Former Workers Cash in at CDC
Ex-employees take ‘revolving door’ back to agency, where they steer millions to outside contractors
[By Alan Judd for The Atlanta Journal-Constitution.] http://www.ajc.com/news/content/news/0504/19cdc.html
When he concluded a 35-year career at the U.S. Centers for Disease Control and Prevention in 1999, Arthur “Jack” Jackson retired as the agency’s top bureaucrat. A year later, he returned as a consultant, hired by officials he once supervised.
Since then, the Atlanta-based CDC has given almost $22 million in work to two companies affiliated with Jackson, federal documents show. The agency has hired his firms 79 times — 67 times without competitive bidding — for tasks that encompass both the overarching and the banal.
Jackson’s current firm helped plan a sweeping reorganization of the agency’s management, for example, and it compiles five news clippings a day for top CDC executives.
Jackson’s post-retirement dealings with the CDC illustrate a legal, if little known, practice across the federal government. After years of public service, many former administrators make a lucrative living by selling their expertise to the agencies where they developed it. At the CDC, for example, 17 former employees work as consultants to the agency through contracts with Jackson’s firm. A $4 million consulting job went to a former administrator of the CDC’s parent agency who had supervised a program that gives contracting preferences to small, minority-owned businesses. His firm got its CDC deal under the program.
The same program benefited the companies that have employed Jackson: McKing Consulting Corp., where he is a vice president in charge of an Atlanta office, and Management Assistance Corp., where he was a vice president from 1999 to 2002. Jackson is a 62-year-old white man. But because both companies belong to women who are minorities, they can get work with the CDC and other federal agencies without bidding or after competing only against other minority-owned firms. Lawyers for both companies said that before they hired Jackson, the firms had done little or no business with the CDC.
Jackson declined to comment for this article.
The Department of Health and Human Services is looking into the CDC’s contracting with former federal employees, officials in Washington and Atlanta said. The inquiry is based on an anonymous complaint to Assistant HHS Secretary Ed Sontag, who soon will send a team from Washington to check the CDC’s contracting procedures, said William Pierce, a department spokesman.
But Pierce said calling the review an investigation would be an overstatement. “They’re just looking into it,” he said. “They don’t know what it is yet.”
CDC officials say former colleagues and their deals represent tiny fractions of the agency’s 5,000 contractors and $7 billion annual budget. William Gimson, the CDC’s chief operating officer, said companies connected with former employees such as Jackson receive no special treatment. “I have no vested interest in business going to McKing or any other contractor,” Gimson said.
Article continues: http://www.ajc.com/news/content/news/0504/19cdc.html
Re: How much confidence do you have in our Federal regulators?
Federal scientists’ ethics under scrutiny
House probe targets consulting work
By Rick Weiss
Updated: 12:30 a.m. ET May 19, 2004
Top legal and ethics officials within the Department of Health and
Human Services have repeatedly allowed government scientists to engage in lucrative consulting deals with pharmaceutical and biotechnology companies while ignoring the concerns of lower-level ethics officers, according to evidence presented at a House subcommittee hearing yesterday.
In one highlighted case, top HHS officials during the Clinton administration insisted that the director of the National Cancer
Institute, Richard D. Klausner, be deemed eligible to receive a
$40,000 award from the University of Pittsburgh even though the university is a major NCI grant recipient — and despite the fact that the NCI had just settled a lawsuit brought against it by a Pitt researcher, on terms favorable to the university.
At a minimum, the proximity of those events gave the appearance that
Klausner was being rewarded by the University for helping to settle the suit, said ethics officers who told the subcommittee yesterday they were uncomfortable with the arrangement but were pushed by HHS general counsel to endorse it.
In a more recent case, a pair of scientists employed by NCI and the
Food and Drug Administration were twice approved to do outside consulting for a California technology company even though that company appears to be in competition with a Maryland company that already had a formal arrangement with the government to use the same scientists’ expertise.
How is it, subcommittee Chairman James C. Greenwood (R-Pa.) asked, that the scientists were allowed to profit personally from a deal that may have undercut a taxpayer-funded public-private collaboration?
Representatives’ descriptions of these and other examples punctuated a tense, five-hour hearing that significantly widened a congressional investigation into possible conflicts of interest in the federal biomedical enterprise.
The investigation by the Energy and Commerce subcommittee on oversight and investigations — and others ongoing by the General Accounting Office, the Office of Government Ethics and the HHS inspector general — has prompted National Institutes of Health Director Elias A. Zerhouni to make substantial changes in the way that agency approves and tracks its scientists’ outside endeavors, which can add hundreds of thousands of dollars to researchers’ annual income.
Yesterday the questions spilled over to the FDA, where ethics officers recently approved a request by agency scientist Emanuel Petricoin to accept payments from a company trying to develop products that would plausibly be regulated by the agency.
Officials there also approved Petricoin’s request to accept free travel and an honorarium to speak at a beach resort conference sponsored by ImClone Systems Inc. and Bristol-Myers Squibb Co. — two companies not only regulated by FDA but also at the heart of the recent Martha Stewart scandal surrounding the cancer drug Erbitux. (Petricoin later decided not to take the trip.) “These decisions are the opposite of what people have the right to expect from their ethics officials,” Henry A. Waxman (D-Calif.) said.
In response to congressional inquiries, acting FDA Commissioner Lester M. Crawford said yesterday that he has issued a new policy requiring that center directors — not lower-ranking officials — must review all employee requests for outside work.
Crawford also has initiated an internal review of all such arrangements involving FDA employees. And Zerhouni has begun to seek information on the amount of money NIH employees have received in their outside deals — information that has until now been incomplete.
As with other cases of possible conflict of interest raised by the committee in recent months, none of the scientists involved has been accused of breaking government ethics rules, which vary by agency but generally forbid federal employees from directly leveraging their positions in ways that lead to real or perceived personal gain.
Greenwood expressed suspicion that the prize Klausner received — the Dickson Prize for Medicine — was a payoff for his cooperation with the University of Pittsburgh. The prize was given to Klausner in 1997 for work he did before 1995 — a breach of university rules that say the prize is to be given for work in the current year, Greenwood said.
“Giving the prize to Klausner in 1997 was like giving the Academy
Award to a well-liked actor who just didn’t happen to make any movies that year,” Greenwood said.
Edgar Swindell, who in 1997 was acting director of the HHS ethics division, told the subcommittee he and other ethics officers were under strict orders from then-HHS General Counsel Harriet S. Rabb to assess such requests in purely legal terms, without regard to concerns about ethics or “how this might appear on the front page of The Washington Post.” Those ethics rules, while warning about appearances of conflict, allow federal officials to receive “bona fide” awards even from grantee institutions.
“So even though this is the ethics division, you’re not supposed to use any ethics,” Rep. Joe Barton (R-Tex.) fumed.
“It’s not a decision I look back on with fondness or pride,” said
Swindell, now HHS’s associate general counsel for ethics.
Swindell said he has not felt the same pressure to approve marginally acceptable ethics decisions since the arrival of the Bush administration. But he conceded that he helped prepare the now
controversial waiver that current HHS Secretary Tommy G. Thompson signed allowing then-Medicare administrator Thomas A. Scully to negotiate outside employment while he was still in his government position. In December Scully joined an Atlanta law firm that represents drug makers, hospitals and other health care businesses.
The FDA’s Petricoin and NCI researcher Lance Liotta told the subcommittee they saw no conflict, at least at first, when they requested and received ethics approval to consult for Biospect of
South San Francisco, a company developing technologies that may aid
disease detection. The two were already part of a federal partnership in which they spend some of their government time collaborating with Bethesda-based Correlogic Systems.
The two scientists did not tell either company they were working for the other because, Liotta said, “there was no overlap in my mind.” But Greenwood noted that the two companies’ descriptions of their business goals are very similar, and that Correlogic’s co-founder complained to NCI when he found out about the Biospect deal.
Although ethics officials had twice approved the dual arrangements, both scientists terminated their Biospect arrangements last week because, they said, they began to see evidence that Biospect’s business plan was evolving in a way that might constitute a conflict of interest for them.
Both Liotta — who an NIH official said earned as much as $45,000 from the Biospect deal — and Petricoin were accompanied yesterday by their lawyers.
The subcommittee also focused on the growing number of NIH employees hired under “Title 42,” a special provision that boosts their salaries while allowing them to sidestep certain reporting requirements for outside collaborations.
Zerhouni has recently sought to tighten financial reporting requirements for many of those hired under that provision but has argued for the importance of allowing NIH scientists to earn competitive salaries and in some cases to do outside consulting.
Several subcommittee members said they are giving serious consideration to banning all such arrangements.
© 2004 The Washington Post Company
http://www.latimes.com/news/nationworld/nation/la-na-
nih18may18,1,5753690.story?coll=la-home-nation
THE NATION
FDA Chief Launches Internal Inquiry of Payments Deals in which medical firms paid government scientists prompt ‘outside activity’ review.
By David Willman
Times Staff Writer
May 18, 2004
WASHINGTON The acting commissioner of the Food and Drug
Administration has ordered an agencywide inquiry to determine the extent of biomedical company payments to officials at the regulatory agency, it was learned Monday.
The inquiry was launched this month as congressional investigators began examining millions of dollars in industry payments “previously blocked from public view” to scientists at the National Institutes of Health.
The newly uncovered deals include consulting payments made to two officials, one at the National Cancer Institute, a unit of the NIH, and another at the FDA. Both arrangements were terminated in recent days, officials said.
After being assigned in 2002 to collaborate with a Maryland company in the development of an ovarian cancer test, the two officials entered into paid consulting deals with a Northern California firm that was a possible competitor, according to documents and individuals familiar with the matter.
The director of the NIH, Dr. Elias A. Zerhouni, said through a spokesman late Monday that he would not stand behind one of the arrangements, involving the chief of the National Cancer Institute’s pathology laboratory. The matter “demonstrates the need for systemic reform,” Zerhouni said through the spokesman, John Burklow.
The consulting arrangement between the laboratory chief, Dr. Lance A. Liotta, and Biospect Inc. of South San Francisco ended Friday, officials said.
The second of the now-terminated deals involved a senior microbiologist at the FDA, Emanuel F. Petricoin, prompting the investigators to determine whether other employees could maintain similar arrangements with the industry they help regulate. The inquiry is continuing, FDA spokesman Lawrence Bachorik said.
“In light of recent questions about possible conflicts of interest involving [Department of Health and Human Services] agencies, acting FDA Commissioner Dr. Lester Crawford has directed a comprehensive review of all current outside activity requests from all FDA employees,” Bachorik said.
The circumstances surrounding Liotta’s and Petricoin’s activities for both companies are expected to be explored today at a hearing of the House Energy and Commerce oversight and investigations subcommittee.
A Los Angeles Times report in December prompted the panel to request the records of payments from drug companies to NIH scientists. The article documented hundreds of payments, totaling millions of dollars, and reported that more than 94% of the agency’s top-paid employees were not required to publicly disclose outside income.
In late 2002, Liotta and Petricoin were given permission by their employers to consult for pay with Biospect, according to federal documents and interviews. Liotta received $39,000 through 2003, records from the NIH show. Payments to Petricoin were not publicly available Monday. Liotta and Petricoin declined via e-mail to comment for this article.
The company payments had been shielded from public view because each official is exempted from reporting outside income on forms accessible under the Freedom of Information Act.
Burklow, the NIH spokesman, acknowledged that officials had become aware that Biospect was a possible competitor with Correlogic Systems, the Maryland company with which Liotta and Petricoin were collaborating. The cofounder of Correlogic Systems, Peter J. Levine, said he hoped to advance the progress of his company’s cooperative research pact with the government.
That relationship “can be very important in furthering our ovarian
cancer research” and ultimately saving lives,” Levine said. The FDA, the National Cancer Institute and Correlogic Systems started working together in April 2002.
Documents from the NIH show that as of last year, ethics officials had concluded that Liotta’s outside consulting work with Biospect was unrelated to the official work he was assigned to perform on the NIH’s behalf with Correlogic Systems.
At the FDA, spokesman Bachorik said that officials “subsequently determined that Biospect participates in activities that are significantly regulated by the FDA. As a result, consulting with Biospect is a prohibited outside activity.”
Biospect announced Monday that it had changed its name to Predicant Biosciences. The company’s chief executive, Deborah J. Neff, did not return a call seeking comment.