Medicare Agency is Focus of Insider Trading Investigations

Employees of the federal agency that oversees Medicare and the federal health exchange website are the focus of three Securities and Exchange Commission (SEC) investigations to determine whether they leaked news about pending health policy decisions that would up in the hands of Wall Street traders.

According to The Wall Street Journal, nearly a dozen officials at the Centers for Medicare and Medicaid Services (CMS) have spoken to investigators, with some receiving immunity in exchange for their information.

The Jounal reported that one of the probes is centered on a CMS decision in June 2010 to set coverage limits on a prostate cancer drug made by Dendreon Corp. Official documents and people close to the investigation say that the official in charge of making the decision emailed three colleagues telling them to keep the news secret until a formal announcement could be made. However, investigators say Dendreon shares had dropped 10 percent by the end of the day when the decision was made. By the end of that June, Dendreon’s stock price had dropped 26 percent from the start of the month.

The investigation is also focusing on at least three policy and research firms that may have acted as middlemen for the inside information. The Journal reports that a second investigation, which involves the FBI in addition to the SEC, is focused on whether a firm called Height Securities LLC was informed ahead of schedule about a pending increase in funding for health insurance firms in April 2013.