WASHINGTON – Rep. Chris Collins' lawyers don't want jurors to see a memo from his staff discussing legislation that could affect Innate Immunotherapeutics, the Australian biotech firm that's at the center of the criminal insider trading case against the Republican lawmaker from Clarence.
Mention of that memo at a court hearing earlier this month hearkened back to one of the earliest strands of the scandal that has enveloped Collins for more than two years. Congressional ethics experts have said Collins introduced legislation that could have benefited a company where he was the largest shareholder and served on the board of directors.
While Collins' team says that helping Innate was never his intent, a review of the 53 bills Collins has authored since his 2012 election shows that seven of them involve issues of importance to biotech companies that, like Innate, invent drugs.
None of those bills became law on their own – but ideas he pushed in three of them ended up being incorporated into widely praised bipartisan legislation that modernized the prescription drug market in 2016.
None of this looks good to Donna M. Nagy, executive associate dean and law professor at Indiana University.
"His personal securities investments in Innate call his legislative judgments into serious question," said Nagy, a security law expert who believes lawmakers should not be allowed to invest in individual stocks. "Was he advocating/proposing legislation for the public good or for his own personal profit as a principal shareholder in Innate?"
'Some sort of talking points'
Collins' spokeswoman, Jennifer Brown, bristled when asked whether Collins' investment in Innate and his lawmaking activities were intertwined.
"Congressman Collins never sponsored or co-sponsored legislation with Innate in mind," Brown said.
Still, one of Collins' own defense lawyers sparked such questions at a court hearing in the criminal case against Collins in New York earlier this month.
Attorney Jonathan B. New argued that the Constitution's speech or debate clause – which aims to protect congressional business from the prying eyes of presidents or prosecutors – bars plenty of evidence from being used against Collins.
Among the items jurors should not be able to see, New said, was "some sort of talking points about legislation that might affect Innate."
Yet Brown, Collins' congressional spokeswoman, appeared to deny the very existence of the memo that New cited in court.
“We are unaware of any so-called 'talking points about legislation that might affect Innate’ other than responses to baseless accusations in the media," she said.
The 21st Century Cures Act
Among any "legislation that might affect Innate," the most important could be the 21st Century Cures Act.
In January 2017, the Wall Street Journal, The Buffalo News and other media outlets noted that Collins had played an important role in the passage of that major 2016 legislation that aimed to modernize drug regulation.
That bill expanded the number of senior researchers at the Food and Drug Administration, just as an earlier Collins bill had suggested.
Similarly, just as Collins had suggested in two earlier bills, the 21st Century Cures Act speeds up the clinical trials of new drugs – a move that won praise from then-President Barack Obama, a Democrat.
"We’re building on the FDA’s work to modernize clinical trial design so that we’re updating necessary rules and regulations to protect consumers so that they’re taking into account this genetic biotech age," Obama said upon signing the legislation.
But Richard W. Painter, a lawyer who served as chief ethics officer in the White House under President George W. Bush – a Republican – termed Collins' involvement in such legislation an "absolutely terrible" conflict of interest, given the bill's possible impact on Innate.
"The real problem we have is that members of Congress are not criminally liable simply for passing a bill that helps a company they own stock in," Painter said. "They are not subject to the criminal conflict of interest statute."
An impact on Innate?
Collins had long told reporters that his involvement in the 21st Century Cures Act posed no conflict because Innate was based in Australia and had no business in front of the U.S. government.
But six months after Obama signed that bill, Innate announced that it wanted to conduct clinical trials of its experimental multiple sclerosis drug in the U.S.
That never happened. Days after making that announcement – which boosted Innate's stock price – the company announced that its clinical trials in Australia and New Zealand had failed.
Prosecutors say that Collins, an Innate board member, got that inside information before the public did and passed it on to his son, Cameron, who passed it on to his prospective father-in-law, Stephen Zarsky. Cameron Collins and Zarsky stand accused of dumping their shares based on inside information, while Collins is accused of launching their inside trades. All three men were arrested last August and charged with fraud, conspiracy and lying to the FBI.
That big news obscured what Collins had done before, but Craig Holman never forgot. He's the public affairs lobbyist for Public Citizen, a good-government group, who filed a complaint about Collins with the Office of Congressional Ethics back in January 2017.
He wanted that office to investigate whether Collins "was using his official position to introduce and promote legislation that would benefit his bottom line."
And now, "You know, it appears very likely the case," Holman said last week.
'A shill for pharma'
Collins kept on legislating pharmaceutical issues even after the Office of Congressional Ethics began probing him in early 2017.
In May of that year, he reintroduced an earlier proposal that would have forced the FDA to change its rules regarding its testing of new medications.
And last June – two months after FBI agents visited him at his Washington condo for an interview – Collins introduced a bill aimed at reforming a federal drug discount program in a way that could make it more profitable for pharmaceutical companies.
Neither of those proposals made their way into law. But for Michael Weinstein, president of the Los Angeles-based AIDS Healthcare Foundation, those bills solidified Collins' reputation as the pharmaceutical industry's main man on Capitol Hill.
"He's a shill for pharma," Weinstein said last week. "I don't know how it relates to Innate, but he was by far the most brazen person in Congress when it came to carrying water for the industry."
Weinstein said he was particularly outraged about the bill Collins introduced last June, which the Daily Beast reported on at the time. That bill would have imposed user fees and strict audits on health care providers that get discount drugs under the federal government's 340B program. That program allows nonprofit health care providers to buy drugs at the cheaper price the government pays, rather than the full mark-up paid by private hospitals.
But Brown, the Collins spokeswoman, said the congressman is simply trying to fix a federal program that is not working.
"His concerns revolve around a program that has become extremely large and has no accountability or transparency with federal regulators," Brown said. "Reform of the 340B program would have nothing to do with Innate."
Call for reform
Collins' investment in Innate ended in big trouble for the congressman and a call for reform in Congress.
Collins lost millions of dollars when Innate's stock collapsed in late June 2017. Then the Office of Congressional Ethics issued a report four months later saying it had "substantial reason to believe" Collins violated federal law by touting Innate's stock based on inside information.
Ten months after that, Collins got indicted on entirely separate insider trading charges. And earlier this month, the House Ethics Committee announced that it would resume its probe of Collins after his criminal trial, which is set for next February.
Collins' troubles resonated in the Senate. Last August, Sen. Elizabeth Warren of Massachusetts, a Democratic presidential candidate, proposed barring all federal elected officials from owning individual stocks.
And earlier this month, Sens. Sherrod Brown of Ohio and Jeff Merkley of Oregon – both Democrats – introduced narrower legislation that would bar members of Congress from buying and selling shares in individual companies.
“Members of Congress serve the American people, not their stock portfolios,” Brown said.
Neither of those proposals is likely to pass soon. Painter, the ethics expert, noted that many powerful members of Congress or their spouses are heavily invested in the stock market, thereby making the bill a tough sell.
Asked for Collins' view of the legislation, his spokeswoman did not reply.
Innate changed its names to Amplia Therapeutics late last year, and Collins is no longer listed as among its top 20 shareholders. But his daughter, Caitlin Collins, retains 1.27 percent of Amplia's stock.
Her father remains deeply interested in the pharmaceutical industry.
The Republican House leadership barred him from serving on congressional committees, where legislation gets honed. But that did not stop Collins from proposing a far more extensive proposal reforming the 340B drug discount program.
Introduced in March, that bill has no cosponsors.