A Small Challenge to Impunity - Lawsuit Against Former Synthes CEO Proceeds

Numerous allegations of bad behavior by big health care organizations, some apparently causing patient harm, have resulted in legal settlements, sometimes of criminal charges.  Yet rarely do the individuals who apparently authorized, directed, or implemented the bad beahvior suffer any negative consequences.  In particular, the top executives on whose watch the bad behavior occured seem to have impunity.

Suing the Former Synthes CEO

So it is news that a lawsuit will proceed against the former CEO of medical device company Synthes,  alleging actions that led to the death of a patient.  The basics were reported by the Daily Caller,

Hansjorg Wyss ... will face charges of running a 'criminal profiteering enterprise' through the illegal use of a drug and in violation of federal patient safety rules that resulted in the death of a 67-year old woman....

Washington State Superior Court Judge Dean Lum agreed Oct. 30 that Wyss, a Swiss billionaire ... can stand trial under the state’s racketeering laws for leading a criminal enterprise that caused the death of Reba Golden. She died during an illegal drug test conducted by Wyss’s company in 2007.

The Washington suit charges Wyss, the former CEO of a Pennsylvania-based medical device company called Synthes and his co-defendants with murder in the second degree as a class A felony, second degree assault and criminal profiteering under the Washington Criminal Profiteering Act.

Wyss faces a statutory civil penalty of $250,000 for each violation, amounting to $9.2 million for 'personal injury to and death of Mrs. Golden.' He is charged in 37 violations.

The plaintiff is Reba Golden’s daughter, Cynthia Wilson, whose mother died in 2007 on the operating table after Synthes organized illegal 'market tests' for at least 50 persons across the country of an untested bone cement substance that the Food & Drug Administration banned for use in the spine.

Ultimately, five patients died during the illicit drug testing. Synthes failed to report the deaths to the FDA, as required by law, until the third fatality occurred.

Furthermore, 

Wyss 'entered into a criminal enterprise to perfo'rm illegal and experimental surgeries on patients,' Daniel Hannula, Golden’s attorney, told The DCNF.

Also,

'Mr. Hansjorg Wyss was the controlling stockholder and ranking executive of Synthes and Norian Corporation and the leader of a criminal enterprise,' the complaint states. 'The criminal enterprise engaged, for profit, in a pattern of criminal profiteering activity,' enticed by the prospect of a company forecast of $3 million in after-tax profit for the first year of sales.

Judge Davis agreed case was about profits, saying their behavior was 'generated by a desire to realize the immense profits.'

Hannula told the DCNF, 'they completely ignored what was required of them in order to get their product to the market as quickly as possible because they recognized that this was a market of huge financial potential.'

These are only allegations, of course. However, again, it is very rare for any top executive of a health care organization to personally face a lawsuit for his or her organization's conduct, no matter how bad that conduct may be. 

The Synthes Case Up to Now

We already knew that Synthes' conduct was particularly bad. We last discussed the Synthes case in 2011.  The case was already extraordinary in that it resulted in criminal convictions of several high-ranking Synthes executives.  At that time we wrote:

Synthes USA, the American branch of a Swiss based device company, first settled charges that it had been paying surgeons with company stock to use its products in its clinical trials in 2009 (see this post).  Then prosecutors alleged that these were not really rigorous trials. Instead, for marketing purposes, executives of Synthes subsidiary Norian persuaded surgeons to use its Norian XR product in a case series of spine surgery patients and then publish the results.  Three patients who received the product for this "off-label" use died.  This scheme was alleged to have been directed by 'person no. 7,' whom journalists identified as the company CEO, Hansjorg Wyss (see post here.)   In an unusual move, the prosecutors indicted four company executives, who then pleaded guilty.  They did not take any further action against Wyss, who turns out to be one of the world's richest men (see post here).

In 2011, Wyss agreed to sell Synthes to Johnson and Johnson, itself a company with a very chequered past (look here), thus making himself into a multi-billionaire, and one of the world's richest men.  (Currently, Forbes lists Wyss as number 240 on its list of the world's richest, estimating his fortune at $6.1 billion.)

The case then slipped into relative obscurity, although Fortune ran a long-form article on it in 2012, which called it a "medical horror story."

An Almost Anechoic Lawsuit

Because of the unusual nature of the ongoing lawsuit, one might expect that it would generate some public discussion.  One would be wrong.  The litigation against Mr Wyss so far has received almost no media coverage, demonstrating the ongoing anechoic effect.  We previous defined  the anechoic effect, as the phenomenon that information or discussion that could challenge or discomfit the powers that be in the US health care often generates no echoes.  

To date, I could only find coverage of the ongoing lawsuit against Mr Wyss in the Daily Caller.  And ironically the Daily Caller did not appear to cover this case because it specializes in malfeasance in health care.  It seemed to cover it because it may have indirectly reflected negatively on prominent members of the US Democratic Party.

Actually, the main focus of the article I quoted above was not health care.  It was that Mr Wyss appears to be a supporter of Hilary Clinton, the currently leading Democratic candidate for the US presidential nomination, and of ostensibly left-wing causes.  I put an ellipsis in the first sentence of the article to allow me to focus on its health care aspects.  What I removed was not a description of Mr Wyss not as an extremely rich former CEO of a medical device company, but as

Hansjorg Wyss, a prominent Clinton foundation donor and wealthy bankrolled of liberal activist groups, will face charges of running a 'criminal profiteering enterprise'....

And the article's title similarly did not mention health care at all: 

Major Clinton Donor Faces 'Criminal Profiteering' Charges

The Daily Caller actually specializes not in health care malfeasance, but in issues of interest to the right wing.  As Politico reported in 2014, Tucker Carlson, described as a "conservative pundit, who founded the Daily Caller, has said

What I despise most about the legacy media isn’t just that they’re mindlessly liberal, though they are.

The Columbia Journalism Review described the Daily Caller as having

carved out a cozy corner of the web in its short life. It’s a place for conservatives to read about the latest liberal scandal and the latest movements in the GOP presidential field.

So presumably if Mr Wyss was uninterested in politics, and did not donate to any remotely left wing causes, the Daily Caller would not have covered the ongoing lawsuit, leaving it totally anechoic.

But whether of not the Daily Caller had an axe to grind when making its choice to report on the ongoing litigation against Mr Wyss, why did every other media outlet to ignore the story?  Perhaps again the rule is in general it is simply not done to publicly discuss what might excessively embarass the people who have gotten very rich from the currently dysfunctional health care system?

Conclusions

The just revealed story of the lawsuit against the extremely rich former CEO of Synthes does suggest that perhaps individuals injured by our curent dysfunctional health care system could use the legal system to try to challenge those who get rich from enabling such injuries.  Or not, because the outcome of this lawsuit is uncertain.

Furthermore, the initiation of this lawsuit again reminds us that those who lead large health care organizations, and may profit mightily from them, regardless of the effects on patients' and the public's health, remain beyond the law.  It is not clear why the US Department of Justice chose not to even attempt to prosecute Mr Wyss, although they apparently believed he was responsible for directing the actions that led to patient deeaths.  But his impunity mirrors that granted to just about every top health care manager who authorized or directed corporate bad behavior that endangered patients. 

This impunity is further enabled by how anechoic stories of bad leadership of health care organizations, even of apparently criminal or corrupt leadership, are.  As long as most health care professionals and the public at large remain unaware of the dark side of health care, they are unlikely to seek light to shed upon it.

True health care reform would encourage open, widespread discussion of all aspects of health care dysfunction, particularly bad behavior by those who profit most from it, and would encourage health care leadership that puts patients' and the public health first, is willing to be accountable for its actions, is transparent, honest and ethical. 

As the Door Turns - The Ongoing Interchange of Leaders Among Large Health Care Corporations, Those who Represent Them, and Government

The revolving door is the two-way conduit between leadership positions in government and industry that helps to enable health care, and maybe all of society, to be run by a group of insiders who can move easily between large or influential health care organizations and the government bodies that are supposed to regulate, oversee, and enforce laws relevant to them.

It has been three months since our last update on the revolving door as it applies to health care, so here is our latest effort, according to the chronological order of the initial media coverage. 

Foundation Leader with Ties to Eli Lilly and to Former Synthes CEO to the White House

As reported by the New York Times in December, 2013, new White House senior adviser John D Podesta, who founded and ran the nominally non-profit organization Center for American Progress, had multiple ties to health care corporations and their leaders, e.g., to pharmaceutical maker Eli Lilly,

The pharmaceutical giant Eli Lilly was also a donor because of what it said was the Center for American Progress’s advocacy for patients’ rights — and just as the debate heated up in Washington over potential cuts to the Medicare program that covers Lilly’s most profitable drugs.

Although, for the record,

Neera Tanden, the president of the Center for American Progress, said in an interview that the group frequently takes positions that conflict with the corporate agendas of its donors, including companies like Eli Lilly. 

Also an important but somewhat less obvious linkage was described thus by the Times, 

 In addition, he earned $90,000 as a consultant to the HJW Foundation of West Chester, Pa, according to an aide working with him on the disclosure report he is preparing. HJW is a nonprofit group run by Hansjörg Wyss, a billionaire businessman and major contributor to the Center for American Progress.

What the Times did not say about Mr Wyss was that he is the former CEO of Synthes, a Swiss based medical device company, since merged into Johnson and Johnson   As we wrote in 2011,

 Synthes USA, the American branch of a Swiss based device company, first settled charges that it had been paying surgeons with company stock to use its products in its clinical trials in 2009 (see this post).  Then prosecutors alleged that these were not really rigorous trials. Instead, for marketing purposes, executives of Synthes subsidiary Norian persuaded surgeons to use its Norian XR product in a case series of spine surgery patients and then publish the results.  Three patients who received the product for this 'off-label' use died.  This scheme was alleged to have been directed by "person no. 7," whom journalists identified as the company CEO, Hansjorg Wyss (see post here.)   In an unusual move, the prosecutors indicted four company executives, who then pleaded guilty.  They did not take any further action against Wyss, who turns out to be one of the world's richest men (see post here).

However, at the time the former executives were sentenced, one of the executive's attorney's claimed,

Wyss was the undisputed leader of the company. 'He made some of the very critical decisions that put the trials on the ultimate pathway,' Gurney said. 'The culture of an organization is set at the top.'

Former Deputy White House Press Secretary to Global Strategy Group, Whose Clients Include Pfizer, Purdue Pharma, and WellPoint

As reported by the National Journal in December, 2013,

Bill Burton
Old gig: Deputy White House press secretary
New gig: Formed and ran Priorities USA Action, a super PAC that raked in more than $75 million during the 2012 campaign; recently joined the public affairs firm Global Strategy Group as a managing director. Clients include GE, Cisco, American Express, Comcast, and Pfizer.

Other health care clients include health insurance company Empire BCBS, pharmaceutical company Purdue Pharma, and for-profit health insurance company WellPoint

Former National Health Information Technology Coordinator to Get Real Health

As reported by Government HealthIT in February, 2014,

Three months after leaving the federal government, [former National Coordinator for Health Information Technology] Farzad Mostashari, MD, is joining the board of directors at the patient engagement company Get Real Health.

The big-thinking, bow-tied public health veteran is currently studying accountable care policies full-time at the Brookings Institution, and said he’s joining the Get Real Health board to help it '‘stay’ real as it innovates and serves patients and providers.'

The Rockville, Maryland-based company was founded in 2000, starting out as a connected health consulting outfit and then, after working with Microsoft’s HealthVault in 2007, launching its own health technology in 2012, the InstantPHR patient engagement platform.

From CareScience Inc to National Coordinator for Health Information Technology to Health Evolution Partners

The article about Dr Mostashari also mentioned in passing a more complicated set of transitions involving an earlier national coordinator for health care information technology.   

Mostashari is not the only former national coordinators to step into the health IT private sector after federal service. David Brailer, MD, the first appointee to the role of the national coordinator for health IT, is now running the San Francisco private equity firm Health Evolution Partners.

But in fact, according to his rather glowing Wikipedia entry, Dr Brailer also came from the commercial health care IT industry,

 In 1992, Brailer left academia and founded a company spun out of his Ph.D. thesis, inventing ways to measure health-care quality. This became CareScience Inc., a Philadelphia software firm that helped hospitals improve efficiency and prevent errors. Under Brailer, CareScience established the nation's first health care Application Service Provider (ASP). Brailer led the company through several financings, strategic partnerships, an initial public offering in 2000, and sale to global software firm Quovadx in 2003.

Then, in 2004,

Brailer was appointed as the first National Health Information Technology Coordinator, pursuant to an executive order by President George W. Bush on April 27, 2004, which called for widespread deployment of health information technology within 10 years.

According to his Health Evolution Partners biography, Dr Brailer is also now a member of the boards of directors of American Optical Services, CenseoHealth, Optimal Radiology, and Walgreen Co.

From Aide to Congressman Young to a Lobbying Firm with Health Care Clients Then to Congress

According to the Tampa Bay Times, yesterday Republican David Jolly won a special election to a congressional seat for Florida.  The article noted that Mr Jolly was "once an obscure aide to the late Republican U.S. Rep. C.W. Bill Young and then a Washington lobbyist,..."

His past work was described in more detail in a post on the Republic Report blog,

David Jolly, the Republican congressional candidate vying for the special election in Florida next week, has not only made a career out of lobbying. Records reviewed by Republic Report show that Jolly’s clients won millions of dollars in taxpayer earmarks from his old boss, the late Rep. C.W. 'Bill' Young (R-FL), an appropriator known for his lavish use of the earmarking process. 

Futhermore,

Two of the firms that hired Jolly as a lobbyist - BayCare Health Systems and Alakai Defense Systmes - won lucrative earmarks from Young while paying Jolly to influence the committee where Young was a senior member.

In 2009, BayCare Health Sytems retained Jolly and another former Young staffer named Douglas Gregory.  Later that year, Young secured a $1 million earmark for BayCare Health Systems for 'facilities and improvements.'

Summary

Note that the revolving door does not seem to discriminate according to political party or ideology.  The cases above involved both Republicans and Democrats. But the revolving door does discriminate against the not well connected, because it seems to provided preferred posts in the upper echelons of government for industry insiders, and preferred posts in the upper echelons of industry for government insiders. 

As we have said many times before, the constant interchange of health care insiders among government, large health care corporations, and the lobbying and legal firms which represent them certainly suggests that health care, like many other sectors, seems to be run by an amorphous group of insiders who owe allegiance neither to government nor industry.

However, those who work in government are supposed to be working for the people, and those who work on health care within government are supposed to be working for patients' and the public health.  If they are constantly looking over their shoulders at potential private employers who might offer big checks, who indeed are they working for?

Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.

Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.   

There They Go Again, Again... - Johnson and Johnson Loses Two Civil Cases, Makes $2.5 Billion Settlement Based on Claims it Withheld Safety Data on its Products

There has been some talk by US government officials that any day now they will actually get tough on corporate executives whose organizations are involved in multiply unethical actions (perhaps using the legally valid, but massively neglected responsible corporate officer doctrine, look here).  However, the march of legal settlements by such corporations continue without any hints of negative consequences for the people who might have actually been involved in unethical activity. 

So, we note another week, another multi-billion dollar settlement and another loss of a civil lawsuit by huge drug, device and biotechnology company Johnson and Johnson

The Articular Surface Replacement Metal-on-Metal Hip Prosthesis Settlement

After various rumors, the report of the settlement appeared in a New York Times article on November 19, 2013.  The basics were,

Johnson & Johnson and lawyers for patients injured by a flawed hip implant announced a multibillion-dollar deal on Tuesday to settle thousands of lawsuits, but it was not clear whether the deal would satisfy enough claimants.

Under the agreement, the medical products giant would pay nearly $2.5 billion in compensation to an estimated 8,000 patients who have been forced to have the all-metal artificial hip removed and replaced with another device. 

Separately, the company has agreed to pay all medical costs related to such procedures, expenses that could raise the deal’s cost to Johnson & Johnson to $3 billion, people familiar with the proposal said.

Under the plan, the typical patient payment for pain and suffering caused by the device would be about $250,000 before legal fees. Based on standard agreements, plaintiffs’ lawyers would receive about one-third of the overall payout, or more than $800 million, with those who negotiated the plan emerging as big winners.

The proposed settlement, which was submitted on Tuesday to a federal judge in Toledo, Ohio, must receive the support of 94 percent of eligible claimants to go forward.

An earlier NY Times article on a rumored version of the settlement emphasized that relevant litigation had featured strong allegations that Johnson  and Johnson's DePuy subsidiary hid what it knew about the faults of the device,

The A.S.R. hip was sold by DePuy until mid-2010, when the company recalled it amid sharply rising early failure rates. The device, which had a metal ball and a metal cup, sheds metallic debris as it wears, generating particles that have damaged tissue in some patients or caused crippling injuries. 

DePuy officials have long insisted that they acted appropriately in recalling the device when they did. However, internal company documents disclosed during the trial of a patient lawsuit this year showed that DePuy officials were long aware that the hip had a flawed design and was failing prematurely at a high rate.

Many artificial hips last 15 years or more before they wear out and need to be replaced. But by 2008, data from orthopedic databases outside the United States also showed that the A.S.R. was failing at high rates in patients after just a few years.

Internal DePuy projections estimate that it will fail in 40 percent of those patients in five years, a rate eight times higher than for many other hip devices. 

A later NY Times article about plaintiffs' sometimes negative reactions to the settlement added,

 The DePuy Orthopaedics division of Johnson & Johnson estimated in an internal document in 2011 that the device would fail within five years in 40 percent of patients. Traditional artificial hips, which are made of metal and plastic, typically last 15 years or more before replacement. 

 DePuy officials have insisted that they acted properly in handling the device, including waiting until 2010 to recall it. However, internal company documents show that company officials were warned years before by their own consultants that the device was so problematic they would not use it in their patients. 

In January, 2013, the NY Times had reported in more detail about how DePuy executives concealed evidence about safety issues with the hips,

. Johnson and Johnson executives knew years before they recalled a troubled artificial hip in 2010 that it had a critical design flaw, but the company concealed that information from physicians and patients, according to internal documents disclosed on Friday during a trial related to the device’s failure.

The company had received complaints from doctors about the device, the Articular Surface Replacement, or A.S.R., even as it started marketing a version of it in the United States in 2005. The A.S.R.’s flaw caused it to shed large quantities of metallic debris after implantation, and the model failed an internal test in 2007 in which engineers compared its performance to that of another of the company’s hip implants, the documents show.

Still, executives in Johnson & Johnson’s DePuy Orthopaedics unit kept selling the A.S.R. even as it was being abandoned by surgeons who worked as consultants to the company. DePuy executives discussed ways of fixing the defect, the records suggest, but they apparently never did so.

Plaintiffs’ lawyers introduced the documents on Friday in Los Angeles Superior Court during opening arguments in the first A.S.R.-related lawsuit to go to trial.

In particular, 

In 2007, DePuy engineers tested the A.S.R.’s rate of wear to see if it matched the wear rate of another all-metal hip implant made by the company. It did not.

'The current results for A.S.R. do not meet the set acceptance criteria for this test,' that report stated.

The same year, company officials began discussing ways to fix the problem, like redesigning the cup to eliminate the groove. But at the same time, it was actively marketing the A.S.R. to surgeons in the United States, who were implanting it into tens of thousands of patients.

'We will ultimately need a cup redesign, but the short-term action is manage perceptions,' one top DePuy sales official told a colleague in a 2008 e-mail. A DePuy executive, Andrew Ekdahl, who is now the unit’s president, was also told by a company consultant that the A.S.R. was flawed, according to another document. 

In mid-2008, DePuy apparently abandoned the redesign project, an internal document indicates. A company spokeswoman, Mindy Tinsley, declined to comment on the document. 

In the fall of 2009, the Food and Drug Administration rejected DePuy’s application to sell the resurfacing version of the A.S.R. in the United States, saying it was concerned about, among other things, “high concentration of metal ions” in the blood of patients who received it. 

DePuy executives soon started making financial estimates of when the company should stop selling the A.S.R., based on the time it would take to convert surgeons to another company implant, a document shows.

So the evidence introduced in litigation suggested that top DePuy executives knew the design was faulty, but chose to not disclose the evidence of this, and not to withdraw the product, but rather to "manage perceptions." 

As is typical of most settlements made by big health care corporations in the last 10 years, no one at DePuy or its Johnson and Johnson parent who might have authorized, directed, or implemented the continued sales of the device despite warnings that it might be unsafe would have to suffer any negative consequences.  In particular, apparently Mr Ekdahl will not suffer any such consequences (and was not obviously named in the few news reports of the settlement.)   Mr Ekdahl, now Worldwide President, DePuy Synthes Joint Reconstruction, was quoted in the official Johnson and Johnson news release about the settlement.

The Topamax Verdicts

This case, which was much smaller in terms of the monetary amounts involved, got much less coverage, but Bloomberg did report on November 18, 2013,

Johnson & Johnson's  Janssen Pharmeceuticals unit was ordered by a Philadelphia jury to pay $11 million in a case claiming its anti-seizure drug Topamax caused birth defects, the second such loss in less than a month.

Again, the case involved claims that the company withheld information about the safety of its product,

Janssen failed to adequately warn doctors for Haley Powell, a stay-at-home mother, of the risks of Topamax before she gave birth to a son with a cleft lip, jurors in state court in Philadelphia found today.

'Janssen has long known that this drug causes debilitating birth defects and yet intentionally kept this information from physicians and patients,' Shelley Hutson, an attorney for Powell, said after the verdict was read.

Furthermore,

 Janssen knew as early as 1997 that animal studies showed an increased risk for birth defects, especially oral clefts, Hutson said during closing arguments on Nov. 15.


Hutson accused Janssen of operating in a culture of secrecy and of intentionally concealing safety reports in 2003 and 2005. She rejected arguments by the company that it presented the information on poster boards, in abstracts and at medical conferences. Those actions “do not keep patients safe,” Hutson said.

'As early as 1997 in admission after admission, this company knew and they didn’t tell the doctors,' Hutson said.

A report in Law360 emphasized,

 Plaintiffs in the Pennsylvania suits alleged the company didn't fully, truthfully or accurately disclose Topamax data to the FDA, to them and to their doctors. As a result, Janssen intentionally and fraudulently misled the medical community, the public and herself about the risks to a fetus associated with the use of Topamax during pregnancy, plaintiffs claimed.

 Summary

There they go again....  So Johnson and Johnson has announced two multi-billion dollar settlements in one month (November, 2013, look here for the first).  It also announced a smaller settlement involving the marketing of Topamax, which is now in addition to a 2010 guilty plea for misbranding Topamax in 2010 (look here).  Note that all the November, 2013 legal actions involved allegations, often backed by seemingly convincing evidence produced in litigation (as noted above), of deceptive, unethical practices.  Both cases above included allegations that the company sold products without fully disclosing those products' harms to patients.  Furthermore, all the month's legal actions are now added to a long list of Johnson and Johnson's legal woes, often involving allegations and evidence of other unethical actions, sometimes involving guilty pleas to charges of such actions (see compilation of the record through July, 2013 here.)  (By the way, Synthes, which is now another Johnson and Johnson subsidiary, and is not run by the same individual on whose watch the ASR case occurred, has had its own legal and ethical woes, look here.) 

Yet despite this lengthy and sorry record, no individual manager or executive at Johnson and Johnson, including its many and confusing subsidiaries, seems to have suffered any negative consequences for authorizing, directing, or implementing any unethical activities, whether they risked harming patients, or whether they resulted in a guilty plea by a corporate entity.  Instead, as we have discussed most recently here, the top executives of the company have grown very rich. 

So since the US government seems to continue to recycle its policy of allowing corporate managers and executives impunity regardless of how repetitively harmful their actions might be to patients' and the public's health, I will recycle my comments from earlier in November, 2013,....

The latest settlement in the parade is another marker of the sort of conduct that big health care organizations have exhibited to increase revenue, and to use that revenue as a rationale for making their top insiders very rich.  The particular conduct alleged here could have put patients at risk, partly by deceiving health care professionals.  Yet in their wisdom, top US law enforcement saw fit not to try to hold any individuals accountable for this conduct, and allowed the company to deny any misconduct other than a single misdemeanor by a subsidiary.  This occurred despite the company's history of multiple legal settlements and findings of guilt in various courtrooms.

Yet none of these actions has resulted in any negative consequences for any individual within the company.  No one who authorized, directed, or implemented bad behavior will pay any penalty, even were the bad behavior to have lead to significant personal enrichment.

As we have said ad infinitum, and on the occasion of a previous Johnson and Johnson settlement, many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved.

These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look here). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that  matter) law enforcement to "grow a backbone" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.

As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.

Roy M. Poses MD on Health Care Renewal 

It Was the Best of Times, It Was the Worst of Times ... for Synthes Executives

The latest news about the Synthes Norian XL bone cement case shows just how bizarre incentives for health care leaders can be. 

The Synthes Case

Synthes USA, the American branch of a Swiss based device company, first settled charges that it had been paying surgeons with company stock to use its products in its clinical trials in 2009 (see this post).  Then prosecutors alleged that these were not really rigorous trials. Instead, for marketing purposes, executives of Synthes subsidiary Norian persuaded surgeons to use its Norian XR product in a case series of spine surgery patients and then publish the results.  Three patients who received the product for this "off-label" use died.  This scheme was alleged to have been directed by "person no. 7," whom journalists identified as the company CEO, Hansjorg Wyss (see post here.)   In an unusual move, the prosecutors indicted four company executives, who then pleaded guilty.  They did not take any further action against Wyss, who turns out to be one of the world's richest men (see post here). 

Executives Sentenced

In late November, three of the executives were sentenced, as per the Philadelphia Inquirer:

Three former executives of medical-device manufacturer Synthes Inc. were sentenced to prison Monday. A fourth might have been if his attorney hadn't collapsed while standing at a lectern moments after saying that Synthes' unindicted board chairman was the ultimate authority and responsible for the illegal, sometimes fatal, bone-cement trial at the center of the proceedings.

Michael Huggins, 54, of West Chester, the former president of Synthes USA, was sentenced to nine months in prison and taken into custody immediately. Thomas Higgins, 55, of Berwyn, former leader of Synthes' spine division, got the same sentence. John Walsh, 48, of Coatesville, who was in charge of regulatory affairs, got five months.

U.S. District Judge Legrome D. Davis gave Higgins two weeks to report to prison so he could arrange for extra medical care for his wife. Davis gave Walsh until next Monday to report because Tuesday is his young daughter's birthday.

The three will pay $100,000 each in fines and be on supervised release after prison. All pleaded guilty to a single misdemeanor count under the responsible-corporate-officer doctrine.


Richard Bohner, 56, of Malvern, former vice president for operations, was the third of four defendants on Davis' docket Monday and might have gotten a sentence similar to those received by Huggins and Higgins.

No Penalty for the Former CEO

However, there were no penalties for the company CEO who was allegedly "person no. 7":

Hansjorg Wyss, the Synthes board chairman, who also was chief executive officer when the illegal bone-cement trial occurred, was not in the courtroom but still was part of Monday's events.

Gurney, Bohner's attorney, said Wyss was the undisputed leader of the company. 'He made some of the very critical decisions that put the trials on the ultimate pathway,' Gurney said. 'The culture of an organization is set at the top.'

Wyss could not be reached for comment.

Meanwhile, Mr Wyss continues to grow richer. Forbes currently lists him as number 164 on its list of the world's wealthiest people, estimating his assets at $6.4 billion.

A Golden Parachute for the Current CEO

Mr Wyss may be made even more wealthy because US health care corporate giant Johnson and Johnson has agreed to buy Synthes. Furthermore, as also reported by the Philadelphia Inquirer, the current Synthes CEO is in line to also greatly benefit from that deal:

Orsinger is getting $51.9 million for leaving the old company and a multimillion-dollar pay package from the new company. His new base salary of $700,000 will be a cut in pay from his old firm, but he will have some lucrative bonus opportunities. If he can make do clipping coupons for three years, he will get a stock package worth $17.2 million.

Orsinger is the chief executive officer of Synthes Inc., the medical-device manufacturer based in Switzerland but with U.S. headquarters and facilities in West Chester.

Implications

On one hand, up to now, it has been very rare for any top executives of health care corporations to suffer any negative consequences due to ethical missteps by their companies, much less to go to jail. The current case may be the first real example of government prosecutors using the responsible corporate officer doctrine in such a setting. We first discussed this concept here in 2010. As noted in Reuters about the Synthes case,

After decades in relative obscurity, a U.S. legal doctrine that holds corporate officers liable for company wrongdoing is finding its way back into some high-profile healthcare prosecutions.

The 'responsible corporate officer' doctrine allows for prison terms of up to one year for misdemeanor violations of the Federal Food, Drug and Cosmetic Act, but typically defendants have received only probation.

Recently, however, the government has sought to reinvigorate the doctrine, and some executives are facing stiffer penalties than they had ever imagined.

Why only now has this doctrine been dusted off, when it has been around for over 70 years, and validated by the Supreme Court over 35 years ago, remains unclear.
Does its use now signal the end of health care leaders' impunity? We have noted that despite all sorts of misbehavior leading to a march of legal settlements, almost no one who authorized, directed or implemented the bad behavior within a large health care corporation has ever paid any penalty for it. The penalties for the four Synthes executives are certainly a break in the pattern.

Moreover, while in the Synthes case the executives who pleaded guilty were aware of what was going on, the doctrine allows prosecution of responsible corporate officers who were not so aware. As in the Reuters article,

The principle behind the doctrine was validated by the Supreme Court in 1975, when it affirmed the conviction of John Park, the chief executive of a national food chain who had been charged with allowing warehoused food to be exposed to rodent contamination. The court held that, to convict Park, the jury did not have to find that he was aware of the unsanitary conditions, only that he was in a position of authority to prevent them.

However, in the Synthes case, there was no attempt made to prosecute even more highly placed "responsible corporate officers." As noted above, the past and current CEO were not charged, and meanwhile have engineered a merger that may make them even more wealthy (ironically, with a company, Johnson and Johnson, that has also had a troubled recent record).

Furthermore, as per Reuters, prosecutors are not exactly gung ho about using the responsible corporate doctrine:

Over the next few decades, prosecutors used the doctrine sparingly, concerned that overuse would bring unwanted judicial scrutiny, said Paul Hyman, formerly of the U.S. Food and Drug Administration's Chief Counsel's Office and now a director at the law firm of Hyman, Phelps & McNamara.

Also,

The future of the responsible corporate officer doctrine could depend on whether executives who plead guilty under the doctrine are able to find other employment.

Cory Andrews, a lawyer with the Washington Legal Foundation, which filed a friend-of-the-court brief on behalf of the Purdue defendants, said that as the severity of penalties increase for misdemeanors, so do the odds of a constitutional challenge.

'Arguably, where the deprivation is very small, the due process violations are not as significant,' Andrews said. 'But where the deprivation goes to someone's ability to earn a living -- I think that raises the constitutional temperature.'

Many of the legal settlements we have discussed involved activities that threatened the safety, health or even lives of patients. But if a corporate executive might not be able to get further lucrative employment as such after participating in such misbehavior, quelle horreur!

Let us hope that government officials, who have been so solicitous in the past about the financial well-being of the health care corporations they are supposed to oversee, will start thinking about the consequences of these corporations' misbehavior for the public to whom those officials are supposed to answer.

I conclude, de rigueur, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Synthes and its Subsidiary Plead Guilty, Boss Remains Billionaire.

In December, 2009, we updated the story of Swiss-based medical device company Synthes and the marketing by its Norian division of a bone cement.  At that time, US authorities charged the company with use of an unapproved product in about 200 patients, three of whom suffered untimely deaths.  At that point, four US based Synthes executives had pleaded guilty to charges related to this affair. 

Last week, another shoe dropped.  As reported by the Associated Press,

A medical devices company will admit criminality and pay the maximum $23 million fine for illegally testing bone cement on about 200 spinal patients, three of whom died in surgery, U.S. prosecutors said Monday.

Norian Corp. trained surgeons to conduct unapproved clinical tests of its bone cement from 2002 to 2004, subverting U.S. Food and Drug Administration safeguards, prosecutors said. The trials were stopped after the third patient death, they said.

The cement, which is used to fill in bone defects, is approved for use in the arm but not the load-bearing spine, authorities said. The surgeries often involved older patients with compression fractures, they said.

The results are:

Norian will plead guilty to conspiracy to impede FDA functions, a felony, and 110 misdemeanor counts of interstate shipping of misbranded Norian XR. Synthes will plead guilty to the same misdemeanor shipping count.

As part of the agreement, Norian will be sold to an outside buyer, the parent company said.

Imposing divestiture of the offending subsidiary was unusual, according to the Philadelphia Inquirer:

Forcing a divestiture of a business unit in a plea agreement was precedent-setting for the U.S. Attorney General's Office in the Philadelphia area, spokeswoman Patricia Hartman said Monday.

Officials with the Office of the Inspector General in DHHS said the divestiture should send a message to other health-care companies that Synthes' behavior had grave consequences.

'Criminal conduct can result in a company getting rid of part of their business,' Greg Demske, a top official with the Inspector General, said Monday. 'This is an egregious case, and it made us firm in our belief that we should draw a line here,' he said.

If it remained a subsidiary of Synthes, Norian would be excluded from participating in Medicare and other government-funded health care programs, which would be potentially devastating to its business. According to a divestiture agreement released Monday by the U.S. Attorney in Philadelphia, Synthes has to sell Norian by May 24.

The assets of Norian would not be allowed to be transferred to another part of the Synthes 'corporate family' as part of the divestiture, Demske said.

Synthes will update the government monthly on its plans to divest Norian, and if it fails to sell the company by the May deadline, it can be fined $10,000 a day.

So does this case signal a new toughness by US authorities in cases of bad behavior by health care corporations?

According to the Wall Street Journal, Synthes officials were not exactly quaking in their boots because of these penalties, as their spokesperson said Synthes "does not expect this settlement to have any significant financial impact." Synthes would only be liable for fines of "about $24.3 million in total." That pales in comparison to the "company['s] posted total sales of $3.4 billion last year." As for the divestiture of Norian, the WSJ reported, "a spokesman said Monday that the Norian unit is mostly active in product development and isn't actively selling products. That business has fewer than 100 employees,...."

In fact, company leadership did not seem to realize that they did anything wrong, despite the company and four executives pleading guilty to crimes, actions involving the death of three patients,

'Synthes remains committed to operating in accordance with the highest legal and ethical standards, and bringing closure to this matter will permit the company to focus on its mission to improve patient care,' the company said.

Furthermore, while this is one of the few cases in which some company executives actually may have to pay penalties (after pleading guilty to at least misdemeanors), the big fish appeared to get away. As we discussed last year, an unindicted "person no. 7" was alleged to have set up the scheme to "test" the bone cement in a clinical series. Person No. 7 was at that time identified as the company CEO. That CEO, according to the Philadelphia Inquirer last year, was one Mr Hansjorg Wyss, noted to have a fortune estimated at $5.7 billion, making him the richest man in Philadelphia, and the 83rd richest man in the world, according to Forbes magazine.  (See this post.)   The settlement of this case would apparently have no impact on his immense wealth.

So although this case has some unusual wrinkles, and may yet yield some negative consequences for some of the people involved in the direction and implementation of the wrong-doing, it would appear to leave unscathed the person who has personally profited the most from the company, and its actions, including its less savory actions.  There is progress here, but only a little.

Once again, it appears that in the eyes of the law, top corporate leaders are different from you and me.  They appear immune from the penalties that lesser individuals may suffer.  They have impunity to continue to amass wealth even wealth that results from actions that were deemed illegal.   Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

"Person No. 7," Also Known as the 83rd Richest Man in the World

This one nearly snuck by. 

A Settlement and Some Indictments

In May, 2009, we posted that international Swiss-based medical device manufacturer Synthes settled charges that it was paying surgeons who conducted clinical trials for the company with company stock, and in June, 2009, we posted that Synthes was indicted based on allegations that it had subjected patients to an experimental use of its Norian XR bone cement product on the spinal cord, a use not approved by the US Food and Drug Administration, and that its executives had lied to the FDA about these actions.  It was noteworthy that the indictment named but did not charge the then CEO of the company as "Person No. 7" who allegedly decided not to conduct clinical trials of Norian XR, but rather to have surgeons use it in a case series that was not identified as clinical research.  The company CEO at that time was a Mr Hansjorg Wyss, who is still chairman of the Synthes board, owner of 40% of Synthes stock, and the richest man in the Philadelphia area, worth $5.7 billion according to Forbes magazine, making him the 83rd richest man in the world in 2009, according to Forbes magazine.

Four Guilty Pleas

Here is what first escaped my attention.  In July, 2009, the Philadelphia Inquirer reported:

Two senior executives of a West Chester-based manufacturer of medical devices pleaded guilty yesterday in connection with illegal clinical trials of a bone cement on about 200 patients, three of whom died.

The company, Synthes USA Inc., did not tell the patients that they were participating in what amounted to human experimentation, according to a 97-count indictment filed June 16 by the U.S. Attorney's Office in Philadelphia.

Michael D. Huggins, 51, of West Chester, was president and chief operating officer of Synthes' spine division from late 1994 to January 2008.

John J. Walsh, 46, of Coatesville, has served as director of regulatory and clinical affairs in the same division since August 2003.

Before U.S. District Judge Laurence F. Stengel, each pleaded guilty to a single misdemeanor count of introducing adulterated medical devices into interstate commerce. They face $100,000 fines and a year in prison when they are sentenced Oct. 22.

Then, in August, 2009, Bloomberg reported:

Synthes Inc. official Richard Bohner pleaded guilty in Philadelphia to charges tied to illegal clinical trials of a bone cement that led to three deaths.

Bohner, Synthes’ vice president of operations, is the last of four executives to plead guilty to shipping misbranded Norian XR across state lines. He faces as long as one year in prison plus a $100,000 fine, according to documents made public today in federal court in Philadelphia.

Bohner and the other executives, Michael Huggins, John Walsh and Thomas Higgins, promoted the drug through the use of test markets aimed at persuading surgeons to publish the results of their surgeries, according to court documents.

Huggins and Walsh, who pleaded guilty July 20, will be sentenced on Oct. 22.

So that is four individual guilty pleas so far in this case. The pleas received only scant attention in the local media, and hence slipped by the technology I was using to scan the media at the time.

The Richest Man in Philadelphia

I got caught up when on 6 December, 2009, the Philadelphia Inquirer published a summary article focused on the "Person No. 7":

Wyss also is chairman of Synthes in West Chester, which faces 52 felony counts stemming from allegations that it illegally experimented on patients, three of whom died.

Synthes is fighting the charges, and a trial could be held next year. Four of its executives already have pleaded guilty to misdemeanor counts in the case and face sentencing hearings in January.

Federal prosecutors in Philadelphia did not name or charge Wyss, but their June indictment describes a "Person No. 7," who was a major shareholder and chief executive officer of the company when the alleged illegal conduct occurred, from 2001 through 2004. A Synthes representative confirmed that Wyss was CEO then.

In 2001, the U.S. attorney's indictment says, Person No. 7 decided the company should not pursue the costly and time-consuming clinical trials that the U.S. Food and Drug Administration demanded for the company's bone-cement product, Norian.

Instead, according to the indictment, Person No. 7 directed the company to 'get a few sites to perform 60 to 80 procedures and help them publish their clinical results' to help popularize Norian for a use not approved by the FDA.

The procedures involved injecting Norian into the spines of patients who had vertebral compression fractures, which are typically caused by osteoporosis. FDA officials had previously approved Norian for other uses, but they demanded trials for that type of surgery, fearing that the cement could perform differently in the spine.

Even after tests in pigs showed that Norian could leak from the spine and cause life-threatening blood clots, Synthes continued with surgeries on human patients, who were never told that the procedure was experimental.

Three of those patients died, but prosecutors do not know whether Norian played any role in their deaths, because the company and doctors did not immediately report all the fatalities to the FDA. The patients have not been identified.

Through a Synthes representative, Wyss initially agreed to be interviewed for this article, but later declined.

The Inquirer article seemed to try to balance the allegations about Wyss with his wealth and philanthropy:

Wyss grew up in Bern, Switzerland. His father sold mechanical calculators and liked to discuss world events, according to Harvard's Web site. Wyss trained as an engineer in Switzerland and soon began setting up Chrysler manufacturing plants worldwide. In 1965, he earned a master's degree at Harvard's business school.

'I didn't speak in class for the first five weeks,' he told a Harvard Web publication at the time of his gift. 'My classmates were all the crème de la crème, with button-down shirts I had never seen before.'

He worked for several large companies, but sold airplanes on the side. One of his buyers was a Swiss surgeon who founded Synthes. That connection eventually led Wyss to become president of the company's U.S. business in 1977.

Over time, he became a large shareholder and chief executive. He retired from that post in 2007, but he remains chairman.

Forbes Magazine in March estimated Wyss was worth $5.7 billion. His fortune has helped him pursue whatever he wants, including the rehabilitation of the Crooked Tree Golf Course in Tucson, Ariz., and the purchase of the 900-acre Halter Ranch & Vineyard in Paso Robles, Calif. The winery emphasizes organic growing methods and sells many wines, including one named Synthesis.

Wyss has given away large chunks of his fortune, mostly to organizations dedicated to his primary passions: science and the environment.

His $125 million donation to Harvard funded the Wyss Institute for Biologically Inspired Engineering....

Wyss also established two private foundations. The Wyss Foundation is dedicated to preserving land in the American West. Wyss went hiking there as a student and fell in love, according to Forbes.

The Wyss Foundation gave away about $13 million and had about $250 million in assets in 2007, according to tax filings.

Wyss also donates heavily from his personal funds. BusinessWeek estimated his total giving from all sources at $277 million from 2004 through 2008.

However, some of Wyss' philanthropy seems more designed to benefit his company:

Wyss' other foundation, the Hansjörg Wyss Foundation, had about $172 million in assets and gave away $4.9 million in 2007. It focuses mostly on education and training of surgeons, according to the AO Foundation, a Swiss research group with ties to Synthes and Wyss.

By funding research and training, Synthes has forged tight relationships with surgeons. The U.S. Attorney's Office alleges that the company paid for trips to educational seminars in San Diego and Charlotte, N.C., where surgeons learned to use Norian in the spine.

Marketing Over Research

This emphasis on education that actually seems to partake of company marketing is also displayed by Synthes itself.  Per the company's 2008 Annual Report, the company runs a "residency program,"

The Synthes Resident Program was originally released in the United States in 2007 by Synthes Trauma. It was first developed to train orthopaedic trauma surgical residents and consists of both online training modules and locally offered workshops.

In 2008, the Synthes Resident Program was expanded to a selection of European countries with modifications for the needs of specific areas and markets. Furthermore it is now also being offered by Synthes Spine and Synthes CM.

This program has achieved remarkable popularity, or should we say "market penetrance?"

The Synthes Resident Program has been well accepted in the U.S., with more than 90% of all U.S. orthopedic residents having utilized the program.

The company also offers an "Enhanced Surgeon Education Program," and support's the AO Foundation's educational activities.

On the other hand, the financial summary provided in the report suggests that research is not what the company emphasizes.  Its 2008 operating expenses included $943.3 million in sales and promotion, $349.4 million in general and administrative, and only $169.9 million in research and development, only 11.6% of total operating expenses.

And if you like the report's verbiage about education, you will also appreciate its full page section on "Integrity," which includes the header:

Corporate Citizenship. Acting with Integrity. Acting ethically and respectfully is a cornerstone of our business. At Synthes we are committed to responding to the challenges in our business by operating in accordance with the highest levels of professional and ethical standards in our industry. Simply put, we must always act with integrity.

It also boasts:

Our commitment to abide by the rules and regulations applies throughout Synthes, to all countries and to all employees, and to all our business partners.

Acting ethically is highly important for Synthes. Our actions create our
reputation. Our good reputation is an integral part of our Synthes brand,
and an essential element of our continued success.

And finally asserts:

Our effort to operate with the utmost integrity begins with the commitment of our Board of Directors and senior managers. [italics added for emphasis]  Our managers are role models for our employees, and lead our efforts to build and to promote a culture that encourages positive ethical conduct and that demonstrates commitment to compliance with the law.

Those four now admitted guilty top executives certainly were excellent role models. Even better was "Person No. 7," the current board chairman and former CEO.

Summary

So here we have all the elements: guilty pleas by top executives in connection with a human experiment whose nature was concealed from patients; allegations about but no charges against a fabulously wealthy company leader; a company that promotes what appears to be marketing in the guise of education; a tremendously profitable company which spends most of its money on marketing, not research; a company that boasts of its integrity and how its leaders are "role models," even as some have pleaded guilty to crimes; and despite the worldwide reach of the company and its products, no national coverage of any of this, the anechoic effect redux.

We have, not only in the US, but in other developed countries (for example, Switzerland, in which Synthes is based), and globally, health care based on marketing and hype, on deception and conflicts of interest, and on making a few privileged insiders fabulously wealthy.  Here is the essence of our health care dysfunction, and the inflating health care bubble.  When would be health care reformer stop arguing about insurance coverage, perhapds they can then pay some attention to these major reasons why health care is so expensive, inaccessible, and often does so little good for patients. 

PS - Earlier this year, we commented on the make-up of the Board of Trustees of the prestigious Hospital for Special Surgery in New York, which seemed split mainly among leaders of finance, including such troubled corporations that contributed to the global financial meltdown as Bank of America, AIG, Citigroup, and Wachovia, and orthopedic surgeons with ties to device makers.  One of the latter was Dr David Helfet, who listed his memberships on advisory boards for OHK Medical Devices Inc, Healthpoint Capital, and Orthobond Corp.  Just to add to the whiffs of lack of full disclosure surrounding this case, Dr Helfet still does not disclose on the hospital web-site that he is on the Board of Directors of Synthes.

Note (added 14 December, 2009) - Per comment below, the Vice President of Corporate Compliance and Internal Audit at the Hospital for Special Surgery claimed that an administrative error, not failure of disclosure by Dr Helfet, lead to the omission of the information about his membership on the Synthes board from the Hospital's web-site.

Synthes Indicted

Last month, we posted about a legal settlement in which device manufacturer Synthes agreed to stop creating conflicts of interests by paying physicians who performed its trials with company stock. Synthes is back in the news, and not in favorable terms. As reported by the Philadelphia Inquirer,

A Swiss company with major operations in West Chester illegally tested its bone cement on about 200 people, three of whom died, according to a 52-count indictment issued yesterday by the U.S. attorney in Philadelphia.

Synthes Inc., a producer of orthopedic products that employs about 1,400 in Chester County, did not tell any of the patients that they were participating in experimental surgeries, the indictment said.

Federal prosecutors also accused Synthes executives of lying to the U.S. Food and Drug Administration about whether they had tested the product for uses that the agency had not approved.

Particularly striking were allegations that the company's CEO was directly involved in the decisions.

The FDA had approved Norian XR to fill bony voids or defects in some parts of the body, but not in the spine. The agency insisted that Synthes conduct clinical trials, which are lengthy and expensive and require FDA oversight, if it wanted to expand the uses of Norian XR to treat spinal fractures.

But, a company executive identified in the indictment as 'Person No. 7' decided not to conduct clinical trials. Instead, the person said the company should 'get a few sites to perform 60-80 procedures and help them publish their clinical results,' according to the indictment.

The report never explicitly identifies 'Person No. 7,' but says he was the chief executive officer and a large shareholder. A company spokesman identified Hansjörg Wyss as the CEO while the tests occurred.

Forbes Magazine lists Wyss, a Swiss citizen, as a West Chester resident and the Philadelphia area's wealthiest person, with a net worth of $5.7 billion. Last year, Wyss gave the largest amount from a single source in Harvard University's history when he donated $125 million to create a bio-engineering institute.

Wyss owns about 40 percent of outstanding Synthes stock. The company, which had about $805 million in first-quarter sales this year, specializes in orthopedic devices, including plates and screws.

The Inquirer article included more detail about how the company allegedly disregarded risks to patients as it pushed the surgeons to try Norian XR on them, without disclosing that its use was experimental,

Instead of conducting trials with FDA oversight, Synthes executives convinced about 50 surgeons to test Norian XR in people with spinal fractures. Synthes sales representatives often were in the operating room during the surgeries, including those where patients died, prosecutors said.

When company executives began these surgical tests in 2002, they knew that Norian XR caused blood clots in test tubes and that clots became lodged in the lungs in tests with pigs, the indictment said.

Synthes continued the experimental surgeries even after two patients died on the operating table, prosecutors said. The company stopped the tests after a third patient died in January 2004.

Again, it seems that the current leaders of health care all too often put more priority on personal profits than on protecting patients' health and safety. So instead of all the talk about reforming how health care is financed, maybe the conversation should be about reforming how health care is lead, and finding ethical, honest leaders who put patients' welfare ahead of their own wealth.

Synthes Settles, Agrees to Stop Giving Stock to Physicians Conducting Clinical Trials

Again, 'tis the season for legal settlements. From the Newark Star-Ledger,

New Jersey and Pennsylvania-based medical company Synthes reached a settlement today over the company's alleged financial conflicts of interest, which officials are calling a landmark deal, state officials announced today.

The attorney general's office launched an investigation early 2008 into Synthes, which produces devices for treating spinal trauma, to determine whether physicians were financially benefiting from conducting clinical trials on the company's products. Under the agreement, Synthes will no longer pay trial physicians with company stock and must disclose all payments to the physicians and whether the physicians have a financial stake in the outcome of the trial.

Attorney General Anne Milgram, who said such provisions were the first of their kind, said conflicts of interest are common within the medical community.

'It is outrageous that doctors who are testing and, in many cases, recommending the use of certain high-risk medical devices are being compensated with stock in the very companies that make the devices,' said Milgram. 'All patients -- but especially those considering high-risk devices such as spinal disc replacements -- deserve honest, objective clinical trial information about the products available.'

She also criticized the Food and Drug Administration, saying the federal agency was not vigilant enough in regulating Synthes, a $3.2 billion global company.

'Medical device makers have a duty to make certain that clinical trial results are accurate and unbiased,' Milgram said. 'In creating these financial incentives for doctors, Synthes and the rest of the industry have done the exact opposite. Going forward, if the industry will not address this problem voluntarily, we most certainly will.'

What will they think of next? We have seen plenty of cases in which physicians have been given payments that could influence their clinical decision making by companies with products or services to sell. Often, such payments are not disclosed. This is one of the few times I have seen physicians other than those on corporate boards, however, receiving payments in company stock. This would seem to be a new low. It surely would provide a more powerful incentive to make the studies' results favor the company's products than would mere cash payments. At least the settlement will stop this practice, and force disclosure of company payments.

The statements by the state Attorney General were particularly and admirably direct.

However, once again we see some familiar patterns. While human beings authorized or committed the acts that got the organization in trouble, rarely do these people seem to suffer any negative consequences. At most, the organization may pay a fine. In this case, the fine was, in corporate terms, tiny. However, even a large fine, however, may come out of dividends or the stock price, dispersing the cost to stock-holders, or out of salaries across the board. Thus, those who got the organization into trouble are unlikely to feel pain from it. Perhaps because of reverence for all organizations related to health care, and fear that the bankruptcy of any health care organization, even a health care insurance company, will leave patients in the lurch, prosecutors do not seem inclined to actually prosecute such organizations. The net effect, though, seems to be that dishonest executives of health care organizations can continue to act with impunity.Until bad leadership of health care organizations leads to negative consequences for those practicing it, health care leadership can be expected to continuously degrade.

ADDENDUM (6 May, 2009) - See also comments by Merrill Goozner on GoozNews blog.