Sunday, October 27, 2019

Circular Logic - A Revolving Door Update

We have actually managed to go for three months without posting on the revolving door.

Since then, however, we have accumulated a sufficient number of relevant cases to post another round up.

The Old School Outgoing Revolving Door

Let us begin with cases of the old fashioned outgoing revolving door, that is, of people leaving leadership positions in governmental bodies which regulate health care or make health care policy, then soon obtaining jobs in the health care industry, particularly organizations which they previously regulated or were affected by the policies they made.

However, it is striking that many of the people recently reported as transiting the outgoing revolving door have also had in the past transited the incoming revolving door (see below).

Cynthia Ridgeway, From Department of Justice Prosecuting White Collar Crimes to Anthem

As reported on July 15, 2019 by Modern Healthcare:

Health insurer Anthem has hired Cynthia Ridgeway, a longtime attorney for the U.S. Justice Department, to be its corporate strategy director.

Ridgeway is first assistant U.S. attorney in the Southern District of Indiana. During her 15-year tenure at the U.S. attorney's office, she litigated high-profile white collar crimes

The brief report had no information about Ms Ridgeway's expected duties for Anthem.  It is possible, but not certain, that they could be relevant to her work in white collar crime investigations and prosecutions for the government.

Marilyn Tavenner, From Administrator of Center for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services (DHHS) to America's Health Insurance Plans (AHIP) and Now to Blue Cross Blue Shield of Arizona

As in a July 23, 2019, PR release:

Marilyn Tavenner, R.N., the former Administrator for the Centers for Medicare and Medicaid Services (CMS) and past president and CEO of America's Health Insurance Plans (AHIP), officially joined the BCBSAZ board, which provides strategic oversight to the company.

Note that Blue Cross Blue Shield of Arizona is a non-profit corporation.

Further note that Ms Tavenner had quite an interesting past history of revolving door transits.  According to her Wikipedia page, she worked for for-profit hospital system Columbia/ HCA, now HCA, from 1981 to 2005, starting as a nurse, and rising to President of the Central Atlantic Division.  While there, she worked for CEO Rick Scott, on whose watch the company made a huge settlement for Medicare fraud (look here).  Scott was not charged, left the company, and then was elected to be Governor of and the Senator for Florida as a Republican.  Ms Tavenner then went on to be Secretary of Health and Human Resources for Virginia, and then CMS administrator from 2013-15.

So Ms Tavenner moved from a for-profit hospital company to running the government agency that operates  government health insurance programs, and thus greatly influences hospital revenues.  The agency also obviously greatly influences the insurance industry, whose major trade association she then went on to lead.  Now she will be part of the governance of a large, albeit non-profit insurance company.

Erik Paulsen, From the House of Representatives to the Board of Cardiovascular Systems

As reported by the St Paul Business Journal, July 25, 2019:

Former U.S. Rep. Erik Paulsen has joined the board of directors for St. Paul medical device company Cardiovascular Systems Inc.

Cardiovascular Systems (Nasdaq: CSII) touted Paulsen’s support for the medical device industry and involvement with federal health care and economic policy in its announcement Thursday.

As a member of Congress from 2009 to 2019 representing Minnesota’s Third District, which covers suburbs of Hennepin County, Paulsen was co-chair of the bipartisan House Medical Technology Caucus. He also served on the House Ways and Means Committee, which covers taxes and policies governing health care, economics and trade.

Thus Mr Paulsen went from having a leadership role in government relationships with medical technology, and "taxes and policies governing health care," to a role in governance of a health technology company.

Dr Scott Gottlieb, From Commissioner of the Food and Drug Administration (FDA) to Venture Capital and the Pfizer Board of Directors, and now the Board of Aetion

Dr Scott Gottlieb has frequently appeard in posts on Health Care Renewal.  Our last summary of his relevant transits to the revolving door, from July, 2019 noted:

Dr Scott Gottlieb, FDA Commisioner from 2017 to May, 2019,  had been no stranger to the revolving door.  Prior to assuming leadership of the FDA, he had relationships with multiple for-profit health care corporations, which drew wide notice when he was appointed to head the FDA in 2017, as we noted at that time here.  Also, Dr Gottlieb was clearly very comfortable with the pharmaceutical and biotechnology industries.  For example, in 2007-2008, we discussed many examples of Dr Gottlieb's strident promotion of the interests of these industries (look here, here, here and here).

Very quickly after leaving the FDA in 2019, Dr Gottlieb rejoined his old venture capital firm, New Enterprise Associates, as a full-time partner investing partner specializing in life sciences companies.

Then in June, 2019, he joined the board of Pfizer.

His latest move was reported on September 17, 2019 by Fierce Healthcare:

Former Food and Drug Administration (FDA) Commissioner Scott Gottlieb, M.D., has added another position to his roster of board and advisory roles since leaving the agency back in March.

He'll be joining healthcare technology company Aetion’s board of directors, the company announced Tuesday. The New York-based company offers real-world evidence and analytics to drug companies, payers, life sciences companies and regulatory agencies.

The company has an interesting array of financial backers:

Sanofi, Amgen, UCB, McKesson Ventures and Horizon Healthcare Services have all backed Aetion as strategic investors, according to the company.

It appears that Gottlieb's former role as leader of the FDA is highly relevant to the business of Pfizer, Aetion, and Aetion's "strategic investors." In particular, regarding Aetion:

Gottlieb will advise the company as it expands the reach and utility of the Aetion Evidence Platform, a scientifically validated tool to assess the safety, effectiveness and value of treatments using real-world evidence, the company said in a press release.

During his tenure, Gottlieb also pushed for the FDA’s use of real-world evidence, recognizing its potential to advance medical products and their development, Aetion said.

'The widespread adoption of real-world evidence to the development and application of new treatments will improve the precision of prescribing decisions and help make drug discovery far more efficient,' Gottlieb said in a statement.'“As a member of Aetion’s Board, I’m inspired by the opportunity to join the company’s efforts to bring RWE to the forefront of drug research and development.'

'Dr. Gottlieb has played a pivotal role in advancing the use of real-world evidence for regulatory decision-making. As a real-world evidence advocate and standard-setter, he’s an ideal partner in our work to help define RWE's role in the development, delivery, and payment of treatments,' Carolyn Magill, CEO of Aetion, said in a statement.

And regarding Pfizer and other pharmaceutical companies:

Aetion works with 12 of the top 20 biopharma firms in the world, along with leading payers.

We had discussed the conflicts of interest presented by Gottlieb's Pfizer board decision, which Senator Elizabeth Warren (D-MA) asserted "smacks of corrupion," here.

Matthew Whitaker, From Acting US Attorney General to Legal Advisor to a Marijuana and CBD Company

As reported on August 28, 2019 by Forbes:

Toronto-based CBD company Alternate Health Corp has hired Matthew Whitaker, former acting U.S. Attorney General, and his law firm Graves Garrett to serve as outside counsel.

Previously, he

served as Chief of Staff to then Attorney General Sessions from September 2017 to November 2018

Why was he selected?

'The legal environment surrounding CBD is rapidly evolving and it is essential that Alternate Health stays at the forefront of new government and FDA regulations,' he said. 'We believe his experience in government and the Department of Justice is a significant asset as we move forward.'

So Mr Whitaker, after taking a leading role in US government law enforcement, including enforcement of laws related to drugs like marijuana, would not be advising a foreign company trying to get favorable legal treatment from the government.

Rebecca Wood, from Chief Counsel at FDA to Leader of Food and Drug Practice at Sidley Austin

Ms Wood had been Chief Counsel at the FDA.

Recently reported by ProPublica (in a October 15, 2019 article to be discussed further below):

Wood now leads the food and drug practice at Sidley Austin, a powerful law and lobbying firm in Washington, where her colleagues lobby the FDA for various clients.

She is an example of

former Trump administration staffers who go back to K Street but don’t register as lobbyists — the Lobbying Disclosure Act only requires those who spend 20% or more of their time lobbying to register.

This still generates important conflicts of interest.

Wood said she 'advises clients on FDA-related issues and, in doing so, complies with all applicable ethics requirements.'

There is nothing illegal about returning to an old employer or being hired by a new one. Nor is there anything wrong with having colleagues who lobby the federal government. But the revolving door does present the possibility of conflicts of interests.

'The most important commodity in D.C. is information,' Hauser said. 'Former insiders have rare access to strategic intelligence, which is of significant value to corporate entities, and they can do so without registering as a lobbyist.'

Dr Karen DeSalvo, from Assistant Secretary of Health, DHHS and Office of the National Coordinator, to the University of Texas, now to Google as Chief Health Officer

As reported by Health Care Dive on October 18, 2019

Google has hired ex-Obama administration official Karen DeSalvo as its first chief health officer, further solidifying its investment in the $3.5 trillion industry by rounding out its healthcare team.

DeSalvo, a well-respected healthcare executive and public health expert, was the acting Assistant Secretary for Health at HHS and ran the Office of the National Coordinator, which manages the nation's health IT, under President Barack Obama. She has spent the past two years teaching at the University of Texas at Austin's Dell Medical School.

Note that there was a two year delay after Dr DeSalvo left the government until her hiring by Google.  This does apparently lessen the conflicts of interest generated.  However, many think 

The Au Courant Incoming Revolving Door

In the Trump era, many people have come through the incoming revolving door, that is, people with significant leadership positions in health care corporations or related groups have attained leadership positions in government agencies whose regulations or policies could affect their former employers.

On October 15, 2019, ProPublica published a striking article on people transiting the incoming revolving door from lobbying positions to leadership positions at government agencies whose regulations or policies could affect their lobbying clients.

Two of the people recently added to the ProPublica data base got major government health care leadership positions after working as lobbyists, and then returned to lobbying after ending their government "service."

By way of background:

At the halfway mark of President Donald Trump’s first term, his administration has hired a lobbyist for every 14 political appointments made, welcoming a total of 281 lobbyists on board, a ProPublica and Columbia Journalism Investigations analysis shows.

With a combination of weakened rules and loose enforcement easing the transition to government and back to K Street, Trump’s swamp is anything but drained. The number of lobbyists who have served in government jobs is four times more than the Obama administration had six years into office. And former lobbyists serving Trump are often involved in regulating the industries they worked for.

Even government watchdogs who’ve long monitored the revolving door say that its current scale is a major shift from previous administrations. It’s a 'staggering figure,' according to Virginia Canter, ethics chief counsel for the D.C.-based legal nonprofit Citizens for Responsibility and Ethics in Washington. 'It suggests that lobbyists see themselves as more effective in furthering their clients’ special interests from inside the government rather than from outside.'

Colin Roskey,  from Health Care Lobbying for Lincoln Policy Group to Deputy Secretary, DHHS, then back to Lobbying for Lincoln Policy Group

Per ProPublica:

Consider Colin Roskey. Days after leaving a two-decade career as what one former employer called the 'smartest' health care lobbyist, he joined the Department of Health and Human Services in January. As deputy secretary for legislation for mandatory health, he headed the portfolio that he tried to influence for most of his career.

HHS declined to reveal any recusals he signed while appointed. A spokesman said that “all employees are expected to abide by the ethics rules.”

Just days before joining HHS, Roskey listed among his clients major dialysis providers that receive federal payments through Medicare, including Fresenius Medical Care — an industry juggernaut, with more than 330,000 patients in thousands of dialysis clinics in the U.S. A third of the company’s billion-dollar revenue comes from Medicare. A recent revamp in the dialysis industry ordered by Trump, expected to shift millions of dollars from dialysis centers to cheaper home-based options, put Roskey’s office at the heart of regulating how much profit or loss some of his former clients will see in coming years. Roskey said in an interview that he recused himself from this matter.

Public records show that Roskey lobbied for at least 27 clients between January 2017 and December 2018 on an array of issues other than dialysis involving public health care programs, from prescription drugs to palliative care.

In early October, Roskey stepped out of government and went straight back to work for his old lobbying firm, Lincoln Policy Group, which specializes in health care policy. “Spending time at HHS will make [Roskey] even more valuable to our team — and we are so excited to have him back,” the lobbying firm announced in a statement.

Roskey said he had no knowledge of how the new kidney care regulations will be implemented.

After his monthslong stint with the Health Department, Roskey said he plans to lobby the legislative branch, which is not prohibited by the current ethics rules. 'While working with the government I gained knowledge and background, intellectually and professionally, and I intend to unapologetically utilize those skills for my employer and clients,' he said.

The conflicts of interest generated by the moves from and to the lobbying firm are are obviously significant.

Laura Kemper from Health Care Lobbyist to Deputy Assistant Secretary of DHHS, then to Lobbying as Vice-President for Governmental Affairs for Fresenius

We had previously discussed Ms Kemper's transit from lobbyist to government health care leader here.   From the ProPublica article,

Laura Kemper, [is] a former HHS senior official who, within days of leaving her post in March, was hired by Fresenius. Now vice president for government affairs, Kemper heads the company’s policy group.

According to lobbying records, she is listed among the in-house lobbyists who have visited Congress, the White House and HHS since March, pushing everything from reimbursement for dialysis services to home dialysis. The records show Fresenius shelled out more than $2.2 million for lobbying activities during the first half of the year.

Furthermore, ProPublica noted:

Her pass through the revolving door tests the boundaries of ethics rules. Indeed, Trump’s pledge prohibits staffers-turned-registered lobbyists from advocating for the special interests of their corporate bosses before the agencies where they used to work for at least five years. It also restricts former employees from behind-the-scenes lobbying with any senior federal official for the remainder of Trump’s presidency. Kemper signed that pledge.

Kemper declined to comment. In a statement, Fresenius said Kemper “has strictly followed her legal and ethical obligations and has not been involved in lobbying the administration or anything related to the Executive Order.” Disclosure forms filed by Fresenius “cite the general activity of a team and do not ascribe any particular lobbying activity,” according to its statement.

Recently, during an earnings call to investors, Fresenius CEO Rice Powell said that the company has talked to the 'appropriate people in Washington,' without naming any particular Fresenius or government staffer. “We are in the midst of commenting and asking questions” with HHS officials, he added.

As ProPublica has reported, political appointees who return to lobbying have found ways to tiptoe around ethics rules. Some register as lobbyists but limit their interactions to Congress, leaving colleagues to lobby the executive branch. Ethics restrictions don’t apply to congressional lobbying.


We have repeatedly said,  most recently in March, 2019, ...

The revolving door is a species of conflict of interest. Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

The ongoing parade of people transiting the revolving door once again suggests how the revolving door may enable certain of those with private vested interests to have disproportionate influence on how the government works.  The country is increasingly being run by a cozy group of insiders with ties to both government and industry. This has been termed crony capitalism. The latest cohort of revolving door transits suggests that regulatory capture is likely to become much worse in the near future.

Remember to ask: cui bono? Who benefits? The net results are that big health care corporations increasingly control the governmental regulatory and policy apparatus.  This will doubtless first benefit the top leadership and owners/ stockholders (when applicable) of these organizations, who are sometimes the same people, due to detriment of patients' and the public's health, the pocketbooks of tax-payers, and the values and ideals of health care professionals.  

 The continuing egregiousness of the revolving door in health care shows how health care leadership can play mutually beneficial games, regardless of the their effects on patients' and the public's health.  Once again, true health care reform would cut the ties between government and corporate leaders and their cronies that have lead to government of, for and by corporate executives rather than the people at large.

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