Statement by
Elias Zerhouni, Md.
National Institutes of Health

Hearing: Avoiding Conflicts of Interest at the National Institutes of Health
before the
Committee on Appropriations
Subcommittee on Labor, Health and Human Services
Education and Related Agencies

January 22, 2004

Mr. Chairman, Senator Harkin, Members of the Subcommittee, thank you for the opportunity to testify today about the implementation of ethics rules at the National Institutes of Health.

The NIH budget doubled over a recent five-year period. This milestone is a reflection of the trust that the American people have in our ability to advance scientific knowledge for their benefit.

NIH has historically been successful because of its outstanding record of excellence through independent scientific inquiry and its reputation for high integrity. But recently, the relationships of NIH employees with outside entities have raised the concerns of Congress and the media about conflicts of interest. Our public health mission - written in law - is too important to have it undermined by any real or perceived conflicts of interest.

So I am responding to these concerns. I am applying the principles I have learned from previous experience, that managing conflicts of interest in science is a continuous process best served by: transparency, full disclosure, independent review and continuous monitoring.

I personally began reviewing ethics rules, policies and practices last July, when the House Energy and Commerce Committee raised questions about NIH employees receiving monetary lecture awards. I was advised by NIH ethics officials that the receipt of lecture awards is proper under Federal ethics regulations in specific circumstances. Nonetheless, based on an initial review of policies and procedures, I announced on November 20, 2003 the formation of a new trans-NIH ethics advisory committee in the office of the director to provide independent peer review of outside relationships and advice for improvements in our policies and procedures. I advised all senior managers to exercise great prudence in entering into any arrangement that could reflect poorly on NIH or could create the appearance of conflict, even in cases where the arrangements are permitted by law. I ask that my memorandum be included in the hearing record.

In addition to the questions from the House Committee, recent press reports have suggested that arrangements between our scientists and outside organizations have potentially harmed individual patients and corrupted the integrity of administrative decisions at NIH. There cannot be more serious allegations against an institution. I felt that it was imperative that NIH tackle this issue as quickly, transparently and aggressively as possible.

I ordered an immediate review, not only of the allegations in the press, but of all existing outside activities, to ensure that there have not been breaches of current rules, and to determine the entire scope of these activities.

My first and foremost concern was to ascertain whether any patient had been harmed or if decisions had been unduly influenced as a result of such outside relationships. I want to inform you that, thus far, we have not identified any situations where patients were harmed as the result of financial arrangements NIH employees had with outside parties. Nor have we identified any situations where outside activities resulted in undue influence on grant approvals or other decisions. I will, however, reserve final judgment until all internal and external reviews are completed.

Furthermore, press reports have implied that NIH and its employees willfully used alternative federal pay systems to avoid disclosing their outside activities. This is simply not true. Outside activities are internally disclosed to Ethics officers and supervisors. But it is true that federal rules sometimes do not allow public disclosure of that information. I believe that this needs to be revisited as transparency and full disclosure are core requirements of any viable process of oversight of these relationships.

Clearly, even though real conflict may not have occurred, it is obvious that our practices lead to a perception of widespread conflicts that needs to be corrected as soon as possible.

The governing regulations are set by the Office of Government Ethics (OGE), which promulgates rules for the entire executive branch of the Federal Government. In 1993, the OGE promulgated executive branch-wide Standards of Conduct regulations. Agencies were then required to repeal their ethics regulations and follow the new OGE regulation or propose supplemental regulations, jointly promulgated by the agency and OGE.

Until 1995, NIH policies on outside activities were more restrictive than they are today. Employees could earn no more than $25,000 per year from any single outside source, and no more than $50,000 in total annually. Payments from outside sources in the form of stocks or stock options were prohibited. High-level NIH officials were not allowed to accept payments from outside sources.

I was advised that NIH revised its ethics policies in 1995, after the OGE audited NIH's implementation of federal ethics regulations and determined that the Agency's policies were more stringent than the existing executive branch-wide regulations. OGE offered NIH two options at that time: either change the policies to conform to the regulations or seek supplemental regulations from OGE.

Although I was not at NIH at that time, my understanding is that Agency management was concerned that NIH was at a disadvantage in competing with the private sector for the best scientists due to lower salaries, benefits and the reduced ability to supplement incomes with outside activities as compared to scientists in the private sector. In light of these concerns, NIH management elected to change its ethics policies to conform to the OGE regulations and not pursue supplemental rules, thus easing restrictions on many outside activities. Since then, outside activities have been approved by NIH or Department ethics counselors in accordance with federal regulations.

What should be allowed and what should not be allowed?

On one hand, I believe it is essential that NIH retain the ability to recruit and retain the best scientific researchers in the world. In order to do this, we must be able to compete for their services. So, I think it is important that our scientists be allowed to receive bona fide awards for scientific accomplishments. NIH researchers should be allowed to teach, write textbooks, be inventors on NIH-held patents, and collaborate with for-profit and non-profit companies and institutions, but with appropriate limitations. As the German philosopher Goethe said, "knowing is not enough, you must apply what you know."

On the other hand, the research landscape has changed since 1995. Investments in research by pharmaceutical companies have surpassed the current budget of NIH. The biotechnology industry exploded with new companies and resources, as well. There are now many more opportunities for NIH scientists to be asked to collaborate with the private sector to share their knowledge and help apply it for tangible treatments.

Given these events and the passage of time, I have reached the conclusion that it is appropriate for NIH to completely review the 1995 decision and its implementation by NIH.

This is why I have asked that a Blue Ribbon Task Force, as an adjunct to the existing independent Advisory Committee to the Director of NIH, review all NIH ethics practices, ponder what types of collaborations with non-government organizations are necessary and appropriate, and make recommendations to me on reforms of our policies and procedures within 90 days of its formation. This panel will be co-chaired by two prominent individuals and will be composed of members of the highest reputation for independence and competence.

In the meantime, I have ordered that the NIH system for implementing ethics regulations be restructured to ensure consistency and a strict level of review. A new NIH Ethics Advisory Committee will review applications to receive compensation for certain outside activities, including payments from pharmaceutical or biotechnology companies and payments that exceed certain dollar thresholds.

Finally, and most importantly, I have reached the conclusion that NIH must make changes that will appropriately restrict current practices. I will reserve judgment on specific changes until our internal review and the work of the Blue Ribbon Task Force is completed.

I have discussed these steps with all of the NIH Institute and Center directors, who reaffirm that NIH's first and foremost duty is to serve the American people. They are committed to helping me implement all necessary measures to insure that we eliminate real and apparent conflicts of interest. My goal is to erase any doubts that we remain worthy of the trust and confidence you have placed in us.

Thank you for the opportunity to testify. I look forward to working with the Congress as we move forward. I will be pleased to answer any questions you may have.

Last Revised: January 22, 2004