Where There's Smoke? ... A University President Who Simultaneously Lead a Failed Financial Company and a Tobacco Company Which Apologized for International Bribery

A long time ago, in 2006, we first blogged about a "new species of conflict of interest" which we thought might prove to be even more important than those afflicting health care that were then starting to be discussed.  This involved health care organizational leaders who were simultaneously members of the boards of directors of for-profit 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.]   Thus, for example, the conflict posed by the president of a university, to whom a medical school and academic medical center report, who also is the director of a pharmaceutical company, would be extreme.

Since then, we noted yet another variant on this theme, university presidents who were supposedly the top leaders of failed financial firms, and then who did various dances to try to avoid accountability for these firms' fates.  That theme recently made it to the big time, a front page article on the Sunday Business section of the New York Times.

The most extreme version was the case of that of Eugene Trani, the former President of Virginia Commonwealth University ( full disclosure: I spent 7 years on the faculty of its medical school, and am still an adjunct faculty member).  Trani turned out to be on the board of a tobacco company, and soon after this was revealed, retired from the presidency (see most recent blog post here).

Now a Washington Post blogger has yet another twist on this case:

Eugene P. Trani left the presidency of Virginia Commonwealth University in 2009 after improving the school and expanding its presence in downtown Richmond. But Trani was also a director of LandAmerica Financial Group, a Richmond-area title insurer that went belly-up in 2008, taking with it millions in investors' money.

Today, Trani is on the board of Richmond-based Universal Corporation, a global tobacco marketer. Universal's subsidiaries have just agreed to pay $8.98 million in a tobacco bribery scandal that stretches from Brazil to Thailand to Africa. The firm has issued a public apology. Trani received $159,032 in total compensation for his board service.

So Trani was not only on the board of directors of a tobacco company, he was on the board of directors of a tobacco company that was forced to settle charges of international bribery and issue apologies for same, and just to ice the cake, was on the board of a failed financial company whose failure affected residents of the locality which his university served.

As the saying goes, "the fish rots from the head down."  How can academic leaders expect integrity from their faculty when they willingly take on such grotesque conflicts?  Leaders who thus try to serve two, or many masters are likely to run health care organizations that do not serve their primary constituents, patients who expect good care, learners who expect honest, competent teaching, and the public who expects important, unbiased research, well.  If we really want to reform health care, we need leaders who put the mission, not their own pocketbooks, prestige, and cronies, first.

Politician, Medical School Dean Convicted in Connection with Bribery and Fraud at UMDNJ

We have frequently discussed the plight of the University of Medicine and Dentistry of New Jersey (UMDNJ), the largest health care university in the US. Facing indictment for federal crimes, the university operated under a deferred prosecution agreement and the supervision of a federal monitor from 2005 to 2007. We most recently blogged about UMDNJ here, and see links backward to previous posts from here.

As reported by the Newark Star-Ledger, there have just been criminal convictions in two cases related to the scandals at UMDNJ:

Former senator Wayne R. Bryant was found guilty yesterday of selling his office as one of New Jersey's most influential lawmakers for a medical school job that padded his pension, in a case that also put on trial the secret political horse-trading of the state budget process.

A federal jury in Trenton convicted Bryant of bribery for soliciting a job at the School of Osteopathic Medicine in Camden County and using his influence to help the school acquire $10.5 million in state grants between 2003 and 2006.

The jury also found Bryant, 61, of Lawnside, guilty of 11 counts of mail and wire fraud stemming from the scheme to land the $35,000-a-year 'low-work' job at the school, run by the University of Medicine and Dentistry of New Jersey. Prosecutors said Bryant used the mail to apply for the job, get paid, and file a financial disclosure form for 2003 that omitted his UMDNJ job -- all in an effort to defraud the state Division of Pensions and Benefits.

'The brazen arrogance of Wayne Bryant -- to believe that he was completely beyond the reach of the law, to extort state institutions for personal profit in return for the funding of good and worthwhile programs that serve the poor, the disadvantaged and the needy of our state -- is simply the most disgusting conduct I've seen by a public official in my seven years as U.S. attorney,' [US Attorney Christopher J] Christie said.

The jurors, who deliberated 14 hours over three days, also convicted the medical school's former dean R. Michael Gallagher, formerly of Haddonfield, of bribery for hiring Bryant to perform what prosecutors say was a phony community relations job. Gallagher also was found guilty on five of the six mail and wire fraud charges involved with creating the job.

The ex-senator and the ex-dean each face more than 15 years in prison when they are sentenced March 20, according to the U.S. Attorney's Office.

The relationship between Bryant and UMDNJ was perhaps made a bit more clear by the Philadelphia Inquirer's version of the story:

In late 2002, Bryant solicited a job from Stuart Cook, then president of the public University of Medicine and Dentistry of New Jersey (UMDNJ). Prosecutors termed it a 'shakedown.'

Gallagher, the former dean of the School of Osteopathic Medicine in Stratford, then rigged a hiring process to give Bryant a job. The school is one of UMDNJ's campuses.

During the years of his employment, from 2003 to 2006, Bryant steered $10.5 million to the osteopathic school, and lobbied on its behalf in other matters.

Prosecutors noted that he had done nothing to help the school before going on its payroll.

Bryant was paid a $35,000 salary and given a $5,000 bonus one year. This, prosecutors said, despite the fact that he showed up on campus just one morning a week and spent most of his time there reading the newspaper and talking on the phone.

These were not the first findings of guilt in the UMDNJ case. Earlier this year, as we noted here, two UMDNJ cardiologists pleaded guilty of embezzlement in a scheme in which they were paid for academic work they did not do in exchange for referring patients to UMDNJ. However, by that time, nobody in a leadership position in UMDNJ had been charged, much less convicted of a crime in connection with the scandal. Now at least one former UMDNJ official has been convicted.

In a continued and striking demonstration of the anechoic effect, the UMDNJ case up to now has never graced the pages of any medical, health care research, or health care policy journal. I wonder whether the convictions of a prominent politician and a former osteopathic school dean will be enough to get this dramatic and sordid case noticed in the medical and health care literature. One would think that a large health care university forced to operate under a federal deferred prosecution agreement, under the supervision of a federal monitor, would have sufficient implications about problems in the leadership and governance of health care organizations to gain widespread attention.

However, as long as such cases are reported as merely regional aberrations, physicians, other health care professionals and patients will probably continue to believe that the ethical challenges they may witness are merely local misfortunes. Until we all recognize that the problems are widespread, if not global, we will not be moved to action. And maybe that is why there is such pressure not to discuss the wider implications of local problems, or to discuss how similar all the local problems are.

For discussion of many other cases of poor leadership and governance of health care organizations, please peruse the archives of Health Care Renewal.

Biovail Pleads Guilty

As reported by by Fortune (via CNNMoney.com):

The big Canadian drug company [Biovail Pharmaceuticals] agreed Friday to plead guilty to U.S. kickback and conspiracy charges. The decision, which closes out a federal investigation of the company's unusual actions in support of a 2003 drug launch, means Biovail (BVF) and a New Jersey-based subsidiary will pay a $24.6 million fine to avoid a court case that could have cost them future business with federal agencies.

The marketing program in question - Proving Cardizem LA through Clinical Experience, or PLACE - aimed to build physician awareness of Biovail's 2003 launch of a crucial product, the long-acting formulation of heart drug Cardizem. Skeptical hedge funds and research outfits charged that by paying doctors up to $1,000 for prescribing the drug for up to 15 patients, Biovail's program amounted to little more than bribery.

Note that, as reported by Bloomberg, the payments were meant to be for "research,"

Biovail's plan [was] to offer them $1,000 to write 15 prescriptions for Cardizem LA, then complete a report on each patient.

However, as Fortune's article noted,

Biovail, the U.S. attorney's office wrote in its press statement Friday, 'did not design or implement the PLACE program in a way calculated to provide new or meaningful scientific data about whether Cardizem L.A. worked better than other available drugs.' It added in settling charges against the company that the payments to doctors exceeded the 'reasonable fair market value' of the physicians' services.

Add this to our collection of grossly unethical financial interactions between health care organizations (in this case, a pharmaceutical company) and physicians. In this case, payments apparently meant to serve as inducements for physicians to prescribe a drug were prettied-up as research support.

Pharmaceutical, biotechnology, and device companies now spend vast amounts on payments to physicians. These include payments for "consulting," "honoraria" for speaking, "royalties" for use of intellectual property, and funding for "research." Rarely do the companies or physicians involved disclose the amounts paid, or what the physicians did in return for these payments. One can only wonder how many other such payments are really for physicians' prescribing particular products, or helping to market these products. Only full disclosure of all payments made to physicians, other than fees for clinical services, could put such concerns to rest.

I would implore my fellow physicians who take payments for "consulting," "honoraria," "royalties," and "research" support to fully disclose these patients, their amounts, and what the physicians have done for them. If such disclosures might seem embarrassing, then the affected physicians should consider whether they should be taking such payments at all. Similarly, the organizations making such payments ought to fully disclose the people getting them, the amounts, and the reasons for the payments. Again, if such disclosures seem embarrassing, then the companies should consider whether they should be making such payments at all.

Physicians rightly often complain the they are being deprofessionalized. Being professional involves subscribing to and upholding a clear code of ethics. A major element of physicians' ethical codes is putting the interests of individual patients first. Taking payments to prescribe particular products, rather than prescribing for individual patients those drugs which are most likely to help, and least likely to hurt those patients, appears to violate this prime ethical directive. Physicians deprofessionalize themselves when they take payments or gifts in return for prescribing specific products. If we do not want to be deprofessionalized, we must not take actions that deprofessionalize ourselves.