Wednesday, September 17, 2014
Inquirer Daily News

Legal troubles for local billionaire

Philanthropist's West Chester medical firm hit with charges.

Hansjörg Wyss was CEO of Synthes during allegedly illegal human trials.
Hansjörg Wyss was CEO of Synthes during allegedly illegal human trials.

He is one of the world's richest men and one of its most generous.

His $125 million gift to Harvard was that university's largest ever, besting even David Rockefeller, whose single biggest donation to the school was $100 million.

West Chester resident Hansjörg Wyss also has donated tens of millions to environmental organizations in the American West. At 74, he can hike for days carrying a 40- to 50-pound backpack, a feat that would defy many younger people.

Wyss also is chairman of Synthes in West Chester, which faces 52 felony counts stemming from allegations that it illegally experimented on patients, three of whom died.

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  • Synthes is fighting the charges, and a trial could be held next year. Four of its executives already have pleaded guilty to misdemeanor counts in the case and face sentencing hearings in January.

    Federal prosecutors in Philadelphia did not name or charge Wyss, but their June indictment describes a "Person No. 7," who was a major shareholder and chief executive officer of the company when the alleged illegal conduct occurred, from 2001 through 2004. A Synthes representative confirmed that Wyss was CEO then.

    In 2001, the U.S. attorney's indictment says, Person No. 7 decided the company should not pursue the costly and time-consuming clinical trials that the U.S. Food and Drug Administration demanded for the company's bone-cement product, Norian.

    Instead, according to the indictment, Person No. 7 directed the company to "get a few sites to perform 60 to 80 procedures and help them publish their clinical results" to help popularize Norian for a use not approved by the FDA.

    The procedures involved injecting Norian into the spines of patients who had vertebral compression fractures, which are typically caused by osteoporosis. FDA officials had previously approved Norian for other uses, but they demanded trials for that type of surgery, fearing that the cement could perform differently in the spine.

    Even after tests in pigs showed that Norian could leak from the spine and cause life-threatening blood clots, Synthes continued with surgeries on human patients, who were never told that the procedure was experimental.

    Three of those patients died, but prosecutors do not know whether Norian played any role in their deaths, because the company and doctors did not immediately report all the fatalities to the FDA. The patients have not been identified.

    Through a Synthes representative, Wyss initially agreed to be interviewed for this article, but later declined.

    Synthes, whose shares trade on the Swiss stock exchange, is one of the world's largest makers of surgical screws, plates, implants, and power tools. Last year, it reported profit of $734 million on sales of $3.2 billion. It employs about 11,000 people globally, about 1,500 in Chester County.

    Wyss grew up in Bern, Switzerland. His father sold mechanical calculators and liked to discuss world events, according to Harvard's Web site. Wyss trained as an engineer in Switzerland and soon began setting up Chrysler manufacturing plants worldwide. In 1965, he earned a master's degree at Harvard's business school.

    "I didn't speak in class for the first five weeks," he told a Harvard Web publication at the time of his gift. "My classmates were all the crème de la crème, with button-down shirts I had never seen before."

    He worked for several large companies, but sold airplanes on the side. One of his buyers was a Swiss surgeon who founded Synthes. That connection eventually led Wyss to become president of the company's U.S. business in 1977.

    Over time, he became a large shareholder and chief executive. He retired from that post in 2007, but he remains chairman.

    Forbes Magazine in March estimated Wyss was worth $5.7 billion. His fortune has helped him pursue whatever he wants, including the rehabilitation of the Crooked Tree Golf Course in Tucson, Ariz., and the purchase of the 900-acre Halter Ranch & Vineyard in Paso Robles, Calif. The winery emphasizes organic growing methods and sells many wines, including one named Synthesis.

    Wyss has given away large chunks of his fortune, mostly to organizations dedicated to his primary passions: science and the environment.

    His $125 million donation to Harvard funded the Wyss Institute for Biologically Inspired Engineering, which aims to take engineering principles from nature and apply them to create "materials and devices that will revolutionize health care and create a more sustainable world," according to its Web site.

    Wyss also established two private foundations. The Wyss Foundation is dedicated to preserving land in the American West. Wyss went hiking there as a student and fell in love, according to Forbes.

    The Wyss Foundation gave away about $13 million and had about $250 million in assets in 2007, according to tax filings.

    Wyss also donates heavily from his personal funds. BusinessWeek estimated his total giving from all sources at $277 million from 2004 through 2008.

    One of the biggest beneficiaries was the Center for Biological Diversity, which got a commitment for $10 million over five years. The center focuses on protecting land and species and has a reputation for using tough tactics, often filing lawsuits to achieve its goals.

    "He liked that we were nimble and aggressive," said Kieran Suckling, the center's executive director. "A lot of environmentalists spin their wheels tremendously going to endless meetings and not getting much done."

    The Wyss donation gave the center a strong long-term foundation, Suckling said, noting that his annual budget is just $6.9 million.

    He and other environmentalists who have gotten donations from Wyss praise his careful study of the issues.

    "He follows environmental legislation very closely. You talk to him about particular places, like the Rio Grande River or Yellowstone National Park, and he knows them. . . . He is very witty, very sharp. He doesn't speak a lot, but when he does, he really knows what he's talking about and has something important to say. He's a commanding presence, no doubt about it."

    Veronica Egan, executive director of Great Old Broads for Wilderness, a Colorado organization founded by a group of older women to "keep roadless areas roadless," said her organization had received about $150,000 from Wyss over 10 years.

    She is impressed that he can carry a heavy backpack for days off the trail in the Grand Canyon. When they hike together, he has mostly talked about "the imperiled status of much of our wild country and why it needs advocates," she said.

    Wyss seems to keep a lower profile in the Philadelphia region. People at several business organizations in the area said they did not know him, although his foundations have given money to local charities.

    Wyss' home here opens up onto the Applebrook golf course in a development where houses sell for $1 million or more.

    Allen Misher, who was on the Synthes board for 12 years ending in 2008 and is a former president of the University of the Sciences in Philadelphia, said he was shocked when the indictment came out because the company always emphasized patient care.

    During a meeting Misher attended in the 1990s, Synthes executives were discussing whether to develop a new product that might not bring in large profits. Wyss stopped the discussion and asked whether patients needed it. The answer was yes, so Wyss told his team to go ahead, Misher said.

    Wyss' other foundation, the Hansjörg Wyss Foundation, had about $172 million in assets and gave away $4.9 million in 2007. It focuses mostly on education and training of surgeons, according to the AO Foundation, a Swiss research group with ties to Synthes and Wyss.

    By funding research and training, Synthes has forged tight relationships with surgeons. The U.S. Attorney's Office alleges that the company paid for trips to educational seminars in San Diego and Charlotte, N.C., where surgeons learned to use Norian in the spine.

    Synthes produced a guide for surgeons using Norian that included X-ray images of one of the patients who died when Norian was used during a spinal procedure, according to court documents.

    In 2002, three University of Washington doctors sent Synthes executives a letter saying they were worried that Norian could cause clots. They offered to do research to test their idea. They also told Synthes to report the potential problem to the FDA because "it may pose liability risks for Synthes."

    Those doctors would not comment. One of them, Jens Chapman, holds the university's Hansjörg Wyss Endowed Chair in Spine Surgery.

     


    Contact staff writer Miriam Hill at 215-854-5520 or hillmb@phillynews.com.

    Miriam Hill Inquirer Staff Writer
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