From Bad Pharma to Good Pharma: Aligning Market Forces with Good and Trustworthy Practices through Accreditation,Certification,and Rating

Buetow S. A. Wellingham J. , “Accreditation of General Practices: Challenges and Lessons,” Quality & Safety in Health Care 12, no. 2 (2003): 129–135; Miller J. E. , “Bioethical Accreditation or Rating Needed to Restore Trust in Pharma,” Nature Medicine 19, no. 3 (2013): 261.

Vogel D. , The Market for Virtue: The Potential And Limits of Corporate Social Responsibility (Washington, D.C.: Brookings Institution, 2006): At 46. For a discussion on problems with current incentives for pharmaceutical firms, and the need for other reforms, see, for example, Gagnon M.-A. , “Corruption of Pharmaceutical Markets: Addressing the Misalignment between Financial Incentives and Public Health,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 571–570.

Miller J. E. , “On Restoring Trust and Ethics in Pharma,” The Lab at Edmond J. Safra for Ethics, available at <http://www.ethics.harvard.edu/lab/blog/274-on-restoring-trust-and-ethics-in-pharma> (last visited June 21, 2013).

Personal conversation by author with Wilco Faessen, an investment banker at Barclays Capital, consumer goods division, March, 2013.

See Hassoun , supra note 5, at 125 and 127.

Wood C. , A Crisis of Confidence: Rebuilding the Bonds of Trust, paper presented at the 10th Annual Fred Newell Customer Relationship Management Conference, Chicago, June 2,2004, available at <http://www.compad.com.au/cms/prinfluences/workstation/upFiles/955316.State_of_Consumer_Trust_Report_-_Final_for_Distribution.pdf> (last visited June 21, 2013). In surveys, “most Americans agree that they usually shop at ‘businesses that have earned [their] trust - even if they tend to charge more than their competitors,’ with an average agreement of 6.4 on a 0-to-10 scale. Conversely, distrust has a potentially devastating impact on profitability. Consider that 45% of Americans say there is at least one retail business that they trusted at one time but do not trust any longer. Of those people, 94% say they spent less money with that company, and spending declined by an average of 87%. Only 3% of consumers report taking no action in response to a perceived betrayal of trust. Instead, most respond by taking action and initiating a negative cycle of ‘viral anti-marketing.’ Other research confirms this finding: Consumers tell approximately 50% more people about bad customer service experiences than they do about good ones.”

See Vogel , supra note 2, at 47. There is often a gap between what consumers say and perceive themselves as doing and what they are actually doing. So, while 90% of consumers in a study may report that they are more likely to patronize the company with the best reputation for ethics, in practice the number is likely much lower.

See Vogel , supra note 2, at vii.

Id.

Hassoun N. , “Global Health Impact: A Basis for Labeling and Licensing Campaigns?” Developing World Bioethics 12, no. 3 (2012): 121–134, at 126.

Margolis J. D. Walsh J. P. , “Social Enterprise Series No. 19 – Misery Loves Companies: Whither Social Initiatives by Business,” Harvard Business School Working Paper, No. 01–058 (2001): 1–62.

Thomas J. Harris J. , Global Environmental Management Initiative Clear Advantage: Building Shareholder Value, February 2004, at 14, available at <http://www.gemi.org/resources/gemi%20clear%20advantage.pdf> (last visited June 21, 2013).

Miller J. E. Loike J. D. , “Personalized Medicine,” in Encyclopedia of Bioethics, 4th ed, Jennings B. Eckenwiler L. Kaebnick G. Koenig B. Krimsky S. Latham S. Mercurio M. R. , eds. (Farmington Hills, MI: Macmillan Reference USA, 2003). Pharmacogenetics or pharmacogenomics is the development and delivery of targeted drugs to treat an individual's particular type of disease based on its specific genetic demarcation. Pharmacogenomics can be helpful in revealing when small populations are likely to experience serious side effects from particular drugs as a result of gene mutations. It also increases the likelihood that patients will metabolize therapeutic drugs in the most efficacious manner by recognizing how individuals metabolize drugs at different rates based on their genetics. There remain many unresolved legal questions regarding who owns the genomic data that is collected during genetic testing and research and what privacy protections these companies can or should assure. It is also unclear how much license companies have to use the materials they collect and what kind of informed consent, if any, is required for subsequent usage of genomic collections, and from whom.

For a discussion of how firms might manipulate financial data, clinical trial data and other information to increase market share, see, Brown A. , “Understanding Pharmaceutical Research Manipulation in the Context of Accounting Manipulation,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 611–619.

Margolis J. D. Walsh J. P. , People or Profits? The Search for a Link between a Company's Social and Financial Performance (Mahwah, NJ: Psychology Press, 2011): At 4–5.

Teisel M. Roe B. , “Can Eco-Labels Tune a Market? Evidence from Dolphin-Safe Labeling,” Journal of Environmental Economics and Management 43, no. 3 (2002): 339–359. Interestingly, in both the Kimberly Process Certification and Dolphin Safe Label cases, there were existing laws barring many of the targeted behaviors of these programs; the activists nonetheless demanded the certification and labeling systems. See Vogel , supra note 2, at 55. Notwithstanding many examples of social activists successfully prompting companies to be more accountable, activists can also scare companies away from action. An ExxonMobil executive recently shared that Exxon shies away from improving its environmental image because as the Norwegian saying states, “the sprouting whale gets harpooned.” In other words, activists are seen as insatiable. Once one demand is met, they simply begin demanding another change.

Universities Allied for Essential Medicines, “History,” available at <http://uaem.org/about-us/history/> (last visited June 21, 2013).

University Global Health Impact Report Card, “Project Summary,” available at <http://globalhealthgrades.org/about/> (last visited June 21, 2013).

See Vogel , supra note 2, at vii.

“NACE Research: 2008 Graduating Student Survey – Where Will They Go After Graduation?” National Association of Colleges and Employers study, June 11, 2008, available at <http://www.naceweb.org/spotlight/2008/june/2008_Graduating_Student_Survey/> (last visited June 21, 2013).

Montgomery D. B. , “Asian Management Education: Some Twenty-First-Century Issues,” Journal of Public Policy & Marketing 24, no. 1 (2005): 150–154, at 153.

Sims R. L. Kroeck K. G. , “The Influence of Ethical Fit on Employee Satisfaction, Commitment and Turnover,” Journal of Business Ethics 13, no. 12 (1994): 939–947.

Koh H. C. Boo E. Y. , “Organisational Ethics and Employee Satisfaction and Commitment,” Management Decision 42, no. 5 (2004):677–693.

Id.

Corso R. , “Oil, Pharmaceutical, Health Insurance, Tobacco, Banking and Utilities Top the List of Industries That People Would Like to See More Regulated,” Harris Interactive, 2012, available at <http://www.harrisinteractive.com/NewsRoom/HarrisPolls/tabid/447/mid/1508/articleId/1131/ctl/ReadCustom%20Default/Default.asp> (last visited June 24, 2013).

Roberts J. S. Coale J. G. , “A History of the Joint Commission on Accreditation of Hospitals,” JAMA 258, no. 7 (1987): 936–940. As the size and scope of the accreditation system grew, so did its funding needs, prompting the program to restructure from a sole initiative of the American College of Surgeons to an independent nonprofit with members from a variety of medical professions.

Id.

Whelan T. Dwinnells E. , “The Role of Certification in Protecting the World's Forests,” in Sethi S. P. , Globalization and Self-Regulation (New York: Palgrave Macmillan, 2011): At 191–193.

Forest Stewardship Council, available at <https://us.fsc.org/what-we-do.186.htm> (last visited June 24, 2013).

Auld G. Gulbransen L. H. , “Certification Schemes and the Impacts on Forests and Forestry,” Annual Review of Environmental Resources 33 (2008): 187–211, at 191. For example, the Sustainable Forestry Initiative which promoted its an industry code of conduct.

Hill C. , “Regulating the Rating Agencies,” American Law & Economics Association Annual Meetings, Washington University Law Quarterly 82, no. 1 (2004): 43–94.

See Miller , supra note 1.

Id.

Id.

Id. Miller J. E. , “Rebuilding Trust and Effectively Communicating Ethics Efforts,” Health Publishing and Services, 2012, available at <http://aboutpharma.com/news/farmaco/rebuilding-trust-and-effectively-communicating-ethics-efforts> (last visited June 24, 2013).

For further discussion of key problems pharmaceutical firms to today, see the following articles in the Journal of Law, Medicine & Ethics 41, no. 3 (2013): Rodwin M. , “Five Un-Easy Pieces to Pharmaceutical Policy Reform,” at 581–589; Light D. W. Lexchin J. Darrow J. , “Institutional Corruption of Pharmaceuticals and the Myth of Safe and Effective Drugs,” at 590–600; Sismondo S. , “Key Opinion Leaders and the Corruption of Medical Knowledge: What the Sunshine Act Will and Won't Cast Light On,” at 635–643; Sah S. Fugh-Berman A. , “Physicians under the Influence: Social Psychology and Industry Marketing Strategies,” at 665–672.

Wittes J. Lakatos E. Probstfield J. , “Surrogate Endpoints in Clinical Trials: Cardiovascular Diseases,” Statistics in Medicine 8, no. 4 (1989): 415–425. Experts generally agree that “use of the surrogate [endpoint] can often lead to dramatic reductions in sample size and much shorter studies than use of the true endpoint.” However, they disagree on how to define the terms. Some “investigators consider not only death but any event or symptom that brings a patient to a doctor as a ‘true’ endpoint; measured variables, like blood pressure or arterial patency, that the patient does not perceive as symptoms are merely surrogates. Another view is that the ‘true’ endpoint for an intervention is usually some cause-specific mortality or morbidity. Total mortality then becomes a surrogate when competing risks prevent the disentanglement of cause-specific deaths from all-cause mortality.” Wittes, Lakatos and Probstfield define the terms more generally: A true endpoint is simply any effect an experiment is designed to show, while a surrogate endpoint is any measurement pathophysiologically related to the true endpoint that is substituted in its place. In this definition, “the context of the therapeutic intervention determines whether the variable under examination is the variable of interest or simply a surrogate.”

Mathieu S. Boutron I. , “Comparison of Registered and Published Primary Outcomes in Randomized Controlled Trials,” JAMA 302, no. 9 (2009): 977–984. Inappropriate behavior within this second domain is perceived as occurring in at least three ways, by (i) failing to register trials, (ii) registering trials, but failing to appropriately disclose results, or (iii) reporting results, but then publishing those results in a journal with discrepancies.

Angell M. , “Industry-Sponsored Clinical Research: A Broken System,” JAMA 300, no. 9 (2008): 1069–1071; Silverstein E. Faich G. Goldstein J. Simon L. , “Gastrointestinal Toxicity with Celecoxib vs. Nonsteroidal Anti-Inflammatory Drugs for Osteoarthritis and Rheumatoid Arthritis: The CLASS Study: A Randomized Controlled Trial. Celecoxib Long-Term Arthritis Safety Study,” JAMA-Express 284, no. 10 (2000): 1247–1255; Institute of Medicine, Conflict of Interest in Medical Research, Education, and Practice (Washington, D.C: National Academies, 2009).

Carreyrou J. McGinty T. , “Taking Double Cut, Surgeons Implant Their Own Devices,” Wall Street Journal, October 8, 2011; Moffat B. Elliot C. , “Ghost Marketing: Pharmaceutical Companies and Ghostwritten Journal Articles,” Perspectives in Biology and Medicine 50, no. 1 (2007): 18–31, at 21. Within this category also fall concerns that companies ghost write or ghost manage journal articles. Yank V. Rennie D. , “Financial Ties and Concordance between Results and Conclusions in Meta-Analyses: Retrospective Cohort,” BMJ 335, no. 7631 (2007): 1202–1205. A study by Yank Veronica Rennie Drummond Bero Lisa confirms evidence of discordance between study results and conclusions purported in literature. Their findings suggest that industry-sponsored clinical trials do not have biased results, but may have biased published conclusions.

See Institute of Medicine, supra note 39, at 49. For example, Orphan Medical, Inc., “agreed to pay $20 million and accept a corporate integrity agreement (in 2007) to settle” several illegal marketing-related charges for its drug Xyrem. Among other charges, “the company was accused of using unrestricted ‘educational grants’ as an inducement for off-label use and paying tens of thousands of dollar in speaker fees to physicians for their promotion of these uses.”

Johnston J. Wassuna A. , “Patents, Biomedical Research, and Treatment: Examining Concerns, Canvassing Solutions,” Hastings Center Special Report 37, no. 1 (2007): S1–S36, at S6.

The ICJME also requires registration of clinical trials as a condition for publishing in member journals. Most IRBs further confirm registration of trials. Additionally, the contracts between research sites and sponsors (federal or private) often specifically require that the study will be registered. Clinical Trials, “FDAAA 801 Requirements,” available at <http://clinicaltrials.gov/ct2/manage-recs/fdaaa#OtherFDAAA801Requirements> (last visited June 24, 2013).

The Pharmaceutical Research and Manufacturers of America, Principles for Conduct of Clinical Trials and Communication of Clinical Trial Results, 2011, available at <http://www.phrma.org/sites/default/files/pdf/042009_clinical_trial_principles_final.pdf> (last visited July 8, 2013). According to PhRMA, results for “exploratory trials conducted in healthy adults” are disclosed only if they provide “significant medical information,” under the justification that those trials “rarely provide information of significant medical importance.” Member companies commit to routinely disclosing “basic information about the study design, study population, primary and secondary outcomes, as well as serious or frequent adverse events.”

The settlement agreement in 2004 to a lawsuit brought by New York Attorney General Eliot Spitzer requires GSK to publically disclose information on its clinical trials. GSK reportedly fought to limit the information it was required to disclose. Since then, however, it has committed to disclosing additional information. For information on the lawsuit leading to the initial disclosure see, Bass A. , Side Effects: A Prosecutor, a Whistleblower, and a Bestselling Antidepressant on Trial, Workman Publishing, 2008.

Rodwin M. Abramson J. , “Clinical Trial Data as a Public Good,” JAMA 308, no. 9 (2012): At; Doshi P. Jefferson T. Del Mar C. , “The Imperative to Share Clinical Study Reports: Recommendations from the Tamiflu Experience,” PLoS Medicine 9, no. 4 (2012): E1001201.

Regulatory capture in part describes the process by which private interests (such as corporations) bias the institutions that are supposed to regulate them in favor of their interests instead of the public's interests (which the regulatory bodies are supposed to protect). Revolving door processes represent an example of regulatory capture.

Partnoy F. , “How and Why Credit Rating Agencies Are Not Like Other Gatekeepers,” Legal Studies Research Paper Series (2006): 59–102, at 62.

It is worth noting that the investor fee model was significantly less profitable than the current conflicted model of credit rating agencies.

Cantor R. Packer F. , “Credit Rating Industry,” Journal of Fixed Income 5, no. 3 (1995): 10–34, at 14. Advances in photocopying and other related technologies which “made it impossible for (rating agencies) to stop subscribers from sharing information with nonsubscribers,” also played a role in the changing of funding models. See, Hill C. , “Why Did Rating Agencies Do Such a Bad Job Rating Subprime Securities?” University of Pittsburgh Law Review 71, no. 3 (2009): 585–608.

Klein A. , “Moody's Board Members Have Ties to Clients,” Washington Post, November 22, 2004, at A09.

There are conflicting opinions about the merits of revolving door theories. For example, Toni Makkai and John Braithwaite, of Australian National University, conclude when speaking about revolving door theories, “that there is limited analytical merit in a conception of capture as an enduring unitary character trait that is structurally determined by a history of interest group affiliations.” Rather they show that capture “is instead a situational problem that requires situational solutions. Constraining the free movement of the revolving door by restricting regulatory appointments from or to the regulated industry is an example of a flawed policy grounded in an overdrawn structural determinism.” See Makkai T. Braithwaite J. , “In and Out of the Revolving Door: Making Sense of Regulatory Capture,” Journal of Public Policy 12, no. 1 (1992): 61–78. Brody Howard , a medical doctor and professor at the University of Texas Medical Branch, points to anecdotal evidence that this strategy was at play in Billy Tauzin's decision to resign from his position as a Louisiana congressman, a position he held from 1980 to 2005, to run PhRMA (a position he was named to in December of 2004). Brody reports that Tauzin had “been a key architect in the House of Representatives of the Medicare prescription drug benefit passed at the end of the 2003,” a law that purportedly had many secret features that favored the industry, “most notably the provision that prohibited Medicare from using its volume purchasing power to negotiate drug price discounts.” Brody argues that “to critics, this sweetheart deal looked like the classic political payola – congressman writes the sort of bill the industry wants; industry rewards congressman with well-paid sinecure from which he can proceed to lobby his former colleagues on behalf of the industry.” See Brody H. , Hooked: Ethics, the Medical Profession, and the Pharmaceutical Industry (Lanham: Rowman & Littlefield Publishers, 2007): At 238.

See Makkai Braithwaite , supra note, 52.

On the other hand, Dieter Helm of New College in Oxford highlights three arguments for why one may not want to prohibit the revolving door phenomena within regulatory agencies: “first, only industry experts can do command-and-control regulation effectively and revolving doors facilitate this; second, ex-regulators might improve the behavior of regulates; and, third, salaries for regulators are (politically) capped, and hence the quality of regulators will fall if there is not the incentive of ex post rewards.” See Helm D. , “Regulatory Reform, Capture, and the Regulatory Burden,” Oxford Review of Economic Policy 22, no. 2 (2006): 169–185, at 183.

See Makkai Braithwaite , supra note 52.

This suggestion is based on known biases that can occur in the auditing industry. See Moore D. Tanlu L. Bazerman M. H. , “Conflict of Interest and the Intrusion of Bias,” Judgment and Decision Making 5, no. 1 (2010): 37–53.

See Partnoy supra note 48, at 70.

The SEC found “rating agency analysts both perform ancillary assessments and participate in marketing consulting services.” See Partnoy , supra note 48, at 69–71.

Kant E. , Ethical Philosophy, Part II of the Metaphysics of Morals: Metaphysical Principles of Virtue , Ellington J. , trans. (Indiana: Hackett Publishing Company, 1983): At 33.