Drugmakers and College Labs: Too Cozy?

Medical researchers at Harvard and Stanford have failed to disclose millions in payments from Big Pharma, an Iowa senator charges

by Arlene Weintraub

U.S. Senator Charles Grassley (R-Iowa) is continuing to criticize what he considers to be the troubling industry ties of some medical researchers and doctors.

Grassley serves as the ranking Republican on the Senate Finance Committee, which has jurisdiction over the federal Medicare and Medicaid programs. In early June, he released information alleging a group of Harvard psychiatrists received more than $4 million from drug companies that they didn't report to the university. On June 23, he singled out another prominent psychiatrist, Dr. Alan Schatzberg of Stanford, saying the university should have demanded more stringent disclosure from its faculty member.

The senator alleged in the Congressional Record that Schatzberg failed to report to Stanford some payments from 2000 to 2006 from Eli Lilly (LLY) and Johnson & Johnson (JNJ) for consulting and other services. Grassley also chastised Schatzberg for not fully informing the university about the value of his personal stake in a drug development company he co-founded—although the psychiatrist appears to have followed Stanford's disclosure rules.

"I am concerned that Stanford might not have been able to adequately monitor the degree of Dr. Schatzberg's conflicts of interest," Grassley said in a June 23 letter to Stanford President John Hennessy that was published in the Congressional Record. The senator suggested the university reexamine its disclosure policies.

Concerned about the influence of drug industry money on patient care, Grassley began investigating physicians at research universities across the country last year. The senator believes his findings will help generate support for a bill he is co-sponsoring that would require drug and medical device companies to report any payment to a physician exceeding $500. Doctors' names and details about the payments would be posted on a Web site. "The public relies on the advice of doctors and leading researchers," Grassley said in an e-mail to BusinessWeek. "The public has a right to know about financial relationships between those doctors and the drug companies who make the pharmaceuticals prescribed by doctors."

Grassley vs. Schatzberg

Schatzberg, who heads the psychiatry department at Stanford, is an expert on psychotic depression, an extreme form of the disease that causes symptoms such as paranoia. In the Congressional Record, Grassley focused on Schatzberg's stake in Corcept Therapeutics (CORT), a company the psychiatrist co-founded in 1998. Corcept is studying the development of the drug Mifepristone, better known as RU-486, as a potential remedy for psychotic depression. RU-486 induces abortion, but it also seems to block cortisol, the so-called stress hormone, which aggravates psychotic depression.

Grassley alleged in the Congressional Record that Schatzberg did not tell Stanford about a $109,179 profit from the sale of Corcept shares in 2005. The senator also pointed out that Schatzberg reported to the university that his stock holdings in Corcept are worth "over $100,000," when, in fact, the psychiatrist's stake is worth more than $6 million.

Grassley acknowledged Stanford's disclosure rules didn't oblige Schatzberg to be more forthcoming, but the senator argued that universities and researchers owe it to the public to reveal industry relationships as fully as possible.

Schatzberg declined BusinessWeek's request for an interview.

Preventing Conflicts of Interest

Stanford disputed some of Grassley's assertions regarding Schatzberg's allegedly undisclosed payments from drug companies. Stanford said in a statement that confusion may have arisen from the fact that the companies' fiscal years differ from the university's calendar. Stanford said it is well aware of Schatzberg's stock ownership in Corcept. "According to university policy," the statement said, "Stanford followed a series of measures to ensure that his research was not compromised by this financial stake." Stanford bars Schatzberg from participating in clinical trials of Mifepristone, for example.

Stanford has been a leader in trying to prevent conflicts of interest. In the fall of 2006, the university's medical school prohibited doctors there from accepting gifts such as pens and pizza lunches from drug company sales representatives. Other universities followed suit, and in April, the Association of American Medical Colleges released a report urging all medical schools to ban promotional freebies and discourage staff physicians from acting as paid speakers on behalf of companies.

Stanford said in its statement that it would continue to look into Schatzberg's disclosures. But it added: "We believe appropriate and well-managed interactions between industry and academic medicine are critical to finding new therapies to alleviate human suffering."

Weintraub is a senior writer for BusinessWeek's science and technology department.