Days after selling her tobacco stock and
donating the proceeds to an anti-smoking program at UCSF, Dr. Susan
Desmond-Hellmann, chancellor of the public medical school and hospital
system, is facing new questions about her investments. This time it’s
about companies that sell prescription drugs and medical supplies.
"The potential conflict is that the official in charge of the
institution could push plans and research that directly benefit her
financially," said Doug Heller, executive director of Consumer Watchdog,
a consumer rights group based in Santa Monica.
Heller emphasized that there is no evidence of impropriety. And
Desmond-Hellmann said she will recuse herself from decisions that might
"But the perception lingers" when the head of a medical institution
has a vested interest in certain drugs or research, Heller said.
The question is more than academic because UCSF and other
universities are increasingly forging research partnerships with private
companies. For example, last month, the Merck pharmaceutical company
announced it would sponsor cancer drug trials around the world,
including at UCSF. Desmond-Hellmann owns more than $1 million of stock
in that drug company.
Stocks worth millions
It’s one of 10 medical or pharmaceutical companies in which the
chancellor owns stocks collectively worth at least $6.1 million to $7.3
million, but potentially much more, according to the statement of
economic interests she signed in August after joining UCSF.
"I am in full compliance with the rules and regulations that apply to
employees of the state of California and the University of California,"
Desmond-Hellmann said in a written statement to The Chronicle. "As
such, I disclose my economic interests as required and will disqualify
myself from participating in decisions that may affect my personal
Ethics experts say that is all the law requires.
"A conflict of interest doesn’t occur until an official influences,
participates in, or makes an official decision that impacts their
economic interests," said Roman Porter, executive director of the
state’s Fair Political Practices Commission.
Bob Stern, who helped write the state’s conflict-of-interest laws in
1974 as general counsel for the FPPC, said that because Desmond-Hellmann
owns so much stock, "she should be consulting with an attorney on
"There’s a potential for conflict," said Stern, now president of the
nonprofit Center for Governmental Studies in Los Angeles.
To avoid such problems, politicians from President Obama to
California Insurance Commissioner Steve Poizner have put their holdings
in blind trusts.
That means handing all holdings to a manager who sells everything and
starts a fresh portfolio without telling the client what’s in it.
California law allows public officials to stop recusing themselves from
key decisions only after this process is done, said Heller of Consumer
Watchdog. He said Desmond-Hellmann should consider a blind trust.
"The honor of being the chancellor of UCSF comes with the small
burden of rearranging your finances to avoid conflict – for the sake of
the institution and the public trust," he said.
State Sen. Leland Yee, D-San Francisco, said that even the appearance
of conflict is a problem.
"The fact that she has holdings in these medical companies, you need
to look at whether her support of that type of research at UCSF has been
objective," said Yee, a frequent critic of UC.
Issues over tobacco
Desmond-Hellmann, a medical doctor, ran into trouble over her
holdings last week when a New York Times reporter asked about her
holdings in the Altria Group, parent company of tobacco giant Philip
When the chancellor joined UCSF in August, she owned between $100,000
and $1 million in Altria stock, described on the disclosure form as
The current form, signed March 30, described Altria as a "consumer
staples" company, and the value of her Altria stock was listed as
between $10,000 and $100,000.
In her statement to The Chronicle, Desmond-Hellmann said that as of
Monday, she and her husband had "sold all holdings in companies whose
primary business includes the sale/manufacture of alcohol, tobacco and
firearms. We also have restricted the purchase of any future stocks in
this category and will monitor our portfolio to ensure that it reflects
Desmond-Hellmann donated $130,000 in proceeds from the tobacco stock
to UCSF’s Center for Tobacco Control Research & Education.
Created cancer drugs
Desmond-Hellman, 53, is perhaps the last person anyone would expect
to back tobacco, which causes cancer and heart disease.
She arrived at UCSF from the biotechnology giant Genentech where, as
president of product development, she helped develop such anti-cancer
drugs as Herceptin, Avastin, Taxol, Rituxan and Tarceva.
At the same time, Desmond-Hellmann also had owned up to $1 million in
McDonald’s and up to $100,000 in Coca-Cola. Fast food and sugary drinks
have been linked to obesity, which in turn is linked to higher risk of
heart disease, diabetes, high blood pressure and cancer, says the
National Institutes of Health.
These companies are gone from the current disclosure form, but she
now lists more than $1 million in the soft drink company PepsiCo.
Chancellor’s medical, drug stock
Of the 132 companies in which UCSF Chancellor Susan
Desmond-Hellmann owns stock, 10 are medical and pharmaceutical
companies. The holdings are listed on Desmond-Hellmann’s statement of
economic interests, Form 700.
Shares worth at least $1 million:
— Alcon Inc.
— Baxter International
— Covidien Plc.
— Merck and Co.
— Pfizer Inc.
— Tiva Pharmaceuticals
Shares worth $100,001 to $1 million:
— Bristol-Myers Squibb
Shares worth $10,001 to $100,000:
— Celgene Corp.
— Medco Health Solutions Inc.
— Vertex Pharmaceuticals
E-mail Nanette Asimov at [email protected].