Enthusiastic Reporters, Doctors and Investment Firms
The Seattle Times recently published an investigative report; "Drug Researchers Leak Secrets to Wall Street", alleging that doctors sell confidential drug information to investment firms who acquire the data for their "elite" clients. Apparently, the informational consultations are set up by "matchmakers", companies that pair Wall Street firms, especially hedge funds, with doctors involved in clinical trials. The article echoes some of the concerns of a recent article in the June issue of the Journal of the American Medical Association (JAMA), which warned that when doctors engaged in such consulting, potential conflict of interest and ethical issues were bound to occur, either intentionally or unwittingly.
The Seattle Times bested the JAMA article by adding journalistic flourish -- names, numbers, and drama -- to JAMA's account. The authors claim to have found 26 cases of illicit liaisons between pharmas and investment banks. According to the account, "the largest matchmaker, the Gerson Lehrman Group "claimed to have 60,000 doctors available to speak to Wall Street, double the number from three years earlier." They conclude that the doctors "violate confidentiality agreements they sign before drug companies allow the drug testing to begin".
Naturally, the Seattle Times article set off a flurry of concern and activity in the medical, journalism and political communities. This week UCLA announced an investigation of the doctor, Robert A. Figlin, MD, who was featured in the article. Representative Jay Inslee (D-WA) has asked the House Energy and Commerce Committee to hold hearings about the Seattle Times evidence. Also this week Chairman of the Senate Finance Committee, Senator Charles Grassley (R-Iowa), asked Attorney General Aberto R. Gonzales and Christopher Cox, chairman of the Securities and Exchange Commission (SEC) to investigate the claims, and as well the New York Times published its own investigative article.
The potential ethical issues in the Times article are legion. Premature drug information disclosure can potentially skew clinical trials and bias stock trading on Wall Street, not to mention enable short term speculation based on insider information. But while the potential for abuse obviously exists, not everyone agrees with the authors' suppositions. Mark Gerson of the Gerson Lehrman Group wrote a lengthy objection letter to the Seattle Times editor that was also published on his company's website. His response, though predictable, made a valid point:
"I was surprised that [one of the authors] ignored facts and arguments that were inconvenient to his story...most notably the value - to physicians, investors, even patients - of adding independent and objective perspectives to the investment decision-making process."
The Gerson letter explains in detail the benefits of expert science evaluations for potential drugs and fairly points out that doctors offer valuable insight into disease and treatments that is beneficial to the process. People are better able to evaluate a drug based on criteria other then how well it's marketed. Of course Gerson's letter is defensive, but it does appear that reporters repeatedly left information that would have provided readers with a more balanced view of the issues. This is not to deny a serious issues. Doctors do consult for drug companies and can influence the outcome of a drug. The alliance is potentially dangerous.
The journalists obtained a tape of a phone consultation between a doctor and some investors. The purpose of the consult was for the doctor to answer questions about "two potential new drugs for kidney cancer: Sutent, a Pfizer drug for which he was a principal researcher, and Sorafenib, a drug that he monitored the safety of for Onyx Pharmaceuticals.". The authors highlight selections from the exchange in their article and try to use this as evidence to bolster their allegations. However a more thorough look at what they present throws doubt on their story.
Although Seattle Times points out the doctor's associations with the two companies, they omit to mention other significant credentials that would change the tone of their story. He's an award winning UCLA professor, clinician and prolific researcher, who has authored over 150 research papers and 30 book chapters. His website mentions that he's listed in many *Who's Whos* of "the West", "Science and Engineering", "Medicine and Healthcare", "America" and "the World" (whose lists, we don't know). He also co-authored a textbook; "Renal and Adrenal Tumors: Biology and Management". His credentials are relevant to the story because he was consulting about angiogenesis inhibiting drugs that could potentially treat renal tumors.
The authors report an exchange from July 18 conference call related to the potential efficacy of the drugs and suggest illicit behavior:
"Figlin also was asked to "handicap" the results of one of the drug trials. In particular, one hedge-fund manager asked whether Onyx would be able to show that its kidney-cancer drug, Sorafenib, had a "survival benefit", that is "that patients taking Sorafenib were living longer. A survival benefit is the gold standard for a cancer drug's success."
The authors quote a part of the exchange:
QUESTION: "And your bet is ...that there will be a survival benefit?"
FIGLIN: "That's a good question. My bet - am I betting with your money or mine? - my bet is that there will be a survival benefit."
So according to the authors, the fact that Figlin "bet" that there would be a "survival benefit" suggests foul play. Smoking gun in hand, the the Seattle Times called Figlin and "quizzed" him about the information the transcript. Here's what they printed:
"In an interview with The Times after the call, Figlin...said he sees nothing wrong with talking to Wall Street investors as long as doctors discuss only publicly available information. "I don't think it's appropriate for the physician to ever discuss things that are unpublished, or anecdotal", including any prediction of a drug's survival benefit, he said."
The Seattle Times article alleges that the information was confidential and insinuates that Figlin was duplicitous in his answers.
"When asked about his prediction of a survival benefit during the July 18 call, Figlin said he was just expressing his hope for its success. "I take care of hundreds of kidney-cancer patients, and I'd like to finally have an agent that demonstrates a survival advantage. If they then take that information and decide, "Oh, Figlin thinks the trial is positive,' then they are extracting information and making conclusions on their own dime.""
When Doctors Bias Drugs? Or When Reporters Think They Do?
The question is, was Figlin sharing inside information as the Times says? Actually, no. An online search yields lots of relevant information about both drugs, which is and always has been public. Whether the Times' authors were aware of the information and ignored it, misunderstood the information, were not aware of it, or simply differ in their opinion is unknown. But data from clinical trials of both drugs was presented at the American Society for Clinical Oncology's (ASCO) annual meeting in San Francisco in May, 2005, several months before the conference call. Presentations and abstracts from both Pfizer and Onyx/Bayer are also available on the ASCO website.
Finally, the ASCO meeting's "2005 Best of ASCO San Francisco" talk, was actually presented by Dr. Figlin, (20 minute talk linked above). He highlighted the two drug trials within the context of the unique biology of kidney angiogenesis, other available treatments, toxicity data, and relevant patient populations. Figlin clearly outlined the results of the ongoing trials and the apparent pros and cons for both Sutent and Sorafenib. For the Onyx/Bayer Phase III Sorafenib trial results, he explicitly notes that the trial was "built as a survival trial". A slide states the primary objective, which was: "To compare the overall survival of patient treated with Sorafenib versus placebo".
The "target conclusions" were:
"Sorafenib significantly prolongs PFS [Progression-Free Survival Benefit] (24 weeks) compared with placeblo (12 weeks) in advanced RCC. PFS benefit is evident in all subsets of patients evaluated."
All of this information was summarized in several science publications as well as in general investor and biotechnology news. While these results don't predict "survival benefit", they should easily clue the astute investor in to the relative potential of both the drugs.
The authors portray the doctor's associations with other doctors as unscrupulous:
"[Figlin] said he had talked about "generally available" information but acknowledged he may have discussed information he heard from other doctors on the studies".
Figlin no doubt talked with the doctors because he presented their clinical trials' results at a meeting of physicians. The doctors were presumably present at the meeting, and they are all in the same subspecialty. One would assume that Figlin probably "discussed information" with them.
The Seattle Times also implied that Figlin's revelation about the schedule of Pfizer's FDA application to the investors at the meeting was secret information that benefited those in the conference call. They claim that when Onyx/Bayer filed for FDA approval, most investors, except those in the conference call, were in the dark about Pfizer's plans for FDA approval:
"The value of Figlin's information became obvious two days later (July 21), when Pfizer let slip that it had not yet filed with the FDA. Analysts who had not been on the call with Figlin put out research reports speculating that Pfizer was losing its cancer-drug race with Onyx. That day Onyx shares rose $2.94 or 12 percent on heavy volume."
However again, the authors overemphasize a view of the exchange that supports their story. Is it a biased view? As "The Street" wrote, in in an article about Pfizer and Onyx/Bayer after their ASCO presentations in May, "the companies plan to file for FDA approval of the treatment." Whether this was a rumor or not, in May, months before according to the ASCO data, some writer and editor capably predicted that both companies would file FDA applications.
Drug Stocks -- How Not To Influence Them
Although the science (or the doctor's opinion of it) is important, it isn't the only thing that determines the stock price. Both companies had existing histories and reputations, and industry analysts issued strong opinions about both stocks continuously up to "the conference call". We should question the assumption that any one person, even an MD, has the information needed to predict drug efficacy at these stages of drug development. The business news available on the internet in May immediately following the ASCO conference, offered just as complete read of the tea leaves and each stock's potential fortune as the speculations of the doctor in the conference call on July 18th, months later.
The Seattle Times authors suggest that potential profits could be reaped from the information that the doctor provided, but their data is merely speculative at this point. While the stock did increase in price and volume Pfizer's (PFE) volume also doubled the same day. Bayer's (BAY) volume also increased. Short term profits could surely be gamed on this stock, but before judging this, there are questions outstanding. Perhaps one would ask: Did people profit from the trade through personal investments in the companies? What other variables were influencing the stock that day? What were other analysts saying? Was the conference all that relevant, and is a $2.94 change in stock price (13% looks like alot when the price and volume are paltry to begin with) truly significant in a volatile stock such as Onyx, compared to say 33%, or $13, which is how much the stock fell one day in October 2004 -- just because.
No doubt the article reveals a regulatory weakness in the current system. Clearly, the Seattle Times authors stirred up an important issue. But with the incomplete set of facts they offer, one could make up several disparate stories that fit the data. For instance one could say that the doctor focused on these two new drugs at the meeting over existing or other emerging candidate drugs (which were also presented and available) and in doing so biased doctors opinions about both drugs, before they were even thoroughly proven in clinical trials. Furthermore, can the authors be so sure who was actually disadvantaged by the conference call? Are they sure the investors who didn't sit in on the conference call were really worse off? Perhaps it was the "elite" investors, who are paying hundreds or thousands of dollars for information that was largely available three months earlier who are being *scammed*, rather then the savvier investors who followed the news back in May and could adjust their portfolios accordingly.
While the probable abilities of a small group of people to profit greedily and unethically off market fluctuations is clear but unproven, it is more certain that the doctor was being frank when he asked who's money he was betting.
