More doctors consulting for Wall Street, study finds

About one in 10 American physicians have become paid consultants to Wall Street in the past few years, a practice that gives some investors an edge but can create legal and ethical problems for doctors, according to a study published yesterday in the Journal of the American Medical Association.

In the first academic study of its kind, written by Dr. Eric Topol of the Cleveland Clinic and Harvard professor Dr. David Blumenthal, the authors found about 75,000 expert clinicians and researchers now consult for hedge funds, stock analysts, venture capitalists or other sophisticated investors.

That's up from 15,000 doctors who consulted in 2002, and fewer than 1,000 in 1996.

Topol, an eminent cardiologist, said he was motivated to look into the connections between physicians and Wall Street after an article in Fortune magazine in December exposed his ties to a hedge fund.

Wall Street investors are eager to connect directly with top physicians like Topol, in order to make smarter investments in pharmaceutical and biotech companies.

The investors, who will pay thousands of dollars for access to a Rolodex of expert physicians, have nurtured a new industry of middlemen who recruit doctors and typically pay them from $200 to $1,000 an hour to answer questions.

Foremost among these middlemen are Gerson Lehrman Group, which says it has 60,000 physicians in its network, and Medacorp, a unit of brokerage firm Leerink Swann,which has signed up 15,000.

Through the rapid growth of such firms, "The relationship of physicians with financial entities has been radically transformed," according to the paper.

There are potential land mines in such relationships, though some physicians may not think they create conflicts of interest, Topol said.

He said physicians could be unwittingly lured into violating federal insider-trading law or breaking their confidentiality agreements with research sponsors.

Also, getting a leading academic physician, like Topol, to say positive or negative things about a drug or device in development "can have a major effect on the financial fortunes" of investment firms who have a stake in companies developing those products, the report said.

Dr. Catherine De Angelis, editor of the Journal of the American Medical Association, said she was amazed to read about the extent of physician consulting with investment firms. "It is hard to believe," she said.

De Angelis said physicians should not consult for Wall Street funds.

"I think it's wrong for physicians to provide that kind of information," she said. "That's not what physicians should be doing. We should be helping to take care of patients, right there in the trenches, or helping to develop new drugs or methods so patients get better care."

Topol himself came under fire after Fortune wrote a story about his relationship with a Connecticut hedge fund, Great Point Partners. In an interview, Topol said his consulting deal focused on his general views of the future of cardiology, not specifics about a drug or device he was studying.

He said he agreed to advise the fund because he was impressed by a smart physician who agreed to pay for limited amounts of his time.

Topol said he had no idea how the fund used his advice in the stock market, and he never gave out proprietary knowledge.

He cut his ties when he learned the firm was claiming its physician experts helped it get a leg up by providing information in advance of major medical meetings.

In the journal article, Topol recommends doctors try to minimize the risk of such consulting deals. He said doctors should start disclosing their financial-industry consulting deals in published journals and in speeches.

He also said medical institutions should review the contracts, which is not typically done.

In an interview, Topol took his advice to fellow physicians a step further. "The best thing is to stay away from these relationships," he said.

One of the firms that connects physicians and investors, Clinical Advisors of New York, said many physicians rebuff its advances, but others who have joined its network of 10,000 physicians are satisfied.

Albert Sebag, chief executive of Clinical Advisors, said its physicians are asked to promise they won't discuss anything that is proprietary.

Sebag said the relationships are symbiotic: Investors get information to make better decisions, while "for the physician, it's great. You get to speak on the phone with an intelligent investor, have a stimulating conversation, and get paid for it."

He said such information sharing has been going on forever; his company and others like it have just made the conversations more organized and efficient.

Arthur Caplan, a bioethicist at the University of Pennsylvania, said doctors should avoid such consulting deals with investors.

"Ethically, it's very suspect if you're being paid to give information to investors that the general public doesn't have," Caplan said.

"You could call it good research, but you could also call it paying for inside information. These investors are always on the prowl to get inside information."

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com