FDA Chief Launches Internal Inquiry of Payments

WASHINGTON —  The acting commissioner of the Food and Drug Administration has ordered an agencywide inquiry to determine the extent of biomedical company payments to officials at the regulatory agency, it was learned Monday.

The inquiry was launched this month as congressional investigators began examining millions of dollars in industry payments -- previously blocked from public view -- to scientists at the National Institutes of Health.

The newly uncovered deals include consulting payments made to two officials -- one at the National Cancer Institute, a unit of the NIH, and another at the FDA. Both arrangements were terminated in recent days, officials said.

After being assigned in 2002 to collaborate with a Maryland company in the development of an ovarian cancer test, the two officials entered into paid consulting deals with a Northern California firm that was a possible competitor, according to documents and individuals familiar with the matter.

The director of the NIH, Dr. Elias A. Zerhouni, said through a spokesman late Monday that he would not stand behind one of the arrangements, involving the chief of the National Cancer Institute’s pathology laboratory. The matter “demonstrates the need for systemic reform,” Zerhouni said through the spokesman, John Burklow.

The consulting arrangement between the laboratory chief, Dr. Lance A. Liotta, and Biospect Inc. of South San Francisco ended Friday, officials said.

The second of the now-terminated deals involved a senior microbiologist at the FDA, Emanuel F. Petricoin, prompting the investigators to determine whether other employees could maintain similar arrangements with the industry they help regulate. The inquiry is continuing, FDA spokesman Lawrence Bachorik said.

“In light of recent questions about possible conflicts of interest involving [Department of Health and Human Services] agencies, acting FDA Commissioner Dr. Lester Crawford has directed a comprehensive review of all current outside activity requests from all FDA employees,” Bachorik said.

The circumstances surrounding Liotta’s and Petricoin’s activities for both companies are expected to be explored today at a hearing of the House Energy and Commerce oversight and investigations subcommittee.

A Los Angeles Times report in December prompted the panel to request the records of payments from drug companies to NIH scientists. The article documented hundreds of payments, totaling millions of dollars, and reported that more than 94% of the agency’s top-paid employees were not required to publicly disclose outside income.

In late 2002, Liotta and Petricoin were given permission by their employers to consult for pay with Biospect, according to federal documents and interviews. Liotta received $39,000 through 2003, records from the NIH show. Payments to Petricoin were not publicly available Monday. Liotta and Petricoin declined via e-mail to comment for this article.

The company payments had been shielded from public view because each official is exempted from reporting outside income on forms accessible under the Freedom of Information Act.

Burklow, the NIH spokesman, acknowledged that officials had become aware that Biospect was a possible competitor with Correlogic Systems, the Maryland company with which Liotta and Petricoin were collaborating. The cofounder of Correlogic Systems, Peter J. Levine, said he hoped to advance the progress of his company’s cooperative research pact with the government.

That relationship “can be very important in furthering our ovarian cancer research -- and ultimately saving lives,” Levine said. The FDA, the National Cancer Institute and Correlogic Systems started working together in April 2002.

Documents from the NIH show that as of last year, ethics officials had concluded that Liotta’s outside consulting work with Biospect was unrelated to the official work he was assigned to perform on the NIH’s behalf with Correlogic Systems.

At the FDA, spokesman Bachorik said that officials “subsequently determined that Biospect participates in activities that are significantly regulated by the FDA. As a result, consulting with Biospect is a prohibited outside activity.”

Biospect announced Monday that it had changed its name to Predicant Biosciences. The company’s chief executive, Deborah J. Neff, did not return a call seeking comment.

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Times researcher Janet Lundblad in Los Angeles contributed to this report.