Names In the News

Halliburton's Bribery

A Halliburton unit, Kellogg Brown and Root (KBR), made a $2.4 million bribe to Nigeria to get favorable tax treatment, Halliburton reported in May.

"The payments were made to obtain favorable tax treatment and clearly violated our code of business conduct and our internal control procedures," Halliburton said in a filing with the Securities and Exchange Commission (SEC).

KBR is building a liquified natural gas plant and an offshore oil and gas terminal in Nigeria.

Halliburton said the bribe was discovered during an audit of KBR's Nigerian office.

"Based on the findings of the investigation, we have terminated several employees," it said. "We are cooperating with the SEC in its review of the matter," Halliburton said.

"We plan to take further action to ensure that our foreign subsidiary pays all taxes owed in Nigeria, which may be as much as an additional $5 million which has been fully accrued."

Bayer: Spreading AIDS?

A unit of the pharmaceutical company Bayer sold millions of dollars of blood-clotting medicine for hemophiliacs -- medicine that carried a high risk of transmitting AIDS -- to Asia and Latin America in the mid-1980s while selling a new, safer product in the West, the New York Times reported in May.

The Bayer unit, Cutter Biological, introduced its safer medicine in late February 1984 as evidence mounted that the earlier version was infecting hemophiliacs with HIV. Yet for over a year, the company continued to sell the old medicine overseas, prompting a U.S. regulator to accuse Cutter of breaking its promise to stop selling the product, the Times reported.

By continuing to sell the old version of the life-saving medicine -- called Factor VIII concentrate, which essentially provides the missing ingredient without which hemophiliacs' blood cannot clot -- Cutter officials were trying to avoid being stuck with large stores of a product that was proving increasingly unmarketable in the United States and Europe.

Yet even after it began selling the new product, the company kept making the old medicine for several months more.

The Times reporters who broke the story, Walt Bogdanich and Eric Koli, found a telex from Cutter to a distributor suggesting one reason behind that decision, too: the company had several fixed-price contracts and believed that the old product would be cheaper to produce.

Nearly two decades later, the precise human toll of these marketing decisions is difficult, if not impossible, to document. Many patient records are now unavailable, and because an AIDS test was not developed until later in the epidemic, it is difficult to pinpoint when foreign hemophiliacs were infected with HIV -- before Cutter began selling its safer medicine or afterward, the Times reported.

Bayer officials, responding on behalf of Cutter and its president at the time, Jack Ryan, declined to be interviewed but did answer written questions.

In a statement, Bayer said that Cutter had "behaved responsibly, ethically and humanely" in selling the old product overseas.

Cutter had continued to sell the old medicine, the statement said, because some customers doubted the new drug's effectiveness, and because some countries were slow to approve its sale. The company also said that a shortage of plasma, used to make the medicine, had kept Cutter from manufacturing more of the new product.

"Decisions made nearly two decades ago were based on the best scientific information of the time and were consistent with the regulations in place," the statement said.

Aetna: Treatment Interference

Aetna will pay $470 million to settle a lawsuit brought by 700,000 physicians and various medical societies who alleged the health insurer unfairly interfered with treatment recommendations.

Aetna will pay $100 million to physicians and $20 million to a foundation established by the agreement, as well as up to $50 million in legal fees to be determined by the court.

The settlement establishes an independent foundation dedicated to improving the quality of health care in the United States.

The agreement will streamline communication between physicians and Aetna, reduce administrative complexity in the claims-payment system and help improve the quality of the health care system.

The value to physicians of the business-practice improvements over the course of the agreement is estimated at approximately $300 million.

This represents, among other things, the value of prompt payment, lower administrative costs for physicians due to electronic claims submissions and reduced resubmissions resulting from increased levels of auto-adjudication.

"The commitments contained in this agreement are premised on achieving the highest quality delivery of health care, and represent a new standard for the industry that is truly in the best interest of physicians and their patients," says Edith Kallas, a partner at Milberg Weiss Bershad Hynes & Lerach LLP, the firm that represented the doctors and other plaintiffs.

-- Russell Mokhiber