Yet Another Species of Health Care Conflicts of Interest: Contract Research Organizations Which Invest in Biotechnology Companies

The St. Petersburg (Florida) Times has an interesting story about the relationships between contract research organizations (CROs) and biotechnology and pharmaceutical companies.

Like many startup businesses, Accentia BioPharmaceuticals of Tampa was long on dreams but short on cash.

It held the license to an experimental sinus drug that looked like a potential blockbuster. But the company needed serious bucks to get the product to market.

Accentia found an investor in PPD Inc., a company that specializes in running the studies that must be conducted before regulators can approve a drug.

A year after recruiting PPD as an investor, Accentia went looking for someone to run the all-important trials proving the safety and effectiveness of its sinus drug.

Guess who got the job.

Now PPD is not only the second-biggest investor in Accentia, it also is handling the final preapproval studies of Accentia’s new drug, SinuNase.

If the PPD-run trials result in the drug being approved by the Food and Drug Administration, financially strapped Accentia will be on its way to tapping a billion-dollar market of folks with chronic sinusitis. And PPD will get 14 percent of the royalties.

Is that a conflict of interest?

The FDA doesn’t think so.

The agency requires doctors to disclose any financial interest in drugs they are testing on patients, but it doesn’t even gather such information from companies like PPD.

Charged with protecting the public, the FDA gets most of its drug approval budget from pharmaceutical companies. Increasingly, those companies have been foisting off the drudgery of running drug trials onto companies like PPD, which are called contract research organizations.

But now, instead of just being paid to conduct a study, some CROs are taking a stake in a trial’s success. This does not concern the FDA’s senior adviser for clinical science, Dr. David LePay.

‘We assume CROs have a financial interest in the compounds they’re testing,’ he said.

As proof the system is working, LePay noted how rarely the government finds fraud in clinical trials: ‘We only find it in 1 to 2 percent of inspections.’

Others say those numbers prove something altogether different: that the regulators’ focus is on approving, not challenging clinical studies.

‘The FDA does not have the resources to inspect all clinical trial sites or even a major fraction of them,’ said Dr. David Ross, who was with the agency’s drug review office for a decade. ‘And if you don’t look for fraud, you won’t find it.’

We should note that Pharmaceutical Product Development Inc (PPDI) was the CRO that ran a very questionable trial of the drug Ketek (see our most recent post here).

It turns out that PPDI’s involvement with Accentia is not an isolated occurrence.

Most preapproval drug testing used to be done in academic institutions, directly under the control of the drug companies. Now most trials are performed in regular doctors’ offices around the globe, and contract research organizations handle a major chunk of the work. As hired hands for the pharmaceutical industry, last year the companies generated some $15-billion in revenue.

Head and shoulders above the competition in terms of size are PPD and its chief rival, Quintiles Transnational Inc. Together their more than 25, 000 employees oversee thousands of clinical trials in more than 50 countries.

The two companies have distinguished themselves by offering clients a particularly attractive feature: money.

PPD, with $1.3-billion in revenue last year, has made four investments, including the one with Accentia. Through these “compound partnering” alliances, PPD said that last year it reaped $94-million in related clinical trial business. The company declined to comment for this story.

Quintiles, with $2-billion in revenue last year, started investing in up-and-coming drugs in 1999. Last year the investment division, called NovaQuest, teamed with a giant $5.8-billion venture fund to give it access to additional capital to invest. To date, NovaQuest has committed $2-billion to dozens of partnerships, including 26 deals with small biotechs.

Not surprisingly, CRO executives think that they can have such relationships without generating conflicts of interest.

Ron Wooten, the 49-year-old president of NovaQuest, said his company deals with the same potential conflicts of interest a drug company has when it oversees trials of compounds it owns.

‘You manage that conflict by having fire walls around all information and strict confidentiality across all functions,’ he said. ‘Nobody on my staff talks to operations about there being higher stakes in a program when we have an investment. That never happens.’

But not all agree.

Arthur Caplan, professor of bioethics at the University of Pennsylvania, said federal regulators need to pay more attention to contract research organizations. Even if they don’t invest in a drug under review, the companies have an incentive to get patients enrolled and tests completed fast, he said. Timely, trouble-free trials are the ticket to the next contract.

‘CROs stay in business by hitting the numbers,’ Caplan said.

And when a trial monitor has a financial interest in a drug study’s outcome, as PPD does with SinuNase: ‘That’s a big ethical no-no,’ Caplan said. ‘They should never be reviewing anything in which they have a direct financial interest.’


Dr. Marcia Angell, senior lecturer at Harvard Medical School, doesn’t buy it. She said having drug companies or their proxies in charge of drug trials means the entire system is corrupt, ‘from stem to stern.’

‘It’s a house of cards built on a fundamental conflict of interest,’ said Angell, former editor of the New England Journal of Medicine and author of The Truth About the Drug Companies: How They Deceive Us and What to Do About It.

‘The problem is that drug companies have inordinate influence over the evaluation of their own products. That, on the face of it, doesn’t make sense.’

We have posted before about major problems with how CROs conduct research. Other than the story of how PPDI ran trials of Ketek, there were, for example, the disastrous trial of TGN 1412 run by Parexel International (see most recent blog post here), and the clinical trials by SFBC International (now Pharmanet) that infected multiple participants with tuberculosis (most recent blog post here).

The St Petersburg Times seems to have uncovered yet another species of conflict of interest affecting health care, and particularly affecting clinical research. In a way, this is akin to the conflicts that occur when academic researchers who are paid part time, usually as consultants or members of speakers’ bureaus, by a given drug, biotechnology, or device company also conduct human research on that company’s products. The concern is that their financial arrangements will influence how they design, carry out, and disseminate this research. The potential research biases induced by such arrangements ought to be clearly disclosed to the humans who volunteer to participate as research subjects.

Similarly, the potential research biases induced when a contract research organization has an ownership interest in the drug, biotechnology, or device company whose products it is supposedly dispassionately evaluating ought to be clearly disclosed to the human subjects of such research.

Finally, this is a reminder that patients and physicians ought to be highly skeptical about the results of clinical research carried out by people and organizations which may have financial relationships with the companies that produce the products their research is supposed to to evaluate.

And it is another reminder that for the good of research subjects, of clinical science, and of patients in general, we ought to consider how to make sure that all human research is done by people who do not have conflicts of interest, especially those that link the researchers to the manufacturers of the products or the providers of the services their research is meant to evaluate.