Thursday, September 29, 2016

Whose Hospitals Are They, Anyway? - Steward to Sell Off, but Continue Operating All Its Hospitals

This looks like the latest trend in the financialization of and diffusion of accountability for health care organizations.  The case involves good ol' Steward Health Care, which was the subject of quite a few Health Care Renewal posts back in the day.

Background - Caritas Christi Bought by Cerberus Capital Management, Became Steward Health Care

[Cerberus, the three headed dog, per William Blake]

Steward is what used to be Caritas Christi Health Care System, formerly a Catholic, non-profit health care system in Massachusetts.  In 2010, Caritas Christi was purchased by Cerberus Capital Management, a private equity, aka leveraged buyout firm, which was known for its not very successful run managing Chrysler (look here) and GMAC (look here).  Cerberus also had enlarging holdings in the gun industry, later expanded into the Freedom Group, and in military contracting, specifically including DynCorp which hired armed "security forces" and was involved in multiple scandals in Iraq, all of which might strike some health care professionals as inappropriate (look here and here).

Steward Health Care, as run by Cerberus, was one of the earlier leaders in hiring corporate physicians, whom it pressured to avoid "leakage" of patients to other hospitals and doctors, even if some might question whether the care provided elsewhere might be better for those patients (look here).  The multimillion dollar a year CEO of Steward suggested the health care had become a commodity, objectionable to those who thought that health care should be a mission-based calling (look here).

After Steward consolidated, operational misadventures began.  In 2013, it closed the pediatric unit at Morton Hospital (look here).  In 2014, it closed Quincy Hospital, despite promises that it would expand health care services, and specifically not close that hospital so quickly (look here).  Starting in 2014, Steward stonewalled state requests to disclose financial data as required by state regulations after the private equity takeover (look here).  In 2016, Steward continued to withhold financial data (look here), and closed the short-lived family medicine residency program at Carney Hospital,  amidst complaints by the residents about poor organization, and inadequate numbers of faculty (look here).

Steward to Sell All its Hospitals, but Keep Running Them

This week, the Boston Globe reported a stunning example of financial engineering:

Steward Health Care System said Monday that it lined up $1.25 billion from a real estate investment firm that will help the Boston-based company finance a national expansion, pay off debt, and return money to the private equity firm that bought it almost six years ago.

Steward said Medical Properties Trust Inc. would buy all of its hospital properties for $1.2 billion and pay $50 million for a 5 percent equity stake in the company. Steward will lease the properties from MPT, based in Birmingham, Ala.

Note that nearly all the "financing" was obtained by selling all the hospital properties, which somehow sound like the core assets of a hospital system.

Of course, current Steward management thought it was a great idea:

Steward’s chief executive, Dr. Ralph de la Torre, said the MPT investment will give Steward a second source of capital funding and allow it to grow its model of community-based care in other states. 'This validates the model,' he said in an interview.

Presumably he was talking about a financial model, maybe the model used by private equity firms (see below).  It did not appear that this model had anything to do with providing health care to patients.

On the other hand, perhaps Dr de la Torre was enthused because he stood a chance of personally profiting from this deal, which

is also designed to allow top Steward leaders to have a 'substantially larger stake' in the company.

The implication is that Dr de la Torre would end up with some piece of Steward, Cerberus, and/or MPT.

Furthermore, the deal apparently would let Cerberus Capital Management recover all the money it initially put into its buyout of Caritas Christi:

The entire initial investment to Cerberus will be paid back, but the amount is proprietary, de la Torre said. The deal will also pay down all of the company’s $400 million in debt, he said.

This would apparently now render the initial take-over of Caritas Christi financially risk-free for Cerberus Capital Managment, but perhaps not risk-free for patients and health care professionals (who essentially were not mentioned in the article.)  

Summary - What Happens When Private Equity Owns Hospitals

We have previously described the private equity playbook here, and here.  The main points were:

-  Private equity is just the new name for leveraged buyout firms (the type of firm described the book, and later movie Barbarians at the Gate.)

-  Therefore, when they buy out firms (e.g., the primary care practices discussed above), they use borrowed money.

-  But they leverage in two senses.  Once firms are bought, the private equity owners makes the firms take out further loans, and the money from them may go back to the owners, usually in the form of a special dividend, to pay down the debt originally incurred by the private equity owners.  This leaves the bought out firms heavily in debt, but frees the private equity firm from its original debt.  If the firm is eventually sold, the new buyers take over the debt.  In a worst case scenario, however, the bought out firm goes bankrupt, the private equity's firm stock in it becomes worthless, but the private equity firm need not be responsible for its financial obligations.

-  If the private equity firm desires more money while it still owns the acquired firm, it may sell parts of it off.

-  To make the finances of the acquired firm look more attractive to the next buyer, the private equity firms often undertakes short term cost cutting measures that may involve layoffs, increased workload on remaining workers, etc.

Other dark aspects of private equity are discussed on the Naked Capitalism blog here.

So Steward Health Systems, which bought out by Cerberus Capital Management, has now largely followed this playbook.  Cerberus initially infused hundreds of millions into Steward, ne Caritas.  Steward then closed facilities and programs, and otherwise cut costs.  Now Steward is going to sell off its biggest assets, the actual hospital facilities that one might think are at the core of hospital systems.  Doing so apparently would allow Cerberus to at least break even on the deal, while still remaining in control.

But now Steward Health is split.  It is still owned by Cerberus.  Its major facilities would be owned by Medical Properties Trust Inc.  Apparently, Steward would have no assets other than its employees.  Of course some employees, that is, top  management, would be more equal than others, since they are likely being paid millions in compensation, and would have the opportunity to enlarge their stakes in "the company," although whether that company is Steward, Cerberus, or even MPT is not clear.

Thus, a hospital system which ostensibly exists to take care of acutely and chronically ill patients, often in their hours of need and vulnerability, would now be split among multiple corporate entities.  Who woud actually be in charge of upholding the mission?  Who would be accountable when things go wrong?  Those questions are not clear.

But it does seem likely that top executives of Steward, Cerberus Capital Management, and perhaps Medical Properties Inc stand to personally gain from this bold bit of financialization.  Whether patients may benefit, or health care professionals work and ability to care for patients might be facilitated by all this is not clear, and was not addressed in the current article.

As we have said again and again,...

Physicians need to realize that to fulfill their oaths to put patients first, they have to reduce the influence of rich and powerful organizations with other agendas, like health care corporations, and especially corporations owned by private equity.  The metastasis of private equity into the corporate practice of medicine and into hospitals and hospital systems should make us all rethink the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.

ADDENDUM (1 October, 2016) - This post was republished, with a very insightful introduction by Yves Smith, on the Naked Capitalism blog

Monday, September 26, 2016

You Cannot Worry About Health Care Reform When You Must Bow Down to a Tyrant

We started Health Care Renewal to highlight major health care problems whose discussion had previously been nearly taboo, with the hopes that this discussion would lead to true health care reform.  These problems included concentration of power within health care organizations; leadership of such organizations that was often generic, and hence ill-informed, unsympathetic or hostile to the values of health care professionals, self-interested, conflicted, or outright criminal or corrupt; and threats to the scientific basis of health care, including manipulation and suppression of clinical research.

We have come a long way in our understanding of these issues since we began in 2004.  But until now, we never needed to discuss some fundamental assumptions underlying what we were doing.  In particular, we could only pursue such discussions within societies that, however imperfectly, respected individual rights, particularly the rights to free speech, free press, free expression, and free association; operated under the rule of law; and were representative democracies.

People who live in anarchy, in societies torn by civil conflicts, or under dictatorships have much more pressing concerns that the niceties of improving health care.  So we knew that while our discussions might well have some relevance to many countries outside of the US, they were not going to be relevant everywhere.

Now maybe we should not feel assured that these discussions will continue to be useful in the US.  So far, reported only in a few outlets has been a crucial interview that appeared in a trailer for the Public Broadcasting System (PBS) documentary Frontline episode that will air tomorrow (September 27, 2016) on the two candidates running for the US presidency.   

At about 3 minutes into this trailer, Ms Omarosa Manigault, who was on the original Apprentice, and who is now Director of African-American Outreach for the Trump campaign, is heard to say:

Every critic, every detractor will have to bow down to President Trump.

As reported in a brief story from the Huffington Post, she followed that up with:

It’s everyone who’s ever doubted Donald, who ever disagreed, who ever challenged him. It is the ultimate revenge to become the most powerful man in the universe.

These statements were also covered briefly by Talking Points Memo, and a number of entertainment sites, but has gotten almost no coverage and generated almost no discussion from larger general media outlets.

There was a brief story on MSNBC by Rachel Maddow who called the interview with Ms Manigault "creepy."    

As far as I can tell, this statement has not been retracted or repudiated by Ms Manigault or the Trump campaign.

This story is more than creepy.  Here is an apparently senior, paid staffer for the campaign of a major party candidate for the US presidency threatening that anyone who disagreed with her candidate will have to "bow down" should he become president.  That seems to be an overt threat of dictatorship should that candidate win.  I do not recall ever hearing any such statement made by any such staffer in any such campaign in the past.

As I noted above, niceties of health or any other policy discussion would be pointless, and probably extremely hazardous to one's health under a totalitarian regime that expects all critics to bow down, presumably under threat of force.

Those who care about true health care reform, and many other important causes, should be aware of this threat, and act accordingly. 

ADDENDUM (28 September, 2016) - The full Frontline episode, "The Choice 2016," aired on September 27, 2016, and early on featured Ms Manigault's "bow down" response.  The full transcript of the interview is here, but it included no further enlargement or explanation these remarks.  Ms Manigault was interviewed after the first US presidential debate here by the Hollywood Reporter, and at that time tried to walk back her quote as merely meaning that those who criticized Mr Trump would be forced to "eat crow."  The Frontline interview with Ms Manigault otherwise has been remarkably anechoic.  I could only find a single opinion piece that discussed its implications, here in the Everett, WA, Herald. 

Saturday, September 24, 2016

Someone wasn't listening to me at my 2012 Keynote to the Health Informatics Society of Australia

In late July 2012 I gave an invited keynote presentation to the Health Informatics Society of Australia (HISA) at the annual Health Informatics Conference (HIC 2012), that year in Sydney.

I wrote up my presentation at and my slide deck is online at

My message included the following:

  • Critical thinking is essential at all times in healthcare ... or your patient's dead.
  • Critical thinking is not mindless criticism; on the contrary, it is reflective, inquisitive, logical thinking that is focused on deciding what to believe or do.
  • Health IT must be trusted by users and patients [and be free of major downsides] - as a primary step before HIT can optimally benefit healthcare 
  • I pointed out I am not suggesting anything new and that, in fact, I am suggesting something old:  "First, do no harm."
  • I pointed out the "revolutions" usually have downsides, and IT always produces winners...and losers (per the empirical research of Social Informatics). 

I also asked if health IT was being done well...

I provided links to various evidence that it was not, such as the National Research Council 2009 report on health IT; AMIA's report on its workshop on healthcare IT failure, the 2012 U.S. IOM report on safety, the 2012 U.S. NIST report on usability, work by Australian Professor Jon Patrick of U. Sydney on health IT defects, and other sources as aggregated at this link.

It seems the following organization in Cairns was either absent or not listening, and this debacle is the result.

Just about every point I raised in 2012 was violated or ignored.  The story speaks for itself, and I have nothing further to say about it other than this type of scenario is unfortunately still occurring worldwide.


CAIRNS Hospital’s Digital Hospital program was deemed defective within two weeks of being rolled out with health staff saying it resulted in “significant adverse impacts” upon patient safety and care.

Daniel Bateman
The Cairns Post
September 22, 2016 7:03pm

The controversial eHealth software program, which went live earlier this year, has been blamed for putting the Cairns and Hinterland Hospital and Health Service on the path towards its $80 million budget blowout.

The hospital’s board resigned as a result of the gaping deficit on Monday and an administrator is expected to be appointed today.

Results from a staff survey about Digital Hospital leaked to the Cairns Post says the program did not “meet stakeholders’ needs for an intuitive, user-friendly system that supported the provision of personalised patient care at the bedside”.

The report also identifies specimen order and collection workflow as a result of the new system as being “convoluted and time consuming, with significant adverse impacts on patient safety and care.”

Cairns Hospital board resigns

The lack of system testing has been identified by stakeholders as the root cause of continual defects after Digital Hospital went live and the report says there has not been adequate support staff to help with problems.

Senior clinicians raised alarm bells about Digital Hospital earlier this year, warning if the problems were not fixed, it would become a major headache for the health service.

Last Friday hospital board chairwoman Carolyn Eagle described Digital Hospital as a “financial challenge” for the health service.

However, the service’s chief executive Clare Douglas said yesterday the program did not contribute to the 2015/16 budget deficit, nor was it a major contributor to the projected budget deficit for the 2016/17 financial year.

“Queensland Health has committed to the establishment of a digital health system and Cairns Hospital is an important part of that system,” she said.

“We are working to improve and embed the system as part of business as usual.”

She said there were benefits of the program, including visibility and ease of access to patient information.


That's akin to saying there are benefits to train wrecks.  Yes, it gets the tracks and signals fixed.  But....

The myth of cybernetic magic is a devilish one, and must be expunged from healthcare if this technology is ever to meet even a fraction of the promises made about it for decades.

-- SS

Addendum:  it seems American EHR company Cerner was involved here:

-- SS

Tuesday, September 20, 2016

Cancer is just a software platform problem: Microsoft will 'solve' cancer within 10 years by 'reprogramming' diseased cells

A short post.

Hand a computer scientist a computer and some genetic data, and the world then becomes a deterministic, binary place:

Microsoft will 'solve' cancer within 10 years by 'reprogramming' diseased cells
Sept. 20, 2016
Sarah Knapton, Telegraph science editor

Microsoft has vowed to “solve the problem of cancer” within a decade by using ground-breaking computer science to crack the code of diseased cells so they can be reprogrammed back to a healthy state.

Chris Bishop, laboratory director at Microsoft Research, said: “I think it’s a very natural thing for Microsoft to be looking at because we have tremendous expertise in computer science and what is going on in cancer is a computational problem.

"What is going on in cancer is a computational problem" sounds like a form of cybernetic scientism ( in this sense:

Scientism ... is a term that is used, often pejoratively, to denote a border-crossing violation in which the theories and methods of one (scientific) discipline are inappropriately applied to another (scientific or non-scientific) discipline and its domain. 

We are only scratching the surface in genomics, and to state it is merely a "computational problem" as if biology worked like a deterministic, binary digital computer is, in my mind, wishful thinking.

It would be great if genetics were just one big Intel Core I7 that one could program in binary assembly language after decoding its instruction set, but I have doubts it's that simple.

-- SS

9/21/16  Addendum

Medicinal chemist/scientist Derek Lowe has written the "long version" of this at

Hat tip to commenter Bruce Grant.

-- SS

Wednesday, September 14, 2016

Pharmaceutical Company Leaders Pretend to Advocate for the Public Interest - But Maybe it's All "For the Love of Money"

In this political season, the US public is confronted with a blizzard of protestations from candidates who claim to want to serve their interests.  We ought to be used to this, because leaders of big health care organizations have been protesting for years about how they are always in it for the public and the patients' health.  Yet as we have repeatedly discuss, such leaders often manage in ways that subvert their own mission.

Recently, there were two striking examples of pharmaceutical leadership saying they were all about the public interest, despite evidence to the contrary.

It's All About the Children Says Insys Therapeutics, or Perhaps the Market Share

In the Intercept, Lee Fang reported the touching concern of the executives at Insys Therapeutics for America's children.
On August 31, Insys Therapeutics Inc. donated $500,000 to Arizonans for Responsible Drug Policy, becoming the single largest donor to the group leading the charge to defeat a ballot measure in Arizona to legalize marijuana.

The drug company, which currently markets a fast-acting version of the deadly painkiller fentanyl, assured local news reporters that they had the public interest in mind when making the hefty donation. A spokesperson told the Arizona Republic that Insys opposes the legalization measure, Prop. 205, 'because it fails to protect the safety of Arizona’s citizens, and particularly its children.'

However, it turns out the company admitted it had other compelling reasons to want to fight the legalization of marijuana.

Investor filings examined by The Intercept confirm the obvious.

Insys is currently developing a product called the Dronabinol Oral Solution, a drug that uses a synthetic version of tetrahydrocannabinol (THC) to alleviate chemotherapy-caused nausea and vomiting. In an early filing related to the dronabinol drug, assessing market concerns and competition, Insys filed a disclosure statement with the Securities and Exchange Commission stating plainly that legal marijuana is a direct threat to their product line:
Legalization of marijuana or non-synthetic cannabinoids in the United States could significantly limit the commercial success of any dronabinol product candidate. … If marijuana or non-synthetic cannabinoids were legalized in the United States, the market for dronabinol product sales would likely be significantly reduced and our ability to generate revenue and our business prospects would be materially adversely affected.
Insys explains in the filing that dronabinol is 'one of a limited number of FDA-approved synthetic cannabinoids in the United States' and 'therefore in the United States, dronabinol products do not have to compete with natural cannabis or non-synthetic cannabinoids.'

The company concedes that scientific literature has argued the benefits of marijuana over synthetic dronabinol, and that support for marijuana legalization is growing. In the company’s latest 10-K filing with the SEC, in a section outlining competitive threats, Insys warns that several states 'have already enacted laws legalizing medicinal and recreational marijuana.'

Insys insists on its web-site
We are an innovative organization with a focus on providing therapeutic solutions helping to improve the lives of patients. 

Our commitment to better patient care is measured not only by our focus on bringing innovative technologies to patients and physicians, but also by the importance we place on making an impact within the communities where we work and live.

But it really more seems to be all about market share, which drives the revenue, which drives the executive compensation (which was $3,862,000 for outgoing CEO Michael L Babich in 2015, per the 2016 proxy statement). 

Pfizer CEO Advocates for the Public Who Do Not Support National Health Insurance, or Maybe They Do

Bloomberg reported that Ian Read, the CEO of Pfizer, "America's biggest drugmaker," said
that Democratic presidential nominee Hillary Clinton’s proposals to contain the price of pharmaceuticals would be 'very negative' for the industry and are a step toward single-payer health care.

Pfizer CEO Ian Read criticized Clinton’s plan, which she released earlier this month, at an investor conference hosted by Wells Fargo in Boston. Clinton’s prescription drug policy would give the government a broad role in overseeing drug prices, including a board to monitor sharp cost increases, and would specifically target price hikes on older medicines.

It is pretty obvious why the CEO of Pfizer would not like any policy that might reduce the prices of his products.   However, Mr Read in addition stated that

'The Clinton approach to health care drives you to a one-payer system, and drives you to rationing, drives you to a place where most consumers don’t want to be,' Read said. “In its totality it would be very negative for innovation.”

One might be suprised that Mr Read, who received $17,987,962 in total compensation in 2015 (per the 2016 proxy statement), would be in touch with what most consumers want.  But maye he was just following the strategic imperative described in the 2016 proxy statement:

Earn greater respect

Earn society’s respect by generating breakthrough therapies, improving access, expanding the dialogue on healthcare and acting as a responsible corporate citizen.

However, it appears that Mr Read did not know what the public really wants.

There is at least some systematic evidence to the contrary, that the US public generally supports single-payer government health insurance, aka national health insurance.  A Gallup poll this year found 58% support for a federally funded health system (look here).  A 2013 survey of people visiting emergency departments in safety-net hospitals in in Massachusets, which has had a longer experience with an "Obamacare" like system than most of the US, showed that 72% would prefer national health insurance. (Saluja S et al. Support for National Health Insurance Seven Years Into Massachusetts Healthcare Reform: Views of Populations Targeted by the Reform. Int J Health Serv 2016; 46: 185-200. Link here.)  For more discussion, see this.

So was Mr Read's insistence that he did not like the Clinton policy on the pharmaceutical industry because he was advocating for the public who did not want national health insurance?  Or was it all about the Benjamins?


Unfortunately, the US, and perhaps other western countries are beset by rising distrust of increasingly powerful elites.  It seems that this may be in response to those elites grabbing an ever increasing share of the nations' wealth.  More unfortunately, this distrust may lead to support of outsider politicians who claim to be on the side of the people, and who may have quick, but often very dirty solutions.  Before grabbing at such easy fixes, or applauding figurative men on white horses, perhaps we need to focus more attention on the leaders who should have inspired mistrust in the first place.

Health care leaders often inspire trust, since they frequently claim to be in it for patients' and the public's health.  We have frequently shown, however, that they may instead do what is best for their personal interests, even if that is hostile to their ostensible health care mission.

Now we have just two more quick, and also dirty examples of leaders, this time of pharmaceutical companies, pledging their support of the public while managing to so what is best for their corporate bottom lines (and presumably thus their personal compensation).

As we have said far too many times - without much impact so far, unfortunately - true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

For our musical interlude, here is "For the Love of Money," by the O'Jays, as used in the introductory sequence for the "reality show," The Celebrity Apprentice, hosted by, well, you know...

Thursday, September 08, 2016

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Settlement of Allegations of Financially Cheating the US Medicaid Program

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

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

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

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

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

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

Settlement of Allegations of Bribing Foreign Health Care Providers

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

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

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

Here are some details about the allegations:

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

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

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

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

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

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


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

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

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

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

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