Seattle Times is thinking Pulitzer today with its release of a story based on its major investigation of physician complicity in one of the most amazingly unethical activities ever.

The practice of selling drug secrets, The Times found, is being driven by hedge funds, the largely unregulated investment pools that cater to the super-rich. Hedge funds can make money with aggressive strategies that exploit quick price swings in stocks, and the volatile biotech industry provides many such opportunities.

A single drug’s prospects can determine whether a small biotech company’s stock soars or plummets, so any inside information provides a potent investing edge.

Such information is so valuable that elite investors pay up to $1 million a year to firms known as matchmakers, which pair Wall Street firms with doctors involved in ongoing drug research. Gerson Lehrman Group, the largest matchmaker, claims to have 60,000 doctors available to speak to Wall Street, double the number from three years earlier…
Matchmakers typically pay doctors $300 to $500 an hour to talk to elite investors. Some doctors said they can make tens of thousands of dollars a year from such talks.

Drug-company executives say they know about the practice but can’t crack down on the doctors they rely upon for conducting patient testing.

One experienced research analyst at a major brokerage firm said he’s studied “elicitation techniques” taught to FBI and CIA interrogators.

“We get them to talk about the weather, or the Mariners, then you pop in your one innocent question you want to know about,” said the analyst, who spoke on the condition that his name not be used. “Then you switch back to whatever it was you were talking about before. When the doctor hangs up, he thinks he’s had a nice conversation about the weather or the Mariners.”

Writes Art Caplan: This story has been brewing for some time now and it is an ethical doozy! The Seattle Times has found that some members of data safety and monitoring committees are leaking information to investment companies and Wall Street firms. Finding out what is going on in a clinical trial prematurely smacks of insider trading. It should draw the attention of Attorneys General in many parts of the United States. And it is clearly, inarguably and obviously unethical.