Investigations of Anemia Drug Profiteering Far from Over – Part II

Evelyn Pringle August 7, 2007

According to US Renal Data System and the Medicare Payment Advisory Commission, Medicare spends about $64,000 annually for each person on hemodialysis for all medical services, and the anemia drugs Procrit, Epogen and Aranesp are the single largest drug expense for Medicare.

In 2005, Medicare spent $2 billion on the drugs, and from 1991 to 2004, the cost of the medications to Medicare increased 716% from $245 million to $2 billion, according to a report by the US House Ways and Means Committee.

Amgen produced the synthetic epoetin in 1989 and sold it under the brand name Epogen as a treatment for anemic kidney patients and HIV related anemia. Shortly after Epogen came on the market, Amgen entered into an agreement to allow J&J to sell the same drug under the brand name Procrit, as long as it stayed out of the dialysis market, which basically helped the young company raise capital.

In 1993, J&J received approval to sell Procrit as a treatment for cancer patients with chemotherapy-related anemia, and a few years later, Amgen gained FDA approval for the long-lasting version of the drug, Aranesp, to treat both renal and chemotherapy related anemia.

Recent investigations have shown the drug makers are providing incentives to encourage the over-prescribing of ESA’s to Medicare patients by charging less for the drugs than the Medicare reimbursement rates.

A March 2006 government report entitled “Medicare Reimbursement for New End Stage Renal Disease Drugs,” found freestanding dialysis facilities on average were able to acquire Aranesp for between 14 and 27% below the Medicare reimbursement amounts in 2005.

On May 10, 2007, due to reports of rampant over-prescribing of the drugs for uses and doses not approved by the FDA and the deaths and injuries to patients as a result, the Oncology Drug Advisory Panel (ODAC) voted 15-2 in favor of adding new restrictions on the use of the drugs and voted 17-0 in favor of requiring the drug makers to conduct new clinical trials.

However, experts say the recommendations come about ten years and probably tens of thousands of deaths and injuries too late, because the FDA was made aware of the serious health risks associated with ESA’s in a report on the Amgen sponsored Normal Hematocrit Study back in 1996, and the FDA did little more than revise the product labeling a wee bit.

The 1996 study was designed to evaluate whether patients with chronic renal failure undergoing dialysis had fewer cardiovascular complications if the ESA was administered to attain a higher hematocrit level as compared to a lower level. The trial was terminated early because of a finding of more deaths and non-fatal myocardial infarctions in the patients randomized to the higher hematocrit target level.

The labeling revision recommended that the ESA’s not be used to achieve hematocrit in excess of 36%, or a hemoglobin level of 12 g/dL and was accompanied by the sponsor’s agreement to conduct a study to further examine the risk for blood clots among patients receiving ESA’s because an increased thrombotic risk was suspected to be one of the causes for the risks detected in the study, according to the FDA.

So ten years later, two clinical trials and an editorial finally appeared in the New England Journal of Medicine in November 2006, to report the risks associated with the use of ESA’s in the treatment of anemia from chronic renal failure.

The Correction of Hemoglobin and Outcomes in Renal Insufficiency (CHOIR) study showed increases in serious and potentially life-threatening cardiovascular events when Procrit was administered to reach higher hemoglobin levels, and the Cardiovascular Risk Reduction by Early Treatment with Epoetin Beta (CREATE) study trended toward more cardiovascular events in a pattern similar to the CHOIR study, thus strengthening the findings of the CHOIR study, the FDA said.

On June 26, 2007, Dr John Jenkins, Director of the FDA’s Office of New Drugs Center for Drug Evaluation and Research, testified at a hearing before the House Ways and Means Committee and said the study findings “underscore the importance of the warnings previously described in the labeling for Procrit, Epogen, and Aranesp regarding cardiovascular risks that include thrombotic events and increased mortality in hemodialysis patients who participated in the Normal Hematocrit Study.”

He told the Committee that the new studies, combined with the findings from the Normal Hematocrit Study, showed that patients with anemia due to chronic renal failure, whether or not receiving dialysis, “were at increased risk for serious cardiovascular complications when ESA’s were administered to attain hemoglobin levels in excess of the 12 g/dL level recommended in the ESA product labels.”

Dr Jenkins also said the FDA became aware of safety concerns about the use of ESA’s in cancer patients receiving chemotherapy between 2001 and 2003, when the agency received reports from two trials (BEST and ENHANCE) that demonstrated higher mortality and more rapid tumor growth when the ESA’s were given to maintain hemoglobin levels of greater than 12 g/dL and the findings were discussed at a May 2004 meeting of the ODAC.

He said the new safety data was added to the labeling for ESA products shortly after that meeting and that the advisory panel recommended additional data be gathered to further evaluate the new safety concerns about patients with cancer.

However, according to Dr Jenkins, it was not until late 2006 and early 2007 that the FDA was informed of several new trials in cancer patients that raised additional safety concerns.

In December 2006, the ESA makers informed the FDA of the interim results of the Danish Head and Neck Cancer Study Group trial (DAHANCA 10), a trial that compared radiation therapy alone to radiation therapy plus Aranesp in the treatment of advanced head and neck cancer.

The trial assessed whether treating anemia to achieve and maintain a hemoglobin concentration of 14.0-15.5 g/dL during radiotherapy would improve local-regional disease control.

The data monitoring committee for this trial found that 3-year local-regional control in patients treated with Aranesp was worse than for those not receiving Aranesp. Overall survival time also favored those not treated with Aranesp, he said, and the monitoring committee recommended the ESA treatment be stopped in the experimental arm on December 1, 2006.

Dr Jenkins said the FDA was notified in January 2007 of the results of a 989 patient trial of Aranesp in cancer patients with anemia who were not receiving chemotherapy when the target hemoglobin in the Aranesp treatment group was 12 g/dL.

The FDA’s analysis of the study data, he told the Committee, demonstrated that Aranesp did not significantly reduce the need for red blood cell transfusions and showed an increase in mortality in patients receiving Aranesp compared to those receiving placebo.

He said the FDA was also notified in February 2007 of the final results of a double-blind, placebo-controlled study that was designed to evaluate whether Epoetin alpha improved the quality of life for patients with non-small cell lung cancer who were not receiving chemotherapy with the dose titrated to maintain a hemoglobin level of 12 to 14 g/dL.

However, according to Dr Jenkins, this study was closed down in December 2003 after enrolling only 70 patients because its data monitoring committee found higher mortality rates in patients treated with Epoetin alfa.

Dr Jenkins informed the panel that the median time to death in patients treated with Epoetin alfa was 68 days and significantly shorter than the median time of 131 days in those treated with placebo. Also, he noted, treatment with Epoetin alfa did not significantly reduce the need for red blood cell transfusion or improve quality of life.

Dr Jenkins also explained that in 1996, the FDA approved the indication for use of ESA’s to reduce the need for blood transfusions in patients with hemoglobin values between 10 and 13 g/dL scheduled to undergo non-vascular, non-cardiac surgery.

Here, too, the approval was accompanied by a commitment to complete a post-marketing study to evaluate the risk for thrombotic events among patients who were not receiving preventive therapy with anti-thrombotic drugs.

In this case, according to Dr Jenkins, the FDA only received the results of this post-marketing study in 2007. Specifically, he said, the FDA was notified in February 2007 of the preliminary results of a trial with Procrit compared to the standard of care in patients undergoing spinal surgery.

“In this trial,” he said, “the frequency of deep venous thrombosis in patients treated with Procrit was 4.7 percent (16 patients), a rate more than twice that of patients who received usual blood conservation care (2.1 percent, seven patients).”

On June 26, 2007, Robert Vito, Regional Inspector General in Philadelphia at the US Department of Health and Human Services’ Office of Inspector General, testified at a hearing before the House Ways and Means Committee subcommittee and described cases where dialysis centers have been found to be overbilling Medicare for the anemia drugs.

He discussed a 2004 audit of payments to DaVita for ESA services provided at one Philadelphia dialysis center, which found that 44 of the 143 claims reviewed did not meet Medicare payment requirements.

In some cases, he said, they identified inconsistencies between the number of units prescribed in the physician order and the number billed to Medicare and also identified instances in which the drug was still administered to the patient after the doctor had ordered its discontinuation.

As another example, he told the committee that, in 2005, Gambro Healthcare, owner and operator of over 500 dialysis centers, agreed to pay over $350 million to resolve civil and criminal fraud allegations in the Medicare, Medicaid and TRICARE programs. To resolve its civil liability, he noted, Gambro paid $310.5 million for submitting false claims to Medicare and paying doctors improper remuneration related to their medical director services.

The new CMS reimbursement rules stipulate that cancer patients receiving chemotherapy should only use ESA’s if their hemoglobin levels fall below 10 and also limit the duration of therapy to a maximum of eight weeks after the completion of chemotherapy. They also limit the starting dose to match the FDA recommendations and limit the levels by which doses can be raised and Medicare will not cover treatment for anemic cancer patients who are not receiving chemotherapy or radiation.

The subpoena from New York Attorney General is just the tip of the iceberg when it comes to Amgen’s legal woes. The company’s failure to disclose the results of a Danish study in head and neck cancer has resulted in an inquiry by the SEC and several shareholder lawsuits.

According to the SEC filing, a class-action lawsuit was filed on May 11, 2007, in California, alleging that Amgen and its executives “made false statements that resulted in a fraudulent scheme and course of business operated as a fraud or deceit on purchasers of Amgen publicly traded securities.”

On May 14, 2007, the company was also served with a shareholder demand on the board of directors to establish a “special litigation committee” to investigate potential breaches of fiduciary duties by current or former officers and directors of the company, according to the filing.

The shareholders allege that these individuals violated core fiduciary duties, causing Amgen to suffer damages, and seek to recover damages resulting from their breach of fiduciary duties, monies and benefits improperly granted to them, insider trading proceeds and all costs associated with the inquiry by the SEC.

Amgen and J&J Funnel Tax Dollars Through Kidney and Cancer Patients

Evelyn Pringle April 17, 2007

Medicare has provided coverage for all patients with End Stage Renal Disease since 1972, and according to the House Ways and Means Committee, the government pays for 93% of services provided to dialysis patients, at a cost of about $2 billion a year.

In 2005, the drugs darbepoetin and epoetin, commonly used by patients who must undergo dialysis, accounted for almost 20% of the $13 billion spent on the Medicare Part B drug plan, and total sales for these drugs worldwide topped $9 billion.

Amgen manufactures and markets darbepoetin as Aranesp, and epoetin is sold under the names Procrit and Epogen. But Procrit is distributed by Ortho Biotech Products, a Johnson & Johnson subsidiary. There are no generic versions of these medications.

The drugs are among the top sellers for both companies. Amgen’s Epogen and Aranesp combined sales were $6.6 billion in 2006, nearly half of the company’s total revenues. Johnson and Johnson’s revenues were $3.2 billion in 2006, making it the company’s second-biggest-selling drug, according to on March 21, 2007.

The drugs are man-made versions of erythropoietin, a hormone normally produced in the kidneys, and belong to a class of drugs known as Erythropoiesis Stimulating Agents. ESA’s are used to treat anemia in raising hemoglobin levels by increasing the number of red blood cells in the body. Anemia’s severity is monitored by a patient’s hematocrit, the proportion of red blood cells in whole blood, which should stay between 33% and 36%.

According to the FDA, ESAs are approved to treat anemia in patients with chronic kidney failure, patients with cancer whose anemia is caused by chemotherapy, patients scheduled for major surgery to reduce potential blood transfusions, and for the treatment of anemia due to zidovudine therapy in HIV patients.

But Aranesp, Epogen, and Procrit are being administered “off label” for uses and in doses not approved by the FDA. For instance, an Amgen vice president recently estimated that about 10% to 12% of Aranesp sales are for the unapproved use of treating “anemia of cancer” in patients who are not undergoing chemotherapy.

A recent company study conducted to support FDA approval for using the drug to treat “anemia of cancer” in patients with cancer in remission who were not undergoing chemotherapy, revealed that Aranesp actually increased the risk of death in these patients.

The February 2, 2007, “Cancer Letter ,” a newsletter for cancer professionals, warns, “If the findings of the recently reported study hold up, more than one in 10 Americans getting Aranesp without chemotherapy has no chance of benefiting from the agent and could be harmed or killed by it, experts say.”

The report estimated that up to 12% of the use of ESAs in the US was for this condition.

After reviewing the results of this study and several others, on March 9, 2007, the FDA announced that black box warnings would be added to the labels for all ESAs and recommended using the lowest possible dose to raise the hemoglobin concentration to the lowest level.

The FDA-approved labeling for the drugs says patients should have a hemoglobin level of 10-12 grams per deciliter of blood, and patients are considered to need treatment if their levels fall below 10 grams.

During a press briefing, Dr Richard Pazdur, director of the FDA’s Office of Oncology Drug Products at the Center for Drug Evaluation and Research, said the black box warning was being added based on the results of several recently reported clinical trials.

Dr Karen Weiss, deputy director of the Office of Oncology Drug Products, said the FDA became concerned after receiving the results from several trials evaluating the aggressive use of ESAs to raise hemoglobin levels higher than listed on their approved labels.

In the March 10, 2007 Wall Street Journal, Dr Weiss was quoted as saying, the “bulk of the data that has raised concerns” came when patients were given higher doses, whether they were experiencing anemia from kidney disease or cancer treatment.

The evidence shows that “this type of strategy is not beneficial and, in fact, has some evidence of harm,” she said.

On March 9, 2007, the FDA also issued a public health advisory based on the results of a number of studies and warned doctors treating patients with kidney disease or cancer not to push hemoglobin levels over 12 grams per deciliter of blood.

The FDA noted a higher chance of death and an increased rate of tumor growth in cancer patients with advanced head and neck cancer receiving radiation therapy and in patients with metastatic breast cancer receiving chemotherapy, when ESAs were given to maintain levels of more than 12.
There was also a higher rate of death reported, but no fewer blood transfusions, when ESAs were given to patients with cancer and anemia who were not receiving chemotherapy.

A higher chance of death and an increased number of blood clots, strokes, heart failure and heart attacks were found in patients with chronic kidney failure when ESAs were given to raise hemoglobin levels of more than 12.
The Advisory warned that a higher risk of blood clots was also reported in patients who were scheduled for major surgery and received ESAs.

The FDA pointed out that ESAs are not approved for treatment of the symptoms of anemia, such as fatigue in patients with cancer, surgical patients and patients with HIV.

The drug makers have been using direct-to-consumer advertising to increase sales with cancer patients by claiming the drugs could restore energy and reduce fatigue in patients undergoing chemotherapy. But the FDA says there has never been any evidence to support claims that ESAs could increase energy or ease fatigue in patients undergoing cancer treatment.

In recent months, Congress has been investigating Medicare reimbursement policies that guarantee dialysis clinics a 6% profit for administering ESAs, since it became apparent that patients are being given higher doses than needed. Critics say any deal that allows for cost plus payments comes with a built-in incentive to provide unnecessary services.

On October 24, 2006, the Boston Globe reported that dialysis clinics are also increasing profits by administering ESAs intravenously instead of by injection, and about 95% of the patients receive the drugs intravenously.

Clinics could use 30% less, the Globe says, because when ESAs are injected they stay in the system longer and require a lower dose. A 2004 analysis found patients injected with the drugs were given 21% less, for a potential total savings of about $375 million.

The two clinic chains that dominate the dialysis industry are DaVita, with over 1,200 clinics, and Fresenius Medical Care, with about 1,500. According to the Globe, the clinics claim the intravenous method is more convenient because patients are already hooked up to IVs for dialysis.

Critics think differently. “The industry is incentivized to use intravenous because they make a profit margin on every unit they administer,” said Dr Peter Crooks, who oversees dialysis for 3,000 patients for Kaiser Permanente where most patients receive injections.

In an April 11, 2007 report, Bernstein Research estimates that dose volume in renal patients could fall as much as 25% if doctors abide by the new black box warning and insurers refuse to pay for the drugs in patients with hemoglobin levels over 12.

On November 17, 2006, the British journal Lancet reported that about half of all dialysis patients have hemoglobin levels above what the FDA considers safe, and about 20% of patients experience dangerously high levels, creating a risk for heart attack and stroke.

Kaiser Kidney Transplant Program Gets Reprieve From Medicare Officials

Evelyn Pringle September 25, 2006

In August 2006, Kaiser Permanente, the nation’s largest Health Maintenance Organization, agreed to pay a $2 million fine and donate $3 million to a charity group after numerous government investigations determined that the HMO caused harm, and in some cases death, to hundreds of kidney transplant patients.

Two months earlier in June 2006, the Centers for Medicare and Medicaid threatened to cut off funding to the HMO after determining that Kaiser’s kidney transplant program had failed to provide adequate care to patients waiting to receive a kidney transplant.

The CMS released a damning report on June 23, that said the program was understaffed, its record keeping and training were nonexistent or inadequate, and that some patients were not matched up with kidneys, even when a perfect matches was available. The CMS also said patients received confusing information and in many cases, patient complaints were lost or ignored.

The program was poorly planned, poorly staffed, poorly run and poorly qualified to care for transplant patients, CMS inspectors wrote in the report. And as the program faltered again and again through late 2004 and 2005, no one at the HMO even seemed aware that patients were at risk, the report said.

“There was no indication that patients were informed of their rights or of other available options as well as potential consequences of the transfer,” the report stated.

The report says that a UC Davis transplant coordinator warned Kaiser back in May 2004, before Kaiser launched its plan, that Sacramento-area patients “would have to wait 1.5 to 3.6 years longer for transplantation, depending on blood type” because they would be getting their organs from a different source.

But according to the report, Kaiser did not notify patients of the longer waiting times, nor did it sufficiently inform Medicare patients that they could obtain transplants at UCSF or UC Davis if they were willing to pay the higher deductibles of non-Kaiser patients.

CMS officials told Kaiser to either fix the problems or lose Medicare funding, and cited 3 problems areas: (1) the governing body and management; (2) patient rights and responsibilities; and (3) the director of the transplant program.

However, Kaiser got a reprieve in a letter dated September 12, 2006, in which the CMS withdrew the threat to cut off funding based on a survey conducted on August 18, 2006, that showed the deficiencies had been corrected and Kaiser was now in compliance with federal standards.

According to the September 14, 2006 LA Times, had the deficiencies not been corrected to the inspectors’ satisfaction, “Kaiser could have lost federal funding not just for transplant patients but for all Medicare patients with end-stage renal disease treated by the HMO’s San Francisco hospital.”

The LA Times and CBS News TV Channel 5, exposed the story about the failed kidney transplant program in early May 2006.

Prior to starting its own transplant program, Kaiser outsourced transplant procedures to non-Kaiser medical centers, including the University of California, San Francisco and the UC Davis Medical Center in Sacramento.

In mid-2004, Kaiser cancelled contracts with UC San Francisco and UC Davis and sent a form letter to more than 1,500 Kaiser patients awaiting transplants at those medical facilities, stating that Kaiser would no longer pay for transplants at outside hospitals and patients would be transferred to Kaiser’s new kidney transplant program.

Kidneys are allocated based on how much time a patient has spent on a waiting list so when patients transfer to other programs, it is essential that the medical records show the time already spent on a waiting list or the patient will appear as a new addition and drop to the bottom of the list.

The transfer of patients involves registration with the federal contractor, United Network for Organ Sharing, responsible for overseeing kidney distribution. A patient is not eligible to receive a kidney without proper registration.

The Times reported that Kaiser launched its transplant program “without holding basic discussions with regulators about how to safely transfer up to 1,500 of its patients from other programs to its San Francisco center.”

Nearly 2 years after Kaiser’s new program began, in May 2006, the LA Times reported that hundreds of patients were stuck in “transplant limbo” because of improper handling of paperwork, and that because of the delays, many patients missed opportunities for a transplant and that the Kaiser waiting list had grown to more than 2,000 patients.

Most of the patients on the list were waiting for kidneys from strangers, which can normally take over 5 years. But some patients had offers of kidney donations from relatives, which if well-matched, usually means a transplant right away.

Thirty-one-year-old, Jessica Parker told CBS News that she had two people who were willing to donate a kidney to her for over a year, but says appointments were delayed and calls to Kaiser’s transplant program often went unreturned.

Ms Parker spends most weekdays hooked to a dialysis machine and says she is angered by Kaiser’s incompetence and mismanagement. “Kaiser needs to come out and publicly say, ‘these are the changes we are going to make’ and possibly issue an apology to the families and people on the wait list that have been waiting in vain through mismanagement and incompetence,” Ms Parker told CBS.

The Times reported that doctors attempting to build a record of success avoided the riskier organs and patients, which slowed the rate of transplants, and that doctors at UC San Francisco revealed that in 25 cases where kidneys were a perfect match for Kaiser patients, the HMO refused to authorize the hospital to perform the transplants.

On May 3, 2006, the Times quoted current and former Kaiser employees who said that problems at Kaiser went beyond mere growing pains. “Surgeons and kidney specialists battled over who should receive transplants,” the newspaper wrote. “Desperate patients complained of inexplicable delays,” it noted.

And since the transplant program began, the Times discovered that 10 permanent Kaiser employees had either quit or been fired out of a staff of 22. In less than a year, the first administrator of the program left, and a little over a year later, her replacement was terminated.

In January, 2006, kidney specialist, Dr James Chon, sent a 12-page letter to Kaiser’s physician-in-chief describing problems he saw in the transplant program, including “numerous resignations” and other internal issues.

“On the outside, the program seems to have settled into a reasonably functioning unit,” he wrote. “However, a closer look at the program will show that it is suffering from very serious and potentially explosive problems,” he said.

In his letter, Dr Chon detailed battles between staff members over which patients could receive transplants. One 73-year-old woman, he wrote, had been waiting, initially at UC San Francisco, since 1999.

Dr Chon stated that he and his colleagues felt that although the woman was a high-risk patient, she was a viable candidate but that Dr Sharon Inokuchi, the program’s medical director, refused to sign off until she saw additional medical records, which Dr Chon said were irrelevant.

“I truly believe that decision to overrule four other transplant physicians was unjust and unethical,” he wrote in the letter.

Dr Chon was also put on leave in February 2006, after the dispute with Dr Inokuchi.

In February 2006, kidney specialist, Dr Eric Savransky, walked off the job and cleared out his office and never returned, but Kaiser officials told the Times that he was technically on leave.

According to the May 3, 2006 LA Times, in the end, Dr Inokuchi was “relieved” of her administrative duties to focus on patient care and with all the departures, she was the only kidney specialist left to manage patients’ care after their transplants, see them for checkups, handle calls for medical advice, review lab results and evaluate patients.

Transplant surgeons at other hospitals told the Times that programs of Kaiser’s size would have trouble functioning without at least four or five transplant nephrologists.

On July 14, 2006, a former administrator of the transplant unit, David Merlin, filed a wrongful termination lawsuit against Kaiser, seeking $5 million in damages. Mr Merlin’s annual salary as head of the transplant program was $128,000, and he was charged with “responsibility for patient safety and risk management,” the lawsuit states.

The complaint alleges that Mr Melin was terminated after two months on the job for raising concerns about patient care in the transplant program and violations of state and federal guidelines.

According to the lawsuit, Kaiser’s new transplant program served 19 Northern California medical centers and received patient referrals from 48 Kaiser nephrologists or kidney specialists throughout the region.

Within a few weeks of starting the job, the complaint states, Mr Merlin “discovered that the program was so poorly organized and unprofessionally managed that it failed to comply with state and federal requirements and was compromising patient care, leading to unnecessary suffering and possibly deaths.”

After being terminated in early February, Mr Merlin went to the media and contacted state and federal regulatory agencies, including the California Department of Managed Health Care, the US Department of Justice, and the California Medical Licensing Board. As result, a steady bombardment of media stories and government investigations followed and prompted Kaiser to shut down the transplant program in May 2006.

The more than 2,000 patients on its waiting list are now being transferred back to UC San Francisco and UC Davis, many to the same hospital that treated them to begin with, in a process that is not expected to be complete until the end of the year.

Kaiser’s dismal record of patient care is beyond dispute. CBS News’ analysis of national transplant data showed that in 2005, when Kaiser performed 56 transplants, more than twice as many, or 116 people died while waiting on the transplant list.

“And the number of transplants completed at Kaiser,” CBS states, “also was low compared to state averages: less than 3 percent of people on Kaiser’s waiting list got transplants compared to an average 12 percent of people on other lists statewide.”

A large part of the problem with any decision made by Kaiser Permanente, critics say, stems from the fact that the for-profit Permanente Medical Group (TPMG), comprised of approximately 6,000 doctors, gets to split the profits at the end of the year that result from cutting corners on patient care.

Thus, as part of an attempt to increase the pot, the TPMG got the bright idea to set up a kidney transplant center so that it could stop outsourcing the expensive procedure and keep the profits in-house.

According to the May 3, 2006, LA Times, the decision to open a transplant unit came about because Kaiser’s San Francisco hospital’s open-heart surgery program was shrinking as less-invasive procedures became more common and the HMO was left with unused beds and operating rooms. So in 2002, the Times notes, heart transplant surgeon, Arturo Martinez, at Sharp Memorial Hospital in San Diego, brought the idea to Kaiser officials.

In August 2003, Kaiser officials told the media that they could do a better job of coordinating the care of their transplant patients by working with its own network of doctors, hospitals, labs and pharmacies, serving Kaiser’s 3.2 million members in Northern California.

“We should be able to achieve higher outcomes,” Dr Inokuchi, told the San Francisco Business Times at the time.

Of course in hindsight, Kaiser officials could not have been more wrong.

Experts told the Times that the delay in providing transplant services to HMO patients on the waiting list also raises ethical questions. “If you don’t have the resources to transplant all the patients you have on the wait list who really should be transplanted, then you have an obligation to send them to another institution,” said David Magnus, who heads Stanford’s Center for Biomedical Ethics.

Former Kaiser employees say the TPMG should be called on the carpet for the transplant program disaster. “The fault lies with the dysfunctional nature of TPMG, which has so far escaped scrutiny,” said Ruth Given, a former Kaiser and California Medical Association executive, in the May 19, 2006 San Jose Business Journal.

“They should have done a better job of monitoring quality, not only of this program but of all medical programs,” Ms Given said. “But my experience is that the M.D.s discourage that (kind of oversight) — and Kaiser typically backs off.”

Considering that Kaiser’s own “Principles of Permanente Medicine” guidelines hold the system’s physicians responsible for directing all clinical decisions and designing and operating care delivery within the organization, Ms Given said in the San Francisco Business Times on July 21, 2006, “it is particularly puzzling to me that there has been no official public statement from TPMG about (its) role in this entire fiasco.”

Rather than just picking on Mary Ann Thode, Kaiser’s Northern California president, she said, “somebody needs to get (Permanente CEO) Robbie Pearl on the hot seat and have him explain and apologize and describe why this will never happen again.”

In his wrongful termination lawsuit, Mr Merlin said he met with several senior executives of the TPMG in January and early February 2006, raising concerns about the operation of the transplant unit.

Mr Merlin’s lawsuit claims that executives Nancy Langholff, RN, assistant medical group administrator; Diane DeCorso, Ms Langholff’s boss, and Dr Nora Burgess, TPMG’s chief financial officer at the San Francisco hospital, ignored the severe ongoing problems that he brought to their attention, and refused to let him schedule a meeting with Dr Bruce Blumberg, MD, the medical center’s physician-in-chief at the time.

Instead, Mr Melin alleges, he was told to “shut up” about the problems, and to “let it go.”

By mid-May 2006, three lawsuits related to its failed kidney program were already filed against Kaiser. One lawsuit was filed on behalf of the widow of a man who died, alleging that her husband was refused a kidney transplant as a result of mishandled paperwork.

Another woman alleges that her condition grew progressively worse after Kaiser continually delayed her transplant.

And the third plaintiff, who has been on dialysis for six years, fears the damage the delay may have caused him, and alleges that a Kaiser doctor advised him on several occasions to travel overseas to get a transplant.

On June 5, 2006, a class action complaint was filed against Kaiser in San Francisco Superior Court, alleging “negligence, fraud and misrepresentation due to Kaiser’s inability to properly administrate the San Francisco Kidney Transplant Program,” according to a press release.

Legal experts predict that many more similar lawsuits will be filed in the months ahead.

At first glance, it would appear that damages for Kaiser patients would be limited by the Medical Compensation Reform Act (MIRCA) enacted in California 1975, that limits pain and suffering awards against health care providers to $250,000.

But legal experts predict that the limitations will not apply to patients injured as a result of the failed transplant program, because California Civil Code S 3428, states that a health care service plan or managed care entity, such as Kaiser, has a duty of ordinary care to “arrange for the provision of medically necessary health care service to its subscribers and enrollees…” and that damages recoverable for a violation of this statute are not limited by MICRA.

Practically speaking, experts say, this means that for those who lost family members, or were otherwise seriously injured, as a consequence of Kaiser’s misadministration of the program, pain and suffering damages may reflect their actual losses and will not be limited by the MICRA.

Medtronic’s Medical Device Legal Troubles far from Over

Evelyn Pringle July 31, 2006

Minneapolis based Medtronic, Inc. is one of the nation’s largest medical device makers. In mid-July 2006, the company agreed to pay a $40 million fine to settle charges that its Sofamor Danek division paid kickbacks to doctors to get them to use the company’s spinal products, which accounted for 20% of the company’s $11.3 billion in sales in 2005.

On July 19, 2006 the US Department of Justice issued a press release announcing the settlement. The DOJ alleged that, between 1998 and 2003, Medtronic paid kickbacks in a number of ways, including sham consulting agreements, sham royalty agreements and lavish trips to desirable locations and that these kickbacks violated the Anti-Kickback Statute and the False Claims Act.

“Kickbacks to physicians are incompatible with a properly functioning health care system,” said Peter Keisler, Assistant Attorney General for the DOJ’s Civil Division. “They corrupt physicians’ medical judgment and they cause overutilization and misallocation of vital health care resources.”

“Today’s settlement,” he added, “reflects the progress we are making in the ongoing fight against abusive and illegal practices in the healthcare industry.”

The DOJ’s investigation was triggered by whistleblower qui tam lawsuits filed under the False Claims Act. The FCA allows private parties to file lawsuits on behalf of the US government and collect a share of any money recovered. The FCA prohibits any corporation or citizen from defrauding the government and the allegations against Medtronic in this instance involve the Medicare program.

“The settlement,” said David Kustoff, the US Attorney for the Western District of Tennessee in the press release, “demonstrates that schemes involving submissions of false or fraudulent claims by health care companies and health care providers to federal health care programs will be vigorously and energetically pursued.”

“This agreement,” he noted, “should serve as a deterrent to those entities that attempt to defraud or deceive the taxpayers.”

In addition to the fine, Medtronic entered into a 5-year corporate integrity agreement with the Office of the Inspector General of the US Department of Health and Human Services. The agreement requires the company to file regular reports with the Inspector General and track all non-sales related customer transactions.

The company must also set up an outside review organization, improve training and employee screening practices, and make a compliance officer a member of senior management, who reports directly to the chief executive and has access to the company’s board of directors

The two whistleblower lawsuits filed by former employees claim Medtronic paid millions of dollars in kickbacks. For instance, Dr Thomas Zdeblick, a Wisconsin surgeon who is listed as a defendant in one of the lawsuits, signed a 10-year consulting contract with the company in 1998, that only required him to consult with Medtronic for eight days a year for $400,000.

A Virginia physician received close to $700,000 in consulting fees for the first 9 months of 2005, and received $1.39 million between 2001 and May 2005, according to the lawsuit.

Internal Medtronic documents filed as part of the lawsuit in the US District Court in Memphis, reveal the details of the rigorous campaigns that Medtronic set up to influence doctors. The documents show the company made payments of at least $50 million to doctors over a four years period through June 2005.

In the lawsuit unsealed in January 2006, the plaintiff, Jacqueline Poteet, a former senior manager of travel services for Medtronic until 2003, says she handled the travel arrangements for doctors to attend medical conferences and is familiar with the company’s efforts to win the doctors’ favor.

She alleges that the company gave spine surgeons “excessive remuneration, unlawful perquisites and bribes in other forms for purchasing goods and medical devices.”

Spinal implants are used in a procedure known as spinal fusion, to make a patient’s spine more stable. The cost of a devices used in this type of surgery is about $13,000, according to Orthopedic Network News, an industry newsletter.

In a subsequent amended complaint, Ms Poteet, accuses the company of continuing the improper payments to doctors in 2004 and 2005, leading them to perform unnecessary spinal surgeries.

With billions of dollars up for grabs, in addition to consultant fees, Medtronic used other creative methods to induce physicians to use its products. According to the lawsuit, Medtronic hosted medical conferences where the “principal objective” was to “induce the physician, through any financial means necessary” to use its devices.

Company spreadsheets show that after a conference, Medtronic went to great lengths to track the use of its devices by each doctor who attended. A spreadsheet for a June 2003 conference in California, lists over 200 doctors and includes an estimate of the dollar amount of the devices each doctor uses in surgery. One surgeon is described as “a 100 percent compliant M.S.D. customer” (Medtronic Sofamor Danek), and other doctors are marked as needing “special attention.”

According to Ms Poteet, Medtronic zeroed in on surgeons while they were still in training, and the company paid for doctors to attend any of 200 professional meetings a year. If the doctors wanted to play golf or go snorkeling, she alleges, Medtronic paid for the outings. When doctors visited Memphis, she says, company employees would take them to the “Platinum Plus” strip club, and then write off the expense as an evening at the ballet.

In 2003, a company document reveals that Medtronic attorney, Todd Sheldon, questioned whether the company should be paying for all the excursions. “When we are sending scores of doctors to a nice resort like this under the guise of training and education on our products,” Mr Sheldon wrote in an email, “I think we need to be more careful and stick to the limits of our rules as best we can.”

Medtronic claims the company has scaled back payments to doctors, but not so, says Ms Poteet. Her amended complaint alleges that any changes made by Medtronic were merely temporary. Its “bribery program,” she alleges, “has not only failed to cease, but continues unabated with increased payments made to many physicians.”

She points out that while payments to some doctors were lowered in 2004, when the company first came under investigation, the payments went back up last year. For instance, Dr Hallett Mathews, of Virginia, was paid $300,000 in consulting fees in 2003, but only $75,000 in 2004. But then in 2005, he was paid nearly $700,000 in consulting fees in the first 9 months.

Had Medtronic not entered into a settlement agreement with the DOJ, the company could have been hit with a triple damages award if it lost in court, under a key provision of the FCA. As it is, the $40 million fine is the second financial penalty for Medtronic’s spinal division in a year. In 2005 the company paid $1.35 billion to settle a patent infringement lawsuit and cover the costs of additional patents from Los Angeles surgeon and inventor, Dr Gary Michelson.

Over the past couple years, the financial relationships between device makers and doctors have caught the attention of several law enforcement agencies. In 2005, US attorneys in Boston and Newark issued subpoenas to Medtronic, along with just about every other major medical device maker, as part of a far reaching investigation into the financial entanglements between physicians and the industry as a whole.

Therefore, legal experts say Medtronic is probably not breathing much easier these days. Three of the subpoenas issued last fall went to the top cardiac-rhythm-management companies, Medtronic, Guidant and St Jude Medical, and seek information on their marketing practices related to pacemakers and defibrillators.

And Medtronic already had plenty of legal problems with its defibrillator division. In February 2005, the company told 87,000 patients that their defibrillators might fail.

However, company documents filed in the California lawsuit, Randall v Medtronic, No C-05-3707-JW, in the US District Court for the North District of California, show the company knew about the flaw back in 2003, and continued to sell the faulty devices for two more years.

“Medtronic has been taking products they know are not quite right and putting them into people rather than take the loss,” according to Hunter Shkolnik, a New York attorney, who said in a February 13, 2006, interview with Bloomberg News, that he represents more than 200 people whose Medtronic devices were recalled.

“If you know there’s a problem with a component,” he said, “you don’t put it out and sell it to people.”

Since the recall, 19,000 people have had replacement surgery, Medtronic spokesman, Rob Clark, told Bloomberg News.

Critics say Medtronic refuses to acknowledge that undergoing replacement surgery is risky and constitutes an injury in itself. According to Bloomberg, based on Medtronic’s estimate of a 2 to 5% post-implantation infection rate, 380 to 950 patients may have developed infections after replacement of their devices.

Spokesman Clark told Bloomberg that Medtronic does not keep track of deaths, disabilities or extra medical costs resulting from such complications.

When announcing the recall last year, Medtronic said it would provide a new defibrillator to patients and up to $2,500 for out of pocket expenses. But the company expects taxpayers, through programs like Medicare, and insurance companies, to pick up the tab for the hospital and doctor bills incurred during the replacement surgery.

However, the company is now facing scores of lawsuits claiming that patients should not be expected to bear any of the costs for having the devices replaced. About 200 lawsuits from states all over the country are seeking class-action status and have been consolidated in US District Court in Minneapolis before Judge James Rosenbaum.

Last month, Medtronic asked the Judge to dismiss the lawsuits, arguing that FDA regulations for medical devices preempt lawsuits in state courts and that the FDA has special authority over lifesaving or life-sustaining medical devices, such as defibrillators. “Any warning has to be regulated by the FDA,” Medtronic attorney, Michael Brown, said.

But attorneys for the plaintiffs said Medtronic “glossed over” the problem in an October 2003, filing with the FDA that sought approval of a new defibrillator model, according to a July 11, 2006, article by the Associated Press.

Judge Rosenbaum is expected to issue a decision on Medtronic’s motion in early fall.

Six months after the first recall in 2005, the company was in hot water with the FDA again over another group of devices. In a June 9, 2005 letter, the FDA said that Medtronic failed to correct manufacturing problems and investigate its LifePak 12 external defibrillators and cited damaged cable connectors and failures to follow through with preventive action after inspections of the company’s Redmond, Washington plant.

The LifePak 12 external defibrillators, used in hospitals to shock the heart back to a normal rhythm, are similar to the LifePak 500 devices the company recalled. Medtronic’s cardiac rhythm management business, which also includes pacemakers and implantable defibrillators, accounted for 46% of its $2.78 billion in sales in its latest quarter, according to Bloomberg News on June 22, 2005.

At the time, about 60,000 LifePak 12 external defibrillators were in use worldwide, Mr Clark said.

In the warning letter, the FDA said Medtronic did not investigate all complaints about defibrillator malfunctions, including one involving a patient’s death. Problems were linked to broken or bent pins in the cable connectors, possibly because the company did not have adequate inspection procedures, the agency said. Failure to correct the problems may result in legal and civil penalties, the FDA warned.

Finally, in another turn of events that could have a negative impact on the financial future of the company, Medtronic is awaiting the final word on a Medicare proposal that would decrease reimbursement for procedures that are considered excessively profitable such as implanting heart devices.

Under the pending proposal, the Medicare reimbursement for implants would be cut from $31,833 to $23,755, or a loss of $8,078 for each procedure.

Natrecor Heart Drug – Deadly and Expensive

Evelyn Pringle January 31, 2006

Let there be no mistake, Johnson & Johnson, and its subsidiary Scois, knew all about the dangers associated with its heart failure drug Natrecor, but threw caution to the wind in promoting its off-label use in pursuit of profits.

Natrecor was FDA approved in August 2001 for the sole purpose of treating patients for the most acute from of congestive heart failure to be administered intravenously to patients during hospitalization under close medical supervision.

However, the company’s aggressive off-label marketing campaign has allowed the drug to be administered in outpatient clinics at a much greater dose and for longer periods of time than recommended.

The off-label prescribing of drugs is wreaking havoc on unsuspecting patients. Guessing at drug dosage levels, medical conditions, and treatment duration for uses that were never approved is proving deadly. This is especially true with life-and-death drugs like heart medications.

As a consequence of Natrecor’s off-label use, patients have suffered serious injuries, including kidney failure, congestive heart failure, stroke, and death.

In this country, doctors are permitted to prescribe drugs to treat a condition even after the FDA has denied approval for a specific condition. Although a drug maker cannot directly promote a drug for an off-label use, a doctor can prescribe it for that use. If a company can orchestrate a doctor-backed marketing scheme, it can turn a restricted drug into a billion-dollar blockbuster.

A point has been reached, where many doctors are acting more like marketing agents than health care professionals. Doctors can spread the word of an off-label and create an exaggerated demand for a drug far and beyond its FDA approved market.

Health officials began investigating the off-label use of Natrecor in May 2005 after the New York Times published an article reporting how tens of thousands of patients were undergoing “tune-ups” at outpatient clinics by receiving weekly infusions over a period of months.

Albeit unfortunate, it is within the law for a drug company to send information to doctors about a drug’s off-label uses, as long as it is for educational purposes only. In the case of Natrecor, this loophole proved to be as wide as a barn door.

Company sales representatives were actually distributing brochures to teach doctors how to set up outpatient clinics to provide regular off-label Natrecor treatments to patients. The company then recruited doctors and nurses with experience in administering outpatient infusions to deliver presentations at medical seminars and meetings.

Some outpatient clinics went so far as to establish programs to administer Natrecor to patients twice a week for up to 12 weeks with full knowledge that there had been no study conducted to determine whether long-term treatment was safe.

Operating a Natrecor clinic was very profitable. The vast majority of patients who received the drug were 65 or older, and eligible for Medicare which covered Natrecor treatment specifically because it was an infusion therapy.

An editorial in the July 14, 2005, New England Journal of Medicine by Dr. Eric Topol, the chairman of cardiovascular medicine at the Cleveland Clinic, objected to the company’s encouragement of doctors to open clinics for Netracor infusions. Dr. Topol, noted that company documents instructed doctors to bill Medicare for a $172 observation fee for the first hour, and $408 for eight hours of observation during the treatment, above and beyond the actual cost of the drug.

The reimbursement guide told doctors to use Medicare codes that treat Natrecor like chemotherapy and allowed them to bill for larger reimbursement payments. As for Natrecor’s $500-$700 per infusion price tag, Dr Topel explained that a dose of other equally effective medications cost less than $10.

“Natrecor was never shown to be superior for reducing death or reducing the need for repeat hospitalizations,” Dr. Topol said. “How could this happen? All of a sudden we have 600,000 people using this drug.”

The good Doctor is correct, there is no logical explanation for the situation. Natrecor has not only been proven to be no better than older drugs, infusion of the drug is often lethal.

A study that appeared in the April 20, 2005 issue of the Journal of the American Medical Association, found patients treated with Natrecor were 80% more likely to die in the 30 days following the treatment than patients given a placebo. And one trial found kidney problems were occurring at a rate three times that found in patients taking a placebo, according to a June 13, 2005 report by Health Day News.

The study was conducted by researchers Dr. Jonathan Sackner-Bernstein, of the North Shore University Hospital in Manhasset, N.Y; Drs. Marcin Kowalski and Marshal Fox, of St. Luke’s-Roosevelt Hospital Center in New York; and Dr. Keith Aaronson, of the University of Michigan.

In their study, the team collected data on 1,269 heart failure patients who participated in five clinical trials comparing Natrecor with other drugs. “We found that there is a 40 to 50 percent higher risk of worsening kidney function when people are treated with nesiritide than when people are treated with other medications,” Sackner-Bernstein said, according to a March 21, 2005 article by Health Day News.

In attempt to discount this damaging analyses, in April 2005, Johnson & Johnson appointed renowned heart specialist, Dr Eugene Braunwald, to form a committee to review the drug studies. Dr Braunwald’s committee reached the same conclusion, that it was inappropriate to use Natrecor, except in acutely ill hospitalized patients.

Specifically, the panel recommended that Natreor should be used only in patients who show up at the hospital with an acute heart failure; that it should not replace diuretics, the front-line heart failure treatment; and that it should not be used for outpatients, where patients scheduled appointments to receive the drug ahead of time. The committee made the following verbatim recommendations:

1) The use of Natrecor should be strictly limited to patients presenting to the hospital with acutely decompensated congestive heart failure who have dyspnea at rest, as were the patients in the largest trial that led to approval of the drug (VMAC). Physicians considering the use of nesiritide should consider its efficacy in reducing dyspnea, the possible risks of the drug summarized above, and the availability of alternate therapies to relieve the symptoms of congestive heart failure.

2) Nesiritide should not be used to replace diuretics. Furthermore, because sufficient evidence is not currently available to demonstrate benefit for the applications listed below, nesiritide should not be used:

For intermittent outpatient infusion
For scheduled repetitive use
To improve renal function
To enhance diuresis.

3) Scios should immediately undertake a pro-active educational program to inform physicians regarding the conditions and circumstances in which nesiritide should and should not be used, as described above. Sponsor supported communications, including review articles of nesiritide, should reflect the above recommendations. Scios should ensure that current and future marketing and sales activities related to nesiritide are consistent with this educational program.

Although Scios spokespersons have argued that they can not control how doctors prescribe Natrecor, Scios itself created the problem by encouraging and praising off-label use right from the start.

Back on April 2, 2002, Scios issued a Press Release to announce that “net sales for its flagship product Natrecor(R) (nesiritide) were $15.4 million in the first quarter of 2002, a 60 percent increase over the prior quarter ended December 31, 2001.”

The company could not have been more enthusiastic about the drug’s off-label use. The press release bragged about the profits from off-label use. “We achieved better than expected sales due to greater than expected physician prescribing of Natrecor for their patients suffering from acute heart failure,” said Richard Brewer, President and CEO of Scios at the time. “Our market research shows physicians are increasingly interested in using Natrecor in a variety of clinical settings,” said Thomas Feldman, Vice President of Sales and Marketing at Scios at the time.

The company also noted that Natrecor had received a pass-through code from the Centers for Medicare & Medicaid Services that allowed reimbursement for patients treated in an outpatient setting, and said that the issuance of a code was a further indication of the growing therapeutic importance of Natrecor and would help increase use of it in outpatient settings.

“We believe this is a significant step toward making Natrecor more widely available to the physicians and patients who need it, and creates a bigger market for the product,” the Press Release said.

The code makes the economics of prescribing the product more attractive for physicians interested in using it for their patients in the outpatient setting, “an area in which Natrecor is particularly well-suited because it is easy to use, has a good safety profile and makes patients feel better,” the release said.

Doctors seeking reimbursements for off-label outpatient treatment were directed to call a toll-free hotline to obtain billing codes and forms.

Reputable doctors consider it ethically irresponsible for a drug company to promote the possibly harmful use of a drug for financial gain. The hotline prompted allegations from some of the country’s leading cardiologists that the company was improperly promoting Natrecor’s off-label use.

Doctors began speaking out against its frequent use, noting the lack of clinical trials to support outpatient treatment, and the drug’s link to kidney problems and death.

Dr Milton Packer, a cardiologist who was chairman of the FDA advisory panel that approved Natrecor in 2001, said the drug was approved for a very limited group of patients. “We said this is a drug that should be approved for patients who are short of breath at rest, who are hospitalized,” said Dr Packer. He faulted the drug’s FDA-approved label for not specifying that Natrecor was meant for hospital use, according to the May 17, 2005 New York Times.

“The fact that the FDA doesn’t have much enforcement capability is a problem,” Dr Sackner-Bernstein told Health Day Reporter. “Then again,” he said, “where are the ethics? The people involved at Scios and others who knew about this data should be hanging their heads.”

“What is wrong with everybody,” Dr Sacker-Bernstein continued, “that you’ve got a drug that increases renal dysfunction and death, and costs 50 times as much as a regular treatment, and yet it’s given to hundreds of thousands of people?”

Whether Natrecor has been illegally marketed for off-label use, is the subject of an investigation by the Justice Department. On July 20, 2005, Johnson & Johnson acknowledged receiving a subpoena from the US Attorney’s office in Boston, MA requesting documents related to the sales and marketing of Natrecor.

The entrance of Sullivan on the scene is no doubt unwelcome news for Johnson & Johnson. He earned a reputation as the pharmaceutical industry’s adversary last year, when he secured a $430 million penalty against Warner-Lambert, with the help of an employee turned whistleblower, involving the off-label sale of Neurontin, a drug approved for epilepsy, but promoted for various other uses. By the time of the settlement, Pfizer had acquired Warner-Lambert.

As if the death rate with Natrecor listed above is not high enough, as it turns out, Johnson & Johnson did not report 2 patient deaths from the study, according to news reports in early January 2006. In addition, to not telling the FDA, the deaths were not included in the results of the study published in the October 2005 Journal of Emergency Medicine.

The October article reported five deaths of patients within 30 days of using Natrecor in hospital emergency rooms in 2001 and early 2002. Of the 237 patient covered in the study, the two new deaths raises the total number of Natrecor deaths to seven.

According to Matthew Herper, in, Johnson & Johnson hired private detectives from Pinkerton Consulting & Investigations, the famous gumshoe agency and the detectives found the two deaths that were not accounted for in the published study.

There seems to be a changing of the guard for Scois. After all the commotion over the hotline, since July 29, 2005, the new message recorded advises callers about the “lack of clinical data” regarding off-label use and warns that Scios “does not recommend Natrecor for this use.”

“As a result,” the message states, “the support line does not maintain or provide information regarding the physician office or hospital infusion clinic use of Natrecor.” The recording clearly seeks to discourage the off-label use of the drug.

And last but not least, on December 5, 2005, officials from the Centers for Medicare and Medicaid Services, announced that Medicare will no longer cover outpatient costs of Natrecor.

Johnson & Johnson Chirate Spinal Disc Under Fire

Evelyn Pringle September 2006

The Pulaski and Middleman law firm in Houston, Texas head’s a group of law firms that represent over 350 injured Charite spinal disc recipients. The patients allege that the disc is defective, that the device was improperly marketed and that the company did not adequately warn of the disc’s dangers.

The Charite artificial disc was first approved for use in the US in October 2004, although it had been used in the European market since 1987. The device was approved to relieve pain by replacing the damaged disc with the Chirate disc, as an alternative to the surgical procedure known as lumbar spinal fusion surgery.

The disc was developed with the premise that segmental mobility will improve outcomes, as has been the case for artificial hip and knee replacements. The current Charite disc is the third modification of a device first developed in 1982 by Buttener-Janz and Schellnack at the Charite Clinic in the former East Germany.

DePuy Spine, a division of Johnson & Johnson, acquired the Link Spine Group in 2003, and gained exclusive worldwide rights to the Charite disc. Since the disc was approved, more than 5,000 people have received the implant in the US, according to DePuy Spine’s Bill Christianson, vice president of regulatory affairs, in USA Today on July 25, 2006.

At present, experts claim, the best candidates for disc replacement are adults who have disc degeneration in only one disc in the lumbar spine, either the disc between the fourth and fifth lumbar vertebrae or the disc between the fifth lumbar vertebra and the sacrum.

Under FDA guidelines, before disc surgery, individuals must have undergone at least 6 months of treatment, such as physical therapy, pain medication, or wearing a back brace, without showing improvement, and must be in overall good health with no signs of infection, osteoporosis or arthritis.

Experts stress the importance of making sure a patient is the right candidate for this surgery. According to Dr Stephen Hochschler and Dr Paul McAfee, examples of how inappropriate patient selection can have serious consequences are:

“If a patient receives an artificial disc, but the disc that was replaced was not actually the cause of the patient’s pain, then the patient will have undergone an extensive, invasive and costly procedure but still have the same level of pain. This may seem like an incredibly obvious point, but with back pain it is often difficult to pinpoint the precise cause of a patient’s pain. Accurate and careful diagnosis of the patient’s pain generator is crucial and cannot be overemphasized.

“If the patient does have a painful disc, but other factors (such as significant degenerative changes in the facet joint) are present, then the patient may have to undergo a revision surgery after the initial surgery to either correct the placement of the disc or fuse the spine—a situation that is definitely best avoided by correctly assessing all the risk factors prior to the first surgery.”

Many critics contend that the Chirate disc is just as big a threat to patients as the problems it is supposed to cure. The disc has been promoted as an alternative to fusion; yet, even in the short term studies, spontaneous and surgical fusion occurred.

The disc is required to function for many years, but information about long term benefits and risks, such as satisfaction, adjacent segment problems, and rate of re-operations, is not available because only one short term study, with a 24 month follow-up, was presented to the FDA when the disc was approved.

And even that study has come under attack because the benefits of the Charite in the context of a noninferiority trial, were shown to be noninferior to Bagby and Kuslich cages (BAK), used in spinal fusion, a failed procedure critics say that has not been performed in years.

The 2- year trial showed only that the disc was no worse than this specific type of spinal fusion surgery, according to a May 2005 FDA report.

Overall, the study found that 57% of Charite patients achieved “overall clinical success,” compared with 47% of the spinal fusion patients. However, more than 3 out of 5 Charite patients, deemed successes, were still taking narcotic painkillers 24 months after surgery.

In addition, a higher number of Charite patients suffered severe or life-threatening events than spinal fusion patients, 15% compared to 9%, according to the FDA review.

Clinical success in the trial was defined by four criteria: (1) more than 25% improvement at 24 months after surgery, (2) no device failure, (3) no major complication, and (4) and no neurologic deterioration.

This composite outcome is unconvincing as a demonstration of net health benefit, according to a February 15, 2006, Memorandum, from the Centers for Medicare and Medicaid Services (CMS), particularly when these points are also considered:

“1) only 57% of disc replacement patients and 46% of BAK fusion patients met these four limited criteria; 2) in patients who were considered a clinical success at 24 months, 64% of the Charite group and 80.4% of the control were using narcotics; 3) at 24 months the change in VAS and ODI did not differ statistically from control; 4) the SF-36 PCS and MCS composite scores did not differ statistically from control; 5) no difference in operative time or blood loss between the two groups.”

According to the CMS Memorandum, the surgical procedure for disc replacement involves an anterior approach for exposure of the spine. With this approach, complications of vessel injury can occur and have the potential to be life threatening (Santos, Polly et al. 2004). As to revision surgery, Santos, et al, state:

“Revision surgery for a failed disc arthroplasty is life threatening. Dealing with the scarring around the great vessels is the main challenge. Indeed, the location of vital vascular structures may make it altogether impossible to perform such anterior abdominal exposures.”

Other postoperative difficulties such as infection, persistent pain, instability, and osteolysis can also occur (Santos, Polly et al. 2004).

In recent years, the cost benefit of surgery for degenerative disc disease has come under scrutiny. The 2005 Cochrane review of surgery for degenerative lumbar spondylosis states, “There is no good evidence on cost-effectiveness” (Gibson, Wassell 2005).

Concern over the cost benefit has been expressed specifically for the artificial disc. Within 5 years of its release, the CMS noted, it was predicted that spinal arthroplasty (lumbar and cervical) could reach an annual cost of $2.18 billion in the US, with the suggestion by Singh that this estimate is conservative (Singh, Vaccaro et al. 2004).

Santos stated, “…long-term clinical outcome using validated instruments are necessary to justify the added cost of these procedures.”

Dr Sohail Mirza, a medical professor at the University of Washington, criticized Charite’s marketing slogan of “natural motion is back.” It “implies that the artificial disc creates a normal spine; it does not,” he stated last year in the journal Spine.

“Contrary to optimistic marketing, the data,” he wrote, “argue for caution by patients and surgeons. Hope for a cure of back pain and a marketing bonanza must be held in check.”

As of July 2006, more than 130 serious adverse events have been reported to the FDA associated with the Chirate disc.

In 2005, the FDA performed an analysis of adverse events reported in the Manufacturer and User Facility Device Experience Database (MAUDE), at the request of CMS. The analysis includes Medical Device Reports (MDRs) that were entered into the database between August 11, 2003 (first report received) and November 16, 2005.

A total of 101 MDRs were analyzed for 96 patients, with 1 MDR for the Prodisc device in addition to the Charite devices.

The most frequently reported event was device migration out of the implanted location, with 54 of 96 patients (56%) experiencing this effect. Seventy-six patients (79%) had a second surgery to remove all or part of the implant, to correct problems with the device, or to correct problems produced during the surgery. Fifty of the 76 (66%) patients had second surgery due to device migration.

The most common second surgery was to remove all or part of the disc followed by spinal fusion of the implanted motion segment. Twelve patients had 2 prostheses placed despite the device labeling for only one device implantation. Most adverse events that required second surgery occurred in the first 2 months after implantation. Two deaths were reported which were both attributed to pulmonary emboli.

Dr Charles Rosen, associate clinical professor of spine surgery at the University of California, Irvine, told the LA Times on August 5, 2006, that he has seen 10 patients since late last year, complaining of worsening pain after receiving the Charite disc and that some patients suffered fracturing and an abnormal pulling apart of the joints of the spine.

He says the Chirate is unsafe and should never have been approved because a 2-year study is too short for a disc that will remain in the spine for many years with implant patients averaging 40-years old.

“There is no solid evidence that this will last for more than five or 10 years and they will not need to have another operation,” Dr Rosen said.

According to Times, Dr Allyson Fried-Cain, 52, a former foot-and-ankle surgeon, has sued the device maker, saying she suffered such an increase in pain after a Charite disc implantation that she lost her practice and had to sell her home in Marina del Rey, California.

Dr Fried-Cain, a former marathon runner whose back injury resulted from a car accident, told the Times, “I couldn’t do surgery anymore. I couldn’t bend over,”

“This implant has destroyed my life,” she said.

According to the LA Times on August 5, 2006, spinal surgery is becoming a very lucrative business, “with at least $3.2 billion spent last year in the U.S. on spinal fusion.”

In August 2006, the FDA approved the ProDisc-L, made by Swiss medical device maker Synthes Inc, which is expected to compete against the Charite.

In its approval letter to Synthes, the FDA said patients receiving the disc should have tried at least 6 months of “conservative” treatment with other therapies such as exercise and medication.

As a condition of approval, Synthes agreed to continue studying the disc for long term safety and effectiveness in a study involving at least 286 patients. The company is also required to conduct a yearly analysis of major adverse events and report the number of devices sold and implanted each year.

The booming spine surgery industry suffered a serious financial set-back earlier this year, when the Medicare program stopped paying for the Charite disc in patients over 60, noting that the surgery costs between $30,000 and $50,000, and has not sufficiently been tested for long term affects. The CMS stated “that the evidence is not adequate to conclude that the Charite lumbar artificial disc is reasonable and necessary.”

“Therefore,” the CMS memo concluded, “we propose to issue a national noncoverage determination.”

Charite Spine Victims and DOJ Go After J&J

Evelyn Pringle October 2006

Lumbar spinal fusion is a procedure in which the vertebrae of the spine are fused together so that motion can no longer occur. As an alternative, the Chirate disc replacement surgery is supposed to restore spinal flexibility, reduce pain and improve the patient’s functional activities. However, in less than two years, the FDA has received over 130 reports of serious adverse events related to the Chirate.

The disc is manufactured by DePuy Spine, a Johnson and Johnson subsidiary, and was approved for use in the US in October 2004, for patients who have degenerative disc disease at one level in the spine and have been unable to obtain relief from low back pain from other spine treatments for a period of at least 6 months.

When seeking approval by the FDA, J&J provided only one 2-year trial purporting to show that the Charite worked as well as the Bagby and Kuslich (BAK) cage, a product used in spinal fusions surgery, which was abandoned years ago by many surgeons due its high failure rate.

Critics say a 2-year trial is far too short for a device that is expected to remain in the spine indefinitely without becoming displaced or causing other problems. Many experts now predict that over the next decade, there will be a slew of Charite patients who will suffer complications and require surgical removal of the disc, which they say is problematic because the removal procedure can be more dangerous than the original implant surgery.

The procedure for replacement involves an anterior approach for exposure for the spine and Santos et al, states, “Revisions surgery for a failed disc arthroplasty is life threatening. Dealing with the scarring around the great vessels is the main challenge Indeed, the location of vital vascular structures may make it altogether impossible to perform such anterior abdominal exposures.”

Expert also warn that other postoperative difficulties such as infection, persistent pain, instability, and osteolysis can occur.

In the study submitted to the FDA for approval, J&J did not include pain relief as a measure of the disc’s success and the product’s ability to restore natural motion was also not listed as a definition of success. And apparently for good reason, because the disc does not live up to its promise of relief.

One Charite victim states: “I have retained my range of motion that is evidently so important.”

“However,” he says, “I am still experiencing the same, if not worse pain than prior to the surgery.”

“I have no idea what is wrong with the implant,” he notes, “if it has moved, broken or was just part of a bigger undiagnosed problem.”

He hesitates to investigate, he says, because his hospital experience was “so horrid.”

“So if a surgical remedy is needed to fix whatever is wrong,” he states, “I’m not going for it again.”

In conclusion, the patient says he would not recommend this procedure to anyone.

The same sentiments are shared by many Charite patients. To date, out of the 5,000 patients implanted with the disc, the Houston, Texas Pulaski and Middleman law firm leads a group of firms that represent over 350 patients who have been injured and allege that the Charite disc is defective and that the company failed to adequately warn patients about the potential risks associated with the disc.

In addition, according the on June 5, 2006, a Chicago law firm has more than 200 clients who have suffered complications from the disc and are seeking reparations from DePuy.

Dr Charles Rosen, founding director of the University of California-Irvine Spine Center, is an outspoken critic of the Charite disc. On June 5, 2006, he told the, that after much prodding, he finally got the FDA to send him 67 reports on adverse events involving the Charite disc and that he found the information incomplete and worrisome.

Some “71% of reports were generated by ‘company representatives’ only, [and] not one report to the FDA concluded any device malfunctioned or was defective — including the 11 cases where the device intrinsically malfunctioned with the plastic dissociating from the metal plate,” Dr Rosen told the

Also, he said, “it is striking that only 15% of retrieved specimens [Charite disc] were sent to the manufacturer for analysis.”

“It is accepted widely,” he says, “and with little question — that retrieval and analysis of any implant is critical for both evaluation and research.”

But the legal troubles of J&J and DePuy are by far not limited to the Charite disc or civil court arena. They now has the US Department of Justice to contend with.

In June 2006, DePuy was served up with a subpoena by the Antitrust Division of the DOJ, requesting documents related to the manufacture and sale of the company’s orthopaedic devices. The DOJ even had search warrants executed in connection with the investigation, according to documents filed by J&J with the SEC on August 8, 2006.

The Wall Street Journal, reports that a spokeswoman at the DOJ has said that they are looking into “anticompetitive practices in the implant-device industry.”

On September 11, 2006, Dow Jones reported that the subpoenas sought several years’ worth of documents regarding possible federal criminal and antitrust-law violations.

The antitrust probe is one of two known DOJ investigations, and Dow Jones notes that “an earlier investigation regarding doctor-company relationships is still an open question.”

All total, five firms were slapped with subpoenas including Biomet Inc, Stryker Corp, Zimmer Holdings, Smith & Nephew and Johnson & Johnson’s DePuy Orthopaedics

The same five companies, Dow Jones says, reported receiving a separate batch of subpoenas regarding a probe of consulting or professional services agreements between companies and orthopedics surgeons in early 2005.

Analysts say the probe revolves around whether the companies actually received the services for which they paid the surgeons or whether they used the agreements to get the doctors to use their devices.

Lehman Brothers analyst, Bob Hopkins, said in a research note that the original investigation may have escalated. “There is a possibility that this is a completely separate investigation, but it is likely that the two are related,” he wrote.

“Either way,” he says, “the involvement of the antitrust division and the wording of the subpoena suggest a serious investigation that may be ongoing for some time.”

“A number of investigations are under way,” Lewis Morris, chief counsel to the inspector general for the Department of Health and Human Services told the New York Time on September 22, 2006.

The question for investigators, he said, is whether the companies and the doctors have crossed a line from legitimate compensation for valuable services rendered in the development of the devices to unethical payoffs for securing competitive advantage in a crowded marketplace.

The question for investigators, he said, is whether the companies and the doctors have crossed a line from legitimate compensation for services rendered in the development of the devices to unethical payoffs for securing competitive advantage in a crowded marketplace.

“The potential for inappropriately steering medical decisions is always at play, and there is always the risk that doctors will prescribe a particular device because of their own financial interest and not the interest of the patient,” Mr Morris said in the Times.

The price spread for medical devices provides plenty of leeway to tack on kickbacks for surgeons. “With manufacturers guarding pricing information closely,” the Times reports, “the price of a given device can vary by thousands of dollars from one hospital to the next.”

For instance, one hospital in the New York area paid $8,000 more for a DePuy hip than a competitor, according to a recent survey by the Greater New York Hospital Association.

In the August 2006 Health Law Fraud Alert, Gregory J. Naclerio, Esq, says that the subpoenas issued to the five device makers “demanded consulting contracts, professional services agreements, and related documents which could evidence the corporation’s arrangements with orthopedic surgeons.”

“Clearly,” he says, “the thrust of the Justice Department’s subpoenas is to establish whether the device companies are in some way offering “remuneration” to orthopedic surgeons to use their products.”

Typically, he says, it is through consulting contracts and professional services agreements that ways are found to compensate physicians for ordering a company’s products.

“Educational seminars at “resort areas” where the “free time” exceeds the “seminar time,” he states, “as well as stipends for research and educational programs that require little or no work by the physician only serve to confirm the government’s belief that violations of the anti-kickback statute are occurring.”

“Under the Medicare/Medicaid anti-kickback statute,” Mr Naclerio explains, “it is illegal “to offer” or “to accept” remuneration in return for a referral of a patient or services paid for by Medicare.”

Not only does the acceptance of payment constitute a federal felony, with a maximum of 5 years imprisonment, he says, “it can also result in civil federal false claims violations and exclusion from the Medicare/Medicaid program.”

Based on reports that the action by the DOJ constitutes a second round of subpoenas that were issued to the same five device makers, Mr Naclerio writes in the alert, “This can only lead one to conclude that the first round of subpoenas led the government to believe that further inquiry was required.”

According to the September 26, 2006, New York Times, the rising cost of devices and the relationships between doctors and device makers are “causing profound concern among hospital executives, health care economists and other experts, mirroring recent reactions to the way pharmaceuticals are marketed.”

“In the last two years,” it reports, “Medicare payments to hospitals for implant surgery have risen about 40 percent, from $10 billion to $14 billion, according to an analysis of Medicare records.”

And that’s why, the Times says, federal prosecutors are questioning the deals between device makers and doctors, trying to determine if they amount to payoffs.

One example of payoffs described involved Dr William Overdyke, an assistant professor at the Louisiana State University Health Sciences Center, who oversaw operations to replace worn-down knees. From 2000 to the middle of 2001, whenever a patient needed an artificial knee, he or the residents he supervised, implanted one made by Sulzer Medical, state documents show.

Dr Overdyke claims he used the Sulzer knee because it was the best available. But Louisiana officials say he had another incentive, the $175,000 a year that he stood to make from contracts with Sulzer that called for him to consult on product design and “promote and educate other surgeons” on the virtues of Sulzer products.

Before signing with Sulzer, Dr Overdyke said that he had never used the company’s artificial knee but as it turns out, he previously had a contract with another company, Wright Medical and while under that contract, he and his residents largely used Wright’s artificial knees.

Wright Medical paid him $150,000 to $200,000 annually, according to the Times, quoting a court deposition.

Dr Overdyke paid $10,000 in fines after Louisiana officials determined that his consulting arrangements with Sulzer were an improper conflict of interest under the state ethics code.

“There is another central figure helping cement the company-doctor relationship,” according to the New York Times, “the sales representative.”

The representatives work on commission of as much as 10 to 20% and according to the Times, can make as much, if not more, from an operation than the surgeon, industry consultants say.

They frequently make several hundred thousand dollars a year, the Times says.

One former salesman who refused to be identified because he still worked in the industry, told the Times that to encourage a surgeon’s loyalty, he used to pay the doctor’s assistant $200 a case. “It was a bonus they didn’t have to pay with their money,” he said.

In addition to all of its legal problems, J&J has also run into trouble with retaining coverage by public and private health care insurance plans to pay for the Charite disc surgery.

Medicare will no longer pay for the procedure with patients over 60. That decision to deny coverage for the Charite has prompted private health insurance companies to not cover the device.

For instance, on September 1, 2006, Tufts Health Plan announced that it does not cover the use of an artificial disc in the treatment of degenerative disc disease, because according to the Plan’s Evidence of Coverage (EOC), a treatment or procedure is considered experimental or investigative “if reliable evidence shows that prevailing opinion among experts regarding the treatment is that more studies or clinical trials are necessary to determine its safety, efficacy, toxicity, maximum tolerated dose, or its efficacy as compared with a standard means of treatment or diagnosis.”

On August 18, 2006 the US Department of Labor and Industry put into rule an existing medical coverage decision to not authorize the Charite disc for the care and treatment of injured workers and victims of crime, based in part it said, on the fact that the disc had only been on the market since October 2004 and yet “more than 133 serious adverse events have been reported to the FDA from its use.”

“The department reviewed the best scientific evidence on artificial discs and made a noncoverage decision,” it said, “because there was not substantial scientific support and thus the device has not been proven to be safe and efficacious.”

“Putting this noncoverage decision in rule,” the department advised, “will give the department more legal support if challenged about the noncoverage decision and ensure the safety of treatment provided to injured workers since the Charite III disc is a treatment option not proven by scientific evidence. “

The Department also noted that Blue Cross Blue Shield reviewed the Charite disc and came to the conclusion that “the evidence is insufficient to determine whether the use of artificial vertebral discs improves the net health outcome or whether they are as beneficial as any established alternative… Therefore, the use of artificial vertebral discs for degenerative disc disease does not meet the Technology Evaluation Center (TEC) criteria.”

However, for what its worth, according to the July 12, 2006 Orange Country Regiser, J&J is educating doctors and patients on the appeals process when coverage is denied and the company’s Web site offers a bibliography of articles about Charite to “enhance your case,” as well as addresses for contacting state insurance regulators.

Charite disc overall sales will also be much lower from here on in since it recently gained a competitor. In August 2006, Synthes Inc, a Swiss medical device maker, won FDA approval for the artificial spine disc ProDisc-L According to Dow Jones, financial analysts estimate that around $100 million sales in 2007 will stem from ProDisc-L.