DOW JONES StarTribune MONEY vs. MISSION at the University of Minnesota NEWS In courting industry, "U' has invited trouble soe Rigert; Maura Lerner; Staff Writers 2,708 words 31 December 1992 Star-Tribune Newspaper of the Twin Cities Mpls St. Paul MSP. METRO ona, English (Copyright 1992) Copyright 1992 Star Tiibune Last month, President Nils Hasselmo declared that the University of Minnesota “needs to make no apology for affliting with private industry. This is part of our mission; always has been. But atthe university's most prestigious arm, the Medical School, industry ties have undermined its credibility, tamished its reputation and invited serious legal trouble. In some ways, the school is acting less like a center of ‘education, training and research and more like a group of private companies inventing and testing products for proft, and making millionaires of some professors. University officials say there's nothing wrong with profit, itself, and it's hard to argue otherwise. But a yearlong investigation by the Star Tribune shows that in practice, lot has gone wrong. And the pattern is even more pervasive than previously reported. In its drive for private money, the Medical School has lent itsname to questionable products and practices. Ithas covered up misconduct and condoned conflict of interest. And it has broken the law. In some cases, university officials have ignored or crushed Paget of 8 © 2014 Factiva, Inc. All rights reserved.dissenters who tried to point out problems from the inside, and blocked attempts by the newspaper to examine them from the outside So far, the Star Tribune has disclosed how one professor's Confit of interest allowed him to become a milionaire from an Lunproved drug; how officials tried to discredit a whistleblower and cover up allegations of falsified research involving another professor, and how an entire program broke the law for 20 years in the sale of an experimental transplant drug ‘As each problem has surfaced, the university has treated it as an isolated event. But the evidence points to a pattern of problems, bom of a system that lacks controls and effective oversight, that this year alone have triggered two federal criminal investigations. Tobe sure, this university is far from alone in ts involvement with the corporate world. Throughout the country, public ‘and private universities have been chasing industry money with increasing zeal, subtly changing themselves and their priorities in the process. Two developments help account for this: Increasingly tight budgets have prompted administrators to Took for other sources of funding = A1980 federal law allowed research institutions to sell the Fights to inventions produced with federal grants, opening a door {or professors and universities to start profiting from their lab work as never before. Gone is much of the old distrust betvieen the academic and business worlds. Now, many professors are starting their own, ‘companies or moonlighting as consuitants, with companies footing the bill for their research, It's trend that has ignited a passionate debate about whether scientists and universties are seling off their independence and integrity. A 1990 congressional hearing posed the question: "Are scientific misconduct and conflicts of interest hazardous to our healthy University officials assert thatthe collaboration is good for everyone because it creates jobs, boosts regional economies and helps the United States compete in the world market. But industry can be a fickle partner, as figures at the University of Minnesota Medical School show. ‘Although industry grants more than doubled in just two years, they dropped last year during the recession. Federal research funding, by comparison, has risen steadily since 1984 -an average of 10 percent a year, though the growth rate slowed in the past two years. In all, corporate money provides only about 6 percent of the University's research budget Page? of 8 © 2014 Factiva, Inc. All rights reserved,Exaggerated benefits Even so, university officials say, the benefits of industry-university courtships are obvious: They're the best way to {get good ideas out ofthe ivory tower and into the marketplace But the trath is more complex. Some of the university's proudest achievements came long before the era of corporate sponsorship. These include the taconite iron-extraction process, the heartJung machine used in open-heart surgery, even low-fat cheese. Some of the ruts ofthe early collaborations with industry were equally impressive -the heart pacemaker and the "black box" flight recorder nov required on al aircraft But some of the more recent ones have been of questionable or limited value, even though they made the professors rich - Microbiologist Anthony Faras made millions of dollars from Molecular Genetics, a company he cofounded in 1979 to make genetically engineered vaccines and other biotechnology products. ‘The vaccines never panned out. The company did develop and sell a ‘ew agricultural products, but eventuslly abandoned the biotech business as unprofitable. After Faras lef, the firm changed into a ‘small drug company called MGI Pharma, A securities analyst said later that the company seemed in the early yearsto seek as much publicity as possible for “every tle development.” At that time it had 12 faculty consultants and stockholders. =n 1987, Prof. Fitz Bach was well on the way to becoming @ millionaire from his ties to a company that was bankrolling his proposal for @ cancer treatment. But suddenly his fortunes changed: His relationship with the company, Endotronies inc., was challenged as improper; the company collapsed amid charges of stock fraud, and the treatment was dropped Now, court documents raise new questions about Bach's role in the case, which was a scandal and embarrassment forthe university ‘They show that his studies were finding itie beneft in the treatment even as he was helping the company tout it as a brealthrough. Atthe time, Bach was the company’s top scientific adviser, as well as a major stockholder. Even before his tests began, Bach said the treatment, using "aller cells" grown in company machines, could rival chemotherapy {and radiation. Then, shortly before the studies were completed, he raved about the "amazing technology" and called ita "very significant step" with "a lat of promise.” Infact, Bach's experiment was a bust. in a 1990 criminal trial, company officials admitted that only three ofthe 10 patients Page 3 of 8 © 2014 Factiva, Inc. All rights reserved,in the tests actually got cells from the Endotronies machine, that none ofthe patients got better and that the whole experiment would have to be repeated, ‘The university investigated Bach but saysit took no formal action against him. He lef the universty this year and could not be reached for comment. Abuses unchecked University officials say they have some of the best safeguards in the nation to prevent abuses in industry relationships. But the protections are easily evaded and ignored by those who are supposed to enforce them, especially when professors with power and prestige are involved Nowhere are the problems more starkly illustrated than in the Surgery Department, headed by world-famous transplant surgeon John Najarian For years, surgeons have been dodging the rules by operating their own private corporations to handle research money. Two nonprofit corporations, known as IBARS and BRAD, have brought in more than $4 millon to the Surgery Department since the mid-80s without fully disclosing where the money came from or how it was Used. ‘According to policy, industry research at the Medical School is ‘supposed to be reviewed by the dean, a faculty watchdog group and a special technology office. Each is a checkpoint against potential ethical problems. But BRAD (Biomedical Research and Development) has been doing Wwork-for-hire at a university lab since 1986, skipping all the checkpoints. was set up by three university scientists primarily totest heart valves for clients such as Medtronic, And though the work is done at the university by university employees, BRAD collects the fees -some $1.2 milion in all -and decides how the moneys spent. Nejarian himself helped set up IBARS (Institute for Basic and ‘Applied Research in Surgery) in much the same way. This corporation, which is run by a large group of university surgeons, has raised about $3.2 million from pharmaceutical companies and other donors since 1984. tt also gets free use of Medical School facilties and bookkeeping. IBARS director Wiliam Sullivan says that the surgeons introduce him to corporations and other donors, and that he raises the money to suppor their research needs. One corporation, Sandoz Lid, has provided more than $360,000 through its subsiciaries. Four years ago, Medical School Dean David Brown warned another Page 4 of 8 © 2014 Factiva, Inc. All rights reserved,{acuity corporation against handling grants from corporations on its own. But he never stopped BRAD and IBARS, even though a professor challenged the legality of one of them five years ago. ‘The Star Tribune has leamed of at least one potential conflict of interest involving a BRAD offical. Pichard Bianco, a university scientist who also works for BRAD, received $500 a month in Consulting fees from a company called Acrtec Inc. while it was sponsoring tests in his lab in 1991 and 1992 BRAD's president, Dr. John Foker, said he was unaware of Bianco's Aortec relationship unti the newspaper asked about it. But he and university officials said the rules on consulting dont cover Civil Service employees, such as Bianco. Foker and Bianco discounted the possibilty that the tests could have been biased in favor of the company. ‘tthe same time, Bianco has been collecting two salaries for working in his lab, one from the university and one from industry money funneled through BRAD. He also used $16,000 in corporate funds last year for trips to professional meetings around the country. Bianco kept the books for the program, which was never audited until late this year. Foker, who helped found BRAD, insists that the company was set Up to assure confidentiality for its clients, not to evade scrutiny But last week, after the Star Tribune raised questions about it, he announced that BRAD had started routing allits research contracts through the university checkpoints for review and approval. (ther faculty members have avoided the system in other ways. (One group in the Surgery Department formed a corporation and limited partnership to act as a go-between in selling technology to industry. The unusual arrangement, led by Dr. Henry Buchwald, makes it possible for the scientists to make more money than ifthe University sold their inventions directly to corporations. ‘The university sad it agreed to the arrangement because its own research office had been unsuccessful in selling technology. "This is an experiment and is being monitored closely,” it said in a ten statement In one of the Surgery Department's biggest programs, which manufactures the transplant drug ALG, top officials have taken part in a two-decade history of breaking the law. Financial controls were 0 loose that they stil cannot explain a $4 million gap between its reported expenditures and reported profits ‘A Medical Schoo! neighbor, the College of Pharmacy, allegedly ‘came up with another ingenious way to make money. Four years ago, facuty membersin the pharmacy practice division were asked to list corporate research grants asttheir own personal donationsto a fund-aising campaign, according to several members who opposed the plan, Page § of 8 © 2014 Factiva, Inc. All rights reserved,‘The main reason, the ciics say, was to make the contributions eligible for state matching funds, which are granted for private gifts but not for corporate research grants. The atrangement also would have shielded the research from review. Records show that at least seven faculty members contributed {$192,000 in their own names. ‘A number of faculty members complained that the fundaising tactic was unethical, and Vice President Robert Anderson began an investigation. But he found no wrongdoing, according to a spokeswoman. "Im teling you that the people who gave the money did ‘ot break the rules," said Sally Howard, crector of health-sciences public relations. Anderson deciined to be interviewed But at least one pharmacist who made a contribution, Nina Graves, said Anderson never questioned her. Asked whether her ait was industry money, she refused to say. Tolerating conticts Even when university officials are watching, they/re sometimes reluctant to act, and they have a right under the rules to look the other way, ‘Although the regents have reformed the rules 13 times since the early 1980s, they stil allow fundamental conflicts of interest ‘among facuity members, as long as they're disclosed and approved by atop official. And Medical School officials seldom find a conflict that is serious enough to stop. ‘After the Endotronies disaster, for example, Bach wert on to involve himsetfin another potential conflict with industry. He would consut for a company supporting his research. The watchdog ‘committee warned that t could lead to future abuses and "cast a shadow on the integrity ofthe university.” But i was approved anyway. Sometimes, the review committees arentt given access to the material they need to make judgments. Last spring, Medical School officials strongly defended Dr. David Knighton, an associate professor of surgery, when the Star “Tribune disclosed how his conflict of interest had helped him become a milionaire from an unproved wound-healing drug called Procuren. ‘They said an outside committee of experts, appointed by Nejaian, found no evidence that his financial interest -as founder and leading stockholder of the company making the drug - ever affected his objectivity as a scientist. But the committee knew nothing then about an early challenge to his Procuren studies by two of his own researchers. Page 6 of 8 © 2014 Factiva, Inc. All rights reserved,Dr. Lynn Vaughan, a dermatologist, says she was removed from the studies when her wound evaluations didnt necessarily match his expectations. And Lori Austin, @ nurse who was then study ordinator, told Knighton she disagreed with his definition of ealing” because it included some wounds that were stil draining. She quit shortly after, in part because of the dispute ‘Asked about those allegations, Knighton issued a written Statement saying: "Neither Dr. Vaughan nor Lori Austin raised any questions with me" about the studies. He said that the assertions are false, and that "My studies of Procuren are sound.” (other universities get tough Hasselmo has argued thet ifthe university makes the rules tough enough to stop such conflicts it will choke off the good projects with the bad But two of the most prestigious schools in the country have taken a much stricter approach. ‘At Johns Hopkins University in Maryland, the medical school {otbids professors from owning stock in companies that support their research. The Massachusetts Insitute of Technology does the same, even though it has more partnerships with industry than any other university ‘The federal government is talking about getting tougher, although it has backed down once already from a strong policy. The National Institutes of Heaith and the National Science Foundation are drafting new confict-of interest polices for scientists seeking federal grants. An NIH official said the rules willbe aimed at preventing scientists from using the grants to further private interests. ‘The University of Minnesota may yet improve its enforcement ‘Two committees are reviewing their policies. And Anne Petersen, the newly appointed vice president for research, says she wants to see tougher rules to help protect the integrity of the facuity as well as the university. Above the rules? But some scientists bristle atthe very idea that they need such restrictions. And others have acted as though the rules that apply to everyone else dontt cover them ‘Aste Star Tribune disclosed earlier, the Surgery Department ‘Simply ignored federal laws and government wamings while it sold the popular ALG drug without approval. Federal authorities are investigating for possible criminal acts But not everyone in academia believes that scientists should be held to a lower standard, especially when it comes to conficts of interest Page of 8 © 2014 Factiva, Inc. All rights reserved,"The most widespread ethical concern in universities today is confit of interest," wrote Rabert L. Park, a physics professor at the University of Maryland, in a recent essay in an educational journal. "The potential for abuse is ob ious when faculty members become involved in businesses that exploit thei research results." ‘Adhur Caplan, the director of biomedical ethics atthe University of Minnesota, put it more bluntly: "ff you cant bring yourself to part with your stock or fat consuiting fee, then you ‘houldnt expect anyone to trust what you have to say about the effectiveness of a drug, device or medical product. Disclosure is not enough.” Document msp0000020020328docv02j9m Search Summary [Text lendotronics Date lan Dates Source lal Sources [author [al Authors [Company [all Companies Subject fall Subjects industry Jal industries Region [al Regions Language English Page 8 of 8 © 2014 Factiva, Inc. All rights reserved,