Putting on the Ritz?

According to an article published by the Detroit Chamber of Commerce, Gerard van Grinsven, who was appointed General Manager of the Dearborn Ritz-Carlton in 2002, has put the "wow"back into the hotel. Among other achievements, van Grinsven succeeded in having the hotel ranked number 1 for customer satisfaction among all the prestige chain's properties.

Van Grinsven had world-wide experience in the hospitality industry. He started managing a coffee-shop in a Holiday Inn in Canada. "His expertise in food and beverage ultimately sent him on an incredible global odyssey throughout many of the world’s most acclaimed hotels, including The Mandarin in Jakarta, The Oriental in Bangkok, The Ramada Renaissance in Hong Kong, the Peninsula in Manila and the Hotel Inter-Continental in Berlin."

"Van Grinsven joined The Ritz-Carlton Hotel Co. in 1994 as executive manager in charge of food and Beverage at The Ritz-Carlton, Seoul, where he led the successful opening of the largest food and beverage operation in the company. Prior to taking the helm at Dearborn he was vice president of food and beverage and vice president of pre-opening operations at the parent company in Atlanta."

At this point, Health Care Renewal readers may begin to think I have started April 1 festivities a bit too early. What does any of this have to do with health care?

Actually, the answer, albeit bizarre, is not hard to find. Yesterday, the Detroit News published an article about plans made by the Henry Ford Health System to open the new Henry Ford West Bloomfield Hospital in 2008. Who did the system hire to be CEO of the new hospital? It was none other than Gerard van Grinsven.

The Detroit News article noted that "Van Grinsven has no background in the health industry but brings years of experience managing post Ritz-Carlton hotels. Henry Ford believes that makes him the ideal person to run an upscale hospital designed to woo patients with the promise of privacy and wired rooms that overlook a pond and landscaped courtyard." Hospital "amenities will include Internet access in each room, flat-screen televisions and a wireless communication system that will eliminate irksome overhead paging."

However, "several national experts said they had never heard of someone making the jump from a career in hospitality to hospital president." Furthermore, "some critics say pouring money into pools and private suites is only going to lead to an arms race that drives health care costs higher."

I am sure Mr Van Grinsven is an excellent manager in the hospitality industry, and that anyone would enjoy staying at a hotel he runs. However, it is mind-boggling that a hospital would put a hospitality executive with no health care background, no matter how accomplished, in charge of runing a hospital. This seems to be a unique case of the idea that all managers know best about health care, again an attitude that seems to have been generated by Einthoven's call to break up the medical "guild" and turn control of health care over to managers and bureaucrats.

Hospitals and hotels both provide over-night acccomodations and food. That's pretty much where the similarity ends. Few hospital patients book stays in advance. Hospital patients arive at all hours, often very sick, and with unique needs. Sick patients do deserve health care professionals and support staff who really care about them. In my humble opinion, however, sick patients, even if they are well-to-do baby boomers, really are unlikely to care about flat screen televisions and internet access. Most sick patients care about getting better, and having a future to which they may look forward. I wish Mr Van Grinsven luck, which he will need. I just hope by the time this hospital really opens, Mr Van Grinsven has been able to delegate most of his responbilities to people who actually understand health care.

Post Title → Putting on the Ritz?

Friday Pharma Follies

This is a wrap-up including a variety of recent stories.

GlaxoSmithKline Settles

GlaxoSmithKline has agreed to settle a lawsuit involving allegations that the company over-charged US government health care programs for the selective serotonin reuptake inhibitor (SSRI) anti-depressant paroxetine (Paxil). The company admitted no wrong-doing. The state of California alone will receive about $14 million. (See the story in San Francisco Chronicle.)

Pfizer Investigated

Pfizer Inc recently announced that it is cooperating with a federal investigation of its marketing of Lipitor [atorvastatin]. At the same time, a Teamsters Union insurance plan has sued Pfizer, charging the company, "illegally promoted Lipitor to the public and prescribing physicians by promoting the off-label use of the drug." A Pfizer spokesperson said that the law-suit has no merit. (See the AP story in the Washington Post.)

Meanwhile, Brandweek ran a lengthy investigative story about charges that Pharmacia, which merged into Pfizer, marketed its version of human growth hormone, Genotropin, for off-label uses, including slowing down the aging process. At the moment, the issue is apparently, according to Brandweek, being investigated by the US Department of Justice. The story also further elucidates the now long-running dispute between Pfizer and former Pfizer and previously former Pharmacia executive Peter Rost. Rost, who is now a blogger too, just slammed pharma CEOs as "robber barons" in a post on the Huffington Post.

Roche's Marketing of Herceptin

The Guardian (UK) ran an investigative report on how Roche has marketed trastuzumab (Herceptin) in that country. Of particular interest were the ties developed between the company and patient advocacy groups. Notably, the reporter cited a survey showing that less than a quarter of British patient advocacy groups eschewed pharmaceutical company support.

US Federal Trade Commission Subpoenas 190 Drug Companies

Per the Los Angeles Times, the US FTC is investigating anti-competitive pricing in the pharma industry, and plans to subpeona a host of drug companies. The issue is whether "pharmaceutical companies are stifling competition by releasing authorized generic copies of their own brand-name drugs to coincide with the debut of generic challengers made by rivals."

Pharma Sponsored Cost-Effectiveness Studies Biased

A systematic review of cost-effectiveness studies published in the British Medical Journal showed that those sponsored by industry were more likely to report more favorable results. [Bell CM et al. Bias in published cost effectiveness studies: systematic review. Brit Med J 2006;332:699-703.] The authors concluded that "more rigour and openness is needed in the discipline of health economics before decision makers and the public can be confident that cost-effectiveness analyses are conducted and published in an unbiased manner."

In conclusion, the whole industry seeming could use a dose of rigour and openness if physicians and the public are to have more confidence in the information they receive about the benefits and harms of its products.

Post Title → Friday Pharma Follies

Do Health Care Managers Think "L'Organisation de la Sante C'est Moi?"

The thinking behind a comment that recently appeared on this blog bears examination beyond the reply I added in our "comments" section.

An anonymous commentator, responding to a post that addressed questions raised in the media about managers who left the troubled University of Medicine and Dentistry of New Jersey (UMDNJ) to work for Drexel University Medical School, wrote,

Through Drexel leadership, the medical school just finished an outstanding LCME review, a very good match, outstanding board scores and fiscal solvency.

"Through Drexel leadership?" Based on my experience in medical education, I would argue, instead, that the people most responsible for good results in an accreditation review, in placing students into residencies, and in board examinations are the students themselves (especially related to the latter two), and the faculty who taught them. Medical school managers, of course, help provide the infrastructure and manage the financing that enables medical education to succeed. But giving the management first credit for educational results is somewhat grandiose. Managers may deserve more credit for fiscal solvency. But so do the students who pay the tuition, and the hard-working health care professionals and support personnel who actually do most of the work.

We have posted previously about how health care managers and bureaucrats seem to believe that what they do is central and more important than anyone else's work to their organizations.

For example, see this post which quotes the Chief Financial Officer (CFO) of Pheobe Putney Health System, "we'll manage it the way we damn well want."

Also, see this post about how the merger with UnitedHealth Group resulted in rich rewards for Pacificare executives. Wall Street analysts thought that the executives were deserving of huge financial rewards for the "risk" they took in trying to turn around a troubled health care company. However, it was their stock-holders who were at financial risk. The executives were paid employees, whose salaries were no more, and possibly less at risk than any other employees if the corporation were to fail.

The attitudes in these three cases seem analogous to that attributed to the French King Louis XIV, "l'etat c'est moi." Managers' apparent beliefs that they are of the most central importance to the medical school, the hospital system, or the managed care company negate the contributions of all the other dedicated people who make these organizations work. The managers perhaps believe that they in effect are owners of these organizations, which, of course, they do not actually own.

This notion that "l'organisation de la sante c'est moi" may represent some of the garbled thinking underlying our presently mismanged health care system.

(I apologize to all and sundry if I have made any errors using the French language. My language education was unfortunately stunted.)

Post Title → Do Health Care Managers Think "L'Organisation de la Sante C'est Moi?"

A New Species of Conflict of Interest in Health Care

This topic warrants an interim summary.

Early this year, we posted about how an article in the Journal of the American Medical Association (JAMA) about conflict of interest in health care provoked considerable discussion (see NY Times editorial, and USA Today editorial). (Brennan TA et al. Health industry practices that create conflicts of interest: a policy proposal for academic medical centers. JAMA 2006; 295: 429-433.) The article posited conflicts of interest as a major threat to physicians' core values. Its exclusive focus was on conflicts of interest involving physicians and pharmaceutical and device manufacturers. It proposed a ban on many possible relationships between physicians and these companies. It asserted that even small gifts, such as pens and coffee mugs with company logos, could influence physicians' decision making. Therefore, it proposed an absolute ban on any gifts of any type to physicians. It also proposed absolute bans on physician service on company speaker bureaus and participation in ghose-written articles. It proposed that all financing of academic activities by pharmaceutical and device companies go through appropriate offices at academic medical centers.

Only a few days later we stumbled across a case of a species of conflict of interest that seemed to be more significant than those discussed in this article, yet had never been discussed in the press or the medical literature (see post here). The case was that of the Marye Anne Fox, Chancellor (equivalent to president) of the University of California - San Diego, and hence the person to whom the University of California, San Diego School of Medicine and its acadmic medical center report. The conflict was between this position, and her service as a member of the board of directors of Boston Scientific, a medical device manufacture, and the board of directors of Pharmaceutical Product Development Inc., a contract research organization.

Medical schools and their academic medical centers and teaching hospitals must deal with all sorts of health care companies, drug and device manufacturers, information technology venders, managed care organizations and health insurers, etc, in the course of fulfilling their patient care, teaching, and research missions. Thus, it seems that service on the board of directors of a such public for-profit health care company would generate a severe conflict for an academic health care leader, because such service entails a fiduciary duty to uphold the interests of the company and its stockholders. Such a duty ought on its face to have a much more important effect on thinking and decision making than receiving a gift, or even being paid for research or consulting services. Furthermore, the financial rewards for service on a company board, which usually include directors' fees and stock options, are comparable to the most highly paid consulting positions. What supports the interests of the company, however, may not always be good for the medical school, academic medical center or teaching hospital.

So, to return to our first example, leaders of the UCSD Medical School must decide whether to purchase medical devices from Boston Scientific or its competitors, perhaps whether to do research concerning such devices, and perhaps whether to cooperate or compete with research done by contract research organizations such as Pharmaceutical Product Development Inc. Yet they also must report to a leader who has a fiduciary duty to and is paid by Boston Scientific and Pharmaceutical Product Development Inc.

Thus alerted, I kept my eye out for other examples of this sort of conflict. To my surprise, they were easy to find.

For example, Dr Ralph Horowitz, Dean of the Medical School at Case-Western Reserve University, was recently appointed to the board of UK based GlaxoSmithKline, although his appointment was then rescinded after the company found he had written an article criticizing one of its products (see post here).

Also, Donna Shalala is President of the University of Miami, and hence the person to whom the University of Miami Leonard M. Miller School of Medicine and its academic medical center reports. President Shalala is on the board of directors of UnitedHealth Group, a large, for-profit managed care organization and health insurer.

I also found a sub-species of this conflict: influential academic leaders of health care research and health policy research who serve on the boards of directors of health care companies whose interests are relevant to their research. This is in some ways similar to the more widely discussed conflicts that may be generated when an academic consults for, serves on a speakers bureau for, owns stock in, or receives research funding from a health care corporation. However, again, service on a board, while it is often well paid, also entails a fiduciary duty to protect the interests of the company and its stockholders. Three examples of this sub-species appeared this month.

Professor Joseph Newhouse of Harvard University was the senior author of an article in Health Affairs about whether oncologists decide which chemotherapy drugs to used based on how they are reimbursed for these drugs. Professor Newhouse, a health care researcher with an international reputation, serves on the board of directors for Aetna Inc., a large for-profit managed care organization and health insurance company. Although some of his previous articles have disclosed this relationship, this one did not. (See post here.)

Mary O'Neill Mundinger, Dean of the School of Nursing of Columbia University, wrote a book chapter in a new book on primary care advocating advanced practice nurses as comparable or even superior to physicians. Dean Mundinger serves on the board of directors of UnitedHealth Group. The book chapter, and some of her previous articles advocating advanced practice nursing did not disclose this relationship. (See post here.)

Professor Uwe Reinhardt, an internationally known health economist at Princeton University, wrote a letter which challenged an op-ed in the New York Times which had decried the effect of business management practices, and of managed care on the doctor-patient relationship. Professor Reinhardt is also on the board of directors of Boston Scientific, on the board of directors of Triad Hospitals, a for-profit hospital network, and on the board of directors of Amerigroup, a for-profit managed care organization. His letter, and his recent articles in JAMA, Health Affairs, and the British Medical Journal did not reveal these relationships. (See post here.)

The ease with which I found examples of conflicts of interest generated by service on a health care company's board of directors suggests that these conflicts may be quite common. Because such service entails a fiduciary duty to protect the company's interests and those of its stock-holders, such conflicts may be quite important. Yet I have found no discussion of this sort of conflict in the media, or in the health care or medical literature. It makes no sense that such conflicts have been ignored while we worry about physicians receiving pens and coffee mugs with company logos. We ought to start paying some attention.

Post Title → A New Species of Conflict of Interest in Health Care

An Economist Puts Down a Physician's Cri du Couer

We previously posted about the consequences of turning control of health care over to managers and bureaucrats, a movement which may have been inspired in part by Einthoven's call in the late 1980's to break up the physicians' "guild." In that post we discussed an op-ed article in the New York Times by Dr Peter Salgo, a cri du coeur (pardon my bad French) about how increasing business pressures were fraying the doctor-patient relationship.

The article drew some responses. One letter, which wowed one of my favorite fellow health care bloggers, was from Professor Uwe Reinhardt from Princeton University, an internationally known health economist. Reinhardt was not kind to Salgo's article.

• Salgo argued that "as health-care dollars became scarce in the 1980's and 90's," hospitals began using business strategies to control costs. Reinhardt countered that total health care spending rose from 1980 to 2000. With all due respect, his reading of Salgo was obtuse. Salgo's phrase seemed to refer to increasing pressures on hospitals' reimbursement, not total health cares spending. And although Salgo was addressing hospitals, Reinhardt added somewhat gratuitously that "per capita spending on doctors services increased even more rapidly." Of course, while spending on doctors increased, the costs imposed on many doctors, at least those in primary care and other cognitive specialties, increased even faster, so that those doctors' income at best barely kept up with inflation (for example, see this survey.)
• Salgo argued that "publicly traded H.M.O's ... began restricting doctors to an average seven-minute 'encounter' with each customer." Reinhardt countered , "I defy him, or any doctor, to produce a memorandum from an H.M.O. to that effect. During the 1990's, H.M.O.'s did extract discounts from doctors. To keep their income at previous levels, doctors voluntarily shortened visits. The H.M.O.'s were not to blame." Here Reinhardt was quibbling, in my humble opinion. Managed care organizations (and Medicare and Medicaid) drove down fees paid to all physicians, while requiring more paper-work and other bureaucratic burdens that increased all physicians' costs. Since anti-trust laws prevented physicians from collectively negotiating with managed care, whatever objections they had to these changes were ineffective. Managed care (and Medicare and Medicaid) mandated changes in physicians' incentives such that those who still wanted to earn a living had only one realistic alternative, to see more patients. It is true that managed care did not directly "restrict" the time physicians spent on patients. But managed care's control of physicians' financial incentives left physicians little choice. Calling how physicians responded to these changing incentives "voluntary" entails a rather collectivist definition of the word, to put it politely.

One wonders why Reinhardt felt the need to take such a heavy-handed approach to Salgo's cri du coeur. Perhaps economists have little sympathy for such intangibles as the doctor-patient relationship, or perhaps Professor Reinhardt was influenced by interests other than those deriving from his academic position.
Prof Reinhardt turns out to be yet another academic who also sits on the board of directors of multiple public commercial health care corporations.

• He is on the board of directors of Boston Scientific, a medical device manufacturer, a position he has held since 2002.
• He is on the board of Triad Hospitals, a for-profit hospital network, a position he has held since 1999.
• Last, but distinctly not least, he is on the board of Amerigroup, a commercial managed care organization, a position he has held since 2002.

Thus, he has fiduciary duties to uphold the financial interests of all three companies and of all three companies' share-holders. Presumably, it is in the financial interest of the latter corporation to defend the actions of commercial managed care in general against any criticisms by physicians. So was his written put-down of Salgo based on his academic background and experience, or on his corporate fiduciary duties? I cannot tell.
Prof Reinhardt did not reveal his fiduciary responsibilities to these three corporations in his letter to the New York Times. Nor did he reveal them on his official Princeton web-page, nor in at least some of his publications in prominent journals on varying aspects of health care policy since 2002 which I could review. See, for example this article in JAMA, this article in Health Affairs, and this letter in the British Medical Journal. These discussed topics that were likely relevant to the interests of device manufacturers, for-profit hospital systems, and/or commercial managed care organizations. (And the latter two both chided physicians for their interests in preserving or enhancing their incomes.)

So once again I say in summary, it seems that the more one looks, the more examples one finds of academics influential in health policy who also are directors of health care companies, yet who may not have always revealed their conflicts when writing about health care, even when their works relate to the interests of the companies whose interests they were legally bound to protect. So how much of their influential work reflects their professional and academic research and beliefs, and how much reflects their fiduciary responsibilities to commercial organizations? Inquiring minds really want to know.

Post Title → An Economist Puts Down a Physician's Cri du Couer

To Whom Do "Udidoos" Owe a Duty?

We recently posted at length about the negative consequences of the growing control of managers and bureaucrats over health care. This may have been inspired by the call of one of the key advocates of managed care, Alain Einthoven, to break up the supposed physicians' "guild."

This theme seems to be on many minds. Philip Alper writes an interesting, pithy column on medicine and health care for the Internal Medicine World Report, (unfortunately not available on the web). In his February column, he took up the issue of the intrusion of managers and bureaucrats into practice.

He coined the term "udoos" for those who say "you do this and you do that," "udids," for those who "chillingly remind us that 'you did this and you did that." He noted, "both types are familiar to physicians because authority figures and critics with whom we interact characteristically speak this language."

Further, the managers who must "redress our [physicians'] failures," he termed "udidoos, who offer 'because'-based prescriptions for doing better in the future. Udidoos simultaneously creat guilt and the promise of expiation. Consequent anxiety pushes us to accept the controls of managed care, for example, no matter what doubts we may privately harbor about their utility or effectiveness."

Alper went on to critique The Future of Primary Care, edited by Showstack et al. He took particular exception to a chapter by Mary O'Neill Mundinger, RN, DrPH, Dean of the Columbia University School of Nursing, whom he would apparently would consider a "udidoo." The chapter was entitled "Advanced Practice Nurses: The Preferred Primary Care Providers for the 21st Century."

Mundinger's prescription as a "udidoo" was for advanced practice nurses (APNs) to take over from primary care physicians. As Alper wrote, "the underlying notion is that nurses are better suited than physicians to be primary care providers. There is no attempt at collegiality here. Dr Mundinger has previously written about why nurses should be paid the same as doctors (they get equal results). Now she wants not only to replace the primary physician but also commandeer their title." Alper finally decided,

Maybe the best thing to do is to just laugh. Even gallows humor certainly beats crying - or going crazy.

Although I do not have a copy of the book, Mundinger has made similar assertions elsewhere. For example, in Pediatrics,(1) she wrote that physicians should be subservient to nurses (and others) in health care teams, "the disease specialist - the pediatrician - merits leadership of the team only when disease is the major concern. At other times, it may be the nurse practitioner... who directs the team." And she asserted that pediatric nurse practitioners are more competent than some physicians in caring for children: "it is questionable that non-pediatric physicians are more qualified to care for children than pediatric nurse practitioners. Education for non-pediatric physicians is often limited to 1-month clerkships in pediatric medicine during the third year of medical school." Furthermore, she claimed these nurse practitioners spend five times as much time in pediatric training than do family physicians.

In a review article in Academic Medicine,(2) Mundinger claimed "APNs - whose advanced primary care is delivered with full accountability and is indistinguishable from such care delivered by physicians - offer a different style of practice, which involves caring, nurturing, support, engagement with patients, attention to illness prevention and health promotion, and patient education."

Mundinger was the lead author of the study that claimed outcomes of patients seen by nurse practitioners in ambulatory settings were comparable to those seen by primary care physicians.(3) The study received wide attention, although its external validity was questioned.(4)

Mundinger's advocacy of nurse practitioners as substitutes for and superiors to physicians is helpful for the managed care organizations Alper criticized. Nurse practitioner care currently costs less than physician care. Although physicians have not always loudly expressed their doubts about managed care, as Alper noted above, nurses are not likely to be more vocal.

But while I read Alper's commentary, and then Mundinger's writing, a small voice in my head reminded me that I had just seen her name before. But where?

Ah yes, it was here. A while back, we commented on the irony that Donna Shalalaw, living the good life as president of the University of Miami, was as on the board of directors of UnitedHealth Group, a large commercial managed care organization whose public mission includes making health care more "affordable," while the University of Miami's outsourced maintenance workers, including those who worked at its medical center, had no medical insurance.

On the roster of UnitedHealth Group's board of directors also was the name of Mary O'Neill Mundinger DrPH. She has been on the board since 1997. If one goes to the Columbia University School of Nursing web-site, Dr Mundinger's biographical page does include her directorships (of Welch Allyn, Gentiva Health Systems, Cell Therapeutics as well as UnitedHealth Group). However, none of the articles cited below(1-3) mention her seemingly important conflict of interest. And Dr Alper informed me he saw nothing about it in the book chapter she wrote that he critiqued.

Thus, she has had a fiduciary duty to UnitedHealth Group and its stock-holders since 1997. And it would clearly seem to be in the interest of UnitedHealth Group to reduce its costs by paying for more care by nurse practitioners, and less by physicians. So how much of Mundinger's advocacy of advanced practice nurses to replace physicians is based on her academic work, and how much is based on her duties to UnitedHealth? I cannot tell.

But readers of her work up to now would never have thought of this question, unless they fortuitously had learned about her responsibilities to UnitedHealth from some other source.

In summary, it seems that the more one looks, the more examples one finds of leaders of academic health care organizations who also are directors of health care companies. Yet these often influential figures have not always revealed their conflicts when writing about health care, even when their works relate to the interests of the companies whose interests they are legally bound to protect. So how much of their influential work reflects their professional and academic research and beliefs, and how much reflects their fiduciary responsibilities to commercial organizations? Inquiring minds really want to know.

References
1. Mundinger MO. Toward a quality workforce. Pediatrics 2003; 112: 416-418.
2. Mundinger MO. Twenty-first century primary care: new partnerships between doctors and nurses. Acad Med 2002; 77: 776-780.
3. Mundinger MO et al. Primary care outcomes in patients treated by nurse practitioners or physicians: a randomized controlled trial. JAMA 2000; 283:59-68.
4. Sox HC. Independent primary care practice by nurse practitioners. JAMA 2000;283:106-108.

Post Title → To Whom Do "Udidoos" Owe a Duty?

An Unrevealing Interview with Genentech's CEO

We have frequently posted about the high cost of drugs and devices. For example, here we noted the increasing costs of drugs, and how they seemed unrelated to costs of production or the overall benefits they provide patients. One of our examples was the more than $50,000 a year cost of Avastatin, made by Genentech.

MSNBC recently interviewed Arthur Levinson, the CEO of Genentech about this, among other questions.

The MSNBC reporter asked Levinson, "what's your response to critics who say Avastatin is too pricy?" His response:

There have been a lot of articles on the pricing of Avastin that I think are missing important points. They're focusing on the annual cost, but I prefer to put that in the context of all the priorities the government has for health care. In the last couple of months, cancer has become the leading cause of death for Americans.

About $2.5 trillion a year is spent on health care, and 12% of that is on prescriptions. Of that spending, 6% is on anti-cancer drugs. I think that's relatively modest. I told the audience today that 40% of them will get cancer and 42% of those who do will die. That's a lot of people. It's a serious disease that deserves serious efforts. It won't bankrupt the American economy.

Thus he completely evaded the question.

The reporter's next question was, "What about patients who can't afford the drug?" He responded:

We took a look at access and discovered that the vast majority of patients have insurance. So their out-of-pocket expense per month [on co-payments] averages $129. We don't think that's terribly onerous. And we have among the most generous patient assistance plans in the industry. Our view is if someone can't afford the drug, we should provide it to them. We get no credit for doing that.

This response begged the question. Even though many patients may have insurance which will currently pay for anti-cancer drugs, the cost to the insurers is real, and ultimately passed along to patients and the public. So just why is Avastatin so expensive? Is the price just what the market will bear, as we discussed in the earlier post?

Mr. Levinson, by the way, pulled down total compensation of just under $4 million and received stock options currently valued at $14.3 million in fiscal year 2005, according to Genentech's most recent proxy statement. Presumably, this high level of compensation reflects his share-holders' confidence in his ability to run the corporation. Yet he seems at a loss to explain the pricing of one his most profitable and important products.

Maybe the insurers and managed care companies who have been willing, so far, to pay more than $50,000 a year for Avastatin should pay some attention. And maybe Congress, which did not allow the Center for Medicare and Medicaid Services (CMS) to negotiate the price of drugs paid for by the new part D benefit, should pay attention as well. If there is no good rationale for pricing the drug so high, why not try to negotiate it down?

Why insurance companies and managed care organizations have not yet done a more effective job of negotiating the prices of drugs like Avastatin remains one of the great mysteries of health care. Instead, their only strategies for controlling health care costs are decreasing physicians' across the board reimbursement while simultaneously heaping ever more onerous bureaucratic requirements on physicians. These also seem to be the only cost-cutting strategies. Yet these strategies are threatening to put primary care (and other "cognitive") physicians out of business. Who will then diagnose the cancers which the expensive drugs may be used as treatments?

Post Title → An Unrevealing Interview with Genentech's CEO

More Questions, Few Answers About TGN 1412

The disastrous results of the phase I trial of TGN 1412 (see our most recent post here) has lead to a news article in the British Medical Journal, and opinion pieces in the BMJ and the Lancet.

None of these has important new answers. The Lancet editorial noted that the journal's request for the protocol of the trail was rebuffed by TeGenero, the manufacturer of the TGN 1412, and by the UK Medicines and Healthcare Regulatory Agency (MHRA) as "commercially sensitive."

The BMJ editorial listed the questions raised by this incident, which somewhat parallel the list of thing we did not know about the trial at the time of our first post on TGN 1412. The questions were:

• How were the volunteers recruited and motivated?
• How much accurate information, based on full risk analysis, do volunteers receive?
• How much money is too much, and when does money cloud the judgment needed to evaluate risks realistically?
• Why was the drug tested on healthy volunteers rather than patients?
• Why were all eight volunteers given the drug at the same time? [Actually, only six were given the drug, while two others got a placebo - Ed]
• What information did the ethical and regulatory bodies have before the trial?
• How much do regulatory and ethical bodies have to rely on information from investigators and sponsors, which may be subject to publication bias, rather than truly independent reviews?
• Finally, what does this trial tell us about the degree of transparency througout the process of developing new drugs?

The conclusion to the BMJ article,

This tragedy creates one more imperative for an open culture in medical research, a culture that many fear is increasingly losing its way.

and the conclusion of the Lancet article,

the fact that [dreadful events] ... have occured should lead to maximum transparency to reaffirm trust in clinical trials and their regulation.

mirror the conclusion of our first post about TGN 1412, "research subjects and future patients deserve complete transparency about the drug or device to be tested, and how the testing will be performed and supervised."
Maybe if enough people repeat this sentiment, it will actually have an effect on the increasingly opaque world of drug development and evaluation.

Post Title → More Questions, Few Answers About TGN 1412

The Cloud Spreads from UMDNJ

The cloud from ongoing problems at the University of Medicine and Dentistry of New Jersey (UMDNJ) is starting to spread over other institutions.

We have posted extensively at the troubles at UMDNJ, which now is operating under a federal deferred prosecution agreement with the supervision of a federal monitor (see most recent post here.) We had previously discussed allegations that UMDNJ had offered no-bid contracts, at times requiring no work, to the politically connected; had paid for lobbyists and made political contributions, even though UMDNJ is a state institution; and seemed to be run by political bosses rather than health care professionals. (See post here, with links to previous posts.)

The Philadelphia Inquirer just reported that New Jersey Governor Corzine is proposing substantial ($169 million) cuts in state higher education funding affecting all state colleges and universities, not just UMDNJ, because he believes that the problems at UMDNJ reflect systemic problems with the management of all New Jersey higher education. He said, "frankly, the UMDNJ issue tells me there may be management weaknesses. UMDNJ tells me the institutions are not as disciplined as we would like...." Furthermore, if the colleges and universities try to make up the cuts with tuition increases, not management cuts, Corzine is threatening to re-organize the entire state higher education effort.

Meanwhile, the Inquirer also reported that questions are being raised about former UMDNJ managers who wound up at Drexel University College of Medicine in Philadelphia. We had previously posted about two fomer managers who wound up at Drexel after receiving golden parachutes from UMDNJ. James Archibald, former senior vice president for administration and finance at UMDNJ, is now Senior Vice President for Health Sciences at Drexel. John Ekanius, former vice president for government and public affairs at UMDNJ, is now Associate Dean for External Relationships and Strategic Development. The Inquirer reported that Archibald had arranged one of the famous "no-bid contracts" at UMDNJ, with the late, politically connected Ronald A. White, former fund raiser for New Jersey's former Governor Jim McGeevey. Drexel also hired David L Printy as chief operating and business development officer at the medical school. He left a year later after a "problem" he had with the US Securities and Exchange Commission (SEC) in 1996 was revealed, which had lead to a 10 year ban from working in the securities field.

Drexel was the successor institution to the former Allegheny University of Health Sciences (AUHS), part of the Allegheny Health Education and Research Foundation (AHERF). As the Inquirer pointed out, "Allegheny leaders spent tens of millions of dollars in restricted medical endowments to keep the money-losing system afloat. That resulted in a 2002 plea and a 11 1/2 - month sentence for Allegheny's head, Sherif Abdelhak. (For a somewhat more detailed history of the AHERF debacle, see the article I wrote for the RI chapter newsletter for the Amercian College of Physicians.) The Inquirer quoted a former assistant US attorney re Drexel's relationship to AHERF, "when you are the successor to a company that has gone through the tumultuous times with law enforcement like Allegheny, there should be lessons learned and a desire to reestablish credibility, not only with regulators, but with the public at large."

Yet, in addition to Printy's "issue," there were other issues raised about Archibald after he became the leader to which Drexel's medical school reported. Archibald's only experience with health care had come during his management career at UMDNJ. Before then he was the Chief Financial Officer (CFO) for SEPTA, the Philadelphia municipal transit system. The Inquirer stated, "Archibald's style and lack of medical credentials angered many on the Drexel faculty." "In March, 2004, nearly all of the 23 [Drexel] department chairs signed a letter to [Drexel President] Papadakis, seeking Archibald's demotion.... 'The dean must be empowered to be the unquestioned leader' they wrote.... The letter stated that the atmosphere of the school had 'become one of both dysfunction and distrust.'" 18 months later, the new dean of the medical no longer had to report directly to Archibald. The Inquirer article was silent about whether the Drexel medical school faculty still feel the institution's atmosphere is characterized as dysfunction and distrust.

The new Governor of New Jersey has realized the existence of widespread mismanagement in our formerly trusted and revered health care and educational institutions, and the consequences such mismanagement may have. I hope the President of Drexel, which only acquired a medical school due as a consequence of mismanagement, and worse, at Allegheny, now realizes that not everyone who fell into health care management in the last 20 boom years necessarily should continue in these roles.

Addendum: Some quick Google searching revealed that Ms. Susan Mettlen, formerly vice president for information services and technology at UMDNJ, who became Chief Information and Technology Officer for Drexel medical school, was forced to resign her position of vice chancellor for information infrastructure at the University of Tennessee in 1998 after questions were raised about her relationship with a company that sold software to the school. Maybe the people who oversee the managers of health care organizations should learn how to use Google.

Addendum (4/7/2006): The Philadelphia Inquirer published a letter from Joseph Jacovini, chair of the Drexel University Board of Trustees, in response to the article cited above:

The reputation of a university is its most important asset. Your Page One headline ("N.J. probe may touch Drexel's reputation," March 24) unfairly imputes a Drexel association with this matter. Simply stated, the facts of the article do not support the headline and your newspaper has improperly impugned Drexel's reputation.

The situation at the University of Medicine and Dentistry of New Jersey is not a Drexel story. It is not related to any actions at Drexel by James Archibald, senior vice president for health sciences, or any of the former UMDNJ employees hired. I should not have to make this clear, except that your article was misleading. The financial management of Drexel University is beyond reproach.

Drexel began operating the College of Medicine in 1998 with the support of Gov. Ridge and Mayor Rendell after the catastrophic Allegheny bankruptcy, saving 13,000 jobs and an irreplaceable medical resource. The college today is strong both financially and academically, earning the highest possible evaluation from its accrediting body and attracting a high caliber of applicants.

As long as your readers know the facts, they will understand that Drexel's reputation as one of the most successful and respected universities in the nation is unassailable. We are owed an apology and a retraction.

Note that Jacovini did not dispute the facts about Archibald, or any other administrators from UMDNJ who were hired by Drexel, that appeared in the original Philadelphia Inquirer story. The concerns I raised above were not about the financial management of Drexel, but about Archibald's alleged involvement with a no-bid contract at UMDNJ, and the protests against him by Drexel Department chairs based on his lack of any direct health care experience or credentials, which they apparently felt were not appropriate for a Vice President for Health Sciences, to whom the Dean of the Medical School and all faculty reported.

Note further that Jacovini, the Chairman of the Dillworth Paxson law firm, is also on the board of directors of Corcell, a health care corporation that provides cord blood stem cell banking services.

Post Title → The Cloud Spreads from UMDNJ

Health Wonk Review is Up

For the last few weeks, Health Care Renewal has been participating in the Health Wonk Review, a compendium of the (hopefully) best recent posts by us few, cutting-edge health policy bloggers.
The latest version of Health Wonk Review is now up here at Healthy Policy.
And Health Wonk Review just got its own web-site.
We invite all Health Care Renewal readers to take a look.

Post Title → Health Wonk Review is Up

Call for Transparency and Physician Input at Guidant

We have posted frequently about the troubles afflicting Guidant Inc (scheduled to be acquired by Boston Scientific). These troubles revolved around Guidant's failure to reveal defects in its implantable cardiac devices. (See posts here, here, here, here, and here.)

The New York Times has just revealed the findings of an external review that Guidant, to its credit, commissioned. Its main findings were:

• "Decisions on how to assess product defects were made by Guidant engineers rather than medical experts."
• "As a result, Guidant officials could claim a device's performance fell within engineering limits without considering the medical consequences of product failures...."
• "'There was no medical input to speak of' in the review process...." "Even the top medical officer of Guidant's cardiac device unit, Dr. Joseph Smith, acknowledged in an interview with the panel that he had not been hired to be a 'patient safety officer' but rather to interact with other physicians on educational issues."

The panel's conclusions were striking, "in addition to recommending the creation of an outside panel to monitor device performance, the panel suggested that Guidant, among other things, employ a physician whose main duty would be patient safety. The group also concluded that both Guidant and other makers of heart devices needed to significantly increase the level of data they collected about possible device failures."
More transparency, and involving physicians, not just managers and engineers, in decisions affecting patients' well being sounds just about right. (We have been saying similar things on Health Care Renewal for quite a while.)

Post Title → Call for Transparency and Physician Input at Guidant

The Consequences of Breaking the Physicians' "Guild"

In 1988, Alain Enthoven, an original member and driving force of the Jackson Hole group, published a short manifesto about "managed competition." (Entoven AC. Theory and Practice of Managed Competition in Health Care Finance. Amsterdam: North Holland, 1988.) This is now not easy to find (but see Amazon here).

In this volume, Enthoven expounded on his scheme to wrest power over health care from physicians and give it to managers and bureaucrats. Enthoven thought of physicians as part of a tightly organized "guild," that is, an economic alliance. His model for this was a pre-World War II document from a French medical society. Basically, he thought such guilds, which he believed to be in place in all Western democracies except in the UK and Scandinavia, were based on principles that were "not the natural expression of a free market in health care," (p.33) and furthermore, that the guild model associated with health insurance "makes it very difficult for government or private payors to control cost growth," (p.41) while they paradoxically "can also produce poor service (p. 42). To combat physicians' overwhelming economic power, Enthoven called for managers to use "tools they have found to counteract market failure." (p. 98) Finally, he suggested using a coordinated strategy to "break up the guild," noting that "overcoming the guild has not been easy in the United States.... However, the guild has broken down." (P. 122)

Some recent opinion pieces document the consequences of breaking up the guild, and turning health care over to managers and bureaucrats.

Debunking Business Dogmas

US News and World Report reminds us that the conventional wisdom among business managers has often proved to be wrong. Yet many health care managers were big supporters of the dogmas debunked by two two management professors, Jeffrey Pfeffer and Robert Sutton. (See the amazingly titled Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting From Evidence-Based Management) :

• Financial Incentives Drive Good Performance (but instead, they have driven a huge number of health care dollars into the pockets of management, for example, see this recent post).
• First Movers Have the Advantage
• Layoffs Are Good Ways to Cut Costs (still the philosophy of too many health care executives who see everyone, except themselves, as interchangable, and are quick to dispatch those with whom they disagree)
• Mergers Are a Good Idea (but remember the mergers of NYU-Mt Sinai, UCSF -Stanford, and especially the mergers that created the Allegheny Health Education and Research Foundation, all now defunct)
• Life and Work Should Be Kept Separate (which really meant don't treat your employees very well, because they can always return to their lives outside of work).

Let's see how long it takes for the news to get out to health care managers.
A Melancholic Look at the Marketing of Pharmaceuticals
In the Atlantic Monthly, Carl Elliott's take on the commercialization of American health care, and how drug marketing has compromised physicians is a must-read. (Web access requires a subscription. The article was briefly posted in its entirety here, but the Atlantic Monthly forced the web-site to take it down. Therefore, I have provided some key quotes, and hope that the Atlantic Monthly will not find them excessive:

For better or worse, America has turned its healthcare system over to the same market forces that transformed the village hardware store into Home Depot and the corner pharmacy into a strip-mall CVS.

For decades the medical community has debated whether gifts and perks from reps have any real effect. Doctors insist that they do not. Studies in the medical literature indicate just the opposite. Doctors who take gifts from a company, studies show, are more likely to prescribe that company’s drugs or ask that they be added to their hospital’s formulary. The pharmaceutical industry has managed this debate skillfully, pouring vast resources into gifts for doctors while simultaneously reassuring them that their integrity prevents them from being influenced.

Doctors’ belief in their own incorruptibility appears to be honestly held. It is rare to hear a doctor—even in private, off-the-record conversation—admit that industry gifts have made a difference in his or her prescribing. In fact, according to one small study of medical residents in the Canadian Medical Association Journal, one way to convince doctors that they cannot be influenced by gifts may be to give them one; the more gifts a doctor takes, the more likely that doctor is to believe that the gifts have had no effect. This helps explain why it makes sense for reps to give away even small gifts. A particular gift may have no influence, but it might make a doctor more apt to think that he or she would not be influenced by larger gifts in the future.

The late 1980s and the 1990s [were] a period when the drug industry was undergoing
key transformations. Its ethos was changing from that of the country-club establishment to the aggressive, newmoney entrepreneur. Impressed by the success of AIDS activists in pushing for faster drug approvals, the drug industry increased pressure on the FDA to let companies bring drugs to the market more quickly. As a result, in 1992 Congress passed the Prescription Drug User Fee Act, under which drug companies pay a variety of fees to the FDA, with the aim of speeding up drug approval (thereby making the drug industry a major funder of the agency set up to regulate it). In 1997 the FDA dropped most restrictions on direct-to-consumer advertising of prescription drugs, opening the gate for the eventual Levitra ads on Super Bowl Sunday and Zoloft cartoons during daytime television shows. The drug industry also became a big political player in Washington: by 2005, according to The Center for Public Integrity, its lobbying organization had become the largest in the country.

Many companies started hitting for the fences, concentrating on potential blockbuster drugs for chronic illnesses in huge populations: Claritin for allergies, Viagra for impotence, Vioxx for arthritis, Prozac for depression. Successful drugs were followed by a flurry of competing me-too drugs. For most of the 1990s and the early part of this decade, the pharmaceutical industry was easily the most profitable business sector in America. In 2002, according to Public Citizen,
a nonprofit watchdog group, the combined profits of the top ten pharmaceutical companies in the Fortune 500 exceeded the combined profits of the other 490 companies.

During this period reps began to feel the influence of a new generation of executives intent on bringing market values to an industry that had been slow to embrace them. Anthony Wild, who was hired to lead Parke-Davis in the mid-1990s, told the journalist Greg Critser, the author of Generation Rx, that one of his first moves upon his appointment was to increase the incentive pay given to successful reps. Wild saw no reason to cap reps’ incentives. As he said to the company’s older executives, “Why not let them get rich?”

The industry began hiring more and more reps, many with backgrounds in sales (rather than, say, pharmacy, nursing, or biology). Some older reps say that during this period the industry replaced the serious detail man with “Pharma Barbie” and “Pharma Ken,” whose medical knowledge was exceeded by their looks and catering skills. A newer, regimented style of selling began to replace the improvisational, more personal style of the old-school reps. Whatever was left of an ethic of service gave way to an ethic of salesmanship.

Many doctors began to feel as though they deserved whatever gifts and perks they could get because reps were such an irritation.

The trick is to give doctors gifts without making them feel that they are being bought. “Bribes that aren’t considered bribes,” Oldani says. “This, my friend, is the essence of pharmaceutical gifting.” According to Oldani, the way to make a gift feel different from a bribe is to make it personal.

Such gifts do not come with an explicit quid pro quo, of course. Whatever obligation doctors feel to write scripts for a rep’s products usually comes from the general sense of reciprocity implied by the ritual of gift-giving. But it is impossible to avoid the hard reality informing these ritualized exchanges: reps would not give doctors free stuff if they did not expect more scripts.

Drug company–sponsored consultancies, advisory-board memberships, and speaking engagements have become so common,especially among medical-school faculty.... The industry as a whole is hiring more and more doctors as speakers. In 2004, it sponsored nearly twice as many educational events led by doctors as by reps. Not long before, the numbers had been roughly equal. This raises the question, Are doctors becoming the new drug reps?

According to an internal study by Merck, reported in The Wall Street Journal, doctors who attended a lecture by another doctor subsequently wrote nearly four times more prescriptions for Vioxx than doctors who attended an event led by a rep. The return on investment for doctor-led events was nearly twice that of rep-led events, even after subtracting the generous fees Merck paid to the doctors who spoke. These speaking invitations work much like gifts. While reps hope, of course, that a doctor who is speaking on behalf of their company will give their drugs good PR, they also know that such a doctor is more likely to write prescriptions for their drugs.

The semi-official industry term for these speakers and consultants is “thought leaders,” or “key opinion leaders.” Some thought leaders do not stay loyal to one company but rather generate a tidy supplemental income by speaking and consulting for a number of different companies. Reps refer to these doctors as “drug whores.”
Thought leaders serve an indispensable function when it comes to a potentially very lucrative marketing niche: offlabel promotion, or promoting a drug for uses other than those for which it was approved by the FDA—something reps are strictly forbidden to do.

Now for the most melancholy conclusions,

In 1997, John Lantos, a pediatrician and ethicist at the University of Chicago, wrote a book called Do We Still Need Doctors? We will always need health care, of course. But, as Lantos observes, it is not clear that we will always need to get our health care from doctors. Many of us already get it from other providers—nurses, physical therapists, clinical psychologists, nutritionists, respiratory therapists, and so on. The figure of “the doctor” is not cast in stone.

We simply live in a country that has decided that the traditional figure of the doctor is not worth preserving in the face of modern economics. Instead, we put our trust in the market.

Not if Health Care Renewal can help it!

The Seven Minute Visit

Peter Salgo is a physician who is also upset about the demise of the traditional figure of the doctor, but seemingly despairs about doctors' prospects for challenging the managers and bureaucrats. He just wrote an op-ed in the New York Times. He sees the problem beginning when managers broke the physicians' "guild,"

Patients aren't unhappy just because health care costs too much (though they would certainly like it to be more affordable). Rather, people sense a malaise within the system that has eroded the respect they feel patients deserve.

As health-care dollars became scarce in the 1980's and 90's, hospitals asked their business people to attend clinical meetings. The object was to see what doctors were doing that cost a lot of money, then to try and do things more efficiently. Almost immediately, I noticed that business jargon was becoming commonplace. "Patients" began to disappear. They were replaced by "consumers." They eventually became "customers."

Doctors in hospitals all over the country began hearing the same business language and facing the same pressures to "keep things moving." I used to be asked how well my patients were doing. Suddenly administrators were asking how long I was planning on keeping sick people in the intensive care unit.

Yet, he seems to feel a degree of learned helplessness,

Doctors know you cannot provide compassion in seven-minute aliquots. But we have felt powerless to change things. The medical establishment has, many of us feel, simply rolled over and gone along to get along. It has sacrificed patients' best interests on the altar of financial return.
This leaves the solution to the problem in the hands of our patients. You, the patient, are the system's best hope. Evaluate what it is you expect from your doctor, then ask for it. If you are unhappy with your doctor, fire him. If you cannot get more than a seven-minute face-to-face encounter with your doctor, he needs fewer patients.

The problem with this scheme, of course, is that primary care doctors are getting scarcer and scarcer. The American College of Physicians just reported, for example, that the number of medical school graduates training in general internal medicine has reached a new low. So in my humble opinion, we doctors cannot just wearily leave the field, hoping that patients alone will be able to take on the bureaucrats and managers. The doctors, along with other health professionals, and patients are all in this mess together, and we will all need to work to clean it up.

I do agree with Salgo's hopes for the results of doing something.

In one respect the business people are right. Restoring the doctor-patient relationship will not save anyone any money. But I submit that it doesn't have to. There are other ways to curtail health care costs. Some involve high technology; others do not. None of them requires patients to sacrifice their self-respect.

We can and must reduce health care expenses. But we cannot do it at the expense of patients' well-being. The doctor-patient relationship is critical to the integrity of the health care system. It is not disposable. Turning doctors into shopkeepers who regard patients as customers is unacceptable.

Post Title → The Consequences of Breaking the Physicians' "Guild"

The Questionable Timing of UnitedHealth Group's CEO's Stock Options

A Wall Street Journal article (not yet available on the web, but summarized here) alleged that some prominent US corporations have back-dated the stock options granted top managers with the effect of enhancing their total compensation.

To quote the article,

The Securities and Exchange Commission is examining whether some option grants carry favorable grant dates for a different reason: They were backdated. The SEC is understood to be looking at about a dozen companies' option grants with this in mind.

The Journal's analysis of grant dates and stock movements suggests the problem may be broader. It identified several companies with wildly improbable option-grant patterns. While this doesn't prove chicanery, it shows something very odd: Year after year, some companies' top executives received options on unusually propitious dates. (An explanation of the methodology is below.)

The analysis bolsters recent academic work suggesting that backdating was widespread, particularly from the start of the tech- stock boom in the 1990s through the Sarbanes-Oxley corporate reform act of 2002. If so, it was another way some executives enriched themselves during the boom at shareholders' expense. And because options grants are long-lived, some executives holding backdated grants from the late 1990s could still profit from them today.

Stock options give recipients a right to buy company stock at a set price, called the exercise price or strike price. The right usually doesn't vest for a year or more, but then it continues for several years. The exercise price is usually the stock's 4 p.m. price on the date of the grant, an average of the day's high and low, or the 4 p.m. price the day before. Naturally, the lower it is, the more money the recipient can potentially make someday by exercising the options.

A key purpose of stock options is to give recipients an incentive to improve their employer's performance, including its stock price. No stock gain, no profit on the options. Backdating them so they carry a lower price would run counter to this goal, by giving the recipient a paper gain right from the start.

Companies have a right to give executives lavish compensation if they choose to, but they can't mislead shareholders about it. Granting an option at a price below the current market value, while not illegal in itself, could result in false disclosure. That's because companies grant their options under a shareholder-approved "option plan" on file with the SEC. The plans typically say options will carry the stock price of the day the company awards them or the day before. If it turns out they carry some other price, the company could be in violation of its options plan, and potentially vulnerable to an allegation of securities fraud.

The article particularly emphasized how UnitedHealth Group, the large commercial managed care organization, granted stock options to its CEO, Dr William W McGuire.

The Journal's analysis raises questions about one of the most lucrative stock-option grants ever. On Oct. 13, 1999, William W. McGuire, CEO of giant insurer UnitedHealth Group Inc., got an enormous grant in three parts that -- after adjustment for later stock splits -- came to 14.6 million options. So far, he has exercised about 5% of them, for a profit of about $39 million. As of late February he had 13.87 million unexercised options left from the October 1999 tranche. His profit on those, if he exercised them today, would be about $717 million more.

The 1999 grant was dated the very day UnitedHealth stock hit its low for the year. Grants to Dr. McGuire in 1997 and 2000 were also dated on the day with those years' single lowest closing price. A grant in 2001 came near the bottom of a sharp stock dip. In all, the odds of such a favorable pattern occurring by chance would be one in 200 million or greater. Odds such as those are 'stronomical,'said David Yermack, an associate professor of finance at New York University, who reviewed the Journal's methodology and has studied options-timing issues.

Until last year, UnitedHealth had a very unusual policy: It let Dr. McGuire choose the day of his own option grants. According to his 1999 employment agreement, he is supposed to choose dates by giving "oral notification" to the chairman of the company's compensation committee. The agreement says the exercise price shall be the stock's closing price on the date the grants are issued.

Arthur Meyers, an executive-compensation attorney with Seyfarth Shaw LLP in Boston, said a contract such as that sounded 'ike a thinly disguised attempt to pick the lowest grant price possible.'Mr. Meyers said such a pact could pose several legal issues, possibly violating Internal Revenue Service and stock-exchange listing rules that require directors to set a CEO's compensation. "If he picks the date of his grant, he has arguably set a portion of his pay. It's just not good corporate governance."

These allegations seem to clash with UnitedHealth Group's mission statement, which expressly includes, "making health care more affordable." Making huge stock option grants to its CEO, as we have mentioned before, hardly seem to be a way to make health care more affordable. Gimmicking the timing of the grants to increase his compensation just adds salt to the wound, and reinforces the concern that large health care organizations may be run more for the benefit of their top executives than for any other purpose.

One wonders what sort of oversight the UnitedHealth Group board of directors was providing. Maybe director Donna Shalala, who also has the seemingly conflicting job of being president of the University of Miami, and hence the person ultimately responsible for the operation of its medical school and academic medical center, was too busy enjoying her lavish lifestyle.
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Post Title → The Questionable Timing of UnitedHealth Group's CEO's Stock Options

An Update on the Tragic TGN 1412 Trial

Our most recent post on the lack of transparency in the trial run by Parexel of TGN 1412, a drug developed by TeGenero, which left all six participants in intensive care with multi-organ system failure, was here.

This trial has generated tremendous media attention. Thus, we now know a bit more about it, but still not much.

According to TeGenero's website, the drug TGN 1412 is a monoclonal antibody that targeted the CD28 receptor on T-lymphocytes. The drug is not meant to destroy T-lymphocytes, but rather to activate the CD28 receptor. According to TeGenero, the TGN 1412 leads to "pronounced T-cell activation and expansion." Thus, unlike some other monoclonal antibodies used to treat cancer, this drug was meant to change the settings, as it were, of the patient's immune system. This was thus a novel therapy, and hence one whose results might have been unpredictable.

Furthermore, the Times (UK) reported that before the trial was carried out, there may have been reasons to be concerned that this drug might have had adverse effects. The Times article quoted Angus Dalgleish, (who holds the Foundation Chair of Oncology at St. George's Medical School in London, but is also the Research Director for Onyvax, a company that also is developing cancer treatments based on immunology), "I would have told the people doing this trial [on TGN 1412] not to do it because the dangers were so great." He cited studies of a "similar drug," "They should have known they would get a meltdown because this drug was hitting exactly the same immune response pathways." (I have not yet been able to figure out precisely which studies he meant.) Furthermore, the Times quoted Jorg Schaaber, "a member of the German drug industry monitoring group Buko Pharma" (whose web-site is here, but appears to only be in German), that monoclonal antibodies like TGN 1412 carry "considerable risks." Finally, it quoted Michael Seed, a Senior Research Fellow at the William Harvey Institute at Barts and the London Hospital and the Queen Mary's School of Medicine and Dentistry, "The danger is that they are messing around with T regulator cells and we don't know what all the T regulator subsets do. Some will switch things on and some will switch things off."

Furthermore, newspaper reports hint at irregularities in how the trial was conducted. The Times (UK) article suggested that the fees paid volunteers were sufficient to be inducements, rather than just payments for time and expenses. It also alleged that in other trials, Parexel, the contract research organization conducting the TGN 1412 trial, used consent forms so long as to be unreadable, and "pressured" volunteers to sign the form with reading it, "because I felt like I was slowing everyone down." Also, it noted that some trial participants may have been professional research subjects, e.g., one, referred to as a "serial human guinea pig," had reportedly made 60,000 pounds sterling in four previous years from participating in drug trials.

An article in the Telegraph (UK) cited a review article on the effects of monoclonal antibodies to CD28 (Hunig T, Dennehy K. CD28 superagonists: Mode of action and therapeutic potential. Immunol Letters 2005; 100: 21-28 )which noted "massive expansion and functional activation of regulatory T-cells by in vivo treatment with CD28 superagonists," but also revealed gaps in current knowledge about what CD28 activation does, and then asked "does it even make sense to talk of informed consent when the experts themselves admit to sugh gaps in their knowledge?"

Thus, there are reasons to suspect that this trial had not been fully thought through, and that it it was not optimally implemented.

Once again, while hoping that six participants in this trial get better, I also hope this tragedy prompts a re-evaluation of our drug testing procedures, and particularly more transparency in all phases of the process.

Post Title → An Update on the Tragic TGN 1412 Trial

A Perspective from Transparency International's 2006 Global Report on Health Care Corruption

To put the various examples of mismanagement, conflicts of interest, and corruption afflicting health care organizations discussed in Health Care Renewal in perspective, I strongly advocate reading Transparency International's Global Corruption Report 2006, which focuses on health care. (We had previously noted the release of the report here, and a Lancet editorial inspired by it, here.)

To get the flavor, I have assembled some key quotes from the beginning of the report.

[Foreward]

Corruption - alongside poverty, inequity, civil conflict, discrimination and violence - is a major issue that has not been adequately addressed.... It leads to the skewing of health spending priorities and the leaching of health budgets, resulting in the neglect of diseases and those communities affected by them; it also means that poor people often decide against life-saving treatment, because they cannot afford the fees charged for health services that should be free. Corruption in the health care sector affects people all over the world.

[Preface]

Corruption might mean the difference between life and death for those in need of urgent care. It is invariably the poor in society who are affected most by corruption because they often cannot afford bribes or private health care.

[Executive Summary]

But the scale of corruption is vast in both rich and poor countries.
Corruption deprives people of access to health care and can lead to the wrong treatments being administered. Corruption in the pharmaceutical chain can prove deadly.... The poor are disproportionately affected by corruption in the health sector, as they are less able to afford small bribes for health services that are supposed to be free, or to pay for private alternatives where corruption has depleted the public services.
Corruption affects health policy and spending priorities.

[The Causes of Corruption in the Health Sector: a Focus on Health Care Systems]

Corruption in the health sector is not exclusive to any kind of health system. It occurs in systems whether they are predominantly public or private, well funded or poorly funded, and technically simple or sophisticated.
No other sector has the specific mix of uncertainty, asymmetric information and large numbers of dispersed actors that characterise the health sector. As a result, susceptibility to corruption is a systemic feature of health systems, and controlling it requires policies that address the sector as a whole.
The forms of abuse may differ depending on how funds are mobilised, managed and paid.
The evidence available on corruption in health care systems with direct public provision [of care] is largely focused on informal, or illegal payments for services in developing or transitional economies. This form of corruption has a particularly negative impact on access to care for the poor when they cannot afford these payments.
When public financing is separated from provision, the character of abuses is likely to change, focusing on ways to divert the flow of payments and reimbursements. One central aspect influencing the type of abuse is the payment mechanism....
When remedies are put in place to remedy these problems, efforts to influence regulators becomes a new potential source of corruption. Powerful interest groups, including suppliers, payers and health providers, may ‘capture’ regulators in order to evade their responsibilities, or further their interests at public expense.
Consumers generally lack the organisation and power to discipline other actors by voicing criticism or choosing different health care providers. In addition, abuses can be hidden behind simple administrative inefficiencies....

I would strongly suggest, as they say in the blogsphere, "read the whole thing."

Post Title → A Perspective from Transparency International's 2006 Global Report on Health Care Corruption

A Window on Human Research Done by Contract Research Organizations

The recent tragic and unprecedented results of a Phase I clinical trial of a monoclonal antibody known only as TGN 1412 provide a new window into the issues surrounding the now heavily commercialized world of drug testing.

The outcome of the TGN 1412 tests have received global attention. Briefly, TGN 1412 is a monoclonal antibody developed by the German company TeGenero AG. An initial test on six volunteers was arranged by Parexel International at their facility at Northwick Park Hospital in London, UK. Six volunteers received apparently the same initial dose of the drug, while two others received placebo. Within hours of receiving the drug, all six complained of fever, and severe pain in their heads. They apparently developed severe swelling of their heads and upper bodies, and then developed multi-organ system failure. All were rapidly admitted to the hospital's intensive care unit.

The particular symptom complex these patients suffered seems to be unprecedented. Previous instances in which everybody who received a new drug rapidly developed life-threatening illnesses are apparently unheard of.

The media have been doing their best to investigate what happened, while the UK Medical and Healthcare Products Regulatory Agency (MHPRA) suspended the trial and is also investigating. Based on newspaper reports available so far, though it is striking what is not known about this drug trial.

We know the company designation for the drug, and its general type (a monoclonal antibody, or protein developed to bind to a specific molecule), but nothing more specific. We do not know what the target molecule was for the antibody, the rationale for its potential therapeutic usefulness, or the results of its in vitro (test-tube) or animal testing. Some of the news reports suggested conflicting results of animal studies. For example, one report in the Times (UK) quoted the girl-friend of one of the trial subjects , "They [the drug company] said there was an oversensitivity in monkeys...." Furthermore, "a dog and some animals had died." But the Times also reported that the Chief Scientific Officer of TeGenero, Thomas Hanke, "refused at a press conference to say whether animals had died during earlier tests. 'There has been no issue on the safety of the drug oanimalsls. This is not relevant.'" In addition, Bloomberg News reported that the CEO of TeGenero, Benedikte Hatz, said "these events were completely unexpected and do not reflect the results we obtained from initial laboratory studies...." Finally, the Independent reported a claim by a lawyer for one of the research subjects that "there is confusion about whether the drug had been testsuccessfullylly and safely on animals before the tests on these volunteers."

We know very little about how the trial was designed. The Times reported "the trial protocol had been agreed with the MHPRA and was carried out 'according to strict ethical and regulatory requirements,' per Parexel. The MHPRA yesterday refused to give precise details, citing commercial confidentiality, and questions to Parexel went unanswered." Some reports suggested that all six volunteers got doses of the drug simultaneously. The Times noted that this practice was not condoned by a textbook it consulted, which instead suggested sequential dosing.

We do not know what sort of oversight or review this trial had received. The Bloomberg report quoted Parexel's claim that it uses "standardized procedures for testing a drug in humans for the first time, based on a protocol approved by ethics committees and regulatory authorities." What ethics committee approved this protocol is unclear.

We have previously posted about how clinical research on human subjects has become more and more an enterprise done by for-profit commercial contract research organizations, (like Parexel), and supervised (in the US, at least) by commercial institutional review boards (IRBs). We posted (go here and see links) about various questionable practices by US based commercial contract research organization SFBC International, which is now under investigation by a US Senate Committee and the US Security and Exchange Commission (SEC). Furthermore, a trial immunosuppressantresant drug carried out by SFBC International's Canadian subsidiary resulted in 20 patients and staff members contracting latent tuberculosis.

Current regulations of clinical research on humans in the US were developed in the days when most research was carried out and directed by faculty members at academic institutions. Now most research is funded by commercial firms, mainly drug and device companies. When such research is carried out in academic institutions, it is performed often under contracts that give considerable control to the commercial research sponsors, rather than to the faculty ostensibly principal investigators. Furthermore, most such research is now carried out by contract research organizations, under contract to the drug or device company, and supervised by commercial IRBs also paid by the commercial sponsor.

Human clinical research has profound health and safety implications both for its subjects, and for any patients who eventually take the drug or use the device under study. Given that, research subjects and future patients deserve complete transparency about the drug or device to be tested, and how the testing will be performed and supervised. Such transparency was obviously not in evidence in the trial of TGN 1412. We need to revise regulation of drug and device testing on human subjects to make it sufficient to protect research subjects and patients in the current era of globalized commercial research.

Post Title → A Window on Human Research Done by Contract Research Organizations

Do EHR's mean the end of the world?

You might think so after reading an op-ed by Spyros Andreopoulos, director emeritus of the Office of Communication and Public Affairs at Stanford University School of Medicine, that appeared in the San Francisco Chronicle.

While its title refers to privacy issues, the op ed takes a somewhat contrarian view towards the EHR in general and the push for healthcare IT at the federal level, e.g., ONCHIT.

My comments are in blue italic.

Technology and Privacy: Keeping snoops out of our health files
Spyros Andreopoulos
Tuesday, March 14, 2006

Despite a strong push by the Bush administration for the majority of Americans to have computerized medical records within 10 years, I am not sure I want the attending privacy risks.

I don't believe the hype dished out by our government that the odds of my survival after a heart attack would improve because the emergency-room computer would let the doctor connect to the Internet, type in a password, and within a few clicks, view my medical history and begin treatment. Those who write this fiction have never seen a real emergency room in operation.

This observation with regard to the value of EHR in an ED setting seems both extremely narrow and probably inaccurate. Instant availability of prior ECG's, cardiac history, past cardiac enzymes, cath results, meds, other medical history, etc. certainly could affect admission and treatment decisions and hence odds for survival. He follows this narrow objection with a list of benefits, somewhat contradicting his original point conceptually:

I cannot deny the positive benefits for public health in having medical records computerized. They make it easier to track diseases and side-effects of prescribed medications. They can prevent redundant invasive procedures, X-rays, MRI and CT scans and blood tests. Universities, where most clinical trials of new drugs take place, have access to data for research. Billing is more efficient, and bad claims are caught more quickly. If an individual is insured or gets sick in another part of the country, that person's medical history is readily available to another doctor or hospital.

"Positive benefits for public health" seems quite contrained considering the value of this information to care of the individual.

But I am wary at the thought of my medical history floating in cyberspace because we have no system to guarantee protection from hackers, insurers and drug-company marketeers.

This is a valid concern. However, such protection is evolving, not non-existent.

I am also concerned because this new development is going ahead without adequate public participation. According to a 2006 survey by Health Industry Insights, a market-research firm, most respondents (70 percent) are unaware of the federal government's initiative to make electronic medical records available.

ONCHIT and the healthcare informatics community needs to get the word out more fully...

Another concern is cost. One estimate places it at $250 billion, to be offset by economic benefits of an estimated $700 billion that critics consider over-inflated. But these savings, spread over a decade, would go to the insurance industry, while the actual costs of implementing the system will accrue to doctors and hospitals. The new computerized system at Lucile Packard Children's Hospital in Palo Alto, for example, soon to go online, will cost $150 million.

Regarding the $150 million EHR implementation figure, rather than abandoning change as this op ed seems to imply, cost reduction is an area for exploration. From my perspective I am concerned that EHR project budgets may be padded and inflated, along with generous consultant engagements and 'fudge factors' for project delays and cost overruns that should be better managed or prevented from occurring in the first place. It's not as if these issues are immutable, new or unknown.

The deployment of the new technology is also expected to create havoc among physicians with small practices who do not have the know-how, the management staff or capacity to re-engineer their practices according to the wishes of government bureaucrats in the same way as large group practices.

Experts doubt the government will succeed without committing tens of billions of dollars. There is no real sign the Bush administration will provide anything even remotely close to that sum. In Britain, the government's adoption of a similar goal is succeeding because it is driven by a single-payer system funded with an extra $10 billion in government contracts and enforced by mandated computerized standards applying to all hospitals and doctors. Approximately 95 percent of the doctors in the United Kingdom now use computers in their practice, as do most doctors in Sweden and European Union nations compared to a measly 20 percent in the United States.

This seems like a bit of gratuitous Bush-bashing. This initiative is not limited to any one administration, and will be ongoing long after this president, and the next, have left the White House. That clinical IT is "succeeding" in the UK seems a strawman argument. Recent publications suggest the UK initiative is far from "success" at this point in time, and part of the problem is the "enforcement and mandated" issue, e.g., "Terminal care", The Economist; 7/23/2005, Vol. 376 Issue 8436, p52:

Convincing Physicians to Use IT-Britain is Struggling: Many observers of physician behavior have been watching to see how Britain would overcome physician hesitancy to use medical information systems. Many have hoped that the enormous Connecting for Health project would solve this barrier and provide learning lessons for others. According to recent publications, only 21% of physicians were enthusiastic about the project, and usage rates were low. A good grounding back to the basics, build it with them and for them, and maybe, just maybe, they will adopt. Terminal Care, The Economist, July 23, 2005

A statement that "95% of the [UK] doctors are now using computers" fails to mention what computers are being used for. A large percentage of the use is administrative at this point in time.

There was a time when medical records were kept on paper in file cabinets of hospitals and doctors' offices. As electronic records gain ground, insurance companies and HMOs require detailed accounts of patient treatments and expenses to stem health costs. Previously, they asked only for basic information on diagnoses.

That this may have been so is not necessarily a good thing. This works both ways. Among other factors, it can encourage overutilization and fraud. I have observed rampant medical fraud in the worker's compensation system as a result of such undetailed reporting and uncontrolled payments.

The chances for misuse are also greater. Employers could use the information to exclude applicants for employment due to medical history, and insurers to refuse insurance to those who are sick or have genetic predisposition to illness. The pharmaceutical industry is organizing conferences to explore how to "mine" information from electronic records for secondary purposes, including selling services and drugs to patients.

In regard to pharma using these systems to "exploit" consumers by "selling services and drugs" as he seems to suggest, the same systems can likely be used to detect postmarketing drug side effects earlier, avoing the next Phen-Fen, as well as missed opportunities for preventive interventions.

Let's not forget hackers and pranksters. Six years ago, a hacker downloaded thousands of confidential files from the University of Washington in Seattle containing patients' names, health conditions and Social Security numbers.

Polls suggest that 70 percent of Americans fear that there could be more sharing of patients' medical information without their knowledge; computerization could increase rather than decrease medical errors; some people would be reluctant to disclose information to doctors because of worries that it will go into their records, and existing federal protection rules will, in time, be relaxed in the name of efficiency.

While these are valid concerns, to state as fact that "existing federal protection rules will, in time, be relaxed in the name of efficiency" is a bit of a leap. It seems far more more likely the rules will be refined and strengthened as errors occur.

Such fears are not without foundation. Last December's issue of Pediatrics reported, for example, that mortality rates for pediatric patients at Children's Hospital of Pittsburgh increased to 6.5 percent after the implementation of a computerized physician order-entry system, intended to prevent medication and patient management errors. While this finding does not mean causality and may have an explanation, it has stirred debate publicly and in cyberspace.

That doesn't mean clinical IT necessarily will increase errors, and it's more likely that well-designed and well-implemented (i.e., clinician-driven as opposed to businessperson driven) clinical IT will not.

In the mid-1990s, Congress passed the Health Insurance Portability and Accountability Act (HIPPA) to protect patients from privacy violations. The regulations are full of loopholes and Congress may need to tighten the law's provisions.

This seems an internal contradiction in the op ed. As I stated above, this is the more likely scenario, rather than loosening federal protections for increased efficiency.

Under HIPPA, health-care providers have the right to process your insurance claims, discuss your case and send data about you to other specialists, respond to requests from public-health authorities, law-enforcement agencies, and your employer if you are injured at work, and send you fundraising materials. While these provisions may appear reasonable, HIPPA also allows health providers to share information with health-care business associates for the purpose of training their personnel. HIPPA gives patients the right to restrict uses of their medical information. Providers or health plans, however, are not obligated to agree to the restrictions if they state so in their privacy notices that patients sign when admitted for treatment. This is why patients must read the fine print carefully before signing.

Dr. David Brailer, appointed by President Bush to coordinate the move to electronic medical records, is a former software company CEO. In his public statements, he acknowledges the mind-boggling complexity of information systems, but with refinements and proper security systems, he believes electronic records can be made to work and be more secure than paper records.

Brailer is also a clinician with a solid knowledge of healthcare quality issues and metrics, as well as medical informatics, not just a former "software company CEO."

If patient information moves successfully from paper to the computer, as its champions hope, the door to privacy abuses will swing wide open.

"The doors to pivacy abuses swinging wide open" as a result of EHR seems a bit hyperbolic.

One suggested solution is to give patients the right to work with the doctors to decide what is included in his or her record. A small step to be sure, but if the law and doctors were to give patients this amount of empowerment and autonomy, the doctor-patient relationship will have come a long way.

Indeed.

In effect, there are arguments on both sides of the EHR issue. I believe this portrayal of EHR is somewhat over the top with a strong tilt towards the "dark side", as often seems the case from those on the "Left Coast" about a number of issues of public import. In EHR, the "light side" needs to be taken into account to avoid premature discouragement or abandonment of the efforts to improve healthcare quality via IT.

-- SS

Post Title → Do EHR's mean the end of the world?