Tuesday, September 30, 2014

Price Fixing, Regulatory Capture, Crony Capitalism - Will the New Public Citizen Report Succeed in Outing the RUC?

Just last month the RUC made it back into the headlines.  Then we posted  Politico made another attempt to shed some light on this obscure committee and its outsize effect on health care. Now the watchdog organization Public Citizen has stepped into the breach, publishing a report on the RUC (Research Based Relative Value Scale Update Committee), with an accompanying press release and op-ed

Introduction - Why the RUC is Important

To explain why this issue is important, I can simply repeat what I wrote before

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

The article in the Annals, however, proposed one conceptually simple answer.  The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject, efforts by humble bloggers such as yours truly, a major journalistic expose in the Wall Street Journal in 2010,  another major expose in Washington Monthly in 2013, congressional hearings in 2013, and yet another major expose in Politico in 2014.  The lack of much public discussion of this issue despite its importance and the above attempts to start discussion seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)

Once Again...  the Public Citizen Report

The latest report draws on the earlier exposes and journal articles, and repeats again all but one of the major points in the Washington Monthly 2013 article.  Here are the points with quotes from the new report.

The RUC is Well Hidden

After describing the RUC as "secretive" in its introduction, the report reviewed the specifics:

most of its proceedings occur behind closed doors and without public scrutiny. Minutes from each of the RUC’s three annual meetings are not made publicly available. Additionally, when the RUC votes each spring to assign work RVU values to CPT codes, the voting results are not released to the public.


One critical piece of information that is not disclosed to anybody (including RUC members) is any indication of how each member of the RUC voted.

The RUC Fixes Prices

The RUC has enormous power in setting health care prices,...

The Government Enables the RUC to Fix Prices

The key data point in the formula that is used to set Medicare payment rates is largely determined by a secretive committee that is managed and funded by the American Medical Association....


CMS is not required to accept the RUC’s recommendations. In fact, the RUC is insistent that its role in the process is only to exercise its right to petition the government. However, studies have demonstrated that CMS accepts RUC recommendations at overwhelmingly high rates.

The Government Fixed Prices are Endorsed by the Private Sector

The RUC’s influence over physician payments extends well beyond Medicare payments because private insurers also use the Medicare payment framework as a baseline for determining their payments. Private insurance companies often set their payments based on the underlying Medicare fee schedule.

The Price Fixing Drives Up Costs and the Use of Services

The RUC has been accused of overstating many of the factors used to determine a physician payment.


When the RUC has recommended adjusting the values that determine physician payments, it has been more than five times as likely to increase pay for a procedure as decrease it.

These Incentives Cripple Primary Care

To the extent that the RUC’s members are biased towards their own specialties, this results in the overvaluing of specialty procedures at the expense of primary care. Because there are significantly more specialty procedures than primary care procedures, the overvaluation of specialty and procedural services has caused U.S. specialists’ pay to rise much more rapidly than primary care physicians since the formation of the RUC.

Higher pay to specialists creates greater incentives for medical students to practice specialty or procedural medicine, resulting in a shortage of primary care physicians.

These Incentives Benefit Big Corporations, not just Medical Specialists

This was the only issue not directly addressed in the 2014 Politico article or in the new Public Citizen report.  (But see our 2013 post.)

Anechoic So Far

So in some sense the Public Citizen report on the RUC sang the same old song.  However, as the report itself noted, previous attempts to inspire action about the RUC have generated no echoes.  Thus, maybe it should be no surprise that so far there has been no press coverage of the Public Citizen report (at least as far as I could tell by using my usual search techniques as of this morning). 

Of course, as we have discussed ad infinitum, that which discomfits those who are making so much money from our current health care system often manages to create few echoes, that is, what we have dubbed the anechoic effect.

This is all the more interesting because there are aspects of the RUC that could outrage both left- and right-wingers.  First of all, the RUC is a major component in a system of government price fixing.  Enabled by the RUC, CMS fixes the prices of medical care.  Many on the right, but particularly those of the more libertarian or free market fundamentalist persuasion say they hate government price fixing.

Second of all, the RUC exemplifies regulatory capture.  The report quoted

 Thomas Scully, an administrator of the Centers for Medicare and Medicaid Services under President George W. Bush, also has been highly critical of the RUC, and particularly the power the AMA has over the process. 'The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild,' Scully said in 2013.

Again, many on the right, and also, probably many on the left worry about regulatory capture.

Third, the RUC represents a particular species of regulatory capture, crony capitalism.  This was not emphasized in the report, but we have written before about how many RUC members have personal financial ties to health care corporations, and how these constitute conflicts of interest (look here).  The Washington Monthly noted that RUC members are sponsored by medical societies that in turn have institutional conflicts of interest involving big health care corporations, and that the way the RUC sets prices could benefit such health care corporations (look here.)  Both left- and right-wingers say they loathe crony capitalism, although the left emphasizes the undue influence of big business, and the right emphasizes the bad actions of government resulting from it.

Yet very few on the right or left seem to have noticed, much less have become outraged by the RUC

The new Public Citizen report suggested

The most important policy change is for CMS to stop relying on the AMA to maintain the existing system for determining the value of Medicare payments to physicians.

Maybe this time someone will listen.  As I have written too often, I hope the latest attempt by Public Citizen to make the RUC less anechoic will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.

APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.


As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.

However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."

In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.

That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.

In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  

Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

Friday, September 26, 2014

Shire Settles Claims of Deceptive Marketing of Multiple Drugs for $56.8 Million, No Individual Held Responsible

Here we go again.  A big drug company has settled claims of deceptive marketing, yet no individual was held accountable.  The most extensive coverage came from the Philadelphia Inquirer, presumably since the announcement came from the local US Attorney.

The basics were:

Shire Pharmaceuticals L.L.C. will pay $56.5 million to settle allegations that it inappropriately promoted the sale of ADHD medicine, among other drugs, the U.S. Attorney's Office in Philadelphia said Wednesday.

Shire is registered in the Channel Islands and headquartered in Dublin, but operates from the United States....

As is usual in such cases,

Shire admitted no wrongdoing, but also entered into a five-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

The detailed allegations make for interesting reading.

The settlement resolves allegations that, between January 2004 and December 2007, Shire promoted Adderall XR for certain uses despite a lack of clinical data to support such claims and overstated the efficacy of Adderall XR, particularly relative to other ADHD drugs. Among the unsupported claims allegedly made by Shire was that Adderall XR was clinically superior to other ADHD drugs because it would 'normalize' its recipients, rendering them indistinguishable from their non-ADHD peers. Shire allegedly stated that its competitors’ products could not achieve similar results, which the Justice Department contended was not shown in the clinical data Shire collected. Shire also marketed Adderall XR based on claims that Adderall XR would prevent poor academic performance, loss of employment, criminal behavior, traffic accidents, and sexually transmitted disease. In addition, Shire promoted Adderall XR for the treatment of conduct disorder, an indication not approved by the Food and Drug Administration (FDA).

The settlement further resolves allegations that, between February 2007 and September 2010, Shire sales representatives and other agents also allegedly made false and misleading statements about the efficacy and abuse liability of Vyvanse to state Medicaid formulary committees and to individual physicians. For example, one Shire medical science liaison allegedly told a state formulary board that Vyvanse 'provides less abuse liability' than 'every other long-acting release mechanism' on the market. No study Shire conducted concluded that Vyvanse was not abusable, and, as an amphetamine product, the Vyvanse label included an FDA-mandated black box warning for its potential for misuse and abuse. Shire also made unsupported claims that treatment with Vyvanse would prevent car accidents, divorce, being arrested, and unemployment.

Additionally, the settlement resolves allegations that, from April 2006 to September 2010, Shire representatives improperly marketed Daytrana, administered through a patch, as less abusable than traditional, pill-based medications. The settlement also resolves allegations that, for part of the foregoing periods, Shire representatives improperly made phone calls and drafted letters to state Medicaid authorities to assist physicians with the prior authorization process for prescriptions to induce these physicians to prescribe Daytrana and Vyvanse.

Finally, the settlement resolves allegations that, between January 2006 and June 2010, Shire sales representatives promoted Lialda and Pentasa for off-label uses not approved by the FDA and not covered by federal healthcare programs. Specifically, the government alleged that Shire promoted Lialda off-label for the prevention of colorectal cancer.
Thus, the allegations were that Shire marketers and "agents" made false, sometimes apparently ridiculous claims about four different medicines.  Some of these claims, for example, that an amphetamine drug had no abuse potential, or that an anti-inflammatory drug would prevent cancer (in patients at risk for cancer), could conceivably have led to patients being harmed. 

According to the Wall Street Journal, the settlement was made to clean up loose ends before the big take-over of Shire,

 The pact resolves one outstanding issue ahead of Shire's planned $54 billion acquisition by AbbVie Inc.

So note that the dollar amount of the settlement is approximately one one-thousandth (0.1%) of the total value of Shire.

According to the Philadelphia Inquirer, no one admitted guilt, and no individual will pay any penalty:

'We are pleased to have reached a resolution and to put this matter behind us,' Flemming Ornskov, Shire’s chief executive officer said in a statement.

So this follows the usual formula for legal settlements in health care.  A big pharmaceutical company was alleged to have deceptively marketed multiple products.  Some of the deceptions could have lead to patient harm.  The government took the company to court, but the end result was a monetary penalty paid by the company that might appear large, but which was tiny compared to the assets of the company.  The company did not have to admit guilt.  No individual at the company paid any penalty or suffered any consequence.  While the organization had to sign a "corporate integrity agreement," it is not clear that such agreements prevent future bad behavior.

There have been many, many such settlements, as we have discussed on Health Care Renewal.  At least these settlements serve as evidence that many, many large health care organizations have behaved unethically, often in ways that not only increase health costs, but may directly harm patients.  Yet the settlements seem bent over backwards not to trouble the people who personally profited from unethical behavior. 

Individual company marketers, their supervisors, and top executive likely made more money because of the revenue brought in by the unethical practices.  However, the settlement somehow avoided identifying any of them, or even stating unequivocally that the company, or any of its employees did anything wrong.  That is absurd, since if nothing bad was done by anybody, why did the company have to pay anything?  Beyond that, if individuals who work for big drug companies, and other large health care organizations know that whatever they do in their official capacities, they will not be held personally responsible, what would deter them from taking unethical actions in the future?

Most citizens trust drug companies to provide safe effective medicines.  Marketing drugs as safer than they are, or for purposes for which they are not effective abuses the companies' entrusted power.  Doing so in order to enrich oneself thus is a manifestation of corruption.  The ongoing parade of legal settlements is thus a marker of how corrupt health care has become. 

Furthermore, the continued inability of regulators and law enforcement to do more in the face of corruption suggest moral failure, incompetence, and perhaps more corruption.

We will never achieve true health care reform, and will never really improve our vastly over-priced, ineffective health care system until we address this sort of health care corruption

A final note: Eric Holder, the current US Attorney General, will soon leave.  While he has been hailed for promoting human rights in some instance (that is, for LGBT individuals), he has been criticized for never making an effort to pursue the top corporate executives who were responsible for the global financial collapse of 2008 (look here) although the Department of Justice constantly goes after relatively small scale white collar criminals.  He also appears to have almost never pursued any top corporate executives involved in deceptive, unethical, illegal or corrupt health care practices, while the government constantly pursues perpetrators of relatively small scale Medicare and Medicaid fraud (look here).  One of his US Attorneys notably pursued the late Aaron Swartz for vaguely specified computer crimes which did not appear to harm anyone while she gave passes to executives at big health care corporations that settled cases of alleged actions that likely harmed patients (look here).   His failure to pursue such large scale health care corruption should be regarded as no less serious than his failure to pursue financial corruption.

Wednesday, September 24, 2014

Being a Health Care CEO Means Never Having to Say You Are Sorry - (Michael) Covert Edition

Physicians and other health care professionals are increasingly subject to various measures of their quality, productivity, and "value," and beholden to administrators, managers and bureaucrats.  The notion of health professionals being primarily accountable to patients and to professional standards has become old school.  Instead, the business school dogma of  "pay for performance" reigns. There is little evidence that putting health care under the control of administrators, managers and bureaucrats has been good for anyone but administrators, managers, and bureaucrats, but the burdens they have imposed seem to be a major reasons for increasing professional burn-out.

While health care professionals are thus subject to increasingly burdensome oversight by managers and administrators, it is not clear that those managers and administrators are taking their own medicine.  At best, they seem only accountable to each other.  And thus, their pay and power seem disconnected from any rational notion of their performance.

I recently stumbled upon a story illustrating how top health care managers can repeatedly get hired again and again despite major questions about previous performance.

A New CEO Position for Michael Covert

In June, 2014, the Houston Chronicle announced Mr Michael Covert as the new CEO of the Catholic Health Initiatives (CHI) St Luke's Hospital System,  and a new Senior Vice President of CHI.  It included the typical praise from top CHI leaders and stewards.

'Michael has the qualities, skill and professional background to help lead CHI through the many dramatic changes occurring today in health care,' Michael Rowan, Catholic Health Initiatives' president of health systems delivery and CEO, said in a written statement.

Leonard Tallerine, [apparently the former CEO of GoldKing Energy, which is currently in bankruptcy] chairman of the CHI St. Luke's Health board of directors, agreed.

'Michael's depth of experience has honed two key skills: communication and collaboration,' Tallerine said in a written statement.

I confess I missed that article, but I did see an article from mid-September, 2014, in the Chronicle documenting a rather uncritical interview with Mr Covert.  He did manage to boast of his previous success:

Q. What makes you the right guy ...?

A. It's because of my past experience. I've worked in an academic setting. I've worked in a Catholic hospital setting. I have run systems. I've worked for physicians. I've been doing it for a while. And I've had the fortune of some good success.

He also decried excess regulation in California ("we were so regulated");  promised to "develop relationships with our physicians that are strong"; promised "It's not going to be all about buildings"; boasted about "teams I've created"; and proclaimed "it's important for us to be strong on our quality, our finance, our patient engagement, our employee engagement."

So far, here we have yet another new top hospital system manager who seems to be a fount of excellence, at least according to those to whom he is supposed to be accountable.

However, the name Michael Covert rang a bell, and quick search of Health Care Renewal, plus Google revealed that his record is not quite as pristine as portrayed above. 

The Covert Record

Million Dollar Plus Compensation  Questionable Celebrity Endorsements, Quality Problems

Mr Covert first lit up the Health Care Renewal radar screen in 2010 because of his relatively large compensation, greater than $1 million per year, for the CEO of a not very large, nominally public hospital system, Palomar Pomerado.  At the time, the usual explanations were provided by the hospital district chairman, who happened to be a former hospital executive.  It later turned out that Mr Covert was the second most highly paid public official in the state of California.

As Mr Covert's pay became the subject of wider discussion, the hospital nurses' union weighed in with charges that Mr Covert had irresponsibly spent money on celebrity endorsements, particularly from a well known athlete who soon left California for New York. (Look here.)

Also, in 2011 the San Diego Union-Tribune reported that the two hospitals Mr Covert lead had been fined for significant errors/ quality problems in 2010, and had been fined before for such problems.

These facts did not seem aligned with the claims by the district hospital board that Mr Covert was a "phenomenal," "excellent" or "top" leader.  They also seemed to belie Mr Covert's recent discussion of being responsible about finance, employee engagement, or quality.  On the other hand, one can see why he dislikes regulation.

Alleged Obstructed Investigation of Murderous Fake Doctor in the 1980s

Later in 2011, a little big of digging on the internet suggested that Mr Covert had a long history of issues.  In 2008, the local Community Paper did an extensive investigation into his past.  We summarized it here.  First, the article charged that in the 1980s, as a top manager at the Ohio State University Hospital System, Mr Covert impeded the investigation into Michael Swango, a fake doctor working at that institution, who was ultimately convicted of murdering three patients.

At that time, Mr Covert seemed not so interest not merely in regulation, but in the laws of the land.

Illegally Revoked a Physician's Hospital Privileges in the 1990s

The Community Paper also found that the Sarasota Memorial Hospital illegally revoked a physician's privileges.  At the time, Mr Covert was CEO of that hospital.  The Community Hospital also alleged that Mr Covert's testimony at that trial was "thoroughly impeached."

What was that about strong relationships with physicians?  

Alleged Misrepresentation of Facts About Hospital Bond Issue

The Community Paper reported in 2007 that Mr Covert misrepresented facts in his advocacy for a large bond issue to support building a new hospital for the Palomar Pomerado Health District.

Responsible about finance? 

Dictatorial Management Style

The Community Paper interviewed multiple health professionals at Palomar Pomerado uncovering multiple charges that Mr Covert was a manipulative, egotistical and dictatorial leader.

Was this a way to develop wonderful teams? 

Another Lawsuit Claiming Improper Termination of a Physician's Privileges

Later in 2008, the Community Paper noted a lawsuit filed against Palomar Pomerado by a staff physician who also alleged that the hospital had improperly terminated his privileges.  I cannot find any record of how this was resolved.

Again, what was that about relationships with physicians? 

Palomar Pomerado Left in Debt

Mr Covert resigned from Palomar Pomerado in mid-2014 to head to his new position as CEO of Catholic Health Initiatives St Luke's Health System in Houston.  At that time, the San Diego Union-Tribune reported that after building an expensive new facility, Mr Covert would be leaving a hospital system deep in debt and with substantially worsening financial results.

Moody’s Investors Service, the bond rating agency that warned twice in two years of Palomar’s declining financial health, most recently in March. 'PH’s debt measures are among the weakest in Moody’s portfolio of rated public and not-for-profit health care organizations (debt measures exclude GO debt),' the agency said.

Palomar Health’s hospitals and clinics run at a loss; operating margin was negative 4.2 percent in the first half of fiscal year 2014, an improvement from minus 12.2 percent in the same period in 2013.

Worse, the district has cash problems. While improving, it’s still violating a bond covenant to keep enough cash for 80 days.

Didn't Mr Covert say something like it's not about the buildings?  Again, what happened to that emphasis on strong finance? 

And in general, looking at the whole section above, what did Mr Covert think was his "good success?"


The bureaucrats and managers to whom Mr Covert reported as CEO of Palomar Pomderado, and those to whom he will report as CEO of CHI St. Luke's thought he was brilliant.  Mr Covert proclaimed that he would engage employees, collaborate with physicians, and focus on quality and responsible finance, among other issues.  Yet Mr Covert seemed to leave in his wake as former leader of multiple hospital systems allegations of dictatorial leadership, irresponsible management of finances, deceptions, and opacity (even in the face of investigations of criminal behavior).  Mr Covert's previous hospitals paid fines for quality violations, went into severe debt, terminated physicians' privileges once allegedly improperly, and once illegally as found by a jury, and in one early case harbored a homicidal fake doctor.

Were the people who recruited and vetted Mr Covert bamboozled by his charm, to the point that they did not even bother to check the public record of his past performance?  Or were they, as managers and administrators, not apt to question a fellow member of their guild?

By the way, why did no one in the Houston media think to actually ask some hard questions about the latest star on the local health care management scene?

So why should we as health care professionals, or members of the public ever believe the managers and administrators who have taken over health care? Especially when they promise to improve quality and control costs by making everyone else responsible to them?

True health care reform would make health care leaders accountable for putting patients' and the public's health ahead of personal gain.  Generic managers following business dogma may not be the people to do this. 

ADDENDUM (29 September, 2014) - Thanks to the comment by Dr Howard Brody below, I corrected the statements about that Michael Swango was a fake doctor.  He did in fact have a real MD degree. 

Monday, September 22, 2014

Health Care Renewal Bloggers to Present

Course on Trustworthiness of Clinical Practice Guidelines

Dr Roy Poses and Dr Wally Smith will be teaching a course on Trustworthiness of Clinical Practice Guidelines at the Annual North American meeting of the Society for Medical Decision Making, Doral, Florida, 18-22 October, 2014.

Particularly relevant to Health Care Renewal, the course will focus on reasons physicians may fail to trust clinical practice guidelines, including  concerns about the integrity of the evidence base supporting the guidelines, particularly due to manipulation and suppression of clinical research, and concerns about the guideline development process, including conflicts of interest. Furthermore, we will discuss measures that might improve the trustworthiness of the CPG development process, with emphasis on the recent report by the US Institute of Medicine, of which Dr Smith was an author.

Special Symposium on Understanding and Challenging Health Care Corruption

Dr Roy Poses and Dr Wally Smith will be presenting a special symposium,  Defense against the Dark Arts: Understanding and Challenging Health Care Corruption at the Annual Meeting of the Society for General Internal Medicine, Toronto, Ontario, Canada, 22- 25 April, 2015. 

We plan to summarize the scope of health care corruption, and discuss the impunity of those involved, and how discussion of it became taboo, before brainstorming ways to begin to challenge corruption.

Thursday, September 18, 2014

Value Extractors, "Super-Managers," Vampires and the Decline of the US and US Health Care

Appearing during the last few weeks were a series of articles that tied the decline of the US economy to huge systemic problems with leadership and governance of large organizations.  While the articles were not focused on health care, they included some health care relevant examples, and were clearly applicable to health care as part of the larger political, social, and economic system.  The articles reiterated concerns we have expressed, about leadership of health care by generic managers, perverse executive compensation, the financialization of health care, in part enabled by regulatory capture, and the abandonment by effective stewardship by boards of directors, but with new takes on them.

The articles included "Profits Without Prosperity," by William Lazonick in the the Harvard Business Review,  "Why Have US Companies Become Such Skinflints," by Paul Roberts in the Los Angeles Times, and "How Business Leaders Turned Into Vampires," by Steve Denning in Forbes, which in turn was partially based on "The Rise (and Likely Fall) of the Talent Economy," in the Harvard Business Review.

Let me summarize the main points, and discuss some health care examples.

"Super-Managers" as Value Extractors

Steve Denning's article contrasted people who  add value to the economy versus those who extract value.  The first species of value extractor he listed was:

 ‘Super-managers’ are people who hold administrative positions in the C-suite of private-sector bureaucracies but are masquerading as entrepreneurs. They are, to use Thomas Piketty’s slyly ironic term, “super-managers.” As such, they have been able to extract extraordinary levels of compensation. They have been lavished with stock and stock options and have been able to 'manage' the share price of their firms with massive share buybacks and other financial engineering so that they receive massive bonuses. As Bill Lazonick documented in the September 2014 issue of HBR, the net effect of their activities is to extract value, rather than create value [see below]. 

Presumably, "super-managers" as health care executives are also likely to be generic managers, unlikely to have much actual knowledge of caring for patients, unsympathetic to the values of health care professionals, and hence unlikely to uphold the health care mission.

He noted that

 there is a tendency to dismiss the activities of ‘vampire talent’ as de minimis. 'That’s capitalism, right? Every man for himself. It’s no big deal if there’s an occasional bad apple in the barrel. The ‘invisible hand’ of capitalism will make everything come out right for society in the end.'


 The problem today is that the super-sized executive compensation, the gambling and the toll-keeping of the financial sector aren’t tiny sideshows. They have grown exponentially and are now macro-economic in scale. They have become almost the main game of the financial sector and the main driver of executive behavior in big business. When money becomes the end, not the means, then the result is what analyst Gautam Mukunda calls 'excessive financialization' of the economy, in his article, 'The Price of Wall Street Power,' in the June 2014 issue of Harvard Business Review.

Mr Denning further asserted that the value extraction of super-managers is augmented by the value extraction of two different groups of players, hedge funds that speculate with other peoples' money, and "tollkeepers" who extract rents through the financial system.

Furthermore, Mr Denning stated that

 The growth of super-sized executive compensation is inversely related to performance. The super-managers are in effect being rewarded for doing the wrong thing.
Of course, if executives in health care, like those in other sectors, are mainly concerned with enriching themselves in the short-term, than they are not mainly concerned with patients' and the public's health, or the values of health care professionals, and hence the performance of their organizations in terms of health care processes and outcomes will suffer. 

Furthermore, the ability of commercial health care firms to actually make a positive impact on health care will be decreased as they are whipsawed by other value extractors like hedge funds and tollkeepers.

Example - Renaissance Technologies

Mr Denning's first example of tollkeepers' value extraction was:

James Simons, the founder of Renaissance Technologies, ranks fourth on Institutional Investor’s Alpha list of top hedge fund earners for 2013, with $2.2 billion in compensation. He consistently earns at that level by using sophisticated algorithms and servers hardwired to the NYSE servers to take advantage of tiny arbitrage opportunities faster than anybody else. For Renaissance, five minutes is a long holding period for a share.

In fact, as we noted here, Renaissance Technologies does not hesitate in trading health care firms.  Furthermore, that company has a noteworthy direct tie to health care.  Its current co-CEO, Peter F Brown, is married to the current Commissioner of the US Food and Drug Administration (FDA).

Value Extraction and Share Buybacks

William Lazonick's article also emphasized how corporate leadership is now focused on extracting value from their companies for their own personal benefit, rather than promoting growth, innovation, better products and services, etc.  In particular, large public for-profit companies now tend to use their surplus capital to buy back shares of their own stock, rather than invest in new facilities, equipment, employees, etc.  Perhaps we should not be surprised that this was facilitated by changes in US government regulation, that is deregulation, in this case instituted during the Reagan administration:

Companies have been allowed to repurchase their shares on the open market with virtually no regulatory limits since 1982, when the SEC instituted Rule 10b - 18 of the Securities Exchange Act.

Note that

The rule was a major departure from the agency's original mandate, laid out in the Securities Exchange Act of 1934.  The act was a reaction to a host of unscrupulous activities that had fueled speculation in the Roaring '20's, leading to the stock market crash of 1929 and the Great Depression.

Given the context, and that the deregulation was implemented by an SEC chair who was "the first Wall Street insider to lead the commission," this seems to be an example of regulatory capture in service of corporate insiders.

The issue here is that while it might make some financial sense for companies to buy back their own shares if they are priced at bargain rates, after this change they could buy shares at any price without supervision.  On one hand, such purchases could lead to short-term bumps in stock prices. On the other hand, a major reason for these buybacks appears to be that they enrich corporate insiders, particularly top hired executives, who now receive much of their pay in the form of stock and stock options, and often can get bonuses based on short-term increases in stock prices.  Lazonick wrote,

Combined with pressure from Wall Street, stock-based incentives make senior executives extremely motivated to do buybacks on a colossal and systemic scale.

Consider the 10 largest repurchasers, which spent a combined $859 billion on buybacks, an amount equal to 68% of their combined net income, from 2003 through 2012. (See the exhibit “The Top 10 Stock Repurchasers.”) During the same decade, their CEOs received, on average, a total of $168 million each in compensation. On average, 34% of their compensation was in the form of stock options and 24% in stock awards. At these companies the next four highest-paid senior executives each received, on average, $77 million in compensation during the 10 years—27% of it in stock options and 29% in stock awards. Yet since 2003 only three of the 10 largest repurchasers—Exxon Mobil, IBM, and Procter & Gamble—have outperformed the S&P 500 Index.

Example - Pfizer

Mr Lazonick's noted some potential outcomes of the frenzy of stock buybacks affecting the US pharmaceutical industry and hence the US health care system.

In response to complaints that U.S. drug prices are at least twice those in any other country, Pfizer and other U.S. pharmaceutical companies have argued that the profits from these high prices—enabled by a generous intellectual-property regime and lax price regulation— permit more R&D to be done in the United States than elsewhere. Yet from 2003 through 2012, Pfizer funneled an amount equal to 71% of its profits into buybacks, and an amount equal to 75% of its profits into dividends. In other words, it spent more on buybacks and dividends than it earned and tapped its capital reserves to help fund them. The reality is, Americans pay high drug prices so that major pharmaceutical companies can boost their stock prices and pad executive pay.

Moreover, during approximately the same period Pfizer compiled an amazing record of legal misadventures including settlements of allegations of unethical behavior, and some convictions, including one for being a racketeering influenced corrupt organization (RICO), as most recently reviewed here, and then updated here.  So while it was putting huge amounts into buybacks, it also put billions into legal fines and costs. This suggests that note only does executive compensation not correlate with "performance," it may also correlate with corporate bad behavior.

The "Shareholder Value" Dogma

In explaining how US corporate executives turned to stock buybacks to boost their own pay, at the expense of essentially everyone else, Mr Lazonick sounded some familiar themes.  One was focus on short-term revenues and short-term stock performance drive by the "share-holder value" dogma out of business schools,

the notion that the CEO's main obligation is to shareholders. It's based on a misconception of the shareholders' role in the modem corporation. The philosophical justification for giving them all excess corporate profits is that they are best positioned to allocate resources because they have the most interest in ensuring that capital generates the highest returns. This proposition is central to the 'maximizing shareholder value" (MSV) arguments espoused over the years, most notably by Michael C. Jensen. The MSV school also posits that companies' so-called free cash flow should be distributed to shareholders because only they make investments without a guaranteed return -- and hence bear risk.

But the MSV school ignores other participants in the economy who bear risk by investing without a guaranteed return. Taxpayers take on such risk through government agencies that invest in infrastructure and knowledge creation. And workers take it on by investing in the development of their capabilities at the firms that employ them. As risk bearers, taxpayers, whose dollars support business enterprises, and workers, whose efforts generate productivity improvements, have claims on profits that are at least as strong as the shareholders'.

Mr Denning similarly noted

The intellectual foundation of all this behavior is the notion that the purpose of a firm is to maximize shareholder value. Unless we do something about this intellectual foundation, the problem will remain. Changes in a few regulations or the tax code won’t make much difference. ‘Vampire talent’ will find ways around them.

Nor will change happen merely by pointing out that shareholder primacy is a very bad idea. Bad ideas don’t die just because they are bad. They hang around until a consensus forms around another idea that is better.

Mr Roberts' article "Why Have US Companies Become Such Skinflints," went at this issue from a slightly different angle, noting first

The bigger story here is what might be called the Great Narrowing of the Corporate Mind: the growing willingness by business to pursue an agenda separate from, and even entirely at odds with, the broader goals of society.

He attributed this to the notion promulgated by

conservative economists, [that] the best way for companies to help society was to ditch the idea of corporate social obligation and let business do what business does best: maximize profits.

He noted that this focus on short-term revenues has led to the decline in long-term results,

 But because management is so focused on share price and because share price depends heavily on current company earnings, strategic focus has grown ever more short term: do whatever is needed to hit next quarter's earnings target. And since cost-cutting is a quick way to boost near-term earnings, layoffs and other downsizing once regarded as emergency measures are now routine.

And here is the paradox. Companies are so obsessed with short-term performance that they are undermining their long-term self-interest. Employees have been demoralized by constant cutbacks. Investment in equipment upgrades, worker training and research — all essential to long-term profitability and competitiveness — is falling.

Of course, this is antithetical to the "innovation" that current corporate boosters proclaim as the goal of drug, biotechnology, medical device companies and other players in the brave new world of corporate health care.  

The Incestuous Mechanisms Used to Set Executive Compensation

Another explanation for the rise in value extraction, and specifically the use of share buybacks to reward top corporate hired executives, was the incestuous way in which corporations set pay for top hired executives. Mr Lazonick wrote,

Many studies have shown that large companies tend to use the same set of consultants to benchmark executive compensation, and that each consultant recommends that the client pay its CEO well above average. As a result, compensation inevitably ratchets up over time. The studies also show that even declines in stock price increase executive pay: When a company's stock price falls, the board stuffs even more options and stock awards into top executives' packages, claiming that it must ensure that they won't jump ship and will do whatever is necessary to get the stock price back up.

This is enabled by boards of directors who seem to represent the 'CEO union,' not stockholders, and certainly not other less favored employees, customers, clients or patients, or society at large,

Boards are currently dominated by other CEOs, who have a strong bias toward ratifying higher pay packages for their peers. When approving enormous distributions to shareholders and stock-based pay for top executives, these directors believe they're acting in the interests of shareholders.

Once again, this was also enabled by the dergulation that started with during the Reagan administration, and continues this day (although the specific relevant deregulatory change occurred during the Clinton administration),

 In 1991 the SEC began allowing top executives to keep the gains from immediately selling stock acquired from options. Previously, they had to hold the stock for six months or give up any 'short-swing' gains. That decision has only served to reinforce top executives' overriding personal interest in boosting stock prices. And because corporations aren't required to disclose daily buyback activity, it gives executives the opportunity to trade, undetected, on inside information about when buybacks are being done. 


Note that while all the discussion above has been about for-profit corporations, we have seen that in health care, various non-profit organizations, particularly hospitals, hospital systems, academic medical institutions, and health insurers, which all now operate in the current market fundamentalist environment, are acting more and more like for-profits.  So while non-profit corporate executives cannot do stock buybacks, they are also all too often generic managers, given huge compensation, but not often for upholding the mission, putting patients' and the public's health first, or upholding health care professionals' values.  

It is striking that we are beginning to see protests like those above not in radical publications, but in the Harvard Business Review and Forbes.  It is more striking that these protestors are beginning to fear the worst.  Mr Roberts wrote,

Sooner or later, markets punish such myopic behavior. Companies that neglect innovation run out of things to sell. Companies that demoralize workers see performance lag. 

Although Mr Denning hopefully wrote,

We are thus about to witness a vast societal drama play out. That’s because we have reached that key theatrical moment, which Aristotle famously called 'anagnorisis' or 'recognition.'  This is the moment in a drama when ignorance shifts to knowledge.  

He then warned,

As usual with anagnorisis and the shock of recognition at a disturbing, previously-hidden truth, there is a disquieting sense that the accepted coordinates of knowledge have somehow gone awry and the universe has come out of whack. This can lead to denial and a delay in action, even though the facts are staring us in the face.

If the recognition of our error comes too late, as in Shakespeare’s Lear, the result will be terrible tragedy. If the recognition comes soon enough, the drama can still have a happy ending. We are about to find out in our case which it is to be.
Let us hope that anagnorisis is really beginning, the anechoic effect is fading, and the drama may yet have a happy ending. 

ADDENDUM (29 September, 2014) - This post was re-posted on the Naked Capitalism blog

Tuesday, September 16, 2014

You Say You Want Some Revolutions? - Famed Academic Physician Dr Milton Packer's Endless Alternating Turns as Drug Company Spokesperson and FDA Advisor

Last week, we noted  we again discussed the web of conflicts of interest that is draped over medicine and health care, and seems responsible for much of our current health care dysfunction.  We have discussed examples of conflicts of interest affecting clinical research, clinical teaching, clinical care, and health care policy.  Each time I think we must have cataloged all the useful examples, a striking new one appears.

Only a few days later, yet another new variant has in fact appeared.

A New Kind of Revolving Door

A new version of the "revolving door" apparently was first noted by Public Citizen, and then reported by Ed Silverman at Pharmalot. 

The usual version of the revolving door occurs when a person transitions from a full-time job in industry to a government position which has regulatory authority or other influence over that same industry, or vica versa.  We have discussed various health care manifestations of that revolving door here.

The new version, as described by Mr Silverman, in its manifestation at the US Food and Drug Administration (FDA) is:

the agency allows some experts who serve on its advisory panels to also make presentations at other meetings of these same panels on behalf of drug makers. By allowing some people to wear different hats within a short amount of time, the advocacy group charges the FDA creates the potential for bias to creep into the proceedings.

The Public Citizen letter to the FDA summarized the problem,

In particular, a sponsor’s use of an individual who serves, or has recently served, as a voting member of an FDA advisory committee to present its case before that member’s colleagues on the committee takes advantage of the special collegiality existing among members in order to improve a company’s chances of a favorable vote. Furthermore, such a revolving door raises concerns about the objectivity of committee members who accept such paid arrangements, with FDA’s approval, at future hearings involving the same or a rival company.

Someone Familiar Going Round and Round

The Public Citizen letter used as an example one well-known academic physician who seemed to have made many revolutions in this sort of revolving door.  As summarized in the PharmaLot post,

As an example, Public Citizen cites a meeting this past March 27 of the FDA’s Cardiovascular and Renal Drugs Advisory Committee, which was held to review an application for a Novartis drug called serelaxin to treat acute heart failure. And Milton Packer, who chairs the department of clinical sciences at UT Southwestern, appeared as a paid speaker on behalf of Novartis.

In his opening remarks, Packer disclosed that Novartis paid for his time and travel, according to the advocacy group. But because he is also considered to be a ‘special government employee,’ which is how advisory panel members are classified, he obtained permission from the FDA to participate as a paid speaker for Novartis (see page 31 here).

However, Packer served as a temporary voting member of the same FDA advisory committee less than two months earlier. Moreover, Public Citizen says this was the sixth time, since Packer first presided as chair of this committee in 1997, that he had 'spoken on behalf of and/or served as a (presumably) paid consultant' to drug makers whose meds were being reviewed at those meetings.

The other occasions in which Packer appeared before the Cardiovascular and Renal Drugs Advisory committee involved speaking on behalf of Bristol-Myers Squibb in 2002; acting as a consultant and speaker for GlaxoSmithKline in 2003; appearing as a speaker for NitroMed in 2005; appearing as a speaker for Sanofi in 2009 and acting as a consultant on behalf of Pfizer in 2010.

In fact, the Public Citizen letter also asserted that

Dr. Packer’s presence as an FDA advisory committee member at hearings extends beyond the CRDAC, as he has also participated in at least three meetings of the Arthritis Advisory Committee and served at least once on the Endocrinologic and Metabolic Drugs Advisory Committee since 2005.

We note with concern that, as with his revolving-door tenure at CRDAC, Dr. Packer has similarly worked with industry in the following capacities at non-CRDAC advisory committees while intermittently serving as a recurring member of some of these same committees:

- As a consultant to Centocor for its presentation on infliximab (Remicade) to the March 4, 2003, meeting of the Arthritis Advisory Committee;
- As an 'external expert' cited by GlaxoSmithKline at the July 30, 2007, joint meeting of the Endocrinologic and Metabolic Drugs and Drug Safety and Risk Management Advisory Committees to discuss the cardiac ischemic risks of the thiazolidinedione diabetes drugs, with a focus on rosiglitazone (Avandia); and
- As a consultant to Boehringer Ingelheim for its presentation concerning the drug tiotropium (Spiriva HandiHaler), made before the November 19, 2009, meeting of the Pulmonary-Allergy Drugs Advisory Committee.


Dr Milton Packer served as a presumably paid spokesperson for six different pharmaceutical companies advocating for six different drugs at meetings of the FDA Cardiovascular and Renal Drugs Advisory Committee.  Over roughly the same time period he served as the chair, acting chair, or voting member of that same committee in numerous instances.  Also, Dr Packer served as a presumably paid spokesperson for one of the same drug companies, and for two additional drug companies advocating for another three drugs at meetings of three other FDA advisory committees.  On various occasions he had also served as a member of these three committees.  Parenthetically, one of the drugs for which Dr Packer, a cardiologist, advocated, Avandia, to a non-cardiologic committee was subsequently pulled from the market because of concerns about excess cardiologic complications (look here). 

Dr Packer repeatedly went back and forth between roles as a paid advocate for drug companies and as a member or chair of federal advisory committees which could influence FDA decisions about the drugs for which he advocated and which were made by the companies that employed him.

It certainly seems that Public Citizen was right in that the sorts of transitions Dr Packer made constituted multiple conflicts of interest, and that his work for multiple drug companies was likely to have distorted the recommendations of the committees on which he served.  Rapid transitions between temporary committee memberships and paid advocacy positions before such committees does seem to be a new version of the revolving door, and newly discovered type of conflict of interest.  It seems that conflicts of interest now pervade every aspect of health care, with huge cumulative effects on clinical and health policy decision making.

Note also that the person whose conflicts of interest were used as examples by Public Citizen just appeared in Health Care Renewal in another capacity.  Earlier this month we discussed a study (PARADIGM - HF) of a new drug for congestive heart failure (sacubitril) which received prominent media attention.  After various people, not limited to yours truly, pointed out that this study seemed to have multiple flaws which undercut claims that the new drug would be a "game changer," the principal investigator of the study delivered a written whupping to a critic whose writing appeared prominently on a cardiology web-site .  The scathing comeback, however, seemed based on a volley of logical fallacies, including repetitive ad hominem attacks on the critic (look here).  The PARADIGM - HF Principal Investigator was none other than the same Dr Milton Packer whose revolving door cycles were discussed above.  Note that the company that sponsored, and largely ran and designed PARADIGM - HF, and which paid Dr Packer to serve as Principal Investigator, was the same Novartis for whom Dr Packer was a spokesperson in the first example above. 

We wondered whether Dr Packer's conflicts of interest contributed to confused, illogical thinking and his apparently logically fallacious response to his critic.  Now it appears that Dr Packer has been immersed much more deeply in conflicts of interest than were apparent a few days ago.  So should he be regarded mainly as a heart failure "expert," or mainly as a paid marketer and public relations man for drug companies?  Obviously, he is both, but the mixture is not so clear.  The concern is all the more important because Dr Packer has become such a prominent medical academic.

So once again, again, again,...  we call for all conflicts to be disclosed in the interests of honesty.  Beyond that, as we have been saying for years, patients' and the public's health would benefit from an aggressive effort to reduce conflicts of interest affecting clinical and health policy decision making.    

Thursday, September 11, 2014

Higher Authorities? - Pharmaceutical Companies, Addiction Experts, and Marijuana Policy

We have often discussed the web of conflicts of interest that is draped over medicine and health care, and seems responsible for much of our current health care dysfunction.  We have discussed examples of conflicts of interest affecting clinical research, clinical teaching, clinical care, and health care policy.  Each time I think we must have cataloged all the useful examples, a striking new one appears.

So, let us get down into the weeds, so to speak, in the trendy new area of marijuana policy.

I am not about to express an opinion on whether marijuana will prove to be useful in health care, but certainly some people are advocating that it might be while others are advocating for the decriminalization or legalization of marijuana for social and health reasons.  Others, of course, do not agree.

Now Vice News, which advertises itself as "an international news organization created by and for a connected generation," has published an article by investigative journalist Lee Fang about conflicts of interest, key opinion leaders, and marijuana policy.  Its main premise was,

As Americans continue to embrace pot—as medicine and for recreational use—opponents are turning to a set of academic researchers to claim that policymakers should avoid relaxing restrictions around marijuana. It's too dangerous, risky, and untested, they say. Just as drug company-funded research has become incredibly controversial in recent years, forcing major medical schools and journals to institute strict disclosure requirements, could there be a conflict of interest issue in the pot debate?

VICE has found that many of the researchers who have advocated against legalizing pot have also been on the payroll of leading pharmaceutical firms with products that could be easily replaced by using marijuana. When these individuals have been quoted in the media, their drug-industry ties have not been revealed.

The article profiled three prominent physicians who advocate against easing rules on marijuana.  The first was Dr Herbert Kleber, a Professor of Psychiatry and Director of the Division of Substance Abuse at Columbia.  Per the article, he

has been quoted in the press and in academic publications warning against the use of marijuana, which he stresses may cause wide-ranging addiction and public health issues.


what's left unsaid is that Kleber has served as a paid consultant to leading prescription drug companies, including Purdue Pharma (the maker of OxyContin), Reckitt Benckiser (the producer of a painkiller called Nurofen), and Alkermes (the producer of a powerful new opioid called Zohydro).

Then there was Dr A Eden Evins, Associate Professor of Psychiatry at Harvard and Director of the Center for Addiction Medicine at the Massachusetts General Hospital,  who

is a frequent critic of efforts to legalize marijuana. She is on the board of an anti-marijuana advocacy group, Project SAM, and has been quoted by leading media outlets criticizing the wave of new pot-related reforms. 'When people can go to a 'clinic' or 'cafe' and buy pot, that creates the perception that it's safe,' she told the Times last year.


when Evins participated in a commentary on marijuana legalization for the Journal of Clinical Psychiatry, the publication found that her financial relationships required a disclosure statement, which noted that as of November 2012, she was a 'consultant for Pfizer and DLA Piper and has received grant/research support from Envivo, GlaxoSmithKline, and Pfizer.' Pfizer has moved aggressively into the $7.3 billion painkiller market. In 2011, the company acquired King Pharmaceuticals (the makers of several opioid products) and is currently working to introduce Remoxy, an OxyContin competitor.

Finally, there was Dr Mark L Kraus, described as a private practitioner and board member of the American Society of Addiction Medicine (ASAM).  He

submitted testimony in 2012 in opposition to a medical marijuana law in Connecticut. 


 According to financial disclosures, Kraus served on the scientific advisory panel for painkiller companies such as Pfizer and Reckitt Benckiser in the year prior to his activism against the medical pot bill.

Mr Fang's argument that the relationships among these physicians who advocate against liberalized marijuana laws and pharmaceutical companies constitute conflicts of interest did not seem unreasonable

Studies have found that pot can be used for pain relief as a substitute for major prescription painkillers. The opioid painkiller industry is a multibillion business that has faced rising criticism from experts because painkillers now cause about 16,000 deaths a year, more than heroin and cocaine combined. Researchers view marijuana as a safe alternative to opioid products like OxyContin, and there are no known overdose deaths from pot.

Assuming the validity of this argument, the article also noted institutional conflicts of interest affecting organizations that publicly advocate against loosening marijuana restrictions,

I reported for the Nation that many of the largest anti-pot advocacy groups, including the Community Anti-Drug Coalitions for America, which has organized opposition to reform through its network of activists and through handing out advocacy material (sample op-eds against medical pot along with Reefer Madness-style videos, for example), has relied on significant funding from painkiller companies, including Purdue Pharma and Alkermes. Pharmaceutical-funded anti-drug groups like the Partnership for Drug-Free Kids and CADCA use their budget to obsess over weed while paying lip-service to the much bigger drug problem in America of over-prescribed opioids.


As we have discussed previously, narcotics addiction is a very difficult clinical and societal problem.  That makes it all the more distressing that research and teaching about, clinical practice affecting and health policy related to narcotics and narcotics addiction has been tangled up with the increasingly aggressive marketing of prescription narcotics.  Now it turns out that the companies that make and market narcotics seem to be tangled up with addiction medicine experts who are not such big fans of medical or recreational marijuana. (And it turns out once again that the physicians who claim expertise on treatment of addiction have financial relationships with the companies that market addictive medications.)

There seems to be no corner of medicine and health care untouched by the web of conflicts of interest.  So once again we call for all conflicts to be disclosed in the interests of honesty.  Beyond that, as we have been saying for years, patients' and the public's health would benefit from an aggressive effort to reduce conflicts of interest affecting clinical and health policy decision making.     

Put that in your pipe and smoke it. 

Monday, September 08, 2014

Does organized medicine need to "man up" on healthcare information technology risk and harms?

After reading a number of articles on healthcare IT problems over the past few years authored by leaders of organized medicine, please excuse me if I wonder out loud if organized medicine's leadership does not suffer from healthcare IT ignorance, low "T", or both.

Case in point, a article by Robert B. Doherty, Senior Vice President of Governmental Affairs & Public Policy, American College of Physicians that appeared in the Philadelphia newspapers blog site "The Field Clinic" today, Monday, September 8, 2014.

The article is entitled "Why doctors hate electronic health records" (no kindness in that title!) and is at http://www.philly.com/philly/blogs/fieldclinic/Why-doctors-hate-electronic-health-records.html.

After an amusing and appropriate analogy to the autobile repair industry, the article makes some good points.

First, it attacks the canard about physicians being technophobes:

... It might be tempting to dismiss the doctors complaining about EHRs as technophobes who are unwilling to embrace new technologies, but the Rand investigators say that this isn’t the case: "... our study does not suggest that physicians are Luddites, technophobes, or dinosaurs.  Physicians recognized the important advances that EHRs have enabled, particularly in accessing information remotely (like checking a patient’s test results from home) and improving compliance with guideline-based care.”

The article, unfortunately, does not go far enough to point out that the real tension is between pragmatic clinicians and information technology hyper-enthusiasts and those who stand to profit from EHR diffusion, who ignore the downsides. (For more on that issue, see my March 11, 2012 essay "Doctors and EHRs: Reframing the 'Modernists v. Luddites' Canard to The Accurate 'Ardent Technophiles vs. Pragmatists' Reality" at http://hcrenewal.blogspot.com/2012/03/doctors-and-ehrs-reframing-modernists-v.html.)

The article's author offers relatively standard and obvious "prescriptions":

... The solution isn’t going back to paper records, but designing EHRs that work for doctors and patients. Here are some obvious steps:
  • EHRs should provide physicians with abstracted, relevant clinical data in the most user-friendly way possible, rather than dumping reams of data on them that make it hard to extract the useful from the extraneous.
  • EHRs should supplement but not substitute for physician decision-making, providing doctors with evidence on the effectiveness of different drugs and tests in the least intrusive and least repetitive manner possible.
  • EHRs should facilitate face-to-face interactions between doctors and their patients not detract from them.  (In my most recent visit to my own primary care doctor. he spent almost the entire time looking at his EHR, rather than making eye contact with me). 
  • EHRs should make it as easy and quick as possible for physicians to document in the record the care provided to the patient.
  • EHRs must become fully interoperable, able to seamlessly exchange secure patient data with other EHRs.
The government has a lot of EHR standards, but the only one that really should matter is how useful EHRs are are in helping physicians take better care of patients.

That said, the failure to address the significant downsides, including compromised safety from bad health IT and actual harms, among others, is disappointing.  I have rarely if ever seen officials in organized medicine address that issue head-on.

Ironically, the author points out that RAND investigators wrote:

... The overarching problem, the authors contend, is that “no other industry, to our knowledge, has been under a universal mandate to adopt a new technology before its effects are fully understood...

Those "effects" happen to include not just clinician inconvenience, but direct patient harm, a phenomenon that in 2014 is poorly understood as admitted by FDA, the Institute of Medicine and numerous others.  That unacceptable state of affairs largely due to systematic impediments to understanding the magnitude of harms - that is, willful and deliberate blindness by those who know better (see the blog link below for more on these assertions if you are not a regular reader here).

My letter to Mr. Doherty at ACP speaks for itself:
From: Silverstein,Scot
Sent: Monday, September 08, 2014 2:43 PM
To: Robert Doherty, American College of Physicians
Subject: RE: "Why doctors hate electronic health records"
Dear Mr. Doherty,

Read with interest your piece "Why doctors hate electronic health records" at http://www.philly.com/philly/blogs/fieldclinic/Why-doctors-hate-electronic-health-records.html

Are you aware another reason for doctors, especially hospital-based ones, to "hate" EHRs (or, more correctly, the hyper-enthusiasts who push them and the industry that creates them) is due to the potential of these unregulated and poorly-engineered systems to contribute to or be causative of patient harms?

I have been expert witness on the Plaintiff's side in numerous cases where this has occurred...after my own mother was tragically and fatally injured in just such an accident.

These were cases where paper would have been more resilient.

FYI, in case you were unaware:

ECRI institute's voluntary 2012 "Deep Dive study of EHR" finding of 171 IT-related "incidents" in 36 member PSO hospitals in 9 weeks, resulting in 8 injuries and 3 possible deaths, is an example of why physicians ought "hate" the state of the health IT industry and its true lack of regulation, pre- and post-market surveillance, and other such factors prevalent in other mission-critical sectors.

More on these issues is at my blog post at the blog site of the Foundation for Integrity and Responsibility in Medicine, a 501(c)(3), at http://hcrenewal.blogspot.com/2014/04/fda-on-health-it-risk-reckless-or.html

I am educating the Plaintiff's Bar on these issues at AAJ national and state chapter meetings.

I have zero tolerance for bad health IT, and complacent clinical users of bad health IT.


Scot Silverstein, MD

In fact, it should be ACP, AMA, the state societies etc. performing the education on the issue of health IT harms, not just me and a small group of patient's-rights-minded "health IT iconoclasts."

One day, I hope organized medicine will start taking "T" supplements and do what needs to be done to compel this industry - and the government that should be regulating it effectively - to man up. 

-- SS

Friday, September 05, 2014

Logical Fallacies in Defense of the PARADIGM - HF Trial of Valsartan - Sacubitril, Suppsedly the "Game Changer" for Heart Failure

We frequently discuss how commercial sponsors manipulate clinical research to serve their interests.  There have been many cases of commercially sponsored controlled trials ostensibly designed to assess their sponsors' products manipulated to make these products look better.

Unfortunately, often such manipulation seems to escape public notice.  What skepticism they may generate often gets little notice, an example of the anechoic effect.  Very rarely do the people responsible for the trial deign to address skeptical criticism. 

However, we recently noted that cogent criticism of a very recently published trial got some circulation, leading to a dialogue with the trial's principal investigator.  The results seemed to show why those involved with manipulated sponsored trials often try to just ignore criticism.

Introduction - the PARADIGM - HF Trial of Valsartan - Sacubitril

As we recently posted, based on a new article now online in the New England Journal of Medicine, a combination of a new drug, sacubitril, in a new class, naprilysin inhibitors, with an older drug, valsartan, an angiotensin receptor blocker (ARB), has been hailed as a "game changer" for patients with heart failure.  However, although the study (entitled PARADIGM - HF) had many good features, it also had some major problems which made its interpretation difficult, and made the hype about "new hope" seem excessive.  Unbeknownst to me when I wrote the post, some pithy overlapping criticisms of PARADIGM - HF by Dr Vinay Prasad were posted on CardioExchange.

Surprisingly, Dr Prasad's post elicited a lengthy comment by Dr Milton Packer, the principal investigator of PARADIGM - HF, defending the study's methods.  This resulted in a back-and-forth between him and Dr Prasad.  (Available by subscription only.)  This seems to be on of those rare instances in which a pillar of the medical establishment was willing to defend the way things are done these days in health care, and in this case, the way commercially sponsored randomized controlled trials are designed.

In my humble opinion, this exchange illustrated one reason that most criticisms about flaws in commercially funded clinical research get the silent treatment: there really are not good explanations for them, other than they resulted from the intention to increase the likelihood that the sponsors' products would look better than they really are.

Let us consider in detail some of the written comments by Dr Packer addressing two major criticisms by Dr Prasad.

The Question about the Choice of Comparator

Dr Prasad and I both questioned the choice of the drug to which valsartan - sacubitril was compared.  Dr Prasad wrote,

In PARADIGM-HF, oral enalapril was dosed up to 10 mg twice daily, whereas LCZ696 was dosed up to 200 mg twice daily (which includes a cumulative 320 mg of valsartan). The problem is that 320 mg is the maximum HF dose of valsartan per drug labeling, but enalapril can be dosed up to 40 mg daily (20 mg twice daily) — double the maximum dose proscribed per protocol.


In effect, drug dosing in PARADIGM-HF was a 'straw man' comparison. The reported outcomes may be entirely a consequence of more ARB versus less ACE inhibitor. That is reason enough to doubt the findings. Sacubutil, the novel drug, could have been a sugar pill, and the results may well have turned out the same. But there are two more good reasons to be skeptical.

Note that in effect Dr Prasad charged that the entire trial was based on a logical fallacy, the "straw man" fallacy.

Dr Packer's Response: Red Herrings, Ad Hominem Fallacies, and Appeals to Authority

Red Herring - Comparison to Trial with a Different Patient Population

Dr Packer made several responses to this criticism.  First,  he asserted that using the maximum dose of enalapril as a target dose would have been inappropriate,

Dr. Prasad proposes that the dose of enalapril was too low, and we should have used 40 mg daily of enalapril as a comparator. However, when 40 mg of enalapril daily has been used in a clinical trial (CONSENSUS), these extremely high doses were poorly tolerated due to hypotension and renal insufficiency.

However, that appears to be to be an example of the red herring fallacy.  The PARADIGM - HF trial was meant to include patients with mild to severe symptoms of CHF (CHF classes II - IV), although it actually included a few (about 5%) patients with no symptoms (class I).  However, as Dr Prasad pointed out in his later comeback,

Dr. Packer suggests that CONSENSUS trial proves that enalapril 40 cannot be given safely. It is worth noting this trial enrolled only NY Heart Classification IV patients, while these were less than 1% of pts in PARADIGM HF. Many patients in PARADIGM HF might well have been able to tolerate and benefit from enalapril 40mg.

So Dr Packer's argument based on a trial of only the sickest patients with CHF seems likely not be relevant to discussion of a trial of patients with much milder disease.

Red Herring - Physiologic Changes vs Patient-Centered Outcomes

Then, Dr countered Dr Prasad's concern that the design of PARADIGM - HF could not distinguish whether the apparent benefits of valsartan (at maximum dose) and sacubitril versus enalapril (at a moderate dose) were due to the valsartan alone versus the combination thus,

Furthermore, Dr. Prasad can provide no evidence whatsoever than valsaratan 160 mg BID produces more blockade of the renin-angiotensin system than enalapril 10 mg BID. It is simply not true.

This seems to be an even better example of the red herring fallacy.  The argument is not about the physiological changes the drugs may or may not produce.  It is about the design of a clinical trial and how that design could affect interpretation of patient-centered outcomes.  Degree of renin-angiotensin system blockade may not directly predict survival, hospitalization, functional status, etc.

Red Herring - References to a Trial of Valsartan in Addition to ACE Inhibitors

Appended to the above, Dr Packer wrote,

In fact, valsartan 160 mg BID does not even have a mortality effect when compared with placebo, whereas enalapril 10 mg BID does have a survival benefit.

It later became apparent that the evidence he felt supported this assertion came from yet another trial with an alphabet soup name, Val - HEFT.  But, as Dr Prasad argued, this was yet another red herring,

The VAL-HEFT trial– where Valsartan 160 BID was no better than placebo– occurred in the setting where 92% of patients were already on an ace-inhibitor. As such, it cannot be used to say what the effect of valsartan is among patients not taking an ace-inhibitor, as was the case in PARADIGM-HF.

To explain a bit, the Val - HEFT trial enrolled patients who were nearly all already taking an ACEI, including enalapril.  So its data could only speak to the question of whether adding valsartan to an ACEI has an effect, not whether valsartan alone is efficacious in CHF.  It does not appear that there has ever been a large, long-term randomized controlled trial that tested valsartan versus placebo for CHF.   So Dr Packer seemed to have supplied another quite large red herring.

Of course that raises the question of why  PARADIGM - HF only assessed the combination of  sacubitril plus valsartan, rather than sacubitril combined with other ARBs.  This question was not directly addressed in the exchange between Dr Packer and Dr Prasad.  Parenthetically, note that valsartan is sold by Novartis, the sponsor of PADADIGM - HF, as Diovan.

Dr Packer only complicated things later by writing,

if Dr. Prasad dismisses the evidence from Val-HeFT, he eliminates ALL of the evidence that supports the use of valsartan in heart failure. If he sets the Val-HeFT trial aside, what evidence is there that valsartan 160 mg BID does ANYTHING in heart failure?

Again, Dr Packer was the one supposedly responsible for the choice of valsartan as the ARB to combine with sacubitril.

In summary thus far, I could not find any instance in the exchange in which Dr Packer logically used evidence to explain why his trial compared valsartan (targeted to maximum dose) plus sacubitril to enalapril (targeted to a moderate dose).  Instead, his arguments seemed to consist of multiple examples of the red herring fallacy.

Ad Hominem - Dr Prasad's Degree of Understanding of the Heart Failure Literature

Instead, he also threw in some additional general points which appeared to be rather gratuitously fallacious, To start,

I wish that Dr. Prasad understood the field of heart failure trials better than he does,


I wish Dr Prasad understood the heart failure literature better.

These seem to be examples of the ad hominem fallacy.  Rather than addressing the logic and evidence used by Dr Prasad, Dr Packer implied that Dr Prasad simply lacks understanding. Dr Prasad's polite response was,

Dr. Packer could tighten his posts by reducing the number of times he wishes I understood the heart failure literature better.
Appeal to Authority - Dr Packer's and Colleagues' Implied Superior Expertise on the Medical Literature

That did not prevent Dr Packer from coming back with,

I suggested that Dr. Prasad become more familiar with the medical literature because it would save him considerable time in formulating useful arguments.

With this repetition, Dr Packer seems to be not only using the ad hominem fallacy, but implying the fallacy of the appeal to authority. The implication is that Dr Packer clearly is an expert, and Dr Prasad is not, and the expert should be heeded. Just to underline this, Dr Packer later wrote,

Dr. Prasad suggests that others share his concerns. If he were here in Barcelona at the ESC meeting, he would know that that was not the case. However, I realize that It is common for those who seek only to win debates to claim that others agree with them. But Dr. Prasad, wishing that people agree with you does not make it true.

That just makes it worse. The implication is that all the experts in Barcelona agree with Dr Packer, and hence as a group they must be right. By the way, it is obvious from our previous blog post, comments on it, and other comments on the CardioExchange exchange that there are at least other people who agree with Dr Prasad.

Appeals to Authority - The New England Journal of Medicine and the US Food and Drug Administration Must Always be Totally Right

Not to leave it there, Dr Packer added as general comments several other appeals to authority.  At the end of his first set of comments there was this,

The real lesson of PARADIGM-HF is that combined angiotensin receptor neprilsyin inhibition is superior to inhibition of the renin-angiotensin system alone in patients with chronic heart failure. That is the conclusion of our paper, which passes stringent peer review in the New England Journal of Medicine.

The implication is that no paper published in the New England Journal of Medicine should ever be questioned about anything.  Also,

it does not appear that you are aware of the criteria that the FDA uses to evaluate or approve new drugs for cardiovascular disease.

This added the appeal to authority that since the FDA approved this trial, there must be nothing major wrong with it, to another implied ad hominem about Dr Prasad's lack of awareness.

Thus it seemed that Dr Packer's defense of his PARADIGM - HF study's choice of drugs to compare was based almost entirely on a string of logical fallacies, rather than logic and evidence.

The Question of Run-In Period Bias

Dr Prasad's other major criticism of his trial had to do with its use of active run-in periods.  He wrote,

The reason why drug run-in periods are problematic is discussed at length in the literature. In short, run-in periods exclude intolerant and nonadherent patients, foster spuriously large treatment effects, and (most troubling) create inclusion criteria that are irreproducible — i.e., that apply to no population we can clearly describe, as reasons for dropout are multifaceted and unique.

Even more concerning is that drug run-in periods test a different question than the one we think we are testing. In PARADIGM-HF, the run-in tested whether sticking with LCZ696 or switching to enalapril is better for HF patients who have taken and tolerated enalapril followed by LCZ696. It effectively turns the trial into a withdrawal study. If stopping LCZ696 is harmful, that counts against enalapril.

Dr Packer's Response: Appeals to Common Practice 

Dr Packer's main argument in defense of the run-in period involved yet another logical fallacy, the appeal to common practice, for example,
Dr. Prasad seem ill-informed here. Drug run-in periods are not a controversial study-design choice. In fact, this type of design is strongly preferred because it closely mimics clinical practice.


I wish I understood Dr. Prasad’s arguments against run-in periods. We have used them in many heart failure trials, and it was used in the SOLVD Treatment Trial,...

Dr Prasad ultimately responded so as to underline the essence of the fallacy,

The fact that many (and often industry sponsored) studies use drug run in periods is not a justification for their use. 


The recently published paper reporting the results of PARADIGM - HF has already generated considerable media hype (and an uncritical editorial) proclaiming valsartan - sacubitril as a new wonder drug for congestive heart failure.  While the trial was not without good features, several critics, including Dr Vinay Prasad and yours truly, suggested the study had multiple problems which make its results difficult to interpret.  The Principal Investigator of the study, Dr Milton Packer, chose to publicly defend his trial, yet so far his defense seems built more on logical fallacies than on logic and evidence.  After he published his remarks in defense of the trial, the hype seems no more justified than it did before.

Not only was PARADIGM - HF sponsored by Novartis, but many of its investigators had ties to Novartis and other pharmaceutical companies.  Dr Packer should be applauded for disclosing clearly the number of companies with whom he works in his dialogue with Dr Prasad.

Competing interests: Personal fees from AMAG, Amgen, BioControl, CardioKinetix, CardioMEMS, Cardiorentis, Daiichi, Janssen, Novartis, and Sanofi.

However, not only is it likely that financial relationships with commercial health care firms influence health care professionals to be more favorably disposed to these firms' products, but also such conflicts of interest may cause conflicted, and hence confused thinking.  As  I have noted before, Dr Joe Collier said, "people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult."  [Collier J. The price of independence. Br Med J 2006; 332: 1447-9. Link here.]  

This all adds to the argument that society needs to reconsider its delegation of the responsibility for much clinical research to the companies that make the drugs, devices, and other goods and services used in health care.  The temptation for them to manipulate the results to improve their marketing is too great.  The temptation for the health care professionals involved to go along to get along with the rich sponsors is too great.  It may be less profitable for some individuals, but it would be much better for patients' and the public's health if research involving people, particularly experiments (clinical trials) involving patients, were directly funded by, and designed, implemented, and analyzed by people without vested interests in the results turning out in favor of particular commercially produced goods or services.