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
 *********************************************************************