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Medical Professors Are Supposed to Share Their Outside Income With the University of California. But Many Don’t.

A comparison of University of California filings with federal data shows that moonlighting professors are shortchanging taxpayers.

María Hergueta, special to ProPublica

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A version of this story was co-published with the Los Angeles Times.

For nearly two decades, Dr. Neal Hermanowicz has led the movement disorders program at the University of California’s Irvine campus, where he earns more than $380,000 a year in salary and bonuses. The widely respected expert on Parkinson’s and Huntington’s diseases adds to his income by consulting for drug companies.

Since 2014, 11 pharmaceutical companies have paid him a total of at least $588,000 for consulting, speaking and honoraria, according to federal data. For example, he has received more than $225,000 in speaking and consulting fees from San Diego-based Acadia Pharmaceuticals, manufacturer of a controversial drug for Parkinson’s-related psychosis. In 2017, he was the company’s highest-paid physician consultant in the U.S. That year, he prescribed the drug more than 180 times, costing patients or their insurers more than $445,000.

Under University of California rules aimed at discouraging excessive moonlighting, Hermanowicz should not only have reported his outside income to UC Irvine; he should also have turned over more than $200,000 to the school from 2016 to 2018, according to UC Irvine policies. His academic department would then have decided how much to keep and how much to return to him. That didn’t happen. From 2014 to 2018, Hermanowicz didn’t report any payments from pharmaceutical companies on his annual “outside professional activity” forms, which ProPublica obtained through a public records request.

Through an assistant, Hermanowicz declined to comment, citing a busy schedule. He did not respond to emailed questions.

Monitoring at UC Irvine was lax. For at least two years, Hermanowicz’s department chair didn’t sign off on his disclosure forms, as the university requires. His most recent disclosure form was approved by the interim chair of the neurology department, Dr. Tahseen Mozaffar.

Like Hermanowicz, Mozaffar has failed to fully disclose his own outside activity and consulting income to the university. According to records, Mozaffar underreported his earnings by around $100,000 between 2014 and 2018, and he didn’t disclose his ties to at least four biotech companies.

Hermanowicz and Mozaffar aren’t unusual. ProPublica reviewed filings by almost 90 health faculty who had among the highest outside incomes at four University of California medical schools, including the two UC Irvine neurologists. We then compared those UC-required “outside professional activity” disclosure forms with a federal database, “Open Payments,” which collects information from pharmaceutical and medical device companies on their payments to doctors. We found that about two-thirds of the professors did not report all of the money as required.

The information gathered by the UC system and the federal government isn’t identical, but ProPublica took the differences into account. For example, we filtered reimbursements for travel, hotels and entertainment out of the Open Payments data, since UC doesn’t regard such reimbursements as salary.

Mozaffar declined to answer specific questions about his underreporting but said “there is some lack of clarity on what needs to be reported.” He didn’t elaborate on what was unclear. He added that Open Payments, the federal database that contains the information on his outside income, is “not a perfect system.”

John Murray, a spokesman for UC Irvine Health, said in an email that medical school officials are aware and concerned that “transparency hasn’t fully permeated the culture of academic medicine....More work needs to be done to ensure uniformity in this area.”

The lack of candor about outside income could be shortchanging the university — and, ultimately, California taxpayers. That’s because, alone among public universities nationwide whose policies were reviewed by ProPublica, the University of California requires most of its 4,000-plus health sciences faculty to turn over to it any earnings above an annual cap of $40,000 or 40% of their base pay, whichever is higher. (The relatively few faculty who do not participate in the university’s specialized health sciences compensation plan are exempt from this requirement.)

The department retains a fraction of the money above the threshold and returns the rest to the professor as bonus compensation or to support conferences and other academic activities. The extent of its slice varies from one department to the next; for example, the department of medicine at UC San Francisco keeps up to 20% of income over the threshold.

At UC Irvine, according to a 2017 audit, the dean’s office takes 5%. It has at least 20 health sciences departments, each of which has its own policy, and may take as little as 5% or as much as 40%. The audit of 38 of the campus’s 800 plus full-time health faculty found that its school of medicine had lost $114,000 in revenue in one year due to underreporting by 11 professors. Based on the audit’s findings, underreporting may cost the university millions of dollars a year.

The case of Hermanowicz, who was among the top 20 professors in outside income of those we reviewed, illustrates this impact. His 2016-17 academic year base salary from the university was about $175,000, less than his roughly $180,000 outside income during that year. Under university policy, he should have turned over at least $110,000, which is the amount of his outside income that exceeded 40% of his base salary, to his campus. In the 2017-18 academic year, when his outside income was about $173,000 and his base salary was about $191,000, he should have shared at least $96,000. Depending on the neurology department’s policy, the dean and the department together should have kept as much as $49,000 in 2016-17, and as much as $43,000 in 2017-18, and given the rest back to Hermanowicz.

The failure to report outside income may also conceal conflicts of interest affecting the objectivity of teaching and research. Under UC Irvine guidelines, for example, outside consulting should be “as separate from the research as possible” to avoid conflicts. If a conflict interferes with academic duties, or the professor fails to report outside work, the university can intervene by limiting consulting or, in egregious cases, terminating employment. UC San Francisco has at times required faculty to repay unreported outside income, spokeswoman Laura Kurtzman said.

Robert Pedowitz at his home in Encinitas, California. (Jenna Schoenefeld for ProPublica)

In recent years, internal audits at the university’s Irvine and San Francisco campuses have both found that, of a sample of health science faculty, about one-quarter weren’t disclosing all of their outside income. ProPublica’s investigation and the audits show that campus administrators fail to monitor or enforce the rules adequately, and that they rarely penalize violators — a testament, critics say, both to the power of tenured faculty and the university’s desire to accommodate pharmaceutical companies that fund academic research. The underreporting at the UC campuses contrasts with the increase in researchers’ disclosures of potential conflicts in academic journals.

“There is an institutional need to cultivate clinical trials, research grants and other relationships with big pharma,” said Dr. Robert Pedowitz, who resigned under pressure as chair of orthopedic surgery at UCLA after trying unsuccessfully to strengthen conflict of interest disclosure. “The institutions are in bed with the pharmaceutical industry, and they don’t want to rock the boat.”

From promoting higher drug prices to defending alleged abusers, professors frequently obtain lucrative outside consulting work, potentially influencing their research topics and findings, as well as their public stances in media appearances and legislative and courtroom testimony. ProPublica examined the University of California records as part of a yearlong effort to build a national database of faculty outside income. Through public records requests, we collected more than 37,000 records for professors and staff at about 20 public universities as well as for academic researchers funded by the National Institutes of Health.

By comparing forms filed by UC health sciences faculty with the federal Open Payments database, which collects information from pharmaceutical and medical device companies on their payments to doctors, we found that many faculty members report around the $40,000 threshold, even though they have amassed higher outside earnings.

For example, Dr. Philip Bickler, a professor of anesthesia at UC San Francisco, told the university that he made $37,000 from law firms as a medical legal consultant during the 2017-18 academic year. He didn’t disclose that he also received an additional $32,000 consulting for Purdue Pharma, which makes the drug OxyContin and has been criticized for contributing to the opioid epidemic. During the 2017-18 academic year, Bickler helped Purdue Pharma try to develop less dangerous pain medications, he told ProPublica.

“If we can make pain meds safer, it’s probably a good thing for society, that’s how I justified it,” Bickler said. He called his lack of disclosure an oversight and said he was not familiar with the university’s $40,000 threshold on outside income.

“Sometimes the regulations aren’t as clear as they should be,” he said, adding that he plans to submit a revised disclosure to the university.

The University of California has traditionally lacked a central reporting system for conflicts. The university divides them into two categories: conflicts of interest, or when professors’ personal — and often financial — interests could influence their professional responsibilities, and conflicts of commitment, when outside activities pull them away from their academic duties. Five medical schools — San Francisco, Davis, Irvine, Los Angeles and San Diego — account for the majority of the university’s health sciences faculty, and each maintains its own system for monitoring conflicts of interest and commitment. Up until this past year, most campuses collected disclosures of outside employment with paper forms. Each campus collects at least three different types of financial disclosure, and for the most part, each department reviews its faculty’s outside employment reports.

The university is implementing a major initiative across campuses, known as the Outside Activity Tracking System, to improve reporting of outside activities and address potential conflicts, spokesperson Stett Holbrook said in an email. It also plans in 2020 to “institute more formalized and focused auditing of disclosures,” Holbrook said. The new system makes reporting easier by employing “a simple, interactive format,” and provides faculty with training and education on disclosure policies, he said.

Holbrook said that the university “cannot offer an explanation” for discrepancies in reporting by specific faculty members “without investigating the facts,” and that each campus does its own monitoring. “There are always opportunities for improvement,” he said.

María Hergueta, special to ProPublica

The dean’s office at UC Irvine’s medical school, the home of its health sciences faculty, didn’t have a process to track, monitor and reconcile outside earnings of its faculty, campus auditors found in 2017. UC Irvine spokesperson John Murray said that the campus is responding to the audit’s recommendations by adopting the tracking system. ProPublica found that, like Mozaffar, department chairs responsible for approving professors’ disclosure forms sometimes understate their own outside incomes.

For example, Dr. Alpesh Amin, a professor and chair of UC Irvine’s Department of Medicine, has been on the payroll of more than 25 different pharmaceutical and medical device companies for consulting, teaching or speaking over the past four years. And for years, he has appeared to underreport these payments on his official university disclosure forms.

During the 2017-18 academic year, he reported a total of $10,500 from Bristol-Myers Squibb and Pfizer for research consulting, but according to federal data, he received more than $100,000 in consulting and speaking payments from the two companies. During the 2014-15 academic year, he reported about $3,000 in income from his position on Daiichi Sankyo’s advisory board. Federal records show he received nearly six times that amount.

Notably, between 2014 and 2017, Amin signed off on his own forms — a recurrent practice at Irvine, auditors found. Only in 2018 were his forms approved by a more senior staff member. Amin did not respond to questions about his consulting work.

The lack of disclosure extends beyond the Irvine campus. At UCLA, Dr. Richard Finn, an assistant professor of hematology and oncology, reported outside income of exactly $40,000 during the 2016-17 academic year. Federal records show that he earned at least $99,000 from pharmaceutical companies that year. Finn did not respond to questions about his industry ties. That same year, at UC San Francisco, Dr. Shane Burch, an associate professor of orthopedic surgery, reported $19,556 in outside earnings, whereas federal records show he earned $160,000 from medical device makers for consulting, teaching and speaking during that time.

Burch, who acknowledged that he owed money to the university from his outside consulting, said that the university’s policies have been unclear and poorly explained.

“The University of California might have put it in the fine print, but none of us understood it,” Burch said. “The university says go and do the outside activities, there is a lot of good that comes out of it. And, at the same time, the policies by which they enforce it have been really vague.”

An internal UC San Francisco audit in late 2016 found that one professor was serving on a speaker’s bureau for a pharmaceutical company and five were receiving side income from the private sponsors of their clinical trials — both violations of university rules. Auditors warned that such indiscretions could create “reputation risks” for the university.

“People who get in there and are trying to make money on the side: Why bother being a professor?” said Stanton Glantz, a UC San Francisco professor who researches the tobacco industry and sits on the conflict of interest committee for his campus; he doesn’t do any paid outside consulting with pharmaceutical companies. “If people are breaking the rules, they should be disciplined.”

Lisa Bero, former chair of UC San Francisco’s conflict of interest committee, said that her committee “was always troubled by incomplete information” due to the lack of centralized reporting. The reports were mostly used by departments to determine if faculty were spending too much time working outside of the university, rather than to identify potential conflicts of interest or the underreporting of income. “A universal, comprehensive conflict of interest disclosure and central review, at least for all research, is needed,” she said.

At UC Davis, Dr. Lin Zhang, a professor of neurology, appeared to underreport his consulting income by more than $200,000 in 2016 and 2017. Dr. Samuel Louie, a UC Davis professor of pulmonary, critical care and sleep medicine, reported earning $60,345 in 2017. According to federal data, he received more than $255,000 in consulting, teaching and speaking fees that year.

Zhang declined to respond to questions, and Louie did not respond to multiple emails and phone calls.

Since 1974, when California passed a comprehensive political reform package in the wake of the Watergate scandal, it has had some of the nation’s most rigorous conflict of interest rules for public employees, from annual reporting to caps on outside income. Tom Houston, who presided over the state’s Fair Political Practices Commission from 1979 to 1983, recognized it was not just politicians who could have financial conflicts, but professors as well. “There were very clear cases of the taxpayer making zero and professors making a ton of money,” he said.

Believing that mandatory disclosure was the only way to ward off potential conflicts, Houston pressured the university to comply with state law. Initially, it resisted, with faculty contending that disclosure infringed on academic freedom.

“Unless [the university] developed its own conflict-of-interest code and some way of enforcing it, we were going to do it for them,” Houston said. “They wanted a full exemption from the law, they didn’t want to have to file any reports on outside income.”

In the early 1980s, the university slowly started following the state’s disclosure requirements. One early dispute revolved around the bioengineering firm Calgene, which UC Davis agricultural professor Ray Valentine co-founded in 1980. During Calgene’s early years, the university questioned whether Valentine’s role at the startup constituted a conflict of interest. Valentine’s research had received a $2.5 million grant from a chemical company, which had also invested in his startup company, potentially creating an incentive to skew the research results. The university gave Valentine an ultimatum in 1981: give up the grant or step down from his company. He gave up the grant. In 1997, Monsanto bought the firm for more than $220 million. Valentine did not respond to emailed questions.

María Hergueta, special to ProPublica

By the 1990s, the university system had instituted its own rules on outside consulting, including the earnings threshold for health sciences faculty. But medical faculty often ignored them. When Pedowitz became chair of orthopedic surgery at UCLA in 2009, the university had recently demoted Dr. Jeffrey Wang, a renowned professor of spine surgery, for failing to report more than $450,000 in outside income from medical device companies. Pedowitz saw a similar pattern of conflicts with other professors in his department. During his first few months as chair, he prioritized bolstering faculty disclosure. But when he tried to collect the outside consulting reports from his faculty, many resisted and others filed incomplete or inaccurate forms.

“I took an aggressive, hard stance and the faculty revolted,” said Pedowitz, who then elevated his concerns to the university’s administration. His complaints were pushed aside, he said, and in 2010, the university pressured him to step down from his position of department chair. “I opened Pandora’s box.”

In 2011, Pedowitz filed a whistleblower retaliation complaint against the university, and in 2012, he sued in Los Angeles County Superior Court. Two years later, the case was settled for $10 million. The UC Regents denied wrongdoing, stating that the university resolved the suit to “refocus on its primary missions of teaching, research, patient care and community engagement.”

Two years later, the UC Regents paid more than $8 million to settle two lawsuits in the Los Angeles County Superior Court related to Wang’s conflicts of interest. Brought by patients claiming that their operations led to complications and recurring pain, the lawsuits alleged that Wang had failed to disclose his financial ties to Medtronic before using the company’s surgical devices. In court documents, both Wang and the UC System denied wrongdoing. Wang did not respond to questions from ProPublica.

Eric Epperson, a senior director of communications for Medtronic, did not respond to direct questions about Wang’s work with the company, but he said the company was “committed to transparency in order to increase patient confidence.”

Phil Hampton, director of communications for UCLA medical school, did not respond to specific questions about Wang’s case, but he said that in recent years, the school has taken steps to bolster disclosure and monitoring of potential conflicts, such as employing an electronic reporting system and creating a conflict management committee to review faculty consulting and formalize disciplinary protocols.

“We are evaluating potential reporting discrepancies and seeking to reconcile reports to UCLA Health with reports to federal regulators,” Hampton said in an emailed statement. “These and many other actions reflect a commitment to ongoing efforts aimed at ensuring behavior consistent with our values and the public’s expectations.”

If a faculty member is found to have violated the earnings threshold or inaccurately declared outside earnings, he added, the university would seek reimbursement “for funds that were owed to the compensation plan and should have been received by UC.”

Medical school professors aren’t the only ones who are supposed to hand over outside income to the university, but sometimes don’t. Until this year, professors at the UC Davis veterinary school were required to remit all of their outside earnings to the school’s profit-sharing plan. Now, they are governed by similar rules as their health sciences colleagues and share outside income above $40,000 with their program.

One UC Davis professor of veterinary medicine allegedly ignored the earlier requirement. In 2014, the UC Regents sued Dr. Jack Snyder in state court, accusing him of making — and keeping for himself — more than $1 million in unreported income from clinical work and consulting in multiple states, including California, Montana and Hawaii. Snyder, who is known for his expertise in equine surgery and has provided veterinary care for equestrian events at the Summer Olympics, frequently missed scheduled meetings, clinical shifts and laboratory classes without receiving prior approval, the complaint states.

In court documents, Snyder denied the allegations and said the university had not been harmed in any way.

Parker White, a lawyer who represents the university in the pending case, said the university does not discourage faculty from doing work outside the university, but it wants to take the profit incentive out of it. The primary responsibility of veterinary faculty should be their teaching and clinical duties, he said.

“If you want to be a private doctor, be a private doctor, but if you’re a teacher, be a teacher,” White said. “He’s not here showing the students how to be doctors.”

Snyder left the university shortly before it filed suit in 2014. Last year, the federal government indicted him for filing false tax returns and tax evasion. He pleaded not guilty to the charges, which are pending in federal district court in Sacramento.

Snyder did not return ProPublica’s phone calls, and his lawyers in the federal case did not respond to questions.

Even professors outside the health and veterinary fields, who don’t have to hand over outside income to the university, sometimes fail to report it. In 2016, auditors sampled about 300 faculty from UC Irvine’s law, business and engineering schools, as well as five health sciences departments, and found that 7% of faculty didn’t submit any disclosure forms. A quarter of faculty submitted their reports late or didn’t list the dates.

“Compliance issues go undetected” because of a fractured system for tracking or monitoring conflicts, the audit found.

A secret conflict of interest even put one UC faculty member behind bars — against the university’s wishes.

Tatsuya Suda, a former UC Irvine computer science professor, pleaded guilty in state court in 2014 to a felony conflict of interest charge for accepting secret payments from a Japanese company that was also funding his research.

“Professor Suda also had secret ties to Japanese corporations and a financial institution that communicated with him directly and in Japanese,” according to a 2012 complaint from the Orange County district attorney. “Because of the clandestine relationship with these companies, Suda was able to hide his financial relationship and payments from UC Irvine.”

Suda, who left the university in 2010, was double billing the university for travel expenses at academic conferences. Students also alleged that Suda pressured them to fill out fake travel vouchers, which the university would then reimburse.

Joe Williams, the former deputy Orange County district attorney who prosecuted Suda, recalled that the university administration didn’t want his office to bring the case.

“They felt that their system could deal with it and they didn’t want to criminalize the behavior,” Williams said. “I just thought that the law was there for a purpose.” Holbrook, the university’s spokesman, said it handled the Suda case as an “internal personnel matter” and declined comment on “our legal considerations.”

Suda was sentenced to more than 280 days in jail and ordered to pay more than $400,000 in restitution and costs to the university. He served about half of his sentence. Suda, who now runs his own information technology firm, did not respond to repeated requests for comment.

“He paid the price for it, but the system is what bothered me more than him,” Williams said. “He was operating in a system, and he wasn’t the only one doing it.”

Standing before doctors and patients in a hospital conference room in Burbank, California, last year, Hermanowicz touted Acadia Pharmaceuticals’ flagship drug.

“My favorite is the pimavanserin,” said Hermanowicz, who disclosed his funding from Acadia at the beginning of his talk. “It specifically was developed for psychosis symptoms in Parkinson’s disease and it works pretty well.”

Approved in 2016, the drug, better known by its trade name, Nuplazid, has been associated with more than 2,000 patient deaths and 10,000 other adverse events, according to FDA data — figures that one expert has called an “important warning signal.” But for Hermanowicz, those concerns were overblown.

Nuplazid “got some attention in CNN recently with maybe an increasing risk of death, which I don’t think is valid,” he told the crowd. “They didn’t really do a careful analysis. They just said people took this medication and then they died.”

When Hermanowicz first connected with Acadia, as early as 2012, it was a relatively unknown firm, with no drugs on the market. But biotech insiders had high hopes for the company, which for over a decade had been developing Nuplazid to treat severe psychosis associated with Parkinson’s.

Hermanowicz became one of the drug’s primary advocates. Besides serving as an investigator in the trials, he also published several studies on its safety and efficacy.

In August 2015, he co-wrote an Acadia-funded study in the American Journal of Managed Care on how to manage the symptoms of Parkinson’s disease, emphasizing the need for effective treatment options. The next year, a study that he co-wrote called the drug “an important advancement” and a “first choice for treatment of Parkinson’s disease psychosis,” and he said it had a “better safety profile than current treatments.” In both studies, Hermanowicz disclosed his ties to Acadia.

The FDA’s clinical review reached a different conclusion. Conducted in 2016 by Dr. Paul Andreason, it found an increased risk of harm and death. Nuplazid failed two clinical trials, and patients experienced double the rate of adverse events of those on a placebo. Based on reviews of similar drugs, Andreason determined that Nuplazid’s safety profile was “not adequately safe” for treating Parkinson’s-related psychosis.

“We needed more controlled trial data to identify what the risk was,” said Andreason, who has since left the FDA.

When Nuplazid came before the FDA’s approval committee, Hermanowicz testified at the meeting, expressing the hope that the drug “will be available to me to provide to my patients.” In the company’s press release celebrating the approval, Hermanowicz said he was “delighted.” He was the only nonemployee quoted.

After Nuplazid hit the market, reports of deaths associated with the drug surged. “It’s a very high number” of deaths, said Diana Zuckerman, president of the National Center for Health Research. While it’s difficult to determine why there are so many fatalities, she said, the drug’s benefit isn’t worth the risk. In hundreds of cases, patients’ hallucinations, which are supposed to subside with the drug, were instead aggravated.

“This is not a particularly effective drug,” she said. “So what is the risk you are going to take?”

Last year, an FDA analysis found no “new or unexpected” safety risks related to Nuplazid. Acadia has maintained that the drug is safe for patients, and that the multitude of adverse events reflects its patient population, which is mostly elderly and in an advanced stage of Parkinson’s disease. “Our top priority is patient safety and we stand by the established efficacy and safety of Nuplazid,” said Maurissa Messier, a senior director for corporate communications at Acadia, in an emailed statement. Acadia is now seeking approval for Nuplazid to treat the millions of people who suffer from dementia-related psychosis, such as Alzheimer’s disease.

Hermanowicz has continued to publish studies supporting Nuplazid, lead medical education courses sponsored by Acadia and receive large consulting payments from the drugmaker without disclosing them to the university.

Some faculty members do take pains to comply with the university’s policy on outside income. Dr. Anjay Rastogi, a professor and clinical chief of nephrology at UCLA medical school, meticulously tracks all payments he receives from industry in a centralized spreadsheet — and remits the required portion, which he said funds academic enrichment, teaching or research.

“We need to disclose everything, I disclose more rather than less,” he said. “In my opinion, it’s fair that we help the university, and they help us as well.”

Editors’ note: Annie Waldman is an education reporter at ProPublica. Her sister is a member of the medical faculty at UC Davis.

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