Through foundations, industry influences their own regulators

October 25th, 2018

The government agencies tasked with research, regulation, and prevention in the health care sector are meant to serve the public interest. Most Americans would probably assume that means they are independent from private industry influence. However, as the popularity of “public-private partnerships” in the health care sector has grown, the line between “independent” and “industry-funded” has blurred.

An important but little-known link between government agencies and industry is through government-chartered foundations. Congress has created foundations for many government organizations, including the Food and Drug Administration (FDA), National Institutes of Health (NIH), and Centers for Disease Control and Prevention (CDC), to supplement the agencies’ funding for specific projects and encourage more public-private partnerships.

Why did Congress set up foundations to help fund the work of CDC, NIH, and FDA, instead of simply allocating more tax dollars? 

“The foundations exist at least in part because they allow industries to directly fund and thus control the work of agencies that are either supposed to regulate them, or conduct research that can help or hurt their business,” said Lown Institute Senior Vice President Shannon Brownlee.

And that’s exactly what these foundations are doing. Since the CDC Foundation was created in the 1990s, hundreds of corporations have contributed to public health programs. Many of these contributions could be seen as conflicts of interest – for example, a $193,000 donation from Roche, the maker of antiviral drug Tamiflu, to fund a CDC flu prevention campaign. Despite the significant funding the CDC receives from industry via its foundation, few were aware of these conflicts until Jeanne Lenzer called attention to the foundation in The BMJ a few years ago. 

The NIH similarly uses contributions from industry through the Foundation for the National Institutes of Health to fund research projects that affect industry’s bottom line. Most famously, big alcohol companies were funding an NIH study on moderate alcohol use through the Foundation, until the study was shut down when conflict of interest concerns came to light. The alcohol study provides a perfect example of how this funding structure can lead to perverse incentives, in which agencies try to persuade industry to fund projects, and then bends the results of studies in ways that are beneficial to their corporate sponsors.

The Reagan-Udall Foundation, created by Congress in 2007 to further the mission of the FDA, is much less established and has far fewer resources than the foundations for the CDC or NIH. An in-depth piece in STAT News illustrates how the Reagan-Udall Foundation is struggling to fund projects without sacrificing the agency’s independence. Currently, the foundation relies on a mix of funding from private companies, other foundations, and the FDA itself.

If it seems confusing that the FDA is funding a foundation whose mission is to help the FDA, that’s because it is confusing. And it’s unclear how much these foundation projects are actually helping the FDA. For example, the foundation’s flagship project, IMEDS, gives private companies access to FDA patient data, so the companies can identify potential harm from drugs. So bizarrely, the FDA is paying the Reagan-Udall foundation to help private companies do research that the FDA could easily do, if they had the money.

Also, as Lenzer wrote in The BMJ last year, giving industry access to this data is more likely to “identify spurious associations that support fast track approvals and indication creep” than actually point out medication harms.  

Foundations for government agencies may provide opportunities for public-private partnerships, but with their funding dependent on industry, it’s hard to see where the line is between cooperation and corruption. Is there an alternative? 

“How about we have Congress simply raise taxes by less than 1% and accomplish the goal of better funding for these agencies?” says Brownlee. “Who would you rather have in charge of research and data that affects the public health? Private industry that’s beholden to stockholders? Or a government agency that is accountable to voters and taxpayers?”