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Stealth Merger: Drug Companies and Government Medical Research

Some of the National Institutes of Health's top scientists are also collecting paychecks and stock options from biomedical firms. Increasingly, such deals are kept secret.

December 07, 2003|David Willman | Times Staff Writer

BETHESDA, Md. — "Subject No. 4" died at 1:44 a.m. on June 14, 1999, in the immense federal research clinic of the National Institutes of Health.

The cause of death was clear: a complication from an experimental treatment for kidney inflammation using a drug made by a German company, Schering AG.

Among the first to be notified was Dr. Stephen I. Katz, the senior NIH official whose institute conducted the study.

Unbeknown to the participants, Katz also was a paid consultant to Schering AG.

Katz and his institute staff could have responded to the death by stopping the study immediately. They also could have moved swiftly to warn doctors outside the NIH who were prescribing the drug for similar disorders. Either step might have threatened the market potential for Schering AG's drug. They did neither.

Questioned later, Katz said that his consulting arrangement with Schering AG did not influence his institute's decisions. His work with the company was approved by NIH leaders.

Such dual roles -- federal research leader and drug company consultant -- are increasingly common at the NIH, an agency once known for independent scientific inquiry on behalf of a single client: the public.

Two decades ago, the NIH was so distinct from industry that Margaret Heckler, secretary of Health and Human Services in the Reagan administration, could describe it as "an island of objective and pristine research, untainted by the influences of commercialization."

Today, with its senior scientists collecting paychecks and stock options from biomedical companies, the NIH is no longer an island.

Interviews and corporate and federal records obtained by the Los Angeles Times document hundreds of consulting payments to ranking NIH officials, including:

* Katz, director of the NIH's National Institute of Arthritis and Musculoskeletal and Skin Diseases, who collected between $476,369 and $616,365 in company fees in the last decade, according to his yearly income-disclosure reports. Some of his fees were reported in ranges without citing exact figures. Schering AG paid Katz at least $170,000. Another company paid him more than $140,000 in consulting fees. It won $1.7 million in grants from his institute before going bankrupt last year.

* Dr. John I. Gallin, director of the NIH's Clinical Center, the nation's largest site of medical experiments on humans, who has received between $145,000 and $322,000 in fees and stock proceeds for his consulting from 1997 through last year. In one case, Gallin co-wrote an article highlighting a company's gene-transfer technology, while hiring on as a consultant to a subsidiary of that company.

* Dr. Richard C. Eastman, the NIH's top diabetes researcher in 1997, who wrote to the Food and Drug Administration that year defending a product without disclosing in his letter that he was a paid consultant to the manufacturer. Eastman's letter said the risk of liver failure from the drug was "very minimal." Six months later, a patient, Audrey LaRue Jones, who was taking the drug in an NIH study that Eastman oversaw, suffered sudden liver failure and died. Liver experts found that the drug probably caused the liver failure.

* Dr. Ronald N. Germain, deputy director of a major laboratory at the National Institute of Allergy and Infectious Diseases, who has collected more than $1.4 million in company consulting fees in the last 11 years, plus stock options. One of the companies collaborated with his laboratory on research. The founder of another of the companies worked with Germain on a separate NIH-sponsored project.

* Jeffrey Schlom, director of the National Cancer Institute's Laboratory of Tumor Immunology and Biology, who has taken $331,500 in company fees over 10 years. Schlom helped lead NIH-funded studies exploring wider use for a cancer drug -- at the same time that his highest-paying client was seeking to make the drug through genetic engineering.

* Jeffrey M. Trent, who became scientific director of the National Human Genome Research Institute in 1993 and, over the next three years, reported between $50,608 and $163,000 in industry consulting fees. Trent, who accepted nearly half of that income from a company active in genetic research, was not required to file public financial-disclosure statements as of 1997. He left the government last year.

Hidden From View

Increasingly, outside payments to NIH scientists are being hidden from public view. Relying in part on a 1998 legal opinion, NIH officials now allow more than 94% of the agency's top-paid employees to keep their consulting income confidential.

As a result, the NIH is one of the most secretive agencies in the federal government when it comes to financial disclosures. A survey by The Times of 34 other federal agencies found that all had higher percentages of eligible employees filing reports on outside income. In several agencies, every top-paid official submitted public reports.

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