Cardinal Health Settles, Novartis Settles

And the march of settlements continues....

As reported by the Tulsa (Oklahoma) World,

A company that provides hospital pharmacy management services in Tulsa has agreed to pay $1 million in civil penalties for failing to account for large amounts of missing prescription drugs, the U.S. Attorney's Office in Tulsa announced Friday.

Cardinal Health Pharmacy Services agreed to settle allegations with the federal prosecutors' office, which alleged that the company's two Tulsa pharmacies were negligent and violated several provisions of the Controlled Substances Act.

An audit showed that nearly 400,000 dosage units of hydrocodone, a painkiller, and 234,000 units of alprazolam, an anti-anxiety drug, were unaccounted for at the Hillcrest Medical Center pharmacy from October 2005 through June 2007, according to a news release.

The investigation also revealed that more than 30,000 doses of drugs at the Oklahoma State University Medical Center pharmacy were unaccounted for between April 2007 and July 2008.

Meanwhile, as reported by Associated Press (via Nj.com),

Federal prosecutors say a Princeton-based pharmaceutical company has agreed to pay $3.5 million to settle allegations that it claimed its heart drug was eligible for Medicaid reimbursement.

The U.S. attorney's office in Boston said Monday that Eon Labs Inc., a subsidiary of Swiss company Novartis AG, submitted false reports to the government between April 1999 and September 2008 that misrepresented Nitroglycerin SR's regulatory status and failed to advise that the drug did not qualify for Medicaid coverage.

Prosecutors say Eon Labs did so even after the Food and Drug Administration determined that there was a lack of evidence that Nitroglycerin SR was effective.

Note that we most recently discussed a settlement by Novartis last month (January, 2010). 

The march of settlements continues. To repeat, seemingly ad infinitum, these are just the latest in a now long parade of settlements that serve as reminders of poor behavior by myriad health care organizations. As we have previously noted, these settlements seem to have little deterrent effect on future bad behavior. (Note that many large health care organizations have settled or plead guilty in several major cases since we started commenting on such settlements.)  Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts will suffer any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior. Until the people who approve, direct, and perform unethical or illegal acts pay some penalties, expect such acts to continue. I again suggest that to truly reform health care, we need rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health.

Post Title → Cardinal Health Settles, Novartis Settles

Conflicts of Interest and Jackson Memorial Hospital's Pharmacy Contract

The latest in the hit-parade of hospital management shenanigans, highlighting issues of conflict of interest, is this story in the Miami Herald.
The newspaper's investigation has uncovered a story of dubious management at Jackson Memorial Hospital, a major University of Miami teaching hospital.
In summary, after hospital President Ira Clark had announced his retirement in 2002, in 2003, the hospital's Fiscal Affairs Committee, chaired by Andres Murai Jr, hired Alson L. Cook as Vice President of Logistics, at a salary of $160,000. Cook advocated giving Cardinal Health a five-year, no-bid contract to manage Jackson Memorial's pharmacy, and to control its drug purchasing, worth $85 million a year.
Murai, it turns out, also is President and CEO of Berna Products Corp, a subsidiary of Acambis plc, which sells a typhoid vaccine to Cardinal Health.
The contract between Jackson Memorial and Cardinal in retrospect also had a significant built-in conflict of interest. "One branch of Cardinal was telling Jackson how much to pay for drugs - purchased from another branch of Cardinal," according to the Herald.
Cardinal's staff at Jackson Memorial included project manager Kevin Reece and pharmacy director Marc Calhoun.
In early 2004, G. William Tomecko Jr., the hospital's Associate Pharmacy Director, noticed billing errors in Cardinal's records. He wrote Calhoun, "This will cause serious consternation at the CFO level. We were supposed to reduce costs by $4 million." Tomecko said Calhoun resisted his enquiries, and "took all the documents from me and requested that I not continue to determine the concerns." Calhoun has since left Cardinal.
Tomecko also found invoices from Reece from a strip club, liquor stores, and fishing boat campgrounds. Reece has since been charged with fraud.
Cook, who had gone fishing with Reece, and approved his bills, resigned and moved out of state.
An outside audit showed that the contract with Cardinal, which was supposed to save $4 million a year, actually cost the hospital $15.5 million. The audit identified $3.1 million in incorrect billing, and $5.9 million in patient under-billing.
A million here, a million there, and after a while these add up to serious costs for the health care system....

Post Title → Conflicts of Interest and Jackson Memorial Hospital's Pharmacy Contract