Life Science Compliance Update

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September 10, 2010

The Controversy on Disclosure of Private Donations to Patient Organizations

The National Alliance for Mental Illness (NAMI) is one of the nation’s best organizations for helping families dealing with mental illness. Founded by relatives (parents and spouses) of those with mental illness, over the years they have been perhaps one of the most effective groups in helping those relatives and patients of mental illness deal with the disease and its sometimes life threatening or at least earth shattering effects. 

Despite their success, NAMI came under investigation when Senator Grassley’s(R-IA)  began sending letters to influential disease and patient advocacy organizations.

As reported by Gardner Harris in the New York Times, Mr. Grassley’s investigation found that “a majority of the donations made to the NAMI, have come from pharmaceutical manufactures in recent years.”

The NYT reported that documents they obtained from Mr. Grassley showed “pharmaceutical manufactures from 2006 to 2008 had contributed nearly $23 million to the alliance, about three-quarters of its donations.” Such funding should be of no concern because the pharmaceutical industry only breaks down to about 50% of NAMIs $10 million to $13 million budget. Consequently, NAMI began “posting on its Web site the names of companies that donate $5,000 or more,” the amount they contributed, and how the money was spent.

It came as a surprise to the Chronicle of Philanthropy  to find such “detailed, up-to-date information about NAMI’s donors,” something they thought was “highly unusual in the nonprofit world.” Especially now since “Mr. Grassley turned an eye on 33 additional nonprofit medical groups by making it clear he would like them to follow the mental-illness alliance’s lead.”

He explained the need for such information because “these organizations have a lot of influence over public policy, and people rely on their leadership.” As a result, he asserted that “there’s a strong case for disclosure and the accountability that results.”

While his focus is on medical issues for now, as the Chronicle points out, Grassley’s practice “could have implications for all charities that receive donations from businesses in areas that overlap with their nonprofit missions.” In fact, this has already happened. As the story explained, the Nature Conservancy “recently came under fire for accepting donations from BP,” which some thought undermined the group’s response to the oil spill in the Gulf of Mexico. Consequently, “the nonprofit group had to spend time (and money) trying to allay such concerns, pointing to policies and procedures that they said prevented any undue influence.

There is also another larger issue at hand regarding Mr. Grassley’s investigation: “the notion, protected by law, that charities have discretion over how much to reveal to the public about their donors.” But Paulette V. Maehara, president of the Association of Fundraising Professionals, asserted that “donors do have rights regardless of what Senator Grassley might think.” She maintained that the “confidentiality of donors” must be preserved and their rights respected.

Supporters of Senator Grassley—mostly anti-industry critics—believe he “is right to examine nonprofit groups as part of his broader effort to unveil the possible influence of corporate cash on doctors, academic researchers, and others who offer medical advice to the public.” Some, such as Howard Brody, director of the Institute for the Medical Humanities at the University of Texas Medical Branch in Galveston, believe that these non-profits are treated by some pharmaceutical companies as “an extension of the marketing department.”

If you asked the thousands of patients and families who have received support and treatment from these organizations, they would tell you that the services they provide to patients are sometimes the only options they have. If there were not as much support or donations from industry, these services would be reduced and patients would suffer. Moreover, if you were to tell the faculty and staff at such organizations they would lose financial support, resources, and potentially their job because of the “possible influence” of donors, they would tell you the main goal of their organization is to the people they serve, not their donors.

Consequently, The Chronicle reviewed responses to more than half of the groups contacted by Senator Grassley (see table), and found “wide-ranging differences in the policies groups have to determine whether to acccept corporate money and when to share information about those payments with others.”

In examining these documents, The Chronicle found groups that took in more than $100-million aggregate each year from medical companies in the form of donations, advertising revenue, exhibit fees, corporate memberships, and support for continuing medical education. But in some cases, “the money represents only a small share of the charity’s budget. For example, the American Cancer Society says such revenue totaled $10-million in 2009, or only 1.2 percent of the group’s nationwide income of almost $900-million.” For other groups, the percentage was higher, but many explained that was because of the economy and other factors such as grants not being renewed.

With respect to NAMI, the group’s executive director, Michael J. Fitzpatrick, asserted that “never in its history, in 31 years, has NAMI been compromised.” Accordingly, Mr. Fitzpatrick acknowledged that “the pharmaceutical money helps the group develop public-awareness programs to fight the stigma around mental illness.” Despite the positive effect this funding provides, he pointed out that “the percentage of the group’s revenues that come from drug makers is expected to fall from about 50 percent in 2008 to less than 40 percent by the end of this year­­ because they are fundraising from other sources.”

The Chronicle also pointed out that “the overwhelming majority of nonprofit medical groups do seek out corporate cash as a way to help pay for their work.” For example, as Douglas Henley, president of the American Academy of Family Physicians noted, “the dollars allow it to offer programs to help doctors better treat patients.” He further emphasized the fact that this money is “appropriately managed” by following good conflict-of-interest policies. And the overwhelming majority of organizations have such policies.

Another problem created by Senator Grassley’s inquiry is that many “groups that advocate for patients with relatively rare diseases do not have large, powerful pools of donors.” As Carol Weisman, a fund-raising consultant for health charities, in St. Louis pointed out, Senator Grassley’s investigation is raising concern among these rare disease groups because “the more devastating the disease, the less likely it is the families can fork over any money,” and the more dependent they are on non-profit organizations. Where will these patients go when there organization has less funding? What will be the real benefit if their loved ones die due because of some misguided situation, their diseases get barely any recognition to begin with, and very little lobbying presence in Washington to help fund research on their disease.  They need the collaboration of brave entrepreneurs willing to risk capital to find cures and industry partnerships are important to make this happen.

Critics of industry support and charitable donations point to a so called “science of reciprocity.” They look at a study in the American Journal of Bioethics in 2003, which “showed that small trinkets can increase donations or sales.” In fact, the study said that “customers spent more money in a pharmacy when the owner gave them a cheap key chain.” To some, these results are “evidence” that despite doctors being trained in the scientific method, even they can be influenced by the “science of reciprocity,” or the desire to offer something in return.

These assertions are misguided and problematic, and the evidence extremely weak. No doctor is truly influenced or predisposed because of a pen or pad of paper. There are too many other factors this study could not have controlled for (i.e. increase in diagnosis, treatment, new breakthroughs, recent education, etc.), and the results could be merely coincidental. The fact is doctors are not making decisions based on pens and lanyards. They are, when they have the time, reading journals, attending CME events, and working with their colleagues to find new information and data to help their patients. Doctors barely have the time to participate in such activities, let alone remember what drug company may be on their pen or coffee mug.

In the end, without the revenue from the medical industry, many non-profit medical organizations could not conduct their programs because “the only alternative would be to radically raise dues.” Since Mr. Grassley and other critics of such support offer no solutions, how does any propose keeping such organizations running without these donations?

Accordingly, non-profit organizations should continue implementing policies that encourage and advance transparency of their donations in order to keep the public trust and their integrity high. It is important that policymakers and government officials recognize these efforts and work with non-profit organizations to ensure continued financial support from the private sector because this money helps doctor’s better treat patients.

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