Managing Conflicts of Interest

Presentation to Rensselaer’s Large Business Managers GroupBy

Jeffrey ArmstrongWhiteman Osterman & Hanna, LLP (Office of the General Counsel)

&Frank J. DiSanto

Research Administration & Finance

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Overview

- What is a Conflict of Interest?

- What is a Conflict of Commitment?

- How does a college or university manage or eliminate these conflicts?

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What is a Conflict of Interest?

A potential conflict exists when there is a possibility that an individual’s outside financial interests could directly and significantly affect the individual’s professional actions or decisions.

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Where can a Conflict of Interest occur?

- Purchasing and other business relationships- Gifts- Employment - Research- Technology licensing- Activities of family members

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What is a Conflict of Interest in Research?

– In the sponsored research setting, a potential conflict exists when there is a possibility that an individual’s outside financial interests could directly and significantly affect the design, conduct, or reporting of the research.

– Under federal law, a financial interest is “significant” if:

• it amounts to more than $10,000 per year in outside income; or • involves equity either worth more than $10,000 or equity

representing more than 5% of the outstanding equity in a company.

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Sources of Law

Federal:- National Science Foundation -“Investigator Financial Disclosure Policy”- National Institutes of Health “Objectivity in Research”- Other federal agencies – required FAR clauses imposing conflict of interest rules

State: - Contractual clauses in grant and other awards

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Essential Requirement #1

All conflict of interest laws require adoption of institutional procedures that require faculty and staff to disclose to the institution outside financial interests above specified thresholds when those interests would likely be affected by the research.

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Goals of a Conflict of Interest Policy

• Protect research participants• Protect the integrity of the research• Protect the institution, faculty, students

– Funding Status– Litigation– Reputation/Public Image

• Reconsideration & Noncompliance• “Good Policy Practices”

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Conflict of Interest Policy- May be more than one policy

- Trustees- Officers- Employees- Faculty- Research policy- Institutional Conflict of Interest

- Typical Scenario: Institution has a financial interest in a technology/company/invention and the research is conducted at that institution

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Conflict of Interest Policy – Basic terms- Definitions:

- including what is a Significant Financial Interest which must be reported

- Disclosures:- periodic (usually annual) disclosures- ad hoc disclosures when potential conflicts arise

- Responsible Individuals:- Who are the responsible individuals who will- (i) Receive and review the disclosures

(ii) Create the conflict management plans(iii) Manage the plan(iv) Enforce the plan

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Essential Requirement #2

The institution must review the disclosures, determine whether there is a conflict, and, if so, manage, reduce, or eliminate it, before funds are expended.

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How are Conflicts Disclosed at Rensselaer?

1. Annual Survey from HR2. Project Information Form (PIF)3. Human Subjects Protocols4. Intellectual Property Processes (disclosure,

patenting, licensing)

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Essential Requirement #3

The institution must disclose and/or otherwise notify the sponsoring agency of the nature of the conflict or the action taken to manage, reduce, or eliminate it.

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October 4, 2008Emory U. Psychiatrist Failed to Report Income From Drug Makers

A prominent psychiatrist at Emory University is the latest researcher to come under fire in Congress for violating federal and university rules against financial conflicts of interest.

The New York Times reports that Charles B. Nemeroff, chairman of the psychiatry department at Emory and former editor in chief of the journal Neuropsychopharmacology, earned more than $2.8-million for consulting with drug companies from 2000 to 2007 and hid much of that income from his university.

October 14, 2008NIH Halts Study at Emory Over Concerns About Drug Company's Payments

The National Institutes of Health has halted a $9.3-million five-year research project at Emory University, pending an investigation into potential conflicts of interest by the project’s former leader, according to Ron Sauder, vice president for communications and marketing at Emory.

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Basics of Conflict Management

- Adopt an Institution-wide Conflict of Interest Policy- Establish training - Establish a disclosure procedure- When the Institution learns of a conflict, adopt

specific plans to manage or eliminate it- Establish processes to ensure that the management

plans are enforced

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Individual Conflict Management Plans – Basic Terms

- Summary of Conflict- Set forth facts which describe the conflict

- Address management of primary conflict- Is a particular business contract or project allowed or

prohibited- If allowed, appoint a disinterested person to directly

oversee the relationship or the project- Make sure that the conduct of the project is reported

to supervisors - Establish rules for use of resources, such as facilities,

students or staff (e.g. prohibit dual employment of students or staff, use of university facilities by outside companies without permission, etc.)

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Individual Conflict Management Plans – Basic Terms (cont.)

- Consider and manage effects on other projects- Aside from primary transaction in which conflict exists,

manage other projects that the conflict could affect (e.g. technology license to a professor’s start up company might affect other research projects involving similar work, etc.)

- Responsible Individuals- Establish persons who will be responsible to supervise the

conflict management - Establish an appeal process to resolve disputes

- Transparency - Set forth procedures to ensure that change in facts will always be reported

- Require fact that potential conflict exists to be disclosed to all who might otherwise be misled (e.g. in publications, etc.)

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Individual Conflict Management Plans – Basic Terms (cont.)

- Follow-Up- Establish a regular process of ensuring that the

conflict management plan is being adhered to- Consequences

- Be clear in the plan about the possible penalties for noncompliance

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What is a Conflict of Commitment?

A conflict of commitment exists when the commitment to external activities of a faculty or staff member adversely affects his or her capacity to meet their job responsibilities.

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What can cause a Conflict of Commitment?

- External consulting by faculty or staff- Being over committed on sponsored projects- Outside teaching - Officer or Director in outside organizations, including

churches and nonprofit organizations- Start Up or other entrepreneurial businesses

- Note: A conflict of commitment often exists alongside of a conflict of interest and both may need to be addressed at the same time.

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What can we expect?

- Greater focus by government- Continued focus by the press- Audits- OIG involvement- Legal action?

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Significant conflict of interest?

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