I love reading the kinds of spy novels where a Russian KGB agent gets on a train, spots a man in a heavy wool suit and white socks in the middle of summer, and then uses convoluted analysis to deduce correctly all of the details of a complex plot to overthrow the government of Bulgaria. It’s fun reading about superb detective work. Today, the KGB is but a shadow of its former self, but the spirit of spying lives on in the work of some stock-market analysts. Their relevance to academic medicine is the subject of my column.
It has long been the practice of Wall Street firms to hire high-profile physicians involved in the development and application of cutting-edge therapies to provide advice so that investors can determine where to place their future bets. This is a bona fide way for investment professionals to get current and generally accurate information about market and industry trends.
However, there’s an important distinction between providing general market and scientific advice and revealing specific knowledge that has not been publicly disclosed regarding the progress (or lack thereof) of a clinical trial or critical research experiment. An article in the Aug. 10, 2005, Washington Post indicates that the Securities and Exchange Commission is taking more than a passing interest in this latter phenomenon, probing physicians’ dealings with stock-market analysts and investors. The Seattle Times reports that “some doctors involved in running corporate-sponsored drug tests are taking payments from stock analysts for violating confidentiality agreements and revealing secret information.”
One reason the SEC is suspicious is the financial equivalent of the wool suit in summer: the all-too-telling bump (or drop) in the stock price of a publicly traded company just before good (or bad) news regarding a clinical trial or FDA ruling is about to be announced. At issue is, where does this information come from that predicts impending significant events, and how was it obtained?
Since the Martha Stewart case, we are all quite familiar with insider trading and the serious ramifications thereof. But we should also be aware that trafficking in insider information—even if you don’t participate in buying or selling stock, or benefit financially in any way—can be a serious breach of confidentiality. Careless talkers may find themselves behind bars, paying a substantial fine or wearing one of those now-fashionable ankle security locks.
Even a casual conversation can have serious consequences. I was told about an investor who called the American Heart Association just before the annual meeting to see if a particular abstract involving a clinical trial was going to be presented. After placing multiple calls to different offices, he spoke to a secretary who innocently informed him that the abstract in question had been pulled from the meeting. The investor correctly surmised that the results must have been positive and that the researchers were submitting a manuscript for publication instead of presenting an abstract. The investor went ahead and purchased stock in the company involved and made a handsome profit.
Confidential information is just that. If you are involved in a clinical trial that requires confidentiality, you (and your secretary and other staff) cannot divulge any information to your colleagues, let alone to outsiders, without breaching your ethical obligations and exposing yourself to potential legal scrutiny.
William R. Brody, M.D., Ph.D.
President, The Johns Hopkins University
Originally published in Change, September 20, 2005
Doctor Beware: A New Conflict of Interest
I love reading the kinds of spy novels where a Russian KGB agent gets on a train, spots a man in a heavy wool suit and white socks in the middle of summer, and then uses convoluted analysis to deduce correctly all of the details of a complex plot to overthrow the government of Bulgaria. It’s fun reading about superb detective work. Today, the KGB is but a shadow of its former self, but the spirit of spying lives on in the work of some stock-market analysts. Their relevance to academic medicine is the subject of my column.
It has long been the practice of Wall Street firms to hire high-profile physicians involved in the development and application of cutting-edge therapies to provide advice so that investors can determine where to place their future bets. This is a bona fide way for investment professionals to get current and generally accurate information about market and industry trends.
However, there’s an important distinction between providing general market and scientific advice and revealing specific knowledge that has not been publicly disclosed regarding the progress (or lack thereof) of a clinical trial or critical research experiment. An article in the Aug. 10, 2005, Washington Post indicates that the Securities and Exchange Commission is taking more than a passing interest in this latter phenomenon, probing physicians’ dealings with stock-market analysts and investors. The Seattle Times reports that “some doctors involved in running corporate-sponsored drug tests are taking payments from stock analysts for violating confidentiality agreements and revealing secret information.”
One reason the SEC is suspicious is the financial equivalent of the wool suit in summer: the all-too-telling bump (or drop) in the stock price of a publicly traded company just before good (or bad) news regarding a clinical trial or FDA ruling is about to be announced. At issue is, where does this information come from that predicts impending significant events, and how was it obtained?
Since the Martha Stewart case, we are all quite familiar with insider trading and the serious ramifications thereof. But we should also be aware that trafficking in insider information—even if you don’t participate in buying or selling stock, or benefit financially in any way—can be a serious breach of confidentiality. Careless talkers may find themselves behind bars, paying a substantial fine or wearing one of those now-fashionable ankle security locks.
Even a casual conversation can have serious consequences. I was told about an investor who called the American Heart Association just before the annual meeting to see if a particular abstract involving a clinical trial was going to be presented. After placing multiple calls to different offices, he spoke to a secretary who innocently informed him that the abstract in question had been pulled from the meeting. The investor correctly surmised that the results must have been positive and that the researchers were submitting a manuscript for publication instead of presenting an abstract. The investor went ahead and purchased stock in the company involved and made a handsome profit.
Confidential information is just that. If you are involved in a clinical trial that requires confidentiality, you (and your secretary and other staff) cannot divulge any information to your colleagues, let alone to outsiders, without breaching your ethical obligations and exposing yourself to potential legal scrutiny.
William R. Brody, M.D., Ph.D.
President, The Johns Hopkins University
Originally published in Change, September 20, 2005
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