Penn. State's Conflict of Interest Policy Charles E. Graham, Ph.D. 22 Mar 1995 14:31 EST

Full text of Robert Killoren's message and the Pennsylvalia State
University Conflict of Interest Draft Policy:

(Forwarded with permission from, and thanks to Bob Killoren)

I'd be happy to share the information with anyone who wants it.  Of course,
I've just heard that NIH and NSF have reached some agreements on final
form -- so there may be a few minor changes (they look as if they are going
to go with a $10k threshold, and clarify that there's a $10k/year threshold
on anticipated salaries, royalties, etc.  They also want to clarify that
certain exclusions will not apply if receipt of the income is contingent on
specific results being obtained.)  I'm not on RESADM, but if you want to
share that info with any of those folks that would be fine.  I just don't
have the time to do it all myself.  I'm teaching a workshop on the subject
for the NCURA Region II meeting in Alexandria on April 30, if anyone is
interested in attending.  I have an electronic version of an updated
policy if you are interested...  I'll send it below.  If you want to
share it with folks that's okay...  (Your message to me is at the end
of this message.  Just so you don't copy that with the policy...)
You can list it on the gopher too, if you want.

Penn State's Significant Financial Interest Policy (DRAFT)

 These guidelines define general University policy and procedures
regarding conflicts of interest in relationship to sponsored
projects involving research, education, and university service.
Their purpose is to protect the credibility and integrity of the
University's faculty and staff so that public trust and confidence
in the University's sponsored activities is ensured.

 In accordance with Federal regulations, the University has a
responsibility to manage, reduce, or eliminate any actual or
potential conflicts of interest that may be presented by a financial
interest of an investigator.  Thus, the University requires that
investigators disclose any significant financial interest that may
present an actual or potential conflict of interest in relationship
with a sponsored project.

A.  Background - Technology Transfer and Conflict of Interest
 Effective interaction between universities conducting research and
industry is essential to ensure the rapid application of scientific
discoveries to the needs of the Nation and to maintain the
international competitiveness of domestic industry. Nonetheless,
prudent stewardship of public funds includes protecting sponsored
research from being compro mised by the conflicting financial
interests of any investigator responsible for the design, conduct,
or reporting of sponsored research.

 Numerous statutes and programs demonstrate Federal interest in the
promotion of in teractions among Government, academia and industry.
For example, the Stevenson- Wydler Technology Innovation Act of 1980
(Public Law (P.L.) 96-480) encourages tech nology 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 par ticipate 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-fer tilization is critical to
the development of U.S. industry. However, these and other in
ducements for collaboration have created a climate in which the
stewardship of public funding for research is increasingly complex
and challenging.

 The value of the results of sponsored 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. This policy seeks to
maintain a reasonable balance between these competing interests,
give the University the ability to identify and manage financial
interests that may bias the research, and minimize reporting and
other burdens on the investigators.

B.  Definitions

 A potential Conflict of Interest occurs when there is a divergence
between an individual's private interests and his or her
professional obligations to the University such that an independent
observer might reasonably question whether the individual's
professional actions or decisions are determined by considerations
of personal gain, financial or otherwise.  An actual conflict of
interest depends on the situation and not on the character or
actions of the individual.

 Investigator means the principal investigator/project director,
co-principal investiga tors, and any other person at the University
who is responsible for the design, conduct, or reporting of
research, educational, or service activities funded, or proposed for
funding, by an external sponsor. In this context, the term
"Investigator" includes the investigator's spouse and dependent

Significant Financial Interest means anything of monetary value,
including, but not limited to:

* salary or other payments for services (e.g., consulting fees or

* equity interests (e.g., stocks, stock options or other ownership

* 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 University;

(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) An equity interest that when aggregated for the Investigator and
the Investigator's spouse and dependent children, meets both of the
following tests: does not exceed $10,000 in value as determined
through reference to public prices or other reasonable measures of
fair market value, or, constitute more than a five percent ownership
interest in any single entity; or

(5) Salary, royalties or other payments that when aggregated for the
Investigator and the Investigator's spouse and dependent children
over the next twelve months, are not expected to exceed $10,000.

 Provided, however, that the exclusions in items (1), (4), and (5)
shall not apply if the compensation or transfer of an equity interest
is conditioned upon a particular outcome in a sponsored research

C.  Guidelines

1. Each Investigator is required to disclose the following
Significant Financial Interests:

(i) Any Significant Financial Interest of the Investigator that
would reasonably appear to be directly and significantly affected by
the research or educa tional activities funded, or proposed for
funding, by an external sponsor; or

(ii) Any Significant Financial Interest of the Investigator in an
entity whose financial interest would reasonably appear to be
directly and significantly af fected by the research or educational
activities funded, or proposed for funding, by an external sponsor.

 Regardless of the above minimum requirements, a faculty or staff
member, in his or her own best interest, may choose to disclose any
other financial or related interest that could present an actual
conflict of interest or be perceived to present a conflict of
interest.  Disclosure is a key factor in protecting one's reputation
and career from potentially embarrassing or harmful allegations of

2. Each Investigator who has Significant Financial Interest
requiring disclosure shall complete a Significant Financial
Interests Disclosure Form and attach all required supporting
documentation.  The completed Disclosure Form must be submitted with
the proposal and University Clearance Data Form (CDF) to the Office
of Sponsored Programs (or with the "Blue Sheet" at Hershey Medical
Center to the Office of Research Affairs) using normal University
procedures.  Supporting documentation that identifies the business
enterprise or entity involved and the nature and amount of the
interest should be submitted in a sealed envelope marked
confidential and accompany the Disclosure Form and the CDF.

3. As required by Federal regulation, all Significant Financial
Interests must be disclosed prior to the time a proposal is
submitted.  All financial disclosures must be updated by
Investigators during the period of the award, either on an annual
basis or as new reportable Significant Financial Interests are

4. The Director of Sponsored Programs or the Director of Research
Affairs at Hershey Medical Center, or official designee, shall
conduct an initial review of all financial disclosures to determine
whether a conflict of interest exists.  A conflict of interest
exists when the review reasonably determines that a Significant
Financial Interest could directly and significantly affect the
design, conduct, or reporting of the proposed sponsored project.  If
the initial determination is made that there may be a potential for
conflict of interest covered by this policy, then the Disclosure
packet will be referred to the appropriate University Conflict of
Interest Review Committee (CIRC).  Committee members are appointed
by the Senior Vice President for Research and Graduate Education for
the University Park CIRC and by the Senior Vice President for Health
Affairs and Dean of the Medical School for the Hershey Medical
Center CIRC.  The CIRC shall contain, at a minimum, four faculty
members (three at Hershey Medical Center) representing a cross
section of academic disciplines and a research administrator.  The
Committee shall determine what conditions or restrictions, if any,
should be imposed by the institution to manage actual or potential
conflicts of interest arising from disclosed Significant Financial

5. Prior to consideration by the CIRC, the Investigator, in
cooperation with the academic unit or College, shall develop and
present to the CIRC a Conflict of Interest Resolution Plan that
details proposed steps that will be taken to manage, reduce, or
eliminate any actual or potential conflict of interest presented by
a Significant Financial Interest.  At a minimum the Resolution Plan
shall address such issues as:

(1) Public disclosure of significant financial interests;

(2) Review of research protocol by independent reviewers; and

(3) Monitoring of research by independent reviewers.

 Where the CIRC deems it appropriate, the CIRC shall review the
Resolution Plan and approve it, add conditions or restrictions,
including the following:

(1) Modification of the research plan;

(2) Disqualification from participation in all or a portion of the
research funded;

(3) Divestiture of significant financial interests; or

(4) Severance of relationships that create actual or potential
conflicts of interest.

 If the CIRC determines that imposing the above referenced
conditions or restrictions would be inequitable, or that the
potential negative impacts that may arise from a significant
financial interest are outweighed by interests of scientific
progress, technology transfer, or the public health and welfare,
then the CIRC may recommend that, to the extent permitted by Federal
regulations, the research go forward without imposing such
conditions or restrictions.  In these cases, the Senior Vice
President for Research or the Senior Vice President for Health
Affairs, as appropriate, shall make the final decision regarding

6. The approved Resolution Plan shall be incorporated into a
Memorandum of Understanding between Penn State University and the
faculty member that details the conditions or restrictions imposed
upon the Investigator in the conduct of the project or in the
relationship with the Business Enterprise or Entity.  The Memorandum
of Understanding shall be signed by the Investigator, the Department
Chair/Unit Head and, on behalf of the University, the Investigator's
cognizant University administrator (usually a Dean/Director or, at
Hershey Medical Center, the Associate Dean for Academic Affairs).
Actual or potential conflicts of interests will be satisfactorily
managed, reduced, or eliminated in accordance with these Guidelines
prior to accepting any award, or they will be disclosed to the
sponsoring agency for action.

7. Records of investigator financial disclosures and of actions
taken to manage actual or potential conflicts of interest, shall be
retained by the Office of Sponsored Programs (or the Office of
Research Affairs at Hershey Medical Center) until 3 years after the
later of the termination or completion of the award to which they
relate, or the resolution of any government action involving those

8. Whenever an Investigator has violated this policy or the terms of
the Memorandum of Understanding, the CIRC shall recommend sanctions
which may include disciplinary action ranging from a public letter
of reprimand to dismissal and termination of employment.  If the
violation results in a collateral proceeding under University
policies regarding misconduct in science, then the CIRC shall defer
a decision on sanctions until the misconduct in science process is
completed.  The CIRC's recommendations on sanctions shall be
presented to the Investigator's cognizant University official who,
in consultation with the Senior Vice President for Research (or the
Senior Vice President for Health Affairs at Hershey Medical Center),
shall enforce any disciplinary action.

9. Collaborators from other institutions must either comply with
this policy or provide a certification that their institutions are
in compliance with Federal policies regarding investigator
significant financial interest disclosure and that their portion of
the project is in compliance with their institutional policies.


Forwarded by:
 Charles E. Graham, PhD.,                     xxxxxx@UNIX1.SNCC.LSU.EDU
 Director, Office of Sponsored Research                   504-388-8692
 117D David Boyd Hall, Louisiana State University         FAX 388-6792
 Baton Rouge, LA 70810