Foundations, Conflicts Of Interest And Drugmakers

Major philanthropic foundations, such as the Bill & Melinda Gates Foudation, regularly make the news with their donations and initiatives aimed at improving global health. But there is an aspect to their efforts that may be overlooked - such organizations can have links with drugmakers that could constitute a conflict of interest, according to an analysis published in PLoS Medicine.

The researchers examined the five largest US private and/or family foundations that focus considerably on global health - besides the Gates Foundation, the list included the Ford Foundation; W K Kellogg Foundation; the Rockefeller Foundation and the Robert Wood Johnson Foundation, which is a philanthropic outgrowth of a Johnson & Johnson founder. They analyzed publicly available endowment disclosures with the US Internal Revenue Service and stock holdings from the US Securities and Exchange Commission. They also examined potential conflicts of interest of individual foundation employees.

What did they find? In some instances, foundation board members sat on the boards of corporations that also may benefit from foundation grants. The opposite was also found to be true - foundation grants are sometimes associated with companies that are represented on a foundation board and are among its investments and partnerships (read the PLoS analysis here).

Bill & Melinda Gates, conflict of interest drugmaker links
(Caption & pic courtesy of One Click)

Take the Gates Foundation. Several members of its management committee, leadership teams, affiliates, and major funders are currently or were previously members of the boards or executive branches of several major drugmakers, including Merck and Novartis (see the commercial network of the Bill & Melinda Gates Foundation here and here).

A related example: In 2005, the Gates Foundation announced a $107.6 million grant to the PATH Malaria Vaccine Initiative (MVI) to extend a public-private partnership between MVI and GlaxoSmithKline Biologicals to develop the drugmaker’s malaria vaccine for children in Africa. Three months later, the Gates Foundation hired Tachi Yamada as executive director of its Global Health program. Until then, he chaired Glaxo R&D.

Meanwhile, there are stock holdings. The Gates Foundation holdings are invested in Berkshire Hathaway, which the researchers write has significant ownership in GlaxoSmithKline, Sanofi-Aventis Johnson & Johnson. And the Gates Foundation held stock in Merck at a time when it developed partnerships with the African Comprehensive AIDS and Malaria Partnership and the Merck Company Foundation to test Merck products.

Also, the researchers noted the Robert Wood Johnson Foundation played a leading role in promoting anti-tobacco products and maintains Smoking Cessation Leadership Centers and programs, but owns Johnson & Johnson stock, a leading manufacturer of cessation products. They also pointed out some board members have been represented on both the foundation’s and the company’s boards (see the 990 form here). UPDATE: The share of Robert Wood Johnson Foundation assets comprised of J&J stock is currently $803 million, or just under 9 percent of total assets of $8.8 billion, a spokesman writes us, adding that there are no current overlapping board members.

For a definition of a conflictd, they relied on the World Health Organization, which notes a conflict of interest “can occur when a partner’s ability to exercise judgment in one role is impaired by his or her obligations in another role or by the existence of competing interests…A conflict of interest may exist even if no unethical or improper act results from it. It can create an appearance of impropriety that can undermine confidence in the individual, his/her constituency or organization. Both actual and perceived conflicts of interest can undermine the reputation and work of the Partnership.”

The authors noted that “a private foundation clearly has the legal right to spend money however it wishes within the limits of the law…yet, in an environment where private foundations influence the future direction of, for example, what programs will be introduced into a foreign community, in a manner that does not necessarily involve directorship or voting from the community- members themselves, it is reasonable to subject the decision-making processes of these entities to public debate, especially if these funds were to have otherwise been collected for public redistribution through federal taxation…

“While private foundations adopt standard disclosure protocols for employees to mitigate potential conflicts of interests, these do not always apply to the overall endowment investments of the foundations or to board membership appointments,” they conclude. “The extent and range of relationships between tax-exempt foundations and for-profit corporations suggest that transparency or grant-making recusal of employees alone may not be preventing potential conflicts of interests between global health programs and their financing.”

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Related Links:
* Microsoft's Bill Gates Promotes Vaccine Eugenics
F. William Engdahl
* Bill Gates Media Funding Taints Objectivity
Sandi Doughton & Kristi Heim, The Seattle Times
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