1600 words assignment

This assignment is in the form of a critical examination of the attached case study. As such, you should analyse and evaluate the issues addressed in the case study and not just describe these or repeat what is in the case study. The assignment should be treated as a serious piece of research work. You will, therefore, be responsible for identifying and using the relevant literature. You will find that the Module textbook and Reading List are a good place to begin.

Part 1

1. Drawing on the literature on leadership styles:

a. Identify the leadership style of the company’s senior managers and discuss its suitability

for the case study situation.

b. Given Synthes’ situation, what other style or styles of leadership might have been

appropriate and why?

(900 words/35 marks).

Part 2

2. Drawing on the literature on ethics:

a. Define ethics.

b. Use the definition to identify the ethical issues raised in the case study.

c. Discuss their impact and how they might have been better addressed.

(1100 words/45 marks).

3. Learning and behaviour:

a. What have you personally learned about leadership from studying the case study?

b. How would this affect your behaviour as a leader?

(500 words/20 marks)

Your answers will include:

A discussion of the key issues involved in the case study.

A discussion of the relevant aspects of the leadership literature.

A clear and logical structure.

Conclusions which critically evaluate the assignment questions.

Evidence that the answers are based on and cite the relevant academic literature.

Reference using the Harvard system.

Use minimum 12pt font, 1.5 or double-spaced.

Bad to the bone: A medical horror story

When medical device company Synthes decided to illegally test a bone cement on people, the results were disastrous. A disturbing tale of corporate crime and punishment. In 2009 the U.S. attorney in Philadelphia accused the company of running illegal clinical trials - essentially, experimenting on

humans. Between 2002 and 2004, Synthes had tested a product called Norian XR, a cement that has a unique capacity to turn into bone when injected into the human skeleton. The Food and Drug Administration explicitly told Synthes not to promote Norian for certain spine surgeries, but the company pushed forward anyway. At least five patients who had Norian injected into their spines died on the operating-room table.

The indictment of Synthes and its executives shook the health care industry. What occurred is a classic example of corporate malfeasance, but set inside an insular corporation run by a reclusive and autocratic Swiss multibillionaire. The Department of Justice targeted four high-ranking executives, all of whom pleaded guilty to a misdemeanor under an unusual provision of health care law called the Responsible Corporate Officer Doctrine. They accepted responsibility for the company's crime of running unauthorized clinical trials and for engaging in off-label marketing, or promoting products for unapproved uses, without conceding that they were involved in the crime. At the time, no executive had ever gone to prison for such a charge.

Off-label marketing is so common among drug and device makers that it's often dismissed as the equivalent of driving slightly over the speed limit. But this wasn't the typical off-label marketing case. Nor was it typical of trials for medical devices or drugs. Patients sometimes die during such clinical trials - but only after being advised of the risks and then granting their consent. In hiding the unapproved status of the cement, prosecutors argued, Synthes denied patients the right to choose whether they wanted to be test subjects.

In the 1970s, a Swiss businessman named Hansjörg Wyss struck a deal to become head of

Synthes's U.S. operation. Wyss later became CEO of the entire company and over the next 30 years built it into an industry giant that specializes in making plates and screws to stabilize broken bones. Along the way he became a multibillionaire.

Former Synthes employees portray Wyss as an intimidating, hands-on leader. Nisra Thongpreda, the manager first assigned to the Norian project, would testify before a grand jury that "for somebody who is at his level and his level of success, I would say he has a surprising amount of contact with what's going on." Several former Synthes staffers recall meetings where Wyss probed the minutiae of their

projects. "It would feel like he wasn't paying attention," says a former employee. "Then, all of a

sudden, he'd turn and raise a question that was far in the weeds - maybe the single dollar amount of something you proposed." Wyss's level of control could verge past micromanagement.

In the late 1990s a fledgling biotech company called Norian popped up on Wyss's radar. The startup, based in Cupertino, Calif., had developed a calcium-phosphate-based cement, also called Norian, with almost miraculous qualities. When implanted in the skeleton, the cement not only fills cracks but also gradually transforms itself into actual human bone. Synthes bought the company in 1999 for about $50 million. At that point Norian had already obtained FDA approval to market two versions: Norian SRS, for use in the arm, and Norian CRS, for use in the skull. There was a third potential application for the cement - one that Synthes executives hoped could be extremely lucrative - and it's this use that would eventually prove disastrous: filling fractures in the spine. In the 1990s specialists were increasingly touting the benefits of a procedure called a vertebroplasty. To perform the surgery - - typically done to treat vertebral compression fractures, or VCFs, a common side effect of osteoporosis - surgeons inject cement into the spine. At the time, the procedure was performed with acrylic cement, which contained a material used to build aquariums. Norian, with its unique properties, seemed like a superior alternative.

When Synthes acquired Norian, the company did not yet have permission to sell it for use in the

spine. Synthes would have to convince regulators that the new use was safe and effective. The government's response was discouraging. An FDA representative told Synthes in a conference call that it would "almost definitely" need to pursue a path that typically necessitates clinical trials, according to minutes of the call. To do that, the company would have to obtain an Investigational Device Exemption, or IDE, from the FDA. (In FDA jargon, the "exemption" grants the manufacturer the right to conduct human tests.) Then Synthes would have to persuade a large number of patients to undergo experimental treatment and conduct a lengthy and expensive clinical study. Instead of preparing a clinical study, Synthes made the first of a series of fateful choices, deciding to launch right into market research.

Whispers of the project began spreading, prompting the first - but not the last - alarm within Synthes. A strait-laced regulatory staffer named Michael Sharp was appalled when he learned, in a chance

conversation, about the plan to promote Norian. Companies are explicitly barred from marketing products for uses that haven't been authorized by the FDA. Even mentioning unapproved uses to surgeons is prohibited. Sharp fired off an e-mail to Tom Higgins, the president of Synthes Spine

Division, and Richard Bohner, vice president of operations at Synthes, expressing his concern. Higgins met with Sharp. The regulatory staffer says he made it clear that Synthes employees shouldn't discuss Norian with spine surgeons. Higgins assured him, Sharp recalls, that the company wasn't going to promote the product for use in the spine. "At that point," says Sharp, "I thought the issue was entirely put to bed."

But the project didn't die there. In February 2001 a surgeon in Santa Monica used Norian to perform two procedures on elderly patients with vertebral compression fractures. In both cases, according to company documents, the patients experienced rapid drops in blood pressure shortly after the surgeon injected the cement, and an anesthesiologist had to administer drugs to keep them from dying.

In April 2001, Higgins organized a focus group in Cupertino with surgeons who were interested in using Norian to treat VCFs. The doctors discussed the operations that had gone wrong in Santa Monica, according to minutes of the meeting. Dr. Sohail Mirza, a surgeon at the University of

Washington, suggested that Norian could be causing problems if it entered the bloodstream.

Meanwhile, Synthes's top brass was scheduled to meet with Wyss in November to decide whether to proceed with plans to sell Norian for use in the spine. A few weeks before the meeting, Higgins asked a regulatory employee to mock up a clinical trial for using Norian in vertebroplasty. The staffer estimated it would take three years and cost about $1 million. He told Higgins that Synthes needed government approval to test Norian on people - a fact that was common knowledge, according to prosecutors and several former Synthes employees.

That November, Huggins, Higgins, and their colleagues met with Hansjörg Wyss in Tucson. It was judgment day for the vertebroplasty project. The attendees discussed the prospect of doing a clinical study, according to the meeting's minutes. Then Higgins asked whether Synthes should get an IDE and conduct trials. The answer, according to the minutes, was no: “Decision made not to pursue an IDE study, but to get a few sites to perform 60-80 procedures and help them publish their clinical

results.”

Former employees describe Synthes as highly regimented - the kind of place where employees do what they're told. "Everybody's just a sort of a worker bee," says one former staffer. Wyss was known for handpicking young executives, typically men who had gone to top-notch schools, and guiding their careers. Several former employees say Huggins and Higgins, who had attended, respectively, Wharton and Harvard, belonged to that group. "He picked these guys and cultivated them," says a former Synthes manager. "They were all fiercely loyal." They also knew, former staffers say, that the man everyone called "Mr. Wyss" didn't tolerate dissent.

In the spring of 2002, Thongpreda [the project manager] received an unsettling e-mail from Dr. Jens

Chapman, an orthopedic surgeon at the University of Washington. Chapman informed her that when Norian was injected into the bloodstream of a pig, "the entire pulmonary artery system had clotted off." As he put it, "We were expecting to kill the pig … but not suddenly and with a relatively small dose."

Over the next few weeks, according to prosecutors, top executives at Synthes held a series of meetings about Norian. On May 13, 2002, Huggins and Higgins met with Wyss and decided to proceed with their plan to informally test it for vertebroplasties. On May 22, Huggins and Higgins met again. This time there was "high concern about SRS in spine test market," according to a document assembled by an employee who didn't attend the meetings. On May 28, Huggins spoke with Wyss, and they "agree[d] to go ahead with Vertebroplasty Test Market."

Two weeks later Jens Chapman and his colleague sent the final results of their study to Higgins. The first test involved mixing Norian with human blood in test tubes, then watching how quickly clots

formed. The scientists noted that "a relatively small amount of Norian results in the formation of a very large volume of clot," which could block the flow of blood inside the heart or lungs. The final word on the pig test was equally worrisome. The surgeons had injected Norian into a large vein leading to the animal's heart to simulate what would happen if the cement leaked during vertebroplasty. The pig's blood pressure plunged. When the scientists cut into it after its demise, they noted that volumes of blood clot containing Norian had amassed in its lungs. The animal had died in less than 30 seconds.

In the summer of 2002, Hamilton, a young Norian product manager (who had recently graduated from business school), began training spine surgeons to mix SRS with barium sulfate in order to perform vertebroplasties - an act explicitly prohibited by the label. During this preliminary trial, which Synthes employees called "test market phase 1," a select group of surgeons conducted several dozen surgeries using the mixture, SRS-R. Hamilton later testified that she knew she was on thin ice. The FDA's warning was unambiguous: They weren't supposed to talk about mixing SRS. But whenever they brought up their concerns with their managers, they were assured that everything would be fine. Hamilton, who was later granted immunity from prosecution in exchange for her cooperation, explained that it was understood at Synthes's spine division that off-label marketing was the status

quo: "This is the way that it's done. And it happens every day."

The SRS-R test market proceeded successfully. Dozens of surgeries went off without a hitch, and Synthes was ready to move on to phase 2. That September, Hamilton gave a presentation to several executives - including Wyss - about the vertebroplasty project. "Wyss inquired about the test-market setup and how surgeons, who are interested in the product, were to be trained," the minutes of the meeting stated. That winter, employees in the regulatory division were tasked with getting the FDA to approve the mixed version of Norian, rechristened as Norian XR, for general use in the spine. It was a touchy subject. The FDA had recently issued a public notification that stressed the off-label nature of vertebroplasties. In December 2002 it approved the mixed version. But Synthes was still stymied: The FDA ordered it to include a warning on its label that said XR should not be used to treat vertebral compression fractures. The fact that Synthes couldn't promote XR for its target market didn't seem to bother its executives. Higgins sent the vertebroplasty team a celebratory e-mail. "Let me take a moment to congratulate the four of you [on] getting XR approved," he wrote. "Very Well Done_"

Less than a month later Dr. Barton Sachs, a spine surgeon in Texas, used Norian to treat a VCF. His patient, a 70-year-old Oklahoma native named Lois Eskind, said beforehand that she was in excruciating pain and that she'd "rather have surgery than live like this." Fifteen seconds after Sachs injected the cement into her spine, Eskind's blood pressure plummeted. As a Synthes sales representative looked on, Sachs attempted to resuscitate her for 30 minutes before she died.

In December 2003, John Walsh, who had just become head of regulatory affairs at Synthes Spine, signed off on Norian XR's technique guide, a brochure that was given to surgeons. The guide omitted the warning that the FDA had ordered Synthes to include on the label, which said that Norian shouldn't be used to treat VCFs. It also included two "case examples" - real X-rays of anonymous patients who had had surgeries with Norian. One of the X-rays belonged to a 41-year-old male. The other came from a 70-year-old female. The female, prosecutors later revealed, was Lois Eskind. Unbeknown to the surgeons who received the brochure, the case study came from a woman who had died after being injected with Synthes's product.

Then, on the morning of May 11, 2004, the project finally imploded. Capt. Joseph Despins, an FDA

investigator, arrived at Synthes headquarters and announced that he had received a tip that the company had engaged in off-label marketing. Over the next month, Despins conducted a series of

interviews. Synthes's staffers denied almost everything. Bohner said he knew nothing about a vertebroplasty test market for SRS. Hamilton disputed having encouraged surgeons to use Norian off label. Huggins told Despins that he didn't recall what was discussed at meetings. Despins didn't buy it. His 143-page inspection report concluded that the company had violated FDA rules. Synthes, he

wrote, should have applied for an IDE before testing Norian. Despins accused the company of off- label marketing.

It took nearly five years of FDA proceedings, investigation, and grand jury hearings before federal prosecutors were ready to move. By 2009 they were prepared to indict not only Synthes but also four individuals: Huggins, Higgins, Bohner, and Walsh. The executives' attorneys negotiated a deal in which the men would plead guilty to a misdemeanor under the Responsible Corporate Officer

Doctrine. The U.S. Supreme Court has ruled that the Food, Drug, and Cosmetic Act allows prosecutors to charge individuals who lack actual knowledge of a crime simply because they are

"standing in a responsible relation to a public danger."

On June 16, 2009, the grand jury handed up an indictment against Synthes and the executives. It was a doozy. Norian, the company, was charged with 52 felony counts, including lying to the FDA and intent to defraud. Synthes, its corporate parent, was charged with 44 misdemeanors. Though the U.S. attorney's office charged the four businessmen with just a single misdemeanor for their roles as

"responsible corporate officers," it outlined in excruciating detail the history of the Norian XR test market and deaths. The U.S. attorney's office issued a press release peppered with lurid details, including the allegations that Synthes had performed "human experimentation."

In Nov. 21, 2011, the four Synthes executives appeared for sentencing in a federal courthouse in

Philadelphia. Huggins went first. His lawyer touted Huggins's devotion to his family and his community service. The judge, Legrome Davis, told Huggins to stand, and the packed room fell silent. Huggins's conduct, the judge said, was "egregious" - so egregious that he was going to send him to prison for nine months. "I think that a lesser sentence would not speak to the harm that has been done here," Davis said. It was the first time in his 25-year career, he continued, that he had sentenced someone above the federal guidelines, which suggested Huggins get no more than six months in jail. "But I do it because it is necessary," he boomed. "Because what has occurred in this case, in terms of wrongfulness - it's 11 on a scale of 10." Davis denied Huggins's request that he be allowed to turn himself in later. Instead, as his wife and daughters watched, Huggins was placed in handcuffs and led directly into custody. Davis sentenced the next executive, Higgins, to nine months. The third man to face the judge was Bohner who was sentenced to eight months in jail. The judge sentenced the fourth executive, John Walsh, to five months.