From Russia with Money - Harvard Medical School Accepts $200 Million from Russian Emigre with Ties to Russian Oligarchs and Putin, and Who Is Under Investigation for US Election Meddling

On Health Care Renewal we have frequently written about individual and institutional conflicts of interest.  The landmark but often ignored 2009 report by the Institute of Medicine on Conflicts of Interest in Medical Education, Research and Practice defined institutional conflicts of interest as arising when

an institution's own financial interests or those of its senior officials pose risks of undue influence on decisions involving the institution's primary interests.

We have written about institutional COIs affecting academic medical institutions, medical societies and patient advocacy organizations.  Typically, the COIs arise from industry (that is, usually pharmaceutical, biotechnology medical device, and sometimes health insurance corporate funding) that might be seen as influencing the institution's decisions about medical care, health care policy, teaching and/or research.  For example, most recently we wrote about systematic research on institutional conflicts of interests affecting patient advocacy organizations, and on organizations writing clinical practice guidelines. 

But now things are different.

We present a big case of what looks like an entirely new, and very troubling variation on an institutional conflict of interest.

A "Transformative" Gift to Harvard Medical School

On November 8, 2018, Felice Freyer, writing in the Boston Globe, documented a huge new gift to Harvard Medical School.

Harvard Medical School has received a $200 million donation — the largest in its history — to support research into fundamental questions about human illness and health.

The pledge, from the Blavatnik Family Foundation, will enable the school to hire researchers, add to its advanced technology, and a build an 'incubator' in the Longwood area to help bring research findings to market.

The gift is so large that Harvard will rename many of the school's components after Blavatnik.

Harvard Medical School is keeping its name for now. But a large portion of the school will be renamed. The 10 academic departments in science and social science — as distinguished from the affiliated hospitals where postgraduate training takes place — will be called the Blavatnik Institute at Harvard Medical School.

Per the Harvard's in-house publication, the Gazette,

Announcing the donation, Harvard President Larry Bacow described it as an 'unprecedented act of generosity and support,' and thanked Blavatnik for his faith that HMS — and the region’s broader life sciences community — can make dreams of dramatic progress in human health become reality.

'It’s one thing to dream for oneself, for one’s family and friends, even for one’s community. It’s another thing to dream for all people, to dream for a future in which more lives are improved and saved through the creation and application of knowledge through science,' Bacow said.

HMS Dean George Q. Daley called the donation 'a transformative opportunity' for the School and said it will enable a new generation of scholars and scientists to emulate those who made key discoveries in every area from organ transplants to polio vaccines to gene therapy.

The Gazette described the donor, Len Blavatnik, thus

The foundation is led by Blavatnik, who graduated from Harvard Business School (HBS) with an M.B.A. in 1989, founded Access Industries, and became one of Britain’s wealthiest men.

What could possibly go wrong?

The Russian Connection

Actually, while he may currently operate out of Britain, Blavatnik came from Russia.  Per the Globe,

Blavatnik made his fortune in aluminum, oil, and gas after the fall of the Soviet Union and in 2011 bought the Warner Music Group. His philanthropy has sometimes raised eyebrows because of his alleged connections to Russian oligarchs.

His connections to these (other) oligarchs should raise some eyebrows, and concerns. 

The Access-Alfa Renova Consortium, Alleged Russian Sponsored Harassment of BP, and FSB Active Measures

Blavatnik's recent generous donations to Oxford sparked protests, and provided documentation of some relevant issues. Per the Globe

When Oxford University in England named a school of government after Blavatnik in 2015, some 20 critics wrote to chide the school for 'selling its reputation and prestige to [Russian President Vladimir] Putin’s associates,'

Their letter, published in the Guardian in 2015, stated that Blavatnik belongs

to a consortium of Russian billionaires called Access-Alfa-Renova (AAR). The consortium has long been accused of being behind a campaign of state-sponsored harassment against BP. In 2008-09 dozens of British and other western managers were forced out of Russia. As part of this campaign, Vladimir Putin’s FSB intelligence agency fabricated a case against two Oxford graduates. According to evidence from its jailed owner Sergei Bobylyov, Alfa-Bank oligarchs also raided a retail company called Sunrise.

The spy case and the attack on Sunrise involved the participation of Russian officials who are listed as gross human rights violators by the US Treasury in line with the Sergei Magnitsky Rule of Law Accountability Act of 2012.

These corporate abuses took place in Russia with active official support. There was a backdrop of state-sponsored propaganda. Russian state media broadcast libellous assertions against western and Russian citizens. AAR went on to make billions from a highly controversial deal with Rosneft.

The letter writers asserted

Oxford University apparently failed to investigate these facts, AAR’s track record from the beginning, and its close ties with the Kremlin.

A 2015 Guardian article described the background of the letter's signatories, including

Pavel Litvinov, one of eight people who in 1968 protested on Red Square against Moscow’s invasion of Czechoslovakia. He was exiled for five years to Siberia. Another is Vladimir Bukovsky, jailed by the KGB. Bukovsky, who lives in Cambridge, exposed the Kremlin’s use of psychiatric treatment against dissidents.

Others include former Oxford academics and graduates, members of Russia’s democratic opposition and human rights activists. One is Vladimir Milov, a colleague and friend of Boris Nemtsov, the opposition leader shot dead in February outside the Kremlin. The letter was organised by Ilya Zaslavskiy, a TNK-BP employee and Oxford graduate who ran Moscow’s Oxford alumni association.

In 2008 Putin’s FSB spy agency arrested Zaslavskiy and his brother Alexander in Moscow and accused them of being 'western agents'. Russian state TV claimed the FSB had exposed a major spy ring. The case against them was 'fabricated', the letter says.

Despite their credentials suggesting that the letter writers knew whereof they spoke, Oxford apparently has not done any further investigation.   However, per the Globe again, 

Last year, after Blavatnik donated $1 million to Donald Trump’s inauguration committee, an Oxford professor quit in protest, the Guardian reported.

In fact, according to contemporaneous (2017) coverage in the Guardian, Professor Bo Rothstein

a specialist on corruption, called the donation 'incomprehensible and irresponsible' in his resignation letter.

The academic subsequently told the Guardian he had received hundreds of messages of support about his decision, adding: 'I’m not going to be the Blavatnik chair of government and public policy because I’m not going to give legitimacy and credibility to this person. $1m is a sizeable amount of money. In my book by donating to the inauguration of Donald Trump you are supporting Donald Trump.'

The 2017 Guardian article expanded on the allegations made by the 2015 letter writers

Access began making investments in Russia after the fall of communism as the energy and aluminium groups of the former Soviet Union were broken up. Eventually Blavatnik combined assets with Viktor Vekselberg and Mikhail Fridman to form AAR. Their partnership with BP ended in acrimony.

In 2008, Bob Dudley, then the chief executive of TNK-BP and now the boss of BP, left Moscow after what the British company described as an 'orchestrated campaign of harassment'. Armed police also raised TNK-BPs office and more than 100 BP managers had to leave Russia after the authorities refused to renew their visas.

US diplomats alleged that at least one individual in AAR, German Khan, was involved in a state-sponsored campaign against BP to try to force them out of Russia. However, AAR and lawyers for Blavatnik have denied any involvement, including that of Khan, in a plot against BP.

In the end, both BP and AAR were bought out of the venture by state-backed Russian energy company Rosneft. The $55bn (£42bn) deal in 2013 handed the oligarchs, including Blavatnik, $28bn. It was signed off at a meeting with Putin.

The cash from the sale of TNK-BP pushed him to the top spot of the Sunday Times rich list in 2015. By this stage Access had already diversified beyond Russia and the energy sector.

However, note that the 2017 Guardian article's addendum included

Sir Leonard Blavatnik’s lawyers have informed the Guardian that the term 'oligarch' in his view does not apply to him. [But] The Guardian editor-in-chief disagrees.

So to recap, Blavatnik made a lot of money from aluminum, gas and oil in Russia after the collapse of the USSR.  He banded together with other very rich Russians in a consortium, AAR, that was accused by multiple people of dirty tricks meant to drive the UK oil firm BP from the Russian market.  There were allegations that this trickery involved Russian state agencies, and was likely to have been condoned by Putin.  The people behind AAR eventually netted a lot of money from the resulting buyout of their firms and of BP, a deal that apparently did involve Putin. 

Blavatnik's Changing Pattern of Political Contributions Raise Question about Foreign Influence on the US Election

While giving a lot of money to various educational and cultural institutions, Blavatnik was giving modest amounts of money to politicians. 

However, his pattern of political giving apparently changed greatly upon Trump's advent on the scene.  A May, 2018, Dallas News op-ed article by Professor Ruth May of the University of Dallas on Russian oligarchs' affinity for Trump's campaign stated,

Data from the Federal Election Commission show that Blavatnik's campaign contributions dating back to 2009-10 were fairly balanced across party lines and relatively modest for a billionaire. During that season he contributed $53,400. His contributions increased to $135,552 in 2011-12 and to $273,600 in 2013-14, still bipartisan.

In 2015-16, everything changed. Blavatnik's political contributions soared and made a hard right turn as he pumped $6.35 million into GOP political action committees, with millions of dollars going to top Republican leaders including Sens. Mitch McConnell, Marco Rubio and Lindsey Graham.

In 2017, donations continued, with $41,000 going to both Republican and Democrat candidates, along with $1 million to McConnell's Senate Leadership Fund.

A Vice News article April 2018, provided more detail,

according to the Wall Street Journal, Blavatnik gave $12,700 in April 2017 to a Republican National Committee fund that was used to help pay for the team of private attorneys representing Trump in the probe of Russian interference in the 2016 election. He’d given the RNC legal fund $100,000 in 2016, the Journal said.

The problem is that, as stated by Represenative Adam Schiff (D-CA), likely now incoming chair of the House Intelligence Committee,

'Unless the contributions were directed by a foreigner, they would be legal, but could still be of interest to investigators examining allegations of Russian influence on the 2016 campaign. Obviously, if there were those that had associations with the Kremlin that were contributing, that would be of keen concern.'

Under federal law, foreigner nationals are barred from contributing directly or indirectly to political campaigns in local, state and federal elections.

Note that according to an April, 2018, Mother Jones article, the 

the question of possible illegal foreign donations from Russia is also under scrutiny by the FBI and the Federal Election Commission. 

Apparently because of these allegations that Blavatnik was helping to channel Russian money to influence the 2016 election, per the Globe

Although no wrongdoing has been alleged, ABC News reported in the spring that special counsel Robert Mueller is looking into Blavatnik’s donation to the inauguration as part of an inquiry into foreign financial support for Trump.

So to recap, Blavatnik became a dual UK-US citizen, and for quite a while made political donations in a style similar to that of many rich businesspeople at the time, giving amounts to both parties, presumably to enhance access whoever was in power.  However, when Trump became a presidential candidate, Blavatnik began making much bigger donations, and only to Republicans and Trump-related causes.  Then he gave a million dollars to Trump's inagural.  Given the known scheme  by Russia to meddle in the US election to benefit Trump (see the 2018 Senate committee report as discussed here), this raised suspicions that Blavatnik, was helping to also influence the election on Russia's behalf. 

Blavatnik's Sanctioned Associates

Moreover, perhaps Mueller is also interested in Blavatnik's ties to other Putin-linked oligarchs.  A profile in Forbes from October, 2018, stated

Blavatnik still retains a few Russian assets. He and Vekselberg, along with [Oleg] Deripaska, are key investors in Rusal, one of the world’s largest aluminum producers.

Note that

His former business partners are now facing U.S. sanctions. They include Viktor Vekselberg (net worth: $13.1 billion) and Oleg Deripaska (net worth: $3.3 billion), two of seven Russian oligarchs that the U.S. Treasury and State departments identified in the April sanctions. Allegations made against the sanctioned oligarchs include interference with the 2016 presidential elections and financially profiting from a Russian government that engages in 'destabilizing activities.'

To recap, Blavatnik has ongoing business relationships with other oligarchs who have been sanctioned for meddling in the 2016 US election.


Blavatnik's Former Lobbyists Spin Through the Revolving Door into the Trump Administration

Furthermore, the April, 2018, Vice News article documented apparent ongoing ties between Blavatnik operators and the Trump administration.

Two senior Trump administration officials were once registered as lobbyists for an investment company controlled by a Soviet-born industrialist who made billions doing business with newly sanctioned Russian oligarchs.

Makan Delrahim is now the assistant attorney general for the Antitrust Division in the Department of Justice, after rising from his original appointment as deputy White House counsel and deputy assistant to the president. David Bernhardt is the No. 2 official in Trump’s Department of the Interior.

Both men registered as lobbyists in 2011 and 2012 for Access Industries, a holding company controlled by billionaire Leonard Blavatnik, according to public filings reviewed by VICE News. And though they are far from the only D.C. lobbyists to get plum jobs in the Trump administration, the connection to Blavatnik, long in business with billionaire associates of Russian President Vladimir Putin, reveals yet another link between Russia and senior Trump officials.

The article noted,

As of the fourth quarter of 2017, the lobbying firm that Delrahim and Bernhardt worked for was still on Access Industries’ payroll, according to public records. Bernhardt told the Senate during his confirmation hearing that despite filing the paperwork, he never actually did any lobbying for Blavatnik’s firm.

Delrahim, may have been in a particularly fraught position,

Both wound up on the Trump transition team. One, Makan Delrahim is now the assistant attorney general for the Antitrust Division in the Department of Justice, after rising from his original appointment as deputy White House counsel and deputy assistant to the president. David Bernhardt is the No. 2 official in Trump’s Department of the Interior.

The problem is while

Neither Delharim nor Bernhardt, who registered to lobby for Blavatnik and Access Industries in the past, currently has a job with direct oversight of issues related to the Russian economy or the Russia probe.... Delharim might have been involved when he was in the White House counsel's office, a position he left in September for the DOJ.

Richard Painter, former White House ethics lawyer under President George W. Bush, said that in his view, Delrahim would have needed to recuse himself from any work at the White House involving the investigation into Russia’s role in the 2016 election due to his previous work for Access Industries.

'I think that if I were in the White House Counsel’s Office, I’d say, ‘This guy needs to stay away from the entire Russia thing,'' Painter told VICE News.

To recap, former lobbyists for Blavatnik's firm served on the Trump transition team, and then were appointed to responsible federal offices, suggesting at the least, conflicts of interest.


Harvard Officials See No Evil

Nonetheless, Harvard officials had nothing but praise for Len Blavatnik, their generous donor.  Per the Globe,

[Lawrence S] Bacow, Harvard’s president, stood by the donor, calling him a 'distinguished alumnus' and 'somebody that we know very well.'

'We’re very comfortable with who Len is,' Bacow said. 'Len is well-known to the medical community here at Harvard and has been very supportive of science at Harvard and elsewhere. . . . He’s also somebody who is intensely curious, who believes in the power of science to improve the human condition, and he also believes in backing really talented young scientists.'

Were they totally unaware of all the accusations against, suspicions of, and likely investigations of their very wealthy donor?  Or did they just not want to look this very generous gift horse in the mouth? 

Not With a Bang,...

As noted above, there were vigorous protests of Blavatnik's much smaller gift to Oxford in 2015, and then in 2017 after Blavatnik's million dollar gift to the Trump inaugural was announced.  Yet so far, there has been little media discussion, and no protest of Blavatnik's "transformative" gift to Harvard, and the naming of a good chunk of the Harvard Medical School in his honor.

Blavatnik's story seems to be anechoic so far.  It has gotten little public coverage.  A Bloomberg article and a tiny AP story made no mention of Russia, oligarchs, Putin, etc.  Not surprisingly, coverage by Harvard's public relations did not bother either, (see the Harvard Gazette as above, and Harvard Magazine.) The only media coverage beyond the Boston Globe that said anything about the questionable aspects of Blavatnik's background was by the Harvard Crimson and WBUR.   


Summary and Discussion

Len Blavatnik  has been accused of acting in association with other Russian oligarchs, and with the Putin regime's FSB to use unethical means to push UK oil interests out of Russia.  Blavatnik has been accused of helping Russia to influence the 2016 US elections.  Some of Blavatnik's business associates have already been sanctioned by the US government for election meddling and profiting from "destabilizing activities."  And Special Counsel Mueller and other federal authorities are apparently in the midst of investigating Mr Blavatnik.


So Blavatnik's huge gift to Harvard Medical School seems likely to generate a new version of an institutional conflict of interest.  Consider a typical insitutional COI: a medical school getting a big donation from a pharmaceutical corporate foundation.  The concern in that case might be that the people running the school would be unduly inclined to support research that might boost the company's products, or support teaching that would again favor its products, or favor pharmaceutical therapy over other approaches.  Perhaps the students and professionals at that school might feel they are supposed to help hype the company's products, or avoid criticizing them.  All that would be highly concerning.

However, in the current case the issue is not how the school, its officials, its faculty, its health professionals and/or its students would favor Mr Blavatnik's corporate products and avoid criticizing them.  It is that they all are being pushed to cozy up to an oligarch, and thus might be pushed to favor the authoritarian government to which Mr Blavatnik appears tied, its anti-democratic practices, its corruption, and its apparent attempts to meddle in US elections, undermine US democracy, and support a particular candidate who may be beholden to it.

The protesters at Oxford in 2015 wrote

We insist that the university should stop selling its reputation and prestige to Putin’s associates.

Now Harvard University and its medical school appear to be "selling its reputation and prestige to Putin's associates."  This endangers Harvard, and the rest of us. Yet no on at Harvard appears to be protesting.  The silence is deafening.

More Health Care Professionals and Trainees Provoked to Resist - Dana-Farber Cancer Institute Protest of Leaders' Acquiescence to Trump's Muslim Travel Ban

The executive order by President Trump that temporarily banned immigration from seven predominantly Muslim countries provoked health care professionals and trainees to challenge another health care leader whom had not been so challenged previously.

We recently described how professionals and trainees protested the decision by Cleveland Clinic CEO Toby Cosgrove not to cancel a fund raising event a Mar a Lago, the resort owned by President Trump, even though Mr Trump's ban had resulted in the deportation (since reversed) of a Cleveland Clinic physician trainee, and Cleveland Clinic health care professionals and trainees had challenged the decision to continue with the event (look here).  Stories about major conflicts of interest affecting Dr Cosgrove had failed to inspire any protests, or even any real public discussion.

The Dana -Farber Cancer Institute and the Immigration Ban

Now a similar story is playing out at the Dana-Farber Cancer Institute, a major academic medical institution and a prominent affiliate of Harvard Medical School.

Here is a summary from the Boston Globe, January 31, 2017:

Hundreds of medical students, doctors, and other medical personnel opposed to President Trump’s immigration order are urging the Dana-Farber Cancer Institute to cancel a lavish fund-raiser at Trump’s Mar-a-Lago Club in Florida.

But even as the number of signatures on a circulating petition grew — rising to 1,206 caregivers in Boston and across the United States by 9:20 a.m. Wednesday — Dana-Farber said it would not risk losing money earmarked for cancer research and treatment by canceling the fund-raiser.

Donors are paying as much as $100,000 to attend the fund-raiser on Feb. 18 at the 20-acre seaside resort in Palm Beach. Dana-Farber raised $2.2 million at last year’s Mar-a-Lago gala, which featured a concert by James Taylor, according to a video on the hospital’s website.

The objections to the fund-raiser are an example of the fallout over Trump’s order restricting travel from seven Muslim-majority countries — restrictions that have prompted protests across the country.

Six medical students and one doctor e-mailed a letter Sunday to Dana-Farber president Dr. Laurie Glimcher and development head Susan Paresky. They said Trump’s immigration order threatens the medical school’s research program, poses a risk to overseas patients who need cancer treatment at Dana-Farber, and 'is a direct threat to the health and well-being of thousands of refugees worldwide who are fleeing violence and persecution.'

Two Iranian medical researchers headed for Brigham and Women’s Hospital were barred from entering the country after the ban went into effect. And the medical school’s teaching hospitals are scrambling to determine whether patients from the seven targeted countries will be able to keep appointments for medical care. When the group did not get a reply to their letter, they began circulating a petition on social media at 6 p.m. Monday, said organizer George Karandinos, a Harvard medical and doctoral student.

'Given the events of recent days,' he said, 'we are asking Dana-Farber to take some moral leadership on this.'

The response was that it was too late to cancel the event. Although CEO Glimcher and Josh Beckstein, the Chair of the Dana-Farber board of trustees, said they sympathized with the petitioners' concerns, they asserted:

contracts have been signed, and a large number of people have committed to attend. Cancelling the event outright would only deny much-needed resources for research and care

An article in the Atlantic posted on February 9, cited questions about Dr Glimcher's and Mr Beckstein's response

It noted that Dana-Farber leadership used a logical fallacy, an appeal to common practice to justify their decision:

Dana-Farber, which brands itself as a pioneering, trailblazing institution, closed its public statement with the argument that 'Other organizations find themselves in a similar position this year and have made a similar decision.'

Meanwhile, the protesters thought the Institute could have done better:

'This was covered in the press as an issue in September,' said George Karandinos, a Harvard medical student among those leading the backlash. 'Partially because this has been brought up before, we're less sympathetic to the argument that the fundraiser is so close' In light of the fact that President Trump has 'sent out a message of exclusion, discrimination, and hate,' Karandinos said, this response 'felt very weak.'

And the number of signatures on the petition continues to rise. It is now greater than 2000. It is likely the protests will get stronger:

Because Dana-Farber has opted to proceed with the Mar-a-Lago gala—has not committed to distancing itself from the Trump Organization in the future—the Harvard students, doctors, and patients are elevating the stakes. This coming Saturday, they plan to rally on the quad of Harvard Medical School, in the shadow of the cancer institute. In the spirit of evidence-based effective protest, their request is clear and concrete: 'We call on the Dana-Farber to relocate its fundraiser away from President Trump’s Mar-a-Lago this year and in all subsequent years.'

Maybe it should have been no surprise that Dr Glimcher was not sympathetic to arguments that the Mar a Lago fund raising event posed a conflict of interest for the Dana-Farber, notwithstanding the conflicts of interest created for President Trump by his continuing business ownership.  Dr Glimcher actually has a long history of her own conflicts of interest.

Dr Glimcher's Conflicts of Interest

As in the case of the Cleveland Clinic, the strong response to Dr Glimcher's refusal to cancel the Mar a Lago fundraiser could be contrasted with the lack of response to what could have been considered questionable actions by Dr Glimcher in the past.  Dr Glimcher accepted leadership positions at the Dana -Farber, and before then at Weill Cornell Medical School, despite severe conflicts of interest.

As we noted in 2011, at the time Dr Glimcher left Harvard to become Dean of the Weill Cornell Medical School, she was already the longest serving member of the board of directors of pharmaceutical giant Bristol-Myers-Squibb.  At that time, she was paid over $240,000 a year for her services on the board, and owned more than $1.4 million of BMS stock units. 

At that time, Dr Glimcher was also on the board of directors of the Waters Corporation, which makes laboratory equipment used in pharmaceutical research.

A long time ago, in 2006, we first blogged about a "new species of conflict of interest" which we thought
might prove to be even more important than other conflicts of interest afflicting health care that were then starting to be discussed.  This new species  involved health care organizational leaders who were simultaneously members of the boards of directors of for-profit health care corporations.  We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]   Thus, for example, the conflict posed by the president of a university, to whom a medical school and academic medical center report, who also is the director of a pharmaceutical company, would be extreme.

Furthermore, even in 2011, BMS had a track record that included settling allegations that the company gave kickbacks to physicians to promote its products.  These actions would have been taken place while Dr Glimcher was responsible for the governance of the company.

At that time, appointing a member of the boards of Bristol Myers Squibb and Waters Corporation to be dean of  Weill Cornell Medical School incited no public discussion, much less protest.  I know of no more public discussion or protest ensuing after Dr Glimcher became CEO of Dana-Farber. 

She is still on the boards of these two corporations.  The most recent (2016) BMS proxy statement  noted that Dr Glimcher's yearly compensation is now $300,000 and she now owns 88,190 share equivalents, worth more than $4.5 million at today's price.

Furthermore, Bristol-Myers-Squibb has continued its ethical misadventures under Dr Glimcher's watch.  Last year we discussed yet another settlement it made of allegations of giving kickbacks to doctors to induce them to prescribe its medication.  Prior to that, but still on Dr Glimcher's watch, we noted the following:

- In 2003, for $617 million, BMS settled suits alleging it tried to prevent competition from low cost generic versions of its products Taxol and Buspar (per the NY Times).
- In 2004, for $150 million, BMS settled suits by the SEC alleging accounting fraud (per the NY Times here).
- In 2007, BMS paid a $1 million dollar penalty while pleading guilty to lying to federal agents about a deal with the Canadian drug company Apotex (per Law360).   In 2009, it paid additional financial penalties in response to a US Federal Trade Commission charge about this case (per the FTC).
 - In 2007, for $515 million, BMS settled a suit alleging it used kickbacks to induce use of Abilify for dementia and by childeren, despite evidence that the drug was not suitable for either.  The settlement included a five year corporate integrity agreement.  (Look at our post here).
 - In 2014, BMS settled allegations its subsidiary Lantheus Medical Imaging Inc evaded state taxes (per the Corporate Crime Reporter)
 - In 2015, Bristol-Myers-Squibb settled allegations by the US Securities and Exchange Commission (SEC) that it bribed physicians in China to induce them to prescribe its drugs.  (Look at our post here).

Maybe those who protest Dr Glimcher's current actions will note that these actions were presaged by her publicly known but largely ignored past actions.

Summary

Donald Trump's campaign, his election, and the beginnings of his administration have evoked tremendous controversy.  Of many questions raised, those about his voluminous conflicts of interest, and whether has background as a corporate leader is suitable for leadership in other spheres, particularly the political, have been salient.  One unanticipated effect of his early decisions as president seems to be to raise questions about his relationships with leaders in other spheres with their own conflicts, and own doubtful qualifications for their leadership roles. 

It is ironic that Mr Trump has pledged to stand up for working people and the middle class, while his affinities seem to be almost entirely for the rich and conflicted.

Dr Toby Cosgrove of the Cleveland Clinic and Dr Laurie Glimcher of the Dana-Farber Cancer Institute seem relatively untroubled about their institutions' financial arrangements with Mr Trump's ongoing businesses, despite the conflicts that these businesses pose for a sitting president.  Furthermore, both Dr Cosgrove and Dr Glimcher have had and continue to have major conflicts of interest affecting their own leadership positions, conflicts which have been largely anechoic up until now.

The protests of President' Trump's dubious actions may shed needed light on the large, complicated network of insiders which has disproportionate influence on health care, public policy, and politics.

So here goes again, for the umpteenth time...

 I now believe that the most important cause of US health care dysfunction, and likely of global health care dysfunction, are the problems in leadership and governance we have often summarized (leadership that is ill-informed, ignorant or hostile to the health care mission and professional values, incompetent, self-interested, conflicted or outright criminal or corrupt, and governance that lacks accountability, transparency, honesty, and ethics.)  In turn, it appears that these problems have been generated by the twin plagues of managerialism (generic management, the manager's coup d'etat) and neoliberalism (market fundamentalism, economism) as applied to health care.  It may be the many of the larger problems in US and global society also can be traced back to these sources.

We now see our problems in health care as part of a much larger whole, which partly explains why efforts to address specific health care problems country by country have been near futile.  We are up against something much larger than what we thought when we started Health Care Renewal in 2005.  But at least we should now be able join our efforts to those in other countries and in other sectors.  

 True health care reform would restore health care leadership that understands health care and medicine, upholds the health care mission, is accountable for its actions, and is transparent, ethical and honest.

Harvard Psychiatry Fails Again

HARVARD PSYCHIATRY FAILS AGAIN

About a year ago I remarked upon the ethical tone deafness that characterizes Harvard psychiatry. It is bad enough that Harvard-MGH is the home of Joseph Biederman, MD, with whom Senator Grassley had so much fun a while back. Biederman is still in the news. It is also the home of Andrew Nierenberg, MD, who was rash enough to take on Marcia Angell in the New York Review over her well founded criticisms of the hyping and misuse of psychiatric drugs. In response, Dr. Angell handed Dr. Nierenberg his head.

Biederman and Nierenberg are not the only ones. When I called one of the senior Harvard professors, Carl Salzman, MD, to task for signing up a pair of compromised key opinion leaders as speakers in his annual Psychopharmacology Master Class last spring, I hoped the ensuing negative publicity would persuade him to go in a different direction next time.

No such luck! Today I saw the flyer for the 2012 Harvard Psychopharmacology Master Class. The list of speakers is virtually unchanged from a year ago. There is Charles Nemeroff. There is Alan Schatzberg. Both were outed by Senator Grassley’s investigation in 2008, and both were subjected to major administrative sanctions, by Emory University and by Stanford University. Other people now occupy the departmental leadership chairs they held in 2008. There also is a group of other key opinion leaders who appear content to endure the taint of sharing the podium with the compromised Nemeroff and the compromised Schatzberg. What are they thinking?

For that matter, what is the course director Carl Salzman thinking? A year back he said Nemeroff and Schatzberg would give great talks and that he would ensure they were objective and impartial. That’s not the point. The point is that they brought dishonor on our field, and for Harvard Medical School to give them this platform amounts to compartmentalizing information in service of their public rehabilitation. To repeat what I said a year ago, Adolph Hitler also gave a lot of speeches that received rave reviews, and compartmentalized information was widespread in the nation of Germany between 1928 and 1945. The best one can say about the upcoming course is that Biederman and Nierenberg are not on the program.

The Augean stables of psychiatry, at Harvard and nationwide, will not be flushed clean by the Carl Salzmans of our field, quibbling over legal technicalities while failing to see the ethical elephant in the living room.

For how long will the grownups at Harvard Medical School allow this farce to continue?

Quis Custodiet Ipsos Custodes? Redux

Revised HHS Rules for Conflict of Interest Fall Short

This morning NIH Director Dr. Francis Collins announced revisions to the existing 1995 regulations on objectivity in research that is funded by the Public Health Service. The focus is on significant financial interests (SFI) and on financial conflicts of interest (FCOI). The regulations illustrate the 3-way dance involving academic institutions (the grantees), NIH (the grantor) and academic scientists (the investigators). Thanks to Senator Grassley (R-Iowa) and his investigator Paul Thacker, headlined revelations in recent years about unacceptable management of FCOI at places like Stanford (Alan Schatzberg), Emory (Charles Nemeroff) and Harvard (Joseph Biederman) forced these revisions of the NIH regulations.

The general initial reaction to the new rules has been critical – here and here, for instance. Many stakeholders had urged the NIH to require that institutions make the disclosed FCOI of their investigators available on a public website. Dr. Collins had intimated that we could expect to see this change, so there is consternation that it somehow became derailed by institutional lobbying in recent months. The stated concern was that institutions would feel burdened by the need to maintain these data bases. Instead, if citizens wish to inquire about FCOI involving PHS-derived research funding, they will need to write to the institution, which is obliged to respond within 5 days. That’s not exactly user friendly. POGO today made the smart suggestion that the data could easily be attached to information about awarded funds on the NIH RePORTER website, that already exists.

A second failing is that the revised regulations do not close the regulatory loophole through which Charles Nemeroff strolled when he moved from Emory to the University of Miami. We covered that incident several times on this blog last year. Though Nemeroff was under a 2-year sanction and banned from participating in NIH-funded research at Emory, his friend Thomas Insel, Director of NIMH, assured the dean of the medical school at Miami that Nemeroff was in good standing to apply for NIH funding when he moved from Emory. To underline the point, Insel displayed the bad judgment of appointing Nemeroff to 2 new NIMH review committees.

Do today’s revised regulations prevent a repeat of this administrative travesty? No, they don’t. There is some mention of ensuring oversight if a sanctioned investigator wishes to transfer a grant to a new institution, but nothing to prevent the Nemeroff-Insel dance from being repeated. Here is the relevant section of today’s announcement (page 89):

We did, however, agree with one respondent that it would be helpful to clarify, in the grants context in particular, that institutional sanctions against an Investigator can travel with the Investigator upon his or her transfer to another Institution. Specifically, we have revised 42 CFR 50.606, paragraph (a), as follows: “If the failure of an Investigator to comply with an Institution’s financial conflicts of interest policy or a financial conflict of interest management plan appears to have biased the design, conduct, or reporting of the PHS-funded research, the Institution shall promptly notify the PHS Awarding Component of the corrective action taken or to be taken. The PHS Awarding Component will consider the situation and, as necessary, take appropriate action, or refer the matter to the Institution for further action, which may include directions to the Institution on how to maintain appropriate objectivity in the PHS-funded research project. The PHS may, for example, require Institutions employing such an Investigator to enforce any applicable corrective actions prior to a PHS award or when the transfer of a PHS grant(s) involves such an Investigator.”

This revision is intended to reference the range of options for the PHS Awarding Component to consider, depending on the specific circumstances at issue. For example, PHS may decide to initiate government-wide suspension or debarment of the Investigator under 2 CFR Part 376; or to use enforcement measures under 45 CFR 74.62, e.g., perhaps to make the approval of a transfer contingent upon the former Institution’s disclosure of the corrective action- including the specific sanctions against the Investigator- to the new Institution; and/or to use special award conditions under 45 CFR 74.14, e.g., perhaps to make the new Institution agree to take the same or similar action against that Investigator or explain to the PHS Awarding Component in writing why such action was not taken and what alternative measures will be used to ensure compliance.

What’s wrong here? Everything is optional; everything is discretionary; everything is contextual – that is a formula for NIH and the academic institutions to just look the other way. And if a Nemeroff decides just to relocate without transferring a grant then he is free to start reapplying again right away. Miami would not be required to continue applying the Emory sanction banning him for 2 years from involvement in federal grants. The PHS Awarding Component (NIMH in this case) may or may not get involved, or it may pass the buck to the new institution. So what has changed? If it is left up to compromised federal bureaucrats like Thomas Insel, and institutional administrators like Pascal Goldschmidt at Miami, then nothing has changed. It's business as usual, folks.

Dr. Collins, you have not done what you set out to do. Too bad.

Who Undermined "These Wonderful Philanthropic Organizations?" - Evil External Swindlers or Their Own Leadership

The rise and fall of yet another esteemed health care institution provides another cautionary tale about health care dysfunction. 

The Tragic Fall of the Picower Foundation

Two years ago, a highly-regarded charitable foundation had to close its doors, apparently one of the biggest victims of the Bernard Madoff Ponzi scheme.  Here is the Boston Globe version of the story:

The unfolding scandal surrounding the alleged Ponzi scheme run by Bernard L. Madoff yesterday claimed as a victim one of the largest foundations in the country, which has funded groundbreaking brain research at the Massachusetts Institute of Technology and diabetes research at Harvard Medical School.

The Picower Foundation of Palm Beach sent an e-mail to 'colleagues and friends' late yesterday saying that it was a victim of Madoff's alleged scheme and that it would soon shut down. With assets of more than a half-billion dollars, it is believed to be the largest charity to have been forced to close by the unfolding scandal.

'It is with great sadness that I write to inform you that the Picower Foundation has ceased all grant-making, effective immediately, and will close its doors in the coming months,' wrote Barbara Picower, the foundation's president, who added that its money was managed by Madoff.

Similarly, the New York Times reported without question:

One of the nation’s leading philanthropies, the Picower Foundation, announced on Friday that it was shutting down.

Also,

Listed previously at $1 billion, the foundation’s assets were managed by Bernard L. Madoff, Mrs. Picower said in a statement, and his 'act of fraud has had a devastating impact on tens of thousands of lives as well as numerous philanthropic foundations and nonprofit organizations.'

A Blow to Medical Research and Academic Medicine

This appeared to be a major blow to philanthropy, and to medical research and academic medicine.  Per the Boston Globe:

[No charities that had suffered from the Madoff scheme] were near the size of the Picower Foundation. In its 2007 tax return, it said the market value of its investment portfolio was $955 million. The Foundation Center, a nonprofit that tracks philanthropy, ranks the Picower philanthropy as the 71st largest in the United States by assets. It finances medical research at many leading institutions, human rights and child advocacy programs, and arts and cultural operations.

In particular,

A portrait of the Picowers hangs in the Picower Institute for Learning and Memory at MIT. They gave the center $50 million in 2002, which was, at the time, the largest grant from a single foundation the university had ever received. The foundation gave MIT another $4 million in May to launch a fund for faculty to conduct high-risk neuroscience research activities.

'I am deeply saddened by the terrible news,' Susumu Tonegawa, the Nobel laureate for medicine who founded the center in 1994, said in an e-mail.

It is unclear from the foundation's statement whether it lost all its money or just enough to force it to cease operations.

The Picower Foundation also gives MIT $200,000 a year to fund scholarships for graduate students, in the name of Norman Leventhal, the famed Boston developer and philanthropist. Leventhal was a director of Picower Foundation until this year.

The Picower Foundation also awarded $1.5 million for diabetes and metabolism research to Dr. Jeffrey Flier, dean of Harvard Medical School.

In addition,

[Dean Flier's] research funded by the foundation 'is over,' he said, unless he finds another funder.

Added his colleague, Dr. Barbara B. Kahn, chief of the division of endocrinology, diabetes, and metabolism at Beth Israel Deaconess Medical Center, 'I think it's tragic for the Picower Foundation and for the public that a single individual could undermine these wonderful philanthropic organizations that support excellent causes such as biomedical research.'

So that was the story in 2008. By then, we all knew that the scope of Bernard Madoff's fraud was audacious, and that all sorts of people were victimized, but it seemed a particularly low blow that he could "undermine these wonderful philanthropic organizations that support excellent causes such as biomedical research."  The narrative was one in which a prestigious, well-intentioned charity was laid low by an evil act perpetrated by a wily criminal.

Should Madoff be Blamed?

Or not. Today the Wall Street Journal reported the latest update on this story, on that seems quite dissonant with the version above:

A federal judge signed off Thursday on a settlement in which the widow of a longtime investor with convicted Ponzi scheme operator Bernard Madoff will return $7.2 billion to the victims of Mr. Madoff's fraud.


The settlement by Barbara Picower, the widow of Jeffry Picower, brings to nearly $10 billion the amount that Irving Picard, the court-appointed trustee for Mr. Madoff's firm, has recovered for people cheated in the scheme.

Recall that Barbara Picower was the President of the Picower Foundation.

Anechoic Stories About the Conflicted Leadership of the Picower Foundation

In fact, the glowing description of that foundation in the Boston Globe did not square with stories that ought to have raised serious questions about this apparent bastion of health care philanthropy, but instead were quite anechoic.

In 2001, the St Petersburg Times had published an expose of the Picower Foundation which suggested that its Jeffrey Picower used it in a complex scheme involving self-dealing for the purposes of personal enrichment.  The story is a bit complicated, but I provide details below to underscore its verisimilitude.

A Foundation that Appeared Virtuous

On one hand, it acknowledged how the foundation was set up to appear virtuous. One of the largest recipients of its apparent charity was the Picower Institute.

Picower's wife, Barbara, was active in determining the charities that received Picower Foundation grants. In 1999, the foundation gave $250,000 to the National Abortion and Reproductive Rights Action League, $700,000 to public television station WNET-Ch. 13 in New York, $120,000 to the Children's Aid Society and $107,000 to the Boys and Girls Clubs of Palm Beach County.

By far, though, its largest grant was to the Picower Institute. The foundation's $5.5-million donation was 41 percent of the $13.3-million in grants it made in 1999.

The Institute's leader was a famous medical academic:

Dr. Anthony Cerami was at the peak of his career in 1991 when he dined with Picower to celebrate his new job as president of the Picower Institute for Medical Research.

A dean at New York's Rockefeller University, Cerami had just been elected to the elite National Academy of Sciences, about the highest honor for a scientist short of a Nobel Prize.

'Dr. Cerami is what we call a giant in the scientific community, and he's also very well liked personally,' said Michael Kent, a biotechnology investor.

A Focus on  Drug Development

But it appeared that the main purpose of the Institute was actually to develop drugs, through a vehicle called Cytokine Networks:

Cytokine Networks held the rights to certain discoveries of the Picower Institute. In an arrangement common for non-profit medical research charities, it was set up in 1993 to commercialize science discovered at the Picower Institute.

'To bring science more quickly to the bedside -- that was their avowed mission,' Massey said of the institute.

Cytokine Network's largest shareholders were the New York-based Picower Foundation and the Picower Institute, which had each invested $2.5-million in the venture and held a combined ownership stake of 62.5 percent.

[Jeffrey Picower] owned no shares of the company.

Cytokine Networks held the rights to a drug labelled CNI-1493:

CNI-1493 has shown great promise in reversing Crohn's disease, a devastating inflammation of the intestine that is treated, though not always effectively, by injections. A small molecule can be taken in pill form and is cheaper to manufacture.

However, Jeffrey Picower, the husband of Barbara Picower, seemed to indirectly control Cytokine Networks:

he ran the board meetings, which were held at the New York offices of the JMP Group, Picower's investment holding company, said [Dr Glenn] Rice, the former Cytokine Networks executive.

'He was involved with every major decision,' Rice said. 'He'd get into minutia -- the capitalization of the company, screening potential new investors, personally reviewing the clinical trials. Virtually everything a chairman of the board would do, he did.'

Picower Foundation Sells Cytokine Networks to Picower (the Person)

And here comes the trick. Observe closely:

In 1999, [Cytokine Networks] ... merged with another private pharmaceutical company, PharmaSciences Inc., in which Picower was the majority shareholder.

So

When the merger was completed in 1999, Picower's non-profit organizations' equity stakes were diminished from a combined 62.5 percent of the old company to 24.5 percent of the new company.

Picower owned nearly 47 percent -- making him the largest shareholder in the company that had obtained the rights to CNI-1493.

An evaluation by Merrill Lynch put the merged company's fair-market value at $15 to $25 a share, making Picower's stake worth an estimated $40- to $67-million.

This is a pretty good trick:

Rice contends that by wearing all the hats in the merger, Picower had a conflict of interest.

In any business negotiation, each side tries to get the best deal. Yet in this merger, the interests of Picower's non-profit organizations were pitted directly against Picower's personal interests.

On one side were shareholders of Cytokine Networks, mainly the Picower institute and foundation. On the other side were the shareholders of PharmaSciences, primarily Picower.

Picower called the shots at the institute and foundation. So, Rice said, the question is this: On whose behalf was Picower working? His own? Or his non-profit organizations?

'The valuation here would be crucial,' said George Cowperthwaite Jr., a certified public accountant who specializes in preparing private foundation returns and has no connection to Picower.

By that, Cowperthwaite means the relative values assigned to each company for purposes of the merger. The shareholders of Cytokine Networks would be expected to push for the highest value possible assigned to their company. A higher value would give them more ownership in the new, merged company.

Yet Rice, who also was a shareholder in Cytokine Networks, questioned whether Picower had any incentive to push for a higher valuation of Cytokine Networks because it would mean that he would end up owning less of the merged company.

Indeed, a 1997 valuation by Lehman Brothers concluded that Cytokine Networks shareholders should own 47 percent of the combined company. They ended up with 36 percent.

In 2009, ProPublica published a report on the Picower Foundation which summarized this transaction thus:

Picower used both his foundations and a private corporation called PharmaSciences, of which he was the majority shareholder, to gain control of a potentially lucrative medical discovery. In 1999, Picower merged PharmaSciences with a for-profit spinoff of his institute called Cytokine Networks, essentially negotiating with himself. The merged company called Cytokine PharmaSciences had the rights to develop a new drug that could help minimize such illnesses as arthritis and multiple sclerosis. The newspaper raised the question of whether Picower had shortchanged his nonprofit in the deal.

So it appeared the Jeffrey Picower used the Picower Foundation, which was lead by his wife, and the Picower Institute, which was ostensibly an independent not-for-profit organization funded by the the Foundation, to set up a deal which could have markedly enriched Jeffrey Picower.

Picower's Previous Anechoic Financial Peccadilloes

In fact, it appeared that Jeffrey Picower had a long history of questionable business deals.  In 2002, Forbes ran a profile of Jeffrey Picower that asserted:

has been battle-hardened from years of legal disputes over his dealings. In the 1980s he sold to clients of his old accounting firm Laventhol & Horwath shaky tax shelters involving computer leases. When the Internal Revenue Service realized the computers were virtually worthless, it challenged the deductions. That spelled trouble for longtime client Peter Davidson of Brooklyn, N.Y.'s Davidson Pipe, who had put at least $30 million in Picower's leases after an introduction by Laventhol accountant William W. Schneck, who happens to be a former boss of Picower. Davidson sued Laventhol and Picower for $90 million. He claimed that Picower had bribed Schneck to betray him. Picower denied that, and his lawyer says he testified that the $50,000 he'd given Schneck was a loan. After hearing the opening arguments, he and Laventhol paid Davidson to drop the case on condition that Davidson keep his mouth shut about the settlement. Davidson later settled with the IRS.

Picower also had a run-in with the Securities & Exchange Commission. In 1983 the SEC rebuked him for being months late disclosing that he had exceeded a 5% position in Fidata, a financial services firm that he later merged into what is now Alaris, a medical device maker. Shades of the Cytokine Pharma merger: Picower was on both sides of the table.

Two years ago Picower had to put up $21 million from another one of his pet companies--Physician Computer Network in Morris Plains, N.J.--to appease other shareholders who'd lost everything when it went bankrupt after it came out that his executives had cooked the books. It is hard to imagine how a smart guy like Picower could have been oblivious to all of that while chairing the board and controlling 45% of the stock, but he was never charged with a thing.

There have been other trips to the courthouse. Fourteen years ago he refused to pay the final bill for renovations on his New York offices. When the interior design firm sued to collect, he sued them for $17 million, taking the stand at trial in an effort to convince the jury that sloppy work had left him in squalor. The judge made a surprise visit to the office with the jury in tow. The place turned out to be sumptuous, and the judge decided not to let it go to the jury at all, rendered a directed verdict and ordered Picower to fork over $178,000, including legal fees.

So by 2002, there were plenty of reasons to worry about the integrity of any organization lead by Picower.  Yet when the Picower Foundation went bankrupt in 2008, the public narrative was of a noble pillar or health care philanthropy done in by an evil confidence man.

One year later, the story was very different

Picower as a Beneficiary of Madoff
So maybe it should have been no surprise when ProPublica chronicled how the Picower Foundation seemed to have made huge profits from the Madoff Ponzi scheme that had victimized so many others.

It now appears that the biggest winner in Madoff's scheme may not have been Madoff at all, but a secretive businessman named Jeffry Picower.

Between December 1995 and December 2008, Picower and his family withdrew from their various Madoff accounts $5.1 billion more than they invested with the self-confessed swindler, according to a lawsuit filed by the trustee who is trying to recover money for those Madoff defrauded.

Jeffrey Picower died in October, 2010.  As noted above, just today, the settlement that would return $7.2 billion from Picower's operations to the Madoff  trustee.

Summary

The big question is why people can be so easily fooled? 

Why were a Chief of Endocrinology, the Dean of one of the country's most prestigious medical schools, and a Nobel Prize winner not the least bit skeptical of a foundation whose leadership was accused of conflicts of interest and self-dealing, and had been involved in a series of questionable business deals over the previous 20 years?  All this was public by six years before the collapse of the foundation.  Why was the media so eager to spin a narrative that labelled the apparent perpetrators as victims?  A simple Google search on "Picower" would have suggested other explanations.

Certain health care institutions seem to held in such high esteem that almost no one thinks to question what goes on behind their walls.  This makes it possible for unscrupulous leaders to subvert the missions of such institutions for personal gain.  It even makes it possible for scam artists to create institutions that appear as if they ought to be held in high esteem as vehicles for chicanery.

We have now seen so much ill-informed, incompetent, mission-hostile, conflicted, and criminal leadership of health care organizations that no one should accept the word of someone just because he or she is in the leadership of an institution with a fancy name.

Just because a health care organization has an impressive name, or even an impressive history does not mean that its current leaders should be immune to questions, inquiry, skepticism, or even investigation.  In fact, in this day and age, the leaders of large health care organizations with historically good names should be scrutinized especially carefully. 

If not, expect so see more collapses of "wonderful" organizations.