The Transparency International 2018 Corporate Political Engagement Index- Pharma Appears All Too Comfortable with the Revolving Door and Making Opaque Political Contributions

Introduction: Big Organizations, Government Policy and Regulation, and Politics

Leaders of big health care organizations clearly are interested in influencing public policy and government regulation in ways that favor their organizations, and often indirectly themselves.  We expect such leaders and organizations to make their policy preferences known.  However, increasingly we have found that they take shadowy routes to their policy goals.

We have frequently discussed how large health care organizations may use less than transparent methods to advocate for their policy and regulatory objectives.  Their public relations departments may fund patient advocacy organizations and medical societies that support these objectives, so-called third-party strategies.  They may fund distinguished professionals and academics as key opinion leaders for the same purposes.  Often they do this in systematic ways so that there efforts amount to stealth advocacy or stealth lobbying campaigns.

Even more concerning is organizational support of the revolving door.  Top organizational leaders may move into government policy and/or regulatory positions relevant to the organizations' goals.  Government policy and regulatory leaders may know that lucrative positions in these organizations are available when they leave government.  The revolving door is certainly a serious type of conflict of interest, and some deem it corrupt.

Big health care organizations have traditionally been non-partisan.  While their leaders certainly may have political views, they used to keep them very quiet.  Recently, especially in the US, we have seen evidence that some health care organizations have become partisan, albeit stealthily, throwing their support behind political candidates, parties and organizations that may support their policy and regulatory goals, even while they may also support positions that go against the health care and public health mission, or even may be frankly anti-democratic.  In the US, organizations and their leaders now may support partisan aims with dark money, funds whose origin is disguised. 

The Transparency International 2018 Corporate Political Engagement Index

A recent report by Transparency International was made public, with little fanfare, in late 2018 that was meant to throw a little light on corporate "engagement" in politics.  It included some interesting information on a few multinartional pharmaceutical companies.

The report introduction stated:

For companies, corporate political engagement carries clear risks of bribery and corruption, conflicts of interest and reputational damage. Any interactions with the political process need careful management to avoid falling foul of anti-bribery and corruption legislation. The risks are increased by the fact that companies are vulnerable to mistakes or abuse by employees and third parties acting
on their behalf such as agents, advisers and consultant lobbyists.

Methods

The study on which the report was based concentrated on 104 large corporations that are active in the UK.  These included the following large multinational pharmaceutical companies:

- AstraZeneca
- Eisai
- GlaxoSmithKline
- Johnson & Johnson
- Novartis
- Pfizer
- Roche
- Shire

The study was based on 20 questions divided in 5 areas.

Three areas were basically about transparency of  and accountablity for political activities.  These included
- Control Environment, including having transparent policies, methods for ensuring their enforcement, and oversight of same by the board of directors
- Responsible Lobbying, including adequate policies and transparency
- Transparency in Reporting

One was about the Revolving Door, and included whether the company has a "cooling-off period" for people going through the revolving door back to the company.  However, it did not directly mention people going directly from leadership positions within the company to government.

One was about Political Contributions, and included whether the company bans them (perhaps the strongest question of the group.)

Each question in each area was scored from 2 for meeting expectations to 0 for failing to do so.  Scores were normalized on a scale going from 100 (best) to 0 (worst), and and summarized in "bands" from A (83.3 - 100) down to F (0 - 16.6)

Results

For the three areas regarding transparency and accountablity the results per company were:

Control Environment
 
- AstraZeneca            C
- Eisai                        C
- GlaxoSmithKline        A
- Johnson & Johnson    C
- Novartis                   F
- Pfizer                       C
- Roche                      E
- Shire                        C

Responsible Lobbying

- AstraZeneca            E
- Eisai                      F
- GlaxoSmithKline        B
- Johnson & Johnson    E
- Novartis                   E
- Pfizer                       F
- Roche                      C
- Shire                        E



Transparency in Reporting

- AstraZeneca            C
- Eisai                        C
- GlaxoSmithKline        A
- Johnson & Johnson    C
- Novartis                   C
- Pfizer                       C
- Roche                      C
- Shire                        C


For the Revolving Door

- AstraZeneca            F
- Eisai                        F
- GlaxoSmithKline        A
- Johnson & Johnson    F
- Novartis                   D
- Pfizer                       F
- Roche                      E
- Shire                        F


For Political Contributions

- AstraZeneca            F
- Eisai                        F
- GlaxoSmithKline        B
- Johnson & Johnson    C
- Novartis                   F
- Pfizer                       E
- Roche                      E
- Shire                        E

Summary and Discussion

Note that the pharmaceutical companies did not do too badly on the measures of transparency and accountablity, but except for GSK did quite badly on minimizing the revolving door, and again with the partial exception of GSK did very badly on avoiding political contributions.

This suggests that at least some big multinational pharmaceutical corporations that do business in the UK, but also in the US and many other developed countries, have worrisome attitudes towards and likely practices affecting their use of political influence.

The Revolving Door

The majority of companies did not show any real concern about the problem of the revolving door.

In the US, this problem seems to be getting worse.  In particular under the Trump regime we see more instances of the  incoming revolving door, that is, people moving directly from corporate leadership positions to government policy and regulatory positions in which they could potentially make decisions affecting the corporations from which they came.  This is potentially a more serious problem than the outgoing door, yet it was not even discussed in the TI study.

We have repeatedly said,  most recently a few days ago, ...

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 from industry to the Trump regime 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.

Corporate Partisanship, Political Contributions, and Dark Money

Given the increasing evidence that large corporations have become partisan in the US, it is particularly worrisome that at least the pharmaceutical corporations in the TI study have not taken a clear stand against making direct political contributions, or even in favor of making such contributions transparent.

Note that the TI report included the directive "do not make political contributions" among its "principles for responsible political engagement," adding:

Corporate political contributions should not be made on behalf of the company other than in exceptional  circumstances where they provide general support for a genuine democratic process, with full transparency and full explanation.

On the other hand, as we said last year,...

 Health care corporations recent and current funding of dark money groups seems to openly conflict with the corporations' promises of social responsibility.  The slanting of these efforts towards one end of the political spectrum, one party, and now the current president suggest that these corporations may have partisan agendas.

Furthermore, the increasing knowledge of these corporate actions raises a big question: cui bono? who benefits?

It is obvious why a pharmaceutical company, for example, might want to defeat legislation that would lower its prices.

It is not obvious why it would want to consistenly support actions by one party, or by people at one end of the political spectrum, even if some such people seem "pro-business."  After all, for years big corporations and their executives openly gave money to both US parties and their candidates, apparently in the belief that this would at least allow more visibility for the corporations' priorities no matter who was in power.

Now, the most obvious theory is that the new practice of secret donations only in right-wing, Republican, and/or pro-Trump directions, which must be orchestrated by top corporate management, and which are not disclosed to employees or smaller corporate shareholders, are likely made to support the top managers' self interest more than the broad priorities of the corporations and their various constituencies.

Thus not only is more investigation needed, at the very least, "public" corporations ought to fully disclose all donations made to outside groups with political agendas.  This should be demanded by at least the corporations' employees and shareholders, but also by patients, health care professionals, and the public at large.

Meanwhile we are left with the suspicion that top health care corporate management is increasingly merging with the current administration in one giant corporatist entity which is not in the interests of health care, much less government by the people, of the people, and for the people.

Pharmaceutical and Other Health Care Corporations Funnel Dark Money to Republicans to Defeat "Leftward" Democratic Candidates - Partisanship Trumps Social Responsibility

Introduction - Health Care Corporations Profess Social Responsibility

As we noted recently, large health corporations, which must deal with patients, health professionals, and government regulators, usually profess their social resonsibility.  For example,

Biotechnology firm Genentech, now a subsidiary of giant Swiss biotechnology and pharmaceutical company Roche, has an elaborate web page about how the company seeks to do good.  Some quotes:

we’re passionate about applying our skills, time and resources to positively impact the patients we serve, the scientific community and the places where we live and work.

Also

We approach giving back the same way we approach discovering medicines: we start by looking for the root cause of a problem and then we explore how we can contribute to a solution.

And particularly

We believe that the best work happens when everyone has a voice.

Similarly, giant American pharmaceutical company Eli Lilly espouses these core values

Three long established core values guide Lilly in all that we do:

Integrity: We conduct our business consistent with all applicable laws and are honest in our dealings with customers, employees, shareholders, partners, suppliers, competitors and the community.

Excellence: We pursue pharmaceutical innovation, provide high quality products and strive to deliver superior business results.

Respect for People: We maintain an environment built on mutual respect, openness and individual integrity. Respect for people includes our concern for all people who touch or are touched by our company: customers, employees, shareholders, partners, suppliers and communities.

Of course, in the policy arena, large health care corporations also tend to advocate for policies that are to their financial advantage.  Furthermore, top executives of large corporations have been known to donate to political candidates who favor their policy positions, although they used to consciously spread their donations out to all parties and many candidates to avoid any appearance of partisanship, while making themselves visible to whomever might be in power.

However, as the current US political chaos leads to more journalistic investigation, there is increasing evidence that large health care corporations have been secretly backing policy positions that do not correspond to their high-minded public statements about corporate social resonsibility, and are becoming quite political, even partisan in the process.  They do so through the use of dark money. 

Pharmaceutical Companies, Other Health Care Companies - and a Tobacco Company - Join Effort to Attack Left-Wing Politicians

On November 5, 2018, Lee Fang wrote about how big corporations, including big health care corporations, enthusiastically financially supported a dark money operation that specifically targeted "progressive" or "socialist" candidates:

Republican operatives and representatives from America’s largest business groups — alarmed at a wave of upset electoral victories by Alexandria Ocasio-Cortez and other avowed democratic socialist candidates — have been plotting to stem the tide of left-wing Democrats sweeping the country.

Andrew Wynne, an official at the Republican State Leadership Committee, spoke to business lobby leaders in July, encouraging them not to ignore the latest trends within the Democratic Party. He called for Republicans’ allies to enact a unified plan to defeat progressives in this week’s midterm elections.

'Recent elections have proven the leftward shift,' said Wynne. 'An anti-free market, anti-business ideology has taken over the Democratic Party, particularly this year during the primaries.'

Wynne was particularly exercised about the primary victory by Democrat Alexandia Ocasio-Cortez:

'Alexandria Ocasio-Cortez captured the energy of these voters to win a congressional nomination in New York, defeating the incumbent who many thought could be the next Democratic speaker of the House,' Wynne continued.

He noted that the defeated incumbent in the Ocasio-Cortez race, Rep. Joe Crowley, a moderate Democrat and former chair of the business-friendly New Democrat Coalition, 'was someone who the business community could have a conversation with on the Democratic side.' On the other hand, Wynne warned, Ocasio-Cortez would not be so receptive to business lobbyists.

Of course, these sentiments coming from a Republican operative are not surprising.  What was surprising was how Mr Wynne wanted to fund efforts to comabt these supposedly left-wing politicians.

Officials from the Republican State Leadership Committee, which assists Republicans in capturing power on the state level, explained during the call that they expected to raise $45 million in direct contributions and $5 million to $7 million through an allied dark money group for election campaigns this fall.

The group is organized under the IRS’s 527 rules and operates in a manner similar to Super PACs: It can raise and spend unlimited amounts from individuals and corporations. The latest disclosures suggest the group is well on track to bring in significant corporate support for electing Republican state officials.

Koch Industries, Crown Cork & Seal, Genentech Inc., ExxonMobil, NextEra Energy, Range Resources, Eli Lilly and Co., Marathon Petroleum, Reynolds American, (a tobacco company which is a subsidiary of British American Tobacco), Boeing, General Motors, and Astellas Pharma are among the companies that have already provided at least $100,000 to the committee.

Many of those companies are from industries that have long contributed to GOP causes, including resource extraction, financial services, tobacco, retail, for-profit education firms, and private health care interests.

Furthermore, the Republican State Leadership Committee has been collecting money from other dark money organizations which in turn are funded in part by health care companies:

Several of the largest donors to the Republican State Leadership Committee are themselves dark money groups. The Judicial Crisis Network, a 501(c) nonprofit that does not disclose its donors, has given $1.5 million to the group. The ABC Free Enterprise Fund, a dark money affiliate of a lobbying group that represents non-union construction companies, gave $100,000.

The U.S. Chamber of Commerce has given $1.7 million to the committee. The chamber, notably, does not disclose its donors but has been financed in the past by Goldman Sachs and Dow Chemical, among other major American and foreign companies.

We recently discussed the health care industry contributions to the US Chamber of Commerce, which came from PhRMA, Pharmaceutical Research and Manufacturers of America, the pharma trade association, and from specific companies, including contributions of at least $100K from: Aetna, Abbott Laboratories, AbbeVie, Amgen, Anthem, Celgene, Cigna, CVS, Eli Lilly, Express Scripts, Johnson & Johnson, Merck, Mylan, Procter & Gamble, and UnitedHealth.

So a lot of big health care companies, most of whom profess their devotion to the greater community and social responsibility, have been funneling considerable money as quietly as possible into an effort to thwart one particular group of politicians, that is, candidates from the leftish wing of the Democratic party.

So much for Genetech's claim:

We believe that the best work happens when everyone has a voice.

Or for Lilly's claim:

Respect for people includes our concern for all people who touch or are touched by our company: customers, employees, shareholders, partners, suppliers and communities.

 
Discussion and Summary

This is now the fifth time we have discussed the role of dark money in health care.

- In 2012 we discussed a case of "dark money" being used to conceal sources of support for particular health policy and political positions.

- Earlier this year,  we discussed the case of huge pharmacy chain CVS,which proclaims its "social responsibility," and its policy of only making charitable contributions to improve "health and healthcare nationwide."  Yet CVS was donating to America First Policies, a supposed non-profit group devoted to promoting the partisan agenda of President Trump, including "repealing and replacing Obamacare," and immigration policies such as building the "wall" and deporting  "illegal immigrants." (Note that these CVS dark money contributions were separate from those discussed above.)

- In September, we discussed how the pharmaceutical trade organization, PhRMA, and some large drug companies donated money to a dark money organization to combat a state initiative to limit pharmaceutical prices, but also to the American Action Network (see above) to "repeal and replace" the Affordable Care Act (ACA, "Obamacare") despite their previous support for and then current neutrality on the ACA.

- In October, we discussed how many health care corporations were donating to dark money groups, predominantly groups, like the US Chamber of Commerce, devoted to distinctly right-wing causes, almost all lately related to the Republican party and in sympathy with the Donald Trump regime.

Health care corporations recent and current funding of dark money groups seems to openly conflict with the corporations' promises of social responsibility.  The slanting of these efforts towards one end of the political spectrum, one party, and now the current president suggest that these corporations may have partisan agendas.

Note that without the various ongoing investigative efforts mainly inspired by the actions of the Trump administration, we would have little idea that this was going on.

May such investigations continue and intensify.  Maybe the recent elections, which gave the opposition to the Republican party and Trump control of the US House of Representatives, will lead to more such investigations.

Furthermore, the increasing knowledge of these corporate actions raises a big question: cui bono? who benefits?

It is obvious why a pharmaceutical company, for example, might want to defeat legislation that would lower its prices.

It is not obvious why it would want to consistenly support actions by one party, or by people at one end of the political spectrum, even if some such people seem "anti-business."  After all, for years big corporations and their executives openly gave money to both US parties and their candidates, apparently in the belief that this would at least allow more visibility for the corporations' priorities no matter who was in power.

Now, the most obvious theory is that the new practice of secret donations only in right-wing, Republican, and/or pro-Trump directions, which must be orchestrated by top corporate management, and which are not disclosed to employees or smaller corporate shareholders, are likely made to support the top managers' self interest more than the broad priorities of the corporations and their various constitutencies.

Thus not only is more investigation needed, at the very least, "public" corporations ought to fully disclose all donations made to outside groups with political agendas.  This should be demanded by at least the corporations' employees and shareholders, but also by patients, health care professionals, and the public at large.

Meanwhile we are left with the suspicion that top health care corporate management is increasingly merging with the current administration in one giant corporatist entity which is not in the interests of health care, much less government by the people, of the people, and for the people.

What Big Drug and Biotechnology Companies Will Not Tell Us - Transparency International on Corporate Reporting

Drug companies are entrusted to provide pure, unadulterated medicines.  Increasingly drug companies are now entrusted with doing research, including experimental studies, on human beings, and providing education to doctors and patients.  Ordinarily, trust requires confidence in transparency. However, a new report suggests that large multinational drug and biotechnology companies are not very transparent.

Transparency International just released a report on the transparency, or lack thereof, of the 124 biggest multinational corporations.  The report detailed how well these companies disclosed their internal anti-corruption programs, their subsidiaries, affiliates, and joint ventures, and their financial data broken down by the countries in which they operate.  In summary, the overall results for disclosing anti-corruption programs were mediocre, and for disclosing organizational structure and country-by-country financial data, they were dismal.

The report is highly relevant to health care.  It included the biggest multinational health care corporations, all drug and/or biotechnology companies: Abbott Laboratories, (based in the US), Amgen (US), AstraZeneca (UK), Gilead Sciences (US), GlaxoSmithKline (UK), Johnson and Johnson (US), Merck and Co (US), Novartis (Switzerland), Novo Nordisk (Denmark), Pfizer (US), Roche Holding (Switzerland), Sanofi (France), Teva Pharmaceutical Industries (Israel).

The report has so far received little media coverage.  In the US, several news services provided brief  summaries.  Somewhat more substantial articles came from Reuters, the Wall Street Journal's Risk and Compliance Journal, and CNBC.  None gave specifics about health care.  Coverage from other countries, e.g., Germany by Deutsche Welle, and the UK by the Guardian, was more detailed but also did not specifically mention health care.

Therefore, I will summarize the rationale and assessment methods used by Transparency International for its three dimensions of transparency, and then show results from the 13 health care corporations.

Disclosure of Anti-Corruption Programs

The rationale for addressing this area was:

Global companies have legal and ethical obligations to conduct their business honestly. This requires
commitment, resources and the ongoing management of a range of risks – legal, political and reputational – including those associated with corruption. The implementation of a comprehensive range of anticorruption policies and management systems is fundamental to efforts to prevent and remediate corruption within organisations.

Transparency International believes that public reporting by companies on their anti-corruption programmes allows for increased monitoring by stakeholders and the public at large, thereby making companies more accountable

Evaluation of disclosure of anti-corruption programs was

based on 13 questions, which are derived from the UN Global Compact and Transparency International Reporting Guidance on the 10th Principle against Corruption. This tool, based on the Business Principles for Countering Bribery, which were developed by Transparency International in collaboration with a multi-stakeholder group, includes recommendations for companies on how to publicly report on their anticorruption programmes.

Note that the project addressed only reporting of anti-corruption programs, not their implementation or effectiveness.

For this and the other two dimensions of transparency, responses were converted into a 0% to 100% scale, with 100% being the best possible result.

Organizational Transparency

The rationale was:

As many of the recent corporate scandals have shown, acts of corruption are very often aided by the use of opaque company structures and secrecy jurisdictions.  But the use of offshore companies and their lack of transparency are posing increasing risks for global companies as well as for their shareholders, employees and local communities.

So,

Companies can mitigate the risks posed by lack of transparency and ownership arrangements by shedding more light on their corporate structures and by making basic financial information public on a country-by-country basis. This allows stakeholders to have a clearer understanding of the extent of a company’s operations and makes the company more accountable for its activities in a given country, including assessing whether it contributes financially in a manner appropriate to its level of activity.

The measurement strategy was,

Transparency International researchers consulted publicly available documents such as annual reports and stock exchange filings for information about company subsidiaries, affiliates, joint ventures and other holdings. The information sought included corporate names, percentages of ownership by the parent company, countries of incorporation and the countries in which the companies operate.

Country-by-Country Reporting

The rationale included:

The importance of country-by-country reporting was first recognised in the extractive sector as a way to ensure that revenues from natural resources are used to foster economic and social development rather than line the pockets of kleptocratic elites.

So,

country-by-country reporting ... [is] a recognised building block for corporate transparency and as a tool for countering tax avoidance.

In addition, country-by-country reporting provides investors with more comprehensive financial information about companies and helps them address investment risk more effectively.

The items measured were disclosure of revenue/sales, capital expenditures, pre-tax income, income tax, and community contribution in each country in which the company operated.

Results for Health Care Corporations

Company                      Total  Anti-Corruption P  Org Structure  by-Country

Abbott Laboratories    40             81                           38                3
Amgen                          37             85                           25                0
AstraZeneca                37             88                           19                3
Gilead Sciences           26             54                           25                0
GlaxoSmithKline          52            96                           50               11
Johnson and Johnson  26           65                           13                0
Merck and Co               42           77                            50                0
Novartis                        38            77                           38                1
Novo Nordisk               39            81                           38                0
Pfizer                             35            92                           13                0
Roche Holding              33            62                           38                1
Sanofi                            38            77                           38                0
Teva Pharmaceutical  35            85                            19                0

Again, only one company, GlaxoSmithKline, achieved an overall score of barely better than 50%.  All the others had lower scores.  Only two companies achieved a 50% score on disclosure of organizational structure, and only one achieved a score of better than 10% for disclosing country-by-country results.  The Transparency International report noted that the health care companies got particularly bad scores for disclosing organizational structure, averaging 31%, the third worst performance by economic sector.


Summary

 The drug and biotechnology companies generally did a fairly good job disclosing what their anti-corruption programs were supposed to do.  However, note that the Transparency International report did not assess how well these programs were implemented or enforced.  That this concern is not academic is underscored by some of these companies disreputable track records.  Some have long histories of legal actions, including billion dollar plus legal settlements, some of which were of allegations of fraud or kickbacks, and some have been convicted of crimes.  See the records of, for example: Abbott Laboratories (look here and here), Amgen (here), AstraZeneca (here), GlaxoSmithKline (here), Johnson and Johnson (here), Merck (here), Novartis (here), Novo Nordisk (here), Pfizer (here), Roche (here), Sanofi (here), and Teva (here).

Moreover, the companies did not do a good job disclosing their organizational structures, and hardly any bothered to report any financial results broken down by country.

We have frequently discussed health care corporations' deceptive marketing, induction of conflicts of interest, including those of supposed "key opinion leaders" who often are marketers in academic or professional clothing, and manipulation and suppression of clinical research.  There has been an ongoing procession of legal settlements involving health care corporations, often involving allegations of, and sometimes convictions for fraud, kickbacks, bribery, or other crimes.  There have even been some cases in which drug companies have failed to assure that their products are pure and unadulterated, their most basic mission.  Thus many are distrustful of drug and biotechnology companies, and large health care organizations in general.

So, as Transparency International's report noted, to rebuild trust,

integrity must be central to these efforts. Those efforts, in turn, can only become fully credible if they are undertaken with a sustained commitment to ethical behaviour and transparency across companies’ operations.

In my humble opinion, a basic premise of true health care reform would be that health care organizations become sufficiently transparent to restore basic trust in them. 

Logical Fallacies in Defense of Conflicts of Interest Employed by a Leader of Academic Medicine

We have repeatedly discussed the adverse effects of conflicts of interest on health care.  Recently, I argued that the most pernicious are conflicts of interest created as an incentive for trusted health care leaders, usually respected health care professionals or academics, to promote the vested interests of those who pay them, in the guise of the leaders' professional roles.  In this capacity, the leaders are often dubbed "key opinion leaders" by those who employ them, but may be regarded as mere "salesmen" by the corporate personnel who recruit them. (See posts here and here)  These relationships may be hidden, often behind confidentiality agreements, unless revealed by litigation.  Documents revealed by discovery in legal actions showed how companies planned other organized stealth marketing efforts for drugs that included activities by KOLs (e.g., see post here about marketing of Lexapro, and here about Neurontin).

However, defenses of conflicts of interest continue to appear regularly.  The latest example, which incorporates an important twist, appeared in yesterday's Wall Street Journal.  It was in the form of a "Boss Talk"  interview with a leader of a major health care organization (whose identity we will discuss later.)

The title of the interview indicated that the interviewee was not "worried about industry ties" of academia or of health care professionals.  Conflicts of interest were clearly its main focus.  For example, it began,

Many universities are wringing their hands over the increasing coziness of medical schools and their corporate partners.

Then it stated that the interviewee:

has no such qualms.

The defense of this lack of qualms was heavily based on logical fallacies.

Biased Sample or Hasty Generalization

The main reason for this lack of concern appeared to be complete disregard of the more serious kinds of conflict of interest briefly described above. The interviewer asked:

What are the trickiest conflicts of interest to navigate?

The answer was:

Surgery is particularly challenging. Let's say you're a physician and you come up with a new hip replacement. You invented it so you're going to make a lot of money. But if you're going to do my surgery, I want you to put in the device you think is best. How do you separate that, when the person is the inventor and the great technician?

This may be tricky, but is arguably not the most tricky kind of conflict of interest.

The trickier example of the key opinion leader hired as a salesman was not raised by the interviewer or the interviewee. Such a case was graphically revealed by testimony of the aborted TMAP trial which implicated the former state mental health director as hired by Johnson and Johnson subsidiary Janssen to "promote ­Risperdal as a safe and effective medication." (See this post.)

Industry spokespeople and key opinion leaders themselves tout KOLs as clinical, educational, and/or scientific experts chosen for their expertise to advance medicine, science and public health.  There have been  documented instances (e.g., see posts here and here) in which defectors from marketing departments of commercial health care corporations described KOLs as salespeople who could be more influential hidden within their professional or academic cloaks.  Even some physicians paid to be speakers on behalf of pharmaceutical corporations have acknowledged their role as salespeople in fancy dress (see post here).  There are cases of documents revealed by discovery in legal actions that show how companies planned organized stealth marketing efforts for drugs that included activities by KOLs (e.g., see post here about marketing of Lexapro, and here about Neurontin).

Perhaps the interviewee was unaware of these issues.  Whether due to ignorance or deliberate avoidance, failing to consider the full spectrum of conflicts of interest, and specifically ignoring those with the greatest likelihood of adverse effects, appears to be a logical fallacy in this instance.  If deliberate, it appears to be reasoning from an (intentionally) biased sample, if not, it appears to be a hasty generalization.

The interview also included a few other choice logical fallacies that went unchallenged by the interviewer.

False Dilemma

The interviewer asked:

What do you tell professors who won't work with drug or biotech companies?

The response was:

I think that's a huge mistake. If you're a professor now, and you want to get your discovery to society, you either need to start a company or work with a company to commercialize a product.

Of course, in the "good old days," academic researchers got their "discoveries to society" simply by publishing them. Developing and marketing products based on their discoveries, while worthwhile undertakings in their own rights, were not considered part of the academic mission. Professors could still do this, if their goal was not to get rich. Yet the Bayh-Dole act allowed academic institutions to make money from their professors' discoveries, and the rush to commercialize the university has been on ever since. So while professors and academic institutions who are motivated mainly by money might not consider just putting the knowledge they discover in the public domain, that course remains possible, just not so lucrative.

The assertion that the only way to get a "discovery to society" is to start or work with a company is simply false, and using this assertion in an argument appears to be an example of a false dilemma.

Straw Man

The interviewee worked another argument into the same paragraph:

When professors have told me they won't work with companies anymore because they feel they'll have this scarlet letter, I think: 'Wouldn't that be sad if all the best scientists and clinicians won't work with companies because the public has said they're evil?'

I doubt that any of even the most vociferous critics of the conflicts of interest that now befog health care have claimed that those involved are evil, much less that they are have successfully convinced the whole public at large that anyone who "works with companies" is evil. Implying that this would be the result of criticism of conflicts of interest does not appear to be supported by evidence, and is probably flat wrong. Asserting it here appears to be an example of the straw man fallacy.

Summary

So the Wall Street Journal has added to our collection of defenses of conflicts of interest that seem mainly to be based on logical fallacies. 

We have noted that logical fallacies are increasingly deployed to defend the status quo in health care, and particularly to defend the interests of those who are profiting the most from the current dysfunctional system.  We have noted that several defenses of the conflicts of interest generated by financial relationships between physicians and medical academics on one hand and commercial health care firms on the other, were based on logical fallacies.  (See examples here, here,  here, and here.)  I have yet to see a coherent, logical, fact-based argument that the benefits for patients' and the public's health of physicians and medical academics working part-time as consultants, advisers, speakers, and directors of health care corporations outweigh the obvious risks of biasing medical decision making, education and research in favor of vested interests.

In 2011, I noted, "I have also yet to see an argument in favor of conflicts of interest made by anyone who does not have such conflicts."At least, however, up to that point I had not noted any such arguments made by people who had much power to enforce their views, as opposed to the ability to just express them.  The interview discussed above, however, was a person who has such power.

The interview was with Dr Susan Desmond-Hellmann, the relatively new Chancellor of the University of California- San Francisco, who was just named one of the "25 most influential people in biopharma."  She has recently been advocating a change of direction towards commercialization for her campus, one of the most prestigious health care oriented universities/ academic medical centers in the country.  She previously justified this redirection again using logical fallacies (look here). 

She also appears to yet another advocate for conflicts of interest who has her own conflicts.  As we noted here, Dr Desmond-Hellmann had little academic experience before she became Chancellor, but had worked her way up in the corporate pharmaceutical world, leaving her position as President for drug development at Genentech after it was taken over by Roche. 

As we noted previously, even after that, Dr Desmond-Hellmann apparently has not completely left the corporate world.
- A web-site for a speakers' bureau in which she apparently still participates lists her as a current "Advisor of Genentech since April 2009."
- In 2010, Dr Desmond-Hellmann joined the board of directors of Procter and Gamble, a company which makes many health related products, although it sold its global pharmaceutical business. Last year, the company made an agreement with Teva to market over-the counter medications (see this Reuters article). Note that she got this position despite apparently not having any prior personal investment in P&G stock. However, per the company's 2011 proxy statement, she appears to be in line to collect over $250,000 a year in compensation for this position.

It does not seem impossible that these ongoing commercial interests may influence how she acts in her role as Chancellor.  Yet while it may be unsurprising, it is very disappointing that conflicts of interest are now being uncritically and illogically publicly defended by people in positions to exert so much influence on health care.

The noted cognitive psychologists George Loewenstein, Sunita Sah, and Daylian Cain just asserted in JAMA [Loewenstein G, Sah S, Cain DM. The unintended consequences of conflict of interest disclosure. JAMA 2012; 307: 669-670. Link here.]

Conflicts of interest, including fee-for-service arrangements, are at the heart of the astronomical increases in health care costs in the United States, and transparency is not substitute for more substantive reform.

True health care reform requires such substantive reform of the financial arrangements among corporations that sell health care services or products and health care professionals and others who make decisions about patients' or the public's health. To decide how to accomplish such reform, we need a better discussion informed by logic and evidence, sans logical fallacies. Those who lead health care ought to be able to participate in this discussion under these conditions.

Legal Settlements Have Become So Common that They are Barely News

Legal settlements by big health care organizations have become so common that those of less than blockbuster size barely seem to qualify as news.  They have become "dog bites man" stories.  For example, the following stories barely got noticed in the media (presented chronologically).

Novartis Settles Price Misrepresentation Suit for $150 Million

This story was mentioned as an aside in a a news story covering a settlement by Watson Pharmaceuticals in September.  In slightly more detail, it has only appeared in PharmaLot in November.  In a very small nutshell,

the Sandoz unit of Novartis earlier this week agreed to pay $150 million to settle lawsuits filed by the states of Florida and California, as well as a whistleblower, to settle charges that it deliberately misreported pricing information in order to hike reimbursements from Medicaid.

By the way, per the settlement document, the allegations were that Novartis' subsidiary knowingly maintained, set or reported "false, fraudulent, and/or inflated Reported Prices," yet, as is typical of nearly all settlements, the settlement "shall not constitute or be construed as an admission of fault, liability, or unlawful conduct."

Roche Settles Off-Label Promotion, Physician Kickback Suit for $20 Million

This story was reported briefly in some blogs, including again PharmaLot, and in the most detail in the San Francisco Business Times. The basics of it were:

Genentech Inc. will pay $20 million to settle a whistleblower lawsuit around off-label marketing of the cancer-fighting drug Rituxan.

It only took eight years since a whistle-blower raised the issue:

John Underwood, ... was a senior manager of sales development from the start of Genentech’s oncology franchise in 1997.

When Underwood filed the suit in July 2003 in U.S. District Court for the Eastern District of Pennsylvania, he was a senior hospital systems specialist for Genentech.

This suit is actually of particular interest because it was not just about off-label promotion,

Genentech, the suit claimed, retained doctors to act as independent speakers on behalf of Rituxan and its off-label uses, paid kickbacks to doctors that were disguised as consulting payments, 'exerted significant pressure' on sales reps to increase off-label uses of Rituxan, and devised and conducted 'selling skills workshops' for sales reps devoted to non-label uses,

What’s more, the suit claimed, Genentech invited doctors to attend “medical education seminars” at 'luxurious locations' and gave financial incentives to sales reps to get doctors who sold the most Rituxan to attend the events.

These were serious allegations, involving allegedly direct efforts by the company to subvert physicians' ethics by tying their decisions for individual patients to payments for prescribing specific products whatever the benefits and risks of those products for those patients.  The allegations suggested that "consulting payments" to physicians may be nothing more than disguised bribes, and that the companies making these payments may be quite conscious of this. 

Nonetheless, as usual,

Genentech, the South San Francisco-based U.S. subsidiary of Swiss drug giant Roche, did not admit wrongdoing....

So, as in the famous recent Citigroup case (see this post), the settlement obfuscates the crucial question, did the corporation involved commit illegal acts? It seems likely that what they did was in some sense unethical, since they were willing to pay millions not make the matter go away.

By the way, one member of the Executive Committee of Genentech at the time these events were allegedly occurring is now the Chancellor of the University of California - San Francisco (See our post here). Maybe concerned students or faculty might ask her what really went on.

CVS Caremark Settles Fraud Suit for about $20 Million

As reported briefly in the Los Angeles Times,

Pharmacy and prescription drug management company CVS Caremark Corp. has agreed to pay nearly $20 million to settle three lawsuits involving allegations that the company defrauded pension systems in three states, including California’s giant pension fund, attorneys said.

The whistleblower lawsuits, filed by two former CVS Caremark pharmacists, accused the company of reselling returned drugs, changing prescription orders to make them more expensive and submitting false reports about how long it took to fill prescriptions.

Not the least bit surprisingly, the company did not admit liability in the settlement, and had no comment for the Times. Ho, hum, another big company paying millions to make allegations of fraud go away... nothing to see here, so we will just move on.

Merck Settles Fraud Suit for $24 Million

This story was picked up by AP, so a very brief version of it did appear in a variety of locations. A longer version was published by the Boston Globe,

At this point, it should be no surprise that it took a long time to get to this settlement, eight years in fact, just as in the case above,

Merck & Co. has agreed to pay $24 million to the state Medicaid program to settle long-running civil charges that it charged too much for some drugs, in the largest single-case Medicaid fraud settlement in Massachusetts history.

The agreement, unveiled yesterday by Attorney General Martha Coakley’s office, closes out a 2003 lawsuit....

Again, the allegations were of fraud,

Coakley said her office’s Medicaid fraud division wanted to hold accountable drug companies that defraud taxpayers.

Again, "hold accountable" did not translate into establish the allegations as true,

Ron Rogers, a spokesman at Merck corporate headquarters, said the drug company did not admit liability or wrongdoing in the settlement. He said Merck agreed to resolve the claims to put the matter behind it.

Nothing more to see here, so we will move on again.
Summary

Every month, it seems that more settlements are announced of cases alleging all sorts of wrongdoing by major health care organizations. Very often, the allegations are of wrongdoing that appears serious to the uninitiated. For example, most of the above cases involved allegations of fraud, and one involved allegations of kickbacks, that is, bribes to doctors.

Yet, in every one of these cases -
- The monetary penalties were barely more than pocket change for the corporations involved.
- The payments were made by the organization as a whole, and hence would disadvantage many people who were not involved in and did not benefit from the specific actions alleged. Such de facto victims of the settlement included company shareholders, employees, and probably patients (who may have paid prices raised to pay for settlements), and the public (who may have indirectly paid these higher prices through insurance premiums or taxes.)
- The organization did not have to admit any facts, leaving the record foggy, and clouding the chances for any people who might have been hurt by the actions to take legal action.
- No people who actually authorized, directed, or implemented the apparent bad behavior suffered any negative consequences.

Thus, these settlements, like many others we have discussed, did not appear to be any major deterrent of future bad behavior.

These settlements do provide a public, if largely ignored, record that suggests how a miasma of sleazy behavior, if not outright corruption has settled over health care. These settlements do provide the context for many pithy questions that could be asked of health care organizational leaders, if anyone dared to do so. The settlements do suggest a need for wholesale, real health care reform that would make health care leaders accountable for what their organizations do, particularly when these organizations misbehave.

Friday Pharma Follies

This is a wrap-up including a variety of recent stories.

GlaxoSmithKline Settles

GlaxoSmithKline has agreed to settle a lawsuit involving allegations that the company over-charged US government health care programs for the selective serotonin reuptake inhibitor (SSRI) anti-depressant paroxetine (Paxil). The company admitted no wrong-doing. The state of California alone will receive about $14 million. (See the story in San Francisco Chronicle.)

Pfizer Investigated

Pfizer Inc recently announced that it is cooperating with a federal investigation of its marketing of Lipitor [atorvastatin]. At the same time, a Teamsters Union insurance plan has sued Pfizer, charging the company, "illegally promoted Lipitor to the public and prescribing physicians by promoting the off-label use of the drug." A Pfizer spokesperson said that the law-suit has no merit. (See the AP story in the Washington Post.)

Meanwhile, Brandweek ran a lengthy investigative story about charges that Pharmacia, which merged into Pfizer, marketed its version of human growth hormone, Genotropin, for off-label uses, including slowing down the aging process. At the moment, the issue is apparently, according to Brandweek, being investigated by the US Department of Justice. The story also further elucidates the now long-running dispute between Pfizer and former Pfizer and previously former Pharmacia executive Peter Rost. Rost, who is now a blogger too, just slammed pharma CEOs as "robber barons" in a post on the Huffington Post.

Roche's Marketing of Herceptin

The Guardian (UK) ran an investigative report on how Roche has marketed trastuzumab (Herceptin) in that country. Of particular interest were the ties developed between the company and patient advocacy groups. Notably, the reporter cited a survey showing that less than a quarter of British patient advocacy groups eschewed pharmaceutical company support.

US Federal Trade Commission Subpoenas 190 Drug Companies

Per the Los Angeles Times, the US FTC is investigating anti-competitive pricing in the pharma industry, and plans to subpeona a host of drug companies. The issue is whether "pharmaceutical companies are stifling competition by releasing authorized generic copies of their own brand-name drugs to coincide with the debut of generic challengers made by rivals."

Pharma Sponsored Cost-Effectiveness Studies Biased

A systematic review of cost-effectiveness studies published in the British Medical Journal showed that those sponsored by industry were more likely to report more favorable results. [Bell CM et al. Bias in published cost effectiveness studies: systematic review. Brit Med J 2006;332:699-703.] The authors concluded that "more rigour and openness is needed in the discipline of health economics before decision makers and the public can be confident that cost-effectiveness analyses are conducted and published in an unbiased manner."

In conclusion, the whole industry seeming could use a dose of rigour and openness if physicians and the public are to have more confidence in the information they receive about the benefits and harms of its products.