Rep. Tom Price Purchases Discounted Healthcare Stocks While Drafting Industry Legislation

On August 31, 2016, Rep. Tom Price (R-GA), chairman of the House Budget Committee and member of the Ways and Means Health Subcommittee, purchased between $50,001 and $100,000 in discounted shares of Innate Immunotherapeutics, an Australian biotech company, through a private placement offering available to fewer than 20 U.S. investors. Price received a tip from Rep. Chris Collins (R-NY), who sat on Innate’s board and owned 17 percent of the company, allegedly gaining access through a “friends-and-family program” that offered shares at a 12 percent discount unavailable to public investors. This purchase was part of over $300,000 in healthcare stock trades Price made in 2015-2016 while simultaneously drafting healthcare legislation affecting those companies’ valuations, raising allegations of STOCK Act violations and insider trading that would later trigger investigations and controversy during his HHS Secretary nomination.

Pattern of Healthcare Stock Trading While Legislating

Tom Price’s trading activity between 2015-2016 established a troubling pattern of purchasing healthcare stocks while holding positions of legislative authority over the industry:

Innate Immunotherapeutics: Price made multiple purchases totaling between $50,001 and $100,000 in 2015 and 2016, with his largest purchase occurring during the August 31, 2016 private placement. Rep. Chris Collins allegedly informed Price about the exclusive offering as part of Innate’s “friends-and-family program,” allowing Price to buy shares at $0.25 and $0.34 per share—a 12 percent discount. At the time, Price served on the House Ways and Means Health Subcommittee and was drafting healthcare legislation. Collins would later resign from Congress on October 1, 2019, the day before pleading guilty to insider trading, and was sentenced to 26 months in prison for crimes directly related to Innate Immunotherapeutics.

Zimmer Biomet: In May 2016, Price purchased between $1,000 and $15,000 in stock in the medical device manufacturer just two weeks before introducing the Healthy Inpatient Procedures Act of 2016, legislation that would have delayed Medicare value-based purchasing rules potentially decreasing payments to companies like Zimmer Biomet. The timing suggested Price introduced legislation benefiting a company in which he had just invested. Later that year, Zimmer Biomet’s political action committee donated $1,000 to Price’s campaign. Price claimed his broker made the Zimmer Biomet trade without his knowledge, an explanation ethics experts found insufficient given his fiduciary responsibility to monitor his portfolio.

Total Healthcare Stock Trades: Congressional financial disclosures revealed Price made over $300,000 in healthcare-related stock trades between 2012 and 2016 while serving on committees overseeing healthcare policy and legislation. These trades included pharmaceutical companies, medical device manufacturers, insurance companies, and biotech firms—all subject to legislation Price helped craft.

STOCK Act Violations and Legal Exposure

Price’s trading raised serious allegations of violating the Stop Trading on Congressional Knowledge (STOCK) Act:

STOCK Act Requirements: The 2012 bipartisan law prohibited members of Congress from using nonpublic information obtained through their official duties for personal financial gain, effectively banning congressional insider trading. The law required members to avoid both actual conflicts of interest and appearances of impropriety created by trading stocks in industries they regulate.

Nonpublic Information Access: As a member of the House Ways and Means Health Subcommittee and Budget Committee, Price had access to nonpublic information about pending healthcare legislation, regulatory changes, and Medicare policy that could affect company valuations. Ethics experts argued that Price’s position gave him material nonpublic information about healthcare industry prospects unavailable to ordinary investors.

Collins Tip Allegations: Evidence suggested Price received inside information from Rep. Collins about the Innate Immunotherapeutics private placement. Collins’s position on Innate’s board and 17 percent ownership stake meant he possessed nonpublic information about the company’s prospects and private placement timing. By allegedly tipping Price about the exclusive offering, Collins may have provided material nonpublic information constituting insider trading under federal securities law.

12 Percent Discount Evidence: Price testified during his Senate Finance Committee confirmation hearings that he purchased Innate stock “at the same price available to all other investors.” The Wall Street Journal later revealed Price had purchased the stock at a 12 percent discount through two separate private placements offered to fewer than 20 U.S. investors. This discrepancy between Price’s testimony and documented facts suggested he either lied to the Senate or was unaware of his own stock transactions—both problematic for a Cabinet nominee.

Preet Bharara Investigation: Former U.S. Attorney Preet Bharara of the Southern District of New York was reportedly overseeing an investigation into Price’s stock dealings when President Trump fired him on March 11, 2017—one month after Price’s HHS confirmation. Bharara’s firing came despite Trump’s earlier promise that Bharara could keep his position, fueling speculation that the dismissal was intended to obstruct the Price investigation.

Conflicts of Interest in Healthcare Legislation

Price’s stock purchases created direct conflicts between his legislative duties and personal financial interests:

Legislation Benefiting Holdings: Price introduced and supported legislation that would directly benefit companies in which he held stock. The Zimmer Biomet case exemplified this pattern: Price purchased stock, then weeks later introduced legislation favorable to the company, then received a campaign contribution from the company’s PAC—a sequence suggesting quid pro quo arrangements.

Committee Positions and Regulatory Oversight: Price’s membership on the House Ways and Means Health Subcommittee gave him jurisdiction over Medicare, Medicaid, and healthcare reform—regulatory areas directly affecting his healthcare stock holdings’ valuations. His Budget Committee chairmanship provided additional influence over healthcare funding and programs affecting his portfolio companies.

Private Placement Access: Price’s ability to access private placements unavailable to ordinary investors suggested his congressional position provided financial benefits beyond his salary. Companies and investors seeking congressional favor could offer lucrative investment opportunities to sympathetic legislators, creating implicit corruption where favors are exchanged for investment access rather than direct payments.

Senate Confirmation Controversy

Price’s stock trading became a central issue during his nomination as HHS Secretary:

Democratic Opposition: Senate Democrats and government watchdogs called for Securities and Exchange Commission investigations citing “possible violations” of insider trading rules and federal ethics laws. Senator Ron Wyden and other Finance Committee Democrats questioned whether Price’s trading record made him suitable to lead an agency regulating healthcare markets.

Misleading Testimony Allegations: Price’s testimony that he purchased Innate stock at market prices was contradicted by evidence showing he received 12 percent discounts through private placements. Democrats accused Price of misleading the Senate, though Republicans defended him by noting he may not have known the specific terms of trades his broker executed.

Industry Capture Concerns: Healthcare reform advocates argued that Price’s extensive industry stockholdings created fundamental conflicts of interest for an HHS Secretary responsible for regulating drugmakers, insurers, and medical device companies. They noted that Price’s financial ties to industry made him unlikely to pursue aggressive regulation or enforcement against companies in which he had invested.

Confirmation Despite Controversy: The Senate confirmed Price as HHS Secretary 52-47 on February 10, 2017, despite the stock trading controversy. No Republicans broke ranks, viewing Democratic concerns about stock trades as partisan attacks. Price’s eventual resignation over private jet travel seven months later vindicated critics who had warned about his ethical problems.

Relationship to Chris Collins Insider Trading Case

Price’s Innate Immunotherapeutics trading was directly connected to Collins’s later criminal conviction:

Collins Guilty Plea: Rep. Chris Collins resigned from Congress on October 1, 2019, the day before pleading guilty to one count of conspiracy to commit securities fraud and one count of making false statements to the FBI. Collins admitted to tipping his son about negative Innate drug trial results, allowing family members to avoid $768,000 in losses. He was sentenced to 26 months in federal prison and fined $200,000.

Price Connection: Collins’s role in tipping family members and friends about Innate established that he was willing to share material nonpublic information for others’ financial benefit. Evidence that Collins tipped Price about the private placement offering suggested Price may have been an early beneficiary of Collins’s pattern of insider information sharing.

Selective Prosecution Questions: While Collins faced criminal prosecution for insider trading related to Innate Immunotherapeutics, Price—who allegedly received tips from Collins about the same company—never faced criminal charges. This discrepancy raised questions about whether Price’s Cabinet position and political connections protected him from accountability Collins faced, or whether prosecutors lacked sufficient evidence to charge Price specifically.

Trump Pardon: President Trump pardoned Collins on December 22, 2020, after Collins had served only a fraction of his 26-month sentence. The pardon eliminated Collins’s criminal record and reinforced perceptions that Trump protected political allies from accountability for white-collar crimes.

Pattern Across Cabinet Nominees

Price’s stock trading controversy was part of a broader pattern of Trump Cabinet nominees’ conflicts of interest:

Industry Insiders as Regulators: Trump systematically nominated industry executives and investors to lead agencies regulating their former employers and holdings. Price epitomized this approach—a physician-turned-congressman with extensive healthcare stock holdings nominated to run the agency regulating healthcare markets.

Ethics Office Overwhelmed: The Office of Government Ethics warned that it was overwhelmed by the volume and complexity of Trump Cabinet nominees’ financial conflicts, lacking sufficient time to properly review holdings and divestiture plans. This allowed nominees like Price to proceed to confirmation votes before ethics reviews were complete.

Post-Confirmation Scandals: Multiple Trump Cabinet members resigned amid ethics scandals—Price (private jets), Scott Pruitt (EPA, multiple violations), Ryan Zinke (Interior, investigations), Tom Marino (Drug Czar nominee, withdrew after opioid industry ties exposed). The pattern suggested inadequate vetting and a tolerance for conflicts of interest that would have disqualified nominees in previous administrations.

Systematic Corruption: Access and Information Asymmetry

Price’s stock trading exposed how congressional access creates financial advantages:

Information Asymmetry: Members of Congress possess material nonpublic information about pending legislation, regulatory changes, and appropriations affecting industry sectors. This information asymmetry gives legislators systematic advantages over public investors, violating the principle that securities markets should operate on equal information access.

Access as Currency: Price’s ability to access private placements unavailable to ordinary investors demonstrated how congressional positions provide financial benefits beyond salaries. Companies and investors can grant lucrative opportunities to friendly legislators, creating implicit quid pro quo arrangements without direct payments that might trigger bribery charges.

Regulatory Capture Through Financial Ties: When legislators own stock in industries they regulate, they face fundamental conflicts between their duty to protect public interests and their personal financial interests in industry profitability. Price’s healthcare stock holdings made him financially invested in maintaining industry-friendly policies, exemplifying how financial ties facilitate regulatory capture.

STOCK Act Enforcement Failure: Despite clear evidence of Price’s problematic trading, he faced no criminal prosecution or ethics sanctions. The STOCK Act’s failure to prevent or punish Price’s conduct demonstrated that ethics laws without rigorous enforcement serve as mere window dressing, allowing systematic insider trading by members of Congress to continue with minimal consequences.

Price’s August 31, 2016 stock purchase was the most egregious example in a pattern of healthcare stock trading that violated both the letter and spirit of insider trading prohibitions, demonstrating how members of Congress exploit their positions for personal financial gain while evading accountability through selective enforcement and political protection.