Intermune Executive Convicted of Fraud

From today's New York Times comes word of an unusual legal case,

In a verdict that could strike fear into pharmaceutical industry executive suites, the former head of a drug company was convicted of wire fraud Tuesday for issuing what federal prosecutors called a misleading press release that contributed to off-label sales of his company’s drug.

But the executive, W. Scott Harkonen, the former chief executive of InterMune, was acquitted by the federal jury in San Francisco of a related charge of off-label marketing itself, known as 'misbranding,' the Justice Department said.

The case was unusual because off-label marketing cases are often settled with the company paying a fine. It is rare for prosecutors to press charges against individual executives.

'Today’s verdict demonstrates that pharmaceutical executives will not be able to hide behind a corporate shield when they promote drugs using false or fraudulent information,' Thomas P. Doyle, a special agent in the Food and Drug Administration’s office of criminal investigations, said in a statement Tuesday.

InterMune’s drug, Actimmune, was approved for two rare genetic conditions. But the main sales of the drug, which peaked at $141million in 2003, came from an unapproved use: treating idiopathic pulmonary fibrosis, a scarring of the lungs that can be fatal.

InterMune conducted a large clinical trial testing Actimmune as a treatment for the lung disease. The drug did not achieve the goal of the trial, which was to improve lung function compared with a placebo. But InterMune found that if only the patients in the trial with mild or moderate disease were considered, those who got the drug lived longer than those who received the placebo. The company highlighted the 'survival benefit' in a news release, issued in August 2002. [Editor's note - if the primary study outcome was improvement of lung function, and the only 'positive' result was improvement of survival in one sub-group, that result may have been due to chance alone, due to multiple statistical comparisons. If one does analyses on multiple sub-groups and for multiple endpoints, the likelihood of finding a 'significant' result increases with the number of such analyses done.]

Prosecutors said the news release was part of a scheme to induce off-label sales of Actimmune, also known as interferon gamma, which costs about $50,000 a year.

[The company's attorney] Mr. Topel said interpretation of the clinical trial results was a matter of debate. 'One position in a scientific dispute has been criminalized — quite an astonishing thing,' Mr. Topel said in an interview.

Wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine. Dr. Harkonen, who remains free on bail, has not been sentenced.

A medical doctor by training, he was chief executive of InterMune from February 1998 until June 2003.

InterMune agreed to pay about $37 million in 2006 to settle charges related to Actimmune marketing. The company, based in Brisbane, Calif., also entered into a five-year corporate integrity agreement with the Department of Health and Human Services.

In 2007, a second big trial of Actimmune found that the drug did not prolong lives of patients with pulmonary fibrosis. Sales of the drug have dwindled year by year. [Editor's note - this suggests again that the result in the sub-group from the first trial might have been a false positive due to multiple comparisons.]

This case is unusual because it involved the prosecution of an individual who appeared to be responsible for the allegedly unlawful conduct. In most cases of unethical or unlawful conduct alleged on the part of health care organizations, at most it is the organization itself that has paid the penalty, usually in the form of a fine, sometimes accompanied by a corporate integrity agreement or deferred prosecution agreement. (See relevant posts here.)

We have argued that such penalties applied to corporations do little to deter bad behavior. A fine can just be a cost of doing business. The cost of the fine may diffuse across the whole organization. For public for-profit corporations, the fine may finally be paid by stockholders (through lower dividends or lower stock appreciation), employees as a group (through lower pay), and customers, clients, or patients (through higher prices). So the penalty may ultimately be spread over a large number of people, hardly any of which were actually responsible for the bad behavior. The few people responsible, who could include people who implemented, directed, or approved the behavior, usually have suffered no consequences. So what is to deter such people from again behaving badly?

So this case seems to be a step forward. One may argue whether off-label marketing should be illegal, but it currently is illegal. Corporate leaders who do not like this law ought to strive to change it, not violate it. If the law is to be upheld, when someone within a corporation implements, directs or approved illegal off-label marketing, then that person should suffer the consequences.

The Kelo Case Redux: Pfizer's "Nice Place" Ends Up Covered with Weeds

Four years ago we posted (here, here and here) about the controversial US Supreme Court decision in the Kelo case. Most discussion of the case at the time focused on individual property rights vs the power of the government to promote economic development, but the case had an important health care angle.

Briefly, the case centered on the taking of private property, including a house owned by Susette Kelo, by a not-for-profit organization, the New London (Connecticut) Development Corporation (NLDC) given the power of eminent domain by the New London city government. While the ostensible rationale for the taking was economic development, the action appeared to have been at the behest of Pfizer Inc, the world's largest pharmaceutical company, which had built a research and development facility in the city, and wanted a suitably upscale and sanitized environment for its workers.

As we previously posted, the NLDC's leadership had multiple conflicts of interest that involved ties to Pfizer. One board member was a Pfizer vice-president. The board president was married to another Pfizer vice-president. Pfizer wanted the part of New London that included Kelo's house made more attractive to complement its new research facility. The husband of the NLDC president had said, "Pfizer wants a nice place to operate. We don't want to be surrounded by tenements."

Kelo's and other property owners' protest of the taking went all the way to the US Supreme Court. As we posted here, the Court decided against the property owners by a 5-4 vote. Justice John Paul Stevens wrote for the majority that the city's "determination that the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference. The city has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including - but by no means limited to - jobs and increased revenues." This majority opinion is important, because the Fifth Amendment to the US Constitution provides "nor shall private property be taken for public use without just compensation." Many had interpreted this provision to mean that eminent domain could only be used to take property for public use, e.g., to build a road or a public school, but not for private purposes, like building upscale waterfront developments.

The Associated Press just published an ironic follow-up.

Weeds, glass, bricks, pieces of pipe and shingle splinters have replaced the knot of aging homes at the site of the nation's most notorious eminent domain project.

There are a few signs of life: Feral cats glare at visitors from a miniature jungle of Queen Anne's lace, thistle and goldenrod. Gulls swoop between the lot's towering trees and the adjacent sewage treatment plant.

But what of the promised building boom that was supposed to come wrapped and ribboned with up to 3,169 new jobs and $1.2 million a year in tax revenues? They are noticeably missing.

What happened?

New London the city's prized economic development plan has fallen apart as the economy crumbled.

The Corcoran Jennison Cos., a Boston-based developer, had originally locked in exclusive rights to develop nearly the entire northern half of the Fort Trumbull peninsula.

But those rights expired in June 2008, despite multiple extensions, because the firm was unable to secure financing, according to President Marty Jones.

So that was the result of the economic development plan the Supreme Court majority termed "carefully formulated." The lesson seems to be that when government makes policy to favor individual corporations, the results are bad policy and little public benefit. Government leaders often seem willing to favor specific health care organizations, rationalizing their actions in terms of economic development or promoting health and health care. Doing so may benefit the corporations involved, but rarely individual or public health.

Although US local and national government officials have have increasingly practiced such corporate socialism, they have neglected their regulatory roles. Instead of picking winners and losers, government would do better to act like a combination of an honest policeman on the beat, deterring and punishing dishonest behavior, and in impartial referee, trying to make sure everyone is playing the game honestly. But no doubt government officials used to mingling with the corporate superclass would not be comfortable in the roles of honest cop or impartial referee.

Malpractices of the multitude revisited: "An outstanding job of educating themselves about clinical issues"

At numerous posts at Healthcare Renewal, we have pointed out what we feel to be a serious gap in the credentials of many in biomedical leadership roles.

The gaps are in the form of a near complete lack of any scientific or biomedical education and experience, except perhaps a high school chemistry and biology class or two.

We often receive comments back, usually from "anonymous" posters such as here to our opinions that this expertise gap impairs the judgment of such leaders on medical matters:

... No. I've met individuals with management training who do an outstanding job of educating themselves about clinical issues. And I've met individuals with clinical training who do an outstanding job of educating themselves about management and business issues.

I feel this "anyone can be an expert" sentiment is an important issue to bring outside of the comments section of our posts.

I raised probing questions in response to such messages here in my post "More On Healthcare Management By Domain Neutral Generalists: CIO's Running Hospital Pharmacies and Home Healthcare Divisions?"

Here are my most recent questions to the above anonymous medical self-education proponent:

Re: "I've met individuals with management training who do an outstanding job of educating themselves about clinical issues."

What, exactly, is it that individuals with management training who do an outstanding job of "educating themselves about clinical issues" are professionally or even reasonably qualified to do?

Could they pass medical boards?

Could they reasonably interpret a complex medical article in, say, The Annals, and make truly informed, wise decisions based on that reading?

Could they reasonably evaluate therapeutic alternatives in complex cases, say, someone with a new heart valve who's just developed fever and a lower GI bleed?

In an emergency could they provide medical care? (mot in the legal sense, just in the skills sense.)

If not, why not, and what do you mean by "outstanding job?"

In comparison, I have no MBA or formal business training (other than working for years in my father's pharmacy as a stocker and cashier) but did a good job managing a department of 50+ and a budget of $13 million for an international pharma, solving severe business problems that had been impairing R&D and managing my budget consistently to within 0.5% of EA.

Is there perhaps an asymmetry between medicine and business?

Finally, I ask:

What percentage of a typical medical training curriculum (such as for a Pharm.D. here or a physician here) can a person with a management background absorb through self-education, and is the medical training curriculum therefore irrelevant? Should we just go back to the days of self-trained practitioners? If not, why not?

The critically thought-out answers to these questions expose the territorial invasion of medicine by ill-suited outsiders and dilettantes quite well.

Echoing an observation I wrote about once before in my eight part series on mission hostile EMR's, but addressing it to medical administration where it also applies:

Medical administration reminds me of dentistry in its early days, especially when medical administrators lacking biomedical expertise refer to themselves as "medical professionals."

B.T. Longbothom, author of the second dentistry book published in the U.S. ("A Treatise on Dentistry", 1802), gave an excellent description in his preface of problems at the time. His observations apply to medical administration in our present age:

The word "dentist" has been so infamously abused by ignorant pretenders, and is in general so indifferently understood, that I cannot forbear giving what I conceive to be its original meaning: viz, the profession of one who undertakes and is capable not only of cleaning, extracting, replacing by transplantation and making artificial teeth, but can also from his knowledge of dentistry, preserve those that remain in good condition, prevent in a very great degree, those that are loose, or those that are in a decayed state, from being further injured, and can guard against the several diseases, to which the teeth, gums and mouth are liable, a knowledge none but those regularly instructed, and who have had a long, and extensive practice, can possibly attain, but which is absolutely necessary, to complete the character of a Surgeon Dentist.

Hardly anyone spoke out.

More than thirty years later, untrained practitioners were as prevalent as ever. One of the leading dentists of the time, Shearjashub Spooner, in his "Guide to Sound Teeth, or, A Popular Treatise on the Teeth" (1836) warned the public of a phenomenon I believe now applies to medical administration:

One thing is certain, this profession must either rise or sink. If means are not taken to suppress and discountenance the malpractices of the multitude of incompetent persons, who are pressing into it, merely for the sake of its emoluments, it must sink, - for the few competent and well educated men, who are now upholding it, will abandon a disreputable profession, in a country of enterprise like ours, and turn their attention to some other calling more congenial to the feelings of honorable and enlightened men.

I understand that point of view.

-- SS

Congress expects physicians to implement EHR's when they can't post a PDF on the web?

Congress expects physicians to implement EHR's and review patient histories in detail, when they can't even review their own bills before acting, and post a PDF on the web?

This has to be the lamest, most inept, and/or most patronizing Congress in history (with approval ratings to match, 16% as of Sept. 25 according to Rasmussen):

Washington Examiner
Baucus claims it's too difficult to put health care bill online
By: BARBARA HOLLINGSWORTH
09/24/09

A proposal by Sen. Jim Bunning, R-Ky., that would have required the Senate Finance Committee to post the final language of the $900 billion health care reform bill, as well as a Congressional Budget Office cost analysis, on the committee’s website for 72 hours prior to a vote was rejected 12-11.

... Chairman Max Baucus, D-Mont., himself admitted that “This probably sounds a little crazy to some people that we are voting on something before we have seen legislative language.” Indeed.

Baucus’ excuse - that it would take his committee staff two weeks to post the bill online – sounds a little crazy too.

This very same Congress is pushing physicians to implement EHR's under penalty of Medicare payment reductions, while they claim an inability to post a PDF or Word document online. Implementing EHR's is only several orders of magnitude more complex...

Or, perhaps the "inability" to post the text has to do with text that appears at pages 80-81 of the bill:

"Beginning in 2015, payment [under Medicare] would be reduced by five percent if an aggregation of the physician's resource use is at or above the 90th percentile of national utilization." Thus, in any year in which a particular doctor's average per-patient Medicare costs are in the top 10 percent in the nation, the feds will cut the doctor's payments by 5 percent."

As in the Washington Times:

This provision makes no account for the results of care, its quality or even its efficiency. It just says that if a doctor authorizes expensive care, no matter how successfully, the government will punish him by scrimping on what already is a low reimbursement rate for treating Medicare patients. The incentive, therefore, is for the doctor always to provide less care for his patients for fear of having his payments docked.

And because no doctor will know who falls in the top 10 percent until year's end, or what total average costs will break the 10 percent threshold, the pressure will be intense to withhold care, and withhold care again, and then withhold it some more. Or at least to prescribe cheaper care, no matter how much less effective, in order to avoid the penalties.

No metrics on quality of care, outcomes, patient satisfaction, or other aspects of the complex process of medical care are apparently involved. Just an "aggregation of the physician's resource use."

May I use the words "capricious and arbitrary" to describe this metric?

Now, we should ask:

• Is this what our government means by "data driven healthcare?"
• Do they realize the likely adverse consequences of such half-baked measures?
• Are those who would propose such a bill friends of patients, and friends of physicians?

Where have I seen this before? (How about: biomedical dilettantes helping impair R&D at a pharmaceutical company, now in sale mode due to a poor pipeline of new drugs, through cutting drug discovery resources on the simplistic metric of "cost per user per database?")

Ultimately, this Medicare strategy is the end result of allowing medical dilettantes (no matter how well they've "self educated" themselves about medicine) to control the playing field. It is a poster example of a perverse incentive in direct conflict with the obligation of physicians to provide the best care.

In the end, patients and physicians get screwed.

-- SS