Wealth and Conflicts of Interest

Carl Bialik’s column in the Wall Street Journal this past weekend (Nov. 12, 2011) discusses the “Income Ladder’s Sticky Steps.”  He tackles the difficult question of assessing mobility, showing how defining the strata may change the conclusions that can be reached, including issues such as (1) What age groups should be included? (2) How do you handle natural progress of careers; older employed folks usually make more than they did when they were younger because their careers progress? (3) Would we be better tracking longterm earnings, as there can be natural fluctuations from year-to-year?

These have important implications when trying to look at economic progress.  For example, the Occupy Wall Street folks claim they are the 99% who are below the chasm of the 1% highest earners.  Of course they are – the 99 out of 100 people will be in the 99% by definition.  Except for celebrity guests of the Occupiers (who likely are in the 1%), those with the time on their hands to protest will be in the 99%.

Bialik states, without making further comments, “And none of the income measures explicitly includes wealth, which is distributed more unequally than income.”  This is an important statement.  Bialik is not the only one who recognizes but does not deal with the issue of wealth.  In Conflicts of Interest in medicine and health care wealth is at least partially ignored.  How?

Most conflict of interest disclosure requirements for authors in journals or speakers in continuing medical education events include provisions to disclose relationships with companies or other interests.

The International Committee of Medical Journal Editors states:  “Conflict of interest exists when an author (or the author’s institution), reviewer, or editor has financial or personal relationships that inappropriately influence (bias) his or her actions (such relationships are also known as dual commitments, competing interests, or competing loyalties).”

The American Council on Continuing Medical Education (ACCME) states:

2.1 The provider must be able to show that everyone who is in a position to control the content of an education activity has disclosed all relevant financial relationships with any commercial interest to the provider. The ACCME defines “‟relevant‟ financial relationships” as financial relationships in any amount occurring within the past 12 months that create a conflict of interest.

In the ACCME’s case financial relationships are defined as “…those relationships in which the individual benefits by receiving a salary, royalty, intellectual property rights, consulting fee, honoraria, ownership interest (e.g., stocks, stock options or other ownership interest, excluding diversified mutual funds), or other financial benefit.”

How does this normally exhibit itself in CME speaking activities?  In my experience the moderator of a session will state “so-and-so discloses that (s)he owns stock in [Drug] Company” or “so-and-so discloses that she has been paid an honorarium by [Device] Company” and it is left at that.  As we know, disclosure doesn’t fix the conflict, it merely reveals it.   Loewenstein notes related to the physician-patient relationship,

Disclosure may give the adviser a “moral license” for strategic exaggeration in the adviser’s best interest. (“I told her I had a conflict—now, I can recommend the surgery.”) Having disclosed a conflict of interest, moreover, advisors may feel compelled to give advice in an extra-forceful fashion.

This may be similar for the speaker-audience relationship, “I [the speaker] have disclosed my conflict, now I needn’t worry about it, or I may feel free to discuss it even more than if it were hidden.”

However, the key question that needs disclosure is “What does this relationship mean to the speaker and how has it influenced his/her presentation of information?”  Simply knowing that someone has been paid an honorarium or owns stock in an enterprise doesn’t tell the audience if such ownership is meaningful.  More importantly, what does that represent in terms of one’s income or wealth?  If the speaker has net worth of $100 million, owning $10,000 of stock likely is relatively meaningless.  On the other hand, if the speaker’s net worth is only $200,000, that $10,000 of stock may be critical for how she wants to please either the commercial interest (to get more stock or honoraria) or the audience (to purchase more of the product offered by the commercial interest).

(As an aside, at a recent Harvard University Program in Ethics and Health conference conditional cash transfer payments to encourage health promoting activities in second world countries was discussed.  As I recall, levels of payments had to approach 20-30% of annual income to get behaviors to change substantially.  This, of course, differs from findings related to physician behavior, which is influenced by small pharmaceutical company gestures.)

So, while ignoring wealth as the denominator of disclosure is usually done, we should consider the issue as a much more important measure.  Further there likely is some interactive relationship between meaningful financial ownership (wealth) and income.  Income fluctuations may have little meaning if the amounts are small, or if one has equilibrium with a lifestyle that is fully supported by drawdowns on existing wealth (not requiring additional annual wealth through income or increases in, for example, stock value).

Because of the complexity of the interaction of wealth, income, and meaningful bias/influence the leading medically-related institutions are moving to requiring disclosure of any financial relationship between an author/speaker/influencer and a commercial interest.  This makes sense, in that research indicates that we often don’t let data get in the way of our biases, which can easily come from financial self-interest, and that even small conflicts can result in unconscious bias.   Until we have more reliable data on the relationship between wealth and income this is probably prudent, but also recognizably excessive.

How to find the right balance?  More easily done when more research is completed.

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