OED: From Benchtop to Bedside

1. OED: From Benchtop to Bedside Entrepreneurshipand Conflict of Interestin Science March 15, 2011 Barbara Barnes, MD Ann Mathias, JD David Smith, JD David Wehrle, CPA, CIA, CFE

2. What is a Conflict of Interest? • A potential Conflict of Interest (COI) may exist if an individual’s outside interests (especially financial) may affect, or perceive to affect, his/her research, teaching, clinical or administrative activities at the University/UPMC.

3. Why does Conflict of Interest management matter? In order to ensure that research results are free from bias (whether conscious or unconscious) arising from the personal financial interests of the investigators, universities have an obligation to monitor and manage conflicts of interest of their employees. • Legal Requirements • Public Policy Considerations • Public Perception

4. USPTO NIH FDA Investors (& SEC) University Conflict of Candor – Transparency

5. Legal Considerations • PHS/NSF Standard • FDA Standard • Stark Act • Insider Trading Laws

6. PHS/NSF StandardConsiderations in Tech Transfer • Federal PHS regulations (NSF has similar guidelines) require the University to maintain written, enforced policies and procedures to manage faculty members’ financial conflicts of interest. • A “Significant Financial Interest” (SFI) exists if a faculty member • receives annual remuneration in excess of $10,000 from a company that has an interest in the faculty member’s research, or • has an ownership interest in the company that exceeds 5% or $10,000.

7. Proposed New PHS Regulations • Highlights • Disclosure threshold lowered to $5,000 (for equity in publicly traded entities or for remuneration) • Any equity interest in non-publicly traded entities is now considered an SFI • Reimbursement of expenses will be counted towards the $5,000 threshold • Regulations will apply to SBIR/STTR Phase I applications • FCOI training required for investigators before engaging in PHS-funded research; and every 2 years thereafter • On publicly accessible web site, institutions must post information on SFIs/FCOIs related to PHS-funded research before spending PHS funds

8. Public Disclosure of Physician Payments • Physician Payment Sunshine Provision of the Patient Protection and Affordable Care Act of 2009: • requiresdrug and medical device manufacturers to report gifts and payments of $10+ made to physicians and teaching hospitals; • beginning in September 2013, the DHHS will post this information on a publicly available, searchable on-line database.

9. Public Disclosure of Physician Payments cont’d • Some companies – including Johnson & Johnson, Glaxo SmithKline, AstraZeneca, Eli Lilly, Pfizer, Stryker, and Zimmer – are already posting on their Web sites consulting and speaking fees paid to physicians. • Vermont, Massachusetts, and Minnesota have made such disclosure a requirement; Ohio is considering doing the same.

10. THE CHRONICLEof Higher Education Baylor College of Medicine Faces NIH Sanctions Over Financial Conflicts Paul Baskin  Tuesday, January 20, 2010 The NIH has ordered tougher financial disclosures on all grant applications from Baylor College of Medicine, [citing] ”serious concerns” about the college’s compliance with regulations governing conflicts of interest…. The doctors who spoke favorably of Vytorin® included Christie M. Ballantyne…who collected $34,472 during a five-month period… The NIH informed the institution last month that the agency would impose ‘special award conditions” on all future grants.

11. FDA RegulationsSee 21 CFR Part 54 • Clinical investigators testing a drug or device must disclose certain financial interests in the sponsor, drug, or device under study: • $25,000 in outside support from the sponsor (including grants to the investigator’s institution); • equity/ownership interest in excess of $50,000 in a public company; or any ownership in a non-public company; • a proprietary interest of the investigator in the drug or device (e.g., a patent). • The FDA will evaluate the disclosed conflict and may take various actions, including requiring further testing with non-conflicted investigators before approving the drug or device.

12. ProPublica: Database of Pharma’s Payments to Physicians • Currently includes payments from 8 companies: Eli Lilly, GlaxoSmithKline, AstraZeneca, Pfizer, Cephalon, Johnson & Johnson, ViiV, and Merck • Searchable by • name of physician • state, city • pharmaceutical company • Discloses type of service provided (e.g., consulting, speaking), expenses (e.g., travel) • http://projects.propublica.org/docdollars/states/pennsylvania?sort=city&sort_order=0

13. Stark Act • The Stark Act relates to physician referral and prescribing practices. • The law forbids physicians or their immediate family members from referring patients to a “designated health service” from which they receive “anything of value.”

14. Federal False Claims Act (Anti-Kickback) • Violation for knowingly and willfully offering or paying/soliciting, or receiving remuneration in return for purchasing, leasing, ordering, arranging for, or recommending an item or service paid in whole or in part by Medicare/Medicaid • Even if the expenditure has a legitimate purpose, there is liability if one purpose is to induce purchases • Applies to both the giver and receiver • Felony: fine and/or imprisonment • “Whistleblowers” can bring about investigations and share in penalty proceeds.

15. Study* of Settlements by Pharmaceutical Companies • U.S. spending on prescription drugs has increased from $40 billion in 1990 to $234 billion in 2008. In this era of rapidly rising drug costs, the illegal pharmaceutical company activities that have contributed to such inflated spending have garnered a significant amount of media attention. Recent billion-dollar settlements with two of the largest pharmaceutical companies in the world, Eli Lilly and Pfizer, provide evidence of the enormous scale of this wrongdoing. *Sammy Almashat, M.D., M.P.H, Charles Preston, M.D., M.P.H, Timothy Waterman, B.S., Sidney Wolfe, M.D., Public Citizen’s Health Research Group Published December 16, 2010

16. Summary of Settlements {Ss*} Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010 • 1991-2010: 165 Ss of $1+ million • 2006-2010: 121 Ss; total $14.8 billion • 1991: 1 S totaling $10 million • 2009: 38 Ss totaling $4.41 billion • Average $ amount of Ss: • 1991-2000: $37 million/per S • 2001-2010: $128 million/per S * Ss = Settlement(s)

17. PHARMACEUTICAL COMPANY OIG CASES

18. PHARMACEUTICAL COMPANY OIG CASEScont.

19. RateMDs.com Top Spine Surgeons Reap Royalties, Medicare Bounty By JOHN CARREYROU And TOM MCGINTY 12/20/2010 • From 2004 to 2008, Norton Hospital in Louisville, KY performed the third-most spinal fusions on Medicare patients in the country. • 5 surgeons are among the largest recipients nationwide of payments from medical-device giant Medtronic, Inc. In the first nine months of this year alone, they received more than $7 million from the company (mostly royalties they earned for helping the company design one of its best-selling spine products.) • Corporate whistleblowers and congressional critics contend such arrangements—which are common in orthopedic surgery—amount to kickbacks to stoke sales of medical devices. They argue that the overuse of surgical hardware is a big factor behind the soaring costs of Medicare.

20. Industry Relationships • In response to concerns over the impact of industry interactions on the prescribing practices of healthcare professionals, the University’s Schools of the Health Sciences and UPMC adopted a policy addressing such relationships in February of 2008 http://www.coi.pitt.edu/IndustryRelationships/index.htm • Most questions surrounding the Industry Relationship Policy involve consulting and speaking engagements

21. University COI Policies Pitt and CMU have policies to address the following concerns: • Consulting Work—Conflict of Commitment • Management, directorship, or ownership of Licensed Start-up Company • Research performed by Pitt and CMU for company in which faculty member has an interest • Differences in policies are due to the different types of research conducted at our respective institutions.

22. Current* Pitt Policy provisions include • 49% equity cap in Licensed Start-up Companies • Assuming his/her department chair does not object, a researcher conflicted with a Licensed Start-up Company can be PI on the University’s portion of an SBIR or STTR grant not involving human subject or animal research. • *revised March 2010

23. Perspective of Venture Capitalists • Licensed Start-up Company evaluates the technology as a business matter, not as a purely scientific inquiry; • A Director/Officer of a Licensed Start-up Company has a fiduciary obligation to the Company; • Scientific Advisory Board members of Companies do not have legal, fiduciary obligations.

24. Conflict of Interest Case Study 1 Tech Transfer Activities, Scenario 1: Ophthalmic lubricants used to treat glaucoma can cause troublesome side effects, such as blurred vision, retinal detachment, and a slow or irregular heartbeat. Richard Gumbert, a Pitt faculty member, has developed a lubricant that may not cause such adverse reactions. The University obtained a patent on this invention. A Licensed Start-up Company, SightSavers, LLC, executed a license agreement with the University providing SightSavers with the exclusive right to this invention. Dr. Gumbert is entitled to receive royalty payments through the University in connection with the license agreement. He also plans on acquiring 25% of the company’s equity and serving as its CEO.

25. Conflict of Interest Case Study 2 Tech Transfer Activities, Scenario 2: Continuing with the previous scenario, SightSavers, LLC would like to sponsor research at the University to continue evaluating the licensed technology. Dr. Gumbert would like to serve as PI on the study. In their proposed agreement, Sight Savers wants the results of such research to remain confidential. Additionally, the company assumes it would be the owner of any new inventions developed by Dr. Gumbert.

26. Questions? • Further information on the University of Pittsburgh’s Conflict of Interest Policies can be found at: http://www.coi.pitt.edu • Carnegie-Mellon University COI web site: http://www.cmu.edu/osp/regulatory-compliance/conflict-of-interest.html

27. Contacts • Jerome L. Rosenberg, PhD Chair/COI Committee/University of Pittsburgh 412-624-3007 jrosenb@pitt.edu • David T. Wehrle Director/COI Office/University of Pittsburgh 412-383-1774 wehrledt@upmc.edu • Barbara Barnes Associate Vice Chancellor for Continuing Education and Industry Relationships (University of Pittsburgh) and Vice President of Sponsored Programs, Research Support, and Continuing Medical Education (UPMC) 412-647-8212 barnesbe@upmc.edu • David Smith of Counsel/Pepper Hamilton, LLP 412-454-5862 smithds@pepperlaw.com • Ann Mathias Assistant Vice President for Research Compliance/CMU 412-268-4817 amathias@andrew.cmu.edu