What a Conflicted Web We Weave: More About Leaders of Financial Firms Influencing Policy in the Guise of Independent Academics

The issue of conflicted academic economists providing public policy recommendations just got bigger.  As discussed by Felix Salmon in his blog for Reuters, and by Nancy Folbre in the Economix blog for the New York Times,  a new study by Epstein and Carrick-Hagenbarth showed that some very prominent economists who frequently make pronouncements about financial policy often failed to disclose some major conflicts of interest. 

In summary, they identified "two groups of economists that were prominent in the field of financial economics and which had taken a public stance on financial regulation."  Some of these economists also had prominent advisory roles for government economic agencies, including the US Federal Reserve, the US Council of Economic Advisers, the Indian Finance Ministry, the Bank of Finland, the World Bank, and the International Monetary Fund. The authors did an extensive search for the economists' financial ties to financial corporations, which probably detected most relationships such as membership on the boards of directors of public companies, but may have missed consulting arrangements.  They found that 12 of 19 had such relationships, mostly positions on boards of directors or ownership interests.  They found that all but one of the economists with such relationships failed to identify these relationships in the majority of their academic papers and writings in the media.  The one economist who always disclosed his relationships in the media only wrote articles for the private financial firm for which he worked.

So major financial conflicts of interest were prevalent among "prominent economists who write op-eds for newspapers, they testify on public panels, they take positions as advisers for politicians and they are interviewed by the media. Academic economists often convey the impression that they occupy these positions as independent objective experts."  The authors concluded:

Academic economists serve as experts in the media, molding public opinion. They are also important players in government policy. If those that are creating the culture around financial regulation as well as influencing policy at the government level for financial reform also have a significant, if hidden, conflict of interest, our public is not likely to be well-served.

They also noted that economics as a profession does not even have a formal code of ethics, and in particular has never embraced any necessity for disclosing, managing, or restricting conflicts of interest.

We had previously discussed anecdotal but striking evidence that some of the most prominent economists who influenced public policy up to and after the great recession/ global financial crisis also had major but undisclosed financial ties to financial institutions. It now looks like conflicts of interest could be as prevalent among those who are influential in economics as they may be among those who are influential in medicine, health care, and health care policy.

This further corroborates the hypothesis that academic medical institutions are so comfortable with their faculty and leaders' conflicts of interest because they exist in a larger academic culture in which such conflicts are standard operating procedure.  Academic institutions may be particularly happy with economists' conflicts of interest because they involve such large amounts of money. Felix Salmon gave the example of  Paul Krugman who when he worked as an economist could command a $40-50,000 fee per speech, easily more than an order of magnitude more than the going rate for medical talks.  Furthermore, as we have noted before, (e.g., here, here, and here) many prominent academic institutions that incorporate medical schools and academic medical centers have boards of directors dominated by leaders of finance.  Now it appears that these leaders' economic interests may lead them to encourage conflicts of interest among their faculty and administration.

So not only do conflicts of interest appear to be a fundamental problem for medicine and health care, they may pose a fundamental problem for society as a whole.

Clearly, as Epstein and Carrick-Hagenbarth wrote, economists, like all professionals who can influence public policy, ought to have a code of ethics, and that code, at a minimum, ought to require full disclosure of all conflicts of interest.  Economists who write about policy in the media, write policy-relevant academic articles, and/or who advise non-profit organizations and government agencies should at a minimum reveal all such conflicts.  Similarly, of course, physicians and health policy/ care/ services researchers who write about or otherwise may influence health care policy should at a minimum reveal all such conflicts.

Meanwhile, extreme skepticism about policy advice by apparently independent academics and experts is warranted.  We risk sliding into the cynical position that all major policy is now being made by imperial CEOs and their cronies and paid agents. 

Ela Medical (Now the Sorin Group) Settles

And we return to the parade of legal settlements, which is still marching along.  The next entrant to the parade was described by the Miami Herald:

In a four-year-old case with nationwide implications, Ela Medical has agreed to pay $9.2 million to settle a whistle-blower case brought by a former Miami technician who charged the company used several schemes to pay kickbacks to South Florida doctors.

The details of the allegations were:

In the Miami case, brought by May and Ben Kuehne, Lee alleged that Ela gave money to doctors for questionable studies, had Ela techs do work on patients that doctors later billed Medicare for, gave doctors free trips and helped doctors get monitoring equipment that to led to more Medicare billing.

The moves were made by the company to boost sales in the multibillion-dollar field of cardiac devices, where pacemakers can cost up to $7,000 and defibrillators up to $18,000.

These devices have batteries that run down in about three years, the lawsuit said, and patients need to be monitored to see how much battery life their devices have left. An Ela tech performed the tests in doctors' office.

'Although Medicare required a physician to be present during the battery test, physicians never attended these battery check appointments,' the lawsuit alleged. Doctors then billed Medicare for the techs' work.

Other times, doctors were paid $2,500 to $4,000 for each Ela patient enrolled in a study, even though patients were never informed and never gave the required permission, the lawsuit said. 'The physicians had no role and in fact did nothing in furtherance of the study,' the lawsuit stated. 'However, Medicare was billed each time the study was conducted, as if the physician had participated.'

Of course, the company's statement had all the expected elements:

Closure of this investigation places this legacy issue firmly behind us and clearly enhances our ability to execute on our plans for CRM [cardiac rhythm management] in the United States. Our commitment to provide patients and healthcare providers with life-saving and life-enhancing innovation, and to conduct our business in a highly ethical manner is stronger than ever.

I leave it to my dear readers to decide on how ethically the company's previous business operations were, based on the above.

I would note that not only did the company want to put this case behind it, it seemed to want to put its old name behind it too. Ela Medical is now apparently known only by the name of its Italian parent company, the Sorin Group.

To add a final disturbing note, this case illustrates why people who see what appears to be unethical, or even illegal behavior are not rushing to report it:

On Monday, May, the attorney, said Lee 'is not talking to anybody. This has been a difficult experience.' She quit Ela when, after complaining about the company's questionable practices, she was told to transfer to California. She took a job with a competitor, but was dropped when the industry learned she had filed the lawsuit.

'She was blackballed,' May said. 'She's basically gone from $100,000 a year to minimum wage.'

One would hardly have expected Ms Lee to have kept her job at Ela once she reported what was going on there. However, it was worse than that. Being known as a whistle-blower may make one radioactive enough to preclude any employment in a segment of health care that is at all related to the one in which one blew the whistle.

The Herald article did note that Ms Lee stands to get part of the settlement. Yet this will come at least four years after the case began, as her lawyer said:

the 'money will allow her basically to start over.' If she had kept her mouth shut, 'she would have made far more money in her lifetime than she will get as a percentage of the settlement.'

As we just noted, in health care, the incentives are strongly tilted to favor financial productivity , or "making the numbers," and to disfavor ethical conduct, especially when it requires dissenting with top managers. If we really want accessible, affordable, high-quality health care, we will have to get rid of these sorts of perverse incentives.

So the march of legal settlements continues.  As in many previous cases, note that the monetary cost of the above settlement, while it seems large to normal humans, would be just slightly more than round-up error for a large multi-national company.  As I have said repeatedly,  penalties that only appear to be (relatively small) costs of doing business are unlikely to deter future bad behavior. Until the people who actually authorized, directed and implemented the bad behavior have to suffer some negative consequences, expect the bad behavior to continue. 

On AMIA's Jan. 2009 Letter to The Office of President Elect Barack Obama: Something is Missing

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Nov. 11, 2010 note: see the new post on an AMIA Board Position Paper released this day (Nov. 11) entitled "Report of an AMIA special task force on challenges in ethics, safety, best practices, and oversight regarding HIT" at this link.
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I was somewhat taken aback by the appearance of the article by Karsh et al. entitled "Health information technology: fallacies and sober realities" (covered at Healthcare Renewal here) in the Oct. 2010 Journal of the American Medical Informatics Association (JAMIA).

I was taken aback since the article rains heavily on the academic memes of healthcare IT as a benign and deterministic solution to healthcare's ills, and of health IT-related adverse outcomes being mere "anecdotes."

(It is ironic that my own mother recently fell victim to healthcare IT's supposed beneficence. It is accurate to say she was nearly killed via health IT-related cognitive disruptions and the resultant utter failure of medication reconciliation, and remains severely impaired nearly six months later.)

My blog posting on that Karsh article brought a letter to my attention, authored by AMIA's leadership and sent on Jan. 7, 2009 to the Office of President Elect Barack Obama. The full PDF of the letter is here.

Here are relevant excerpts about which I will make only a single comment:

January 7, 2009

Dear Mr. President-Elect,

On behalf of the more than 4,000 physicians, nurses and other members of the American Medical Informatics Association (AMIA) who use health information and communications technology (HIT) to improve the quality, efficiency and safety of healthcare, I am writing to applaud and encourage your commitment to investing in a genuine transformation of our nation’s healthcare system. Properly deployed and supported, HIT can be part of broad health care reform and, importantly in this time of economic challenge, a significant economic multiplier that will encourage the creation of new jobs and real improvements in patient care, public health and life sciences research.

... If we are to develop a national infrastructure for the use of health information to benefit individuals and our entire population, the United States must –

• Develop mechanisms, including grants, loans and financial incentives for physicians, nurses, and healthcare organizations to deploy, implement successfully, and widely disseminate electronic health records (EHRs);
• Develop and support local, regional and national health information exchange to ensure that accurate, secure health information is available whenever and wherever needed by those authorized to access such information;
• Develop and support programs to address the need for a prepared health information technology workforce, with training and continuing education of physicians, nurses, health information managers and others;
• Develop more effective ways to address the health needs of underserved populations, including providing equitable access to health information and communications technology;
• Develop and assure compliance with standards, policies and practices that support effective sharing of health information, while fostering security, confidentiality and transparency, and building trust with the public;
• Develop and maintain health terminologies and classifications that will allow health data to be not only useful, but uniform and consistent, and enable interoperability across myriad information systems;
• Develop proper means to link information related to individuals in order to ensure the validity and integrity of health data used to inform care and research;
• Develop proper means for authentication of the identity of individuals and caregivers and any others authorized to access identifiable health information;
• Support the development of decision-making and other knowledge-management tools in order to permit the delivery of individualized, evidence-based care;
• Develop and support secure web-portals to link individuals to their caregivers and ensure genuinely patient-centered care;
• Develop appropriate and secure linkages between EHRs and the public health system to ensure safety from bioterrorism, rapidly spreading infectious diseases, and other threats;
• And provide appropriate funding for the development of a robust national health information strategy, with support for continued HIT and informatics research and innovation.

During the Presidential campaign, you demonstrated your boldness and vision by pledging to allocate $10 billion annually for five years to promote the adoption and use of health IT. Such an investment will pay dividends not only in improving health care, but in creating jobs...

These are all laudable and interesting goals for an experimental technology, as tacitly admitted in the above goals (although it would have been more ethical, I believe, to have waited for the technology to have "needed" fewer of these goals as a result of research in constrained settings before boldly promoting expensive national rollouts on live patients).

In any case, however, something very, very important is missing...

There is no mention of healthcare IT safety.

At $10 billion annually, surely the AMIA leadership could have specifically and explicitly recommended that some fraction, even a token % (even a small percentage of $10,000,000,000 is not chicken feed), should have been dedicated to help ensure the disruptions and unintended consequences caused by any new/developing/expanding information and communications technology (ICT) didn't kill or maim patients such as my mother.

Perhaps through the publication of the aforementioned Karsh study on HIT fallacies and sober realities, the AMIA leadership is subconsciously seeking absolution.

-- SS

Addendum: my own Dec. 7, 2008 "Open letter to President Obama" on healthcare IT took a decidedly different approach, namely, I attempted to make the President-elect aware of numerous HIT "fallacies and sober realities":

... our government has been seduced by the promise, the potential, the Siren Song if you will of HIT, and shielded from information on its true challenges, difficulties, downsides and failures. An "irrational exuberance", a Syndrome of Inappropriate and Uninformed Overconfidence in Computers prevails in healthcare.

... [If HIT itself is not reformed,] billions of precious healthcare dollars that might be spent on “IT misadventure” in a time of unprecedented national financial challenges and hardships might simply be better spent on delivery of needed medical services, health insurance and other "safety net" interventions.

... healthcare’s defects cannot be effectively changed or reformed via healthcare IT, if that healthcare IT itself is defective.

AMIA leadership and I also differed on the issue of health IT regulation, as I posted in July 2009 at "JAMA letter: Health Care Information Technology, Hospital Responsibilities, and Joint Commission Standards." On that issue, JAMA published my commentary, not theirs.

-- SS

Observations from France

I recently got back from a trip to the UK and France visiting family and friends. It was great to see everyone, eat great food and even do some unexpected foraging (chestnuts, mushrooms, walnuts, blackberries). French people are in better general health than most industrialized nations. The obesity, diabetes and heart disease rates are all considerably lower than in the US, although still much higher than in non-industrial cultures. Here are a few of my observations about French food:

1. The French diet generally contains a lot of fat, mostly from traditional animal sources such as dairy and pork fat. Industrial seed oils have crept into the diet over the course of the 20th century, although not to the same degree as in most affluent nations. People seem to think that eating a lot of fat is unhealthy, particularly the younger generation, but they do it anyway. I had dinner with my family at a traditional restaurant in Lyon (a "bouchon Lyonnais" called Stepharo) last week. Before we ordered, they immediately brought out crispy fried chunks of pork skin and fat (I'm not claiming this is healthy!). The entree was a salad: a bed of lettuce piled high with chicken livers, herring, and "pig's feet". The pigs feet were essentially gobs of pork fat. It was a very good meal that I'll continue describing later in the post. I think it's worth pointing out that Lyon is in Southern France. Is this the "Mediterranean diet"?
   
2. French people eat organs. Yes, they never got the memo that muscle meat is the only edible tissue. A typical butcher or even grocery store will have liver, tripe, kidney and blood sausage on full display next to the meat. If you want to make a French person angry, try selling them a chicken or a rabbit without the liver, gizzard and heart. The main course at Stepharo was a large "andouilette", or tripe sausage, baked in mustard sauce. This was a typical traditional restaurant, not a hangout for gastronauts.
   
3. French people fiercely defend the quality of their food. Have you heard of the abbreviation AOC? It stands for "Appellation d’Origine Contrôlée", or controlled designation of origin. A familiar example is Champagne, which has the AOC label. You can't call your sparkling wine Champagne unless it comes from the region Champagne. However, that's only half the story. AOC also designates a specific, traditional production method, in this case called the "méthode champenoise." The AOC label can apply to a variety of food products, including wine, butter, cheese, honey, mustard and seafood, and is a guarantee of quality and tradition. 44 cheeses currently have the AOC designation, and these are commonly available in markets and grocery stores throughout the country (1). These are not fancy products that only the wealthy can afford-- many of them are quality foods that are accessible to nearly everyone. AOC defines many aspects of cheese production, often requiring a minimum amount of pasture time and specifying livestock breeds. The US has a few products that are regulated in a similar fashion, such as Bourbon whiskey, but generally we are far behind in assuring food quality and transparency.
4. French people cook. There is less outsourcing of food processing in France, for several reasons. One reason is that restaurants are generally expensive. That trend is changing however.

I don't think the French diet is optimal by any means. They eat a lot of white flour, some sugar, seed oils and other processed foods. But I do think the French diet has many good qualities, and it certainly poses a number of problems for the mainstream concept of healthy food. Hence the "French paradox."

Observations from France

I recently got back from a trip to the UK and France visiting family and friends. It was great to see everyone, eat great food and even do some unexpected foraging (chestnuts, mushrooms, walnuts, blackberries). French people are in better general health than most industrialized nations. The obesity, diabetes and heart disease rates are all considerably lower than in the US, although still much higher than in non-industrial cultures. Here are a few of my observations about French food:

1. The French diet generally contains a lot of fat, mostly from traditional animal sources such as dairy and pork fat. Industrial seed oils have crept into the diet over the course of the 20th century, although not to the same degree as in most affluent nations. People seem to think that eating a lot of fat is unhealthy, particularly the younger generation, but they do it anyway. I had dinner with my family at a traditional restaurant in Lyon (a "bouchon Lyonnais" called Stepharo) last week. Before we ordered, they immediately brought out crispy fried chunks of pork skin and fat (I'm not claiming this is healthy!). The entree was a salad: a bed of lettuce piled high with chicken livers, herring, and "pig's feet". The pigs feet were essentially gobs of pork fat. It was a very good meal that I'll continue describing later in the post. I think it's worth pointing out that Lyon is in Southern France. Is this the "Mediterranean diet"?
   
2. French people eat organs. Yes, they never got the memo that muscle meat is the only edible tissue. A typical butcher or even grocery store will have liver, tripe, kidney and blood sausage on full display next to the meat. If you want to make a French person angry, try selling them a chicken or a rabbit without the liver, gizzard and heart. The main course at Stepharo was a large "andouilette", or tripe sausage, baked in mustard sauce. This was a typical traditional restaurant, not a hangout for gastronauts.
   
3. French people fiercely defend the quality of their food. Have you heard of the abbreviation AOC? It stands for "Appellation d’Origine Contrôlée", or controlled designation of origin. A familiar example is Champagne, which has the AOC label. You can't call your sparkling wine Champagne unless it comes from the region Champagne. However, that's only half the story. AOC also designates a specific, traditional production method, in this case called the "méthode champenoise." The AOC label can apply to a variety of food products, including wine, butter, cheese, honey, mustard and seafood, and is a guarantee of quality and tradition. 44 cheeses currently have the AOC designation, and these are commonly available in markets and grocery stores throughout the country (1). These are not fancy products that only the wealthy can afford-- many of them are quality foods that are accessible to nearly everyone. AOC defines many aspects of cheese production, often requiring a minimum amount of pasture time and specifying livestock breeds. The US has a few products that are regulated in a similar fashion, such as Bourbon whiskey, but generally we are far behind in assuring food quality and transparency.
4. French people cook. There is less outsourcing of food processing in France, for several reasons. One reason is that restaurants are generally expensive. That trend is changing however.

I don't think the French diet is optimal by any means. They eat a lot of white flour, some sugar, seed oils and other processed foods. But I do think the French diet has many good qualities, and it certainly poses a number of problems for the mainstream concept of healthy food. Hence the "French paradox."