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August 17, 2005
When Doctors Advise Investors
It's getting harder and harder to disentangle the medical profession from
financial conflicts of interest. The familiar concern has involved doctors
who take money from pharmaceutical or biotechnology companies for consulting
or research. Such ties inevitably call into question how objective such
doctors can be in conducting research, offering advice to government
agencies or prescribing drugs for patients. It is never wholly clear whether
the doctor is focused on the medical needs of patients or has one eye on the
prospects of a financial patron.
Now, as described yesterday in an article by Stephanie Saul and Jenny
Anderson in The Times, there is an additional concern: doctors who are paid
to give advice to investment firms. The worry here is not that doctors will
somehow shortchange their patients, but that their advice to financial firms
may distort the markets, offering sophisticated investors the kind of
insider information that the ordinary investor can't get.
With little notice or alarm, this form of financial consulting has expanded
rapidly. An article on June 1 in The Journal of the American Medical
Association concluded that almost 10 percent of the nation's 700,000 doctors
had entered into formal consulting relations with the investment industry.
The percentage of doctors from academic medical centers, where much of the
clinical research of interest to investors takes place, was thought to be
considerably higher.
The financial firms seeking advice include hedge funds, venture capital
firms, investment bankers and stockbrokers, among others. They are assisted
by specialized companies that enroll doctors and link them with
information-hungry financial firms. A doctor is typically paid on an hourly
basis - at rates ranging from $200 to more than $1,000 per hour - for
consulting that can be done by telephone or face to face.
This kind of consulting looks like a recipe for trouble. The information
most prized by investors is some hint as to how an experimental drug is
performing in ongoing clinical trials or informed guidance about problems
that may trouble the Food and Drug Administration. Although the doctors are
routinely warned not to reveal confidential or proprietary information, it
is a virtual certainty that when the scope of consulting is so large, there
will be disclosures, even if they are inadvertent.
The best antidote would be a pledge of abstinence backed by the ethical
guidelines of medical societies. Any doctor who has inside information about
clinical trials or the F.D.A.'s thinking should not do consulting work for
investment firms.
a.. Copyright 2005 The New York Times Company