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

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

Deceptive Marketing of Protonix

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

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

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

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

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

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

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

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

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

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

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

Misleading Marketing of Zyvox, Lyrica

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

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

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

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

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

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

Avoiding Impunity as a Topic of Polite Discussion

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

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

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

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

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

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

Pfizer's Multiple Ethical Opfenses

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

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

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

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

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

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

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

Will Impunity Finally Lead to Outrage?

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

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

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

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

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

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

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

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

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

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

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

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

A NY Times editorial opened,

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

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

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

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

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

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

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

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

When Clinical Trials are Meant for Marketing, not Science

The development of the randomized controlled clinical trial (RCT) was one of the major scientific advances in clinical medicine. RCTs provide a major part of the evidence underlying evidence based medicine. RCTs provide a major source of data used by the US Food and Drug Administration, and similar agencies in other countries, to decide whether to approve drugs or devices to manage particular clinical problems. Unfortunately, with the rise of the RCT came a rise in attempts to suppress and manipulate clinical trials by those with vested interests, often in selling the products and services the trials can evaluate.

Many of the examples we have discussed were of attempts at manipulation or suppression of clinical trials originally done to provide evidence for product approval, or even ostensibly to advance clinical science. Yet a relatively new article covering evidence revealed from litigation about the drug gabapentin (Neurontin) originally made by Parke-Davis, first a part of Warner Lambert, now part of Pfizer suggests that many clinical trials may not be done to advance science, or even just to provide data to regulators, but only to market products.

The article is Vedula SS, Goldman PS, Rona IJ, Greene TM, and Dickersin K. Implementation of a publication strategy in the context of reporting biases: a case study based on new documents from the Neurontin litigation. Trials 2012; 13: 136. Link here.

Methods Summary

The article described a case study based on documents revealed in 2008 litigation. The purpose of the study was:

to describe the implementation of a publication strategy for off-label marketing of gabapentin, within the context of reporting biases and spin of Pfizer and Parke-Davis’s clinical trial findings, for four off-label uses: migraine prophylaxis, treatment of bipolar disorders, neuropathic pain, and nociceptive pain.

The study examined documents revealed through the 2008 litigation. It concentrated on documents relating to the marketing of Neurontin for four off-label indications, that is, for four potential reasons to use the drug which had not yet been approved by the US FDA. It focused on documents discussing strategies for marketing for these indications, and then documents about particular company sponsored RCTs done for these indications.

Strategies to Sell Drugs

The documents examined by the investigators showed that Parke-Davis prepared "marketing assessments" for four possible indications for Neurontin. The assessments discussed two possible strategies. The "indication strategy" would be to conduct trials for the purposes of providing data to the FDA in the hope that the FDA would then approve the new indication for the drug. The "marketing strategy" would be, in the words of an internal company memo quoted in the study, to conduct clinical trials and

to disseminate the information as widely as possible through the world’s medical literature

In other words, the publication strategy involved using RCTs first for marketing, rather than scientific or regulatory purposes.

How the Trials were Controlled by Marketers

The publication strategy involved not simply doing trials and publicizing their results, but controlling the messages conveyed by the trials to make sure they primarily supported marketing. This was done by having the company's marketing department control the content of the trial reports.

A Neurontin Publications Subcommittee (NTN PSC) was formed within Pfizer and Parke-Davis to implement a publication plan. Minutes from meetings between the NTN PSC and Medical Action Communications (MAC), a medical writing company, indicate that a list of key messages, guiding the content of published reports related to the trials of gabapentin for off-label indications, was developed based on a branding guide

Thus it appeared to be that marketers, not physicians or scientists were in control of supposedly scholarly research publications appearing in medical journals.

The marketers controlled content by controlling those who wrote it.

A standard operating procedure related to publication of affiliate-driven manuscripts was identified in internal company documents dated October 16, 2002, and it sheds further light on the publication planning process (see Figure 3). (The term affiliate in this context refers to Pfizer’s foreign affiliates, that is, corporations related to Pfizer by either shareholdings or other means of control, including subsidiary, parent, or sibling corporations). According to the internal company documents, 'affiliate-driven manuscripts' were written for Pfizer and Parke-Davis by MAC and sent to the authors for approval. Each article was coordinated by a manuscript team, consisting of representatives from the medical and marketing divisions of the company. The documents also indicate that all affiliate-driven manuscripts should be forwarded to the NTN PSC for review. One of the objectives of manuscripts being reviewed by the NTN PSC was to ‘ensure that they are in-line with current product messages and areas of interest’

Manipulating the Dissemination (and Analysis) of Research Results

Note that the control of publication by marketers describe above involved ghost-writing of articles by medical education and communications companies (MECCs). Later the article explained that these ghost writers were "not appropriately acknowledged" in the resulting published articles.

The Vedula et al study article provided examples of "spin" in the writing of again supposedly scholarly research publications used in fact to support marketing, and controlled if not composed by marketers.

We identified spin in publications related to 8/12 trials included in our analysis.... We classified the following as spin: emphasis in the published report on outcomes that were not specified in the study protocol (Study 879–201) ...; conclusions that did not match study findings described in the internal company research report (Study 945–220) ...; extensive rationale to explain away statistically non-significant (unfavorable to the sponsor) findings (Study 945–209; 945–291; No study number - Gorson) ...; conclusion of treatment effectiveness from an uncontrolled study (Study 945–250) ...; emphasis on statistically significant secondary outcomes despite negative findings for the primary outcome (Study 945–271) ...; and an explicit description of an attempt to spin study findings (as described in internal company emails) (Study 945–306).

Note that while most of these examples of spin involved manipulation of the dissemination of study results, that is, doubtful, biased or fallacious arguments based on apparently unbiased data, they also involved manipulation of the analyses (in italics).

The article also described manipulation of dissemination involving the timing of publication, including delaying publication of an article despite the wishes of the study's investigators because the results were not statistically significant, and hence not favorable for marketing.

Summary

Documents revealed by litigation about Neurontin in 2004 provided insights about how pharmaceutical and presumably other kinds of health care corporations may conduct systematic, deceptive stealth marketing campaigns to promote their products and services (look here). We noted that initial media coverage of documents revealed in the 2008 litigation also suggested the existence of a systematic "publication strategy" to control dissemination of results of particular trials, while suppressing trials whose results could not easily be spun to provide support of marketing objectives (look here).

Now the new paper by Verdula et al fill out our knowledge of this case. The paper suggests that randomized controlled clinical trials may be done not to advance science, or even convince regulators, but primarily to market their sponsors' products. Thus some significant proportion of the clinical research literature, the literature that physicians and other health professionals have relied upon to make evidence-based decisions for their patients, may exist mainly for marketing purposes. Even the most rigorous methods used by clinical epidemiologists to review research are meant to discover problems that arose from human error or the inevitable trade-offs made when research is done in the real world, but not deliberately introduced biases and defects meant to promote vested interests. Thus it is not clear that even the most "evidence-based" medical decisions are based on real scientific evidence rather than the spinning of marketers.

Thus health care professionals, policy makers, researchers, and the interested public need to be even more skeptical about arguments made to promote innovative treatments and other clinical interventions. However, it is not clear that even rigorous skepticism can defend the integrity of evidence based medicine from marketing disguised as clinical research.

Going forward, we must consider erecting an impregnable barrier between clinical research and those whose primary interest is to make money by selling health care goods and services. If we do not do that, we will forever need to worry that we really have no idea what "works in medicine," and whether any particular test, treatment, or program provides benefits that outweigh its harms.

Pfizer's Pforeign Pfiasco

Quelle surprise. Giant international pharmaceutical company Pfizer managed to go for nearly 10 months without announcing a major legal settlement. However, this month, as reported by Bloomberg, it was time for Pfizer to settle again. The basics were:

Pfizer Inc., the world’s biggest drugmaker, agreed to pay $60.2 million to settle foreign bribery cases it brought to U.S. authorities involving alleged payments paid by employees and agents of subsidiaries.

Pfizer entered into two agreements with the Securities and Exchange Commission and the New York-based drugmaker reached a deferred prosecution accord with the Department of Justice, according to filings today in federal court in Washington.

Bribery

This case is worth perusing because of how it documents what the US government called not merely deceptive, but corrupt practices used by Pfizer to sell drugs. The practices were widespread around the world:

The settlements announced today include Pfizer operations in eight countries: Bulgaria, Croatia, Kazakhstan, Russia, Italy, China, the Czech Republic and Serbia. The Wyeth settlement, over its nutrition business, was for China, Indonesia, Saudi Arabia and Pakistan.

The practices involved, not to put too fine a point on it, bribing doctors. Furthermore, as part of the settlement Pfizer apparently admitted to some of the specific practices alleged by the government:

In Bulgaria, local representatives spent $28,000 to invite government doctors on 'incentive trips' to Greece, as a reward for the physicians who were the biggest prescribers of Pfizer’s products, Pfizer admitted according to the Justice Department filing. They also paid $17,000 to send doctors to medical conferences, again in exchange for commitments to prescribe Pfizer drugs.

In Croatia, the unit there had used a consulting agreement with a government doctor to help influence which drugs were allowed to be sold in the country, paying the physician in cash and travel expenses, Pfizer admitted.

Pfizer also admitted to what was called the 'hospital program,' in Russia, where doctors were given a 5 percent kick- back on certain drugs prescribed.

'Pfizer Russia used the Hospital Program to make cash payments to individual government healthcare professionals to corruptly reward past purchases and prescriptions of Pfizer products, and to corruptly induce future purchases and prescriptions,' the Justice Department said in the filing. Pfizer’s Russian unit also used intermediary companies to pay off doctors and government officials, the company admitted.

No Individual Penalties

Despite the shamefulness of these practices, as is now distressingly usual (look here), no individual seems to be obligated to suffer any penalty or negative consequences as a result of this settlement. While the US government alleged criminal behavior, beyond the fines imposed on the company, further prosecution will be deferred:

The Justice Department charged the Pfizer HCP Corp. unit with two criminal counts, conspiracy to violate the Foreign Corrupt Practices Act and a violation of the FCPA’s anti-bribery provisions. Prosecutors agreed to defer prosecution and drop the charges after two years if Pfizer continues to cooperate and take remedial steps.

The article contained a curious statement seemingly asserting that the payments were somehow made independent of any actions by individuals at Pfizer:

The SEC said the payoffs were made 'without the knowledge or approval of officers or employees of Pfizer, but the inaccurate books and records of Pfizer subsidiaries were consolidated in the financial reports of Pfizer.'

So were the payments made by machines acting autonomously? or by ghosts? Maybe this was just a typo. However, note that the de rigeur statement by Pfizer's internal counsel was phrased so as to imply the actions somehow occurred outside of the organization:

'The actions which led to this resolution were disappointing, but the openness and speed with which Pfizer voluntarily disclosed and addressed them reflects our true culture and the real value we place on integrity and meeting commitments,' Amy Schulman, Pfizer’s general counsel, said in an e-mailed statement.

Summary

This latest settlement reaffirms the poor ethical culture now prevalent in major health care organizations throughout the world. It also affirms how deeply unethical the culture has become at some of our largest and most prominent and influential health care organizations. This settlement is only the latest evidence of ethical missteps by Pfizer's leadership.

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

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

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

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

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

Thus, it appears on 10 separate occasions between 2002 and 2012, Pfizer settled allegations of, pleaded guilty to, or was convicted for actions that represented seriously unethical behavior. Note that these included a conviction that found the company to be a racketeer-influenced corrupt organization.

Yet the company has not failed or been restructured, and none of its leaders has ever faced any negative consequences. In fact, last year its CEO made over $18 million, up from over $6 million the year before (see this post).

So obviously it is not just that one company's culture has become seriously corrupt. We seem to live in such a corrupt nation, and maybe such a corrupt global society that such corrupt cultures thrive in our major corporations and organizations. Despite stories like this in health care, just like in finance despite the global financial collapse, as Charles Ferguson said at the Oscar awards last year, " not a single ... executive has gone to jail, and that's wrong."

Unless we hold leaders of health care organizations accountable for bad behavior and corruption, expect bad behavior and corruption to get worse. Until we have political leaders with the courage to stand up for honesty and the law, expect continued dishonesty and the law to continue to be trampled by the rich and powerful.

There They Go Again - Pfizer CEO Compensation Triples, Ordinary Employees' Severance Cut

In mid-March, Pfizer, which used to proclaim itself to be the world's largest research-based pharmaceutical company, announced in a regulatory filing a huge increase in total compensation for its relatively new CEO. Per the AP, via the Wall Street Journal:

Pfizer Inc. nearly tripled CEO Ian Read's compensation in 2011, his first full year as top executive of the world's largest drugmaker, which has been cutting costs and making other moves to compensate for generic competition hurting sales of top medicines.

Read, 58, received compensation worth a total of $18.12 million in 2011, up from $6.42 million in 2010, according to an Associated Press analysis of a regulatory filing Thursday by the maker of Viagra and cholesterol fighter Lipitor.

The total includes a salary of $1.7 million, up 42 percent, stock awards and option awards totaling about $12.5 million, a $3.5 million incentive award and about $319,000 in other compensation. The last category ranges from use of company aircraft and a car and driver to contributions to Read's retirement savings.

Contrast: Decreasing Research and Development Spending, Facilities, Employment

Mr Read seems to have been rewarded for decreasing the scope of research and cutting research spending:

Over the past year, Read has narrowed the focus of Pfizer's huge research operations to diseases with big sales potential or few existing treatment options, trimming the research budget significantly in the process.

Reuters noted that involved sweeping layoffs and the closure of multiple research facilities:

Pfizer said it had improved its performance during 2011 by reducing research spending by nearly $1 billion. That feat came, however, at the expense of thousands of Pfizer researchers, whose jobs are being eliminated along with numerous laboratories in an effort to ultimately slash Pfizer research spending by up to $2 billion a year.

Contrast: Long-Term Shareholder Value

Read traded research capacity, and presumably the long-term value of the company, for an immediate boost in the stock price,

Pfizer, under Read, has narrowed its focus to five main therapeutic areas and is considering either selling or spinning off its nutritional products and animal health units.

Proceeds from the transactions will likely be used to buy back company shares, Read has said, delighting investors and helping boost company shares almost 27 percent in the past twelve months.

On the other hand, a quick look at Google Finance reveals that while the stock price is higher than it has been since 2009, it is roughly half of what it was from the late 1990s until 2004.

On its web-site, the company still proclaims, however,

we at Pfizer are committed to applying science and our global resources to improve health and well-being at every stage of life.

Contrast: Treatment of Other Employees

Note that Mr Read is an employee of Pfizer, albeit its most highly paid employee by a huge margin.

Other employees are not being treated so well. The massive increase in CEO compensation should also be contrasted with the company's new severance policies, as explained in an article from last week in The (New London, CT) Day,

Pfizer Inc. personnel being laid off at the company's Groton laboratories after May 14 will receive less money than previous waves of departing workers have received.

Pfizer, at the tail end of a planned 1,100 layoffs locally, said in a memo released last week that in the future people leaving the company will receive eight weeks of severance in addition to two weeks for every year served with the company. The pharmaceutical giant had previously offered at least 12 weeks of severance to employees, and before acquiring Wyeth Pharmaceuticals in 2009 had handed out three weeks of pay for every year served.

Summary

While Pfizer recently has made an amazing series of ethical missteps (look here), a decreasing drug pipeline, lost half of its stock price since its peak, and decreased its ability to develop new products, it has quickly returned to its previous ways of making its top hired executives very rich. (No matter, by the way, that Mr Read ought to bear some responsibility for the company's previous problems, since as the AP pointed out, he "has spent his entire career at the New York-based drugmaker, became Pfizer's CEO in December 2010 after running its worldwide pharmaceutical business since 2006.")

This is just the latest of many, many examples of how top hired executives of health care organizations are not like you and me. Whatever is happening to their organization, whatever its faithfulness to its mission, its performance, its value, its treatment of employees in general, many CEOs just get to take more and more off the top. Given this perverse incentive structure, is there really any question why most health care organizations do not always seem to put patients' or the public's health, or health care professionals' values, or their employees' welfare, or even their owners' financial interests (when they are publicly held for-profit corporations) first? Or why health care costs steadily increase while quality and access decrease?
Repeat after me - we will never solve the problem of health care dysfunction until we assure that the leaders of health care organizations are well-informed about the context of health care, uphold health care professionals' values, put patients' and the public's health first, are accountable and transparent, and receive reasonable incentives based on all the above.

What the Pfizer (V)? - Few Consequences of a Long History of Bad Behavior

The drugmaker Pfizer Inc. has agreed to pay the government $14.5 million to settle charges it illegally marketed its drug for a condition called overactive bladder.

The settlement disclosed Friday resolves the last of 10 whistleblower lawsuits, dating back to 2003, that claimed Pfizer marketed a number of its prescription medicines for unapproved uses. Pfizer agreed to pay $2.3 billion in September 2009 to settle both criminal charges and civil claims in many of those cases. The rest were dismissed.

In the final case, Pfizer was accused of marketing overactive bladder drug Detrol for men with enlarged prostates and related conditions including bladder obstruction. The drug wasn’t approved for those uses.

As usual,

New York-based Pfizer, the world’s biggest drugmaker by revenue, said in a statement it denies all allegations of wrongdoing and that the 'settlement allows Pfizer to avoid the cost and distraction of litigation.'

Maybe the company will stay out of trouble for a little while. Its statement noted,

the company has put 'numerous controls and oversight mechanisms in place to ensure compliance with state and federal laws,' including a corporate compliance committee.

A History of Misbehavior

Based on recent history, it seems unlikely that the company will be able to stay out of trouble. This settlement is just the latest chapter in a long story of misbehavior.

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

And going back a little further, from the Philadelphia Inquirer,

Repeat Offender: Previous Pfizer Settlements

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

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

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

By my count, Pfizer made nine separate settlements from 2002 to 2011. Some other bad behavior by Pfizer that did not necessarily result in legal action can be found under our label "Pfizer."

Summary

Looking at a summary of this bad behavior, it seems remarkable that no individual in a leadership position at Pfizer has suffered any obvious negative consequence of these events, that Pfizer's whole leadership has not been forced to reorganize, maybe even that the company is still in business.

Naively, one might ask why trust a company with such a track record? Why is there not so much mistrust of this organization that it could no longer continue business as usual?

Yet, while as noted in previous posts, Pfizer has not had the best financial results, and has gone through several CEOs, the company has made no fundamental changes in its leadership or governance despite this sorry history.

Perhaps one reason for the lack of response to these events is that they have not previously been presented together so that their pattern is evident, as we did above on Health Care Renewal. It is true that in 2009, then Pfizer CEO Jeffrey Kindler acknowledged the company has had ethical lapses, and called on government and industry leaders in general to face up to ethical breaches or else the people would find a way to force changes upon them (see post here.) However, not even then did Kindler detail Pfizer's own troubled history, and he did not last much longer as CEO.

I have not found any other publication that puts together the list of bad behaviors that appears above. Most publications in business sections of the news media focus on only the most recent lapses. The medical, and health care/ services/ policy research literature generally ignores these issues entirely.

So here is the tragedy of the anechoic effect. Because it is still simply not done to talk about the poor stewardship, bad leadership, and ethical misadventures of big health care organizations, the dysfunction just continues.

As long as we fear to even talk about what has gone wrong with the leadership and governance of health care, how are we ever going to make any real improvements?

Enabled by the Revolving Door, Corporatistic US Trade Policy Seems to Put US Drug Companies Ahead of Global Public Health

We just discussed how leaders of big health care corporations with histories of ethical and legal missteps want to export our supposedly "wonderful technology, wonderful approaches" to the rest of the world. A story on the Huffington Post showed how big health care corporations, partnering with the US government, have already been doing that with not very pretty results. The article discussed two cases, connected by a single person who transited the revolving door from government to the pharmaceutical industry and then back to government.

The US Dispute with Brazil, on Behalf of Merck and Pfizer, About HIV Drugs

When [William] Daley was commerce secretary in the later years of the Clinton administration, Brazil rankled U.S. drug companies by opting to provide its citizens with a generic version of another HIV drug. Like Thailand, Brazil declared a public health emergency in an effort to lower the cost of treating roughly a half-million HIV infections. The U.S. government responded by sending Daley to Brazil with executives from U.S. pharmaceutical giants Merck & Co. and Pfizer to try to pressure the Brazilian government into reversing its decision.

Thus the US government appeared to be putting the revenues of US corporations ahead of the public health, at least in Brazil.
Daley soon made the transition to the private sector:

In a speech at Johns Hopkins University before leaving for Brazil, Daley encouraged students to enter the revolving door between big business and public policy-making. 'Let me say this: As one of the only members of the president's Cabinet to come from business, it's good when you mix both government and business in your careers,' he said. 'It makes better public servants, and it makes better businesspeople.'

It has certainly been good for Daley's career. His effort to twist arms in Brazil failed, but drug companies apparently took note. It was after leaving the Clinton administration that Daley was hired by Abbott, where he raked in more than $1.3 million as a board member from 2004 to 2010, according to Securities and Exchange Commission filings. Over the same period, he served on Boeing's board and was a top lobbyist for JPMorgan Chase.

Abbot's Dispute, Supported by the US Government, with Thailand About Kaletra

Soon Abbot was involved in a similar dispute.

The background is:

[HIV drug] Kaletra costs more than $10,000 a year for a patient living in the United States, a price that is reflective of the highly protective American patent system. The U.S. is the only country that grants long-term monopolies on life-saving medicine without regulating the price of monopolized drugs.

In addition

In countries that negotiate with companies on drug prices, the cost of medicine is often far lower. But though American pharmaceutical companies do supply drugs to developing nations at rates below those charged in the U.S., those discounted prices are still too high for many poor or hard-hit nations to afford.

'In many developing countries, it's a death sentence,'said Nobel Prize-winning economist Joseph Stiglitz, referring to high drug prices.

The core of the dispute:

In 2007 negotiations with the Thai government, Abbott Labs wouldn't budge below a price of $2,200 per person, per year for Kaletra. At the time, Thailand was classified as a 'lower-middle income' country by the World Bank -- the second lowest of four categories. With more than a half-million citizens living with HIV, Thailand considered that price beyond its budgetary capacity. So it declared a public health emergency and began importing a vastly cheaper generic version of Kaletra from India.

And then, by international trade standards, all hell broke loose.

'When countries declare the health emergency, they face a huge backlash, particularly from the USTR [US Trade Representative] and the drug companies,'said Tim Boyd, policy research coordinator with the AIDS Healthcare Foundation, a U.S. nonprofit dedicated to eradicating HIV.

Abbott responded by withdrawing pending applications to register drugs in Thailand, cutting its citizens off from other medications. The move was unprecedented: Never before had an American drug company attempted to punish a country during drug price negotiations by cutting off the supply of other medicines.

At the time, Brook Baker, a law professor at Northeastern University and a member of the board at the Health Global Access Project, called the move a 'ruly appalling example of corporate hubris'that 'irectly violates any conceivable norm of corporate responsibility.'

At that time, the US government went along with Abbott:

As for the USTR, it seemed to support the company, placing Thailand on its 'Priority Watch List 'of nations that do not respect U.S. intellectual property rights. 'In late 2006 and early 2007, there were further indications of a weakening of respect for patents, as the Thai Government announced decisions to issue compulsory licenses for several patented pharmaceutical products,' wrote the agency in its report announcing that Thailand had been added to the priority list.

Although the USTR blacklist is little known domestically, it is a major economic indicator abroad and can affect a country's ability to import everything from software to DVDs to automobiles. Thailand's new status as an international rogue sparked concern among the country's economic policy officials and corporate leaders. And 35 members of Congress wrote to the USTR to protest Thailand's blacklisting, noting, 'The move is being interpreted in the public health community as a warning and a threat to other countries.'

Note that:

Abbott Labs declined to detail Daley's involvement in the Thailand episode, but as a member of the board, he should have been well informed about the strategy.

US Government Pressure to Protect Drug Companies' Patents

William Daley has transitioned the revolving door again in the other direction:

As commerce secretary under Bill Clinton, William Daley worked with U.S. pharmaceutical giants to curb the use of cheaper generic drugs abroad. As a board member for Abbott Laboratories, he had a front-row seat on a brutal clash between a major drug company and a developing nation over access to life-saving medication. And as White House chief of staff today, Daley has President Barack Obama’s ear.

In his new government job,

Add up Daley’s power and experience, and experts who follow public health policy suspect his influence in the U.S. stance in negotiations over a major international trade deal -- a stance with hugely profitable implications for giant American drugmakers.

The United States is in talks with eight other Pacific nations to establish the Trans-Pacific Partnership, which the administration hopes will serve as a template for other trade pacts. According to leaked documents from the negotiations, the Obama administration is using the deal to push hard-line intellectual property standards that could drive up medicine prices overseas, boosting the bottom line for U.S. drugmakers like Abbott Labs at the expense of public health.

Public health advocates are worried. 'If the point of the trade policy is not just to protect the interests of our companies, but the public health benefit and burden of research, then [the United States] is doing this all wrong,' said James Love, director of Knowledge Ecology International, a nonprofit that focuses on how patent laws affect the poor.

A White House spokesman said only that the negotiations -- which are being conducted behind closed doors with input from corporate lobbyists -- are being 'ably led' by the United States Trade Representative (USTR) and that Daley is 'not directing or participating in those negotiations.'

Note that the USTR leadership includes other travelers through the revolving door:

Daley's personal history with drug access is not unique among top-tier government officials with trade responsibilities. McCoy lobbied on intellectual property issues at the influential D.C. law firm Covington & Burling before moving to the USTR in 2006. His top deputy, Kira Alvarez, was a lobbyist for drugmaker Eli Lilly before joining the agency.

Summary

Per Zach Carter, the author of the Huffington Post article:

Daley, who previously lobbied for JPMorgan Chase, is a prominent examplar of a bipartisan phenomenon in American government in which corporate insiders, and the profit-driven perspective of the boardroom, have come to dominate formal and informal debate over public policy.

Another way to describe this is corporatism. The corporatism in this case is partly enabled by the continuation of the revolving door, the free transit of individuals from leadership positions in top corporations and in government. The government and big corporations have teamed up to produce solutions that may seem beneficial to the people making the decisions, and may benefit their long term career strategies, but may not be good for the US public, for patients' and the public's health in this case, and for the ability of the country to conduct foreign policy based on some ethical and moral principles.

By the way, note that combined with other cases we have discussed, this shows that the revolving door pheonomenon, and other aspects corporatism affecting health care are not linked with any one political party.

So,

There is no evidence that any of these players, including Daley, have done anything illegal or explicitly corrupt during the Trans-Pacific trade negotiations. But public health doesn’t seem to be their first priority.

'The real concern is that the U.S. is using its international power and prestige to force poor countries to enforce our intellectual property standards, and the result of that is that access to medicine is denied and people are dying,' said Joseph Stiglitz.

Until we dispel the fog of corporatism that has spread over the government that was once supposed to be of the people, by the people, and for the people, expect no real health care reform, and expect continuing rising costs, declining access, and worsening patient care. Obviously, true health care reform would start with the government and its officials putting patients' and the public's health first, way ahead of the financial comfort of corporate leaders.
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What the Pfizer (IV)? - One Board to Rule Them All

The recent in-depth investigation by Fortune reporters of 10 years of dysfunctional leadership at Pfizer, the "world's largest research-based pharmaceutical company," raises many issues about leadership and governance in health care (see our post here). We then discussed lack of transparency in Pfizer's communication about management performance here, and how bad management was rewarded with outsize compensation here. To continue what has become a lengthy series, let us now discuss the board of directors who were responsible for "stewardship" or governance of what turned out to be a very troubled company.

Let us focus on the membership of the boards that appointed the two CEOs Fortune described as failed.

Henry A "Hank" McKinnell - 2001

In 2001, the board appointed Henry A "Hank" McKinnell CEO.    Mr McKinell was forced to retire in 2006. The Fortune article described Mr McKinnell as a "desperate CEO" by 2002 because he could find no way to replenish the company's fading drug pipeline; who then became an absent CEO who "left a power vacuum" and then triggered internal political warfare by setting up a "bitter contest" over succession planning.

In 2001, the board is as listed below. (I include their current positions, any former positions as chairman, CEO, president or the equivalence, and current leadership positions in health care or finance.)  -

- Michael S Brown -

Distinguished Chair in Biomedical Sciences, Texas Southwestern Medical Center... Director of Regeneron Pharmaceuticals

- M Anthony Burns -

Chair of the Board, former CEO of Ryder System Inc ... Director of JP Morgan Chase and Co... Trustee of the University of Miami

- Robert N Burt -

Chairman of the Board and CEO of FMC Corporation... Director of the Rehabilitation Institute of Chicago and Evanston Hospital Corp

- W Don Cornwell -

Chairman of the Board and CEO of Granite Broadcasting Corporation... Director of CVS Corporation

- William H Gray III -

President and CEO of the College Fund/UNCF...   Director of JP Morgan and Co... Trustee of the University of Miami

- Constance J Horner -

Guest Scholar at the Brooking Institution... Director of the Prudential Insurance Company of America

- William R Howell -

Chairman Emeritus and former CEO of JC Penney Company Inc...

- Stanley O Ikenberry -

President of the American Council on Education... Former President of the University of Illinois... President of the Board of Overseers of Teachers' Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF)

- Harry P Kamen -

Former Chairman of the Board and CEO of Metropolitan Life Insurance Company... Director of Banco Santander Central Hispano SA, BDirect Capital ... Metropolitan Life Insurance Company

- George A Lorch -

Chairman Emeritus and Former CEO of Armstrong Holdings Inc...

- Alex J Mandl -

Chairman of the Board and CEO of Teligent

- Henry A McKinnell -

CEO of Pfizer... Director of Moody's Corporation

- Dana G Mead -

Retired Chairman and CEO of Tenneco Inc... Director of Zurich Financial Services

- John F Niblack -

President of Pfizer Global Research and Development

- Franklin D Raines -

Chairman and CEO of Fannie Mae...

- Ruth Simmons -

President of Brown University... Director of Goldman Sachs Group Inc, Metropolitan Life Insurance

- Michael I Sovern -

Chairman of the Board of Sotheby's Holdings Inc...  President Emeritus of Columbia University

- Jean-Paul Valles -

Chairman and Former CEO of Minerals Technology Inc

- William C Steer Jr -

Former CEO of Pfizer... Director of Metropolitan Life Insurance Company... Director of New York University Medical Center.... Member of the Board of Overseers of Sloan-Kettering Cancer Center

The box score is... Of 19 directors, 17 were current or former chairpeople or CEO/ Presidents of large organizations.

Eight had leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities, or other influential non-profit health care organizations. 1 had a leadership position at a potentially competing pharmaceutical company. 1 had a leadership position at a pharmacy corporation.

Furthermore, 10 had leadership positions in financial services corporations, including some that were implicated in the global financial collapse, and/or required massive federal bail-outs to avoid collapse.

Jeffrey Kindler 2006

In 2006, the board appointed Jeffrey Kindler CEO. Mr Kindler was forced to resign in 2010. The Fortune article also described Mr Kindler as "suddenly desperate" after two failures of drugs in development; someone who "just couldn't make up his mind," about acquisitions and spin-offs; "anguished" about research, leading to a "messy" overhaul; and putting "destructive" trust in a subordinate with previously described problems with "character, integrity and divisiveness" leading to loss of the loyalty of the executive team.

The board in 2006 appears below, with information formatted as above. Note that all were members in 2001, although some members from 2001 were no longer there.

- Michael S Brown -

Distinguished Chair in Biomedical Sciences at University of Texas Southwestern Medical Center at Dallas... Director of Regeneron Pharmaceuticals.

- M Anthony Burns -

Chairman and CEO Emeritus of Ryder System Inc.... Life trustee of the University of Miami

- Robert N Burt -

Retired Chairman and CEO of FMC Corporation...

- W Don Cornwell -

Chairman of the Board and CEO of Granite Broadcasting Corporation.... Director of CVS Corporation.

- William H Gray III -

Chairman of the Amani Group... Director of JP Morgan Chase and Co, Prudential Financial Inc

- Constance J Horner -

Former Guest Scholar at the Brookings Institute...  Director of Prudential Financial Inc

- William R Howell -

Chairman and CEO Emeritus of JC Penney Company Inc... Director of Deutsche Bank Trust Corporation and Deutsch Bank Trust Company Americas.

- Stanley O Ikenberry -

President Emeritus University of Illinois... President, Board of Overseers TIAA-CREF

- George A Lorch -

Chairman and CEO Emeritus of Armstrong Holdings Inc.... Director of HSBC Finance Co and HSBC North America Holding Company.

- Henry A McKinnell -

CEO of Pfizer...   Director of Moody's Corporation.

- Dana G Mead -

Chairman of Massachusetts Institute of Technology Corporation. Former Chairman and CEO of Tenneco Inc... Director of Zurich Financial Services.

- Ruth J Simmons -

President of Brown University... Director of Goldman Sachs Group Inc.

- William C Steere Jr -

Chairman and CEO Emeritus of Pfizer... Director of Metlife Inc and Health Management Associates... Director of New York University Medical Center... Member of the Board of Overseers of Memorial Sloan-Kettering Cancer Center.

The new box score is similar to the old one, as expected, since none of the directors in 2006 was new since 2001. Of 13 directors, 11 were current or former chairpeople or CEO/ Presidents of large organizations.

Five had leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities, or other influential non-profit health care organizations. 1 had a leadership position at a potentially competing pharmaceutical company. 1 had a leadership position at a pharmacy corporation. 1 had a leadership position at a for-profit hospital operating company.

Furthermore, 9 had leadership positions in financial services corporations, including some that were implicated in the global financial collapse, and/or required massive federal bail-outs to avoid collapse.

Summary

The board that acquiesced to huge compensation for very dysfunctional leadership arguably provided dubious "stewardship" of the company and the interests of its stockholders. The composition of the board suggests some reason for this. The board itself was mainly composed of current and former CEOs, and hence may have felt more in common with the executives whom it was supposed to supervise than the stockholders. Many board members had conflicts of interests, also leading organizations that were supposed to be dealing at least at arms length with Pfizer. Many of the board members were likely influenced by the corporate culture of the financial services industry, since they were in leadership roles there as well. That culture, which let unaccountable, hugely remunerated executives gamble with other peoples' money, personally benefit when the gambles went well, and unload their losses on others, including tax-payers when their gambles failed, seems to have infected health care.

We have often discussed how conflicted, overpaid, and/or unaccountable leadership can damage non-profit health care organizations, like hospitals and academic medical institutions. I would suggest it can also damage for-profit health care corporations, sapping their ability to create new and useful products, and undercutting shareholders.

I submit that all health care organizations would benefit from leadership and stewardship that cares more about patients' and the public's health, and the values of health care professionals than it does about the welfare of CEOs; that is accountable for and receives incentives proportionate to its effect on health and health care; and that is free from conflicts of interest and corruption. True health care reform would reform health care leadership and governance.

Smart ALEC's Strange Bedfellows

A number of articles in the Nation, plus posts by some of our blogging colleagues discussed the American Legislative Exchange Council (ALEC) and its role in policy, including health policy advocacy. The lead article, "ALEC Exposed," in the Nation, characterized ALEC as:

a critical arm of the right-wing network of policy shops that, with infusions of corporate cash, has evolved to shape American politics. Inspired by Milton Friedman’s call for conservatives to 'develop alternatives to existing policies [and] keep them alive and available,' ALEC’s model legislation reflects long-term goals: downsizing government, removing regulations on corporations and making it harder to hold the economically and politically powerful to account. Corporate donors retain veto power over the language, which is developed by the secretive task forces. The task forces cover issues from education to health policy.

ALEC and Health Care Reform
Wendell Potter contributed an article about ALEC's position on health care reform. First,

ALEC crafted the Freedom of Choice in Health Care Act, which, despite its Orwellian name, was written to deny the citizens of any state that passed it the freedom to set up such a system. By declaring that Congressional attempts to regulate health insurance at the federal level would be unconstitutional, it would effectively ban not only a federal single-payer proposal but also a federally created health insurance exchange and a federally operated public insurance option.

ALEC

adopted a strategy to shape rather than stop reform. Its top five goals became:

§ Keeping single-payer proposals off the table;

§ Ensuring that the final bill contain a clause requiring all Americans not eligible for an existing federal program to buy coverage from a private insurance company; [note that thus the "mandate" that pseudo-conservative groups like the Tea Party hate seems to have been pushed by big commercial insurance firms, and by some of the Tea Party's backers, not by the "big government" the Tea Party also loves to hate]

§ Preventing the new law from establishing a government-run plan (the 'public option') that would compete with private insurers;

§ Making sure that the reform law is implemented primarily at the state level, to keep the federal government from assuming any significant new oversight of private insurers’ business practices; and

§ Keeping any new regulations and consumer protections to a minimum.

Insurers achieved their first four goals, with ALEC playing a key role in a well-coordinated effort to keep the most progressive proposals from being enacted at the state or federal level.

Corporate Funders and Influencers
The articles in the Nation suggest that ALEC's health policy advocacy is shaped only by commercial health care insurance. However, it appears that ALEC is supported by a much broader spectrum of health care corporations and other corporations whose products affect health care. It's "Private Enterprise Board" includes Mrs Sandra Oliver, First Vice Chairman, Bayer Corp; Mr John Del Giorno, Second Vice Chairman, GlaxoSmithKline; Mr David Powers, Treasurer, Reynolds American; and Board Members Mr Don Bohn, Johnson and Johnson, Mr Jeffrey Bond, PhRMA, and Mr Michael Hubert, Pfizer.

A PRWatch special report on its funding noted:

98% of ALEC's funding comes from corporations like Exxon Mobil, corporate 'foundations' like the Charles G. Koch Charitable Foundation, or trade associations like the pharmaceutical industry's PhRMA and sources other than 'legislative dues.'

In more detail,

Other current ALEC corporate leaders have given an undisclosed sum to ALEC this year and before.

These companies include: CenterPoint 360 (a firm that helps companies 'manage legislation'), Altria (formerly Phillip Morris tobacco), the American Bail Coalition (the trade group for for-profit bail bonds), AT&T, Bayer (aspirin), Coca-Cola, Diageo (Crown Royal and other liquor), Energy Future Holdings (Texas electricity), ExxonMobil, GlaxoSmithKline (Tums and other brands), Intuit (Quickbooks), Johnson & Johnson (lotion), Koch Industries (Georgia Pacific paper products and other brands), Kraft Food (Macaroni and Cheese dinners), Peabody Energy (the largest private coal company in the world), Pfizer (Viagra), PhRMA (the pharmaceutical trade group), Reed Elsevier (Lexis/Nexis legal research), Reynolds American (tobacco), Salt River Project (energy), State Farm Insurance, United Parcel Service, and Wal-Mart (world's largest retailer).

So ALEC supporters include some very strange bed fellows.

Commercial Insurance in Bed with Pharma
ALEC has championed health care positions that seem designed to favor commercial health insurance. However, it is supported by many corporations with which commercial health insurance ostensibly negotiates at arms length, and whose prices commercial health insurance ostensibly wants to lower. These include pharmaceutical companies, Bayer, GlaxoSmithKline, and Pfizer, and pharmaceutical/ biotechnology/ device conglomerate Johnson and Johnson, all represented by PhRMA.

It is very curious, to say the least, that such companies are helping to fund a set of policy objectives all designed to further the interests of commercial insurance companies as listed above. Perhaps the leaders of drug companies think that commercial insurers are likely to be easier negotiators than would be some future hypothetical "public option," (government run insurance company). Perhaps the leaders of commercial insurance companies realize that they can more plausibly raise their administrative costs, and the amounts they pay to top executives, when overall health care costs, fueled by pharmaceutical and device prices, are rising.

A UK Company in Bed with American State Legislators

ALEC is supposed to be directed at American state legislatures, and be a membership organization for American state legislators. It literally includes a graphic of a waving American flag on its home page. However, it is supported by at least one foreign (UK) pharmaceutical company, GlaxoSmithKline.

It is very curious that a British company seems to be seeking to influence the US state legislative process. The appropriateness, and the legality of a British company seeking to influence American state legislatures I leave to be judged by others.

Pharmaceutical Companies (Including Those that Make Smoking Cessation Products) in Bed with Tobacco Companies

ALEC is supported by pharmaceutical companies that all promise to improve health care. These particularly include those that make or sell products that are designed to improve health by aiding smoking cessation, (GlaxoSmithKline, Johnson and Johnson, and Pfizer). However,by their side stand two tobacco companies, Reynolds America and Altria, whose products the pharmaceutical companies' products are designed to counter.

It is very, very curious that smoking cessation product manufacturers would team up with tobacco companies. Perhaps cynics among the leadership of the drug companies realize that the market for smoking cessation products increases with tobacco sales. Perhaps cynics among the leadership of tobacco companies think that the knowledge that there are treatments, albeit not very effective ones, to aid in smoking cessation may encourage people to start or continue smoking (an interesting but rarely discussed example of the "moral hazard" that free market economists love to otherwise discuss).

Summary

So in my humble opinion, the strange bedfellows among health care related corporations funding ALEC suggest 1) how little the health care system functions like anything resembling an ideal free market; and 2) how top organizational leaders may have feel they have more in common with each other than they do with their more lowly employees, customers, clients, and the public at large.

True health care reform would require decreasing the size and power of large health care organizations, and ensuring that their leaders put their mission, and their patients' and the public's health ahead of their personal enrichment.

Hat tip to Naomi Freundlich's post on the Health Beat blog.