US court upholds Rajat Gupta’s conviction

Rajat Gupta's bid to overturn his conviction on insider trading charges was rejected by a US court

A US court on Wednesday rejected a bid by Rajat Gupta, former director of Goldman Sachs, to overturn his conviction on insider trading charges and sentenced him to two years in prison.


The US Court of Appeals for the Second Circuit in its order rejected Gupta’s appeal against his conviction and said, “We have considered all of Gupta’s arguments on this appeal and have found them to be without merit. The judgement of the district court is affirmed,” the order said.


In June 2012, the 65-year-old Gupta was found guilty of securities fraud and conspiracy to commit securities fraud.


He was charged with passing confidential boardroom information about Goldman Sachs to now jailed hedge fund founder Raj Rajaratnam.


This information included information on Goldman’s financial results, as well as a crucial $5-billion investment by Warren Buffett’s Berkshire Hathaway Inc.


Earlier this week, US regulator Security and Exchange Commission (SEC) had asked the court to affirm a district court’s decision that Gupta pay a $13.9-million penalty and be banned for life from serving as director of a public corporation.


Gupta, the former head of McKinsey & Co, the global consulting firm, is the most prominent corporate executive convicted in the Government’s sweeping investigation into insider trading.


The case, which caps a wave of successful insider trading prosecutions over the past years, is a significant victory for the government, which has penetrated some of Wall Street’s most vaunted hedge funds and reached into America’s most prestigious corporate boardrooms.


Tobacco users caught up in insurer’s Obamacare ‘glitch’

After signing up for coverage and disclosing they were smokers, about 100 New Hampshire consumers, including Terry Wetherby, find their new Anthem Blue Cross and Blue Shield policies cancelled because they were charged incorrect ‘non-smoker’ rates

Retired New Hampshire nurse Terry Wetherby doesn’t hide the fact that she smokes.

She checked the box on saying she uses tobacco and fully expected to pay more for her insurance policy under the Affordable Care Act. “It’s not a secret at all,” she said.

Wetherby dutifully paid the premium Anthem Blue Cross and Blue Shield charged her for January and again for February — and believed she had coverage effective on Jan. 1.

Then when Wetherby went to pay her March premium, she was told she couldn’t. A check arrived in the mail refunding her February premium with a two-word explanation: “Contract cancelled.”

Turns out, Wetherby was among about 100 smokers in New Hampshire caught up in a “technical glitch” that caused them to lose their new health insurance policies because they had been mistakenly charged non-smoking rates, according to the New Hampshire Department of Insurance.

It is unclear if the error affected smokers in other states served by Anthem.

Wetherby, 64, learned on Friday that her insurance was being reinstated, retroactive to Jan. 1, and that the original rate she was quoted — about $26 a month after a big government subsidy — would be honored throughout this year. She turns 65 in October and will then go on Medicare.

“When we were contacted by consumers who were experiencing application processing problems, we reached out to the carrier (Anthem), and worked with them to understand the factual situation,” said insurance department spokeswoman Danielle Kronk Barrick. “Ultimately, Anthem agreed that it would honor the originally quoted nonsmoker rates for the remainder of 2014, even though Anthem believes the glitch was not of its making.”

Still, for the past month, Wetherby has been scrambling to find out what happened and get it fixed. She contacted Anthem, her governor, her Congresswoman, her senator and state insurance regulators. She set up a Twitter account to try to get someone’s — anyone’s — attention.

“How can this be??” she wrote to me. “The ACA guarantees coverage. I went to the ACA website and received a rate. Anthem has taken my premium for 2 months and undoubtedly they have taken the corresponding US government subsidy dollars, yet they tell me I am not covered. I read where Obamacare is covering millions but when I speak to the NH Insurance department I am told many people have the same issue as I do.”

An official with the Centers for Medicare and Medicaid Services, which oversees, said “this was an error committed by Anthem” and that the insurer recently submitted revised data, which will soon be reflected in the online health plan comparison tool.

“CMS works to ensure the accuracy and completeness of the data issuers submit,” agency spokesman Aaron Albright said. “Issuers are also responsible for sending accurate and complete rating information to CMS."

Maine’s insurance superintendent Eric Cioppa said that up to 200 smokers in his state were also affected by Anthem’s glitch. “We have been working with Anthem and they have agreed to not only reinstate the policies but offer and honor the rates that they [the smokers] have been quoted,” Cioppa said.

Cioppa said four consumers had complained to his department about the problem and that officials are now working with CMS to get approval for the fix.

Across the country, some of those signing up for coverage are finding out that their policies are not what they thought: Their physicians are not in their insurance network, their drugs aren’t covered, or their copays are higher than expected. But Wetherby’s case was different — she was left with no insurance at all.

While it is legal in many states to charge smokers more for insurance, it generally is not okay to cancel them based on an error made by the insurer.

Officials at Anthem, the lone Obamacare offering in New Hampshire, did not return multiple emails and phone calls seeking comment. In a letter last week to the insurance department about Wetherby’s case, an analyst wrote that “it was determined that when the policy was to be loaded there was a difference between the calculated rate and the quoted rate, so it was never effective.”

Wetherby is exactly the type of person the ACA is intended to help. Retired in 2013, she lives on Social Security benefits and had been paying $400 per month for high-deductible coverage last year.

Once began working again in November, she logged on and signed up for coverage. Because her income is barely above the federal poverty limit, she qualifies for a huge federal subsidy — $657 a month. She is also eligible for help paying her copays and deductibles.

While Wetherby said she is healthy, she said she was nervous about not having insurance. When she canceled her old policy four days before the new one took effect, “I wouldn’t leave the house. I was so afraid I was going to get hurt.”

Even after what’s happened, Wetherby said she remains a “boisterous” supporter of the ACA.

“It’s been a long hard journey but I still believe in it because I believe that everyone should have insurance,” she said. “The president has just put so much effort into this and I feel we still do have a lot of people in government who believe in this, and I myself believe in it.”

Update: We've added information about additional Anthem customers in Maine who experienced similar problems to those in New Hampshire.

Have you tried signing up for health care coverage through the new exchanges? Help us cover the Affordable Care Act by sharing your insurance story.




Doctors paid to advice, promote drug companies that fund their research

Research has been seen as less objectionable than other forms of interactions with drug companies, but 10 percent of researchers have multiple ties among the nine companies ProPublica analysed. That raises questions about doctors’ impartiality

Pharmaceutical companies pay for the clinical trials that Dr. Yoav Golan conducts on antibiotics at Tufts Medical Center.

They also pay him tens of thousands of dollars a year to give speeches and advice on behalf of their drugs.

If Golan worked at some teaching hospitals, he would be barred or severely restricted from accepting both research funding and personal payments for promotional speaking or consulting from drug makers. These hospitals fear the money could influence clinical findings, or at least create the appearance of a conflict of interest.

Yet Tufts and many other academic medical centers allow doctors to accept overlapping payments — and some doctors still take them.

A ProPublica analysis shows that more than 1,300 practitioners nationwide received both research money and speaking or consulting fees from the same drug maker in 2012. All told, they received more than $90 million in research grants — plus nearly $13 million for speaking engagements and another $4 million for consulting.

Critics say doctors who conduct a clinical trial while accepting personal payments from the company sponsoring the study can feel beholden to the drug maker.

“The pharmaceutical company has a paramount stake in a favorable outcome. The [research] grant recipient has a stake in a favorable outcome and the honorarium recipient or consultant has yet another stake in the outcome,” said David Rothman, director of the Center for Medicine as a Profession at Columbia University. “It’s not only my lab. It’s my mortgage.”

ProPublica used its Dollars for Docs database, which tracks payments to practitioners by 15 drug companies, to conduct the review. Not every company discloses all types of payments — research, speaking and consulting — or distinguishes between the types. The analysis covered the nine companies that disclosed payments in this form.

Golan, an infectious disease specialist, was the only doctor who received speaking, consulting, and research payments from three companies in 2012, the most recent year for which data has been compiled. Pfizer, Merck, and Forest Labs gave Tufts $51,000 for his research that year, in addition to paying him $125,000 to speak about their drugs and $13,000 for consulting. His speaking fees ranked second nationally among all the researchers examined, and his total personal payments ranked fourth.

Golan referred questions to the public relations department at Tufts Medical Center, which said in a statement that Golan complies with its research conflict-of-interest policy and that officials keep a close watch over his work.

“Dr. Golan’s work has contributed to the development of two important antibiotics, including the first antibiotic developed in the past 25 years to treat the growing threat of deadly C. difficile,” the statement said.

Pharmaceutical companies’ payments for promotional speaking and consulting appear to have decreased in recent years, as blockbuster drugs have lost patent protection and the push for transparency has advanced. Beginning this fall, all drug companies will have to publicly disclose payments they made to doctors, under the Physician Payment Sunshine Act, part of the 2010 Affordable Care Act.

But industry-backed clinical studies, which can lead to advances in care, have largely been seen as a separate matter.

ProPublica’s is the first large-scale analysis of how frequently researchers receive additional payments from companies that fund their clinical trials. About 10 percent of researchers for the nine companies examined for this story also received money for speaking or consulting, or both.

One Doctor’s Overlapping Relationships
Dr. Yoav Golan, an infectious disease specialist at Tufts Medical Center, received speaking, consulting and research payments from three companies in 2012, the only physician in ProPublica’s Dollars for Docs database that met those criteria. Some ethicists question doctors’ abilities to stay impartial when receiving both research and promotional payments from pharmaceutical companies.


 Forest Labs
























Source: Company disclosures, ProPublica research

Pfizer had the lowest rate of dual relationships among its researchers, about 7 percent; Novartis and ViiV Healthcare had the highest, at more than 15 percent.

ViiV spokesman Marc Meachem said his company focuses exclusively on HIV medications, so “the number of people with the expertise to do both the research and be expert speakers is a lot smaller.”

In a statement, Novartis said it abides by the policies of different academic institutions, and requires doctors it works with to receive permission, if needed, from their employers.

The Mayo Clinic and University of California San Francisco prohibit employees from receiving personal compensation from companies that concurrently fund their research. Harvard allows doctors to take no more than $10,000 annually in personal income from companies funding their research.

“It’s such an enormous conflict of interest to have personal financial gain from the company that’s sponsoring a clinical trial on human subjects that you’re the principal investigator on,” said Lisa Bero, a professor of pharmacy at UC San Francisco who chaired its conflict of interest committee from 1999 to 2010.

Tufts University School of Medicine does not bar overlapping payments, but has a policy banning faculty members from speaking for a pharmaceutical company if “the company controls the content of the presentation, which may include creating or having final approval over the slides or presentation materials or setting limits on the scope of discussion.”

Researcher Funding by Company


All researchers

Researchers with at least one speaking or consulting payment










Eli Lilly




























Source: Company disclosures, ProPublica research

The companies that employ Golan as a speaker say they do create and have final approval of any materials used, but because he is an unpaid “volunteer faculty member” at the medical school by virtue of his hospital job, its rules don’t apply to him, a spokeswoman said. Tufts Medical Center requires only that doctors agree that the slides provided by companies for their lectures are scientifically accurate; Golan’s slides are reviewed by his department chairman as well.

Beyond his work for Pfizer, Merck, and Forest, Golan has reported receiving research, consulting, and speaking payments from Cubist Pharmaceuticals of Lexington. He co-wrote a 2011 research study, published in the New England Journal of Medicine, about the antibiotic Dificid with employees of its maker, Optimer Pharmaceuticals — a company purchased by Cubist last fall.

According to the most recent disclosure statement Golan submitted to Tufts Medical Center, covering the 12 months before March 4, 2014, Golan said he received a total of $260,000 to $359,995 in salary, speaking, consulting (and some travel) fees from Forest, Merck, Pfizer, Optimer, and Cubist. That does not include grants for research and is on top of what he earns for treating patients, according to Tufts which provided the data to ProPublica.

Tufts Medical Center said it has a committee with the authority to bar doctors from accepting additional payments from companies that fund their research if panel members conclude there’s no other way to mitigate the conflict of interest.

Instead, hospital officials have put Golan under a “rigorous management plan to ensure the research is done in a transparent and ethical manner, including meetings between Dr. Golan and a committee of research and physician leaders every six months to review his research and any changes in his relationship with industry,” the center said in a statement.

Ethicists and experts on conflicts of interest say overlapping payments can give researchers an incentive to bend or break the rules, sometimes in ways they aren’t even aware of. They note that published research supported by pharmaceutical companies tends to be more favorable to the drugs being studied than research funded by other sources.

Some questioned whether it was possible to balance a commitment to research with outside work for pharmaceutical companies.

“I would argue that any academic that has the time to be a part-time drug salesman needs to have a talk with their department chair right away about how they’re spending their time,” said Eric Campbell, a professor of medicine at Harvard Medical School who studies the topic. “If doctors want to be drug salespersons, they should go to be drug salespersons.”

Not every doctor who accepts research and promotional money is an academic. Some work for hospitals not tied to universities; others run their own clinical trial centers, and others are solo practitioners.

Dr. Andrew Wachtel is co-director of a research group called the Southern California Institute for Respiratory Diseases. He practices at Cedars-Sinai Medical Center in Los Angeles, but said he is not employed by the hospital. While conducting research for Merck, GlaxoSmithKline and Forest Labs, he received nearly $110,000 in 2012 for speaking on behalf of their products (the vast majority was from Forest).

“If I was doing research and speaking exclusively for one company that might be construed as a conflict, and it is potentially a conflict,” he said. Working with multiple companies, he added, shows “I don’t have a personal gain by promoting one over the other.”

Still, Wachtel said that if he were given the choice between research and speaking, he would choose research. “I would just stop lecturing. It’s not a huge part of what I do or that big a deal.”


Dual relationships have come under scrutiny from lawmakers and regulators in the past. In 2009, Sen. Charles Grassley (R-Iowa) asked the National Institutes of Health to investigate university physicians who were paid by Merck to work on a campaign for the cholesterol drug Vytorin even though an internal study had showed it was no more effective than cheaper drugs. The relationships were first reported by the Chronicle of Higher Education.

Grassley raised particular concerns about Baylor College of Medicine, which didn’t tell the NIH that one of its researchers, Dr. Christie M. Ballantyne, had accepted $34,000 from Merck to consult about Vytorin while also receiving money from the NIH to study cholesterol-lowering therapies.

NIH director Francis Collins told Grassley in a letter that while Ballantyne had followed the rules and notified Baylor, the institution had not shared the information with NIH as it should have.

Even after Baylor said it tightened its practices, Ballantyne’s work with Merck continued. In 2012, ProPublica data shows, Ballantyne received speaking and consulting money from Merck while conducting research on the company’s behalf. Merck data shows he received $11,000 as a speaker and $7,175 as a consultant in 2013 as well.

Ballantyne said in an email that he is no longer participating in speakers’ programs because companies insist on having the final say on the slides used. “The position of the companies is clearly not consistent with the position taken by our medical school, and most other medical schools, so academic physicians almost never participate in speakers bureaus,” he wrote.

Baylor spokeswoman Lori Williams said Ballantyne spoke internationally on behalf of Merck in 2012 and 2013 and used his own slides, which did not violate Baylor’s rules.

Ballantyne wrote that he does not see a conflict in continuing to work as a consultant for companies that support his research. “I consult for companies because I have expertise that I hope may help in the search for new therapies. Research saves lives. I participated in a clinical trial when I was treated with lymphoma. If I had been diagnosed 50 years ago I would have lived less than 6 months.”

Ballantyne was one of several Baylor faculty members who received speaking or consulting payments in 2012 from companies that fund their research.

Baylor’s senior vice president of research, Dr. Adam Kuspa, said the school stepped up its review of research conflicts after the NIH findings. He said faculty are not permitted to serve as company speakers if a drug maker retains final approval of slides, but can spend up to 20 percent of their time on consulting.

Kuspa cautioned against going too far to regulate payments to doctors. “You certainly wouldn’t want people who didn’t know anything about the drugs consulting about what Pfizer’s doing in that area,” he said.

The Pharmaceutical Research and Manufacturers of America, the industry trade group, said it sees benefits in doctors working with companies in multiple roles. A company could hire a researcher overseeing a clinical trial, for example, to consult with other trial sites about patient recruitment or to speak about new uses for drugs being studied, officials said.

Kendra Martello, PhRMA’s deputy vice president of strategic operations, said research integrity is protected by institutional review boards, which are appointed by hospitals to approve the design of studies and patient consent forms, as well as by the U.S. Food and Drug Administration, as part of the drug approval process.

Massachusetts has taken a harder line than most states on doctors’ conflicts of interest. For a time, it banned meals to physicians. The state requires all pharmaceutical companies to disclose payments to Massachusetts doctors, though not for research, and posts the information online.

Policies at academic medical centers in Massachusetts differ. While Harvard caps the outside income of researchers, UMass Memorial Medical Center, Tufts Medical Center, and Boston University do not. They require researchers to disclose dual relationships internally but do not limit them as a rule.

Even so, John Randolph, vice president and chief compliance officer of UMass Memorial Health Care, said his conflict-of-interest committee rarely allows researchers much leeway.

“We are very conservative about it,” he said. “I don’t think we’ve allowed any faculty member to have a relationship like this where we’ve approved greater than $5,000 of activity from the same company — and that was only in the situation where the research and the consulting were in completely different areas of the company.”

ProPublica news applications fellow Eric Sagara contributed to this report.



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