After a controversial endorsement dealwith Sunbeam Corp. blew up in its face, the American Medical Association is investigating exactly how the deal was approved without going through proper channels.
AMA spokesman Lew Crampton says the board and at least three review committees failed to look over the Sunbeam alliance--which covers medical-related products like heating pads--before it was signed. Accusations that the AMA sold out its good name prodded the organization to announce at an Aug. 21 news conference that it wanted to back out of the deal, the first in the AMA's 150-year history in which the not-for-profit group agreed to affix its seal to consumer products.
"We did make errors of judgment and errors of process," Crampton says. "On top of that, we got a second opinion-a rousing second opinion from the American public.
"We apologize for the deal," Crampton said after the news conference.
When the AMA's board meets as scheduled Sept. 4, Crampton says it will determine what action it will take in response to the deal and its backlash. When Modern Physician went to press, the board had taken no disciplinary action in relation to the agreement with Delray Beach, Fla.-based Sunbeam.
"Nothing is planned in terms of resignations," Crampton says.
AMA Executive Vice President P. John Seward, M.D., reading from a prepared text at the news conference in Chicago, said the organization will try to renegotiate the Sunbeam deal to eliminate some of the more assailed terms. Under the AMA's revised plan, Sunbeam would no longer have the exclusive right to use the AMA's logo on its products, and the AMA would not collect millions of dollars of royalties on the sale of the company's products.
At its news conference, the AMA didn't blame anyone in particular for pushing through the Sunbeam deal outside proper channels.
But after the news conference, Crampton did say the deal's "major impetus" came from the AMA's marketing group, led by Larry Jellen. The department thought the Sunbeam deal "would supply a long-lasting resource" to the AMA, Crampton says.
Jellen has not been available to take questions from the press. Public-interest groups have called for both Jellen and Seward's resignations because of the Sunbeam deal.
Seward and AMA board Chairman Thomas Reardon, M.D., appeared to take some responsibility for the deal and its fallout. The AMA would not comment on Reardon and Seward's specific role in negotiating the Sunbeam alliance, announced Aug. 13 at a Chicago hardware show news conference.
"Our decision to approve the Sunbeam agreement in the form adopted was in error. . . . We take full responsibility for actions on our part that may have eroded our credibility," Seward said, reading the statement attributed to himself and Reardon. Seward did not stay to answer questions, citing the need to keep a prior appointment. Reardon did not appear at the news conference.
A source close to the AMA says it is possible Reardon and Seward approved the deal without being familiar with all its terms.
The deal was a shock to many AMA executives, says Crampton, who was "on vacation when I first heard about it."
The fact that the AMA wasn't testing products, like the American Dental Association does before allowing commercial brands to use its seal, was particularly galling to some critics.
"They are in effect walking through the aisles of a supermarket with their patients, tapping them on the shoulders and saying, 'Here's the product you should be interested in,' " says Alexander Capron, co-director of the Pacific Center for Health Policy and Ethics at the University of Southern California.
"If they aren't saying to the patient, 'I've looked at this,' then there's a confusion of the role they're playing."
It is that potential for confusion that is spurring the AMA to restructure the deal to focus it more on the distribution of healthy living brochures.
Crampton says that in every case, the AMA would ask only that its corporate partners cover the cost of printing and distributing its brochures. It would collect no royalties. The AMA would not test products, he says.
However, Sunbeam is not going to be a willing partner in the battle to save the AMA's reputation.
In a prepared statement, Sunbeam Chairman Albert Dunlap says he expects the AMA to stick with the terms of the contract despite the torrent of negative reaction. Dunlap is used to bad publicity; he earned the nickname "Chainsaw Al" for his propensity to cut unapologetically tens of thousands of jobs.
Dunlap criticized the AMA for "unilaterally wanting to change the contract" but says he would be willing to meet with the AMA as long as it did not insist "on imposing unacceptable preconditions as a result of the meeting."
If the AMA did, "then we will not hesitate to take all necessary actions to ensure the rights of Sunbeam and its shareholders continue to be protected," he says.
But Sunbeam may have an interest in reopening negotiations, Capron says.
"If (the AMA's) credibility is hurt through this process--if people take the cynical view that this is a trade association, like the ball bearing association, then (the deal) would get less credibility," Capron says. "The whole thing is only worth something to Sunbeam if the AMA appears to be a reliable and disinterested evaluator of the quality of the product."