The Transparency International 2018 Corporate Political Engagement Index- Pharma Appears All Too Comfortable with the Revolving Door and Making Opaque Political Contributions

Introduction: Big Organizations, Government Policy and Regulation, and Politics

Leaders of big health care organizations clearly are interested in influencing public policy and government regulation in ways that favor their organizations, and often indirectly themselves.  We expect such leaders and organizations to make their policy preferences known.  However, increasingly we have found that they take shadowy routes to their policy goals.

We have frequently discussed how large health care organizations may use less than transparent methods to advocate for their policy and regulatory objectives.  Their public relations departments may fund patient advocacy organizations and medical societies that support these objectives, so-called third-party strategies.  They may fund distinguished professionals and academics as key opinion leaders for the same purposes.  Often they do this in systematic ways so that there efforts amount to stealth advocacy or stealth lobbying campaigns.

Even more concerning is organizational support of the revolving door.  Top organizational leaders may move into government policy and/or regulatory positions relevant to the organizations' goals.  Government policy and regulatory leaders may know that lucrative positions in these organizations are available when they leave government.  The revolving door is certainly a serious type of conflict of interest, and some deem it corrupt.

Big health care organizations have traditionally been non-partisan.  While their leaders certainly may have political views, they used to keep them very quiet.  Recently, especially in the US, we have seen evidence that some health care organizations have become partisan, albeit stealthily, throwing their support behind political candidates, parties and organizations that may support their policy and regulatory goals, even while they may also support positions that go against the health care and public health mission, or even may be frankly anti-democratic.  In the US, organizations and their leaders now may support partisan aims with dark money, funds whose origin is disguised. 

The Transparency International 2018 Corporate Political Engagement Index

A recent report by Transparency International was made public, with little fanfare, in late 2018 that was meant to throw a little light on corporate "engagement" in politics.  It included some interesting information on a few multinartional pharmaceutical companies.

The report introduction stated:

For companies, corporate political engagement carries clear risks of bribery and corruption, conflicts of interest and reputational damage. Any interactions with the political process need careful management to avoid falling foul of anti-bribery and corruption legislation. The risks are increased by the fact that companies are vulnerable to mistakes or abuse by employees and third parties acting
on their behalf such as agents, advisers and consultant lobbyists.

Methods

The study on which the report was based concentrated on 104 large corporations that are active in the UK.  These included the following large multinational pharmaceutical companies:

- AstraZeneca
- Eisai
- GlaxoSmithKline
- Johnson & Johnson
- Novartis
- Pfizer
- Roche
- Shire

The study was based on 20 questions divided in 5 areas.

Three areas were basically about transparency of  and accountablity for political activities.  These included
- Control Environment, including having transparent policies, methods for ensuring their enforcement, and oversight of same by the board of directors
- Responsible Lobbying, including adequate policies and transparency
- Transparency in Reporting

One was about the Revolving Door, and included whether the company has a "cooling-off period" for people going through the revolving door back to the company.  However, it did not directly mention people going directly from leadership positions within the company to government.

One was about Political Contributions, and included whether the company bans them (perhaps the strongest question of the group.)

Each question in each area was scored from 2 for meeting expectations to 0 for failing to do so.  Scores were normalized on a scale going from 100 (best) to 0 (worst), and and summarized in "bands" from A (83.3 - 100) down to F (0 - 16.6)

Results

For the three areas regarding transparency and accountablity the results per company were:

Control Environment
 
- AstraZeneca            C
- Eisai                        C
- GlaxoSmithKline        A
- Johnson & Johnson    C
- Novartis                   F
- Pfizer                       C
- Roche                      E
- Shire                        C

Responsible Lobbying

- AstraZeneca            E
- Eisai                      F
- GlaxoSmithKline        B
- Johnson & Johnson    E
- Novartis                   E
- Pfizer                       F
- Roche                      C
- Shire                        E



Transparency in Reporting

- AstraZeneca            C
- Eisai                        C
- GlaxoSmithKline        A
- Johnson & Johnson    C
- Novartis                   C
- Pfizer                       C
- Roche                      C
- Shire                        C


For the Revolving Door

- AstraZeneca            F
- Eisai                        F
- GlaxoSmithKline        A
- Johnson & Johnson    F
- Novartis                   D
- Pfizer                       F
- Roche                      E
- Shire                        F


For Political Contributions

- AstraZeneca            F
- Eisai                        F
- GlaxoSmithKline        B
- Johnson & Johnson    C
- Novartis                   F
- Pfizer                       E
- Roche                      E
- Shire                        E

Summary and Discussion

Note that the pharmaceutical companies did not do too badly on the measures of transparency and accountablity, but except for GSK did quite badly on minimizing the revolving door, and again with the partial exception of GSK did very badly on avoiding political contributions.

This suggests that at least some big multinational pharmaceutical corporations that do business in the UK, but also in the US and many other developed countries, have worrisome attitudes towards and likely practices affecting their use of political influence.

The Revolving Door

The majority of companies did not show any real concern about the problem of the revolving door.

In the US, this problem seems to be getting worse.  In particular under the Trump regime we see more instances of the  incoming revolving door, that is, people moving directly from corporate leadership positions to government policy and regulatory positions in which they could potentially make decisions affecting the corporations from which they came.  This is potentially a more serious problem than the outgoing door, yet it was not even discussed in the TI study.

We have repeatedly said,  most recently a few days ago, ...

The revolving door is a species of conflict of interest. Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

The ongoing parade of people transiting the revolving door from industry to the Trump regime once again suggests how the revolving door may enable certain of those with private vested interests to have disproportionate influence on how the government works.  The country is increasingly being run by a cozy group of insiders with ties to both government and industry. This has been termed crony capitalism. The latest cohort of revolving door transits suggests that regulatory capture is likely to become much worse in the near future.

Corporate Partisanship, Political Contributions, and Dark Money

Given the increasing evidence that large corporations have become partisan in the US, it is particularly worrisome that at least the pharmaceutical corporations in the TI study have not taken a clear stand against making direct political contributions, or even in favor of making such contributions transparent.

Note that the TI report included the directive "do not make political contributions" among its "principles for responsible political engagement," adding:

Corporate political contributions should not be made on behalf of the company other than in exceptional  circumstances where they provide general support for a genuine democratic process, with full transparency and full explanation.

On the other hand, as we said last year,...

 Health care corporations recent and current funding of dark money groups seems to openly conflict with the corporations' promises of social responsibility.  The slanting of these efforts towards one end of the political spectrum, one party, and now the current president suggest that these corporations may have partisan agendas.

Furthermore, the increasing knowledge of these corporate actions raises a big question: cui bono? who benefits?

It is obvious why a pharmaceutical company, for example, might want to defeat legislation that would lower its prices.

It is not obvious why it would want to consistenly support actions by one party, or by people at one end of the political spectrum, even if some such people seem "pro-business."  After all, for years big corporations and their executives openly gave money to both US parties and their candidates, apparently in the belief that this would at least allow more visibility for the corporations' priorities no matter who was in power.

Now, the most obvious theory is that the new practice of secret donations only in right-wing, Republican, and/or pro-Trump directions, which must be orchestrated by top corporate management, and which are not disclosed to employees or smaller corporate shareholders, are likely made to support the top managers' self interest more than the broad priorities of the corporations and their various constituencies.

Thus not only is more investigation needed, at the very least, "public" corporations ought to fully disclose all donations made to outside groups with political agendas.  This should be demanded by at least the corporations' employees and shareholders, but also by patients, health care professionals, and the public at large.

Meanwhile we are left with the suspicion that top health care corporate management is increasingly merging with the current administration in one giant corporatist entity which is not in the interests of health care, much less government by the people, of the people, and for the people.

As US Attorney, Labor Secretary Nominee Enabled Drug and Biotechnology Executives' Impunity

The new Trump administration nominee for US Secretary of Labor is a former US Attorney for the southern district of Florida.  In that role, he seemed to uphold the ideas that certain big corporations, particularly big pharmaceutical and biotechnology corporations, are too big to jail, and that top executives of big corporations should not be held accountable for their corporations' actions.

He had central involvement in three big settlements of charges of corporate misbehavior which held no individuals accountable for enabling, authorizing, directing or implementing the bad behavior.  The settlements imposed only monetary penalties on the corporations as a whole, accompanied at times by corporate integrity agreements.  In some cases, the failure to charge any individuals at the corporation occurred despite the corporations' history of previous bad behavior.  In each case, the penalties seemed unable to deter more bad behavior by the corporations going forward.  It was not obvious that any of the corporate integrity agreements were enforced. Thus, he enabled the continuing impunity enjoyed by the leadership of large health care organizations. 

The three cases, all discussed on Health Care Renewal, were, in approximate chronologic order:

2005 - GlaxoSmithKline Settled Charges of Overbilling Medicare and Medicaid for Zofran and Kytril

As we discussed in 2005, GlaxoSmithKline has settled for $150.8 million US Department of Justice charges that the company fraudulently overbilled Medicare and Medicaid. The alleged scheme involved inflating average wholesale prices for Zofran and Kytril used to set reimbursement rates.  According to the 2005 Department of Justice news release, "GlaxoSmithKline has agreed to enter into an addendum to its existing Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services that, among other things, will require the company to report accurate average sales prices and average manufacturer's prices for its drugs covered by Medicare and other federal healthcare programs."

No individual who authorized, directed, enabled or implemented these alleged actions suffered any penalty.  The decision not to prosecute any individuals was made after the first (2004) famous Paxil case.  Paxil is the anti-depressant whose marketing lead GlaxoSmithKline (GSK) to settle allegations of fraud brought by then New York Attorney General Elliott Spitzer.  That case included allegations of suppression and manipulation of clinical research, and was discussed in great detail in the book Side Effects by Alison Bass.  We posted about various aspects of this case, e.g., here, here, and here. 

Since 2005, we have discussed myriad examples of misbehavior by GSK.  Notably the company made a $3 billion settlement in 2012 for all sorts of allegations involving multiple drugs, (see this post).  Its most recent settlement was in 2016 for bribing Chinese doctors (see this post).  Other cases included the manipulation of Study 329 (see this post), the manipulation and suppression of evidence about Avandia (see this post).  So the 2005 settlement seemed to have little deterrent effect.

The 2005 DOJ press release included this quote

'As our nation struggles to contain healthcare costs, we must ensure that drug manufacturers do not take advantage of the poor, the elderly or the sick by illegally inflating the price of prescription drugs. That a manufacturer would fraudulently inflate the cost of a drug used primarily to reduce the side effects of cancer treatments is unconscionable,' said U.S. Attorney R. Alexander Acosta of the Southern District of Florida.      

2007 - Bristol Myers Squibb Settled Charges of Kickbacks to Physicians and Fraudulent Marketing of Abilify 

As we discussed in 2007, BMS was charged by the US government for promoting the atypical anti-psychotic drug Abilify for use by children and the elderly absent any good evidence that it provided benefits that outweighed harms for these group. So such patients who received these drugs due to the overpromotion might have been harmed, and probably did not benefit.   One means used to promote the drug was giving kickbacks to physicians.  The settlement included monetary penalties to the company totaling $515 million, and a five-year corporate integrity agreement to ensure its compliance with the law.

Note that the corporate integrity agreement did not appear to have improved subsequent BMS behavior.  Since 2007, we have noted that:
 - In 2014, BMS settled allegations its subsidiary Lantheus Medical Imaging Inc evaded state taxes (per the Corporate Crime Reporter)
 - In 2015, BMS settled allegations by the US Securities and Exchange Commission (SEC) that it bribed physicians in China to induce them to prescribe its drugs.  (Look at our post here).

No individual who authorized, directed, enabled or implemented the actions alleged in the 2007 settlement suffered any negative consequences. The decision not to charge any individuals seemed to be made despite the company's history of previous bad behavior, which included:
 - In 2003, for $617 million, BMS settled suits alleging it tried to prevent competition from low cost generic versions of its products Taxol and Buspar (per the NY Times).
- In 2004, for $150 million, BMS settled suits by the SEC alleging accounting fraud (per the NY Times here).
- In 2007, BMS paid a $1 million dollar penalty while pleading guilty to lying to federal agents about a deal with the Canadian drug company Apotex (per Law360).   In 2009, it paid additional financial penalties in response to a US Federal Trade Commission charge about this case (per the FTC).

According to the 2007 Department of Justice news release,  one of the two US Attorneys involved in the 2007 BMS settlement was R Alexander Acosta of Florida.

2007 - Sanofi-Aventis Settled Charges of Overcharging Medicare for Anzemat

Per a 2007 post, Sanofi-Aventis settled allegations that it overcharged the US government for the drug Anzemet.  Of course, no individual who authorized, directed, enabled or implemented these alleged actions suffered any negative consequences.

As described by a Law360 post in 2007, he settlement also included yet another corporate integrity agreement.  This did not deter further misbehavior by Sanofi-Aventis.  It  settled charges of overcharging the US Medicaid system in 2009 for over $90 million  (see post here), and charges that it gave doctors kickbacks to induce them to prescribe the drug Hyalgan in 2012 (see post here).  In 2014, Sanofi's Genzyme subsidiary settled charges it promoted a surgical film product for unproven uses (see post here), and settled further charges from this case in 2015 (see post here).

Law360 also reported,

 U.S. Attorney for the Southern District of Florida R. Alexander Acosta said the lawsuit proved that corporations could not get away with misleading the government by exploiting a health care system based on honesty.

'Again, a corporation has been caught fraudulently inflating the cost of a drug used primarily to reduce the side effects of cancer treatments without regard to the increased costs borne by government health care programs or elderly and indigent patients,' Acosta said. 

Summary

President Trump promised time and again that he would stand up for the forgotten working people and families of the US, and would reduce the power of big corporate interests.  Now, his nominee to be Labor Secretary is an attorney who seemed unwilling to personally challenge top management of big drug and biotechnology companies when their companies misbehaved.  He did not hold management accountable even when their companies had previously and repeatedly misbehaved.  His failure to hold individuals accountable apparently failed to deter future bad behavior by the same companies.

There are many more examples on this blog of legal settlements, and even episodes involving bribery, fraud, kickbacks, and other crimes that demonstrate the continuing impunity of leaders of large health care organizations.  It is likely that such impunity has led to the general concerns that the system is "rigged" in favor of the wealthy, the well-connected, and the insiders.

And we have a President who has promised to act against the "rigged system," but seems to be bent on appointing wealthy, well-connected people to run his executive branch. Now he has just nominated someone who failed to hold wealthy, well-connected corporate executives accountable for their corporations bad behavior.  So, in any case, as we have said before...)

We once again see the perverse incentives at work that drive bad behavior by health care oragnizational leaders.  One can obviously become very rich by directing this bad behavior.  Up to now, the likelihood that one would eventually pay any penalty for doing so was tiny.  Now it is slightly higher.  Whether those up the ladder, who might have authorized the behavior, turned a blind eye to it, or avoided enquiring about anything that could be bad behavior, as long as the money came in, will suffer any negative consequences from these actions or inactions in the future is still unclear.

We will not make any progress reducing current health care dysfunction if we cannot have an honest conversation about what causes it and who profits from it.  True health care reform requires ending the anechoic effect, exposing the web of conflicts of interest that entangle health care, publicizing who benefits most from the current dysfunction, and how and why.  But it is painfully obvious that the people who have gotten so rich from the current status quo will use every tool at their disposal, paying for them with the money they have extracted from patients and taxpayers, to defend their position.  It will take grit, persistence, and courage to persevere in the cause of better health for patients and the public. 

Legal Settlements to Remind Us How Our Health Care System Became Rigged: by GSK, Novartis, CVS

Amidst the sound and fury of the US election season, almost under the radar sneak legal settlements demonstrating continuing bad behavior by big health care organizations, and the continuing lack of accountablity of these organizations' leaders.

We note three cases involving unethical practices leading to overuse of pharmaceuticals that appeared in the last two months, in chronological and alphabetical order.


GlaxoSmithKline Settles Charges of Bribing Chinese Doctors

A summary from Stat by Ed Silverman on September 30, 2016,

GlaxoSmithKline on Friday agreed to pay $20 million to settle charges of violating the Foreign Corrupt Practices Act for what authorities called a pay-to-prescribe scheme in China. In doing so, Glaxo becomes the latest global drug maker to face such accusations as part of a long-running probe by US authorities into companies that paid bribes overseas in order to boost sales of their medicines.

The settlement is an outgrowth of the bribery scandal that rocked Glaxo and resulted in a $490 million fine two years ago after a Chinese court found the company guilty of bribing doctors, hospital officials, and other non-governmental personnel. The former head of the Glaxo unit in China also pleaded guilty to bribery-related charges and was given a three-year suspended sentence.

As part of the scheme, Glaxo employees allegedly funneled kickbacks through trade groups and travel agencies that planned events. Between 2010 and June 2013, Glaxo spent nearly $225 million on planning and travel services. But after reviewing a sample of invoices, authorities found about 44 percent were inflated and approximately 12 percent were for events that did not occur, according to an SEC order.

In 2010, Glaxo hired a Chinese company to develop a project to provide clinics with tools to store and administer vaccines that required refrigeration. Instead, the project was used to give laptops and other electronic devices as gifts to clinics that were believed to have the potential to market still other Glaxo drugs. In all, the drug maker spent about $2.3 million doing this.

Articles in the Wall Street Journal and Reuters stated the bribes were explicitly meant to boost sales of drugs.  However, I am not able to find any information in the few media reports or the US Securities and Exchange Commission order about which products were so promoted.  It appears likely, however, that these alleged practices led to overuse of drugs that at best did patients no good and at worst caused direct harm. 

Although proceedings in China resulted in punishment of a GSK official there, the US proceedings did not subject any individual to negative consequences for enabling, authorizing, directing or implementing any bribes.

Note that our posts on previous misadventures by GSK can be found here.

Novartis Settles Charges of Illegally Promoting Skin Cream for Infants in the US

Again, as summarized by Ed Silverman in Stat on October 5, 2016,

Novartis has agreed to pay $35 million to settle charges of illegally promoting a prescription skin cream for use with infants and toddlers. The deal marks the second time in the past year the drug maker has struck a deal with US authorities to resolve allegations of improperly marketing its medicines.

The agreement, announced on Wednesday, stems from a whistleblower lawsuit filed by a former Novartis sales representative, who accused the company of deliberately trying to widen the market for Elidel by encouraging prescriptions for children younger than 24 months, even though the medicine was not approved for that patient population. At one point, regulators issued a warning about the risk of cancer in small children.

'We were instructed that Elidel was so safe it could be put on up to 80 percent of a baby’s body. And we were never told that it might cause cancer,' said Donald Galmines, 44, the former rep, in a statement. He added that he was trained to invite doctors and their families or staffs to dinners at expensive restaurants, even though during the course of the meal, Elidel might not even be brought up.

The illegal marketing occurred between 2002 and 2009,...

So this case involved allegations of deceptive marketing.  In particular, the deception was potentially dangerous to infant patients, since it appears that the drug promoted was unduly dangerous.

In this settlement, however, the company got to explicitly deny wrongdoing.

Novartis denied the allegations in the settlement agreement.

Novartis has had considerable recent legal trouble involving unethical behavior.

The settlement comes amid a difficult stretch for Novartis. The drug maker last year paid $390 million to settle charges of paying kickbacks to boost sales of two other drugs. And the company is facing a trial stemming from yet another whistleblower lawsuit filed by a different former sales rep, who similarly alleged Novartis illegally marketed medicines.

Those cases gained considerable attention because US Attorney Preet Bharara, who is based in New York, claimed Novartis is a repeat offender when he announced the government had joined the lawsuits in 2013. He was referring to a 2010 case in which the company paid $422.5 million for allegedly marketing six drugs off-label and paying kickbacks to health care professionals.

The United States is not the only venue where Novartis has encountered such charges. Last March, the drug maker agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care providers in China. Employees gave money, gifts, vacations, and entertainment to health care professionals between 2009 and 2011, according to US authorities.

Furthermore, an even more extensive list of previous Novartis misadventures can be found in our post here.

Despite all that, however, the settlement did not subject any individual to negative consequences for enabling, authorizing, directing or implementing the allegedly illegal promotion.

Omnicare Settles Charges of Accepting Kickback to Help Illegally Promote Depakote

Finally, as yet again best summarized by Ed Silverman on StatNews on October 17, 2016,

Omnicare, which is the nation’s largest nursing home pharmacy, agreed on Monday to pay more than $28 million to resolve charges of seeking kickbacks from Abbott Laboratories in exchange for boosting prescriptions for a medicine that the drug maker had promoted illegally.

As part of the scheme, Omnicare disguised the kickbacks from Abbott as grants and educational funding, and took rebates from the drug maker based on the amount of Depakote that was prescribed for each nursing home resident. In addition, Abbott paid for Omnicare management meetings at a Florida resort and offered tickets to sporting events, according to the US Department of Justice.

The arrangement between Omnicare and Abbott began after the drug maker launched a new initiative in 1997 to boost prescriptions for the drug, which is approved for treating seizures, bipolar mania, and migraines, but not uncontrollable behavior due to dementia. The following year, Omnicare began soliciting kickbacks from Abbott and the scheme lasted about three years, according to court documents.

The settlement is the latest in a long-running probe by the feds into Omnicare, which is now owned by CVS, and the interplay between nursing home pharmacies and drug makers.

In 2012, Abbott reached a $1.5 billion global civil and criminal settlement that resolved, among other things, alleged kickbacks paid to nursing home pharmacies. At the time of the agreement, the feds noted that Abbott promoted Depakote for controlling behavioral disturbances in dementia patients, even though the US Food and Drug Administration never approved the pill for this particular use.

'Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs,' said Benjamin Mizer, the principal deputy assistant attorney general in the Justice Department’s Civil Division,...

So it appears that at best the kickbacks led to prescription of drugs that did patients little good, and may have caused adverse effects.  

An article in the Cincinnati Business Courier noted that CVS, of which Omnicare is now a subsidiary, avoided admitting any responsibility for the alleged acceptance of kickbacks,

CVS 'agreed to settle this matter to avoid the expense and uncertainty of protracted litigation,' spokesman Mike DeAngelis said of the suit against Omnicare. 'The activities, which were alleged to have violated anti-kickback laws, all occurred prior to CVS Health’s acquisition of Omnicare. These matters involved Omnicare only, and no allegations were made against any of CVS Health’s other businesses, including CVS Pharmacy and CVS Caremark. CVS Health is committed to the highest standards of ethics and business practices, and there was no admission of wrongdoing.'

An Associated Press article noted Omnicare's previous track record,

Omnicare has spent hundreds of millions of dollars resolving kickback litigation in recent years. In 2014, it agreed to pay more than $124 million to settle lawsuits alleging it gave kickbacks to some facilities so they would keep the company as their drug provider for elderly Medicare and Medicaid recipients.

In 2009, Omnicare said it would pay $98 million to settle allegations that it solicited or paid a variety of kickbacks. That included an accusation that it received kickbacks from Johnson & Johnson for recommending that doctors prescribe to nursing home patients the antipsychotic Risperdal, which can hasten death in elderly people with dementia.

Furthermore, an extensive list of parent company CVS' misadventures can be found in this post.


Despite all that, again, the settlement did not subject any individual to negative consequences for enabling, authorizing, directing or implementing the alleged acceptance of kickbacks.

Summary

Three settlements in two months by three major health care corporations involved allegations of unethical behaviors that were meant to increase prescribing of various pharmaceuticals, whether or not patients needed them, or were more likely to be harmed by them.  Despite the unsavory nature of the behaviors, and the likelihood of patient harms, the companies involved had to pay fines that were tiny relative to their multi-billion dollar revenues.  The companies did not have to admit responsibility, and company managers and leaders did not suffer any negative consequences for enabling, authorizing, directing or implementing the bad behavior.  Thus they exhibited impunity.

These cases are just the latest in a long march of legal settlements to remind us of the continuing bad behavior of large health care organizations, and the continuing impunity of their managers and leaders.

This adds to the evidence suggesting that US health care, at least, is rigged to benefit its top insiders and cronies, and as such, is part of a larger rigged system.  We have previously discussed how market fundamentalism (or neoliberalism) led to deregulation, which enabled deception, fraud, bribery, and intimidation to become standard business practices, and allowed increasing concentration of power by large corporations. Managerialism allowed the top leaders of these corporations and their insider cronies to amass increasing power and money. Everyone else, other employees, stockholders of public corporations, customers, vendors and suppliers, and the public at large lost out. In health care, these changes led to an increasingly costly system which produced increasingly bad results for patients and the public.

We have called for years for what we sometimes term "true health care reform" to derig the system.  Little has changed, while perceptions that the system is rigged have become more common.

Unfortunately, perceptions of a rigged system may not always inspire honest reform. Instead, they can enable the rise of demagogues and would be dictators who promise only they can solve the problem. This appears to have happened in the US. Now honest people who want to unrig the system must first prevent an even worse result, authoritarianism or frank dictatorship.  Never has Benjamin Franklin's warning that we only have "a republic, if you can keep it" been more salient.

However, should we be successful in fending off despotism, the original problems that led the system to be rigged will remain, and new men on white horses may appear, unless we truly reform the system. 

So let us not forget how we got here in the first place.  And should we successfully preserve our republic, let us remember the need for wholesale, real health care reform that would make health care leaders accountable for what their organizations do, particularly when these organizations misbehave.

What Big Drug and Biotechnology Companies Will Not Tell Us - Transparency International on Corporate Reporting

Drug companies are entrusted to provide pure, unadulterated medicines.  Increasingly drug companies are now entrusted with doing research, including experimental studies, on human beings, and providing education to doctors and patients.  Ordinarily, trust requires confidence in transparency. However, a new report suggests that large multinational drug and biotechnology companies are not very transparent.

Transparency International just released a report on the transparency, or lack thereof, of the 124 biggest multinational corporations.  The report detailed how well these companies disclosed their internal anti-corruption programs, their subsidiaries, affiliates, and joint ventures, and their financial data broken down by the countries in which they operate.  In summary, the overall results for disclosing anti-corruption programs were mediocre, and for disclosing organizational structure and country-by-country financial data, they were dismal.

The report is highly relevant to health care.  It included the biggest multinational health care corporations, all drug and/or biotechnology companies: Abbott Laboratories, (based in the US), Amgen (US), AstraZeneca (UK), Gilead Sciences (US), GlaxoSmithKline (UK), Johnson and Johnson (US), Merck and Co (US), Novartis (Switzerland), Novo Nordisk (Denmark), Pfizer (US), Roche Holding (Switzerland), Sanofi (France), Teva Pharmaceutical Industries (Israel).

The report has so far received little media coverage.  In the US, several news services provided brief  summaries.  Somewhat more substantial articles came from Reuters, the Wall Street Journal's Risk and Compliance Journal, and CNBC.  None gave specifics about health care.  Coverage from other countries, e.g., Germany by Deutsche Welle, and the UK by the Guardian, was more detailed but also did not specifically mention health care.

Therefore, I will summarize the rationale and assessment methods used by Transparency International for its three dimensions of transparency, and then show results from the 13 health care corporations.

Disclosure of Anti-Corruption Programs

The rationale for addressing this area was:

Global companies have legal and ethical obligations to conduct their business honestly. This requires
commitment, resources and the ongoing management of a range of risks – legal, political and reputational – including those associated with corruption. The implementation of a comprehensive range of anticorruption policies and management systems is fundamental to efforts to prevent and remediate corruption within organisations.

Transparency International believes that public reporting by companies on their anti-corruption programmes allows for increased monitoring by stakeholders and the public at large, thereby making companies more accountable

Evaluation of disclosure of anti-corruption programs was

based on 13 questions, which are derived from the UN Global Compact and Transparency International Reporting Guidance on the 10th Principle against Corruption. This tool, based on the Business Principles for Countering Bribery, which were developed by Transparency International in collaboration with a multi-stakeholder group, includes recommendations for companies on how to publicly report on their anticorruption programmes.

Note that the project addressed only reporting of anti-corruption programs, not their implementation or effectiveness.

For this and the other two dimensions of transparency, responses were converted into a 0% to 100% scale, with 100% being the best possible result.

Organizational Transparency

The rationale was:

As many of the recent corporate scandals have shown, acts of corruption are very often aided by the use of opaque company structures and secrecy jurisdictions.  But the use of offshore companies and their lack of transparency are posing increasing risks for global companies as well as for their shareholders, employees and local communities.

So,

Companies can mitigate the risks posed by lack of transparency and ownership arrangements by shedding more light on their corporate structures and by making basic financial information public on a country-by-country basis. This allows stakeholders to have a clearer understanding of the extent of a company’s operations and makes the company more accountable for its activities in a given country, including assessing whether it contributes financially in a manner appropriate to its level of activity.

The measurement strategy was,

Transparency International researchers consulted publicly available documents such as annual reports and stock exchange filings for information about company subsidiaries, affiliates, joint ventures and other holdings. The information sought included corporate names, percentages of ownership by the parent company, countries of incorporation and the countries in which the companies operate.

Country-by-Country Reporting

The rationale included:

The importance of country-by-country reporting was first recognised in the extractive sector as a way to ensure that revenues from natural resources are used to foster economic and social development rather than line the pockets of kleptocratic elites.

So,

country-by-country reporting ... [is] a recognised building block for corporate transparency and as a tool for countering tax avoidance.

In addition, country-by-country reporting provides investors with more comprehensive financial information about companies and helps them address investment risk more effectively.

The items measured were disclosure of revenue/sales, capital expenditures, pre-tax income, income tax, and community contribution in each country in which the company operated.

Results for Health Care Corporations

Company                      Total  Anti-Corruption P  Org Structure  by-Country

Abbott Laboratories    40             81                           38                3
Amgen                          37             85                           25                0
AstraZeneca                37             88                           19                3
Gilead Sciences           26             54                           25                0
GlaxoSmithKline          52            96                           50               11
Johnson and Johnson  26           65                           13                0
Merck and Co               42           77                            50                0
Novartis                        38            77                           38                1
Novo Nordisk               39            81                           38                0
Pfizer                             35            92                           13                0
Roche Holding              33            62                           38                1
Sanofi                            38            77                           38                0
Teva Pharmaceutical  35            85                            19                0

Again, only one company, GlaxoSmithKline, achieved an overall score of barely better than 50%.  All the others had lower scores.  Only two companies achieved a 50% score on disclosure of organizational structure, and only one achieved a score of better than 10% for disclosing country-by-country results.  The Transparency International report noted that the health care companies got particularly bad scores for disclosing organizational structure, averaging 31%, the third worst performance by economic sector.


Summary

 The drug and biotechnology companies generally did a fairly good job disclosing what their anti-corruption programs were supposed to do.  However, note that the Transparency International report did not assess how well these programs were implemented or enforced.  That this concern is not academic is underscored by some of these companies disreputable track records.  Some have long histories of legal actions, including billion dollar plus legal settlements, some of which were of allegations of fraud or kickbacks, and some have been convicted of crimes.  See the records of, for example: Abbott Laboratories (look here and here), Amgen (here), AstraZeneca (here), GlaxoSmithKline (here), Johnson and Johnson (here), Merck (here), Novartis (here), Novo Nordisk (here), Pfizer (here), Roche (here), Sanofi (here), and Teva (here).

Moreover, the companies did not do a good job disclosing their organizational structures, and hardly any bothered to report any financial results broken down by country.

We have frequently discussed health care corporations' deceptive marketing, induction of conflicts of interest, including those of supposed "key opinion leaders" who often are marketers in academic or professional clothing, and manipulation and suppression of clinical research.  There has been an ongoing procession of legal settlements involving health care corporations, often involving allegations of, and sometimes convictions for fraud, kickbacks, bribery, or other crimes.  There have even been some cases in which drug companies have failed to assure that their products are pure and unadulterated, their most basic mission.  Thus many are distrustful of drug and biotechnology companies, and large health care organizations in general.

So, as Transparency International's report noted, to rebuild trust,

integrity must be central to these efforts. Those efforts, in turn, can only become fully credible if they are undertaken with a sustained commitment to ethical behaviour and transparency across companies’ operations.

In my humble opinion, a basic premise of true health care reform would be that health care organizations become sufficiently transparent to restore basic trust in them. 

You Say You Want Some Revolutions? - Famed Academic Physician Dr Milton Packer's Endless Alternating Turns as Drug Company Spokesperson and FDA Advisor

Last week, we noted  we again discussed the web of conflicts of interest that is draped over medicine and health care, and seems responsible for much of our current health care dysfunction.  We have discussed examples of conflicts of interest affecting clinical research, clinical teaching, clinical care, and health care policy.  Each time I think we must have cataloged all the useful examples, a striking new one appears.

Only a few days later, yet another new variant has in fact appeared.

A New Kind of Revolving Door

A new version of the "revolving door" apparently was first noted by Public Citizen, and then reported by Ed Silverman at Pharmalot. 

The usual version of the revolving door occurs when a person transitions from a full-time job in industry to a government position which has regulatory authority or other influence over that same industry, or vica versa.  We have discussed various health care manifestations of that revolving door here.

The new version, as described by Mr Silverman, in its manifestation at the US Food and Drug Administration (FDA) is:

the agency allows some experts who serve on its advisory panels to also make presentations at other meetings of these same panels on behalf of drug makers. By allowing some people to wear different hats within a short amount of time, the advocacy group charges the FDA creates the potential for bias to creep into the proceedings.

The Public Citizen letter to the FDA summarized the problem,

In particular, a sponsor’s use of an individual who serves, or has recently served, as a voting member of an FDA advisory committee to present its case before that member’s colleagues on the committee takes advantage of the special collegiality existing among members in order to improve a company’s chances of a favorable vote. Furthermore, such a revolving door raises concerns about the objectivity of committee members who accept such paid arrangements, with FDA’s approval, at future hearings involving the same or a rival company.

Someone Familiar Going Round and Round

The Public Citizen letter used as an example one well-known academic physician who seemed to have made many revolutions in this sort of revolving door.  As summarized in the PharmaLot post,

As an example, Public Citizen cites a meeting this past March 27 of the FDA’s Cardiovascular and Renal Drugs Advisory Committee, which was held to review an application for a Novartis drug called serelaxin to treat acute heart failure. And Milton Packer, who chairs the department of clinical sciences at UT Southwestern, appeared as a paid speaker on behalf of Novartis.

In his opening remarks, Packer disclosed that Novartis paid for his time and travel, according to the advocacy group. But because he is also considered to be a ‘special government employee,’ which is how advisory panel members are classified, he obtained permission from the FDA to participate as a paid speaker for Novartis (see page 31 here).

However, Packer served as a temporary voting member of the same FDA advisory committee less than two months earlier. Moreover, Public Citizen says this was the sixth time, since Packer first presided as chair of this committee in 1997, that he had 'spoken on behalf of and/or served as a (presumably) paid consultant' to drug makers whose meds were being reviewed at those meetings.

The other occasions in which Packer appeared before the Cardiovascular and Renal Drugs Advisory committee involved speaking on behalf of Bristol-Myers Squibb in 2002; acting as a consultant and speaker for GlaxoSmithKline in 2003; appearing as a speaker for NitroMed in 2005; appearing as a speaker for Sanofi in 2009 and acting as a consultant on behalf of Pfizer in 2010.

In fact, the Public Citizen letter also asserted that

Dr. Packer’s presence as an FDA advisory committee member at hearings extends beyond the CRDAC, as he has also participated in at least three meetings of the Arthritis Advisory Committee and served at least once on the Endocrinologic and Metabolic Drugs Advisory Committee since 2005.

We note with concern that, as with his revolving-door tenure at CRDAC, Dr. Packer has similarly worked with industry in the following capacities at non-CRDAC advisory committees while intermittently serving as a recurring member of some of these same committees:

- As a consultant to Centocor for its presentation on infliximab (Remicade) to the March 4, 2003, meeting of the Arthritis Advisory Committee;
- As an 'external expert' cited by GlaxoSmithKline at the July 30, 2007, joint meeting of the Endocrinologic and Metabolic Drugs and Drug Safety and Risk Management Advisory Committees to discuss the cardiac ischemic risks of the thiazolidinedione diabetes drugs, with a focus on rosiglitazone (Avandia); and
- As a consultant to Boehringer Ingelheim for its presentation concerning the drug tiotropium (Spiriva HandiHaler), made before the November 19, 2009, meeting of the Pulmonary-Allergy Drugs Advisory Committee.

Summary

Dr Milton Packer served as a presumably paid spokesperson for six different pharmaceutical companies advocating for six different drugs at meetings of the FDA Cardiovascular and Renal Drugs Advisory Committee.  Over roughly the same time period he served as the chair, acting chair, or voting member of that same committee in numerous instances.  Also, Dr Packer served as a presumably paid spokesperson for one of the same drug companies, and for two additional drug companies advocating for another three drugs at meetings of three other FDA advisory committees.  On various occasions he had also served as a member of these three committees.  Parenthetically, one of the drugs for which Dr Packer, a cardiologist, advocated, Avandia, to a non-cardiologic committee was subsequently pulled from the market because of concerns about excess cardiologic complications (look here). 

Dr Packer repeatedly went back and forth between roles as a paid advocate for drug companies and as a member or chair of federal advisory committees which could influence FDA decisions about the drugs for which he advocated and which were made by the companies that employed him.


It certainly seems that Public Citizen was right in that the sorts of transitions Dr Packer made constituted multiple conflicts of interest, and that his work for multiple drug companies was likely to have distorted the recommendations of the committees on which he served.  Rapid transitions between temporary committee memberships and paid advocacy positions before such committees does seem to be a new version of the revolving door, and newly discovered type of conflict of interest.  It seems that conflicts of interest now pervade every aspect of health care, with huge cumulative effects on clinical and health policy decision making.

Note also that the person whose conflicts of interest were used as examples by Public Citizen just appeared in Health Care Renewal in another capacity.  Earlier this month we discussed a study (PARADIGM - HF) of a new drug for congestive heart failure (sacubitril) which received prominent media attention.  After various people, not limited to yours truly, pointed out that this study seemed to have multiple flaws which undercut claims that the new drug would be a "game changer," the principal investigator of the study delivered a written whupping to a critic whose writing appeared prominently on a cardiology web-site .  The scathing comeback, however, seemed based on a volley of logical fallacies, including repetitive ad hominem attacks on the critic (look here).  The PARADIGM - HF Principal Investigator was none other than the same Dr Milton Packer whose revolving door cycles were discussed above.  Note that the company that sponsored, and largely ran and designed PARADIGM - HF, and which paid Dr Packer to serve as Principal Investigator, was the same Novartis for whom Dr Packer was a spokesperson in the first example above. 

We wondered whether Dr Packer's conflicts of interest contributed to confused, illogical thinking and his apparently logically fallacious response to his critic.  Now it appears that Dr Packer has been immersed much more deeply in conflicts of interest than were apparent a few days ago.  So should he be regarded mainly as a heart failure "expert," or mainly as a paid marketer and public relations man for drug companies?  Obviously, he is both, but the mixture is not so clear.  The concern is all the more important because Dr Packer has become such a prominent medical academic.

So once again, again, again,...  we call for all conflicts to be disclosed in the interests of honesty.  Beyond that, as we have been saying for years, patients' and the public's health would benefit from an aggressive effort to reduce conflicts of interest affecting clinical and health policy decision making.    

GlaxoSmithKline's Marketing Firm Promised "Clinical Trials Could be Your Solution" to Poor Graduate Students

We have frequently raised concerns about the increasing domination of clinical research, particularly clinical trials, by those with vested in interests in the research producing particular results.  In particular, drug, biotechnology and device companies often sponsor trials meant to evaluate their own products.  Often it appears that commercial trial sponsors manipulate various aspects of research design, implementation, analysis, and dissemination to increase the likelihood of a result favorable to their interests.  Furthermore, when even such manipulation fails to produce the desired result, particular studies may simply be suppressed, that is, hidden.

Clinical Trial Participation as "Your Solution" to Graduate Students' Money Woes

A recent story, first told on the In-Pharma Technologist web site, gave an example of how trial recruitment could be gamed so as to produce more compliant study subjects. Since that web-site does not allow copy and pasting of even a few sentences of its content, I will quote, instead, from a subsequent article in the Guardian.

GlaxoSmithKline  the pharmaceuticals multinational, has apologised after being accused of playing on the hardship of unpaid interns to recruit them to take part in clinical trials.

A marketing firm working for the FTSE 100 company sought to place a blog on careers advice websites boasting that involvement in drug trials could help graduates to finance their way through unpaid work placements.

In a proposed 'guest blog' for the website Graduate Fog, an employee at TouchPoint Digital, working on behalf of GSK, wrote: 'Clinical trials could be your solution.'

The "guest blog" proposed that many graduate students "would prefer an immediate income to tide you over for the coming months."  So,

Clinical trials could be your solution. Depending on the length of the study, you could earn up to £2,000 per trial for up to 4 trials a year, plus reasonable travel expenses.

This was not a one-off,

 Touchpoint provided examples of similar articles previously published on websites targeted at students. In an email to the founder of Graduate Fog, Tanya de Grunwald, it added: 'Your readers would also benefit if there is a small link at the end of the article to the GSK website, which is the biggest pharmaceutical company in the UK, so that if they want to find out more or get answers to more specific questions they can do so.'

Excessive Inducement

The story was picked up by Ed Silverman at the PharmaLot blog in the US, who pointed out how TouchPoint Digital appeared to be supplying an excessive inducement to vulnerable subjects,

Tanya de Grunwald, who runs the Graduate Fog website in the U.K., objected to the tone of the overture. 'Some of my readers are feeling very low, vulnerable and desperate for money,' she wrote us in an e-mail after openly questioning the recruiting tactic in a note to readers on her website last week. 'Many are unemployed. Others are in low-paid graduate jobs or doing unpaid internships.'

'Suggesting that participating clinical trials is a great way to earn easy cash is not just crass – I think it’s irresponsible. Surely, the more desperate someone is for money, the more likely they are to be dazzled by the financial benefits and less careful about weighing up the risks.'

A long time ago, that is, from 2006 - 2008, we published a series of posts about how contract research organizations running clinical research projects for commercial health care firms often preyed on financially and otherwise vulnerable research subjects by offering what would appear to such people to be dazzling remuneration.  For example, we discussed the trials by SFBC International (later PharmaNet Development Group, and now apparently Inventiv Health Clinical)  in Miami that enrolled immigrants, often undocumented, under questionable circumstances and in Montreal that resulted in the transmission of active tuberculosis (see post here and links backward); and the trial by Parexel International in London that put most of its subjects in intensive care (see post here, with links backward). In 2008, as we discussed here, two articles questioning the ethics of research done under the auspices of CRO appeared in two major medical journals.  Excessively zealous recruiting designed to tempt vulnerable subjects with money appears unethical, and may be dangerous for these subjects.

How Excessive Inducement Could Lead to Invalid Trial Results

Not only is such a practice apparently unethical and dangerous, it could endanger patients outside the research projects in question by producing invalid research.  Subjects who could be dazzled by such inducements might avoid disclosing conditions which would otherwise exclude them from particular research projects, or participate in multiple projects without sufficient or any wash out periods in between, meaning that one treatment's effects could confound another.  (Note that the blog post proposed by the marketer above suggested that subjects could participate in multiple trials during one year.)  Furthermore, subjects desperate to complete studies and earn their fees might avoid reporting adverse effects to avoid the risk of premature termination of their participation, or avoid protesting questionable actions by the researchers.   

But now in the modern era of the Internet and social media, overzealous recruitment using monetary lures is still going on.  As per PharmaLot,

One expert believes the flap is not surprising, because drug makers are under pressure to maintain a steady stream of clinical trial recruits.

'Middle class folks just sit back and wait until the drug reaches the market. Poor folks are the guinea pigs in an economy that is more and more uneven, and uncertain by the day,' says Roberto Abadie, a senior researcher at the Social Networks Research Group at John Jay College, City University of New York, and author of ‘The Professional Guinea Pig: Big Pharma and the Risky World of Human Subjects.'

A Belated Response from GSK

Apparently only after the story broke did GSK notice there was a problem.  Again, per PharmaLot,

A Glaxo spokeswoman blamed the outside marketing firm for the episode. In an e-mail, she wrote us that 'we would agree that the tone used in the ads… is wrong. It trivializes the role of clinical trials in developing new medicines and the part that volunteers play in that process. This isn’t acceptable and we’re looking into what happened.'

Whether GSK was properly supervising the marketing firm, and whether GSK had provided incentives that might have lead to overzealous recruitment were not addressed.

Summary

This story is yet another reminder that health care professionals, health policy makers, and the public at large should be extremely skeptical of clinical research sponsored (and controlled) by those with vested interests in the research results turning out a certain way, particularly clinical trials run by drug, biotechnology, or biotechnology companies meant to assess those companies' own products. However, note that very rarely do published clinical trial reports provide enough detail about subject recruitment to determine whether overzealous recruitment and undue inducements may have lead to enrollment of subjects who should have been excluded, under reporting of adverse effects, etc.

In my humble opinion, we need to reassess current policies that allows organizations with such obvious conflicts of interest to run experiments on human beings (which is what clinical trials are.)

By the way, this story is also a reminder that most big drug, device and biotechnology firms seem to be associated again and again with dodgy clinical research.   For example, see what we have previously written about GSK here.

Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a story of a somewhat new variant on the conflict of interest theme, one that has not gotten a lot of attention, but should.

The issue was medical, with a twist, - how to best treat a bioterror attack with anthrax engineered to be resistant to multiple drugs, an event that luckily is not known to ever have occurred.  The story came from the bad old days of the "war on terror," but only has now come to light years later.

The Alarm Raiser

The story opened thus,

Over the last decade, former Navy Secretary Richard J. Danzig, a prominent lawyer, presidential advisor and biowarfare consultant to the Pentagon and the Department of Homeland Security, has urged the government to counter what he called a major threat to national security.

Terrorists, he warned, could easily engineer a devastating killer germ: a form of anthrax resistant to common antibiotics.

In particular,

Danzig began warning about antibiotic-resistant anthrax after the terrorist attacks of Sept. 11, 2001, and the mailings of anthrax-laced letters that fall.

The powdered anthrax in the letters killed five people but was not resistant to common antibiotics. Asked what gave rise to his concern about resistant strains, Danzig cited conversations with 'people whose technical skills exceed mine.' One of them, Dr. Robert P. Kadlec, a bioterrorism advisor in the Bush White House, said he and others were concerned that terrorists could develop such a weapon.

Danzig has sounded the alarm in published papers and in private briefings and seminars for biodefense and intelligence officials.

In a 2003 report funded by the Pentagon, "Catastrophic Bioterrorism — What Is To Be Done?" he wrote that it would be 'quite easy' for terrorists to produce antibiotic-resistant anthrax. He has expanded on that theme over the years, including in a 2009 paper for the Pentagon.

In the 2003 report, published while raxi [raxibacumab, an anthrax anti-toxin] was in development at Human Genome, Danzig said a drug to combat resistant strains of anthrax should be produced 'as soon as possible' and that stockpiling such a treatment, 'even if expensive and in limited supply' would deter an attack.

John Vitko Jr., a top Homeland Security official during the Bush and Obama administrations, said he turned frequently to Danzig for advice on biodefense matters — and read and 'paid attention to' his 'Catastrophic Bioterrorism' report.

Note that while Danzig is a lawyer, and certainly not a physician or biomedical researcher, he had major credibility in the defense field, particularly in anti-terrorism, so his recommendations had great influence.

He served as a Pentagon appointee during the Carter administration and as undersecretary and then secretary of the Navy under President Clinton. He has a long-standing interest in biowarfare.

During the 2008 presidential campaign, Danzig advised then-Sen. Barack Obama on national security and bioterrorism. After Obama's election, Danzig was named to the Pentagon's Defense Policy Board and the President's Intelligence Advisory Board, in addition to his consulting positions with the Defense Department and Homeland Security.

So apparently at least partly due to Mr Danzig's persistent warnings, the government took action,

 In 2004, President Bush signed into law Project BioShield, which provided billions of dollars for biodefense drugs.

The contracts are administered by the Department of Health and Human Services, based on advice from federal agencies and consultants. Homeland Security must certify the need for a drug before the government can buy it.

 Danzig, through his seminars, writings and consulting duties, has helped frame the discussion over whether a given biological threat is 'material' and whether the government should stockpile medicines to defend against it.

Also,

Speaking of Danzig's broader role as a government advisor, Vitko said: 'Richard's got incredible insights into this and I think has made major contributions'

He called Danzig one of 'the major bio player' and said his views had informed a range of policy considerations, including 'how many countermeasures do you need, of what kind.'

It was in response to advice from Vitko and his staff that Homeland Security Secretary Tom Ridge in 2004 declared anthrax a 'material threat,' the certification required for the government to buy drugs to fight it.

The drug the government bought was raxibacumab, or raxi, an anthrax anti-toxin made by Human Genome Sciences Inc.  

In 2006, the Department of Health and Human Services finalized its first order of raxi — 20,000 doses at a cost of $174 million.

That year, Ridge's successor, Michael Chertoff, signed a second, more specific declaration, adding 'multi-drug-resistant' anthrax to the government's list of material threats.

Asked the basis for the second declaration, Vitko said: 'I think the concern was more forward-looking, and saying, 'How could the threat evolve, and are we prepared for that?''

Since 2009, the Obama administration has ordered an additional 45,000 doses of raxi for $160 million.

There was just one catch.

The Undisclosed Conflict

Mr Danzig had a largely undisclosed conflict of interest.  He was on the board of directors of Human Genome Sciences Inc, the company whose drug his constant warnings and exhortations lead the government to buy.

When Human Genome named Danzig to its board on May 24, 2001, the company's chief executive said his high-level federal experience would 'serve us well.'

He thus was on the board on September 11, 2001, and later when the events on that day and soon after apparently induced him to start sounding the alarm about resistant anthrax, and he stayed on the board as he continued sounding alarms, and after the government started buying his company's drug.

During his 11-year tenure on the board, which ended in August, Danzig collected at least $1,054,255 in director's fees and by cashing in grants of Human Genome stock and stock options, according to Fred Whittlesey of Compensation Venture Group, who reviewed the company's Securities and Exchange Commission filings for The Times.

Nearly half of Danzig's compensation came from the stock options, of which he had been granted 184,000 by the end of 2011, Whittlesey said.

Danzig did not seem to think that serving on the board of the company which made the primary drug directed at the perhaps hypothetical disease about which Danzig was sounding the warning constituted any sort of conflict of interest.

Danzig said in an interview that he believed his position at Human Genome posed no conflict.

He said he had tried to improve policymakers' understanding of biodefense issues, including the threat of antibiotic-resistant anthrax, but never lobbied the government to purchase raxi.

'My view was I'm not going to get involved in selling that,' Danzig said. 'But at the same time now, should I not say what I think is right in the government circles with regard to this? And my answer was, 'If I have occasion to comment on this, it ought to be in general, as a policy matter, not as a particular procurement.'

'I feel that I've acted very properly with regard to this'' he said.

He also apparently did not feel he needed to disclose his board membership to most of the people he was trying to persuade to be alarmed about resistant anthrax, and to pursue a treatment, such as that made by the company on whose board he sat.

 A number of senior federal officials whom Danzig advised on the threat of bioterrorism and what to do about it said they were unaware of his role at Human Genome.

Dr. Philip K. Russell, a biodefense official in the George W. Bush administration who attended invitation-only seminars on bioterrorism led by Danzig, said he did not know about Danzig's tie to the biotech company until The Times asked him about it.

Also,

 Vitko said he knew nothing of Danzig's involvement with Human Genome until a Times reporter asked him about it.

'I'm surprised I didn't,' Vitko said. 'I'm not aware of it.'

Five other present or former biodefense officials who conferred with Danzig said they, too, had been unaware of his position with the company. Danzig, they said, made no mention of it in their presence during group discussions he led or in smaller meetings.

Furthermore,

A Times search found seven papers Danzig had written on bioterrorism since 2001. In only one of those did he disclose his tie to Human Genome.

As an advisor to the federal government, Danzig is required to file confidential forms annually, revealing any outside affiliations but not his related compensation. Danzig said he had noted his position with the biotech firm on the forms.

Asked whether he mentioned his corporate role during contacts with government officials, Danzig replied: 'If I thought any of it posed a potential conflict that might cause somebody who knew about it to discount my views, I would tell them.'

Some people disagreed with Danzig's failure to perceive a conflict of interest

 'Holy smoke—that was a horrible conflict of interest,' said Russell, a physician and retired Army major general who helped lead the government's efforts to prepare for biological attacks.

The Take-Over by a Familiar Corporation

By the way, Human Genome Science was eventually bought out by a bigger company which has had its own sets of issues regarding conflicts of interest, GlaxoSmithKline,

 Human Genome was acquired by GlaxoSmithKline in August [presumably 2012] for $3.6 billion.

It may yet stand to make even more money from raxi,

 Because raxi loses its potency after three years in storage, the government's supply will expire as of 2015, according to federal documents and people familiar with the matter. 

Summary

This appears to be a variant on the "key opinion leader" (KOL) theme writ large.  Mr Danzig clearly functioned as a very major key opinion leader about bioterrorism.  Like many KOLs we have previously discussed, he had financial interests that favored the company whose drugs his key opinion leadership seemed to be favoring.  His influence seems to have lead to huge purchases of these drugs. Like many KOLs who are physicians or health care academics, Mr Danzig seems utterly blind to the possibility that his multiple efforts to emphasize the importance of the supposed disease for which his company made a drug could somehow be viewed as a conflict of interest, or to why failure to tell his audiences about his major relationship to this company might have appeared just a small bit dishonest.  We have seen many medical/ health care KOLs who deny that somehow their opinions could have been influenced by their financial relationships, or that their audiences deserved at least to be aware of these relationships.  Yet, of course, Mr Danzig is not a doctor, and he was trying to influence government purchasers of drugs, not physician prescribers of it.

It does seem that the leadership of health care organizations, particularly but certainly not limited to pharmaceutical and biotechnology companies, have no lack of imagination about how to construct financial relationships with influential people who could help sell their products, whether or not they acknowledge what amounts to their marketing roles.

Given that this story involved influencing the government, it will be interesting to see at this late date whether it results in any legal action.  After all, as David Willman pointed out,

 Federal law bars U.S. officials, including consultants, from giving advice on matters in which they or a company on whose board they serve have 'a financial interest.'

It will also be interesting to see if it gets any more attention.  Only a few blogs have noted it, but at least they included The Scientist.


Yet our country has an unfortunately very long history of corporate leaders getting close to political leaders who then may overlook the legal niceties when their friends' interests are at stake.  Nonetheless, true health care reform would require all those who have decision making power over patients, health policy, or the public health to be completely transparent about their conflicts of interest, and would ban the more serious variants of conflicts of interest, even if that might cost some already rich people a bit of money.  I am not holding my breath, however, about when this might happen.