Price Fixing, Regulatory Capture, Crony Capitalism - Will the New Public Citizen Report Succeed in Outing the RUC?

Just last month the RUC made it back into the headlines.  Then we posted  Politico made another attempt to shed some light on this obscure committee and its outsize effect on health care. Now the watchdog organization Public Citizen has stepped into the breach, publishing a report on the RUC (Research Based Relative Value Scale Update Committee), with an accompanying press release and op-ed. 

Introduction - Why the RUC is Important

To explain why this issue is important, I can simply repeat what I wrote before. 

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

The article in the Annals, however, proposed one conceptually simple answer.  The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject, efforts by humble bloggers such as yours truly, a major journalistic expose in the Wall Street Journal in 2010,  another major expose in Washington Monthly in 2013, congressional hearings in 2013, and yet another major expose in Politico in 2014.  The lack of much public discussion of this issue despite its importance and the above attempts to start discussion seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)

Once Again...  the Public Citizen Report

The latest report draws on the earlier exposes and journal articles, and repeats again all but one of the major points in the Washington Monthly 2013 article.  Here are the points with quotes from the new report.

The RUC is Well Hidden

After describing the RUC as "secretive" in its introduction, the report reviewed the specifics:

most of its proceedings occur behind closed doors and without public scrutiny. Minutes from each of the RUC’s three annual meetings are not made publicly available. Additionally, when the RUC votes each spring to assign work RVU values to CPT codes, the voting results are not released to the public.

Also,

One critical piece of information that is not disclosed to anybody (including RUC members) is any indication of how each member of the RUC voted.

The RUC Fixes Prices

The RUC has enormous power in setting health care prices,...

The Government Enables the RUC to Fix Prices

The key data point in the formula that is used to set Medicare payment rates is largely determined by a secretive committee that is managed and funded by the American Medical Association....

Also,

CMS is not required to accept the RUC’s recommendations. In fact, the RUC is insistent that its role in the process is only to exercise its right to petition the government. However, studies have demonstrated that CMS accepts RUC recommendations at overwhelmingly high rates.

The Government Fixed Prices are Endorsed by the Private Sector

The RUC’s influence over physician payments extends well beyond Medicare payments because private insurers also use the Medicare payment framework as a baseline for determining their payments. Private insurance companies often set their payments based on the underlying Medicare fee schedule.

The Price Fixing Drives Up Costs and the Use of Services

The RUC has been accused of overstating many of the factors used to determine a physician payment.

Also,

When the RUC has recommended adjusting the values that determine physician payments, it has been more than five times as likely to increase pay for a procedure as decrease it.

These Incentives Cripple Primary Care

To the extent that the RUC’s members are biased towards their own specialties, this results in the overvaluing of specialty procedures at the expense of primary care. Because there are significantly more specialty procedures than primary care procedures, the overvaluation of specialty and procedural services has caused U.S. specialists’ pay to rise much more rapidly than primary care physicians since the formation of the RUC.

Higher pay to specialists creates greater incentives for medical students to practice specialty or procedural medicine, resulting in a shortage of primary care physicians.

These Incentives Benefit Big Corporations, not just Medical Specialists

This was the only issue not directly addressed in the 2014 Politico article or in the new Public Citizen report.  (But see our 2013 post.)

Anechoic So Far

So in some sense the Public Citizen report on the RUC sang the same old song.  However, as the report itself noted, previous attempts to inspire action about the RUC have generated no echoes.  Thus, maybe it should be no surprise that so far there has been no press coverage of the Public Citizen report (at least as far as I could tell by using my usual search techniques as of this morning). 

Of course, as we have discussed ad infinitum, that which discomfits those who are making so much money from our current health care system often manages to create few echoes, that is, what we have dubbed the anechoic effect.

This is all the more interesting because there are aspects of the RUC that could outrage both left- and right-wingers.  First of all, the RUC is a major component in a system of government price fixing.  Enabled by the RUC, CMS fixes the prices of medical care.  Many on the right, but particularly those of the more libertarian or free market fundamentalist persuasion say they hate government price fixing.

Second of all, the RUC exemplifies regulatory capture.  The report quoted

 Thomas Scully, an administrator of the Centers for Medicare and Medicaid Services under President George W. Bush, also has been highly critical of the RUC, and particularly the power the AMA has over the process. 'The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild,' Scully said in 2013.

Again, many on the right, and also, probably many on the left worry about regulatory capture.

Third, the RUC represents a particular species of regulatory capture, crony capitalism.  This was not emphasized in the report, but we have written before about how many RUC members have personal financial ties to health care corporations, and how these constitute conflicts of interest (look here).  The Washington Monthly noted that RUC members are sponsored by medical societies that in turn have institutional conflicts of interest involving big health care corporations, and that the way the RUC sets prices could benefit such health care corporations (look here.)  Both left- and right-wingers say they loathe crony capitalism, although the left emphasizes the undue influence of big business, and the right emphasizes the bad actions of government resulting from it.

Yet very few on the right or left seem to have noticed, much less have become outraged by the RUC

The new Public Citizen report suggested

The most important policy change is for CMS to stop relying on the AMA to maintain the existing system for determining the value of Medicare payments to physicians.

Maybe this time someone will listen.  As I have written too often, I hope the latest attempt by Public Citizen to make the RUC less anechoic will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.



APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.
 
However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.
 
That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.
 
In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  
 
Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

Value Extractors, "Super-Managers," Vampires and the Decline of the US and US Health Care

Appearing during the last few weeks were a series of articles that tied the decline of the US economy to huge systemic problems with leadership and governance of large organizations.  While the articles were not focused on health care, they included some health care relevant examples, and were clearly applicable to health care as part of the larger political, social, and economic system.  The articles reiterated concerns we have expressed, about leadership of health care by generic managers, perverse executive compensation, the financialization of health care, in part enabled by regulatory capture, and the abandonment by effective stewardship by boards of directors, but with new takes on them.

The articles included "Profits Without Prosperity," by William Lazonick in the the Harvard Business Review,  "Why Have US Companies Become Such Skinflints," by Paul Roberts in the Los Angeles Times, and "How Business Leaders Turned Into Vampires," by Steve Denning in Forbes, which in turn was partially based on "The Rise (and Likely Fall) of the Talent Economy," in the Harvard Business Review.

Let me summarize the main points, and discuss some health care examples.

"Super-Managers" as Value Extractors

Steve Denning's article contrasted people who  add value to the economy versus those who extract value.  The first species of value extractor he listed was:

 ‘Super-managers’ are people who hold administrative positions in the C-suite of private-sector bureaucracies but are masquerading as entrepreneurs. They are, to use Thomas Piketty’s slyly ironic term, “super-managers.” As such, they have been able to extract extraordinary levels of compensation. They have been lavished with stock and stock options and have been able to 'manage' the share price of their firms with massive share buybacks and other financial engineering so that they receive massive bonuses. As Bill Lazonick documented in the September 2014 issue of HBR, the net effect of their activities is to extract value, rather than create value [see below]. 

Presumably, "super-managers" as health care executives are also likely to be generic managers, unlikely to have much actual knowledge of caring for patients, unsympathetic to the values of health care professionals, and hence unlikely to uphold the health care mission.

He noted that

 there is a tendency to dismiss the activities of ‘vampire talent’ as de minimis. 'That’s capitalism, right? Every man for himself. It’s no big deal if there’s an occasional bad apple in the barrel. The ‘invisible hand’ of capitalism will make everything come out right for society in the end.'

However,

 The problem today is that the super-sized executive compensation, the gambling and the toll-keeping of the financial sector aren’t tiny sideshows. They have grown exponentially and are now macro-economic in scale. They have become almost the main game of the financial sector and the main driver of executive behavior in big business. When money becomes the end, not the means, then the result is what analyst Gautam Mukunda calls 'excessive financialization' of the economy, in his article, 'The Price of Wall Street Power,' in the June 2014 issue of Harvard Business Review.

Mr Denning further asserted that the value extraction of super-managers is augmented by the value extraction of two different groups of players, hedge funds that speculate with other peoples' money, and "tollkeepers" who extract rents through the financial system.

Furthermore, Mr Denning stated that

 The growth of super-sized executive compensation is inversely related to performance. The super-managers are in effect being rewarded for doing the wrong thing.

Of course, if executives in health care, like those in other sectors, are mainly concerned with enriching themselves in the short-term, than they are not mainly concerned with patients' and the public's health, or the values of health care professionals, and hence the performance of their organizations in terms of health care processes and outcomes will suffer. 

Furthermore, the ability of commercial health care firms to actually make a positive impact on health care will be decreased as they are whipsawed by other value extractors like hedge funds and tollkeepers.

Example - Renaissance Technologies

Mr Denning's first example of tollkeepers' value extraction was:

James Simons, the founder of Renaissance Technologies, ranks fourth on Institutional Investor’s Alpha list of top hedge fund earners for 2013, with $2.2 billion in compensation. He consistently earns at that level by using sophisticated algorithms and servers hardwired to the NYSE servers to take advantage of tiny arbitrage opportunities faster than anybody else. For Renaissance, five minutes is a long holding period for a share.

In fact, as we noted here, Renaissance Technologies does not hesitate in trading health care firms.  Furthermore, that company has a noteworthy direct tie to health care.  Its current co-CEO, Peter F Brown, is married to the current Commissioner of the US Food and Drug Administration (FDA).

Value Extraction and Share Buybacks

William Lazonick's article also emphasized how corporate leadership is now focused on extracting value from their companies for their own personal benefit, rather than promoting growth, innovation, better products and services, etc.  In particular, large public for-profit companies now tend to use their surplus capital to buy back shares of their own stock, rather than invest in new facilities, equipment, employees, etc.  Perhaps we should not be surprised that this was facilitated by changes in US government regulation, that is deregulation, in this case instituted during the Reagan administration:

Companies have been allowed to repurchase their shares on the open market with virtually no regulatory limits since 1982, when the SEC instituted Rule 10b - 18 of the Securities Exchange Act.

Note that

The rule was a major departure from the agency's original mandate, laid out in the Securities Exchange Act of 1934.  The act was a reaction to a host of unscrupulous activities that had fueled speculation in the Roaring '20's, leading to the stock market crash of 1929 and the Great Depression.

Given the context, and that the deregulation was implemented by an SEC chair who was "the first Wall Street insider to lead the commission," this seems to be an example of regulatory capture in service of corporate insiders.

The issue here is that while it might make some financial sense for companies to buy back their own shares if they are priced at bargain rates, after this change they could buy shares at any price without supervision.  On one hand, such purchases could lead to short-term bumps in stock prices. On the other hand, a major reason for these buybacks appears to be that they enrich corporate insiders, particularly top hired executives, who now receive much of their pay in the form of stock and stock options, and often can get bonuses based on short-term increases in stock prices.  Lazonick wrote,

Combined with pressure from Wall Street, stock-based incentives make senior executives extremely motivated to do buybacks on a colossal and systemic scale.

Consider the 10 largest repurchasers, which spent a combined $859 billion on buybacks, an amount equal to 68% of their combined net income, from 2003 through 2012. (See the exhibit “The Top 10 Stock Repurchasers.”) During the same decade, their CEOs received, on average, a total of $168 million each in compensation. On average, 34% of their compensation was in the form of stock options and 24% in stock awards. At these companies the next four highest-paid senior executives each received, on average, $77 million in compensation during the 10 years—27% of it in stock options and 29% in stock awards. Yet since 2003 only three of the 10 largest repurchasers—Exxon Mobil, IBM, and Procter & Gamble—have outperformed the S&P 500 Index.

Example - Pfizer

Mr Lazonick's noted some potential outcomes of the frenzy of stock buybacks affecting the US pharmaceutical industry and hence the US health care system.

In response to complaints that U.S. drug prices are at least twice those in any other country, Pfizer and other U.S. pharmaceutical companies have argued that the profits from these high prices—enabled by a generous intellectual-property regime and lax price regulation— permit more R&D to be done in the United States than elsewhere. Yet from 2003 through 2012, Pfizer funneled an amount equal to 71% of its profits into buybacks, and an amount equal to 75% of its profits into dividends. In other words, it spent more on buybacks and dividends than it earned and tapped its capital reserves to help fund them. The reality is, Americans pay high drug prices so that major pharmaceutical companies can boost their stock prices and pad executive pay.

Moreover, during approximately the same period Pfizer compiled an amazing record of legal misadventures including settlements of allegations of unethical behavior, and some convictions, including one for being a racketeering influenced corrupt organization (RICO), as most recently reviewed here, and then updated here.  So while it was putting huge amounts into buybacks, it also put billions into legal fines and costs. This suggests that note only does executive compensation not correlate with "performance," it may also correlate with corporate bad behavior.

The "Shareholder Value" Dogma

In explaining how US corporate executives turned to stock buybacks to boost their own pay, at the expense of essentially everyone else, Mr Lazonick sounded some familiar themes.  One was focus on short-term revenues and short-term stock performance drive by the "share-holder value" dogma out of business schools,

the notion that the CEO's main obligation is to shareholders. It's based on a misconception of the shareholders' role in the modem corporation. The philosophical justification for giving them all excess corporate profits is that they are best positioned to allocate resources because they have the most interest in ensuring that capital generates the highest returns. This proposition is central to the 'maximizing shareholder value" (MSV) arguments espoused over the years, most notably by Michael C. Jensen. The MSV school also posits that companies' so-called free cash flow should be distributed to shareholders because only they make investments without a guaranteed return -- and hence bear risk.

But the MSV school ignores other participants in the economy who bear risk by investing without a guaranteed return. Taxpayers take on such risk through government agencies that invest in infrastructure and knowledge creation. And workers take it on by investing in the development of their capabilities at the firms that employ them. As risk bearers, taxpayers, whose dollars support business enterprises, and workers, whose efforts generate productivity improvements, have claims on profits that are at least as strong as the shareholders'.

Mr Denning similarly noted

The intellectual foundation of all this behavior is the notion that the purpose of a firm is to maximize shareholder value. Unless we do something about this intellectual foundation, the problem will remain. Changes in a few regulations or the tax code won’t make much difference. ‘Vampire talent’ will find ways around them.

Nor will change happen merely by pointing out that shareholder primacy is a very bad idea. Bad ideas don’t die just because they are bad. They hang around until a consensus forms around another idea that is better.

Mr Roberts' article "Why Have US Companies Become Such Skinflints," went at this issue from a slightly different angle, noting first

The bigger story here is what might be called the Great Narrowing of the Corporate Mind: the growing willingness by business to pursue an agenda separate from, and even entirely at odds with, the broader goals of society.

He attributed this to the notion promulgated by

conservative economists, [that] the best way for companies to help society was to ditch the idea of corporate social obligation and let business do what business does best: maximize profits.

He noted that this focus on short-term revenues has led to the decline in long-term results,

 But because management is so focused on share price and because share price depends heavily on current company earnings, strategic focus has grown ever more short term: do whatever is needed to hit next quarter's earnings target. And since cost-cutting is a quick way to boost near-term earnings, layoffs and other downsizing once regarded as emergency measures are now routine.

And here is the paradox. Companies are so obsessed with short-term performance that they are undermining their long-term self-interest. Employees have been demoralized by constant cutbacks. Investment in equipment upgrades, worker training and research — all essential to long-term profitability and competitiveness — is falling.

Of course, this is antithetical to the "innovation" that current corporate boosters proclaim as the goal of drug, biotechnology, medical device companies and other players in the brave new world of corporate health care.  


The Incestuous Mechanisms Used to Set Executive Compensation

Another explanation for the rise in value extraction, and specifically the use of share buybacks to reward top corporate hired executives, was the incestuous way in which corporations set pay for top hired executives. Mr Lazonick wrote,

Many studies have shown that large companies tend to use the same set of consultants to benchmark executive compensation, and that each consultant recommends that the client pay its CEO well above average. As a result, compensation inevitably ratchets up over time. The studies also show that even declines in stock price increase executive pay: When a company's stock price falls, the board stuffs even more options and stock awards into top executives' packages, claiming that it must ensure that they won't jump ship and will do whatever is necessary to get the stock price back up.

This is enabled by boards of directors who seem to represent the 'CEO union,' not stockholders, and certainly not other less favored employees, customers, clients or patients, or society at large,

Boards are currently dominated by other CEOs, who have a strong bias toward ratifying higher pay packages for their peers. When approving enormous distributions to shareholders and stock-based pay for top executives, these directors believe they're acting in the interests of shareholders.

Once again, this was also enabled by the dergulation that started with during the Reagan administration, and continues this day (although the specific relevant deregulatory change occurred during the Clinton administration),

 In 1991 the SEC began allowing top executives to keep the gains from immediately selling stock acquired from options. Previously, they had to hold the stock for six months or give up any 'short-swing' gains. That decision has only served to reinforce top executives' overriding personal interest in boosting stock prices. And because corporations aren't required to disclose daily buyback activity, it gives executives the opportunity to trade, undetected, on inside information about when buybacks are being done. 

Summary

Note that while all the discussion above has been about for-profit corporations, we have seen that in health care, various non-profit organizations, particularly hospitals, hospital systems, academic medical institutions, and health insurers, which all now operate in the current market fundamentalist environment, are acting more and more like for-profits.  So while non-profit corporate executives cannot do stock buybacks, they are also all too often generic managers, given huge compensation, but not often for upholding the mission, putting patients' and the public's health first, or upholding health care professionals' values.  

It is striking that we are beginning to see protests like those above not in radical publications, but in the Harvard Business Review and Forbes.  It is more striking that these protestors are beginning to fear the worst.  Mr Roberts wrote,

Sooner or later, markets punish such myopic behavior. Companies that neglect innovation run out of things to sell. Companies that demoralize workers see performance lag. 

Although Mr Denning hopefully wrote,

We are thus about to witness a vast societal drama play out. That’s because we have reached that key theatrical moment, which Aristotle famously called 'anagnorisis' or 'recognition.'  This is the moment in a drama when ignorance shifts to knowledge.  

He then warned,

As usual with anagnorisis and the shock of recognition at a disturbing, previously-hidden truth, there is a disquieting sense that the accepted coordinates of knowledge have somehow gone awry and the universe has come out of whack. This can lead to denial and a delay in action, even though the facts are staring us in the face.

If the recognition of our error comes too late, as in Shakespeare’s Lear, the result will be terrible tragedy. If the recognition comes soon enough, the drama can still have a happy ending. We are about to find out in our case which it is to be.

Let us hope that anagnorisis is really beginning, the anechoic effect is fading, and the drama may yet have a happy ending. 

ADDENDUM (29 September, 2014) - This post was re-posted on the Naked Capitalism blog. 

The RUC. "an Independent Group of Physicians?" - But It Includes Executives and Board Members of For-Profit Health Care Corporations and Large Hospital Systems

Introduction

We just discussed how a major story in Politico has once again drawn attention to the opaque RUC (Resource Based Relative Value System Update Committee) and its important role in determining what physicians are paid for different kinds of services, and hence the incentives that have helped make the US health care system so procedurally oriented.  (See the end of our last post for a summary of the complex issues that swirl around the RUC.)

The Politico article covered most of the bases, but notably omitted how the RUC may be tied to various large health care organizations, especially for-profit, and how the incentives it creates may benefit them. When the RUC membership first became public in 2011 due to efforts by Wall Street Journal reporters, I used internet searches to find that nearly half of the RUC members had conflicts of interest (look here).  Most of them were part-time paid consulting relationships, paid speaking engagements, and memberships on advisory boards involving drug, device, biotechnology and occasionally health insurance companies, or personal stock holdings in such companies.

In preparing my latest post, I found that to its credit, the AMA now makes the RUC membership more accessible (look here, free registration required.)  So I decided to check whether the current RUC roster still seems so conflicted.

As I did in 2011, I ran internet searches on all new RUC members since 2011, and updated searches on the continuing members.  Results are below.  Information new since 2011 is highlighted thus.  Note that I believe all the listed relationships are or were actual, but cannot rule out errors, especially given some RUC members have common names.  Any corrections are welcome.


The RUC Members and Their Financial Relationships

- Barbara S Levy, MD

Chair, RVS Update Committee
Federal Way, WA 2000

Consultant/Advisory Boards: Conceptus; AMS; Covidien; Halt Medical; Gynesonics; Idoman Medical (hysteroscopic surgery and sterilization, endometrial ablation, electrosurgery, vaginal hysterectomy) per UptoDate


-Margie Andreae MD
American Academy of Pediatrics
Ann Arbor, MI

Chief Medical Officer of Integrated Revenue Cycle and Billing Compliance, University of Michigan Health System, per University of Michigan Health System

- Michael D. Bishop, MD
American College of Emergency Physicians (ACEP)
Bloomington, IN 2003

- James Blankenship, MD
American College of Cardiology (ACC)
Danville, PA 2000

Lecture fees from Sanofi-Aventis per New England Journal of Medicine
Financial relationships with  The Medicines Company, Abbott Vascular, Conor Med Systems, Portola Pharmaceuticals, Schering Plough, AGA Medical, Astra Zeneca, Abiomed, Bristol Myers Squibb, Tryton Medical, Kai Pharmaceutical, Novartis (Grants or Research Support) per Society for Cardiovascular Angiography and Interventions Disclosure Summary


- Robert Dale Blasier, MD
American Academy of Orthopaedic Surgeons (AAOS)
Little Rock, AK 2008

-Albert Bothe Jr MD
CPT Editorial Board
Danville PA

Executive Vice President and Chief Medical Officer, Geisinger Health Systems, per Geisinger

- Ronald Burd, MD
American Psychiatric Association (APA)
Fargo, ND 2006

-C Scott Collins MD
American Academy of Dermatology
Rochester, MN

- Thomas P Cooper MD
American Urological Association
Everett, WA

General Partner, Aperture Venture Partners LLC, (health care focused venture capital firm) , per Aperture
Member, Board of Directors, Kindred Healthcare, per Kindred
Member, Board of Directors, Hanger Inc (orthotic and prosthetic care), per Hanger
Member, Board of Directors, IPC/ the Hospitalist Company, per IPC


-Anthony Hamm DC
Health Care Professional Advisory Committee
Goldsboro, NC

- David F. Hitzeman, DO
American Osteopathic Association (AOA)
Tulsa, OK 1996


- Charles F. Koopmann, Jr., MD
American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS)
Ann Arbor, MI 1996

- Robert Kossmann, MD
Renal Physicians Association (RPA)
Santa Fe, NM 2009

Member of Advanced Renal Technologies Advisory Board, Network 15 Medical Advisory Board, Baxter Home Dialysis Advisory Board, Fresenius Medical Advisory Board per Renal Physicians Association

- Walter Larimore, MD
American Academy of Family Physicians (AAFP)
Colorado Springs, CO 2009

-Alan E Lazaroff MD
American Geriatrics Society
Denver, CO

- J. Leonard Lichtenfeld, MD
American College of Physicians (ACP)
Atlanta, GA 1994

Member, Physician Advisory Board, Aetna per Aetna 
Deputy Chief Medical Officer, American Cancer Society, per ACS

- Scott Manaker, MD, PhD
Practice Expense Subcommittee
Philadelphia, PA 2010

Consultant to Pfizer and Johnson and Johnson. Owns stock in Neose Technologies, Pfizer, Johnson & Johnson, and Rohm and Haas per Chest

-William J Mangold Jr MD
American Medical Association
Tuscon, AZ

Vice President, Board Developer Inc (health care management consulting firm), per Board Developer
Senior Advisor, ADVI (health care management consulting firm), per ADVI
Member, Board of Directors, Sante (post-acute health care company), per Sante

-Geraldine B McGinty MD
American College of Radiology,
New York, NY

- Gregory Przybylski, MD
American Association of Neurological Surgeons (AANS)
Edison, NJ 2001

Stock Ownership: United Healthcare (300 shares); Scientific Advisory Board: United Health Group (B, Spine Advisory Board) per NASS meeting

- Marc Raphaelson, MD
American Academy of Neurology (AAN)
Leesburg, VA 2009

personal compensation for activities with Jazz Pharmaceuticals and Medtronics as a speakers bureau member or consultant per AAN

- Sandra Reed, MD
American College of Obstetricians and Gynecologists (ACOG)
Thomasville, GA 2009


GlaxoSmithKline Consulting, $1750 in 2009, $1500 in 2010 per ProPublica Dollars for Docs search through here

-  David H Regan MD
American Society of Clinical Oncology
Portland, OH

Payment from Cephalon in 2009 for $2200, per ProPublica search 


-Chad A Rubin MD
American College of Surgery
Columbia, SC

-Joseph R Schlecht
Pimrary Care Seat
Jenks, OK 

- Peter Smith, MD
Society of Thoracic Surgeons (STS)
Durham, NC 2006

Eli Lilly, Consulting, $1500 in 2009, $1990 in 2010 per Pro Publica Dollars for Docs search through here
Advisor or consultant to Bayer per Medscape

-Samuel D Smith MD
American Pediatric Surgical Association
Little Rock, AK

-Stanley Stead MD
American Society of Anesthesiologist
Encino, CA

-  J Allan Tucker MD
College of American Pathologists
Mobile, AL

- James Waldorf, MD
American Society of Plastic Surgeons (ASPS)
Jacksonville, FL 2008

- George Williams, MD
American Academy of Ophthalmology (AAO)
Royal Oak, MI 2009

Advisory Team, RetroSense Therapeutics
Shareholder and consultant for ThromboGenics Ltd. and holds intellectual property on the use of plasmin per Review of Opthamology
Alcon Laboratories, consultant, lecturer; Allergan, consultant, lecturer; Macusight, consultant, equity owner; Neurotech, consultant; Nu-Vue Technologies, equity owner, patent/ royalties; OMIC- Ophthalmic Mutual Insurance Company, employee; Optimedica, consultant, equity owner; Thrombogenics, consultant, equity owner per AAO meeting

Pfizer, “Professional Advising,” $5534 in 2009 per Pro Publica Dollars for Docs search through here
Member, Medical and Scientific Committee, Pixium Vision Inc, per Pixium 
Member, Board of Directors, Macusight Inc, per BusinessWeek.  


Summary 

The membership of the RUC continues to have a considerable number of apparent financial conflicts of interest.  By my count, in 2014, nearly half, 15/31 members had such conflicts.

Again, most of the conflicts were financial ties such as part-time paid consulting relationships, paid speaking engagements, and memberships on advisory boards involving drug, device, biotechnology and occasionally health insurance companies, or personal stock holdings in such companies.  A number of members who had such ties known in 2011 have several more such ties in 2014. 

In 2014, new kinds of conflicts of interest that appear even more intense have appeared.  Several members are now known to also be members of the boards of directors of for-profit health care corporations, including biotechnology, device, health care provider, and health care management services companies. 

We have been writing about the severe conflicts of interest presented by service on the boards of  health care corporationa.  In 2006 we first discussed a newly discovered species of conflict of interest in health care, in which leaders of medical or health care organizations were simultaneously serving on boards of directors of health care corporations.
 
We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]  Of course, after the global financial collapse of 2008 made us sadder and a little wiser, we realized that many board members actually seem to have unyielding loyalty to their cronies among top management.  However, in any case, the stated or actual interests of a member of the board of a health care corporation, like a pharmaceutical company or medical device company, could be very different and at odds with the mission of an academic medical institution or a non-profit ostensibly dedicated to improving health care quality, like in this case, the RUC of the American Medical Association.

Also, one new RUC member is apparently a top executive of a health care management services company, and another new RUC member is apparently a general partner of a health care venture capital firm. Again, such leadership roles create responsibilities that could be very much at odds with a leadership role in a very influential committee run by a physicians' society.

Finally, two new members are top executives of large, although admittedly non-profit hospital systems.  One member is now known to be a full-time executive of a large, non-profit disease specific patient advocacy organization.  While hospital systems' interests may overlap those of physicians, modern  hospital systems are often run by generic managers who put revenues ahead of all else.  Furthermore, in pursuit of revenues, hospital system leaders may be very interested in increasing utilization of the most lucrative, usually high-technology and procedural services, and thus in structuring physicians' incentives accordingly.  While disease-specific patient advocacy goups' interests may also overlap those of doctors, they may tend to be more interested in their diseases than all others.

By the way, note that AMA and RUC leaders often defend the RUC as purely physician run organization, e.g., the testimony of the RUC leader, Dr Barbara Levy, at a Senate hearing, per MedPage Today in 2011, (see this post),

The RUC is an independent group of physicians from many specialties, including primary care, who use their expertise on caring for Medicare patients to provide input to CMS [the Centers for Medicare and Medicaid Services],' RUC chair Barbara Levy, MD, said in a statement. 

But now it is clear that the RUC includes corporate executives and board members, and top hospital system executives.  These people may have MDs, but their loyalties appear divided.

We have questioned the tremendously influential role the RUC plays in setting the incentives that drive the US health care system.  Now it appears that the RUC membership remains conflicted.  Almost half work part-time for drug, device, biotechnology, and health insurance companies.  Several are in the top leadership and/or governance of various health care corporations and large non-profit hospital systems.  Thus it seems that the incentives that drive are health care system are under the influence of people who may put corporate or organizational revenue ahead of patients' and the public's health.

As we wrote before, the prevalence of conflicts of interest among RUC members highlight the need for a more accountable, transparent and honest system to manage how the government pays physicians, and a need for more transparency and accountability in the relationship among the government, health care insurance, and physicians.

As a first step, I submit that all RUC members who are executives or board members of for-profit health care corporations or large hospital systems step down from the RUC, or resign these positions.

Another Attempt to Show the RUC Behind the Curtain

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

Prices are High Because They are Fixed That Way

The article in the Annals, however, proposed one conceptually simple answer.

The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject,.efforts by humble bloggers such as yours truly, a major journalistic expose, and recent congressional hearings.  The lack of discussion of this issue seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)

The Washington Monthly Pulls Back the Curtain

Now another attempt to pull back the curtain that hides the RUC was just made by the Washington Monthly.  A long, detailed, well-written article by Haley Sweetland Edwards went through the major points, and included some new discoveries.  She asserted:

The RUC is Well Hidden

[The RUC is] probably one of the most powerful committees in America that you’ve never heard of.

The RUC Fixes Prices

when a roomful of professionals from the same trade meet behind closed doors to agree on how much their services should be worth. It’s called price-fixing. 

The Government Enables the RUC to Fix Prices

 this kind of 'price-fixing' is not only perfectly legal, it’s sanctioned by the U.S. government. At the end of each of these meetings, RUC members vote anonymously on a list of 'recommended values,' which are then sent to the Centers for Medicare and Medicaid Services (CMS), the federal agency that runs those programs. For the last twenty-two years, the CMS has accepted about 90 percent of the RUC’s recommended values—essentially transferring the committee’s decisions directly into law.

The Government Fixed Prices are Endorsed by the Private Sector

 private insurance companies also use Medicare’s fee schedule as a baseline for negotiating prices with hospitals and other providers. 

The Price Fixing Drives Up Costs and the Use of Services

 So if the RUC inflates the base price Medicare pays for a specific procedure, that inflationary effect ripples up through the health care industry as a whole.

These Incentives Cripple Primary Care

 These manipulated prices are also a major reason why specialists are in oversupply in many parts of the country, while a worsening shortage of primary care providers threatens the whole health care delivery system. 

These Incentives Benefit Big Corporations, not just Medical Specialists

 the incentives are perfectly aligned: ordering that extra test means more money for a doctor’s practice or hospital, more money for the labs, and often more money for the device makers and drug companies, too. (Oh, and, by the way, the device makers and drug companies are, not incidentally, major funders of the medical specialty societies whose members vote on the RUC.)

[Art by Monte Wolverton for the Washington Monthly article]

What to Do and What Will Happen?

We previously wrote,

 Economists have beaten us over the head with idea that incentives matter.  The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.  It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.

Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society.  If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.

Ms Edwards ended her article with two specific suggestions:

take the process away from the control of the AMA and put it in the hands of a well-resourced group of experts under the auspices of the federal government. This might take the form of a panel of doctors employed by the government, or of an advisory committee of representatives of different medical societies but with greater representation of primary care doctors.

Or

 get Medicare out of the business of funding fee-for-service medicine. 

I can only hope that the latest Washington Monthly article, which was accompanied by an editorial and a short first-hand account of how difficult is the lot of the modern primary care physician, will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.

APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.
 
However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.
 
That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.
 
In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  
 
Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

ADDENDUM (15 July, 2013) - see also comments by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog.  

ADDENDUM (18 July, 2013) - see also comments by Yves Smith on the Naked Capitalism blog.

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

The "King of Pain" Recants - Pharmaceutical Paid Key Opinion Leader Admits It Was All "Misinformation"

This may be a first.  A Wall Street Journal story announced that the "key opinion leader" who played a pivotal role in the promotion of  aggressive use of narcotics to treat non-malignant chronic pain has had a change of heart.  

Background - Embracing Narcotics

In the long ago time when I was in medical school, the wisdom was then that narcotics (that is, drugs like morphine or heroin, the latter not legal) should only be used in severe acute pain, like that due to bad trauma or occurring post-operatively, or for the pain of terminal illnesses, like cancer.  The reason their use was so restricted was that the drugs were believed to cause frequent adverse effects, from severe constipation, to addiction, to respiratory depression and death.

However, starting in the 1990s, the conventional wisdom changed.  Suddenly, the focus was on the under-treatment of chronic, but not malignant pain, and it became permissible, or even preferable, to use potent narcotics for this purpose.  Physicians like me who were very conservative in their use of narcotics were chastised for under-treating pain.

The Wall Street Journal article explained how this radical change in approach was apparently engineered by a few key opinion leaders, particularly Dr Russell Portenoy.  It opened,

Two decades ago, the prominent New York pain-care specialist drove a movement to help people with chronic pain. He campaigned to rehabilitate a group of painkillers derived from the opium poppy that were long shunned by physicians because of their addictiveness.

Dr. Portenoy's message was wildly successful. Today, drugs containing opioids like Vicodin, OxyContin and Percocet are among the most widely prescribed pharmaceuticals in America. 

The article provided graphics showing that per capita prescription narcotic use has more than tripled since 1999, 

A Change Driven by Wishful Thinking, not Evidence

Unfortunately, as the article made clear, the radical change that seemed so odd to some of us physicians who were trained before the 1990s was not driven by any good evidence from clinical research.

Per the WSJ,

Because doctors feared they were dangerous and addictive, opioids were long reserved mainly for cancer patients. But Dr. Portenoy argued that they could be also safely be taken for months or years by people suffering from chronic pain. Among the assertions he and his followers made in the 1990s: Less than 1% of opioid users became addicted, the drugs were easy to discontinue and overdoses were extremely rare in pain patients. 

However, Dr Portenoy's contention seemed to be based only on a small case-series of patients, lacking any sort of control group, and too small and likely too selective to generalize, particularly to patients with chronic, non-malignant pain.(Portenoy RK, Foley KM.   Chronic use of opioid analgesics in non-malignant pain: report of 38 cases. Pain 1986; 25:171-86.  This article does not seem to be available online.)

In 1986, at the age of 31, he co-wrote a seminal paper arguing that opioids could also be used in the much larger group of people without cancer who suffered chronic pain. The paper was based on just 38 cases and included several caveats. Nevertheless, it opened the door to much broader prescribing of the drugs for more common complaints such as nerve or back pain. 

 Dr Portenoy also cited

the statistic that less than 1% of opioid users became addicted.

Today, even proponents of opioid use say that figure was wrong. 'It's obviously crazy to think that only 1% of the population is at risk for opioid addiction,' said Lynn Webster, president-elect of the American Academy of Pain Medicine, one of the publishers of the 1996 statement. 'It's just not true.'

The figure came from a single-paragraph report in the New England Journal of Medicine in 1980 describing hospitalized patients briefly given opioids.

The reference here appears to be a letter to the New England Journal of Medicine ( Porter J, Jick H. Addiction rate in patients treated with narcotics. New England Journal of Medicine 1980; 302:123.  Link here.)  This was literally one paragraph long, so the methods of the research it reported cannot be rigorously evaluated.  In any event, the letter appears to have retrospectively documented an observation of hospitalized patients who were given at least a single dose of narcotics, and thus appears not relevant to the effects of long-term narcotics on patients with chronic pain. 

Thus, Dr Portenoy's enthusiasm for aggressive use of narcotics in non-malignant chronic pain was never based on any good evidence from well designed and performed randomized controlled trials with long-term followup that showed that narcotics were safe and effective in this setting.  At best, Dr Portenoy's and colleagues' contentions that narcotics should be liberally utilized for such patient were based on wishful thinking, not good evidence.


A Change Driven by Stealth Marketing

The WSJ article documented how Dr Portenoy was a prime mover in what appeared to be deceptive stealth campaigns to market narcotics for chronic, non-malignant pain.  Dr Portenoy's 1986 case-series

opened the door to much broader prescribing of the drugs for more common complaints such as nerve or back pain.

Charming and articulate, he became a sought-after public speaker. He argued that opioids are a 'gift from nature' that were being forsaken because of 'opiophobia' among doctors. 'We had to destigmatize these drugs,' said Dr. Portenoy.

He rose to chairman of pain medicine and palliative care at Beth Israel Medical Center in New York. His small office is studded with awards and evidence of his offbeat sense of humor. He prominently displays a magazine mock-up that jokingly dubs him 'The King of Pain.'

At medical conferences, his confident, knowing manner helped smooth the way for his message. Before an audience of government regulators, he once joked that he might tell a patient at low risk of abuse: 'Here, [have] six months of drugs. See you later,' he said, according to a Food and Drug Administration transcript. Amid laughter, he added, 'It's just hyperbole. I don't actually do that.'

Steven Passik, a psychologist who once worked closely with Dr. Portenoy and describes him as his mentor, says their message wasn't based on scientific evidence so much as a zeal to improve patients' lives. 'It had all the makings of a religious movement at the time,' he says. 'It had that kind of a spirit to it.'

So Dr Portenoy became a respected opinion leader.  His influence was demonstrated by how he generated disciples

 Dr. Portenoy's ideas about opioids reached into mainstream medicine and attracted outspoken advocates. In a 1998 talk in Houston, Alan Spanos, a South Carolina pain specialist, said patients with chronic noncancer pain could be trusted to decide themselves how many painkillers to take without risk of overdose. According to a recording, Dr. Spanos said he understood that a patient would simply 'go to sleep' before stopping breathing. While asleep, he said, the patient 'can't take a dangerous dose. It sounds scary, but as far as I know, nobody anywhere is getting burned by doing it this way.'

Dr Portenoy was affiliated with organized efforts that facilitated the marketing of narcotics for chronic malignant pain.  The marketing used clinical practice guidelines to push narcotics

Dr. Portenoy helped write a landmark 1996 consensus statement by two professional pain societies that said there was little risk of addiction or overdose among pain patients. 

The campaign enlisted government regulators, and thus seemed to include an element of regulatory capture,

One of Dr. Portenoy's chief complaints was that doctors were reluctant to prescribe opioids because they feared scrutiny by regulators or law enforcement. In the second half of the 1990s, he and his followers campaigned successfully for policies to change that.

In 1998, the Federation of State Medical Boards released a recommended policy reassuring doctors that they wouldn't face regulatory action for prescribing even large amounts of narcotics, as long as it was in the course of medical treatment. In 2004 the group called on state medical boards to make undertreatment of pain punishable for the first time.

This case demonstrated the direct involvement of pharmaceutical companies who sold narcotics,

That policy was drawn up with the help of several people with links to opioid makers, including David Haddox, a senior Purdue Pharma executive then and now. The federation said it received nearly $2 million from opioid makers since 1997. The federation says it derives the majority of its funding from administering medical licensing exams, credential verification, and data services.

A federation-published book outlining the opioid policy was funded by opioid makers including Purdue Pharma, Endo Health Soluttions Inc, and others, with proceeds totaling $280,000 going to the federation. .

 The campaign also involved an important hospital accrediting organization

In 2001, the Joint Commission, [JCAHO] which accredits U.S. hospitals, issued new standards telling hospitals to regularly ask patients about pain and to make treating it a priority. The now-familiar pain scale was introduced in many hospitals, with patients being asked to rate their pain from one to 10 and circle a smiling or frowning face.

The Joint Commission published a guide sponsored by Purdue Pharma. 'Some clinicians have inaccurate and exaggerated concerns" about addiction, tolerance and risk of death, the guide said. "This attitude prevails despite the fact there is no evidence that addiction is a significant issue when persons are given opioids for pain control.'

A Change Leading to Personal Enrichment

Meanwhile, Dr Portenoy was personally profiting from his relationships with pharmaceutical companies

Over his career, Dr. Portenoy has disclosed relationships with more than a dozen companies, most of which produce opioid painkillers. 'My viewpoint is that I can have those relationships, they would benefit my educational mission, they benefit in my research mission, and to some extent, they can benefit my own pocketbook, without producing in me any tendency to engage in undue influence or misinformation,' he said.

Dr. Portenoy and Beth Israel declined to provide details of their funding by drug companies. A 2007 fundraising prospectus from Dr. Portenoy's program shows that his program received millions of dollars over the preceding decade in funding from opioid makers including Endo, Abbott Laboratories, Cephalon, Purdue Pharma and  Johnson & Johnson.  

He currently also appears to be on the advisory boards of  Zars Pharma Inc,  Relevare Therapeutics, and Cytogel Pharma.

Thus, it seems that Dr Portenoy fit the usual definition of key opinion leader.  He was regarded as an authority in his area and his opinions were obviously influential.  He was paid by health care corporations with interests in selling their goods or services, in this case, narcotic drugs, and was using his influence to promote individual patient care decisions and policy decisions that facilitated the widespread use of these drugs. 

A Change Leading to Sick and Dead Patients

Since the campaign to "destigmatize" narcotics began, the US has seen what many have called an epidemic of narcotic adverse effects.  The WSJ article provided graphs showing that narcotic related deaths and hospital admissions both increased more than five times since 1999.   As the WSJ put it,

 some specialists now question whether the drugs should be prescribed so freely for months or years to people with chronic pain that isn't related to cancer, as Dr. Portenoy proposed 25 years ago. "People lost sight of the fact that these are dangerous drugs that are highly addictive," said Jane Ballantyne, a pain specialist at the University of Washington. She once agreed with Dr. Portenoy and proponents of broad opioid use but now believes they need to be used more selectively.

Dr Portenoy Recants

What is most remarkable about this case is that it seems to be the first in which a highly influential industry paid key opinion leader has publicly had a change of heart.

Now, Dr. Portenoy and other pain doctors who promoted the drugs say they erred by overstating the drugs' benefits and glossing over risks. 'Did I teach about pain management, specifically about opioid therapy, in a way that reflects misinformation? Well, against the standards of 2012, I guess I did,' Dr. Portenoy said in an interview with The Wall Street Journal. 'We didn't know then what we know now.'

I would note there is some sophistry there.  There was never good evidence for narcotics' effectiveness or safety for patient with chronic, non-malignant pain.

In fact, Dr Portenoy also admitted that, sort of,

'Data about the effectiveness of opioids does not exist,' Dr. Portenoy said in his recent Journal interview. To get a painkiller approved, companies must prove that it is better at reducing pain than a sugar pill during short trials often lasting less than 12 weeks. 'Do they work for five years, 10 years, 20 years?' Dr. Portenoy said in the Journal interview. 'We're at the level of anecdote.'

Again, it is not that the data that supported the use of the drugs has disappeared, or that new data has been developed that contradicts the old data.  There never has been any good data, that is, from well designed and performed randomized controlled trials that demonstrate that the benefits of narcotics outweigh their harms for patients with chronic, non malignant pain.  It does not exist now and it never existed.

Dr Portenoy also admitted,

'I gave innumerable lectures in the late 1980s and '90s about addiction that weren't true,' Dr. Portenoy said in a 2010 videotaped interview with a fellow doctor. The Journal reviewed the conversation, much of which is previously unpublished.

In it, Dr. Portenoy said it was 'quite scary' to think how the growth in opioid prescribing driven by people like him had contributed to soaring rates of addiction and overdose deaths. 'Clearly, if I had an inkling of what I know now then, I wouldn't have spoken in the way that I spoke. It was clearly the wrong thing to do,' Dr. Portenoy said in the recording.

So not only did the Wall Street Journal article describe how the overuse of narcotics for chronic, non-malignant pain came from wishful thinking energized by the possibility of corporate and personal profit, it showed how the chief medical cheer leader for these drugs now admits he was wrong.


Summary

In summary, it appears that the huge increase in the use of narcotics to treat chronic, non-malignant pain was never based on clear convincing evidence from well-designed studies.  At best it was based on irrational enthusiasm and wishful thinking by some very vocal and persuasive advocates.  These advocates seemed to become "key opinion leaders," that is, influential people who promoted the use of pharmaceuticals while they were being paid by pharmaceutical companies, and were likely involved in what appears to be systematic stealth marketing campaign by the pharmaceutical companies that make narcotics.  These campaigns included production of clinical practice guidelines promoted as authoritative, and enlistment of accrediting organizations and government regulatory agencies.

One particularly disturbing part of this story was the involvement of numerous people and organizations  entrusted by society to promote good medical care.  It shows how physicians, other health professionals, and the public at large must be very skeptical of vocal advocates of new, aggressive, "innovative" approaches, of clinical practice guidelines even those developed by apparently prestigious professional societies, of accrediting organizations, and of government regulators.  That is discouraging, and could lead to the cynical approach of simply not trusting anyone.

I would note, however, that two ways the headlong rush to over-use of narcotics could have been derailed would have been:
-  employment of extreme skepticism of people paid by narcotics manufacturers advocating increased use of these drugs, no matter how distinguished, scholarly, or influential these people appear to be.  This suggests the need for general skepticism of people with financial relationships with health care corporations pushing the goods or services these corporations provide, or pushing policies that would aid the selling of those goods or services
-  a rigorous evidence-based medicine approach, meaning making clinical and policy decisions based on the best evidence found by systematic search from rigorously evaluated clinical research about the benefits and harms of these decisions, informed by patients' values.  Such an approach would have revealed there was never any good clinical evidence to support long-term use of narcotics for chronic, non-malignant pain, the particular "innovation" being pushed in this case.

So I would argue that the case of the legal narcotics pushers underlines the need for utmost transparency about conflicts of interest affecting people and organizations that advocate for particular approaches to health care, and to the management of individual patients; continuing movement to bar at least the most egregious conflicts, as per the Institute of Medicine report on the topic (look here); and the need for the very skeptical, rigorous application of true evidence-based medicine approaches.  

Finally, I must note that this seems to be the first time that a prominent, highly influential key opinion leader  has recanted.  Maybe he will write an article entitled "Dr Drug Pusher?" - just joking, but at least one former  key opinion leader did write the confessional  "Dr Drug Rep."  Maybe this is the beginning of a movement toward health care based on logic and evidence rather than wishful thinking, irrational enthusiasm, or ideology, or even worse, on deception or personal enrichment.     

Is the Meaningful Use Stage 2 Final Rule invalid?

Here are a few reasonable questions I decided to elevate as a post of its own.

In the face of the discovery of industry influence over comments submitted to ONC regarding Meaningful Use Stage 2, as I documented at my post earlier today "Health IT Vendor EPIC Caught Red-Handed: Ghostwriting And Using Customers as Stealth Lobbyists - Did ONC Ignore This?" (ghost writing, in effect, by those with obvious conflicts of interest):

•  Is the MU Stage 2 Final Rule invalid due to the influence the industry had on the submitted "public" comments and opinions, supposedly by and of the submitters, which are now demonstrably tainted?
•  Should an investigation be opened?

After all, as I pointed out on Aug. 29 in "The Scientific Justification for Meaningul Use, Stage 2: The NWB Methodology", not only is MU2 based on an admitted "nevertheless, we believe" justification (that is, lack of scientific rigor), but now it appears the legislation is based on stealth lobbying and resultant regulatory capture, ONC in essence doing the seller's bidding.

Tens of billions of taxpayer dollars are at issue here.

-- SS

Old Mystery Solved? Former FDA Reviewer Speaks Out About Intimidation, Retaliation and Marginalizing of Safety

At my Dec. 2005 post "Report: Life Science Manufacturers Adapt to Industry Transition" I wrote:

... The recognition of a gap in formally-trained medical informatics-trained personnel in the pharmaceutical industry [by Gartner Group] is welcome. For example, from my own experience:

I recall an interview I had last year with the head of the Drug Surveillance & Adverse Events department at Merck Research Labs in a rehire situation [after a 2003 layoff]. I came highly recommended by an Executive Director in the department, to whom I had shown my prior work. This included well-accepted, novel human-computer interaction designs I'd developed for use by busy biomedical researchers for a large clinical study in the Middle East, as well as my work modeling invasive cardiology and leading the development and implementation of a comprehensive information system to detect new device and treatment modality risks in a regional center performing more than 6,000 procedures/year. In addition, I'd worked with the wife of the Executive Director in years prior, when she ran the E.R. of the hospital where I was director of occupational medicine.

Despite all this in my favor, the Executive Director's boss, himself a former FDA adverse events official [a former deputy director of CDER’s office of drug safety, who'd recently moved to the pharma industry he once regulated - ed.], dismissed me in five minutes as I was showing him the cardiology project, saying flatly "we don't need a medical informatics person here." I had driven 80 miles to Rahway for this interview to save the executive a trip to Pennsylvania, where I was originally scheduled to come for the interview, since the executive's father was ill in the hospital. In an instance of profound social ineptness, my effort was not even acknowledged. Perhaps he was in a bad frame of mind, but the dismissal under the circumstances was all the more disappointing.

I recall this was one of the most puzzling hiring debacles I'd ever experienced, as all the senior people in his dept. had recommended he hire me - I was really only there for his approval and signoff - and the work I'd shown him had improved care, saved lives, and saved money.

I may not need to be puzzled any longer.  This story just appeared:

Former FDA Reviewer Speaks Out About Intimidation, Retaliation and Marginalizing of Safety
By Martha Rosenberg, Truthout
July 29, 2012

The Food and Drug Administration (FDA) is often accused of serving industry at the expense of consumers. But even FDA defenders are shocked by reports this week of an institutionalized FDA spying program on its own scientists, lawmakers, reporters and academics that included an enemies list of "actors" and collaborators

... Ronald Kavanagh [FDA drug reviewer from 1998 to 2008]:  ... In the Center for Drugs [Center for Drug Evaluation and Research or CDER], as in the Center for Devices, the honest employee fears the dishonest employee. There is also irrefutable evidence that managers at CDER have placed the nation at risk by corrupting the evaluation of drugs and by interfering with our ability to ensure the safety and efficacy of drug ... While I was at FDA, drug reviewers were clearly told not to question drug companies and that our job was to approve drugs.

Read the entire story at the link.  I won't cover it more here, except to say it's certainly possible to believe certain FDA officials don't want serious people around -- who in addition to being MD's can write serious software to detect drug and device problems -- whose work can get in the way of drug approvals.

-- SS