Managing Conflicts of Interest 10/16/2008 Managing Conflicts of Interest Presentation to Rensselaer’s Large Business Managers Group By Jeffrey Armstrong Whiteman Osterman & Hanna, LLP (Office of the General Counsel) & Frank J. DiSanto Research Administration & Finance 10/16/2008

Overview What is a Conflict of Interest? 10/16/2008 Overview What is a Conflict of Interest? What is a Conflict of Commitment? How does a college or university manage or eliminate these conflicts? 10/16/2008

What is a Conflict of Interest? 10/16/2008 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. 10/16/2008

Where can a Conflict of Interest occur? 10/16/2008 Where can a Conflict of Interest occur? Purchasing and other business relationships Gifts Employment Research Technology licensing Activities of family members 10/16/2008

What is a Conflict of Interest in Research? 10/16/2008 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. 10/16/2008

Sources of Law Federal: 10/16/2008 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 10/16/2008

Essential Requirement #1 10/16/2008 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. 10/16/2008

Goals of a Conflict of Interest Policy 10/16/2008 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” 10/16/2008

Conflict of Interest Policy 10/16/2008 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 10/16/2008

Conflict of Interest Policy – Basic terms 10/16/2008 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 Create the conflict management plans Manage the plan Enforce the plan 10/16/2008

Essential Requirement #2 10/16/2008 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. 10/16/2008

How are Conflicts Disclosed at Rensselaer? 10/16/2008 How are Conflicts Disclosed at Rensselaer? Annual Survey from HR Project Information Form (PIF) Human Subjects Protocols Intellectual Property Processes (disclosure, patenting, licensing) 10/16/2008

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Essential Requirement #3 10/16/2008 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. 10/16/2008

Emory U. Psychiatrist Failed to Report Income From Drug Makers October 4, 2008 Emory 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, 2008 NIH 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. 10/16/2008

Basics of Conflict Management 10/16/2008 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 10/16/2008

Individual Conflict Management Plans – Basic Terms 10/16/2008 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.) 10/16/2008

Individual Conflict Management Plans – Basic Terms (cont.) 10/16/2008 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.) 10/16/2008

Individual Conflict Management Plans – Basic Terms (cont.) 10/16/2008 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 10/16/2008

What is a Conflict of Commitment? 10/16/2008 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. 10/16/2008

What can cause a Conflict of Commitment? 10/16/2008 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. 10/16/2008

What can we expect? Greater focus by government 10/16/2008 What can we expect? Greater focus by government Continued focus by the press Audits OIG involvement Legal action? 10/16/2008

Significant conflict of interest? 10/16/2008