108th Congress

Testimony Before the Senate Appropriations Subcommittee on Labor, HHS, and Education

Stephen I. Katz, M.D., PhD.
Director, National Institute of Arthritis and Musculoskeletal and Skin Diseases
National Institutes of Health
Department of Health and Human Services
January 22, 2004

Mr. Chairman, Senator Harkin, and Members of the Committee:

I am Stephen I. Katz, M.D., Ph.D., Director of the National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS) and Senior Investigator in the Dermatology Branch of the National Cancer Institute (NCI). I am a dermatologist, an immunologist and a research scientist. My research has been focused on basic and clinical studies related to the skin and the immune system.

I have devoted my entire medical and scientific career to public service and have done so, I believe, in a manner that reflects the highest integrity, first in the U.S. Army and, for almost the last 30 years, at the NIH. For 24 of these years, I was Chief of the Dermatology Branch of NCI and for six of these years, I served as both Dermatology Branch Chief and Director, NIAMS. During 12 of these years (1983-1995), I also served as the Marion Sulzberger Professor and Acting Chair of Dermatology at the Uniformed Services University of the Health Sciences.

During my nearly 32 years of public service, I have focused my research efforts on enhancing our understanding of how skin functions as an immunologic and inflammatory organ system and how it becomes a target for autoimmune diseases. I have trained more than 60 research dermatologists, almost half of whom now serve as Deans of medical schools or Professors and Chairs of Dermatology Departments in leading centers in the U.S., Europe and Asia. I have received many awards and honors from both governmental and non-governmental organizations, including the President’s Distinguished Executive Award of the Senior Executive Service.

In my role as a physician, scientist and leader at the NIH, I have had numerous interactions with scientists in the private and public sectors, including those in industry, and have always abided by governmental rules regarding such contacts. I have consulted with industry at various times beginning in 1986, when such interactions between government and industry were encouraged by then President Reagan to promote technology transfer from government to the private sector.

When I became Director of the NIAMS in 1995, I conferred with NIH ethics officials and, on their advice, stopped all of my consulting activities. In late 1995, I was informed that a new policy had been adopted by the NIH, initiated by then Director Harold Varmus, which again permitted such consulting arrangements. Thereafter, I began to accept consulting relationships on a limited basis. However, recently, in response to Dr. Zerhouni’s outside activity approvals memo of November 20, 2003, and in keeping with the spirit in which it was written, I elected to terminate my one remaining outside consulting agreement.

These consultations utilized my global knowledge as both a dermatologist and a basic scientist and, as required, were conducted outside of my government work schedule. The consultations dealt with a broad range of subjects, but were most often focused on my critiquing the activities that the company was undertaking to address a given clinical or basic science issue and suggesting new or varied approaches. In no instance did I ever discuss, with any company for which I was consulting, any research that it might be conducting with the NIH or any application it had submitted to the NIH for funding. Although I had many opportunities for consulting, I undertook such consultations only if the issues were of intellectual interest to me, I felt that I could contribute scientifically and the agreements would not create unavoidable conflicts of interest that might interfere with my duties at NIH. These consultations provided me with an in-depth knowledge of how industry functions – knowledge that has helped me in carrying out my responsibilities at the NIH and especially as NIAMS Director.

I wish to emphasize that I have always conducted myself in full compliance with NIH's rules and regulations; that I have always sought and received official government permission to undertake these consultations; that I properly and, in writing, recused myself from contacts with the companies with which I consulted; that, as an NIH employee, I made no decisions affecting any company for which I consulted; that I fully and publicly reported all income earned from outside consulting; and that government-supported research was not influenced as a consequence of my consulting agreements.

It is in this context that the allegations presented in the LA Times December 7, 2003, article must be considered. These allegations of misconduct on my part are misleading, grossly inaccurate, and filled with false innuendo. The manner in which the story misrepresented my actions deliberately led the reader to an entirely false impression about my conduct. Buried within the innuendos are the facts -- that I always conducted myself in accordance with government regulations; that I recused myself where appropriate; that I made no decisions regarding the companies for which I consulted; and that I reported all outside income. However, the carefully crafted story paints a very different and entirely inaccurate picture.

Within days of the article’s publication, Slate Magazine took the LA Times to task for "choosing to furtively prod the reader" to conclusions about my conduct that were not justified by the facts. Even as sophisticated a reader as The Associated Press was misled by the way the article described my actions and was required to issue a formal correction of its story on the article. In addition, other newspapers, such as the Charleston, W. Va. Gazette and the Pittsburgh Post Gazette, picked up the LA Times story, were also misled by the way it was written, and they issued apologies, corrections or letters in response to my identifying the misleading nature of the LA Times story.

The LA Times story raised questions about my relationship with two companies, Advanced Tissue Sciences and Schering AG.

On the matter relating to Advanced Tissue Sciences, I had recused myself and made no decisions regarding their application or grant. In keeping with NIH policies, the recusal was sent to the Deputy Director for Extramural Research at NIH, who had responsibility for making decisions regarding this company.

With respect to my consultation with Schering AG, the LA Times story identified a gap in the NIH recusal process. Although I had recused myself from all matters relating to “Schering AG,” NIH had no mechanism in place to identify subsidiaries or affiliated entities to the companies from which NIH staff had recused themselves. Then, when Berlex, a U.S. subsidiary of Schering AG, undertook to help support a lupus study, no one at NIH linked US-based Berlex to its German parent company Schering AG for purposes of applying the recusal policies. As a consequence, the usual procedures which prevented anything identified as a matter related to Schering AG from reaching my desk, failed to operate with respect to issues related to Berlex.

Notwithstanding this gap in the system, and despite the sensationaI and wholly innacurate impression the LA Times sought to create, I did not make any substantive decisions which affected Berlex or the lupus trial conducted with its drug.

Because of the misleading emphasis given by the LA Times to my three contacts with the lupus trial, I will review these in detail for the record:

1. I signed a form letter acknowledging a gift to the NIAMS from Berlex: As Director, I routinely sign such thank you notes drafted by others. This gift was negotiated by another NIAMS employee without my knowledge or involvement, and followed the usual administrative clearance procedures through the NIH technology transfer experts. Significantly, at the time I signed the letter, neither I nor any NIH staff handling my recusal were aware that the thank you note was addressed to a subsidiary of a company for which I was consulting. I was consulting for Schering AG’s Center of Dermatology in Berlin, Germany- the subsidiary company had a different name (Berlex) and, at that time, did not have anything to do with dermatology or products related to the skin. In fact, I did not become aware that it was a Schering AG subsidiary that had supplied one of the drugs used in the lupus trial until the LA Times made inquiries to me about these issues.
2. With regard to the lupus nephritis trial, I had no role in conceiving, initiating or overseeing the trial. I made no decisions about how the results were to be reported or what the NIH's response should be to the patient's death. When the patient died, as Director, I was notified by the NIAMS Clinical Director, Dr. Jack Klippel, who told me that actions were being taken to determine the cause(s) of death. Standard NIAMS procedure following an adverse event required the Clinical Director, not the Institute Director, to make all necessary decisions and take any actions required subsequent to the event. As the most knowledgeable person about the trial, Dr. Klippel was the appropriate person to take action. Of importance for our purposes here, is the fact that at that time, neither he nor I discussed or focused upon who had manufactured the drug utilized in the trial, let alone whether it was provided by a subsidiary of a company for which I was consulting. Consistent with NIH procedures, no decisions were made by me during that conversation. The author of the LA Times article knew this and that is why he included only that "Steve Katz was notified almost immediately," without expanding on what he (the author) learned in his conversation with Dr. Klippel. In fact, and also known to the LA Times, studies using the drug in question for lupus nephritis had been undertaken at the NIH, and by the NIAMS in particular, long before I ever became Director of the NIAMS.
3. In April 2000, Dr. Peter Lipsky (the NIAMS Scientific Director) told me that there was going to be a newspaper report on the death of the patient in the lupus nephritis trial, and that in his opinion, possible litigation might follow. We thereupon met with Dr. Ruth Kirschstein, then Acting Director of NIH, who told us to refer all calls to the Office of General Counsel. At that meeting, none of us discussed the company that had manufactured the drug in question, and certainly not that it bore any relationship to a company for which I was consulting. Most importantly, no decisions were made by either Dr. Lipsky or myself at that meeting.

Thus, notwithstanding that the recusal process failed to exclude me from three contacts with a matter related to Berlex, most important to this hearing, is that no substantive decisions related to this lupus trial were made by me, despite the misleading insinuations contained in the LA Times story.

In sum, in my three brief contacts with this trial, I was unaware that it bore any relationship to a company with which I was consulting. I had no role in the conception or initiation of the lupus nephritis study, was not advised that it was ongoing, and had no role in overseeing its conduct or in how the results were reported or in what the NIH's response should be to the patient's death. All decisions were made in accordance with established procedures by people other than me.

Of note, in preparing my response to the LA Times article, I learned that Dr. Michael Gottesman, NIH Deputy Director for Intramural Research, was informed by the NIH Office of Human Subjects Research that the death of the patient in the lupus trial was properly reported to regulatory authorities by the NIAMS and promptly reported to the Food and Drug Administration and to the National Institute of Allergy and Infectious Diseases (NIAID) Institutional Review Board, the review group that was overseeing this study. Decisions regarding the notification of other patients in the study and whether the study should be continued or not were solely those of the principal investigators and the NIAID Institutional Review Board. In addition, the DHHS Office for Human Research Protections (OHRP), on February 27, 2002, reported that, upon examination of this study, it found no evidence that the investigators and the NIAID Institutional Review Board failed to ensure the safety of the research subjects, as required by DHHS regulations.

I share Dr. Zerhouni’s view that the NIH must uphold the highest standards for scientific excellence and ethical practices, and believe that my career in government service has been exemplary in this regard.

While the issue of the relationship of the NIH and its senior scientists to private industry is an important topic for public reflection and discussion and while this is a legitimate and appropriate issue for debate in the media, I believe that it is entirely improper and unfair of the LA Times to have maligned my character and misrepresented my actions in focusing attention on this topic.

I am pleased to have had the opportunity to appear before the Committee to publicly set this record straight and will be happy to answer any questions you may have.