Over the past year, a growing number of insider trading cases involved information concerning drugs, devices and companies that develop them. But the recent case involving Sid Gilman, a leading Alzheimer’s expert and former University of Michigan neurology professor, has focused increased attention on the issue. Gilman, you may recall, chaired the safety monitoring committee for the 2008 trial of the ‘bapi’ drug that was developed by Wyeth and Elan, and became a tipster in what federal prosecutors last month called the “most lucrative insider trading scheme ever charged.” He provided inside info about the trial to a former trader at a division of SAC Capital who was charged with making $276 million in combined profits. As it turns out, more than one in five US insider-trading cases involved health-care stocks, and since 2007, 97 people charged or sued by regulators for insider trading gained an edge thanks to secret info about drugs and devices, according to Bloomberg News. Yet most drugmakers among 30 surveyed refused to discuss their policies, and those that did saw no reason for change, the news service writes. NPS Pharmaceuticals (NPSP) ceo Francois Nader tells Bloomberg said insider trading is largely confined to “rogue cases from time to time,” a view shared by other execs. But critics say it is a systemic problem that will undercut investor support if companies fail to step up. It is “garbage” that drugmakers are doing all they need to do, Bill Singer, a former regulatory attorney with the American Stock Exchange who is now in private practice at the Herskovits law firm, tells Bloomberg. “The industry isn’t capable or willing to regulate itself.”
