Stanford University, responding to a request for information from Sen.
Charles Grassley (R-Iowa), has said that faculty member and APA
President-elect Alan Schatzberg, M.D., has properly complied with its
requirements for disclosure regarding his financial interest in a
pharmaceutical company he cofounded and consulting fees he earned from other
Grassley's staff later acknowledged that at least one charge leveled
against Schatzberg about undisclosed income was in error.
Moreover, the university is "fully aware" of the extent of
Schatzberg's interest in Corcept Therapeutics Inc., the company he cofounded,
and has "managed the conflict of interest to ensure that it did not
influence the research he was conducting," the university said.
(According to the company's Web site at<www.corcept.com>,
Corcept is engaged in development of medications for treatment of severe
psychiatric and metabolic diseases believed to result from, or be negatively
affected by, prolonged exposure to elevated cortisol. Schatzberg is chair of
the company's scientific advisors, according to the Web site.)
The allegations and request for information made by Grassley—who is
the ranking Republican member of the Senate Finance Committee—is part of
a number of investigations he has launched into relationships between medicine
and the pharmaceutical industry. These include requests for information from
APA and at least two other physician organizations (see Senator Wants APA
Records of Drug-Industry Interactions).
In a letter to Stanford University President John Hennessy, and in comments
on the Senate floor published in the June 23 Congressional Record,
Grassley alleged that Johnson and Johnson reported paying Schatzberg $22,000
in 2002 and that in 2004 Eli Lilly reported paying him $52,000—but that
neither of these payments appeared in disclosure statements made by
But Stanford responded in a public statement two days later that in fact
both earnings were reported; in the first case, the discrepancy
appeared because the $22,000 was reported by Schatzberg as coming from
Janssen, which is the wholly owned subsidiary of Johnson and Johnson that made
In the second instance, university documents show that Schatzberg disclosed
three sources of compensation from Eli Lilly in 2004: less than $10,000 for an
advisory board, $10,000 to $50,000 for consultation, and $10,000 to $50,000
for honoraria. "[S]o, together, this disclosure fully accounts for the
2004 payments from Lilly," according to Stanford.
A further charge by Grassley stated that Schatzberg had not disclosed
receiving a payment from Eli Lilly in 2007. "That is simply an
error," Stanford said in response. "Dr. Schatzberg did disclose
Grassley's staff later acknowledged the error, and a press officer for the
senator told Psychiatric News that a correction would be placed in
the Congressional Record. (At press time it was not known when that
would appear.) When asked whether Grassley found Stanford's response to all of
the charges satisfactory, the press officer said that "his investigation
She added, "His investigation is not focused solely on Stanford, and
it is not focused solely on psychiatry," but that at least 20 other
institutions were also receiving requests for information from the
Grassley also charged that Schatzberg did not disclose to the university
the true value of his stock holdings in Corcept and did not disclose earnings
from a sale of some of the company's stock in 2005.
(An SEC filing shows Schatzberg as owning 2,438,749 shares of Corcept as of
March 30, 2007. On July 31, Corcept stock closed at $1.86 a share.)
Again, Stanford refuted Grassley's charge in its statement. In keeping with
university requirements, Schatzberg "disclosed in writing his ownership
of the Corcept stock and its actual value," the university stated."
As a result, Stanford was fully aware of the value of his stock based
on his disclosures to the university."
Moreover, Stanford said the stock sale was publicly disclosed through
filings with the Securities and Exchange Commission (SEC).
Additionally, the university stressed that Schatzberg has not "been
involved in managing or conducting any human subjects research involving
mifepristone, a pharmaceutical that Corcept licenses for the treatment of
psychotic major depression."
Stanford acquired a patent on mifepristone in the 1990s following
NIMH-funded research, for which Schatzberg was principal investigator, on the
biology of psychotic depression. The patent was then licensed to Corcept."
Before the patent was issued, Dr. Schatzberg did not have any financial
interest in this drug. Once he was aware he was going to have a financial
interest in mifepristone, he disclosed it, and Stanford University managed the
conflict of interest."
The university added, "Stanford and Dr. Schatzberg disclosed this
conflict and the fact that Stanford was managing the conflict to the NIH
[national Institutes of Health]. In addition, NIH reviews its data through its
Data Safety and Monitoring Board structures."
Stanford also said in its statement that it had acquired "a small
amount of equity in Corcept under a technology license" and that"
pursuant to its policy on institutional conflict of interest, Stanford
divested itself of the stock."
However, a search of university SEC filings turned up a March 31 filing
that appeared to indicate that some 47,000 shares are held in the university's
name. (The SEC filing is a "13F" document that, according to the
SEC's Web site, "is required of institutional investment managers who
exercise discretion over $100 million or more in securities." It can be
found online at<www.sec.gov/Archives/edgar/data/1315828/0001315828-08-000002.txt>.)
When Psychiatric News asked the university about its filing, the
university issued a statement in which it explained that the stock is
individually held by the university's investment management company as part of
a fund for the graduate school of business and is not related in any way to
the university's research on mifepristone.
"A Stanford Graduate School of Business [GSB] investment fund, whose
purpose is to benefit the school's education programs, purchased $100,000 of
stock in Corcept Therapeutics in August 2007," Stanford said in a
statement. "The University does not monitor the individual holdings of
its investment funds managed by the Stanford Management Company, including the
GSB fund, as there is an ethical wall between the University's research and
operations and investment of its endowment, so that one does not influence the
other. This transaction occurred more than three years after the University
had divested its entire stake in Corcept, acquired through its licensing
agreement with Corcept. That sale was the result of the University's
institutional conflict of interest policy, enacted in December 2002, that
prohibits the University from holding any stock in a company acquired through
licensing of its technology if the company has a product undergoing human
subjects research at the University. Investments in publicly traded companies
managed by the Stanford Management Company are not required to be divested
because it is believed that these circumstances sufficiently insulate
University faculty and administrators from presumed biasing
Additionally, information contained in Corcept filings with the
SEC—and later confirmed by Stanford's press office—indicates that
Stanford also receives $50,000 annually from Corcept as a non-refundable
royalty payment. The company is also obligated to pay Stanford a $50,000"
milestone" payment upon the filing of a new drug application for
Corlux (the company's brand name for mifepristone) for the treatment of
Alzheimer's and psychotic major depression. The company will be required to
pay a further $200,000 milestone payment upon FDA approval of Corlux,
according to the SEC filing.
"Stanford gets no payments for any other uses of
mifepristone/Corlux," a Stanford press officer told Psychiatric
News. "The payments are related only to the use of the patent for
Alzheimer's disease or psychotic depression; all other uses are outside of the
two indications covered in the Stanford patent."
In an interview with Psychiatric News, Schatzberg characterized
Grassley's investigation as an "attack" and defended his work on
developing drugs for psychotic depression.
"I don't relish the publicity," Schatzberg said. "What we
have done for the last 10 years is try to develop a novel treatment for one of
the most serious mental illnesses. If that is going to be impugned, then it is
a sad state of where we are in terms of trying to help people with severe
"I have nothing to hide, and I am delighted that Stanford has made it
clear to the public that all is OK and there were no improprieties."
As for the money from his investments and consulting activities, he said,"
Anytime someone makes a profit, it will generate a lot of conflicting
feelings among people, including anger."
In addition, Schatzberg emphasized that the current system of drug
development allows for—actually encourages—the kind of
collaboration between academic medicine and the pharmaceutical industry that
has existed between Stanford and Corcept.
Specifically, a 1980 change to a federal law known as the University and
Small Business Patent Procedures Act (also known as the Bayh-Dole Act, after
its sponsors Birch Bayh, a former senator from Indiana, and Bob Dole, a former
senator from Kansas) gives U.S. universities and nonprofit organizations
intellectual property rights over inventions—such as novel
pharmaceuticals—that result from federal research funding.
The law was specifically enacted to speed the transfer of research
discoveries to the marketplace by allowing universities to license their
patents to private firms—just as Stanford did with its patent on
mifepristone. Mifepristone is also known as RU486, a drug that acts as a
progesterone antagonist and has for that reason been used to induce
But as Schatzberg explained, it is also a glucocorticoid antagonist."
We have long had the idea that psychosis seen in depression is due to
excessive production of cortisol and could potentially be treated by
administering antagonists for the low affinity glucocorticoid receptor,"
But in part because of politics surrounding the use of the agent to induce
abortion, companies did not want to invest in testing it for psychotic
"If we were ever going to get the drug to the market for psychotic
depression," said Schatzberg, "we were going to have to do it