Some time ago I posted Pennsylvania State University's Financial Conflict of Interest draft policy to this list as it has become something of a model based on its presentation at both NCURA and SRA workshops. Bob has summarised the changes in the July 11 final rules which were published in the Federal Register, and provided the revised PSU policy for posting for the benefit of RESADM-L readers. We should be grateful to Bob for sharing the fruits of his, and his legal advisors' labors. (Thanks, Bob!) Particularly helpful are some grey areas that remain in the regulations, which Bob discusses. If you don't have a policy in an advanced stage of development, now is the time to start, since you have to certify, starting Oct 1, 1995 that a policy is in place meeting the requirements (including disciplinary measures for non-complying faculty). Some lead time for informing faculty of the requirement is going to be needed. ----- Forwarded message begins here ----- From: Robert A. Killoren <xxxxxx@rtto.psu.edu> Thu, 27 Jul 1995 09:26:15 EST+300 To: xxxxxx@unix1.sncc.lsu.edu Subject: COI Update Charlie: You may share this update with others as you deem appropriate. It incorporates (I hope) all the changes of the July 11, 1995, Federal Register. The principal changes, as I read the new policies, include: It is now the responsibility of the instititution, not the PI to determine if financial interests appear to DIRECTLY and SIGNIFICANTLY affect the research. The PI has to disclose anything that REASONABLY APPEARS to be affected by the research. This means, I believe, more disclosures and more work for reviewers. Disclosures still need to be made at the time of proposals, but conflicts must be resolved PRIOR TO THE EXPENDITURE OF FUNDS. This will make it possible for committees to be sure there is an award before going through all the effort of developing a resolution plan. However, the fate of the 90-day pre-award costs expanded authority is unknown. The question of "accelerated expenditures" also comes up, especially during this transition period, because you may be spending on the next year's award before you have a resolution. It would be difficult to monitor things at this level. Another significant change that applies to PHS only is the responsibility of the institution to get assurances from all subrecipients, including (it would appear) commercial subcontractors. The threshold has been increased to $10,000, and the thresholds for income versus equity are split for more clarity. Disclosures must be updated during the PERIOD of the award, EITHER annually or as they appear. A reporting requirement exists for PHS (prior to expenditure of funds) whenever a conflict exists, but you do not have to identify any details. NSF only requires reporting of conflicts that you cannot resolve. Another outstanding question is what the effective date really means. Is it proposals submitted on or after October 1, or for the October 1 deadline? The new PHS application kits which are now out have all the conflict information in them, so some schools are going with the changes for the October 1 deadline. REVISED POLICY INCORPORATING 7/11/95 CHANGES: 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 would reasonably appear to be affected by sponsored research. 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 compromised 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 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-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. For purposes of this policy, a conflict of interest exists when the University, through procedures described herein, reasonably determines that a significant financial interest could directly and significantly affect the design, conduct, or reporting of sponsored projects. Investigator means the principal investigator/project director, co-principal investiga tors, and any other person who is responsible for the design, conduct, or reporting of research, educational, or service activities funded, or proposed for funding, by an ex ternal sponsor. In this context, the term "Investigator" includes the investigator's spouse and dependent children. Significant Financial Interest means anything of monetary value, including, but not limited to: * salary or other patments for services (e.g., consulting fees or honoraria) * equity interests (e.g., stocks, stock options or other ownership interests) * 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 pub lic 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, and does not represent 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. 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 affected by the research or educational activities funded, or proposed for funding, by an external sponsor; or (ii) Any Significant Financial Interest of the Investigator in an entity whose fi nancial interest would reasonably appear to be affected 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 misconduct. 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 as new reportable Significant Financial Interests are obtained. 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. 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. A conflict of interest exists when the CIRC reasonably determines that a Significant Financial Interest could directly and significantly affect the design, conduct, or reporting of the proposed sponsored project. The Committee shall then 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 Interests. 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 either ineffective or inequitable, and 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 [PHS policy, for instance, does not permit such an action], 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 resolution. 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 and all required reports regarding the conflict of interest submitted to the sponsor prior to expenditure of any funds under an award. [For example, the PHS requires the University to report to the PHS Awarding Component the existence of a conflicting interest (but not the nature of the interest or other details) found by the University and assure that the interest has been managed, reduced or eliminated. NSF only requires the University to report conflicts which cannot be satisfactorily managed, reduced, or eliminated.] 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 records. 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. In addition, the University shall follow Federal regulations regarding the notification of the sponsoring agency in the event an Investigator has failed to comply with this policy. The sponsor may take its own action as it deems appropriate, including the suspension of funding for the Investigator until the matter is resolved. 9. Collaborators/subrecipients/subcontractors from other academic or not-for-profit institutions must either comply with this policy or provide a certification from their institutions that they 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. Subcontractors from commercial firms need not make a certification, except when the prime award is from the Public Health Service. The PHS requires a certification from any subcontractor, including commercial firms, stating that it is in compliance with Federal policies regarding investigator significant financial interest disclosure and that its portion of the project is in compliance with company policies. Bob Killoren Sponsored Programs ------ Forwarded message ends here ------ ********************************************************************* 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 *********************************************************************
