Ex-chief of cancer agency faces new queries

WASHINGTON -- The investigative arm of Congress has widened the scope of a long-running inquiry into whether a former director of the National Cancer Institute helped steer a $40 million federal contract to Harvard University during a period when he was seeking jobs at the university and one of its medical school affiliates.

House leaders requested the Government Accountability Office investigation in August after spending nearly two years on their own inquiry into whether Dr. Richard D. Klausner skewed the application process to favor Harvard, where he was seeking its presidency. In light of the allegations, the GAO will examine if the National Cancer Institute, has adequate procedures to prevent conflicts of interest.

The GAO inquiry is the latest blow to the National Institutes of Health, a federal agency that includes the cancer institute, which earlier this year was forced to take a tougher stance on conflicts of interest after reports that NIH employees accepted millions of dollars in fees and stock for work they performed for drug companies. The disclosure of lucrative outside contracts also triggered high-profile congressional hearings.

The House investigation zeroed in on Klausner's actions and the process the institute used to award a $40 million contract in March 2002 to create a new lab to speed drug development. Klausner twice had pledged in writing to avoid activities related to Harvard because he was under consideration for employment there as the contract was fine-tuned and made public, and as bids were received.

On June 9, 1999, while he was under consideration for a job at Dana-Farber Cancer Institute, a teaching affiliate of Harvard Medical School, Klausner signed a memorandum recusing himself from matters involving Harvard, according to the House probe. Klausner signed a second recusal from matters related to Harvard in December 2000 -- he was a candidate to be Harvard's president until February 2001.

The recusals, effective immediately on the date signed, remained in effect for up to one year after each of Klausner's unsuccessful job searches.

In the summary of their inquiry, House investigators noted that during the time he had recused himelf of institute business related to Harvard, Klausner had frequent contacts with Harvard scientists -- including a renowned chemist who co-founded a Cambridge pharmaceutical company that gave Klausner stock and paid him consulting fees shortly after he stepped down as NCI director in 2001.

''During the June-November 1999 time period when [Klausner] was seeking employment with Harvard, documents and witness statements provide reasonable grounds to believe the NCI director participated personally and substantially as a government employee in matters affecting Harvard," wrote US Representatives Joe Barton, Republican of Texas, and Edward Whitfield, Republican of Kentucky.

Barton is chairman of the House Energy and Commerce Committee, which has oversight over NIH. Whitfield is chairman of the House oversight and investigations subcommittee. The congressmen's letter summarized the findings of House investigators.

Klausner ultimately took a job as global health executive director for the Bill and Melinda Gates Foundation. He announced recently he will step down to begin a different business venture in Seattle. His resignation announcement was not due to the House investigation, he said.

Klausner, through his lawyer, denied wrongdoing and disagreed with the time line given by the House that appears to show active involvement in Harvard matters while he was seeking employment there.

House investigators reviewed thousands of pages of documents and puzzled over Klausner's handwritten notes on his appointment calendar, according to Barton and Whitfield's letter.

Among other activities, Klausner, they said, ''personally recruited" three of 10 panelists who were directed to assign scores to the six finalists, from which a single contract would be awarded. The lead scientist for Harvard's application e-mailed the university's dean of the faculty of Arts and Sciences to report ''working closely" with Klausner on the project, noting 10 meetings with Klausner in Washington and ''regular phone discussions" as key elements for the molecular lab concept evolved. The e-mail, dated April 11, 2000, described a close working relationship between the Harvard scientist and the NCI director during the time period covered by Klausner's June 9, 1999 recusal memo.

''Given the evidence of his interactions on Harvard matters, it is questionable whether the NCI director complied with the terms of the recusal memorandum he signed," Barton and Whitfield wrote.

Their 17-page letter stamped ''confidential" and sent on Aug. 8 to the GAO, was posted on the website for The Cancer Letter, which tracks cancer policy and funding.

Moreover, the letter indicates, within days of leaving the cancer institute on Sept. 30, 2001, Klausner accepted a board position and 100,000 shares of stock from Infinity Pharmaceuticals Inc. The Cambridge firm, which now has one experimental anti-cancer drug in early-stage trials, was co-founded in 2001 by Stuart L. Schreiber, the lead scientist for the $40 million federal grant awarded to Harvard.

Because of overlapping allegiances, even actions described as innocent could take on the taint of a conflict of interest, the House leaders wrote.

Schreiber's office referred phone calls to the university's media relations staff.

A spokesman said the university did not receive favorable treatment. Harvard won the NCI contract based on ''the merit of the proposal," said Kevin Casey, Harvard's senior director of federal and state relations.

''No one, as far as I'm aware, has said Harvard did anything but follow the rules as they were laid out," Casey said.

Klausner's National Cancer Institute appointment calendar showed numerous contacts between himself and Infinity co-founders, including Schreiber and Steven Holtzman, according to the House committee leaders.

Klausner denies wrongdoing, according to his lawyer, who said his client sought ethics guidance from the cancer institute and followed it.

''Dr. Klausner does not think he did anything wrong," said Peter Spivack. ''That committee was independent. My client did not sit on the committee. He didn't go to [its] meetings or participate in deliberations. And at the end of the day, when he left NIH, he didn't even know who had been awarded the contract."