The New Conflict of Interest Rules: What’s There, and What’s Not

Eric Campbell

First posted 9/15/11 on The Health Affairs Blog

Copyright ©2011 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Last month the federal government issued new regulations governing the disclosure and management of potential financial conflicts of interest on the part of investigators in federally funded research projects. As explained below, these regulations, which replace earlier rules adopted more than 15 years ago, represent an important step toward transparency. However, they also contain important omissions, such as the lack of any oversight of potential conflicts on the part of the very institutions charged with monitoring their researchers’ conflicts of interest.


In 1995 the federal government implemented a set of regulations entitled Objectivity in Research.”  These regulations were “… intended to ensure that the design, conduct, or reporting of research funded under public health service (PHS) grants, cooperative agreements or contracts will not be biased by any conflicting financial interest of those investigators responsible for the research.”  However, since the mid 1990’s much has changed that has called the utility of these regulations into question.

For example, presently the majority of academic scientists have at least one industry relationship, and these relationships are significantly more frequent among the most academically and commercially productive scientists.  Among those in the highest echelons of academic science and medicine (especially in small fields)  it is often difficult to find an academic scientist who doesn’t have extensive financial relationships with companies whose products and services are related to their area of scientific expertise.   Today there is not a single aspect of medical education, research or patient care into which industry does not have an extensive web of financial relationships with individual scientists and institutional leaders.

Coupled with the frequency of industry relationships  has been a number of high profile scandals in which individual researchers failed to disclose relationships with industry.  The most infamous cases involved Dr. Joseph Biederman at Harvard Medical School,  Dr. Charles Nemeroff at Emory University,  Dr. Alan Schatzberg at Stanford University, Dr. Thomas Zedeblick at the University of Wisconsin, and many others.

A fundamental flaw of the 1995 regulation which led to several of these scandals  was that it relied on faculty to make a full and complete disclosure of payments from companies that were made directly to them as individuals — money which is often invisible to institutions.  Another flaw was that the 1995 regulation gave institutions absolute autonomy and no guidance to decide what, if any, action should be taken in response to a faculty disclosure.  The processes and outcomes of such decisions are unique to every academic institution, poorly studied, largely free of governmental oversight, and often shrouded in complete secrecy.  Also, these decisions are often made in the presence of undisclosed institutional industry relationships.  The bottom line was that the whole system for oversight of industry relationships was characterized by the Office of Inspector General as  an honor system that relied on “…the assurances that the grantee institutions have followed Federal regulations” (p. 19)

Over the years there has been a groundswell of interest in this topic driven in part by scientific research (much of which is funded by the NIH).  Studies have shown that industry relationships have benefits and risks and that institutions (primarily medical schools and teaching hospitals) vary greatly in their oversight (or lack thereof) of these relationships.  Finally, research has repeatedly shown that published studies that are funded by industry disproportionately support the safety, use, and desirability of companies’ products and services—leading to the perception that industry sponsorship results in an intentional and systematic bias in scientific research.

Given these developments the federal government proposed a new set of regulations embodied in a notice of proposed rule making (NPRM). This NPRM was published in the Federal Register and solicited public comment on the proposed changes to the regulations.  Finally, after running through the sausage maker of Washington regulation formation, in late August of 2011 final regulations were made public.

2011 Regulations:  What is Included

The key requirements of the 2011 regulations are:

  • Investigators (those designated as Senior/key personnel on grants) must receive training on their institutional policy and the disclosure obligations of the investigator prior to engaging in public health service (PHS) funded research and every four years thereafter.
  • Prior to receiving federal funding and at least annually (or sooner if circumstances change ) investigators must disclose to their institution all Significant Financial Interests (SFI) related to their responsibilities at their institution, consisting of:

    1. Compensation or equity of $5000 per year or more, and any  equity/ownership interest in a non-publicly traded company; exceptions for income from certain academic and governmental institutions.
    2. Intellectual property rights upon receipt of income from those rights, except for royalties through the institution if the individual is employed or appointed by that institution
    3. Reimbursed expenses, the occurrence of which must be disclosed by the investigator and the amount of which may be included in the calculation of compensation; special provisions where amount can’t be readily ascertained (that is, for example, where a company arranges for travel directly with a hotel for an individual)


  • Institutions are responsible for determining if an SFI constitutes a financial conflict of interest (FCOI), defined as “…when an institution or its designated official(s) reasonably determines that a SFI could directly and significantly affect the design, conduct or reporting of PHS funded research.”
  • If a FCOI is identified then the institution must report to the funding agency the Project number, the name of investigator with the FCOI, the name of the entity with which there is an FCOI, the nature of interest and value within ranges, a description of how the FCOI relates to the research, the basis for determination that it’s a FCOI, a description of key elements of the management plan, the investigator’s agreement to it, and how the FCOI will be monitored.
  • Institutions are required to make public FCOI information regarding senior/key personnel, either on a public website or by responding to individual requests for FCOI information within five business days of receipt of a request.  Information required to be made public includes the individual’s name, title, role, name of entity in which the FCOI is held, the nature of the SFI, and the dollar amount or dollar range.

2011 Regulations:  What is Not Included

As with all governmental regulations what is not included is often as important as what is included.  Most noticeably absent from the 2011 regulations is the requirement that all institutions must post FCOI information on the web.  This requirement was included in the initial draft of the 2011 regulations that were put out for public comment but was later abandoned for unknown reasons. Nor do the new regulations require institutions to make their management plans for FCOIs public.

The 2011 regulations do not incorporate oversight or reporting of Institutional Conflict of Interests (ICOI)—and in many ways ICOIs may be more influential and problematic than investigators’ FCOIs.  For example, imagine that an investigator identifies a SFI involving a company related to his/her area of research.  At the same time the institution has a significant equity stake in the company.  It is highly problematic that the institution will decide if an FCOI exists and also design and implement a management plan to address the individual FCOI when the institution itself has a FCOI with the same company.  This scenario happens frequently in the life sciences when new cash poor start-ups provide scientists and academic institutions with equity in exchange for access to intellectual property.  It is too bad the government failed to address this problem, despite the fact scientific data show these ICOIs are highly prevalent among medical schools and their leadership

The new regulations also fail to close the loophole that allows individuals to change institutions to avoid governmental sanctions.  For example, Dr. Charles Nemeroff moved from Emory University to the University of Miami in order to escape sanctions for failing to disclose more than a million dollars in payments from a company.  In practice this is unlikely to be much of a problem in the future because sanctions by the government for failure to disclose industry relationships are exceedingly rare.

Finally, the 2011 regulations still rest entirely on the willingness and ability of individual investigators to make full and complete disclosures of their industry relationships to their institutions.  In essence, there is no reliable way for institutions or the federal government to comprehensively assure that researchers’ disclosures are complete and accurate.  As such there is no comprehensive, reliable mechanism to ensure that the whole system is functioning as efficiently and effectively as possible.

Implications for Institutions

The new regulations are likely to have the largest impact on research institutions. For example, it is likely that substantially more resources, including more sophisticated personnel, will be necessary for institutional officials to determine when SFIs are FCOIs and thus reportable to the funding agency.  The increased need for resources will likely be greatest in the most research intensive medical schools and teaching hospitals.

In addition, it is unclear how institutions should decide which SFIs are FCOIs and which are not.  Some institutions may rely heavily on the insight/opinions of the investigator, while some may use internal committees or outside experts to make this determinations.  Regardless of the process, anyone who has any experience with such decisions knows that they are often complex, situation specific, and shrouded in a dark veil of institutional secrecy. The 2011 regulations will do very little to address these issues.

Also, the new regulations provide no substantive guidance as to what constitutes or should constitute aprohibited financial conflict of interest.  At present all judgments about what should and should not be allowed rest on the shoulders and pocketbooks of institutions.  Under the new regulations there will be a lot more process and documentation, but it is still up to the institution to determine what needs to be “managed”, including what should be eliminated and what should be given a pass.  Also, it is likely that there will be a strong financial disincentive for institutions to consider an SFI as a FCOI, since doing so will require additional resources to deal with the reporting and management requirements of the new regulation.

Finally, it is possible that web-based disclosures could, in certain instances, require extensive resources to develop, test, and maintain.  The good news is that the electronic infrastructure for collecting and posting such information already exists in many of the major research centers. However, it is important to note that the alternative to web posting, which requires institutions to provide a written responses within five business days with current financial information, could be logistically unworkable if an institution receives a large number of individual request for FCOI information.

Implications for Individual Researchers:

The 2011 regulations have several implications for individual researchers.  First, scientists need to understand that information about their FCOIs will be made public either by their institutions posting this information on the web or by responding to individual requests.  Regardless of the mechanism, it will be difficult to keep FCOI information away from interested members of the press, colleagues, students and competitors.  Scientists who do not wish for such information to be made public may forgo establishing financial relationships with industry in the future,  they may chose to limit their financial involvement with industry to less than $5000 annually, or they may provide their professional services free of charge (i.e. giving talks, consulting, service on boards, etc).

Unfortunately, individuals will be forced to continue to make multiple (and often confusing) disclosures associated with grant submissions, publications, presentations, service on government committees and other professional activities.    The current regulations do nothing to reduce the reporting burden on the individual researcher.

Also, individuals must make sure that the disclosures that they give to their institutions do not conflict with reports from other public sources, including those that are part of the Affordable Care Act, settlements with companies for illegal behavior, and reporting by other independent groups.  Sorting out and explaining disagreements between these varying sources of public reports is likely to rest solely on the back of the individual investigator.

Overall Policy Assessment

The 2011 regulation in many ways represents a positive step towards increased transparency regarding financial conflicts of interest and federally funded research.  This increased transparency should send a clear message that the federal government is committed to addressing this important topic.

Second, there is absolutely nothing in these regulations that in any way directly or indirectly limits relationships between PHS-funded scientists and industry.  It simply requires that institutions now take additional responsibility for deciding which SFIs create  FCOIs and making that information public.  Doing so could go a long way to increasing accurate knowledge and attitudes about relationships between researchers and industry.

However, in many respects the new regulation failed to change the fact that this is still an honor system with no reliable mechanism to ensure full and complete disclosure.  It also failed to make determinations of FCOIs more consistent across institutions, and did not create any mechanism to address ICOIs.

Regardless of one’s opinions on whether the guidelines went too far or did not go far enough, what seems universal is the belief that the government is unlikely to revisit these regulations for quite some time. In the meantime institutions must get on with the work of implementation and the federal government should fund work to rigorously evaluate the effectiveness, or lack thereof, of the new regulations on publicly funded science.

Eric Campbell is Director of Research at the Mongan Institute for Health Policy and an associate professor of medicine at Harvard Medical School. 

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