After feds bust U.S. rep for insider trading in Pharma stock, will Congress drain ethics swamp?

chriscollins-300x201At a time when prescription drug prices keep skyrocketing and Americans pay hundreds of billions of dollars for medications that account for as much as 15 percent of all U.S. health care spending, federal law enforcers provided a rare and jarring sight with the public arrest of a congressman on charges he engaged in insider trading involving an Australian drug maker.

Chris Collins, a Republican who represents a western New York district and was among President Trump’s earliest and most vocal supporters in Congress, insists he committed no wrong. He says he will be exonerated, but he has pulled the plug on his plans to seek reelection in November.

The sordid details of his financial dealings, as laid out in news stories and a damning indictment, however, may keep front and center not only the charges against him but also troubling questions about members of Congress and their private investing, corporate board roles, and especially their tenacity as Big Pharma lapdogs, instead of being watchdogs on behalf of besieged, too often bankrupted American patient-consumers.

Collins’ ethical challenges may have started when, while sitting in Congress, he also agreed to join the board of directors of Innate Immunotherapeutics, a small biotech firm from down under. Innate had no products on the market but was developing MIS416, a prospective therapy for muscular sclerosis. The drug still faced a gauntlet of rigorous clinical trials.

The congressman, who became one of its major shareholders, promoted Innate relentlessly, boasting about how he would enrich friends and family in Buffalo — as well as colleagues in the U.S. House, if they, too, would buy the relatively inexpensive shares in the little known company. Collins’ bragging, other lawmakers said, occurred at congressional functions, including in a loud conversation overheard just off the House floor.

He became so blatant in hyping Innate that it attracted the attention and ire of good government groups and the late Rep. Louise M. Slaughter. She was a senior Democrat who represents a Rochester-based district just to the east of Collins’ district. She also was the lead Democratic author of a 2012 law known as the STOCK Act that banned federal officials, supposedly including lawmakers and members of the president’s cabinet, from insider trading.

She and others asked the House and the SEC to investigate Collins and Tom Price, then a Georgia GOP congressman. When Price was nominated and confirmed as head of the giant, federal Health and Human Services agency, he was forced to disclose and divest hundreds of thousands of dollars in Innate stock, on which, he conceded, he had gotten a favorable price with the help of Collins.

The SEC investigation continues. But the Office of Congressional Ethics already has reported to the House Committee on Ethics, the body with the authority to act, that Collins’ Innate role was problematic. He may not have benefited from sweetheart deals with the firm. But his use of his office, including arranging for federal scientists to meet and possibly assist the company in a clinical trial, was unacceptable.

Collins, who already has used campaign funds to pay for his legal defense, has said his vindication from the insider-trading charges will come, in part, from his losses on his Innate shares — millions of dollars.

But federal prosecutors, in their court documents, have explained that this occurred only due to trading circumstances: Innate learned that its MS drug failed a crucial clinical trial and had halted trading of its shares in Australia, as it had done before for various reasons.

Collins, prosecutors assert, learned as a board member about the clinical trial and how it soon would send Innate shares plunging. He couldn’t rid himself of his holdings, partly because the SEC and House ethics officials already were watching him but also because his shares as a director were held in Australia, and, thus, were frozen.

Instead, he made frantic calls to his son, who, in turn, launched warnings to others. (Talk about bad timing and worse conduct: Broadcast outlets have footage matching when prosecutors assert Collins made the dicey calls — he did so from the White House, where he was attending a congressional picnic.) They cashed out of their Innate holdings, doing so on American exchanges where the shares still could be traded. Prosecutors said Collins and family members, notably his son, daughter-in-law, and her father, made more than $780,000 on their insider-information and avoided big losses on Innate.

In my practice, I see not only the harms that patients suffer while seeking medical services but also their struggles to access and afford safe, efficient, and even excellent medical care, especially when ever-rising prices for prescription medications send them to the fiscal brink and too many drugs prove to be downright dangerous. Due process demands that we give Collins the presumption of innocence as he works his way through criminal charges that could send him to prison for the rest of his life.

But as a lawmaker, it should go without saying that his conduct was unacceptable. Moreover, it illustrates that, as another politician notably has asserted, Washington can be a political swamp and it needs a lot of cleaning up.

News organizations, including Politico, Kaiser Health News Service, and the Buffalo News, deserve credit for keeping a spotlight on members of Congress and their outside activities, especially as they create disturbing conflicts of interest. Politico dug deep into thousands of stock traders by lawmakers, singling out the hyper-active few, including Collins and Price, who was forced out of office by his sketchy ethics, including his free-spending on first-class and private air travel. Texas media are reporting that at least two other U.S. representatives are squirming over their Innate investments — already divested, true, but profitably and curiously just before results of that decisive clinical trial became public.

But why isn’t Congress itself doing more about its members dubious dealings? House Speaker Paul Ryan, with requisite umbrage, finally has ousted Collins from a choice committee seat, where the New Yorker had legislative powers, among others, over the nation’s health sector. But Ryan has known for months about the nightmares tied to Collins’ outside role. The Washington Post has editorialized about steps both the House and Senate should take to crack down on lawmakers’ outside entanglements, especially as the create conflicts of interest.

We need to know whether our elected representatives are looking after our interests — or their own, or of Big Pharma, which already also floods Congress with tens of millions of dollars in campaign contributions. Lawmakers, briefly, had tried to quiz and shame Big Pharma executives in public hearings over various of their product pricing outrages. They’ve gone mighty mum since. Congress’ role has grown ever more important as President Trump displays naivete or gullibility in his views about drug makers and their rapacious profit-seeking, now seeing himself as “grateful” to the sector for postponing, not canceling, its annual round of price increases.

Photo credit, Collins visiting Yahoo facility: ©Creative Commons, Yahoo photo
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