- The SEC is investigating insider trading allegations relating to activity at the Centers for Medicare & Medicaid Services (CMS) dating back to 2010, when there were discussions about potentially limiting coverage of Dendreon's Provenge (sipuleucel-T) for treatment of prostate cancer.
- Shortly after internal communication regarding the planned review occurred at CMS, shares of Dendron plunged.
- There are three ongoing investigations into the matter. The gist of the inquiry is whether two policy-research firms and a former CMS official acted as middlemen in providing information to investors.
The SEC has issued subpoenas to the policy-research firm Marwood Group LLC and also to former CMS employee David Blaszczak. There are also many other oarties wrapped up in the investigation, including other firms, Wall Street traders, and government officials.
If any of these investigations eventually lead to formal charges, this will be one of the first cases to test whether one of the major ways in which information is exchanged in Washington violates insider trading laws. As the case continues to unfold, there will undoubtedly be opportunities for precedent-setting policy changes.