Sucheta Dalal :When Doctors Advise Investors
Sucheta Dalal

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When Doctors Advise Investors  

August 18, 2005

Published: August 17, 2005


It's getting harder and harder to disentangle the medical profession from financial conflicts of interest. The familiar concern has involved doctors who take money from pharmaceutical or biotechnology companies for consulting or research. Such ties inevitably call into question how objective such doctors can be in conducting research, offering advice to government agencies or prescribing drugs for patients. It is never wholly clear whether the doctor is focused on the medical needs of patients or has one eye on the prospects of a financial patron.


Now, as described yesterday in an article by Stephanie Saul and Jenny Anderson in The Times, there is an additional concern: doctors who are paid to give advice to investment firms. The worry here is not that doctors will somehow shortchange their patients, but that their advice to financial firms may distort the markets, offering sophisticated investors the kind of insider information that the ordinary investor can't get.


With little notice or alarm, this form of financial consulting has expanded rapidly. An article on June 1 in The Journal of the American Medical Association concluded that almost 10 percent of the nation's 700,000 doctors had entered into formal consulting relations with the investment industry. The percentage of doctors from academic medical centers, where much of the clinical research of interest to investors takes place, was thought to be considerably higher.


The financial firms seeking advice include hedge funds, venture capital firms, investment bankers and stockbrokers, among others. They are assisted by specialized companies that enroll doctors and link them with information-hungry financial firms. A doctor is typically paid on an hourly basis - at rates ranging from $200 to more than $1,000 per hour - for consulting that can be done by telephone or face to face.


This kind of consulting looks like a recipe for trouble. The information most prized by investors is some hint as to how an experimental drug is performing in ongoing clinical trials or informed guidance about problems that may trouble the Food and Drug Administration. Although the doctors are routinely warned not to reveal confidential or proprietary information, it is a virtual certainty that when the scope of consulting is so large, there will be disclosures, even if they are inadvertent.


The best antidote would be a pledge of abstinence backed by the ethical guidelines of medical societies. Any doctor who has inside information about clinical trials or the F.D.A.'s thinking should not do consulting work for investment firms.


-- Sucheta Dalal