Pharmaceutical companies previously did all their own research and testing and submitted the results to the Food and Drug Administration for approval to put a medication on the market.

Since the 1990s or so, Big Pharma has farmed out more and more of that testing to companies like Quintiles Transnational Corp., which grew quickly to meet the demand.

Now Quintiles is branching out…

Now Durham, N.C.-based Quintiles is the world′s biggest contract research organization, and more than ever, it’s using its deep pockets to entwine itself with the pharmaceutical companies, fronting them cash and services for a piece of the profits once a drug is approved.

Quintiles, which was created in 1982, upped the ante last month, saying it wants to invest even more in potential drugs as pharmaceutical companies grapple with the down economy. Quintiles is hoping its new investments will produce enormous payoffs in the future,….

Quintiles′ decision to become more aggressive in taking investment risks comes at a time it’s betting drug makers can use the resources it can offer, both cash and services.

‘They’re both currency for managing risk and having skin in the game,’ said Ron Wooten, a Quintiles executive vice president who heads the company’s capital investment group.

Controversy over creating the drug investment unit in 2000 was key in pushing Quintiles founder Dennis Gilling and several private-equity firms to buy out shareholders for $1.75 billion and take the company private again in 2003. Wall Street analysts complained they couldn’t estimate what the drug investments were worth, prompting Gilling and others to decide the company’s stock was undervalued.

The private company no longer publishes its profits. It claims revenues of about $3 billion a year. That’s also about what Quintiles has invested in other drug companies.

Furthermore,

Quintiles appears to be uniquely positioned to both invest in and test potential medications. None of the half-dozen major shareholder-owned contract research organizations will have a drug-investment division after Wilmington, N.C.-based Pharmaceutical Product Development Inc. spins off its unit in a few months, Coldwell said.

The payoffs for the risk of developing a drug can be huge.

In 2002, Quintiles took a chance on Eli Lilly and Co.’s antidepressant Cymbalta. Quintiles said it invested $125 million in cash, then spent another $400 million on a sales force of more than 550 after the product launch. Cymbalta is now Lilly′s second-biggest drug. Quintiles said it’s brought in more than $700 million so far for a stream of royalties lasting to 2012.

Japan’s Eisai Co. is hoping Quintiles’ money and experience helps it double the number of potential treatments it can put through testing simultaneously

The article raised a concern that “the buffer between drug makers and testers are again blurred.”

But not to worry…. Here is the response from Quintiles,

Wooten, the Quintiles executive, doesn’t see his company’s increased interest in bringing drugs to the market affecting its testing objectivity. Instead Quintiles is the outsider turning a hard eye on which pharmaceuticals will become profitable.

‘It allows you to really get to the essence of the data that you’re looking at instead of what you hope it says,’ he said. There isn’t ‘the natural bias that you would have with your own babies.’

Furthermore, the AP reporter got reassurances from a noted academic expert in the area,

The FDA preserves the integrity of testing in a landscape already pockmarked with potential conflicts of interest that include company-sponsored academic research and investigators testing drugs while owning shares in companies that own the drug, said Kenneth Getz, a senior fellow at Tufts University′s Center for the Study of Drug Development.

The FDA’s view is that any company with a financial stake in a potential drug will face similar scrutiny from the agency.

‘It’s assumed,’ FDA spokeswoman Karen Riley wrote in an e-mail, ‘that drug/device/biologic companies who sponsor trials of pending products have a conflict because they will gain if the product is approved.’

Besides, pharmaceutical companies have navigated the tricky territory that comes with testing, Getz said. So have the companies like Quintiles that have taken on the outsourced work, he said.

‘These potential conflicts of interest are ever-present, and the real question is how do companies manage these potential conflicts effectively,’ he said. ‘These are massive, massive companies that have thousands of staff that are not generally aware of a conflict of interest at a corporate level. They are paid to do a quality job that meets internal and regulatory guidelines or they are not going to keep their jobs.’

Here on Health Care Renewal, we have discussed how the conflicts of interest that are now pervasive in health care can adversely affect clinical care, teaching, and research.  We have looked at how clinical research sponsors, who have a vested interest in having the results favor the products and services they sell, may manipulate the design, implementation, analysis, and dissemination of research, and when all else fails, suppress unfavorable results.  We have also looked at problems with the ethics and quality of research done by contract research organizations, who are, after all, paid by companies again with vested interests in selling particular products or services.

Given all that, one may argue that having contract research organizations invest in particular drugs or devices which they are also evaluating through clinical research may not make things much worse.  However, at the least, it seems to me that it further obfuscates conflicts of interest that may lead to biased research results, dishonoring the patients who volunteered for the trials, and biasing the information on which patients and physicians make decisions.

Finally, I should note how Quintiles new investments in specific drugs was defended in the article.  The article quoted Quintiles executive vice president Ron Wooten suggesting that Quintiles might be able to be objective in making the original decision to invest in a drug. He conveniently did not address what might happen after the investment was made, when Quintiles was performing, analyzing, and reporting clinical research on a drug or device in which it had invested.

The article also quoted Kenneth Getz, the Senior Fellow at Tufts, who seemed unconcerned about the issue.  What the article did not mention is that the Tufts Center for the Study of Drug Development, at which Mr Getz is based,

receives unrestricted grants from pharmaceutical and biotechnology firms, as well as companies that provide related services to the research-based industry (e.g., contract research, consulting, and technology firms). These grants represent approximately 40% of Tufts CSDD’s operating expenses.

per the Center′s web-site. Another page on the web-site lists Mr Getz’s qualifications,

Kenneth A. Getz is a senior research fellow at the Tufts CSDD. Considered an expert on the investigative site and CRO markets, R& D management, ECT solutions adoption and clinical research volunteerism,….

Mr. Getz is the founder and chairman of CISCRP ….

He holds an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University and a bachelor’s degree, Phi Beta Kappa, from Brandeis University. Mr. Getz worked for over seven years in management consulting, where he assisted biopharmaceutical companies in planning and implementing drug development strategies. He is also the founder and former CEO of CenterWatch.

Note that Mr Getz seems to have no training in biomedical science, medicine, or health care.  Furthermore, CISCRP (the Center for Information and Study on Clinical Research Participation), has an advisory board (see their web-site here) that includes representatives of pharmaceutical companies (Vertex Pharmaceuticals, Biogen Idec, and Roche), and contract research organizations, (PPD Inc, and particularly, in this case, Quintiles). The vast list of the Center’s “supporters” include a catalog of drug and biotechnology companies (including Abbott Vascular, Amgen, AstraZeneca, Biogen Idec, Daiichi Sankyo Pharmaceutical Development, Eli Lilly, Forest Laboratories, Genentech, Genzyme, GlaxoSmithKline, Janssen, Johnson and Johnson, Merck, Novo Nordisk, Novartis, Ortho-McNeil, Pfizer, Roche, Sankyo, Sanofi-Aventis, Serono, Shire, Takeda, and Wyeth), and contract research organizations, (including Covance, Parexel, PPDI, and notably again, Quintiles.)

So the other lesson from this bit of news is how the information the public, health care professionals, and policy makers  receive about health care policy is frequently shaped by people with horses in the race, but that such influences are rarely disclosed.  This article included an interview with a single apparently academic expert who provided reassurance that the conflicts of interest discussed in the article were not really so worrisome.  This expert, however, failed to disclose his own extensive, albeit somewhat indirect ties to a variety of corporations that might benefit from the conflicts discussed as the main topic of the article, including corporations that were directly involved in them (Quintiles and Eli Lilly).  Maybe because the reporter thought that the expert was unbiased, there was no attempt to find a contrasting opinion.

So I say again, again, again, health care professionals, policy  makers, and people in general need to be extremely skeptical of most of the apparently unbiased pronouncements made about medical and health care policy issues in the media.  It would be a small step toward a more transparent discussion if those who expressed opinions would also fully disclose in detail their relevant conflicts of interest.

This promises to be an engaging two days, and I encourage even late arrivals to head over to hear the speakers and shmooze with other Leaners.

We’ll start, though, with a humorous, light touch.  GBMP′s Bruce Hamilton (seen here) is famous for a short video, entitled Toast, in which he demonstrates the basic principles of Lean process improvement.  How fitting, then that the bagel toasting process at the convention center is anything but Lean!  A batch process, with poorly designed flows, leaves people waiting in line, unsure of what to do next.  Even the toaster itself is in an unstable setting, almost falling off the table!

Some of you may recall my “oatmeal chronicles,” from last year’s IHI Annual Forum, where the convention center in Florida likewise inadvertently provided a wonderful display of a poor service process.&nbsp Perhaps this kind of thing is intended at these kind of conferences, to offer real-time examples of how not to do things, so the attendees can think more clearly about how to do them right.

Monarchs and their heirs are not always noted for their rational medical advice. But James VI of Scotland, who became James I of England in 1603, was different.

Published anonymously in 1604 but immediately credited to the king, A Counterblaste to Tobacco flew in the face of prevailing medical opinion by outlining some of the chief health risks of smoking more than three centuries before scientists made the connection.

Possibly the first official antismoking campaign, the royal pamphlet highlighted cost and passive smoking as two of the most powerful arguments against tobacco, while it lamented that addiction, peer pressure, and fashion were among the most difficult obstacles to overcome.

Gastroenterologist’s view of the stomach

Recently, while covering for one of my partners on a weekend, I was consulted by a physician to do a procedure. The doctor wanted his patient to undergo an EGD, which is a scope test that examines the esophagus, stomach and first portion of the small intestine called the duodenum. We gastroenterologists do this test routinely to search for an explanation for a patient’s symptoms, or to determine if these organs might be harboring a lesion that is silently bleeding.

Gastroenterologists are obligated to perform procedures for sound medical reasons. I have already confessed publicly on this blog why physicians like me have performed medical tests for the wrong reasons. The medical universe is not ideal, and neither are its players. Nevertheless, we want our care to make sense and not to waste dollars. For example, if a patient is suffering an acute headache, it would be hard to justify ordering a CAT scan of the abdomen, which would be unlikely to explain the symptom. One reason that wrong tests are done is because physicians ask colleagues for a specific procedure, and not for their cognitive advice.

For example, when we order a radiology examination, such as routine x-rays, CAT scans, MRIs, etc., we are not requesting the radiologist’s opinion on the medical issue, only that the test be performed. For ordinary readers who are on the sidelines of the medical arena, here’s how it works.

• A doctor like me decides that a patient needs a CAT scan.
• I order it.
• The radiologist does it.

Personally, I think this is a serious failing in medical practice. Radiologists have the deepest expertise in the procedures they do, yet they are not routinely consulted in advance. If they had knowledge of the particular patient, they could advise us if our intended test is the best option. Perhaps, a different radiology test would clarify the clinical issue better. Or, perhaps, we ordered the proper test, but it should be performed using special technique. In general, radiologists are not treated as true consultants, but as technicians. By doing so, clinicians like me who take care of patients are squandering an opportunity to practice better medicine. 

Of course, there are many times that physicians and radiologists do confer to optimize the diagnostic approach. But, in my experience, these important conversations are exceptional. Physicians who order imaging studies on their patients likely feel that they have enough knowledge to choose the right exam. Some do, and some don’t.

I have never liked serving as a technician gastroenterologist, but I am often asked to do so. Like every other gastroenterologist, I have performed requested procedures that were reasonable, but that I would not have personally recommended if my advice had been sought. The patient referenced at the top of this post was in a different category. This was not a ‘gray area’ issue.

This particular patient was having some minor rectal bleeding. He had already had the pleasure of a full colonoscopy this past November, when hemorrhoids were discovered. No additional testing was necessary for the current minor bleeding, as hemorrhoids were the likely culprit. The request for an EGD was nonsensical. The ordering physician had no economic conflict of interest in ordering the test; only the gastroenterologist would benefit financially. An EGD here was like ordering a foot x-ray on a patient with a sore throat.

I will now risk outrage from my medical colleagues by sharing a dark secret with the public. I will divulge two pieces of confidential medical code, and trust you all to protect me from vengeful physicians who will accuse me of breaking sacred medical omerta. In other words, what you read on Whistleblower, must remain here.

At the very bottom of my consultation report, I wrote: ‘will discuss with you’. This is standard medical code for, your request is nuts and I won’t put in writing what I really think. When a doctor uses this phrase, it means that a private conversation between the consulting and referring physician will soon follow. Ask your own doctor what the phrase ‘will discuss with you’ means, but be prepared for garbled gobbledygook seasoned with a dash of doublespeak.

Later that day, my partner continued the discussion with the physician and gently asked for his rationale for requesting the EGD. Here comes secret code #2. The referring physician wanted the EGD ‘for completeness’. When a doctor uses this phrase, as we all have done, it means, the test makes no sense and is totally unnecessary.

So, what happened? Monday morning, the gastroenterologist who was originally consulted assumed care of the case. The EGD was done.

Fear of litigation results in overutilization of medical care. I know this personally. But, there are other reasons why we physicians pull the procedure trigger. This vignette illustrates that our profession has its own healing to do.  Tort reform can’t cure it all.

While I didn’t perform the EGD, am I an accomplice by not standing up to the referring physician initially?  Can I rightfully still consider myself to be an ethical practitioner?  Radiologists don’t refuse to do CAT scans that make no clinical sense. Should the standard be different for other medical procedures, which have very low risks of complications? What would you have done here? Would you have refused the physician’s request, which would likely result in the loss of this physician’s future referrals? Would you rationalize the unnecessary test knowing that if you didn’t do the EGD, that someone else would? Do private pracitioners view this scenario differently than employed physicians? Should they?

Do you have similar vignettes from your own practice or experience that you can share?

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“Sometimes we forget just how short and precious our time on this planet really is. It’s for this reason that John Lewis’s new television ad seems to have struck an uncharacteristic chord.

You won’t find many people admitting to crying over the usual flood of formulaic adverts on our screens – yet this ‘moving’ ad has got Britain talking – and sobbing into their breakfast bowls.

At 91 seconds long, and costing £6 million, the ad shows the the life cycle of a woman from birth to old-age – infancy, a girl′s birthday party, a clumsy kiss in a university corridor, marriage, pregnancy, parenthood and the path into old age.”

“I was the first person these would-be doctors had ever fully examined on their own. Some were shaking so violently when they approached me with their otoscopes—the pointed device for looking in the ear—that I feared an imminent lobotomy.

A “standardized patient” is a trained person who is paid $15 an hour to be poked and prodded by inexperienced fingers, so that med students can learn communication and examination skills before they are sicced on actual sick people.

Now there are standardized patients trained for genital duty (they’re called GUTAs, for genitourinary teaching associates).

Dr. N wasted the first eight minutes of the exam trying repeatedly to get a blood pressure reading. The panic in his eyes seemed to say, “She appears to be alive, yet she has no vital signs.”

Photo Credit

Leisure Guy, one of my most faithful commenters, opines that I am omitting an important aspect of the tort reform argument. He has implored me repeatedly to read a particular book that I suspect buttresses his views, but this worthy pursuit is simply not near the top of my priority pyramid. Since he’s retired, he enjoys the luxury of burrowing deeply into the base of his priority pyramid. With 4 tuitions to go, retirement is a distant mirage for me. I’m can be a ‘leisure guy’, but only in my dreams.

I have written throughout this blog and elsewhere that there are too many frivolous lawsuits against physicians. I have admitted that caps on non-economic damages are not ideal, because they deny some worthy plaintiffs of complete compensation, but I support them because I believe they serve the greater good. I have ranted that there is no effective filter to screen out physicians who should never be invited to the litigation party in the first place. I believe that the current liability system encourages the practice of defensive medicine, which wastes billions of health care dollars and exposes patients to unnecessary risk and expense. I believe that the system is unfair and needs to be reformed. I stand by these views.

Leisure Guy (LG), in between sipping piña coladas on his deck, sent me a personal e-mail. Here’s his correspondence in its entirety.

It does seem that, given the goal of reducing the number of lawsuits for medical malpractice, the simplest, most direct, and most effective action is preventing incompetent MDs from practicing, regardless of the source of the incompetence (alcoholism or other drug dependency, dementia, and so on). In fact, it would seem to me that this is much more obviously a course of action than going after lawyers and tort reform: stop the malpractice, and the lawsuits will stop. (That was the experience of anesthesiologists.) But you continue to focus on lawyers and the courts, and I’ve never read a post in which you go after the MDs for protecting incompetents and keeping them in practice—that seems inexplicable.

MDWhistleblower is not like the Sunday evening CBS news program 60 Minutes, where an unsuspecting guest is accosted by a journalist who intends to humiliate the individual publicly and irrevocably. In contrast, I have come not to bury LG, but to praise him. He has an important point that merits inclusion in the tort reform conversation. Is it fair for physicians like me to rail against the unfair medical liability system, while we remain mute about medical negligence? No, it is not.

Reading plaintiff lawyers’ blogs, one would think that medical incompetence is spreading across the medical landscape like a wildfire. We read the ubiquitous assertion that there are 98,000 preventable deaths every year, a statistic that is trying through repetition to become transformed into a fact. In my 20 year career, I have only occasionally witnessed medical negligence. I certainly see and participate in plenty of adverse outcomes. I see every day colleagues who make medical judgments that differ from my own. I am informed by patients about physicians who lack important communication skills and would benefit from a week’s retreat at Doctor Charm School. I see on occasion physicians who are rude to nurses. I regularly see physicians who, along with patients, over utilize medical testing and treatment. I see too often physicians who order medical tests for the wrong reasons.

In some of the above cases, the physician is me.

None of these examples, however, represent negligence. If there is an epidemic of medical incompetence, it either doesn’t exist in my world in northeast Ohio, or I am too incompetent to recognize it. I am interested in the views of other physician readers on this issue. How much true medical negligence and incompetence do you witness?

Nevertheless, my friend LG correctly points out that we physicians are not effective or serious at holding our members accountable. Sure, every state has a medical board, but we all know how egregious an offense must be to result in a serious professional sanction. It is not part of medical culture to identify colleagues who have demonstrated competency lapses, committed a negligent act or may be impaired. Recall the adage, ‘friends don’t let friends drive drunk’. Physicians don’t turn in colleagues who may be in need of remediation and rehabilitation, except in extreme circumstances. What stops us? Are we scared that we will be stigmatized as a squealer and ostracized? Do we rationalize that we might not know all the facts about a practitioner who may appear to be missing the mark? Do we look the other way hoping that some other corrective mechanism will descend from the sky to address the issue? Do we allow our empathy for a fellow colleague to corrupt our judgment? .

I don’t retract a single syllable of my views on the need for tort reform. But, we physicians should also heal ourselves. This is our professional obligation and would also deepen the trust between us and the patients we serve.  Not only is it the right thing to do,but it’s a smart move also.  Haven’t we learned over and over again what happens when we don’t act proactively to solve a problem?  The White Coat Wall of Silence will become yet another target for ‘reformers′ to shoot at.  Let’s take this target off the field.

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The session was held on February 9 and was entitled, “Recapitalizing Not-for-Profit Hospitals with For-Profit Equity Capital.” It had excellent and lucid presentations by Sandford Steever, Editor of The Health Care M&A Monthly; Wayne Ziemann, Managing Director of Alvarez and Marsal Healthcare Practice Group; and Lori Braender and Bruce Boisture of Day Pitney. The slides are here.

The theme of the day was that health care reform activities over the coming years will require massive capital investments to comply with the new federal law and associated regulations and to create accountable care organizations. This is a problem for not-for-profits, which are are often locked out of capital markets or have difficult access to such markets. In contrast, for-profits have an easier time raising capital.

One panelist then reported, though, that for-profits and not-for-profits have generally earned virtually identical after-tax profit margins. He also noted that equity holders demand a high return, in the range of 25 to 30 percent.

These remarks led to a series of questions from the audience: If for-profits are identical to not-for-profits with regard to after-tax profit margins, how can those puny margins be sufficient to justify investment by equity markets? Or putting it another way, if equity holders are demanding a 25-30% return, how do they earn that return if after-tax margins are the same as not-for-profits. Does this depend on flipping the properties in an IPO or to another private equity firm?

The initial reply was startling, “It is an apparent contradiction occurring in the market today.”

Expanding on that, it was noted that private equity entry in this field is different from the for-profit hospital companies that have purchased properties in the past. “Private equity firms envision exiting, and not in the far future. Betting that there will be a buyer at some time in the future is the exit strategy. It is quite a gamble. They are banking a lot of health care reform and consolidation in the industry. Beyond that there is not much that is well defined.”

Beyond that, there was a suggestion that the play in the marketplace right now is a “bet on a business plan″ — hoping that access to strategic capital will give these companies a competitive edge in the marketplace and grow market share. It is a bet on a transformation in the health care industry — different payment models, being a low-cost, efficient provider, and wringing out inefficiency and overtreatment. “It is a heck of a bet to make,” noted one panelist.

We were reminded that for-profit investors believe that community-based governing bodies lead to poor business decisions by not-for-profits. (This thought parallels the “stale bologna sandwiches″ comment noted in my earlier post.) This belief, though, is interesting in light of a comment by one panelist who noted that not-for-profits have done better than for-profits with regard to building integrated networks of care and coordination of electronic health records.

Finally, though, there were two sobering comments from the panelists. The one: “It is kind of like the gold rush in years past.”

The other was worse: “A third possibility beyond an IPO or sale to another investor is that the firm will simply shut down.”

It was on this point that I concluded last week: Investors may come and go, but the community depends on its local hospital to provide high quality service. It is the residents of the community who are left holding the bag if the hospital corporation reaches the conclusion that ownership is not financially viable.