Two More Settlements, One More Corporate Integrity Agreement for Novo Nordisk

And the legal settlements for health care organizations keep right on marching along.  Here are the basics, per the Wall Street Journal, starting with the outline of the first settlement for Novo Nordisk:

Drug maker Novo Nordisk A/S's U.S. affiliate has agreed to pay more than $25 million to end investigations by U.S. authorities related to the marketing of NovoSeven and several diabetes drugs.

In one settlement, Novo Nordisk Inc., the U.S. affiliate, agreed to pay $25 million to end a probe and settle a civil lawsuit related to alleged improper marketing practices regarding Novo Seven, which is used to treat patients suffering from rare bleeding disorders. The complaint had alleged that Novo Nordisk promoted NovoSeven for unapproved uses.

Here is the outline of the second settlement:

Separately, the U.S. affiliate also agreed to pay $1.73 million in a settlement with the U.S. government to resolve allegations that its sales representatives accessed confidential patient information and submitted false Medicaid claims related to the marketing of diabetes drugs, including Novolin and Novolog.

Federal prosecutors in Brooklyn, N.Y., had alleged Novo Nordisk representatives made payments to pharmacists in exchange for recommendations for Novolin and Novolog products. As part of their activities, the pharmacists, or Novo Nordisk sales representatives, accessed confidential patient information, according to the settlement agreement.

Here is the usual pro forma denial by a company spokesperson that the company had done anything wrong:

'We are committed to running our business according to high legal and ethical standards and have been cooperating with the government since the investigation began,' said Jim Shehan, corporate vice president and U.S. general counsel for Novo Nordisk Inc. 'With this settlement, we avoid the distraction and costs of a lengthy legal battle, which would not have been in the best interest of the company or its stakeholders.'

Novo Nordisk denies any wrongdoing related to NovoSeven marketing....

Also,

Novo Nordisk didn't admit wrongdoing in the Novolin pact.

By the way, here is the brief mention of the corporate integrity agreement:

[Novo Nordisk] agreed to enter a five-year corporate integrity agreement with the U.S. Department of Health and Human Services in which it will add additional reporting and other procedures to its compliance program.

Why would a company that professes "high ethical and legal standards" not contest allegations that it engaged in improper marketing, paid health care professionals to recommend its products, and instigated breaches of patient confidentiality? 

Setting that aside, however, the coverage of this story in the Baltimore Sun  raises further questions.

First, how Novo Nordisk allegedly promoted Novo Seven, and the uses for which it was promoted are disturbing:

the government [did not] back down from its charge that the company engaged in unlawful marketing that helped persuade the Army to treat combat casualties with a largely experimental drug that was not approved for such use by the Food and Drug Administration.

Beginning in 2000, according to the government's claims, Novo Nordisk promoted the drug, also known as NovoSeven, to military doctors and entered into research agreements with Army hospitals. It provided funding for trials in which military officers participated, and gave 'donations and other gifts' to nonprofit foundations on behalf of military physicians. Those practices 'caused the military to use NovoSeven in its trauma patients,' the agreement states.

There was no evidence that Novo Seven decreased the morbidity and mortality of battlefield trauma, but there were reasons to believe the drug increased thrombosis risk:

Numerous clinical studies have since shown, however, that Factor VII is ineffective at controlling traumatic bleeding and can potentially cause blood clots that lead to heart attacks and strokes.

This was not just paying physicians and institutions to market an expensive, but innocuous drug.  It was paying US military physicians and institutions to market a drug that put injured soldiers at risk, but gave them no benefit.  Given the degree of deference public officials give to the brave soldiers that serve the country on the battlefield, one would think that putting them at risk, and putting the honor of their officers and military institutions at risk ought to be a big deal, maybe a big deal requiring more than even a $25 million fine.
On the other hand, although $25 million seems like a lot of money, it pales beside the amounts Novo Nordisk were making from Novo Seven:

Last year Novo Nordisk reported annual sales of NovoSeven of almost $1.6 billion — mainly for treatment of hemophilia. Company officials say roughly 15 percent of its sales are for unapproved uses, or as much as $250 million last year.

So while the settlement seems expensive compared to the cost of defending the suit in court, and it trades the distraction of a corporate integrity agreement for avoiding the "distraction" of further legal action, maybe a settlement equal to only one-tenth of the yearly sales of the relevant drug seemed a good deal for the company.

Since the company was already laboring under a deferred prosecution agreement in the US related to charges of illegal foreign kickbacks (see this post), maybe adding a corporate integrity agreement did not seem like all that much distraction.

On the other hand, the big question is: why was this deal a good one for the US government, or the people which it is supposed to protect? The amount involved only seems like a cost of doing business, and seems disproportionately small given that the allegations involved unlawful marketing that apparently threatened to corrupt US military doctors and hospitals, and were made against a company already under a deferred prosecution agreement for illegal kickbacks. Finally, since the impact of even the relatively small financial payment could be spread among all corporate employees and stockholders, and the deal involved no negative consequences for any individual who authorized, directed or implemented the bad behavior, why would it defer corporate insiders from authorizing or directing future bad behavior?  .

We have heard a series of threats from US government officials that they are about to crack down on big health care companies that misbehave, and, in particular, actually try to impose some negative consequences on the people in those companies that authorized, directed, or implemented bad behavior (see this post). However, we continue to see settlements like this, involving relatively small financial penalties imposed on rather large corporations, and corporate integrity agreements and/or deferred prosecution agreements that do not obviously seem to change how the companies operate.

Although a year ago we discussed threats by the US government to hold health care leaders accountable using the "Responsible Corporate Officer Doctrine," which has been available since 1943, so far there is no evidence that this concept has been made operational.

The continuing march of legal settlements now seems to have included most of the previously well reputed commercial health care firms in the US. The length of this march is an indication of how pervasive is bad behavior by such health care organizations, especially when the marchers were accused of behavior that appeared clinically, not just financially unethical.

I assert again that pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.

So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable.    As long as they are not, expect the bad behavior to continue.