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Integrity Scorecard

By Siri Schubert*

A prosecutor, nine policemen and three IRS agents entered the Aachen offices of Trommsdorff, one of the oldest German pharmaceutical companies on June 25, 2008. They were looking for evidence in a criminal investigation that could spell the end of a common corrupt practice in Germany's health care sector.

The investigators soon found what they were looking for: more than 10,000 drug-use study questionnaires for Emestar, a blood pressure medication that produced more than US$10 million in revenue for Trommsdorff in 2007. The studies, along with internal documents and e-mails, provided ample material for investigators, who were acting on an anonymous tip.

The most telling detail was the drug-study cover sheet. On it, physicians could choose from what seemed to be a selection of kickbacks after prescribing Emestar to a certain number of patients. For five patients, a doctor could claim either a 17-inch flat-screen monitor or an iPod; 14 patients would bring in a car GPS system or a DVD recorder, while 18 patients would imply a laptop or PC with printer as rewards. Doctors not into electronic toys were offered money as an alternative.

"It was a real catalog with compensations for prescriptions," says Robert Deller, the prosecutor in charge of the case.

The rewards weren't the only evidence that led prosecutors to believe the study was a disguise for illicit payments. Several of the questionnaires were filled out by Trommsdorff representatives with fictional data after doctors had returned blank surveys. The questionnaires also didn't seem to be used in any study; instead, they were stored in Trommsdorff's offices. This led to investigations of 480 physicians and 86 pharmaceutical sales representatives working for Trommsdorff all over Germany; legal proceedings have been initiated against close to 200 medical doctors.

"What we found looks like a systematic approach to handing out and taking kickbacks that must have been known to the responsible people at Trommsdorff, the pharma reps and the doctors," says prosecutor Deller.

Common Form of Corruption

Drug-use studies have come under intense criticism by anti-corruption organizations such as Transparency International and I Will Pay for My Meal (MEZIS — Mein Essen Zahl Icht Selbst), a small organization focused on eliminating corruption and questionable business practices in doctors' offices.

This is one of the most common forms of corruption in the medical system," says Christiane Fischer MD, a spokesperson for MEZIS. So common, in fact, that these studies are known as "fireplace studies," because they are not filled out in doctors' offices but in doctors' homes, in front of the fireplace, with no patients involved.

"They have no scientific value or application, and most doctors are well aware of that," says Fischer. "The drug-use studies are not transparent or uncontrolled, and therefore not evidence based."

Pharmacology professor Peter Schoenhoefer, co-publisher of the independent medical newsletter Arznei-Telegramm, which has more than 30,000 subscribers, believes that the pharmaceutical industry spent about 1 billion euros (US$1.5 billion) in Germany in 2007 for gratuitous drug-use studies. "The money is nothing more than a bounty paid for each patient," he says.

Other Cases of Alleged Fraud

While the Trommsdorff case is going on in the Western region of Germany, a similar case in the South, in Ulm, resulted in the first penalty orders. Approximately 2,800 physicians are still under investigation for receiving kickbacks for prescribing medications made by Germany's third largest pharmaceutical company, Ratiopharm, which sells 750 different generic drugs ranging from antibiotics to cancer medications. The kickbacks amounted to between 2 and 8 percent of the sales price and were often disguised as payments for consulting or educational services.

"Drug-use studies and consulting services should be declared illegal when they are used as sales incentives and to pay off doctors," says Professor Schoenhoefer.

Not Punishable Under the Law

So far, payments for these studies, as well as other thinly disguised bribery payments, exist in a legal gray zone. For decades they weren't prosecuted because they were not considered punishable under German law. A first change came about when a young lawyer in Hamburg, Oliver Pragal, argued in a 2005 paper that doctors contracting with public health insurance companies were public officials and could thus be criminally prosecuted for bribery. He also argued that doctors acting as trustees for private health insurance companies could be punished under existing German criminal law. His interpretation is the foundation for the recent cases involving Trommsdorff and Ratiopharm. But until the highest appeals court in Germany (the Bundesgerichtshof) has ruled on one of these cases, legal questions remain.

This is why Alexander Badle, special prosecutor for fraud and corruption in health care for the state of Hessen, who opened 350 new investigations in the first six months of 2009 alone, has dismissed the 100 Ratiopharm cases that occurred in his jurisdiction.

"The marketing methods that occurred in this case are fairly common in Germany. There is no question that they are unethical, but we want the lawmakers to clearly define whether they are illegal or not," he says.

Although experts agree that these cases are likely to be settled out of court, a definite ruling could stop the unethical marketing practices for good.

"The outcome is relevant not only for Trommsdorff or Ratiopharm but for every German pharmaceutical company. The outcome has implications on a market with a billion-dollar volume. If the highest court in Germany concludes that these practices are illegal, the whole pharmaceutical distribution system has to be changed," says Frankfurt prosecutor Alexander Badle.

Unethical Practices Hurt Citizens

While legal discussion continues, these unethical practices continue to raise the cost of health services for all citizens. Transparency International estimates that the loss due to corruption in the German health care system amounts to between 6 and 20 billion Euros (US$8.8-billion and US$29 billion) annually.

But the financial burden is not the only cause for concern. "The victims are the patients because the focus is on making money and not on whether the medication is affordable and effective," says Schoenhoefer. He believes that many drugs that are unnecessary or outright harmful are prescribed.

The fact that several prominent cases of corruption in the health care system involve pharmaceutical companies does not surprise prosecutor Badle. "In Germany, more money is spent on pharmaceuticals than on treatment by physicians. This is why this area is especially vulnerable for corruption and other kinds of criminal activity."

Not Just Pharmaceutical Companies

However, that doesn't mean pharmaceutical companies hold the monopoly on questionable practices. In December 2008, a regional office of health insurer AOK rewarded 2000 doctors with 100 Euros (US$147) travel certificates for being part of a disease-management program for chronic patients. Having more AOK-contracted doctors enrolled in the program could result in more money from a special state risk fund for the company.

"The doctors were basically paid to classify more patients as chronically ill so the insurance company could get a larger share of the state-run risk adjustment fund," Schoenhoefer explains.

However, AOK claims that it paid only 2.57 Euros (US$3.77) per doctor and thus stayed within the legal maximum for advertising expenses (the rest, AOK says, was provided by the travel agency). The insurance company also insists that it was not granting any undue advantages to the doctors.

Unconvinced, Transparency International has informed the state and federal health departments about the case. It is unclear whether the complaint will result in any further action.

"The extent of corruption in the German health care system has increased over the years," says Schoenhoefer, "but awareness [of it] within society is still very low," he says.

Because Germany has had several large corporate corruption cases in the past few years - involving companies like engineering giant Siemens and microchip manufacturer Infineon — it is likely that awareness about corruption will increase.

And it's not just big businesses that are involved in corruption. In Hannover, a 53-year-old professor was sentenced to three years in prison in 2008 after pocketing more than 150,000 Euros (US$220,000) for helping doctoral candidates obtain their degrees. This case led to investigations of 100 other professors suspected of taking bribes. In Cologne, the former mayor was sentenced to 3.5 years in prison for receiving 75,000 Euros (US$110,000) in political contributions in exchange for an expected positive vote on privatization of municipal garbage disposal operations.

Despite all this, there are positive signs. In its latest report, Transparency International named Germany as one of the four countries that fulfilled the requirements of the Organization for Economic Cooperation and Development's (OECD) anti-bribery convention. And prosecutor Badle thinks there will be positive developments in the health care sector in the future.

"Patients have to become more watchful, but at least health insurance companies are paying more attention," he says. And that, he hopes, will lead to more cases being solved and, in the long run, to significant changes toward a more honest and transparent system.

*Siri Schubert is a freelance journalist in Richmond, California, and a reporter for the PBS Frontline/World website "The business of bribes". She is a former fellow with the Investigative Reporting Program at UC Berkeley. Her work has been published in the New York Times, Fortune International and magazines and newspapers in her native Germany.