More About What We Don't Know About the Contaminated Heparin from China

We last blogged about the case of Baxter International's adulterated heparin here.  (For a more detailed summary of the case, look here.)

In 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.

Now, an article in the Wall Street Journal by Alicia Mundy tells us more about what we don't know,

The Chinese government didn't pursue an investigation into contaminated heparin sent to the U.S. in 2007 and 2008, despite repeated requests from the U.S. for help, according to a congressional probe.

Two House Republicans said Food and Drug Administration officials recently told them that the agency has been "severely hampered" by the lack of cooperation from China in finding those responsible.

Furthermore,

'It is shocking to find out two years after Chinese-made heparin was killing Americans, the Chinese government still has done no investigating to find out why,' said Mr. Barton, the top Republican on the House Energy and Commerce Committee. He called on ... [FDA Commissioner Margaret] Hamburg to air the issue with Chinese officials.

Chinese officials denied there is a problem,

Yan Jiangying, spokeswoman for China's State Food and Drug Administration, said the congressmen's accusations are 'not true.'

Ms. Yan said her agency 'did a very thorough investigation, including very detailed inspection and testing, and surveys of enterprises as well. We signed an agreement with the FDA on drug safety in the end of 2007, and strengthened the monitoring of heparin.'

Note that their investigation, such as it was, did not appear to identify any misconduct or wrong-doing by anyone.

So now we know more about what we do not know about the deadly adulterated heparin from China.

But remember this is a case about heparin sold in the USA by Baxter International, an American company as an American product, resulting in the death of Americans.  Also, remember that the American company obtained the heparin from another American 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. 

Since Baxter International sold the heparin under its own label, should not its leaders be responsible for the safety and purity of the product?  Since Scientific Protein Laboratories LLC furnished the active pharmaceutical agreement to Baxter, and obtained it from a factory it partially owned in China, should not its leaders also be responsible for the safety and purity of the product?

It would be important to find out ultimately where in China the adulterated heparin entered the supply chain, but the current uncertainty about the initial origin of the contamination does not absolve those in the US who sold the active pharmaceutical ingredient, and then sold that ingredient in bottles with a US company label of responsibility for the safety and purity of the drug.

Why have we heard nothing more from Baxter International's and Scientific Protein Laboratories' leaders about the deadly heparin which they had sold?  Why have we heard nothing more about any investigation of these US based participants in this case? 

Both US companies doubtless saved money by buying the heparin from the cheapest Chinese sources they could find, by not directly inspecting and supervising its production, and by at best ignoring the lack of regulation of producers of active pharmaceutical ingredients in China.  They and their leaders benefited from this out-sourced, off-shore production.  (Note that Baxter CEO Robert L Parkinson Jr received total compensation of $14,361,305 according to the company's proxy statement, and six named officers all received more than $2,200,000.) Why aren't they being held accountable for its bad results?

As we have said until being blue in the face, as long as the leaders of health care organizations are not held accountable for the results of their decisions on health care quality, cost, and access (even in such extreme quality violations as those resulting in multiple patient deaths), we can expect continuing decisions that sacrifice quality, increase costs, and worsen access, but that are in the self-interest of the people making them.

To really reform health care, we must hold health care organizations and their leaders accountable (and not blame all the problems on doctors, other health care professionals, patients, and society at large).

Hat tip to Ed Silverman on the PharmaLot blog.

Prosecuting Doctors for Importing IUDs from Canada, but Still No Penalties for Selling Adulterated Heparin from China

Here in Rhode Island, the big health care story recently was the use of unapproved intra-uterine devices (IUDs) by some local obstetrician-gynecologists (OB-GYNs).  The first nuanced summary of the story which just appeared in the Providence Journal, written by Felice Freyer, suggested how the consequences of possible misconduct in health care depend on the clout of those involved.

The Unapproved IUDs

Here are the main points. The issue that caused so much local controversy was the use of unapproved IUDs:

Ten Rhode Island medical groups with 28 doctors told the Health Department that they bought IUDs, a form of birth control, from a foreign source, at prices about half what they had to pay for IUDs approved for use in the United States. Many had stopped using the unapproved devices long before the Health Department began its investigation in June.

Here is what we know about the actual devices they implanted:

An IUD is a T-shaped device that can fit in the palm of a woman’s hand. To prevent pregnancy, doctors insert it into the uterus, where it can stay for years. There are two types available in the United States: the ParaGard copper IUD and the Mirena hormonal IUD. Mirena, the more costly and more popular brand, has a coating of a progesterone-like drug that reduces heavy menstrual bleeding.

Unapproved IUDs Made by an American Company in Finland and Sold in Canada

Most of the "unapproved devices" the doctors were using were apparently made in Finland by an American company.

In most cases, the doctors were using Mirena, which is made at a factory in Finland by an American company, Bayer Healthcare Pharmaceuticals. Only when it comes through approved channels can doctors and patients be assured that a product meets FDA standards. But it is unclear whether Bayer –– or anyone –– makes a version of Mirena that does not meet those standards.

The doctors imported the devices from far-away, exotic Canada.

Most of the devices apparently came from Canada, where the government negotiates with drug and device makers to keep prices low.

There is no reason to suspect the devices were counterfeit, or defective.

'If they’re really from Canada and from a reputable pharmacy, it should be exactly the same thing [as the FDA-approved version],' said Sheryl Ruzek, a retired public health professor at Temple University and vice chair of the board of the ECRI Institute, a nonprofit organization that evaluates medical procedures and products. 'My hunch is the patients were not harmed,' she said.

Potential Negative Consequences for the Physicians

However, the RI physicians are in big trouble for importing them:

In Rhode Island, the state boards that regulate physicians, nurses and nurse-midwives are investigating all those involved. If any are found guilty of unprofessional conduct, they could face disciplinary action such as a reprimand or license suspension. The state attorney general’s office has a Medicaid fraud unit, but declined to comment. The U.S. Attorney also had no comment.

US doctors in other states have also been importing IUDs, and also are in big trouble:

So many doctors were importing IUDs or considering doing so that the American College of Obstetricians and Gynecologists recently took an official stand, issuing an advisory opposing the use of imported devices.

In 2006, the California Department of Health found that eight doctors had used imported IUDs in some 850 women.

In October 2009, an Arkansas doctor was indicted by a federal grand jury for using non-FDA-approved versions of Mirena. He was charged with violation of the Food, Drug & Cosmetic Act, health-care fraud (for allegedly billing Medicaid for the unapproved devices) and money-laundering (for the way he allegedly handled Medicaid reimbursements). The doctor, Kelly Dean Shrum, has not yet come to trial, but potential penalties include fines and imprisonment.

Summary, and the Contrast with the Case of the Adulterated, Fatal Heparin
So to summarize, doctors who imported IUDs from Canada that appeared to be identical to those sold with FDA approval in the US, and were made in Finland by an American company at the same factory in which the US approved IUDs were made have gotten into major trouble with state and federal authorities. There is no clear evidence that the IUDs caused any harm to patients.

I am not defending the doctors' actions. However, contrast the treatment they are likely to receive with another case we have frequently discussed.

We last blogged about the case of Baxter International's adulterated heparin here.  In 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.

Yet everyone from state health departments to the federal authorities have jumped into the case of the unapproved IUDs imported, but from Canada, and apparently identical to the IUDs sold in the US.  There is, at least so far, no evidence that the IUDs were defective or dangerous, and no evidence they have harmed patients.  One doctor has been prosecuted for violating the Food, Drug and Cosmetic Act, and for health care fraud and money-laundering.  No one working for Baxter International (or for the identified organizations within its supply chain) has been prosecuted for anything.

What the...?   I do not object to discipline and prosecution of individual doctors who appear to have broken the law.  But why are we so vigorously pursuing individual doctors for an apparently technical violation of laws that did patients no apparent harm, when we are not pursuing health care corporate executives for selling adulterated drugs that likely killed patients? 

F Scott Fitzergald wrote that the "very rich are different from you and me," and it appears that very rich health care leaders have impunity when it comes to conduct that let patients be harmed and die. 

Real health care reform would make top health care leaders as accountable as we now make individual doctors.

An Attempt to Hold Health Care Leaders Accountable for Their Organizations' Bad Behavior?

We have frequently noted how health care organizations accused of kickbacks, fraud, and other unethical and sometimes illegal behavior involving how they produce or market health care products or services often are allowed to settle the charges only with a fines to the companies, and sometimes with corporate integrity agreements.  Almost never are the people who authorized, directed, or implemented the unethical behavior required to pay any sort of penalty.  We recently commented on a case in which an executive of a medical device company accused of exaggerating the performance of a diagnostic test in development was charged, not with misleading doctors or patients by the US Food and Drug Administration (FDA), but with misleading investors by the US Securities and Exchange Commission (SEC).  That executive lost her job, and will be barred from leading any public company.

So up to now, a corporate executive responsible for misleading doctors or patients about issues that could affect clinical decisions or outcomes likely would never pay a penalty, but one responsible for misleading  investors about similar issues could lose his or her job and livelihood.

Now, per an article in Fortune, it appear the situation may be changing,

The federal government is fed up with the amount of fraud, especially recurring fraud from the same companies, happening in the pharmaceutical industry. So regulators have decided that when it comes to punishments, it's time to get personal.

From now on, individual executives risk being ejected from their jobs -- and perhaps even barred from the industry -- for fraud their companies commit, even if they did not participate or even know about the crimes.

Furthermore,

The new approach, emerging from the unusually powerful Inspector General's office in the Department of Health and Human Services, reflects frustration with corporate recidivism even in the face of ramped-up fines, penalties and disgorgements.

'We are going to start to use that authority in the appropriate circumstances to get high level executives out of companies, so that the company has a better shot at changing its behavior, so that it does not become a recidivist,' explains Lewis Morris, chief counsel to the Inspector General.

The article noted some cases in which even large fines and corporate integrity agreements seemingly failed to deter future bad behavior by the companies which paid these penalties. For example,

In the government's most recent major settlement -- in which AstraZeneca agreed to pay $520 million -- the fine represented 16.5% of the $8.6 billion income (between 2001-2006) from U.S. sales of Seroquel, a powerful anti-psychotic. AstraZeneca (AZN) turned this narrowly approved drug into a cash cow by marketing it for much wider use, including by the elderly and children, even though they are particularly vulnerable to 'serious and debilitating side effects.'

All the while, AstraZeneca was operating under a corporate integrity agreement (CIA) with the Inspector General, imposed after a 2003 off-label marketing case.

We discussed the AZ settlement here in October, 2009. We asked then, "Does anyone really still believe that integrity agreements, and settlements assessed against huge corporations deter such profitable bad behavior?"

Another example:

Drug company Pfizer (PFE, Fortune 500), which was fined $2.3 billion just last September, is now on its third CIA. Steeper fines and harsh individual penalties should help put more teeth into these agreements and keep companies from flouting them.

We discussed the repeated lack of effect of settlements by Pfizer here in September, 2009. We concluded, "So will even a $2,300,000,000 settlement and yet another corporate integrity agreement make Pfizer or any other health care corporation act more ethically? I doubt it."

The Fortune article quoted Peter Rost, former Pfizer executive turned whistle-blower and ethics advocate (and to whose blog I offer a hat tip for first mentioning the Fortune article), on aspects of corporate culture and corporate incentives that foster repeated unethical behavior by management,

'Usually by the time someone becomes a senior executive they are very aware of the pitfalls in the organization, and they have become masters at not doing something wrong or not getting caught doing something wrong,' explains Peter Rost, a former senior Pfizer executive turned industry gadfly.

Incentive-based compensation systems -- typically 40% to 50% of salespeople's income comes from hitting their numbers -- are one weak point. 'They are going to work real hard to increase those numbers and do whatever it takes, and if they think somebody gave them a wink about doing this or that, they are going to run with it.' says Rost.

Booting senior executives out for any fraud under their watch might end the wink-and-nod system, giving hope to critics.

In my humble opinion, the government's new approach looks like real progress. Giving corporate executives personal impunity was a recipe for increasing unethical, and sometimes criminal behavior. The sorts of marketing fraud they authorized or directed certainly lead to increasing costs, and overuse of unnecessary and sometimes harmful tests and treatments. While there have years of complaints about health care's increasing costs and decreasing quality in health policy circles, it is just amazing that until now, there has been so little action against the bad behavior that was undoubtedly responsible for much of these problems.

So three cheers for making health care organizations' leaders accountable for the bad behavior of their organizations.

After cheering, however, there ought to be some serious inquiry about why they were not held accountable much sooner.  It turns out that there has been legal justification for holding leaders so accountable available for a long time:

All that's required for the government to flex this remarkably broad authority -- embedded in the Responsible Corporate Officers Doctrine -- is that the executives were in a position to have stopped the fraud that resulted in a criminal conviction or plea.

Note that the Responsible Corporate Officers Doctrine apparently derives from a US Supreme Court case about the selling of misbranded or adulterated drugs into interstate commerce under the US Food and Drug Act, decided in 1943.

However, it looks like in the hyper laissez faire climate of the last 20 or more years, no one wanted to bother to invoke it. After all, the formerly highly regarded leader of the US Federal Reserve believed there was no need for regulators to punish fraud, because the magic of the market would take care of it. US health care has paid a heavy price for such breathtaking naivete (see the PBS Frontline show, "The Warning." )

Genzyme Settles

In late 2009, we posted about problems at a Genzyme plant that manufactured some fabulously expensive drugs, e.g. Cerezyme whose cost to patients approximated $160,000 a year.  We thought then that for a drug costing that much, the company ought to have figured out a conservative process to provide pure and unadulterated product.  In a later post we also why a company that could afford to make its CEO very rich could not afford to adequately maintain its manufacturing facilities.

Now Genzyme has reached a settlement with the US Food and Drug Administration (FDA) on the matter.  As reported by the Boston Globe,

Genzyme Corp will remain under federal oversight for the next seven to eight years as it works to fix quality-control problems that have bedeviled its Allston Landing plant for 15 months.

The timetable was spelled out in a consent decree struck between Genzyme and the Food and Drug Administration.

Under its terms, Genzyme will pay a previously disclosed $175 million federal fine, the first in its 29-year history. The agreement, filed with the US District Court in Boston yesterday, is subject to court approval.

Although the company said last month that it expected to pay the $175 million fine, other terms of the consent decree were not known until yesterday. Among them, Genzyme agreed to move fill-finishing work for its domestic drug shipments out of the Allston site by November. The transfer of fill-finishing for overseas shipments will take place by Aug. 31, 2011.

Fill finishing is the process of pouring drugs into vials for shipments to hospitals and clinics, where they are administered to patients.

Late last year, inspectors found bits of steel, rubber, and fiber in some drugs during the fill-finishing process in Allston. The work will be moved to a Genzyme operation in Waterford, Ireland, and to subcontractors such as Hospira Inc., subject to approval by federal regulators.

The firm faces additional fines if it fails to meet FDA deadlines

In all, the Cambridge biotechnology giant will spend two to three years in remediation under the consent decree, and another five years under oversight by a third-party contractor, the Quantic Group, a Livingston, N.J., consulting firm focused on boosting manufacturing quality and safety.

Quantic will craft a remediation plan with Genzyme, and the company could be fined $15,000 a day for missing milestones.

So now Genzyme is marching in our parade of settlements.  While this settlement is of charges related to very fundamental violations, failure to manufacture pure and unadulterated drugs, in one important way its provisions seem similar to many other such settlements we have now seen.  The settlement fines the company as a whole, but results in no penalties for any individuals. 

As we have noted before, fines, even fines larger than this one, can be regarded just as a cost of doing business (especially when the business is very lucrative.  The company's 2010 proxy statement noted that even in 2009, when production was affected by the plant closure, "sales of Cerezyme were $793 million, compared with $1.2 billion in 2008. Sales of Fabrazyme were $431 million compared with $494 million in the previous year. So the company was fined $175 million for production problems with two drugs that brought in over $1.2 billion in revenue in 2009.) 

Furthermore, the fine's impact may be diffused over the whole company, and ultimately comes out of the pockets of stockholders, employees, and customers alike.  It provides no negative incentives for those who authorized, directed, or implemented the behavior in question.  So it is not clear that settlements like this deter future wrong-doing.

Additionally, as we noted in the earlier post, the current CEO of Genzyme has gotten quite rich by virtue of his position.  While the 2010 Genzyme proxy statement indicates his compensation was affected by the financial impact of the production slowdown, even so he continued to get richer, albeit at a slightly slower pace than he did before.  That statement indicates that in 2009, CEO Henri Termeer's total compensation was a mere $9,507,403, down from $12,699,301 the previous year.  The main difference was that his non-equity incentive plan compensation dropped from $1,962,725 to 0.  While a $3 million plus salary decrement seems sizable, it is hard to conceive of an executive who makes nearly $10 million a year as suffering major financial consequences from the current debacle. 

As I have said before, endlessly, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Epic Stupidity: Does the Award for the Most Laughable Statement Made by a Health IT Vendor Belong to EPIC?

It may, because I am hard pressed to find any statement that approaches this one in vacuousness.

Regarding reporting of healthcare IT problems and defects that might cause, or have caused, patient harm, the executive VP at EPIC stated at a HHS Health IT Policy Committee certification workgroup:

... The FDA might not be the best organization to help the ONC create an environment where people feel comfortable coming forward with incident reports, said Carl Dvorak, executive VP at EHR system provider Epic Systems and a workgroup member

Dvorak said he's also concerned that the FDA's QSR process wouldn't address problems people spoke about in recent workgroup testimony. "If the mission is to build a safer system, I don't know that the FDA can contribute toward that mission," he said.

To this I ask these questions:

1. Where, exactly, does Mr. Dvorak think clinicians and healthcare organizations report defects and problems with devices and drugs now? Consumer Reports? Good Housekeeping?

2. What is Mr. Dvorak's first hand experience with the FDA in terms of reporting on medical devices and medical device IT, and pharmaceuticals? Could that be the reason he "doesn't know" how the FDA can contribute to "the mission" of HIT medical device safety?

Perhaps Mr. Dvorak himself is uncomfortable reporting defects and problems with health IT medical devices to FDA as opposed to some new, amateur medical device safety organization [see note 1] friendly to the HIT industry or in their pockets, but clinicians won't be.

Either that, or this is one of the lamest attempt at FUD in computing history [see note 2].

A possibly real billboard from parts unknown about where to report shoddy HIT: FDA's MedWatch Hotline. (Hat tip to HisTALK blog.)

-- SS

Notes:

[1] See my post "Third-Party Reviews of Medical Devices Come Under Scrutiny at the FDA - Except Healthcare IT Medical Devices, Which Get Special Accommodation" for more on the issue of third-parties and amateurs performing device review.

[2] HIT personnel in my experience often seem to resort to a psyops strategy of trying to instill Fear, Uncertainty and Doubt in others to kill ideas they don't like (usually, ideas that would cause them to have to work harder), although it's usually done in a far more credible manner than in this example.

Epic Stupidity: Does the Award for the Most Laughable Statement Made by a Health IT Vendor Belong to EPIC?

It may, because I am hard pressed to find any statement that approaches this one in vacuousness.

Regarding reporting of healthcare IT problems and defects that might cause, or have caused, patient harm, the executive VP at EPIC stated at a HHS Health IT Policy Committee certification workgroup:

... The FDA might not be the best organization to help the ONC create an environment where people feel comfortable coming forward with incident reports, said Carl Dvorak, executive VP at EHR system provider Epic Systems and a workgroup member

Dvorak said he's also concerned that the FDA's QSR process wouldn't address problems people spoke about in recent workgroup testimony. "If the mission is to build a safer system, I don't know that the FDA can contribute toward that mission," he said.

To this I ask these questions:

1. Where, exactly, does Mr. Dvorak think clinicians and healthcare organizations report defects and problems with devices and drugs now? Consumer Reports? Good Housekeeping?

2. What is Mr. Dvorak's first hand experience with the FDA in terms of reporting on medical devices and medical device IT, and pharmaceuticals? Could that be the reason he "doesn't know" how the FDA can contribute to "the mission" of HIT medical device safety?

Perhaps Mr. Dvorak himself is uncomfortable reporting defects and problems with health IT medical devices to FDA as opposed to some new, amateur medical device safety organization [see note 1] friendly to the HIT industry or in their pockets, but clinicians won't be.

Either that, or this is one of the lamest attempt at FUD in computing history [see note 2].

A possibly real billboard from parts unknown about where to report shoddy HIT: FDA's MedWatch Hotline. (Hat tip to HisTALK blog.)

-- SS

Notes:

[1] See my post "Third-Party Reviews of Medical Devices Come Under Scrutiny at the FDA - Except Healthcare IT Medical Devices, Which Get Special Accommodation" for more on the issue of third-parties and amateurs performing device review.

[2] HIT personnel in my experience often seem to resort to a psyops strategy of trying to instill Fear, Uncertainty and Doubt in others to kill ideas they don't like (usually, ideas that would cause them to have to work harder), although it's usually done in a far more credible manner than in this example.