[Federal Register Volume 59, Number 123 (Tuesday, June 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15500]
[Federal Register: June 28, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Public Health Service
42 CFR Part 50
Office of the Secretary
45 CFR Part 94
RIN 0905-AE01
Objectivity in Research
AGENCY: Public Health Service and Office of the Secretary, HHS.
ACTION: Notice of proposed rulemaking.
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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.
ADDRESSES: 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 Sec. 50.603) of the type specified in
Sec. 50.605(a) must be managed as provided in Sec. 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 SIBR 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 Sec. 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
regulations. 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 Sec. 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 a 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
Sec. 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 Sec. 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
Sec. 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
----------------------------------------------------------------------------------------------------------------
Applicable section Total No.
Applicable section of of regulation 45 CFR of Hours per Total hours Total hours Total hours
regulation 42 CFR 94 respondents response 42 CFR 45 CFR
----------------------------------------------------------------------------------------------------------------
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., NW.,
Washington, DC 20503.
Catalogue of Federal Domestic Assistance
The proposed rules affect all research, research and development,
and research and development support funded by 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
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,
Assistant Secretary for Health.
Dated: June 17, 1994.
Donna E. Shalala,
Secretary.
Accordingly, it is proposed to amend 42 CFR part 50 and 45 CFR
subtitle A as set forth below:
42 CFR Chapter I
PART 50--[AMENDED]
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.
Subpart F--Responsibility of Applicants for Promoting Objectivity
in Research for Which PHS Funding Is Sought
Authority: 42 U.S.C. 216, 289b-1, 299c-3.
Sec. 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.
Sec. 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.
Sec. 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 5% 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.
Sec. 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 Sec. 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 Sec. 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
Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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.
Sec. 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.
Sec. 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 Sec. 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 Sec. 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.
Sec. 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
45 CFR SUBTITLE A
2. A new Part 94 is added to 45 CFR subtitle A 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.
Sec. 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.
Sec. 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.
Sec. 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) that:
(1) Submits a proposal for a research contract whether in response
to a solicitation from the PHS or otherwise, or
(2) 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.
PHS Awarding Component means an organizational unit of the PHS that
funds research that is subject to this part.
Public Health Service Act or PHS Act mean the statute codified at
42 U.S.C. Sec. 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 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
5% 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.
Sec. 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 Sec. 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.
Sec. 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.
Sec. 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 Sec. 94.4 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 part, the Institution must require disclosure of the
financial interest in each public presentation of the results of the
research.
[FR Doc. 94-15500 Filed 6-27-94; 8:45 am]
BILLING CODE 4140-01-P
