June 20, 2016
Corruption In Healthcare—Part One
By Michael D. Shaw
Let’s see. Why do you suppose there might be corruption in healthcare? For starters, total healthcare spending—just in the United States—was $3.2 trillion last year. We need only invoke famed criminal Willie Sutton, when asked why he robbed banks. He is alleged to have replied: “Because, that’s where the money is!” Secondly, healthcare is the most highly regulated industry on earth, and excessive regulation will inevitably lead to conflicts beyond measure, as well as breeding corruption.
For Part One of this series, we turn to Big Pharma. While the pharmaceutical industry provides a target-rich environment, with no shortage of lurid tales of venal greed, retail sales of prescription drugs accounts for less than ten percent of health care expenditures. Moreover, conventional investigative reporters tend to focus on Pharma, since misdeeds here are far easier to probe and understand than other sources of healthcare corruption.
That’s why such matters as institutionalized scientific bias; the manifold problems with electronic health records; absurd reimbursement policies; and the catastrophic emphasis on procedural over cognitive medicine are virtually ignored.
A recent story involves Tarceva, a drug for the treatment of non-small-cell lung cancer. Tarceva was promoted for all non-small-cell lung cancers, although the data indicated that it only seemed to work for patients who had either never smoked, or had a particular gene mutation affecting the Epidermal Growth Factor Receptor (EGFR). Overexpression of this gene has been linked to a variety of cancers—including lung cancer.
A whistle-blower lawsuit was filed in 2011 by former Genentech sales rep and product manager Brian Shields, after his employers refused to acknowledge his concerns regarding deceptive marketing practices for Tarceva. Among other things, product brochures discouraged doctors from testing their patients for EGFR overexpression; Genentech paid lung cancer patient “ambassadors” to tout off-label use of the drug; and doctors were given kickbacks, disguised as speaking fees, or as honoraria for serving on advisory boards.
The complaint also suggested that certain adverse effects of the drug were not reported. Thus, on June 6, Genentech and its marketing partner OSI Pharmaceuticals agreed to pay $67 million to settle, and avoid further litigation. As the complaint noted, “Cancer patients only get one shot at first-line treatments, and defendants took that opportunity away.”
At about the same time as this settlement, Transparency International UK issued a report entitled “Corruption in the pharmaceutical sector: Diagnosing the challenges.” The report chronicles a litany of misdeeds, including suppression of certain Paxil clinical trial data; Ranbaxy USA and adulterated medicines; deceptive marketing of Risperdal; ex-UN consultants bribed to rig pharmaceutical contracts; and arson at the Ghanaian Central Medical Stores to cover fraud.
Sophie Peresson—Transparency’s head of pharmaceuticals and healthcare—doesn’t hold back: “It is shocking that despite scandal after scandal involving pharma companies, still policy makers simply are not taking seriously the corrosive effect of corruption. The red flags are being ignored.”
Per the report: “To genuinely diminish corruption in the pharmaceutical sector, national governments must show commitment to tackling the issues. Regardless of a company’s revenue, an official’s seniority or a healthcare professional’s prestige, anyone suspected of corruption must be investigated and sanctions applied.”
Here’s one more case that broke on June 6: The Supreme Court rejected a bid by GlaxoSmithKline to avoid a lawsuit brought by three health plans, which claimed they overpaid for the Avandia diabetes pill because the drug maker hid some of the safety risks.
We’ll close with some commentary on Pharma corruption, culled from insider blogs…
“This is hardly surprising. When the chase for extreme profits on Wall Street began in the late 1970s, it was the cutting edge pharmaceuticals (Genentech, Cetus, etc.) that led the way with P/E ratios of 30 and above being standard fare. It’s now to the point that these profit levels are a requirement of pharmaceutical management, and corruption seems to be the easiest way to achieve them.”
“I have been a pharmacist for 40 years, and what Big Pharma is doing today is nothing but fraud, to get people to take more drugs. They want you to be dependent on them to live longer. But what about your quality of life? Drugs have two actions, the one you desire and the one you don’t want. Those extra years you’re being promised will not be quality years, as the drug side effects will require yet more drugs to offset them. If you do not change anything in your lifestyle other than consuming more drugs, you are being led down a delusional road.”