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an online version of the magazine Fall 2006
Painting of a bull in a laboratory Leaky Labs
  As investors look for inside information about drug trials, the University issues a word of caution to prevent researchers from divulging too much.

By Michael Anft

When he isn't looking into patients' eyes or teaching soon-to-be ophthalmologists to read the shapes their instruments pick up there, Peter Campochiaro tucks himself away in his lab at the Wilmer Eye Institute. A retinal specialist who hopes to help find new treatments for blinding diseases like retinitis pigmentosa and macular degeneration, the 53-year-old ophthalmologist spends 50 hours or more each week—“Whenever I can fit it in”—studying the retina in lab mice.

Campochiaro, who joined the Hopkins faculty in 1991, has watched his research load pick up steadily. Along the way, he's developed an expertise in his specialty that colleagues and patients have learned to count on. Drug companies and those who invest in them also value Campochiaro's opinions. He now finds himself called on regularly to give them advice in his field and also to test their drugs and talk with prospective investors about science and the human eye.

“It's a key part of what I do,” Campochiaro says of his role as a consultant. “Explaining diseases to companies is important because they don't know all that much about them. At the same time, we in academia need industry. They have technology that's not readily available in our world.”

But Campochiaro states categorically that the big reason academy/industry pairings are vital is because drug companies, with their facilities, money and market clout, possess the wherewithal to make important new treatments created in university laboratories available to the public. To move such projects forward, start-up companies ask him to talk to venture capitalists looking to get in on the ground floor.

“Often, investors want a third party—someone who is objective about a particular treatment—to sign off on it before they invest in it,” Campochiaro explains. “When researchers talk to investors, we guarantee that they are receiving the correct information. It keeps the process honest.”

Still, when an investor called last year and asked Campochiaro whether he had any “personal experience” with a drug treatment still in the clinical-trial stage that involved blood vessels in the eye, Campochiaro was taken aback. He knew he was bound by confidentiality agreements between him and the University not to divulge information that had not yet been made public, as was the case with the trials for this drug. He also knew that the investor, who had paid him somewhere between $300 and $400 an hour for his expertise, expected him to leak privileged information. He refused.

“He was upset with me,” Campochiaro says, “and said, ‘What's wrong with you? This isn't usually a problem when I talk to other researchers.' I didn't think too much of it at the time,”

For Campochiaro, a scientist who has staked his professional career on knowing the rules of research—which include maintaining confidentiality and educating people without being hassled to do it—alarm bells began ringing. His mind went back to reports in the Seattle Times and the New York Times a little over a year ago about numerous instances of alleged insider trading by research physicians. Then, when a representative of an investors' group wanted the School of Medicine to quickly sign off on a consulting contract with Campochiaro, he wrote a memo to the School of Medicine's Office of Policy Coordination, which had been reviewing the proposed deal, and told them he was pulling out.

“It's made me see some things in context,” Campochiaro says of his experience. “When the news accounts came out, it became clear that some of these guys are looking for information on clinical trials, so it made me not go forward with that relationship. I try to be very careful. I don't want to get into that situation.”




Peter Campochiaro  
Peter Campochiaro never felt uncomfortable in his consulting relationships until the public accounts of laboratory leaks last year.

In the Summer of 2005, the Seattle Times cited 26 instances in which research physicians—some at the nation's most respected academic institutions— prematurely leaked results of drug trials to Wall Street brokerages and hedge funds. At the same time, top biomedical research institutions like Johns Hopkins were beginning to realize that without proper failsafes, those numbers could grow. As the funding of pharmaceutical research and development has more than doubled—from around $20 billion per year in 1999 to nearly $50 billion last year—physicians are finding more opportunities to earn fees for sharing their expertise.

Experts here and elsewhere now agree that the time to make doctors aware of the dangers of conversations between them and investors is now. Merrill Goozner, director of the Integrity in Science Project for the Center for Science in the Public Interest, a watchdog group in Washington, says investor interest in drugs is ratcheted up with each new successful trial and that financial firms will make attempts to gather information long before FDA approval.

“A stock price can go from, say, 3 to 7 after a phase I trial to 10 after phase II,” Goozner, a former business reporter, says. “When phase III shows that a drug is viable and you can go to the FDA, the company's stock might triple in value. The stock market is very efficient at factoring in information long before the effect of the information kicks in. If Wall Street can get access to data early, before FDA approval, then they'll try to do it.”

With an estimated 10 percent of the nation's physicians now serving as consultants to the investment industry, the possibility of a slip of the tongue or of direct attempts at influencing the value of a stock has increased. Reports of physicians who wrongly offer insider information have spurred calls by physicians' professional associations for more vigilance among their members who talk with investors. And across the country, warning bells are sounding at medical institutions and research universities where allegations of loose-lipped researchers have served as a wake-up call. Many institutions are strengthening their policies on conflict of commitment and on confidentiality.

Meanwhile, at Hopkins, where clinicians and scientists spend much of their professional lives in research laboratories, newspaper revelations such as those in the Seattle Times expose' have done more than persuade investigators to watch their tongues or weigh whether maintaining ties to investors is worth the hourly fee. They have raised questions such as: Will my credibility be ruined if I inadvertently give privileged information to an investor? Will my research be endangered? Could I go to jail—as have insider traders from Ivan Boesky to Martha Stewart?

Potential threats to their professional lives have even prompted some researchers to reconsider their relationships with investors or so-called matchmaker firms that link medical researchers with groups of financial people interested in backing new treatments. A handful, says Julie Gottlieb, assistant dean for policy coordination, have even decided that the risk to their reputations from dealing with investors is too high. “They've told me that they want to terminate their relationships with these firms.”

But invitations to work with investors can be tempting to a researcher who has spent years toiling in the lab to develop a new treatment for a menacing disease. Investors offer the opportunity to bring a new drug quickly to market and to earn cash for even brief conversations about its potential. At Hopkins, where 1,100 trials involving drugs were conducted in 2005, specialists in a wide range of disciplines are wooed regularly by matchmaker firms.




Seated in his squeezed, spartan office on the seventh floor office in the Maumenee Building, Peter Campochiaro, replete with glasses, a measured and rounded speaking voice, and a white linen coat, reflects on how he got started as an advisor to the financially savvy a decade ago. Companies would frequently ask him to talk to investors, which he happily did. Sometimes, those investors would call later to ask questions on their own, for a separate fee.

Most frequently he receives offers from firms to interpret information from the public domain for investors. “Sometimes, it's investors or potential partners,” he says. “Normally, it's to verify what the company has told them. That's a very useful thing. There are companies out there that make claims that are not based on fact.”

As an example, Campochiaro cites a company that claimed its drug worked more selectively than those from other companies because it destroyed abnormal blood vessels only and not normal ones. There had been some evidence of this difference when the agent was tested during blood-vessel development, but absolutely no sign of it when it was tested in adult animals.

“This was a marketing ploy centered around a half-truth,” Campochiaro says. “It was deliberately misleading. If we want to maintain integrity in the interaction between investors and companies, it's critical to expose scams of this sort.”

Although his roles were rarely set in stone—he might work for a company one month, then a potential investor in that company a few months later, Campochiaro says he has never felt uncomfortable in his consulting relationships—at least not until the public accounts of laboratory leaks last year.

“I've always felt completely safe entering into these arrangements,” Campochiaro says. “I've never felt threatened by the situation. I've felt safe because I understand confidentiality.”

Privileged information and doctors' understanding of how to handle it go to the heart of the issue, he says. Several investment companies make sure that doctors sign contracts that include clauses that require them to honor all third-party agreements—often specifically mentioning those inked with universities and medical centers and that deal with confidentiality.

But some public officials worry that such clauses don't safeguard against leaks. One has called for governmental action to nab those who break federal law by offering confidential information on the progress of drug trials to Wall Street types.

Following the Seattle Times reports, Senator Charles Grassley, a Republican from Iowa who heads the powerful Senate Finance Committee, asked the Department of Justice and the Securities and Exchange Commission to open investigations into the newspaper's allegations. “Selling drug secrets violates a trust that is fundamental to the integrity of both scientific research and our financial markets,” Grassley said.

The SEC defines insider trading as “buying or selling a security while in possession of material, nonpublic information about the security.” But the regulation also is clearly aimed at people with no financial interest in the stock, as has been the case with the physicians accused of passing along confidential information: “Insider trading violations may also include ‘tipping' such information, securities trading by the person ‘tipped', and securities trading by those who misappropriate such information.”

At Hopkins , the news accounts and the controversy that followed them have been heeded at the highest levels. Edward Miller, dean of the medical faculty, has urged all researchers and physicians to “be scrupulous in adhering to the letter and spirit” of their confidentiality agreements with the University. And last September, University President William Brody wrote an article titled “Doctor Beware: A New Conflict of Interest” in his column for Change, the faculty newsletter. While relationships between investors and researchers are necessary, Brody said, “if you are involved in a clinical trial that requires confidentiality, you (and your secretary and other staff) cannot divulge information to your colleagues, let alone to outsiders, without breaching your ethical obligations and exposing yourself to potential legal scrutiny.”

The School of Medicine 's Office of Policy Coordination, meanwhile, has strengthened the language it requires in contracts between physicians and companies regarding the disclosure of Hopkins-owned information. Gottlieb believes that the current policies are strong enough to keep insider trading from becoming a campus issue. “At this point, I do not anticipate a formal policy change, but we will continue to monitor the potential risks of consulting for investment/matchmaker firms,” she says.

Hopkins' policy on conflict of commitment—the area of the institution's rules that deals explicitly with consulting arrangements and where they should rank in a physician's pecking order of priorities—is clear on how faculty members should view their ties with outsiders, Gottlieb says. The policy, in part, reads: “Despite the increasing frequency and complexity of the relationships of the University and its faculty with industry, government and other entities, these relationships are governed by one basic principle: Full-time faculty members of The Johns Hopkins University School of Medicine recognize that their primary responsibility is to The Johns Hopkins University.” Hopkins faculty members are “expected to devote their energies to activities that further the academic objectives of the School.”

Gottlieb says proposed arrangements with physicians who wish to enter into deals with companies or investors must pass through a rigorous process. Faculty must submit written agreements or offers of a relationship to the Office of Compliance for prior review.




Julia Haller  
Julia Haller: “You may not know that you are providing confidential information when you speak with representatives of the investment industry.”

Peter Campochiaro's protocol for dealing with pharmaceutical companies and financial people could serve as Hopkins ' textbook model. When he receives a proposal to share his expertise, he forwards the written contracts straightaway to Gottlieb's office. “Sometimes, I'll just glance at them first,” he says. He then waits for sign-off from considerable sources: the Office of Compliance, the head of his own retinal division, the director of the Department of Ophthalmology and the Office of Policy Coordination. Finally, if the contract relates to research that Campochiaro himself is involved with, the conflict of interest committee will also look at it before it can proceed.

These same procedures, Gottlieb makes clear, govern all School of Medicine researchers. The process assures that their relationships and agreements with companies remain consistent with research integrity principles.

And because people in so many parts of the School of Medicine read the proposed agreements before they are signed, physicians are held accountable for whatever happens after they ink them. As Campochiaro says, “You're not the only one aware of your outside agreements, to say the least.”

To oncology researcher Curt Civin, a recent chair of the Committee on Conflict of Interest, “there's nothing inherently wrong about consulting. That's why there's no rule against this. What we want to make sure of is that people are careful.” This simple policy of caution, Civin says, is a nod to the School of Medicine's desire to maintain and develop strong ties with industry—and to prevent a possible backlash from faculty members who believe they have a right to share their expertise with companies.

“If we need to get a helpful pill to millions of people,” Civin adds, “perhaps we should make sure that industry gets that pill right. We need to give them advice so they can do that If it's a biotech company asking for advice, you know pretty much what they want. With investment companies, you don't know whether they want to buy the company, sell it, invest in a drug, or whatever. Doctors tend to be open and collegial about these things. It's our job to educate, after all. But we may have to recalibrate when we're contacted for investing advice.”

Julia A. Haller, the Katharine Graham Professor of Ophthalmology, agrees that doctors can be “hoodwinked,” as she puts it, by wily financial people. As effective treatments for retinal diseases have multiplied in recent years, so have the opportunities for entering into consulting deals with investors.

To warn her colleagues of worst-case scenarios, Haller wrote a mass e-mail to the 1,400 members of the American Society of Retina Specialists in September, warning of the thorniness of many physician/investor relationships. Haller, who serves as the group's vice president, wrote: “You may not know that you are providing confidential information when you speak with representatives of the investment industry. However, responses to seemingly innocent questions may allow hedge funds and other investors to make significant trades in advance of FDA approval or disapproval of a new drug application.”

She adds that she has contacted University higher-ups, including Dean Miller, about the issue. “People still don't seem all that well-informed,” she says.

But some faculty say the insider-information issue is little more than a tempest in a test tube. Because they have signed confidentiality agreements with Hopkins , they believe they and their colleagues are likely to understand how important it is for certain information to remain hush-hush.

“I'm not sure why this is even a story,” says the eminent neuroscientist Solomon Snyder. While conceding that “academics are naïve about the business world,” Snyder adds, “if you leak information, drug companies, the government and the institution can all go after you. So why would anyone do it?”


 The Making of a Phenom
 Leaky Labs
 The Secret Life of Curt Civin
 Circling the Dome
 Medical Rounds
 Annals of Hopkins
Class Notes
 Triumph Amid the Tumult
 Learning Curve
Johns Hopkins Medicine

© The Johns Hopkins University 2006