Leading Professors Getting Paid Thousands by Big Pharma

Emily Scott at her home in the Cumberland Gap region of eastern Tennessee. Scott was denied the treatment for hepatitis C by Tennessee’s state Medicaid program. (Ben Corda for ProPublica)

The professors’ disclosure of their ties to the firm and to the pharmaceutical industry in scholarly articles is inconsistent: sometimes extensive, sometimes scanty. Members of Precision Health tend to reveal less about their paid work in blogs, public forums like conferences, and legislative testimony. At the Capitol Hill briefing last May on hepatitis C drugs, Lakdawalla didn’t mention his affiliation with Precision Health Economics, though it was listed in the journal issue, which was provided to attendees.

“Conflicts are always a concern, which is why it is important to be transparent about study methods — that way they can be scrutinized and debated in the academic literature,” said Lakdawalla, adding that he has disclosed his ties to the firm in at least 33 publications over the past three years.

Goldman said he and other academics at Precision Health Economics disclose their ties whenever appropriate, but typically journal editors and conference sponsors decide how to make that information available. “I wear two hats,” Goldman said in an interview. “And I try to reveal what that might mean in terms of perceived conflict of interest.”

The issues at stake aren’t just academic. Goldman says that pharmaceutical companies need to reap financial rewards from the enormous time and expense they invest in developing better medical treatments. Yet the high prices of some drugs have left government health programs strapped, or forced them to limit coverage. For example, one promising hepatitis C treatment is so expensive that some state Medicaid programs have chosen to cover its cost for only the sickest patients.

“Triage, triage, triage,” said Emily Scott, a Tennessee factory worker with hepatitis C who was denied coverage for the new treatment. “They set their price so high that we poor folks can’t afford it.”

Despite such cases, four researchers from Precision Health Economics warned in an article last month that any government controls on drug prices could actually shorten the average American’s life by two years by discouraging development of new drugs.

“As the pace of innovation slows, future generations of older Americans will have lower life expectancy relative to the status quo,” they wrote. The article, funded by the pharmaceutical trade group PhRMA, was published in Forum for Health Economics & Policy, of which Goldman is the editor-in-chief and co-founder. More than half of the editors listed on its masthead are current or former consultants at the firm.

Just after Precision Health Economics co-founder Dana Goldman completed his Ph.D. in economics at Stanford, in 1994, he was diagnosed with type 1 diabetes. He was 29 years old. With a pump he wears every day, he takes insulin to treat the disease.

“I would pay hundreds of thousands of dollars if I could take one pill that would make me better,” Goldman said.

His desire for a cure led to a new scholarly interest: the economics of medical innovation. Because there were few government funders for research in the field, he turned to industry. In 2005, Goldman established the firm with Lakdawalla and Philipson.

The headquarters of Precision Health Economics sits in a West Los Angeles office building flanked by palm trees, about 10 miles from Goldman’s academic center at USC. Goldman’s assistant at USC is also an executive assistant at the consulting firm. Daniel Shapiro, director of research compliance at USC, said that both Goldman and Lakdawalla were in compliance with the university’s standards on consulting.

Precision Health Economics has counted at least 25 pharmaceutical and biotech companies and trade groups as clients. The roster includes Abbott Nutrition, AbbVie, Amgen, Biogen, Bristol-Myers Squibb, Celgene, Gilead, Intuitive Surgical, Janssen, Merck, the National Pharmaceutical Council, Novartis, Otsuka, Pfizer, PhRMA, rEVO Biologics, Shire and Takeda. The firm has 85 staff members in nine locations.

Over the years, the founders recruited an impressive cadre of high-profile academics to consult for these clients. Early in 2016, the firm boasted more than two dozen academic advisers and consultants from top universities on its website. (The site later stopped identifying professors by their university affiliations.) The list of associates has also included some policy heavyweights who recently left the government, including a top official from the Congressional Budget Office, a senior economist from the White House’s Council of Economic Advisors, and an FDA commissioner. About 75 percent of publications by the firm’s employees in the past three years have either been funded by the pharmaceutical industry or have been done in collaboration with drug companies, a ProPublica review found.

Some academics worry that a tight relationship with industry might suggest bias. “I personally find, when your enterprise relies so substantially on a particular source of funds, you will tend to favor that source,” said Princeton economist Uwe Reinhardt.

Goldman says his industry connection has helped him ask better questions.

“The right way to do these things is not to push away the private sector, but to engage them,” he told ProPublica. “If we end up with a world where everyone who has a voice in a debate must be free of perceived bias, we lose the importance of the diversity of ideas.” In a later interview, he added, “You have to separate the appearance of the bias with actual bias.”

These ideas were recently echoed in an op-ed that he wrote with Lakdawalla in the online publication The Conversation.

“To be sure, collaboration with industry supplements our income through consulting fees. But no matter who funds our research — foundations, government, or companies — we apply the same template to our work,” wrote Goldman and Lakdawalla. “The ivory tower is not always the best place to understand the social benefits of treatments, the incentives for medical innovation, and how aligning prices with value can aid consumers.”

Engaging the private sector has indeed boosted Goldman’s income. According to federal conflict of interest forms filed last year, when he served on an advisory panel to the Congressional Budget Office, Goldman earned consulting income from the firm in the range of $25,000 to $200,000, on top of his income as a USC professor. He also has more than $500,000 in equity in the firm. Precision’s Harley says Goldman and Lakdawalla each have equity stakes of less than 1 percent, indicating that the firm is worth at least $50 million. Lakdawalla and Philipson have not publicly disclosed their consulting incomes.

In April 2015, Precision Health Economics was acquired by a privately held biotech company, Precision for Value. Terms weren’t disclosed.

Precision for Value, the parent company of the health economics firm, lays out its approach for conducting research for its biotech clients, which includes assessing the price of medical treatments.

Precision Health Economics raised its profile in 2013 when the president’s annual economic report cited a cancer study by several of the firm’s principals and consultants. To some critics, though, the study showed how industry funding can taint academic research.

Originally published in Health Affairs, where Goldman also serves on the editorial board, the study found that Americans paid more for cancer care than Europeans but had better survival gains.

As the study acknowledged, it was funded by Bristol-Myers Squibb, a company that at the time was developing a much-anticipated cancer treatment. It was priced at more than $150,000 per year when it eventually came on the market. All three founders of Precision Health Economics were listed as authors of the Health Affairs article, alongside one of their employees, yet none of the founders disclosed their ties to their consulting firm in the published study. In an interview, Goldman said this might have been an “oversight.”

Goldman later emailed ProPublica to clarify that the journal was aware that the study was a Precision Health Economics publication and that Goldman and his co-founders were affiliated with the firm. Goldman has published more than 25 articles and letters to the editor in Health Affairs since co-founding Precision Health Economics, and only five have listed the connection.

“This affiliation is clearly not a secret and I include it where relevant,” Goldman wrote in the email. “The bottom line is that disclosure policies vary across journals, journal editors, and over time. Definitions of what is ‘relevant’ are also subject to their own judgments.”

Originally published as “Big Pharma Quietly Enlists Leading Professors to Justify $1,000-Per-Day Drugs” on ProPublica

Written by Annie Waldman

Annie Waldman is a reporter covering education at ProPublica. She recently graduated with honors from the dual masters program at Columbia’s School of International and Public Affairs and the School of Journalism, where she was a recipient of the Pulitzer Traveling Fellowship. Her work has been published with the BBC, Vice, Mic, and The New York World.