Joint Statement: American Academy of Ophthalmology and American Society of Retina Specialists

Serious legal issues may arise when an ophthalmologist who is an investigator in a clinical trial or a member of a data safety monitoring board consults with a representative of the investment industry about an ongoing study.

First, providing information to the investment industry regarding the results of a clinical trial or even your general impressions of how a clinical trial is proceeding will, in many instances, be a breach of your clinical trial agreement, making you vulnerable to a breach of contract claim and liable for any damages caused by your breach. You also could be terminated from participation in the clinical trial. As a practical matter, clinical trial sponsors may avoid your participation in future trials.

Second, providing information to the investment industry might violate state and federal statutes and regulations that prohibit insider trading, even if you do not buy or sell any securities. If you provide a “tip” of confidential, non-public information that is material to the purchase or sale of securities, you are at risk. Violations of the insider trading laws may result in significant monetary and/or criminal penalties. Senator Charles E. Grassley (R-Iowa), Chairman of the Senate Committee on Finance, recently asked the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) to investigate conduct that he said “violates a trust that is fundamental to the integrity of both scientific research and our financial markets.” Given Senator Grassley’s request and recent widespread publicity, prosecutions may follow.

Please note that you are at risk whether or not you are compensated for your discussion with a representative of the investment industry. If you are being compensated, that increases the risk, especially with respect to insider trading issues.

You may not think that you are providing confidential information when you speak with representatives of the investment industry. However, responses to seemingly innocent questions may allow hedge funds and other investors to make significant trades in advance of FDA approval or disapproval of a new drug application.

PDF version of this statement  (88K)

References:

Code of Ethics, American Academy of Ophthalmology.

The Seattle Times, "Selling Drug Secrets," Aug. 7, 2005.

Steinbrook R, "Wall Street and Clinic Trials," N Engl J Med 2005; 353:1091-93.

Topol EJ, Blumenthal D., "Physicians and the Investment Industry," JAMA 2005; 293:2654-57.

September 2005