Nominee's Past Investments Create Present Concerns

Donald Trump’s pick for Secretary of Health and Human Services, former Rep.  Tom Price, is still in the hot seat after the Senate Finance Committee held confirmation hearings to determine whether he is qualified to fill the position.  The committee has held two hearings to date, totaling to eight hours of interrogation on topics ranging from public health concerns to how Price will handle the dismantling of the Affordable Care Act – one of Donald Trump’s main campaign promises.  The main concern, however, has been Price’s financial investments in pharmaceutical and biotech firms, and how that relationship may create conflicts of interest down the road. 

Per the conflict-of-interest rules, lawmakers should not contribute to legislation that directly affects them financially.  However, an exemption exists for stock that is publicly traded and worth less than $15,000. Most of Price’s investments fall into this category, and technically this is not unethical. Similarly, the STOCK Act, which was enacted in 2012 by President Obama, prohibits members of Congress from using trading information that is not available to the public when making decisions on their investments. 

Price’s public financial disclosure report revealed that he owns stock in several health care related companies, including Aetna, CVS, Zimmer Biomet, and Innate Immunotherapeutics, whose share price is influenced by legislation Congress enacts and the Department of Health and Human Services enforces.  While Price has stated that he would divest himself of the stock he holds in the corporations that pose a conflict, there is still a high degree of uncertainty regarding his intentions due to the nature of his prior investments.

In March 2016, Price purchased $15,000 worth of stock in Biomet, a company that manufactures medical devices, specifically hip and knee replacements.  Two days after the purchase, Price introduced legislation that would delay the progression of a regulation that would have altered the reimbursement procedures for Medicare and Medicaid.  Although his legislation prevents a regulation that would have directly hurt Biomet, Price has stated that a broker purchased the stock, and that he had no direct knowledge of the investment prior to him introducing the legislation.

His most troubling investment was in the Australian biotech firm Innate Immunotherapeutics.  In 2015, Price invested $5,000 in the firm. In August 2016, the firm needed to raise more capital, and specifically targeted “sophisticated U.S. investors.”  The company then sold almost $1 million in reduced priced stock to two congressmen, Rep. Chris Collins and Tom Price.  Rep. Collins is on the company’s board and has been investing in the company since 2011; his family’s holding is around 20%. Price’s August contribution is his largest investment in the company to date.  In his disclosure, Price stated that the investment was between $50,000 to $100,000, it was later determined that the investment was between $100,000 and $250,000.  When this error was brought to Price’s attention, he agreed to recalculate the value using market value at the time of disclosure, instead of at the time of purchase.  Innate Immunotherapeutics indicated that it hopes to utilize the funds for FDA approval, and wants to gain “investigational new drug” status to shorten the approval process.  Price has a history of contacting the FDA on the drug manufacturer’s behalf. At his confirmation hearing​, Price denied allegations of receiving stock tips from Rep. Collins regarding Innate Immunotherapeutics. 

Although there is no direct evidence of wrongdoing, there are still valid concerns surrounding the nomination of Tom Price.  His past relationships with health-related corporations create the possibility of conflict, regardless of whether he divests himself of all his stocks.  There is already speculation that he drafted and pushed through legislation that would directly impact the companies in which he has a financial relationship. Accordingly, it is unclear whether he will be able to remain impartial going forward during his tenure as secretary of HHS. 

Originally from South Jersey, Tamalyn attended Loyola University Chicago where she received a B.A. in Political Science and a B.S. in Criminal Justice & Criminology.  A Health Law Fellow and current 3L from DePaul University College of Law, she has a passion for Health Law Policy and Healthcare Compliance.