posted
Just an FYI. There are many articles on this topic out there. The MSNBC one major advantage over many others - no registration required. It's worth doing a search on this if you're interested - unlike many stories where everyone copies an AP story, there are many reporters writing on this one. So different points and quotes are used from article to article.
quote: Restrictions on outside income meet with derision at meeting By Rick Weiss
Updated: 5:08 a.m. ET Feb. 3, 2005
WASHINGTON - National Institutes of Health Director Elias A. Zerhouni stood before hundreds of NIH employees yesterday to explain why it had become necessary for him to impose, in his words, "drastic" restrictions on stock ownership and other forms of outside income, which take effect today for all agency employees.
"What I'm asking you to do is hold your fire until you hear the details," he told the crowd assembled in an auditorium on the agency's Bethesda campus.
They held.
And when he was done, they let him have it.
quote:The event, which NIH officials dubbed a "town hall meeting" for employees, marked an extraordinary climax to a convoluted tale of science, politics and money that had grown increasingly unmanageable in recent months. After trying to "stand up for his troops," Zerhouni said, he was "shot in the back" with the discovery, made by congressional investigators, that more than 100 NIH employees had not disclosed various relationships they had with pharmaceutical and biotech companies, in violation of government ethics rules.
quote: Most irritating, apparently, is the rule that will require thousands of employees -- and their spouses and dependents -- to divest themselves of all stock holdings in drug, biotech and other medically oriented companies. Even lower-ranking employees with no influence on grants or policies will be limited to individual holdings of $15,000.
All are required to make those divestitures within 90 days, at a time, as one speaker put it, that much of that industry "is at the bottom of a cycle."
"This is going to make it difficult to participate in an ownership society," quipped David Levens, an investigator at the National Cancer Institute, to a burst of applause -- a not-so-subtle reference to President Bush's recent exhortations to revamp Social Security in ways that would get Americans more involved in the stock market, not less.
Like I said, there are other examples out there of some of the stuff that brought this to a crisis. One staffer was working with one company on a grant in his role as an NIH staffer and also consulting privately with a competitor. A few were receiving stock options, consulting fees, and other perks that were pretty staggering.
The NIH staffers also rightly point out that University researchers don't have these restrictions (which is a whole other big ethical issue) and resent being singled out.
Kind of fascinating if you like this kind of thing...
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posted
It's going to be a lot like the Windfall exclusion act.
Someone notices something unethical and unfair - like people getting both huge pensions and huge social security earnings, or capitalizing on government grant research by cashing in on pharmaceutical stock options.
Then, they pass a law that is intended to correct it - but it's over-reaching, and instead of just correcting the main problem - that of the corrupt abusers of the system - it also punishes people who never did anything wrong, and now have to suffer for it.
So, fire fighters and school teachers and other public servants don't get social security when they retire, even though they qualified for it by working two jobs to support their families, and some low-level administrative assistant at the NIH with no influence whatsoever, whose husband had invested their retirement in stocks, has to pay the penalty for taking all their money out of those stocks.
posted
It's radical, but in a way, an impressively responsible act. Belle, there is going to be a penalty for any action, and if NIH is going to take it's responsibility as an unbiased instituted seriously, it has to make these kind of requirements of the employees.
It's bloodletting, but it's better than knowing that NIH is serving some corporate influence. If the transition cost weren't so awful, I'd support the law unequivocally. There are other ways to make money on the market than in drug and medical companies. It's a reasonable requirement imposed at an infelicitous time.
Does anyone know how long the employees have to divest themselves of the stocks?
WASHINGTON — When a group of senior government scientists announced their opposition to new and restrictive conflict-of-interest rules at the National Institutes of Health last week, they complained that the agency's mission was in danger of being irreparably compromised.
They said the new rules, which ban NIH employees from accepting consulting fees or stock options from biomedical companies, would victimize even food handlers and elevator operators.
But unmentioned in their prepared statement was another, more personal impact: One-third of the 18-member executive committee leading the dissidents has accepted consulting fees or stock options from biomedical companies in recent years, records show.
The fees totaled more than $400,000, according to the records. One committee member received stock options for 500,000 shares as compensation from a company.
quote: Four months ago, 180 staff scientists signed a letter to Zerhouni urging him not to embrace tougher rules that they say would render them "second-class citizens" by reducing their outside activities. Among those who signed the letter was Dr. H. Bryan Brewer Jr., who had helped draft national guidelines urging more aggressive use of drugs to lower cholesterol while collecting stock options and about $114,000 in consulting fees from companies making or developing cholesterol medicines.
Last March, about a dozen NIH scientists voiced opposition to tighter rules during public sessions of a blue-ribbon committee that was appointed by Zerhouni to evaluate the agency's policies.
Among those who spoke in opposition was Dr. Lance A. Liotta, a laboratory chief at the National Cancer Institute. Interviews and government records would later show that Liotta — while leading the government's collaboration with a Maryland company to develop a test for early detection of ovarian cancer — had accepted $70,000 in fees from a competitor firm. Liotta did so with the approval of his supervisors at the National Cancer Institute.
posted
Does this prohibit ownership of shares in mutual funds that invest in these companies? If so, a lot of people's retirement plans could be screwed up.
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quote:Does this prohibit ownership of shares in mutual funds that invest in these companies?
That's a great question. Mutual funds are usually brokered through a third party, right, so can Solomon Brothers, or whoever, work with NIH to surgically extricate the medical interests from the retirement fund and disperse the money through the other stocks?
posted
I would like to know that too...I imagine that it won't affect funds, because that would be harder to use as a bribe.
Lets not forget this folks...a lot of those people were "on the take", and that is what is really irresponsible about all of this. They were being paid by the NIH, and recieving grants for their research, while the companies who make the very drugs they were testing were paying them large amounts of money...either in cash or by stock options.
posted
Could they maybe, perhaps on a case-by-case basis, compensate or alleviate for those whose retirement gets screwed up?
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