Statement by
Elias A. Zerhouni, M.D.
National Institute of Health
Department of Health and Human Services
NIH Ethics Concerns: Consulting Arrangements and Outside Awards
before the
Committee on Energy and Commerce
United States House of Representatives

May 12, 2004

NIH's mission is to generate new knowledge to improve health. The outcomes of NIH research affect the lives of every American and increasingly people around the world. Medical research leads to new diagnostics, treatments and prevention strategies -- and these medical interventions must be founded on the veracity of the data and on the unimpeachable integrity of the individuals who conduct the research and oversee the research enterprise.

Recently Congress has questioned the relationships of some NIH employees with outside organizations. Our public health mission is too important to have it undermined by any real or perceived conflicts of interest. And to this point, I am aggressively developing and implementing new conflict of interest policies, revamping review of activities with outside organizations and working to increase transparency by expanding the number of employees who file internal and public financial disclosure reports.

I want to personally thank Chairman Greenwood and Members of the Subcommittee for helping me to identify potential weaknesses in NIH's ethics policies and systems and for supporting my efforts to review and reform ethics rules and procedures at the Agency. I appreciate both your leadership and the constructive guidance you provided on this very important issue.

New and Ongoing Changes to NIH's Management of Conflict of Interest:

I want to describe actions I have taken in response to concerns about NIH's management of conflict of interest.

I began reviewing ethics rules, policies and practices last July, when this Subcommittee raised questions about NIH employees receiving lecture awards. I believe NIH scientists must remain eligible to receive recognition for their work in the form of legitimate awards. However, NIH scientists should not be accepting awards that are merely a ruse to provide compensation, and we will develop a system to increase uniformity and track the determinations of NIH's senior ethics officials as to whether an award can be accepted by NIH employees.

On November 20, 2003, I wrote to all senior managers at NIH advising them 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 (emphasis added).

In the same memorandum, I announced the creation of the new NIH Ethics Advisory Committee (NEAC) in the Office of the Director to provide independent peer review of activities involving outside organizations. The NEAC, which conducted its first meeting on January 20, advises the NIH Deputy Ethics Counselor (DEC) on conflicts of interest and helps to ensure that activities involving acceptance of compensation from outside sources receive uniform oversight at the NIH. NEAC reviews applications for proposed activities with outside organizations that stand the greatest chance of posing risks to NIH's objectivity, or appearances thereof, including, where an award is valued at $2,500 or more; where total income from an activity with an outside organization exceeds $10,000 or is unknown; where outside compensation is in the form of equity; where the activity involves a drug or biotech company; or where the activity involves senior NIH leaders (e.g., scientific and clinical directors).

Co-chaired by the NIH Deputy Ethics Counselor (DEC) and Deputy Director for Intramural Research, the NEAC consists of ten rotating members and two ex-officio ethics advisors, all of whom are full-time federal employees. The rotating members are nominated by IC Directors and appointed by the Co-chairs. Membership represents the categories of employees submitting proposals to the NEAC, including IC Directors and Deputy Directors, Scientific Directors, Clinical Directors, Extramural Directors, OD Senior staff, and others. During the centralized NIH review, committee members review each proposed activity to help assess whether it creates an actual or apparent a conflict of interest. The committee reviews the proposals based on criteria set forth in the Standards of Ethical Conduct for Employees of the Executive Branch promulgated by the U.S. Office of Government Ethics (OGE) and the supplemental Department of Health and Human Services (HHS) regulations.

To ensure oversight of activities that had already been approved prior to the creation of NEAC, we also instructed that all existing consulting relationships with pharmaceutical or biotechnology firms be stopped and resubmitted to NEAC for its review and input, before they could be reapproved, if appropriate, by the NIH DEC.

The Inspector General of the Department of Health and Human Services and the General Accounting Office also initiated their own, separate reviews of ethics processes at NIH. In addition, OGE accelerated its regularly scheduled review of the NIH ethics program. We welcome these inquiries and are cooperating with the various reviewers.

On January 12, 2004, at my request, Dr. Raynard Kington, the Deputy Director of NIH, was appointed to be the new Deputy Ethics Counselor for the Agency. Commensurate with his appointment, the role of the NIH DEC has been expanded beyond the staff of my office and the Institute and Center Directors to include Institute and Center Deputy Directors, Scientific Directors, Clinical Directors and Extramural Program Directors.

Regarding the important issue of public disclosure, working through the Department of Health and Human Services, I asked that the Office of Government Ethics grant approvals to require the submission of public financial disclosure reports from an increased number of NIH's most senior and highest-salaried personnel. OGE approved the request on February 6, and as a result, all senior scientific personnel within the jurisdiction of the NIH DEC are now required to file public financial disclosure statements. Although many of these individuals were already filing public financial disclosure forms, they will now be required to do so. Recently, a second request was submitted to OGE to require additional high-level personnel at NIH to file public financial disclosure reports.

In addition, because the majority of NIH employees who file financial disclosure forms are required to use the OGE-450 financial disclosure form, which does not request the amounts of compensation paid by outside organizations, and because the approval process focuses on the nature of the activity and the identity of the outside organization rather than the compensation paid, the amounts paid to NIH employees in connection with their activities with outside organizations has in many cases not been collected or reported either internally or externally. I requested that the Department ask OGE to revisit this approach and, as a result, NIH employees are now required to submit these compensation amounts for all current and future consulting arrangements in their request for approval of activities with outside organizations. Furthermore, to the extent that additional NIH employees will be required to file public financial disclosure forms, these amounts will be collected and reported on such forms.

As part of our internal policy review, we are also asking employees to disclose compensation amounts for expired activities with outside organizations. I personally believe we should know those amounts, and so I requested that the Department work with OGE to find a way, consistent with the Privacy Act, which places limits on collection of identifiable information by the federal government, to ask for these amounts. The Department was successful in doing so, and so we have been able to ask employees for these dollar amounts. We have carefully considered, including internal discussions with legal counsel and others, to what extent we can and should order that employees must provide this information instead of voluntarily requesting it. After such consideration, it is our understanding that asking for this information on a voluntary basis is the most appropriate and prudent way to proceed. We have also been cooperative in providing this information we have collected for our internal policy review to the Subcommittee where it has asked for the information.

The Blue Ribbon Panel:

Finally, I created the Blue Ribbon Panel on Conflict of Interest Policies to review existing laws, regulations, policies, and procedures under which NIH operates regarding real and apparent financial conflicts of interest where compensation is received by employees. I also charged the Panel with reviewing public financial disclosure rules and procedures. The panel began its review on March 1 and made its recommendations to the standing Advisory Committee to the NIH Director May 6. The recommendations were adopted by the Advisory Committee and submitted to me on the same day.

The Blue Ribbon Panel operated with extraordinary speed. Norm Augustine and Bruce Alberts, the panel's co-chairs, as well as all the panel members, served with distinction and performed a great public service. They deserve gratitude and respect, and I thank them for their extraordinary efforts. Dr. Alberts and Mr. Augustine are here to testify and answer your questions.

In reviewing the Panel's report, I was impressed with the degree to which they looked closely at both NIH policies and its procedures. The Panel also explored regulations of other Agencies and the rules, regulations, and laws set in place by the HHS, the Office of Government Ethics (OGD), and the Congress. And in making recommendations, they did as I asked - they did not limit themselves to what was in my authority to change - rather I asked them to make any and all recommendations that would improve NIH's management of conflict of interest. I told them that where I did not have the authority to implement change, I would seek the help of HHS and OGE.

I have reviewed all of the Panel's recommendations and plan to move ahead as appropriate.

In sum, these actions have already significantly strengthened NIH's internal oversight of ethics matters and continue to do so in the future.

Next steps: Principles and Policies

After nine months of review and listening to the concerns of the public, and after examining the recommendations of the Blue Ribbon Panel, I want to unveil my plans for further improving NIH's ethics program. My plans are based on four main principles:

  1. Enhance public trust in NIH by preventing conflicts of interest through the restriction of financial relationships employees may have with outside organizations;
  2. Increase levels of transparency in the NIH ethics program by requiring much more internal as well as public disclosure of the details of financial relationships employees have with outside organizations, including consulting arrangements and awards;
  3. Balance NIH's ability to recruit and retain the best scientific expertise while expediting the translation of research advances;
  4. Establish effective monitoring and oversight of employee activities.

I will seek to implement actions in response to these principles, as appropriate, through administrative actions, and supplemental regulations.

Principle One: Enhance Public Trust

  • I will seek to prohibit NIH senior management and NIH extramural employees who are responsible for program funding decisions and recommendations, and professional staff managing grants and contracts and publication review from consulting with pharmaceutical or biotechnology companies or from paid consulting for academia, except in the case of the clinical practice of medicine.

  • I will reaffirm the prohibition against NIH scientists participating in research involving human subjects where the scientist has a personal or imputed financial interest in an organization whose interests would be directly and predictably affected by his research, except in those exceptional cases where the interest is not so substantial as to be deemed likely to affect the integrity of the employee's services to the Government or is otherwise subject to regulatory exemptions.

  • I will propose that employees engaged in compensated activities with outside organizations be, in future, prohibited from compensation in the form of stock or other forms of equity ownership in the companies for whom they are working.

  • I will set into place polices and procedures to fully consider the extent to which the recusals necessitated by an approved activities with outside organizations have an effect on the ability of senior scientific managers and decision makers to conduct their government work. NIH will clarify the use of recusals that are required because of financial relationships with outside organizations. We will require a uniform policy for informing relevant personnel of who is recused and establish a new process for monitoring recusals.

Principle Two: Increase Transparency

  • NIH, working with HHS and OGE, has already increased the number of senior managers who must publicly disclose their compensated activities with outside organizations and the amounts received. These are interim steps. I will aggressively seek additional authorities to require more employees to disclose their activities with outside organizations, where appropriate, including disclosure of relevant relationships and financial holdings in connection with research publications, speeches, inventions, and clinical research. As I have said previously, public disclosure and transparency will be the cornerstone of the NIH ethics program.

  • I will ask NIH employees to voluntarily disclose all relevant relationships with outside organizations and financial holdings in their work products, such as publications, speeches, and invention disclosures. And I will seek changes to regulations to make such disclosures a requirement.

Principle Three: Recruit and Retain Best Scientific Expertise While Expediting Translation of Research Advances

  • I will propose that regulations allow NIH scientists to receive compensation for teaching, speaking or writing about their research, but only if the information is shared in a public forum and has already appeared in published literature.

  • NIH will continue to allow certain types of consulting arrangements, teaching and lecturing opportunities, receipt of bona fide awards, and collaborations with the private sector, but only under clear, rigorous rules meant to eliminate real and appearances of conflict of interest. Consulting, collaborating and teaching must continue in order to expedite the translation of research advances, but only under clear guidelines.

Principle Four: Establish Effective Monitoring and Oversight Mechanisms

  • I will seek to limit the amount of time spent on consulting and the amount of compensation received annually. The limits proposed by the Blue Ribbon Panel will be considered as the draft regulation is developed.

  • NIH will improve its ability to manage and track approved activities with outside organizations by increasing the accountability of managers, creating a centralized data base, centralizing review of senior managers and scientists, conducting random audits of files pertaining to activities with outside organizations, and continuing the rigorous peer review conducted by the NEAC.

  • NIH will develop and implement a new, more understandable method of training employees on ethics rules, and we will establish a web site that displays rules in plain language, updates employees on regulatory trends and changes and discusses - anonymously - ongoing cases as examples of best practices or unacceptable practices.

Much of the discussion about ethics policies and procedures at NIH has been unnecessarily negative. NIH employees have great integrity. In retrospect, the policies and rules could have been even stricter, their implementation could have been more efficient and oversight could have been more rigorous. But for better or worse, this was the system NIH employees had to navigate.

As we move forward, all of us, the NIH leadership, HHS, OGE, and the Congress, will have to strike a careful balance between maintaining public trust in NIH and allowing appropriate interactions between NIH scientists, industry, academia and all elements of the research community.

Collaborations with the non-governmental research community are vital, not only for understanding and advancing science, but for translating our knowledge into actual medical practice and treatment. We should be more transparent, more vigilant about oversight, and we need to tighten the rules. But it would be a mistake to ban all compensated activities with outside organizations. Such an action would be bad for science, unfair to the employees, and ultimately hinder our efforts to improve the nation's health.

Last Revised: May 17, 2004