A Tenet of Impunity - Tenet Settles Kickback Allegations for $514 Million, No Individual Suffers Any Negative Consequences

anechoic effect corporate integrity agreement crime fraud health care corruption impunity kickbacks legal settlements Tenet

A Tenet of Impunity - Tenet Settles Kickback Allegations for $514 Million, No Individual Suffers Any Negative Consequences

Unknown 8/05/2016 Komentar

Tramp, tramp, tramp.  The march of legal settlements continues.  The latest entry is a corporation that has had a 20 plus year history of legal misadventures, allegations of unethical behavior, and actual crimes.  Here are the basics from the Atlanta Business Chronicle:

Tenet Healthcare Corp. (NYSE: THC) said Monday that it believes it has reached an agreement in principle with the government to resolve a long-running criminal investigation and civil litigation about a kick-back scandal involving an Atlanta medical clinic and three of the company's Atlanta-area hospitals.

Dallas-based Tenet said it has agreed to pay $514 million, has agreed to the appointment by the U.S. Department of Justice of a corporate monitor for a period of three years, and has agreed for two wholly owned subsidiaries that previously operated Atlanta Medical Center and North Fulton Hospital to each plead guilty to a single-count indictment.

In particular, regarding kickbacks,

The company's two subsidiaries will plead guilty to a single count of conspiracy to violate the federal anti-kickback statute and defraud the United States, Tenet reported.

Four hospitals owned by Tenet -- Atlanta Medical Center, North Fulton Hospital, Spalding Regional Medical Center and Hilton Head Hospital -- allegedly paid kickbacks to a Georgia company called Clinica de la Mama for Medicaid patient referrals. Clinica de la Mama operated medical clinics that provided prenatal care to predominantly undocumented Hispanic women in metro Atlanta and Hilton Head, S.C.

The contracts were in effect for various periods from 2000 to 2013 between the four hospitals.

Like many such settlements, this one evoked almost no media coverage, and what coverage there was appeared in the business, not health care news.  For example, the brief Wall Street Journal story focused almost entirely on the financial implications for Tenet of the settlement.  Thus the anechoic effect continues.  

Unpacking the Settlement

Bad Patient Care

First of all, the settlement included guilty pleas to charges of "conspiracy to violate the federal anti-kickback strategy."  The allegations were that the kickbacks were paid "for Medicaid patient referrals."  That means that Tenet was alleged to have paid the operator of medical clinics to send patients to Tenet hospitals.  This goes beyond financial crime.

Physicians swear oathes to put the care of individual patients ahead of all other concerns.  The new American Medical Association Principles of Medical Ethics states:

A physician shall, while caring for a patient, regard responsibility to the patient as paramount.

That means that decisions by physicians to refer patients to specific hospitals, specialists, etc should be based on what referrals would be best for individual patients, and certainly not on payments to the physicians by such hospitals, specialists, etc.  Kickbacks like those described above could send patients to hospitals that were not the most suitable for the patients' needs, thus potentially harming patients.  So this case raises big concerns about bad patient care, not merely unethical money transfers.

Yet in the minimal media coverage of the Tenet settlement, I see nothing about medical ethics, potential harms to patients, etc. 

Impunity

As is typical of such settlements, no individual who might have authorized, directed or implemented the kickbacks suffered any consequences.  While top managers of Tenet might have gotten even bigger bonuses because of the additional revenues supplied by the sorts of behavior discussed above, they  would suffer no financial penalties as a result of this settlement.  In fact, in 2015, the current Tenet CEO,  Mr. Trevor Fetter, who was an officer of the company in 2013, the last year kickbacks covered by the settlement ocurred, received total compensation of $15,354,283 according to the company's 2016 proxy statement.

Although in this settlement there were at least some corporate guilty pleas, allowing this case to be considered criminal, these pleas were not made by Tenet.  Instead they were by its subisidiaries.  This would allow Tenet itself  to avoid any non-financial penalties, such as being barred from participating in US government programs.  While the monetary size of the settlement appeared to be large, it was trivial compared to Tenet's annual earnings, which last year were over $18.6 billion according to Google Finance.

This settlement, like many others, included a corporate integrity agreement.  Such agreements, and conceptually similar deferred prosecution agreements, were heavily promoted, in part through the use of a logical fallacy, by then US Attorney, now Governor of New Jersey Chris Christie.  However, there seems to be little evidence that they deter future bad behavior (look here).  

Recidivism

Tenet actually has a long, dark record of misbehavior.  In 2012, we published our last post on Tenet.  It was about a $42.7 million dollar settlement the company made then of charges it overbilled the Medicare program from 2005-07.  As we wrote then:

While this story appeared briefly and without context in a few business news outlet, it really is part of a much bigger picture.

National Medical Enterprises

Published in 2006, Maggie Mahar's Money Driven Medicine was one of the important early works on health care dysfunction (see post here, the web-site of the documentary film based on it here).  One of the striking cases it discussed was that of Nartional Medical Enterprises.  NME was charged not only with run of the mill offenses like over-billing, but more exotic ones like kidnapping patients. NME eventually settled with federal authorities in 1994 for $379 million, and pleaded guilty to a variety of charges. The results were similar to many more recent cases. No one went to jail, and the CEO walked away with a golden parachute.  Despite the seriousness of the offenses, NME did not go out of business.  It simply changed its name - to Tenet Healthcare.

Legal Problems in the 21st Century

The "new" Tenet continued to have legal issues.  These included a $395 million settlement of the Redding Medical Center unnecessary heart surgery scandal in 2004 (look here), and a $21 million settlement of US government charges of kickbacks (look here), a $7 million settlement with the government of Florida of charges of fraudulent billing (look here), and a $900 million settlement of federal over-billing complaints (look here, and see our post here), all in 2006.  There was an apparent lull, and then in 2011 the company settled a class action suit brought after the deaths of 34 patients in a Tenet facility in New Orleans after Hurricane Katrina (see Bloomberg story here.)

Yet this more than 20 year history of repeated allegations, settlements, and crime did not apparently affect the latest settlement.

Conclusions

Nearly every big US health care corporation now seems to now have a long history of bad behavior, sometimes criminal behavior, that has not stopped the revenues from flowing, and the top managers from becoming millionaires, or billionaires.  Is it any wonder that a few years ago, nearly a majority of US respondents to a Transparency International poll declared our health care system to tbe corrupt (look here)?

Their dark musings may be partially due to their awareness that health care corruption is a taboo topic.  As we wrote about it in 2016 (look here)...

 Essentially, there is so much money to be made through pharmaceutical (and by implication, other health care corruption) that the corrupt have the money, power, and resources to protect their wealth accumulation by keeping it obscure.  In the Transparency International 2016 Report on health care corruption in the pharmaceutical industry,

However, strong control over key processes combined with huge resources and big profits to be made make the pharmaceutical industry particularly vulnerable to corruption. Pharmaceutical companies have the opportunity to use their influence and resources to exploit weak governance structures and divert policy and institutions away from public health objectives and towards their own profit maximising interests.

Keep in mind that the money made from corruption does not just go to innocent peoples' retirement funds that are invested in pharmaceutical stocks.  It predominantly goes to top corporate executives and managers, and their cronies who preside over the corrupt practices.

I might as well repeat myself once again.  As I wrote in 2015,

If we are not willing to even talk about health care corruption, how will we ever challenge it? 

So to repeat an ending to one of my previous posts on health care corruption....  if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.  Yet such action cannot begin until we acknowledge and freely discuss the problem.  The first step against health care corruption is to be able to say or write the words, health care corruption.

Baca selengkapnya

Law and Order? - Bristol-Myers-Squibb Settles Case Alleging Fraud and Kickbacks, No Admissions of Guilt, No Individuals Charged

Abilify Bristol-Myers-Squibb crime impunity kickbacks legal settlements logical fallacies

Law and Order? - Bristol-Myers-Squibb Settles Case Alleging Fraud and Kickbacks, No Admissions of Guilt, No Individuals Charged

Unknown 7/22/2016 Komentar

Introduction 

Donald Trump, Republican candidate for the US presidency last week announced he is the "law and order" candidate, accompanied by then vice presidential contender and New Jersey Governor Chris Christie.



I wonder if all this interest in law and order will lead to increasing the effectiveness of enforcing laws when large US health care corporations are accused?

For years, we have been watching a parade of legal settlements made by big US health care organizations.  These have included the biggest drug companies, biotechnology companies, device companies, insurance companies, etc, etc.  Many involved accusations of fraud, kickbacks, and other seeming crimes.

In many cases, the alleged white collar crimes could have resulted in harms to patients.  For example giving physicians kickbacks to promote particular drugs or devices could have led them to prescribe treatments that could have been useless for particular patients, yet subjected those patients to risks of adverse effects.

Yet few of these cases were resolved with findings of guilt.  Many resulted in financial penalties for the accused organization, but which were tiny compared to that organization's revenue.  Almost none resulted in any consequences for the people in the organization who might have individually profited from the alleged actions, particularly the top executives who were making millions of bonuses, suggesting their apparent impunity.

This parade of settlements does not look like instantiation of law and order to me, in my humble opinion.

Bristol-Myers-Squibb Settles Allegations of Kickbacks

And the parade continues.  The latest case, which barely was noticed in the media, involved huge pharmaceutical company Bristol-Myers-Squibb.  It was best documented by Ed Silverman in Stat,

After nearly a decade of litigation, Bristol-Myers Squibb on Monday agreed to pay $30 million to settle charges by California officials of paying kickbacks to induce doctors to prescribe several of its medicines.

The settlement with the California Department of Insurance stemmed from a whistleblower lawsuit that was filed in 2007 by three former Bristol-Myers employees. They alleged that from 1997 through 2003, the drug maker used a wide variety of inducements to generate revenue. The state later joined the lawsuit in 2011 and, last year, the former employees were dismissed from the case by a state court.

The kickbacks included box seats at sporting events where doctors were given food, drinks, and parking; enrollment in a Los Angeles Lakers basketball camp for doctors and their children; prepaid golf outings at luxury courses; tickets for doctors and their families to see Broadway shows in California cities; and lavish dinners, resort hotel trips, and concert tickets for doctors who were especially big prescribers.

Among the many medicines for which doctors were persuaded to write more prescriptions were the Pravachol cholesterol pill; the Plavix blood thinner; the Abilify antipsychotic; the Glucophage diabetes treatment; and the BuSpar antianxiety drug.

A Bristol-Myers spokesman wrote us that the company denied any wrongdoing, but also noted that the firm began adhering to a voluntary industry marketing code in 2002. 'We are pleased to put this matter behind us so that we can focus on making transformational medicines for patients battling serious diseases,' he wrote.

Note that in this case, as is typical for such cases, the financial penalty seems to be minimal compared to the company's total revenues (more than $16.5 billion according to Google finance.)  The company was allowed to deny wrongdoing (although in absence of same, why should it pay a fine?)  No individuals who might have personally profited from the actions in question suffered any negative consequences.

Why Not More Severe Penalties for a Repeat Offender?

Furthermore, the outcome seems to have nothing to do with the accused's track record.  Anyone who follows the news knows that in general, penalties in criminal cases are likely to be different for first offenders and habitual criminals.  Penalties in civil cases also may depend on the defendant's track record.

However, this case, like most other cases involving big health care organizations, seems to have occurred in a vacuum, separate from the company's track record.  Yet a bit of searching reveals that BMS, like many other big health care corporations, seems to have a pretty bad record.


- In 2003, for $617 million, BMS settled suits alleging it tried to prevent competition from low cost generic versions of its products Taxol and Buspar (per the NY Times).
- In 2004, for $150 million, BMS settled suits by the SEC alleging accounting fraud (per the NY Times here).
- In 2007, BMS paid a $1 million dollar penalty while pleading guilty to lying to federal agents about a deal with the Canadian drug company Apotex (per Law360).   In 2009, it paid additional financial penalties in response to a US Federal Trade Commission charge about this case (per the FTC).
 - In 2007, for $515 million, BMS settled a suit alleging it used kickbacks to induce use of Abilify for dementia and by childeren, despite evidence that the drug was not suitable for either.  The settlement included a five year corporate integrity agreement.  (Look at our post here).
 - In 2014, BMS settled allegations its subsidiary Lantheus Medical Imaging Inc evaded state taxes (per the Corporate Crime Reporter)
 - In 2015, Bristol-Myers-Squibb settled allegations by the US Securities and Exchange Commission (SEC) that it bribed physicians in China to induce them to prescribe its drugs.  (Look at our post here).

(Parenthetically, I apologize that many of these previous cases have not been previously mentioned on Health Care Renewal.  For that I apologize.  Yet some simple Google searches were all that were required to find them.)

Why did none of the law enforcers involved in the later cases do similar searches, and why did the company's track record not figure into how the current case was resolved?

Chris Christie and the Rise of the Deferred Prosecution or Corporate Integrity Agreement for Too Big to Jail Organizations

The answer to that will not be easy.  At best, it now seems to be standard operating procedure for law enforcement to treat big health care organizations very gently.  However, there is one clue in BMS track record that it might be helpful to discuss in this political season.


Note that in one of the biggest settlements listed above, BMS agreed to a corporate integrity agreement.  According to a 2015 article in Time, the use of such agreements, coupled with apparently large fines but no other penalties, for corporate offenders was pioneered by none other than then US Attorney Chris Christie, (who spoke in the video above).

Christie was apparently horrifed by the criminal prosecution of Arthur Andersen, a big accounting firm, in the wake of the Enron scandal.  At that time, federal prosecutors acted so that

The company itself—not its employees who might have been responsible—was indicted and found guilty. The trial put the company out of business. The conviction was overturned on appeal, but not before the company’s reputation was destroyed and its employees forever branded with a Scarlet Letter, representing Andersen, not Adultery.

The article described Mr Christie's response:

Christie had watched wall-to-wall coverage of the case, and it made him uncomfortable. He decided he did not want to run his office in that way. Instead of bulldozing New Jersey companies facing smaller-scale fraud cases and leaving their employees out of work, Christie preferred to build a case against the firms and then bring their leaders in for a take-it-or-leave-it chat. Ultimately, seven New Jersey corporations accepted deferred prosecution agreements, or deals with the government that let them avoid trial in exchange for the companies hiring independent monitors to oversee operations and put in place guards against future wrongdoing.

Christie often was relieved they were open to the deals. 'Put the company itself out of business? Lose all the jobs?' Christie asked when asked about the alternatives. He pointed to a corruption case he built against St. Barnabas Health Care System, the state’s largest, for double- and over-billing Medicare and Medicaid services. St. Barnabas paid $265 million to settle the case. 'What are you going to do?' Christie asks. 'Close the hospital, the largest hospital that serves the poor?'

Neither Time, nor Mr Christie seemed to notice that this reasoning involved a logical fallacy, a false dilemma.  True, there are two options:
1) criminally prosecute the whole company
2) allow the company to operate under a deferred prosecution or corporate integrity agreement.
But there is a third option:
3) Criminally prosecute the individuals in the company who were most involved in and most benefited from the bad behavior.

So in the St Barnabas example, what he could have done was prosecute the people at St Barnabas who were most responsible for the over-billing, and let the hospital itself go with a fine. Mr Christie for some reason never seemed to think about that option.  Neither have most other US law enforcers who have dealt with large organizations since.

Ironically, Mr Christie has got himself into some ethical hot water because of how he managed corporate integrity or deferred prosecution agreements involving BMS and other health care organizations.  Some have alleged that Mr Christie found some other advantages to using such agreements, advantages that accrued mainly to Mr Christie and his cronies.  As the Time article noted, re BMS

As part of its penance, the company also proposed paying for a professor of business ethics at a law school. The company initially offered to pick up the tab at a school in New York. No way, Christie said. 'This is a New Jersey case. Pick a New Jersey school,' Christie replied. Rutgers already had such a program, and there was only one other law school in New Jersey. It just happened to be Christie’s alma mater, Seton Hall. 'It couldn’t have mattered less to me,' Christie says. 'I didn’t get anything out of it. I was long graduated from Seton Hall.' (The Justice Department signed off on the agreement, but would later limit U.S. Attorneys’ ability to negotiate such deals.)

Christie’s critics pounced on the $5 million payment to Seton Hall, and to this day are trying to use it as a way to suggest he is another pay-to-play New Jersey politician.

And in two other health care cases:

Christie hired former Attorney General John Ashcroft, his one-time boss, to monitor Zimmer Inc., one of the firms that settled with the government. In turn, Ashcroft’s company charged between $1.5 million and $2.9 million a month to monitor the medical device company. By the time Christie arrived in Washington to answer lawmakers’ questions, The Ashcroft Group had earned $52 million on that case. 'To me, that is outrageous,' Rep. Steve Cohen chided Christie. 'I don’t care what you did. It is not worth $52 million,' the Tennessee Democrat continued. 'Even if you took steroids and hit 70 home runs, it is not worth $52 million.'

Lawmakers also wanted to know why he named David Kelley to a post to oversee the Bristol-Myers Squibb settlement. Kelley two years earlier, as a former prosecutor, declined to bring securities fraud charges against Todd Christie, the future-Governor’s brother. Was this payback for sparing a Christie Family?

Mr Christie defended his conduct in the BMS case:

Christie to this day says he has no regrets about the deferred prosecution agreements, including the professor position. To him, it matters less about whether there was a conviction than whether the illegal behavior ended. 'The goal as the U.S. Attorney is to stop the conduct,' Christie says. 'If you’ve stopped the conduct, you’ve won.'

But of course the current case, and those involving BMS from 2014 and 2015, shows that Mr Christie's corporate integrity agreement did not "stop the conduct" at least in the case of BMS.  That rationale was fallacious too.


Summary

Now that political campaigners are once again shouting about law and order, maybe this is the time to call for effective and equal enforcement of the laws regarding white collar crime in health care.  For years, we have watched perpetrators of small scale Medicaid and Medicare fraud go to jail.  Yet when big companies are accused of big scale crime, almost no one ever goes to jail.

It is time for equal justice for all in health care.

Let me end with a quote from a report by Senator Elizabeth Warren (D - Massachusetts) published in January, 2016, entitled "Rigged Justice: 2016 - How Weak Enforcement Lets Corporate Offenders Off Easy."

 Laws are effective only to the extent they are enforced. A law on the books has little impact if prosecution is highly unlikely.

This country devotes substantial resources to the prosecution of crimes such as murder, assault, kidnapping, burglary and theft, both in an effort to deter future criminal activity and to provide victims with some degree of justice. Strong enforcement of corporate criminal laws serves similar goals: to deter future criminal activity by making would-be lawbreakers think twice before breaking the law and, sometimes, by helping victims recover from their injuries.

When government regulators and prosecutors fail to pursue big corporations or their executives who violate the law, or when the government lets them off with a slap on the wrist, corporate criminals have free rein to operate outside the law. They can game the system, cheat families, rip off taxpayers, and even take actions that result in the death of innocent victims—all with no serious consequences.

The failure to punish big corporations or their executives when they break the law undermines the foundations of this great country: If justice means a prison sentence for a teenager who steals a car, but it means nothing more than a sideways glance at a CEO who quietly engineers the theft of billions of dollars, then the promise of equal justice under the law has turned into a lie. The failure to prosecute big, visible crimes has a corrosive effect on the fabric of democracy and our shared belief that we are all equal in the eyes of the law.

Under the current approach to enforcement, corporate criminals routinely escape meaningful prosecution for their misconduct. This is so despite the fact that the law is unambiguous: if a corporation has violated the law, individuals within the corporation must also have violated the law. If the corporation is subject to charges of wrongdoing, so are those in the corporation who planned, authorized or took the actions. But even in cases of flagrant corporate law breaking, federal law enforcement agencies – and particularly the Department of Justice (DOJ) – rarely seek prosecution of individuals. In fact, federal agencies rarely pursue convictions of either large corporations or their executives in a court of law. Instead, they agree to criminal and civil settlements with corporations that rarely require any admission of wrongdoing and they let the executives go free without any individual accountability.

And end with a video of her speaking on the subject.

Baca selengkapnya

UnitedHealth's Optum Division Settles Case Alleging it Enrolled Non-Terminally Ill Patients in Hospice, Thus Risking Their Deaths Due to Treatable Illnesses

fraud hospices legal settlements UnitedHealth

UnitedHealth's Optum Division Settles Case Alleging it Enrolled Non-Terminally Ill Patients in Hospice, Thus Risking Their Deaths Due to Treatable Illnesses

Unknown 7/19/2016 Komentar

Fraudulant hospice enrollment is a uniquely dangerous practice, yet the latest cases of it have, as usual, attracted little attention.

Background

As we have discussed before, hospice care was initially designed to provide more humane treatment of the terminally ill, particularly patients with advanced cancer.  The idea was that rather than subjecting such patients to futile, but often painful or dangerous treatment, they would receive humane, palliative care.  Hospice care initally was provided in the US by small, local non-profit organizations.  But since Medicare pays for hospice care fairly well, for-profit corporations soon got into the act.  As we have discussed previously, some hospices, often but not always for-profit, began to admit patients who were not terminally ill.

The danger is that hospice care specifically excludes potentially curative care, such as antibiotics for infection or surgery for appendicitis.  So if a patient who is not terminal is in hospice and that patient develops severe bacterial pneumonia, that patient may not get antibiotics and thus may die of a potentially curable disease. 

We have been writing about this dangerous aspect of modern hospice care since 2011 (look here).  In various posts here we have detailed particular cases of non-terminal patients admitted to hospice who later died, seemingly of the neglect of treatable illness mandated by the concept of hospice care.  There have also been cases in which patients with chronic pain, but no terminal illness, may have died from hospice's overly aggressive use of narcotics .  For example, in a 2014 Wasthington Post story,

Clinard 'Bud' Coffey, 77, a retired corrections officer, did the crossword in The Charlotte Observer after breakfast every morning, pursued his hobby of drawing cartoons, talked seven or eight times a day to his son Jeff and, just two weeks before his death, told a pal that he still felt 'like a teenager.'

He did, however, have some chronic back pain, and in late March he was enrolled in hospice care 'essentially for pain management,' his doctor said. Over a two week period, he received rising doses of morphine and other powerful drugs, grew sleepy and disoriented, and stopped breathing, dying peacefully at home, according to his family and medical records they provided.

The Latest UnitedHealth/ Optum Case

The latest case of allegations of fraudulant hospice enrollment involved a very big, very profitable corporation.  As reported in detail only in the Minneapolis Star-Tribune,

A division at Minnetonka-based UnitedHealth Group is paying $18 million to settle allegations that it submitted false claims to Medicare for hospice patients who were not terminally ill.

The payment announced this week resolves a whistleblower lawsuit against Optum Palliative and Hospice Care that alleged the company tried to boost the number of patients for whom it could bill the federal Medicare program, without regard to whether they were eligible for and needed hospice services.

UnitedHealth Group's Optum subsidiary is a fairly big player in the commercial hospice world,

Optum/Evercare provides hospice care in 12 U.S. markets, including Arizona and Colorado. It does not operate in Minnesota.

The Strib provides a bit more detail about what seems to have happened.

The government alleged that false claims in the case were submitted to Medicare from Jan. 1, 2007, through Dec. 31, 2013. The lawsuit argued that Optum discouraged doctors from recommending that ineligible patients be discharged from hospice, and failed to ensure that nurses accurately and completely documented patients’ conditions.

The allegations were first raised by former employees in whistleblower lawsuits, which let private parties sue on behalf of the government and share in any recovery. The share to be awarded in the Optum case has not yet been determined, the Justice Department said in a news release.

As is now tediously typical in legal settlements involving large health care organizations, the government allowed the case to settle without any determination of guilt or innocence, and of course, without any individual who may have profited from the alleged bad behavior having to suffer any negative consequences.

'We are pleased to resolve this issue and are proud of our long record of providing high-quality, compassionate hospice care consistent with the needs of patients and supported by their doctors and family members,' Optum said in a statement. 'We believe Evercare Hospice acted properly and did not engage in wrongdoing.'

Also,

'The claims resolved by the settlement are allegations only, and there has been no determination of liability,' the Justice Department said in a news release.

As is also usual in these cases, the monetary value of the settlement, while it might appear large to a middle-class lay-person, is tiny compared to the revenue of UnitedHealth. For example, according to Google Finance, the corporation's 2015 total revenue exceeded $157 billion.

All that would be bad enough if the case only involved financial fraud.  Again, as noted above, it is possible that some patients without terminal disease who were enrolled in UnitedHealth's Optum hospice could have died of treatable conditions.  Yet this possiblility was not addressed by the limited press coverage of this case, or even by the US Department of Justice's news release about the settlement. 

Other Recent Cases

In 2016, there have been nearly anechoic media reports of cases of smaller hospices at least alleged to have deliberately enrolled non-terminal cases.  Perhaps because these organizations involved were not "too big to jail," some of these cases involved findings of guilt.

Home Care Hospice

In February, 2016, according to the Philadelphia Business Journal,

Nearly three years after fraud charges against a Philadelphia nurse first surfaced, a jury found 68-year-old Patricia McGill guilty for her role in scamming Medicare out of $9.32 million.

McGill was the director of professional services for Home Care Hospice for roughly three years beginning in 2005. During that time, she authorized and supervised the admission of patients for hospice services that they did not need or were not eligible for, according to court records.

This was not the first finding of guilt in this case involving a small, local for-profit hospice.

Alex Pugman and Matthew Kolodesh, the owners of the defunct Home Care Hospice – at one time located along Grant Avenue in Northeast Philly – were previously convicted for their part in the crime. Kolodesh, of Bucks County, was sentenced to 14 years in prison after being found guilty on more than 30 separate counts.

Note that the sentences were severe, but as far as I could tell, not based on the possible danger to patients without terminal illness created by their admission to hospice.

Horizon Hospice Subsidiairy of  JourneyCare

As reported by the Pittsburgh Post-Gazette in March, 2016,

The former top executive at Horizons Hospice in Monroeville is set to enter a guilty plea Friday in connection with charges of scheming to send patients to the center who weren’t terminal so she could bill Medicare and Medicaid.

She was not the first person to be found guilty in this case.

One of the key witnesses was expected to be Oliver Herndon of Peters, the medical director at Horizons from 2008 to 2012.

Herndon was sentenced in July to 33 months in prison after pleading guilty to certifying patients for hospice care who weren’t terminal and keeping them there longer so Horizons could continue billing the government.

Again, the possible danger to the fraudulantly enrolled patients was not discussed in the media accounts. Note that Horizons Hospice is a subsidiary of JourneyCare, which appears to be a non-profit organization.

Multiple Michigan Hospices

As reported in April, 2016, by the Washington Free Beacon,

Five individuals who have donated to Democratic politicians pleaded guilty to a scheme that drained Medicare out of $33 million dollars.

Two physicians and three owners of hospice and home care companies based out of Detroit, Mich., were charged on June 18, 2015 as part of the largest Medicare fraud case in history for submitting fraudulent claims for home health care and hospice services that were either not provided or deemed medically unnecessary.

The elaborate operation revolved around Muhammad Tariq, Shahid Tahir, and Manawar Javed—the owners of the home health care and hospice companies—paying kickbacks and bribes to physicians for referrals to their companies that included A Plus Hospice and Palliative Care, At Home Hospice, and At Home Network Inc.

While the reporting of this case focused on the apparent political leanings of the individuals involved, it also ignored any danger to non-terminal patients.


Discussion

The problem of fraudulant enrollment of non-terminal patients in hospice continues, despite our efforts over five years to make the problem more public.  The latest case involved a very big, very wealthy for-profit health care corporation which has had its share of troubles in the past.  Yet the latest case is as anechoic as earlier ones, including smaller cases this year.

These enrollments may be motivated by the desire for more money, but they put patients at risk.  Nonetheless, such abuses by hospices get little press coverage, seemingly are ignored by health care regulators and law enforcement, and are almost completely anechoic in the health care, medical and health policy literature.

If a measure of society is how it cares for the most vulnerable patients, the US laissez faire approach to for-profit hospices suggests a society in decline.

To repeat what I wrote the last time for-profit hospices were (barely) in the news for enrolling the wrong patients,...

 In my humble opinion, we should return control of direct patient care, especially of the most vulnerable patients, to health care professionals and if necessary small non-profit community organizations.  We ought to give strong consideration to banning corporate hospices, and banning all forms of the corporate practice of medicine and corporate health care "delivery."

Given how many insiders make so much money from the current version of laissez faire capitalism in health care, however, I would expect strong resistance should such apparently "radical," but actually conservative proposals actually get any mainstream attention.

But in an election season now often dominated by ridiculous hyperbole and outlandish statements, maybe such vitally (literally) important issues should start getting some attention.     

Baca selengkapnya

What You See Is Not What You Get - Purdue Pharma Executives Pleaded Guilty, but the Oxycontin Billionaires Went Unnoticed

anechoic effect conflicts of interest deception health care corruption legal settlements marketing narcotics Oxycontin Purdue Pharma

What You See Is Not What You Get - Purdue Pharma Executives Pleaded Guilty, but the Oxycontin Billionaires Went Unnoticed

Unknown 3/31/2016 Komentar

What you see if often not what you get.  

Nine years ago, three top executives of Purdue Pharma pleaded guilty to criminal charges of "misbranding" Oxycontin.  The case appeared to be a landmark.  In previous years, top executives of large health care corporations rarely faced legal consequences when their companies misbehaved.  Yet in the Purdue Pharma/ Oxycontin case, things were not what they seemed.  Maybe that is why this case never did yield a new era of accountability for top corporate health care leaders.

Background - the Oxycontin Guilty Pleas

In 2007, we posted about the executives' guilty pleas.  Relying on the New York Times coverage, we noted that the Department of Justice charged that the company used aggressive, deceptive marketing, including claims that Oxycontin had little potential for addiction, even though they then knew otherwise.  Unlike many other settlements, the executives and the company admitted their dishonesty, although they were not apparently charged with fraud.

In a statement, the company said: 'Nearly six years and longer ago, some employees made, or told other employees to make, certain statements about OxyContin to some health care professionals that were inconsistent with the F.D.A.-approved prescribing information for OxyContin and the express warnings it contained about risks associated with the medicine. The statements also violated written company policies requiring adherence to the prescribing information.'

'We accept responsibility for those past misstatements and regret that they were made,' the statement said.

While no executives went to jail, the three who pleaded guilty,

Michael Friedman, the company’s president, who agreed to pay $19 million in fines; Howard R. Udell, its top lawyer, who agreed to pay $8 million; and Dr. Paul D. Goldenheim, its former medical director, who agreed to pay $7.5 million.

appeared to be the top leaders of the company.  So, at the time I concluded,

At least in the Purdue Pharma/ Oxycontin case top company leaders were prosecuted, pleaded guilty, and will personally have to pay substantial financial penalties. Maybe this will convince the leaders of health care organizations that deceptive marketing practices may not be in their long term interests. Up to now, it may have been too easy to be swayed by the enormous profits deceptive marketing can bring, and regard fines paid by the company as just a cost of doing business.

No Lasting Effects

I was much too optimistic.  Alas, we have since documented numerous legal settlements, and other cases of at least alleged bribery, kickbacks, or fraud, in which the top organizational leaders who authorized or directed the questionable conduct never suffered any consequences for their actions.  That is, they demonstrated impunity.

Meanwhile, Purdue Pharma has been in the news since 2007, and not in a good way.  In particular, we noted that the company seemed to keep up manipulative, if not deceptive marketing efforts on behalf of its narcotic product.  In 2010, Canadian medical students protested that their "education" about narcotics and pain management was influenced by Purdue marketing (look here).   In 2012, we noted that a leading "key opinion leader" who had a key role promoting the liberalized, if not reckless use of narcotics to treat all sorts of chronic pain, and had financial relationships with numerous narcotic pharmaceutical manufacturers, including Purdue Phrama, later admitted that it was all "misinformation."  Yet this aggressive promotion of narcotics was likely a major factor in the ongoing narcotic epidemic which has killed thousands in the US.  And in January, 2016 we described how opposition to new CDC guidelines that suggested much more conservative use of narcotics seemed to be funded, if not orchestrated by narcotic pharmaceutical manufacturers, notably including Purdue Pharma.  Finally, there have been many other stories about Purdue Pharma about which we failed to post.

One would think, however, that a company that admitted to a crime, and whose three top executives lost their jobs and also pleaded guilty to crimes, would at least change its ways, even if these guilty pleas and admissions did not inspire more attempts to hold top corporate health care leaders accountable.

An Assumption about Unaccountable Hired Mangers

But it turns out that some obvious assumptions that I and probably many other people made about the Purdue Pharma cases of 2007 were wrong.  I implicitly assumed when I wrote my 2007 post that the three Purdue Pharma executives who pleaded guilty were the top leaders of the company.

Furthermore, as we have discussed elsewhere, the top executives of large, for-profit publicly held corporations, like most pharmaceutical companies, have become largely unaccountable.  They may seem to exist in a bubble, in which they are hailed as visionaries, and paid exceedingly well no matter how their organizations perform.  (Look here).  However, many top hired corporate managers have mainly become "value extractors."

These executives are nominally accountable to their corporate boards of directors, which are supposed to represent the owners of the companies.  However, most large pharmaceutical companies have numerous stockholders, who have no easy avenue to organize.  Many of their stockholders, in turn, are mutual funds, retirement funds, etc whose shares in turn are owned by thousands more.  These numerous, dispersed "owners" have little influence on corporate boards, who often functionally are dominated by cronies of the top management.

So when the three top Purdue executives pleaded guilty, at least it looked like in this case the unaccountable hired executives had been made accountable, if not to their boards of directors, at least to the courts.

But Who Owned Purdue?

But what you see is not always what you get.  There was a hint buried in the NY Times article,

Between 1995 and 2001, OxyContin brought in $2.8 billion in revenue for Purdue Pharma, a closely held company based in Stamford, Conn. At one point, the drug accounted for 90 percent of the company’s sales.

As part of the plea agreement, Purdue Frederick, a holding company for Purdue Pharma that is also closely held, pleaded guilty to a felony charge of misbranding OxyContin.

The article did not further discuss the meaning and implications of the twice used phrase, "closely held."  I confess I missed it entirely.  However, it seems to have meant that rather than being a public corporation with numerous, dispersed stockholders, the owners of Purdue Pharma and its parent were a smaller group, perhaps a group who should have been accountable for the actions of their executives.  However, the NY Times did not further describe this group.  Neither did reports in other outlets, such as the Wall Street Journal, CBS, or Time. Nor did a variety of other news stories that mentioned Purdue Pharma through 2010.

The Oxycontin Billionaires

There were a fewother clues available in 2007, but would have not been easily found at that time.  After the case's resolution was disclosed, an article appeared in the Corporate Crime Reporter (but was presumably only available at that time by subscription.)

Purdue is a privately held, very secretive company based in Stamford, Connecticut.

It’s controlled by the Arthur Sackler family. Arthur Sackler is the guy who, before he delivered OxyContin, brought to you the marketing for Librium and Valium. Walk on the mall in Washington and you walk by the Freer Gallery of Art and Arthur Sackler Gallery.

Art brought to you by Oxy.

New York Times correspondent Barry Meier is probably the most plugged in journalist on the topic. A couple of years ago, he wrote a book detailing the problem titled Pain Killer: A 'Wonder' Drug’s Trail of Addiction and Death (Rodale Books, 2004.)

So apparently Purdue Pharma and Purdue Frederick were privately held, the Sackler family held a controlling interest, and the Sackler family were rich enough to have their name attached to an art museum.

The relationship between the Sackler family and Purdue got no other attention I could find until 2010.  In March of that year, another member of the family, Dr Mortimer D Sackler died, and his NY Times obituary led off with evidence of his wealth, and philanthropy,

Mortimer D. Sackler, a psychiatrist who was a co-owner of the pharmaceutical company Purdue Pharma, makers of the controversial painkiller OxyContin, and whose lavish gifts to the Guggenheim Museum, the Metropolitan Museum of Art and Columbia University made him one of New York City’s most prominent benefactors, died March 24 in Gstaad, Switzerland. He was 93 and had homes in London, Gstaad and Antibes, France.

The obituary also provided evidence of a direct relationship among the Sacklers, Purdue, and the development of Oxycontin.

The Sackler brothers were all doctors, and all businessmen as well. In 1952, while the three were working at the Creedmoor state psychiatric hospital, Arthur financed the purchase of a small drug manufacturer based in Greenwich Village, the Purdue Frederick Company, which Mortimer and Raymond Sackler ran as co-chairmen and which later became Purdue Pharma, now based in Stamford, Conn.

Then,

by the mid-1990s Purdue Pharma was still a small drug company. But with a new product, OxyContin, a powerful, long-acting, narcotic painkiller, the company hoped to join the ranks of industry giants. Indeed, by 2001 sales of the drug had reached nearly $3 billion and accounted for 80 percent of Purdue Pharma’s revenue.

An obituary in the London Telegraph quantitated the wealth that the Sacklers obtained from Purdue a bit more,

The lavish scale of Sackler's generosity was indicated in The Sunday Times's "Rich List" for 2008, which noted that while he and his family owned a £500 million stake in the pharmaceutical business, Purdue Pharma, huge charitable contributions had cut their wealth to £300 million. Yet few knew much about the Sacklers apart from their association with the cultural institutions that bear their name.

However, I could find no echos of this story beyond these obituaries, and certainly none that prominently made their way into the health care world.  In late 2011, about ten percent of a long piece by Fortune on Purdue made the Sackler's ownership and wealth clear, but did not discuss the implications.

The story only began to echo a little in 2014.  That year, the prospect of a trial of a civil lawsuit against Purdue filed in the state of Kentucky, one of the most hard hit by the narcotic epidemic, promised to shake things up.  A long Bloomberg story on the lawsuit was the first to suggest that the very wealthy Sackler family might bear some responsibility for how Purdue marketed Oxycontin, and the results on patients' and the public's health. 

Kentucky lawyers plan another first for Purdue: They want to elicit testimony from the company’s board, which is dominated by members of the Sackler family, the wealthy philanthropists who own the company and have until now remained largely untouched by the controversy tied to the blockbuster drug that netted their business billions of dollars.

It underlined the tightness of the ties between the Sackler's and Purdue. The family does not merely own a controlling interest, but dominates the company's governance.

Purdue today is owned through holding companies and family trusts for the benefit of Mortimer and Raymond Sackler’s families, according to Raul Damas, a company spokesman. In all, nine members of the Sackler family are Purdue directors. In January, Raymond Sackler announced the appointment of Chief Executive Officer Mark Timney. None of the Sacklers has been named in the Kentucky suit.

Raymond, who remains on the board, and his children have been the most involved in the family business. His son, Richard, a physician, worked at Purdue for three decades before being named president in 1999. Now retired, he remains a director. A grandson, David Sackler, sits on the board and runs a family investment fund, Summer Road LLC, in New York. Raymond’s other son, Jonathan, is a director, too.

By the way, the Bloomberg article also detailed another point (which had been mentioned in the obituaries and the CNN article). One member of the Sackler family was behind the aggressive, deceptive marketing campaign that sparked so many sales of Oxycontin. In fact, this Sackler brother could be viewed as the father of modern aggressive, deceptive pharmaceutical/ biotechnology/ device corporate marketing.

Raymond and Mortimer ran the company together. Arthur, the oldest, appears to have been primarily an investor and adviser.

Considered the father of modern pharmaceutical marketing, Arthur Sackler created the first medical-journal advertising insert to promote a drug and pushed for hiring sales reps long before they became as common in physicians’ waiting rooms as out-of-date magazines. Purdue used many of Arthur Sackler’s tactics when it introduced OxyContin, a time-released dose of the opioid oxycodone, in 1995.

CNN had gone into a bit more detail on Arthur Sackler's previous work:

Arthur, joined a small advertising agency that specialized in marketing pharmaceuticals. (He also funded his brothers’ purchase of Purdue, according to a 2003 book by New York Times reporter Barry Meier called Pain Killer: A Wonder Drug’s Trail of Addiction and Death.) Arthur was so successful that in 1997 he was one of the first people named to the Medical Advertising Hall of Fame, whose website credits him with helping 'shape pharmaceutical promotion as we know it today.' As early as the 1950s he was experimenting with TV marketing, and according to the entry, Arthur’s scientific knowledge and ability to expand the uses for Valium helped turn it into the first $100 million drug ever. Arthur’s philosophy was to sell drugs by lavishing doctors with fancy junkets, expensive dinners, and lucrative speaking fees, an approach so effective that the entire industry adopted it.

So at least this article credits Dr Arthur Sackler, of Purdue Pharma, with being one of the creators of the web of conflicts of interest that has ensnared many medical professionals in the last decades.  Who knew?

Just to ice this cake, in later 2015, it became apparent that the Sacklers did not merely become wealthy from Purdue profits and Oxycontin sales. They became fabulously wealthy. Forbes listed the Sackler family that year as one of the 20 richest US families, estimating their combined wealth as $14 billion.

The Sackler family, which owns Stamford, Conn.-based Purdue Pharma, flew under the radar when Forbes launched its initial list of wealthiest families in July 2014, but this year they crack the top-20, edging out storied families like the Busches, Mellons and Rockefellers.

How did the Sacklers build the 16th-largest fortune in the country? The short answer: making the most popular and controversial opioid of the 21st century — OxyContin.

Purdue, 100% owned by the Sacklers, has generated estimated sales of more than $35 billion since releasing its time-released, supposedly addiction-proof version of the painkiller oxycodone back in 1995. Its annual revenues are about $3 billion, still mostly from OxyContin. The Sacklers also own separate drug companies that sell to Asia, Latin America, Canada and Europe, together generating similar total sales as Purdue’s operation in the United States.

Forbes estimates that the combined value of the drug operations, as well as accumulated dividends over the years, puts the Sackler family’s net worth at a conservative $14 billion.

Perhaps if the Kentucky lawsuit had gone to trial, these echos would have gotten even louder.

However, in December, 2015, Purdue settled the suit for $24 million, admitting no liability, and keeping the Sackler name out of the limited press coverage (although see this in STAT by Ed Silverman.)

I, for one, only found out about the Sackler / Purdue linkage when STAT published a followup in March, 2015.  It turns out that in the run up to the Kentucky trial, a member of the Sackler family was actually deposed.  This may have been the only direct discussion of the Oxycontin case by a member of the family.

The settlement required the attorney general to 'completely destroy' or return to Purdue all documents it received from the company or from any other party through a subpoena. The attorney general was given 60 days from the Dec. 18 agreement to comply. The agreement also prohibits the attorney general from sharing the documents with any other entity investigating or litigating against Purdue.

The attorney general’s office destroyed millions of pages of documents within the 60-day period, according to spokesman Terry Sebastian.

While the attorney general destroyed the records in its possession, copies of some of those records remain under seal in the Pike County courthouse, including the Sackler deposition.

The STAT article noted that millions of pages of records from other Oxycontin litigation were destroyed or returned to the company as stipulated by previous settlements. This time,

STAT is making a motion to intervene in the settled Kentucky lawsuit. The motion was sent to the Pike Circuit Court Monday via overnight courier.

The motion argues that STAT and the public have a constitutional right to the records that trumps Purdue’s interest in keeping them secret. The motion also states there is a substantial public interest in the case, citing the epidemic of drug addiction and related crime stemming from the abuse of OxyContin in Kentucky and other states. STAT is requesting the court make the documents available immediately.

We will see how this attempt to shine a little light on the long running Oxycontin story goes. I am not optimistic, since this long-running case has vividly shown how those who have the biggest vested interests in keeping our commercialized, overutilizing, over-marketed health care system going can use money and influence to keep it all so anechoic.

Summary

So now we see, dimly, reasons why the penalties handed out to "top" Purdue Pharma executives for the deceptive "misbranding" of a dangerous narcotic failed to end the impunity of top health care leaders.  Those supposed "top men" were not really the top.

Just like in "Raiders of the Lost Ark,"




They were hired managers with fancy titles who worked for a secretive family which owned Purdue Pharma, which was apparently directly involved in the engineering of the aggressive, deceptive, "misbranding" sales campaign which sold so much Oxycontin, which became fabulously wealthy from the ownership of the company, and which managed to conceal their relationship to the company from nearly all prying eyes.  So far, the family seems to either have befuddled or intimidated law enforcement sufficiently to prevent any direct consequences from befalling them.

This case vividly demonstrates, first, how those who have personally gained the most from our current dysfunctional health care system have often brilliantly covered up what they were doing (part of what we have called the anechoic effect).  As long as we do not know where the money goes, and how it is made, we do not know what needs to be done to make things better.  True health care reform requires bright sunlight to be shown on how the health care sausage is made, who makes it, and how they profit from it.  As long as we the people let ourselves stay in the dark, we will continue to endure our woefully overpriced, inaccessible, mediocre quality, and all too often frankly corrupt health care system.  

A piece this long and heavy deserves a musical interlude. Here is a live performance by the Dramatics of "What You See Is What You Get," (if only that were the case here).





 

Baca selengkapnya

Ho-hum, Another Month, Another Set of Multi-Million Dollar Settlements by Health Care Corporations Acting Badly

adverse effects deception Fresenius health care prices impunity legal settlements Merck Pfizer Vioxx You heard it here first

Ho-hum, Another Month, Another Set of Multi-Million Dollar Settlements by Health Care Corporations Acting Badly

Unknown 2/21/2016 Komentar

Amazingly, with a US presidential election looming, there is finally some public discussion here of the impunity of top corporate executives.  Columnist Gretcher Moregenson wrote on February 6, 2016 in the New York Times,

Ho-hum, another week, another multimillion-dollar settlement between regulators and a behemoth bank acting badly.

Then,

As has become all too common in these cases, not one individual was identified as being responsible for the activities. Once again, shareholders are shouldering the costs of unethical behavior they had nothing to do with.

It could not be clearer: Years of tighter rules from legislators and bank regulators have done nothing to fix the toxic, me-first cultures that afflict big financial firms.

Similarly, but more broadly, Senator Elizabeth Warren (D - Massachusetts) published a report in January, 2016, entitled "Rigged Justice: 2016 - How Weak Enforcement Lets Corporate Offenders Off Easy." She summarized its main conclusions in a New York Times op-ed,

Corporate criminals routinely escape meaningful prosecution for their misconduct.

Furthermore,

In a single year, in case after case, across many sectors of the economy, federal agencies caught big companies breaking the law — defrauding taxpayers, covering up deadly safety problems, even precipitating the financial collapse in 2008 — and let them off the hook with barely a slap on the wrist. Often, companies paid meager fines, which some will try to write off as a tax deduction.

The failure to adequately punish big corporations or their executives when they break the law undermines the foundations of this great country. Justice cannot mean a prison sentence for a teenager who steals a car, but nothing more than a sideways glance at a C.E.O. who quietly engineers the theft of billions of dollars.

These enforcement failures demean our principles. They also represent missed opportunities to address some of the nation’s most pressing challenges.

In particular, she cited this example involving health care.

When Novartis, a major drug company that was already effectively on federal probation for misconduct, paid kickbacks to pharmacies to push certain drugs, it cost taxpayers hundreds of millions of dollars and undermined patient health. Under the law, the government can boot companies that defraud Medicare and Medicaid out of those programs, but when Novartis got caught, it just paid a penalty — one so laughably small that its C.E.O. said afterward that it 'remains to be seen' whether his company would actually consider changing its behavior.

Note that we discussed the Novartis settlement here.  The case referred to by Senator Warren was just the latest in a series of ethical misadventures by Novartis which led to legal actions in the US and around the world, but feeble penalties.

But while Ms Morgenson wrote about financial institutions, now we can also write:

Ho-hum, another month, another set of multimillion-dollar settlements between regulators and  behemoth health care companies acting badly.

In chronological order, since mid-January, 2016...

For $830 Million, Merck Settled Shareholders Lawsuit Alleging Deceptions by Corporate Management

On January 15, 2016, the Wall Street Journal reported,

Merck said Friday it agreed to pay $830 million to resolve a class-action lawsuit brought by shareholders, alleging the drug maker and its executives made false and misleading statements about the safety of Vioxx between its introduction in 1999 and its market withdrawal in 2004.

The shareholders alleged they paid inflated prices for Merck shares because of the company’s conduct.

Note that if the company misled its shareholders, it also misled health care professionals and the public about the harms of Vioxx,  putting many patients at risk. Of course, the Vioxx case is now old news, but it continues to be an example of a case in which the corporation paid fines, presumably at the expense of shareholders, employees and patients, but in which no one who authorized or directed the bad behavior paid any penalty.

As is typical in such cases,

Merck, which is based in Kenilworth, N.J., said Friday the settlement of the shareholders’ lawsuit doesn’t constitute an admission of liability or wrongdoing by the company or individual executives named as defendants in the case.

Merck has paid billions to settle multiple lawsuits related to Vioxx, yet what it paid was much less than the revenue produced by the drug.

The bulk of Merck’s Vioxx-related costs came from its 2007 agreement to pay $4.85 billion to settle thousands of product-liability lawsuits alleging that patients’ use of Vioxx caused heart attacks and strokes, and that Merck failed to properly warn people of the risks. Merck didn’t admit liability in that settlement.

In addition, Merck agreed in 2011 to pay $950 million to resolve allegations by the U.S. Justice Department and state governments that the company deceived the government about the safety of Vioxx, and marketed it for uses not included in the prescribing label approved by the Food and Drug Administration.

Merck recorded more than $11 billion in Vioxx sales during the drug’s years on the market from mid-1999 to September 2004.

The company did plead guilty to one criminal charge related to Vioxx.

 As part of the 2011 settlement, Merck pleaded guilty to a misdemeanor criminal violation of a federal drug law, admitting that it promoted Vioxx to treat rheumatoid arthritis before that use was approved by the FDA.

But apparently no Merck manager was ever charged with a crime, much less convicted.  We have discussed the Vioxx case here, and other issues with Merck here.

Note that this settlement comes soon after a smaller settlement in 2015 that was barely mentioned in the press,Merck to pay $5.9 million for misleading marketing of pink eye drug: U.S [Reuters]

For $785 Million, Pfizer Settled Suit Alleging Overcharging of Medicaid

On February 16, 2016, per the Wall Street Journal,

Drugmaker Pfizer Inc. on Tuesday said it reached an agreement in principle to pay $784.6 million to settle a long-running U.S. government investigation of allegations that its Wyeth unit overcharged government Medicaid health programs for the heartburn drug Protonix.

Of course,

Pfizer said the agreement doesn’t include any admission of liability by Wyeth.

Much less did the agreement include any penalties for anyone at Wyeth or Pfizer who authorized or directed the overcharging. Yet some people must have.

Note that this settlement did not seem informed by Pfizer's amazingly lengthy record of legal settlements, and some guilty pleas and/or convictions (for illegal marketing/ misbranding, and for violating the racketeering influenced corrupt organization [RICO]  statute), as most recently summarized here.

Note also, pertinent to the report by Senator Warren mentioned above, every week people pay severe penalties for defrauding Medicaid, Medicare, or other federal health programs.  Today, a quick Google search for "medicaid fraud prison" found such stories from the last month as a woman sentenced to five years in Louisville, and another women sentenced again to five years in Dallas. Yet no person at Pfizer paid any penalty for for practices that deprived the government of hundreds of millions of dollars.  

For $250 Million, Fresenius Settled Lawsuits Alleging it Withheld Information About the its Products' Hazards

Per the New York Times, January 18, 2016,

The world’s largest provider of kidney dialysis equipment and services has agreed to pay $250 million to settle thousands of lawsuits from dialysis patients and their relatives claiming that the company’s products had caused heart problems and deaths.

The settlement was announced by Fresenius Medical Care, a German company whose North American division is one of the two large dialysis providers in the United States.

The lawsuits arose after Fresenius’s own medical office sent an internal memo to doctors in the company’s dialysis centers saying that failure to properly use one of the company’s products appeared to be causing a sharp increase in sudden deaths from cardiac arrest.

But the company did not warn doctors in non-Fresenius clinics who were also using the product, called GranuFlo. It did so only after the internal memo was sent anonymously to the Food and Drug Administration, which began an investigation.

 The company conducted a recall, which was actually a change in the label, not the removal of the product from the market.

Note that this settlement was of allegations not of financial chicanery, but of behavior that put patients in harms way. Nonetheless,

Kent Jarrell, a spokesman for the company, said the initial internal memo was actually incorrect and contradicted by further careful analysis. He said the warning language added to the GranuFlo label in 2012 was eventually removed. GranuFlo, and a related product called NaturaLyte, are used in dialysis machines to help cleanse patients’ blood.

In the first case to go to trial, a jury in Massachusetts state court ruled that Fresenius was negligent, for not distributing the memo more widely, but that a patient’s death could not be attributed to GranuFlo, so no monetary damages were awarded, according to Mr. Jarrell and to Christopher Seeger, a lawyer who led the settlement negotiations for the plaintiffs.

But if the initial concern was unwarranted and Fresenius won the first trial, why would it pay $250 million to settle? Mr. Jarrell suggested that a reason was to put the more than 10,000 lawsuits behind it.

'Fresenius deeply regrets the confusion and concern temporarily generated by the November 2011 memorandum,' he said in an emailed statement.

Again, there were no admissions or findings of guilt, no apologies (except for causing "confusion and concern"), and no negative consequences for the corporate managers who authorized or directed the actions in question.  While the FDA apparently issued a recall notice for GranuFlo, no federal agency apparently took action against the company or any individuals within it.    Also, this settlement seemed uninformed by previous settlements made by Fresenius, which were made in 2011 of allegations of false claims, in 2010 again of allegations of false claims, and in 2007 of allegations of restraint of trade (look here).

Summary

We first discussed how legal settlements may serve as markers for misbehavior by large health care organizations, but not as deterrents to future bad behavior in 2006.  Then we wrote ...

 Why do the mainly monetary penalties seem mainly to come out of the hides of stock-holders and consumers, rather than the people who actually made the decisions that lead to the offenses?

In 2008, we wrote,

After all, a fine or settlement paid years later can just be written off as a cost of doing business. Furthermore, although such a payment may have a (minimal) effect on the company's bottom line, it has no real effect on the people whose decisions and actions lead to the problem.

So rather than repeating our usual verbiage about the impunity of health care leaders, let me defer to Senator Warren:

Laws are effective only to the extent they are enforced. A law on the books has little impact if prosecution is highly unlikely.

This country devotes substantial resources to the prosecution of crimes such as murder, assault, kidnapping, burglary and theft, both in an effort to deter future criminal activity and to provide victims with some degree of justice. Strong enforcement of corporate criminal laws serves similar goals: to deter future criminal activity by making would-be lawbreakers think twice before breaking the law and, sometimes, by helping victims recover from their injuries.

When government regulators and prosecutors fail to pursue big corporations or their executives who violate the law, or when the government lets them off with a slap on the wrist, corporate criminals have free rein to operate outside the law. They can game the system, cheat families, rip off taxpayers, and even take actions that result in the death of innocent victims—all with no serious consequences.

The failure to punish big corporations or their executives when they break the law undermines the foundations of this great country: If justice means a prison sentence for a teenager who steals a car, but it means nothing more than a sideways glance at a CEO who quietly engineers the theft of billions of dollars, then the promise of equal justice under the law has turned into a lie. The failure to prosecute big, visible crimes has a corrosive effect on the fabric of democracy and our shared belief that we are all equal in the eyes of the law.

Under the current approach to enforcement, corporate criminals routinely escape meaningful prosecution for their misconduct. This is so despite the fact that the law is unambiguous: if a corporation has violated the law, individuals within the corporation must also have violated the law. If the corporation is subject to charges of wrongdoing, so are those in the corporation who planned, authorized or took the actions. But even in cases of flagrant corporate law breaking, federal law enforcement agencies – and particularly the Department of Justice (DOJ) – rarely seek prosecution of individuals. In fact, federal agencies rarely pursue convictions of either large corporations or their executives in a court of law. Instead, they agree to criminal and civil settlements with corporations that rarely require any admission of wrongdoing and they let the executives go free without any individual accountability.

Keep in mind that the impunity of health care leaders, especially in contrast with the tough enforcement efforts against small fry health care offenders, not only has a corrosive effect on the fabric of democracy but endangers patients' and the public's health, and makes health care more expensive and inaccessible.

Maybe now that the impunity of corporate leaders is becoming a mainstream topic of discussion, we can start talking about, and then doing something about the impunity of corporate leaders in health care. 

Baca selengkapnya

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

anechoic effect impunity Johnson and Johnson legal settlements Synthes

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

Unknown 12/11/2015 Komentar

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

Suing the Former Synthes CEO

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

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

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

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

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

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

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

Furthermore, 

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

Also,

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

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

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

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

The Synthes Case Up to Now

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

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

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

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

An Almost Anechoic Lawsuit

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

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

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

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

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

Major Clinton Donor Faces 'Criminal Profiteering' Charges

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

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

The Columbia Journalism Review described the Daily Caller as having

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

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

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

Conclusions

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

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

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

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

Baca selengkapnya

Their Cheating Hearts - Latest Allergan Settlement Is a Reminder of Merger Participants' Sketchy Pasts

Allergan crime deception fraud impunity kickbacks legal settlements obstruction of justice Pfizer RICO

Their Cheating Hearts - Latest Allergan Settlement Is a Reminder of Merger Participants' Sketchy Pasts

Unknown 11/25/2015 Komentar

A Huge, but Sketchy Merger

The announced merger and "tax inversion" of Pfizer and Allergan would be one of the largest corporate marriages in US history.  It has drawn more than its share of criticism.  For example, per the Los Angeles Times, former US Senator and Secretary of State, and current presidential candidate Hilary Clinton said "this proposed merger, and so-called inversions by other companies, will leave U.S. taxpayers holding the bag."

By creating the world's largest drug company, it could certainly further consolidate the US and global pharmaceutical market and raise already high drug prices.  While Pfizer in particular has benefited from US funding of biomedical research, including training of researchers and development of research infrastructure, (see this New Yorker article by John Cassidy) making the company pseudo-Irish may be "unpatriotic," as President Obama said with regard to tax inversions in general (per the Washington Post).

The nature of the merger, creating a company that would be Irish for tax purposes, but effectively run out of the US seems at least intellectually dishonest.  (Note that the CEO of its supposedly Irish component, Allergan, works out of Parsippany, NJ (per Bloomberg, here.)

The main beneficiaries of the merger appear not to be patients, or health care providers, or US taxpayers, but top company executives.  As John Cassidy wrote,

It's hard to avoid seeing the merger as a cynical move designed to boost Pfizer's stock price and generate a windfall for the company's senior managers....

But the latest settlement by Allergan, which I was just about to write about before the merger was officially announced, is a reminder that the companies are a good fit in one sense.  Both have long histories of shady behavior as marked by many legal settlements, and in some cases corporate guilty pleas and convictions.

The Latest Allergan Settlement

The beginnings of the latest Allergan settlement were noted back in July, 2015, but first not even connected to Allergan.  According to the US Federal Bureau of Investigation (FBI),

A former district manager of Warner Chilcott Sales U.S., LLC (Warner Chilcott), a pharmaceutical company based in Rockaway, N.J., pleaded guilty today in U.S. District Court in Boston in connection with a scheme to deceive insurance companies and Medicare so that they would cover the costs of Warner Chilcott’s osteoporosis medications, Actonel and Atelvia.

The idea was to promote two of Warner-Chilcott's products, osteoporosis medicines Actonel and Atelvia, by evading insurance company requirements for physicians to justify their use, given questions about their benefits versus harms, and availability of generic treatments for osteoporosis.

Beginning in 2010 and throughout 2011, Podolsky directed the sales representatives in his district to fill out prior authorizations for physicians who prescribed Actonel and Atelvia using false clinical justifications as to why the patient needed Warner Chilcott drugs and submit them to health insurance companies. In some instances, Podolsky’s sales representatives reviewed patients’ medical charts to get the information necessary to fill out the prior authorizations, in violation of the Health Insurance Portability and Accountability Act (HIPAA). Podolsky also directed sales representatives to utilize a website to submit prior authorizations to insurance companies to disguise their identity as pharmaceutical sales representatives. Podolsky and the sales representatives that he supervised knew that they should not be involved in the preparation or submission of prior authorizations.

But Podolsky was not a lone wolf. At the end of October, 2015, the Boston Globe reported more fully on the scheme, and the large settlement made by Allergan, of which Warner-Chilcott was merely a subsidiary. US Department of Justice allegations involved top leaders of Allergan.

The drug reps bought the doctors lunches, dinners, drinks. They paid for speeches the doctors never made. And in exchange, the doctors prescribed drugs that boosted their sales.

Warner Chilcott, a unit of pharmaceutical giant Allergan PLC, will pay $125 million to settle these and other charges in an agreement announced Thursday by US Attorney Carmen M. Ortiz in Boston.

Ortiz said the company ran an elaborate scheme to prod doctors — including in Massachusetts — to prescribe its drugs in exchange for kickbacks.

Warner Chilcott’s former president, W. Carl Reichel, was charged in federal court for allegedly conspiring to pay kickbacks to physicians, and a Massachusetts physician, Dr. Rita Luthra of Longmeadow, was indicted for allegedly accepting payments.

Warner Chilcott illegally promoted at least seven drugs, including the osteoporosis treatments Actonel and Atelvia.

Court documents show that Warner Chilcott representatives promoted their drugs by wining and dining physicians and giving them money and gifts for participating in medical education events. These events often were held at 'upscale restaurants' and contained 'minimal or no educational component.'

The company made fraudulent requests to the federal government and to insurance companies to boost sales of their drugs, the US attorney’s office said, and employees also made unsubstantiated claims about the drugs’ benefits.

Note that the charges were of actions that went well beyond financial fraud. They included dishonest marketing and kickbacks to physicians. The alleged actions could have harmed patients, by inducing physicians to prescribe unneeded drugs with known adverse effects.

Note further that unlike many other legal settlements about which we have written in the past, this one did not allow the company to escape by just paying some money and then claim that it did not confirm or deny the charges.  In this case, the company pleaded guilty.

Warner Chilcott has agreed to plead guilty to health care fraud. It will pay a $23 million criminal fine and $102 million to resolve false claims with state and federal governments. The case was brought by two whistle-blowers.

And as noted above, unlike many other legal settlements which did not entail any negative consequences for those who authorized, directed, or implemented the bad behavior, in this case a top executive (although not the highest executive in the overall corporate structure, and not a current executve) was charged with a crime and apparently actually physically arrested (although he has not been convicted of it, yet.)

Meanwhile, Reichel, the former Warner Chilcott president, was arrested in Boston on Thursday.

Prosecutors say in their indictment that Reichel designed a sales and marketing strategy to entice doctors to prescribe his company’s drugs with free dinners and bogus speaking fees. The physicians paid to give speeches often did not speak at all, and instead enjoyed expensive dinners with sales representatives, the indictment says.

Reichel left Warner Chilcott in 2011, according to a news release.

Furthermore, per a Forbes column, Mr Reichel was allegedly involved up to his proverbial eyeballs.

The Reichel indictment says that, while president of Warner Chilcott’s pharmaceuticals divisions from 2009 to 2011, he directed company sales staff to push physicians’ to prescribe its drugs by throwing money at doctors’ in various ways, such as expensive dinners for doctors and their spouses and 'speaker' fees to attend informal dinners without educational content.

Reichel also allegedly provided sales reps with a separate expense account to buy food and drinks for employees of physicians who prepared prior authorization forms certain insurers required to pay for patients’ drugs.

Reichel hired 'Type A crazy' sales representatives, as he called them, who were provided with 'limited training concerning compliance with health care laws and otherwise de-emphasized the importance of compliance to the sales force,' the indictment says.

Of course, the top executive in the overall corporate structure said the usual, as likely written by his public relations spin doctors,

Brent Saunders, the chief executive of Dublin-based Allergan, said in a statement: 'We take seriously our responsibility and commitment to abide by all US and international laws that govern the sales, marketing, education, and promotion of our products, and recognize the tremendous impact that this responsibility has on the customers and patients we serve.'

Finally, two other middle managers involved in the case entered guilty pleas, according to the Department of Justice.

Thus this settlement may be regarded as much tougher than many previous legal settlements involving big health care organizations.

However, its bearing on the huge Prizer-Allergan merger has apparently not so far been publicly discussed.

Allergan's Previous Track Record

It is not that the new Allergan settlement is a one-off.   It needs to be viewed in the context of Allergan's previous history of misbehavior.

That history may be a bit obscure, especially because of Allergan's complex corporate structure.  However, a Wall Street Journal article on the merger provided a bit of Allergan's corporate back story,

Allergan itself is the result of a number of mergers in quick succession. It started off as a generic-drug company called Watson Pharmaceuticals Inc. In 2012, Watson acquired Swiss rival Actavis Group and adopted that name. It also absorbed Warner Chilcott PLC and Forest Laboratories Inc. in multibillion-dollar deals.

Mr. Saunders was CEO of Forest Labs, and became CEO of Actavis after that deal. Shortly after, Allergan’s predecessor was put into play when Valeant Pharmaceuticals International Inc. made an unsolicited offer to buy the California company.

Actavis then stepped in as a white knight and bought Allergan, taking the company’s name.

Allergan and its predecessor companies have an interesting record of misbehavior.  Just perusing Health Care Renewal one can find:

-  Actavis was convicted and fined more than $170 million in 2011 by a Texas jury of misrepresenting prices to the state's Medicaid program (see this post.)

-  In 2010, in case which included allegations that it paid kickbacks to physicians to promote its product, Allergan pleaded guilty to to federal charges of misbranding of Botox and agreed to penalties of about $600 million (see this post).

-  In 2010, Forest Laboratories settled allegations that it deceptively promoted drugs, particularly that it promoted anti-depressant Celexa for children by partially by covering up negative trial results about it.  This likely hurt patients, since anti-depressants like Celexa have been shown to have severe adverse effects, including suicidal ideation, for children.  The company also was charged with giving kickbacks to physicians to promote drugs.  The company pleaded guilty to a felony charge of obstructing justice, and two misdemeanors, including misbranding Celexa and illegal distribution of Synthroid.  The company paid over $300 million in penalties and submitted to a corporate integrity agreement.  (See this post)  The Department of Justice threatened to disbar the CEO of Forest Laboratories, but then inexplicably backed off (see this post). 

So the latest settlement by Allergan subsidiary Warner Chilcott is the fourth major settlement since 2010.  The company and its predecessors have pleaded guilty to crimes, at least once to a felony, and settled cases involving allegations of kickbacks and deceptive marketing practices. 

Pfizer's Previous Track Record

And things really get interesting when one considers Pfizer's track record, which seems much sorrier than Allergan's.  Our latest post, about Pfizer misbehavior was only one month ago (October, 2015).  A  UK judge found that the company threatened health care professionals for using a generic competitor.

Many posts on Pfizer can be found here.   The latest update of Pfizer's troubles since 2000 follows.

In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,
- In 2002, Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.
- In 2004, Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.
- In 2007, Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

Thereafter,
- Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).
- Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).
- The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).
- In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).
- In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
- In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).
- In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).
- In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this post).
- In July, 2013, Pfizer settled charges of illegal marketing of Rapamune (see this post.)
- In April, 2014, Pfizer settled allegations of anti-trust law violations for delaying generic versions of Neurontin( see this post).
- In June, 2014, Pfizer settled another lawsuit alleging illegal marketing of Neurontin (see this post).
- In 2015, a settlement by Pfizer of a shareholders' lawsuit stemming from charges of illegal marketing was announced (see this post).

Summary

So the proposed merger of Pfizer and Allergan would truly create a behemouth of bad behavior.  The combined company would have a staggering record of legal settlements, guilty pleas and convictions involving deceptive marketing, fraud, kickbacks, bribes and anti-trust violations, and even an obstruction of justice plea and a RICO conviction.  Yet the managers in charge of the two companies when the bad behavior occurred never had to suffer any negative consequences (although in one current case there is the possibility one executive might be convicted).  Many of these managers have become amazingly rich during the course of their leadership.  Is there any reason to think, absent any unexpected increase in the courage and resolve of government law enforcement, or any unexpected public protest, that the new company will not continue to misbehave as long as its executives are making money from the process?

The Pfizer Allergan merger is the true poster child for the amorality, and consequent dysfunction and decline of modern US and now global health care. As long as top managers of big health care organizations can act with impunity, can avoid all responsibility for their organizations' bad behaviors, and can personally profit wildly from their companies actions, the health care death spiral will continue.  Will we continue to cry out in the wilderness, or will anyone else see the writing on the wall?

A musical moment to partially alleviate the gloom. "Your Cheatin Heart" sung by Hank Williams Jr.



 

Baca selengkapnya