Code Blue

Inside America's Medical Industrial Complex

Mike Magee

• Publisher: Atlantic Monthly Press
• Year: 2019
• ISBN:
  9780802146878
• Topic: Business
• Subtopic: Pharmaceutical, Biotechnology & Healthcare Industry
• Index: Business

This "searing and persuasive exposé of the American health care system" demonstrates the disastrous consequences of putting profit before people ( Kirkus Reviews, starred review). In this timely and important book, Mike Magee, M.D., sends out a "Code Blue" —an urgent medical emergency—for the American medical industry itself. A former hospital administrator and Pfizer executive, he has spent years investigating the pillars of our health system: Big Pharma, insurance companies, hospitals, the American Medical Association, and anyone affiliated with them. Code Blue is a riveting, character-driven narrative that draws back the curtain on the giant industry that consumes one out of every five American dollars. Making clear for the first time the mechanisms, greed, and collusion by which our medical system was built over the last eight decades. He persuasively argues for a single-payer, multi-plan insurance arena of the kind enjoyed by every other major developed nation.

Chapter 1

The Constant Gardener

In 2005, my wife, Trish, and I went to see the film of John Le Carré’s The Constant Gardener, a thriller about a pharmaceutical company’s exploitation of Nigerian children in a corrupt clinical trial that leads to murder.¹ As we were walking out of the theater, Trish said, “That’s based on Pfizer, isn’t it?”

For me, that was a life-changing comment. For eight years I had been the physician-spokesman for Pfizer’s most noted product, Viagra. For eight years I had been part of the large, well-financed team wheeling and dealing with the American Medical Association (AMA), the insurance industry, the academic research establishment, state and federal lawmakers, and government regulators all over the world. From the time I’d started there, I’d been astonished by the resources this single company had been able to marshal to launch this single drug—we lobbied the pope, after all. Yet until I turned away in a kind of revulsion at the manipulation and well-financed maneuvering, I was right in there, helping give moral cover and scientific legitimacy to the world’s largest drugmaker, which also happens to be an industry leader in penalty fees paid to the government for regulatory infractions—$2.3 billion in 2009 for one settlement alone.²

I mention my experience with Viagra and Pfizer not just as a point of access to the much larger story I want to tell, but also because the new model of “corporate affairs on steroids” that Pfizer developed for this one drug has become standard operating procedure throughout the health care industry. And this raw corporate power is only one of the many imbalances and contradictions at the heart of the entire $4 trillion enterprise, an increasingly organized economic syndicate in which, as Saint Augustine said, “plunder is divided according to an agreed convention,” and that now represents more than 20 percent of our total gross domestic product (GDP).

When Donald Trump expressed his cluelessness—“Nobody knew that healthcare could be so complicated”³—before a meeting of state governors in February 2017, he was referring to our approach to health insurance, which has been a political piñata whacked by both left and right for decades. But even when we Americans acknowledge the absurdity of our convoluted system of third-party payers, and the pretzel positions our politicians weave into and out of as they try to justify it, reform it, then unreform it, many still find solace in telling themselves, “Well, we still have the best health care in the world.”

In point of fact, we’re not even close to having the best health care in the world. As legendary Princeton health economist Uwe Reinhardt said, “At international health care conferences, arguing that a certain proposed policy would drive some country’s system closer to the U.S. model usually is the kiss of death.”⁴ Our system is marked by extreme variability, a nation of health care haves and have-nots. The fortunate receive services from immensely talented and dedicated physicians, nurses, and other caregivers, and they have access to drugs, devices, and facilities that are the envy of the world. All others struggle just to stay healthy without going broke. Americans spend from 50 percent to 100 percent more on health care as a share of GDP than people in other industrialized countries do, and for all our high expenditure we get collective outcomes that are demonstrably worse.⁵ In fact, we get outcomes that are, in general, truly dismal.

American women, on average, are three times as likely to die in pregnancy as British or Canadian women, with 28 deaths per 100,000 births versus just 8 in the United Kingdom and 11 in Canada.⁶ In Germany and Japan, two countries whose universal health care systems were rebuilt from scratch by the American military as part of the Marshall Plan following World War II, maternal deaths per 100,000 are 7 and 6, respectively. According to World Bank data, American children are about twice as likely to die in the first five years of life as are British, Canadian, German, or Japanese children.⁷ A 2017 study by the Commonwealth Fund comparing the health care performance of 11 nations ranked the United States last in health system performance.⁸ This was the same position the US held six years earlier when compared with 15 other industrialized nations. That study revealed that the US rates of premature death (the rate of preventable death amenable to timely and effective care) were 68 percent higher than those of the best-performing nations; this figure translated into 91,000 lives needlessly cut short each year.⁹

As for cost-efficiency, in the 2016 Bloomberg index of health care efficiency rankings of 55 nations, the only nations with lower scores than ours were Jordan, Colombia, Azerbaijan, Brazil, and Russia.¹⁰ We pay on average twice as much for our drugs as any other developed nation does and waste $375 billion a year on billing and insurance-related services simply because we rely on a complex multi-payer system of insurers rather than having—like every other advanced economy in the world—a more streamlined and coordinated single-payer/multi-plan approach.¹¹ All of which contributes to Americans’ receiving medical care that has consistently ranked last over the past decade among developed nations, not just in terms of efficiency and equity, but also in terms of overall quality, with the death rate from treatable diseases nearly 70 percent higher than the rates in Australia, France, and Sweden.¹²

Although health insurance is only one part of this sorry state of affairs, our approach to it underscores the core problem of our health care overall, a truth so fundamental and so blindingly obvious that we often overlook it. The simple fact is that nothing about our system was ever envisioned as a holistic way to logically and efficiently provide for the overall health and well-being of our nation’s most valuable resource—our citizens.

Quite the contrary, our health care system’s focus, at every phase of its development, but especially since its expansion and increasing sophistication after World War II, has been on maximizing opportunities for profit and/or career advancement for the players within it. Which helps explain why we now have a health care lobby four times the size of the lobbying effort run by the defense industry.¹³ Which also helps explain why it’s easier to get an MRI than a home health aide, and why, according to a 2012 Institute of Medicine report, we as a nation lose roughly $750 billion annually to unnecessary services, administrative excess, lax preventive measures, and medical fraud.¹⁴

I’ve been a physician in private practice, a senior administrator at one of the country’s premier academic medical centers, an executive at the country’s largest pharmaceutical company, a medical reporter and commentator, and, during the administration of George W. Bush, a candidate for surgeon general of the United States. I’ve waded through the quagmire at every level, from the trenches to the command center, and I’ve had many years to reflect, research, and analyze—to try to make sense of my experience and put it in the broadest and most meaningful context.

Accordingly, this book is much more than a string of horror stories about soulless hedge fund managers buying companies to jack up prices of lifesaving drugs for children, or mold-contaminated steroids causing outbreaks of meningitis, or an absurd and wasteful insurance system that only Rube Goldberg could have dreamed up. The book will tell some of those stories, but only as a way of directing our attention to two basic questions: How did we get into this mess, and what do we do about it now?

To address the second question—what do we do now?—I believe we truly need to understand the first: the developmental steps, starting decades ago, that led to the structure we now find ourselves forced to muddle through.

In his epilogue to The Big Short, Michael Lewis said that the reason American financial culture was so difficult to change was that “it had taken so long to create, and its assumptions had become so deeply embedded.”¹⁵ I think the same can be said of the culture of American health care. It is a system that includes many caring and committed professionals who labor tirelessly in the trenches; yet at the highest levels, that culture has become a self-serving network of vested interests that is, if anything, more dangerous and more harmful than the cabal of defense contractors, hawks, and saber-rattlers that, nearly 60 years ago, President Eisenhower labeled the military-industrial complex. The network of mutually beneficial relationships in health care weaves back and forth across the boundaries of big business, academic medicine, patient advocacy organizations, and government to create a fabric with the strength of Kevlar—a fabric I call the Medical Industrial Complex (MIC).

My focus is on examining how that fabric operates today, but I believe that understanding the weave requires seeing the present in a historical context, which means following the trajectory of medical care from the domain of patient, physician, and local pharmacist into the domain of global corporations, Wall Street mergers, K Street lobbyists, Byzantine insurance programs, political logrolling, and rampant greed with hidden profit-sharing tactics worthy of a crime syndicate.

My focus is on US health care, but here, too, it’s only reasonable to widen the frame and look at other systems to compare and contrast. After all, there is no way to comprehend just how truly awful our system’s performance is compared with that of other developed nations without some benchmark—in this case, the much higher population-wide levels of performance, patient satisfaction, and even physician income achieved at a much lower cost elsewhere.

This brings us back to the most fundamental question about a commitment to the people’s health as a matter of national purpose. In France, the United Kingdom, Canada, Germany, Scandinavia, and almost anywhere else in the developed world, when an individual has a medical issue, he or she engages with the system without question or concern, knowing that access to care is a basic right of citizenship, the same way that police protection or protection by the nation’s embassies for travelers abroad is a right. Individuals in other nations get this kind of access. So does a small segment of our population with resources and the good fortune of having insurance and high-quality health services nearby. But population-wide, medical services in other nations on the whole are both far superior and considerably cheaper than ours, because each of these societies made a determination that a healthy population was essential to the country’s economic well-being, as well as to the national identity. At a certain point, such a determination created the obligation to define what “a healthy population” means, and this led to the setting of priorities, which often included ways of promoting health that extended beyond the scope of health care per se, integrating planning for housing, education, jobs, nutrition, the environment, safety, and security. After establishing such goals, these countries set about budgeting and allocating resources in order to meet them.

In the United States, we never made that commitment. Instead, as we gained increasing leverage in our ability to fight disease, we simply doubled down on a prior commitment to preserve the widest range of entrepreneurial opportunities, believing somehow that market competition would save the day and produce the most modern, efficient, streamlined system possible.

* * *

Today’s health care status quo was born in the immediate aftermath of World War II, as a product of American health care’s original sin. Without undertaking dialogue or planning to support population-wide health, as the Canadians did, or the build-out of a universal health care system, as our military did under the Marshall Plan for our recently vanquished adversaries in Germany and Japan, our political and medical leaders gave way to the conceit that scientific ingenuity and innovation could defeat disease the way we had just defeated the Nazis. They believed that when disease was defeated, good health for our citizenry would be left in its wake. Profiteers chose cure over care and embraced federal funding, over-the-top advertising, and the overpromising of scientific discoveries. When costs exploded and discoveries lagged, they fanned the fear of “socialized medicine,” eroded regulations, and finally supported a partial expansion of health coverage, but only after being granted concessions to ensure that the private-market status quo would remain intact. And with health care expenditures approaching one of every five American dollars, they offered to manage the burgeoning health care data and cost-control enterprise for a price, and quietly dealt every health sector player in—except the American patient.

Unfortunately, that American bias toward health care as a business rather than as a human right produced a system with unconscionable disparities between the haves and have-nots. But what locked a bad system in place was that, by the time policymakers got around to trying to mitigate some of the worst excesses in the 1970s and 1980s following the passage of Medicare, the entrepreneurial wheels were humming, and the foxes—if you’ll forgive the mixing of metaphors—were already in charge of the henhouse. Endless special arrangements and inside deals led to a mind-boggling level of complexity and the institutionalization of blatant conflicts of interest that undermined even the best intentions.

If you want to understand how we fail in quality and excel in cost when our health care system is compared with that of almost any other developed nation—and why drug prices jumped by nearly 20 percent in 2017 alone while the general inflation rate for the same year was 1.7 percent—the Medical Industrial Complex is the place to look.¹⁶ If you want to understand why the level of National Institutes of Health (NIH) research funding rises and falls in direct response to aggressive lobbying, while health insurers and health professionals actively question the integrity of medical research, the independence of the US Food and Drug Administration (FDA), and the safety, effectiveness, and affordability of pharmaceuticals—again, check out the MIC.

It’s not just the high cost and inadequacy of health insurance that should alarm us, or drug companies’ price gouging, or our nation’s third-world rates of infant mortality, or the fact that by some estimates 250,000 Americans die of medical errors in our hospitals each year,¹⁷ or that a teenage girl in Mississippi is 15 times more likely to give birth than her counterpart in Switzerland,¹⁸ or the barriers to abortion being erected in some states, or why we can’t get the same drug prices that are available in Canada for drugs manufactured in the United States, or why we keep seeing fraud by overly ambitious scientists in biomedical research labs. It’s also the prescription opioid epidemic, hospital chains buying hugely expensive ads while costs skyrocket, cancer centers hustling patients out just before they die to keep the institutions’ mortality ratings low, and drug companies engaging in pay-for-delay collusion to slow the introduction of lower-cost generics. And serving as croupiers at this casino are the insurance companies, which assign critical decisions to patients despite a 2016 Yahoo Finance–PolicyGenius survey showing that only 4 percent of Americans understand the following four terms: “deductible,” “co-payment,” “co-insurance,” and “out-of-pocket maximum.”¹⁹

The strength and durability of the Medical Industrial Complex lie in the fact that strange bedfellows from each of these domains—medicine, insurers, hospitals, pharmaceuticals—long ago develop...

Table of contents

• Cover
• Also by Mike Magee
• Title Page
• Copyright
• Dedication
• Contents
• About the Title
• Chapter 1 The Constant Gardener
• Chapter 2 Intertwined
• Chapter 3 Government Steps In
• Chapter 4 The War of Science against Disease
• Chapter 5 Advocates
• Chapter 6 The House of God
• Chapter 7 Insuring Complexity
• Chapter 8 Masters of Manipulation
• Chapter 9 Equal Parts Politics and Science
• Chapter 10 Strange Bedfellows: Health Care, Politics, and the Christian Right
• Chapter 11 Nigeria, CROs, and Research Biases
• Chapter 12 Viagra: “Everything That Rises Must Converge”
• Chapter 13 New Rules
• Chapter 14 Time to Deal
• Chapter 15 The MIC—“Tapeworm of American Economic Competitiveveness”
• Afterword
• Appendix: Time Line of Pfizer’s Penalties and Transgressions
• Acknowledgments
• Notes
• Index
• Back Cover