Economics

The Medical-Industrial Complex Pads Its Pockets As We Empty Ours

By MIKE MAGEE, MD

A report this month published in the British Medical Journal found that 80% of 293 physician leaders and board members of 10 of the most influential medical associations in the United States (including the American College of Physicians, American College of Cardiology, American Psychiatric Association, Infectious Disease Society of America, American College of Rheumatology, the American Society of Clinical Oncology, Endocrine Society, American Thoracic Society, and Orthopaedic Trauma Association) received financial payments of $130 million in total for “leadership” activities between 2017 and 2019.

In doing so, they were replicating the behavior established in 1939 by Vannevar Bush. Born March 11, 1890, in Everett, Massachusetts, the only son of a Universalist preacher and the grandson of a whaler, Bush earned a math degree from Tufts, followed by a PhD in engineering from MIT. From the beginning of his career he straddled the academic and the industrial in a way that anticipated the future of almost all scientific research.

In 1939, with the Second World War consuming both Europe and Asia, the father of the Medical-Industrial Complex met with the president of Harvard University and the president of Bell Labs, and mapped out a strategy for overcoming our lack of scientific preparedness. Out of that small meeting came a short, four-paragraph proposal for a centralized science operation—outside the control of the military—which he presented to President Roosevelt on June 12, 1940.

The president read the report, seized his pen, and scratched at the top, “OK-FDR.” With that stroke, the National Defense Research Committee (NDRC) was created, and with it, the fully codified and institutionalized era of academic-industrial partnerships in research.

In FDR’s eyes, whether it was materials, logistics, or coordinating laboratory studies themselves, the effort to put research on a war footing required a group of wily and innovative businessmen-scientists. Primary among them was the bespectacled gentleman who appeared on the April 3, 1944, cover of Time, leaning forward into the lens, tanned, in a light gray suit, with a crisp, white shirt and steel-blue tie, next to a ray-emitting radio microphone. The caption read, “Vannevar Bush: General of Physics – Meet the man who may win or lose the war.”8

Staffing up, Bush had launched a nationwide talent search that ranged from Nobel laureates to high school chemistry teachers, compiling automated case histories on more than 200,000 individuals. As overall head of President Roosevelt’s Office of Scientific Research and Development (OSRD)—also known as the fifth branch of the military general staff, or G5—Bush coordinated 6,000 scientists working in some 300 laboratories, both university-based and commercial.

Rather than build and manage large government laboratories, he endorsed entrepreneurial, innovative, profit-driven,  cross-sector partnerships, and in the process made scientific progress an achievable commodity. The success stories were well known– a blood bank and plasma program, 18 different vaccines, large-scale production of penicillin, mega-computer decoders, radar, the A-bomb and more.

Less well known were Bush’s ties – before and after the war – to Merck Pharmaceuticals. One of Bush’s closest friends, since 1933, and an early wartime hire, was George Merck, CEO of the company. He served out the war as Bush’s Director of Biological Warfare. Their head of the OSRD Medical Research Committee was the University of Pennsylvania’s Alfred Newton Richards, a long-time consultant to Merck. John T. Connor, VP of Government Relations at Merck, served as OSRD General Counsel.

This integrated career ladder, from government to academia to industry and back again, remained intact after the war. George Merck successfully recruited Bush to his Board where he subsequently became Chairman. Richards joined the Board, and Connor moved up the ranks becoming CEO of the company in the 1960’s.

During the war, government funding exploded with the national GDP doubling between 1940 and 1945. Medical Research saw some of the steepest rises with the 1940 investment of $45 million growing to $161 million by 1950, and topping $14 billion three decades later.

George Merck especially relied on Bush and Richards to build the post-war cross-sector partnerships with academic medicine, challenging them to penetrate and advantage the most prestigious academic medical establishments. To do so, they developed eight funded specialty advisory boards whose purpose was laid out clearly at the time by Bush. He stated, “If one knows where the breaks are likely to occur, he makes effective contact with those who are at the forefront of the advance, aids them in any way possible, and watches for places where that aid can become independently applied.”

With the assistance of medical marketing, direct-to-consumer advertising, and aggressive and coordinated lobbying in and among members of the Medical-Industrial Complex, these efforts greatly expanded the profitability of academic institutions and their premier scientists. But they did so at the price of their own integrity.

As the BMJ authors note, “Studies have found that sponsored trials have more favourable outcomes for sponsors’ products, sponsored education is associated with higher prescribing of sponsors’ medicines, and guideline panels, which change and often expand disease definitions, are populated by doctors with extensive financial conflicts of interest…guidelines from these professional medical associations ‘frequently call for greater use of health care services,’ and financial independence from commercial interests is doubly desirable if we are to tackle the problems of overuse and overdiagnosis.”

Today’s conflict infused Medical-Industrial Complex has its origins among these war-hardened, scientific warriors who saw the Nazi’s and disease as enemies to be defeated through whatever means necessary. In pursuing silver bullets and silver linings, at the cost of rejecting universal healthcare as socialistic and public health infrastructure as window dressing, they created a health care system that placed profit above patient at every turn.

As the major medical association leaders pad their pockets, our federal and state leaders are now forced to empty theirs, as we continue to search for universal health coverage and sound public health policy.

Mike Magee MD is a Medical Historian at the President’s College at the University of Hartford, and author of “Code Blue: Inside the Medical-Industrial Complex.”

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5 replies »

  1. medical complex how it empties our pocket, nice written article, thanks for sharing.

  2. Bob-
    Thanks so much for this. You are correct, it is an area (“value based payment systems”) that I did not address in CODE BLUE. But you have me thinking. I was mentoring a young sociologist the other day for a project he’s leading. Discussing the value of grounding community-wide reconstruction on universal health services, I was reminded that by and large, doctors and nurses instincts (and oaths) have been honored by their action and service 24/7 over many decades. We have our share of saints and sinners, but in general we provide society a reservoir of compassion, understanding and partnership. Pressing the profit button over appeals to our natural callings do carry us farther away from our finer selves.

  3. Good article, but the target you missed is the HMO-ACO industry crony (government backed) corporate cartel system profiteering through rationing care masquerading as “cost control”. Since the industry failed to control costs for near 5 decades, Obamacare created the far more powerful cartels empowered by government to bribe (“incent”)bedside clinicians to ration care–a value to the corporations with profits (“savings”) to be “gain-shared” with CMS. The process is called “pay for value” and “value contracting”–clearly unethical payments for behavior rather than for medical services. A shameful means of cost control when policymakers and politicians use bribery at the nation’s bedside to ration care. If you want to know where the money is wasted in the US, look at the stock prices of the cartels!

    Nobody is covering this story. I hope you will.

    I would be glad to share my articles/references on the cartels’ bribery scandals and CMS’s “Pathway to Success” program with you through its regulatory repeal in 2011 of anti-kickback and anti-self-referral (Stark) laws. The published article was titled “ACO Kickbacks in the News and Gatekeeping in the Courts”. [Only obscure journals publish this kind of stuff!]

    Best wishes,

    Bob

  4. thanks for sharing the information, nice post on Medical-Industrial Complex.

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