I HAPPENED TO BE VISITING a friend at the University of Texas M.D. Anderson Cancer Center in Houston this past June when good and bad news collided. The good news was that one of the center’s patients, 73-year-old Josephine Fleming, of Denton, had become the first lung cancer patient in the world to survive for five years after being treated with gene therapy. This was considered a huge vindication for a controversial form of treatment that the center’s scientists had long championed, as well as for Anderson’s philosophy of “translational research”—making cutting-edge, even experimental, treatments available to patients through clinical trials as soon as is safely possible. The bad news was that the long arm of scandal had reached out and touched the nation’s largest cancer center: Questions were being raised about Anderson president John Mendelsohn’s longtime relationship with the biotech company ImClone, which had become the subject of inquiries concerning its business practices as well as insider trading by its executives, their families, and their friends (including interior-decorating and entertaining guru Martha Stewart). Even Houston’s most incorruptible institution, it appeared, wasn’t immune to infection by Enronitis.

The most interesting thing about this convergence was how little it seemed to affect “the Anderson,” as its loyal employees and patients prefer to call it. Indeed, when I first encountered the hulking twelve-story pink-granite edifice known as Albert B. and Margaret M. Alkek Hospital—the main structure of M.D. Anderson’s three-building campus at the Texas Medical Center—I had the immediate sensation that this was a mood-swing-free zone, like the Supreme Court. The business of eradicating cancer, like the business of maintaining justice, is such an all-consuming and righteous mission that those who pursue it can’t afford to be distracted by such temporal matters as scandals. In other words, business went on as usual, which is to say, with a certain persistent cheerfulness and aplomb that I have not found in any other hospital I have ever been in, either as a patient or a journalist.

When you visit M.D. Anderson, it’s hard not to be encouraged about the decades-old war on cancer. Here are four million or so square feet of labs and operating rooms, where nearly a thousand of the world’s finest doctors spend most of the institution’s annual $1.4 billion operating budget studying, diagnosing, and treating a single disease. With its emphasis on clinical trials, there has never been anything quite like the Anderson in the history of medicine.

But then, there has never been a hospital like the Anderson; in many ways, it does not seem like a hospital at all. The main lobby, with its vaulted ceilings and designer colors, is more mindful of a chic hotel than a medical facility that treats a disease that will kill nearly 40 percent of the people it afflicts. It doesn’t reek of that familiar hospital odor either, and its employees—from janitors to world-class researchers—don’t have the familiar hospital attitude that the place exists for the staff, not the patients. There seems to be an acute awareness that since more than a third of us will be diagnosed with cancer before we die—and the rest of us will suffer along with a loved one who has it or live in fear of acquiring it until we die of something else—we’re all in this cancer thing together, and there’s really no reason to be anything but nice to each other about it. This is why the Anderson, among many other things, is one of the sweetest and most serene places you’ll find, no small accomplishment for an institution that treats 65,000 people from all over the world each year.

Almost everything here seems designed to take your mind off the Big C. There are aquariums everywhere you turn; a food court with a pianist; a 322-room hotel run by Marriott International, where outpatients and spouses and loved ones can enjoy a fully loaded cable system and excellent room service. From the moment you enter the hospital’s registry, you have patient advocates and troubleshooters who can handle all of your appointments or, if necessary, bully your managed-care company into paying for your treatment. Josephine Fleming, the lung cancer survivor, told me, “I have never been treated better anywhere, at any time in my life.”

The Anderson’s institutional optimism is genuine and rooted in its history. It has been in the business of fighting cancer for a long time—since 1941, when it was created, in a rare moment of foresight, by the Texas Legislature as both a public hospital to treat the disease and a part of the University of Texas system to study it. The blend of research and treatment enables M. D. Anderson to embrace the cultural myth, so dear to Texas and Houston, that you can do whatever you dare to do. While most cancer centers are a part of a medical school or a wing of a large hospital, the Anderson is among just a handful of freestanding centers in the nation that study and treat the disease exclusively. (Memorial Sloan-Kettering Cancer Center in New York is the most notable other example.) Most important, because the Anderson is chartered and partly funded by the state, it has always had to be egalitarian. Sitting in a waiting room, I saw a cab driver from Houston’s Fourth Ward sitting next to a sheik who had just jetted in from Saudi Arabia for chemo. And while its rich and famous patients have always been noted prominently in articles about the Anderson—in recent years it has treated rocker Eddie Van Halen and Southwest Airlines chairman Herb Kelleher—it still spends about $120 million a year on cancer care for the indigent. All of this has created a unique ambience that is remarkably optimistic. Rather than treating cancer as something that one dies from, the Anderson treats it as something that can be lived with.

The amenities and the culture are just the sizzle; the main reason most cancer patients think of M.D. Anderson first is that it has a reputation for offering treatments that no other hospital can for our most insidious and intractable disease. Last spring, when my father first learned that he had metastatic colon cancer that had spread to his liver, he had barely finished informing me of the fact before asking, “Do you think I should go to the Anderson? Do you think I could?” There was a reverential tone in his voice that suggested that the Anderson has a mystique that transcends respect or adulation. It is the place of last resort, which holds out the hope that when no one else can save your life, maybe it can.

THE KEY TO THE ANDERSON’S TREATMENT is translational research, a concept that was not invented by the hospital but has been utilized by it to the fullest extent. The idea is that state-of-the-art cancer research often languishes in the lab too long before becoming available to patients who have exhausted all other options. So the Anderson has always performed more clinical trials (800 this year) and treated more patients in them (11,000) than any other cancer center.

Few patients have validated this philosophy better than Josephine Fleming. After doctors told her during a routine physical, in 1995, that she had a tumor in her left lung, she went to M.D. Anderson for a second opinion and treatment.

“Everyone said we wouldn’t get in there for years,” Fleming told me. “But I had an appointment the next week.” Surgery was quickly ruled out because the tumor had spread to different locations in the lung, so she started a regimen of chemotherapy. But within a month or so, she developed debilitating nerve damage as a side effect and her doctors halted the treatment. “They told me to go home to Denton and spend time with my kids,” she recalled. “I knew what that meant.”

But her son Rod, an engineer at NASA in Houston, wasn’t satisfied and surfed the Internet, looking for another answer. He found information about gene-replacement therapy for lung cancer and remembered hearing that doctors at M. D. Anderson were conducting trials. Josephine was approved for a clinical trial run by Jack Roth, one of the nation’s preeminent researchers in gene therapy. For twenty years, Roth and his team had been investigating the fact that a lot of cancers seemed to be caused by the crippling of something called the p53 gene, a “tumor suppressor” that, when healthy, serves as a kind of cell replication cop that will simply snuff out cells that reproduce too frequently but when compromised, which occurs in a large number of cancers, allows cells to proliferate wildly. Rather than simply treating cancer patients with chemotherapy to kill off the reproducing cells, Roth had reasoned, why not figure out a way to replace the defective p53 gene with a functioning one? If cancer can be most simply defined as bad cells driving out the good, then why couldn’t the process be reversed by introducing good tumor suppressor genes to drive out the malignancy?

Scientists and the public alike had always been drawn to the economy of the notion—if cancer was a genetic disease, then why not treat the genes?—but it had become controversial. For one thing, the preferred means of importing the healthy genes to the tumor was the shell of the common cold virus. Even though the virus was stripped of its viral DNA, some scientists couldn’t get past the idea of willfully injecting someone with an invasive virus. And when a patient in a Pennsylvania clinical trial involving the technique died a few years back, the subsequent bad publicity seriously tainted its reputation.

But Roth’s experiments with lab animals and early trials with human patients had been successful. Gene replacement wasn’t a magic bullet, but it could cause some tumors to reverse course and at least lengthen the lives of some patients with advanced malignancies. In Fleming’s case, it took eighteen injections of p53 over four years to stabilize her lung tumor. Even Roth admits that she is not cured. “She represents a new paradigm for cancer,” he says, “that is, patients who can live well for longer periods with their disease under control.”

She represents another paradigm as well: Fleming wasn’t the sort of patient you would expect to receive cutting-edge treatment. Neither wealthy nor indigent, she is a member of the broad middle class (like my dad) for whom the idea of getting the best treatment in the world seemed beyond reach. That she was able to prolong her life by finding such treatment at the Anderson via the Internet and afford it through her own Medicare coverage and the grant funding that supported Roth’s study was, in its way, as great an accomplishment for the Anderson as the success of Roth’s gene therapy. After all, the problem with the American health care system is not the quality of our bioscience but rather how to get that science to patients at a cost that doesn’t make the hospital, the patient, or the insurance company go broke.

IN SOME WAYS, M. D. ANDERSON’S innovations in the business of cancer care have been as impressive as the gee-whiz science produced in its labs. Less than a decade ago, the hospital was headed for a financial meltdown. Many managed-care companies had deemed it too expensive and were directing their patients to cheaper treatment at general hospitals. At the same time, the cost of state-mandated care for the indigent had doubled. M. D. Anderson was out tens of millions of dollars it could have spent elsewhere. Worst of all, a state law prohibiting Texans from being admitted to the hospital without a doctor referral—to preempt charges that the state-supported institution was unfairly competing with private physicians—kept the center from seeing many paying patients. The crisis became severe enough to force a $90 million cut in the budget, including layoffs. “Patients couldn’t get into the hospital; patients who did couldn’t pay,” recalls Anderson’s former vice president for strategic planning, Martin Raber, himself a cancer survivor.

M.D. Anderson lobbied the Legislature and schmoozed the Texas Medical Association to get the prohibition against self-referral removed in 1995. In return, the center promised to find more budget cuts. But that was the easy part. The Anderson also had to persuade managed-care companies to let their patients come. When Mendelsohn arrived, in 1996, he told the HMOs that M.D. Anderson would play ball by managed-care rules.

“We had to convince them that it might be cheaper in the long run if we took care of the patient, even if we were more expensive to begin with,” he says. “We have a thousand doctors, and about two thirds are clinicians who treat nothing but cancer, and one third are Ph.D.’s who study nothing but cancer. We have a very good chance of doing the right thing the first time.”

The business acumen displayed by Mendelsohn, who is now 66, was unexpected. He had been a dark-horse candidate for the center’s presidency and had attained the post largely because of his international reputation as a cancer researcher, not his skills as a manager or an entrepreneur. At Harvard, he studied under James Watson, the Nobel laureate who co-discovered the structure of DNA. He had taught and done research at the University of California at San Diego, then served as the chairman of medicine at Memorial Sloan-Kettering before taking the top post at the Anderson.

No one anticipated that it would be research that would get him in trouble. While at UC-San Diego in the early eighties, Mendelsohn developed a cancer treatment based on preventing a cell-growth signal from binding with cancerous cells, thus halting cell proliferation without damaging normal cells, as most chemotherapies do. The therapy, called C225, was promising, but he had trouble finding a corporate home for the development and marketing of the drug. In the early nineties he finally settled on a small New York-based biotech company called ImClone, which had been started by two brothers, Sam and Harlan Waksal. As it happened, the Waksals had been casting about for a “marquee medication” to put their company on the map. By the time Mendelsohn arrived at M.D. Anderson, C225 had entered clinical trials and soon after began to show promise.

Six years later, C225—since renamed Erbitux—has not only failed to win FDA approval but has become the focus of a scandal. In December 2001 the FDA shocked the world of cancer research by rejecting ImClone’s application for accelerated review of Erbitux, citing the poor design of the clinical trials and incomplete data. That spring, news surfaced that, according to Securities and Exchange Commission investigators, ImClone CEO Sam Waksal had had insider knowledge of the FDA’s impending rejection of the drug days before it was made public (and ImClone’s stock price started to collapse). He had allegedly tried to dump some of his own holdings and advised family members and at least one friend—Martha Stewart—to do the same. Waksal has been indicted for bank fraud, forgery, and other charges in the insider-trading scandal, Stewart is under investigation, and Mendelsohn has been left to try to explain how he, a member of ImClone’s board of directors and the inventor of its primary product, could have been outside the loop.

I had met Mendelsohn back in the spring of 2001, when I first began poking about on a story about the Anderson. White-haired, spry, and boyishly enthusiastic, he was erudite, animated, witty, and opinionated, and he uttered the single pithiest statement about the war on cancer I’ve ever heard: “Our bodies are so complex that we’re lucky we don’t get cancer every day. In fact, the five-year survival rate has doubled in my lifetime, so maybe we are winning the war.” By the time I got back to him this summer, the ImClone controversy had exploded into a tangle of questions about what Mendelsohn knew and when he knew it. Three issues continue to dog him. The first involves whether his cashing out about $6.4 million in ImClone stock (options granted to him years ago as a scientific collaborator and consultant on his invention) during the year before the FDA’s rejection of Erbitux was because of insider knowledge. The second is his role, if any, in the research that the FDA rejected. Finally, in late June, the Washington Post raised questions about why Mendelsohn had neglected to include his financial interest in Erbitux in patient-consent forms used in a trial of the drug at the Anderson (though not managed by him).

His response to my question about insider knowledge was a flat no. “In fact, I sold twenty percent of my shares because Bristol-Myers Squibb was buying twenty percent of ImClone and all stockholders were invited to tender their shares.” A review of SEC filings reveals that Mendelsohn sold his shares in two lots—in April 2001 and then again in October—well before the late-December window during which the insider trading allegedly took place. While any large liquidation of ImClone stock within, say, a year before the Erbitux rejection might be viewed with suspicion, investigators appear to be focusing on transactions that occurred during the month before the FDA announcement. Mendelsohn’s name has not surfaced.

As for his responsibility for the research that did not pass FDA muster, Mendelsohn explained that the clinical trial the FDA rejected had not taken place at the Anderson, let alone under his control. He added that when he took over the Anderson, he promulgated a policy prohibiting staff scientists with a financial interest in a particular therapy from either managing a clinical trial or directly administering it to patients. “I’ve never given any patient my drug,” he told me. The Anderson did conduct trials of Erbitux during Mendelsohn’s tenure, which led to the Washington Post story that he did not reveal his stake in the drug in patient-consent forms.

Even as Mendelsohn found himself explaining the ImClone mess, the Anderson was rescued by a U.S. News and World Report survey that named it the best cancer hospital in the nation for the second time in three years. The juxtaposition of the two events indicates the degree to which M.D. Anderson, and all of modern medicine, finds itself under ever-increasing scrutiny. Having watched the cancer war for a number of years now from several perspectives—medical journalist, bereaved son, and concerned potential victim—I understand that Big Science equals Big Business equals Big Politics. Still, as Houston scandals go, we need to keep this one in perspective. Ultimately, we can survive without Enron. Many of us can’t survive without M. D. Anderson.