Yesterday, The Boston Globe reported that Fidelity Investments will pay $8 million to settle charges that traders improperly accepted gifts from brokers seeking their business. The SEC investigation revealed that traders for the Boston-based company received an estimated $1.6 million in gifts (including sports tickets and some very strange bacchanalia involving dwarves) between 2002 and 2004. Some of the 13 traders involved are still under investigation by the SEC, and Fidelity has admitted no wrongdoing in the settlement.
The Globe excerpts several email from brokers who were gifting, including this one to a Fidelity trader in March 2003: "Your prompt response will be rewarded w/ Celtic playoff seats. Thanks for caring." According to The Globe, “the SEC said Fidelity traders failed to seek the best stock trades on behalf of its mutual fund customers because their choice of brokers was influenced by gifts.”
Different verse, same refrain. Gifts influences behavior, whether you’re prescribing Zocor or selling shares of Merck. And in both cases, the costs of those compromised decisions fall to a party that, well, wasn’t invited to the party…or the Celtics game…or the golf trip. While the guardians of our health and our finances jockey for favor and market share, it seems we patients and investors are left to pick up the tab, and swallow the pill.
And speaking of gifts...
A relevant editorial appeared in the Hartford Courant today about the dim prospects for two bills that address the gifts-for-prescribing regulatory waltz industry has been doing around federal anti-kickback rules. Last year’s bill, which never got voted on, would have required pharmaceutical companies to disclose all gifts to docs and other health care providers or face a hefty fine. This year’s, also DOA, would ban quid pro quos (which the federal anti-kickback statute already does), gifts for physicians personal use, pharma-physician consulting deals without specific deliverables, but would allow small business-use gifts (like post-its) and samples to continue.
Both bills were proposed by Connecticut AG Richard Blumenthal and supported by the Connecticut Center for Patient Safety.
The Wall Street Journal health blog puts the Courant editorial in the context of several other state and federal bills being considered to rein in the gifting of doctors – including Massachusetts, where Senate President Therese Murray introduced a health care bill this week that would, if passed, become the first complete ban on industry gifts to physicians in the country.