How Wall Street Reacts to Fraud in Our Health Care Industry

This appeared on Bloomberg News today:

“WellCare Shares Jump After Analyst Calls Fraud Probe `Limited’

Nov. 20 (Bloomberg) – WellCare Health Plans Inc., the U.S. health insurer under investigation for possible government overpayments, rose the most in two weeks in New York trading after an analyst upgraded the company.

“The analyst, Carl McDonald of CIBC World Markets in New York, called the probe ‘limited’ and raised his rating of WellCare to ‘sector outperform-speculative’ from ‘sector perform.’ WellCare rose $2.38, or 6.8 percent, to $37.39 at 9:40 a.m. in New York Stock Exchange composite trading after touching $38.14.

“A U.S. government raid of WellCare’s Tampa, Florida, headquarters on Oct. 24 yielded thousands of records, including papers pulled from a shredder bin and files on offshore bank accounts, according to court filings. McDonald said the filings suggest the probe is focused on Florida’s Medicaid program for the poor.

“’It’s possible that the Florida Medicaid investigation spreads into other areas, but the document seems to rule out widespread, systemic fraud,’ the analyst said in a note to clients today.”

Bloomberg also reveals that: “The agents seized records from the desks of Chief Executive Officer Todd Farha and Chief Financial Officer Paul Behrens, according to the court records. From Behrens’ desk, agents grabbed a document called the ‘Stairway to Heaven Plan,’ according to the inventory.

“Also taken were wire transfers, tax returns, bank accounts in the Grand Cayman Islands, a calendar of political visitors and contributions, and phone lists. One seized document was labeled ‘Re: Possible Kickback,’ according to the court records”.

Yet none of this seems to bother the analyst who upgraded the stock or the many investors who followed his upgrade–pushing the share price up 6.8 percent this morning.  The analyst predicts that “that WellCare [will] settle, pay a fine, but remain in all its businesses, rather than being put out of business.”

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ADHD and the Medication Feeding Frenzy in America

CORRECTION: In the post below, I make mention that there has been no U.S. media coverage on the MTA report. But after some further digging, I found coverage from Investor’s Business Daily, along with popular sources the New York Post, and Fox News and technical/niche publications like Planet Chiropractic. So there is some American coverage.

But if you click around you can see that the American stories are much more brief than their international counterparts. Each of the stories in the mainstream outlets is more of a newswire dispatch than an actual article, where as the international stories are comprehensive. And while pretty much all of the news sources of record in the U.K. covered the story, the major U.S. outlets–like the WSJ, NYT, Time, Newsweek, etc–seem to have had nothing.

Given that the U.S. is 90 percent of the ADHD drug market, you’d think that MTA’s findings would make nation-wide headlines. But instead coverage is scattered and superficial. Stories are relegated to quasi-interest group literature (investors who may lose money on the drugs, chiropractors who have a professional interest in questioning medication), or to the News Corporation (which owns both the Post and Fox news)–a multinational company with a strong Australian and British component. There’s still no convincing evidence that the American media is, on the whole, ready to meaningfully cover MTA’s findings.


Earlier this week the British press broke some startling news: the Multimodal Treatment Study of Children with ADHD (MTA), has issued a report that claims there are no long-term benefits of ADHD medication for hyperactive children. Report co-author Professor William Pelham of the University of Buffalo, is quoted in the British press as concluding that ADHD medication is, in the long-term, all risk and no reward.

“The children [on ADHD medication] had a substantial decrease in their rate of growth so they weren’t growing as much as other kids both in terms of their height and in terms of their weight,” he says. “And…there were no beneficial effects – none.”

This is an about face from MTA’s benchmark report in 1999 that asserted with certainty that ADHD drugs were the best way to address ADHD in children. The 1999 study claimed that “combination treatments” (i.e. drugs and behavioral training) along with “medication-management alone” (i.e. drugs) are “both significantly superior” to other ADHD treatments that don’t include medication.

But, according to Pelham, “we exaggerated the beneficial impact of medication in the first study. We had thought that children medicated longer would have better outcomes. That didn’t happen to be the case.” So, according to Pelham, here’s the bottom line: “in the short run [medication] will help the child behave better, in the long run it won’t.”

To some, Pelham’s report might be unwelcome news. Thanks in part to the medical credibility that MTA and other studies have conferred on ADHD medications, global sales of ADHD drugs are predicted to be $4.3 billion by 2012. This ADHD boom is a recent phenomenon, largely a product of the 1990s. According to the US National Ambulatory Medical Care Survey, the number of children who received a diagnosis of ADHD increased 250 percent from 1990 to 1998. A study from 1996 showed that from 1990-1995 child use of ADHD medication increased by a factor of 2.5 and drug production increased six-fold. The production of Ritalin (the most common ADHD medication) increased by 700 percent from 1990-1999.

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Desperate, Drug Makers Court Doctors in Developing Countries

In the U.S. we are accustomed to seeing exceptionally well-dressed drug company reps strolling into doctors’ offices bearing trinkets: coffee cups, note pads and pens. We also know that they take doctors to expensive dinners, and host “continuing education” junkets to warm climes. Device-makers have been known to ferry doctors to strip clubs after dinner.

But in the developing world, drug makers are pulling out all of the stops. Often there is not even a pretense that the gift will help the doctor do his job. In Kashmiri, a physician confides, “representatives of pharmaceutical  companies offer cash, refrigerators, color televisions, laptops, PCs, mobile phones, ovens, phone bills, [and even to pay school] tuition [for your] children.”

In India, a doctor from Mumbai reports:  “On sale of 1,000 samples of the drug, you get a Motorola handset. On sale of 5,000 samples you get an air cooler. On sale of 10,000 samples get a motor bike.”

In Pakistan, a survey of 149 doctors, 100 medical information officers (sales representatives) and 99 medical store personnel, found that gifts may include included air conditioners, cars, cash, home appliances and domestic cattle.   Murad M. Khan, professor & chairman of the department of psychiatry at Aga Khan University, describes the latest practice: For writing 200 prescriptions of a company’s high-priced drug, a doctor is rewarded with the down payment on a brand new car.

These are just a few of the enticements documented in a November 2007 Consumers International (CI ) study, "Drugs, Doctors and Dinners: How Drug Companies Influence Health in the Developing World." (Thanks to Gary Schwitzer, at Schwitzer Health News Blog, for calling attention to this report.) A global voice for consumers, CI is an independent not-for-profit boasting over 220 member organizations in 115 countries.

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Health Beat Hosts Health Wonk Review

Today, Health Beat is hosting Health Wonk Review, a biweekly compendium of the best of the health policy blogs. More than two dozen health policy, infrastructure, insurance, technology, and managed care bloggers participate by contributing their best recent blog postings to a roving digest, with each issue hosted at a different participant’s blog.

Thanks to all of you for your submissions. I couldn’t do justice to all of them, but here’s a sampling of some of the best posts about health care on the blogosphere:

At Health Care Policy and Marketplace Review Robert Laszewski takes on Mitt Romney’s assertion that there are “pots of money” in the states –enough to allow states to follow Massachusetts’ initiative and fund health care reform without raising taxes. Laszewski demolishes the argument, pointing out that even Massachusetts doesn’t have enough money to follow Massachusetts’s initiative. That’s why the state has had to exempt some citizens from the mandate that everyone buy insurance.

On Health Access California, Anthony Wright offers the clearest explanation I’ve seen of Governor Schwarzenegger’s plan for reforming care in California, and its merits and limitations when compared to both HRC’s proposal and the Romney plan in Massachusetts.

On Physician Executive, Zagreus Ammon’s ambitious post “Defining Universal Health Care” begins by addressing the theory that each of us is responsible  for our own health—i.e. “that people do well because they make good choices and people do poorly because of poor choices.”

Here Ammon is responding to Peter Huber of Manhattan Institute fame and his editorial in IBD (Investors’ Business Daily) arguing that universal healthcare is an idle dream because eventually, the “pocket-book healthy” (read: wealthy) will get tired of paying for the “health-careless people” who don’t “live informed, disciplined lives”(read: less well-educated and poorer.) The righteous would rather see that money funneled into products that would provide them with “better hair, skin and sex,” Stern suggests.  For a more generous synopsis of Huber’s argument, see H.G. Stern’s rave review on Insureblog

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Human Growth Hormone and The Business of Immortality

Last week, James Forsythe, a prominent doctor in Reno, Nevada was acquitted by a federal jury after going to trial on allegations that he trafficked in human growth hormone (HGH). The decision came as a relief to the American Academy of Anti-Aging Medicine (A4M), because among other allegations, the doctor was accused of selling HGH as an anti-aging treatment, which is illegal in the U.S. A4M has a history of pushing for HGH-driven anti-aging treatments.

So what’s so special about HGH when it comes to aging? Beginning in your 40s, the pituitary gland slowly reduces the amount of hormone it produces, a fact that some feel is both responsible for the frailty of age and reversible through the introduction of synthetic growth hormones.

But there is little, if any, reliable scientific evidence about the anti-aging benefits of HGH. In fact, there are no double-blind placebo-controlled studies for most of the anti-aging miracle cures out there. Yet we do know for a fact that HGH can increase the risk of cancer—not to mention edema (retention of fluids), arthralgia (joint pain), carpal tunnel syndrome, diabetes, and gynecomastia (enlarged mammary glands in males).  Oh, and it might actually shorten life.

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When the Government Does What Drug-Makers Won’t Do

Today, Bloomberg News reported that “Deadly Staph Germs May Be Cured by Old, $1-a-Day Antibiotics.” It turns out that generic, World War II-era antibiotics are becoming “the newest weapon of choice in the fight against deadly, drug-resistant staph germs.”

Physicians have discovered that drugs costing less than $1 a day can be very effective when treating methicillin-resistant Staphylococcus aureus, known as MRSA. The bacteria, once found only in hospitals and nursing homes, recently made news by showing up in schools and gyms. Last month, MRSA was linked to the deaths of a student in New York and one in Virginia.  Annually, more than 18,000 Americans are killed by MRSA.

The physicians who mounted the studies of the older drugs were funded by the federal government. Meanwhile, in the for-profit private sector, Bloomberg observes, “drug-makers are spending hundreds of millions developing medicines that cost more than $100 a day to treat advanced cases.”

But physicians know the older, cheaper drugs work. “We have used these
older drugs with success for years,” says Gregory Moran, one of the
study leaders. He is a professor of emergency medicine at the Olive
View-UCLA Medical Center in Sylmar, California, affiliated with the
University of California at Los Angeles.

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Disease Mongering By Way of Restless Legs

Yesterday during lunch I saw an ad for Mirapex, a “prescription medicine used in
the treatment of moderate to severe primary restless legs syndrome (RLS).” The
fact that there was such thing as a restless leg syndrome seemed odd to me, so
I did some sleuthing. (Maggie, who has in fact discussed RLS over at the Health Care Blog, has some great
thoughts on the issue as well.)

 RLS is a “medical condition that is described as an urge to
move the legs”—simple enough. The Mirapex website offers a list of question
designed to help you diagnose yourself:

  • Do you feel a strong desire to move your legs from time to time, often when they make you uncomfortable?
  • Do those sensations in your legs occur or get stronger when you are inactive?
  • Does moving around or stretching help ease those uncomfortable sensations in your legs?
  • Do those uncomfortable sensations feel their worst at night?

Ingelheim Pharmaceuticals, the manufacturer of Mirapex, is considerate enough
to translate these symptoms into layman’s terms:

People often use words like
"burning," "creeping," "crawling,"
"aching," "tingling," and/or "tugging" to try and
describe their symptoms. Many people with restless legs syndrome have
difficulty explaining the odd sensations they feel, even when talking to their

So far it seems that I may have RLS if my (1) legs get uncomfortable after
sitting for a while and (2) I have trouble articulating this sensation. By
these criteria, most anyone who has uttered the phrase “my leg feels weird”
qualifies as an RLS sufferer.

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Do You Want to Know That You Will Be an Alzheimer Patient in Two to Six years?

Yesterday The New York Times reported a medical breakthrough: “the development of a blood test that can  accurately  diagnose Alzheimer’s disease, and even do so years before truly debilitating memory loss.”

Well, “accurately” may be a bit of a stretch. As the Times explained, the test is about “90 percent accurate in distinguishing the blood of people with Alzheimer’s from the blood of those without the disease” and “about 80 percent accurate in predicting which patients with mild memory loss would go on to develop Alzheimer’s disease two to six years later.”

Then, the Times acknowledged, there is one other problem with the test:  “At present, treatments for Alzheimer’s disease are not very effective.”

So why exactly would I want an early warning that would give me two to six years to contemplate what it will be like to observe my mind dissolving? (Of course I could comfort myself with the fact that the test is only 80 percent accurate, but somehow I suspect that would only compound my anxieties.)

“There are people who want to know what their future holds so they can plan their estates and lives,” Dr. Sam Gandy, a professor at Mount Sinai School of Medicine in New York who is chairman of the medical and scientific advisory council of the Alzheimer’s Association, told the Times.

Right, this is an estate planning tool.

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More Thoughts On the Hospital Building Boom

A Startling Insider’s Look at What Happens to Patients Who Stay in the Luxury Suites of a Prestigious Hospital 

Last week, (THCB) asked if they could put up my post about the hospital building boom below where I ask “Can we Afford the Waterfalls”– and all of  the other hotel-like amenities that new hospitals are beginning to offer. Do we really need grand pianos, valet parking and all-private rooms—especially in hospitals that don’t yet have electronic medical records? (See my original post here)

Quite a few readers at THCB commented, with a number voting “yes” for the
amenities.  But one young doctor said “no”—and then offered this startling insider’s  view of  the care patients do and don’t receive on the luxury floor of one prestigious hospital:

“Maggie’s right-on regarding the disconnect between hospital frills and quality of care…

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The Hospital Building Boom: Can We Afford the Waterfalls?

In Money-Driven Medicine: The Real Reason Health Care Costs So Much I talk about the nationwide hospital building boom—and ask two questions: Can we afford it? Do we need it?

In many regions, suburban hospitals have been reaching for big-city business. “What we have to do to maintain our position in the markets is to keep adding services,” explained Westchester Medical Center CEO Ed Stolzenberg. “That’s the whole reason we went into liver transplants.”

Did the resident of Westchester Country (just outside of New York City) need a local hospital doing liver transplants? Just how many transplants would a Westchester hospital do? Would such patients be better off at a high-volume medical center in Manhattan where “practice makes perfect”?

Those questions didn’t seem to come up.  The CEO knew that transplants would raise the hospital’s image.

Across the nation, as not-for-profit hospitals set out to invest in new construction and equipment, decisions seemed to be market-driven—but  not necessarily driven by the local population’s medical needs.  Instead, they were powered by the hospital’s need for market-share.

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