Former GlaxoSmithKline pharmaceutical executive Moncef Slaoui
Former GlaxoSmithKline pharmaceutical executive Moncef Slaoui, who will serve as chief adviser on the effort to find a vaccine for the coronavirus disease (COVID-19) pandemic, speaks as US President Donald Trump listens during a coronavirus disease response event in the Rose Garden at the White House in Washington, US, May 15, 2020. Image Credit: Reuters

Chief of White House's 'Operation Warp Speed' vaccine effort can keep investing in pharma firms, under IG ruling

WASHINGTON: The co-director of President Donald Trump's Operation Warp Speed can maintain extensive investments in the drug industry and avoid ethics disclosures while he continues to make decisions about government contracts for promising coronavirus vaccines under a decision this week by the Health and Human Services inspector general.

Monday's ruling by the Office of Inspector General (OIG) came in response to a complaint filed by the advocacy groups Public Citizen and Lower Drug Prices Now.

Exception to rules

The groups said the Trump administration has carved out an improper exception to federal conflict of interest rules for Moncef Slaoui, a venture capital executive and former high-ranking official at drug giant GlaxoSmithKline.

Slaoui took the helm of Operation Warp Speed in mid-May as what the administration has described as a volunteer contractor, accepting just $1 for his services. That designation has allowed him to avoid the requirement for government employees to disclose financial interests and divest in holdings that conflict with their responsibilities.

Public Citizen and Lower Drug Prices Now contend that there is no basis in law for Slaoui to run Operation Warp Speed without being a full-time government employee or a "special government employee," a designation that permits the government to tap outside people with unique expertise for up to 130 days.

"The whole purpose of that is to allow Slaoui to avoid the conflict of interest and public disclosure requirements," Craig Holman, Public Citizen's chief watchdog for conflicts of interest and government lobbying and ethics rules, said Tuesday.

In their complaint to the Office of Inspector General filed May 28, the groups said: "It is imperative that there be a reasonable level of confidence that the decisions coming from the Warp Speed project are being based on the public's interest. But the conflicts of interest posed by Slaoui's private-sector employment and financial interests with his new official role in government seem enormous and seriously undercut such confidence."

The inspector general, in a brief letter rejecting the groups' complaint, did not address the broader questions about conflict of interest and instead focused on the definition of a special government employee. It said Slaoui did not qualify for that designation because he is very likely to be in his post for more than 130 days.

It said OIG is "not in a position to determine that [the HHS] decision was unreasonable when it pursued options other than an SGE appointment for Mr. Slaoui's advisory services for this operation."

The Office of Inspector General is being led by the principal deputy inspector general, Christi Grimm, pending the confirmation of Trump's nominee for the top job, Jason Weida, an assistant U.S. attorney in Boston. Trump announced Weida's selection in May after he expressed displeasure with a report from Grimm's office that discussed "severe shortages" of government supplies available for its response to the coronavirus pandemic.

Operation Warp Speed said in response to complaints about potential conflicts of interest that Slaoui has taken steps, including selling stock and stepping back from corporate leadership, that mitigated ethical concerns.

"HHS ethics officers have determined Dr. Slaoui's contractor status, divestiture and board resignations put him in compliance with our robust department ethical standards. The American people are fortunate to have him as a leader of President Trump's effort to discover vaccines, therapeutics and diagnostics to defeat the coronavirus," the administration said in an email.

The administration trumpeted Slaoui's expertise as a former chief of vaccine development for GlaxoSmithKline when it tapped him to co-lead Operation Warp Speed. Slaoui has been credited with leading the creation of 14 vaccines in 10 years.

The New York Times reported in May that Slaoui continued to hold $10 million worth of stock in GSK and did not wish to divest after assuming his Operation Warp Speed post. GlaxoSmithKline has teamed up with drug company Sanofi to develop a coronavirus vaccine.

The administration said Slaoui will donate any gains in GSK stock beyond the average pharmaceutical stock index increase to National Institutes of Health research.

When he accepted the role as Trump's top vaccines official, Slaoui stepped down from the board of director at Moderna, one of the leading contenders to develop a vaccine. The administration also said he was selling his stock holdings in Moderna. Moderna has $483 million in government commitments to develop its vaccine candidate.

Medicxi, Vaxcyte

Slaoui has taken a temporary hiatus from his job as a partner at Medicxi, a venture capital firm that has invested in more than 50 biotech companies. He is chairman of the board of one of the companies that has received investment from Medicxi, Vaxcyte, which develops vaccines.

He also is chairman of Galvani, a bioelectronics company owned by GSK and Verily Life Sciences, which is part of Google parent Alphabet Inc., according to an administration news release at the time of his government appointment.

Slaoui's lack of financial disclosure has attracted negative attention from Democrats on Capitol Hill.

Last month, Sens. Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut and Rep. Pramila Jayapal of Washington wrote to Health and Human Services Secretary Alex Azar blasting his employment status, calling it "a blatant attempt to skirt federal ethics law."

Democrats outraged

"If Dr. Slaoui were properly brought on as a federal official, it would be illegal for him to maintain these conflicts while leading Operation Warp Speed," the lawmakers said in a news release.

"It is outrageous that the administration made a special arrangement, circumventing the law, that allows Dr. Slaoui to avoid disclosing his conflicts of interest," they wrote to Azar.