Research (OER)
9000 Rockville Pike
Bethesda, Maryland 20892
and Human Services (HHS)
NOTICE OF PROPOSED RULEMAKING - OBJECTIVITY IN RESEARCH
NIH GUIDE, Volume 23, Number 25, July 1, 1994
P.T. 34
Keywords:
Grants Administration/Policy+
Public Health Service
The following is a reprint of the Notice of Proposed Rulemaking,
which was published in the Federal Register of June 28, 1994.
SUMMARY: The Public Health Service (PHS) proposes to issue rules
requiring Institutions that apply for research funding from the PHS
to assume responsibility for ensuring that the financial interests of
the employees of the Institution do not compromise the objectivity
with which such research is designed, conducted, or reported.
Under the proposed rules, investigators are required to disclose to
an official(s) designated by the Institution a listing of Significant
Financial Interests. The institutional official(s) will review these
disclosures in accordance with an administrative process to be
established by each institution. Following this review, the
institutional official(s) will determine the acceptability of the
reported financial interests and act to protect PHS-funded research
from any bias that is reasonably expected to arise from those
interests.
DATES: To ensure consideration, comments must be received at the
address below on or before August 29, 1994.
ADDRESS: Please address comments to: Dr. George J. Galasso,
Associate Director for Extramural Affairs, National Institutes of
Health, Shannon Building, Room 152, 9000 Rockville Pike, Bethesda,
Maryland, 20892. The PHS encourages persons with disabilities to use
auxiliary devices and services to submit comments.
FOR FURTHER INFORMATION CONTACT: Dr. George J. Galasso, Associate
Director for Extramural Affairs, National Institutes of Health at the
address above. The telephone number is (301)-496-5356 (this is not a
toll-free number).
SUPPLEMENTARY INFORMATION
Technology Transfer and Conflict of Interest.
Effective interaction between PHS-funded Institutions conducting
research and industry is essential to ensure the rapid application of
scientific discoveries to the health needs of the Nation and to
maintain the international competitiveness of domestic industry.
Nonetheless, prudent stewardship of public funds includes protecting
Federally funded research from being compromised by the conflicting
financial interests of any Investigator responsible for the design,
conduct, or reporting of PHS-funded research.
Numerous statutes and programs demonstrate the Federal interest in
the promotion of interactions among Government, academia and
industry. For example, the Stevenson-Wydler Technology Innovation
Act of 1980 (Public Law (P.L.) 96-480) encourages technology
transfer, particularly through industrial-academic collaborations.
The Patent and Trademark Act Amendments of 1980 (P.L. 96-517) allow
universities and other funding recipients to apply for patents
developed with Federal funding, and expressly promote collaboration
between commercial concerns and nonprofit organizations. The
Economic Recovery Tax Act of 1981 (P.L. 97-34) is aimed at fostering
research and development by small companies and associated university
partners. The Federal Technology Transfer Act of 1986 (P.L. 99-502),
which amended P.L. 96-480, and Executive Order 12592 provide similar
patent and licensing authority to Federal laboratories, and encourage
them to participate in cooperative research and development
agreements with the private sector and nonprofit organizations,
including universities.
These legal authorities facilitate the movement of intellectual
capital between the Federal Government, academic institutions, and
the private sector. This kind of cross-fertilization is critical to
the development of the U.S. biotechnology industry. However, these
and other inducements for collaboration, as well as the rapid growth
of the biotechnology industry, have created a climate in which the
stewardship of public funding for biomedical and behavioral research
is increasingly complex and challenging.
The value of the results of PHS-funded research to the health and the
economy of the Nation must not be compromised by any financial
interest that will, or may be reasonably expected to, bias the
design, conduct or reporting of the research. The proposed
regulations seek to maintain a reasonable balance between these
competing interests, give applicants for PHS research funding
responsibility and discretion to identify and manage financial
interests that may bias the research, and minimize reporting and
other burdens on the applicants.
Background
The proposed regulations are the result of a lengthy process of
consideration. Throughout that process, the PHS has carefully
considered and changed its approach in response to public comments.
On June 27 and 28, 1989, the National Institutes of Health (NIH) and
the Alcohol, Drug Abuse, and Mental Health Administration (ADAMHA)
sponsored an open meeting to discuss issues related to financial
conflict of interest. At that meeting there was general agreement
that an Institution that receives research funds from a PHS Awarding
Component should develop policies to identify and manage any
financial conflict of interest in the funded research.
On September 15, 1989, the NIH and ADAMHA published a Request for
Comment on Proposed Guidelines for Policies on Conflict of Interest
in the NIH Guide for Grants and Contracts (Volume 18, Number 32).
Seven hundred fifty-one responses were received from individuals
associated with medical schools, other academic and research
institutions, biotechnology companies, local governments, and non-
profit organizations; venture capitalists; attorneys; biomedical
journal editors; Federal employees and contractors at Government
facilities; and others. In general, those submitting comments were
concerned that the proposed guidelines imposed undue burdens on
funded institutions and would impede mutually beneficial research
collaboration between universities and industry. In response to
these comments, the Secretary determined that regulations should be
developed that would address those concerns.
A public meeting was held at NIH on November 30, 1990, to discuss
further the regulation of financial conflict of interest by the PHS.
The 18 written comments received at that time reflected views similar
to those received earlier.
Many respondents to earlier proposals stated that the primary
responsibility for setting guidelines and maintaining compliance
should rest with each awardee Institution. The present proposed
rule, like PHS policy in other areas involving protection of the
public interest (such as the protection of human subjects in research
and the investigation of alleged scientific misconduct), sets
standards for performance and assigns the primary responsibility for
procedural development and compliance to the Institution.
Many of those commenting on prior proposals agreed with the
importance of disclosure, but thought that the requirement to
disclose all financial interests, as set forth in the previously
proposed guidelines, should be reduced in scope to prevent needless
invasion of privacy and creation of paperwork burdens. The proposed
regulations achieve this end by limiting the disclosures that must be
made to "Significant Financial Interests," any interest of monetary
value exceeding a defined threshold of value ($5,000) or percentage
of ownership (five percent or more) that would reasonably appear to
be directly and significantly affected by the research funded by PHS
or proposed for funding. PHS specifically requests public comment on
whether the minimum threshold for disclosure is appropriate to ensure
that PHS-funded research projects are not biased by conflicting
financial interests of those responsible for the design, conduct, or
reporting of the research.
There was a wide range of opinion among those commenting on previous
proposals regarding which types of financial interest should be
permissible. In these proposed rules a Significant Financial
Interest (defined in 50.603) of the type specified in 50.605(a) must
be managed as provided in 50.605(b) and the existence and management,
reduction, or elimination of that financial interest must be
certified in the application. The PHS may at any time request
submission of, or review on site, all records pertinent to the
certification. This procedure gives Institutions broad discretion in
determining how to manage Significant Financial Interests that
reasonably appear to directly and significantly affect the design,
conduct, or reporting of the research while providing for appropriate
PHS oversight. PHS may undertake periodic reviews of the records in
order to assess the reliability of institutional and investigator
certifications, and to determine whether institutional safeguards do,
in fact, protect the integrity of PHS-funded research. In
undertaking any such review HHS will coordinate, to the extent
feasible, with the National Science Foundation (NSF) to ensure that
institutions are not unnecessarily subjected to multi-agency reviews.
Managing potential conflicts carefully; avoiding unnecessary burden
and useless paperwork; and preserving appropriate incentives for
productive research represent challenges individually and
collectively. Even after we issue a final rule some unforeseen
problems will certainly emerge. Therefore, approximately one year
after the final rule is issued we plan to initiate an evaluation, to
include a conference and other mechanisms to consult with
investigators and institutions. Based on that evaluation, we would
revise these rules if and as appropriate.
Basis and Purpose. A more detailed discussion of the proposed
regulations and their basis and purpose follows.
I. Applicability.
a. Types of Research. The proposed regulations implement section
493A of the PHS Act, added by Public Law 103-43, which mandates the
issuance of regulations defining, and setting standards for, the
management of financial interests that will, or may be reasonably
expected to, bias a clinical research project whose purpose is to
evaluate the safety or effectiveness of a drug, medical device, or
treatment. In addition, the proposed regulations implement section
924 of the PHS Act, as amended by Public Law 102-410, which requires
the Administrator of the Agency for Health Care Policy and Research
(AHCPR) to issue regulations defining the financial interests that
will, or may be reasonably expected to, create a bias in the health
care services research projects funded by the AHCPR. The proposed
regulations are not limited to the implementation of these statutory
authorities, however. Pursuant to the Secretary's authority to issue
regulations governing those who seek or receive PHS funding, they
apply broadly to all research funded by the PHS, whether under the
authority of the PHS Act or other statutes, except Phase I projects
under the Small Business Innovation Research (SBIR) Program. Very
limited amounts of funding are provided under Phase I of the SBIR
Program to plan and determine the feasibility of the research project
for further funding under Phase II. Because potentially biasing
financial interests will be assessed at the time of the Phase II
application, it would be burdensome and unproductive to require such
a review for Phase I applications. With this exception, it is
believed that financial interests can create a bias in all types of
research, although the likelihood of such a bias may diminish if the
outcome of the research would have little effect on the commercial
potential of any product, device, or other property in which the
Investigator may have a financial interest. However, this
distinction can not be so clearly drawn that the need to protect the
integrity of all PHS-funded research uniformly is alleviated.
b. Individual vs. Institutional Financial Interests. The proposed
regulations provide for the disclosure and consideration of the
financial interests of individuals involved in the design, conduct,
and reporting of the research. Section 493A of the PHS Act, added by
Public Law 103-43, refers to financial interests of entities (e.g.,
institutions), as well as individuals, in clinical research projects.
We are considering the following alternatives with respect to the
coverage of institutions that apply for clinical research funding
under the PHS Act:
(1) Exempting Institutional Financial Interests that Would Not Bias
the Project. Under the statute, adoption of this alternative would
be based on a determination that the exempted institutional financial
interests would not be reasonably expected to bias the design,
conduct, or reporting of PHS-funded research. This conclusion might
be based on a finding that the limited size of the interest would
preclude any biasing effect, or a finding that the institutional
financial interest would have only an indirect and unpredictable
effect on the project, in the absence of a personal financial
interest on the part of those responsible for the design, conduct or
reporting of the research. There would, of course, have to be a
reasonable factual basis for such findings.
(2) Requiring Institutional Applicants to Certify Whether They Have
Significant Financial Interests. Adoption of this alternative would
involve establishing a procedure for institutions similar to the
procedure in the proposed regulation for individuals. This option
would be based on the same rationale as the preceding option, i.e.
that there is no need to regulate institutional financial interests
that aren't reasonably expected to bias the conduct of the research.
Significant Financial Interest might be defined for institutions as
limited only to direct financial interests (such as a patent
application on, or a financial arrangement with a company regarding,
the product of the research).
(3) Requiring Full Disclosure to the PHS of the Financial Interests
of Institutions. This alternative would impose a reporting burden
upon the institutions, but would ensure a complete PHS review of any
potential conflict of interest prior to a funding decision.
(4) Other Alternatives. We will also consider combinations of these
three alternatives and other alternatives that may be suggested in
the public comments. We will choose an alternative based on the
requirements of the statute, and, to the extent consistent with the
statute, based upon our weighing of the burdens on the institutions,
the potential that institutional financial interests will bias PHS-
funded research, and the potential adverse effect of the alternative
upon technology transfer.
c. Types of Interests. The proposed regulations require disclosure
of "significant financial interests" of the Investigator that would
reasonably appear to be directly and significantly affected by the
research funded by PHS or proposed for funding or of the investigator
in an entity whose financial interest would reasonably appear to be
directly and significantly affected by the PHS research. The
following are examples of the types of significant financial
interests that would fall within the categories in 50.605: ownership
of stock, stock options, or any equity, debt, security, capital
holding, salary or other remuneration, or financial consideration, or
thing of value for services as an employee, consultant, officer, or
board member in (1) any business enterprise, including the applicant
for PHS funds (except SBIR applicants are not included), that owns or
has applied for the patent, manufacturing or marketing rights to a
drug, vaccine, device, procedure or any other product involved in or
that will predictably result from the research described in the
application or (2) a business enterprise that is known by the
investigator to own or have applied for such rights in any product
that can reasonably be expected to compete with the product or
procedure that will predictably result from the research described in
the application. We request comments on a range of disclosures that
would on the one hand, include interests that may threaten
objectivity; and, on the other exclude those interests that cannot
reasonably be regulated or that are so obvious as not to warrant
regulation. We also request comments on whether specific examples of
biasing significant financial interests, such as those set forth
above, should be included in the regulations.
In particular, we request comments on whether interests in a business
enterprise that is known by the investigator to have an interest in a
product that competes with the product involved in the application
should fall within the categories of significant financial interests
described in 50.605. There may not be any reasonable way for an
investigator either to identify all competing products or to
determine what companies own them. For example, for most medical
devices there may be dozens of competing products, many made by
subsidiaries of "Fortune 500" conglomerates. How would an
investigator determine just what products were "competing"? Should
we be concerned if an investigator owns $5,000 of stock in a company
in which only a small fraction of revenues and profits derive from
the competing product? We request comments on whether, and how best,
to cover interests in competing products.
We also request comments on whether an employee's stock or other non-
salary financial interests in the applicant institution should be
covered. This is of particular relevance when the grant or contract
is with a for-profit enterprise. Specifically, should we be
concerned, and how could we expect the company to "manage" against
conflict, when the company's employees obviously stand to benefit if
the product is a commercial success? The proposed rule includes an
exemption for an ownership interest in the institution if it is an
Small Business Innovation Research (SBIR) applicant. Can we justify
exempting SBIR awards and not all other awards to both large and
small profit-making enterprises? Should we exempt from disclosure
any equity or ownership interest in the applicant institution? Should
we exempt disclosure of interests other than bonuses or other
compensation tied to the outcome of the research?
II. Burdens Upon Applicants. The proposed regulation is intended to
minimize reporting and other burdens upon applicants to the maximum
extent feasible. Certain types or amounts of financial interests
that cannot be reasonably expected to bias the research are excluded
from the requirements for disclosure by investigators. Such
interests are also excluded from the certification of whether these
are Significant Financial Interests that must accompany each
application. Even when there is a Significant Financial Interest of
the type specified in the proposed rule, the institutions are given
broad discretion in managing the conflict; details of the interest
need not be reported to the PHS awarding component. It is the
responsibility of that component to determine whether to review the
institutional records relating to the disclosure and management of
that interest.
The Department will also seek to reduce burdens upon applicants by
being available to provide advice and assistance as applicants
establish the policies and procedures required by this subpart. The
PHS Awarding Components will be available to respond to general
inquiries regarding compliance with this subpart.
Another way of reducing burdens upon applicants is to exempt certain
types of applicants from the requirements or to impose different,
less burdensome requirements on them. The proposed 50.602 provides
that the regulations do not apply to SBIR Phase I applications and
that where the applicant for a research grant is an individual,
determinations of the procedures to be followed to ensure the
objectivity of the research will be made on a case-by-case basis.
The National Science Foundation (NSF) exempts from its Investigator
Financial Disclosure Policy that is being published in this issue of
the Federal Register grantees employing fifty persons or less.
Comment on whether HHS should adopt a similar exclusion is requested.
Our experiences with conflict of interest situations indicate that
investigators working for small entities may be just as subject to
conflicts of interest as investigators working at large institutions.
The interests of appropriate coverage and of reducing burdens might
both be served by determining the procedures to be followed by small
entities on a case-by-case basis as is proposed for individuals.
III. Uniform Federal Policy. We have been working closely with the
National Science Foundation (NSF) to ensure that this Notice of
Proposed Rulemaking and the policy published by NSF in this issue of
the Federal Register will be consistent, and will impose the same
obligations on funding recipients. In addition, HHS has been working
with the Office of Science and Technology Policy, the Office
Management and Budget, NSF, and other interested agencies to develop
and propose a common Federal policy on investigator conflicts of
interest. It is expected that this policy, when completed, will
ensure consistent treatment of investigator conflicts issues by all
Federal funding agencies.
However, the statutes described above have necessitated some
inconsistencies between these proposed regulations and the policy
being published by the NSF. Unlike the NSF policy, there is no
provision permitting institutions to waive the management, reduction,
or elimination of an actual or potential conflicting interest when
such action would be either ineffective or inequitable, and the
potential negative impacts that might arise from the conflicting
interest are outweighed by interests of scientific progress,
technology transfer, or the public health and welfare. Because
section 493A of the Public Health Service Act requires institutions
conducting PHS-funded clinical research projects to manage or
eliminate financial interests that would potentially bias the
project, we do not believe HHS has the discretion to permit
institutions to waive this requirement. Similarly, section 493A
necessitates the requirements for institutional notification of the
PHS Awarding Component in 50.604(a)(7)(ii) and (8). In addition, the
statute specifically requires the announcement, with each public
presentation of the research, of a conflicting financial interest
that was not managed, reduced, or eliminated, as set forth in
50.606(d). This requirement is limited to PHS-funded clinical
research projects, but the requirements of institutional notification
to the PHS have not been so limited, because we believe that such
notification serves a useful purpose for all PHS-funded research, and
that disparate reporting requirements for different types of research
would cause confusion and create burdens for the institutions.
The Department notes that "management of a financial interest that
could potentially bias a project" may include recognition by the
institution that a potential conflict exists, and monitoring progress
of the research to insure that the financial interest does not bias
the project. The Department specifically requests comment on whether
this interpretation maximizes consistency between this NPRM and the
NSF's final policy, in the light of the statutory distinctions
discussed above. The Department seeks comment on whether this
expansion of the statutory requirement is appropriate in the context
of PHS-funded research and the need to minimize burden on
institutions.
IV. Relationship to other laws. Many Institutions funded by the PHS
Awarding Components are State Institutions whose employees are
subject to State laws designed to prevent financial conflict of
interest. The proposed rules would not supplant these requirements
and are intended to be applied in addition to other applicable
Federal and State restrictions related to potential financial
conflicts of interest, including Federal statutes and regulations
that prohibit trading in securities with knowledge of privileged or
non-public information.
V. Enforcement. The proposed regulations provide for enforcement
remedies both against researchers that fail to comply with
institutional policies issued under the regulation and Institutions
that fail to comply with the regulation. The proposed rules
specifically state that the requirements constitute a condition of
award and as such could be enforced through the suspension or
termination of a grant or cooperative agreement. A Termination for
Convenience or a Stop Work Order could be issued in accordance with
the FAR if a contractor fails to enforce the Special Standards. Each
contractor would be required to meet the specified responsibility
requirements prior to award of a contract. PHS awarding components
will work diligently with applicants to resolve compliance problems
informally, to avoid the need for formal enforcement action.
E.O. 12866/Regulatory Flexibility Act Analysis. Executive Order
12866 requires us to prepare an analysis for any rule that meets one
of the E.O. 12866 criteria for a significant regulatory action, that
is, that may --
Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments, and
communities;
Create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency;
Materially alter the budgetary impact of grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or
Raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in E.O. 12866.
In addition, we prepare a regulatory flexibility analysis, in
accordance with the Regulatory Flexibility Act, if the rule is
expected to have a significant impact on a substantial number of
small entities.
For reasons outlined below, we do not believe this rule is
economically significant nor do we believe that it will have a
significant impact on a substantial number of small entities. In
addition, this rule is not inconsistent with the actions of any other
agency. However, we recognize that there are potential
inconsistencies depending on what other agencies may later propose.
Several agencies are now considering issuing policies on what
circumstances are likely to lead to bias in research that is funded
or relied upon by the Federal Government.
Any rule in this area has the potential to inhibit socially
beneficial research, and to hamper the technological progress so
essential to the American economy and to the advance of science. We
are further mindful of the importance of the requirements in
Executive Order 12866 that any new regulatory system be based on a
showing that there is a significant problem requiring regulation,
that regulatory priorities be based on the degree and nature of
risks, and that regulations be designed to be cost-effective.
Moreover, the Regulatory Flexibility Act requires us to minimize
adverse effects not only on small businesses and individual
entrepreneurs, but also on almost all non-profit entities including
universities.
In the hearings that preceded enactment of the requirement in the NIH
Revitalization Act, known cases were described in which scientists
have stood to make large sums of money contingent on the positive
outcome of research on a particular product, where this fact was not
known to those reviewing the research, and where bias did occur.
We have drafted this rule to address these instances of abuse, while
minimizing unnecessary burden to researchers. We did not consider
any option that would routinely require all researchers to list all
of their significant assets (unrelated to the research project), that
would encourage searches for hypothetical or speculative conflicts,
that would require divestiture of ownership of a product undergoing
research, or that would discourage in any way funding grants or
contracts to scientists to develop products with significant profit
potential. We have not inhibited research in any way, other than
requiring that it be managed to assure that potential bias is
minimized. Such management methods are common in the sciences and
impose no undue burden.
We request comment on whether there are any provisions of the
proposed rule that might inadvertently hamper socially desirable
research. For example, we have proposed allowing institutions to
require that researcher employees divest themselves of stock in
companies owning products undergoing research. Conversely, if there
are other types of situations in which a financial conflict of
interest has a substantial risk of biasing research results, we will
consider expanding the scope of the rule. We ask that commenters
provide evidence as to magnitude and frequency of any claimed adverse
effects or loopholes.
We do not believe that the annual costs of implementing this rule
will reach as much as $1,000 an institution in staff time, or as much
as $1 million a year across all institutions. Most of the cost will
arise from the several seconds or minutes spent certifying the
absence of significant financial interests for individual awards.
Spread across thousands of grantee and contractor institutions, these
costs are infinitesimal. Therefore, we have determined that this
rule would not create an "unfunded mandate" imposed on state-owned
institutions and would not trigger the requirements of Executive
Order 12875, on "Enhancing the Intergovernmental Partnership."
For these same reasons, we certify that this rule will not have a
significant economic impact on a substantial number of small
entities, and that a Regulatory Flexibility Analysis is not required.
2. Paperwork Reduction Act
The proposed rules contain information collection requirements that
are subject to review by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1980. Appropriate instructions
for making certifications to the PHS Awarding Components will be
issued as an addendum to the instructions for applications for PHS
research funding. It is contemplated that the certification will be
provided by checking a box on the application. The title,
description, and respondent description applicable to the information
collection are shown below with an estimate of the annual reporting
and record-keeping burden. Included in the estimate is the time for
reviewing instructions, searching existing data sources, gathering
and maintaining the data needed, and completing and reviewing the
collection of information.
Title: Responsibility of Applicants for Promoting Objectivity in
Research for which Public Health Service (PHS) Funding is Sought
Description: The regulations would require each applicant/offeror
Institution to establish procedures to avoid the inappropriate
financial interest of an Investigator involved in the design, conduct
or reporting of the research for which PHS funding is sought.
Description of Respondents: Public and private non-profit
institutions, small businesses, and other for-profit organizations.
ESTIMATED ANNUAL REPORT AND RECORD KEEPING BURDEN
42CFR 45CFR94 # Hrs Hrs Hrs tot
Rspdnts p/rsp 42CFR 45CFR
Reporting:
50.604(a)(8) (d)(1)(viii) 20 10.0 160 40 200
50.604(b) (d)(2) 100 10.0 850 150 1,000
50.606(a) (f)(1) 20 10.0 160 40 200
SUB-TOTAL: 1,400
Record keeping:
50.604(a)(5) (d)(1)(v) 2,000 100.0 180,000 20,000 200,000
SUB-TOTAL: 200,000
Disclosure:
50.604(a)(1) (d)(1)(i) 2,000 10.0 18,000 2,000 20,000
50.604 (a)(3) (d)(1)(iii) 50,000 1.0 45,000 5,000 50,000
SUB-TOTAL 70,000
TOTAL BURDEN 271,400
In accordance with the requirements of the Paperwork Reduction Act of
1980, the Department of Health and Human Services will submit the
information collection requirements cited above to OMB for review and
approval. Organizations and individuals desiring to submit comments
on the information collection requirements and the estimated burden
should direct such comments to the information address cited above
and to: NIH/PHS Desk Officer, Office of Information and Regulatory
Affairs, OMB, New Executive Office Building, Room 3208, 725 17th St.,
N.W., Washington, DC 20503.
Catalogue of Federal Domestic Assistance
The proposed rules affect all research, research and development, and
research and development support funded by of the Public Health
Service. Questions about the proposed rules should be directed to
the Information Contact provided above.
List of Subjects
42 CFR Part 50, Subpart F - Grant programs--health; Conflict of
interest; Medical research; Behavioral, biological, biochemical,
psychological and psychiatric research
45 CFR Part 94 - Government procurement.
Dated: June 16, 1994
Philip R. Lee, M.D.
Assistant Secretary for Health
Donna E. Shalala
Secretary
Accordingly, it is proposed to amend 42 CFR part 50 by adding a new
Subpart F, and to amend 45 CFR by adding a new Part 94, as set forth
below:
1. Subpart F is added to 42 CFR Part 50 to read as follows:
Subpart F--Responsibility of Applicants for Promoting Objectivity in
Research for which PHS Funding is Sought
50.601 Purpose.
50.602 Applicability.
50.603 Definitions.
50.604 Institutional responsibility regarding Significant Financial
Interests of Investigators.
50.605 Management of Significant Financial interests.
50.606 Remedies.
50.607 Other HHS regulations that apply.
Authority: 42 U.S.C. 216, 289b-1, 299c-3.
50.601 Purpose.
This subpart promotes objectivity in research by requiring that each
Institution that applies for PHS grants or cooperative agreements for
research ensure there is no reasonable expectation that the design,
conduct, and reporting of the research to be funded pursuant to the
application will be biased by any Significant Financial Interest of
an Investigator responsible for the design, conduct, or reporting of
the research.
50.602 Applicability.
This subpart is applicable to each Institution that applies for PHS
grants or cooperative agreements for research and, through the
implementation of this subpart by each Institution, to each
Investigator participating in research covered by this subpart;
provided, that this subpart does not apply to SBIR Program Phase I
applications. In those few cases where an individual, rather than an
institution, is an applicant for PHS grants or cooperative agreements
for research, PHS Awarding Components will make case-by-case
determinations on the steps to be taken to ensure that the design,
conduct, and reporting of the research will not be biased by any
Significant Financial Interest of the individual.
50.603 Definitions.
As used in this subpart:
"HHS" means the United States Department of Health and Human
Services, and any components of the Department to which the authority
involved may be delegated.
"Institution" means any domestic or foreign, public or private,
entity or organization (excluding a Federal agency).
"Investigator" means the principal investigator and any other person
at the Institution who is responsible for the design, conduct, or
reporting of research funded by PHS, or proposed for such funding.
For the purposes of the requirements of this subpart relating to
financial interests, "Investigator" includes the Investigator's
spouse and dependent children.
"PHS" means the Public Health Service, an operating division of the
U.S. Department of Health and Human Services, and any components of
the PHS to which the authority involved may be delegated.
"PHS Awarding Component" means the organizational unit of the PHS
that funds the research that is subject to this subpart.
"Public Health Service Act" or "PHS Act" means the statute codified
at 42 U.S.C. 201 et seq.
"Research" means a systematic investigation designed to develop or
contribute to generalizable knowledge relating broadly to public
health, including behavioral and social-sciences research. The term
encompasses basic and applied research and product development. As
used in this subpart, the term includes any such activity for which
research funding is available from a PHS Awarding Component through a
grant or cooperative agreement whether authorized under the PHS Act
or other statutory authority.
"Significant Financial Interest" means anything of monetary value,
including but not limited to, salary or other payments for services
(e.g.,consulting fees or honoraria); equity interests (e.g.,stocks,
stock options or other ownership interests); and intellectual
property rights (e.g., patents, copyrights and royalties from such
rights). The term does not include:
(1) salary, royalties, or other remuneration from the institution; or
any ownership interests in the institution, if the institution is an
applicant under the SBIR Program;
(2) income from seminars, lectures, or teaching engagements sponsored
by public or nonprofit entities;
(3) income from service on advisory committees or review panels for
public or nonprofit entities; or
(4) financial interests in business enterprises or entities if the
value of such interests do not exceed $5,000 per annum if salary,
fees or other continuing payments or represent more than a five
percent ownership interest for any one enterprise or entity when
aggregated for the investigator and the investigator's spouse and
dependent children.
"Small Business Innovation Research (SBIR) Program" means the
extramural research program for small business that is established by
the Awarding Components of the Public Health Service and certain
other Federal agencies under Public Law 97-219, the Small Business
Innovation Development Act, as amended. For purposes of this
subpart, the term SBIR Program includes the Small Business Technology
Transfer (SBTT) Program, which was established by Public Law 102-564.
50.604 Institutional responsibility regarding Significant Financial
Interests of Investigators.
(a) Each Institution must:
(1) Inform each Investigator of the Institution's policy for
identifying and managing Significant Financial Interests, the
Investigator's reporting responsibilities, and of this subpart.
(2) Designate an institutional official(s) to solicit and review
financial disclosure statements from each Investigator who is
planning to participate in PHS-funded research.
(3) Ensure that Investigators have provided to the designated
official(s) a listing of Significant Financial Interests that ensures
disclosure of all Significant Financial Interests of the type
described in 50.605(a) prior to the time an application is submitted
to PHS. All financial disclosures must be updated during the
pendency of the award, either on an annual basis, or as new
reportable Significant Financial Interests are obtained.
(4) Provide guidelines consistent with this subpart for the
designated official(s) to identify Significant Financial Interests of
the type described in 50.605(a) and take such actions as necessary to
ensure that any such financial interest will be managed, reduced, or
eliminated.
(5) Maintain records, identifiable to each award, of all financial
disclosures and all actions taken by the Institution with respect to
each Significant Financial Interest of the type described in 50.605
for at least three years beyond the termination or completion of the
award, or until resolution of any action by the HHS involving the
records, whichever is longer.
(6) Establish procedures for resolving any alleged violation of the
financial conflict of interest policy of the Institution and
establish appropriate enforcement action for failure to comply.
(7) Certify, in each application for the funding to which this
subpart applies, that;
(i) there is in effect at that Institution a written and enforced
administrative process to identify and manage, reduce or eliminate
Significant Financial Interests of the type described in 50.605(a)
with respect to all research projects for which funding is sought
from the PHS,
(ii) the Institution either has, or has not found a Significant
Financial Interest of the type described in 50.606 and, where such
interest is found, certify that actions will be taken prior to the
award of funding to manage, reduce or eliminate that interest in
accordance with this subpart; and that the Institution will notify
the PHS Awarding Component of such action prior to issuance of the
Notice of Grant Award.
(iii) the Institution agrees to make information available, upon
request, to the HHS regarding all Significant Financial Interests
identified by the Institution of the type described in 50.605 and how
those interests have been managed, reduced, or eliminated to protect
the research from bias;
(iv) the Institution will otherwise comply with this subpart.
(8) (i) Notify the PHS Awarding Component of the identification and
management, reduction or elimination of any Significant Financial
Interest of the type described in 50.605 that originates or becomes
known to the institution after the grant or cooperative agreement has
been awarded, within sixty days of its becoming aware of that
interest.
(ii) The HHS may at any time request submission of, or review on
site, all records pertinent to these certifications. To the extent
permitted by law, all records of financial interests will be
maintained confidentially.
(iii) An investigator may participate in a PHS-funded research
project that is being simultaneously supported by an organization
that has a commercial interest in the finding of the research
project. However, the research support must be provided through the
PHS awardee Institution. Any direct compensation or payment to the
Investigator under that support is considered a financial interest
under this subpart.
50.605 Management of Significant Financial interests.
(a)(1) Institutions applying for PHS funding for research shall
ensure that the following types of Significant Financial Interests
attributable to an Investigator are managed, reduced, or eliminated,
in accordance with paragraph (b) of this section, prior to award of
the grant:
(i) any Significant Financial Interest of the Investigator that would
reasonably appear to be directly and significantly affected by the
research funded by PHS, or proposed for funding; and
(ii) any Significant Financial Interest of the Investigator in an
entity whose financial interest would reasonably appear to be
directly and significantly affected by the research funded by PHS, or
proposed for funding.
(2) In addition to the types of Significant Financial Interests
described in this paragraph that must be managed, an Institution may
require the management of other financial interests as the
Institution deems appropriate.
(b) The designated official(s) must review all financial disclosures,
determine whether Significant Financial interests could affect the
design, conduct, or reporting of the research activities funded by
PHS, or proposed for such funding, and determine what conditions or
restrictions, if any, should be imposed by the institution to manage
such interests.
Examples of conditions or restrictions that might be imposed to
manage actual or potential conflicts of interest include: (1) public
disclosure of significant financial interests;
(2) monitoring of research by independent reviewers;
(3) modification of the research plan;
(4) disqualification from participation in all or a portion of the
research funded by the PHS;
(5) divestiture of significant financial interests; or
(6) severance of relationships that create actual or potential
conflicts.
50.606 Remedies.
(a) Each Institution that applies for research funding from the PHS
must include in its policy for the identification and management of
Significant Financial Interest procedures for enforcement action
against employees who do not comply with the Institution's policy.
If the failure of an employee to comply with the policy of the
Institution has biased the design, conduct, or reporting of the PHS-
funded research, the Institution must promptly notify the PHS
Awarding Component of the corrective action taken. The PHS Awarding
Component will consider the situation and, as necessary, take
appropriate action, or refer the matter to the Institution for
further action, which may include directions to the Institution on
how to maintain appropriate objectivity in the funded project.
(b) The HHS may inquire into the Institutional procedures and actions
regarding financial interests in PHS-funded research, including the
disposition of a particular financial interest. Such inquiry may be
initiated based on information obtained by the HHS under this
subpart, from an award-related document (application, progress
report, publication of results), or any other source. Based on a
specific inquiry, the HHS may decide that a particular Significant
Financial Interest of the type described in 50.606 will bias the
objectivity of the PHS-funded research to such an extent that further
corrective action is needed or that the Institution has not managed a
Significant Financial Interest described in 50.606 in accordance with
this subpart. The PHS may determine that suspension of funding is
necessary until the matter is resolved.
(c) In any case in which the Department determines that a PHS-funded
project of clinical research whose purpose is to evaluate the safety
or effectiveness of a drug, medical device, or treatment has been
designed, conducted, or reported by an Investigator with a
Significant Financial Interest that was not disclosed or managed as
required by this subpart, the Institution must require disclosure of
the financial interest in each public presentation of the results of
the research.
50.607 Other HHS regulations that apply.
Several other regulations and policies apply to this subpart. They
include, but are not necessarily limited to:
42 CFR Part 50, Subpart D---Public Health Service grant appeals
procedure
45 CFR Part 16---Procedures of the Departmental Grant Appeals Board
45 CFR Part 74---Administration of grants
45 CFR Part 76---Government-wide debarment and suspension (non-
procurement)
45 CFR Part 92---Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments
2. A new Part 94 is added to 45 CFR to read as follows:
45 CFR Part 94--Responsible Prospective Contractors
94.1 Purpose.
94.2 Applicability
94.3 Definitions
94.4 Institutional Assurance and Responsibility regarding
Significant Financial Interests of Investigators
94.5 Management of Significant Financial Interests
94.6 Remedies
Authority: 42 U.S.C. 216, 289b-1, 299c-3.
94.1 Purpose.
This part promotes objectivity in research by establishing special
standards for each Institution to ensure that the design, conduct,
and reporting of research to be performed are not compromised by any
Significant Financial Interest of an Investigator responsible for the
design, conduct, or reporting of the research.
94.2 Applicability.
This section is applicable to each Institution that seeks PHS funding
for research and, through the implementation of this section, to each
Investigator who participates in such research; provided that this
section does not apply to SBIR Program Phase I applications.
94.3 Definitions.
As used in this part:
"Contractor" means an entity that provides property or services for
the direct benefit or use of the Federal Government.
"HHS" means the United States Department of Health and Human
Services, and any components of the Department to which the authority
involved may be delegated.
"Institution" means any public or private entity or organization
(excluding a Federal agency) (1) that submits a proposal for a
research contract whether in response to a solicitation from the PHS
or otherwise, or (2) that assumes the legal obligation to carry out
the research required under the contract.
"Investigator" means the principal investigator and any other person
at the Institution who is responsible for the design, conduct, or
reporting of a research project funded by PHS, or proposed for such
funding. For the purposes of the requirements of this section
relating to financial interests, "Investigator" includes the
Investigator's spouse and dependent children.
"PHS" means the Public Health Service, an operating division of the
U.S. Department of Health and Human Services, and any components of
the PHS to which the authority involved may be delegated.
"Public Health Service Act" or "PHS Act" mean the statute codified at
42 U.S.C. 201 et seq.
"PHS Awarding Component" means an organizational unit of the PHS that
funds research that is subject to this part.
"Research" means a systematic investigation designed to develop or
contribute to generalizable knowledge relating broadly to public
health, including behavioral and social-sciences research. The term
encompasses basic and applied research and product development. As
used in this part, the term includes any such activity for which
funding is available from a PHS Awarding Component, whether
authorized under the PHS Act or other statutory authority.
"Significant Financial Interest" means anything of monetary value,
including but not limited to, salary or other payments for services
(e.g., consulting fees or honoraria); equity interests (e.g., stocks,
stock options or other ownership interests); and intellectual
property rights (e.g., patents, copyrights and royalties from such
rights). The term does not include:
(1) salary, royalties, or other remuneration from the institution; or
any ownership interests in the institution, if the institution is an
applicant under the SBIR program;
(2) income from seminars, lectures, or teaching engagements sponsored
by pubic or nonprofit entities;
(3) income from service on advisory committees or review panels for
public or nonprofit entities; or
(4) financial interests in business enterprises or entities if the
value of such interests do not exceed $5,000 or represent more than a
five percent ownership interest for any one enterprise or entity when
aggregated for the investigator and the investigator's spouse and
dependent children.
"Small Business Innovation Research (SBIR) Program" means the
extramural research program for small business that is established by
the awarding components of the Public Health Service and certain
other Federal agencies under Public Law 97-219, the Small Business
Innovation Development Act, as amended. For purposes of this part,
the term SBIR Program includes the Small Business Technology Transfer
(SBTT) Program, which was established by Public Law 102-564.
94.4 Institutional Assurance and Responsibility regarding
Significant Financial Interests of Investigators.
(a) Each Institution must:
(1) Inform each Investigator of the Institution's policy for
identifying and managing Significant Financial Interests, the
Investigator's reporting responsibilities, and of this part.
(2) Designate an institutional official(s) to solicit and review
financial disclosure statements from each Investigator who is
planning to participate in PHS-funded research.
(3) Ensure that Investigators have provided to the designated
official(s) a listing of Significant Financial Interests that ensures
disclosure of all Significant Financial Interests of the type
described in paragraph (e) (1) of this part, prior to the time an
application is submitted to PHS. All financial disclosures must be
updated during the pendency of the award, either on an annual basis,
or as new reportable Significant Financial Interests are obtained.
(4) Provide guidelines consistent with this subpart for the
designated official(s) to identify Significant Financial Interests of
the type described in paragraph (e) (1) of this part and take such
actions as necessary to ensure that any such financial interest will
be managed, reduced, or eliminated.
(5) Maintain records identifiable to each award of all financial
disclosures and all actions taken by the Institution with respect to
each Significant Financial Interest of the type described in
94.5 for at least three years beyond the termination or completion of
the contract, or until resolution of any action by the HHS involving
the records, whichever is longer.
(6) Establish procedures for resolving any alleged violation of the
financial conflict of interest policy of the Institution and
establish appropriate enforcement actions for failure to comply.
(7) Certify, in each contract proposal, that:
(i) there is in effect at that Institution a written and enforced
administrative process to identify and manage, reduce or eliminate
Significant Financial Interests of the type described in paragraph
(e)(1) of this part with respect to all research projects for which
funding is sought from the PHS,
(ii) the Institution either has, or has not found a Significant
Financial Interest of the type described in paragraph (e)(1) of this
part and, where such interest is found, certify that actions have
been taken to manage, reduce or eliminate that interest in accordance
with this part.
(iii) the Institution agrees to make information available, upon
request, to the HHS regarding all Significant Financial Interests
identified by the Institution of the type described in
paragraph(e)(1) of this part and how those interests have been
managed, reduced, or eliminated to protect the research from bias;
(iv) the Institution will otherwise comply with this part.
(8) (i) Notify the PHS Awarding Component of the identification and
management, reduction or elimination of any Significant Financial
Interest, of the type described in Sec. 94.5(a) of this Part that did
not exist or was not known at the time of the proposal, within sixty
days of its becoming aware of that Interest.
(ii) HHS may at any time request submission of, or review on site,
all records pertinent to these certifications. To the extent
permitted by law, the PHS will maintain all records of financial
interests confidentially.
(iii) An investigator may participate in a PHS-funded research
project that is being simultaneously supported by an organization
that has a commercial interest in the outcome of the project.
However, the research support must be provided through the PHS
awardee Institution. Any direct compensation or payment to the
Investigator under that support is considered a financial interest
under this part.
94.5 Management of Significant Financial Interests.
(a) Institutions seeking PHS funding for research shall ensure that
the following types of Significant Financial Interests attributable
to an Investigator are managed, reduced, or eliminated, in accordance
with paragraph (b) of this section, prior to award of the contract:
(i) any Significant Financial Interest of the Investigator that would
reasonably appear to be directly and significantly affected by the
research funded by PHS, or proposed for funding; and
(ii) any Significant Financial Interest of the Investigator in an
entity whose financial interest would reasonably appear to be
directly and significantly affected by the research funded by PHS, or
proposed for funding.
(b) In addition to the types of Significant Financial Interests
described in this paragraph that must be managed, an Institution may
require the management of other financial interests as the
Institution deems appropriate.
(c) The designated official(s) must review all financial disclosures,
determine whether Significant Financial Interests could affect the
design, conduct, or reporting of the research activities funded by
PHS, or proposed for such funding, and determine what conditions or
restrictions, if any, should be imposed by the institution to manage
such interests. Examples of conditions or restrictions that might be
imposed to manage actual or potential conflicts of interest include:
(1) public disclosure of significant financial interests;
(2) monitoring of the research by independent reviewers;
(3) modification of the research plan;
(4) disqualification from participation in all or a portion of the
research funded by the PHS;
(5) divestiture of significant financial interests, or;
(6) severance of relationships that create actual or potential
conflicts.
94.6 Remedies
(a) Each Institution that submits a research contract proposal must
include in its policy for the identification and management of
Significant Financial Interest procedures for enforcement action
against employees who do not comply with the Institution's policy.
If the failure of an employee to comply with the policy of the
Institution has biased the design, conduct, or reporting of the PHS-
funded research, the Institution must promptly notify the PHS
Awarding Component of the corrective action taken. The PHS Awarding
Component will consider the situation and, as necessary, take
appropriate action or refer the matter to the Institution for further
action, which may include directions to the Institution on how to
maintain appropriate objectivity in the funded project.
(b) The HHS may inquire into the Institutional procedures and actions
regarding financial interests in PHS-funded research, including the
disposition of a particular financial interest. Such inquiry may be
initiated based on information obtained by the HHS under this part,
from a procurement-related document (proposal, progress report,
publication of results) or any other source. Based on a specific
inquiry, the HHS may decide that a particular Significant Financial
Interest of the type described in section 4 of this part is so
sensitive that the issuance of a Stop Work Order by the Contracting
Officer may be necessary until the matter is resolved.
(c) In any case in which the Department determines that a PHS-funded
project of clinical research whose purpose is to evaluate the safety
or effectiveness of a drug, medical device, or treatment has been
designed, conducted, or reported by an Investigator with a
Significant Financial Interest that was not disclosed or managed as
required by this subpart, the Institution must require disclosure of
the financial interest in each public presentation of the results of
the research.
.
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