Nov. 29, 2018
The resignation of Memorial
Sloan-Kettering's CEO from the corporate board of Merck & Co. last month
has drawn new attention to the opaque web of connections between pharmaceutical
companies and nonprofit health systems at the highest levels of power.
A BioPharma Dive review found about
two-thirds of the pharma industry's largest companies had at least one board
member compensated by both the nonprofit they lead as well as the
drugmaker, setting up a potential financial conflict of interest.
Each role entails a distinct mission. On
one hand, these individuals guide a nonprofit institution, ostensibly operating
with a public or community interest in mind. By contrast, a director on a
for-profit corporate board carries a fiduciary responsibility to pursue shareholders'
interests and, in effect, help the company grow and succeed.
While the directorships are disclosed in
proxy statements of the public companies, most nonprofit health system websites
failed to disclose the directorship on the main biographical page of that
leader. Generally, these relationships have not been subject to the same
scrutiny from the public and academia as others in the healthcare industry,
such as ties between drugmakers and physicians.
The health systems — including well-known
names like the Mayo Clinic, the Dana-Farber Cancer Institute and Massachusetts
General Hospital — defend these arrangements. Many point to
conflict-of-interest policies that aim to prevent misconduct. But critics say
the dual positions can be inappropriate, with some calling for closer
examination in light of recent questions on corporate ethics at Sloan
Kettering.
"It does seem like buying influence
and it's hard to imagine what else it would be," Carl Elliott, a professor
for the Center for Bioethics at the University of Minnesota said in an
interview with BioPharma Dive. "If you're actually trying to buy
scientific knowledge, then you wouldn't really be going after CEOs. What they
have is power."
That criticism is off target, said those
that defend the relationships. Board service can provide valuable insights and
experience useful to companies on both sides of the relationship.
Eric Orts, a legal studies and business
ethics professor at the Wharton School of the University of Pennsylvania said
in an interview with BioPharma Dive that these dual positions can bring
valuable efficiency gains when people do the right thing.
"I wouldn't want to throw everybody
under the bus just because you have some cases where people behave unethically
or egregiously," Orts said.
In Sloan Kettering's case, the nonprofit's
chairman struck a questioning tone on the suitability for CEO Craig Thompson to
be on Merck's board when Thompson announced his resignation on Oct. 2.
"We need to step back from that now
and ask ourselves whether that continues to be appropriate, whether it's
appropriate in the future," Douglas Warner, the cancer center's board
chairman then told The New York Times.
While the controversy has spurred a
re-think at Sloan Kettering, it hasn't led to a broader re-evaluation of board
service among other nonprofit healthcare companies.
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