Logical Fallacies in Defense of Aggresive Screening for and Treatment of Hepatitis C

anechoic effect evidence-based medicine hepatitis C logical fallacies Sovaldi

Logical Fallacies in Defense of Aggresive Screening for and Treatment of Hepatitis C

Unknown 1/22/2015 Komentar

And the hepatitis C follies continue...

As we have frequently written, most recently last week, the hepatitis C screening and treatment bandwagon keeps rolling along.  There is constant public argument about the prices of treatment regimens, which approach $100,000 per patient in the US.  However, nearly all the public chatter, which seems mostly to come from corporate public relations people and marketers, investors and investment advisers, physicians with financial conflicts of interest, and pundits with little background in clinical epidemiology, seems never to question the assumption that the new drugs for hepatitis C are miraculous cures, which, of course, makes it hard to argue that they should not cost royal amounts.

The Lack of Good Evidence for the New Hepatitis C Treatments

However, starting in March, 2014, we have posted about the lack of good evidence from clinical research suggesting these drugs are in fact so wondrous.  The drugs are now touted as "cures," at least by the drug companies, (look here), and physicians are urged to do widespread screening to find patients with asymptomatic hepatitis C so they can benefit from early, albeit expensive treatment.

However, as we pointed out (e.g., here and here)
-  The best evidence available suggests that most patients with hepatitis C will not go on to have severe complications of the disease (cirrhosis, liver failure, liver cancer), and hence could not benefit much from treatment.
-  There is no evidence from randomized controlled trials that treatment prevents most of these severe complications
-  There is no clear evidence that "sustained virologic response," (SVR), the surrogate outcome measure promoted by the pharmaceutical industry, means cure. 
-  While the new drugs are advertised as having fewer adverse effects than older drugs, it is not clear that their benefits, whatever they may be, outweigh their harms.

Furthermore, health care professionals and researchers with heftier credentials in clinical epidemiology and evidence based medicine than mine have since published similar concerns.  These included
- a report from the German Institute for Quality and Efficiency in Health Care (the English summary is here)
- an article in JAMA from the Institute for Clinical and Economic Review (1)
- a report from the Center for Evidence-Based Policy (link here)
- an article in Prescrire International (2)

These publications and your humble scribe noted that the clinical trials or other types of clinical research about new hepatitis C treatment published in the most prominent journals had numerous methodologic problems that all seemed likely to make the new drugs look better, perhaps intentionally.  (See posts here,  here, and here.)

Yet the lack of evidence, and the discussion up to last week of this lack of evidence, was mostly anechoic.  The public argument continued to be based on the assumption that new treatments of hepatitis C are miraculous.  

The BMJ Elicits An Interesting Response

Last week the British Medical Journal provided the first opportunity for a large audience to be exposed to skepticism about the hepatitis C bandwagon.  As we discussed here, the article by Koretz et al(3) based an affirmation of the four points above on a critical examination of the evidence. 

The article, and even our blog post about it, seem less anechoic than the previous articles and blog posts mentioned above.  At least a few commentators were inspired to a defense of the currently received wisdom.  However, in my humble opinion, the commentators mainly succeeded in demonstrating how received wisdom is often supported by illogic.

Defending the Received Wisdom with Logical Fallacies - Analysis of an Anonymous Comment 

Let me start with examples derived from dissecting the arguments of the first anonymous comments we received on our  blog post.

Examples of the Straw Man Fallacy

The commentators arguments included,

 The article suggests that the INF+RBV therapy is just as good as Harvoni,

Note that whether by "the article" the commentator meant the article by Koretz et al,(3) or the blog post on Health Care Renewal was not clear. In any case, neither made a statement to that effect.  Incidentally, I am not aware of any trial that directly compared Harvoni to some combination of interferon and ribavirin.

Both Koretz et al and I did refer to the ONLY trial in which one of the new antiviral drugs (sofosbuvir) was directly compared to peg-interferon and ribavirin.(4)    I discussed that trial in detail here ( http://hcrenewal.blogspot.com/2014/04/knee-deep-in-hoopla-triumph-of-medical.html)  It showed no significant difference between the sustained viral responses at 12 weeks produced the two regimens.  As far as I can tell, there is NO evidence from any controlled trial that the new drugs are more effective than the old drugs.

So the commentator's argument was based on a misstatement of either Koretz and colleagues' or my argument.  In any case, it is therefore an example of a logical fallacy, the straw man fallacy.  The commentator was not arguing with something we wrote, but rather a straw man assertion which the commentator constructed.  

The commentator also said,

the claim that INF+RBV causes adverse effects in less than 1% of treated is just false,

Again, neither Koretz et al nor I wrote that.  So this began another argument based on the straw man logical fallacy. 

Koretz et al and I again referred to data from the Lawitz et al controlled trial.  That trial did suggest that the new drug produced more, not less severe adverse effects than the old drug.

The Red Herring Fallacy

The commentator wrote,

The statement that most patients will not go on to severe liver damage/liver cancer is unproven.

Presumably, this meant most patients with untreated hepatitis C will not go on to severe liver disease/ cancer.  This, however, is a statement about the natural history of a disease.  How a statement about disease prognosis could be "proven," however, is not clear.  It is not ethically easy, or perhaps possible, to do an experiment to prove the natural history of disease.  Our knowledge of prognosis therefore relies on observational studies.  While such studies can show association, they cannot prove causation.  So it is true that the prognosis of hepatitis C is unproven, but in practical terms it cannot be proven, or unproven.  While the commentator implied that longer term studies would show that patients have very bad outcomes, but no one knows that with certainty.  Thus, the assertion seems to be an example of a red herring, bringing up an irrelevant point to distract from the issue. 

Appeal to Authority

The commentator wrote,

SVR12 is a commonly accepted evidence for complete eradication of the virus

So the argument was that some people, perhaps, as was said at the conclusion of “Raiders of the Lost Ark,” top men believe that SVR means complete cure.



Why anyone believes that SVR12 means cure, and particularly whether this belief is based on evidence and logic was not explained. Just because some people, even top men, believe it does not mean it is true.  Thus this assertion is an example of another logical fallacy, an appeal to authority. By the way, there are plenty of people, including Koretz et al, who do not believe this. 

ADDENDUM (27 January, 2015) - I have now independently verified that the comments made on our blog by "anonymous" were made by a patient, and were made honestly, not cynically.  Furthermore, English is not the patient's first language, so he or she may have used English words such as "unproven" and "commonly accepted" somewhat differently than I understood. 

More Logical Fallacies in the BMJ Rapid Responses

Similarly, the article by Koretz et al has generated a few rapid responses which contain their own share of logical fallacies.  Some examples follow from comments through January 19, 2015.

Begging the Question and the Burden of Proof Fallacy

In the January 15, 2015 comments by Donna R Cryer

[The article by Koretz et al] severely undervalues the harms, to the individual and society, of active HCV infection. Reduction or avoidance of end stage liver disease or death are not the only appropriate measures of value of screening or the effectiveness of new medications.

Ms Cryer did not state what the values of the harms are, nor what the other appropriate measures might be, and provided no evidence for either assertion.  So this boils down to, "you are wrong and I am right."  More formally, this could be an example of begging the question, that is, an argument - in this case that screening is warranted - simply based on assumptions without explanation or supporting evidence.  On the other hand, this could also be an argument of the burden of proof fallacy.  Ms Cryer implies that Koretz et al must prove their conclusions, while she simply needs to assert hers. 

Appeal to Fear

Again from Cryer,

To propose that widespread birth cohort screening efforts be undermined is a disservice to every individual living, unknowingly, with the silently devastating disease that is hepatitis C.

Note that this sentence again appears to include begging the question, with the assertion that hepatitis C is "silently devastating," without explanation or supporting evidence, and the burden of proof fallacy, since it implicitly rejected Koretz and colleagues' argument that hepatitis C is not devastating to all patients, which was based on at least some evidence, without supplying any evidence that it is devastating.  Furthermore, this has an element of an appeal to fear in its use of the emotionally loaded word, "devastating."  Note that Koretz et al instead talked about specific complications of hepatitis C. 

Wishful Thinking

In the January 18, 2015, comments by Nowlan Selvapatt

newer regimes will ultimately improve pricing competition and sustained virologic response rates compared to interferon based therapies.

The author did not explain why these improvements will occur.  This could be another example of begging the question.  On the other hand, it also could be wishful thinking, which at least some people consider a logical fallacy as well as a cognitive bias.  Obviously, it would be nice for the newer treatments to achieve better results at lower prices in the future, but the future is not so predictable.

An even more explicit example of wishful thinking, alsoby Selvapatt, was,

The hope would be that ... [screening] would serve to reduce the economic and healthcare pressures associated with end stage liver disease caused by hepatitis C.

That would be the hope, certainly, but should the decision to screen be based on hope, or on evidence and logic.

Appeal to Authority

In the January 19, 2015, comments by Padmanabhan Badrinath

Regarding side effects Koretz et al state 'However, in a trial of sofosbuvir versus peginterferon plus ribavirin, 3% of participants taking sofosbuvir experienced serious adverse events compared with 1% in the peginterferon plus ribavirin arm (difference not significant)'. According to NICE 'Evidence Review Group (ERG) was satisfied that the evidence showed that treatment with sofosbuvir-based regimens was generally well tolerated and led to fewer adverse events than treatment with peginterferon alfa and ribavirin'.

Note that Koretz et al provided data, and again, that from the only clinical trial that compared a new drug (sofosbuvir) to an old drug, peg-interferon.  However, Badrinath contrasted that evidence with conclusions from the NICE report that were about apparently any, rather than just severe adverse events, and Badrinath did not provide any justification of or evidence supporting these conclusions.  While NICE is admittedly often considered to be pretty authoritative, simply stating its conclusions in the absence of evidence to refute Koretz's presentation of evidence amounts to an appeal to authority.

Summary

So it appears that the BMJ article on hepatitis C rendered the skepticism about the miraculous qualities of the innovative new antiviral drugs for hepatitis C less anechoic.  However, the response to these echoes seems to have been enriched with illogic.

So it goes in the brave new world of health care.  In the current money driven system, new "innovations" touted as miraculous constantly appear.  When a few skeptics question the evidence or logic supporting these claims, these doubts usually start as anechoic.  If the doubts are more widely expressed, the first line of defense seems to be often based on logical fallacies.  We most recently saw such fallacies deployed defending another drug, sacubitril, touted as miraculous from annoying skeptics.

Health care professionals, health care policy makers, and the public at large should not be swayed by illogic.   Our continuing series about how logical fallacies are used to support the status quo and the powers that be in health care suggests, if nothing else, that health care professional education ought to include courses in logic.

References

1.   Ollendorf DA, Tice JA et al.  The comparative clinical effectiveness and value of simeprevir and sofosbuvir in chronic hepatitis C viral infection.  JAMA Inte Med 2014.  Link here.
2. Sofosbuvir (Sovaldi), active against hepatitis C virus, but evaluation is incomplete. Prescrire Int 2015; 24: 5- 10. Link here.
3. Koretz RL, Lin KW, Ioannidis JPA, Lenzer J.  Is widespread screening for hepatitis C justified? Br Med J 2015; 350: g7809. Link here.
4.  Lawitz E, Mangia A, Wyles D et al.  Sofosbuvir for previously untreated chronic hepatitis C infection.  N Engl J Med 2013; 368: 1878-1887.  Link here.

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Making the Arc of the Moral Universe Bend

Making the Arc of the Moral Universe Bend

Unknown 1/20/2015 Komentar

On this day, the US celebrates the legacy of the Rev Martin Luther King Jr.

Martin Luther King Jr once famously addressed the question of how long it would take to achieve some measure of real equality in the US (in the "Our God is Marching on Speech.")  He stated,

the arc of the moral universe is long, but it bends towards justice. 

In context, he clearly meant that such bending was possible when people devoted hard work and concerted action toward this end.  Rev King was hardly one to sit back and passively expect good things to happen. However, as pointed out in the Huffington Post entry by Christ Weigant, this sentence has often been taken out of context to justify passivity, and argue that we need not discomfit ourselves too much to achieve justice.

I have heard it used that way in the health care sphere, to justify collaboration with industry in areas where management's typical thrust to achieve quick revenue may lead to interests very different from those of medical professionals.  (We have posted frequently about conflicts of interest, and institutional conflicts of interest in health care, and how justification for such "collaboration" is often based on logical fallacies.)

So on this day, I urge you to think about how hard it may be to make health care more just, but how necessary it is to push on regardless.

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The Fashion Challenges of the Emperor of Hepatitis C Treatment - Now in the BMJ, but Who Will Notice?

clinical trials evidence-based medicine health care prices hepatitis C Sovaldi

The Fashion Challenges of the Emperor of Hepatitis C Treatment - Now in the BMJ, but Who Will Notice?

Unknown 1/16/2015 Komentar

As we wrote, most recently last week, the hepatitis C screening and treatment bandwagon keeps rolling along.  There is constant public argument about the prices of treatment regimens, which approach $100,000 per patient in the US.  However, nearly all the public chatter, which seems mostly to come from corporate public relations people and marketers, investors and investment advisers, physicians with financial conflicts of interest, and pundits with little background in clinical epidemiology, seems never to question the assumption that the new drugs for hepatitis C are miraculous cures, which, of course, makes it hard to argue that they should not cost royal amounts.

The Lack of Good Evidence for the New Hepatitis C Treatments

However, starting in March, 2014, we have posted about the lack of good evidence from clinical research suggesting these drugs are in fact so wondrous.  The drugs are now touted as "cures," at least by the drug companies, (look here), and physicians are urged to do widespread screening to find patients with asymptomatic hepatitis C so they can benefit from early, albeit expensive treatment.

However, as we pointed out (e.g., here and here)
-  The best evidence available suggests that most patients with hepatitis C will not go on to have severe complications of the disease (cirrhosis, liver failure, liver cancer), and hence could not benefit much from treatment.
-  There is no evidence from randomized controlled trials that treatment prevents most of these severe complications
-  There is no clear evidence that "sustained virologic response," (SVR), the surrogate outcome measure promoted by the pharmaceutical industry, means cure. 
-  While the new drugs are advertised as having fewer adverse effects than older drugs, it is not clear that their benefits, whatever they may be, outweigh their harms.


Furthermore, health care professionals and researchers with heftier credentials in clinical epidemiology and evidence based medicine than mine have since published similar concerns.  These included
- a report from the German Institute for Quality and Efficiency in Health Care (the English summary is here)
- an article in JAMA from the Institute for Clinical and Economic Review (1)
- a report from the Center for Evidence-Based Policy (link here)
- an article in Prescrire International (2)

These publications and your humble scribe noted that the clinical trials or other types of clinical research about new hepatitis C treatment published in the most prominent journals had numerous methodologic problems that all seemed likely to make the new drugs look better, perhaps intentionally.  (See posts here,  here, and here.)

The British Medical Journal Publishes a Skeptical Review of Hepatitis C Screening  

Now an article in the British Medical Journal again raises questions about whether the emperor of hepatitis C treatment has some missing garments.(3)  To date, this article has received minimal attention from large media outlets.  I could only find stories in Bloomberg, and by the San Francisco Chronicle to date.

The article by Koretz et al focused on the evidence, or lack thereof in favor of screening for hepatitis C, but affirmed the following points

Most Patients with Hepatitis C Will Not Go On to Have Severe Complications of the Disease

To wit,

At least 2.7 million people are infected with hepatitis C virus in the US, and around 16 000 people each year die or have liver transplantations because of the disease. This suggests that less than 0.6% of infected patients will die of liver disease or be transplanted each year.

Also,

Retrospective studies of the natural course of hepatitis suggest that end stage liver disease is common and that it takes about 20 years to develop cirrhosis and 30 years to develop liver cancer. However, such series are usually composed of people who have a medical problem and are thus a sicker subpopulation of the people with chronic hepatitis C infection (referral bias). Furthermore, the total number of infected patients from which they are drawn is unknown.

Finally,

The risk of developing end stage liver disease is low for the first three decades of infection. Unfortunately, data on the risk beyond that point are limited. Only three studies provide data beyond 30 years, and the data are for children and women (both groups perhaps being at lower risk of progression) and for men in whom it was not clearly proved that the infections were chronic when diagnosed. Nonetheless, these data are consistent with previously cited epidemiological data from the general population, and it is likely that 80-85% of patients with chronic hepatitis C will die from non-hepatic causes

There is No Evidence from Randomized Controlled Trials that Treatment Prevents Most of these Complications

The most convincing way to establish efficacy of treatment is through well designed and conducted randomised, placebo controlled trials using clinical outcomes (morbidity and mortality). However, such trials are available only for interferon monotherapy. Ten randomised trials of interferon alfa have been conducted in patients with severe fibrosis or cirrhosis. The results were disappointing, even though at the time, expert opinion advocated interferon treatment for these patients.

There is No Clear Evidence that SVR Means Cure

Sustained virological response is not a cure. Viral RNA is sometimes found in body tissues even when the serum is clear; in some studies this has been found frequently. The virus also reappears in some patients with sustained response, and though this might be thought to be due to reinfection, at least sometimes these events represent the reappearance of the same virus. Moreover, a few patients with a sustained response develop end stage liver disease. In the largest observational study to assess this risk, 1001 patients with severe fibrosis (84% with cirrhosis) with sustained virological response were followed for up to eight years. During that time, 50 developed hepatocellular carcinomas, a 1% annual risk. Observational studies have suggested that the annual incidence of hepatocellular carcinoma in people with compensated cirrhosis secondary to hepatitis C infection is 1.4-3.3%.

There is No Evidence that the Benefits of Treatment Outweigh Its Harms

Claims of increased safety or tolerability of the newer treatment have been based on fewer and less severe side effects. However, the new drugs can still cause serious adverse events (resulting in persistent disability, hospital admission, or death).

Also,

Safety data are limited for the newest drugs. However, in a trial of sofosbuvir versus peginterferon plus ribavirin, 3% of participants taking sofosbuvir experienced serious adverse events compared with 1% in the peginterferon plus ribavirin arm (difference not significant). Combination therapy with sofosbuvir plus ledipasvir with or without ribavirin, was associated with a 0.5-2% rate of serious adverse events. According to a recent analysis of US Food and Drug Administration data, over one year telaprevir accounted for the single greatest number of reported severe and fatal skin reactions of any drug monitored. Unfortunately, we cannot weigh the risk versus the benefit at this time because we have no data on the precise benefit (if any).

Summary

Koretz et al supplied these conclusions:

If the treatment of hepatitis C is to be scaled up to cover a large portion of the 125-150 million infected people worldwide, regulatory agencies should ensure that drugs have been evaluated by long term follow-up of clinical outcomes (not just surrogate markers) in several thousands of patients. The financial cost of treatments have been discussed elsewhere, but given the uncertainty about the validity of the surrogate markers, the lack of evidence regarding clinical outcomes of treatment or of screening strategies, and the adverse events caused by the newer regimens, screening may be premature. 

By the same logic, it is not clear that treatment of asymptomatic patients found to have hepatitis C provides benefits that outweigh its harms.

Thus, more authoritative voices are saying that the hepatitis C treatment emperor is seriously fashion challenged.

If there is no good evidence that these drugs do more good than harm for asymptomatic patients, why should physicians prescribe them for these patients?  If use of these drugs in general has not been shown to do more good than harm, why should they be prescribed for any but the most desperate patients?  Finally, if these drugs have not been shown to do more good than harm, and the lack of evidence is clearly the responsibility of  the drugs' manufacturers who chose not to do very large and/or long-term randomized controlled trials and not to assess clinical outcomes, what justification is there for the gargantuan prices of these drugs?

A larger societal question is why the public discussion has been so dominated by enthusiasts for these drugs, and so little informed by the existing evidence, or lack thereof, from clinical research?  

To repeat,.. the Sovaldi (and now Harvoni, Viekira Pak, etc) case is a signal example of how our health care system is awash in marketing hype and public relations buzz that has swamped rational skeptical thinking about logic and evidence.  That marketing and PR is ever enriching managers while it will send the rest of us, health care professionals included, to the poor house.  And all the money we spend will likely not buy us the promised miracles and triumphs.

It is disappointing that so many physicians and other health professionals have been caught up in this hype and spin, probably abetted by their wishful thinking about cures of hepatitis C, and perhaps also abetted by financial conflicts of interest.  Yet to protect the best interests of their patients, they should be rigorously skeptical of illogical or evidence-free arguments made to further vested financial interests.

As we have said until blue in the face, true health care reform would bring some skeptical thinking and regard for evidence and logic into the health policy discussion.

ADDENDUM (19 January, 2015) - See also comments in the HealthNewsReview.org blog.

ADDENDUM (22 January, 2015) - See an analysis of logical fallacies found in comments arguing with this post, and employed by authors of rapid responses to the Kortetz et al article in the BMJ, in this post.

ADDENDUM (28 January, 2015) - This post was republished in OpenHealth News here. 

References
1.   Ollendorf DA, Tice JA et al.  The comparative clinical effectiveness and value of simeprevir and sofosbuvir in chronic hepatitis C viral infection.  JAMA Inte Med 2014.  Link here.
2. Sofosbuvir (Sovaldi), active against hepatitis C virus, but evaluation is incomplete. Prescrire Int 2015; 24: 5- 10. Link here.
3. Koretz RL, Lin KW, Ioannidis JPA, Lenzer J.  Is widespread screening for hepatitis C justified? Br Med J 2015; 350: g7809. Link here.

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The March of Legal Settlements Continues into 2015 - Daiichi Sankyo Settles Charges of Kickbacks to Doctors for $39 Million

conflicts of interest corporate integrity agreement Daiichi Sankyo impunity kickbacks legal settlements

The March of Legal Settlements Continues into 2015 - Daiichi Sankyo Settles Charges of Kickbacks to Doctors for $39 Million

Unknown 1/14/2015 Komentar

We are just into January and have our first legal settlement by a major health care corporation of charges of giving physicians kickbacks to spur use of a commercial product.  Like most such stories, this one got little notice.  The most extensive report was in Ed Silverman's PharmaLot blog on the Wall Street Journal site.

The Summary and Allegations

The basic summary...

Daiichi Sankyo agreed to pay $39 million to the U.S. federal government and state Medicaid programs to settle allegations of paying kickbacks to physicians to prescribe several of its drugs.

The allegations were ...

that Daiichi initiated different speaker programs and paid doctors kickbacks – in the form of honoraria and meals, among other things – that were labeled as speaking fees between 2004 and 2011. The speaker programs, however, were problematic, according to the U.S. Department of Justice.

How so? The feds allege that some physicians spoke only to his or her own office staff; the audience sometimes included the physician’s spouse; payments were made to physicians even when participants took turns 'speaking' about duplicative topics at dinners paid for by the drug maker; and the dinners were lavish and, sometimes, exceeded internal Daiichi cost limitations of $140 a person, according to the settlement agreement.

Note that the defenders of physician - industry "collaboration" often defend payments such as speaking fees as necessary "conflicts of interest" to encourage health care "innovation."  Innovation does not seem the right word for the conduct in this case, and the payments seem to be more than just "conflicts of interest."  Nonetheless the defenders often argue that at best, such "conflicts of interest" only need to be disclosed, not limited. 

The drugs whose prescription were allegedly being encouraged by the kickbacks were...

the Welchol cholesterol-lowering medication and the Benicar, Azor and Tribenzor high blood pressure pills

Details of the Penalties, or Lack Thereof

This settlement followed the usual choreography. It included a corporate integrity agreement...

which stipulates that the drug maker must implement compliance programs to prevent such illegal practices from occurring in the future.

It did not apparently include any obligation for the company to admit wrongdoing, much less plead guilty to anything. Instead, a company executive offered the de rigeur statement...

Ken Keller, who heads Daiichi Sankyo commercial operations in the U.S., says 'we are pleased to have finalized these agreements and remain focused on our core mission of helping people live healthy and meaningful lives. We are committed to being an ethical, trusted and respected company, and constantly improving how we operate is part of our culture.'

The irony induced by juxtaposing the present tense "we are committed to being... ethical" and the substance of the charges was apparently lost on Mr Keller.

Finally, no individual who authorized, directed, or provided the kickbacks apparently suffered any negative consequences, much less fines or other legal sanctions.

Summary and Comments

Here comes the New Year, just like the old year. I have lost count of how many posts we have published about legal settlements of cases in which drug, biotechnology, or device companies were alleged to have given physicians kickbacks to prescribe, use or implant their products.

During the last half of 2014, similar cases in our archives include -
November, 2014 - Biotronik settled charges of kickbacks for use of its devices
November, 2014 - Teva settled charges it induced physicians use of drugs by payments to physician
October, 2014 - Biomet settles charges it gave kickbacks for use of its bone growth products
October, 2014 - DaVita settles charges it gave kickbacks for referral of patients to its dialysis clinics


Such kickbacks are obviously unethical, and fit the Transparency International definition of corruption, "abuse of entrusted power for private gain."  Physicians are entrusted to make decisions on behalf of patients in the patients' best interests, not for the sake of payments from commercial firms.

Nonetheless, as in the cases of legal settlements of other charges involving other kinds of unethical behavior by big health care organizations, the consequences for these organizations seem to be slaps on the wrist with wet noodles.  Although the fines meted out may seem big to regular folk whose income has been stagnant for years, they are usually small compared to the organizations' revenues.  In any case, the fines are paid out of general corporate funds, and so ultimately by stockholders, employees, and perhaps customers, clients, or patients who had nothing to do with the kickbacks.  On the other hand, those who actually profited from the kickbacks usually walk away with no consequences.  Thus it seems unlikely that these sorts of fines in the absence of penalties assessed against individuals deter future bad behavior.  We have discussed these problems frequently in our posts on legal settlements.

The corporate integrity and/or deferred prosecution agreements deserve a bit more comment at this juncture.  They only seem to ask the company to refrain in the future from doing anything really nasty, but rarely incorporate serious scrutiny or any meaningful consequences should the company do something nasty.

In fact, the pioneering use of these  agreements by current New Jersey Governor Chris Christie when he was a US Attorney lead to charges that they were a form of "shakedown," rather than justice, and could be used to do favors for political cronies installed as the monitors for the agreement.  A 2014 article in the New York Observer provided examples of health care related settlements authored by Mr Chistie,

In 2007, the Star-Ledger broke the news that John Ashcroft, the former attorney general who had been Mr. Christie’s boss at the DOJ, received a '$52 million payday' for serving as an outside monitor to medical device company Zimmer Holdings. [See our summary of the Zimmer case including this deferred prosecution agreement here.]  Another DPA led to Bristol-Myers Squibb agreeing to spend $5 million to fund a business ethics program at Seton Hall University, where Mr. Christie had attended law school. [See our 2005 summary of the Bristol-Myers-Squibb case involving this deferred prosecution agreement here.]  And then there was the mother of all eyebrow-raising DPA paydays.

When the University of Medicine and Dentistry of New Jersey, one of the largest medical schools in the country, was revealed in 2005 to be a veritable parking garage for politically connected no-show jobs, Mr. Christie tapped an old friend, mentor and predecessor, former New Jersey U.S. Attorney Herb Stern, to serve as the school’s federal monitor. [We posted extensively on the UMDNJ case here.]  Mr. Stern is a giant in New Jersey legal circles—he is the subject of the book Tiger In the Court—but his fees after his return to private practice had raised eyebrows. The former CEO of Qwest, Joseph Nacchio, alleged that Mr. Stern wildly overbilled him for 'duplicative and unnecessary work,' including sending seven attorneys to attend a court appearance and even charging thousands for staff breakfasts, in-room movies and underwear. According to The New York Times, Mr. Stern’s firm 'ultimately billed the state for more than $10 million.' A couple of days after Mr. Stern landed the contract, Mr. Christie hired Samuel Stern, the son of Herb Stern, despite what were reported by The Star-Ledger to be 'objections from nearly every assistant U.S. attorney who interviewed him.' A couple days after that, Mr. Christie announced his own resignation as U.S. attorney.

Note further that most of these legal settlements seem uninformed by any previous bad behavior of the organization or the people involved.  Many of the organizations subject to these settlements have already made previous settlements, sometimes many of them.  Some of them have already signed corporate integrity or deferred prosecution agreements.  Relevant to the current case, Daiichi Sankyo's Ranbaxy subsidiary paid a $500 million settlement for selling adulterated products in 2013 (see our blog post here).

Finally, note that the settlements made by large health care corporations often seem effete compared to those imposed on smaller organizations or individuals.  Some recent examples appear in blog posts here and here.  In fact, the US Attorney responsible for the current Daiichi Sankyo settlement is Ms Carmen Ortiz.  In 2014, Ms Ortiz was responsible for the little ($6 million) Biomet settlement above, constructed without regard to several larger settlements made by the same company.  In fact, we had posted that Ms Ortiz was involved in settling three seemingly big previous cases, involving allegations that Forest Pharmaceuticals promoted Celexa in adolescents despite the drug's likely dangers to them, GlaxoSmithKline used misleading drug packaging, also likely endangering patients, and St Jude Medical gave kickbacks to doctors to induce them to implant medical devices.  All cases were settled with fines, but again no individuals suffered any negative consequences.  However, in contrast, Ms Ortiz was also the prosecutor who proved how tough she was when she threatened activist Aaron Swartz with serious prison time for alleged computer fraud, driving Mr Swartz to suicide.

So, quelle surprise, the Kabuki play that is regulation of and law enforcement for large health care organizations goes on.  As our society is being increasingly divided into a huge majority in increasingly difficult economic circumstances and a small and  increasingly rich minority, it also seems to be increasingly divided into little people who may be ruined by lawsuits, and imprisoned for even minor infractions, and big people who have impunity. 

True health care reform would hold leaders of health care organizations accountable for their organizations' behavior, and its effects on patients and health care professionals. 

For a more humorous take on Mr Christie's career, see this performance by Jimmy Fallon and Bruce Springsteen, "Governor Christie Traffic Jam" -




 

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Once More, the Hospital CEO as Scrooge - Cape Cod Healthcare CEO Collected Millions in Severance After Laying Off Hundreds of Health Professionals, and Being Sanctioned by the State Medical Board

boards of trustees Cape Cod Healthcare executive compensation perverse incentives

Once More, the Hospital CEO as Scrooge - Cape Cod Healthcare CEO Collected Millions in Severance After Laying Off Hundreds of Health Professionals, and Being Sanctioned by the State Medical Board

Unknown 1/08/2015 Komentar

The theme of non-profit hospital CEO as Scrooge seems to be persisting in the media even beyond the holiday season.  (Our last post on this theme was in December, 2014).  The previous cases we discussed (also here) involved  marked contrasts between how well top hired managers of non-profit hospitals were doing, and how their institutions were doing.

Turning Around the Hospital, but Turning Away Employees

The background to this story comes from an article in the Cape Cod (MA) Times from January, 2014.  Cape Cod Healthcare, a regional non-profit hospital system, hired Dr Richard Saluzzo as CEO to turn around the system's troubled finances.

Cape Cod Healthcare had 'a pretty significant economic turnaround' under Salluzzo's stewardship, as well as accolades for quality of care, [board chairman Thomas] Wroe said.

'We were really in trouble. He was the architect and foundation of turning that around,' Wroe said.

In this case, the turn around seemed to be strictly financial,

During his tenure Cape Cod Healthcare's bond rating improved from one grade above junk status to BBB with a favorable outlook.

However, the turn around also involved turning away employees,

The financial turnaround came in part from cost-cutting measures such as layoffs for about 200 employees and improved billing.

More details about these layoffs were in a Cape Cod Times article from 2008,

A hospital chaplain and several psychiatric nurses are among the cuts emerging from Cape Cod Healthcare's announcement last month that it is eliminating 169 positions.

In particular,

the hospital's largest union is expected to begin the process of 'bumping' later this week, which allows employees with more years of service to move into jobs of junior colleagues.

Most of the layoffs announced last month are at Cape Cod Hospital.

Union jobs scheduled for elimination are going through a process of negotiation with management.

Seventy-six positions held by members of the 1199SEIU United Healthcare Workers East are slated for elimination.

Also still in negotiation is the fate of seven members of the Massachusetts Nurses Association, several of whom are employees of the psychiatric center located across the parking lot from Cape Cod Hospital in Hyannis.

Some of the nurses work part time, said Marilyn Rouette, president of the Cape Cod Hospital chapter of the association.

But the psychiatric services help 'a very vulnerable population,' she said.

So the hospital apparently did improve its financial performance during the reign of Dr Saluzzo, but at the expense of quite a few employees, including health professionals serving vulnerable patients.

CEO Compensation as the Gift that Keeps on Giving

CEO Dr Saluzzo earned pretty good pay during his last full year, as reported by the Cape Cod Times in 2014,

In fiscal 2010 — his last full year of employment at Cape Cod Healthcare — Salluzzo earned under $1 million, garnering $835,609 in salary and $23,967 in other compensation. He also received a benefit plan worth $78,618.

He did much better than did the previous CEO,

Salluzzo's most recent salary stands in striking contrast to that of his predecessor, retired Cape Cod Healthcare CEO Stephen Abbott, whose salary came to $621,225 in fiscal 2008, his last full year on the job. That year he also had a benefit plan worth $111,544.

However, CEO Dr Saluzzo's compensation did not stop when he left.  The 2014 article in the Cape Cod Times included,

Even as Dr. Richard F. Salluzzo abruptly left his CEO position at Cape Cod Healthcare more than three years ago, he was due to receive more than $2 million in compensation.

Reports filed with the state attorney general's office for fiscal 2012 and 2011 show that Salluzzo remained Cape Cod Healthcare's highest-paid employee those years, despite the fact that he left just two months into fiscal 2011.

Salluzzo earned $1,309,308 for fiscal 2011 and $1,095,342 for fiscal 2012, according to forms filed with the attorney general's nonprofit/public charities division. Cape Cod Healthcare's fiscal year starts Oct. 1.

This week, the January 5, 2015 Cape Cod (MA) Times updated the figures,

Three years after he abruptly left Cape Cod Healthcare, former CEO Dr. Richard Salluzzo continued to be one of its highest-paid employees, according to new financial reports filed with the state attorney general’s office.

Since departing the nonprofit organization in November 2010, Salluzzo has taken in more than $3 million in compensation, including $857,953 for the most recent fiscal year on file, 2013.

The compensation made Salluzzo the fourth-highest-paid employee at Cape Cod Healthcare for that period, which started Oct. 1, 2012, according to forms recently filed with the attorney general’s nonprofit/public charities division. The payout is less than what Salluzzo earned in fiscal years 2011 and 2012, which came to $1,309,308 and $1,095,342.

The Board Continues its Defense of the Seemingly Endless CEO Compensation

According to the 2015 Cape Cod Times article, the new board chairman continued the defense of the continuing payment of a CEO who departed over three years ago,

This was a commitment made by the board years ago,' said William Zammer, chairman of the Cape Cod Healthcare Board of Trustees. 'The system was hemorrhaging money, and we were in a terrible position.'

'Salluzzo came onboard and did the job' of shifting the health care system from the red to the black,' Zammer said.

Never Mind the Questions Raised about the CEO Since 2008

This defense, admittedly not as strident as some other defenses by hospital board members of CEO compensation that we have discussed, was maintained despite some pretty significant questions about former CEO Dr Saluzzo since he was hired back in 2008.

Dr Saluzzo's Leadership of Wellmont Health System

This concern goes all the way back to 2009, as reported again by the Cape Cod Times,

Amid the good news, however, comes word from the Wellmont Health System in Kingsport, Tenn., that profits under Salluzzo were significantly less than first reported. A recent audit by a new firm found the system overstated its net earnings for fiscal years 2006 and 2007 by nearly $20 million and lost $4.6 million in 2008. The financial restatement came as a shock to Salluzzo, who said audits during his tenure always came back clean.

'This is a disagreement between auditors,' he said. 'I know my team and I did nothing wrong.'

Wellmont officials, who have not returned phone calls, said in a prepared statement that the audit turned up no evidence of criminal acts. The press release referred to errors in recording expenses, receivables and assets and said the system was imposing a new set of controls to reconcile accounts and strengthen internal auditing.

At that time, the board of Cape Cod Healthcare just seemed relieved that the issue was not criminal,

'There's no indication of fraud, manipulation of funds or personal gain,' [board chairman Thomas Wroe] ... said. 'They changed auditors. Any time you do that, you have a different translation of financial results. We have strong confidence in Dr. Salluzzo. He's been doing a great job for us.'

Saying that there is no indication that a person is a criminal seems like rather faint praise.  Never mind that it was still on CEO Dr Saluzzo's watch that these results, which now appear less than stellar, were produced, and that the belief, not apparently wrong, that CEO Dr Saluzzo produced stellar results at Wellmont was a reason to hire him as CEO of Cape Cod Healthcare.  Never mind that it was on CEO Dr Saluzzo's watch that the Wellmont hospital systems accounting was full of errors, yet it was Dr Saluzzo's financial leadership at Wellmont that apparently endeared him to the Cape Cod board.

Dr Saluzzo Sanctioned by the Massachusetts State Medical Board

In 2011, after Dr Saluzzo left his position as CEO, the Falmouth (MA) Enterprise reported,

Dr. Richard F. Salluzzo, former CEO of Cape Cod Healthcare, was disciplined by the state Board of Registration in Medicine this week for using drugs prescribed to others for his own use and prescribing drugs to family members without keeping proper records.

In particular,

Among the allegations in the board’s investigation of Dr. Salluzzo are that in 2008, before he started at Cape Cod Healthcare, he wrote four prescriptions for Valium for an employee working under him and then asked the employee to fill the prescriptions and give him the drugs. In 2009, while holding the top job at Cape Cod Healthcare, he wrote prescriptions for Zoloft for a friend and filled the prescriptions for his own use.

According to the board’s allegations, he also wrote prescriptions for controlled substances for his wife, his two adult children and his father but did not keep medical records for the family members.

In disciplining Dr. Salluzzo for those actions, the board cites the American Medical Association’s Code of Medical Ethics that 'physicians should not treat themselves or family members as professional objectivity may be compromised and issues of patient autonomy and informed consent may arise.'

In a consent order, Dr. Salluzzo agreed to the ruling and punishment, signing the document on November 1.

At that time, the Cape Cod Healthcare board of trustees responded to the disciplinary measures taken for unprofessional actions by the system's former CEO thus,

Cape Cod Healthcare’s board of directors, in a press release, stated, 'We became aware of a complaint and followed our established policies to ensure that the licensing board was involved in this matter on a timely basis. We then cooperated fully with the Board of Medicine’s investigation.'

The board notes that the Board of Medicine discipline concerns Dr. Salluzzo’s private practice and not his management performance.

'No complaint was ever reported or filed by any patients or physicians here regarding the quality of the clinical care provided by Dr. Salluzzo during his tenure on the medical staff of both CCHC hospitals,' according to the statement.

The board reiterated its statement last year about Dr. Salluzzo’s tenure at the hospital. 'He achieved the goals set for him as witnessed by our financial turnaround and improved relationships with our physicians, then decided to pursue other career challenges and professional interests.'

By the way, the January, 2014, Cape Cod Times article also noted,

On the basis of the Massachusetts disciplinary actions, Salluzzo also was fined and reprimanded in 2012 by medical boards in New York, Tennessee and Pennsylvania — all states where he has practiced medicine in the past.

I would guess that this means that actions uncovered by the Massachusetts board of medicine included some that took place in these other states.  

The real issue raised was not whether Dr Salluzzo's professional actions harmed patients, but whether a physician so sanctioned for unprofessional conduct deserved continuing payments, amounting to millions of dollars, for his previous employment as CEO of  Cape Cod Healthcare. 

The usual justification for extremely high compensation of hired health care managers is their brilliance. Recall that in 2014, well after CEO Dr Saluzzo departed from Cape Cod Healthcare, then chairman of the board of trustees Thomas Wroe gave him accolades for "quality of care."  It seems that one could question the quality of care produced by the leadership of a physician who wrote used subterfuges to obtain controlled substances for himself and his family.  Such questions did not occur to the former chair of the system's board of trustees even by 2014.

Summary

Note that the 2014 Cape Cod Times article quoted W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley University, who called CEO Dr Saluzzo's cumulative compensation "outrageously lucrative."  The 2015 Cape Cod Times article quoted David Schildmeier, spokesman for the Massachusetts Nurses Association, who called it "obscene," and furthermore,

We're paying this failure of a CEO millions of dollars.

Nevertheless, heaven forfend that a hospital board of trustees would try to withhold pay for a CEO, even pay provided years after that CEO's departure, that might violate a previously written contract, even new information discovered might now provide reasons to challenge that contract.

So here is an amazing example in which a former hospital system CEO continues to be rewarded with millions of dollars after he actually left his employment as CEO.  These rewards started even though the financial turnaround he supposedly engineered required layoffs of health care professionals serving vulnerable patients  The hospital system board of trustees continued to authorize, and failed to question these payments even after subsequent revelations that the CEO's initial hiring was apparently based on a false impression of the financial performance of his previous hospital system generated by accounting problems within that system, and that the CEO had behaved unprofessionally in obtaining prescriptions of controlled substances for his family and for himself.

As we have said before, in US health care, the top managers/ administrators/ bureaucrats/ executives - whatever they should be called - continue to prosper ever more mightily as the people who actually take care of patients seem to work harder and harder for less and less. This is the health care version of the rising income inequality that the US public is starting to notice.

 Thus, like hired managers in the larger economy, non-profit hospital managers have become "value extractors."  The opportunity to extract value has become a major driver of managerial decision making.  And this decision making is probably the major reason our health care system is so expensive and inaccessible, and why it provides such mediocre care for so much money. 

One wonders how long the people who actually do the work in health care will suffer the value extraction to continue?

So to repeat, true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

But this sort of reform would challenge the interests of managers who are getting very rich off the current system.  So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes.

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