Thursday, October 15, 2020

Adding (Corrupt Financial) Insult to (Coronavirus Pandemic) Injury

We have frequently discussed the voluminous evidence that President Trump, his family and his cronies have many more conflicts of interest, and have acted corruptly orders much more frequently than any other US administration (see this summary).  These conflicts of interest and corrupt actions likely have badly hurt the country and its people.  

Now a new story suggests that the administration's selective dissemination of information about the coronavirus pandemic may have enabled the enrichment of its supporters while simultaneously endangering public health.  This may be a new low.

Warning Donors and Supporters While Deceiving the Public

A report by the New York Times on October 15, 2020 suggested that early on top Trump administration officials warned favored donors and supporters that the coronavirus was much more dangerous than the administration had admitted publicly.  This allowed the recipients to personally profit: 

On the afternoon of Feb. 24, President Trump declared on Twitter that the coronavirus was 'very much under control' in the United States, one of numerous rosy statements that he and his advisers made at the time about the worsening epidemic. He even added an observation for investors: 'Stock market starting to look very good to me!'

But hours earlier, senior members of the president’s economic team, privately addressing board members of the conservative Hoover Institution, were less confident. Tomas J. Philipson, a senior economic adviser to the president, told the group he could not yet estimate the effects of the virus on the American economy. To some in the group, the implication was that an outbreak could prove worse than Mr. Philipson and other Trump administration advisers were signaling in public at the time.

The next day, board members — many of them Republican donors — got another taste of government uncertainty from Larry Kudlow, the director of the National Economic Council. Hours after he had boasted on CNBC that the virus was contained in the United States and 'it’s pretty close to airtight,' Mr. Kudlow delivered a more ambiguous private message. He asserted that the virus was 'contained in the U.S., to date, but now we just don’t know,' according to a document describing the sessions obtained by The New York Times.

The document, written by a hedge fund consultant who attended the three-day gathering of Hoover’s board, was stark. 'What struck me,' the consultant wrote, was that nearly every official he heard from raised the virus 'as a point of concern, totally unprovoked.'

The consultant’s assessment quickly spread through parts of the investment world. U.S. stocks were already spiraling because of a warning from a federal public health official that the virus was likely to spread, but traders spotted the immediate significance: The president’s aides appeared to be giving wealthy party donors an early warning of a potentially impactful contagion at a time when Mr. Trump was publicly insisting that the threat was nonexistent.

Those Who Got the Information Were Trump Cronies and Supporters

 Note that those most likely to hear about the more realistic and dire, but non-public predictions of Trump insiders were people who were supporters of and donors to Trump et al at the Hoover Institute, whose board

includes the media mogul Rupert Murdoch and the venture capitalist Mary Meeker, neither of whom attended the meetings in February

Also,

The Hoover Institution has close relations with the Trump administration, and the White House has pulled from its ranks to fill top positions. Joshua D. Rauh, one of the White House economists addressing the Hoover crowd on Feb. 24, has returned to the institution, where he worked previously. Kevin Hassett, who moderated the panel and has served as the chairman of the White House Council of Economic Advisers, is now a Hoover Institution fellow.

Receiving Information Enabled Personal Profit

Those who heard about the Trump administration insider's non-public concerns soon acted on them, thus profiting from their enhanced knowledge of the pandemic to come:

'Short everything,' was the reaction of the investor, using the Wall Street term for betting on the idea that the stock prices of companies would soon fall.

That investor, and a second who was briefed on the Hoover meetings, said that aspects of the readout from Washington informed their trading that week, in one case adding to existing short positions in a way that amplified his profits

 


Corruption that Endangered Public Health

 Note that the Times article stated

it is not apparent that any of the communications about the Hoover briefings violated securities laws. The Justice Department and the Securities and Exchange Commission would have several hurdles to clear before establishing that Appaloosa or other funds that received insights from Mr. Callanan, either directly or through intermediaries, acted improperly.

However, consider this: The Trump administration had a duty to manage the growing coronavirus pandemic so as to protect the lives and health of the American people.  The administration had access to considerable information about the pandemic which was not widely available.  We know from reporting by Bob Woodward that President Trump knew how serious the pandemic was likely to be, but concealed that information to prevent "panic." In particular, per Reuters, September 9, 2020:

'I wanted to always play it down,' Trump told author Bob Woodward on March 19, days after he declared a national emergency. 'I still like playing it down, because I don’t want to create a panic.'

Yet, the Trump administration did not act on the information it had.  Many public health experts believe its inaction resulted in the loss of thousands of lives, and resulted in many more cases of COVID-19, some quite morbid that might have been prevented by more forceful action.  Trump avoided effective action while constantly reassuring the public. Meanwhile, his appointees were giving Trump supporters and donors cause to think that the pandemic would actually be quite serious.  Some of them took advantage of that information to make financial transactions, like selling stocks short, enabling them to personally profit.

Transparency International defines corruption as

Abuse of entrusted power for private gain

Whether or not they were legal, the actions above by Trump and his political appointees appeared to have abuse their entrusted for the private gain of their supporters and donors.

We have frequently discussed, most recently here, the many conflicts of interest affecting and corrupt action by Trump, his family, and his cronies.  This case above adds to that list.  

We know of one way that the conflicts of interest generated by Trump's continued ownership of the Trump Organization may have enabled his mismanagement of the coronavirus pandemic. We discussed here and here how concerns about financial losses incurred by the Trump Organization due to lockdowns and other restrictions by state and local public health authorities to manage the pandemic may have influenced Mr Trump to urge premature reopening of the economy.  Thus he may have prioritized his personal finances over public health.

However, the danger of the apparent corruption revealed by the newest case seems more direct. Trump and cronies' restricted dissemination of information about the pandemic allowed enrichment of their supporters while endangering the population at large. In any case, once again, private profit trumped public health.

Yet up to now, protests of his conflicts of interest and corruption have been feeble, while the country has been distracted by each new surprise from a presidency run like a reality television show.  How much longer can the country survive our lack of focus on how we are threatened?

 

 

 


Sunday, October 04, 2020

For Coronavirus Pandemic Management, In Johnson and Johnson and Pfizer Trump Trusts: Public Health at Risk ... Due to Corruption?

In 2003 we found that health care professionals felt one reason for US health care dysfunction was that it was increasingly "dominated by large, bureaucratic organizations which do not honor ... [its] core values"(1)  These organizations included big health care corporations like pharmaceutical, biotechnology and device companies, and large non-profits like hospital systems.  Since then, the power of the largest health care organizations has only increased.  Now we learn how President Trump seems to have ceded control of the management of the coronavirus pandemic to a few big pharmaceutical companies.

In "Massive Companies" Like Johnson and Johnson and Pfizer, Not the FDA, We Trust?

The first US presidential debate included a performance by the president which was likened to something out of professional wrestling. In addition, as reported by StatNews on September 29, 2020:

Throughout a turbulent, disorganized, and hostile debate, Trump highlighted his government’s efforts on vaccine development, pledging, dubiously, that the country is 'weeks away from a vaccine' and contradicting high-level officials within his own government who have suggested it will be months, at least, before a vaccine is available.

And

Trump viewed vaccines and his government’s vaccine moonshot, known as Operation Warp Speed, as the centerpiece of a pandemic response and his campaign rhetoric.

Yet Trump continued to undercut two officials central to that effort: Moncef Slaoui, Warp Speed’s director, and Robert Redfield, the director of the Centers for Disease Control and Prevention. They are 'both wrong' for standing by published timelines for vaccine distribution, Trump said, which show vaccines will be widely available to the U.S. public by mid-2021.

 So

At one point, Trump even appealed to drug companies’ trustworthiness on vaccine safety, asking Biden at one point: 'You don’t trust Johnson & Johnson, Pfizer?'

This mirrored what he had said a few days before.  Per the New York Times on September 23, 2020, in the context of threatening to counter efforts by the FDA to impose strict efficacy and safety standards on coronavirus vaccines, apparently so he could speed them to market and then claim a major victory against the pandemic, Trump said

he had 'tremendous trust in these massive companies' that are testing the vaccines, adding, 'I don’t know that a government as big as' the federal government could do as well.

In "massive companies," like Johnson and Johnson and Pfizer we trust? 

Trump Has Benefited from the Actions of Leaders of Massive Corporations, Including Johnson and Johnson and Pfizer

Making pandemic management policy under the motto of  "in massive companies we trust" fits with Trump's coziness with big corporate leadership, particularly that of  Johnson and Johnson and Pfizer. 

Health Care Corporations, Their Executives and Board Members Supported Trump's Political Causes

Trump's campaign has benefited from massive support from big corporations, including pharmaceutical companies, specifically Johnson and Johnson and Pfizer


Large health care corporations have funded dark money organizations that  strongly supported Trump and his agenda.  For example,Johnson and Johnson made large donations to the US Chamber of Commerce, which at that time "mostly endorses Republican candidates" and had contributed to a campaign to support Trump's appointment of US Supreme Court Justice Kavanaugh (look here).  

Johnson and Johnson and Pfizer are members of pharmaceutical trade organization PhRMA, which also acts as a political funding organization.  According to Sludge on April 6, 2020:

[The] Job Creators Network has been funded by Pharmaceutical Research and Manufacturers of America (PhRMA)

And,

The Job Creators Network was founded in 2011 by billionaire Home Depot co-founder Bernard Marcus, a major GOP donor who spent more than $7 million through outside groups to help elect Trump in 2016. Marcus has said that he plans to spend part of his fortune to help re-elect Trump in 2020.

We have noted that prior to the 2018 election, health care corporate CEOs often gave large political donations heavily biased in favor of Republicans.  For example, the CEO of Pfizer, Ian Read, gave $145K to Republicans, but only $26K to Democrats (look here).

Also, Trump appointed Robert (Woody) Wood Johnson IV, heir of the family which founded Johnson and Johnson, and major Johnson and Johnson shareholder, as ambassador to the UK.   The New York Times reported in July, 2020, that Johnson's support of Trump included using his official position to tout Trump's golf resort in Scotland as a site for the British Open. Johnson's monetary support for Trump's causes included

$1.2 million to the Republican National Committee and the Trump Victory fund, as well as another $1 million to America First Action, a super PAC supporting Mr. Trump’s re-election.

Health Care Corporations, Their Executives and Board Members Patronized Trump's Properties to His Personal Benefit

The biggest owner of the Trump Organization is President Trump, so he personally profits from revenue to it. Health care corporate managers and owners, including those of Johnson and Johnson and Pfizer, and health care corporate lobbyists, including one who worked for Pfizer, patronized Trump Organization properties directly or indirectly.  For example, according to the Observer in 2013,

Johnson & Johnson heiress Libet Johnson loved the Trump International Hotel and Tower [in New York]—so much so that it’s nearly impossible to keep track of [all the condominiums she owned in it]. So difficult, in fact, that we lost count.

 

Lobby, Trump International Hotel, Washington, DC

Big corporate donors, including Pfizer, supported the Trump Inauguration Committee, which then spent considerable sums at the Trump International Hotel in Washington DC, to Trump's personal benefit (see Newsweek, January, 2019).  Prominent Pfizer lobbyist Kenneth M. Duberstein is a long-time member of Trump's Mar A Lago resort in Florida (New York Times, 2017).

Trump's Coziness with Managers and Owners of Massive Corporations, Including Johnson and Johnson and Pfizer

Health Care Corporate Executives Got Access to Trump

Trump has spent a lot of time meeting with top executives and owners of big corporations, including health care corporations. For example, as reported by Becker's Hospital Review in April, 2020, 27 health care executives were appointed to Trump's economic revival task force (during and after the pandemic), including Albert Bourla, the CEO of Pfizer, and Alex Gorsky, the CEO of Johnson and Johnson.

Back in 2017, Johnson and Johnson CEO Gorsky was appointed to Trump's Manufacturing Council.  He temporarily left that position after Trump refused to disavow the right-wing extremists who marched in Charlottesville, but then was put "on the guest list Tuesday for dinner at [Trump's] Bedminster [golf club]."  After that, Trump seemed to be promoting Johnson and Johnson products, particularly Spravato touted as a treatment for opioid dependence (look here).

Health Care Corporate Executives and Lobbyists Appointed to Government Leadership Positions Affecting Health Care

We have noted that many of Trump's political appointments to leadership positions in government that affect health care came through the revolving door from health care corporations and lobbying firms that worked for them.  For example, the current Secretary of the Department of Health and Human Services (DHHS) is a former top Eli Lilly executive.

 


Several top positions as DHHS were filled by former lobbyists for big pharma and other health care corporations (look here). Particularly, Daniel Best went from Pfizer to DVS and then to DHHS as a Senior Advisor (look here.)

Also, Dr Scott Gottlieb, a former commissioner of the US Food and Drug Administation (FDA) under Trump soon became of member of Pfizer's board of directors (look here).

Should Trump Trust Johnson and Johnson and Pfizer?

Trump's affinity for Johnson and Johnson and Pfizer may be based on personal relationships and perceived political common interests, as well as on how he has politically and personally benefited from the actions of their leaders and owners. That affinity should not be sufficient for him to trust them to run a coronavirus pandemic response.  Arguing against placing so much trust in them are their corporate track records of misbehavior.  

On Health Care Renewal, we have been tracking ethical misadventures by big health care organizations for a long time.  The records of Johnson and Johnson and Pfizer stand out, but not in a good way.  To summarize what we have discussed about each...

Johnson and Johnson

Derived from our previous blog posts - 

 2010
- Convictions in two different states for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax

2011
- Guilty pleas to bribery in Europe by DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses  (see this link for all of the above)
- A guilty plea to misbranding Natrecor by subsidiary Scios (see post here)

2012 
  - Testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
-  fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
-  announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post).

2013
-  settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this post)
-  Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this post).
 -  DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .
-  Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this post for this and above case).
-  Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this post).
- fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (see this post).

2014 
- DePuy subsidiary settled Oregan state charges that it marketed the ASR XL metal-on-metal hip joint prosthesis without disclosing its high failure rate (see this post).

2015
-  found by jury to have concealed harms of Risperdal.
-  Ethicon subsidiary found by jury to have concealed harms of its vaginal mesh device.
-  McNeil subsidiary pleaded guilty to marketing adulterated Tylenol. (see this post for three items above.)

2016
- subsidiary Aclarent settled allegations that it sold its Stratus device for unapproved uses.  Two former executives of that subsidiary also were found guilty of distributing misbranded and adulterated devices (see this post)  

2018
- settled allegations that subsidiary Actelion used illegal kickbacks to market Tracleer for an inflated price (see this post)

2019
- found by Oklahoma judge to have launched a deceptive marketing campaign for opioids (see this post)

And we recently learned that Johnson and Johnson settled allegations of deceptive marketing of surgical mesh in lawsuits in multiple states (per the AP, May 202, here)

Pfizer

 From this post:

The company's track record from 2000 to 2017 is staggering.

Since 2000, Pfizer's troubles started, according to the Philadelphia Inquirer, with the following...

- In 2002, Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.
- In 2004, Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.
- In 2007, Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

Thereafter,

- In 2009, Pfizer paid a $2.3 billion settlement of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).
- Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).  In that year the company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- In early 2011, Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York (see post here).
- In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).
- In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
- In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).
- In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).
- In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this post).
- In July, 2013, Pfizer settled charges of illegal marketing of Rapamune (see this post.)
- In April, 2014, Pfizer settled allegations of anti-trust law violations for delaying generic versions of Neurontin( see this post).
- In June, 2014, Pfizer settled another lawsuit alleging illegal marketing of Neurontin (see this post).
- In 2015, a settlement by Pfizer of a shareholders' lawsuit stemming from charges of illegal marketing was announced (see this post).
- In October, 2015, a  UK judge found that the company had threatened health care professionals for using a generic competitor (see this post).
- In February, 2016, Pfizer settled a lawsuit for $785 million for overcharging the US government for Protonix (look here).
- In August, 2016, Pfizer made a $486 million settlement of allegations it bilked shareholders by concealing research showing the harms of Celebrex (look here for this and next two items)
- In December, 2016, Pfizer fined $106M in UK for using monopoly on production of generic phenytoin to overcharge National Health Service
- In November, 2017, Pfizer made $94 million settlement of allegations of fraud to delay generic competition

Note that other companies involved in Trump's crash project to develop a coronavirus vaccine, preferably in time to influence the 2020 election, Astra Zeneca and Merck, also have questionable track records. 

Summary

Health care is increasingly dominated by large organizations who may threaten the values of health care professionals.  Now in a pandemic the US President seems determined to trust in a few large pharmaceutical corporations rather than public health experts and health care professionals.  His trust may be based on his personal affinity for the leadership of such corporations, and the cozy relationships they have cultivated with him. Worse, it may be based on how he has politically benefited and personally profited from their actions.  To the extent that Trump has ceded control of the pandemic to large corporations because he has politically benefited and personally profited from them, his actions appear to fit the ethical definition of corruption, as defined by Transparency International:

the abuse of entrusted power for private gain

Meanwhile, the pandemic has been steadily worsening, and as of this week, the president himself, along with key political allies have been infected. 

Thus, at a crucial time, the country is increasingly being run by a cozy group of insiders with ties to both government and industry.  Top health care (and other) corporate management is increasingly merging with the current administration in one giant corporatist entity. This merger is not in the interests of peoples' or the public's health, especially in a time of pandemic.  Instead, benefits will go to the top leadership and owners/ stockholders (when applicable) of these organizations, who are sometimes the same people.  At times the actions of the current administration, and in particular, its maximum leader, may be abuse of power for private gain, apparently corruption, and in this instance, health care corruption.  This fits a pattern of wholesale corruption and conflicts of interest at the top of the administration that we have often decried, most recently here.

To unrig the system, we need wholesale, real health care reform that would make health care leaders accountable for what their organizations do, and 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.

However, before thinking about true health care reform, we need top accomplish wholesale government reform. We need to excise the deception, crime and corruption at the heart of our government and restore government by the people, of the people, and for the people. 

Reference

1.  Poses RM. A cautionary tale: the dysfunction of American health care.  Eur J Inte Med 2003; 14: 123-130.  Link here.