Testimony

Statement by
Alex Azar
General Counsel
Department of Health and Human Services

on
NIH Ethics Concerns: Consulting Arrangements and Outside Awards
before the
The Subcommittee on Oversight and Investigations
Committee on Energy and Commerce
United States House of Representatives

June 22, 2004

Thank you for inviting me to speak with you today to discuss ethics issues at the National Institutes of Health (NIH) relating to consulting arrangements and outside awards.

As General Counsel for the U.S. Department of Health and Human Services (HHS) my office is responsible for providing representation and legal advice to HHS on a wide range of health and human services issues. By providing such legal services to the Secretary of HHS and the organization's various agencies and divisions, the Office of the General Counsel (OGC) supports the development and implementation of the Department's programs. OGC has over 400 attorneys and a comprehensive support staff located in many locations across the United States. Our office has a diverse and challenging portfolio, with legal issues about technical rules for agency programs on topics as disparate as health financing and welfare, as well as a broad range of general legal issues facing every federal agency such as administrative law, personnel and employment law, information law, and, of course, ethics.

OGC's main role in the area of ethics has been the Ethics Division's provision of legal advice regarding applicable laws and regulations to the ethics officials who run the agency's ethics program. In HHS, as in most large Cabinet Departments, the ethics program is overseen by a Designated Agency Ethics Official (DAEO) appointed by the Secretary and who, in our case, also heads OGC's Ethics Division. The DAEO oversees and coordinates a decentralized Departmental ethics program. The DAEO also appoints Deputy Ethics Counselors (DECs), who are senior management officials chosen by each operating division. Each of these DECs, along with agency heads and management in each component, are responsible for running ethics programs tailored to the needs of extensive, geographically dispersed workforces composed of many professionally trained employees with varied responsibilities. As managers closest to day-to-day operations, these DECs are equipped and responsible for identifying and evaluating the relevant ethics issues in their respective components. Additionally, the DECs and their staffs possess the scientific and technical expertise necessary to identify and resolve ethics issues in situations involving science, medicine, and other complex fields. Within their respective operating divisions, the DECs are responsible for establishing a system for reviewing public and confidential financial disclosure forms, considering outside activity requests, providing ethics advice to individual employees, initiating ethics education and training programs, and ensuring that violations of the conflicts statutes or the conduct standards are reported to investigatory authorities and where appropriate, seeing that disciplinary action is taken. Individual employees are, of course, ultimately responsible for their own actions.

As an attorney who has devoted over half of my professional career to serving the federal government and who attaches great importance to public service, my objective in leading OGC has been to ensure the best possible legal advice to assist in the accomplishment of HHS' critical missions. I view the role of OGC not as making policy, but rather as providing those who do set policy with the best possible legal advice. This means that the function of my office is to work to identify the Department's policy objectives and then to identify the range of permissible legal options to accomplish those policy objectives and advise on the legal and other risks associated with those options. Of course, legal advice is often accompanied by advice regarding considerations such as appearances, judgment, and other factors that may be relevant to the agency's situation. Where there is no established Government-wide interpretation of a law, it is the Department, then, which decides which interpretation of law to adopt and what course of action to take. In so doing, the Department can appropriately balance the considerations identified by their lawyers among many others relevant to accomplishing the agency's objectives.

I strongly believe that such advice, including advice about appearances, is particularly important in the area of government ethics - where the law may be arcane and complex, but where other non-legal factors invariably play a large role. Consistent with the President's statement that, "Everyone who enters into public service for the United States has a duty to the American people to maintain the highest standards of integrity in Government," I have initiated and led a successful effort to obtain and dedicate additional resources to enhance the Ethics Division in OGC. This initiative, which is already being implemented this year, will enhance the ability of the DAEO to scrutinize and oversee the Department's ethics activities. In addition, it will dramatically strengthen the ability of the DAEO to oversee these programs and their officials.

As part of this initiative, the Department will institute systematic oversight of the ethics programs within the various operating divisions of the Department through regularized compliance auditing and program review. The initiative will increase component accountability for ethics program implementation, augment financial disclosure review and training development, and enhance the capabilities of the Ethics Division and the authority of the DAEO. To my knowledge, this will make HHS OGC's Ethics Division the largest single legal office devoted exclusively to government ethics outside of the Office of Government Ethics.

These efforts will help ensure that the DAEO is in the best position to oversee HHS' and NIH's ethics program in the future. The Department is also committed to helping the Committee understand the past implementation of and compliance with the current ethics rules at NIH. In this regard, we have worked hard to solve a number of legal issues relevant to the Committee's work, as well as to support NIH's efforts to identify and rectify areas of concern. The Committee's oversight in this area has also been helpful in identifying areas of concern. We hope these steps have aided the Committee's work and helped provide insight into the relevant processes and issues. The goal of ensuring public confidence in the integrity of NIH is one that the Department shares with the Committee and a goal we can best accomplish together. As NIH moves forward, with the help of the Department and my office, to address those concerns, the Department continues to value the Committee's informed views and welcome the Committee's suggestions regarding steps that may be taken to ensure that the tremendous trust that the Congress and the public place in NIH is as unquestioned as the vast contributions NIH has made towards advancing the nation's health and the promise it holds to continue doing so.

The proposal outlined by Dr. Zerhouni today to strengthen the ethics rules at NIH is an important fruit of that collaborative effort. The proposal was largely born out of the work Dr. Zerhouni has led to find ways to build on the recommendations of the Blue Ribbon Panel, which were a helpful starting point. The Department was pleased to see that NIH proposed to take strong steps to provide additional review of awards and prohibit outside activities with grantees of NIH by the leadership of NIH as well as employees involved in the grants process. And the Department worked with Dr. Zerhouni to strengthen the proposal even further. The result has been a collaborative effort to address the issues raised by the Committee, including a proposed prohibition on holding of stock in individual biotechnology and pharmaceutical companies like that in place at the Food and Drug Administration (whereby such holdings are prohibited for all employees that file financial disclosure reports, and there is a $5,000 limit on such holdings by other employees. There are also proposed prohibitions on outside activities by senior NIH leadership with industry and extensive limitations for all other employees. As a lawyer, my predisposition is for bright line rules, e.g., complete prohibitions, which are easy to administer and interpret. This Committee's oversight work has also demonstrated the difficulty in applying complicated rules to real world scenarios. However, the proposal balances this consideration with the needs identified by Dr. Zerhouni to ensure NIH can recruit and retain the nation's most talented scientists and allow them to contribute to the march of human scientific progress outside the confines of the workplace.

In conclusion, the Department shares the Committee's commitment to maintaining the highest ethical standards at NIH and thereby ensuring that the vitality and promise of NIH is not undermined by any lack of public confidence in the motivations of its employees and their conduct. OGC remains committed to help NIH understand applicable laws, further identify legal options, and give legal advice relevant to NIH's ethics program. And OGC remains committed to cooperating with this Committee in its important work.

Thank you for the opportunity to speak with you today. I would be pleased to answer your questions.

Last Revised: June 24, 2004