Monday, November 29, 2004
The Conflict On Drugs
The cases that have dominated the better part of my legal career over the past two years have dealt largely with the conflicts of interest within the nation's largest financial institutions, and how these conflicts have negatively impacted investors and the markets as a whole.
By way of background, most of the major financial institutions in the US offer both investment banking services as well as research and analyst services. Theoretically, the two are supposed to operate independently, since the missions of each segment are different in nature, and often in conflict. But certain temptations undermined the ability to keep these entities separate during the recent internet boom, as the allure of easy money led to malfeasance and fraud.
The investment banking side of the business began to use their influence to coerce the analysts to offer favorable research reports about certain companies that the analysts knew were weak and destined for failure. In so doing, the investment bankers were rewarded by those subject companies with lucrative underwriting deals for their initial public offerings, and subsequent stock sales. The subject companies, in turn, were able to maintain artificially high stock prices, buoyed by the positive reports emanating from the analysts.
It was a self-sustaining circle. Since both branches, investment banking and research, operated under the same corporate umbrella, it was seen as a win for all involved, and the money from the banking deals fueled big bonuses and jaw dropping salaries for the pseudo-celebrity analysts that frequented the cable networks and pages of the leading financial periodicals.
Unfortunately, many investors who relied on the advice of these high priced and highly touted analysts lost enormous amounts of money when reality caught up to the rosy spin put out in their reports. The public suffered greatly from this conflict of interest, and the markets themselves, which owe much of their success to the concept of transparency and disclosure, lost much of their luster as ordinary Americans and foreign investors found themselves uncertain of what they could know and learn from a system so compromised.
An article in today's New York Times echoes many of the familiar plot lines and patterns that have so punctuated my professional life in recent memory including money, influence, conflicts of interest, and injuries suffered by an unsuspecting and trusting public. The only difference is, this story is about our health care system and the role that pharmaceutical companies play in its functioning.
The article discusses a somewhat troubling side effect of the growing influence that pharmaceutical companies have over medical schools and researchers. Recently, when researchers tried to pool data to better determine if anti-depressants prescribed to adolescents and children increased risks of suicide, amid a stir of controversy stemming from some test results that suggested just such a corollary, they discovered that they could not access, share or compare all the data from the studies - even the ones they had helped author. In most cases, the pharmaceutical companies themselves owned the data, and they alone could determine how and when, and if at all, such data would be made public or even available to other physicians researching the problem. This was not an isolated incident, but it is particularly egregious because the drugs in question may have increased the incidents of suicide among their young users. Despite the stakes, these drug companies maintained the confidentiality of the findings out of concern for what dissemanation of such material could do to drug sales and prescription habits among physiscians.
The question presented is why would doctors willingly cede such access to study results to the companies that sponsor them? The answer is, that drug companies are able to secure such beneficial confidentiality clauses in contracts with researchers because of the carrot they dangle in front of medical schools and other research institutions. There is big money in research, and these companies pay handsomely for the services of researchers. In return, the drug companies themselves benefit from the imprimatur of a reputable academic establishment. Each side gets what they need most, much like the triangle of bankers, analysts, and internet companies.
While that may seem like a comprehensive approach by the pharmaceutical industry to dominate the medical profession, or at least manipulate it in order to yield results that comport with its own goals and objectives, the drug companies have left no stone unturned in their effort to cement their position of hegemony. Drug companies have also been spreading their tentacles into the world of federal regulation, which in itself is fast becoming a thinly veiled tool for the very industries its various offices are charged with regulating. No recent case better exemplifies this phenomenon than that of Vioxx, the prescription painkiller put out by pharmaceutical giant Merck.
An article appearing in The Lancet (subscription required), sums up the scope of the Vioxx story:
The problem is, studies showed that Vioxx had other more pernicious side effects - namely that it increased the risk of major cardiovascular events such as heart attacks or strokes. Given the fact that the drug was targeted for the elderly, as frequent sufferers of arthritis who are thus in need of everyday painkillers, the increased risks of heart attack and stroke were that much more pertinent. When faced with the results of these studies, Merck chose to bury them, downplay them and come up with new study parameters that would conceal the results (for example: subsequent studies selected younger participants less likely to be as susceptible to cardiovascular disease, but also not representative of Vioxx's likely market). Merck was unwilling to abandon its prized project even though it meant that it would be subjecting the drug's takers to life-threatening risks. The investment in Vioxx was too large, and the payoff too tempting.
It is no secret that President Bush has made what he calls "tort reform" a major plank in his second term agenda. But his version of tort reform is actually an attempt to strip away this safety net for citizens injured by big corporate entities. It is an attempt to remove any semblance of corporate restraint by reducing payouts to injured parties, a system that would encourage more corporate abuses - making the cost of litigation more acceptable and thus providing incentive to partake in unsafe practices if otherwise profitable.
In light of the ugly calculus used by Merck in the Vioxx case, and the fact that the FDA was complicit, consider the fact that the Bush administration actually wants to make FDA approval itself a form of immunity for drug companies. According to the Bush administration's take, if the FDA approves a drug, no citizen could hold that company liable for any level of abuse in producing, testing, marketing or distributing the drug. It is the ultimate get out of jail free card.
If the Bush administration has its way, however, companies like Merck could release drugs like Vioxx with impunity. They would be able to manipulate studies, hide negative results, influence the FDA, and would not have to fear the economic repercussions of lawsuits. This power and lack of responsibility would have the effect of giving the maximization of profits carte blanche in its decision making process. Considering how disfunctional and coopted the FDA has shown itself to be, it would be foolish to make FDA approval alone the bestower of immunity from any and all wrongdoing.
The public needs protection from conflicts of interest, whether it be in the realm of financial markets or prescription drugs. Our society is made healthier by such regulations, as markets gain the trust of investors, and well informed physicians and health care professionals are able to best serve patients in a way that improves health and well being. Unchecked power leads to corruption. This is the very basis of our Constitution. The administrative state, an outgrowth of the government for the people, must not shirk its responsibilities to guarantee the public's interest. But if federal regulators are not up to the task, then we must maintain the ability of public protection lawyers to perform their valuable service to society as a last ditch avenue for justice.
By way of background, most of the major financial institutions in the US offer both investment banking services as well as research and analyst services. Theoretically, the two are supposed to operate independently, since the missions of each segment are different in nature, and often in conflict. But certain temptations undermined the ability to keep these entities separate during the recent internet boom, as the allure of easy money led to malfeasance and fraud.
The investment banking side of the business began to use their influence to coerce the analysts to offer favorable research reports about certain companies that the analysts knew were weak and destined for failure. In so doing, the investment bankers were rewarded by those subject companies with lucrative underwriting deals for their initial public offerings, and subsequent stock sales. The subject companies, in turn, were able to maintain artificially high stock prices, buoyed by the positive reports emanating from the analysts.
It was a self-sustaining circle. Since both branches, investment banking and research, operated under the same corporate umbrella, it was seen as a win for all involved, and the money from the banking deals fueled big bonuses and jaw dropping salaries for the pseudo-celebrity analysts that frequented the cable networks and pages of the leading financial periodicals.
Unfortunately, many investors who relied on the advice of these high priced and highly touted analysts lost enormous amounts of money when reality caught up to the rosy spin put out in their reports. The public suffered greatly from this conflict of interest, and the markets themselves, which owe much of their success to the concept of transparency and disclosure, lost much of their luster as ordinary Americans and foreign investors found themselves uncertain of what they could know and learn from a system so compromised.
An article in today's New York Times echoes many of the familiar plot lines and patterns that have so punctuated my professional life in recent memory including money, influence, conflicts of interest, and injuries suffered by an unsuspecting and trusting public. The only difference is, this story is about our health care system and the role that pharmaceutical companies play in its functioning.
The article discusses a somewhat troubling side effect of the growing influence that pharmaceutical companies have over medical schools and researchers. Recently, when researchers tried to pool data to better determine if anti-depressants prescribed to adolescents and children increased risks of suicide, amid a stir of controversy stemming from some test results that suggested just such a corollary, they discovered that they could not access, share or compare all the data from the studies - even the ones they had helped author. In most cases, the pharmaceutical companies themselves owned the data, and they alone could determine how and when, and if at all, such data would be made public or even available to other physicians researching the problem. This was not an isolated incident, but it is particularly egregious because the drugs in question may have increased the incidents of suicide among their young users. Despite the stakes, these drug companies maintained the confidentiality of the findings out of concern for what dissemanation of such material could do to drug sales and prescription habits among physiscians.
The question presented is why would doctors willingly cede such access to study results to the companies that sponsor them? The answer is, that drug companies are able to secure such beneficial confidentiality clauses in contracts with researchers because of the carrot they dangle in front of medical schools and other research institutions. There is big money in research, and these companies pay handsomely for the services of researchers. In return, the drug companies themselves benefit from the imprimatur of a reputable academic establishment. Each side gets what they need most, much like the triangle of bankers, analysts, and internet companies.
Makers of drugs and medical devices frequently turn to medical schools and academic teaching hospitals to run clinical trials and recruit patients for them. The industry pays many academic institutions millions of dollars annually to run such trials; the involvement of a leading academic researcher in an industry-sponsored test gives it both prestige and credibility. Medical researchers who attract studies reap the benefits of such rainmaking with bigger research budgets and career advancement.The relationship between medical schools and pharmaceutical companies does not end there. Pharmaceutical companies are also substantial contributors to the endowments of most of the nation's medical schools, and have recently been assuming a more prominent role in funding, designing and influencing many continuing medical education programs (CME) that doctors need to complete in order to maintain certification. According to an article appearing in the Journal of the American Medical Association:
Worse, many medical educational institutions not only allow the industry's encroachments but also welcome and even solicit pharmaceutical company participation in programs that should be the profession's sole responsibility. As a result, CME is now so closely linked with the marketing of pharmaceuticals that its integrity and credibility are being questioned. The problem is not new, but it has recently grown to alarming proportions.In recent years, private non-academic institutions have shown an increased proclivity to enter the market in pursuit of the largesse drug companies lavish on the providers of studies and trials.
While industry financing of clinical trials has increased, for example, the share of it going to academic institutions has fallen to 35 percent in 2002 from 70 percent in 1991, according to Thompson CenterWatch, a Boston company that covers the testing industry.This increased competition has further strengthened the hand of the pharmaceutical industry, and augmented their bargaining position.
Specialists like Dr. Korn [an executive of the Association of American Medical Colleges] said that some medical schools, because of their reliance on industry money, might not negotiate aggressively over contract provisions for fear that companies would take test work elsewhere.One of the concessions medical researchers frequently grant to drug companies is the willingness to bury negative studies and studies that were neutral in their findings. The studies relating to the efficacy of anti-depressants for adolescents and children is a microcosm of the problem, but again, the findings are particularly troublesome because they involve an increased likelihood of death for the children and adolescents who are the patients.
Of the 12 studies, all five of the reports claiming positive results, meaning the drug worked without worrisome side effects, that were submitted for possible regulatory approval were published. The seven other studies were inconclusive or negative, which can mean that the drug failed to work or that the test failed because of its design...The influence of the drug companies stretches even further than the researchers themselves. Many of the medical journals and industry publications are also very well attuned to the interests and needs of one of their primary benefactors.
Because many of the antidepressant studies were unpublished, many doctors never heard about the results. Their findings were typically disclosed in limited settings, like talks at meetings of medical specialists or on a poster displayed in a room with dozens of other posters, which is a typical way of disseminating research results at professional conferences.
Several researchers who worked on the pediatric antidepressant trials said that in many cases they had little incentive to submit ambiguous or failed trials to medical journals because they thought the papers would be rejected by journal editors.While this imbalance of power affects such contractual provisions as ownership of the data, whether the results will be published, the schedule and manner of public disclosure, etc., the more troubling aspect of the relationship is the influence the sponsorship itself could be having on the "results" that are reached. Just as the financial analysts were influenced to embellish their reports by the allure of banking contracts, so too are many researchers incentivised to exaggerate their findings in a manner most favorable to their patrons.
One of those researchers, Dr. Neal Ryan, a professor of psychiatry at the University of Pittsburgh, said there has typically been little publishing interest in studies with inconclusive findings or those that failed to work because of study design, a type sometimes referred to as a negative study.
"No one gets famous from publishing negative studies," Dr. Ryan said.
Several studies of academic research have also found that investigators may overstate, unwittingly or not, test findings to please a study's sponsor or a medical journal editor. And university researchers, [prominent medical school] researcher Dr. [Karen Dineen] Wagner among them, are also sometimes paid significant amounts of money by a drug's manufacturer for work directly related to their study of that medication, creating a potential conflict of interest...Other studies have contrasted the typical findings for government sponsored studies versus those financed by private industry.
Academic researchers routinely receive speaking and consulting fees from drug companies whose products they test. But some schools put restrictions on such payments.
Studies of the issue suggest more bias in industry-sponsored studies. One survey of such studies, published last year in BMJ, a British medical journal, found that reports sponsored by drug makers and published in medical journals were more likely to find drugs safe and effective than studies financed by the government and other sources.To summarize, the pharmaceutical industry is exerting an ever larger measure of control and influence over the process of clinical research concerning the drugs that they are sponsoring. Through an advantageous bargaining position, the industry is able to dictate the terms of the studies, including which findings will be published and which will not, no matter what the interest of the public is, or what interest the medical profession has in having access to such information when making health care decisions. The professions' own trade papers seem so preoccupied with the interests of the drug companies that they display an institutional reluctance to publish negative results. Further, their patronage alone is creating a conflict of interest by which researchers are touching up their findings in order to present the results in a light most favorable to their sponsors despite actual scientific data. Rounding out the list, the pharmaceutical industry has taken an increased role in determining the curriculum at medical schools and in continuing medical education courses.
While that may seem like a comprehensive approach by the pharmaceutical industry to dominate the medical profession, or at least manipulate it in order to yield results that comport with its own goals and objectives, the drug companies have left no stone unturned in their effort to cement their position of hegemony. Drug companies have also been spreading their tentacles into the world of federal regulation, which in itself is fast becoming a thinly veiled tool for the very industries its various offices are charged with regulating. No recent case better exemplifies this phenomenon than that of Vioxx, the prescription painkiller put out by pharmaceutical giant Merck.
An article appearing in The Lancet (subscription required), sums up the scope of the Vioxx story:
The Vioxx story is one of blindly aggressive marketing by Merck mixed with repeated episodes of complacency by drug regulators. We need clear statements from all parties in this sorry tale about the lessons to be learned. Without more vigilant drug regulation in the future, doctors will continue to be misled and patients' lives will continue to be endangered.The drug itself, Vioxx, was supposed to be something of a wonder drug in that it provided pain relief for people suffering from chronic conditions such as arthritis, while at the same time caused fewer of the gastrointestinal side effects, such as ulcers, than other pain medication such as aspirin, when taken on a daily or regular basis.
The problem is, studies showed that Vioxx had other more pernicious side effects - namely that it increased the risk of major cardiovascular events such as heart attacks or strokes. Given the fact that the drug was targeted for the elderly, as frequent sufferers of arthritis who are thus in need of everyday painkillers, the increased risks of heart attack and stroke were that much more pertinent. When faced with the results of these studies, Merck chose to bury them, downplay them and come up with new study parameters that would conceal the results (for example: subsequent studies selected younger participants less likely to be as susceptible to cardiovascular disease, but also not representative of Vioxx's likely market). Merck was unwilling to abandon its prized project even though it meant that it would be subjecting the drug's takers to life-threatening risks. The investment in Vioxx was too large, and the payoff too tempting.
Internal Merck & Co. e-mails and marketing materials show the drugmaker fought forcefully for years to keep safety concerns from destroying the sales of big-selling painkiller Vioxx, according to a published report.In furtherance of its efforts at obfuscation, Vioxx found a willing accomplice in the FDA. Merck let profits cloud its judgment, but that is precisely why we have government regulation in place. It is not prudent, in every scenario, to leave the welfare of the public to people who are overly influenced by corporate edicts. Federal regulators are supposed to be there to mitigate the conflict of interest. But, as I stated earlier, federal regulators have been coopted by the industries they are tasked with overseeing, spreading the conflict of interest like a virus to all gate keepers.
The Wall Street Journal reported...that the e-mails seen by the paper show that Merck executives were worried in the mid-to-late 1990's that Vioxx would show greater heart risk than cheaper painkillers that were harsh on the stomach but were believed to reduce the risk of heart attacks...
The paper said that several company officials discussed in e-mails how to design a study that would minimize the finding that Vioxx had a higher heart attack risk than the cheaper drugs, even though some of those writing the e-mails believed that damaging comparisons would be difficult to conceal.
"The FDA didn't do anything," says Eric Topol, chief of cardiovascular medicine at the Cleveland Clinic. "They were passive here."Within this context I want to revisit the subject of tort reform that I first addressed in an earlier post. The right wing has derisively labeled the plaintiff's bar as "trial lawyers" and ascribed to them every societal wrong, from a slumping job market to a shortage of flu vaccines. In actuality, these attorneys represent the last line of defense for ordinary citizens who are injured through negligent, reckless and malicious corporate practices. When the system of regulation fails, as it has been prone to do in recent years, these public protection lawyers are the sole recourse for the injured party. In addition, they are, in many instances, the only group capable of providing a financial incentive for corporations, such as Merck, to revise their negligent and reckless practices, and to bring their policies in line with the greater public good.
Sen. Chuck Grassley, R-Iowa, says the FDA was worse than passive.
Investigators for the Senate Finance Committee, which Grassley chairs, met Thursday with FDA researcher David Graham, lead scientist on a study presented in August at a medical meeting in France.
Graham told the finance committee investigators that the FDA was trying to block publication of his findings, Grassley said in a statement. "Dr. Graham described an environment where he was 'ostracized,' 'subjected to veiled threats' and 'intimidation,'" Grassley said. Graham gave Grassley copies of e-mail that appear to support his claims that his superiors suggested watering down his conclusions.
Rep. Tom Davis, R-Va., chair of the House Government Reform Committee, last week wrote acting FDA commissioner Lester Crawford to ask what the agency knew about Vioxx and when. Davis also asked whether the FDA plans to collect more data on related drugs.
"In light of Merck's withdrawal of Vioxx...and other recent news stories examining FDA's review of the safety and efficacy of antidepressant drug use by children, I am concerned whether FDA has been sufficiently aggressive in monitoring drug safety," Davis wrote.
It is no secret that President Bush has made what he calls "tort reform" a major plank in his second term agenda. But his version of tort reform is actually an attempt to strip away this safety net for citizens injured by big corporate entities. It is an attempt to remove any semblance of corporate restraint by reducing payouts to injured parties, a system that would encourage more corporate abuses - making the cost of litigation more acceptable and thus providing incentive to partake in unsafe practices if otherwise profitable.
In light of the ugly calculus used by Merck in the Vioxx case, and the fact that the FDA was complicit, consider the fact that the Bush administration actually wants to make FDA approval itself a form of immunity for drug companies. According to the Bush administration's take, if the FDA approves a drug, no citizen could hold that company liable for any level of abuse in producing, testing, marketing or distributing the drug. It is the ultimate get out of jail free card.
The Bush administration has been going to court to block lawsuits by consumers who say they have been injured by prescription drugs and medical devices.I do not mean to demonize the pharmaceutical industry. They are merely seeking to maximize their influence, profits and power. In the process, they have spearheaded many important scientific breakthroughs that have saved lives, and greatly benefited society as a whole. But at times, the industry will be seduced by the same siren's song that big business inevitably falls prey to: profits over public welfare. Since this is an inextricable conflict of interest, it is necessary to rein in such unchecked power. Greater regulation of the industry is needed in order to insure that its beneficial qualities are maximized, and any conflicts of interest are minimized and taken out of the decision making process - whether it be legislation mandating that all test results of drugs are released to doctors and consumers, or reinvigorating the FDA with a sense of purpose for performing its oversight duties.
The administration contends that consumers cannot recover damages for such injuries if the products have been approved by the Food and Drug Administration. In court papers, the Justice Department acknowledges that this position reflects a "change in governmental policy," and it has persuaded some judges to accept its arguments, most recently scoring a victory in the federal appeals court in Philadelphia.
If the Bush administration has its way, however, companies like Merck could release drugs like Vioxx with impunity. They would be able to manipulate studies, hide negative results, influence the FDA, and would not have to fear the economic repercussions of lawsuits. This power and lack of responsibility would have the effect of giving the maximization of profits carte blanche in its decision making process. Considering how disfunctional and coopted the FDA has shown itself to be, it would be foolish to make FDA approval alone the bestower of immunity from any and all wrongdoing.
The public needs protection from conflicts of interest, whether it be in the realm of financial markets or prescription drugs. Our society is made healthier by such regulations, as markets gain the trust of investors, and well informed physicians and health care professionals are able to best serve patients in a way that improves health and well being. Unchecked power leads to corruption. This is the very basis of our Constitution. The administrative state, an outgrowth of the government for the people, must not shirk its responsibilities to guarantee the public's interest. But if federal regulators are not up to the task, then we must maintain the ability of public protection lawyers to perform their valuable service to society as a last ditch avenue for justice.
