Logical Fallacies in Defense of Conflicts of Interest Employed by a Leader of Academic Medicine

We have repeatedly discussed the adverse effects of conflicts of interest on health care.  Recently, I argued that the most pernicious are conflicts of interest created as an incentive for trusted health care leaders, usually respected health care professionals or academics, to promote the vested interests of those who pay them, in the guise of the leaders' professional roles.  In this capacity, the leaders are often dubbed "key opinion leaders" by those who employ them, but may be regarded as mere "salesmen" by the corporate personnel who recruit them. (See posts here and here)  These relationships may be hidden, often behind confidentiality agreements, unless revealed by litigation.  Documents revealed by discovery in legal actions showed how companies planned other organized stealth marketing efforts for drugs that included activities by KOLs (e.g., see post here about marketing of Lexapro, and here about Neurontin).

However, defenses of conflicts of interest continue to appear regularly.  The latest example, which incorporates an important twist, appeared in yesterday's Wall Street Journal.  It was in the form of a "Boss Talk"  interview with a leader of a major health care organization (whose identity we will discuss later.)

The title of the interview indicated that the interviewee was not "worried about industry ties" of academia or of health care professionals.  Conflicts of interest were clearly its main focus.  For example, it began,

Many universities are wringing their hands over the increasing coziness of medical schools and their corporate partners.

Then it stated that the interviewee:

has no such qualms.

The defense of this lack of qualms was heavily based on logical fallacies.

Biased Sample or Hasty Generalization

The main reason for this lack of concern appeared to be complete disregard of the more serious kinds of conflict of interest briefly described above. The interviewer asked:

What are the trickiest conflicts of interest to navigate?

The answer was:

Surgery is particularly challenging. Let's say you're a physician and you come up with a new hip replacement. You invented it so you're going to make a lot of money. But if you're going to do my surgery, I want you to put in the device you think is best. How do you separate that, when the person is the inventor and the great technician?

This may be tricky, but is arguably not the most tricky kind of conflict of interest.

The trickier example of the key opinion leader hired as a salesman was not raised by the interviewer or the interviewee. Such a case was graphically revealed by testimony of the aborted TMAP trial which implicated the former state mental health director as hired by Johnson and Johnson subsidiary Janssen to "promote ­Risperdal as a safe and effective medication." (See this post.)

Industry spokespeople and key opinion leaders themselves tout KOLs as clinical, educational, and/or scientific experts chosen for their expertise to advance medicine, science and public health.  There have been  documented instances (e.g., see posts here and here) in which defectors from marketing departments of commercial health care corporations described KOLs as salespeople who could be more influential hidden within their professional or academic cloaks.  Even some physicians paid to be speakers on behalf of pharmaceutical corporations have acknowledged their role as salespeople in fancy dress (see post here).  There are cases of documents revealed by discovery in legal actions that show how companies planned organized stealth marketing efforts for drugs that included activities by KOLs (e.g., see post here about marketing of Lexapro, and here about Neurontin).

Perhaps the interviewee was unaware of these issues.  Whether due to ignorance or deliberate avoidance, failing to consider the full spectrum of conflicts of interest, and specifically ignoring those with the greatest likelihood of adverse effects, appears to be a logical fallacy in this instance.  If deliberate, it appears to be reasoning from an (intentionally) biased sample, if not, it appears to be a hasty generalization.

The interview also included a few other choice logical fallacies that went unchallenged by the interviewer.

False Dilemma

The interviewer asked:

What do you tell professors who won't work with drug or biotech companies?

The response was:

I think that's a huge mistake. If you're a professor now, and you want to get your discovery to society, you either need to start a company or work with a company to commercialize a product.

Of course, in the "good old days," academic researchers got their "discoveries to society" simply by publishing them. Developing and marketing products based on their discoveries, while worthwhile undertakings in their own rights, were not considered part of the academic mission. Professors could still do this, if their goal was not to get rich. Yet the Bayh-Dole act allowed academic institutions to make money from their professors' discoveries, and the rush to commercialize the university has been on ever since. So while professors and academic institutions who are motivated mainly by money might not consider just putting the knowledge they discover in the public domain, that course remains possible, just not so lucrative.

The assertion that the only way to get a "discovery to society" is to start or work with a company is simply false, and using this assertion in an argument appears to be an example of a false dilemma.

Straw Man

The interviewee worked another argument into the same paragraph:

When professors have told me they won't work with companies anymore because they feel they'll have this scarlet letter, I think: 'Wouldn't that be sad if all the best scientists and clinicians won't work with companies because the public has said they're evil?'

I doubt that any of even the most vociferous critics of the conflicts of interest that now befog health care have claimed that those involved are evil, much less that they are have successfully convinced the whole public at large that anyone who "works with companies" is evil. Implying that this would be the result of criticism of conflicts of interest does not appear to be supported by evidence, and is probably flat wrong. Asserting it here appears to be an example of the straw man fallacy.

Summary

So the Wall Street Journal has added to our collection of defenses of conflicts of interest that seem mainly to be based on logical fallacies. 

We have noted that logical fallacies are increasingly deployed to defend the status quo in health care, and particularly to defend the interests of those who are profiting the most from the current dysfunctional system.  We have noted that several defenses of the conflicts of interest generated by financial relationships between physicians and medical academics on one hand and commercial health care firms on the other, were based on logical fallacies.  (See examples here, here,  here, and here.)  I have yet to see a coherent, logical, fact-based argument that the benefits for patients' and the public's health of physicians and medical academics working part-time as consultants, advisers, speakers, and directors of health care corporations outweigh the obvious risks of biasing medical decision making, education and research in favor of vested interests.

In 2011, I noted, "I have also yet to see an argument in favor of conflicts of interest made by anyone who does not have such conflicts."At least, however, up to that point I had not noted any such arguments made by people who had much power to enforce their views, as opposed to the ability to just express them.  The interview discussed above, however, was a person who has such power.

The interview was with Dr Susan Desmond-Hellmann, the relatively new Chancellor of the University of California- San Francisco, who was just named one of the "25 most influential people in biopharma."  She has recently been advocating a change of direction towards commercialization for her campus, one of the most prestigious health care oriented universities/ academic medical centers in the country.  She previously justified this redirection again using logical fallacies (look here). 

She also appears to yet another advocate for conflicts of interest who has her own conflicts.  As we noted here, Dr Desmond-Hellmann had little academic experience before she became Chancellor, but had worked her way up in the corporate pharmaceutical world, leaving her position as President for drug development at Genentech after it was taken over by Roche. 

As we noted previously, even after that, Dr Desmond-Hellmann apparently has not completely left the corporate world.
- A web-site for a speakers' bureau in which she apparently still participates lists her as a current "Advisor of Genentech since April 2009."
- In 2010, Dr Desmond-Hellmann joined the board of directors of Procter and Gamble, a company which makes many health related products, although it sold its global pharmaceutical business. Last year, the company made an agreement with Teva to market over-the counter medications (see this Reuters article). Note that she got this position despite apparently not having any prior personal investment in P&G stock. However, per the company's 2011 proxy statement, she appears to be in line to collect over $250,000 a year in compensation for this position.

It does not seem impossible that these ongoing commercial interests may influence how she acts in her role as Chancellor.  Yet while it may be unsurprising, it is very disappointing that conflicts of interest are now being uncritically and illogically publicly defended by people in positions to exert so much influence on health care.

The noted cognitive psychologists George Loewenstein, Sunita Sah, and Daylian Cain just asserted in JAMA [Loewenstein G, Sah S, Cain DM. The unintended consequences of conflict of interest disclosure. JAMA 2012; 307: 669-670. Link here.]

Conflicts of interest, including fee-for-service arrangements, are at the heart of the astronomical increases in health care costs in the United States, and transparency is not substitute for more substantive reform.

True health care reform requires such substantive reform of the financial arrangements among corporations that sell health care services or products and health care professionals and others who make decisions about patients' or the public's health. To decide how to accomplish such reform, we need a better discussion informed by logic and evidence, sans logical fallacies. Those who lead health care ought to be able to participate in this discussion under these conditions.

Another Month, Another Set of Legal Settlements, Deferred Prosecution Agreements, and Jury Findings Adverse to Large Health Care Corporations

Another month, another series of adverse legal rulings suggesting misbehavior by large health care organizations.  In alphabetical order,...

Baxter, McKesson, Teva Pay Punitive Damages

As reported by Bloomberg,

A jury said Teva Pharmaceutical Industries Ltd. unit and two other drugmakers must pay $162.5 million in punitive damages for selling the anesthetic Propofol in a way that led three colonoscopy patients to develop Hepatitis C.

Jurors in state court Las Vegas ordered Teva Parenteral Medicines Inc., Baxter Healthcare Corp. and McKesson Corp. to pay so-called punishment damages over sales of the anesthetic in vials large enough to be reused by doctors. Anne Arnold, Richard Sacks and Anthony Devito contend they contracted Hepatitis C from reused vials during colonoscopy procedures. They had sought more than $700 million in damages.

It’s the second punitive award against Baxter and the unit of Petach Tikva, Israel-based Teva over a 2008 hepatitis outbreak in Nevada tied to Propofol. The first case resulted in a punitive verdict of more than $500 million against the drugmakers. Teva has agreed to cover all damage awards arising from the Nevada cases on behalf of Baxter and McKesson.

In particular,

The patients’ lawyers allege Teva intentionally sold Propofol in jumbo-sized vials to encourage doctors to reuse them, even with the risk of spreading blood-borne diseases such as hepatitis, an incurable liver disease.

So the allegations are that the company intentionally put financial gain ahead of the safety of patients.

Boston Scientific Settles Over-Billing Allegations

Again per Bloomberg:

Boston Scientific Corp.’s Guidant LLC unit will pay $9.25 million to settle a whistleblower’s claim that the company over-billed the U.S. and private hospitals for heart pacemakers and defibrillators.

The details:

Guidant allegedly reneged on credits owed to the U.S. Department of Veterans Affairs for replacement of units still under warranty and is accused of over-charging hospitals for the devices, causing them to over-bill Medicare, according to an e-mailed statement from the Justice Department.

Note that we have quite a extensive files on Boston Scientific, and on Guidant, now its subsidiary.

Hil-Rom Settles Fraud Allegations

Reported by the Knoxville News-Sentinel:

Federal prosecutors announced Tuesday a $41.8 million civil fraud settlement in a 'whistle-blower' lawsuit against international medical equipment supply company, Hill-Rom Company Inc.

The results also were that

As part of the settlement, Hill-Rom has entered into a five-year 'corporate integrity agreement,' in which the firm will face close scrutiny by federal officials, Killian said.

The allegations were:

'Hill-Rom submitted false claims for medical equipment for patients who did not qualify for the equipment, including patients who had died, were no longer using the equipment or had been moved to nursing homes,' [US Attorney Bill] Killian said.

In particular,

The lawsuit alleged the firm was ripping off Medicare with its faulty billing practices. According to the lawsuit, unsealed Tuesday, Hill-Rom offered its sales representatives $200 gift certificates and 42-inch televisions as reward for boosting billings and, in 2001, laid off the lion's share of staff dedicated to ensuring compliance with Medicare rules.

Note that this suggests a pattern of providing incentives to employees who "make their numbers," no matter how they do so. We have seen how making the financial numbers seems to take precedence over all else, including patients' well-being, in many contemporary health care organizations.

Maxim Healthcare Settles Fraud Allegations

In a story in the Baltimore Sun,

A Columbia-based health care firm has agreed to a $150 million settlement with the federal government and 43 states to resolve criminal and civil charges that it submitted claims for millions of dollars of work that it did not perform and operated offices that were not properly licensed, officials said Monday.

A five-year federal investigation found that Maxim Healthcare Services Inc., one of the country's largest providers of home healthcare services, submitted $61 million in false claims for services to the federal government's Medicaid and Veterans Affairs health programs over an 11-year period from 1998 to 2009.

Investigators said managers and workers at Maxim repeatedly modified time sheets and documents to cover up the fraud, creating a culture in which submitting false claims became 'common practice.'

The settlement was of criminal as well as civil charges:

The settlement includes a $20 million criminal fine and $130 million in civil settlements.

It will also involve a deferred prosecution or corporate integrity agreement:

In addition to the fines, Maxim also has been charged criminally with conspiracy to commit health care fraud. But the company could avoid conviction if it meets requirements outlined in the settlement.

Unlike many such cases, this one involved criminal charges for and guilty pleas by some people involved in the wrong-doing, in this case, middle managers:

Several regional account managers, a home health aid and a clinical services director also pleaded guilty to criminal charges, government officials said. They could face as much as $250,000 in fines and jail time for their roles in the fraud.

Another atypical result was that the CEO who presided over the misbehavior actually suffered some consequences, although he did not have to pay fines for face criminal charges,

Maxim officials said they take full responsibility for the violations. The company said it hired a new CEO in 2009 and changed its business practices to protect against a repeat.

ProPublica published an article at the same time which noted that Maxim's practices had come into question before,

A different set of problems involving Maxim came up during a ProPublica investigation into the oversight of registered nurses in 2009. We identified several nurses who were hired by the Maryland-based company despite having a record of problems.

Although that previous article did not mention the company's name:

The articles focused on how regulators across the country did little to scrutinize troubled nurses who crossed state lines to continue working. Our earlier stories did not identify Maxim by name.

We have noted that organizations which misbehave once are likely to misbehave again. This may stem from an organizational culture that puts revenue ahead of ethics and patients' and the public's health, and the lack of negative consequences that people who respond to the resulting positive financial incentives are likely to suffer.

Medicis Settles Shareholder Class-Action Lawsuit

Noted by the Arizona Republic,

Medicis Pharmaceutical Corp. and its auditing firm, Ernst & Young, have agreed to pay $18 million to settle a shareholder class-action lawsuit stemming from the pharmaceutical company's financial statements.

The shareholders alleged that Medicis was not honest about its financial affairs:

The shareholders' lawsuit stems from Medicis' announcement in September 2008 that it would restate earnings from 2003 through the first half of 2008.

Shareholders alleged that Medicis offered its wholesale customers generous return policies for prescription drugs as part of an effort to inflate the company's revenue. Medicis would accept returned products that were expired or about to expire at either no cost or substantial discounts to the wholesale customers, according to the lawsuit.

Summary

The constant march of legal settlements by, jury verdicts against, and in some cases criminal convictions of or guilty pleas by large health care corporations indicate how common misbehavior by such organizations has become. Since it is likely that much misbehavior does not lead to publicly announced legal actions, what is published can only provide a floor for an estimate of how common it is. The march, which we have been documenting since starting Health Care Renewal, shows how sleazy and often corrupt health care has become, and how that sleaziness and corruption is prevalent not just among small players, but among the biggest and richest health care organizations, and their top leaders.

One reason the situation continues to be so bad is that while the unethical behavior does sometimes result in pontificating by the civil authorities, and fines that may only be costs of doing business, it rarely leads to meaningful negative consequences for those who authorized, directed or implemented it. This was noted in the reporting of the Maxim Healthcare case above. For example, in the Baltimore Sun article we found,

One watchdog group called the penalty a drop in the bucket for a company that had $2 billion in reimbursements from 2003 to 2009.

'That is hardly crippling,' said Joe Newman, a spokesman for the Project on Government Oversight, which tracks government contractors. 'It is certainly something that stings Maxim's pocketbook, but they will be fine after that.'

'They won't be barred from the Medicaid program. That would hurt them.'

Also, Sun columnist Jay Hancock wrote:

Corporations are happy to be treated as people under the law, as we know from recent court decisions. They can own property. They can seek redress in Congress and the courts. They can make huge political contributions.

But when it comes to being penalized for cheating the government, corporations quickly abandon their personhood and go back to being abstract blobs.

'I don't know about you, but if I hired a contractor to work on my house and he charged me a ton of extra money for work he didn't do, I wouldn't use that contractor again,' Minnesota Sen. Al Franken said in Congress a few months ago. 'And I would make sure my friends knew not to use them either. It seems like the same should be true of government contractors.'

But that is often not the case. For years, government agencies have not vigorously enforced the law when doing so might inconvenience big corporations and their well-paid executives. Maybe this lenience stems from the loony philosophy of former Chairman of the Federal Reserve Alan Greenspan, who was once regarded as some sort of economic genius, who seemed to think that fraud cannot occur in his idealized idea of a free market, because somehow all bad actors would become widely known and therefore all counter-parties would avoid them. In an article in Stanford Magazine,

The influential Greenspan was an ardent proponent of unfettered markets. Born was a powerful Washington lawyer with a track record for activist causes. Over lunch, in his private dining room at the stately headquarters of the Fed in Washington, Greenspan probed their differences.

'Well, Brooksley, I guess you and I will never agree about fraud,' Born, in a recent interview, remembers Greenspan saying.

'What is there not to agree on?' Born says she replied.

'Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,' she recalls. Greenspan, Born says, believed the market would take care of itself.

For the incoming regulator, the meeting was a wake-up call. 'That underscored to me how absolutist Alan was in his opposition to any regulation,' she said in the interview.

It is a measure of the insanity of recent years that one of the chief leaders of government economic policy did not believe there was any need for laws against fraud.

It appears that this daft idea has carried over to and still influences how many in government and out deal with health care. However, as we have ddiscussed, health care is not and probably cannot ever be an ideal free market. Also, in health care, most of the bad actions remain anechoic, and in many cases it may be hard for counter-parties to avoid bad actors because they may dominate the market. Also, it may be those that make decisions about whether to deal with particular organizations may be executives, and sometimes health care professionals who have become indifferent to the ethical issues.

As I have said again and again, pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.

So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue.

More Settlements: Christ Hospital, Teva Pharmaceutical Industries

For the end of the week, a round-up of the latest legal settlements involving large health care organizations, in alphabetical order....

Christ Hospital (Cincinnati, Ohio)

As reported by the Business Courier of Cincinnati:

Christ Hospital and the federal government have reached a settlement agreement on a whistleblower lawsuit that accused the hospital of defrauding federal health-care programs.

The suit alleged that Christ Hospital and the Ohio Heart Health Center cardiology practice, which Christ Hospital has since bought, 'devised a scheme that provided cardiologists improper financial incentives in exchange for generating revenue for the hospital,' according to the U.S. Department of Justice.

Potential liability was reported to be as high as $424 million across the Health Alliance and its former members in an October 2007 document from VMG Health, a consultant hired as part of the separation of Christ Hospital from the Health Alliance.

Christ faced potential liability of as much as $123 million in the case, according to the report, and the St. Luke Hospitals, which also left the Health Alliance, faced exposure of $51 million.

The focus of the suit is an outpatient cardiology testing unit within Christ Hospital known as the Heart Station, where patients receive non-invasive heart procedures such as electrocardiograms, echocardiograms and stress tests.

The action was originally filed in the U.S. District Court in Cincinnati under the whistleblower provisions of the False Claims Act by Dr. Harry Fry, a cardiologist who had provided services to Christ Hospital and Ohio Heart.

The lawsuit alleges that, between at least 1999 and 2004, cardiologists were allocated time at the Heart Station based on the number of coronary arterial bypass graph procedures and catheter lab revenues they or their group generated for Christ the previous year.

Many of the procedures were billed to federal benefit programs, including Medicare and Medicaid, according to the government. It’s against federal law to exchange financial incentives for patient referrals.

Teva Pharmaceutical Industries

As reported by Reuters,

Generic drugmaker Teva Pharmaceutical Industries Ltd ... said on Friday it plans to settle lawsuits alleging it caused governments to pay inflated prices for its drugs under Medicaid and other programs.

Teva, which denies the charges, said it will record a charge of about $315 million in its fourth quarter, 2009. The charge includes the settlement in principle and a reserve for the remaining drug pricing lawsuits to which Teva is a party.

Israel-based Teva is one of a number of drug companies named in civil lawsuits that relate to drug price reporting by manufacturers in about 15 states. The cases are pending....

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. 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.