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Boston Globe Investigation Finds Many Boston Hospital CEOs Also Sit on Healthcare Company Boards

Cozy relationships between hospital chief executives and healthcare companies they do business with may raise ethical questions

If hospital employees, including pathologists, wonder why their hospital uses a certain company’s products and services it may be because their Chief Executive Officer (CEO) sits on the Board of Directors of the same companies from which the hospital buys products and services. That’s the suggestion in a recent Boston Globe investigative report.

In “Boston’s Hospital Chiefs Moonlight on Corporate Boards at Rates Far Beyond the National Level,” The Boston Globe reported that, in Boston, hospital CEOs at the city’s academic medical centers frequently sit on the boards of healthcare companies with which their hospitals do business. However, because the investigative reporters did not list the healthcare companies which had Boston hospital CEOs as board members, clinical laboratory managers and pathologists cannot determine from the article if their medical laboratories are using products from those same companies.

According to The Globe, five of seven CEOs and Presidents of Boston’s major teaching hospitals also receive compensation for serving as directors of publicly traded companies. And in their roles as corporate board members, hospital CEOs often receive stock in these companies, making the value of their remuneration potentially worth millions of dollars, The Globe reported.

Not Illegal, But Is It Ethical?

The Boston Globe’s investigation noted that such moonlighting, while not unheard of elsewhere in the country, is commonplace in Boston, raising ethical concerns despite conflict-of-interest policies aimed at limiting outside relationships.

“Hospitals in Boston and elsewhere that allow this outside corporate work do so under the terms of conflict-of-interest policies,” The Globe reported. “A Globe review of more than a dozen hospital conflict-of-interest policies across the country found more similarities than differences. Almost all require hospital trustees to approve a hospital chief’s outside board work and consider certain factors, such as the amount of business a company does with the hospital and time required.

“But the policies offer limited evidence about actual practices,” The Globe added. “Trustees typically retain significant discretion over what is permitted or barred, and their deliberations are generally hidden from the public. It is hard to tell if the relative rarity of hospital chiefs in other cities holding outside directorships is because of a lack of interest or opportunity, or is the result of trustees saying no.”

One of the hospital chief executives The Globe’s investigation highlighted was former-Boston Children’s Hospital CEO Sandra Fenwick. While there, The Globe noted, she also held a seat on the board of for-profit telehealth company Teledoc Health, and during her tenure as Children’s CEO, she lobbied Massachusetts legislators for telehealth funding at the start of the COVID-19 pandemic.

Though no laws were broken, some questioned the ethics of such actions. Nevertheless, The Boston Globe wrote that “Debra O’Malley, a spokesperson for Secretary of State William Galvin’s office, said Fenwick’s actions did not appear to violate the law: She is required to disclose in writing to the state that she is a lobbyist for the hospital and the bills she lobbied on, which she did, O’Malley said. That information is publicly available.”

And though The Globe reported that Boston Children’s Hospital had “declined to answer detailed questions about [Fenwick’s] lobbying efforts,” the paper wrote that a hospital spokesperson said, “[Fenwick’s] directorships are publicly disclosed in filings with the Securities and Exchange Commission.”

Fenwick retired from Boston Children’s Hospital in March 2021. The Globe noted that at that time her Teledoc Health stock, which was compensation for her board work, was worth $8.8 million. Additionally, she had been paid $2.7 million annually as CEO of Boston Children’s Hospital.

carl-elliott-md-phd-at-podium
“It does seem like buying influence and it’s hard to imagine what else it would be,” Carl Elliott, MD, PhD (above), Professor in the Center for Bioethics and the Department of Pediatrics at the University of Minnesota told BioPharma Dive. “If you’re actually trying to buy scientific knowledge, then you wouldn’t really be going after CEOs. What they have is power.” (Photo copyright: Boston University.)

Avoiding Conflicts of Interest

Bad optics created by a Boston hospital CEO receiving seven-figure compensation for serving on the board of directors of a publicly traded company is not new. In July 2020, former Brigham and Women’s Hospital President Elizabeth Nabel, MD, resigned from the board of biotech company Moderna (NASDAQ:MRNA) “to alleviate any potential concern about the conduct or the outcome of the COVID-19 vaccine trial when Brigham and Women’s Hospital was identified by NIH as one of the clinical sites for the Phase 3 trial,” a Moderna press release states.

On March 1, 2021, Nabel also stepped down as Brigham and Women’s Hospital president. She then rejoined the Moderna board of directors on March 10, 2021, the press release noted.

In a STAT editorial, titled, “Hospital CEOs, Med School Leaders Shouldn’t Sit on For-Profit Health Care Company Boards,” endocrinologist and former Dean of Harvard Medical School Jeffrey Flier, MD, wrote, “As dean, I vigorously supported the value of robust interactions between faculty and industry to advance innovation and human health, and still do. In my current status as a professor of medicine at Harvard, I serve on several for-profit and not-for-profit boards. I learn from this work, and I believe I am making useful contributions as a board member. But I also believe that the considerations governing such relationships should be judged differently for institutional leaders.”

Flier maintains there are multiple reasons why hospital and medical school leaders should not sit on for-profit boards despite the expertise they bring to the table, including:

  • The time commitment required,
  • The “extraordinary compensation packages” they receive in their full-time jobs,
  • The potential for complicated “business intersections,” and
  • The risks to an “institution’s reputation for integrity.”

“I recommend that hospital CEOs and academic leaders at the level of Deans and Presidents devote their full attention to their well-compensated day jobs and defer positions on the boards of for-profit companies—and the unavoidable conflicts they raise—to the post-leadership phase of their careers,” Flier wrote.

While cozy relationships between hospital and academic medical center leaders and for-profit healthcare companies may not directly impact hospital pathologists and staff, it is worth staying aware of potential conflicts of interest.

Andrea Downing Peck

Related Information:

Boston’s Hospital Chiefs Moonlight on Corporate Boards at Rates Far Beyond the National Level

Elizabeth Nabel Steps Down as President of Brigham and Women’s Hospital to Team Up with Husband’s Biotech Joint–Report

Betsy Nabel, MD, to Step Down as President of Brigham Health

Dr. Elizabeth Nabel Rejoins Moderna’s Board of Directors

Hospital CEOs, Med School Leaders Shouldn’t Sit on For-Profit Health Care Company Boards

Advances in Gene Sequencing Technology Enable Scientists to Respond to the Novel Coronavirus Outbreak in Record Time with Medical Lab Tests, Therapies

Scientist described the speed at which SARS-CoV-2’s full sequence of genetic material was made public as ‘unprecedented’ and medical labs are rushing to validate tests for this new disease

In the United States, headlines scream about the lack of testing for the novel Coronavirus disease 2019 (COVID-19). News reporters ask daily why it is taking so long for the US healthcare system to begin testing large numbers of patients for SARS-CoV-2, the virus that causes COVID-19. Yet, pathologists and clinical laboratory scientists know that new technologies for gene sequencing and diagnostic testing are helping public health laboratories bring up tests for a previously unknown new disease faster than at any time in the past.

At the center of the effort to develop accurate new assays to detect SARS-CoV-2 and help diagnose cases of the COVID-19 disease are medical laboratory scientists working in public health laboratories, in academic medical centers, and in research labs across the United States. Their collective efforts are producing results on a faster timeline than in any previous discovery of a new infectious disease.

For example, during the severe acute respiratory syndrome (SARS) outbreak in 2003, five months passed between the first recognized case of the disease in China and when a team of Canadian scientists cracked the genetic code of the virus, which was needed to definitively diagnose SARS patients, ABC News reported. 

In contrast, Chinese scientists sequenced this year’s coronavirus (originally named 2019-nCoV) and made it available on Jan. 10, 2020, just weeks after public health officials in Wuhan, China, reported the first case of pneumonia from the unknown virus to the World Health Organization (WHO), STAT reported.

Increases in sequencing speed enabled biotechnology companies to quickly create synthetic copies of the virus needed for research. Roughly two weeks later, scientists completed sequencing nearly two dozen more samples from different patients diagnosed with COVID-19.

Molecular biologist Kristian Andersen, PhD (above right, with graduate students who helped sequence the Zika virus), an Associate Professor in the Department of Immunology and Microbiology at Scripps Research in California and Director of Infectious Disease Genomics at Scripps’ Translational Research Institute, worked on the team that sequenced the Ebola genome during the 2014 outbreak. He told STAT that the pace of sequencing of the SARS-CoV-2 coronavirus is “unprecedented.”  (Photo copyright: Scripps Research.)

Lower Sequencing Costs Speed COVID-19 Diagnostics Research

Additionally, a significant decline in the cost of genetic synthesis is playing an equally important role in helping scientists slow the spread of COVID-19. In its coverage of the SARS-CoV-2 outbreak, The Verge noted that two decades ago “it cost $10 to create a synthetic copy of one single nucleotide, the building block of genetic material. Now, it’s under 10 cents.” Since the coronavirus gene is about 30,000 nucleotides long, that price reduction is significant.

Faster sequencing and cheaper access to synthetic copies is contributing to the development of diagnostic tests for COVID-19, an important step in slowing the disease.

On Feb. 4, 2020, the US Food and Drug Administration (FDA) issued its first emergency use authorization (EUA) for a diagnostic test for the coronavirus called 2019-nCoV Real-Time RT-PCR Diagnostic Panel. The test was developed by the US Centers for Disease Control and Prevention (CDC).

“This continues to be an evolving situation and the ability to distribute this diagnostic test to qualified medical laboratories is a critical step forward in protecting the public health,” FDA Commissioner Stephen M. Hahn, MD, said in an FDA statement.

However, the Washington Post soon reported that the government-created coronavirus test kits contained a “faulty component,” which as of February 25 had limited testing in the US to only 426 people, not including passengers who returned to the US on evacuation flights. The Post noted that the nation’s public health laboratories took “the unusual step of appealing to the FDA for permission to develop and use their own [laboratory-developed] tests” for the coronavirus.

“This is an extraordinary request, but this is an extraordinary time,” Scott Becker,

Chief Executive of the Association of Public Health Laboratories (APHL), told the Post.

Parallel efforts to develop and validate tests for COVID-19 are happening at the clinical laboratories of academic medical centers and in a number of commercial laboratory companies. As these labs show their tests meet FDA criteria, they become available for use by physicians and other healthcare providers.

Dark Daily’s sister publication, The Dark Report just published an intelligence briefing about the urgent effort at the clinical laboratory of Northwell Health to develop both a manual COVID-19 assay and a test that can be run on the automated analyzers already in use in the labs at Northwell Health’s 23 hospitals. (See TDR, “Northwell Lab Team Validates COVID-19 Test on Fast Timeline,” March 9, 2020.)

Following the FDA’s March 13 EUA for the Thermo Fisher test, Hahn said, “We have been engaging with test developers and encouraging them to come to the FDA and work with us. Since the beginning of this outbreak, more than 80 test developers have sought our assistance with development and validation of tests they plan to bring through the Emergency Use Authorization process. Additionally,” he continued, “more than 30 laboratories have notified us they are testing or intend to begin testing soon under our new policy for laboratory-developed tests for this emergency. The number of products in the pipeline reflects the significant role diagnostics play in this outbreak and the large number of organizations we are working with to bring tests to market.”

So far, the FDA has issued a total of seven EUAs:

Pharma Company Uses Sequencing Data to Develop Vaccine in Record Time

Even as clinical laboratories work to develop and validate diagnostic tests for COVID-19, drug manufacturers are moving rapidly to develop a COVID-19 vaccine. In February, Massachusetts-based biotechnology company Moderna Therapeutics (NASDAQ:MRNA) announced it had shipped the first vials of its potential coronavirus vaccine (mRNA-1273) to the National Institute of Allergy and Infectious Disease (NIAID) for use in a Phase One clinical trial.

“The collaboration across Moderna, with NIAID, and with CEPI [Coalition for Epidemic Preparedness Innovations] has allowed us to deliver a clinical batch in 42 days from sequence identification,” Juan Andres, Chief Technical Operations and Quality Officer at Moderna, stated in a news release.

The Wall Street Journal (WSJ) reported that NIAID expects to start a clinical trial of about 20 to 25 healthy volunteers by the end of April, with results available as early as July or August.

“Going into a Phase One trial within three months of getting the sequence is unquestionably the world indoor record,” NIAID Director Anthony Fauci, MD, told the WSJ. “Nothing has ever gone that fast.”

There are no guarantees that Moderna’s coronavirus vaccine will work. Furthermore, it will require further studies and regulatory clearances that could delay widespread distribution until next year.

Nonetheless, Fauci told the WSJ, “The only way you can completely suppress an emerging infectious disease is with a vaccine. If you want to really get it quickly, you’re using technologies that are not as time-honored as the standard, what I call antiquated, way of doing it.”

In many ways, the news media has overlooked all the important differences in how fast useful diagnostic and therapeutic solutions for COVID-19 are moving from research settings into clinical use, when compared to early episodes of the emergence of a new infectious disease, such as SARS in 2003.

The story the American public has yet to learn is how new genetic sequencing technologies, improved diagnostic methods, and enhanced informatics capabilities are being used by researchers, pathologists, and clinical laboratory professionals to understand this new disease and give healthcare professionals the tools they need to diagnose, treat, and monitor patients with COVID-19.

—Andrea Downing Peck

Related Information:

To Fight the Coronavirus, Labs Are Printing Its Genome

DNA Sleuths Read the Coronavirus Genome, Tracing Its Origins and Looking for Dangerous Mutations

FDA Takes Significant Step in Coronavirus Response Efforts, Issues Emergency Use Authorization for the First 2019 Novel Coronavirus Diagnostic

Coronavirus (COVID-19) Update: FDA Issues Emergency Use Authorization to Thermo Fisher

A Faulty CDC Coronavirus Test Delays Monitoring of Disease’s Spread

Moderna Ships mRNA Vaccine Against Novel Coronavirus (mRNA-1273) for Phase 1 Study

Drugmaker Moderna Delivers First Experimental Coronavirus Vaccine for Human Testing

China Detects Large Quantity of Novel Coronavirus at Wuhan Seafood Market

Scientists Claim SARS Breakthrough

Discovery of ‘Hidden’ Outbreak Hints That Zika Virus Can Spread Silently

Research Use Only Real-Time RT-PCR Protocol for Identification of 2019-nCoV

Interim Guidelines for Collecting, Handling, and Testing Clinical Specimens from Persons for Coronavirus Disease 2019 (COVID-19)

Roche’s Cobas SARS-Cov-2 Test to Detect Novel Coronavirus Receives FDA Emergency Use Authorization and Is Available in Markets Accepting the CE Mark

Hologic’s Molecular Test for the Novel Coronavirus, SARS-CoV-2, Receives FDA Emergency Use Authorization

Emergency Use Authorization (EUA) Information and List of All Current EUAs

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