Testimony

Statement by
Ruth Kirchstein, M.D.
Special Advisor to the Director
National Institutes of Health

on
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, members of the Committee, I am Ruth Kirschstein. I am currently the Senior Advisor to the Director of the National Institutes of Health (NIH). Today, I am appearing before this committee to describe the role of the NIH Deputy Ethics Counselor, as part of the duties of the Deputy Director of NIH. I will also discuss the evolution of the ethics program at NIH.

History

In 1978, the Ethics in Government Act established the U.S. Office of Government Ethics (OGE) as part of the Office of Personnel Management. Each department or agency of the Executive Branch of the Government was given the responsibility for its own ethics program. The Department (at that time) of Health, Education and Welfare, in turn, delegated much of the responsibility for ethics program activities to its agency heads. In turn, the Director of NIH delegated the individual responsibility for ethics activities to the heads of the various institutes, centers and divisions.

And so, in 1978, as Director of the National Institute of General Medical Sciences (NIGMS), one of my responsibilities was to serve as the Deputy Ethics Counselor of that Institute. In the early days of the new ethics laws, the Deputy Ethics Counselors of the Institutes worked closely with the ethics officials of the Department and the OGE to establish the applicable rules and regulations. We also received considerable training about the new law and its implementations.

For fifteen years, from 1978 until 1993, as Director of NIGMS, I personally reviewed all the financial disclosure forms that were filed by Institute staff. I ensured that annual ethics training was given to all such employees and participated, with the other Deputy Ethics Counselors (the Directors of the other Institutes and Centers) and with Department officials, in the evolution of the ethics activities both at NIH and in the executive branch generally.

Office of Government Ethics (OGE) Audits

Over the years, the ethics program at NIH has evolved, based on the experiences of NIH and the Department staff in its operation, and more recently, on periodic audit reports by the Office of Government Ethics. This evolution resulted in a number of revisions and reissuances of the NIH Policy Manual Chapter 2300 - 735 - 4, which sets out NIH policies on activities involving outside entities. Since 1987, there have been four OGE Audit Reports submitted and each has had a different perspective. Three have resulted in a careful revision of the NIH Policy Manual Issuance Chapter cited above.

1991 Audit

The 1991 Audit Report recommended that NIH establish an Office of Ethics. In response, the Office of the Special Counsel for Ethics, within the Office of General Counsel, Department of Health and Human Services (HHS), established a satellite office on the campus of NIH. This individual reported to the Ethics Division but worked very closely with NIH ethics staff.

Role of the NIH Deputy Ethics Counselor

In 1993, when I was appointed the Deputy Director of NIH by Harold Varmus, then NIH Director, both he and the HHS Designated Agency Ethics Official at that time appointed me as Deputy Ethics Counselor for NIH.

As I said previously, responsibilities for the ethics programs for the various Institutes and Centers were, and still are, delegated to those organizations. The NIH Deputy Director/Deputy Ethics Counselor provided assurance that the activities of the Institute and Center Directors as well as the senior staff in the Office of the Director were performed properly, both in regard to their official duties that involved outside organizations, as well as, and even more importantly, any other outside activities such as lecturing, editing and consulting. No activities could be undertaken by these senior level officials without the approval of the Deputy Ethics Counselor. In addition, the final review and certification of the financial disclosure reports filed by these employees was performed and certified by the Deputy Ethics Counselor. The procedure that was followed regarding outside activities is outlined in the NIH Policy Manual Chapter as follows:

  • The employee (in this case, the IC Director or senior staff member) submitted a request of approval for either an official duty or on outside activity to the Office of Human Resources Management (OHRM). For an outside activity a special form (520) is submitted. Each form was reviewed by OHRM and forwarded to the HHS Office of Special Counsel for Ethics for consultation as needed. (It became standard practice to forward all requests relating to Institute and Center Directors to this office.)

  • The HHS Office of Special Counsel for Ethics reviewed the paperwork and additional information provided to ensure that all required information was supplied, and, at times, alerted the Deputy Ethics Counselor to potential issues related to the request. If this review presented no problems, the material was sent back through the OHRM Office to the NIH Deputy Ethics Counselor for final review and recommendation.

In general, I approved activities that were recommended, but, if necessary, I discussed the activity with the individual involved. Based on legal advice provided and knowledge of the surrounding facts and underlying science, the majority of such requests were approved. In 1993, outside work by high-level NIH officials was significantly limited, and consulting with outside entities that had been, or were likely to be, recipients of NIH grants or contracts was prohibited. Besides formal requests, the Deputy Ethics Counselor discussed many requests informally with officials and provided advice, which often led to decisions not to make formal requests.

In addition, the Deputy Ethics Counselor had to ensure that each employee received annual training in ethics and, when required, disqualified (recused) him/herself from issues in which there is a conflict of interest.

Recusals

A Deputy Ethics Counselor also must assess the information provided in the financial disclosure form or in the Request for Approval of Outside Activity (form 520) as to the application of the conflict of interest statutes and regulations and must attempt to resolve actual or potential conflicts or the appearance of a loss of impartiality. In regard to a proposed outside activity, a determination must be made as to whether it conflicts with official duties and whether the recusals that would ensue in the Federal workplace as a result of the particular outside activity would require the employee's disqualification from matters so central or critical to the performance of his or her official duties that the employee's ability to perform the duties of the Federal position would be materially impaired. If conflicts are of such magnitude that official duties would be impaired, the outside activity must be denied.

If a disqualification can resolve the conflict, then a written memorial of the promise to recuse is prepared and signed by the employee and the Deputy Ethics Counselor and sent to the official at the next highest level, who can act instead of the employee. All other employees in the official chain of command must be informed of the fact that, as long as the agreement or need to recuse pertains, the official must disqualify him/herself from any actions covered by the promise.

1995 Audit

The June 1995 report of the audit review of the NIH ethics program was transmitted to the then HHS Designated Agency Ethics Official and the NIH. The report stated that, "[t]he ethics program demonstrates a commitment to ensuring that violations of ethics statutes and regulations do not occur. OGE's recommendations are made with a view toward further refining an already estimable program."

In terms of financial disclosure systems, the report further stated:

    NIH has effectively implemented practices and procedures to ensure that financial disclosure reports are filed and reviewed according to applicable statutes and regulations. NIH's accomplishment of administering sound financial disclosure systems demonstrates its commitment to ensuring that violations of ethics statutes and regulations do not occur.

Regarding approval of outside activities, the report stated:

    NIH has documented its internal guidance on the policies and procedures governing outside activities in the NIH Policy Manual Chapter 2300-735-4, "Outside Work, Financial Interest and Related Activities" (the Manual). The Manual, which was reissued on August 30, 1993, reflects changes implemented by the new executive branch standards, NIH Policy, and recommendations made in OGE's 1991 ethics program review report.

    It is evident that much skill, time, and effort were devoted to developing the Manual. While the Manual accomplishes its purpose to explain the executive branch standards (and HHS' preserved standards), we identified several restrictions and limitations that are broader in scope than provided by the executive branch standards, including those sections on prohibited source criteria for outside activities, outside activity compensation and service limitations, and outside activities performed by high-level officials. If NIH wished to continue these prohibitions and limitations, HHS should consider including them in the agency's proposed supplemental regulation and obtaining concurrence from OGE. (emphasis added).

    1. NIH's prohibited source criteria for outside activities are broader in scope than the executive branch standards in two aspects. First, NIH's criteria for outside activities by intramural employees (scientists who perform research in-house at NIH) and extramural employees (scientists who administer grants and contracts with outside sources who perform research outside of NIH) generally states that intramural employees are prohibited from engaging in outside activities with outside entities that do business with the employees laboratory/branch; and extramural employees are prohibited from engaging in outside activities the employee's ICD.

    2. NIH provides two outside activity compensation and service limitations, which are more restrictive than the executive branch standards. First, the Manual provides that total compensation from any one outside organization is limited to $25,000 per year, with some exceptions. It also states that total service time for all compensated activities is limited to 500 hours per year. However, there is no dollar limit on the amount of outside employment income from all sources, except for certain Presidential appointees. There is also no limitation of service time for compensated outside activities, per se. Therefore, if HHS wished to restrict outside activity and service time, the limitations would also require inclusion in HHS' supplemental regulations. (emphasis added). Second, the Manual states that employees may not consult as an outside activity with companies in which they (or their spouses or dependent children) own stock and may not accept stock or stock options as compensation. The executive branch standards also do not contain this restriction.

    3. The Manual is also broader in scope than the executive branch standards regarding outside activities performed by high-level officials. The Manual states that because of their national prominence and professional achievement, the NIH Director and certain other high-level officials are limited to performing only certain outside activities such as editing and writing. However, absent a specific regulation that is being violated, we do not recommend that NIH subjectively restrict certain outside activities.

1995 NIH Policy

Based on the OGE 1995 Audit Report, NIH management undertook to consider and analyze the pros and cons of seeking supplemental regulations versus implementing the government-wide Standards of Ethical Conduct in light of the nature of the work done at the NIH. On November 3, 1995, Dr. Varmus notified the Directors and OD Staff that:

  • High-Level Officials -- defined as NIH Deputy Directors and Associate Directors, and ICD Directors and Deputy Directors -- may perform the same type of outside activities as all other NIH employees, but any outside activity request submitted by any employee should be reviewed for any conflict based on the employee's actual job duties and not on the position of the employee.

  • Intramural employees may now engage in activities for any outside organization except those with whom they have direct official business dealings as government employees.

  • Extramural employees may engage in activities with outside organizations provided they do not manage a portfolio that includes grants or contracts from one or more of these outside organizations.

  • Employees may accept stock as payment for approved outside activities.

  • There is no longer a dollar limit on the amount of income that can be received from activities performed for one or more outside activities.

  • Employees may no longer be limited in the amount of time they devote to activities performed for outside organizations. If it is determined that the amount of work for outside entities will impinge on the performance of NIH duties, the request should be denied.

As of the issuance of that memorandum for all outside activities, the sequential procedures for approving outside activity requests were as follows:

  1. The outside activity request must be approved by the supervisor.

  2. Analysis of the proposed activity must be performed by the NIH OHRM.

  3. As necessary, consultation was sought with the lawyers in the Office of Special Counsel for Ethics of the OGC.

  4. Based on the information provided by 1-3 above, I, as the Deputy Ethics Counselor, in turn, reviewed the activity and in general, would approve. However, on occasion, there was a need for further discussion and an activity would be disapproved, even though no issues warranting disapproval were raised by the previous reviewers.

  5. A recusal, if needed, was prepared and provided to the appropriate official so that a required action could be referred to the next subordinate level of authority. (Recusals for activities with which the official has a "covered relationship" (i.e., is a Director, Officer, consultant or employee or spouse of an employee of the outside organization) last for a year beyond the end of the relationship.)

Mr. Chairman, I believe that the NIH Ethics Program has followed the principles set forth by the Executive Branch Office of Government Ethics as they have evolved over the past 25 years. I also believe that there is need for greater oversight of the entire program and, like many activities, room for improvement. I completely and strongly endorse the proposals made by Dr. Elias Zerhouni, the NIH Director. I would be pleased to answer any questions that you may have.

Last Revised: January 22, 2004