By DUFF WILSON
c.2010 New York Times News Service
The owner of two research hospitals affiliated with Harvard Medical School has imposed restrictions on outside pay for two dozen senior officials who also sit on the boards of pharmaceutical or biotechnology companies. The limits come in the wake of growing criticism of the ties between industry and academia.
Medical experts say they believe the conflict-of-interest rules at the institution, Partners HealthCare, go further than those of any other academic medical center in restricting outside pay from drug companies. The rules, which became effective on Friday, impose limits specifically on outside directors who guide some of the nation’s biggest companies.
Senior officials at the two hospitals, Massachusetts General and Brigham and Women’s Hospitals in Boston, must limit their pay for serving as outside directors to what the policy calls “a level befitting an academic role” – no more than $5,000 a day for actual work for the board. Some had been receiving more than $200,000 a year. Also, they may no longer accept stock.
Criticism has been mounting in recent years as the conflicting roles of some medical leaders have been disclosed through congressional investigations, lawsuits and reports in the news media. Those disclosures have raised questions about bias and the cost and quality of patient care at the nation’s medical institutions.
Harvard, in particular, has come under scrutiny from Sen. Charles E. Grassley, R-Iowa, a leader of congressional inquiries into the influence of money in medicine.
Partners HealthCare is also forbidding speaker’s fees from drug companies for any employee, including nearly 8,000 with Harvard faculty appointments. Some other medical schools have taken similar actions in prohibiting faculty members from being paid by drug companies to speak about their products.
But no other academic medical centers have so restricted participation in boards of directors.
“We’re the first to go in this deep, and we’re still into it only up to our knees,” said Dr. Eugene Braunwald, a Harvard professor and former Partners chief academic officer who was chairman of the policy-writing group. He said the group had “a very spirited debate” before announcing its compromise in general terms in April, much of it effective in 2010.
“We thought it was a very good idea to have institutional officials serve on boards, but we did not want to have personal enrichment,” Braunwald said.
The ban on speaking fees was one reason Partners wanted to take a strong stand on the issue of directors, he added. It would seem unfair to restrict outside pay of junior faculty but not senior leaders, he said.
Christopher Clark, a senior lawyer at Partners and director of a new office for interactions with industry, said the restrictions would affect about two dozen department heads, vice presidents and other high-ranking officials in the sprawling hospital system.
They include Dr. Dennis A. Ausiello, the Partners chief scientific officer, who serves on Pfizer’s board, is co-chairman of its science committee and was paid more than $220,000 by the company last year. Ausiello said he would continue in both roles.
Ausiello, chief of medicine since 1996 at Massachusetts General, the oldest and largest Harvard teaching hospital, was named a director of Pfizer, the world’s largest pharmaceutical company, in 2006. Since then, he has received more than $700,000, company filings show.
Ausiello said Pfizer and other companies are crucial to translate academic research into drugs that benefit patients. At Partners, he has oversight of a research, ventures and licensing office that seeks to commercialize the hospitals’ intellectual property.
“I’m very proud of my board work,” he said. “I’m not there to make money. I certainly think I should be compensated fairly and symmetrically with my fellow board members, but if my institutions rule otherwise, as they have, I will continue to serve on the board.”
The proper pay for time spent on board meetings under the new policy was calculated at $500 an hour for a 10-hour day, Clark said. Stock and options were banned because they tie the director’s fortunes to company profits – the very reason many compensation experts recommend stock and options for corporate directors.
Companies can choose to donate the difference in compensation to a charity, as long as it is not affiliated with Partners.
Some say the restrictions are too tough on well-meaning hospital leaders. Others say they are too weak to control conflicts of interest, arguing that corporate directors should not be directing research, managing educational programs or determining elements of patient care.
“I think that’s a gross conflict for an official of an academic medical center to be on the board of a pharmaceutical company,” said Dr. Arnold S. Relman, former editor of The New England Journal of Medicine and Harvard professor emeritus who has written about conflicts of interest.
“It’s happening more and more around the country,” he added. “If it isn’t stopped, I think the academic institutions are going to lose the confidence of the country and the government, and they will no longer deserve the tax exemption or anything else. They will be part of industry itself.”
Ann C. Bonham, chief scientific officer for the Association of American Medical Colleges, said other academic centers were considering restrictions on director pay from zero to $10,000 a day. “They’re all taking this very seriously and moving as quickly as they can,” she said.
Thomas Donaldson, a professor of business ethics at the Wharton School of the University of Pennsylvania, said: “It strikes me as a breath of fresh air in a room that’s getting progressively more stale. I hope this will set a standard for others – hospitals, medical schools.”
Donaldson, who advises large companies on corporate governance issues, said dual roles in a hospital and at a drug maker were “dicey at best” because of the fiduciary duty a director owes a corporation.
Senior faculty in leading teaching hospitals are in high demand on medical product boards, but corporate filings show that Partners and Harvard Medical have a disproportionate share of them.
For instance, Dr. Samuel O. Thier was president of Partners when he was named to the Merck board in 1994. Now retired from Partners, he is still a Merck director, receiving more than $250,000 a year. Thier encouraged Merck to build a big research laboratory in 2004 within a block of a new Harvard medical research building. He did not return phone messages seeking comment.
Dr. Joseph B. Martin, dean of the Harvard Medical School from 1997 to 2007, was named to the board for Baxter International in 2002, receiving up to $202,615 in 2008. He does not work for Partners, and so its new policy does not apply to him. Martin, a professor of neurobiology, declined to comment.
Dr. Daniel K. Podolsky was the original chairman of the Partners policy commission in 2007, when he was the chief academic officer at Partners and a $191,000-a-year board member at GlaxoSmithKline, the London-based pharmaceutical company.
Podolsky, who left in 2008 to become president of the University of Texas Southwestern Medical Center in Dallas, said the group specifically wanted to focus on board memberships along with other industry relations.
“At the heart of this issue, there is a knot that’s hard to untie,” Podolsky said in an interview. “It is possible to find an approach that separates the potentially distorting effects of the personal benefit, but more importantly the perception of that, and still work in a constructive way as a board member.”
Braunwald, who succeeded him as chairman, also had industry ties, as a director of Astra Pharmaceuticals 20 years ago and as a science adviser to at least six companies more recently.
“In all fairness,” he said, “what was OK three years ago is not OK now.”