BLOGSCAN - Attention to Medtronic's Payments to Spine Surgeons in the Main Stream Media

On the HealthBeat blog, Maggie Mahar takes up the case of huge royalty and consulting payments to spine surgeons by medical device company Medtronic.  We had discussed the case recently here, followed by Howard Brody on the Hooked: Ethics, Medicine and Pharma blog (see link in this post).  Ms Mahar was notably optimistic because of the continued attention to this case by the main stream media.  She argued that the increased emphasis on aspects of health care dysfunction shown by the media means "health care reform is moving ahead on the ground."  I hope she is right, but I would feel more hopeful if ill-informed, mission-hostile, self-interested, conflicted, and corrupt health care leadership was less anechoic, if health care dysfunction actually got some attention in the medical/ health care/ health services research/ health care policy literature , and if I could identify at least one prominent politician or policy-maker who talks about these issues.

BLOGSCAN - Attention to Medtronic's Payments to Spine Surgeons in the Main Stream Media

On the HealthBeat blog, Maggie Mahar takes up the case of huge royalty and consulting payments to spine surgeons by medical device company Medtronic.  We had discussed the case recently here, followed by Howard Brody on the Hooked: Ethics, Medicine and Pharma blog (see link in this post).  Ms Mahar was notably optimistic because of the continued attention to this case by the main stream media.  She argued that the increased emphasis on aspects of health care dysfunction shown by the media means "health care reform is moving ahead on the ground."  I hope she is right, but I would feel more hopeful if ill-informed, mission-hostile, self-interested, conflicted, and corrupt health care leadership was less anechoic, if health care dysfunction actually got some attention in the medical/ health care/ health services research/ health care policy literature , and if I could identify at least one prominent politician or policy-maker who talks about these issues.

BLOGSCAN - On Device Company's Obfuscation of the Reasons for Payments to Surgeons

On the Hooked: Ethics, Medicine and Pharma blog, Dr Howard Brody analyzed further the case of the huge royalties paid to spine surgeons by Medtronic (see our most recent post here).  He wondered why surgeons would get such sizable payments for "intellectual property" related to devices that they neither seemed to use or to research?  I would note that the lack of clarity about the reason for Medtronic's payments to these surgeons is just part of a larger lack of clarity about most of the payments made to physicians and medical and health care academics for "consulting" or serving on advisory boards.  If such professional-industrial collaboration is so important for "innovation," one wonders why the people engaged in it are almost never willing to disclose the topics of these wonderful interchanges?

BLOGSCAN - On Device Company's Obfuscation of the Reasons for Payments to Surgeons

On the Hooked: Ethics, Medicine and Pharma blog, Dr Howard Brody analyzed further the case of the huge royalties paid to spine surgeons by Medtronic (see our most recent post here).  He wondered why surgeons would get such sizable payments for "intellectual property" related to devices that they neither seemed to use or to research?  I would note that the lack of clarity about the reason for Medtronic's payments to these surgeons is just part of a larger lack of clarity about most of the payments made to physicians and medical and health care academics for "consulting" or serving on advisory boards.  If such professional-industrial collaboration is so important for "innovation," one wonders why the people engaged in it are almost never willing to disclose the topics of these wonderful interchanges?

Spine Surgeons Reticent About Disclosing Huge Medtronic Payments

Starting in 2007, we posted (here, here, here, here and here) about the payments, often huge, that five manufacturers of prosthetic joints (Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew) revealed they made to orthopedic surgeons and various academic and other organizations. We also noted that some of the leadership of the major orthopedic societies have received substantial amounts from these companies, as have the societies themselves.

In 2008, our post on this subject noted the minimal disclosure some of the surgeons receiving these huge payments made when writing scholarly articles on related topics.  In 2009, an article in the New England Journal of Medicine showed that almost 30% of surgeons who got such payments in 2007 failed to disclose them when they presented at the 2008 American Academy of Orthopedic Surgeons meeting.(1)

Medtronic's Payments to Spine Surgeons

This month, the media reported that Medtronic also made payments, sometimes huge, to orthopedic and spine surgeons (see this post by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog, and our summary post here.) 

Now further investigation by John Fauber of the Milwaukee Journal-Sentinel suggests that surgeons receiving often huge payments from Medtronic may not have been good at disclosing them either.

The article examined payments made to surgeons who authored two major studies about bone morphogenetic protein-2, a biologic drug manufactured by Medtronic used to promote bone growth at surgical sites:

Over the last decade, a small group of prominent surgeons from around the country has been enlisted by medical device-maker Medtronic to do clinical research or write articles about the company's new spine surgery product.

This year alone, many of those doctors received payments of hundreds of thousands to millions of dollars each in royalties for a variety of other Medtronic spinal devices, according to a Journal Sentinel analysis of newly released company payments. Medtronic began disclosing the payments this year, in advance of a federal requirement set to take effect in 2013.

Since it won approval for narrow uses in 2002, the product - bone morphogenetic protein-2, known as BMP-2 - has been an increasingly dominant force in spinal fusion surgery, with sales of about $800 million a year, often for use in other procedures.

Independent doctors say the product's success is due largely to positive findings made by the surgeons affiliated with the company.

Doctors involved with two of the many research articles on BMP-2 published since it was approved - one in 2002, the other in 2004 - received a combined $6 million in royalties this year for other Medtronic spinal products, the newspaper found. The payments went directly to the doctors or business entities they are associated with.

No Disclosure in a 2002 Article

The Journal-Sentinel article referred to two scholarly articles written about BMP-2. Regarding the first,

At the time BMP-2 was approved in 2002, little was known about the financial connections between Medtronic and doctors associated with the clinical trial. Likewise, little was known that year when the Journal of Spinal Disorders & Techniques published the article on the trial.

The paper made no mention of doctors getting royalties or having any financial connection to the company.

[Note: I am unable to find this article using standard search techniques, so I cannot give a citation for it.]
Regarding the lack of disclosures made in the first article,

The four co-authors of a 2002 paper about that trial received a total of $2.8 million this year from Medtronic in royalties for products not including BMP-2.

The paper made no mention of any financial relationship between the authors and Medtronic.

Burkus, who also was involved in the 2004 study, again declined to say if he was receiving royalties from Medtronic or if had some other financial connection with the company at the time the 2002 paper was published. He got $573,000 through September.

Curtis Dickman, a Phoenix surgeon, did not respond to phone calls and e-mails. He and Vantage Investments LLC received $306,000 in royalties.

Matthew Gornet, a St. Louis surgeon, and Gornet Enterprises got $591,000 in royalty payments.

Gornet said he did not have a financial connection with the company at the time of the study, though he developed a relationship as a consultant right after the trial, an arrangement that ended after about a year.

He said his patent rights with Medtronic did not begin until 2003 and none of his royalties involves BMP-2.

The last author listed was Thomas Zdeblick, an orthopedic surgeon at the University of Wisconsin School of Medicine and Public Health. Through September, he and Taz Consulting received $1.4 million in royalties for a variety of products.

Other records show Zdeblick has received more than $23 million in royalties from Medtronic since 2002.

In an e-mail, Zdeblick said he had no financial interest in BMP-2. He does receive royalties for the invention of the LT-Cage, which was used in the BMP-2 clinical trial, but the two products are sold separately.

Little Disclosure in the 2004 Article

Regarding the second article,(2)

Three of the four authors of a 2004 article on the study of the productare listed as receiving nearly $4 million this year in royalties from Medtronic for a variety of spinal products, not BMP-2.

That paper was important because it involved a clinical trial that had to be stopped because the product was causing troubling bone formation in the spinal canal of patients. In the paper, that finding was downplayed, with the authors describing the results as 'encouraging.'

[Professor Dan] Spengler, the Vanderbilt orthopedic surgeon and former medical journal editor, said he doubted the paper would have been written in such positive terms by authors without financial ties to Medtronic.

He described the article as egregious, saying it 'just blew off the complications. It's a horrible article.'

Orthopedic surgeon [University of California - Irvine Clinical Professor Charles] Rosen said the paper was biased, calling it 'more of a marketing paper than an objective scientific study.'

Regarding the disclosures made in the second article,

The article described three of the authors as consultants to Medtronic, though it did not disclose that any of them were receiving royalties at the time.

Regis Haid, lead author of the article and an Atlanta neurosurgeon, told the Journal Sentinel he was getting royalties for other Medtronic products. Haid noted disclosure rules for medical journals have become more stringent in recent years.

He said BMP-2 provides excellent benefit to patients, adding he had it implanted in his own neck in an off-label procedure. ;I have BMP in me, and I would put it in you . . . ,' he told a reporter.

Through September, Haid and Spinal Engineering LLC received about $2 million in royalties this year from Medtronic.

Meanwhile, co-author Ken Burkus, a Columbus, Ga., surgeon, and RBCK Research & Consulting, received $573,000.

'Very importantly, you cannot assume that such royalty payments were made prior to 2010,' he said in an e-mail, declining to say whether he got royalties at the time the paper was written. 'I follow the rules to my fullest ability as put forward by the specific journal.'

He took issue with criticism that the paper put a positive spin on a troubling clinical trial.

'I believe the words used were appropriate . . . ,' he said. 'I believe the words used were neither 'positive nor negative' but rather were representative of the data presented.'

He said if other doctors have problems with the paper, they should take it up with the editor of the journal: 'They can write a letter to the editor.'

Co-author Charles Branch Jr., chairman of neurosurgery at Wake Forest University, and the university itself have received $1.2 million in royalties this year.

A spokeswoman for the university said it owns the intellectual property rights to Branch's patents and that royalties generally are split with 35% to the individual and 65% to the university. None of those royalties involved BMP-2, university media relations manager Bonnie Davis said in an e-mail.

She said Branch and Wake Forest were getting royalties at the time the paper was published, but not when the trial was going on.

In a separate e-mail, Branch said use of the term 'encouraging' in the paper 'was not a strong endorsement,' but, rather, recognition that patients getting BMP-2 had superior results to those receiving a traditional bone graft.

Summary

So here we go again.  Once again we see an example of a single medical device company paying heroic amounts, hundreds of thousands to over a million dollars a year, to surgeons ostensibly as royalties for their intellectual property.  The company and the surgeons were all rather cagey about the nature of the intellectual property for which the money was paid, and about the justification for the size of the payments.

While it is likely that the payments have been going on for a while, previous influential articles written by some of the surgeons receiving the payments contained at best minimal disclosure of their financial relationships with Medtronic, and gave no hint about the magnitude of these relationships.  These previous influential articles seemed more enthusiastic about a Medtronic product than was justified by their results.  Of course, maybe getting hundreds of thousands or millions of dollars a year from a commercial health care firm could lead to some excess enthusiasm about its products.

It seems that every drug, biotechnology, and device company has its stable of highly paid physicians and surgeons who can be counted on for their enthusiasm about the companies' products, and their reticence about their financial relationships with the companies.  We have often discussed the pervasiveness of the web of conflicts of interest that seems to link most commercial health care firms with most influential medical academics and practitioners.  The web seems even more pervasive than we once imagined, and the conflicts seem even more intense. 

Those who laud ties between academic medicine and industry may perseverate about how collaboration leads to innovation, while denying that mere money can influence professional judgement.  However, it is difficult to imagine how even the most well-intentioned professional would not be influenced by hundreds of thousands or millions of dollars a year.  When professionals hide the magnitude of such relationships, it only raises more suspicions that they know they have something to hide because they realize they have been bought.

The ever increasing revelations about conflicts of interest pervading academic medicine should inspire extreme skepticism about clinical research or clinical teaching supported in any way by commercial interests.  At the very least, these revelations justify the need for detailed and complete disclosure of all financial relationships among commercial health care firms and academic and practicing physicians, and others who make or influence health care decisions. 

I suspect that if such full disclosure took place, physicians, other health care professionals and the public, at least those who had not been paid themselves, would be so aghast that such relationships would not remain legal for long. 


References
1.  Okike K, Kocher MS, Wei EX, Mehlman CT, Bhandari M.  Accuracy of conflict-of-interest disclosures reported by physicians. N Engl J Med 2009; 361:1466-1474.
2. Haid RW, Branch CL, Alexander JT, Burkus JK. Posterior lumbar interbody fusion using recombinant human bone morphogenetic protein type 2 with cylindrical interbody cates. The Spine Journal 2004; 4: 527-539.

Spine Surgeons Reticent About Disclosing Huge Medtronic Payments

Starting in 2007, we posted (here, here, here, here and here) about the payments, often huge, that five manufacturers of prosthetic joints (Biomet, DePuy Orthopaedics (a unit of Johnson & Johnson), Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew) revealed they made to orthopedic surgeons and various academic and other organizations. We also noted that some of the leadership of the major orthopedic societies have received substantial amounts from these companies, as have the societies themselves.

In 2008, our post on this subject noted the minimal disclosure some of the surgeons receiving these huge payments made when writing scholarly articles on related topics.  In 2009, an article in the New England Journal of Medicine showed that almost 30% of surgeons who got such payments in 2007 failed to disclose them when they presented at the 2008 American Academy of Orthopedic Surgeons meeting.(1)

Medtronic's Payments to Spine Surgeons

This month, the media reported that Medtronic also made payments, sometimes huge, to orthopedic and spine surgeons (see this post by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog, and our summary post here.) 

Now further investigation by John Fauber of the Milwaukee Journal-Sentinel suggests that surgeons receiving often huge payments from Medtronic may not have been good at disclosing them either.

The article examined payments made to surgeons who authored two major studies about bone morphogenetic protein-2, a biologic drug manufactured by Medtronic used to promote bone growth at surgical sites:

Over the last decade, a small group of prominent surgeons from around the country has been enlisted by medical device-maker Medtronic to do clinical research or write articles about the company's new spine surgery product.

This year alone, many of those doctors received payments of hundreds of thousands to millions of dollars each in royalties for a variety of other Medtronic spinal devices, according to a Journal Sentinel analysis of newly released company payments. Medtronic began disclosing the payments this year, in advance of a federal requirement set to take effect in 2013.

Since it won approval for narrow uses in 2002, the product - bone morphogenetic protein-2, known as BMP-2 - has been an increasingly dominant force in spinal fusion surgery, with sales of about $800 million a year, often for use in other procedures.

Independent doctors say the product's success is due largely to positive findings made by the surgeons affiliated with the company.

Doctors involved with two of the many research articles on BMP-2 published since it was approved - one in 2002, the other in 2004 - received a combined $6 million in royalties this year for other Medtronic spinal products, the newspaper found. The payments went directly to the doctors or business entities they are associated with.

No Disclosure in a 2002 Article

The Journal-Sentinel article referred to two scholarly articles written about BMP-2. Regarding the first,

At the time BMP-2 was approved in 2002, little was known about the financial connections between Medtronic and doctors associated with the clinical trial. Likewise, little was known that year when the Journal of Spinal Disorders & Techniques published the article on the trial.

The paper made no mention of doctors getting royalties or having any financial connection to the company.

[Note: I am unable to find this article using standard search techniques, so I cannot give a citation for it.]
Regarding the lack of disclosures made in the first article,

The four co-authors of a 2002 paper about that trial received a total of $2.8 million this year from Medtronic in royalties for products not including BMP-2.

The paper made no mention of any financial relationship between the authors and Medtronic.

Burkus, who also was involved in the 2004 study, again declined to say if he was receiving royalties from Medtronic or if had some other financial connection with the company at the time the 2002 paper was published. He got $573,000 through September.

Curtis Dickman, a Phoenix surgeon, did not respond to phone calls and e-mails. He and Vantage Investments LLC received $306,000 in royalties.

Matthew Gornet, a St. Louis surgeon, and Gornet Enterprises got $591,000 in royalty payments.

Gornet said he did not have a financial connection with the company at the time of the study, though he developed a relationship as a consultant right after the trial, an arrangement that ended after about a year.

He said his patent rights with Medtronic did not begin until 2003 and none of his royalties involves BMP-2.

The last author listed was Thomas Zdeblick, an orthopedic surgeon at the University of Wisconsin School of Medicine and Public Health. Through September, he and Taz Consulting received $1.4 million in royalties for a variety of products.

Other records show Zdeblick has received more than $23 million in royalties from Medtronic since 2002.

In an e-mail, Zdeblick said he had no financial interest in BMP-2. He does receive royalties for the invention of the LT-Cage, which was used in the BMP-2 clinical trial, but the two products are sold separately.

Little Disclosure in the 2004 Article

Regarding the second article,(2)

Three of the four authors of a 2004 article on the study of the productare listed as receiving nearly $4 million this year in royalties from Medtronic for a variety of spinal products, not BMP-2.

That paper was important because it involved a clinical trial that had to be stopped because the product was causing troubling bone formation in the spinal canal of patients. In the paper, that finding was downplayed, with the authors describing the results as 'encouraging.'

[Professor Dan] Spengler, the Vanderbilt orthopedic surgeon and former medical journal editor, said he doubted the paper would have been written in such positive terms by authors without financial ties to Medtronic.

He described the article as egregious, saying it 'just blew off the complications. It's a horrible article.'

Orthopedic surgeon [University of California - Irvine Clinical Professor Charles] Rosen said the paper was biased, calling it 'more of a marketing paper than an objective scientific study.'

Regarding the disclosures made in the second article,

The article described three of the authors as consultants to Medtronic, though it did not disclose that any of them were receiving royalties at the time.

Regis Haid, lead author of the article and an Atlanta neurosurgeon, told the Journal Sentinel he was getting royalties for other Medtronic products. Haid noted disclosure rules for medical journals have become more stringent in recent years.

He said BMP-2 provides excellent benefit to patients, adding he had it implanted in his own neck in an off-label procedure. ;I have BMP in me, and I would put it in you . . . ,' he told a reporter.

Through September, Haid and Spinal Engineering LLC received about $2 million in royalties this year from Medtronic.

Meanwhile, co-author Ken Burkus, a Columbus, Ga., surgeon, and RBCK Research & Consulting, received $573,000.

'Very importantly, you cannot assume that such royalty payments were made prior to 2010,' he said in an e-mail, declining to say whether he got royalties at the time the paper was written. 'I follow the rules to my fullest ability as put forward by the specific journal.'

He took issue with criticism that the paper put a positive spin on a troubling clinical trial.

'I believe the words used were appropriate . . . ,' he said. 'I believe the words used were neither 'positive nor negative' but rather were representative of the data presented.'

He said if other doctors have problems with the paper, they should take it up with the editor of the journal: 'They can write a letter to the editor.'

Co-author Charles Branch Jr., chairman of neurosurgery at Wake Forest University, and the university itself have received $1.2 million in royalties this year.

A spokeswoman for the university said it owns the intellectual property rights to Branch's patents and that royalties generally are split with 35% to the individual and 65% to the university. None of those royalties involved BMP-2, university media relations manager Bonnie Davis said in an e-mail.

She said Branch and Wake Forest were getting royalties at the time the paper was published, but not when the trial was going on.

In a separate e-mail, Branch said use of the term 'encouraging' in the paper 'was not a strong endorsement,' but, rather, recognition that patients getting BMP-2 had superior results to those receiving a traditional bone graft.

Summary

So here we go again.  Once again we see an example of a single medical device company paying heroic amounts, hundreds of thousands to over a million dollars a year, to surgeons ostensibly as royalties for their intellectual property.  The company and the surgeons were all rather cagey about the nature of the intellectual property for which the money was paid, and about the justification for the size of the payments.

While it is likely that the payments have been going on for a while, previous influential articles written by some of the surgeons receiving the payments contained at best minimal disclosure of their financial relationships with Medtronic, and gave no hint about the magnitude of these relationships.  These previous influential articles seemed more enthusiastic about a Medtronic product than was justified by their results.  Of course, maybe getting hundreds of thousands or millions of dollars a year from a commercial health care firm could lead to some excess enthusiasm about its products.

It seems that every drug, biotechnology, and device company has its stable of highly paid physicians and surgeons who can be counted on for their enthusiasm about the companies' products, and their reticence about their financial relationships with the companies.  We have often discussed the pervasiveness of the web of conflicts of interest that seems to link most commercial health care firms with most influential medical academics and practitioners.  The web seems even more pervasive than we once imagined, and the conflicts seem even more intense. 

Those who laud ties between academic medicine and industry may perseverate about how collaboration leads to innovation, while denying that mere money can influence professional judgement.  However, it is difficult to imagine how even the most well-intentioned professional would not be influenced by hundreds of thousands or millions of dollars a year.  When professionals hide the magnitude of such relationships, it only raises more suspicions that they know they have something to hide because they realize they have been bought.

The ever increasing revelations about conflicts of interest pervading academic medicine should inspire extreme skepticism about clinical research or clinical teaching supported in any way by commercial interests.  At the very least, these revelations justify the need for detailed and complete disclosure of all financial relationships among commercial health care firms and academic and practicing physicians, and others who make or influence health care decisions. 

I suspect that if such full disclosure took place, physicians, other health care professionals and the public, at least those who had not been paid themselves, would be so aghast that such relationships would not remain legal for long. 


References
1.  Okike K, Kocher MS, Wei EX, Mehlman CT, Bhandari M.  Accuracy of conflict-of-interest disclosures reported by physicians. N Engl J Med 2009; 361:1466-1474.
2. Haid RW, Branch CL, Alexander JT, Burkus JK. Posterior lumbar interbody fusion using recombinant human bone morphogenetic protein type 2 with cylindrical interbody cates. The Spine Journal 2004; 4: 527-539.

BLOGSCAN - Medtronic's Multi-Million Dollar Payments to Spine Surgeons

Starting in 2007, we discussed the huge payments made by four medical device companies to orthopedic surgeons and medical organizations related to the use of hip and knee prostheses.  (See post here with links backward.)  Payments, in the millions of dollars per year range, went to surgeons including noted academics, and leaders of the main orthopedic physicians' society.  Payments went to medical schools, teaching hospitals, and professional societies.  Many of these financial relationships were not disclosed, and the disclosures that were made rarely indicated the amounts involved.

Now the Wall Street Journal reports millions being paid to spine surgeons by Medtronic in connection with devices used in spinal fusion.  See Dr Howard Brody's discussion here on the Hooked: Ethics, Medicine, and Pharma blog, and also Felix Salmon's discussion here on the Felix Salmon blog.

What seems lacking is a clear rationale for any payments, much less for payments of the sizes listed.  The WSJ article cited a Medtronic spokesperson, "surgeons' device-development work goes beyond mere consulting when the company deems that they are contributing valuable intellectual property to a product. But that intellectual property doesn't necessarily have to be patented."  The reporters found, "search of spine-device patents awarded to the Norton surgeons turned up about a dozen total for Drs. Puno, Johnson, Campbell and Dimar, most owned by companies other than Medtronic. The search turned up no patents for Dr. Glassman."  So what intellectual property that was not or could not be patented could be worth millions a year?

BLOGSCAN - Medtronic's Multi-Million Dollar Payments to Spine Surgeons

Starting in 2007, we discussed the huge payments made by four medical device companies to orthopedic surgeons and medical organizations related to the use of hip and knee prostheses.  (See post here with links backward.)  Payments, in the millions of dollars per year range, went to surgeons including noted academics, and leaders of the main orthopedic physicians' society.  Payments went to medical schools, teaching hospitals, and professional societies.  Many of these financial relationships were not disclosed, and the disclosures that were made rarely indicated the amounts involved.

Now the Wall Street Journal reports millions being paid to spine surgeons by Medtronic in connection with devices used in spinal fusion.  See Dr Howard Brody's discussion here on the Hooked: Ethics, Medicine, and Pharma blog, and also Felix Salmon's discussion here on the Felix Salmon blog.

What seems lacking is a clear rationale for any payments, much less for payments of the sizes listed.  The WSJ article cited a Medtronic spokesperson, "surgeons' device-development work goes beyond mere consulting when the company deems that they are contributing valuable intellectual property to a product. But that intellectual property doesn't necessarily have to be patented."  The reporters found, "search of spine-device patents awarded to the Norton surgeons turned up about a dozen total for Drs. Puno, Johnson, Campbell and Dimar, most owned by companies other than Medtronic. The search turned up no patents for Dr. Glassman."  So what intellectual property that was not or could not be patented could be worth millions a year?

The Boards Who Ought to be Accountable for the Misbehavior of Health Care Corporations

I recently posted about the multiple conflicts of interest affecting a university health sciences leader.  While he was supposed to be running a medical school and an academic medical center, he was also responsible for the stewardship, as a board member, of three health major health care corporations, and a food and beverage corporation (whose products have bearing on nutrition and public health.)  .

This one case suggested how pervasive are conflicts of interest affecting the people at the top of health care leadership in the US, and also how such conflicts may be associated with problems for all the organizations involved.  The story originally came to my attention because students were demonstrating against the lavish compensation given the health sciences leader at a time of university cutbacks, suggesting that university leaders were paying more attention to their own enrichment than to the mission of the university.  At the same time, one of the corporations which he was stewarding (Genzyme) had to shut down a factory because the extremely expensive drug it was producing was found to be impure and adulterated, while its CEO continued to be compensated lavishly.  The other corporation (Medtronic) had to settle litigation accusing it of manufacturing defective products for hundreds of millions of dollars, while its CEO again continued to be compensated lavishly. 

So I thought it might be interesting to see who are the other stewards of these troubled corporations.  I consulted the official biographies of their board members from their 2010 proxy statements (Genzyme here, Medtronic here).  I looked for board members who also held leadership positions in other health care organizations whose interests may not be aligned with the two corporations of interest.  I also looked for those who held leadership positions in the discredited financial services corporation who helped usher in the global financial collapse.

The specifics of what I found follow.

Genzyme

Genzyme had 10 directors in 2010.  The following directors had relationships of interest:

-  Douglas A Berthiaume is "Chairman of the Children's Hospital (Boston) Trust Board, a member of the Children's Hospital board of trustees, and a Trustee of the University of Massachusetts Amherst Foundation."  Children's Hospital is a teaching hospital.  The University of Massachusetts includes a medical school. 
-  Robert J Bertolini "retired from Schering-Plough Corp following its merger with Merck & Co in November, 2009."  Schering-Plough was a large pharmaceutical company now combined with Merck to form an even larger company.
-  Gail K Boudreaux "has served since May 2008 as an Executive Vice President of United Health Group Incorporated."  Also, "she serves on the board of directors of America's Health Insurance Plans...."  UnitedHealth is one of the US' largest health insurance/ managed care corporations.  Incidentally,it has frequently misbehaved, as can be seen in this set of posts.  AHIP is the health insurance corporations' trade associations.
-  Robert J Carpenter "is Chairman of Hydra Biosciences Inc... He is also a trustee of the Immune Disease Institute, a non-profit institute affiliated with Children's Hospital in Boston...." 
-  Charles L Cooney "is a director of India-based Biocon Limited, a biotechnology healthcare company."
-  Victor J Dzau MD (discussed in the earlier post) is "Chancellor for Health Affairs and President and Chief Executive Officer of Duke University Health System...."  He "sits on the board of directors of Pepsico Inc, Anylam Inc, Medtronic Inc, and the Duke University Health System."
-  Senator Connie Mack III is "Chairman Emeritus of the parent board of the H. Lee Moffitt Cancer Center and Research Institute...."  He also is director of "EXACT Sciences Corporation and Moody's Corp."  EXACT Sciences is a biotechnology company that develops diagnostic test technology.  Moody's Corp is a financial ratings agency whose lax ratings of financial derivatives, perhaps arising from conflicts of interest produced by payments from the producers of the derivatives, have been implicated as a major cause of the global financial collapse.
-  Richard E Syron was from "January 2004 to September 8, 2008 ... Chairman and Chief Executive Officer of the Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac...."    Freddie Mac as bailed out and taken over by the US government when he departed, or was forced out.  Freddie Mac, was a "government-sponsored enterprise," (GSE) one of another group of companies whose enthusiastic participation in securitizing dubious mortgages was implicated as a major cause of the global financial collapse.
- Henri A Termeer (CEO of Genzyme) is a "director of Massachusetts General Hospital, a board member of Partners HealthCare, and a member of the board of fellows of Harvard Medical School." 

So the box score for Genzyme's 10 directors: six have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director).  Seven have leadership positions in other drug, device or biotechnology corporations.  One have leadership positions in health insurance/ managed care corporations.  Two had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.

Medtronic

Medtronic had 11 directors in 2010.  The following directors had relationships of interest:

- Richard H Anderson "was Executive Vice President of UnitedHealth Group Incorporated."  As above, UnitedHealth is a health insurance/ managed care corporation.
- Victor J Dzau (see above) is "Chancellor for Health Affairs at Duke University and President and Chief Executive Officer of the Duke University Health System."  He is "a director of Alnylam Pharmaceuticals Inc, ... PepsiCo Inc, and Genzyme Corporation." (See discussion above.)
- James T Lenahan "served as President of Johnson & Johnson from 2002 until June 2004...."  He is "director of Telecris Biotherapeutics Inc, Alton Pharma Inc and Imacor Inc."  Johnson & Johnson is a large drug, device, and biotechnology company.  Telecris, and Alton Pharma are biotechnology pharmaceutical companies.  Imacor is a medical device company.
- Denise M O'Leary "is a director of Lucille Packard Children's Hospital and Stanford Hospitals and Clinics."  Also, "she was a member of the Stanford University Board of Trustees from 1996 through 2006, where she chaired the Committee of the Medical Center...."
-  Robert C Pozen is "an advisor to Gelesis Inc."  Gelesis is a biotechnology company.
-  Jack W Schuler "has been a director of Stericycle Inc since March 1990...."  He is a "director of Quidel Corporation and Elan Corporation plc...."    Stericycle company disposes of medical waste, including that produced by medical devices.  Quidel is a biotechnology and (medical diagnostic) device company.  Elan is an multinational biotechnology and pharmaceutical company.

So the box score for Genzyme's 11 directors is: Two have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Ten have leadership positions in other drug, device or biotechnology corporations. One has a leadership position in health insurance/ managed care corporations. None had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.

Summary

Just to summarize the sorts of conflicting interests these relationships suggest. 

Teaching hospitals and medical schools are supposed to provide unbiased teaching, including about issues relevant to drug and device corporations, such as choice of diagnostic strategies and treatments, and relevant health policy.  They are supposed to perform unbiased research, including research that evaluates drugs and devices.  They are supposed to provide the best possible patient care at a reasonable cost, which relates to choices of and prices paid for drugs and devices. 

Other drug, device, and biotechnology corporations may be producing, or developing products that compete with those of the index corporations.

Health insurance companies ostensibly try to control costs and improve quality in part by reducing excess utilization and bargaining down prices of drugs and devices. 

So this limited case study of the boards of directors, that is, the ostensible stewards of two health care corporations, selected because they have a common member who is the leader of a large medical school and academic medical center, and which both have histories of poor management or ethical missteps showed  - that the leadership of health care organizations is incredibly interrelated, interlocked, incestuous. 

This gave an example of how pervasive are the conflicts of interest that affect all kinds of health care organizations.  Companies that ought to be competing have interlocked directors.  Companies that ought to be negotiating at arms length have interlocked directors.  Not-for-profit academic medical institutions have leaders who are also directors of companies whose drugs their patients may take, whose devices their patients may receive, whose insurance their patients may buy, and whose products and services they may teach about and evaluate through clinical research and policy research. 

This also gives an example of how the failed culture of finance may be linked to the culture of medicine and health care.  Some of the stewards of health care organizations were also the stewards of financial services corporations whose reckless, if not arrogant, greedy and amoral leadership is widely believed to have caused the global financial collapse and our ongoing economic problems. 

Finally, this suggests how top leaders of various health care organizations may be more familiar with and identify more with each other than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients. 

What is to be done?

I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships.  A few bloggers cannot do it all.  Obviously, the anechoic effect mitigates against medical and health care academics looking into their own leaders.  However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience.

Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment.  Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. 

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.   

The Boards Who Ought to be Accountable for the Misbehavior of Health Care Corporations

I recently posted about the multiple conflicts of interest affecting a university health sciences leader.  While he was supposed to be running a medical school and an academic medical center, he was also responsible for the stewardship, as a board member, of three health major health care corporations, and a food and beverage corporation (whose products have bearing on nutrition and public health.)  .

This one case suggested how pervasive are conflicts of interest affecting the people at the top of health care leadership in the US, and also how such conflicts may be associated with problems for all the organizations involved.  The story originally came to my attention because students were demonstrating against the lavish compensation given the health sciences leader at a time of university cutbacks, suggesting that university leaders were paying more attention to their own enrichment than to the mission of the university.  At the same time, one of the corporations which he was stewarding (Genzyme) had to shut down a factory because the extremely expensive drug it was producing was found to be impure and adulterated, while its CEO continued to be compensated lavishly.  The other corporation (Medtronic) had to settle litigation accusing it of manufacturing defective products for hundreds of millions of dollars, while its CEO again continued to be compensated lavishly. 

So I thought it might be interesting to see who are the other stewards of these troubled corporations.  I consulted the official biographies of their board members from their 2010 proxy statements (Genzyme here, Medtronic here).  I looked for board members who also held leadership positions in other health care organizations whose interests may not be aligned with the two corporations of interest.  I also looked for those who held leadership positions in the discredited financial services corporation who helped usher in the global financial collapse.

The specifics of what I found follow.

Genzyme

Genzyme had 10 directors in 2010.  The following directors had relationships of interest:

-  Douglas A Berthiaume is "Chairman of the Children's Hospital (Boston) Trust Board, a member of the Children's Hospital board of trustees, and a Trustee of the University of Massachusetts Amherst Foundation."  Children's Hospital is a teaching hospital.  The University of Massachusetts includes a medical school. 
-  Robert J Bertolini "retired from Schering-Plough Corp following its merger with Merck & Co in November, 2009."  Schering-Plough was a large pharmaceutical company now combined with Merck to form an even larger company.
-  Gail K Boudreaux "has served since May 2008 as an Executive Vice President of United Health Group Incorporated."  Also, "she serves on the board of directors of America's Health Insurance Plans...."  UnitedHealth is one of the US' largest health insurance/ managed care corporations.  Incidentally,it has frequently misbehaved, as can be seen in this set of posts.  AHIP is the health insurance corporations' trade associations.
-  Robert J Carpenter "is Chairman of Hydra Biosciences Inc... He is also a trustee of the Immune Disease Institute, a non-profit institute affiliated with Children's Hospital in Boston...." 
-  Charles L Cooney "is a director of India-based Biocon Limited, a biotechnology healthcare company."
-  Victor J Dzau MD (discussed in the earlier post) is "Chancellor for Health Affairs and President and Chief Executive Officer of Duke University Health System...."  He "sits on the board of directors of Pepsico Inc, Anylam Inc, Medtronic Inc, and the Duke University Health System."
-  Senator Connie Mack III is "Chairman Emeritus of the parent board of the H. Lee Moffitt Cancer Center and Research Institute...."  He also is director of "EXACT Sciences Corporation and Moody's Corp."  EXACT Sciences is a biotechnology company that develops diagnostic test technology.  Moody's Corp is a financial ratings agency whose lax ratings of financial derivatives, perhaps arising from conflicts of interest produced by payments from the producers of the derivatives, have been implicated as a major cause of the global financial collapse.
-  Richard E Syron was from "January 2004 to September 8, 2008 ... Chairman and Chief Executive Officer of the Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac...."    Freddie Mac as bailed out and taken over by the US government when he departed, or was forced out.  Freddie Mac, was a "government-sponsored enterprise," (GSE) one of another group of companies whose enthusiastic participation in securitizing dubious mortgages was implicated as a major cause of the global financial collapse.
- Henri A Termeer (CEO of Genzyme) is a "director of Massachusetts General Hospital, a board member of Partners HealthCare, and a member of the board of fellows of Harvard Medical School." 

So the box score for Genzyme's 10 directors: six have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director).  Seven have leadership positions in other drug, device or biotechnology corporations.  One have leadership positions in health insurance/ managed care corporations.  Two had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.

Medtronic

Medtronic had 11 directors in 2010.  The following directors had relationships of interest:

- Richard H Anderson "was Executive Vice President of UnitedHealth Group Incorporated."  As above, UnitedHealth is a health insurance/ managed care corporation.
- Victor J Dzau (see above) is "Chancellor for Health Affairs at Duke University and President and Chief Executive Officer of the Duke University Health System."  He is "a director of Alnylam Pharmaceuticals Inc, ... PepsiCo Inc, and Genzyme Corporation." (See discussion above.)
- James T Lenahan "served as President of Johnson & Johnson from 2002 until June 2004...."  He is "director of Telecris Biotherapeutics Inc, Alton Pharma Inc and Imacor Inc."  Johnson & Johnson is a large drug, device, and biotechnology company.  Telecris, and Alton Pharma are biotechnology pharmaceutical companies.  Imacor is a medical device company.
- Denise M O'Leary "is a director of Lucille Packard Children's Hospital and Stanford Hospitals and Clinics."  Also, "she was a member of the Stanford University Board of Trustees from 1996 through 2006, where she chaired the Committee of the Medical Center...."
-  Robert C Pozen is "an advisor to Gelesis Inc."  Gelesis is a biotechnology company.
-  Jack W Schuler "has been a director of Stericycle Inc since March 1990...."  He is a "director of Quidel Corporation and Elan Corporation plc...."    Stericycle company disposes of medical waste, including that produced by medical devices.  Quidel is a biotechnology and (medical diagnostic) device company.  Elan is an multinational biotechnology and pharmaceutical company.

So the box score for Genzyme's 11 directors is: Two have leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities (some such institutions are lead by more than one Genzyme director). Ten have leadership positions in other drug, device or biotechnology corporations. One has a leadership position in health insurance/ managed care corporations. None had or have leadership positions in discredited financial services corporations that were implicated in the global financial collapse.

Summary

Just to summarize the sorts of conflicting interests these relationships suggest. 

Teaching hospitals and medical schools are supposed to provide unbiased teaching, including about issues relevant to drug and device corporations, such as choice of diagnostic strategies and treatments, and relevant health policy.  They are supposed to perform unbiased research, including research that evaluates drugs and devices.  They are supposed to provide the best possible patient care at a reasonable cost, which relates to choices of and prices paid for drugs and devices. 

Other drug, device, and biotechnology corporations may be producing, or developing products that compete with those of the index corporations.

Health insurance companies ostensibly try to control costs and improve quality in part by reducing excess utilization and bargaining down prices of drugs and devices. 

So this limited case study of the boards of directors, that is, the ostensible stewards of two health care corporations, selected because they have a common member who is the leader of a large medical school and academic medical center, and which both have histories of poor management or ethical missteps showed  - that the leadership of health care organizations is incredibly interrelated, interlocked, incestuous. 

This gave an example of how pervasive are the conflicts of interest that affect all kinds of health care organizations.  Companies that ought to be competing have interlocked directors.  Companies that ought to be negotiating at arms length have interlocked directors.  Not-for-profit academic medical institutions have leaders who are also directors of companies whose drugs their patients may take, whose devices their patients may receive, whose insurance their patients may buy, and whose products and services they may teach about and evaluate through clinical research and policy research. 

This also gives an example of how the failed culture of finance may be linked to the culture of medicine and health care.  Some of the stewards of health care organizations were also the stewards of financial services corporations whose reckless, if not arrogant, greedy and amoral leadership is widely believed to have caused the global financial collapse and our ongoing economic problems. 

Finally, this suggests how top leaders of various health care organizations may be more familiar with and identify more with each other than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients. 

What is to be done?

I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships.  A few bloggers cannot do it all.  Obviously, the anechoic effect mitigates against medical and health care academics looking into their own leaders.  However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience.

Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment.  Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. 

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.   

Duke Divinity Students Protest Pay of Chancellor for Health Affairs

This may be a first.  A small group of Duke University divinity students publicly protested the compensation given to some top university leaders, specifically including the Chancellor for Health Affairs.  According to the Raleigh-Durham News-Observer:

Theo Luebke strolled the plaza outside Duke's Bryan Center on Thursday afternoon with a bucketful of apples and a tale of woe.

'Come on! Everyone's in this together! Get your apples!' he exhorted students passing by during the lunchtime rush. 'With all the cuts we have around here and all the bonuses we have to give to the big guys, we need to raise all the money we can.'

Luebke isn't really the Depression-era fruit peddler his costume suggested. Luebke and a couple of other Duke divinity students hawked apples, ostensibly to raise money for the university, while others dressed as paperboys distributed a mock newspaper railing against bonuses paid to top officials within Duke's healthcare system and investment company.

For Duke workers whose pay has been frozen of late, the bonuses appear staggering.

A couple of examples: Neal Triplett, president of the management company, received a $729,749 bonus on top of his $413,603 salary; Victor Dzau, chancellor of the Duke health system, got a $983,654 bonus, bringing his total compensation to more than $2.2 million.

Thursday's skit, which mostly drew befuddled looks, was the third in a series mocking executive pay.

It turns out these munificent compensation amounts were paid at a time when Duke is in some financial difficulty:

In recent years, Duke has frozen pay and eliminated jobs in an attempt to pare its annual operating budget by $100 million.

Nearly 400 workers have accepted buyout offers since early 2009. Their jobs were then eliminated.

'During a time when the administration is saying we all needed to tighten our belts and make sacrifices...as it turns out, some of the folks who lost money for Duke were giving themselves bonuses,' said Amy Laura Hall, a tenured professor of Christian ethics. 'I think that's obscene.'

I cannot recall a previous example of students demonstrating against the compensation of a leader of a medical school and/or university health care system.  Maybe these students have started something.

In fact, we have frequently discussed executive compensation given by health care organizations that seems wildly out of proportion to the value of the health care they provide or the clinical value of their products.  Although compensation is even higher for executives of for-profit health care corporations, even leaders of not-for-profit organizations, including academic institutions, is now often in the millions per year range.

Service on (Mostly Health Care) Corporate Boards

Dr Dzau's compensation may appear even more extreme in the context of the money he brings in from outside work.  As Prof Margaret Soltan pointed out on the University Diaries blog, Dr Dzau also serves on multiple corporate boards.  The multiplicity of his outside work is not fully acknowledged in the most complete official biography posted on the Duke web-site, here, which only notes service on the Genzyme board.  In fact, he also serves on the boards of Anylam Pharmaceuticals, Medtronic, and PepsiCo.

According to the Alnylam Pharmaceuticals 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $234,433.  In 2009, Dr Dzau owned the equivalent of 45,000 shares, worth $424,800 at today's $9.44 price per share. 

According to the Genzyme 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $412,942.  In 2009, Dr Dzau owned the equivalent of 75,137shares, worth $5,312,937 at today's $70.71 price per share.

According to the Medtronic 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $173,698.  In 2009, Dr Dzau owned the equivalent of 14,552 shares, worth $493,895 at today's $33.94 price.

According to the PepsiCo 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $260,000.  In 2009, Dr Dzau owned the equivalent of 25,065 shares, worth $1,622,458 at today's $64.73 price per share.

So, in summary, in 2009, Dr Dzau received  $1,081,073 in compensation to be a director of these four companies.  In 2009, Dr Dzau owned stock or equivalent in these four companies valued at $7,854,090.  He has become what most people would consider rich just from his work on these boards, in addition to the millions he has received from Duke.

Conflicts of Interest and Other Questions

So this raises even more questions.  The most obvious is how the good doctor has time to simultaneously fulfill his responsibilities at Duke and for the four corporations? 

The next most obvious is why the university does not make a full disclosure of what appear to be severe conflicts of interest?  Anylam and Genzyme are biotechnology pharmaceutical companies.  Medtronics is a medical device company.  PepsiCo is a food and beverage company whose products affect nutrition and public health.  Dr Dzau's service on the board of each of these companies means he has fiduciary duties to each company, and is supposed to show unyielding loyalty to the companies' stockholders.  Of course, many business commentators have charged that most corporate directors are mainly chosen to be compliant with the top hired management's wishes, if not to be frank cronies of the management.  Even in the best case, showing unyielding loyalties to the stockholders of companies that make drugs, medical devices, and sugary drinks seems to be likely to influence a leader of an academic medical institution in ways that risk degrading the leader's responsibilities to uphold the institution's mission, i.e., to create severe conflicts of interest. 

Dr Dzau has a fairly severe case of what we labeled as a "new species of conflict of interest" in 2006.  Concerns about such conflicts affecting university presidents, but not specifically chancellors or vice presidents for health affairs, appeared in the New York Times last summer (see post here).  Maybe some day student protesters will see such conflicts as a problem.

However, should Dr Dzau make the usual defense of such conflicts, that they promote collaboration with industry needed for innovation, maybe Duke students or alumni might ask questions about the other side of the coin.

The Other Side of the Conflict of Interest Coin

Dr Dzau is supposed to be responsible for the stewardship of Genzyme.  We have recently posted about the company's seeming recent inability to make pure, unadulterated pharmaceuticals, and while exhibiting such inability to perform such basic functions, its payment of extremely lucrative compensation to its hired CEO.  Maybe someone could ask Dr Dzau what he thought about such actions, and whether he would take any responsibility for them?

Dr Dzau is supposed to be responsible for the stewardship of Medtronic.  Medtronic recently settled thousands of patients' lawsuits that alleged injuries due to a faulty lead on one model of a Medtronic implantable cardiac defibrillator for over $200 million. Medtronic has been the source of several alleged conflicts of interest involving influential physicians (see posts about Medtronic here).   Maybe someone could ask Dr Dzau what he thought about such actions, and whether he would take any responsibility for them.

Finally, a larger question is: is it good to have a leader of a medical school and academic medical center who has presided over such ethical lapses by health care corporations?  Let's see if anyone does get to ask Dr Dzau such questions. 

Duke Divinity Students Protest Pay of Chancellor for Health Affairs

This may be a first.  A small group of Duke University divinity students publicly protested the compensation given to some top university leaders, specifically including the Chancellor for Health Affairs.  According to the Raleigh-Durham News-Observer:

Theo Luebke strolled the plaza outside Duke's Bryan Center on Thursday afternoon with a bucketful of apples and a tale of woe.

'Come on! Everyone's in this together! Get your apples!' he exhorted students passing by during the lunchtime rush. 'With all the cuts we have around here and all the bonuses we have to give to the big guys, we need to raise all the money we can.'

Luebke isn't really the Depression-era fruit peddler his costume suggested. Luebke and a couple of other Duke divinity students hawked apples, ostensibly to raise money for the university, while others dressed as paperboys distributed a mock newspaper railing against bonuses paid to top officials within Duke's healthcare system and investment company.

For Duke workers whose pay has been frozen of late, the bonuses appear staggering.

A couple of examples: Neal Triplett, president of the management company, received a $729,749 bonus on top of his $413,603 salary; Victor Dzau, chancellor of the Duke health system, got a $983,654 bonus, bringing his total compensation to more than $2.2 million.

Thursday's skit, which mostly drew befuddled looks, was the third in a series mocking executive pay.

It turns out these munificent compensation amounts were paid at a time when Duke is in some financial difficulty:

In recent years, Duke has frozen pay and eliminated jobs in an attempt to pare its annual operating budget by $100 million.

Nearly 400 workers have accepted buyout offers since early 2009. Their jobs were then eliminated.

'During a time when the administration is saying we all needed to tighten our belts and make sacrifices...as it turns out, some of the folks who lost money for Duke were giving themselves bonuses,' said Amy Laura Hall, a tenured professor of Christian ethics. 'I think that's obscene.'

I cannot recall a previous example of students demonstrating against the compensation of a leader of a medical school and/or university health care system.  Maybe these students have started something.

In fact, we have frequently discussed executive compensation given by health care organizations that seems wildly out of proportion to the value of the health care they provide or the clinical value of their products.  Although compensation is even higher for executives of for-profit health care corporations, even leaders of not-for-profit organizations, including academic institutions, is now often in the millions per year range.

Service on (Mostly Health Care) Corporate Boards

Dr Dzau's compensation may appear even more extreme in the context of the money he brings in from outside work.  As Prof Margaret Soltan pointed out on the University Diaries blog, Dr Dzau also serves on multiple corporate boards.  The multiplicity of his outside work is not fully acknowledged in the most complete official biography posted on the Duke web-site, here, which only notes service on the Genzyme board.  In fact, he also serves on the boards of Anylam Pharmaceuticals, Medtronic, and PepsiCo.

According to the Alnylam Pharmaceuticals 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $234,433.  In 2009, Dr Dzau owned the equivalent of 45,000 shares, worth $424,800 at today's $9.44 price per share. 

According to the Genzyme 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $412,942.  In 2009, Dr Dzau owned the equivalent of 75,137shares, worth $5,312,937 at today's $70.71 price per share.

According to the Medtronic 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $173,698.  In 2009, Dr Dzau owned the equivalent of 14,552 shares, worth $493,895 at today's $33.94 price.

According to the PepsiCo 2010 Proxy Statement, Dr Dzau's compensation as a director in 2009 was $260,000.  In 2009, Dr Dzau owned the equivalent of 25,065 shares, worth $1,622,458 at today's $64.73 price per share.

So, in summary, in 2009, Dr Dzau received  $1,081,073 in compensation to be a director of these four companies.  In 2009, Dr Dzau owned stock or equivalent in these four companies valued at $7,854,090.  He has become what most people would consider rich just from his work on these boards, in addition to the millions he has received from Duke.

Conflicts of Interest and Other Questions

So this raises even more questions.  The most obvious is how the good doctor has time to simultaneously fulfill his responsibilities at Duke and for the four corporations? 

The next most obvious is why the university does not make a full disclosure of what appear to be severe conflicts of interest?  Anylam and Genzyme are biotechnology pharmaceutical companies.  Medtronics is a medical device company.  PepsiCo is a food and beverage company whose products affect nutrition and public health.  Dr Dzau's service on the board of each of these companies means he has fiduciary duties to each company, and is supposed to show unyielding loyalty to the companies' stockholders.  Of course, many business commentators have charged that most corporate directors are mainly chosen to be compliant with the top hired management's wishes, if not to be frank cronies of the management.  Even in the best case, showing unyielding loyalties to the stockholders of companies that make drugs, medical devices, and sugary drinks seems to be likely to influence a leader of an academic medical institution in ways that risk degrading the leader's responsibilities to uphold the institution's mission, i.e., to create severe conflicts of interest. 

Dr Dzau has a fairly severe case of what we labeled as a "new species of conflict of interest" in 2006.  Concerns about such conflicts affecting university presidents, but not specifically chancellors or vice presidents for health affairs, appeared in the New York Times last summer (see post here).  Maybe some day student protesters will see such conflicts as a problem.

However, should Dr Dzau make the usual defense of such conflicts, that they promote collaboration with industry needed for innovation, maybe Duke students or alumni might ask questions about the other side of the coin.

The Other Side of the Conflict of Interest Coin

Dr Dzau is supposed to be responsible for the stewardship of Genzyme.  We have recently posted about the company's seeming recent inability to make pure, unadulterated pharmaceuticals, and while exhibiting such inability to perform such basic functions, its payment of extremely lucrative compensation to its hired CEO.  Maybe someone could ask Dr Dzau what he thought about such actions, and whether he would take any responsibility for them?

Dr Dzau is supposed to be responsible for the stewardship of Medtronic.  Medtronic recently settled thousands of patients' lawsuits that alleged injuries due to a faulty lead on one model of a Medtronic implantable cardiac defibrillator for over $200 million. Medtronic has been the source of several alleged conflicts of interest involving influential physicians (see posts about Medtronic here).   Maybe someone could ask Dr Dzau what he thought about such actions, and whether he would take any responsibility for them.

Finally, a larger question is: is it good to have a leader of a medical school and academic medical center who has presided over such ethical lapses by health care corporations?  Let's see if anyone does get to ask Dr Dzau such questions. 

Prominent Health Care Policy Advice from People Sans Health Care Expertise

It is two days after the US Thanksgiving holiday, and one thing I am thankful for is the continued hilarity generated by health care corporate CEOs who pretend to be health care experts.  Of course this all really is not so funny, because the bogus expertise appears not in MAD Magazine, but in the most respected media outlets with the most influence over health care policy.

 This week's example comes from the Wall Street Journal's vaunted CEO Council.  A summary of its health care panel appeared early this week in that newspaper.

The panel included Angela Braly President and CEO, Wellpoint Inc., William A. Hawkins Chairman and CEO, Medtronic Inc., and Klaus Kleinfeld Chairman and CEO, Alcoa.  Angela Braly, a lawyer with no obvious record of direct experience in health care or related fields (see her bio here), received total compensation from WellPoint of more than $13 million in 2009, while presiding over various snafus and ethical missteps (most recently here, and with a further catalog here.)   William Hawkins, who has an undergraduate degree in engineering, and an MBA, received total compensation from Medtronic of over $9 million in fiscal 2010.  His direct involvement in health care or related fields apparently ended after his undergraduate years, when he was said to have done research in pathology (see his bio here).   He presided over Medtronic's settlement of thousands of patients' lawsuits that alleged injuries due to a faulty lead on one model of a Medtronic implantable cardiac defibrillator for over $200 million.  The company's other recent questionable activities may be found here.  Dr Kleinfeld's doctorate is in strategic management, but he has no obvious health care background (see his bio here.)   (The panel apparently had a "subject expert," Dr Risa Lavizzo-Mourey, a physician who is now CEO of the Robert Wood Johnson Foundation, but she was not quoted directly in the WSJ edited transcript.)

So what could we expect from a panel on health care that included no one with direct experience or expertise in health care, but two CEOs who managed to become extremely wealthy courtesy their employment by health care companies? 

Here is Ms Braly on changing incentives:

This really gets to the fact that right now we have a fee-for-service payment system, so we pay for quantity rather than quality. And very importantly, we think we need to redesign the way in which we reimburse for health care.

So,

Reimbursement could come in the form of accountable care organizations or patient-centered medical homes or pay-for-performance or risk sharing. There are a number of ways—and we didn't want to be completely prescriptive in terms of what that reimbursement formula would be.

The issue is not quantity versus quality, but cognitive, including primary care vs procedures. Ms Braly completely ignores how the government takes only the advice of the RUC to set physician payments, and how her company just apes that example (see posts here). Ms Braly also completely ignored how her company could actually try to change reimbursement on its own. There is no law that says it must follow the example set by Medicare.

So what she said about changing "delivery incentives" is just nonsense, to use a polite term.

Then we have Dr Kleinfeld ostensibly on transparency, but really on thinking about health care as if it were done on a production line:

Let me first talk about the transparency aspect. It was very informative to hear from those that are in the industry how big a variation you have in practices across the board.

If I were to look at a set of factories that make the same thing, and one does it in five days and the other one in 10 days, and the one that does it in five days is cheaper than the one that does it in 10 days, why would I not bring everybody down to the five days?

So the question is, what hinders the health-care industry from applying the same mechanics? There was agreement that today for every important disease category there are also quality indicators that are accepted that you could use to see what is the quality delivered.

Once you control the process, once you bring the quality up, the costs go down.

Dr Kleinfeld does not seem to realize that health care involves taking care of unique patients. Even when patients have common problems, they have unique mixtures of other medical problems and personal characteristics. The physician's most basic pledge is to do what is best for each individual patient. Treating them as if they were identical widgets on a production line makes absolutely no sense.  One cannot apply the "same mechanics" that apply on a production line, because actually taking care of patients is not done, and does not at all resemble what happens on a production line. It goes without saying that Dr Kleinfeld seems to have no idea how complex and fraught with error the process of measuring quality in health care actually is.

His remarks again, to put it politely, were nonsense.

Finally, there was Mr Hawkins in a similar vein:

Contrary to popular belief, we actually have very good medical care in this country, and with the proliferation of evidence-based medicine, we have determined that there are best practices for how we can treat hypertension or some of the neurodegenerative diseases or diabetes. And the reality is, as you look across different systems, there's a lot of variability in what people are doing.

We talked about the importance of publishing or being very clear about what are the best practices for dealing with hypertension, and then making sure that we have the means by which people will be held accountable moving forward in that area.

Maybe we should acknowledge that at least Mr Hawkins tried to concentrate on hypertension, which may have a slightly more secure evidence base than some other conditions. But the implication still is that there are "best practices" when the complexity of real patients in a real health care context makes figuring out what really is best for individual patients very challenging. Maybe that is why we used to try to leave such decisions up to doctors, other health professionals, and their patients.

However, it seems that the CEOs of big health care corporations seem to feel the need to justify their ridiculous total compensation by opining on health care topics that are completely beyond their experience, training, and expertise. The real problem is that probably because of the assumption that those huge salaries must correlate with huge expertise and intelligence, their opinions are taken seriously. The quotes above did not come from MAD Magazine. They came from a highly respected and prestigious conference sponsored by and whose results were published by the Wall Street Journal.

To truly reform health care, we need to stop pretending that general business or law training makes someone a health care expert, and that being paid a lot of money by a health care corporation makes one a bigger health care expert.   We need to go back to developing health care policy with the help of people who actually know something about health care, and who are not paid by particular health care corporation to support their vested interests. 

Prominent Health Care Policy Advice from People Sans Health Care Expertise

It is two days after the US Thanksgiving holiday, and one thing I am thankful for is the continued hilarity generated by health care corporate CEOs who pretend to be health care experts.  Of course this all really is not so funny, because the bogus expertise appears not in MAD Magazine, but in the most respected media outlets with the most influence over health care policy.

 This week's example comes from the Wall Street Journal's vaunted CEO Council.  A summary of its health care panel appeared early this week in that newspaper.

The panel included Angela Braly President and CEO, Wellpoint Inc., William A. Hawkins Chairman and CEO, Medtronic Inc., and Klaus Kleinfeld Chairman and CEO, Alcoa.  Angela Braly, a lawyer with no obvious record of direct experience in health care or related fields (see her bio here), received total compensation from WellPoint of more than $13 million in 2009, while presiding over various snafus and ethical missteps (most recently here, and with a further catalog here.)   William Hawkins, who has an undergraduate degree in engineering, and an MBA, received total compensation from Medtronic of over $9 million in fiscal 2010.  His direct involvement in health care or related fields apparently ended after his undergraduate years, when he was said to have done research in pathology (see his bio here).   He presided over Medtronic's settlement of thousands of patients' lawsuits that alleged injuries due to a faulty lead on one model of a Medtronic implantable cardiac defibrillator for over $200 million.  The company's other recent questionable activities may be found here.  Dr Kleinfeld's doctorate is in strategic management, but he has no obvious health care background (see his bio here.)   (The panel apparently had a "subject expert," Dr Risa Lavizzo-Mourey, a physician who is now CEO of the Robert Wood Johnson Foundation, but she was not quoted directly in the WSJ edited transcript.)

So what could we expect from a panel on health care that included no one with direct experience or expertise in health care, but two CEOs who managed to become extremely wealthy courtesy their employment by health care companies? 

Here is Ms Braly on changing incentives:

This really gets to the fact that right now we have a fee-for-service payment system, so we pay for quantity rather than quality. And very importantly, we think we need to redesign the way in which we reimburse for health care.

So,

Reimbursement could come in the form of accountable care organizations or patient-centered medical homes or pay-for-performance or risk sharing. There are a number of ways—and we didn't want to be completely prescriptive in terms of what that reimbursement formula would be.

The issue is not quantity versus quality, but cognitive, including primary care vs procedures. Ms Braly completely ignores how the government takes only the advice of the RUC to set physician payments, and how her company just apes that example (see posts here). Ms Braly also completely ignored how her company could actually try to change reimbursement on its own. There is no law that says it must follow the example set by Medicare.

So what she said about changing "delivery incentives" is just nonsense, to use a polite term.

Then we have Dr Kleinfeld ostensibly on transparency, but really on thinking about health care as if it were done on a production line:

Let me first talk about the transparency aspect. It was very informative to hear from those that are in the industry how big a variation you have in practices across the board.

If I were to look at a set of factories that make the same thing, and one does it in five days and the other one in 10 days, and the one that does it in five days is cheaper than the one that does it in 10 days, why would I not bring everybody down to the five days?

So the question is, what hinders the health-care industry from applying the same mechanics? There was agreement that today for every important disease category there are also quality indicators that are accepted that you could use to see what is the quality delivered.

Once you control the process, once you bring the quality up, the costs go down.

Dr Kleinfeld does not seem to realize that health care involves taking care of unique patients. Even when patients have common problems, they have unique mixtures of other medical problems and personal characteristics. The physician's most basic pledge is to do what is best for each individual patient. Treating them as if they were identical widgets on a production line makes absolutely no sense.  One cannot apply the "same mechanics" that apply on a production line, because actually taking care of patients is not done, and does not at all resemble what happens on a production line. It goes without saying that Dr Kleinfeld seems to have no idea how complex and fraught with error the process of measuring quality in health care actually is.

His remarks again, to put it politely, were nonsense.

Finally, there was Mr Hawkins in a similar vein:

Contrary to popular belief, we actually have very good medical care in this country, and with the proliferation of evidence-based medicine, we have determined that there are best practices for how we can treat hypertension or some of the neurodegenerative diseases or diabetes. And the reality is, as you look across different systems, there's a lot of variability in what people are doing.

We talked about the importance of publishing or being very clear about what are the best practices for dealing with hypertension, and then making sure that we have the means by which people will be held accountable moving forward in that area.

Maybe we should acknowledge that at least Mr Hawkins tried to concentrate on hypertension, which may have a slightly more secure evidence base than some other conditions. But the implication still is that there are "best practices" when the complexity of real patients in a real health care context makes figuring out what really is best for individual patients very challenging. Maybe that is why we used to try to leave such decisions up to doctors, other health professionals, and their patients.

However, it seems that the CEOs of big health care corporations seem to feel the need to justify their ridiculous total compensation by opining on health care topics that are completely beyond their experience, training, and expertise. The real problem is that probably because of the assumption that those huge salaries must correlate with huge expertise and intelligence, their opinions are taken seriously. The quotes above did not come from MAD Magazine. They came from a highly respected and prestigious conference sponsored by and whose results were published by the Wall Street Journal.

To truly reform health care, we need to stop pretending that general business or law training makes someone a health care expert, and that being paid a lot of money by a health care corporation makes one a bigger health care expert.   We need to go back to developing health care policy with the help of people who actually know something about health care, and who are not paid by particular health care corporation to support their vested interests.