Princess Health and More Unrest Over the New NIH Ethics Rules. Princessiccia

Princess Health and More Unrest Over the New NIH Ethics Rules. Princessiccia

conflicts of interest NIH

Gusty 12:17 Add Comment

The Washington Post reports yet more unrest among top NIH employees about the new ethics rules.

• Another prominenet leader is stepping down because he can't comply with the new rules. James F. Battey, the Director of the National Institute on Deafness and Other Communicative Disorders, said "I manage a family trust ... which supports the education of my father's seven grandchildren, and it contains assets I'm told I'd have to divest. This would cost a lot of money, and I can't do that to my family."
• A dissenting group of "senior agency scientists," complained that they would have to get permission for practically any outside activity, "whether paid or not, from singing in a jazz group to selling art or jewelry, from volunteering at charity organizations to membership in a school or community organization...." from the NIH. "It is intrusive and scary. It suggests the NIH owns our lives away from work."
• Ashani Weerarartna of the National Institute on Aging was told she could not accept a $200 train ticket from a "physicians' education group" to present a paper. "I felt awful. I had to call and tell them to find someone else."
• Furthermore, NIH workers complained that they "cannot hold executive postions - even on a volunteer basis - with trade or professional organizations..." Regarding this, Robert L. Nussbaum, Chief, Genetic Disease Research Branch,National Human Genome Research Institute, said "But what I'm really worried about is backlash from the organizations.""We will be cut off, disenfranchised from our academic colleagues."

An interesting theme here, in my humble opinion, is how those who complain about the new regulations seem to exaggerate their impact.

• Let's start with Dr. Battey, who also does seem to represent a very special case. I would imagine he could continue to manage his family trust himself if he were willing to sell individual stocks of pharmaceutical and biotechnology companies. Why that would be so expensive is unclear, unless he chose some very bad investments. Furthermore, he could re-invest the money in say, mutual funds that specialize in pharma or biotech. On the other hand, he could simply hire a professional money manager.
• The dissenting NIH employees seem to have exaggerated the effect of the regulations, as summarized here, on outside activities unrelated to their work at the agency.
• If the meeting were so important, why couldn't Weerarartna ask the NIH to pay her way, or pay her own way? On the other hand, was the "physicians' education group" actually a commercial CME source, or was it funded by pharma or biotech money?
• Why couldn't Dr Nussbaum participate in some way other than an "executive" role in the organization? If those "executive positions" were the only members not to feel "cut off, disenfranchised" from this organization, why would anyone want to be a member of it?

Again, let me reiterate, NIH leaders have the privilege of working for what many consider to be the world's premier biomedical research institution. In holding such positions, their speech and actions ought to reflect their scientific knowledge and their commitment to the public good. Major personal financial involvements with outside entities, especially for-profit manufacturers of pharmaceuticals and devices, raise questions about whose interests they are really serving. As Director Zerhouni has said, "It is undermining in a profound way � more profound than I personally realized at the beginning of the process � the integrity of our research and our ability to maintain public trust in our research.�
If NIH salaries are too low to attract competent scientists and physicians, they should be raised. But an NIH position should not be license to seek lucrative after-hours employment for industry.

Princess Health and More Unrest Over the New NIH Ethics Rules.Princessiccia

Princess Health and More Unrest Over the New NIH Ethics Rules.Princessiccia

conflicts of interest NIH

Gusty 12:17 Add Comment

The Washington Post reports yet more unrest among top NIH employees about the new ethics rules.

• Another prominenet leader is stepping down because he can't comply with the new rules. James F. Battey, the Director of the National Institute on Deafness and Other Communicative Disorders, said "I manage a family trust ... which supports the education of my father's seven grandchildren, and it contains assets I'm told I'd have to divest. This would cost a lot of money, and I can't do that to my family."
• A dissenting group of "senior agency scientists," complained that they would have to get permission for practically any outside activity, "whether paid or not, from singing in a jazz group to selling art or jewelry, from volunteering at charity organizations to membership in a school or community organization...." from the NIH. "It is intrusive and scary. It suggests the NIH owns our lives away from work."
• Ashani Weerarartna of the National Institute on Aging was told she could not accept a $200 train ticket from a "physicians' education group" to present a paper. "I felt awful. I had to call and tell them to find someone else."
• Furthermore, NIH workers complained that they "cannot hold executive postions - even on a volunteer basis - with trade or professional organizations..." Regarding this, Robert L. Nussbaum, Chief, Genetic Disease Research Branch,National Human Genome Research Institute, said "But what I'm really worried about is backlash from the organizations.""We will be cut off, disenfranchised from our academic colleagues."

An interesting theme here, in my humble opinion, is how those who complain about the new regulations seem to exaggerate their impact.

• Let's start with Dr. Battey, who also does seem to represent a very special case. I would imagine he could continue to manage his family trust himself if he were willing to sell individual stocks of pharmaceutical and biotechnology companies. Why that would be so expensive is unclear, unless he chose some very bad investments. Furthermore, he could re-invest the money in say, mutual funds that specialize in pharma or biotech. On the other hand, he could simply hire a professional money manager.
• The dissenting NIH employees seem to have exaggerated the effect of the regulations, as summarized here, on outside activities unrelated to their work at the agency.
• If the meeting were so important, why couldn't Weerarartna ask the NIH to pay her way, or pay her own way? On the other hand, was the "physicians' education group" actually a commercial CME source, or was it funded by pharma or biotech money?
• Why couldn't Dr Nussbaum participate in some way other than an "executive" role in the organization? If those "executive positions" were the only members not to feel "cut off, disenfranchised" from this organization, why would anyone want to be a member of it?

Again, let me reiterate, NIH leaders have the privilege of working for what many consider to be the world's premier biomedical research institution. In holding such positions, their speech and actions ought to reflect their scientific knowledge and their commitment to the public good. Major personal financial involvements with outside entities, especially for-profit manufacturers of pharmaceuticals and devices, raise questions about whose interests they are really serving. As Director Zerhouni has said, "It is undermining in a profound way � more profound than I personally realized at the beginning of the process � the integrity of our research and our ability to maintain public trust in our research.�
If NIH salaries are too low to attract competent scientists and physicians, they should be raised. But an NIH position should not be license to seek lucrative after-hours employment for industry.

Princess Health and Thoughts on the Merck CEO Getting a "Performance" Bonus. Princessiccia

Princess Health and Thoughts on the Merck CEO Getting a "Performance" Bonus. Princessiccia

executive compensation Merck

Gusty 13:04 Add Comment

Regarding the post below by Roy Poses: as former Director of Published Information Resources (running Merck Research Labs' science libraries) and Director of The Merck Index of Chemicals, Drugs and Biologicals, an encyclopedia of medicinal chemistry dating to 1889, I was laid off from the company as part of a group of approximately 4,400 in late 2003. While I cannot comment on many of the issues, and have no direct knowledge of events there since my layoff, I can speculate that the CEO performance objectives that led to the noted rewards likely had much to do with "lowering the cost structure" (management jargon for cost cutting).

From Gilmartin's statement at http://www.merck.com/newsroom/press_releases/corporate/2004_0427.html :

Merck is fundamentally lowering its cost structure and improving the efficiency of its operations through numerous actions. For example, Merck is lowering its cost structure by 2005 as much as $300 million annually by reducing 4,400 positions from its worldwide workforce. To date, 3,800 positions have been eliminated. In addition, the company expects to free up as much as $600 million in additional cash flow through 2006 through a series of efficiencies in its operations and capital investment activities.

Recent news reports said that the layoffs have now exceeded 5,100:

Pharmaceutical maker Merck, on the heels of the recall of its flagship drug Vioxx, announced that it will cut about 5,100 jobs by the end of 2004, and will cut its costs by $2.4 billion over the next four years. In October 2003, Merck had said that as part of a restructuring, it would cut approximately 4,400 jobs. The company has thus announced 700 more employee cuts than originally planned. Merck projects savings of $300 million on payroll and benefits in 2005 as a result of the cuts. The company also plans to save $1.2 billion from procurement changes, $300 million from inventory reduction, and $600 million from capital initiatives by 2008

Whether a reward for this is appropriate or not, I can also add that in my opinion, creativity in high-risk, information-intensive biomedical research of any kind, and aggressive cost-cutting measures keyed to pleasing Wall Street and large institutional stockholders , are generally incompatible.

For example, even in the public sector, when the NIH budget is cut, or not raised enough, statements like this follow:

The AAMC estimates that once all factors are taken into account, the new NIH budget will be about 3.1% more than it was last year. With inflation, that is not even really an increase, said Stacie Pabst, PhD, director of science policy for Research America, a public education and advocacy nonprofit organization in Alexandria, Va. "It's a major problem for people doing research," she said.

and this :

... the pending Senate budget resolution could force as much as a $2.5 billion cut in current NIH funding and that level would be frozen until the Year 2002. If the proposed cuts are permitted to take place, it would damage NIH research at a time of unprecedented productivity, drive talented scientists, both young and established, into other careers, and cause the U.S.to lose its hard-won leadership in such fields as biotechnology and pharmaceuticals.

-- SS

Princess Health and Thoughts on the Merck CEO Getting a "Performance" Bonus.Princessiccia

Princess Health and Thoughts on the Merck CEO Getting a "Performance" Bonus.Princessiccia

executive compensation Merck

Gusty 13:04 Add Comment

Regarding the post below by Roy Poses: as former Director of Published Information Resources (running Merck Research Labs' science libraries) and Director of The Merck Index of Chemicals, Drugs and Biologicals, an encyclopedia of medicinal chemistry dating to 1889, I was laid off from the company as part of a group of approximately 4,400 in late 2003. While I cannot comment on many of the issues, and have no direct knowledge of events there since my layoff, I can speculate that the CEO performance objectives that led to the noted rewards likely had much to do with "lowering the cost structure" (management jargon for cost cutting).

From Gilmartin's statement at http://www.merck.com/newsroom/press_releases/corporate/2004_0427.html :

Merck is fundamentally lowering its cost structure and improving the efficiency of its operations through numerous actions. For example, Merck is lowering its cost structure by 2005 as much as $300 million annually by reducing 4,400 positions from its worldwide workforce. To date, 3,800 positions have been eliminated. In addition, the company expects to free up as much as $600 million in additional cash flow through 2006 through a series of efficiencies in its operations and capital investment activities.

Recent news reports said that the layoffs have now exceeded 5,100:

Pharmaceutical maker Merck, on the heels of the recall of its flagship drug Vioxx, announced that it will cut about 5,100 jobs by the end of 2004, and will cut its costs by $2.4 billion over the next four years. In October 2003, Merck had said that as part of a restructuring, it would cut approximately 4,400 jobs. The company has thus announced 700 more employee cuts than originally planned. Merck projects savings of $300 million on payroll and benefits in 2005 as a result of the cuts. The company also plans to save $1.2 billion from procurement changes, $300 million from inventory reduction, and $600 million from capital initiatives by 2008

Whether a reward for this is appropriate or not, I can also add that in my opinion, creativity in high-risk, information-intensive biomedical research of any kind, and aggressive cost-cutting measures keyed to pleasing Wall Street and large institutional stockholders , are generally incompatible.

For example, even in the public sector, when the NIH budget is cut, or not raised enough, statements like this follow:

The AAMC estimates that once all factors are taken into account, the new NIH budget will be about 3.1% more than it was last year. With inflation, that is not even really an increase, said Stacie Pabst, PhD, director of science policy for Research America, a public education and advocacy nonprofit organization in Alexandria, Va. "It's a major problem for people doing research," she said.

and this :

... the pending Senate budget resolution could force as much as a $2.5 billion cut in current NIH funding and that level would be frozen until the Year 2002. If the proposed cuts are permitted to take place, it would damage NIH research at a time of unprecedented productivity, drive talented scientists, both young and established, into other careers, and cause the U.S.to lose its hard-won leadership in such fields as biotechnology and pharmaceuticals.

-- SS

Princess Health and After Vioxx Withdrawal, How Did the Merck CEO Get a "Performance" Bonus?. Princessiccia

Princess Health and After Vioxx Withdrawal, How Did the Merck CEO Get a "Performance" Bonus?. Princessiccia

executive compensation Merck

Gusty 10:27 Add Comment

USA Today has an article (with accompanying data table) about the resurgence of stratospheric pay for corporate CEOs. For example, Ray Gilmartin, CEO of Merck, most recently received a salary of US $1.6 million, plus a $1.4 million bonus, and stock options worth $19.2 million. Also, he exercised other stock options, gaining a further $34.8 million. Gilmartin's got the bonus because he met his "personal performance objectives."
However, USA Today noted that Merck's stock price fell 30% last year after it withdrew Vioxx because of its risk of severe cardiovascular adverse events. The withdrawal of Vioxx gained sufficient notoreity to be easily called a debacle. Furthermore, as has been extensively documented (for example, see these "Perspectives" from the New England Journal of Medicine, FitzGerald GA. Coxibs and cardiovascular disease; Topol EJ. Failing the public health - Rofecoxib, Merck and the FDA; and Psaty BM, Furberg CD. Cox-2 inhibitors - lessons in drug safety.), Merck marketed Vioxx extensively as a general purpose pain reliever even though there was no data it was better than conventional non-steroidal anti-inflammatory drugs like aspirin and ibuprofen. (It did have the advantage of causing fewer severe gastro-intestinal adverse effects for at risk patients.) Furthermore, although Merck had data suggesting Vioxx's cardiovascular adverse effects for years, it consistently minimized them to physicians and the public.
Merck's degree of culpability for the over-use and then withdrawal of Vioxx will be argued for a long time. But it is easy to argue, as Psaty and Furberg did, that "physicians are dismayed, pharmaceutical companies are embarrassed and financially threatened, and patients are injured."
How these results justified Gilmartin's "personal performance" bonus boggles the mind. Rather, the Merck CEO seems to be yet another example of how health care leaders remain insulated from the consequences of their actions. Per the USA Today article, "directors remain largely beholden to management when it comes to compensation. The era of CEO pay packages befitting royalty still reigns." The article quoted an expert on CEO compensation, "most directors are in the ostrich crowd, sticking their heads in the sand and doing what they've always done."
The accompanying table shows the compensation of the CEOs of some of the largest companies in the US, including some other health care CEOs whose pay only seems to go up, regardless of how they perform. But the Vioxx calamity should warn us what to expect if health care leaders remain unaccountable.

Princess Health and After Vioxx Withdrawal, How Did the Merck CEO Get a "Performance" Bonus?.Princessiccia

Princess Health and After Vioxx Withdrawal, How Did the Merck CEO Get a "Performance" Bonus?.Princessiccia

executive compensation Merck

Gusty 10:27 Add Comment

USA Today has an article (with accompanying data table) about the resurgence of stratospheric pay for corporate CEOs. For example, Ray Gilmartin, CEO of Merck, most recently received a salary of US $1.6 million, plus a $1.4 million bonus, and stock options worth $19.2 million. Also, he exercised other stock options, gaining a further $34.8 million. Gilmartin's got the bonus because he met his "personal performance objectives."
However, USA Today noted that Merck's stock price fell 30% last year after it withdrew Vioxx because of its risk of severe cardiovascular adverse events. The withdrawal of Vioxx gained sufficient notoreity to be easily called a debacle. Furthermore, as has been extensively documented (for example, see these "Perspectives" from the New England Journal of Medicine, FitzGerald GA. Coxibs and cardiovascular disease; Topol EJ. Failing the public health - Rofecoxib, Merck and the FDA; and Psaty BM, Furberg CD. Cox-2 inhibitors - lessons in drug safety.), Merck marketed Vioxx extensively as a general purpose pain reliever even though there was no data it was better than conventional non-steroidal anti-inflammatory drugs like aspirin and ibuprofen. (It did have the advantage of causing fewer severe gastro-intestinal adverse effects for at risk patients.) Furthermore, although Merck had data suggesting Vioxx's cardiovascular adverse effects for years, it consistently minimized them to physicians and the public.
Merck's degree of culpability for the over-use and then withdrawal of Vioxx will be argued for a long time. But it is easy to argue, as Psaty and Furberg did, that "physicians are dismayed, pharmaceutical companies are embarrassed and financially threatened, and patients are injured."
How these results justified Gilmartin's "personal performance" bonus boggles the mind. Rather, the Merck CEO seems to be yet another example of how health care leaders remain insulated from the consequences of their actions. Per the USA Today article, "directors remain largely beholden to management when it comes to compensation. The era of CEO pay packages befitting royalty still reigns." The article quoted an expert on CEO compensation, "most directors are in the ostrich crowd, sticking their heads in the sand and doing what they've always done."
The accompanying table shows the compensation of the CEOs of some of the largest companies in the US, including some other health care CEOs whose pay only seems to go up, regardless of how they perform. But the Vioxx calamity should warn us what to expect if health care leaders remain unaccountable.

Princess Health and NIH Update: Resistance Against New Conflict of Interest Rules Continues. Princessiccia

Princess Health and NIH Update: Resistance Against New Conflict of Interest Rules Continues. Princessiccia

conflicts of interest NIH

Gusty 13:35 Add Comment

The New England Journal of Medicine this week has a good summary by Robert Steinbrook of the latest developments at the NIH. In particular, it has a clear table of the new, more stringent regulations temporarily put in place by Director Zerhouni.
These included:

• Prohibition of employment with pharmaceutical and biotechnology companies, research institutions that receive NIH grants and contracts, health care providers and insurers, and related trade, professional, or similar associations
• Prohibition of compensated teaching or writing for these organizations
• Prohibition of self-employed business activity involving sale or promotion of products or services of a pharmaceutical or biotechnology company or a health care provider or insurer
• Prohibition of holding stock in biotechnology or pharmaceutical companies for employees who must file financial disclosure reports, a $15,000 limit in holdings in any one company for other employees
• Prohibition for senior employees only of the receipt of most awards worth more than $200, and a similar prohibition for all employees of such awards from an organization which is involved with the employees work
• In general, outside teaching, clinical, scientific writing, and scientific editing activities are permitted as long as they comply with other standards.

It also includes a narrative of how Zerhouni changed his mind about the need for such regulations. Much of its contents has already appeared on Health Care Renewal, but it does have some important new items.
One is that the new regulations at the NIH parallel those already in place at regulatory agencies, such as the Food and Drug Administration and the Securities and Exchange Commission. This was in part driven by the realization that NIH decisions can have "increasingly powerful influence ... on financial markets." Moreover, Zerhouni felt the regulations were in response to activities by high NIH officials that "really were purely and imply what you would call product-endorsement activities, speaking for a company on behalf of a product to entice physicians to prescribe that product at greater levels."

The article also mentions the opposition to these new regulations that Zerhouni has encountered. Furthermore, yesterday, the Washington Post reported that apparently a physician recently nominated to head the National Institute of Environmental Health Sciences now has "serious concerns about taking the job under the new rules." "His primary concenr is that he would be unable to recruit or retain top talent."

The NIH is, as Steinbrook stated, is "regarded as the world's premier biomedical research institution." So, it amazes me that some people don't think the could manage to work in full-time leadership positions at the NIH because they no longer could also work for certain outside organizations, or simultaneously pursue self-employed business activity involving the products of such organization. Are NIH salaries really so low that its high level employees need second jobs to get along economically? Or do people now feel so entitled to lucrative side-employment with industry that the notion of loyal service to the public means nothing? But maybe such people are not those who should be working at "the world's premier biomedical research institution."