Since the story broke about duodenoscopes infecting hundreds of patients with the carbapenem-resistant Enterobacteriaceae (CRE) “superbug” which led to numerous deaths, improperly cleaned endoscopes have become top-of-mind in the world of healthcare. (So top of mind, in fact, that it has been named the number one health technology hazard of 2016.)
As a result, the three major manufacturers of endoscopes in the US—Olympus, Pentax, and Fujifilm—have been scrutinized by the FDA for their failure to properly report device safety events, and criticized by public media about their lack of accountability to hospital and patients. (You can read a more optimistic view I took in an earlier blog when the story was still developing at the time.)
More recently, the Los Angeles Times exposed a chain of emails between Olympus and the UCLA Ronald Reagan Medical Center that suggested Olympus was trying to take advantage of and profit from the situation it created. (The LA Times was one of the first news outlets to report the story given that UCLA was one of the medical facilities associated with the CRE outbreak.) The emails showed UCLA had purchased its duodenoscopes from Olympus in 2014 for about $26,200 each, but the 2015 quote it got was for $33,500 each—an increase of 28%. A follow up email from Olympus claimed that it would take up to three months to fulfill an order of ultrasound and duodenoscopes because it was experiencing an inventory shortage. Another email also showed Olympus reminding UCLA that it had only spent about $22k of its $44k minimum annual spend on disposable equipment at the 11-month mark.
The accompanying March 25 LA Times article interpreted these correspondences as a strong-arm move by an embattled large corporation attempting to turn a profit even after selling faulty scopes to begin with. A congressman’s outraged remarks—“[Olympus] jacked up the prices and made even more money off their defective scopes and then bragged about it.”—were quoted to support the idea that Olympus was acting shamelessly and immorally.
In my opinion, the article is an unfair and sensationalized interpretation of Olympus’s emails, and it compelled me to offer a few opposing perspectives here:
- The article asserts that, “The emails show how Olympus continued to push sales even as the devices it previously sold […] were linked to illnesses and deaths.”
- If Olympus was in fact wanting to push sales, then a price hike of 28% would hardly be the best tactic, as evidenced by UCLA eventually turning to Pentax for scopes.
- Olympus’s explanation for the increase in price was because UCLA had created two separate small orders—one for ultrasound scopes and another for duodenoscopes—which failed to trigger a 30% discount to be applied on large orders of over $2 million. Instead, UCLA was given the lesser 25% discount.
- Olympus asked whether combining the two orders would work for UCLA, but instead of interpreting this as a suggested solution, the article suggested that this meant “the university could earn a discount if it ordered more scopes.”
- The article also suggested that Olympus was purposely uncooperative because it mentioned that scope inventories were low and that UCLA’s order could take between 30 and 90 days to deliver.
- Firstly, it is quite reasonable to expect that duodenoscope demand across the US increased after the CRE outbreak was announced, because as facilities adopted more rigorous cleaning techniques, the amount of time each scope was available for use decreased, and each scope was at a greater risk of being damaged; thus more scopes would need to be purchased in order to minimize procedural downtime. As the endoscope market leader, would one not expect Olympus to be the most caught off guard by the sudden spike in scope orders?
- Secondly, Olympus had reasonably stated it wanted “to set realistic expectations on [scope] delivery”—why does that sound so similar to the business mantra “under-promise and over-deliver”?
- Finally, the article’s claim that Olympus “chastised” UCLA for not meeting its minimum spend agreement is also ungrounded.
- Rather than chastisement, the email provided an update of how much UCLA had spent thus far; the email would seem to be better described as a gentle reminder that UCLA was not on pace to meet its contractual obligations. As it is quite common for medical device manufacturers to set up disposables contracts in return for discounted durable equipment, it is hard to see any wrongdoing from such an email, not to mention that the outstanding difference was a mere $22k, chump change when it comes to endoscopy instruments.
Don’t get me wrong, I think that Olympus and the other endoscope manufacturers need to be accountable for their actions and are part of the blame in the duodenoscope debacle. These companies have a poor track record (e.g., Olympus’s involvement in kickbacks, manufacturing site violations, and marketing prior to FDA clearance) and have done very little to earn back public trust, making them an easy target to point fingers at.
Manufacturers have a duty to be forthright about device safety reporting and proactive about mitigating risks inherent in product design. Communication and training for healthcare providers should also be comprehensive in order to ensure products are used properly. On the other hand, hospitals also have a duty to be diligent about infection control and to be in full compliance with disinfection protocols.
However, while it would be productive journalism to increase awareness about an esoteric topic such as duodenoscope safety by exposing the emotional and physical consequences resulting from poor infection control (i.e., patient stories, legal testimony), it is rather shameless to craft a misleading story based on emails that I would consider to be reflective of typical negotiations between customer and supplier. For the LA Times to read between the lines and cherry-pick phrases in Olympus’s emails is to take advantage of the lay reader and spin a story that is far more sinister than in reality.
Follow Jason Lau on Twitter for more insights on gastroenterology and other endoscopy markets.