"The 'Third Rail' that No One Wishes to Analyze" - Conflicts of Interest Affecting Health Care Foundations

On Health Care Renewal we discuss what we think are important issues affecting health care that seem to be rarely mentioned in the medical and health care literature and the "main-stream media."  In particular, we focus on problems in health care leadership and governance, how they threatened the core values of health care professionals, and how these threats contribute to rising costs, and declining access and quality. 

One of our preoccupations has been why these problems remain so anechoic.  A new article in PLoS Medicine [Stuckler D, Basu S, McKee M. Global health philanthropy and institutional relationships: how should conflicts of interest be addressed? PLoS Med 8(4): e1001020. doi:10.1371/journal.pmed.1001020.  Link here. ] seems to have uncovered another missing link to the anechoic effect. 

Private Foundations and Their Influence on Global Health

The article noted the importance of the influence of private foundations on global health:

While corporate involvement in and government aid for health has been extensively analyzed and critiqued in the public health literature, less attention has been paid to the impact of private donors on public health. Over the past decade, the bulk of new health aid designed to reach the Millennium Development Goals has come from individuals and corporations. The influence of this private philanthropy on global health is profound and transformative.

So,

Private foundations operate outside the typical boundaries of democracy; unlike government ministries, private foundations cannot be influenced in the same way by the communities affected by the foundations' actions. In the interests of public health, and particularly because poor communities affected by foundations do not automatically have a feedback mechanism to influence the decisions of private funders, we argue that it is appropriate to subject private foundations to the same scrutiny received by public institutions.

In this paper, we examine the scope of potential conflicts of interests that exist among the private foundations that are major funders of global health.

I would add that private foundations may have an outsize influence not only on global public health policy, but also on health care policy within particular countries, including the US.   This may arise because of the perception that they are more independent and nearer the cutting edge than are government and industry sources of funding. For example, here in the US, the Kellogg and Robert Wood Johnson Foundations have been widely perceived by health care, services and policy researchers as especially influential and respectable sources of funding, possibly partially because of the perception that they have less self-serving agendas than do government agencies and for-profit health care corporations.

The Possibility of Conflicts of Interest

The authors noted increasing concern about conflicts of interest affecting the activities of for-profit corporations involved in public health and health care:

because tensions can arise between the profit motives of corporations and the promotion of public health. Whereas corporations make products that can improve health (such as pharmaceuticals and vaccines) and relationships between public health institutions and for-profit corporations can be seen as positive opportunities for corporations to improve public health, corporations also make products that damage health (such as tobacco or unhealthy foods). And because some corporations have a vested interest in the activities of public health bodies, there have been documented attempts to influence the public health agenda by establishing associations with health care institutions

Thus the authors thought it also made sense to address conflicts of interest affecting private foundations operating in the global health space. They performed a case-study of the largest global health foundation, the Bill & Melinda Gates Foundation, while also briefly discussing four other large global health foundations, the Ford Foundation, W. K. Kellogg Foundation, Robert Wood Johnson Foundation, and Rockefeller Foundation.

Stock Holdings

The article noted that the Gates Foundation had substantial investments in food and pharmaceutical companies:

The Bill & Melinda Gates Foundation's corporate stock endowment is heavily invested in food and pharmaceutical companies, directly and indirectly .... The Foundation holds significant shares in McDonald's (9.4 million shares representing about 5% of the Gates' portfolio), and Coca-Cola (>15 million shares, over 7% of the Foundation's portfolio, not counting Berkshire Hathaway holdings). In 2009 the Bill & Melinda Gates Foundation sold extensive pharmaceutical holdings in Johnson & Johnson (2.5 million shares), Schering-Plough Corporation (14.9 million shares), Eli Lilly and Company (about 1 million shares), Merck & Co. (8.1 million shares), and Wyeth (3.7 million shares).

Also, the Foundation indirectly invests in food and pharmaceutical companies through its holdings of Berkshire Hathaway:

Berkshire Hathaway's largest investment is in Coca-Cola. It owns an additional 8.7% of Coca-Cola (Warren Buffett's firm is the largest shareholder in Coca-Cola, having stock worth >$10 billion dollars) and 6.3% of Kraft (Buffett is also the largest shareholder of Kraft). Berkshire Hathaway also has significant ownership in GlaxoSmithKline, Sanofi-Aventis, Johnson & Johnson, and Procter & Gamble, and is one of the main global investors in the latter two pharmaceutical companies.

The article also noted that the Ford, Rockefeller, Kellogg and Robert Wood Johnson Foundation had significant holdings in Coca-Cola, Kellogg, PepsiCo, Pfizer, GlaxoSmithKline, McDonalds, Nestle, NovoNordisk, YumBrands, Pizza Hut, KFC, Johnson & Johnson, and Sanofi-Aventis, and that the Ford Foundation held shares in a tobacco company, Lorillard, and the Kellogg and Rockefeller Foundations "were indirectly invested in tobacco corporations through conglomerate equity funds...."

This admittedly case-based data suggested that the major private foundations active in global health may have financial holdings that could possibly influence their actions in favor of the vested interests of food, pharmaceutical, and even tobacco companies.

Conflicts Affecting Foundation Leadership

The article noted that:

Several of the [Gates] Foundation's members of the management committee, leadership teams, affiliates, and major funders are currently or were previously members of the boards or executive branches of several major food and pharmaceutical companies ... including Coca-Cola, Merck, Novartis, General Mills, Kraft, and Unilever....

In addition,

Further overlaps between Bill & Melinda Gates Foundation leadership, other private foundations, and circular flows of personnel with food and pharmaceutical companies were observed .... Such patterns of interlinked board directorships, common among corporations and nonprofit organizations, were similarly found in the other private foundations studied.

Examples provided in an appendix were:

Anne Fudge, the chairman of the Gates Foundation’s US Program Advisory Panel is also on the board of directors of Rockefeller Foundation (in addition to General Electric, Novartis, Unilever, and Harvard University, among others).

Furthermore,

Members of personnel also move between the Foundation and pharmaceutical companies. For example, in April 2010, a former Merck senior vice president, Richard Henriques, became the chief financial officer of the Gates Foundation. At least two other members of the Gates Foundation leadership have transferred from the leadership of GlaxoSmithKline to sit on the Foundation’s board of directors, including Kate James, the chief communications officer, and Tachi Yamada, until February 2011, the head of the Foundation’s global health program. Similar patterns were observed with the other foundations studied.

Again, this admittedly case-based data suggested that the major private foundations active in global health may have leaders who have financial relationships that could possibly influence their actions in favor of the vested interests of food and pharmaceutical companies.

Program Initiatives Possibly Related to Conflicts

The article asserted:

The bulk of the Bill & Melinda Gates Foundation's financial transfers in global health have been to programs developing medical technologies....

In particular,

Overall, about 42% of all funding was spent on health care delivery or increasing access to drugs, vaccines, and medical commodities, while an additional one-third was allocated to technology development (mainly for vaccines and microbicides) or basic science research.

Specific programs were related to companies in which the the Gates Foundation or its leaders had financial interests:

The Foundation has established partnerships with the Coca-Cola Company, which, in the words of the Foundation, are intended to 'create new market opportunities for local farmers whose fruit will be used for Coca-Cola's locally-produced and sold fruit juices'.

Also,

many of the Foundation's pharmaceutical development grants may benefit leading pharmaceutical companies such as Merck and GlaxoSmithKline....

and

Johnson & Johnson has entered a clinical partnership to develop new HIV-prevention technology, noting 'the work between Johnson & Johnson and the Gates Foundation is a strong, strategic, comprehensive relationship'.

While there are many needs in global health, and many approaches to addressing these needs, this limited case-based data suggested that a strong focus of the Gates Foundation was on approaches that revolve around drugs, devices and biotechnology, again which would tend to favor the vested interests of the pharmaceutical companies which the Foundation holds in its investment portfolio and with which some of its leaders have or had financial relationships.

Discussion

While the data from this case-study were limited, they do suggest that major private foundations that support global health, and by extension, health care, services, and policy research may have institutional conflicts of interest, and their leaders may have personal conflicts of interest. It is possible that these conflicts have steered global health policy to favor vested interests, particularly towards approaches that depend on drugs and devices, perhaps instead of more effective ones using less technology.

Furthermore, it is possible that that these conflicts of interest have helped create the anechoic effect.  Conflicts of interest could have pushed the foundations in directions that favored specific vested interests, and away from others that may threaten such interests.  Many of the issues we discuss on Health Care Renewal may threaten such interests.  Private health foundations have been notably uninterested in addressing how problems in leadership and governance of health care organizations can threaten core values, They have been particularly uninterested in addressing specific tactics used when leadership is ill-informed, incompetent, self-interested, conflicted, or even corrupt, e.g., deceptive practices used to promote products and services, and promote policies favorable to vested interests, including, of course, deliberate creation of conflicts of interest (such as the cultivation of key opinion leaders).

In fact, a particular version of the anechoic effect surrounds the private foundations themselves, as described by Stuckler et al:

Although the philanthropic activities of wealthy individuals and corporations have attracted controversy in the past (Text S1), their charitable mission often means that they face less scrutiny than governments; critical analysis of foundations can be seen as 'biting the hand that feeds us.' As a result, within the global health community, private donors are sometimes viewed as the 'third rail' that no one wishes to analyze.

We have often commented on the pervasiveness of conflicts of interest in health care. Now we see them affecting even the most respected private health care foundations which were previously regarded as independent. The web of conflicts of interest may benefit those personally involved, but to the detriment of patients' and the public's health. Unfortunately, as the web has gotten more complex, it stifles awareness of the problem by the unconflicted, much less their ability to respond.

At a minimum, I urge that private health care foundations fully disclose their institutional conflicts of interest, and the conflicts of interest of their leaders. If they wish to maintain their previously sterling reputations, they ought to consider divesting themselves of financial holdings that generate institutional conflicts, and of leaders who have financial relationships that generate personal conflicts.

Hat tip: to Ed Silverman on the PharmaLot blog.

What a Conflicted Web We Weave: More About Leaders of Financial Firms Influencing Policy in the Guise of Independent Academics

The issue of conflicted academic economists providing public policy recommendations just got bigger.  As discussed by Felix Salmon in his blog for Reuters, and by Nancy Folbre in the Economix blog for the New York Times,  a new study by Epstein and Carrick-Hagenbarth showed that some very prominent economists who frequently make pronouncements about financial policy often failed to disclose some major conflicts of interest. 

In summary, they identified "two groups of economists that were prominent in the field of financial economics and which had taken a public stance on financial regulation."  Some of these economists also had prominent advisory roles for government economic agencies, including the US Federal Reserve, the US Council of Economic Advisers, the Indian Finance Ministry, the Bank of Finland, the World Bank, and the International Monetary Fund. The authors did an extensive search for the economists' financial ties to financial corporations, which probably detected most relationships such as membership on the boards of directors of public companies, but may have missed consulting arrangements.  They found that 12 of 19 had such relationships, mostly positions on boards of directors or ownership interests.  They found that all but one of the economists with such relationships failed to identify these relationships in the majority of their academic papers and writings in the media.  The one economist who always disclosed his relationships in the media only wrote articles for the private financial firm for which he worked.

So major financial conflicts of interest were prevalent among "prominent economists who write op-eds for newspapers, they testify on public panels, they take positions as advisers for politicians and they are interviewed by the media. Academic economists often convey the impression that they occupy these positions as independent objective experts."  The authors concluded:

Academic economists serve as experts in the media, molding public opinion. They are also important players in government policy. If those that are creating the culture around financial regulation as well as influencing policy at the government level for financial reform also have a significant, if hidden, conflict of interest, our public is not likely to be well-served.

They also noted that economics as a profession does not even have a formal code of ethics, and in particular has never embraced any necessity for disclosing, managing, or restricting conflicts of interest.

We had previously discussed anecdotal but striking evidence that some of the most prominent economists who influenced public policy up to and after the great recession/ global financial crisis also had major but undisclosed financial ties to financial institutions. It now looks like conflicts of interest could be as prevalent among those who are influential in economics as they may be among those who are influential in medicine, health care, and health care policy.

This further corroborates the hypothesis that academic medical institutions are so comfortable with their faculty and leaders' conflicts of interest because they exist in a larger academic culture in which such conflicts are standard operating procedure.  Academic institutions may be particularly happy with economists' conflicts of interest because they involve such large amounts of money. Felix Salmon gave the example of  Paul Krugman who when he worked as an economist could command a $40-50,000 fee per speech, easily more than an order of magnitude more than the going rate for medical talks.  Furthermore, as we have noted before, (e.g., here, here, and here) many prominent academic institutions that incorporate medical schools and academic medical centers have boards of directors dominated by leaders of finance.  Now it appears that these leaders' economic interests may lead them to encourage conflicts of interest among their faculty and administration.

So not only do conflicts of interest appear to be a fundamental problem for medicine and health care, they may pose a fundamental problem for society as a whole.

Clearly, as Epstein and Carrick-Hagenbarth wrote, economists, like all professionals who can influence public policy, ought to have a code of ethics, and that code, at a minimum, ought to require full disclosure of all conflicts of interest.  Economists who write about policy in the media, write policy-relevant academic articles, and/or who advise non-profit organizations and government agencies should at a minimum reveal all such conflicts.  Similarly, of course, physicians and health policy/ care/ services researchers who write about or otherwise may influence health care policy should at a minimum reveal all such conflicts.

Meanwhile, extreme skepticism about policy advice by apparently independent academics and experts is warranted.  We risk sliding into the cynical position that all major policy is now being made by imperial CEOs and their cronies and paid agents. 

Mainstream Media "Discovers" Conflicts of Interest of Prominent Health Policy Pundit

The main-stream media, in this case the San Francisco Chronicle, just "discovered" an important case of a conflicted health policy pundit,

Uwe Reinhardt, a Princeton economic professor who often writes about health care for the New York Times' Economix blog, earns more than $500,000 a year working for a number of health care companies. He also holds more than $5 million worth of related stock.

Reinhardt's NYT bio does not mention these financial relationships.

As the NYTPicker points out, Reinhardt's various incomes break the New York Times rules, which ban anyone who writes for the paper from having any financial interest 'in a company, enterprise or industry that figures or is likely to figure in coverage that he or she provides, edits, packages or supervises regularly.'

We asked the New York Times for comment. They sent us this email:

'Professor Reinhardt is a leading expert on the economics of health care, and has provided valuable and independent insights in his blog posts. He has mentioned his service on corporate boards in the blog, but we are reviewing how to more fully describe his activities for readers of Economix.'

We also asked Reinhardt for comment. He is working on one for us and we will post it here as soon as possible.

Here's the breakdown of what he owns, according to NYTPicker:

* Reinhardt either earns an income or stock options from the five different private health care companies for which he sits on the board of directors/serves as a trustee.
* He has sat on the board of health care company, Amerigroup, since 2003. This tenure has resulted in Reinhardt's accumulation of 144,558 shares in the company and $226,531 in cash-and-stock compensation. These shares are currently valued around $4.8 million.
* Reinhardt also holds 75,625 shares of Boston Scientific (worth more than $500,000 in value) and earned $213,132 from the company in 2009. He has sat on the board of this medical device manufacturing company since 2005.
* Reinhardt serves as a trustee for H&Q Healthcare Investors and H&Q Life Science Investors. His 2008 income from the companies included $43,000 in income and between $1 and $10,000 worth of securities.
* He also made $2.3 million from the 2007, $5.1 billion sale of Triad Hospitals to Community Health Systems.

It only took four years for this to get into the main-stream media. The reason "discovered" is in quotes is that we have been writing about Reinhardt's conflicts of interests vis a vis his prominent opinions on health policy since 2006 on Health Care Renewal.

As I wrote in a comment on the original NYTPicker post, in 2006, we first wrote about a letter to the editor of the NY Times by Reinhardt dismissing a physician op-ed writer's concerns about what has gone wrong with health care.  Reinhardt's letter failed to disclose the board memberships he held at that time. In 2009, we wrote about how Reinhardt left out some crucial facts in his discussion in the Economix blog of how physicians are paid. That year we also wrote about how Reinhardt defended Ms Karen Ignagni, CEO of America's Health Insurance Plans (AHIP) in an interview quoted in a Washington Post article.

In neither case above did Reinhardt or the newspaper reveal his conflicts.

Note that Reinhardt is not the only case of a prominent health policy expert with undisclosed conflicts of interest. See this post for some examples we had found in 2006.

In fact, in my humble opinion, the public discourse about health care policy in general, and health care reform in particular has been seriously distorted by various commentators, pundits, and experts who have major conflicts of interest, usually in the form of important financial relationships with large health care organizations.  In many cases, these conflicts are not disclosed.  A related problem is the influence of various non-profit organizations that are heavily funded by those with vested interests, usually in selling particular health care products or services.  Such funding is also rarely disclosed. 

I further submit that this distortion has overwhelmingly been in favor of various aspects of the status quo that have been so profitable for the discussants, and their commercial sponsors.  This distortion has meant that certain important problems, especially those that we discuss on Health Care Renewal, are rarely even mentioned in the mainstream media, in journals on health care and services research and health policy, and in political discussion.  Try, for example, to find any discussion of the impact of ill-informed, self-interested, conflicted or corrupt leadership of prominent health care organizations on costs, access and quality, or on patient outcomes.  It is simply not done to discuss the shortcomings of leadership, maybe because it is this leadership who subsidizes many of the pundits, commentators and experts. 

At a minimum, participants in the health policy discussion, starting with the most prominent, should fully disclose all financial relationships that could constitute conflicts of interest. 

Meanwhile, those listening to the discussion should be extremely skeptical about the opinions expressed.