Since 2007, we have been writing about the secretive RUC (RBRVS Update Committee), the private AMA committee that somehow has managed to get effective control over how Medicare pays physicians. The RUC has been accused of setting up incentives that strongly favor invasive, high technology procedures while disfavoring primary care and other "cognitive medicine." Despite the central role of (perverse) incentives in raising health care costs while limiting access and degrading quality, there was surprisingly little discussion about the pivotal role played by the RUC until the formation of the "Replace the RUC" movement (see post here).
Recently, the leaders of Replace the RUC scored a journalistic coup by putting the current list of RUC members publicly on-line. As we have discussed, previously the membership of this committee was kept very obscure, although the committee argued it was not exactly secret.
Some Google searching suggests one possible reason that the RUC was in no hurry to disclose its own membership. It appears that many of the RUC members have significant conflicts of interest with respect to their roles as de facto setters of the rates at which physicians are paid by the government.
The RUC Members and Their Financial Relationships
Below is the list of the current RUC membership (from this link), and relevant conflicts of interest obtained by Google searching. Note that for each member, I first give the name, affiliation relevant to the RUC, location, and first year of membership as provided by the link above. Then I list relevant financial relationships that appear to present conflicts of interest.
- Barbara Levy, MD
Chair, RVS Update Committee
Federal Way, WA 2000
Consultant/Advisory Boards: Conceptus; AMS; Covidien; Halt Medical; Gynesonics; Idoman Medical (hysteroscopic surgery and sterilization, endometrial ablation, electrosurgery, vaginal hysterectomy) per UptoDate
- Bibb Allen, Jr., MD
American College of Radiology (ACR)
Birmingham, AL 2006
- Michael D. Bishop, MD
American College of Emergency Physicians (ACEP)
Bloomington, IN 2003
- James Blankenship, MD
American College of Cardiology (ACC)
Danville, PA 2000
Lecture fees from Sanofi-Aventis per New England Journal of Medicine
- Robert Dale Blasier, MD
American Academy of Orthopaedic Surgeons (AAOS)
Little Rock, AK 2008
- Joel Bradley, MD
American Academy of Pediatrics (AAP)
Brentwood, TN 2008
Medical Director, Americhoice by UnitedHealthcare, per AAP conference brochure
- Ronald Burd, MD
American Psychiatric Association (APA)
Fargo, ND 2006
- William F. Gee, MD
American Urological Association (AUA)
Lexington, KY 2010
Member, Physician Advisory Board, Aetna per Aetna
- John O. Gage, MD
American College of Surgeons (ACS)
Pensacola, FL 1991
- David F. Hitzeman, DO
American Osteopathic Association (AOA)
Tulsa, OK 1996
- Peter A. Hollmann, MD
CPT Editorial Panel (AMA/CPT)
Providence, RI 2003
Medical Director, Blue Cross and Blue Shield of Rhode Island, per RI Medical Society
- Charles F. Koopmann, Jr., MD
American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS)
Ann Arbor, MI 1996
- Robert Kossmann, MD
Renal Physicians Association (RPA)
Santa Fe, NM 2009
Member of Advanced Renal Technologies Advisory Board, Network 15 Medical Advisory Board, Baxter Home Dialysis Advisory Board, Fresenius Medical Advisory Board per Renal Physicians Association
- Walter Larimore, MD
American Academy of Family Physicians (AAFP)
Colorado Springs, CO 2009
- Brenda Lewis, DO
American Society of Anesthesiologists (ASA)
Cleveland, OH 2009
- J. Leonard Lichtenfeld, MD
American College of Physicians (ACP)
Atlanta, GA 1994
Member, Physician Advisory Board, Aetna per Aetna
- Scott Manaker, MD, PhD
American College of Chest Physicians (ACCP)
Philadelphia, PA 2010
Consultant to Pfizer and Johnson and Johnson. Owns stock in Neose Technologies, Pfizer, Johnson & Johnson, and Rohm and Haas per Chest
- Bill Moran, MD
Practice Expense Review Committee
Oklahoma City, OK 2000
- Guy Orangio, MD
American Society of Colon & Rectal Surgeons (ASCRS)
Atlanta, GA 2009
- Gregory Przybylski, MD
American Association of Neurological Surgeons (AANS)
Edison, NJ 2001
Stock Ownership: United Healthcare (300 shares); ... Scientific Advisory Board: United Health Group (B, Spine Advisory Board) per NASS meeting
- Marc Raphaelson, MD
American Academy of Neurology (AAN)
Leesburg, VA 2009
personal compensation for activities with Jazz Pharmaceuticals and Medtronics as a speakers bureau member or consultant per AAN
- Sandra Reed, MD
American College of Obstetricians and Gynecologists (ACOG)
Thomasville, GA 2009
GlaxoSmithKline Consulting, $1750 in 2009, $1500 in 2010 per ProPublica Dollars for Docs search through here
- Daniel Mark Siegel, MD
American Academy of Dermatology (AAD)
Brooklyn, NY 2003
Vivacare Dermatology Advisory Board, 2006 – present. Photomedex Scientific Advisory Board, 2006-present, Ad Hoc consultant to ClickDiagnostics, per Encite CV
DermFirst-Shareholder, Logical Image – Consultant, Vivacare - Consultant per MOHS Surgery
- Lloyd S. Smith, DPM
Health Care Professionals Advisory Committee
Bethesda, MD 2007
- Peter Smith, MD
Society of Thoracic Surgeons (STS)
Durham, NC 2006
Eli Lilly, Consulting, $1500 in 2009, $1990 in 2010 per Pro Publica Dollars for Docs search through here
Advisor or consultant to Bayer per Medscape
- Susan Spires, MD
College of American Pathologists (CAP)
Lexington, KY 2007
- Arthur Traugott, MD
American Medical Association (AMA)
Champaign, IL 2006
- James Waldorf, MD
American Society of Plastic Surgeons (ASPS)
Jacksonville, FL 2008
- George Williams, MD
American Academy of Ophthalmology (AAO)
Royal Oak, MI 2009
Advisory Team, RetroSense Therapeutics
Shareholder and consultant for ThromboGenics Ltd. and holds intellectual property on the use of plasmin per Review of Opthamology
Alcon Laboratories, consultant, lecturer; Allergan, consultant, lecturer; Macusight, consultant, equity owner; Neurotech, consultant; Nu-Vue Technologies, equity owner, patent/ royalties; OMIC- Ophthalmic Mutual Insurance Company, employee; Optimedica, consultant, equity owner; Thrombogenics, consultant, equity owner per AAO meeting
Pfizer, “Professional Advising,” $5534 in 2009 per Pro Publica Dollars for Docs search through here
Summary
There you have it. A substantial proportion, almost half, 14 of 29 members of the RUC have financial relationships with pharmaceutical companies, biotechnology companies, device companies, companies that directly provide health care, and health care insurance companies.
As we have noted in our previous discussions of the RUC, that committee has been accused of being the de facto controller of how the US government pays physicians. In that role, it has been accused of favoring procedural care rather than cognitive or primary care by increasing the relative financial incentives for the former over the latter. This may be one of the most important reasons for the expensive, high-technology, procedural-heavy style of care in the US, which has likely been a major driver for increasing costs, declining access and stagnant quality.
It seemed obvious that a committee dominated by a majority of physicians who perform procedures would tend to favor bigger financial incentives for procedures. But now it appears the committee also includes a substantial number of people who work part-time or have ownership interests in companies that also stand to benefit from increasing use of procedures. Procedures drive increased consumption of drugs, supplies and devices, and lead to larger revenue for hospitals and clinics. Thus these financial relationships could reasonably be suspected of even further distorting the committee's decision-making in favor of procedures.
I was surprised how many RUC members have financial ties to health care insurance companies. Such companies are not usually thought of as beneficiaries of high-technology, procedural care. However, if one conceives of their revenue as a percentage of health care costs, perhaps they are. Furthermore, one can only wonder if the links between the RUC and health care insurance companies have anything to do with how such companies have apparently unquestioningly adapted the RBRVS system controlled by the RUC?
The prevalence of conflicts of interest among RUC members highlight the need for a more accountable, transparent and honest system to manage how the government pays physicians, and a need for more transparency and accountability in the relationship among the government, health care insurance, and physicians.
As we have previously noted, there are still many unanswered questions about the RUC:
- How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry.
- Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC?
- How did the RUC become de facto in charge of this process?
- Why does the AMA [keep the membership of the RUC so opaque, and] give no input into the RUC process to its general membership?
- Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers?
- Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures?
Stay tuned, maybe these will be answered in our life-times....
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Those Big Doors Keep Revolving
A few months ago, we discussed the revolving door that seems to connect US government leadership positions and leadership positions of commercial health care firms. There are other such revolving doors, like two recently discovered just north of here.
State Government to For-Profit Hospitals
As reported by the Boston Herald:
Furthermore,
Note that we have previously discussed the Steward Health Care System, the new name given to the Caritas Christi system after it was bought out by private equity firm Cerberus Capital Management. Steward's aggressive plan to stamp out "leakage" raised concerns that the new movement to make practicing physicians employees could push them to do what is best for the company's bottom line rather than for patients.
We previously suggested that deals that turn previously non-profit health systems and physicians' practices into for-profit corporations deserve considerable scrutiny. After Caritas became Steward, state government officials promised close oversight. Now Steward has acquired a new executive who has friends in state government.
Non-Profit Health Insurance/ Managed Care by Way of a Political Campaign to Health Care Venture Capital
This story also came from the Boston Herald:
In addition,
Note that managed care was originally touted as a way to control health care costs, and that the commercial health care insurance companies/ managed care organizations claim to be doing all they can to control costs. Such a focus on cost control would imply that they ought to be able to vigorously negotiate at arms' length with health care providers and drug and device companies. Now some device companies have acquired a new venture capital overseer who has friends in insurance and managed care.
Summary
Not only are there revolving doors connecting the national government and large commercial health firms, but also connecting state government and regional hospital systems, and non-profit health care insurers/ managed care organizations and device companies.
This is just some more evidence that people in the leadership of large health care organizations have more in common with each other, even if their organizations are supposed to be competing or negotiating at arms length, than they have with patients, clients, customers and the public at large.
The various revolving doors appear not to align the interests of leaders of health care organizations with their organizations' stated missions, or with promoting the health of patients. To truly reform health care, we need to expose these doors to more sunlight, and then think about retarding their spin or even locking them in place.
State Government to For-Profit Hospitals
As reported by the Boston Herald:
David Morales, a longtime trusted adviser to [Massachusetts] Gov. Deval Patrick, became the latest official to leave the administration as he stepped down from a top health-care post for a private sector gig.
Morales resigned abruptly yesterday to take a position with Steward Health Care System.
Furthermore,
Morales worked as a top adviser during the governor’s first term before taking a $128,000-a-year post in 2009 as commissioner of the Division of Health Care Finance and Policy. His resignation was effective yesterday.
Note that we have previously discussed the Steward Health Care System, the new name given to the Caritas Christi system after it was bought out by private equity firm Cerberus Capital Management. Steward's aggressive plan to stamp out "leakage" raised concerns that the new movement to make practicing physicians employees could push them to do what is best for the company's bottom line rather than for patients.
We previously suggested that deals that turn previously non-profit health systems and physicians' practices into for-profit corporations deserve considerable scrutiny. After Caritas became Steward, state government officials promised close oversight. Now Steward has acquired a new executive who has friends in state government.
Non-Profit Health Insurance/ Managed Care by Way of a Political Campaign to Health Care Venture Capital
This story also came from the Boston Herald:
Four months after his failed Massachusetts gubernatorial bid, Charlie Baker has landed a private-sector job at a Cambridge venture capital firm.
The former Harvard Pilgrim Health Care CEO is now an 'executive in residence' for General Catalyst Partners. He’ll focus on working with small and midsize health-care services companies for the VC firm, which has $1.7 billion under management across five funds.
In addition,
Health-related companies already in General Catalyst’s portfolio include iWalk, a Cambridge developer of orthotic and prosthetic devices, and North Carolina-based TearScience, which specializes in diagnostic and treatment devices for evaporative dry eye in addition to several still in stealth mode.
Note that managed care was originally touted as a way to control health care costs, and that the commercial health care insurance companies/ managed care organizations claim to be doing all they can to control costs. Such a focus on cost control would imply that they ought to be able to vigorously negotiate at arms' length with health care providers and drug and device companies. Now some device companies have acquired a new venture capital overseer who has friends in insurance and managed care.
Summary
Not only are there revolving doors connecting the national government and large commercial health firms, but also connecting state government and regional hospital systems, and non-profit health care insurers/ managed care organizations and device companies.
This is just some more evidence that people in the leadership of large health care organizations have more in common with each other, even if their organizations are supposed to be competing or negotiating at arms length, than they have with patients, clients, customers and the public at large.
The various revolving doors appear not to align the interests of leaders of health care organizations with their organizations' stated missions, or with promoting the health of patients. To truly reform health care, we need to expose these doors to more sunlight, and then think about retarding their spin or even locking them in place.
Why Would Directors of Health Care Corporations Push for Bigger Pensions for Academic Administrators?
We recently posted about 36 well-paid top executives in the University of California system, including leaders of medical schools, academic medical centers, and public health, who threatened a lawsuit if their pensions were not increased according to what they claim was a promise made to them in 1999.
Riddle me this: why would a group of directors of for-profit corporations that provide health care goods and services. plus a director of a leading biotechnology trade group, and the director of a leading mutual fund family band together to support this demand, thus to push for bigger pensions for these top managers of the University of California system?
Here is a list of the directors, and their corporations:
- Mark R Laret, director of Varian Medical Systems and Nuance Communications Inc, which provides numerous health care products
- Dr David Feinberg, director of OSI Systems, whose Spacelabs Healthcare subsidiary manufactures medical devices
- Steven C Currall, director of Leadership in Medicine Inc, which claims to be a leading provider of intelligence about key opinion leaders (KOLs) in medicine and health care. Its web-site asserts, "IF YOU NEED TO KNOW who are the most prominent, admired, and influential actors in healthcare, how they are interconnected, and why, you need our expertise. Given how vastly complex are the relationships among providers, researchers, and other significant actors in healthcare, it is vital to focus on key opinion leaders (KOLs) at local, regional, and global levels, and to understand the ties among them." (Note that we have often discussed how KOLs function as stealth marketers for pharmaceuticals and devices.)
They joined:
- Robert S Sullivan, PhD - director of BIOCOM, whose web-site asserts it is the" largest regional life science association in the world, representing more than 550 member companies in Southern California."
- Richard K Lyons, director of iShares, a leading provider of mutual funds.
The answer is simple. All the corporate directors listed above are also members of the group of 36 litigious executives. See their name on the list of 36 here in the San Francisco Chronicle.
- Mark R Laret, director of Varian Medical Systems and Nuance Communications Inc, which provides numerous health care products, is also CEO of UCSF Medical Center.
- Dr David Feinberg, director of OSI Systems, whose Spacelabs Healthcare subsidiary manufactures medical devices, is also CEO of the UCLA Hospital System
- Steven C Currall, director of Leadership in Medicine Inc, which claims to be a leading provider of intelligence about key opinion leaders (KOLs) in medicine and health care, is also Dean, and Professor of Management of the University of California - Davis Graduate School of Management.
Robert S Sullivan, PhD - director of BIOCOM, whose web-site asserts it is the" largest regional life science association in the world, representing more than 550 member companies in Southern California, is also Dean of the University of California - San Diego Rady School of Management.
- Richard K Lyons, director of iShares, a leading provider of mutual funds, is also Bank of America Dean and Professor of Business, University of California - Berkeley Haas School of Business.
Their inclusion within the larger group seems ironic, at best. As corporate directors, they have outside income and have accumulated assets that will likely keep them out of poverty in their old age. For example, Mr Laret had accumulated the equivalent of 37,168 shares of Varian, and was paid $267,300 a year for his services according to the company's 2010 proxy statement.
Furthermore, for those who directly lead health care institutions, Mr Laret and Dr Feinberg, their memberships on the boards of health care corporations, which imply fiduciary responsibilities to the companies and their stock-holders, conflict with their duties as leaders of academic health care to uphold teaching, research and patient care. Dean Currall's responsibilities to an organization which seems entirely dedicated to helping drug, device, and biotechnology companies turn health care professionals and academics into stealth marketers at least seems unseemly given that his school is part of a university which also includes a medical school and academic medical center.
Since our earlier post, it appears that the University of California president will not accede to the demands of the 36, as noted in the San Francisco Chronicle. Their demands have continued to provoke outrage. A recent discussion in Inside Higher Ed interviewed Emeritus Professor Helen Henry, a member of the University's Academic Senate, who posited:
Five of the university leaders demanding higher pensions for themselves have responsibilities as directors of corporations that may conflict with their academic institutions' missions, while these corporate positions ought to insulate them from financial concerns about their retirement. This corroborates Prof Henry's notion that they see themselves as businesspeople whose role is separate from, and not necessarily supportive of the university mission.
I disagree, however, with Prof Henry's implication that the University has to live with such a split among its leadership. People who lead academic institutions have a primary responsibility to support the academic mission. Their goals should not be to maximize profits, much less to enrich themselves. Letting academia, and academic medicine be lead by leaders out to make money and line their own pockets will lead to just that, but hardly better teaching, research, and patient care.
Riddle me this: why would a group of directors of for-profit corporations that provide health care goods and services. plus a director of a leading biotechnology trade group, and the director of a leading mutual fund family band together to support this demand, thus to push for bigger pensions for these top managers of the University of California system?
Here is a list of the directors, and their corporations:
- Mark R Laret, director of Varian Medical Systems and Nuance Communications Inc, which provides numerous health care products
- Dr David Feinberg, director of OSI Systems, whose Spacelabs Healthcare subsidiary manufactures medical devices
- Steven C Currall, director of Leadership in Medicine Inc, which claims to be a leading provider of intelligence about key opinion leaders (KOLs) in medicine and health care. Its web-site asserts, "IF YOU NEED TO KNOW who are the most prominent, admired, and influential actors in healthcare, how they are interconnected, and why, you need our expertise. Given how vastly complex are the relationships among providers, researchers, and other significant actors in healthcare, it is vital to focus on key opinion leaders (KOLs) at local, regional, and global levels, and to understand the ties among them." (Note that we have often discussed how KOLs function as stealth marketers for pharmaceuticals and devices.)
They joined:
- Robert S Sullivan, PhD - director of BIOCOM, whose web-site asserts it is the" largest regional life science association in the world, representing more than 550 member companies in Southern California."
- Richard K Lyons, director of iShares, a leading provider of mutual funds.
The answer is simple. All the corporate directors listed above are also members of the group of 36 litigious executives. See their name on the list of 36 here in the San Francisco Chronicle.
- Mark R Laret, director of Varian Medical Systems and Nuance Communications Inc, which provides numerous health care products, is also CEO of UCSF Medical Center.
- Dr David Feinberg, director of OSI Systems, whose Spacelabs Healthcare subsidiary manufactures medical devices, is also CEO of the UCLA Hospital System
- Steven C Currall, director of Leadership in Medicine Inc, which claims to be a leading provider of intelligence about key opinion leaders (KOLs) in medicine and health care, is also Dean, and Professor of Management of the University of California - Davis Graduate School of Management.
Robert S Sullivan, PhD - director of BIOCOM, whose web-site asserts it is the" largest regional life science association in the world, representing more than 550 member companies in Southern California, is also Dean of the University of California - San Diego Rady School of Management.
- Richard K Lyons, director of iShares, a leading provider of mutual funds, is also Bank of America Dean and Professor of Business, University of California - Berkeley Haas School of Business.
Their inclusion within the larger group seems ironic, at best. As corporate directors, they have outside income and have accumulated assets that will likely keep them out of poverty in their old age. For example, Mr Laret had accumulated the equivalent of 37,168 shares of Varian, and was paid $267,300 a year for his services according to the company's 2010 proxy statement.
Furthermore, for those who directly lead health care institutions, Mr Laret and Dr Feinberg, their memberships on the boards of health care corporations, which imply fiduciary responsibilities to the companies and their stock-holders, conflict with their duties as leaders of academic health care to uphold teaching, research and patient care. Dean Currall's responsibilities to an organization which seems entirely dedicated to helping drug, device, and biotechnology companies turn health care professionals and academics into stealth marketers at least seems unseemly given that his school is part of a university which also includes a medical school and academic medical center.
Since our earlier post, it appears that the University of California president will not accede to the demands of the 36, as noted in the San Francisco Chronicle. Their demands have continued to provoke outrage. A recent discussion in Inside Higher Ed interviewed Emeritus Professor Helen Henry, a member of the University's Academic Senate, who posited:
the debate as part of a fundamental philosophical disagreement within the university. The signatories to the letter, many of whom are based in medicine or management, have a different view of the university than faculty from other disciplines, she said.
'I don’t think there’s any question but that there are these two different mindsets that are fighting for what the university should be. It’s transparent in this letter,' said Henry, a professor emeritus of biochemistry at the Riverside campus. 'They are running businesses. But there are those of us that don’t feel this is what the university should be.'
'This is absolutely a manifestation of that clash between the people who see UC as their business … and the people who see UC’s mission as teaching, and research and service to the state. That’s a dual personality that the university always has to live with.'
Five of the university leaders demanding higher pensions for themselves have responsibilities as directors of corporations that may conflict with their academic institutions' missions, while these corporate positions ought to insulate them from financial concerns about their retirement. This corroborates Prof Henry's notion that they see themselves as businesspeople whose role is separate from, and not necessarily supportive of the university mission.
I disagree, however, with Prof Henry's implication that the University has to live with such a split among its leadership. People who lead academic institutions have a primary responsibility to support the academic mission. Their goals should not be to maximize profits, much less to enrich themselves. Letting academia, and academic medicine be lead by leaders out to make money and line their own pockets will lead to just that, but hardly better teaching, research, and patient care.
The Boards Who Ought to be Accountable for the Misbehavior of Health Care Corporations
I recently posted about the multiple conflicts of interest affecting a university health sciences leader. While he was supposed to be running a medical school and an academic medical center, he was also responsible for the stewardship, as a board member, of three health major health care corporations, and a food and beverage corporation (whose products have bearing on nutrition and public health.) .
This one case suggested how pervasive are conflicts of interest affecting the people at the top of health care leadership in the US, and also how such conflicts may be associated with problems for all the organizations involved. The story originally came to my attention because students were demonstrating against the lavish compensation given the health sciences leader at a time of university cutbacks, suggesting that university leaders were paying more attention to their own enrichment than to the mission of the university. At the same time, one of the corporations which he was stewarding (Genzyme) had to shut down a factory because the extremely expensive drug it was producing was found to be impure and adulterated, while its CEO continued to be compensated lavishly. The other corporation (Medtronic) had to settle litigation accusing it of manufacturing defective products for hundreds of millions of dollars, while its CEO again continued to be compensated lavishly.
So I thought it might be interesting to see who are the other stewards of these troubled corporations. I consulted the official biographies of their board members from their 2010 proxy statements (Genzyme here, Medtronic here). I looked for board members who also held leadership positions in other health care organizations whose interests may not be aligned with the two corporations of interest. I also looked for those who held leadership positions in the discredited financial services corporation who helped usher in the global financial collapse.
The specifics of what I found follow.
Genzyme
Genzyme had 10 directors in 2010. The following directors had relationships of interest:
- Douglas A Berthiaume is "Chairman of the Children's Hospital (Boston) Trust Board, a member of the Children's Hospital board of trustees, and a Trustee of the University of Massachusetts Amherst Foundation." Children's Hospital is a teaching hospital. The University of Massachusetts includes a medical school.
- Robert J Bertolini "retired from Schering-Plough Corp following its merger with Merck & Co in November, 2009." Schering-Plough was a large pharmaceutical company now combined with Merck to form an even larger company.
- Gail K Boudreaux "has served since May 2008 as an Executive Vice President of United Health Group Incorporated." Also, "she serves on the board of directors of America's Health Insurance Plans...." UnitedHealth is one of the US' largest health insurance/ managed care corporations. Incidentally,it has frequently misbehaved, as can be seen in this set of posts. AHIP is the health insurance corporations' trade associations.
- Robert J Carpenter "is Chairman of Hydra Biosciences Inc... He is also a trustee of the Immune Disease Institute, a non-profit institute affiliated with Children's Hospital in Boston...."
- Charles L Cooney "is a director of India-based Biocon Limited, a biotechnology healthcare company."
- Victor J Dzau MD (discussed in the earlier post) is "Chancellor for Health Affairs and President and Chief Executive Officer of Duke University Health System...." He "sits on the board of directors of Pepsico Inc, Anylam Inc, Medtronic Inc, and the Duke University Health System."
- Senator Connie Mack III is "Chairman Emeritus of the parent board of the H. Lee Moffitt Cancer Center and Research Institute...." He also is director of "EXACT Sciences Corporation and Moody's Corp." EXACT Sciences is a biotechnology company that develops diagnostic test technology. Moody's Corp is a financial ratings agency whose lax ratings of financial derivatives, perhaps arising from conflicts of interest produced by payments from the producers of the derivatives, have been implicated as a major cause of the global financial collapse.
- Richard E Syron was from "January 2004 to September 8, 2008 ... Chairman and Chief Executive Officer of the Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac...." Freddie Mac as bailed out and taken over by the US government when he departed, or was forced out. Freddie Mac, was a "government-sponsored enterprise," (GSE) one of another group of companies whose enthusiastic participation in securitizing dubious mortgages was implicated as a major cause of the global financial collapse.
- Henri A Termeer (CEO of Genzyme) is a "director of Massachusetts General Hospital, a board member of Partners HealthCare, and a member of the board of fellows of Harvard Medical School."
So the box score for Genzyme's 10 directors: six have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Seven have leadership positions in other drug, device or biotechnology corporations. One have leadership positions in health insurance/ managed care corporations. Two had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.
Medtronic
Medtronic had 11 directors in 2010. The following directors had relationships of interest:
- Richard H Anderson "was Executive Vice President of UnitedHealth Group Incorporated." As above, UnitedHealth is a health insurance/ managed care corporation.
- Victor J Dzau (see above) is "Chancellor for Health Affairs at Duke University and President and Chief Executive Officer of the Duke University Health System." He is "a director of Alnylam Pharmaceuticals Inc, ... PepsiCo Inc, and Genzyme Corporation." (See discussion above.)
- James T Lenahan "served as President of Johnson & Johnson from 2002 until June 2004...." He is "director of Telecris Biotherapeutics Inc, Alton Pharma Inc and Imacor Inc." Johnson & Johnson is a large drug, device, and biotechnology company. Telecris, and Alton Pharma are biotechnology pharmaceutical companies. Imacor is a medical device company.
- Denise M O'Leary "is a director of Lucille Packard Children's Hospital and Stanford Hospitals and Clinics." Also, "she was a member of the Stanford University Board of Trustees from 1996 through 2006, where she chaired the Committee of the Medical Center...."
- Robert C Pozen is "an advisor to Gelesis Inc." Gelesis is a biotechnology company.
- Jack W Schuler "has been a director of Stericycle Inc since March 1990...." He is a "director of Quidel Corporation and Elan Corporation plc...." Stericycle company disposes of medical waste, including that produced by medical devices. Quidel is a biotechnology and (medical diagnostic) device company. Elan is an multinational biotechnology and pharmaceutical company.
So the box score for Genzyme's 11 directors is: Two have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Ten have leadership positions in other drug, device or biotechnology corporations. One has a leadership position in health insurance/ managed care corporations. None had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.
Summary
Just to summarize the sorts of conflicting interests these relationships suggest.
Teaching hospitals and medical schools are supposed to provide unbiased teaching, including about issues relevant to drug and device corporations, such as choice of diagnostic strategies and treatments, and relevant health policy. They are supposed to perform unbiased research, including research that evaluates drugs and devices. They are supposed to provide the best possible patient care at a reasonable cost, which relates to choices of and prices paid for drugs and devices.
Other drug, device, and biotechnology corporations may be producing, or developing products that compete with those of the index corporations.
Health insurance companies ostensibly try to control costs and improve quality in part by reducing excess utilization and bargaining down prices of drugs and devices.
So this limited case study of the boards of directors, that is, the ostensible stewards of two health care corporations, selected because they have a common member who is the leader of a large medical school and academic medical center, and which both have histories of poor management or ethical missteps showed - that the leadership of health care organizations is incredibly interrelated, interlocked, incestuous.
This gave an example of how pervasive are the conflicts of interest that affect all kinds of health care organizations. Companies that ought to be competing have interlocked directors. Companies that ought to be negotiating at arms length have interlocked directors. Not-for-profit academic medical institutions have leaders who are also directors of companies whose drugs their patients may take, whose devices their patients may receive, whose insurance their patients may buy, and whose products and services they may teach about and evaluate through clinical research and policy research.
This also gives an example of how the failed culture of finance may be linked to the culture of medicine and health care. Some of the stewards of health care organizations were also the stewards of financial services corporations whose reckless, if not arrogant, greedy and amoral leadership is widely believed to have caused the global financial collapse and our ongoing economic problems.
Finally, this suggests how top leaders of various health care organizations may be more familiar with and identify more with each other than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients.
What is to be done?
I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships. A few bloggers cannot do it all. Obviously, the anechoic effect mitigates against medical and health care academics looking into their own leaders. However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience.
Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.
If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.
This one case suggested how pervasive are conflicts of interest affecting the people at the top of health care leadership in the US, and also how such conflicts may be associated with problems for all the organizations involved. The story originally came to my attention because students were demonstrating against the lavish compensation given the health sciences leader at a time of university cutbacks, suggesting that university leaders were paying more attention to their own enrichment than to the mission of the university. At the same time, one of the corporations which he was stewarding (Genzyme) had to shut down a factory because the extremely expensive drug it was producing was found to be impure and adulterated, while its CEO continued to be compensated lavishly. The other corporation (Medtronic) had to settle litigation accusing it of manufacturing defective products for hundreds of millions of dollars, while its CEO again continued to be compensated lavishly.
So I thought it might be interesting to see who are the other stewards of these troubled corporations. I consulted the official biographies of their board members from their 2010 proxy statements (Genzyme here, Medtronic here). I looked for board members who also held leadership positions in other health care organizations whose interests may not be aligned with the two corporations of interest. I also looked for those who held leadership positions in the discredited financial services corporation who helped usher in the global financial collapse.
The specifics of what I found follow.
Genzyme
Genzyme had 10 directors in 2010. The following directors had relationships of interest:
- Douglas A Berthiaume is "Chairman of the Children's Hospital (Boston) Trust Board, a member of the Children's Hospital board of trustees, and a Trustee of the University of Massachusetts Amherst Foundation." Children's Hospital is a teaching hospital. The University of Massachusetts includes a medical school.
- Robert J Bertolini "retired from Schering-Plough Corp following its merger with Merck & Co in November, 2009." Schering-Plough was a large pharmaceutical company now combined with Merck to form an even larger company.
- Gail K Boudreaux "has served since May 2008 as an Executive Vice President of United Health Group Incorporated." Also, "she serves on the board of directors of America's Health Insurance Plans...." UnitedHealth is one of the US' largest health insurance/ managed care corporations. Incidentally,it has frequently misbehaved, as can be seen in this set of posts. AHIP is the health insurance corporations' trade associations.
- Robert J Carpenter "is Chairman of Hydra Biosciences Inc... He is also a trustee of the Immune Disease Institute, a non-profit institute affiliated with Children's Hospital in Boston...."
- Charles L Cooney "is a director of India-based Biocon Limited, a biotechnology healthcare company."
- Victor J Dzau MD (discussed in the earlier post) is "Chancellor for Health Affairs and President and Chief Executive Officer of Duke University Health System...." He "sits on the board of directors of Pepsico Inc, Anylam Inc, Medtronic Inc, and the Duke University Health System."
- Senator Connie Mack III is "Chairman Emeritus of the parent board of the H. Lee Moffitt Cancer Center and Research Institute...." He also is director of "EXACT Sciences Corporation and Moody's Corp." EXACT Sciences is a biotechnology company that develops diagnostic test technology. Moody's Corp is a financial ratings agency whose lax ratings of financial derivatives, perhaps arising from conflicts of interest produced by payments from the producers of the derivatives, have been implicated as a major cause of the global financial collapse.
- Richard E Syron was from "January 2004 to September 8, 2008 ... Chairman and Chief Executive Officer of the Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac...." Freddie Mac as bailed out and taken over by the US government when he departed, or was forced out. Freddie Mac, was a "government-sponsored enterprise," (GSE) one of another group of companies whose enthusiastic participation in securitizing dubious mortgages was implicated as a major cause of the global financial collapse.
- Henri A Termeer (CEO of Genzyme) is a "director of Massachusetts General Hospital, a board member of Partners HealthCare, and a member of the board of fellows of Harvard Medical School."
So the box score for Genzyme's 10 directors: six have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Seven have leadership positions in other drug, device or biotechnology corporations. One have leadership positions in health insurance/ managed care corporations. Two had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.
Medtronic
Medtronic had 11 directors in 2010. The following directors had relationships of interest:
- Richard H Anderson "was Executive Vice President of UnitedHealth Group Incorporated." As above, UnitedHealth is a health insurance/ managed care corporation.
- Victor J Dzau (see above) is "Chancellor for Health Affairs at Duke University and President and Chief Executive Officer of the Duke University Health System." He is "a director of Alnylam Pharmaceuticals Inc, ... PepsiCo Inc, and Genzyme Corporation." (See discussion above.)
- James T Lenahan "served as President of Johnson & Johnson from 2002 until June 2004...." He is "director of Telecris Biotherapeutics Inc, Alton Pharma Inc and Imacor Inc." Johnson & Johnson is a large drug, device, and biotechnology company. Telecris, and Alton Pharma are biotechnology pharmaceutical companies. Imacor is a medical device company.
- Denise M O'Leary "is a director of Lucille Packard Children's Hospital and Stanford Hospitals and Clinics." Also, "she was a member of the Stanford University Board of Trustees from 1996 through 2006, where she chaired the Committee of the Medical Center...."
- Robert C Pozen is "an advisor to Gelesis Inc." Gelesis is a biotechnology company.
- Jack W Schuler "has been a director of Stericycle Inc since March 1990...." He is a "director of Quidel Corporation and Elan Corporation plc...." Stericycle company disposes of medical waste, including that produced by medical devices. Quidel is a biotechnology and (medical diagnostic) device company. Elan is an multinational biotechnology and pharmaceutical company.
So the box score for Genzyme's 11 directors is: Two have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Ten have leadership positions in other drug, device or biotechnology corporations. One has a leadership position in health insurance/ managed care corporations. None had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.
Summary
Just to summarize the sorts of conflicting interests these relationships suggest.
Teaching hospitals and medical schools are supposed to provide unbiased teaching, including about issues relevant to drug and device corporations, such as choice of diagnostic strategies and treatments, and relevant health policy. They are supposed to perform unbiased research, including research that evaluates drugs and devices. They are supposed to provide the best possible patient care at a reasonable cost, which relates to choices of and prices paid for drugs and devices.
Other drug, device, and biotechnology corporations may be producing, or developing products that compete with those of the index corporations.
Health insurance companies ostensibly try to control costs and improve quality in part by reducing excess utilization and bargaining down prices of drugs and devices.
So this limited case study of the boards of directors, that is, the ostensible stewards of two health care corporations, selected because they have a common member who is the leader of a large medical school and academic medical center, and which both have histories of poor management or ethical missteps showed - that the leadership of health care organizations is incredibly interrelated, interlocked, incestuous.
This gave an example of how pervasive are the conflicts of interest that affect all kinds of health care organizations. Companies that ought to be competing have interlocked directors. Companies that ought to be negotiating at arms length have interlocked directors. Not-for-profit academic medical institutions have leaders who are also directors of companies whose drugs their patients may take, whose devices their patients may receive, whose insurance their patients may buy, and whose products and services they may teach about and evaluate through clinical research and policy research.
This also gives an example of how the failed culture of finance may be linked to the culture of medicine and health care. Some of the stewards of health care organizations were also the stewards of financial services corporations whose reckless, if not arrogant, greedy and amoral leadership is widely believed to have caused the global financial collapse and our ongoing economic problems.
Finally, this suggests how top leaders of various health care organizations may be more familiar with and identify more with each other than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients.
What is to be done?
I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships. A few bloggers cannot do it all. Obviously, the anechoic effect mitigates against medical and health care academics looking into their own leaders. However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience.
Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.
If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.
A Great Investment Opportunity? - Biotechnology Company Run by an Ex-Convict
A sad commentary on the current morality of the health care "business," as provided by the New York Times. Sam Waksal is back in the biotechnology business:
Is there a catch? It might be Mr Waksal's record, criminal record. Mr Waksal's previous company was ImClone:
Presumably, Kadmon is not publicly traded, so the SEC ban does not apply to his leadership of that company. Yet despite the ban and his criminal record, investors seem to be ready to throw money at him.
Maybe it has more to do with emotion than reason, much less morality,
Furthermore,
In my humble opinion, an investor who throws money at an ex-con, apparently because he seems exuberant, irrepressible, even seductive, needs a brain transplant. (But maybe some investors should read Snakes in Suits, see post here.)
But this blog is not about giving advice to investors. If Mr Waksal invested in basically harmless products that had nothing to do with patients' health and safety, the foolishness of investment decisions about his company would have nothing to do with me.
However, Mr Waksal is proposing to develop drugs to be given to patients:
So, we are not talking about merely foolish investment decisions, but amoral ones. The amorality of this brave new business world becomes relevant.
There, in a nutshell seems to be the problem with running health care organizations not just in a business-like manner, but as businesses, businesses in a completely laissez faire environment, businesses in a new world run by new robber barons.
Would you trust a company run by an ex-convict to product safe, effective, and unadulterated drugs? (After all, some very respected companies run by people who are certainly not ex-cons have proven to be unable to keep all of their products pure and unadulterated.)
This case vividly illustrates the need for assuring that the leaders of all health care organizations, including but not limited to pharmaceutical and biotechnology companies, have some knowledge of the health care context, some sympathy for the values of health care professionals, including putting patients' health and welfare first, and are externally accountable. But at a minimum, health care organizations should not be run by former felons. However, in our extremely laissez faire environment, in a country now increasingly dominated by new robber barons, ex-convicts can run biotechnology companies.
Mr. Waksal says his new venture, Kadmon Pharmaceuticals, will be 'a fully integrated biopharmaceutical company from the get-go,' replete with everything, including its own research and products on the market or in clinical trials that it acquires from others.
'You’ll see a company that next year will be doing significant revenues in a growth area, with earnings, probably five Phase 3 programs and a couple of Phase 2 products,' Mr. Waksal said Sunday in a telephone interview. Phase 3 and Phase 2 are the late and middle stages, respectively, of clinical trials.
Several of Mr. Waksal’s former colleagues from ImClone have joined him at Kadmon, a name from kabbalah, the Jewish mystical movement. He even looked into leasing the Lower Manhattan headquarters ImClone is vacating.
Kadmon, which will focus on cancer, infections and autoimmune diseases, has started to make deals. On Monday it is expected to announce it has licensed an experimental hepatitis C drug from Valeant Pharmaceuticals International, a person close to the transaction said. That follows the disclosure last week that it had acquired Three Rivers Pharmaceuticals, a Pennsylvania company specializing in hepatitis drugs.
Kadmon circulated a private placement memorandum in February to raise $50 million to $175 million. As of July, it had raised $10.8 million from 26 investors, a filing with the Securities and Exchange Commission said.
But David Pitts, a spokesman for Kadmon, said that other debt and equity offerings had raised more than $200 million, with the biggest investor being SBI Holdings of Japan.
Is there a catch? It might be Mr Waksal's record, criminal record. Mr Waksal's previous company was ImClone:
That started to come undone in December 2001, when Mr. Waksal got word that the Food and Drug Administration was not going to approve Erbitux. Before the company announced the news, Mr. Waksal alerted relatives to sell their ImClone stock and tried to sell some of his. Martha Stewart sold her ImClone shares and was given a five-month prison sentence and five months of home confinement for lying to federal investigators about it.
Mr. Waksal pleaded guilty to securities fraud, bank fraud, perjury, obstruction of justice and conspiracy. He is prohibited by a settlement with the S.E.C. from serving as an officer or director in a publicly traded company.
Presumably, Kadmon is not publicly traded, so the SEC ban does not apply to his leadership of that company. Yet despite the ban and his criminal record, investors seem to be ready to throw money at him.
Maybe it has more to do with emotion than reason, much less morality,
One investor in Kadmon, who also sits on its board, said Mr. Waksal’s energy and his acumen in spotting promising drugs far outweigh his past problems.
'He is irrepressible,' said this investor, who spoke on the condition that she not be named because her company has a policy against being quoted in the media. 'I don’t think what happened to Sam in the past is going to have a negative effect on my investment in this business.' [Being convicted of 'securities fraud, bank fraud, perjury, obstruction of justice, conspiracy' is a good background for a company CEO? - Ed]
Furthermore,
prospective investors say his trademark exuberance and penchant for hyperbole remains.To make it even more explicit:
'He hadn’t changed,' said a prospective investor who met with Mr. Waksal and spoke on the condition of anonymity to retain relations with him. 'He was spinning big stories about big money, big deals'
Another prospective investor said Mr. Waksal had told him that Carl C. Icahn, the billionaire who is a friend of Mr. Waksal and had invested in ImClone, had committed $30 million to Kadmon. Marc Weitzen, a lawyer for the investor, said Mr. Icahn had evaluated Kadmon but 'decided to pass.' [It sounds like Mr Waksal has not developed any new affinity for the truth - Ed.]
The private placement memorandum circulated in February said Kadmon had 'a simple yet revolutionary plan for creating the pre-eminent 21st century biopharmaceutical company.'
Mr. Waksal, who earned a doctorate in immunology, is charming to the point of being seductive. He was a fixture in New York social circles, befriending celebrities and dating many women, including Alexis Stewart, daughter of his friend Martha Stewart. He lived in a spacious SoHo loft with millions of dollars in art, where he hosted extravagant parties and intellectual salons attended by leading lights in literature, art and science.
In my humble opinion, an investor who throws money at an ex-con, apparently because he seems exuberant, irrepressible, even seductive, needs a brain transplant. (But maybe some investors should read Snakes in Suits, see post here.)
But this blog is not about giving advice to investors. If Mr Waksal invested in basically harmless products that had nothing to do with patients' health and safety, the foolishness of investment decisions about his company would have nothing to do with me.
However, Mr Waksal is proposing to develop drugs to be given to patients:
In its first big deal, Kadmon announced last Monday that it had acquired privately held Three Rivers for more than $100 million.
Three Rivers, whose main products are drugs for hepatitis C, is meant to be the commercial base of Kadmon, its revenues helping to defray the cost of developing new drugs.
The deal, an investor familiar with the structure said, is highly leveraged, to the extent that Three Rivers’ earnings might not be sufficient to cover the debt. But Mr. Waksal is betting that sales will soar because new pills being developed by other companies will make treatment more effective, enticing more people with hepatitis C to be treated.
'The hep C market is going to undergo a real sea change next year,' Mr. Waksal said. Three Rivers has a proprietary form of the drug ribavirin that requires two pills a day, instead of the standard six to eight. Even with new drugs coming, ribavirin will remain a mainstay of treatment.
In fact, Mr. Waksal is increasing that bet. On Monday, Kadmon is expected to announce that it has obtained exclusive worldwide rights to taribavirin, a form of ribavirin that may have fewer side effects. Kadmon is paying $5 million initially, with other payments possible later, to Valeant Pharmaceuticals, which has been testing the drug in clinical trials, according to the person close the transaction. Valeant will pay $7.5 million for rights to sell Kadmon’s ribavirin in Eastern Europe.
Kadmon has bought a tiny company started by Princeton professors that has a way to measure cell metabolism. Influencing a cell’s use of nutrients is emerging as a novel way to treat cancer and infectious diseases.
So, we are not talking about merely foolish investment decisions, but amoral ones. The amorality of this brave new business world becomes relevant.
For many investors, 'there are few judgments beyond whether you made me money,' said Samuel D. Isaly, managing partner at OrbiMed Advisors, a big investor in biotech companies that was not asked to invest in Kadmon. 'Sam Waksal made a lot of people a lot of money with ImClone.'
There, in a nutshell seems to be the problem with running health care organizations not just in a business-like manner, but as businesses, businesses in a completely laissez faire environment, businesses in a new world run by new robber barons.
Would you trust a company run by an ex-convict to product safe, effective, and unadulterated drugs? (After all, some very respected companies run by people who are certainly not ex-cons have proven to be unable to keep all of their products pure and unadulterated.)
This case vividly illustrates the need for assuring that the leaders of all health care organizations, including but not limited to pharmaceutical and biotechnology companies, have some knowledge of the health care context, some sympathy for the values of health care professionals, including putting patients' health and welfare first, and are externally accountable. But at a minimum, health care organizations should not be run by former felons. However, in our extremely laissez faire environment, in a country now increasingly dominated by new robber barons, ex-convicts can run biotechnology companies.
Sanofi-Funded Society of Hospital Medicine Stands Up for Lovenox
Here is another case to raise questions about the true goal of some medical societies. As reported by Alicia Mundy in the Wall Street Journal in late June,
Of course, the two medical societies involved denied that there was any relationship between their support from Sanofi-Aventis and their concerns about the safety of biogeneric medications that might compete with a Sanofi-Aventis product (which, as the WSJ article noted, "had global sales of $4.57 billion in 2009").
The CEO of the SHM denied even a responsibility to disclose the Society's support from Sanofi-Aventis:
In fact, the SHM web-site includes a "disclosure of organizational support" page which suggests Sanofi-Aventis provided somewhere between $200,000 to $800,000 for three projects of the Society's projects, "pharmacoeconomics," "improving glycemic control," and "preventing VTE." The latter presumably could have something to do with anti-coagulants such as Lovenox. (The numbers are vague because the statement only discloses the amount of support provided in broad ranges.) Thus, support by Sanofi-Aventis could provide as little as 2.7% or as much as 11.1% of the Society's total income, which was noted to be $7,203,596 in its 2009 Form 990 filed with the IRS, and publicly available via Guidestar.
Given the broad mission of the SHM
Thus it appears that the leadership of SHM was very concerned about the safety of an anti-coagulant manufactured by a competitor of Sanofi-Aventis which could threaten that company's revenues from the drug, while Sanofi-Aventis is one of the Society's major financial supporters. On the other hand, the leadership seemed unconcerned about the safety of an anti-coagulant sold under the Baxter International label, while Baxter-International is also one of the Society's major financial supporters. So it is hard to tell whether the leadership is more concerned about the safety of anti-coagulants, or the financial interests of the drug companies that support it.
The problem with the funding of health care professional societies by health care corporations that sell products or services that doctors can prescribe or order is that it raises the suspicion that such societies may use their considerable influence to serve the corporations', not patients' interests, and so undermine the professional values of the societies' members. For this reason, Rothman et al suggested that such societies sever most of their financial ties to such corporations.(1) (See our blog post here.) As long as the SHM chooses to accept support from drug and device companies, questions will be asked about the effects of such support on how the Society uses its influence. Furthermore, assertions that such support is so irrelevant that the Society need not even disclose it will only fuel more suspicion.
If ostensibly mission-driven not-for-profit health care organizations, like health care professional societies, but also including medical schools, academic medical centers, and patient advocacy groups, want the public and health care professionals to believe that they really are mission-driven, they need to spurn funding from organizations with vested interests whose service might distort these missions.
Hat tip to Steve Lucas for his comment here.
References
1. Rothman DJ, McDonald WJ, Berkowitz CD et al. Professional medical associations and their relationships with industry. JAMA 2009; 301: 1367-1372. (Link here.)
A medical researcher and two medical groups with financial ties to Sanofi-Aventis SA have asked federal regulators to hold off on approving generic forms of a Sanofi blood-thinner....
Citing potential patient safety issues, the head of the Society of Hospital Medicine and a medical researcher at Duke University last month sent letters to the Food and Drug Administration contending that Lovenox is too complex for any generic maker to copy fully.
Earlier this year, another Sanofi-sponsored medical group, the North American Thrombosis Forum, sent two letters in favor of Sanofi's position opposing generic Lovenox. None of the letters mentions the signer's financial support from Sanofi.
Two small drug companies, Amphastar Pharmaceuticals Inc. and Momenta Pharmaceuticals Inc., filed applications to the FDA in 2003 and 2005 respectively seeking to sell generic Lovenox, called enoxaparin.
Of course, the two medical societies involved denied that there was any relationship between their support from Sanofi-Aventis and their concerns about the safety of biogeneric medications that might compete with a Sanofi-Aventis product (which, as the WSJ article noted, "had global sales of $4.57 billion in 2009").
Laurence Wellikson, chief executive of The Society of Hospital Medicine, which represents doctors who coordinate patient care, said his letter to the agency 'was based entirely on the best evidence-based medicine available and the collective experience of SHM's senior hospitalists.'Also
Ilene Sussman, executive director of the North American Thrombosis Forum, said the group's doctors are concerned about generic Lovenox, and its letter was independent of Sanofi.
The CEO of the SHM denied even a responsibility to disclose the Society's support from Sanofi-Aventis:
Dr. Wellikson said it wasn't necessary to disclose that the group receives financial support from Sanofi because its letter 'focused on providing the best, most effective care to the hospitalized patient.'
In fact, the SHM web-site includes a "disclosure of organizational support" page which suggests Sanofi-Aventis provided somewhere between $200,000 to $800,000 for three projects of the Society's projects, "pharmacoeconomics," "improving glycemic control," and "preventing VTE." The latter presumably could have something to do with anti-coagulants such as Lovenox. (The numbers are vague because the statement only discloses the amount of support provided in broad ranges.) Thus, support by Sanofi-Aventis could provide as little as 2.7% or as much as 11.1% of the Society's total income, which was noted to be $7,203,596 in its 2009 Form 990 filed with the IRS, and publicly available via Guidestar.
Given the broad mission of the SHM
SHM is dedicated to promoting the highest quality care for all hospitalized patients. SHM is committed to promoting excellence in the practice of hospital medicine through education, advocacy and research.one wonders why it would want to get officially entangled in the approval process for specific biogeneric drugs. If the leadership of the Society is so concerned about the safety of anti-coagulants, one wonders why they did not speak up about the case of the lethal contaminated heparin, about which we have blogged extensively, most recently here. (I can find nothing on the web to suggest the Society, or Dr Wellikson, ever noted any concerns about this issue.) Of course, that case involved heparin sold by Baxter International, whose production was out-sourced to a questionable supply chain. SHM also receives support, amounting to something between 0 and $100,000, according to its "disclosure of organizational support" page, from Baxter International.
Thus it appears that the leadership of SHM was very concerned about the safety of an anti-coagulant manufactured by a competitor of Sanofi-Aventis which could threaten that company's revenues from the drug, while Sanofi-Aventis is one of the Society's major financial supporters. On the other hand, the leadership seemed unconcerned about the safety of an anti-coagulant sold under the Baxter International label, while Baxter-International is also one of the Society's major financial supporters. So it is hard to tell whether the leadership is more concerned about the safety of anti-coagulants, or the financial interests of the drug companies that support it.
The problem with the funding of health care professional societies by health care corporations that sell products or services that doctors can prescribe or order is that it raises the suspicion that such societies may use their considerable influence to serve the corporations', not patients' interests, and so undermine the professional values of the societies' members. For this reason, Rothman et al suggested that such societies sever most of their financial ties to such corporations.(1) (See our blog post here.) As long as the SHM chooses to accept support from drug and device companies, questions will be asked about the effects of such support on how the Society uses its influence. Furthermore, assertions that such support is so irrelevant that the Society need not even disclose it will only fuel more suspicion.
If ostensibly mission-driven not-for-profit health care organizations, like health care professional societies, but also including medical schools, academic medical centers, and patient advocacy groups, want the public and health care professionals to believe that they really are mission-driven, they need to spurn funding from organizations with vested interests whose service might distort these missions.
Hat tip to Steve Lucas for his comment here.
References
1. Rothman DJ, McDonald WJ, Berkowitz CD et al. Professional medical associations and their relationships with industry. JAMA 2009; 301: 1367-1372. (Link here.)
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