Top Pharmacy Chain Executives Indicted for Conspiracy, Fraud and Bribery

Late last week, the Providence Journal reported the indictment of two top executives of CVS, one of the largest US pharmacy chains:

[Carlos] Ortiz and another prominent CVS executive, John R. 'Jack' Kramer, were accused in a 23-count indictment of conspiracy, fraud and bribery for allegedly hiring [former Rhode Island State Senator John] Celona as a $1,000-a-month consultant from early 2000 to the fall of 2003, paying him a total of about $45,000 and also lavishing him with golf outings, trips to Florida and California and tickets to professional sporting events.

Although Celona was ostensibly paid to improve CVS’ image among consumers, U.S. Attorney Robert Clark Corrente charged that Kramer and Ortiz put Celona on the payroll 'to advance the company’s legislative agenda…through illicit payments to Senator Celona.'

In return, the indictment said, Celona used his political clout to kill controversial 'pharmacy choice' legislation that would have expanded the Rhode Island network of pharmacies that accepted Blue Cross reimbursements. CVS, which dominated the restricted network, opposed the bill so strongly that the company tied Kramer’s and Ortiz’s performance reviews to defeating the legislation.

Killing the legislation, Ortiz wrote in one review, had 'helped to protect millions of dollars of sales.'

The indictment says that Celona also opposed the licensing of Canadian pharmacies in Rhode Island, pushed legislation to allow the electronic filing of prescriptions and promoted the creation of a state-backed loan program for pharmacy students.

Celona pleaded guilty in 2005 to selling his office to CVS, Blue Cross & Blue Shield of Rhode Island and Roger Williams Medical Center, and is due to be sentenced Jan. 31. He testified last fall in the corruption trial leading to the conviction of former Roger Williams executives Robert Urciuoli and Frances Driscoll.

Yesterday’s indictment left one major question unanswered: Will the investigation reach Tom Ryan, the chief executive of the nation’s largest drugstore chain...?

The indictment refers cryptically to a 1999 memo that Ortiz sent to a number of CVS officials, including 'Executive #1,' in which he discussed pharmacy choice and wrote, that he was 'hopeful that we will be able to kill it in the Senate Corporations Committee.' However, the indictment also charges that Kramer and Ortiz failed to have Celona’s consulting agreement reviewed and approved by CVS’ chief financial officer; and others, as required under company policy governing consultants.

Ryan has declined to comment on whether he knew of the arrangement. The indictment mentions Celona’s attendance at a social function at the home of 'CVS Executive #1,' but doesn’t elaborate on that person’s possible knowledge of the relationship.

'No charges were filed against the company, which has fully cooperated with the government in connection with its investigation of this matter since its inception,' CVS said in a statement yesterday.

Of course, an indictment does not prove guilt. But this is just the latest example of allegations of criminal behavior made against the leadership of health care organizations of every type.

It seems that for far too many executives and managers of US health care organizations, conspiracy, fraud, and bribery are just part of another day at the office. It is likely that such criminal conduct, plus the probably much more common conflicts of interest, and just plain mismanagement that seem everywhere in the leadership of US (and global) health care are important, maybe the most important explanations of why we seem unable to address rising costs, declining access, stagnant quality, and demoralization of health care professionals.