Exclusive: Trading charges spur FDA data protections

WASHINGTON (Reuters) - The U.S. Food and Drug Administration is moving to bolster protection of commercially sensitive data after an agency chemist was charged with using inside information to illegally make millions in stock trades.

Food and Drug Administration Commissioner Margaret Hamburg, in a memo provided to Reuters, told employees she had taken steps to address "potential vulnerabilities" in the way the agency handles information electronically. The agency houses details about upcoming drug decisions that can make or break a pharmaceutical company's fortunes.

The steps include a new tracking system to "better monitor employee access of data," Hamburg said in a memo sent to FDA staff on Wednesday.

She also created a task force to review information technology security across the agency. The group will inventory data in the various FDA divisions and develop new security measures, the memo said. Acting Deputy Commissioner John Taylor will serve as a member.

"In light of recent events, I am taking several measures to reaffirm that our security policies are keeping pace with new technology and that access to sensitive information is restricted to those employees whose job responsibilities require it," Hamburg wrote.

On March 29, an FDA chemist and his son were charged with using inside information about drug approvals to reap more than $3.6 million in profits.

The Securities and Exchange Commission charged Cheng Yi Liang, 57, with illegally trading in advance of at least 27 public announcements about 19 publicly held companies.

The Justice Department charged Liang and his 25-year-old son Andrew with conspiracy, securities fraud and wire fraud for making $2.27 million in trades involving five pharmaceutical companies between November 2007 and March 2011.

Liang has worked at the FDA since 1996 and had access to the agency's internal tracking system for new drug applications. He was able to monitor confidential information about whether and when the FDA was about to approve certain drug applications. Liang and his son used several brokerage accounts to execute trades, prosecutors said.

The new security measures "allow us to strike the proper balance between facilitating scientific review processes and ensuring the protection of FDA information," Hamburg said.

(Reporting by Lisa Richwine, editing by Dave Zimmerman and Matthew Lewis)