The Times also reports that doctors involved in the case were annoyed that investigators would find anything inappropriate about their
passing along proprietary information to Wall Street analysts. Some physicians quoted in the series claim the information
they discussed with analysts was already in the public domain and that it wasn't very useful. One doctor cited in the piece,
Corey Langer from the Philadelphia-based Fox Chase Cancer Center, told reporters that he was only giving out personal opinions
on ongoing studies and research, and what he said was clearly within the limits of the SEC's (Securities and Exchange Commission's
strict rules on confidentiality.
We'll let the SEC and congressional investigators sort this mess out, but the burgeoning trend of doctors being paid money
by Wall Street investment firms is deeply disturbing and ought to be abolished. According to the Journal of the American Medical Association (JAMA), the number of doctors who accept money from Wall Street firms has risen from fewer than 1,000 in 1995 to roughly 75,000
What's the big deal? Besides the obvious conflict of interest in a private investment firm "buying" time and information from
doctors and researchers deeply involved in sensitive drug research, there's a big ripple effect in how such fee arrangements
negatively impact clinical trials. As The Times series attests, a "worst case" scenario might involve a physician inflating up clinical data to ensure that the analyst was
getting his or her money's worth for the fat fees paid out to researchers. Conversely, a doctor who hears from an analyst
that results from a given drug trial would help the drug company's stock may tend to select healthier study participants to
"push" the drug toward better study results — then cash in on the stock frenzy that usually follows. As Drummond Rennie, deputy
editor at JAMA told The Times, "When the data leaks out, it wrecks the trial."
With so much at stake, it's no surprise that Congress is itching to get involved. Senator Charles Grassley from Iowa is making
the most noise, urging both the SEC and the department of Justice to conduct investigations into a potentially block-buster-sized
drug trial payola scandal. Said Grassley in a letter to the House of Representatives, "We need a complete and thorough review
of these findings and allegations. Selling drug secrets violates a trust that is fundamental to the integrity of both scientific
research and our financial markets."
What are the chances of some doctors doing a perp walk on CNN? (Led away in handcuffs on TV.) I'd say 50-50. As a separate
article in The New York Times points out, federal investigators have their work cut out for them. The SEC would be the primary investigators and they have
jailed a few over the years on insider trading charges (including a handful in the biosciences sector). You may recall former
executive Eric Tsao of biotechnology company Med-Immune Inc., who was sentenced to 15 months in prison for insider trading
and perjury, as reported by the Department of Justice a few years ago. There have been others. But those were clear-cut cases
of biotech executives leaking company financial information directly to Wall Street types.
The doctor-analyst tango is more nuanced and tougher to prove. As The New York Times reports, SEC investigators must "weed through a number of complex issues determining whether securities laws have been breached,"
and their job will be "challenging." The key for regulators is to prove that the information changing hands is valuable enough
to convince a trader to buy or sell the company-in-question's stock. Says The NY Times, regulators must also demonstrate that the information in question was "non-public" and that medical researchers did, in
fact, breach their confidentiality agreements (agreements often can vary in scope and discipline).