Utah tech CEO behind TestUtah showed early interest in malaria drugs

Seven weeks ago, as the coronavirus began to spread in Utah, the CEO of an Orem software company called on his colleagues in the tech sector to save the state’s health care industry from itself.

Otherwise, he warned, squabbling among hospitals, labs and insurance companies would hamper the response to the pandemic.

“Let’s solve it,” Nomi Health CEO Mark Newman wrote in an email to other tech entrepreneurs. “We pay for it. We pay manufacturers of tests. Labs and pharmacies directly for testing + med packs for our employees and families. No noise. On top of that like Tom’s shoes we match each buy for the community and open access to everyone.”

Later in the email, Newman elaborated on his plan, explaining that he had negotiated low-cost tests and access to drug packs of hydroxychloroquine, chloroquine and zinc. “We want to mobilize the community — pay for the tests + packs and setup drive through testing locations in our empty office parking lots,” Newman continued, “and let our shared employees, family members and broader community members come and participate. No cost to them."

But as state officials joined with Utah’s tech executives on task forces and working groups related to the coronavirus, the “we pay” plan changed — and the companies involved amassed millions of dollars in no-bid contracts for digital services, medical supplies and hydroxychloroquine, the controversial drug that the Food and Drug Administration has since warned against using for the coronavirus outside a hospital or clinical trial.

In fact, public records obtained by The Salt Lake Tribune show that hydroxychloroquine was integral to the plans of TestUtah.com’s architect from the very beginning, and the idea of connecting patients to the drug appears to have quickly caught on among state officials.

In his March 14 email calling for the tech sector to lead Utah’s response to the coronavirus, Newman explained the “med packs” he wanted to distribute would contain anti-malaria drugs compounded by a Draper pharmacy chain called Meds in Motion.

Newman did not mention he sits on the pharmacy’s board of directors. In late March, the pharmacy sold the state a stockpile of the malaria medication for $800,000, in a transaction that was later reversed by Utah officials.

Emails and other records obtained by The Tribune show Newman had firsthand involvement in the state’s acquisition from the pharmacy company, sending the Meds in Motion invoice to state purchasing officials on March 31.

And he later won a $5 million contract to develop TestUtah.com’s online assessment form and medical testing sites in Utah — and more than $50 million in contracts to do the same in Iowa and Nebraska.

The online forms in all three states contained questions to determine whether a patient might be a candidate for hydroxychloroquine. Those questions are on a March 16 cache of what appears to be an early draft of the questionnaire by a Salt Lake City firm called SafeLane Health, which designed the assessment forms.

Dr. Kurt Hegmann, a University of Utah physician specializing in occupational medicine, compared the drug’s effects to the biblical Lazarus: “People, almost dead, coming back,” he said in a March 20 news conference that was announced by nonprofit industry group Silicon Slopes and Senate leaders and drew together officials and businesses promoting the medication.

Hegmann did not disclose that he and another occupational health specialist in the group, Dr. Matthew Thiese, are executives for SafeLane Health.

The hydroxychloroquine questions were written in conjunction with the Utah Department of Health, according to the survey draft. The Utah Department of Health has declined to comment on its role in those questions, which Gov. Gary Herbert has since ordered be removed.

But other state officials supported getting the drug to Utahns.

“We want to offer it to individuals when they learn they are positive,” Kristen Cox, who leads the Governor’s Office of Management and Budget, wrote in an April 5 email obtained by The Tribune.

‘We aren’t doctors’

By then, Cox wrote, the state already had acquired $800,000 of hydroxychloroquine from Meds in Motion, a purchase that was later refunded after reports of the transaction generated public outcry.

But at least one state official was cautioning against the hype in support of the drugs, as well as the idea of providing them to Utahns without the prescription.

On a March 20 virtual town hall hosted by Silicon Slopes CEO Clint Betts, Newman said Meds in Motion’s CEO Dan Richards and Utah Senate President Stuart Adams, R-Layton, had been leading a charge for a state-issued standing order that would allow pharmacies to dispense hydroxychloroquine and chloroquine to COVID-19 patients without a prescription.

The state ditched those plans after infectious disease specialists and other health experts raised concerns. Adams said health department leaders — Drs. Joseph Miner and Marc Babitz — were the point people on the proposed standing order. A health department spokesman confirmed that characterization of Miner’s and Babitz’s roles.

Dr. Angela Dunn, the state epidemiologist, warned tech executives in late March that the drugs can cause serious side effects and should be used only under the close supervision of a doctor or in a clinical trial.

“We don’t know how these medications react in a body that has COVID-19, and those risks can be very serious,” Dunn said during a virtual town hall with Betts, just a few days after the news conference touting the drugs. “So it’s really important that they’re under the control of a physician.”

Minutes later, in the same online event, Adams also acknowledged the lack of scientific evidence on using hydroxychloroquine to treat coronavirus — but he said experts will only increase their understanding of the drugs if they prescribe them.

“Right now we’ve got an economy that actually is struggling,” he said. “One thing we’re hearing about hydroxychloroquine is that it actually has a tendency perhaps to bend the curve.”

But Newman’s disruptor approach of “open source” health care at times took a dim view of medical expertise.

“How do I say this nicely?” Newman said during an April 1 online update to Betts. “We aren’t doctors, and so sometimes doctors don’t always appreciate our opinion. As I say, the difference between God and doctors is that God doesn’t generally think he’s a doctor.”

Despite resistance from infectious disease specialists, the state pushed forward on the deal to buy Richards’ massive supply of the malaria drugs, with the idea of dispensing them to pharmacies statewide and to coronavirus patients.

From public service to state purchase

But that drug supply initially was promoted as being free to taxpayers.

In an interview this week with The Tribune, Miner, director of the Utah Department of Health, said he was told in early conversations about the drugs with Newman, other tech execs and lawmakers that the state would not be spending money on the Meds in Motion medication.

“I was on a conference call with them. I said, ‘How was this going to be funded?’” said Miner, who was on March 31 replaced by Jeff Burton at the helm of the department’s day-to-day operations and the state’s coronavirus response. “And they said, ‘Oh, it’s being crowdfunded by private companies.’”

That account is consistent with a March 20 presentation Newman gave to Betts, in which he said six-figure donations from Nomi Health, Ancestry and nonprofit company WCF Insurance would help pay for the initiatives on testing and medication.

On March 20, and again on March 23, Newman claimed 20,000 packs of hydroxychloroquine would be “paid for by the private sector so cost isn’t an issue for anyone.”

But, on March 31, the state had signed off on $800,000 for 20,000 packs of the drug. And state lawmakers went on to set aside $8 million to lay the groundwork for a second, larger drug buy from Meds in Motion.

After that larger purchase was canceled on April 24 amid FDA warnings about the drug, state leaders tried to distance themselves from the negotiations.

Herbert and Lt. Gov. Spencer Cox, who was placed at the head of the state’s coronavirus task force, both claimed no knowledge of the March 31 contract — though Kristen Cox, who is among Herbert’s top advisers, earlier had described the purchase in an email to other state employees.

And drafts of the Herbert’s “Utah Leads Together” recovery plan on March 22 and March 23 announce that “the state and private partners are … working to acquire a sufficient supply, and creating distribution networks to ensure it can get to those who need it in a timely manner.”

Meanwhile, in an interview Friday, Adams said his understanding from early conversations with the tech leaders was that the companies wanted to buy the drugs for COVID-19 to take the pressure off the supply for lupus and arthritis patients, who depend on the medication to ease their symptoms.

"The intent was to do it as a public service," Adams said.

"And,” he said, “quite honestly, I'm not sure how it turned from a public service to the state buying it” — although, in an April 5 email, Burton describes Richards’ $8 million proposal and says Richards is “working with Stuart Adams.”

Adams said he was aware of the state's initial $800,000 purchase of the drugs but was not involved in the negotiations or conversations about pricing. He said he’s not sure why the pharmacy couldn’t donate the medication to the state, if it used the tech sector’s donated funds to procure it.

Adams said he met Richards during conversations with lawmakers and tech executives. These discussions also connected the pharmacist to Miner and Babitz, leaders in the health agency that ultimately explored the $8 million deal with Meds in Motion, Adams said.

Newman said the role of Utah’s tech companies has changed over time.

“In March, everyone was focused on helping whichever way they can,” he wrote in a Saturday statement to The Tribune. “We were exploring all support options and receiving dozens of various requests from state and community organizations. As you can imagine, the first few weeks of the crisis response were fast-moving and chaotic across the state.

“As TestUtah progressed into a more formal effort with the Utah Department of Health,” he said, "we’ve worked to ensure that we are in alignment with the State and with the Department of Health’s strategy for Utah’s testing initiative every step of the way.”

A changing deal

The hydroxychloroquine is not the only state purchase that was initially pitched as a donation from the tech sector.

In an April 2 news conference announcing the launch of TestUtah.com, Betts said the project was a volunteer effort. “No tech company is going to make any money off of this," Betts said. “We’re going to make sure of that.”

Later that day, in a virtual town hall with Betts, Newman said:

“If we were going to try to make money, we would tune this up as fast as we can and go sell it to New York. Let’s get very clear on that. What we’re actually doing here is trying to bring Utah back to work."

But tech companies already were making money from TestUtah.com. Nomi Health, Newman’s company, had secured a $2 million no-bid contract with the state on March 31 for the TestUtah.com health assessment tool. The day after the news conference, the state signed another contract with Nomi for $3 million, to operate the testing sites and process tests. And the company in less than three weeks had contracts with Iowa and Nebraska.

The American Fork analytics company Domo also had contracts with the state.

On March 27, Domo’s chief legal officer forwarded agreements for technical services connected to TestUtah.com to Dan Frei, finance director of the state’s information technology department. In an email also sent to other Domo personnel, the lawyer wrote: “I told Dan that our agreement terms already contemplate a free services scenario.”

The next day, another Domo executive sent a service order to the state, writing: “I’ve noted in this draft that there is no cost, and the … term is during the period the State of Utah is tracking COVID-19. This draft is based on what I understand the State of Utah may need for this effort. We can modify this as needed once we have more information.”

The modifications happened quickly: The contract was amended on April 1 and Domo sent a bill for $2 million to the state.

Betts said Saturday that he was unaware of the companies’ contracts during the April 2 news conference, “but I believe every company has acted and is acting in good faith in an effort to expand the state’s testing capacity and provide other critical COVID-19 relief needs.” Silicon Slopes played no role in the state’s negotiations or contracts, he said.

Rep. Joel Briscoe and his Democratic House colleagues have advocated for more transparency in the state’s coronavirus response, expressing concern that decisions about taxpayer dollars and public health are happening out of view.

“Absolutely I’m concerned,” Briscoe, D-Salt Lake City, said about the possible undisclosed financial connections between business leaders who have the ear of state officials. “I mean, do we need to run professional development for people on doing due diligence?”

Spokespeople with other companies tied to the tech sector’s work said they did not believe those who have profited from their own involvement acted with malicious intentions.

“At no point in time did I sense that anyone on the task force had ulterior motives in mind,” Matt Lyon, chief operating officer for the workers compensation insurer WCF, wrote in an email. “While there were many conversations that I was not privy to, I observed members of the community struggling with the pandemic and working to help relieve suffering and improve the economy.”

— Reporter Nate Carlisle contributed to this story.

Editor’s note • Clint Betts serves on the The Salt Lake Tribune’s nonprofit board of directors.