WASHINGTON – The chairman of the Senate Finance Committee called Monday for a federal investigation into whether doctors are supplying investment firms with information about clinical drug trials before companies announce the results.
The Seattle Times reported Sunday that, despite confidentiality agreements, doctors are divulging details about ongoing research for a fee. The newspaper's investigation cited 26 cases in which doctors leaked confidential details of their research, including 24 in which firms issued reports to select clients that advised whether to buy or sell a drug stock.
"The serious nature of the reported findings and allegations, coupled with the grave implications if these allegations are meritorious, compel me ... to refer these matters to the Department of Justice and to the Securities Exchange Commission for consideration," wrote Sen. Charles Grassley (search), R-Iowa.
"Selling drug secrets violates a trust that is fundamental to the integrity of both scientific research and our financial markets," Grassley wrote.
The letter was addressed to Attorney General Alberto Gonzales and SEC Chairman Christopher Cox. He asked them to also advise him on whether Congress needs to strengthen any laws in light of the reports.
The Times said that elite investors pay up to $1 million a year to firms known as matchmakers, which pair Wall Street firms with doctors involved in ongoing drug research. Gerson Lehrman Group, the largest matchmaker, claims to have 60,000 doctors available to speak to Wall Street, double the number from three years earlier.
Those who know in advance whether a drug is going to succeed or fail can buy stock low or sell it high to those who don't know, making quick fortunes by taking advantage of unwitting investors.
There is a broader cost to society: Leaking details about ongoing research can introduce bias into drug trials and possibly halt development of potentially lifesaving drugs, biotech executives said.
The trade group representing prescription drug manufacturers responded to the report by saying it condemned the practice of providing investors with inside information about clinical drug trials.
"If a doctor breaks securities laws or his or her confidentiality agreement with a pharmaceutical research company to gain financially, they should be severely punished," said Ken Johnson, senior vice president of The Pharmaceutical Research and Manufacturers of America.