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Journal of Clinical Oncology, Vol 25, No 3 (January 20), 2007: pp. 338-340 © 2007 American Society of Clinical Oncology. DOI: 10.1200/JCO.2006.08.9052
Interactions With the Investment Industry: Practical and Ethical ImplicationsThe American Society of Clinical Oncology From the American Society of Clinical Oncology, Alexandria, VA. Address reprint requests to the American Society of Clinical Oncology, 1900 Duke St, Alexandria, VA 22314; e-mail: stormc{at}asco.org
Recently, the Journal of the American Medical Association published an article on financial relationships between clinical researchers and investment firms.1 This article described the growing practice of investment firms and intermediary firms making significant payments to physicians involved in clinical research, which may result in the disclosure of nonpublic confidential information about ongoing clinical trials. Subsequent news coverage of the issue attracted the attention of Republican Senator Charles Grassley of Iowa, Chair of the Senate Finance Committee, who requested investigations by the Department of Justice and the Securities and Exchange Commission.2 In these matters, the primary concern of government officials is the sharing of confidential or nonpublic information obtained through participation in clinical research, which can impact public and investor opinion of a developing technology, affect the sponsor's share prices, and facilitate insider trading. For the American Society of Clinical Oncology (ASCO), the ethical implications of these relationships are cause for concern.1,3 Given the growing prevalence of this practice, financial advising could have considerable impact on the oncology research environment. Many oncologists are involved in critically important clinical research. Maintaining public trust is essential to achieving enrollment in this research, and ultimately, developing new therapies. Oncologists need to understand the nature of investment entities and what relationships with these entities mean in light of their responsibilities to trial participants, academic institutions, and trial sponsors.
An article that ran in The Seattle Times entitled "Drug Researchers Leak Secrets to Wall Street" describes how physicians who conduct clinical trials are approached by hedge fund representatives, either directly or through intermediaries known as matchmakers, in search of information from ongoing clinical trials.4 Investment interests frequently offer to pay between $300 and $500 per hour, but have been known to pay up to $1,000, to speak with physicians in hopes of obtaining information that allows them to predict market changes and maximize investor return. This practice has already impacted the oncology community. The Seattle Times described a case which highlights both its widespread nature and adverse consequences. In 2002, clinical trials were under way for a potentially innovative lung cancer drug. During the course of the trials, stock in the trial sponsor rapidly dropped in price. When the reasons for this precipitous decline were investigated, it was discovered that physicians who administered the drug trials discovered the drug was ineffective and divulged their findings to investment interests despite having signed confidentiality agreements. So many physicians revealed this information that word spread quickly among biotechnology stock traders who "short sold" stock in the sponsor, driving the price down and eventually collecting enormous profits.
Physicians who share confidential information with investment firms in exchange for compensation may violate laws prohibiting insider trading. Illegal insider trading is defined as trading on the basis of relevant, nonpublic information in violation of a duty or trust of confidence and may give rise to serious penalties. When a physician researcher shares information about a clinical trial, including trial data and results, which is covered by a confidentiality agreement he or she holds with a trial sponsor, institution, or professional society, there may well be a breach of the insider trading laws. Those with insider access are prohibited from both directly trading on insider information on their own behalf and from being a "tipper" who divulges inside information to an outsider for the same improper purpose. Thus, a physician who shares nonpublic information about a clinical research trial with an investment firm in exchange for compensation may be held liable for insider trading, even though the physician did not trade on the information himself or herself.
Physicians are exposed to insider information through many of the roles they assume in clinical research. These include advising on research development, conducting the research, enrolling, treating, and observing trial participants, and participating in data safety monitoring board or institutional review board deliberations. Physicians may also be exposed to insider information through consultation with institutional colleagues or trial participants, and in their roles as ASCO volunteers and meeting participants. It is also important to remember that research staff, including nurses and data managers, have access to insider information and may be approached by investment firms or their representatives or other intermediaries. Like physicians, they can be held liable for insider trading if confidential information is shared.
Insider information is defined as nonpublic material information about a public company. Material information is information that would be viewed by a reasonable investor making an investment decision that significantly alters the total mix of information available. A party violates the insider trading laws if he or she discloses insider information in violation of a duty of trust or confidence. The extent to which a duty exists is determined by the scope of the applicable confidentiality agreement. In general, confidentiality provisions in clinical trial agreements are broadly worded and include data, results, and other information collected or developed during the course of the trial. Within ASCO, some committee volunteers gain access to nonpublic information during the course of reviewing abstracts submitted for presentation at ASCO meetings. In addition, editors and peer reviewers for ASCO publications gain access to nonpublic manuscripts during the course of the review process. Each volunteer invited to join a committee or review a manuscript must (electronically) sign a confidentiality provision as a precondition to the acceptance of their appointment. Abstract authors selected to participate in or have their scientific abstracts presented as part of an ASCO meeting must agree to keep the subject matter of their work confidential as well.
While illegal insider trading is a primary concern, physician relationships with investment firms can be problematic even when actions do not rise to this level. Regardless of whether a particular instance of information sharing rises to the level of illegal insider trading, physician researchers owe moral and legal duties to trial participants, trial sponsors, and academic institutions that are breached when confidential or nonpublic information is divulged. Physician researchers owe a duty to trial participants to ensure that they are fully informed.5,6 ASCO believes physicians should not give investment interests higher priority for disclosure of trial information than the participants themselves. Accordingly, physician researchers should remain dedicated to disseminating trial data and related information through the accepted pathways for sharing such matters: peer-reviewed publications or scientific presentations, accredited educational programs, and peer to peer communications among investigators and other official collaborators, and, at times, direct communication to trial participants. Furthermore, physician researchers have a contractual and ethical responsibility to trial sponsors and academic institutions that should preclude the premature release of trial information that can damage their financial interests (though this should not interfere with a principal investigator's ability to publish completed trial results, as highlighted in the ASCO conflict of interest policy).7 A contractual relationship with an investment firm that obligates a physician to discuss ongoing research places both physician and trial sponsor in a compromised position that should be avoided. If a physician does enter into a relationship with investment interests, any information provided should be limited to published data or the physician's general medical knowledge. Physicians should not discuss trial results or other nonpublic information prematurely.
ASCO recognizes that physicians who engage in relationships with investment firms or their intermediaries are not necessarily sharing insider information. Any physician may discuss his or her expert opinion about a particular drug or therapy with an investment firm or interpret public trial data without issue. Physicians who are involved in clinical research may conscientiously restrict the scope of their conversations to information they know to be public. However, ASCO strongly cautions its members against these relationships for the following reasons: first, it is important to note that even conversations that do not involve divulging confidential information raise legitimate ethical questions that can cast both study results and the reputations of individual physicians in a negative light. This point is well-illustrated in the article by Topol and Blumenthal1 in which the authors discuss the case of a physician who served on a medical advisory board for a life sciences hedge fund. Though he had no personal investment in the hedge fund or the drug company involved, the physician advisor was portrayed as having a conflict of interest when the fund bragged of the profit it made from short selling the drug company's stock shortly before a major drug recall. Topol and Blumenthal note that "While no true conflict of interest existed in this case, the appearance was troublesome both to the physician involved and to the scientific community, and the case poignantly illustrates how a relationship with an investment company may entangle physician advisors in real or apparent conflicts of interest that are very difficult to manage without severing the relationship."1 These relationships also generate a significant amount of bad publicity that impacts the entire research enterprise, as evidenced by the aforementioned press coverage and Congressional investigations. Second, even a physician with the best of intentions can unwittingly disclose confidential information. The line between information that is public or nonpublic or material or not material is usually unclear, and investment firms may use underhanded approaches in order to obtain the latter. Investment firm representatives have been known to pose as fellow clinicians or trial participants to gain information about the progress of a clinical trial, and to enlist physicians to contact investigators and make inquiries on their behalf. Scientific Program Committee members, who have access to trial results once the abstract grader opens, may also be targeted, as will authors whose abstracts are selected for presentation at an ASCO meeting.
The best way for physicians to avoid the negative consequences that can result from unintentionally sharing insider information is to avoid the relationships with investment firms that put them at risk. It is for this reason that ASCO discourages these relationships. However, if a physician does participate in discussions with investment firm representatives he or she should keep the following rules of thumb in mind: (1) beware of the underhanded approaches used by investment firms to obtain nonpublic information; and (2) if one would not or should not trade stock for oneself based on this information, then one should not share it with others. ASCO also recommends that physicians take the time to educate research staff about this issue as they also have access to insider information and may be approached by investment interests. In order to address the risks posed by the increased outreach of investment interests to clinical researchers, ASCO will require that relationships with investment advisors be disclosed in the context of ASCO activities. Currently, the ASCO General Conflict of Interest Policy requires the disclosure of "consultant or advisory arrangements with an entity having an investment, licensing or other commercial interest in the subject matter under consideration." ASCO's view is that all consulting relationships, including those with investment interests, must be disclosed under this policy. Those who must disclose under the ASCO General Conflict of Interest Policy include ASCO Board of Directors, volunteers who sit on committees, task forces, and guideline panels, and people who are selected to participate in ASCO meetings or publish in ASCO publications (ASCO General Conflict of Interest Policy, Section III.A.). 7 In addition, ASCO reminds all volunteers, as well as those selected to participate in ASCO meetings or publish in ASCO publications, that information obtained through their position or role is confidential. ASCO currently requires volunteers invited to sit on ASCO committees to sign a responsibilities agreement that requires them to keep committee business confidential. Similar agreements are also signed by those who are chosen to participate in ASCO meetings as faculty members or abstract presenters. Authors whose abstracts are selected for publication in conjunction with an ASCO meeting are advised of ASCO's confidentiality policy in their abstract notification letter. Any ASCO volunteer or participant who fails to disclose relevant relationships to ASCO, breaches his or her responsibilities agreement with ASCO. This may jeopardize their ability to participate in some ASCO activities and, in extreme cases, their ASCO membership. In addition, if they knowingly or inadvertently share nonpublic information, they may be subject to enforcement actions by federal or state authorities.
Physician relationships with investment firms are becoming increasingly commonplace within the clinical research landscape. Even in cases where the exchange of information between physician researchers and investment interests does not constitute illegal insider trading, these relationships can be problematic. As a result, ASCO will require disclosure of these relationships by its volunteers and those who are selected to participate in an ASCO activity or publish in an ASCO publication, pursuant to the ASCO General Conflict of Interest Policy. ASCO remains committed to educating its members about the nature of this practice, and will develop educational materials concerning the ethical and legal responsibilities of physician researchers to trial participants, trial sponsors, and the entire research enterprise.
The authors indicated no potential conflicts of interest.
ASCO sincerely appreciates the contributions of the following individuals, who devoted much time and thought to this project: Allen Lichter, MD, (University of Michigan Medical School, Ann Arbor, MI), Howard Burris, MD, (Tennessee Oncology, Nashville, TN), Jordan Berlin, MD, (Vanderbilt Ingram Cancer Center, Nashville, TN), Steven Joffe, MD, (Dana-Farber Cancer Institute, Boston, MA), and Roscoe Morton, MD, (Medical Oncology and Hematology Association, Des Moines, IA).
Approved on August 17, 2006 by the American Society for Clinical Oncology. Author's disclosures of potential conflicts of interest and author contributions are found at the end of this article.
1. Topol EJ, Blumenthal D: Physicians and the investment industry. JAMA 293:2654-2657, 2005 2. Letter from Senator Charles E. Grassley, Chairman, Finance Committee, to The Honorable Alberto R. Gonzales, Attorney General of the United States, and The Honorable Christopher Cox, Chairman, U.S. Securities and Exchange Commission. http://www.finance.senate.gov/sitepages/grassley.htm 3. Steinbrook R: Wall Street and clinical trials. N Engl J Med 353:1091-1093, 2005 4. Timmerman L, Heath D: Drug researchers leak secrets to Wall Street. The Seattle Times. August 7, 2005, pp. A1 5. Morreim EH: The clinical investigator as fiduciary: Discarding a misguided idea. J Law Med Ethics 33:586-598, 2005[Medline] 6. Emanuel EJ, Miller FG: The ethics of placebo controlled-trials: A middle ground. N Engl J Med 345:915-919, 2001 7. American Society of Clinical Oncology: Revised conflict of interest policy. J Clin Oncol 24:519, 2006 Submitted October 23, 2006; accepted October 27, 2006.
This article has been cited by other articles:
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Copyright © 2007 by the American Society of Clinical Oncology, Online ISSN: 1527-7755. Print ISSN: 0732-183X
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INTRODUCTION
PRACTICES THAT RAISE CONCERN
