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Watchdog: Accountability

Three people died in illegal human experiments carried out by John Podesta backer's firm

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Watchdog,Richard Pollock,Barack Obama,Center for American Progress,FDA,Accountability,John Podesta

John Podesta, one of President Obama's closest White House advisers, counts among his key financial supporters Hansjorg Wyss, a reclusive Swiss billionaire whose company conducted illegal human experiments that resulted in the deaths of three elderly patients.

Justice Department attorneys negotiated a $23.8 million plea deal in 2011 with Synthes Inc., and Norian Corporation, its wholly owned subsidiary, and sent four of its U.S. executives to prison. The money was paid to the federal government.

Two of the victims died in a California hospital and the third perished in a Texas medical facility. One of the California victims was Ryoichi Kikuchi, 83, who died on the operating table at John Muir Hospital in Walnut Creek on Sept. 19, 2009.

He was a prize-winning physicist who analyzed the thermodynamic behavior of liquids and gases and worked at scientific centers at the Massachusetts Institute of Technology, the University of California at Berkeley, the Max Planck Institute in Germany and the National Bureau of Standards.

The federal judge who heard the case said the company's "pattern of deception is unparalleled.”

Synthes was a Swiss medical device firm with U.S. corporate offices in West Chester, Pa. Wyss opened the U.S. office in 1974 and was CEO until the company was bought by Johnson & Johnson in 2012 for $21.3 billion.

The Washington Examiner asked a White House spokesman whether the president was aware of Podesta’s relationship with Wyss or of the three deaths when Podesta was invited to join the chief executive's inner circle. The spokesman declined to respond.

Podesta, who was White House chief of staff under President Bill Clinton, and Wyss have been financially linked for years. Among the Swiss billionaire's largest gifts in recent years have been those made to the Center for American Progress.

CAP received $4.1 million from Wyss during Podesta's tenure as the liberal nonprofit’s founding president and chief executive officer. A CAP spokesman declined to respond to the Examiner's request for information about the Podesta-Wyss relationship.

The HJW Foundation, which is Wyss's private foundation, hired Podesta in 2013 as a paid consultant, for which he was paid $87,000 that year, according to the presidential counselor’s financial disclosure statement.

A HJW spokesman declined to respond to the Examiner’s questions about the kind of work Podesta performed for the fee.

Wyss has a seat on CAP's 10-member board of directors, which also includes former Secretary of State Madeleine Albright; former Senate Majority Leader Tom Daschle, D-S.D.; and Carol Browner, Obama's first energy czar and administrator of the U.S. Environmental Protection Agency under Clinton.

Podesta's think tank is the fourth-largest recipient of Wyss money among 27 liberal nonprofit activist groups the Swiss billionaire has supported since 2008, according to the HJW Foundation's Internal Revenue Service tax returns.

The IRS 990 tax returns for all of the groups can be reviewed via the Examiner's Citizen Audit database.

CAP itself was the largest single recipient of HJW contributions in 2011 and 2012, according to the foundation’s IRS filling.

Wyss and other Synthes executives decided to enter the highly profitable field of spinal surgery in 2000 with Norian XR, a cement-like mixture of calcium phosphate with barium sulfate.

Company managers claimed the compound could act like bone when injected in the spine in a procedure called "vertebrosplasty."

Federal prosecutors noted that at the time there was "excitement about using Norian for vertebroplasties" at Synthes, even though the U.S. Food and Drug Administration had not approved its use on the spine. FDA approval could take at least three years.

Company managers, however, decided not to seek FDA approval for Norian XR on the spine. Instead, they conducted unauthorized human experiments over a four-year period that included the three deaths.

FDA officials got wind of the deadly experiments and dispatched Capt. Joseph Despins in May 2004 to conduct an unannounced inspection, which kept him at the company until June 18.

Despins' findings subsequently became the basis for a federal indictment of the company, its subsidiary and four of its officers, which was filed June 16, 2009.

U.S. District Judge Legrome D. Davis said during a 2011 sentencing hearing following the plea agreement that the two firms ran “rogue clinical trials,” conducted “illegal training of spine surgeons” and “in search of profits, chose not to tell the FDA the truth.”

He also said they “did not stop the testing until three elderly patients had died on the operating table over the period of a year. … This pattern of deception is unparalleled.”

Four Synthes executives went to jail, each for varying terms of less than one year, in the plea agreement. They admitted their company had feloniously conspired “to defraud the United States” in an effort “to impair and impede the lawful functions of the Food and Drug Administration.”

Wyss was not named in the indictment but was referred to as “Person No. 7” and the “CEO and a major stockholder of Synthes.” Wyss was CEO and major stockholder at the time of the indictment and the experiments.

Wyss, who now lives in Wyoming, is a major donor to scores of liberal groups in this country, with his contributions estimated to total more than $110 million, according to the HJW Foundation's tax filings with the IRS since 2008.

The Swiss Broadcasting Corp. reported last year that Wyss was the second-richest person in Switzerland. He is the 112th wealthiest man in the world, with a net worth estimated at $11.2 billion by Forbes magazine.

Despite his relationship with Podesta and active role in funding liberal political activism, Wyss is not well known to the American public.

In fact, George Soros, the high-profile financial supporter of many liberal groups, has given less to CAP than Wyss.

Wyss told a Swiss newspaper in a rare interview in 2011 that “nobody knows me, and I hope that it stays like this,” according to Fortune.

But federal court documents paint a graphic description of his firm's brazen decision to ignore the FDA’s drug approval procedures, which are intended to assure patient safety.

The FDA had previously approved another Synthes-produced substance for use in treating injured bones in the arm.

But in order for XR to be used in spinal cases, the company had to complete the government’s Investigational Device Exemption process.

Regardless of whether the company pursued the IDE process, however, the FDA required Synthes to include a warning label on the XR compound's container stating it was “not intended for the treatment of vertebral compression fractures.”

Wyss and his subordinates decided during a Nov. 15, 2001, meeting to forgo the IDE process and to proceed with the unauthorized human experiments, according to the indictment.

“Person No. 7 decided that Synthes would not pursue an IDE study,” the indictment said, referring directly to Wyss. The meeting minutes noted the CEO and his subordinates ordered 60-80 test procedures without FDA approval.

In a pre-sentencing report, Assistant U.S. Attorney Mary Crawley described Wyss’s role: “After this [November] meeting Wyss, the CEO and major shareholder of Synthes, directed that Synthes would not pursue FDA approval of Norian XR via an IDE,” but “would press on with a ‘test market’” with surgeons.

Crawley also said the Synthes test market programs “were not slow or cautious, or careful, or motivated by patient safety.”

Davis said at a Dec. 13, 2011, sentencing hearing for Michael D. Huggins, one of the convicted Synthes executives, that “the safer and lawful approval route was expressly rejected.”

“One of the most offensive things was the little piddly sentence they got for this,” complained Eva Sloan, whose elderly mother, Lois Eskind, died during an XR experiment, according to Fortune.

Sloan filed a separate wrongful death lawsuit against the company in 2012 that charged “willful, wanton, malicious and reckless misconduct.”

The four executives “could have gone to 7-Eleven and stolen a six-pack of beer and got more time,” she said.

Sloan’s lawsuit was settled out of court. Laura Feld, Sloan’s attorney, said she could not comment because the settlement included a confidentiality agreement.

Defense attorney Brent J. Gurney told Davis at a sentencing hearing he thought Wyss was the missing person at the table.

“There is another person who is not present in this process,” he said while representing former Synthes executive Richard E. Bohner, “and that is the former chairman, CEO, controlling shareholder of the company, Mr. Wyss.”

Gurney, a former U.S. attorney, said, “Mr. Wyss was a highly involved owner of Synthes. The record shows that at the very beginning, it was he who made some of the very critical decisions that put the company on its ultimate pathway.”

Washington Examiner intern Monica Perez of the National Journalism Center contributed to this report.
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