The Tragic Case of Aaron Swartz: Unequal Justice for Web Activists vs Health Care Corporate Executives

The recent tragic case of the suicide of Aaron Swartz raises many issues, and has inspired an outpouring of news coverage and internet discussion.  Yet one issue it should raise that has not received much notice so far is that of how individuals and top executives are treated differently before the law.

Summary of the Case

Aaron Swartz was a prodigy who developed  helped develop the RSS system for disseminating updates on web-site contents, and who helped develop the Reddit web-site.  He was an advocate for information freedom, and more broadly, according to Matt Stoller, "a political activist interested in health care, financial corruption, and the drug war."  Furthermore, he "recognized that politics is a corrupt money driven system, but also that it could be cracked if you spent the time to understand the moving parts."

Although apparently very well known among internet activists and computer scientists, Mr Swartz did not attract a lot of mainstream media attention, at least until 2011 when he was arrested "on a series of felony counts including wire fraud, computer fraud, unlawfully obtaining information from a protected computer and recklessly damaging a protected computer," according to the New York Times.  His alleged crime was that he downloaded thousands of scientific scholarly articles from the site JSTOR, and was accused of intending to make them publicly available for free.  Note that the articles were already publicly available, but only online through expensive subscriptions.  At the time, the US Department of Justice took this to be a very serious crime:

'Stealing is stealing, whether you use a computer command or a crowbar, and whether you take documents, data or dollars,' the United States attorney for Massachusetts, Carmen M. Ortiz, said last week in a statement about the case. 'It is equally harmful to the victim whether you sell what you have stolen or give it away.' 

The charges Ms Ortiz filed lead to Mr Swartz's arrest

on a series of felony counts including wire fraud, computer fraud, unlawfully obtaining information from a protected computer and recklessly damaging a protected computer. If convicted on all counts, the Justice Department said he could face up to 35 years in prison and $1 million in fines. 

Yet Mr Swartz certainly was not accused of either violence or of planning to personally profit from his alleged crimes.  At the time of his arrest, the severity of the allegations baffled many:

 'This makes no sense,' said David Segal, executive director of Demand Progress, an organization Mr. Swartz founded to rally support online for an open Internet. 'It’s like trying to put someone in jail for allegedly checking too many books out of the library.'

JSTOR got the hard drives that contained the articles in question back from Mr Swartz, and planned no further action:

Asked if it was pleased that someone misusing the service could be brought to justice, a spokeswoman for Jstor wrote in an e-mail response: 'We wanted the content back, and we were able to secure it and ensure it wasn’t distributed. We were not interested in further legal action around this incident. We have no comment on the prosecution or how they have chosen to characterize it.'

Since 2011 the case got little notice until Mr Swartz ended his own life this month.  After his death, his family and partner issued a statement, as reported by the Guardian:

In a statement released late Saturday, Swartz's parents, Robert and Susan, siblings Noah and Ben and partner Taren Stinebrickner-Kauffman said the Redditt builder's demise was not just a 'personal tragedy' but 'the product of a criminal justice system rife with intimidation and prosecutorial overreach'.

They also attacked the Massachusetts Institute of Technology (MIT) for not supporting the internet activist in his legal battles and refusing to stand up for 'its own community's most cherished principles'.

And according to the New York Times (via CNBC), Harvard Professor Larry Lessig, Director of the Safra Center for Ethics, where Swartz had been a fellow protested

the idea that he could have seen serious prison time was infuriating. Lawrence Lessig, the Harvard Law professor who founded Creative Commons to advocate greater sharing of creative material online, called the prosecution's case absurd and said that boxing in Mr. Swartz with an aggressive case and little ability to mount a defense ''made it make sense to this brilliant but troubled boy to end it.'

 Hounding Swartz but Failing to Pursue Health Care Corporate Executives

The Daily Beast just ran a story that suggests that Swartz should have known better to have done something that would have attracted the wrath of one of the toughest federal prosecutors, but one who is also a "liberal's dream."  It opened its piece on US Attorney Carmen Ortiz thus:

 Until she was accused of driving the 26-year-old cyber wunderkind and public-access activist Aaron Swartz to suicide, the top federal prosecutor in Massachusetts was a liberal’s dream.

 Not for nothing was United States Attorney Carmen Ortiz championed by the late Sen. Edward Kennedy and appointed by President Obama nearly four years ago.

Then, it suggested how tough Ms Ortiz really is:

She is Hispanic and was raised in a New York housing project, and after her husband died of cancer she raised two daughters on her own. She has taken on political corruption, and she has been so aggressive against white-collar crime that her office collected more in forfeitures and fines than any other jurisdiction in the country.

Her avowed motive in becoming a prosecutor was because 'there’s a greater chance for justice.'

that is a pretty amazing summary.  However, it seems decidedly at odds with Ms Ortiz's record dealing with misdeeds by health care corporations, as discussed on Health Care Renewal.  Ms Ortiz, whose harsh views of Swartz appear above, has been quoted at least three times about three different cases on this blog.  In all instances, her quotes were in the context of legal settlements she made with large health care corporations.

Forest Pharmaceuticals

In September, 2010, how Ms Ortiz led the pursuit of a settlement with Forest Pharmaceuticals became apparent (look here).   The company was accused of promoting its anti-depressant Celexa for use in adolescents and children.  Such drugs have since been shown to increase the risk of suicide by such young patients, and this drug was only approved for adults.  At the time, Ms Ortiz said, "Forest Pharmaceuticals deliberately chose to pursue corporate profits over its obligations to the F.D.A. and the American public."  Although the offense may have lead to use of the drug by many adolescents and children, and hence may have lead to some of them attempting or committing suicide, the case was settled only with fines.  As is usual in such legal settlements, no individual corporate executive who authorized or lead the off-label and potentially dangerous marketing of the drug was arrested, or accused, and none suffered any negative consequences.

GlaxoSmithKline

In October, 2010, how Ms Ortiz led the pursuit of a settlement with GlaxoSmithKline became apparent (look here.)  The company was accused of selling drugs that were not what they appeared to be, apparently because the wrong drugs were put in labelled containers.  Obviously, taking one drug, like Paxil, GSK's anti-depressant which has a number of known adverse effects, including suicide risk for adolescents and children as noted above, when a patient is supposed to be taking a wholly different drug could lead to patient harm.  At that time, Ms Ortiz said, "We will not tolerate corporate attempts to profit at the expense of the ill and needy in our society -- or those who cut corners that result in potentially dangerous consequences to consumers."   Again, while the settlement involved a guilty plea by a GSK subsidiary, again no individual corporate executive who had authority over the drug manufacturing was arrested or accused, much less suffered any negative consequences.

St Jude Medical

In January, 2011, Ms Ortiz led the pursuit of a settlement with St Jude Medical (look here).  The company was accused of paying kickbacks to doctors to implant its cardiac defibrillators (ICDs) and pacemakers.  Obviously, providing kickbacks to doctors may have lead them to plant devices in patients who did not really need them, yet the devices and the implantation procedures can have adverse effects.  At that time, Ms Ortiz said, "The United States alleges that St Jude solicited physicians for the studies in order to retain their business and/or convert their business from a competitor's product."  Again, as is usual, the settlement did not require any executive who authorized or directed the activities leading to the kickbacks suffered any negative consequences.

So in summary, in three major cases involving unethical practices by big health care corporations that could have put patients at risk, US Attorney Carmen Ortiz provided strong words, but did not apparently seek any punishment of any form of any of the corporate leaders who authorized or directed the bad, and potentially dangerous behavior.  Yet in the sorry case of Aaron Swartz, Ms Ortiz charged a gifted computer activist whose alleged crimes certainly did not put any individuals at risk of adverse medical effects or any bad physical outcomes with crimes that if proven would have lead to years in jail and millions in fines for him as an individual.

Equal Justice Under the Law?

So it seems ironic, or worse, that the main narrative of the Swartz case has become: well meaning but reckless hacker versus implacably tough law enforcer.  As noted above, Ms Ortiz's office appeared anything but tough when dealing with misdeeds by big pharmaceutical and device companies.  So the real question is why she went after Mr Swartz so relentlessly, when his alleged crime was non-violent and physically hurt nobody, when she failed to pursue corporate executives who enriched themselves while leading companies whose unethical practices likely harmed a lot of patients.

In that light, the dark imaginings of Matt Stoller do not seem so far-fetched.  On Naked Capitalism he wrote,

 As we think about what happened to Aaron, we need to recognize that it was not just prosecutorial overreach that killed him. That’s too easy, because that implies it’s one bad apple. We know that’s not true. What killed him was corruption. Corruption isn’t just people profiting from betraying the public interest. It’s also people being punished for upholding the public interest. In our institutions of power, when you do the right thing and challenge abusive power, you end up destroying a job prospect, an economic opportunity, a political or social connection, or an opportunity for media. Or if you are truly dangerous and brilliantly subversive, as Aaron was, you are bankrupted and destroyed.

I did not know Aaron Swartz, but am very sorry that we have lost someone so intelligent and imaginative.  I hope one question that his untimely death raises is what has become of the idea of equal justice under the law, and how its apparent demise has enabled the dysfunction of our health care system, and our whole society. 

Pfizer's Pfourteenth Settlement - a Small Reminder of Continuing Impunity

Well, that did not take long.  Less than a month after its last legal settlements were announced, Pfizer had to settle again.

The Details of the Settlement

This case, involving charges filed by the Texas Attorney General, was only reported locally, e.g., here in the Houston Business Journal:

The state of Texas will receive more than $36 million from two civil Medicaid fraud settlements with Pfizer Inc and Endo Pharmaceuticals,  Attorney General Greg Abbott said Friday.

Both companies will pay $18.17 million to the state, plus attorney fees and relator shares. The federal government is also entitled to a share of the total settlement, Abbott’s statement said.

As usual, the settlement was about deceptions:

 State and federal law requires drug companies disclose to the Medicaid program the prices they charge pharmacies, wholesalers and distributors for their products. Texas’ lawsuits claimed the companies misreported the price of various generic drugs and overcharged Medicaid for certain products.

As usual, Pfizer had excuses:
 

In the Pfizer settlement, the state’s investigation originally targeted entities that are now wholly owned subsidiaries of Pfizer.

In making the settlements, neither company is admitting to any wrongdoing.

New York-based Pfizer released a statement saying the safety of its subsidiaries’ products was not an issue of the investigation and Pfizer was not a target or subject of the case.

'Pfizer’s subsidiaries are resolving this investigation to avoid the further time and cost of litigation,' the company said in its statement. 'The majority of the Texas investigation focused on reporting that took place prior to the subsidiaries being acquired by Pfizer. The company remains committed to providing accurate pricing information to the Texas Medicaid program and providing quality pharmaceutical products to the citizens of Texas.'

 Of course, Pfizer acquired the companies (which were listed in the settlement document as ESI Lederle, Lederle Labs, and Pharmacia) in order to make money from them.  Furthermore, in acquiring the subsidiaries, Pfizer assumed responsibility for them and their actions.

As usual, there was no hint in the minimalist coverage of this settlement of any sort of negative consequences for anyone who authorized, directed, or implemented the relevant behavior, which did involve deception upon the government of Texas.

Nobody Held Responsible, Even After 14 Settlements

As is also usual, there was no mention in the media coverage, or the settlement document that Pfizer has made numerous other settlements in the recent past.   By my best count, the total was up to thirteen from the beginning of the 21st century to the present, as most recently tabulated here, and listed in the Appendix below.  (There may easily have been more that I missed.)

At the time of the twelfth and thirteenth settlements, we wondered whether the sheer volume of documentation of Pfizer's actions, and the sheer number of legal actions against it would finally lead to the end of the impunity of Pfizer's leaders.  After all, one would think that if the town drunk showed up in court for his fourteenth drunk driving charge, the book would be figuratively thrown at him.  Instead, at best, Pfizer had a wet noodle thrown at it.  The costs of this settlement, and even the cumulative costs of all the previous ones over time just added up to costs of doing business.  And these costs were not paid by the people who profited the most from the bad behavior, but were diffused among all stock-holders, employees, patients, and payers. 

Of course, leadership and governance of Pfizer is by some very fancy people indeed, and our society has not been good lately at holding such fancy people to any standards whatsoever.

 The sorts of practices discussed in Pfizer's multiple settlements have added to the revenue that have helped a lot of people live in the style to which they have become accustomed.  Pfizer has had some very, very well paid executives.  In 2011, according to the company's 2012 proxy statement, its CEO, Ian Read, got more than $25 million, that is to repeat more than twenty-five million dollars, count them, in total compensation.  All the rest of its named executive officers got more than $5 million in total compensation.  That 2012 report justified this other worldly munificence in part because

 We continued to improve our reputation in society through engagement with our customers, our shareholders, and the investor community.

Really, after now 14 settlements? 

The issue of the impunity of leaders of large organizations has finally made it to the big time.  For example, a New York Times editorial called the latest US government settlement with the large banks whose exploitative mortgage practices helped to usher in the global financial collapse or great recession "another slap on the wrist."  Writ large, continuing impunity is the sort of problem that indicates a degree of societal corruption that can destroy particular civilizations.

I am just a simple country doctor and can only do my small part to keep the barbarians outside the gate, but at least those who care about what has gone wrong with health care ought to be calling for vigorous, impartial law enforcement that holds leaders of health care organizations accountable for wrong-doing, and in general, changes that make leaders of health care organizations broadly accountable for their actions.

There are some luminaries from health care and academia on the current Pfizer board, like  Dennis A. Ausiello, M.D.,
Jackson Professor of Clinical Medicine at Harvard Medical School and Chief of Medicine at Massachusetts General Hospital;  Frances D. Fergusson, Ph.D., President Emeritus of Vassar College; Helen H. Hobbs, M.D., Investigator of the Howard Hughes Medical Institute since 2002, is a Professor of Internal Medicine and Molecular Genetics and Director of the McDermott Center for Human Growth and Development at the University of Texas (UT) Southwestern Medical Center; and Marc Tessier-Lavigne, Ph.D., President of The Rockefeller University since March 2011. Maybe some people at their base institutions ought to be asking them about Pfizer's multiple ethical lapses and what they are doing to make its leadership more accountable. 

APPENDIX - Pfizer's Settlements

In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,

October 2002: Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.

May 2004: Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.

April 2007: Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

Thereafter, Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).  Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).  The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).  Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).   In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).  In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post). Finally, in August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).

In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).  

Amgen Settles, Pleads Guilty to Misbranding Aranesp

Now it's Amgen's turn to settle and plead.  Per the New York Times,

The biotechnology giant Amgen marketed its anemia drug Aranesp for unapproved uses even after the Food and Drug Administration explicitly ruled them out, federal prosecutors said on Tuesday.

 The federal charges were made public as Amgen pleaded guilty to illegally marketing the drug and agreed to pay $762 million in criminal penalties and settlements of whistle-blower lawsuits.

Amgen was 'pursuing profits at the risk of patient safety' Marshall L. Miller, acting United States attorney in Brooklyn, said in a telephone news briefing on Tuesday.

David J. Scott, Amgen’s general counsel, entered the guilty plea at the United States District Court in Brooklyn to a single misdemeanor count of misbranding the drug, Aranesp, meaning selling it for uses not approved by the F.D.A.

Amgen agreed to pay $136 million in criminal fines and forfeit $14 million, with about $612 million going to settle civil litigation. 

The article noted the key charge against Amgen,

 In court on Tuesday, prosecutors charged that Amgen had promoted the use of Aranesp to treat anemia in cancer patients who were not undergoing chemotherapy, even though the drug’s approval was only for patients receiving chemotherapy.

A subsequent study sponsored by Amgen showed that use of Aranesp by those nonchemotherapy cancer patients had actually increased the risk of death, and the off-label use diminished. 

Also,

 The federal charges also say Amgen promoted using larger but less frequent injection of Aranesp than stated in the label as a way of making the drug more attractive to doctors and patients than Procrit, a rival anemia drug from Johnson & Johnson. 

As is typical of such cases, the prosecutors could not figure out how to charge any individuals who might have authorized, directed, or implemented the bad behavior,

 Mr. Miller said that the evidence in the Amgen case was not sufficient to charge individuals. However, he said, Amgen agreed to sign a corporate integrity agreement that requires executives and board members to personally certify compliance with regulations. That would make it easier to prosecute individuals should violations occur again, he said. 

The Charges in Context

In some reports of the settlement, the issue appeared to be money.  For example, Pharmalot reported that after a whistle-blower filed suit against Amgen, "a subsequent investigation by the Justice Department found that these practices induced physicians to use Amgen medications unnecessarily when lower cost alternatives were available."

However, Amgen's practices could have had much worse effects than just removing money from the US Treasury.

Consider the context.  Only a few of the not very numerous articles in the media on this case noted that the key complaint was that Amgen was pushing use of Aranesp for patients with cancer, specifically those not receiving chemotherapy.   (Reuters made this explicit, for example, but not so the Los Angeles Times, or Bloomberg's initial coverage.)

 In fact, there has been concern about the adverse effects of Aranesp for patients with cancer for a while.  In 2007, Khuri noted in a commentary in the New England Journal of Medicine(1) that "concern about a detrimental effect of ESAs [erythropoiesis stimulating agents, a class of drugs of which Aranesp is a prominent member] in patients with cancer arose" after results of a small clinical trial of epoetin beta in patients with oral, pharyngeal or laryngeal cancer receiving radiation therapy showed worse survival in patients receiving that drug.  Subsequently, in 2008, a meta-analysis of multiple randomized clinical trials showed that patients with cancer receiving ESAs, including Aranesp, had an increased risk of venous thromboembolism (drug clots) and death.(2)  In 2009,  another meta-analysis showed that ESAs lead to decreased survival in patients with cancer.(3)

Recall, though, that Aranesp is meant to improve anemia.  It was not meant to cure cancer, or even put the disease into remission.  Its use therefore was mainly adjunctive.  Thus, it appears its benefits for cancer patients (improved anemia, and possibly decrease in such symptoms as fatigue) could not outweigh its harms (including hastening death).

So the issue was not merely that Amgen was promoting a drug in an instance in which its use had not been improved by the US Food and Drug Administration (FDA), or that such use of the drug was unnecessarily costly.  The issue was that Amgen was promoting a drug that had no proven benefits for the patients, but could hasten their death.  It appears that Amgen was pursuing profits at the expense of lives.

Summary

So it is particularly disturbing that no individual apparently will be held responsible for the promotion of Aranesp for patients for whom its use might prove fatal.  The assurance that the proposed corporate integrity agreement will prevent further abuse is notably hollow.  I can recall no recent case in which the government authorities have used such an agreement to pursue charges against individuals.  The likely deterrent effect of the monetary settlement will likely be minimal.  $762 million may look just like a cost of doing business when the drug in question was bringing in over $2 billion a year (per the Los Angeles Times). 

So the legal settlements march on and on.  The government continues to extract fines from health care organizations whose actions endanger not only the federal budget, but patients' well being and lives, without even trying to hold individuals responsible.  The impunity of health care corporate executives thus also continues.

As we have said far too many times, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

References

1.  Khuri FR. Weighing the hazards of erythropoiesis stimulation in patients with cancer.  N Engl J Med 2007; 356: 2445-2447.  Link here.

2.  Bennett CI, Silver SM, Djulbegovic B et al.  Venous thromboembolism and mortality associated with recombinant erythropoietin and darbepoetin administration for the treatment of cancer-associated anemia.  JAMA 2008; 299: 914-924.  Link here.

3.  Bohlius J, Schmidlin K, Brillant C et al.  Recombinant human eryhtropoiesis-stimulating agents and mortality in patients with cancer: a meta-analysis of randomised trials.  Lancet 2009; 373: 1532-1542.  Link here.

Pfizer's 13th Legal Settlement - Will it be Enough to End the Impunity?

It has been almost two months since we lasted noted misbehavior by giant global pharmaceutical firm Pfizer Inc. With little fanfare, however, a few small news items noted the corporation's latest legal settlements.

Deceptive Marketing of Protonix

The first settlement merited only a few paragraphs from Reuters.  The gist was:

Pfizer Inc will pay $55 million plus interest to settle charges that Wyeth promoted its acid reflux drug Protonix for unapproved uses and made unproven claims about the medicine, the U.S. Department of Justice said on Wednesday. 

The infractions took place between February 2000 and June 2001, long before the world's largest drugmaker acquired Wyeth in 2009 for $68 billion.

A report in the examiner explained that Wyeth did not merely go beyond the label in promoting Protonix, it went beyond the evidence.

Wyeth allegedly promoted Protonix as the 'best PPI for nighttime heartburn' even though there was never any clinical evidence that Protonix was more effective than any other PPI for nighttime heartburn. 

Furthermore, the charges were that systemic efforts to mislead were sanctioned by top management:

 The allegations in the complaint are that this superiority slogan was formulated at the highest levels of the company. Wyeth retained an outside market research firm, at the cost of tens of thousands of dollars, to ensure that sales representatives delivered that misleading superiority message.

Finally, the government asserted that Wyeth corrupted physicians' continuing medical education in the process:

Finally, the government alleges that Wyeth used continuing medical education (CME) programs to promote Protonix for unapproved uses. CME programs are sponsored by accredited independent providers, such as universities, nonprofit organizations, or specialty societies. Pharmaceutical companies are permitted to provide financial support for CME programs, but they are not permitted to use CME programs as promotional vehicles for off-label indications.

According to the complaint, Wyeth spent millions of dollars providing 'unrestricted educational grants' to CME providers, and these grants invariably included promises that Wyeth would not attempt to influence the content of the program in any way. Nevertheless, the government alleges that one of Wyeth’s core marketing tactics for Protonix was to use CME programs to drive off-label use of the drug. According to the complaint, the Protonix 'brand team' influenced virtually every aspect of these CME programs: program topics, speaker selection, organization, and content. In addition, the government alleges that Wyeth even insisted that the CME program materials use the same color and appearance as Protonix promotional materials–a tactic that Wyeth and the vendor called 'branducation.'

So it seemed that the company put on quite an effort to promote what we have called elsewhere pseudo-evidence based medicine, yet, like many other legal settlements involving large health care organizations, this one involved no penalties of any type against the people within the organization who authorized, directed, or implemented the bad behavior. 

 Misleading Marketing of Zyvox, Lyrica 

Another settlement, for a few dollars less, got even less attention.  Fox Business news did report this:

 Pfizer Inc. (PFE) agreed to pay a combined $42.9 million to North Carolina and 32 other states in a settlement of allegations that the drug maker used unfair and deceptive practices in the marketing of antibiotic Zyvox and nerve-pain medicine Lyrica.

I could find no detail about the sorts of deception allegedly involved in the news media.  What little more Fox provided did suggest that this case also involved pitching drugs in instances in which their use was unsupported by good evidence:

The states had alleged that Pfizer had marketed Zyvox as superior to another antibiotic in fighting certain types of infections, though there allegedly wasn't substantial evidence to support superior results for some uses that Pfizer claimed.

The states also alleged that Pfizer marketed Lyrica for some off-label, or unapproved, uses.

There was no hint that again any individual would suffer any negative consequences for this particular set of deceits either.

Avoiding Impunity as a Topic of Polite Discussion

We have discussed a seemingly endless parade of legal settlements by large health care organizations.  In almost none was there any consequence beyond a fine paid by the company, and sometimes a pledge that the company would thereafter behave better.  While these relatively small costs were diffused throughout the organizations, almost never did the people who authorized, directed, or implemented the bad behavior pay any price or suffer any penalty.  Thus we have opined again and again (e.g., most recently here) that these settlements have become just another cost of doing business, and have no power to deter future bad behavior.

In addition, we have noted not only have multiple organizations made such settlements, some organizations have settled again and again.  Yet even in the cases of these multiple organizational offenders, the individuals involved maintain their immunity from any negative consequences.  Thus these are examples of impunity.  

Transparency International declared 23 November, 2012, as the International Day to End Impunity, explained as follows:

At Transparency International we view impunity as getting away with bending the law, beating the system or escaping punishment. Impunity is anathema to the fight against corruption.

However, impunity is one of those concepts which never seems to be a subject of polite conversation in health care, or, as we say, it has become anechoic.  

Therefore, it is fascinating that while these two Pfizer settlements were announced almost simultaneously, each was discussed, such as it was, as if it occurred in a vacuum.  Moreover, it also seems that each settlement was crafted by law enforcers without any attention to the record of the company making the settlement.  Thus, any implications about impunity were avoided.

Pfizer's Multiple Ethical Opfenses

In fact, during the time we have been posting on Health Care Renewal, Pfizer has become one of the great repeat ethical offenders in the health care arena.  Its track record since the beginning of the 21st century, (with yello colored background below, compiled from this post), is remarkable.

In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,

October 2002: Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.

May 2004: Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.

April 2007: Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

Thereafter, Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).  Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).  The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).  Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).   In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).  In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post). Finally, in August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post). 

By my count, the two current settlements would be numbers twelve and thirteen.  Of course, while I believe this list is accurate, it may be incomplete.

Since none of these posts involved any negative consequences for any individuals who authorized, directed, or implemented the bad behavior, or who profited from it, and none involved any changed in the leadership or organization of the company, this becomes an amazing record of the impunity of Pfizer leadership over time and space. 

Will Impunity Finally Lead to Outrage?

Impunity, though, is a concept that is beginning to command some attention.

The Brasilia Declaration which was published at the conclusion of the 15th International Anti-Corruption Conference (hosted by Transparency International) included:

it is clear we all face a common challenge in our work: impunity for those who abuse positions of power. 

If impunity is not stopped, we risk the dissolution of the very fabric of society and the rule of law, our trust in our politics and our hope for social justice.

Activists, businesspeople, politicians, public officials, journalists, academics, youth and citizens who gathered in Brasilia to discuss the threat of corruption made it clear that impunity undermines integrity everywhere.

Whether we are investing collective efforts and resources in fighting poverty, human rights violations, climate change or bailing out indebted economies, we need to give the people a reason to believe that impunity will be stopped.

While the two latest Pfizer settlements barely got media coverage, maybe a $1.9 billion dollar settlement in the US by international banking giant will get more attention.  The charges in this case were not merely deceiving some doctors and patients about drug efficacy and safety.  The company was accused of aiding money laundering by drug cartels, and facilitating rogue regimes get around international sanctions.  As the New York Times reported,

State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.

Instead, HSBC announced on Tuesday that it had agreed to a record $1.92 billion settlement with authorities. The bank, which is based in Britain, faces accusations that it transferred billions of dollars for nations like Iran and enabled Mexican drug cartels to move money illegally through its American subsidiaries.

Unlike Pfizer's slow-motion impunity, this example got attention.  The Los Angeles Times noted,

The massive penalty still was not enough to appease some critics. No bank executives were charged as part of the investigation, leading some analysts to question the government's willingness to hold powerful Wall Street firms accountable.

'It's mind-boggling how they think you can have a financial system and allow this kind of impunity,' said William Black, a former banking regulator who aided federal prosecutors during the savings and loan crisis of the 1980s and 1990s. HSBC 'put the world at enormous risk.'

A NY Times editorial opened,

It is a dark day for the rule of law.   Federal and state authorities have not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.  They have also not charged any top HSBC banker in the case, though it boggles the mind that a bank could launder money as HSBC did without anyone in a position of authority making culpable decisions.

Clearly, the government has bought into the notion that too big to fail is too big to jail.  When prosecutors choose not to prosecute to the full extent of the law in a case as egregious as this, the law itself is diminished.  The deterrence that comes from the threat of criminal prosecution is weakened, if not lost.

So maybe this huge financial case will prove to be the straw that breaks impunity's back.  So I will close by quoting the end of the Brasilia Declaration, in the hope that a few people will take it to heart in the context of health care, as well as in finance.

To take this important struggle forward the international anti-corruption community should promote greater people engagement and find ways to provide greater security for anti-corruption activists.

Reducing impunity also requires independent and well-resourced judiciaries that are accountable to the people they serve.

We call on leaders everywhere to embrace not only transparency in public life but a culture of transparency leading to a participatory society in which leaders are accountable.

We call on the anti-corruption movement to support and protect the activists, whistleblowers and journalists who speak out against corruption, often at great risk.

It is up to all of us in government, business and society to embrace transparency so that it ensures full participation of all people, bringing us together to send a clear message: We are watching those who act with impunity and we will not let them get away with it.

"Phony Consulting and Royalty Agreements," "Chocolate" Bribes, a Sales Representative Doubling as a Stripper, Oh My - Three Settlements for Othrofix

On this US election day, we seem to be in a mini-squall of cases involving unethical, deceptive, and now very colorful marketing practices used to push drugs and devices. 

We recently discussed a settlement of allegations of deceptive marketing practices and kickbacks by pharmaceutical company Boehringer-Ingelheim (here), a US congressional report alleging deceptive influence by Medtronic marketers over ostensibly scholarly publications (here), a study of documents released after litigation that appear to show how Pfizer had a systemic marketing campaign that used controlled trials as deceptive marketing vehicles (here),

Now three separate settlements by device/ biotechnology company Orthofix have come to light.

Settlement 1 - "Phony Consulting and Royalty Agreements," and Prostitution as Kickbacks, and a Sales Representative as Stripper

A Bloomberg article outlined Orthofix's two latest settlements.  The newest seems the most audacious, or bodacious,

Orthofix International NV, (OFIX) a maker of spinal implants, agreed to pay the U.S. $30 million to settle claims that a subsidiary paid illegal kickbacks and provided prostitutes to doctors in return for orders.

The subsidiary, Blackstone Medical Inc., paid kickbacks to spinal surgeons in the form of phony consulting and royalty agreements, and travel and entertainment to entice them to use its products, the U.S. Justice Department said in a statement today.

This case adds to the mounting pile of evidence that many of the financial relationships among physicians and health care academics and drug, device, biotechnology and other health care corporations are not merely conflicts of interest incidental to innovation.  In particular, Bloomberg reported,

[Whistle blower Susan] Hutcheson alleged that officials of Blackstone, purchased by Orthofix in 2006, violated kickback and false-claim laws by setting up a system to compensate doctors under sham consulting agreements and phony research grants, according to court filings. The sales executive said the company also offered lavish travel opportunities to doctors who implanted its products, the filing said.

Some doctors were paid as much as $8,000 a month under the fictitious consulting agreements, Hutcheson said in her suit, filed in federal court in Massachusetts. Orthofix’s U.S. unit is based in Lewisville, Texas. Some also received phony research grants for as much as $18,000, the suit added.

Then there was this colorful detail,

Blackstone salespeople also were urged to take surgeons out for expensive dinners, escort them to strip clubs and pay for liaisons with prostitutes to get their business, Hutcheson said in the suit.

One female sales manager in Dallas agreed to disrobe and join strippers on stage at the request of two surgeons to whom she was pitching the company’s products, Hutcheson said in her suit. The sales manager was demoted, not fired, over the incident, Hutcheson said in the suit.

We often hear from drug, device, and biotechnology companies that their sales efforts are all about providing needed information to physicians, information they could not otherwise obtain.  In this case, the information appeared to be rather anatomical, but also rather personal.

The AP coverage of this store (here, via Businessweek) also noted that the settlement involved a corporate integrity agreement.  Neither story mentioned any admissions made by the company.  As far as I could tell, no corporate executives suffered any consequences as part of this settlement.

Settlement 2 - Fraud, Obstructing the US Government, and Less Colorful Kickbacks to Promote Bone Growth Stimulators

The article did nor provide any helpful photographs, but it did note that Orthofix recently made a second settlement.

The settlement’s approval comes after Orthofix officials agreed to pay $42 million to resolve a separate whistle-blower suit and a criminal probe of allegations it paid kickbacks to doctors who used its bone-growth stimulators.


One of its units will plead guilty in federal court in Boston federal court to a single felony count of obstructing a U.S. government audit and pay a $7.8 million fine, according to a June 7 regulatory filing. Orthofix also will pay $34.2 million to resolve whistle-blower claims that the company defrauded the federal Medicare program over bone-growth stimulators, which patients wear after surgery to speed healing.

Amazingly, unlike the first settlement, and unlike most settlements we have discussed,

Five Orthofix employees have pleaded guilty to criminal charges in connection with probes of the kickback allegations. Thomas Guerrieri, an Orthofix vice president, pleaded guilty in April to violating the federal anti-kickback statute by setting up fake consulting agreements for doctors who used the company’s products.

Note that we discussed a surgeon who pleaded guilty to accepting kickbacks from multiple device companies, including the Blackstone subsidiary of Orthofix, here in 2008.

Settlement 3 - "Chocolate" Bribes to Mexican Government Officials

Finally, the AP story noted in passing "the recent resolution of a federal Foreign Corrupt Practices action" against the company.  I could not find any news coverage of that, but in July there did appear a SEC press release.

The Securities and Exchange Commission today charged Texas-based medical device company Orthofix International N.V. with violating the Foreign Corrupt Practices Act (FCPA) when a subsidiary paid routine bribes referred to as 'chocolates' to Mexican officials in order to obtain lucrative sales contracts with government hospitals.

The SEC alleges that Orthofix’s Mexican subsidiary Promeca S.A. de C.V. bribed officials at Mexico’s government-owned health care and social services institution Instituto Mexicano del Seguro Social (IMSS). The 'chocolates' came in the form of cash, laptop computers, televisions, and appliances that were provided directly to Mexican government officials or indirectly through front companies that the officials owned. The bribery scheme lasted for several years and yielded nearly $5 million in illegal profits for the Orthofix subsidiary.


Orthofix agreed to pay $5.2 million to settle the SEC's charges.

Also,

Orthofix also disclosed today in an 8-K filing that it has reached an agreement with the U.S. Department of Justice to pay a $2.22 million penalty in a related action.

Summary  

So the box score here includes settlements of legal actions alleging bribery and kickbacks, a corporate integrity agreement, a guilty plea by a company subsidiary to obstructing the US government, and multiple guilty pleas by company executives.  The bribes and kickbacks were provided in various colorful forms.  

The variety of unethical behaviors unearthed suggests a company with a seriously deranged corporate culture.  Whether the various actions taken against it, including the very unusual punishments meted out to some of its apparently mid-level executives will change its behavior, or serve as a lesson to other companies and their leaders is not clear.  Whether they are sufficient to suggest anyone should trust this company, its leaders, or its products seems questionable.   

This story adds to our various compilations of legal settlements and tales of crime, including bribery, kickbacks and fraud involving major health care organizations which suggest serious, deep afflictions within the culture of our commercialized health care system.  Yet almost nowhere, except here on Health Care Renewal are there calls for serious reforms to restore trust in our health care organizations and their leaders.

As we have said endlessly, up to now, such legal settlements seemingly have had no effect on the bad behavior of big health care organizations, while they continually erode trust in these organizations and their leadership, and trust in physicians to put patients ahead of personal gain.

Furthermore, these cases seem to be part of a larger social problem. It seems that nowadays the leadership of large, powerful organizations feels free to promote their own interests using psychologically sophisticated but deceptive marketing and public relations strategies no matter what their effect on the public welfare.

Again as we have said all too many times before, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Maybe after all the election hoopla dies down here in the US, we can finally have a serious conversation about health care reform that will make our health care system more trustworthy. 

Just Another Day at the Office: Boehringer Ingelheim Settles Allegations of Deceptive Off-Label Marketing, Kickbacks

Legal settlements by pharmaceutical companies for less than $100 million now seem to barely rate as news in the US. The best report, albeit short, of a by Boehringer Ingelheim for a mere $95 million, seems to be in the Hartford (CT) Courant. The summary was:

Boehringer Ingelheim, a German company with U.S. headquarters in Ridgefield, has agreed to pay $95 million to settle allegations that it promoted four drugs for uses unsupported by research, and that it paid kickbacks to doctors to prescribe the drugs, the U.S. Department of Justice has announced.

It included most of the usual elements.

Off Label Marketing

Two of the drugs in the case are for treating chronic bronchitis and emphysema, and were suggested for children with asthma and coughs from the flu. The drugs had not been tested on children.

'I was concerned that doctors were basing their treatment decisions on false information,' [former Boehringer Ingelheim pharmaceutical representative and whistle blower Ron] Heiden said in the released statement. 'Promoting off-label treatments with potential serious consequences just to increase sales is heinous behavior.'

I note parenthetically that some industry apologists belittle the possible harms of truthful off-label marketing (e.g., look here).  However, at least in this case, the marketing was alleged to be based on falsehoods. 

Furthermore, some industry apologists may also decry the regulation of off-label marketing as a violation of the US Constitutional guarantees of freedom from government infringement on individual free speech.  Note, however, that Boehringer Ingelheim in this case got exclusive rights to market these drugs for many years from the government.  In exchange for these rights, the law restricted their right to market the drugs to approved indications.  

Promotion Beyond the Evidence

The company told doctors Aggrenox was better than Plavis to reduce the risk of heart attacks, but there was no evidence to support that claim, the Justice Department said. The drug had FDA approval to prevent secondary strokes.

Again, the truthfulness of the premises underlying the marketing apparently was questionable, to use charitable phrasing.  

Kickbacks to Physicians

This information came from the AP version of the story, here via the Washington Post:

the settlement resolved allegations that Boehringer Ingelheim paid kickbacks to health care professionals to induce them to prescribe all four of the drugs. These kickbacks included payments for participating in advisory boards, speakers’ training programs, speaker programs and consultant programs.

 Note further that apologists for industry also belittle the importance of the effects of conflicts of interest on health care (e.g., look here).  In this case, activities that are often referred to as species of conflicts of interest, e.g., advisory board membership, speakers board membership, consulting, apparently were meant as vehicles for payments to induce prescribing.  That is, apparently what some might have called conflicts of interests were allegedly kickbacks, or bribes.  As we have discussed before, it is one thing to be paid for legitimate clinical, educational, or scientific activity when such payments might influence professional, educational, or scientific judgments or activities about other matters.  It is entirely another thing to be paid a kickback to favor a drug company's marketing campaign instead of making decisions that put patients first.

A Corporate Integrity Agreement

[From the Hartford Courant]

Also as part of the settlement, Boehringer agreed to enter into an expansive Corporate Integrity Agreement to avoid such marketing in the future.

 We have noted before that such agreements do not seem to deter future bad behavior, (e.g., look here).

No Admission of Wrongdoing by the Company

[from the AP]

'The pharmaceutical industry as a whole has undergone significant changes over the past decade and continues to be under intense scrutiny,' said Greg Behar, president and chief executive officer of Boehringer Ingelheim. 'Likewise, our internal processes and compliance practices have evolved significantly over the years.' The company said it has been cooperating with the government investigation.

Again, if there is no acknowledgement by the company that it did wrong, do we expect it not to do wrong in the future?

Summary

Here was yet another legal settlement that documents the pervasiveness of the influence of marketing and public relations over physicians' professional responsibilities.  This is just one of several recent posts (e.g., here and here) about the malevolent influence of deceptive marketing or public relations on the evidence that health care professionals should be using to make the best possible decisions for individual patients.

Such legal settlements seemingly have had no effect on the bad behavior of big health care organizations, while they continually erode trust in these organizations and their leadership, and trust in physicians to put patients ahead of personal gain. 

Furthermore, these cases seem to be part of a larger social problem.  It seems that nowadays the leadership of large, powerful organizations feels free to promote their own interests using psychologically sophisticated but deceptive marketing and public relations strategies no matter what their effect on the public welfare.

As we have said all too many times before, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Just the Latest Legal Settlement for HCA

Last month, we posted about investigative reports that suggesting that for-profit hospital chain HCAwas pushed by its private equity owners to put short-term revenue ahead of good patient care.  A legal settlement announced this week corroborates these concerns. 

As reported by television station WRCB in Chattanooga, TN,

HCA Inc., one of the nation's largest private hospital chains, has agreed to pay $16.5 million to settle alleged violations of the Ethics in Patient Referrals Act (also known as the Stark law), the False Claims Act, and other federal and state laws and regulations in connection with the operation of its subsidiary, Parkridge Medical Center, Inc., in Chattanooga.
In addition, Parkridge Medical Center has entered into a comprehensive five-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) to ensure its continued compliance with federal health care benefit program requirements.
As alleged in the settlement agreement, during 2007, HCA, through its subsidiaries Parkridge and HCA Physician Services (HCAPS), entered into a series of financial transactions with a physician group, Diagnostic Associates of Chattanooga, through which it provided financial benefits intended to induce the physician members of Diagnostic to refer patients to HCA facilities.
The financial benefits included lease of office space from Diagnostic at a rental rate well in excess of fair market value to meet the mortgage obligations of the Diagnostic members and release of Diagnostic members from a separate lease obligation. These financial arrangements violated the Ethics in Patient Referrals Act and the Anti-Kickback Statute – laws designed to protect patients as well as the integrity of government-funded health care benefit programs such as Medicare, Medicaid, TRICARE, and TennCare.

The issue here were allegations that HCA and its subsidiaries were paying physicians extra so that they would refer patients to an HCA hospital. Obviously, physicians are supposed to put each patient's interests ahead of extraneous considerations, and hence should make referral decisions based on the patients needs, and the likely benefits and harms of the referral, not the amounts the physicians might make from such payments.

Referrals for particular services can be very lucrative for hospitals.  So this settlement seems to provide more evidence that to get profitable referrals, HCA was willing to subvert physicians' values by paying physicians to induce to make what might have been the wrong decisions for individual patients.  Of course, in this situation some physicians were hardly blameless, since they were also willing to set aside their values to receive the payments that generated those referrals.

This fits with the thesis we advanced last month.  While hospitals are supposed to have a mission to put care of the sick ahead of all else, it appears that for-profit hospitals, and especially those owned by private equity are more likely to put short-term revenue ahead of patient care.

As an aside, while this settlement provides useful information, do not think of it as a solution to the immediate problem. 

As we have frequently asserted, it is doubtful that the relatively small payment and the relatively unlikely to be enforced corporate integrity agreement imposed in this settlement will change the company's behavior, in the absence of any negative consequences for the people who authorized, directed or implemented the bad behavior.  HCA once made a $1.7 billion fraud settlement, at the time the biggest such settlement ever made (see this post).  However, the company's CEO at the time, Rick Scott, left the firm with a golden parachute and no negative consequences, and is now Governor of Florida.  If that previous huge settlement did not deter the more recent bad behavior in the absence of any penalties for company executives, why should we expect that the current comparatively tiny settlement also in the absence of such penalties will have any effect?

As we have now said many, many times, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Furthermore, as I wrote last month, we need to challenge the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. Before market fundamentalism became so prominent, many stated prohibited the corporate practice of medicine, and the American Medical Association forbade the commercialization of medicine. It is time to heed that wisdom. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.

Twilight of the Anechoic Effect? - New England Journal of Medicine Article Discusses Previously Taboo Topic of Bad Corporate Health Care Leadership

We have often complained of the anechoic effect, that the issues we discuss on Health Care Renewal often do not seem to be considered topics of polite conversation.  Any discussion that might question the brilliance, integrity, dedication, or selflessness of the leaders of health care organizations seems particularly taboo. 

So a major aim of this blog has been to discuss the numerous publicly available examples of leadership that is ill-informed, uncaring about or hostile to the values of health care professionals, incompetent, self-interested, conflicted, or outright corrupt, and of governance that lacks accountability, transparency, integrity, honesty, or ethics.  We have postulated that such problems with leadership and governance are not only causes, but the major causes of the increasing dysfunction of our health care system.  That discussing these issues is simply not done in many contexts, including academic health care, medical and health care journals, and health policy fora has only accelerated health care dysfunction.

The New England Journal on Punishing Health Care Fraud

Therefore, I note with some surprise that the New England Journal of Medicine just published an article (online first) that implicitly challenged the leadership of some large health care organizations. [Outterson K. Punishing health care fraud - is the GSK settlement sufficient.  N Engl J Med 2012; 367: 1082 - 1085.  Link here.]

The article summarized the record settling legal settlement agreed to by GlaxoSmithKline (see this post).  It noted that the company pleaded guilty to three criminal charges.  It then noted that while this was the largest recent legal settlement by a pharmaceutical company, "it would be a mistake to assume that GSK was an outlier in the global pharmaceutical and medical-device industries. Indeed, many of the major companies have settled with the Department of Justice in recent years."  It included a table of the largest pharmaceutical company settlements with the US government from 2009 to now.

Based on this background, the article dared to question whether such settlements deter bad behavior:

But questions remain about the efficacy of fines and corporate integrity agreements in deterring corporate misbehavior. The 2012 fines against Abbott Laboratories and GSK represent a modest percentage of those companies' revenue. Companies might well view such fines as merely a cost of doing business — a quite small percentage of their global revenue and often a manageable percentage of the revenue received from the particular product under scrutiny. If so, little has been done to change the system; the government merely recoups a portion of the financial fruit of firms' past misdeeds.

Even more daring was its challenge to top executives of pharmaceutical corporations,

One partial solution would be to impose penalties on corporate executives rather than just the company as a whole. Boston whistleblower attorney Robert M. Thomas, Jr., embraces this approach: 'GSK is a recidivist. How can a company commit a $1 billion crime and no individual is held responsible?'

A Taboo Broken

Having blogged on Health Care Renewal for nearly eight years, I recall very few, if any instances in which leaders of health care organizations were described as deserving punishment, or perhaps even guilty of crimes within large circulation medical journals, and within the New England Journal of Medicine, the most prominent US journal in particular. While discussion of misbehavior within health care organizations has slowly been seeping into the medical and health care literature, delicate phrasing has often been employed that leaves unclear whether top executives have any accountability for this behavior. (For example, while the Lancet editorial on the GSK settlement condemned "GSK's fraud," accused GSK of "actively encouraging off-label prescription," and asserted that "GSK and other drug companies have come adrift from standards of the societies they seek to serve," it never said anything about GSK's leaders or whether they in paticular had anything to do with the company's bad behavior. [Anon. Moral decaly at GSK reaps record US$# billion fine. Lancet 2010; 380: 2. Link here.])

So it is a big step for the NEJM to publish an article that suggests corporate executives might deserve penalties. I hope that this publication might lead to a bit of discussion of these issues within the larger medical and health care communities, the vast majority of whom have likely never heard of this blog and may have never seen anything other than an occasional news article in local media questioning the leadership of large health care organizations.

Things are Even Worse

Unfortunately, I need to end with the observation that the problems are even worse than what the NEJM article implies. Legal settlements of allegations of bad behavior by large health care organizations are much more numerous than those mentioned in this article (look here for examples).

Many of the largest and most prestigious organizations actually have histories of multiple settlements, guilty pleas, and related legal and governmental findings. For example, look here for Pfizer's record, here for Johnson and Johnson's record, here for Abbott's record, and here for Wellpoint's record. Pfizer was even found by a jury to be a racketeering influenced and corrupt organization (RICO)(see post here).

Despite these records of recidivism, no leaders of these companies have paid any individual penalties, and none of these organizations have had any restructuring or leadership changes imposed. This is even more disturbing when this kid-glove treatment of misbehavior by big health care organizations is contrasted with the severe penalties imposed on individuals or leaders of small companies found guilty of health care fraud (look here).

You Heard It Here First

However, in 2003 we first published documentation of individual physicians' concerns that ill-informed, incompetent, self-interested, or even corrupt leadership was threatening their core values [Poses RM. A cautionary tale: the dysfunction of American health care. Eur J Int Med 2003; 14: 123-130. Link here.] Furthermore, since 2008 we have been stating that corporate fines do not deter bad behavior.

It is not that law enforcement does not have the power to seek penalties on individuals. As we noted here, a Supreme Court case from 1943 empowered the government to seek penalties against responsible corporate officers (the "responsible corporate officer doctrine") who were in a position to stop a fraud that resulted in a guilty plea or conviction, particularly for the selling of misbranded or adulterated drugs into interstate commerce under the US Food and Drug Act.  (This was exactly the situation dealt with by the GSK settlement.)  Despite a threat made in 2010 by the chief counsel of the Inspector General's office of the US Department of Health and Human Services to use such legal authority to "get high level executives out of companies," nothing of the sort has happened.

So now that it is no longer taboo to question the pretensions of some leaders of health care organizations to near divine purity, let me state as I did in 2008,

As long as health care leaders can shrug off the consequences of unethical behavior merely as acceptable costs of doing business, absent any serious attempts to get health care organizations to enforce internal codes of ethical behavior or to avoid hiring ethically challenged leaders, the procession will likely continue. The effects will be continually rising costs, declining quality, shrinking access, and rising numbers of demoralized health professionals.

As I wrote in 2009,

Until bad leadership of health care organizations leads to negative consequences for those practicing it, health care leadership can be expected to continuously degrade.

How Many Legal Settlements Does it Take... to Lead to Real Change in Johnson and Johnson Leadership?

And the latest Johnson & Johnson settlement is (as described in Bloomberg/ BusinessWeek):

Johnson & Johnson (JNJ) will pay $181 million to resolve claims by 36 states that it improperly marketed and advertised the antipsychotic drugs Risperdal and Invega.

J&J and its Janssen unit settled claims that it promoted the drugs from 1998 through 2004 for uses not approved by the U.S. Food and Drug Administration. New York Attorney General Eric Schneiderman said today the accord is the largest multistate consumer protection-based pharmaceutical settlement.

'This landmark settlement holds the companies accountable for practices that put patients in danger, and serves as a warning to other pharmaceutical giants that they must play by one set of rules,' Schneiderman said in a statement.

J&J agreed it won’t promote the drugs for off-label uses or tout them falsely.

Specific Bad Behaviors

The allegations were of the sorts of behavior that should make health professionals cringe,

Using speaker programs on unapproved uses, sham consulting programs for physicians, and lucrative agreements with doctors who prescribed off-label, J&J 'sought to enhance Risperdal’s off-label market penetration across a wide range of diagnoses and patient populations, according to Florida’s complaint.

So reading slightly between the lines, the behaviors included various ways to pay physicians ("sham consulting," "lucrative agreements") for prescribing drugs, providing physicians monetary incentives to violate the most core of their core values, putting the individual patient's welfare and needs ahead of personal enrichment. Why these were not labeled kickbacks or bribes is not obvious.

No Individuals Pay any Penalty

Nonetheless, as in nearly every other legal action by state or federal law enforcement against a big pharmaceutical company or other big health care company, the entire settlement involved no penalties to any individuals who may have authorized, directed or participated directly in the misbehavior. In fact,

The company, based in New Brunswick, New Jersey, settled 'to resolve the concerns of the attorneys general under state consumer protection laws and to avoid unnecessary expense and a prolonged legal process,' it said in a statement.

J&J didn’t admit wrongdoing or pay a fine or penalty.

The tough law enforcers claimed

The agreement 'sends a message to all pharmaceutical companies that these practices will not be tolerated,' Florida Attorney General Pam Bondi said in a statement.

Of course, there was another part to the settlement. The company promised not to do these sort of bad things again,

Bondi said Janssen agreed to several steps over five years. They include having policies to ensure that financial incentives aren’t given to encourage off-label marketing; sales and marketing employees can’t develop the medical contents of responses to health-care providers; and it must describe the effectiveness and risks of drugs in a balanced manner.

Should we believe them? Their record is not promising.

Earlier this year Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians about the very same drug at issue in this suit, Risperdal (look here). That was just the latest in a remarkable string of legal cases suggesting an ongoing pattern of unethical and illegal behavior by this very large health care corporation. As we wrote recently, this included
- Convictions in two different states in 2010 for misleading marketing of Risperdal, as noted above
- A guilty plea for misbranding Topamax in 2010
- Guilty pleas to bribery in Europe in 2011 by J+J's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see this link for all of the above)
- Accusations that the company, which makes smoking cessation products, participated along with tobacco companies in efforts to lobby state legislators (see post here)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
- More recently, in 2012, testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
- Most recently, there are reports that the company is in negotiation with the US Department of Justice to settle other lawsuits about the marketing of Risperdal, perhaps for as much as $1.8 billion (see this BusinessWeek story.)

One might think that the leadership on whose watch this all occurred would be in disgrace. There has been, however, no major changes in leadership of the company. The CEO who was in power during the time when these settlements, and much of the behavior leading to them, will be retiring, after earning huge compensation, and with a retirement package valued somewhere between $143 and $197 million (see this post). Rather than disgrace, he recently was put on the committee responsible for investigating JP Morgan Chase's $5.8 billion dollar trading loss (as reported by Bloomberg, via NJ.com).

Summary

As we have noted again and again and again, many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved.

These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look here). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that  matter) law enforcement to "grow a backbone" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.

As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.