted that some top officials got more than even what UC dubbed their total compensation. A total of $871 million in bonuses, administrative stipends, relocation, and other payments went to 105,482 employees, with the bulk, about $599 million going to 8500 employees who got at least $20,000 more than their regular salaries.

These payments included special incentives for employees who took on extra work, e.g. an Associate Vice Chancellor at UCLA who got $37,000 as an "incentive award" in addition to a $183,400 salary; relocation allowances, e.g., the Dean of the UCLA Law School got a $270,000 housing allowance in addition to his $290,000 salary and payment of his moving expenses; housing and car allowances, e.g., the acting human resources director at Los Alamos National Laboratory got $83,383 for rent, car lease, and living expenses in addition to a salary of $161,000; administrative stipends, apparently yet another term for extra payments for some special administrative work; and revenue sharing, referring mainly to physicians who get a cut of the clinical revenue they bring in.

The article noted that ordinary faculty do not get extra money for taking on additional teaching duties.

Furthemore, some of these extra payments apparently were never subject to oversight. "Even UC regents typically don't find out about the extra pay. Although UC policy generally requires regents to approve salaries above $168,000 at public meetings, UC administrators are usually free to give employees other compensation on their own."

Some administrators also generated considerable "outside income," while they ostensibly worked full-time for the university. For example, the Dean of the UC - San Francisco Medical School, David Kessler, not only recieved $540,ooo in "total compensation," a relocation allowance of $125,000, and $30,000 for rent, but also earned "tens of thousands of dollars for serving on advisory boards for several firms, including Fleishman-Hillar, the public relations firm." In addition, the Chancellor of UCSF, Michael Bishop, "had more than a dozen sources of moonlighting income - including lectures, research, and consulting - in addition to his annual salry of $358,899."

Many officials had additional non-cash benefits. These included: free or subsidized housing, some of it palatial; jobs for spouses or significant others; and free entertainment, travel, and parties.

Top leaders live in university owned mansions, with all expenses paid and services provided by UC. At the very top, UC President Robert Dynes and his wife live in a 13,000 plus square foot mansion on 10 acres, with an extensive staff. The upkeep of the estate, including landscaping, cleaning, and hired help, cost $294,559 in 2003. Landscaping alone cost more than $19,000.

Although commonly justified by the need for these officials to entertain, the reporters noted that many of the lavish homes that house top UC officials are the site of only a few events a year.

During a time when the UC system sustained a 15% cut in state funding, increased student fees by 79% ($3429 to $6141) in the last four years, and froze salaries of lower level employees, these increasingly lavish salaries, other financial compensation, and perks suggest an organization more attuned to benefiting its top leaders than maintaining the morale of its other employees, and fulfilling its mission to its students and other stake-holders (including patients of its teaching hospitals and clinics). Furthermore, leaders splendidly isolated in their fully-staffed dachas may rapidly forget what the interests of ordinary students, patients, faculty, and employees might be.
Services cut for students as high-pay jobs boom 2,275 university employees earned more than $200,000 during the last fiscal year
Free mansions for people of means UC system spends about $1 million yearly on upkeep

UC piling extra cash on top of pay 8,500 top staffers pulling down at least $20,000 each in bonuses, compensation

Other perks include parties, gifts, travel

Friday, November 11, 2005

Advertised Explanations of How SSRI Anti-Depressants Work May Be Misleading

A new commentary in PLoS Medicine (full citation: Lacasse JR, Leo J (2005) Serotonin and Depression: A Disconnect between the Advertisements and the Scientific Literature. PLoS Med 2(12): e392 ) suggests that direct-to-consumer advertisement (DTCA) of the newer selective serotonin reuptake inhibitor (SSRI) medications for depression and anxiety may be misleading.
In particular, such advertisements sometimes suggest that these drugs correct an imbalance of serotonin chemistry in the brain. For example, the article quoted these advertisements:
  • “Celexa helps to restore the brain’s chemical balance by increasing the supply of a chemical messenger in the brain called serotonin."
  • “When you’re clinically depressed, one thing that can happen is the level of serotonin (a chemical in your body) may drop. So you may have trouble sleeping. Feel unusually sad or irritable. Find it hard to concentrate. Lose your appetite. Lack energy. Or have trouble feeling pleasure…to help bring serotonin levels closer to normal, the medicine doctors now prescribe most often is Prozac®”
  • “Chronic anxiety can be overwhelming. But it can also be overcome…Paxil, the most prescribed medication of its kind for generalized anxiety, works to correct the chemical imbalance believed to cause the disorder."
  • “While the cause is unknown, depression may be related to an imbalance of natural chemicals between nerve cells in the brain. Prescription Zoloft works to correct this imbalance. You just shouldn’t have to feel this way anymore”
Providing such a physiologic explanation for these drugs' actions makes it more plausible that they benefit patients.
Yet the theory that depression or anxiety are due to imbalances in brain levels of serotonin is just that. There is no proof that it is correct, and in my humble opinion, it seems overly simplistic given our increasing but still fragmentary understanding of neuroscience. Thus the advertisements may be misleading because they provide seemingly authoritative mechanistic explanations of why these drugs should work that are not necessarily true.
Again, neither patients nor doctors are served well by potentially misleading marketing, especially when there are new questions whether the class of drugs being marketed is really superior to older (and cheaper) alternatives.
Thanks to Schwitzer's Health News blog for the tip.

Thursday, November 10, 2005

A Drug for "Eliminating Cardiovascular Risk?"

The Washington Post recently reported on an interview with Pfizer Chief Executive Officer (CEO) Henry A. (Hank) McKinnell. (The PhD seems to have been in business, from Stanford, as per his official bio.). In it, he asserted that the combination of the new drug torcetapib with atorvastatin (the latter is now marketed as Lipitor) could potentially eliminate coronary disease,
It looks like a combination of raising HDL and lowering LDL cholesterol could have dramatic impact, maybe eliminating cardiovascular risk.
This is an extraordinary assertion.
Although high LDL (bad) cholesterol and probably low HDL (good) cholesterol are risk factors for coronary artery disease (CAD), they are surely not the only risk factors. Cigarette smoking, diabetes, and hypertension are also well known risk factors. In addition, CAD clearly afflicts people who have no known risk factors.
Therefore, it is hard to believe that any treatment, no matter how potent, that addresses only cholesterol would come anything close to eliminating the risk of cardiovascular disease.
So why would Mr. McKinnell say such a thing?
The possibilities seem to be marketing hyperbole, his ignorance of the epidemiological and clinical background, or misquotation.
The first two are particularly discomfiting.
Although we expect hyperbole in the marketing of ordinary products, laundry detergent for example, this sort of hyperbole in the marketing of drugs could have serious repercussions in this context. If people were lead to believe that they could prevent all CAD by merely taking a pill to improve their cholesterol profile, this might reduce their motivation to control their blood pressure or diabetes, or to give up smoking.
On the other hand, if Mr. McKinnell is so ill-informed about the drugs his company produces that he really believes that this new combination pill will eliminate CAD, what else about pharmaceuticals doesn't he understand? Having someone in charge of the world's largest pharmaceutical company who knows so little about drugs could lead to all sorts of mischief.
So I really hope he was misquoted.
If not, I really hope that he learns to restrain his tendencies to hyperbole, and/or to become better informed about what his company makes before something really bad happens.