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Junk Bonds to Junk Science? Drug Treatment Program Questioned
by Gregory Dober
What was worth approximately $554 million in 2007 and is valued at about $94 million today? The correct answer is the stock market value of a firm formerly known as Alaska Freightways Inc., a shell company that, as the result of a merger, is now doing business as Hythiam, Inc.
According to a corporate profile on its website, Hythiam “offers initial disease management offerings for substance dependence built around its proprietary PROMETA Treatment Program for alcoholism and dependence to stimulants.” Basically, the company’s primary pharmaceutical product, Prometa, is being marketed for the treatment of various drug addictions – including alcohol and methamphetamine abuse.
However, buyers may want to beware. Hythiam notes that “Clinical studies are under way to evaluate the PROMETA Treatment Program and to confirm reports from physicians providing the PROMETA Treatment Program in their practices.... The medications used in the PROMETA Treatment Program are Food and Drug Administration (FDA) approved for uses other than treating dependence on alcohol, cocaine or methamphetamine. Therefore, the risks and benefits of using these medications to treat dependence on these substances have not been evaluated by the FDA.”
Their cautionary statement has not deterred drug court programs in six states from trying Prometa; indeed, the corrections system is a huge market for addiction treatment. In one of Hythiam’s annual reports, the company noted that it could potentially treat up to 5 million people in criminal justice programs. Prometa has also been marketed heavily to the general public.
What is Prometa? It is a 30-day treatment regimen that includes the use of three powerful prescription drugs. The drugs are gabapentin, an anti-seizure medication, flumazenil, which is used as an antidote in the treatment of benzodiazepine overdose, and hydroxyzine, an antihistamine.
The Prometa protocol costs approximately $15,000 per participant and has been touted as a revolutionary cure-all for a myriad of addictions. The company cites numerous success stories, which have been echoed by some doctors and substance abuse treatment programs.
However, the hype created by Prometa may have cost a local Texas judge his elected position. Twelve-year incumbent judge Charles J. Sandoval, of the 380th Judicial District Court in Collin County, lost the Republican primary in March 2008. He had started a Prometa pilot program, funded by Hythiam, that involved 20 probationers.
Judge Sandoval was interviewed by the Plano Courier Star in January 2008 and made the following statement about Prometa: “It only takes about a month to go through the program and it runs about $15,000. The result of my pilot program is that the state of Texas, in the last legislative session, allocated $2 million to this sort of treatment. That $2 million is going to be dispersed throughout the state and Collin County is going to get its fair share of that money.”
In fact, Collin County received $185,000 for Prometa funding. Three other Texas counties, Lubbock, Caldwell and Nueces, received lesser amounts ranging from $100,000 to $154,000. The local programs made participation in the Prometa protocol a requirement for certain offenders placed on probation.
On the Collin County Observer news blog, author Bill Bumbaugh noted that Sandoval’s website reportedly claimed the Prometa trial program had saved the county $400,000. Upon inquiry from Bumbaugh regarding this claim, Sandoval’s office stated it had “no records of the Prometa pilot program.” One of the participants had died during the program; the death was recorded as a suicide.
Like swift Texas justice itself, Emily Ramshaw published a story in the January 20, 2008 edition of the Dallas Morning News that criticized the allocation of funds for, and questioned the credibility of, the Prometa protocol. Ramshaw noted that $2 million was appropriated by the Texas legislature with “little notice or objection for an obscure medical treatment.”
In the article, Dallas Criminal District Judge John Creuzot opined, “I don’t think anybody should be spending any amount of money on something that hasn’t been clinically researched to be safe and effective.” He said the company that marketed the treatment was “in the business of making money, and they did a great sales job on some well-intended legislators in Texas.”
Judge Creuzot refused to adopt the Prometa program in his district. In addition, Kathryn Cunningham, director of the University of Texas Medical Branch’s Center for Addiction Research, acknowledged that while it’s true some treatments can alter brain chemistry and curb drug use, no evidence indicated that Prometa was one of them. “There’s been a lot of marketing hype before the evidence exists. This is not something I’d personally want to spend my taxpayer money on,” she said. “I know a lot of scientists in this area, and we’re all singing the same tune.... This is misguided.”
Lori Karen, a researcher with the Drug Dependence Research Laboratory at the University of California San Francisco, concurred. “The marketing is way ahead of the science,” she noted.
Texas was not the only state to hire Hythiam in an attempt to reduce drug addiction. In 2006, Washington State’s Pierce County committed to spend $489,000 on Prometa treatment. A study of the drug court program conducted for the Pierce County Performance Audit Committee concluded, “While Hythiam claims the Prometa protocol has been exceptionally successful the foregoing analysis indicates that the results of the 2006 ... pilot study do not surpass results normally found in drug court settings.”
The audit found the pilot program didn’t factor in no-shows for drug tests or participant drop-outs when calculating successful program completion statistics, and that some program graduates still tested positive when checked for drug use. “It’s clear to me that we are much more involved in a marketing scheme … rather than testing real results,” remarked Pierce County Councilman Shawn Bunney.
Additionally, the Tacoma News Tribune reported that some public officials who had requested funding for the Prometa pilot programs in Washington had either failed to disclose or understated their Hythiam stock holdings.
Pierce County’s Prometa program was subsequently discontinued in late 2007, although the county appropriated funds to finish the pilot program with its existing participants and to conduct a Prometa study at the University of Washington.
The Pierce County audit report had also criticized Hythiam’s corporate marketing description of Prometa programs, and noted various examples where the company’s statements were incorrect or not entirely candid.
A February 2006 Hythiam news release referenced a 30-patient trial program in Idaho. There was no such pilot program. According to Judge Ron Wilper, a member of the Idaho Drug Court Coordinating Committee, “they wanted us to partner with them so they could put out a press release.” The Coordinating Committee declined to use Prometa, as it was not FDA-approved and not supported by unbiased clinical studies. “We’re hicks, I grant you that,” said Judge Wilper. “But we didn’t just fall off the turnip truck.”
Hythiem also touted a November 2005, 20-person study in Gary, Indiana as a success story – and indeed, program officials, including Drug Court Judge Deidre Monroe, endorsed Prometa’s efficacy. However, the drug court refused to release any data about the study, citing privacy laws. Also, a court case manager stated in October, 2007 that only 43 percent of the Prometa program participants were “still clean.”
Interestingly, on July 10, 2007, Karen Freeman-Wilson joined Hythiam’s board of directors. Freeman-Wilson, a former Indiana Attorney General and former judge who had presided over the Gary, Indiana drug court, was listed as having “coordinated” the Prometa pilot program. She is also a former CEO of the National Association of Drug Court Professionals.
According to an SEC filing, the month after she joined the company she reported owning 100,000 shares of Hythiam stock.
In February 2006, a Hythiam press release cited a planned pilot program in Covington, Louisiana that involved the 22nd Judicial District Court, where Judge Peter Garcia ran a drug court. “It never got to that point,” Judge Garcia said. “The study was never done. Nothing was ever developed.”
A Prometa trial program was initiated in Fulton County, Georgia in December 2006. According to Hythiam, the trial was to include 20 participants in conjunction with the Fulton Co. Superior Court. The program ended after only three months; just four participants took part.
Court spokesman Don Plummer stated, “We discontinued the program because it had not been effective for our Drug Court defendants,” and said “We do not plan to use the program in the future.”
Most recently, in April 2008, city officials in Federal Way – located just northeast of Tacoma, Washington – unanimously decided to cancel a trial Prometa program before it started. The city had approved $20,000 to fund the program last November, but then had concerns about the lack of scientific proof that the drug treatment regimen actually worked. “The more we learned the more we became concerned whether this was an appropriate use of the city’s resources,” stated City Council member Jim Ferrell.
Other jurisdictions are experimenting with Prometa, including a Municipal Court in Las Vegas, Nevada. Others have turned it down, including drug courts in King, Snohomish and Thurston Counties in Washington State.
The use of Prometa to treat drug addicts, absent approval from the FDA, amounts to Phase I or Phase II clinical trials on human test subjects.
Because Hythiam is privately funded, the Office of Human Research Protections (OHRP) has no jurisdiction under current regulations to protect the program participants or monitor such studies. Hythiam has created the perfect storm – drug addicted test subjects under court-ordered supervision with no OHRP oversight, and overzealous and sometimes financially-conflicted public officials “hyping” the company’s non-FDA approved treatment protocol.
Hopefully the CEO of Hythiam, Terren Peizer, a former junk bond salesman and executive at Drexel Burnham Lambert during the Michael Milken scandal era, is not selling “junk science” as well. Hythiam’s stock, which has traded as high as $9.00 a share within the past year, is presently valued at less than $1.80 per share. According to MorningStar, an independent investment research firm, “Over the long haul, this company has posted some of its industry’s worst returns on assets.” Hythiam has generated a net loss each year for the past 5 years.
Only time – and independent, objective large-scale clinical testing – will tell if the Prometa treatment being pushed by Mr. Peizer is like the junk bonds he once sold: worthless.
Sources: Collin County Observer, Chicago Tribune, Dallas Morning News, Tacoma News Tribune, The News Tribune, www.msnbc.com
What was worth approximately $554 million in 2007 and is valued at about $94 million today? The correct answer is the stock market value of a firm formerly known as Alaska Freightways Inc., a shell company that, as the result of a merger, is now doing business as Hythiam, Inc.
According to a corporate profile on its website, Hythiam “offers initial disease management offerings for substance dependence built around its proprietary PROMETA Treatment Program for alcoholism and dependence to stimulants.” Basically, the company’s primary pharmaceutical product, Prometa, is being marketed for the treatment of various drug addictions – including alcohol and methamphetamine abuse.
However, buyers may want to beware. Hythiam notes that “Clinical studies are under way to evaluate the PROMETA Treatment Program and to confirm reports from physicians providing the PROMETA Treatment Program in their practices.... The medications used in the PROMETA Treatment Program are Food and Drug Administration (FDA) approved for uses other than treating dependence on alcohol, cocaine or methamphetamine. Therefore, the risks and benefits of using these medications to treat dependence on these substances have not been evaluated by the FDA.”
Their cautionary statement has not deterred drug court programs in six states from trying Prometa; indeed, the corrections system is a huge market for addiction treatment. In one of Hythiam’s annual reports, the company noted that it could potentially treat up to 5 million people in criminal justice programs. Prometa has also been marketed heavily to the general public.
What is Prometa? It is a 30-day treatment regimen that includes the use of three powerful prescription drugs. The drugs are gabapentin, an anti-seizure medication, flumazenil, which is used as an antidote in the treatment of benzodiazepine overdose, and hydroxyzine, an antihistamine.
The Prometa protocol costs approximately $15,000 per participant and has been touted as a revolutionary cure-all for a myriad of addictions. The company cites numerous success stories, which have been echoed by some doctors and substance abuse treatment programs.
However, the hype created by Prometa may have cost a local Texas judge his elected position. Twelve-year incumbent judge Charles J. Sandoval, of the 380th Judicial District Court in Collin County, lost the Republican primary in March 2008. He had started a Prometa pilot program, funded by Hythiam, that involved 20 probationers.
Judge Sandoval was interviewed by the Plano Courier Star in January 2008 and made the following statement about Prometa: “It only takes about a month to go through the program and it runs about $15,000. The result of my pilot program is that the state of Texas, in the last legislative session, allocated $2 million to this sort of treatment. That $2 million is going to be dispersed throughout the state and Collin County is going to get its fair share of that money.”
In fact, Collin County received $185,000 for Prometa funding. Three other Texas counties, Lubbock, Caldwell and Nueces, received lesser amounts ranging from $100,000 to $154,000. The local programs made participation in the Prometa protocol a requirement for certain offenders placed on probation.
On the Collin County Observer news blog, author Bill Bumbaugh noted that Sandoval’s website reportedly claimed the Prometa trial program had saved the county $400,000. Upon inquiry from Bumbaugh regarding this claim, Sandoval’s office stated it had “no records of the Prometa pilot program.” One of the participants had died during the program; the death was recorded as a suicide.
Like swift Texas justice itself, Emily Ramshaw published a story in the January 20, 2008 edition of the Dallas Morning News that criticized the allocation of funds for, and questioned the credibility of, the Prometa protocol. Ramshaw noted that $2 million was appropriated by the Texas legislature with “little notice or objection for an obscure medical treatment.”
In the article, Dallas Criminal District Judge John Creuzot opined, “I don’t think anybody should be spending any amount of money on something that hasn’t been clinically researched to be safe and effective.” He said the company that marketed the treatment was “in the business of making money, and they did a great sales job on some well-intended legislators in Texas.”
Judge Creuzot refused to adopt the Prometa program in his district. In addition, Kathryn Cunningham, director of the University of Texas Medical Branch’s Center for Addiction Research, acknowledged that while it’s true some treatments can alter brain chemistry and curb drug use, no evidence indicated that Prometa was one of them. “There’s been a lot of marketing hype before the evidence exists. This is not something I’d personally want to spend my taxpayer money on,” she said. “I know a lot of scientists in this area, and we’re all singing the same tune.... This is misguided.”
Lori Karen, a researcher with the Drug Dependence Research Laboratory at the University of California San Francisco, concurred. “The marketing is way ahead of the science,” she noted.
Texas was not the only state to hire Hythiam in an attempt to reduce drug addiction. In 2006, Washington State’s Pierce County committed to spend $489,000 on Prometa treatment. A study of the drug court program conducted for the Pierce County Performance Audit Committee concluded, “While Hythiam claims the Prometa protocol has been exceptionally successful the foregoing analysis indicates that the results of the 2006 ... pilot study do not surpass results normally found in drug court settings.”
The audit found the pilot program didn’t factor in no-shows for drug tests or participant drop-outs when calculating successful program completion statistics, and that some program graduates still tested positive when checked for drug use. “It’s clear to me that we are much more involved in a marketing scheme … rather than testing real results,” remarked Pierce County Councilman Shawn Bunney.
Additionally, the Tacoma News Tribune reported that some public officials who had requested funding for the Prometa pilot programs in Washington had either failed to disclose or understated their Hythiam stock holdings.
Pierce County’s Prometa program was subsequently discontinued in late 2007, although the county appropriated funds to finish the pilot program with its existing participants and to conduct a Prometa study at the University of Washington.
The Pierce County audit report had also criticized Hythiam’s corporate marketing description of Prometa programs, and noted various examples where the company’s statements were incorrect or not entirely candid.
A February 2006 Hythiam news release referenced a 30-patient trial program in Idaho. There was no such pilot program. According to Judge Ron Wilper, a member of the Idaho Drug Court Coordinating Committee, “they wanted us to partner with them so they could put out a press release.” The Coordinating Committee declined to use Prometa, as it was not FDA-approved and not supported by unbiased clinical studies. “We’re hicks, I grant you that,” said Judge Wilper. “But we didn’t just fall off the turnip truck.”
Hythiem also touted a November 2005, 20-person study in Gary, Indiana as a success story – and indeed, program officials, including Drug Court Judge Deidre Monroe, endorsed Prometa’s efficacy. However, the drug court refused to release any data about the study, citing privacy laws. Also, a court case manager stated in October, 2007 that only 43 percent of the Prometa program participants were “still clean.”
Interestingly, on July 10, 2007, Karen Freeman-Wilson joined Hythiam’s board of directors. Freeman-Wilson, a former Indiana Attorney General and former judge who had presided over the Gary, Indiana drug court, was listed as having “coordinated” the Prometa pilot program. She is also a former CEO of the National Association of Drug Court Professionals.
According to an SEC filing, the month after she joined the company she reported owning 100,000 shares of Hythiam stock.
In February 2006, a Hythiam press release cited a planned pilot program in Covington, Louisiana that involved the 22nd Judicial District Court, where Judge Peter Garcia ran a drug court. “It never got to that point,” Judge Garcia said. “The study was never done. Nothing was ever developed.”
A Prometa trial program was initiated in Fulton County, Georgia in December 2006. According to Hythiam, the trial was to include 20 participants in conjunction with the Fulton Co. Superior Court. The program ended after only three months; just four participants took part.
Court spokesman Don Plummer stated, “We discontinued the program because it had not been effective for our Drug Court defendants,” and said “We do not plan to use the program in the future.”
Most recently, in April 2008, city officials in Federal Way – located just northeast of Tacoma, Washington – unanimously decided to cancel a trial Prometa program before it started. The city had approved $20,000 to fund the program last November, but then had concerns about the lack of scientific proof that the drug treatment regimen actually worked. “The more we learned the more we became concerned whether this was an appropriate use of the city’s resources,” stated City Council member Jim Ferrell.
Other jurisdictions are experimenting with Prometa, including a Municipal Court in Las Vegas, Nevada. Others have turned it down, including drug courts in King, Snohomish and Thurston Counties in Washington State.
The use of Prometa to treat drug addicts, absent approval from the FDA, amounts to Phase I or Phase II clinical trials on human test subjects.
Because Hythiam is privately funded, the Office of Human Research Protections (OHRP) has no jurisdiction under current regulations to protect the program participants or monitor such studies. Hythiam has created the perfect storm – drug addicted test subjects under court-ordered supervision with no OHRP oversight, and overzealous and sometimes financially-conflicted public officials “hyping” the company’s non-FDA approved treatment protocol.
Hopefully the CEO of Hythiam, Terren Peizer, a former junk bond salesman and executive at Drexel Burnham Lambert during the Michael Milken scandal era, is not selling “junk science” as well. Hythiam’s stock, which has traded as high as $9.00 a share within the past year, is presently valued at less than $1.80 per share. According to MorningStar, an independent investment research firm, “Over the long haul, this company has posted some of its industry’s worst returns on assets.” Hythiam has generated a net loss each year for the past 5 years.
Only time – and independent, objective large-scale clinical testing – will tell if the Prometa treatment being pushed by Mr. Peizer is like the junk bonds he once sold: worthless.
Sources: Collin County Observer, Chicago Tribune, Dallas Morning News, Tacoma News Tribune, The News Tribune, www.msnbc.com
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