Paige.AI, a startup that applies artificial intelligence to cancer diagnoses, was founded by three insiders at Memorial Sloan Kettering Cancer Center in New York City — which subsequently granted the company exclusive rights to its archives, presenting a possible conflict of interest, a joint investigation from ProPublica and The New York Times argues.
Here are six things to know about the potential conflict of interest:
1. MSK and three leaders at the center — a member of the health system's executive board, the chairman of its pathology department and the head of one of its research laboratories — hold equity stake in Paige.AI. Three other board members are investors in the MSK spin-out, as well.
2. Paige.AI has an exclusive deal to use MSK's 25 million patient tissue slides and pathologists' extensive library of past work, which some argue give Paige.AI an advantage over its competitors. Unlike other startups that market an invention, the Paige.AI-MSK deal centers on access to raw materials, according to ProPublica and NYT.
3. In a letter — which was tweeted out by ProPublica editor Charles Ornstein — sent to the health system's staff shortly after the article was published, MSK President and CEO Craig Thompson and COO Kathryn Martin disputed "mischaracterizations included in the [New York Times/Propublica] article." They noted that "no patient tissue, patient slides or protected health information has been — or will be — used by, or shared with, Paige. AI." MSK also posted the statement to its website.
4. Several MSK pathologists expressed concerns over the deal, claiming it is unfair for Paige.AI founders to receive equity stake in a company that relies on their expertise and work. They also questioned whether the deal implicates patient privacy, even if the data used in the project is anonymized.
5. According to experts in nonprofit law and corporate governance that spoke with ProPublica and NYT, MSK may not have complied with federal and state law when it made the deal with Paige.AI, since charitable institutions like MSK must show that they don't provide assets to insiders for less than the fair market value.
"It just seems awfully coincidental that the individuals involved happen to be people in control and influence of that asset, and they ended up with an exclusive use of it," Marcus Owens, a Washington lawyer who ran the IRS division that oversees tax-exempt organizations, told ProPublica and NYT. "It seems to create a cascading series of conflicts for the operation of Sloan Kettering."
6. However, MSK officials said board members invested in the startup only after Paige.AI attempted and failed to drum up outside interest from investors. Officials added they acted properly and appropriately in approving the deal, and in exchange for sharing its database, MSK received about 9 percent stake in the company.
Click here to access the complete ProPublica-NYT article.
Editor's Note: This article was updated on Sept. 26, after MSK reached out to Becker's Hospital Review. MSK said recent news stories included "mischaracterizations" about the deal, including the sharing of patient tissue, patient slides or protected health information with Paige.AI. MSK clarified that the patient slides are stored with and remain in MSK's possession. Becker's updated this article for clarity.