Top cancer center’s business deals created a web of conflicts, say ethics experts

In forging partnerships with a New Jersey hospital and a data analytics startup, Memorial Sloan Kettering Cancer Center has created a web of interlocking financial interests and conflicts that, ethics experts told STAT, raise doubts about whether the prominent New York City hospital can always put its patients’ interests first while using information in their medical records to make money.

In late 2016, Memorial Sloan Kettering signed a deal with Hackensack Meridian Health, one of New Jersey’s largest hospital systems, giving the cancer center access to a larger pool of patients and a bulwark against encroaching competition from other national players in cancer care.

Within a year, MSK launched another collaboration with a data analytics startup called Cota, and invested $1.4 million in the company. Its founder: a Hackensack Meridian executive and oncologist named Dr. Andrew Pecora, who was Hackensack’s lead negotiator in striking the blockbuster 2016 partnership and serves on the board overseeing the hospitals’ joint venture.

Cota promises that its software can ingest patient data from electronic medical records and spit out insights about how best to treat various cancers. But MSK’s stake in Cota’s commercial success, the ethics experts said, calls into question whether its executives can be objective about the value of Cota’s software for patients. Hackensack Meridian is also a minority investor in Cota and contracts with the company for data analysis services.

“It sets up the potential for bias,” said Dr. Robert Cook-Deegan, a bioethics expert and professor at Arizona State University. “It’s all perceived to be part of their business interests. You can’t play that game and at the same time retain the perception as being a white hat to the patient.”

Both hospitals said their partnership and deals with Cota were unrelated and that they had taken steps to ensure that any potential conflicts don’t influence their decisions.

STAT’s examination comes as Memorial Sloan Kettering faces criticism for other business arrangements, including one in which the cancer center gave exclusive rights to anonymized images of patient pathology slides to a private entity whose investors include MSK’s clinical leaders and board members. Concerns raised about these arrangements highlight the ethical dilemmas arising as Memorial Sloan Kettering and other providers seek to use their patient data not only to improve care, but also to increase their revenues.

The cancer center is also collaborating with IBM in the development and sale of Watson for Oncology, a product that combines its clinical expertise with artificial intelligence to deliver cancer treatment recommendations. The cancer center receives royalties on the sale of IBM’s product.

Ethics experts said these deals fall into a regulatory gray area in which hospitals and other private companies are trading on patient data in novel ways that may cross ethical lines and trigger a backlash among patients.

“When institutions start treating things like patient tissue or data as properties or assets they can start selling, people start readjusting what they’re willing to share with those institutions,” said Cook-Deegan. “It’s common sense that folks are going to react that way.”

Hospitals nationwide are entering into contracts with private technology companies to help analyze their data and make better decisions about the care of patients. The details of those deals, and the amount of money flowing back and forth, are seldom publicized, and hospitals are largely free to craft them as they see fit.

A spokesman for Memorial Sloan Kettering, Mike Morey, said in a statement “there is zero connection” between MSK’s partnership with Hackensack Meridian and its agreement with Cota. He described them as “two separate transactions driven by entirely different goals that occurred nearly one year apart from one another,” and added that the cancer center considered 15 vendors before deciding to partner with Cota.

The collaboration with Cota calls for the company to use MSK’s anonymized patient records to build datasets of clinical genomic information that could help improve patient care and advance MSK’s research priorities. Cota, in turn, can incorporate MSK’s data into products sold to hospitals, drug companies, and other customers. MSK will receive a share of Cota’s revenues based on the use of its anonymized patient data in those products. So far, MSK has shared with Cota information from 55,000 records of adults treated between 2014 and 2017.

Morey said MSK “always has and always will evaluate the value of any relationship objectively and based on our perspective as to whether the partnership advances our mission of preventing, treating and curing cancer.”

Mary Jo Layton, a spokeswoman for Hackensack Meridian, said the health system became a minority investor in Cota because of its “groundbreaking technology and the impact it can have on the future of medicine.”

Details of the business deals were not  previously disclosed by Memorial Sloan Kettering or Hackensack, making it hard for patients to understand these relationships and the financial interests of the parties involved.

The deals also pose conflicts for Pecora, the chief innovation officer and vice president of cancer services at Hackensack. “There has to be conflict management processes in place,” said Pilar Ossorio, a bioethics professor at the University of Wisconsin Law School. “But at a certain point, the conflicts can become so severe, it’s not possible to manage them.”

Layton said Pecora’s relationship with Cota “is being reviewed” as part of the hospital’s conflict management policy.

Joining forces to head off competition

Memorial Sloan Kettering’s arrangements with Cota and Hackensack stand out because of the criss-crossing financial interests involved, ethics experts said. The cancer center had long sought a clinical partnership in New Jersey, where the rate of cancer incidence is among the highest in the U.S.

By striking the partnership with Hackensack, which operates the John Theurer Cancer Center, MSK could attract more patients without having to spend significant sums to acquire another provider. No money changed hands through the 10-year partnership agreement, in which the hospital systems agreed to co-brand their facilities in New Jersey and develop standard treatment plans for their patients.

In promoting the partnership, executives with MSK and Hackensack said it would benefit patients by expanding their access to clinical trials underway at both institutions. It would also allow the organizations, which treated 1 in 5 New Jersey cancer patients before their partnership, to increase their clout in the market at a time when rivals were also ramping up their presence. In the years before the partnership, Houston-based MD Anderson Cancer Center, one of MSK’s biggest national competitors, had formed affiliations with two hospitals in New Jersey.

Several studies have shown that hospital mergers and other deals that limit competition in regional markets often result in higher costs for patients, because the providers are able to command higher reimbursements from insurers. It is unclear whether the partnership between Hackensack Meridian and Memorial Sloan Kettering has affected costs in New Jersey.

Pecora negotiated the MSK-Hackensack partnership with Dr. Jose Baselga, who was MSK’s chief medical officer until resigning this year after the New York Times and ProPublica reported that he failed to disclose millions of dollars in payments from drug and health care companies connected to his cancer research. The relationship between Pecora and Baselga dates to the 1980s, when both gained reputations as standout fellows at Memorial Sloan Kettering.

As part of the new partnership, Baselga and Pecora were appointed to a steering committee charged with overseeing the implementation of its goals. The partnership was to include a focus on using data analysis to improve care, an area in which Pecora had been working through Cota Inc., which he founded in 2011. However, both hospitals said their partnership was unrelated to their work with Cota.

Six months after the partnership was signed, Cota and Hackensack Meridian announced a pilot study with IBM, in which Cota’s data would be incorporated into Watson for Oncology to help provide better treatment recommendations to patients. That deal opened the door to additional business benefits for the parties: Cota got a shot at a potentially lucrative partnership with IBM, while Memorial Sloan Kettering stood to collect additional revenue based on the use of its data and expertise in the companies’ products. Memorial Sloan Kettering declined to say how much revenue it has collected through the sale of Watson for Oncology.

Several months later, Memorial Sloan Kettering selected Cota for the separate data deal in which the company would build new data sets to help MSK improve care for its patients. The deal provided a major boost to Cota, attaching a nationally recognized data collaborator to its product.

Morey, the spokesman for Memorial Sloan Kettering, said “none of the parties involved in the chief negotiations of the clinical partnership had a role in negotiating the terms of an agreement with a data partner.” The contract terms were negotiated by the cancer center’s technology transfer office, with assistance from outside counsel.

MSK executives have said their main goal for partnering with Cota was optimizing the use of available clinical data to gain insights into clinical decision-making and potentially improve patient outcomes.

About two months after the contract was awarded, Memorial Sloan Kettering invested $1.4 million in Cota, taking a 4.2 percent equity stake in the company.

Cook-Deegan, the bioethics scholar, said the decision to invest in Cota creates a transparency problem for Memorial Sloan Kettering, because startups typically disclose only limited details about their operations and finances. Furthermore, he said, such investments set up a conflict between the cancer center’s mission to deliver the best care to patients and its financial interest in pumping up the company’s valuation in advance of a possible initial public offering or sale to another company.

“There’s really strong incentive to spin it to make the stock price go up or to promote the IPO so it goes successfully,” Cook-Deegan said, adding that health care institutions risk losing the trust of their patients by failing to disclose their financial interests in startups. “That’s the space where institutions need to be most careful and most transparent.”

Yet few health care providers across the country have developed clear standards, especially in regard to deals that involve sharing patient data. Ossorio, the bioethics professor at the University of Wisconsin, said the need to do so is urgent, as more institutions are being approached by technology companies seeking to gain access to their data to build new software products.

“Institutions don’t have policies for what to do with their patient data and they see it as a big gold mine,” Ossorio said. “We have been in an era for awhile where a lot of bad behavior is tolerated in the the kinds of deals that get done.”