Pfizer Does It Yet Again—More Perpetrator-less Corporate Crime

Once again to defer to Dr. Roy Poses at the Health Care Renewal blog:

http://hcrenewal.blogspot.com/2013/07/pfizers-umpteenth-settlement-for-491.html

--on an issue we also have blogged about in the past:

http://brodyhooked.blogspot.com/2012/12/doing-it-again-after-pomising-not-to.html

--it seems that Pfizer has yet again settled with the Feds, in this case actually going so far as to admit guilt, in relation to a $491M claim over illegal marketing of the drug Rapamune. This drug, manufactured by Wyeth, which Pfizer bought out, was approved for use to prevent immune rejection only in kidney transplants, and data show that it causes serious risks when used in other organ transplants. Nevertheless Pfizer now admits that Wyeth illegally marked the drug for different sorts of organ transplants, to the extent that 90% of the firm’s revenue from Rapamune resulted from non-kidney uses. (Sounds like a pretty effective marketing campaign to me, even if illegal.)

Dr. Poses makes the excellent point, even if it’s a broken record that he’s getting tired of playing, that just as we sometimes talk about “victimless crimes,” the drug industry seems to have teamed up with Federal prosecutors to perfect perpetrator-less crime. A firm is caught doing illegal stuff and settles for huge sums of money—but no actual human beings ever seem to be responsible, much less get punished for their misdeeds. Apparently both Wyeth and Pfizer are operated robotically and no actual person ever takes charge of any decisions.

Pfizer, while admitting guilt, acted like all this is water under the bridge anyway because of course, this crime was not committed by sterling and pure Pfizer, it rather was committed by that nasty, evil company Wyeth, which by the way no longer exists as a separate entity. Which leads to the question of what happens when a company like Pfizer decides whether or not to buy a company like Wyeth. I am of course far from being a business tycoon, but in my state of ignorance I imagine it goes something like this. Pfizer looks at Wyeth’s assets and at its liabilities, and decides on a purchase price based on how both balance out. Among the liabilities, the buyer looks at any future legal actions that might be pending or that it can anticipate. It sets the purchase prices such that if it ends up paying out a lot of money in a legal settlement—just say, to take a wild hypothetical example, $491M—it has paid a low enough price for the bought company so that the assets it acquires makes up for whatever it has to pay out in the legal settlement(s). I assume that’s how business is done. So that seems to make Pfizer a full participant in the process. And any claim that it had nothing at all to do with any chicanery sounds pretty hollow.

The other question, of course, is how this fits with any patterns of long-standing behavior on Pfizer’s part. Dr. Poses admits that by now he’s lost count of how many times Pfizer has had to settle with the Feds over alleged or actual wrongdoing. He adopts the term “umpteenth” as the best count he can manage. And of course, each time it happens, Pfizer promises on its grandmother’s grave never to do it again.

Doing Patents the Indian Way

Last week’s New England Journal of Medicine features a “perspectives” by Amy Kapcynski of Yale Law School:
http://www.nejm.org/doi/full/10.1056/NEJMp1304400

Prof. Kapcynski reports on a ruling by the Supreme Court of India last April that effectively upholds that nation’s Patent Act, against a challenge to a patent ruling by the drug giant Novartis.

Folks in poorer nations have a strong interest in promoting locally made generic drugs and limiting the ability of international firms to extend the patent life of their expensive brand-name drugs. With these concerns in mind, Section 3(d) of the Indian Patent Act was designed to forbid patents of the sort that lead to the most extreme cases of “evergreening” in the U.S. Pharma world (as described in HOOKED). It forbids a company getting a patent on a new, minor chemical variant of a known drug, such as a salt or isomer, unless it has shown that the new form offers a significant advantage in efficacy.

Novartis tried to extend its patent on the cancer drug Gleevec by claiming a patent on the beta-crystalline form of the drug’s active ingredient. The Supreme Court cried foul.

Prof. Kapcynski says that the Indian law and the Court’s ruling have two virtues. First, they keep prices lower for the developing world. But they also do the opposite of what Novartis immediately claimed when the adverse ruling came down—that the Indian law was stifling innovation by reducing the financial rewards to big companies. Prof. Kapcynski argues that the law rather promotes the right sort of innovation. It turns companies’ attention away from silly me-too drugs and forces them actually to innovate—to discover new drugs that work better than existing drugs.

That’s the business and public health end of the equation. What about the legal end? The basic idea behind patent law, those non-lawyers among us are told when we try to study the issue, is that important criteria for deciding whether to issue a patent are novelty and non-obviousness. Now, patenting a minor chemical tweak in an existing drug sounds like a poster child for “obvious” and “not novel.” So why has the U.S. patent office acted like such a wuss and granted patents to drug companies wholesale for these “new” drugs?

Prof. Kapcynski makes the claim that it’s not merely the case that the Indian patent law should be allowed to stand—but that it would be a great model for other countries to emulate. How about the USA?

More Recent Legal Settlements: Yes, 'Bribery' Is the Right Word

Back again to lifting my material from Dr. Roy Poses' Health Care Renewal blog:
http://hcrenewal.blogspot.com/2013/07/why-do-people-think-us-health-care-is.html

The point of this post is to follow up on the "corruption" theme, which both our blog and Dr. Poses' have recently commented on:
http://brodyhooked.blogspot.com/2013/07/the-corrupt-us-health-system-and.html

The particular instances discussed are the companies Amgen and Mallinckrodt, each of which recently settled Federal lawsuits claiming that they had paid kickbacks to physicians for prescribing their drugs. (Both companies, of course, denied any wrongdoing.) Dr. Poses' point, emphasized repeatedly in his blog, is that while the companies had their hands slapped--Mallinckrodt was fined $3.5M, which I think is the sort of chump change drug company execs find in their sofa cushions-- no actual human being was found guilty or had to suffer any consequences.

The point I'd make for our blog is slightly different. When I wrote HOOKED and started to write this blog I adhered to the usual custom, and described the goodies that docs received from drug firms with labels such as "gifts." After a while, I decided that I was actually aiding and abetting the practices I wished to criticize by not calling them by their true name--bribes. See for instance:
http://brodyhooked.blogspot.com/2007/11/framing-problem-and-physician-bribery.html

It is somewhat reassuring to see from these recent cases that the word "bribe" is, in fact, the correct descriptor at least some of the time.

A Recent Survey on Physician's Attitudes toward Pharma

For many people in my line of work, a newly published survey by Dr. Jon Tilburt and colleagues:
http://jama.jamanetwork.com/article.aspx?articleid=1719740
--is likely to cause a fair amount of handwringing. (See for example Dr. Ezekiel Emanual's accompanying editorial:
http://jama.jamanetwork.com/article.aspx?articleid=1719718).

"My line of work," in this case, is arguing that physicians and their professional societies ought to step up to the demands of professionalism and take leadership in stopping the overuse of medical interventions that provide no patient benefit, might do harm, and waste a lot of money. The present survey of attitudes among a national sample of physicians is nonreassuring in several ways. Physicians generally point the fingers at others as being much more responsible for doing something about excessive medical costs (those evil trial lawyers, of course, being right at the top of the list). And while most policy wonks think we'll do nothing to reduce the overuse of worthless procedures until we reform the fee-for-service system of payment, physicians are quite solidly stacked against any such changes in reimbursement.

I'll pass on those comments for now, however, and simpy focus on a couple of questions that seemed relevant to the theme of this blog.

First, while physicians were happy to dodge the bullet on responsibility for reducing health costs, with only 36% of the sample admitting that practicing physicians had a major responsibility for this, 56% of them said that pharmaceutical and device manufacturers had such a major responsibility--suggesting that a lot of physicians held these people responsible for a good deal of high health costs. (Only 5% said these companies had no responsibility.)

Next, when asked what measures they might approve of to reduce health costs, "Limiting corporate influence on physician behavior" received a 63% "very enthusiastic" rating and an additional 27% "somewhat enthusiastic." So again, the vast majority of physicians seemed to agree that it would be a good thing if corporate influence were limited as a way of controlling costs.

So there appears to be some evidence that we pharmascolds have had some impact on physician attitudes in recent years.

The Astroturf Speaks Out--More Industry Anti-Transparency Manipulations

A month or so ago I cited in a post a recent editorial by Drs. Robert Steinbrook and Rita Redberg:
http://archinte.jamanetwork.com/article.aspx?articleid=1680139

Drs. Steinbrook and Redberg were waxing optimistic about new measures to improve the trustworthiness of the medical research literature. Among the reasons for optimism, they listed: "Finally, as of January 2014, the European Medicines Agency (EMA) will publish clinical trial data for the medications it considers for approval. ... Two companies have recently mounted legal challenges to decisions by the EMA to grant access to documents. But if the agency is able to keep to its timetable and fulfill its promises, a new era of access to clinical trial data will commence."

The Guardian in the UK now reports:
http://www.guardian.co.uk/business/2013/jul/21/big-pharma-secret-drugs-trials
--that the drug industry is not exactly taking this threat of increased transparency in drug research lying down: "The pharmaceutical industry has "mobilised" an army of patient groups to lobby against plans to force companies to publish secret documents on drugs trials....The strategy was drawn up by two large trade groups, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the European Federation of Pharmaceutical Industries and Associations (EFPIA), and outlined in a memo to senior industry figures this month, according to an email seen by the Guardian."

Appropriate comments on this move are provided by Tim Reed of Health Action International, a group that has been active in exposing financial connections between drug companies and patient organizations:

"It underlines the fact that patient groups who are in the pay of the pharmaceutical industry will go into battle for them. There's a hidden agenda here. The patient groups will say they think it's a great idea to keep clinical trials data secret. Why would they do that? They would do that because they are fronts for the pharmaceutical industry.

"Patient groups get traction because they are assumed to represent the voice of the suffering. But industry uses them to say we're not going to get innovative medicines if the industry is deterred from investing by having to be transparent about their clinical trials..."

When this apparently secret campaign was brought out into the open, the responses of the drug firms and their lobbying organizations was interesting. The drug companies basically either did not reply to the Guardian or else said, "Who, us? We would never do such a thing." The lobbying organizations, PhRMA and EFPIA, brazened it out by insisting that there are serious risks to public and patient health if these trial results are openly available, and so they are just protecting their public health mandate by objecting.

According to The Guardian, the campaign seems to be working so far: "A source in the European parliament, who is close to the negotiations over the clinical trials directive, said he had experienced intense lobbying from patient groups. 'We've witnessed this sort of activity in recent months, and it's a concern if the pharmaceutical industry is behind some of it. They are trying to weaken some of the transparency proposals and that's clear from the amount of lobbying we've had,' he said."

In HOOKED, I explained the origins of the industry-insider term "astroturf" to designate a phony grass roots organization, which appears to be transmitting the real thoughts and ideas of real people, when in fact it is nothing but a PR mouthpiece for the drug industry, bought and paid for. At first I meant by "astroturf" a genuinely phony organization, that actually had no membership and was solely the creation of industry PR firms. This example from Europe suggests that we need to extend the concept and note that even real patient organizations, that actually do represent people suffering from particular diseases, can turn themselves into "astroturf" when they are willing to serve as paid shills in instances like this one.

Piling Up on the RUC--About Time

To follow our earlier post regarding the AMA's secret committee, the RUC, that helps the Center for Medicare and Medicaid Services (CMS) set physicians' reimbursement rates:
http://brodyhooked.blogspot.com/2013/07/the-ruc-revisited-more-corruption-in.html
--Peter Whoriskey and Dan Keating at the Washington Post have printed their own investigation of the RUC's doings:
http://www.washingtonpost.com/business/economy/how-a-secretive-panel-uses-data-that-distorts-doctors-pay/2013/07/20/ee134e3a-eda8-11e2-9008-61e94a7ea20d_story.html

After so many years of totally ignoring the RUC, it's nice to see the American media finally doing a lttle bit of piling on.

The focus of this recent investigative piece is one aspect of the resource-based relative value scale (RBRVS) calculation that the RUC is supposed to be reviewing and updating regularly--the amount of time that a medical procedure takes, on average. The reporters first looked at the RBRVS calculations for common procedures in gastroenterology, ophthalmology, orthopedics, and some other specialties who routinely work in outpatient surgical centers. They then looked at the publicly available records of such centers in Florida and Pennsylvania to see how many procedures were performed each day.

Given the fact that the RUC bases its calculations mostly on surveys of the specialists doing the procedures, who are told up front that their responses will be used to set reimbursement rates for their specialty, you may not be surprised to hear that in virtually all cases, the RBRVS formula overestimates the time required to do a procedure, often by a factor of two. According to the figures the RUC has come up with, a lot of specialists working in outpatient surgical centers put in 12-hour days, despite the fact that the centers are not open that many hours. A few intrepid souls manage to do more than 24 hours' worth of procedures each day.

In fairness, the time required for a procedure is only one of several factors the RBRVS takes into account in deciding how many value units to assign to that procedure. But as the factors are multiplied together, if you overestimate the time, it is hard to fully correct for that.

The CMS folks, when this is pointed out to them, respond by saying that they are now relying less and less on RUC to set their own rates. But that means that while they used to accept the RUC's recommendations wholesale 90 percent of the time, they now accapt them only 70 percent of the time. I think you could call that baby steps.

CMS has also protested all along that however flawed the RUC system might be, they simply don't have the staff or funding to decide these things independently. Which is true; according to the Post story, CMS has only 7-8 people working part time on RBRVS calculations.

However, if you look to see what Whoriskey and Keating did to calculate their numbers, it is hardly rocket science; and had they had the in-house access to the numbers that CMS must have, it would have been even easier to show that the RUC calculations were simply ridiculous. It is hard to imagine that no one at CMS, over all these years, could have observed this same thing.

Whoriskey and Keating interviewed Dr. Amrit Narula, a gastroenterologist and owner-operator of an endoscopy clinic in Pottsville, PA. The three doctors who worked there took in $700,000 for doing colonoscopies alone in 2011, while the facility charged its own separate fees and showed a profit of $1.5M. Dr. Narula, the reporters noted, lives in a 5000-square-foot house in the community.

Dr. Narula was obviously a bit embarrassed by the way he and his colleagues rake in money off a procedure that's paid much more generously in the U.S. than in any comparable industrial nation, thanks largely to the RUC. But he also pushed back a bit: “'What is the right price?... Who can tell? A lawyer can charge $400 an hour. My accountant charges me for 15 minutes of time even if he just opens an e-mail from me. And what about the bankers? . . . Ultimately, this is for society to decide.'”

Dr. Narula has a good point. And if it's for society to decide, it should be done in an open forum, not behind closed doors and under the control of the same medical specialists who are paid according to the resulting formulas.

ADDENDUM 7/22/13: As this blog is about ethics and professionalism in medicine, it may be worth taking a minute to reflect on the career of the RUC. As this and previous posts indicate, when the RUC and its activities and processes are brought out into the light of day, there is a distinct aroma problem--what's going on doesn't pass the sniff test. It seems quite obvious to any members of the general public who take the time to inform themselves about these activities (all seven of them) that what's going on sounds more like corruption and extortion than how a supposedly "professional" organization ought to conduct its business.

The AMA was fat and sassy during a good part of the 20th century. The vast majority of American physicians were AMA members (you were considered a sleazeball if you were not a member of your county medical society, and for decades you were not allowed to be a member of the county and state societies unless you also joined the AMA). The AMA was one of the most powerful lobbies in Washington and was credited single-handedly with shooting down Truman's efforts at national health insurance; in the 1948 elections more than 90 percent of all Congressional candidates whom the AMA supported got elected. Most people had high praise for physicians and for the new advances in medical sciences, and credited the medical "profession" with standing for those advances for the good of everyone. Physicians still worked incredibly long hours and made house calls, and most of them drove Chevys, not BMWs.

By the 1980s and 1990s, this halo was starting to tarnish. The AMA was starting to lose dues as legal rulings prevented automatic membership requirements--sinking to the present level where fewer than a quarter of US physicians are members of the AMA. (Full disclosure: I am not and never have been.) Historians gradually gained attention as they rewrote the history of 20th century medicine, not as Ben Casey and Dr. Kildare selflessly saving lives, but as a powerful guild making more and more money, exercising more and more power, and justifying it all on the charade that everything was done for the public good and nothing was done for selfish reasons. The public noted that physicians' incomes suddenly took off like gangbusters after Medicare and Medicaid were passed and so many previous "charity" patients suddenly had decent insurance.

So in this environment, if you'd asked any thoughtful person what was going to happen if the AMA took over the RUC and ran it strictly for the financial bennies that accrued to physicians--and then, only for one segment of physicians, the procedural specialists--and the public interest be damned, then what was going to happen? And the answer would be--maybe for a while, maybe for a long while no one will notice. But when they do, some pretty serious chickens are coming home to roost. And the result won't be pretty for those who are trying to defend American medicine as something vaguely resembling a "profession."

So they could have connected the dots and been warned. But no, they had to succumb to greed. As the old folk song said, when will we ever learn?

Pharma Corporate Crime—A Perennial Topic, Apparently

When I started doing research for HOOKED, one of the first books I came across was by the Australian business sociologist John Braithwaite, whose 1984 volume bore the catchy title Corporate Crime in the Pharmaceutical Industry. Recently, I recommended this book to a colleague interested in the international pharmaceutical trade, but apologized for suggesting such an old and possibly out-of-date source. While Braithwaite focused a lot on the bribes Western drug companies paid in developing nations to push their products and evade regulation, I figured a lot must have changed since 1984 and that the situation must be a lot better.


Turns out I should not have worried about being out of date.

According to Katie Thomas in the New York Times:
http://www.nytimes.com/2013/07/17/business/global/for-drug-makers-china-becomes-a-perilous-market.html?hp&_r=1&
--some of the same drug companies whose illegal activities have landed them in hot water in the U.S. are up to similar tricks internationally, and the Chinese government, in particular, is trying to rein them in.

Thomas tells us that as the Chinese pharmaceutical market blooms (with 95% of Chinese now having health insurance, probably a better percentage than in the US) and as China tries to position its own companies to compete more effectively with transnational Pharma, “selling pharmaceuticals and other health care products in China is increasingly fraught with peril, as shown by accusations in China this week that GlaxoSmithKline funneled payments through travel agents to doctors, hospitals and government officials to bolster drug sales in the country.

“Chinese officials have compared the company’s operations to organized crime…”

Is it strange that GSK, in particular, should have been caught doing these questionable things? “GlaxoSmithKline has been struggling to rebuild its image after a $3 billion fine in the United States last year, in which the company admitted to improperly promoting its antidepressants and failing to report safety data about the diabetes drug Avandia. Andrew Witty, who took over as chief executive in 2008, has repeatedly pitched the company as a global leader in ethical practices and said it had moved on from its previous lapses.”

As part of “rebuilding its image,” GSK issued a contrite statement in response to these recent charges: “In a statement, Glaxo said it was ‘deeply concerned and disappointed’ by the accusations. ‘GSK shares the desire of the Chinese authorities to root out corruption,’ the company said, adding that it had stopped its relationships with the travel agencies identified in the investigation and was reviewing past transactions with them. ‘These allegations are shameful and we regret this has occurred.’”

Following the superb precedent set by the Claude Rains character in Casablanca, I think the correct term that one is “shocked, shocked” to discover these corrupt practices going on in a morally pristine operation.

But the claim to have been caught by surprise by these revelations—that apparently a few loose cannon were free-lancing without the knowledge of any company higher-ups—starts to ring hollow according to observers quoted by Thomas such as attorney Richard L. Cassin: “[T]he accusation by Chinese authorities that Glaxo channeled as much as 3 billion renminbi (about $489 million) through more than 700 travel agencies makes this case more egregious than most. ‘The question of 700 travel agencies, it’s an astounding number,’ he said.”

Thomas also tells us that despite the strong growth of the Chinese national pharmaceutical industry, “some believe Western companies will have an edge because consumers may be willing to pay more for brands that are known for high-quality ingredients.

“‘There are so many drugs that are poor quality in China, so the ability to differentiate yourself is important,’ said Craig A. Wheeler, the chief executive of the American generic drug maker Momenta Pharmaceuticals. His company is developing complex drugs known as biosimilars through a business deal with Baxter, which has an established presence in China.”

Now, let me get this straight—as we posted a while back:
http://brodyhooked.blogspot.com/2011/09/none-dare-call-it-corruption.html
--when 21 Americans died in 2007 after taking contaminated heparin made with sub-par Chinese ingredients from uninspected factories, wasn’t it Baxter that sold the product? And these are now the people who claim to have the superior-quality drugs that the Chinese ought to buy instead of their own home-made products?

So I guess I won’t toss my copy of Braithwaite’s book on the recycle pile just yet.