Sunday, May 01, 2016



Three months ago I took JAMA to task over a Viewpoint opinion piece about conflict of interest. The authors proposed dancing around the reality of financial conflict of interest in medicine by talking instead about confluence of interest. I countered with a proposal for the term competing interests, which would not paper over the problem. In that post I also included a letter I had sent to JAMA in response to the opinion piece, but which JAMA had declined to publish. I questioned whether JAMA had deep sixed all the critical replies it received.

Now I can report that, in the April 26, 2016 print edition, JAMA has finally published one critical letter and a reply from the original authors. So JAMA didn’t deep six everything. This new correspondence appears 174 days after print publication and 214 days after on-line publication of the original Viewpoint article. That glacial delay is problematic – it disables meaningful dialogue.

The new critical letter is from a group in Europe, and it thoughtfully discusses weaknesses in the Viewpoint authored by Cappola and FitzGerald. These Viewpoint authors did not do justice to the critical letter in their reply. Moreover, they disclosed multiple potential competing interests, but they did not follow their own advice by clarifying why we should disregard those obvious competing interests. As we all know, the mere disclosure of competing interests does not by itself remove the problem. It can be a device for hiding in plain sight. Substantively, the reply from Cappola and FitzGerald is mostly hand waving and restatement of biased opinion, without real analysis or incisive thought.

The closing sentences of their reply letter illustrate these issues: “Everyone has biases. Rather than present these pejoratively, as a clash of values that undermines validity, it seems more constructive to mine the complexity of these biases, present them in an accessible fashion, and seek to determine whether they are confluent with the interests of patients, scientists, and regulators who might base their decisions on the results of a given piece of work.” The reference to complexity of biases concerns the matter of nonfinancial bias like fame and careerism in science. The reference to presenting biases in an accessible fashion concerns the ill-considered proposal to include a bias heat map on patients’ consent forms. This idea rightly was panned by the European critics. Meanwhile, where did the compromised and disgraced key opinion leaders disappear to in all this wishful thinking? Where did the corrupt corporations disappear to? They paid billions of dollars in penalties for felony crimes and plea-bargained settlements. They have been airbrushed out of the Cappola-FitzGerald narrative. These authors come across like Bambi confronting Godzilla.

If this is the best that an associate editor of JAMA and a fellow of the Royal Society can do then JAMA needs a fix. This effort is too little and much too late.

Friday, April 29, 2016

Back to Paper After U.S. Coast Guard EHR Debacle: Proof of Hegel's Adage "We Learn From History That We Do Not Learn From History"?

I have become blue in the face writing about healthcare information technology mismanagement over the years.  In fact, the original focus of my 1998 website on health IT (its descendant now at was on HIT project mismanagement.

If this industry actually had learned anything from history, I would not be reading nor writing about brutally mismanaged HIT endeavors in 2016.  Sadly, that is not the case.

The Coast Guard, founded by Alexander Hamilton, has this as its motto and mission:
Semper Paratus - Always Ready.

The Coast Guard is one of our nation's five military services. We exist to defend and preserve the United States. We protect the personal safety and security of our people; the marine transportation system and infrastructure; our natural and economic resources; and the territorial integrity of our nation–from both internal and external threats, natural and man-made. We protect these interests in U.S. ports and inland waterways, along the coasts, on international waters.

We are a military, multi-mission, maritime force offering a unique blend of military, law enforcement, humanitarian, regulatory, and diplomatic capabilities. These capabilities underpin our three broad roles: maritime safety, maritime security, and maritime stewardship. There are 11 missions that are interwoven within these roles.

It seems the Coast Guard personnel need personal protection from the HIT industry, for the motto of that industry, sadly appears to be something like "Stupra Acetabulus" (Screw the Suckers).

From Politico, one of only a few publications that in recent years has taken a critical approach to this industry and pulls no punches:
EHR debacle leads to paper-based care for Coast Guard servicemembers
By Darius Tahir

The botched implementation of an electronic health records system sent Coast Guard doctors scurrying to copy digital records onto paper last fall and has disrupted health care for 50,000 active troops and civilian members and their families.

Five years after signing a $14 million contract with industry leader Epic Systems, the Coast Guard ended its relationship with the Wisconsin vendor, while recovering just more than $2.2 million from the company. But it couldn’t revert back to its old system, leaving its doctors reliant on paper.

This state of affairs is simple inexcusable.  It represents gross negligence and severe multi-axial incompetence at best - but likely primarily not by the Coast Guard, whose core competency does not include HIT.

There’s no clear evidence the EHR disaster has harmed patients, and a Coast Guard spokesman said the use of paper records hasn’t affected “the quality of health care provided to our people.”

Proof by lack of evidence is not reassuring in a debacle of this kind.  However, the Coast Guard admits that paper records aren't the clear and present danger the IT pundits make them out to be.

Politico is skeptical of the claim:

That seems unlikely. Without digital records, if a patient goes outside a Coast Guard clinic, it can take weeks for the paper record to follow him or her back to the Coast Guard, says Michael Little of the Association of the United States Navy. And since the Coast Guard primarily provides outpatient, rather than hospital, services, many of its patients seek outside care.

“It’s one thing if you’re doing paper-based [care] in Ohio, but what about if you’re on paper records in [an] icebreaker or cutter in Alaska, and you need your gall bladder removed?” said Little, the organization’s director of legislative affairs.

In this case, I disagree that the lack of records is so dangerous.  There's the telephone, FAX machines, the patient himself or herself, and the hand-carried note.  Used with care, those serve care reasonably well. 

With the Department of Veterans Affairs weighing whether to buy a top-of-the-line commercial electronic health record and the Pentagon beginning a multibillion-dollar EHR implementation, the Coast Guard case displays how poorly the process can go for the government, even when the biggest names in health IT are involved.

Not just the government.  I'd also argue that this shows that the "biggest names" are, at best, overextended, and at worst, badly needing external investigation as to their software development, customization, implementation and support practices, as well as hiring practices (e.g., see my August 15, 2010 post "EPIC's outrageous recommendations on healthcare IT project staffing"
at and contracting.

Reversion to a purely paper-based system is a rare event in the recent annals of electronic records, said Thomas Payne, a health IT expert at the University of Washington. “I can think of examples where that has happened, but in the last decade that is much less common.”

I believe that is because of the general invisibility of, and immunity from, the risks and harms that occur from "making do" with bad health IT due to financial pressures.  Hence one sees hair-raising examples like I wrote of at my Nov. 17, 2013 post "Another 'Survey' on EHRs - Affinity Medical Center (Ohio) Nurses Warn That Serious Patient Complications 'Only a Matter of Time' in Open Letter"at where going back to paper to allow a complete rethinking of the EHR implementation would likely have been the safe response.

See also, for example, my July 2013 post "RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals" at (there are links there to still more examples).

The Coast Guard is tight-lipped about the causes, timeline and responsibility for the debacle. “Various irregularities were uncovered, which are currently being reviewed,” a spokesman said.

The causes are all covered at, and have been since the late 1990s.  In the alternative, the book "Managing Technological Change: Organizational Aspects of Health Informatics" ( by Lorenzi & Riley does likewise for an even longer period, since the mid 1990s - for those willing or able to learn from history and from the pioneers

There’s no shortage of candidates: the service relied on five separate vendors to build the new system, and its own planning seems to have been at fault.

Lawmakers are looking into the matter, said a spokesman for the Senate Appropriations Committee, which is “monitoring the situation."

This is symptomatic, in my view, of the fact that there are a lot of "Beltway Bandit" IT consultant companies doing business, few of them very good.

Bungled implementation, followed by chaos

In September 2010, the Coast Guard bid out the contract to Epic Systems, then added an array of other contracts to software vendors and consultants to help implement it. Since 2010, the agency spent, on net, just more than $34 million on health IT.

In a January 2011 speech, Coast Guard Chief Medical Officer Mark Tedesco cited the success of Epic installations at Kaiser Permanente and Cleveland Clinic. He predicted that the Epic implementation would improve the health of its population and save money.

Overall it’s a cheaper system for us to run than to upgrade to [the next generation military EHR], because of what that would’ve meant to us infrastructure-wise and support-personnel wise,” he said.

It's stunning to think what this says about the next-generation military EHR.  The previous one was not very good, either (see my June 4, 2009 post "If The Military Can't Get Electronic Health Records Right, Why Would We Think Conflicted EHR Companies And IT-Backwater Hospitals Can?" at 

Trouble, apparently, struck quickly. The solicitation for the EHR contract envisioned rolling out the software within six months at two to three pilot sites, before deploying it to a total of 43 clinics and the sickbays aboard the Coast Guard’s fleet.

That didn’t occur; the system never deployed to any clinic or cutter, said Eric Helsher, an executive with Epic. The next missed deadline was March 2012, which Trent Janda — the Coast Guard doctor serving as project leader — announced in a summer 2011 newsletter of the Uniformed Services Academy of Family Physicians.

One can only wonder what penalties the contract called for if the goals and timelines were not met.  That software was not deployed even to any pilot sites is nearly unimaginable to me.

As Janda set the new goal, he acknowledged there had been “multiple hurdles and delays,” and explained that the service had expanded its ambitions.

“Immediately upon award of the contract, we began a comprehensive analysis of the clinical workflows and existing information systems,” Janda wrote. “Many of the weaknesses became apparent as we compared ourselves to industry standards and best practices. Frequently, a weakness would lead to others, ultimately leading to the need for an additional system. The work-flow analysis quickly grew into a system wide re-engineering project like a snowball rolling down the mountainside.”

This sounds like a groundbreaking level of project mayhem and chaos, even for HIT.

The comment reveals that the agency failed to do necessary advance planning, says Theresa Cullen, an informatics executive with the Regenstrief Institute who formerly worked with Veterans Health Affairs and the Indian Health Service.

“They should have done a full needs assessment,” she said. “One would have normally done the workflow evaluation prior to the release of the RFP.”

If true, I believe it was an obligation of EPIC and the multiple contractors to have pointed that out to their future customer, and adjusted their bids accordingly, taking into account the time and resources needed for this type of work - or not placed a bid at all.  Such deficiencies and what they mean towards project progress and failure are obvious - to anyone who's learned from history.

... Cullen also found it odd that the Coast Guard didn’t hire consultants to implement the new system until September 2012. The service ended up hiring Leidos, which also maintained its old EHR.

The Coast Guard further complicated the process by deciding to team up with the State Department. Its original request was complicated enough, with installations spanning six time zones. The partnership with State meant implementing across 170 countries. (A spokeswoman for State said the agency was investigating its options, but refused additional comment).

The sheer number of sites led Cullen to question whether Coast Guard and State had devoted enough resources to the project. Between Epic and Leidos, the project was budgeted for roughly $31 million. That was “an inadequate amount of funding for what you’re asking to do,” she said. Consultants receive roughly $100 an hour, and Epic’s work with clinicians is time-consuming.

Again, those hired knew, should have known, or should have made it their business to know that under such conditions, if true, project failure was the predictable outcome.  They are supposed to be the HIT experts, after all, not the Coast Guard.

While a very efficient health care system could implement the EHR, she said, the Coast Guard lacks that reputation. She speculated that Epic intentionally underbid the contract. (Epic’s Helsher said that “the contract was viable and we were fully motivated to lead a successful install.”)

Someone is right, and someone is wrong.  I leave it to the reader to decide who was correct and who wasn't.

Anecdotes of further delays pepper various newsletters and reports from 2012 through 2015. Server failures scuttled a pilot rollout in 2014, then developed into deeper problems, and last July the systems started failing on a more regular basis.

Perhaps the "anecdotes" need to be turned into "teachable moments" through legal discovery by federal law enforcement.

The Coast Guard advised retirees and dependents that month that, due to incompatibility between its EHR and the Department of Defense’s new medication reconciliation system, they couldn’t get their prescriptions filled at Coast Guard clinics.

Around Labor Day, Coast Guard health care personnel were directed to copy information from electronic files onto paper, for fear of losing their data.

That is just about the most pathetic sentence I've ever had to read in my 24 years in Medical Informatics.

... doctors are frustrated. One complained in the Uniformed Services Academy of Family Physicians newsletter of “unique challenges which seemed to revolve around many electronic record keeping changes.” “The question we pose is, how is this affecting shipboard life?” Little said. “This is the most important thing that’s happening right now in the Coast Guard.”

My advice to the Coast Guard is to treat the IT invaders and consultants as it would a invading maritime fleet from a hostile nation.

The vendors who worked with the Coast Guard either don’t know what went wrong, or aren’t telling. Leidos — also the lead company implementing the Pentagon’s EHR project — declined comment, as did Lockheed Martin, which was contracted to implement access to the EHR through mobile devices, and Apprio, which was to provide credentialing services.

I believe they have a very good idea of "what went wrong", and aren't telling (per the Fifth Amendment)?  If they have "no idea" what went wrong, what, I ask, are they doing in the IT consulting business?

... The EHR giant [EPIC] says it’s not entirely clear why the Coast Guard pulled the plug. But the situation wasn’t Epic’s fault, company executive Eric Helsher said.

They pulled the plug out of fear for their members' well-being, hopefully.

It seems everyone seeks to escape culpability, with the blame placed on the customer.

The Coast Guard spokesman said the decision was “driven by concerns about the project's ability to deliver a viable product in a reasonable period of time and at a reasonable cost.”

It seems there's still some who don't continue down the sunk-cost fallacy road ( and are willing to walk away from bad HIT.

... In general, software contracts deserve more scrutiny, said Kingston, who served on the House Appropriations Committee. “These things don’t get the scrutiny a weapons system does.”

Considering the reputation of military costs, that's saying quite a lot.  The lesson that should have been learned from history is that HIT is both exploratory, and a relative free-for-all.

Caveat emptor.

One last piece of (free!) advice for the Coast Guard leadership.

Read this paper:

Pessimism, Computer Failure, and Information Systems Development in the Public Sector.  (Public Administration Review 67;5:917-929, Sept/Oct. 2007, Shaun Goldfinch, University of Otago, New Zealand).  Cautionary article on IT that should be read by every healthcare executive documenting the widespread nature of IT difficulties and failure, the lack of attention to the issues responsible, and recommending much more critical attitudes towards IT.  link to pdf

That may be the most valuable learning experience of all for their next attempt to implement EHRs.

-- SS

Saturday, April 23, 2016

John Stossel Discovers Health Care Dysfunction, Blames it on "Socialists" - Like Maurice Greenberg (AIG), John Thain (Merrill Lynch), Sanford Weill (Citigroup), and David H Koch?

We have been ranting for a while about the dysfunctionality of the US health care system.  Unfortunately, many people only realize how bad things are when they become patients, when they have bigger things to worry about than complaining.   Furthermore, even if they complain, many patients may not feel they understand enough about what has gone wrong to suggest solutions.

Bad Customer Service at New York Presbyterian

This may not apply when media pundits, especially those with strong ideological views, become patients.  So this week Fox News commentator and well known libertarian John Stossel disclosed his new illness, and vented his opinions about his hospital stay.   Mr Stossel unfortunately developed lung cancer, although he was optimistic about his prognosis: "My doctors tell me my growth was caught early and I'll be fine. Soon I will barely notice that a fifth of my lung is gone."

However, he was not happy about his hospital's customer service:

But as a consumer reporter, I have to say, the hospital's customer service stinks. Doctors keep me waiting for hours, and no one bothers to call or email to say, 'I'm running late.' Few doctors give out their email address. Patients can't communicate using modern technology.

I get X-rays, EKG tests, echocardiograms, blood tests. Are all needed? I doubt it. But no one discusses that with me or mentions the cost.


I fill out long medical history forms by hand and, in the next office, do it again. Same wording: name, address, insurance, etc.


In the intensive care unit, night after night, machines beep, but often no one responds. Nurses say things like 'old machines,' 'bad batteries,' 'we know it's not an emergency.'


Some of my nurses were great -- concerned about my comfort and stress -- but other hospital workers were indifferent.
Unfortunately, long wait times, poor communications, excess paperwork, and misapplied technology are all too familiar problems to those in the health care system.

Moreover, this all was happening at one of the most highly rated US hospitals, 

After all, I'm at New York-Presbyterian Hospital. U.S. News & World Report ranked it No. 1 in New York.

Were "Socialist Bureaucracies" Responsible?

Mr Stossel had his own ideas about the causes of these problems. 

Customer service is sclerotic because hospitals are largely socialist bureaucracies. Instead of answering to consumers, which forces businesses to be nimble, hospitals report to government, lawyers and insurance companies.

Whenever there's a mistake, politicians impose new rules: the Health Insurance Portability and Accountability Act paperwork, patient rights regulations, new layers of bureaucracy...


Leftists say the solution to such problems is government health care. But did they not notice what happened at Veterans Affairs? Bureaucrats let veterans die, waiting for care. When the scandal was exposed, they didn't stop. USA Today reports that the abuse continues. Sometimes the VA's suicide hotline goes to voicemail.

Patients will have a better experience only when more of us spend our own money for care. That's what makes markets work.
A "Socialist Bureaucracy" with a VIP Penthouse?

I am sorry to hear Mr Stossel has lung cancer, and hope that his prognosis is indeed good.  I am a bit surprised that a media celebrity who became a patient found big issues with "customer service" at such a prestigious hospital.  After all, many big hospitals have programs to give special treatment to VIPs (for example, see these posts from 2007 and 2011).

In particular, back in 2012 we posted about the contrast between the VIP services specifically at New York - Presbyterian Hospital and how poor patients are treated there.  Then we quoted from a 21 January, 2012 article from the New York Times focused on the ritzy comforts now provided for wealthy (but perhaps not very sick) patients at the renowned New York Presbyterian/ Weill Cornell Hospital.  It opened,

The feverish patient had spent hours in a crowded emergency room. When she opened her eyes in her Manhattan hospital room last winter, she recalled later, she wondered if she could be hallucinating: 'This is like the Four Seasons — where am I?'

The bed linens were by Frette, Italian purveyors of high-thread-count sheets to popes and princes. The bathroom gleamed with polished marble. Huge windows displayed panoramic East River views. And in the hush of her $2,400 suite, a man in a black vest and tie proffered an elaborate menu and told her, 'I’ll be your butler.'

It was Greenberg 14 South, the elite wing on the new penthouse floor of NewYork-Presbyterian/Weill Cornell hospital. Pampering and décor to rival a grand hotel, if not a Downton Abbey, have long been the hallmark of such 'amenities units,' often hidden behind closed doors at New York’s premier hospitals. But the phenomenon is escalating here and around the country, health care design specialists say, part of an international competition for wealthy patients willing to pay extra, even as the federal government cuts back hospital reimbursement in pursuit of a more universal and affordable American medical system.

Additional amenities include:
A waterfall, a grand piano and the image of a giant orchid grace the soaring ninth floor atrium....

the visitors’ lounge seems to hang over the East River in a glass prow and Ciao Bella gelato is available on demand....

An architect who specializes in designing such luxury facilities for hospitals noted:
'These kinds of patients, they’re paying cash — they’re the best kind of patient to have,' she added. 'Theoretically, it trickles down.'
It appears that someone failed to book Mr Stossel into the penthouse.  Instead, he found out what service was like for the masses.

Perhaps this was why Mr Stossel railed at the "socialist bureaucracies" he perceived as running New York - Presbyterian Hospital.  However, calling the hospital management "socialist" seems - not to put too fine a point on it - wrong.

A "Socialist Bureaucracy" Paying Millions to its CEOs?

First of all, New York Presbyterian is hardly a government agency.  It is a private, non-profit corporation.  Every year as such it files a form 990 with the dread US Internal Revenue Service. (The latest publicly available version is from 2013, here.)  Obviously, US government agencies do not file with the IRS.

In fact, the New York Presbyterian system seems about as far from a federal government agency as one can imagine.

First, its top managers are paid like for-profit corporate executives.  In 2014, we posted about the humongous compensation given to its previous, long-serving CEO, Dr Herbert Pardes, who received multi-million dollar compensation every year through his 2011 retirement, and then continued to receive several million a year from the system in his retirement.  His successor, current CEO Dr Steven Corwin, received $3.6 million in 2012.  (More recent compensation figures are not yet available.)

A "Socialist Bureaucracy" Dominated by Managers, with Stewardship by Top Financial Executives, and one of the Koch Brothers?

The current leadership of New York Presbyterian is dominated by businesspeople, not physicians, nurses, or other health care professionals.  Only 10 of 33 listed senior leaders are health care professionals.  The rest have administrative/ management or legal backgrounds and training.  Many appear to be generic managers, that is, people with background and experience primarily in administration or management, but not in medicine, health care, public health, etc.

The hospital system's board of trustees was and is filled with some of the top business executives in the US, including some finance executives who have been cited as responsible for the global financial collapse/ great recession.

For example, we wrote about Mr Dick Fuld, a trustee until recently.  Mr Fuld was the CEO who presided over the bankruptcy of Lehman Brothers, which heralded the beginning of the great financial crisis/ great recession of 2008 onward.  Mr Fuld seemed to lack the sort of compassionate approach one might expect from someone charged with the stewardship of a big hospital system.  He had once publicly said about those who sold Lehman Brother stock short: "what I really want to do is I want to reach in, rip out their heart, and eat it before they die."

Another recently retired board member was Sanford I Weill, architect of the mergers that created the now federally bailed out Citigroup.  In 2014, we posted about how Mr Weill, contemplating retirement from the board of trustees of Weill Cornell Medical School, one of the two medical schools with primary affiliations with New York Presbyterian, managed to bequeath his board seat to his daughter, Ms Jessica Bibliowicz, also the CEO of a finance firm, National Financial Partners.  Ms Bibliowicz now also seems to have Mr Weill's seat on the New York Presbyterian board. 

Also, still on the board are two top finance CEOs who have been blamed for the global financial collapse.  These are  Maurice R Greenberg of the federally bailed out AIG, and John A Thain, CEO of the nearly collapsed Merrill Lynch (merged into Bank of America).  See this post for more information about their roles in the global financial collapse.

Finally, one other board member is David H Koch, described by Wikipedia

Koch is an influential libertarian. He was the 1980 candidate for Vice President of the United States from the United States Libertarian Party and helped finance the campaign. He founded Citizens for a Sound Economy. He and his brother Charles have donated to political advocacy groups and to political campaigns, almost entirely Republican
With socialists like these ...?   


I do not doubt that John Stossel found the customer service at New York Presbyterian not up to his expectations.  And I actually have no doubt that New York Presbyterian has to operate within a complex health care system in which government bureaucracy plays a large role, and sometimes a counter-productive one.  Furthermore, I have no doubt that the management of New York Presbyterian is very bureaucratic, and this may in part may be a reason for poor customer service, and other failings.

However, to say that the management and governance of the hospital system is "socialist" is dead wrong.  In fact, like many other large health care organizations, the New York Presbyterian system appears to be run largely by "managerialists," that is generic managers who have little experience or background in health care, may have little understanding or sympathy for its values, and approach health care with the same management techniques that might be applied to selling soap powder.  Furthermore, the stewardship of this particular hospital system seems to be largely up to some of the biggest, and loudest "capitalists," and one of the most prominent "libertarians" in the US.

But to someone with a hammer, most problems look like nails.

Maybe Mr Stossel needs to complain to Mr Koch.

In conclusion, I am glad that some of the problems in the dysfunctional US health care system are getting more public attention.  However, now we need to calmly and rationally consider what is causing them and what to do about them without the blinders of ideology or vested interests. 

IMHO, true US health care reform would put the operation of US health care organizations more in the hands of people who have knowledge and experience in health care, and are willing to be accountable to support health care professionals' values.  Furthermore, oversight and stewardship of these organizations should represent the patients and public which the organizations are supposed to serve. 

Friday, April 22, 2016

Lown Institute/ Right Care Alliance 2016 Conference

I am back from the annual Lown Institute/ Right Care Alliance meeting in Chicago.  A considerable part of the meeting was devoted to issues that may be familiar to readers of Health Care Renewal.

Shannon Brownlee, in her keynote talk, "Introducing the Right Care Alliance," called our current US health care system "corrupt."  She noted how clinical research has been "hijacked," (see our posts on the suppression and manipulation of clinical research).  She noted how the multi-million dollar compensation of CEOs whose hospitals serve - not always well - primarily poor people (see our posts on executive compensation and mission-hostile management).  She called for a national conversation to "expose the dark matter" of medicine, and right the wrongs of a new "gilded age."

The Right Care Alliance has a Vision Statement which calls for health care in which

Healthcare is a right, not a commodified privilege, and access to healthcare is universal, equitable, and affordable. Everybody in, nobody out.

There is meaningful public transparency around costs and outcomes that matter to patients and communities.

The science and practice of medicine is free of commercial bias and the profit motive.

among other imperatives.

Not to toot our own horns too much, but Dr Adriane Fugh-Berman of and I led a workshop on deceptive pharmaceutical and device promotion in the context of health care corruption.

Hopefully, much of the conference content will eventually show up on the web, but so far one nice video summary has been produced:

Wednesday, April 13, 2016

The More Things Stay the Same - More Apparently Adulterated Heparin, This Time from Chinese Ruminants

The story of the contaminated heparin just will not go away.  We first wrote about it in 2008 (see first post here, most related posts here, and the longer summary at the end of this post.)

Quick Summary

Baxter International imported the "active pharmaceutical ingredient" (API) of heparin, that is, in plainer language, the drug itself, from China. That API was then sold, with some minor processing, as a Baxter International product with a Baxter International label. The drug came from a sketchy supply chain that Baxter did not directly supervise, apparently originating in small "workshops" operating under primitive and unsanitary conditions without any meaningful inspection or supervision by the company, the Chinese government, or the FDA. The heparin proved to have been adulterated with over-sulfated chondroitin sulfate (OSCS), and many patients who received got seriously ill or died. While there have been investigations of how the adulteration adversely affected patients, to date, there have been no publicly reported investigations of how the OSCS got into the heparin, and who should have been responsible for overseeing the purity and safety of the product. Despite the facts that clearly patients died from receiving this adulterated drug, no individual has yet suffered any negative consequence for what amounted to poisoning of patients with a brand-name but adulterated pharmaceutical product.

Here We Go Again

At the end of March, 2016, per Bloomberg,

Heparin tainted with unauthorized Chinese-made ingredients may be on the market in the U.S. and the Food and Drug Administration hasn’t moved swiftly enough to prevent it, according to a congressional probe nearly a decade after hundreds of deaths were linked to sullied batches of the blood-thinning drug.

This possible contamination is different from the earlier one, when Chinese producers made crude heparin containing a deadly chemical. They may be using cow and sheep intestines to produce the raw material for heparin that is supposed to be derived only from the intestinal membranes of pigs, according to a letter the House Energy and Commerce Committee sent Tuesday to the FDA. The agency has known about the risky practice since 2007, around the time it discovered the chemically enhanced crude heparin, the panel said.

The FDA didn’t react early on 'to credible evidence of non-porcine contamination of the Chinese heparin supply,' according to the letter, only putting out testing guidelines for pharmaceutical companies in 2012. Even after the tragedy of the chemically soiled heparin, the committee said, 'loopholes and exemptions that permit part of the Chinese drug supply chain to operate outside government scrutiny still remain.'

The committee charged that nothing much as changed since the 2008 episode of deadly heparin made from Chinese pigs

The letter from the House committee said the FDA dropped the ball on many fronts and may have allowed unsafe blood thinners to remain on the market longer than necessary. Regulators didn’t properly or widely enough share information and didn’t follow up on leads about tainted heparin from other governments, according to the letter. Agency investigators failed to inform others about dodgy crude heparin makers, the panel said. It also said the FDA didn’t follow up on concerns that heparin with the chemical was recycled after the poison was removed and may have entered the U.S. market. The claims are based on documents that Baxter, Scientific Protein and FDA provided the committee as well as interviews with FDA employees, according to footnotes in the letter.

Also, efforts to investigate the 2008 problem seem to have failed,

The chemical, oversulfated chondroitin sulfate, was connected to 246 deaths and sickened hundreds of people who took the blood-thinning medicine, the FDA said at the time. Regulators never found at what point in the chain in China that the drug, sold in the U.S. by Baxter International Inc., was corrupted. The FDA closed its initial criminal investigation after it became difficult to obtain evidence in China, though it has since re-opened a related inquiry, according to the House committee. Baxter, which recalled its heparin in 2008, hasn’t sold the anticoagulant since. It said at the time it was alarmed that the contamination appeared to have been deliberate, but had no proof of how it happened.

Now the problem appears to be more bovine. It appears that French regulators first noted the problem of imported heparin derived from Chinese cows.

The French National Agency for Medicines and Health Products Safety called non-pig blending a 'critical' violation in an inspection report released in February. France cited China’s Dongying Tiandong Pharmaceutical Co. for making heparin with ruminant DNA, which includes cows and sheep. Dongying is registered with the FDA as a manufacturer of active ingredients and isn’t on the agency’s list of companies banned from importing to the U.S.

Yet, the FDA

considers heparin adulterated if it contains oversulfated chondroitin sulfate or non-pig material, according to an FDA document for the pharmaceutical industry on monitoring heparin quality. Material from cows could pose a risk because of possible contamination with mad cow disease.
Oddly enough, the Bloomberg article did not mention any criticism by the committee of the US based manufacturers who outsourced their heparin production to China.

Outsourcing Continues Unabated

In 2012 we noted that outsourcing by big multinational drug companies based in the US and other developed countries of active pharmaceutical ingredient (API) production to dubious manufacturers based in countries with much less robust regulation was continuing.  I wrote then

To put it more directly, most so called pharmaceutical companies in the US and other developed countries have outsourced the actual manufacturing of drugs. Thus, most companies that appear to be pharmaceutical manufacturing companies are really just pharmaceutical marketing and development companies. (And not so much the latter, look here:  Light DW, Lexchin JR. Pharmaceutical R&D; what do we get for all that money? Brit Med J 2012; 345: 22-25.  Link here.) Pharmaceutical companies appear to be abandoning their core essence, but are content to market drugs  under their logos without telling the patients who take them the real source of these products.  This would appear to be a big scandal, but one that stays curiously anechoic.

In 2016, outsourcing of drugs by big multinational corporations with prestigious names seems to be continuing at a rapid pace.  Per Bloomberg,

The U.S. depends heavily on China for medicine. Along with India, the country is one of the top two producers of base ingredients for drugs in the world, according to the National Academies of Sciences, Engineering, and Medicine.

There is still no clear way for US patients or doctors to identify outsourced medicines, and efforts to better regulate them seem feeble. Thus the danger that patients may be getting ineffective, adulterated, even deadly outsourced medicine in bottles with the logos of big, famous pharmaceutical companies seems to be ongoing.

The More Things Stay the Same

In 2012, we wrote

I have yet to see any discussion with pharmaceutical executives about why their companies hardly make drugs anymore. In the absence of such discussion, I can only speculate that most likely, this is first a product of financialization. Drug company executives, like most organizational leaders, have fallen under the spell that says their only goal should be to increase short-term revenues. It may be cheaper to buy drugs from perhaps dodgy outsourced suppliers rather than manufacturing them them themselves. Continuing stories like those above, and that of the contaminated Chinese heparin suggest that these outsourced drugs are cheap for a reason. It appears that to save money short-term, pharmaceutical executives may be abandoning their most central mission, to provide pure, unadulterated drugs.

The continuing story of outsourced pharmaceutical manufacturing provides yet more evidence that current management dogma may be literally toxic. Once again, I suggest that true health care reform requires leadership of health care organization who put patients' and the public's health ahead of short-term revenue (and the personal enrichment that may result).

It is likely that a number of policy changes will be needed to reduce the threats posed by contaminated or adulterated outsourced pharmaceuticals.  There is one simple step that ought to be taken quickly to at least make the problem more transparent.  In the US, most manufactured products have a label disclosing the country of origin.  In parallel with that, all pharmaceutical containers, and all pharmaceutical labels and marketing materials ought to disclose the country in which the active pharmaceutical ingredient was manufactured, and the name and location of the company responsible for that manufacture.

There seems to be no need to rewrite or update this.

The fact that this problem has been known for 2008 year, but not clearly addressed, shows the pitiful state of American health care dysfunction.  But those with vested interests in preserving the current system remain fat and happy, like the pigs of China.

 Appendix - Heparin Case Summary

- We have posted several times, recently here about the tragic case of suddenly allergenic heparin. Although heparin, an intravenous biologic anti-coagulant, has been in use for over 70 years, serious allergic reactions to it had heretofore been rare. Starting late in 2007, hundreds of such reactions, and 21 deaths were reported in the US after intravenous heparin infusions.All the heparin related to these events in the US was made by Baxter International.

- We then learned that although the heparin carried the Baxter label, it was not really made by Baxter. The company had outsourced production of the active ingredient to a long, and ultimately mysterious supply chain. Baxter got the active ingredient from a US company, Scientific Protein Laboratories LLC, which in turn obtained it from a factory in China operated by Changzhou SPL, which in turn was owned by Scientific Protein Laboratories and by Changzhou Techpool Pharmaceutical Co. Changzhou SPL, in turn, got it from several consolidators or wholesalers, who in turn got it from numerous small, unidentified "workshops," which seemed to produce the product in often primitive and unsanitary conditions. None of the stops in the Chinese supply chain had apparently been inspected by the US Food and Drug Administration nor its Chinese counterpart. (See posts here and here.)

- We found out that the Baxter International labelled heparin was contaminated with over-sulfated chondroitin sulfate, a substance not found in nature, but which mimics heparin according to the simple laboratory tests used in the Chinese facilities to check incoming heparin. (See post here.) Further testing revealed that the contamination seemed to have taken place in China prior to the provision of the heparin to Changzhou SPL. (See post here.) It is not clear whether Baxter International or Scientific Protein Laboratories had inspected most of the steps in the supply chain, or even knew what went on there.

- The Baxter and Scientific Protein Laboratories CEOs did not seem aware of where they got the heparin on which the Baxter International label was eventually affixed. But one report in the New York Times alleged that Scientific Protein Laboratories would not pay enough for heparin to satisfy any sources other than the small "workshops."

- Leaders of all organizations involved, Baxter International, Scientific Protein Laboratories, Changzhou SPL, the Chinese government, and the US Food and Drug Administration, and the US Congress assigned blame to each other, but none took individual or organizational responsibility. (See post here.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post here).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post here).

- Researchers (who turned out to have financial ties to a company which is developing an anti-coagulant drug that could compete with the heparin made by Baxter International) investigated the biological mechanisms by which the contamination of the heparin lead to adverse effects, but no one investigated further how the contamination occurred, or who was responsible. (See post here.)

- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post here.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post here).

- A government report which attracted little attention warned of the dangers of pharmaceutical ingredients made in China and subject to virtually no oversight. (See post here.)

-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post here.)

-  In February, 2011, a congressional investigation of the case was announced, but results were unavailable until now (see above)

-  In June, 2011, a jury returned the first verdict in a civil case about the contaminated heparin, awarding money from Baxter International and Scientific Protein Laboratories to the estate of a man who apparently died due to tainted heparin (see post here).

Thursday, April 07, 2016

"Immersion Day" to Expose Hospital Board Members to Real Health Care for a Day - A Great Idea, but Why Should It Be News?

Last week, the New England Journal of Medicine published an article by Bock and Paulus describing an innovative program at Mission Health in Asheville, NC to expose health system board members to the real world of health care.(1)  The article was nice, but begged an important question: why was such a program news?

The Immersion Day Program

 The article asserted:

The U.S. health care industry has long been beset by seemingly intractable problems: incomplete and unequal access to care; perverse payment incentives; fragmented, uncoordinated care that threatens patient safety and wastes money; and much more.

So the hypothesis on which the program was based was:

These challenges are particularly vexing to the people who oversee or set policy for health care organizations. The disconnect between health care in its intimate, real-world setting and the distilled information delivered in the boardroom or policy discussions is a key barrier to responsive governance and policymaking. Sometimes seeing with new eyes can lead to transformational understanding

In particular, the two physician authors of the article noted

Yet until 2013, none of our lay board members had ever been afforded the opportunity to see the complexities of care delivery, except when they were patients, visited someone in the hospital, or watched a TV show like Grey’s Anatomy. Like most boards, we did our work in the boardroom. There, management and our four physician board members did our best to paint accurate pictures of our system’s complexity: the workflows and the choreography, the opportunities for error, the forces behind increasing costs, and the good derived from serving all patients regardless of ability to pay. We shared our struggles and successes using PowerPoint presentations, graphs, spreadsheets, and patient statements.

So Doctors Bock and Paulus came up with the idea of providing basically provided a one-day clinical immersion program to members of the hospital system's board of directors.

we created 'Immersion Day,' when board members and thought leaders could spend 9 to 12 hours in scrubs, behind the scenes, immersed in the nuances of care delivery.

Board members went from pre-operative care, to the operating room, to intesive care, to surgical wards to rounds with "nephrologists, pulmonologists, trauma surgeons, and hospitalists, finally to the emergency department.

The board members apparently greatly appreciated thr program:

Board members have called their Immersion Day 'eye-opening and endlessly fascinating,' 'unforgettable and humbling,' even 'the best-spent day of my life.' One said, 'I learned more about hospitals and health care from my 10 immersion hours than 6 years sitting on our board.' Our staff benefits, too: when a physician or nurse meets a board member in scrubs, the encounter builds trust and admiration in both directions. Word spreads. Caregivers express gratitude that the board is spending time seeing what they do; many had never previously met a board member. Physicians’ relationships with the board and management, though imperfect, are far better than they’ve been in years, despite ever-increasing challenges.

The authors are now trying to make the program available to journalists, and "state and federal policy makers."  Their conclusion was:

we’ve built a transformative experience that can guide our board. Deep immersion in the work of our health system has strengthened governance and engendered trust in our community, staff, and physicians, while elucidating health care for policymakers. After three years of Immersion Days, we cannot imagine being governed by a board that hasn’t seen so intimately how a health system works.

There are some obvious limitations to this article, which unfortunately were not addressed in the text.  The article was entirely impressionistic.  It presented no data about actual end results of immersion day, much less a comparison to any other kind of interevention.

Furthermore, the authors did not describe some important characteristics of their hospital system which may differentiate it from others.  In particular, the management of Mission Health is much less generic than that of other hospitals.  Half of the top hospital administrators have medical or nursing degrees.  The CEO of the hospital is a physician.  In fact, he was the second author of the article. Five of 21 directors (including the CEO) are physicians.   So it is not clear how this program would work in a hospital whose management is dominated by people with business backgrounds.

Why Is This News?

But the article begged the questions of why this is news? The article stated that there is a big "disconnect" between what is discussed in hospital board rooms, and the health care that goes on in hospitals day by day.  Furthermore, it stated that many hospital board members had no direct experience with health care.  Instead, the article described the non-physician board members, who were by far in the majority, as "educators, attorneys, manufacturers, investors, and bankers."  It did not say why the majority of people responsible for the governance of a health care organization had no direct familiarity with health care.  That does not seem to make sense.  So why did it take so long to try to give them such familiarity, and why would a program to do so be newsworthy? 

The article also failed to note that the hospital in which the immersion program was initiated actually had a board that was more familiar with health care that the typical hospital board.  Many hospital boards of trustees are completely dominated by "attorneys, manufacturers, investors, and bankers," that is, wealthy businesspeople without health care experience, and parenthetically probably without much familiarity with the context of the many less financially fortunate patients of their hospitals.  Mission Health at least had a few physicians on its board.

We have posted some vivid stories about the skewed natures of hospital boards before.  For example,
-  the board of IU Health (Indiana), dominated by top executives and board members of large for-profit corporations (look here).
-  the board of the Hospital for Special Surgery (New York), of whose 42 members, 23 had major relationships, often top executive positions or board memberships, just in large financial firms, including some which were responsible for the great recssion.
Other examples can be found here.

Hospital boards whose members are unfamiliar with health care may reflect hospital management that is similarly unfamiliar with health care. In fact, most hospitals and hospital systems, like most US health care organizations, are not led by health care professionals.  Instead, they are led by generic managers, following the dogmas of managerialism.

We have frequently posted about what we have called generic management, the manager's coup d'etat, and mission-hostile management. Managerialism wraps these concepts up into a single package.  The idea is that all organizations, including health care organizations, ought to be run people with generic management training and background, not necessarily by people with specific backgrounds or training in the organizations' areas of operation.  Thus, for example, hospitals ought to be run by MBAs, not doctors, nurses, or public health experts.  Furthermore, all organizations ought to be run according to the same basic principles of business management.  These principles in turn ought to be based on current neoliberal dogma, with the prime directive that short-term revenue is the primary goal.

Of course, if top hospital leaders do not perceive their own unfamiliarity with health care as a problem, they are unlikely to perceive their boards' unfamiliarity as a problem too.  So it really was news that at one hospital, the management thought it necessary to better educate their own board about what really goes on in hospitals outside board rooms and management suites.

At a really manageralist hospital, whose management is dominated by people with business backgrounds, which may lack any top managers who have any health care background, and whose board is dominated by wealthy businesspeople with backgrounds outside of health care, the management would likely not bother trying to improve their board members' or their own familiarity with health care.  Were they to do so for some reason, I hypothesize that an immersion day for board members would have little effect.  The apparent, but not clearly proven success of  "immersion day" at Mission Health may be due to the important presence of health care professionals in top management and on the board of trustees, but may not generalize to most other hospitals.

In fact, the current leadership of hospitals and other health care organizations almost entirely by generic managers, reporting to boards made up almost entirely of generic managers, defies common sense.  Although trying to give board members some rudimentary familiarity with the health care context, during one day of the year, is obviously better than nothing, it clearly is only a tiny bandage on a gaping wound.  When one hospital deploys such a bandage, it is news.  That most hospitals' managers and boards would not even think of deploying such measures is a scandal.

So as we have said endlessly,...  

We need far more light shined on who runs the health care system, using what practices, to what ends, for the benefits of whom.

True health care reform would enable transparent, honest, accountable governance and leadership that puts patients' and the public's health over ideology, self-interest, and self-enrichment.

1. Bock RW, Paulus RA. Immersion day - transforming governance and policy by putting on scrubs.  N Engl J Med 2016; 374: 1201-1203.  Link here

Tuesday, April 05, 2016

What is more important in healthcare, computers, or nurses and other human beings? Southcoast Health cutting dozens of jobs on heels of expensive IT upgrade

That I even have to ask the question on the title of this post is a tragedy and a scandal.

I've written a number of posts on this blog about hospitals laying off staff and even put in financial jeopardy due to EHR implementation, e.g., my June 2, 2014 post "In Fixing Those 9,553 EHR "Issues", Southern Arizona’s Largest Health Network is $28.5 Million In The Red" at and numerous others indexed under "healthcare IT costs" at query link

This often occurs due to poor project planning, overconfidence, underestimation of complexity and even incompetence, that drives up electronic records system costs way over estimates. 

It's happened again:

Southcoast Health cutting dozens of jobs on heels of expensive IT upgrade
Mar 30, 2016, 11:25am EDT
Updated Mar 30, 2016, 11:31am EDT

Stung by losses linked to costly technology upgrades, Southcoast Health is laying off 95 employees just a year after finalizing a similar staffing cut.

The cuts represent 1 percent of Southcoast’s 7,251 workforce, and will happen across the care provider's three hospitals in Fall River, Wareham and New Bedford. All levels of hospital staff will be affected, officials said.

Southcoast employees were notified of the cut Wednesday morning. The cuts come as the hospital negotiates a merger with Care New England, a four-hospital system in Rhode Island.

The care provider said the cuts stemmed from training costs associated with the installation of a $100 million records system, known as Epic. Similar operating challenges have been reported by other Massachusetts care providers in the midst of Epic upgrades and installations.

I note that $100 million can purchase an entire new hospital wing or facility.

Training costs, of all things, should have been factored into the original project plans.  It's not as if this issue is an unknown in an industry and product extant for several decades now.

Also, IMO the word "challenges" should be altered to "challenged" to describe the institutional geniuses responsible for debacles like this.

Training costs for the system, which went live in October, contributed to a $9.9 million operating loss in the first quarter of fiscal 2016, which ended Dec. 31. Hospital executives said similar expenses have impacted the bottom line in the current quarter, which ends Thursday.

So, training costs for the EHR devoured profits from an increasing revenue stream as below, plus consumed enough to leave a near $10 million loss. Stunning.

“These financial challenges are attributable to higher-than-budgeted operating expenses, largely a result of our Epic implementation,” said Southcoast president and CEO Keith Hovan, in a letter to employees. “During the first two quarters of this fiscal year, revenue has grown positively at a rate of 4 percent – a significant accomplishment, particularly given the lack of a flu season. However, expenses have grown at 6 percent during that time, which is an untenable variance that must be corrected.”

I note that the hospital system might have realized their cost underestimations via reading the literature a bit, including but not limited to my completely free academic site at (in existence in various flavors since 1998), and this very blog.

Hovan went on to ask employees for recommendations to reduce costs, going so far as to tell employees to reach out to him directly.

How about reducing IT expenditure and laying off IT personnel responsible for the cost underestimates?  Costing is supposed to be a core competence of management information systems (MIS) personnel in those IT departments.

... Approximately 70 people were let go in October 2014, and another 35 were let go in January 2015.

The hospital still has 339 job openings for a number of clinical roles. Cohenno wouldn’t detail what kinds of jobs the hospital was eliminating, but said employees affected by today’s layoffs will be encouraged to apply to open positions.

Some consolation for being fired to maintain the good health of a computer.

The solution to this problem is for hospital executives to actually learn more about what they're getting into in HIT acquisition, implementation and operation, instead of simply believing the marketing hype coming from the HIT industry and its cybernetic hyper-enthusiasts.

That means reading far more than typical industry marketing BS, a.k.a. performing robust due diligence.

-- SS

Thursday, March 31, 2016

What You See Is Not What You Get - Purdue Pharma Executives Pleaded Guilty, but the Oxycontin Billionaires Went Unnoticed

What you see if often not what you get.  

Nine years ago, three top executives of Purdue Pharma pleaded guilty to criminal charges of "misbranding" Oxycontin.  The case appeared to be a landmark.  In previous years, top executives of large health care corporations rarely faced legal consequences when their companies misbehaved.  Yet in the Purdue Pharma/ Oxycontin case, things were not what they seemed.  Maybe that is why this case never did yield a new era of accountability for top corporate health care leaders.

Background - the Oxycontin Guilty Pleas

In 2007, we posted about the executives' guilty pleas.  Relying on the New York Times coverage, we noted that the Department of Justice charged that the company used aggressive, deceptive marketing, including claims that Oxycontin had little potential for addiction, even though they then knew otherwise.  Unlike many other settlements, the executives and the company admitted their dishonesty, although they were not apparently charged with fraud.

In a statement, the company said: 'Nearly six years and longer ago, some employees made, or told other employees to make, certain statements about OxyContin to some health care professionals that were inconsistent with the F.D.A.-approved prescribing information for OxyContin and the express warnings it contained about risks associated with the medicine. The statements also violated written company policies requiring adherence to the prescribing information.'

'We accept responsibility for those past misstatements and regret that they were made,' the statement said.
While no executives went to jail, the three who pleaded guilty,

Michael Friedman, the company’s president, who agreed to pay $19 million in fines; Howard R. Udell, its top lawyer, who agreed to pay $8 million; and Dr. Paul D. Goldenheim, its former medical director, who agreed to pay $7.5 million.

appeared to be the top leaders of the company.  So, at the time I concluded,
At least in the Purdue Pharma/ Oxycontin case top company leaders were prosecuted, pleaded guilty, and will personally have to pay substantial financial penalties. Maybe this will convince the leaders of health care organizations that deceptive marketing practices may not be in their long term interests. Up to now, it may have been too easy to be swayed by the enormous profits deceptive marketing can bring, and regard fines paid by the company as just a cost of doing business.
No Lasting Effects

I was much too optimistic.  Alas, we have since documented numerous legal settlements, and other cases of at least alleged bribery, kickbacks, or fraud, in which the top organizational leaders who authorized or directed the questionable conduct never suffered any consequences for their actions.  That is, they demonstrated impunity.

Meanwhile, Purdue Pharma has been in the news since 2007, and not in a good way.  In particular, we noted that the company seemed to keep up manipulative, if not deceptive marketing efforts on behalf of its narcotic product.  In 2010, Canadian medical students protested that their "education" about narcotics and pain management was influenced by Purdue marketing (look here).   In 2012, we noted that a leading "key opinion leader" who had a key role promoting the liberalized, if not reckless use of narcotics to treat all sorts of chronic pain, and had financial relationships with numerous narcotic pharmaceutical manufacturers, including Purdue Phrama, later admitted that it was all "misinformation."  Yet this aggressive promotion of narcotics was likely a major factor in the ongoing narcotic epidemic which has killed thousands in the US.  And in January, 2016 we described how opposition to new CDC guidelines that suggested much more conservative use of narcotics seemed to be funded, if not orchestrated by narcotic pharmaceutical manufacturers, notably including Purdue Pharma.  Finally, there have been many other stories about Purdue Pharma about which we failed to post.

One would think, however, that a company that admitted to a crime, and whose three top executives lost their jobs and also pleaded guilty to crimes, would at least change its ways, even if these guilty pleas and admissions did not inspire more attempts to hold top corporate health care leaders accountable.

An Assumption about Unaccountable Hired Mangers

But it turns out that some obvious assumptions that I and probably many other people made about the Purdue Pharma cases of 2007 were wrong.  I implicitly assumed when I wrote my 2007 post that the three Purdue Pharma executives who pleaded guilty were the top leaders of the company.

Furthermore, as we have discussed elsewhere, the top executives of large, for-profit publicly held corporations, like most pharmaceutical companies, have become largely unaccountable.  They may seem to exist in a bubble, in which they are hailed as visionaries, and paid exceedingly well no matter how their organizations perform.  (Look here).  However, many top hired corporate managers have mainly become "value extractors."

These executives are nominally accountable to their corporate boards of directors, which are supposed to represent the owners of the companies.  However, most large pharmaceutical companies have numerous stockholders, who have no easy avenue to organize.  Many of their stockholders, in turn, are mutual funds, retirement funds, etc whose shares in turn are owned by thousands more.  These numerous, dispersed "owners" have little influence on corporate boards, who often functionally are dominated by cronies of the top management.

So when the three top Purdue executives pleaded guilty, at least it looked like in this case the unaccountable hired executives had been made accountable, if not to their boards of directors, at least to the courts.

But Who Owned Purdue?

But what you see is not always what you get.  There was a hint buried in the NY Times article,

Between 1995 and 2001, OxyContin brought in $2.8 billion in revenue for Purdue Pharma, a closely held company based in Stamford, Conn. At one point, the drug accounted for 90 percent of the company’s sales.

As part of the plea agreement, Purdue Frederick, a holding company for Purdue Pharma that is also closely held, pleaded guilty to a felony charge of misbranding OxyContin.

The article did not further discuss the meaning and implications of the twice used phrase, "closely held."  I confess I missed it entirely.  However, it seems to have meant that rather than being a public corporation with numerous, dispersed stockholders, the owners of Purdue Pharma and its parent were a smaller group, perhaps a group who should have been accountable for the actions of their executives.  However, the NY Times did not further describe this group.  Neither did reports in other outlets, such as the Wall Street Journal, CBS, or Time. Nor did a variety of other news stories that mentioned Purdue Pharma through 2010.

The Oxycontin Billionaires

There were a fewother clues available in 2007, but would have not been easily found at that time.  After the case's resolution was disclosed, an article appeared in the Corporate Crime Reporter (but was presumably only available at that time by subscription.)

Purdue is a privately held, very secretive company based in Stamford, Connecticut.

It’s controlled by the Arthur Sackler family. Arthur Sackler is the guy who, before he delivered OxyContin, brought to you the marketing for Librium and Valium. Walk on the mall in Washington and you walk by the Freer Gallery of Art and Arthur Sackler Gallery.

Art brought to you by Oxy.

New York Times correspondent Barry Meier is probably the most plugged in journalist on the topic. A couple of years ago, he wrote a book detailing the problem titled Pain Killer: A 'Wonder' Drug’s Trail of Addiction and Death (Rodale Books, 2004.)

So apparently Purdue Pharma and Purdue Frederick were privately held, the Sackler family held a controlling interest, and the Sackler family were rich enough to have their name attached to an art museum.

The relationship between the Sackler family and Purdue got no other attention I could find until 2010.  In March of that year, another member of the family, Dr Mortimer D Sackler died, and his NY Times obituary led off with evidence of his wealth, and philanthropy,

Mortimer D. Sackler, a psychiatrist who was a co-owner of the pharmaceutical company Purdue Pharma, makers of the controversial painkiller OxyContin, and whose lavish gifts to the Guggenheim Museum, the Metropolitan Museum of Art and Columbia University made him one of New York City’s most prominent benefactors, died March 24 in Gstaad, Switzerland. He was 93 and had homes in London, Gstaad and Antibes, France.

The obituary also provided evidence of a direct relationship among the Sacklers, Purdue, and the development of Oxycontin.

The Sackler brothers were all doctors, and all businessmen as well. In 1952, while the three were working at the Creedmoor state psychiatric hospital, Arthur financed the purchase of a small drug manufacturer based in Greenwich Village, the Purdue Frederick Company, which Mortimer and Raymond Sackler ran as co-chairmen and which later became Purdue Pharma, now based in Stamford, Conn.


by the mid-1990s Purdue Pharma was still a small drug company. But with a new product, OxyContin, a powerful, long-acting, narcotic painkiller, the company hoped to join the ranks of industry giants. Indeed, by 2001 sales of the drug had reached nearly $3 billion and accounted for 80 percent of Purdue Pharma’s revenue.

An obituary in the London Telegraph quantitated the wealth that the Sacklers obtained from Purdue a bit more,

The lavish scale of Sackler's generosity was indicated in The Sunday Times's "Rich List" for 2008, which noted that while he and his family owned a £500 million stake in the pharmaceutical business, Purdue Pharma, huge charitable contributions had cut their wealth to £300 million. Yet few knew much about the Sacklers apart from their association with the cultural institutions that bear their name.

However, I could find no echos of this story beyond these obituaries, and certainly none that prominently made their way into the health care world.  In late 2011, about ten percent of a long piece by Fortune on Purdue made the Sackler's ownership and wealth clear, but did not discuss the implications.

The story only began to echo a little in 2014.  That year, the prospect of a trial of a civil lawsuit against Purdue filed in the state of Kentucky, one of the most hard hit by the narcotic epidemic, promised to shake things up.  A long Bloomberg story on the lawsuit was the first to suggest that the very wealthy Sackler family might bear some responsibility for how Purdue marketed Oxycontin, and the results on patients' and the public's health. 

Kentucky lawyers plan another first for Purdue: They want to elicit testimony from the company’s board, which is dominated by members of the Sackler family, the wealthy philanthropists who own the company and have until now remained largely untouched by the controversy tied to the blockbuster drug that netted their business billions of dollars.

It underlined the tightness of the ties between the Sackler's and Purdue. The family does not merely own a controlling interest, but dominates the company's governance.

Purdue today is owned through holding companies and family trusts for the benefit of Mortimer and Raymond Sackler’s families, according to Raul Damas, a company spokesman. In all, nine members of the Sackler family are Purdue directors. In January, Raymond Sackler announced the appointment of Chief Executive Officer Mark Timney. None of the Sacklers has been named in the Kentucky suit.

Raymond, who remains on the board, and his children have been the most involved in the family business. His son, Richard, a physician, worked at Purdue for three decades before being named president in 1999. Now retired, he remains a director. A grandson, David Sackler, sits on the board and runs a family investment fund, Summer Road LLC, in New York. Raymond’s other son, Jonathan, is a director, too.

By the way, the Bloomberg article also detailed another point (which had been mentioned in the obituaries and the CNN article). One member of the Sackler family was behind the aggressive, deceptive marketing campaign that sparked so many sales of Oxycontin. In fact, this Sackler brother could be viewed as the father of modern aggressive, deceptive pharmaceutical/ biotechnology/ device corporate marketing.

Raymond and Mortimer ran the company together. Arthur, the oldest, appears to have been primarily an investor and adviser.

Considered the father of modern pharmaceutical marketing, Arthur Sackler created the first medical-journal advertising insert to promote a drug and pushed for hiring sales reps long before they became as common in physicians’ waiting rooms as out-of-date magazines. Purdue used many of Arthur Sackler’s tactics when it introduced OxyContin, a time-released dose of the opioid oxycodone, in 1995.

CNN had gone into a bit more detail on Arthur Sackler's previous work:

Arthur, joined a small advertising agency that specialized in marketing pharmaceuticals. (He also funded his brothers’ purchase of Purdue, according to a 2003 book by New York Times reporter Barry Meier called Pain Killer: A Wonder Drug’s Trail of Addiction and Death.) Arthur was so successful that in 1997 he was one of the first people named to the Medical Advertising Hall of Fame, whose website credits him with helping 'shape pharmaceutical promotion as we know it today.' As early as the 1950s he was experimenting with TV marketing, and according to the entry, Arthur’s scientific knowledge and ability to expand the uses for Valium helped turn it into the first $100 million drug ever. Arthur’s philosophy was to sell drugs by lavishing doctors with fancy junkets, expensive dinners, and lucrative speaking fees, an approach so effective that the entire industry adopted it.

So at least this article credits Dr Arthur Sackler, of Purdue Pharma, with being one of the creators of the web of conflicts of interest that has ensnared many medical professionals in the last decades.  Who knew?

Just to ice this cake, in later 2015, it became apparent that the Sacklers did not merely become wealthy from Purdue profits and Oxycontin sales. They became fabulously wealthy. Forbes listed the Sackler family that year as one of the 20 richest US families, estimating their combined wealth as $14 billion.

The Sackler family, which owns Stamford, Conn.-based Purdue Pharma, flew under the radar when Forbes launched its initial list of wealthiest families in July 2014, but this year they crack the top-20, edging out storied families like the Busches, Mellons and Rockefellers.

How did the Sacklers build the 16th-largest fortune in the country? The short answer: making the most popular and controversial opioid of the 21st century — OxyContin.

Purdue, 100% owned by the Sacklers, has generated estimated sales of more than $35 billion since releasing its time-released, supposedly addiction-proof version of the painkiller oxycodone back in 1995. Its annual revenues are about $3 billion, still mostly from OxyContin. The Sacklers also own separate drug companies that sell to Asia, Latin America, Canada and Europe, together generating similar total sales as Purdue’s operation in the United States.

Forbes estimates that the combined value of the drug operations, as well as accumulated dividends over the years, puts the Sackler family’s net worth at a conservative $14 billion.

Perhaps if the Kentucky lawsuit had gone to trial, these echos would have gotten even louder.

However, in December, 2015, Purdue settled the suit for $24 million, admitting no liability, and keeping the Sackler name out of the limited press coverage (although see this in STAT by Ed Silverman.)

I, for one, only found out about the Sackler / Purdue linkage when STAT published a followup in March, 2015.  It turns out that in the run up to the Kentucky trial, a member of the Sackler family was actually deposed.  This may have been the only direct discussion of the Oxycontin case by a member of the family.

The settlement required the attorney general to 'completely destroy' or return to Purdue all documents it received from the company or from any other party through a subpoena. The attorney general was given 60 days from the Dec. 18 agreement to comply. The agreement also prohibits the attorney general from sharing the documents with any other entity investigating or litigating against Purdue.

The attorney general’s office destroyed millions of pages of documents within the 60-day period, according to spokesman Terry Sebastian.

While the attorney general destroyed the records in its possession, copies of some of those records remain under seal in the Pike County courthouse, including the Sackler deposition.

The STAT article noted that millions of pages of records from other Oxycontin litigation were destroyed or returned to the company as stipulated by previous settlements. This time,

STAT is making a motion to intervene in the settled Kentucky lawsuit. The motion was sent to the Pike Circuit Court Monday via overnight courier.

The motion argues that STAT and the public have a constitutional right to the records that trumps Purdue’s interest in keeping them secret. The motion also states there is a substantial public interest in the case, citing the epidemic of drug addiction and related crime stemming from the abuse of OxyContin in Kentucky and other states. STAT is requesting the court make the documents available immediately.

We will see how this attempt to shine a little light on the long running Oxycontin story goes. I am not optimistic, since this long-running case has vividly shown how those who have the biggest vested interests in keeping our commercialized, overutilizing, over-marketed health care system going can use money and influence to keep it all so anechoic.


So now we see, dimly, reasons why the penalties handed out to "top" Purdue Pharma executives for the deceptive "misbranding" of a dangerous narcotic failed to end the impunity of top health care leaders.  Those supposed "top men" were not really the top.

Just like in "Raiders of the Lost Ark,"

They were hired managers with fancy titles who worked for a secretive family which owned Purdue Pharma, which was apparently directly involved in the engineering of the aggressive, deceptive, "misbranding" sales campaign which sold so much Oxycontin, which became fabulously wealthy from the ownership of the company, and which managed to conceal their relationship to the company from nearly all prying eyes.  So far, the family seems to either have befuddled or intimidated law enforcement sufficiently to prevent any direct consequences from befalling them.

This case vividly demonstrates, first, how those who have personally gained the most from our current dysfunctional health care system have often brilliantly covered up what they were doing (part of what we have called the anechoic effect).  As long as we do not know where the money goes, and how it is made, we do not know what needs to be done to make things better.  True health care reform requires bright sunlight to be shown on how the health care sausage is made, who makes it, and how they profit from it.  As long as we the people let ourselves stay in the dark, we will continue to endure our woefully overpriced, inaccessible, mediocre quality, and all too often frankly corrupt health care system.  

A piece this long and heavy deserves a musical interlude. Here is a live performance by the Dramatics of "What You See Is What You Get," (if only that were the case here).