Policy and Medicine

The Difficulty and High Costs in Creating New Medications

Over the past several years, there has been significant discussion about the difficulty pharmaceutical and medical device manufacturers face bringing a product to market.  As a recent article from David Shaywtiz noted, “the difficulty of creating new and better medicines has been the subject of extensive – at times excessive – soul searching, a process that’s intensified as high-profile patents expire, along with their associated revenue streams, traditionally relied upon to support future R&D.” 

Much of the focus has centered on the ability of the Food and Drug Administration (FDA) to have the resources and capabilities to handle the number of applications for new drugs or devices.  There has also been concern about the lack of transparency and consistency in FDA decisions.  Whether the difficult regulatory pathway company’s face is caused by FDA or not, “both biopharma companies and patients awaiting new treatments find themselves struggling for viable solutions.” 

This is particularly problematic because as a recent Forbes article noted, “The average drug developed by a major pharmaceutical company costs at least $4 billion, and it can be as much as $11 billion.” 

Consumers argue that regulation is necessary to ensure safety and efficacy of products, creating a balance to the debate.  This balance however, has caused the public to become willfully blind and unable “to recognize the extent to which a deliberate and very conscious regulatory policy is putting a damper on what has traditionally been the world’s most vibrant drug development ecosystem.” 

Because developing new drugs is challenging, so inherently difficult, Shaywitz asserted that it is “crucial to do everything within our control to work together and create an environment, an ecosystem that stimulates and enables meaningful innovation.”  What is standing in the way however is that regulators have misapplied the “precautionary principle,” colloquially understood as “first, do no harm.”  He noted that, “the problem isn’t so much the sentiment as the way it’s reduced to practice.” 

The practice today is that no regulator wants to face a Congressional committee who demands to know how an approved drug was ultimately discovered to cause unexpected problems.   To avoid this, regulatory agencies raise the bar for approval high enough to reduce the likelihood of this occurring.  The problem with this however is that far “less attention is paid to the reverse – to the very real patients who never receive a new medication because excessive regulation resulted in prohibitively high hurdles, effectively dampening work, disincentiving investment, and stifling progress." 

While in general, we want to ensure high standards for our products to be approved, particularly those with significant implications for our health, what many regulators appear to be doing is attempting to “protect doctors from themselves.”  In other words, regulators are worried that by approving a drug with “risks,” doctors will not be able to evaluate the individual risks patients will face taking them.  As a result, “patients are systematically denied access to medicines that might be useful, and for whom the risk/reward, when fully understood and discussed with their physician, would be worth it.” 

Shaywitz noted this “a critical point: not everyone has the same view of risk/reward, and by positioning themselves on the far, far end of this spectrum, regulators effectively substitute their often extreme value judgements for the considered views of others who might thoughtfully come to a different decision.” 

The problem is, “regulators don’t trust patients and doctors to make these judgments, and take these decisions into their own hands; the result has been bad for the entire biopharmaceutical ecosystem, and most unfortunately of all, absolutely disastrous for patients — of course the very people who regulators are ostensibly trying to protect.” 

Shaywitz noted that people should listen to one of the most compelling talks of TEDMED2011, presented by Juan Enriquez, and available here.  Enriquez presents an accessible and sensible discussion of the problem of the uncaptured costs of failing to innovate. 

Cost of New Drugs 

The drug industry has been tossing around the $1 billion figure to create a drug for a number of years, supported by a study by Joseph DiMasi of Tufts University.

 study creates additional concerns.  However, as Bernard Munos of the InnoThink Center for Research In Biomedical Innovation has noted, just adjusting that estimate for current failure rates results in an estimate of $4 billion in research dollars spent for every drug that is approved.  Munos showed divided each drug company’s R&D budget by the average number of drugs approved. This was far more dramatic. 

Wanting to make this even more rigorous, Forbes took Munos’ count of drug approvals for the major pharmas and combined it with their research and development spending as reported in annual earnings filings going back fifteen years, pulled from a Thomson Reuters database using FactSet.  They adjusted all the figures for inflation.  Using both drug approvals and research budgets since 1997 keeps the estimates being skewed by short-term periods when R&D budgets or drug approvals changed dramatically.  The range of money spent is stunning. 

• AstraZeneca has spent $12 billion in research money for every new drug approved, as much as the top-selling medicine ever generated in annual sales;
• Amgen spent just $3.7 billion. 

Why is it so expensive?  A single clinical trial can cost $100 million at the high end, and the combined cost of manufacturing and clinical testing for some drugs has added up to $1 billion. But the main expense is failure. AstraZeneca does badly by this measure because it has had so few new drugs hit the market. Eli Lilly spent roughly the same amount on R&D, but got twice as many new medicines approved over that 15 year period, and so spent just $4.5 billion per drug.

Why include failure in the cost? Right now, fewer than 1 in 10 medicines that start being tested in human clinical trials succeed.  Some biotechnology companies do manage to make it to market without having to spend money on failed medicines – but only because other startups went bust trying to test other ideas. 

Although drugs only account for 10 cents out of every dollar spent on healthcare, medicines are the easiest products to scapegoat for high costs in our health care system because their prices are easier to track.  However, “the reality is that the pharmaceutical business is in the grip of rising failure rates and rising costs.” 

The high costs of making drugs, coupled with the regulatory problems Shaywitz pointed out, is troubling for patients and health care professionals trying to improve patient outcomes.  “We can all only hope that new technologies and a better understanding of biology will turn things around.”

Convergence of Interest - Not Conflict of Interest

Given all the recent coverage of the proposed regulations implementing the Physician Payments Sunshine Act (Section 6002 of the Affordable Care Act), there has been an increasing focus on the issue of “conflicts of interest” that may arise from physicians who collaborate with industry.  A recent blog post addressed this issue and correctly asserted that people should “stop trivializing conflicts of interest.” 

The blog post, written by ophthalmologist Darrell White noted that given all the other potential for conflicts of interest in other industries in America today, it seems a bit surprising that people expect the provision of health care in America to be so “pure”—that is free from industry.  

For some, the simple existence of other interests is de facto evidence of some nefarious conflict of interest.  The underlying assumption appears to be that it is impossible to have any additional interest–ownership of a business, a consulting agreement, stock or stock options–without the ability to devote your primary attention to the best interests of your patient. Any other interest is automatically bad, and every physician is guilty and can’t be proven innocent. How did we come to this? 

There are issues and examples both substantial and trivial, and yet each of them is addressed as if they are one and the same. For example, he noted that recently Dr. White had to purchase his own pens for the first time since he graduated from medical school in 1986.  He noted how some people believe these “pens” influence physician decision making and lead to the use of high cost drugs that are risky or even unnecessary.  There’s only one problem with that assertion according to Dr. White: he doesn’t remember a single thing about even one of those pens.  And yet somehow accepting those pens is a conflict of interest. 

Why is it that if a doctor somehow gets something from someone, big or small, even if they perform some service or even buy something from them, that it’s a conflict of interest if some company or other might make money from what the doctor does for their patient?  Why is every peripheral interest that exists around the little silo in which a physician practices medicine automatically a conflict of interest with some sort of negative connotation? That the physician must be doing something bad? 

Why not just another interest? Why can’t these things be a “convergence of interests” between what is best for my patient and any of the other stuff that might be going on around us? 

While there have been instances where docs have pushed inferior products on their patients because they had a significant financial incentive to do so. In fact, Dr. White noted how he is reviewing a medical malpractice case in which a cataract surgeon clearly had a conflict of interest for putting in an inferior lens inplant.  But he noted that for every surgery center owner like this one, he knows 50 who put in state-of-the-art implants because that’s what’s best for their patients. Those docs still make a profit, but it’s smaller because they are putting the patient first. Why is that a conflict of interest?

Dr. White said, “It’s not.” 

Three different companies make 3 versions of the same kind of medicine, all of which have identical efficacy and safety, and all of which sell within pennies of each other. How does one choose among them if one needs to be prescribed? Is it such a heinous insult to humanity to choose to prescribe the product from the company that pays the doc to consult on some other project? Or the company that brought in lunch? Or the one that left a couple pen lights in the office? Tell me, how and why is this a conflict of interest? 

This trivialization of the concept of conflict of interest is actually weakening the protections that we should have against real conflicts that cause real harm. Pushing unproven technology (artificial spinal discs, anyone?) on unsuspecting patients prior to definitive proof in return for obscene consulting agreements, for example. Applying the same degree of moral outrage to a ham sandwich as we do to conflicts which truly pit the best interests of our patients against some profound interest on the part of the physician that prevents him/her from centralizing the patient is farcical moral equivalence. I think it is actually harming our patients. 

Our most renowned medical editors, innovators, inventors, and teachers are withdrawing from public positions that require a monk-like aversion to these conflicts of interest. Who will replace them? Will the ascetic cocooned in the conflict-free zone and unaware of what developments are on the way contribute? How about the teachers? Will we be taught by specialists who put together the purest power-points from the latest scrubbed articles, priests who are not stained by the sins of the those who are touched by the commerce of medicine by actually touching, you know, patients? 

Ultimately, Dr. White asserted that, “a true conflict of interest is one in which there is an essential tension between what is best for a patient, and some other ancillary benefit that might accrue to the physician.” Something that makes the doc think about that other benefit first, before the patient. Everything else is an “additional” benefit. 

He maintained that, “We should stop this silliness; stop trivializing the concept of conflict of interest through the dumping together of all other interests in the same gutter. We should all be allowed to ignore all but the truest of conflicts as we continue to put our patients’ interests first.” 

We should be allowed to seek a convergence of interests.

Thomas Stossel Addressed American College of Surgeons: Where Has All this Concern Led?

Thomas P. Stossel, MD, professor of medicine at Harvard Medical School, director of translational medicine at Brigham and Women’s Hospital, and co-founder of the Association of Clinical Researchers and Educators (ACRE), recently gave a keynote address at the industry breakfast for this year’s 97^th Annual Clinical Congress for the American College of Surgeons. 

ACRE is a not-for-profit, professional medical association which advocates the value of physician-industry collaboration.

During his keynote address, Dr. Stossel discussed the current environment in medical-industry relationships and noted how a small minority of voices is impeding medical and scientific progress with their concern about potential “conflicts of interest” by “decrying the beneficial relationships between industry and medicine.”  Dr. Stossel asked the audience, "Where has all this concern led?"

"We have gone from bad to worse," he said. "We have immense regulatory issues and massive confessions where we disclose our relationships to industry, and these are used to initiate a whole variety of inhibitions in freedom of speech, freedom of association and reward for excellence."

Dr. Stossel described the current environment physicians practice in today, in which, “All corporate payments to physicians now are disclosed. Peer-to-peer speaking has been curtailed, and physician-industry relationships preclude editorials, journal review articles or service on guideline or Food and Drug Administration (FDA) review panels.”

The reasons given for these restrictions are "that those in industry allegedly live in a separate moral universe than medicine," Dr. Stossel said. "The idea is that those who work for industry are obligated to lie, cheat, and steal for profit and for your investors."  He maintained that the individuals who make such assertions “have launched the conflict of interest (COI) mania.”  However, the evidence for these medical and lay media COI messages does not stack up to reality.

For example, Dr. Stossel pointed to research into the area of COI he conducted a few years ago.  The study looked at 101 papers in high-profile journals from the Journal of the American Medical Association to the New England Journal of Medical on physician-industry relationships.  While Ninety-six percent of the articles emphasized the risks of those relationships, less than half (44 percent) presented evidence to underpin those conclusions about risk, and less than half (43 percent) acknowledged an alternative viewpoint.

Accordingly, Dr. Stossel asserted that, "There is no evidence at all about the effect of physician-industry relations on patient outcomes, yet 76 percent of these papers claim patient harm."  Moreover, only a handful of papers emphasized benefits of medical-industry relationships based on evidence that did not draw inferences about patient care.

Dr. Stossel also dispelled the perception that physicians and the medical industry have a “cozy” relationship by pointing to the fact that “no evidence exists” for commercial bias in continuing medical education, as we have written numerous times.  Instead, as Dr. Stossel correctly pointed out, it is the lay and medical media that have helped perpetuate this COI mania, which is unfortunate because “Despite daunting obstacles, industry relationships have delivered huge value," Dr. Stossel said.

"Evidence that relationships compromise scientific integrity is weak or false, but legal administration and legal strangulation is harming innovation and education and bodes ill for better patient care," Dr. Stossel emphasized.

Prior to the keynote address, Amilu Stewart, MD, FACS, Chair of the Corporate and Foundation Relations Committee, American College of Surgeons (ACS) Foundation, presented results of the ACS Survey of Fellows Regarding Industry Relations. Invitations were sent to 27,021 individuals, resulting in a 9.6 percent (2,582) participation rate in responses to three survey questions.

From the survey, 13.3 percent (341) of respondents said they had developed a product in collaboration with medical industry that had benefitted patients.  Additionally, 9.7 percent (247) of respondents said that they had developed a surgical procedure in collaboration with medical industry that had benefitted patients.  Finally, 45.7 percent (1,172) respondents said that they had participated in a clinical trial in collaboration with medical industry that benefitted patients.

"This was an important survey for us to complete because we had no concept of how involved our Fellows were in collaboration with industry," Dr. Stewart said.

Thomas R. Russell, MD, FACS, Chair of the ACS Foundation Board of Directors, said the ACS Foundation is pleased to sponsor the Medical Industry Breakfast each year to promote discussions on issues of mutual interest to the medical profession and industry.

David B. Hoyt, MD, FACS, ACS Executive Director and ACS Foundation President, recognized that, ACS "cannot educate or innovate in what we do without our relationship with industry," and that the medical industry meeting "is an incredibly important relationship, and I want to do everything to foster and continue that."

Patient Groups Encourage Congress to Remove Burdensome FDA Rules

Patient organizations are encouraging congress to drop burdensome conflict of interest quotas on FDA advisory panels which are causing severe shortages of qualified committee members. 

Earlier this month, a group of patient foundations expressed their “deep concerns” about the issue of “current conflicts of interest statutory provisions and their impact on the appointment of experts, particularly researchers and patients, as Special Government Employees (SGE’s) on Food and Drug Administration (FDA) Advisory Committees and as otherwise needed.” 

Specifically, a coalition of over 80 organizations sent a letter to Senators Tom Harkin (D-IA) and Michael Enzi (R-WY), the Chairman and Ranking Member of the Senate Committee on Health, Education, Labor and Pensions (HELP). 

Each of these “organizations promote efforts to bring better treatments and cures to those struggling with diseases” however, “many of these conditions have no adequate treatments and, therefore, it is imperative that we challenge hurdles that impede the quality and efficiency of the treatment development process.” 

The groups recognized the importance of having protections in place when persons are appointed to positions where their own financial interests might influence their service to the federal government.  Nevertheless, they maintained that, “the current conflicts of interest statutes that apply to FDA have resulted in a system that is out of balance to the point that conflict avoidance is the primary driver of who serves on Advisory Committees, regardless of the extent of the conflict, the uniqueness of their expertise, or the government’s need for their services.” 

The groups explained how FDA SGE’s are subject to an additional layer of statutory conflict of interest provisions beyond those that already govern SGE’s for all other departments and agencies in the executive branch.  Specifically, under current law, the FDA must analyze potential committee members pursuant to Section 712 of the Food, Drug, & Cosmetic Act (FDCA), in addition to the government-wide provisions found in the Federal Advisory Committee Act and the Ethics in Government Act of 1978. 

The letter asserted that, “This additional FDA-specific provision appears to drive the FDA to look only for individuals to serve as SGE’s who have virtually no financial ties to any issue that might be addressed by a given Advisory Committee.” 

“While that may sound wise at first glance, in fact those with expertise in a given area often have foreseeable and unavoidable ties to the community as a result of their expertise,” the groups asserted. “Yet, under the current structure, the FDA is not allowing those individuals to serve as SGE’s, despite the fact that by doing so the FDA is being deprived of expertise by those who are best qualified.” 

Two years ago, 218 positions of the 600-plus on FDA's 49 advisory committees had yet to be filled, in part because the FDA tightened guidelines in 2007 to minimize industry ties that could sway a panelist's view.  This kind of absence rate is extremely disturbing for patients who are waiting for new treatments and products to be approved. 

While supporters of the tightened rules said they were necessary to protect the public from bias and to remain objective, a study published over five years ago dispelled these concerns.  Specifically, a study published in 2006 in the Journal of the American Medical Association (JAMA) examined a total of 221 meetings held by 16 drug advisory committees.  Overall, the study reported that the meeting-level analysis did not show a statistically significant relationship between conflict rates (“index conflict,” “competitor conflict,” or “any conflict”) and voting patterns.  From these findings, the researchers concluded that excluding advisory committee members and voting consultants with “conflicts” would not have altered the overall vote outcome at any meeting studied.

In the past few weeks and months, we have seen a renewed focus on FDA’s conflict of interest rules, with FDA Commissioner Dr. Hamburg and Janet Woodcock, Director of the Center for Drug Evaluation and Research (CDER), coming out publicly and announcing that the agency needs to address these provisions.  In fact, Woodcock acknowledged that, “the [conflict of interest] limits have slowed down the advisory committee process.” 

Moreover, several pieces of legislation in both the Senate and House were recently introduced, which would restore the appropriate balance to conflicts of interest requirements by requiring the FDA to be subject to the same conflicts of interest requirements as the rest of the federal government, under the Federal Advisory Committee Act.   

Consequently, these patient groups added their support “to eliminate the additional conflicts of interest restrictions that apply only to the FDA.”  Specifically, the groups maintained that, “the existing provisions in the Federal Advisory Committee Act and the Ethics in Government Act of 1978 are adequate to safeguard against conflicts of interest, while still allowing those with the necessary expertise and perspective to serve on these very important committees.” 

Moreover, the groups acknowledged that, “the specific standard for SGE’s found in 18 U.S.C. 208(b)(3) recognizes that potential SGE’s may have conflicts of interest, but allows for their service nevertheless when the need for their services outweighs the potential for a conflict of interest created the financial interest involved.” 

This “standard is clear, reasonable, and balanced and appropriately recognizes that some potential SGE’s may come to the FDA with ties to the community that may pose some conflict of interest, but that the primary issue must be the government’s need for their services.” 

Ultimately, the groups recognized that, “The main goal of these committees, after all, is to help the FDA to make the best decisions possible” and “FDA can only do that if it has the best, most well-informed researchers, clinicians, and patients advising it.”

As more patient groups, legislators, and healthcare stakeholders begin to press FDA and Congress to change the current conflict rules at FDA, it is becoming more likely that the currently proposed legislation noted above will be included in the PDUFA V negotiations, especially given FDA’s recent proposals to increase and enhance innovation.

CMS Proposed Rule: Changes to the Conditions of Participation for Long Term Care Facilities – Proposing to Ban Manufacturer Rebates to Long Term Care Pharmacies

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) proposed a Medicare rule that considers requiring the independence of Long Term Care (LTC) consultant pharmacists from Long Term Care pharmacies and drug manufacturers and distributors.   As considered, nursing homes also would be prohibited from contracting for consultant pharmacy services with an LTC pharmacy subsidiary created to provide reorganized services.

In response to the proposed rule, American Society of Consultant Pharmacists (ASCP) President Albert Barber, PharmD, CGP, FASCP noted that he was, “deeply troubled that CMS has mischaracterized our profession by suggesting that consultant pharmacists don’t serve patients’ best interests as a primary goal of our practice.”  In an ASCP news release posted October 14 on the group’s website, he noted that the ASCP Code of Ethics “clearly defines professional conduct that places patients’ needs at the center of care.”

Comments must be received by December 12, 2011. In commenting, refer to file code CMS–4157–P.  For further information contact:  Christian Bauer, (410) 786–6043, and Kathryn Jansak, (410) 786–9364.  CMS is asking for comments on the following:

•  LTC independence from manufacturers and related facilities
•  Waivers to independence requirements
•  Impact on rural LTCs and related entities
•  Financial relationships that should be allowed
•  Drug regimen reviews 

The proposed rules requiring independence potentially are problematic because CMS explicitly recognizes several times that it has no direct evidence to suggest that the current practices with nursing homes and LTC facilities have caused any patient harm.  Overall, the proposed rule seems to be focused on economically controlling the prescribing habits of LTC facilities for the purpose of saving money for CMS programs (by using generics) and not necessarily a focus on what is in the best interest of patients.

Current Regulations

Under current regulations, long term care (LTC) facilities must provide, either directly or under arrangements with others, for the provision of pharmaceutical services to meet the needs of each resident.  This requires LTC facilities to employ or obtain the services of a licensed pharmacist to provide consultation on all aspects of the provision of pharmacy services in the facility, including a drug regimen review at least once a month for each facility resident. 

In the process of performing the drug regimen reviews, if the consultant pharmacist recommends a modification of a resident’s drug treatment regimen, he/she notates the resident’s medical record with the recommendation to the prescribing physician. The prescribing physician must respond to the recommendation and, based on our experience, the physician generally follows it because the consultant pharmacist is considered to be an unbiased expert of pharmacology in the LTC setting.   As a result of their role in LTC facilities, LTC consultant pharmacists have significant influence over the drugs that LTC facility residents receive. 

Part D sponsors are required to provide LTC facility residents who are plan enrollees convenient access to LTC pharmacies.  CMS expects that each LTC facility would select one, or possibly more than one, eligible network LTC pharmacy to provide Medicare drug benefits to its residents. 

Commonly, nursing homes contract with a single LTC pharmacy for prescription drugs for facility residents.  Usually, the same LTC pharmacy then also contracts with the facility to provide consultant pharmacists for required consultation on all aspects of the provision of pharmacy services in the facility, including the monthly resident drug regimen reviews.   

CMS noted that it has “been concerned with the potential effect on patient safety and quality of care of various contractual arrangements involving LTC facilities, LTC pharmacies, the LTC consultant pharmacists these pharmacies provide to LTC facilities, and pharmaceutical manufacturers and/or distributors.  These arrangements may take many forms. The practice of LTC pharmacies’ providing consultant pharmacists to nursing homes at below cost or fair market value is one such type of arrangement.” 

CMS said it was “concerned that these arrangements may be used to entice nursing homes to enter into contracts with the LTC pharmacy for pharmacy dispensing services and the purchase of prescription drugs.”  CMS added that it is also “greatly concerned with financial arrangements that involve payments from pharmaceutical manufacturers directly or indirectly to LTC pharmacies and LTC consultant pharmacists for encouraging physicians to prescribe the manufacturer’s drug(s) for residents.” 

The agency noted that, the impact of these financial incentives is heightened when, as permitted under State law or by the State Pharmacy Board, LTC facilities sign agreements with LTC pharmacies permitting the consultant pharmacists to make medication switches. These types of arrangements may result in incentives for the LTC consultant pharmacist to make recommendations that potentially could conflict with the best interests of nursing home residents, as well as with Part D sponsors’ formularies and/or drug utilization management (DUM) programs. 

CMS asserted that, “any such arrangements have the potential to directly or indirectly influence consultant pharmacist drug regimen recommendations. As a result, the arrangements bring into question the ability of the LTC consultant pharmacists to provide impartial reviews of the residents’ drug regimens, which in turn raises concerns regarding the quality of those reviews and potential impact on resident health and safety.” 

While CMS believes that such arrangements are “widespread” because industry estimates indicate that three LTC pharmacy organizations have 90 percent of the market, they cite no proof to support this claim.  Instead, they express only their concern that the “lack of independence of the consultant pharmacist from the interests of the LTC pharmacy or other LTC pharmacy-related organization may lead to recommendations that steer nursing home residents to certain drugs.”  

Specifically, CMS is concerned that “this steering could result in the overprescribing of medications, the prescribing of drugs that are inappropriate for LTC residents, or the use of unnecessary or inappropriate therapeutic substitutions.”  However, CMS explicitly recognized that it has “no evidence directly linking these arrangements to adverse outcomes.” 

Despite a complete lack of evidence, CMS still recommends having a requirement that LTC consulting pharmacists be independent “because it would ensure that financial arrangements did not influence the consultant pharmacist’s clinical decision making to the detriment of LTC residents.”  Such a recommendation seems premature and overly restrictive considering CMS has no evidence whatsoever to show that relationships have cause any detriment to LTC residents.   

Discussion 

To support its rationale, CMS cites claims brought by qui tam relators (whistleblowers) under the False Claims Act alleging that, for instance, an LTC pharmacy received quarterly payments styled as rebates from the pharmaceutical manufacturer to engage in an active intervention program to convince physicians to prescribe a manufacturer’s antipsychotic agent to the physicians’ nursing home patients and to authorize all competitive products only after the failure of the manufacturer’s product.   

Additionally, CMS cites to a June 2008 study by the HHS Office of Inspector General (OIG) regarding Part D drugs and LTC facility residents.  The report showed that about 80 percent of the 128 nursing home administrators interviewed for the study indicated the consultant pharmacists performing their facility’s drug regimen reviews were employed by the nursing home’s LTC pharmacy. The report stated that 54 percent of the 79 pharmacy directors interviewed for the study reported that their pharmacy receives rebates from pharmaceutical manufacturers that are frequently based on market share or volume.  However, only three of the pharmacy directors reported providing rebate information to the LTC facility.   

As a result, CMS noted that, in delegating responsibility for avoiding use of unnecessary drugs to consultant pharmacists, nursing homes may generally be unaware of any financial interests that can bias the pharmacist’s drug recommendations.  CMS also noted that some research causes concern that unnecessary medications, such as antipsychotics, are problematic in LTC facilities. Based on this research and data, the proposed CMS rule would require the independence of consultant pharmacists. 

However, again, CMS explicitly acknowledges that their “findings do not directly connect LTC pharmacy relationships with consultant pharmacists to these research findings and survey results.”  Nevertheless, CMS believes the proposed rule, which is clearly not evidence-based, is necessary because it is “reasonable to presume that the incentives present in the relationships among consultant pharmacist, LTC pharmacies and drug manufacturers can influence the prescribing practices reflected in these data.” 

CMS is specifically requesting comments on their understanding in this matter.  Given they have no evidence to suggest that the current LTC pharmacy relationships with pharmacists or manufacturers who provide rebates, cause any misuse or unnecessary prescribing, or patient harm, it is prudent for the pharmacy consultant community to provide their input. 

Drug Regimen Review 

Consultant pharmacists perform monthly drug regimen reviews for all LTC facility residents. During this review, the consultant pharmacist may recommend a medication change. In making a decision whether to accept the recommended change, CMS claimed that, “prescribing physicians are likewise generally unaware of the LTC pharmacy rebate arrangements with pharmaceutical manufacturers that may influence the recommendation.”  In the previously cited report, OIG noted that the prescribing physician accepted a consultant pharmacist recommended medication change during the drug regimen review 74% of the time. 

Accordingly, CMS proposes to require that LTC consultant pharmacists be independent of any affiliations with the LTC facilities’, LTC pharmacies, pharmaceutical manufacturers and distributors, or any affiliates of these entities to ensure that consultant pharmacist decisions are objective and unbiased. 

CMS asserted that, “severing the relationship between the consultant pharmacist and the LTC pharmacy, pharmaceutical manufacturers and distributors, and any affiliated entities would further protect the safety of LTC residents because it will ensure that financial arrangements do not influence the consultant pharmacist’s clinical decision making to the detriment of LTC residents.”  That is, LTC facilities must use a qualified professional pharmacist to conduct drug regimen reviews and make medication recommendations based solely on what is in the best interests of the resident. 

CMS believes “this can be achieved only if the consultant pharmacist is working without the influence of conflicting financial interests that might otherwise encourage overprescribing and overutilization, which creates health and safety risks for residents, and can implicate fraud and abuse laws for which the HHS OIG and the Department of Justice (DOJ) have jurisdiction.  However, as noted above, CMS has no evidence to suggest that any such relationships have harmed LTC residents or caused consultant pharmacist decisions to be biased. 

CMS is also “considering requiring that long term care facilities employ or directly or indirectly contract the services of a licensed pharmacist who is independent.”  CMS is “considering including a definition of the term ‘‘independence’’ to mean that the licensed pharmacist must not be employed, under contract, or otherwise affiliated with the facility’s pharmacy, a pharmaceutical manufacturer or distributor, or any affiliate of these entities.”  CMS noted that “affiliate” can be “be broadly interpreted to cover all relationships that incent overprescribing and inappropriate prescribing in LTC facilities.” 

The changes would also prohibit nursing homes from contracting for the provision of consultant pharmacy services with entities (such as a subsidiary of an LTC pharmacy) that have been created for the purpose of providing reorganized consultant pharmacist services.  CMS noted however that these changes would not “prohibit any relationships that would be inherently free of conflict of interest.”  However, CMS provides no examples of such relationships, and instead, solicits comment on the specific relationships that should be permitted.  

Implementation 

To meet the proposed rule requirements, CMS noted that consultant pharmacists would likely reorganize to achieve independence from the parties (facility pharmacies, pharmaceutical manufacturers and distributors, and affiliated entities) with which the consultant pharmacists are currently affiliated.  CMS believes that if the changes under consideration were to take effect beginning January 2013, such a time frame would provide sufficient time for implementation of the requirement. 

However, CMS specifically recognized that LTC facilities in rural areas would face the greatest challenges in recruiting qualified consultant pharmacists, particularly if the

consultant pharmacists currently serving the rural facilities do not reorganize in order to continue to provide services.  Accordingly, CMS is soliciting comment on whether to provide for a later effective date for rural facilities as opposed to other LTC facilities or to make other accommodations for the unique circumstances in which rural facilities operate. 

CMS is “also soliciting comments on whether it would make sense to waive the independence requirement to permit alternative approaches.”  In describing these other approaches, CMS noted that, “comments should address the protections that would be implemented to reduce the risk of conflict of interest due to the lack of independence of the consultant pharmacists.” 

The agency is also soliciting comments on best practices related to the conduct of drug regimen reviews.  Presently, LTC consultant pharmacists commonly perform approximately 60 drug regimen reviews in a day.  CMS suspects this is too high a rate given CMS’s expectation that independent consultant pharmacists would conduct more thorough drug regimen reviews, monitoring for drug side effects and efficacy. 

CMS expects that the Medicare program, State Medicaid programs, as well as other payers, would realize savings as a result of independent pharmacists performing drug regimen reviews that would be uncompromised by any financial incentives. By reducing overprescribing and unnecessary use of high cost brand name drugs, CMS asserts that its proposed rule “would result in lower drug costs to Medicare, Medicaid and other payers.”  CMS also anticipates that this requirement would likewise curb the use of drugs that are inappropriate and should generally be avoided among older LTC residents, leading to further savings to all payers from fewer hospitalizations and treatments for drug-related problems, such as pharmacologic interactions.

ASCP reacts

The American Society of Consultant Pharmacists (ASCP) was aware that the agency was concerned about some areas of conflict of interest, but was not expecting the discussion in the proposed rule, Lynne Batshon, ASCP Director of Policy & Advocacy, told pharmacist.com.  While the agency’s examples of how there could be a potential for conflict of interest are accurate, Batshon said, “We’re concerned that the setting has not been portrayed accurately.”

In a February 2010 position statement that predates the new proposed rule, ASCP recommended that LTC consultant pharmacists should be independent of the LTC pharmacy providing medications to residents because of the potential for, or appearance of, conflicts of interest.  In the absence of separation, the position statement suggested:

• separate contracts for dispensing and consultant pharmacist services,
• payment for consultant pharmacist services at market-based rates, and
• empowerment of consultant pharmacists by their employers to make independent judgments about appropriateness of medication use for patients.

To gather information, ASCP is conducting a survey and also is reaching out to member experts in a variety of settings with good data.

Asked about the impact on consultant pharmacists, as considered, Batshon responded, “We are still in the process of evaluating that.” The day the survey came out, within 30 minutes, ASCP had received 50 responses. As of October 13, ASCP had received nearly 1,200 responses. Also, nonmembers have responded in overwhelming numbers. The reactions continue to pour in.

ASCP will submit comments to CMS based on the feedback. APhA will continue dialogue with ASCP and other pharmacy stakeholders as it analyzes and prepares comments on this issue and other provisions in the proposal.

Coordinated Ad Hominem Attacks on Physician-Industry Relationships in Guideline Development: The Next Frontier?

Recently, we saw concerted attacks on clinical guidelines committees, but interestingly, not on the science coming out of them.  Instead, the attacks were focused on whether the writers of those guidelines have a financial interest in the area they are working in. 

Two articles looked at conflict of interest (COI) disclosures as they relate to guidelines creating panels.  The first article, published in the British Journal of Medicine (BMJ), did a cross sectional study to examine the extent of financial COIs among members of guideline panels who participated in the development of guidelines on hyperlipidaemia and diabetes between 2000 and 2010. 

The second article, published in Forbes blog, attacks the Journal of Clinical Lipidology and its new Recommendations from an expert panel assembled by the National Lipid Association (NLA), based on an analysis, which found that some members of the panel have collaborated with industry on other work.

Also this week medical malpractice law firms began pining for guideline whistleblowers.

What is problematic about both articles is that they do not account for the tremendous breakthroughs Americans have benefited from over the past several decades in areas such as diabetes, heart disease, hypertension, and related diseases and symptoms.  For example, 

• Since 1970, the death rate from heart disease has dropped nearly 60%,
• Deaths from stroke are down 70% since 1970
• The average life span of Americans increased from 69.7 years in 1960 to approximately 80 years in 2007. 

If it were not for the declines in death rates from heart disease and stroke, we would lose 1 million more Americans every year.  Moreover, for every $1 spent on: 

• Statin therapy for heart attack survivors produced as much as $9.44 in health gains.
• Routine use of beta-blockers for acute heart attack sufferers produced as high as $38.44 in health gains
• Intensive glycemic control in newly diagnosed type 2 diabetes patients produced $3.77 in health gains 

In addition, a recent article from CNN noted that, “the prevalence of heart disease in the United States is declining.”  Specifically, the Centers for Disease Control and Prevention (CDC) found that the prevalence of coronary heart disease decreased from 6.7% to 6.0% a remarkable 10.9% drop from 2006 to 2010. The results, based on a national telephone survey, were published Thursday in the CDC’s Morbidity and Mortality Weekly Report.

"That’s a very significant decline, from 6.7% to 6% in five years,” said Dr. Jerome Cohen, a board member of the National Lipid Association and professor emeritus in preventive cardiology at St. Louis University.  Consequently, the decrease in heart disease prevalence reflects the work of industry on developing statins and the medical profession in developing guidelines, and medical education in ensuring the data and guidelines reach prescribers.

Additionally, a recent study from JAMA found that because of “specialized pacemakers and better use of medications such as ACE inhibitors that relax blood vessels, diuretics that prevent fluid buildup, digoxin that boosts heartbeat strength and beta blockers that ease strain on the heart, hospital stays for heart failure fell a remarkable 30 percent in Medicare patients over a decade.  All of these tools are products created by physician-industry collaboration.

Physician Industry Collaboration

Despite the clear benefits Americans have experienced from these breakthroughs, a small minority of individuals are concerned about physician-industry collaboration.  These critics call the issue a matter of “conflicts of interest,” which has recently surged in the media and government investigations over the past several years. 

However, the relationships that physicians, academia, and government have with industry have been subject to a great amount of misunderstanding, exaggeration, and outright stigmatized for the past few years, in part because of what some believe are widespread unethical practices. These include “frequent and large ‘consultancy’ payments to physicians, the practice of ‘ghost writing’ by drug company employees, and the prevalence of industry funded ‘key opinion leaders’ in medicine,” which have raised concerns that physicians’ financial relations with industry may undermine the practice and promotion of high quality evidence based care.  The reality however, is that such “conflicts” are extremely rare, and have never been shown to harm patients directly.

Consequently, the authors of the study noted that, “one area in which the presence of COI may be particularly concerning is the development of clinical practice guidelines.”

Guidelines serve to standardize care, to inform evidence based practice, and ultimately to protect patients, so their freedom from bias is particularly important. Over the past decade, most organizations that produce guidelines have adopted COI disclosure policies for members of guideline panels. Some organizations, such as the UK National Institute for Health and Clinical Excellence (NICE), have gone further, excluding authors with COI from relevant decision making. US and Canadian guidelines are issued by medical specialty societies, non-profit organizations, government agencies, and professional associations, each with their own guideline development processes and COI disclosure policies.

The authors explicitly recognized that “most organizations mandate some form of disclosure.”  However, they assert that, “complete transparency is often not achieved, and simple disclosure of interests may not be enough to prevent panel members’ bias from influencing recommendations.”  Yet they cite no evidence to support this claim.

Instead, the authors rely on a non substantiated report from the Institute of Medicine (IOM), which called for “the exclusion of panel members with financial COI, the appointment of a chair without any relationships with industry, and an end to direct funding of guidelines by industry. IOM also recommends full disclosure of the COI policy of each guideline panel, along with the potential interest of all panel members. Lastly, based on personal opinion they recommend that if appointing panelists with interests is unavoidable, their presence should be limited to a minority and they should be prohibited from voting.”

Methods and Findings

The authors used the IOM recommendations as a framework to determine the prevalence of financial COI among guideline panelists from organizations considered likely to reflect best clinical practice and influence behavior. Specifically, the authors did a cross sectional study of members of panels that have produced guidelines over the past decade (2000-2010) through national organizations in the United States and Canada that covered screening for and treatment of diabetes and hyperlipidaemia.

Fourteen (14) guidelines met the search criteria, of which five had no accompanying declaration of interest by panel members. The authors searched each guideline for declaration of COI by the panel members. If no conflict was declared in the guideline or in an accompanying document, they searched Medline to identify financial interest, accounting that any relationship with industry whether applicable to the guidelines or not were by the writers to be considered a conflict of interest.  They also searched all publications of each panel member in the two years before publication and the year of publication of the guideline for data on COI.  If the Medline search identified no COI, the authors used Google to search the internet, combining each panelist’s name with the name of each of the major manufacturers that develop and market drugs for hyperlipidaemia and diabetes.

Among the 14 guideline producing organizations, nine provided a document listing the COI of panelists. Five guidelines did not provide an opportunity for panelists to publicly declare financial COI, and four of these were sponsored by the government.  288 panel members had participated in the guideline development process, of which:

• Overall, 150 (52%) panel members had relationships with industry, of which 138 were declared and 12 were undeclared.
• 138 (48%) reported relationships at the time of the publication of the guideline
• 150 (52%) either stated that they had no such conflicts or did not have an opportunity to declare any.
• Among 73 panelists who formally declared no conflicts, 8 (11%) were found to have one or more.
• Of the 14 guidelines, 12 identified a chair. Of these 12, six had a interest, all of which were declared. Among guidelines that provided public declarations of interests, six of seven chairs reported interests
• Panel members from government sponsored guidelines were less likely to have conflicts of interest compared with guidelines sponsored by non-government sources (15/92 (16%) v 135/196 (69%).
• Of the 211 panelists who had an opportunity to publicly declare interest, 73 stated that they had no COI, among whom 11% (n=8) had undeclared interest identified through the authors search strategy
• Among the 77 panel members who did not have an opportunity to publicly declare interest, the authors found 5% (4) to have interest through their search strategy
• Of the 12 undeclared interests, they found one through Google search and the remainder through Medline search.

The authors defined financial COI as the “direct compensation of a guideline panelist by a manufacturer of a drug used to treat the disease of interest in the guideline, in the form of grants (including research), speakers’ fees, honorariums, consultant/adviser/employee relationships, and stock ownership.”  The authors classified COI into three categories: 1) declared in the guideline; 2) undeclared in the guideline but identified through our search strategy; and 3) no opportunity to declare COI in the guideline but identified COI by our search strategy.

Based on the above findings, the authors claimed that COI “were present for the vast majority of guideline panels reviewed.”  However, only 52% had COI’s, hardly a vast majority.  The authors also exaggerate claims about members who did not report.  Only one in nine (11%) reported no COI but were found to have undeclared COI.  However, the authors did not show any evidence or discuss why the authors had not declared.  This could be reasons that are outside the scope of the individual panel member, such as the policies of the guidelines committees or the dates ranges in which they had served the companies.   

Consequently, the authors noted “that in spite of increasing requirements for disclosure of COI by guideline panelists the rate of COI remains similar, suggesting that mandating transparency may not translate into decreased COI on guideline panels.”

The authors suggested that because government sponsored panels “had significantly fewer panel members with COI,” that expert panels can be convened from members predominantly without COI.  However, this claim is completely misguided.  As recent numbers from Food and Drug Administration (FDA) advisory committee panels have demonstrated, it is extremely difficult to find experts who have not collaborated with industry.  If a federal agency such as the FDA does not have the means or resources to find adequate panel members and experts to serve important advisory committee roles, finding such experts for guidelines committees will be even more difficult.

National Lipid Association

The National Lipid Association's (NLA) mission is to enhance the practice of lipid management in clinical medicine. In support of this objective, the Association convened an expert panel to author a paper entitled, "Clinical Utility of Inflammatory Markers and Advanced Lipoprotein Testing: Advice from an Expert Panel of Lipid Specialists," for publication in the September/October issue of the Journal of Clinical Lipidology, which was mailed to the membership and published online this week to the Journal website and ScienceDirect.

The paper discusses the consensus view of the expert panel, which evaluated the use of selected biomarkers [C-reactive protein, lipoprotein-associated phospholipase A2, apolipoprotein B, LDL particle concentration, lipoprotein(a), and LDL and HDL subfractions] to improve risk assessment, or to adjust therapy. The panel recommendations are intended to provide practical advice to clinicians who wrestle with the challenges of identifying the patients who are most likely to benefit from advanced lipid testing, to provide the optimum protection from CV risk.

"The goal of this paper was to help clinicians decide which tests may be useful for various types of patients on an initial visit to assess and also which tests are useful for follow-up after the initiation of lifestyle modification and drug therapy."

However, an article posted on CardioBrief asserted that, “panel members, along with the NLA itself, have a dizzying number of industry relationships.”  Despite this claim, NLA contributors to the paper provided full disclosures and the contributors affirmed that their participation was not influenced by bias or commercial interest.

Rather, NLA firmly asserted that the viewpoints expressed in the paper “represent the clinical experience and opinion of NLA experts and the scientific evidence, which serves as the basis of clinical lipidology.” All members of the organization and others reviewing this document thoroughly reviewed the study and made sure it met the interests of patient care. The NLA also disclosed its educational grants from multiple manufacturers to support the development of this position. All author and industry disclosures are included in the paper, preceding the reference section, beginning on page 359.

Discussion

First ask yourself "so what." How does this affect patient care?  The answer is simple, if you look at the health statitics, acess to these experts with "interests" and following their guidelines has improved patient care.   It is a sad day when one thinks that guidelines committees will be denied access to experts who are working to develop some of the most important medicines.  While the authors of the BMJ study believe the high prevalence of COI is concerning, they are exaggerating the findings, considering barely over half had any reported COIs.  Moreover, the authors do not point out any evidence of any harm done by such panel members or any harm the guidelines have caused to patient care.  Rather, as noted above, Americans and patients have seen tremendous breakthroughs and improvements in patient care for diabetes and hyperlipidaemia, and related ailments. 

Additionally, the authors’ suggestion that guideline committees should rely on IOM recommendations is equally problematic.  To “reform” the guidelines committee process, as the authors suggest, is unnecessary, and would pose a significant burden to guideline committees, which do not have the resources or staff necessary to accomplish what the authors recommend.  While the authors suggest it’s feasible to have conflict-free panels, they offer no plan or evidence on how this would be accomplished.

As previously noted, FDA is experiencing significant challenges filling positions on their advisory committees.  If Commissioner Hamburg and CDER Director Woodcock both admit the challenges of finding qualified experts without relationships with industry, following IOM recommendations for guidelines committees could lead to significant absence on guidelines committees.  This would lead to less consistency among physicians and practicing clinicians, which could ultimately harm patients.

Moreover, as Canadian Cardiovascular Society president Dr. Blair O’Neill noted, “it’s impossible for all experts not to have such ties because the level of expertise would be diluted.”  He explained that there is a “limited pool of experts in Canada to begin with and the best ones inevitably have their research funded by industry because the government funding just isn’t there.  “The experts in the field . . . have done research funded by industry because government granting agencies’ purse strings have become ever tighter,” O’Neill said.

What these articles and many we have discussed recently are beginning to do is to use an ad hominem attack.  “An ad hominem is a general category of fallacies in which a claim or argument is rejected on the basis of some irrelevant fact about the author of or the person presenting the claim or argument.  Typically, this fallacy involves two steps. 

First, an attack against the character of person making the claim, her circumstances, or her actions is made (or the character, circumstances, or actions of the person reporting the claim).  Second, this attack is taken to be evidence against the claim or argument the person in question is making (or presenting).  This type of "argument" has the following form: 

1. Person A makes claim X.
2. Person B makes an attack on person A.
3. Therefore A's claim is false.  

The reason why an ad hominem (of any kind) is a fallacy is that the character, circumstances, or actions of a person do not (in most cases) have a bearing on the truth or falsity of the claim being made (or the quality of the argument being made).”  Other than a few extremely rare exceptions of individuals who have worked with industry and have chosen unethical behavior, the overwhelming majorities of physicians who work and collaborate with industry are ethical, and choose this kind of work because it is in the best interest of their patients and it will further progress healthcare and science.

Consequently, the authors in both of the articles used ad hominem attacks.  Rather than arguing the science (if any existed to support their position), the authors of these articles point to what they believe are negative characteristics of physicians who collaborate and work with industry.  They argue that because such physicians work with industry, any work they produce on guidelines committees must be bias or conflicted or not evidence-based.  This form of ad hominem attack is utterly mistaken.

Most likely, authors using ad hominem attacks in these contexts do so because there is no evidence or scientific proof to even suggest that relationships with industry harm patients or produce negative outcomes.  The only “science” that these critics can point to is “social science,” and that “gifts” influence behavior.  But even that study (Wazana) is problematic because it tried to show how interactions with industry hurt clinical care, but of the publications reviewed by the article, none used patient outcome measures. If anything the outcomes including a 10.9% reduction in heart disease in 6 years would point that those guidelines benefited from the use of experts who work with industry.

Ultimately, there is nothing, as of now, to suggest that the guidelines created by any of these organizations are anything but evidence-based.  There is no evidence of undue influence or bias, other than the authors pointing out that panel members have properly disclosed their interests.  Instead, the evidence we do have is that patients and Americans are healthier and living longer lives.  Why should we change that now?

A Hard Look at Physician-Industry Relationships and Ad Hominem Attacks by Critics

 
Arguing against science is difficult, so what we have seen lately is rather than arguing the science and eventual benefit to society, attacks on the character of those delivering the science.  This sums up the entire conflict of interest in medicine debate.  It is taking the easy way as opposed to the principled way of debating an issue.

The core principle of universities is that, “the pursuit and free exchange of ideas is vital and uplifting, and efforts that seek to impose a particular viewpoint to the exclusion of others should be fiercely resisted.” 

Today however, many of our universities, medical schools, and academic medical centers are following short of this principle by allowing the concerns of a few overpower the agenda.  A recent article from Forbes explained how one group, the Pharmascolds, is leading a movement to “impose a particular viewpoint” on medical students, faculty and the greater public.

As the author pointed out, Pharmascolds are “critics who worry about university/industry interactions,” and “constriction of academic freedom is typically cited as a key concern.” 

To the Pharmascolds, “industry represents an inherently corruptive influence on students and trainees, and threatens to impose a restrictive and biased world view upon them.”  Although Pharmascolds may have made the headlines for some stories, the article noted that, “there’s another competing narrative to consider.”

Those who wonder how academic orthodoxy is enforced in practice need look no further than the response to a recent lecture given at Case Western University by Dr. Tom Stossel, the American Cancer Society Professor of Medicine at Harvard, and Director of the Translational Medicine Division of the Brigham and Women’s Hospital, where he is also an attending physician. 

Stossel’s lecture, entitled, “A Hard Look at Physician-Industry Relationships AKA ‘Conflicts of Interest’” examined a multitude of research and discussion about the recent focus on industry-physician collaboration. 

At the beginning of his lecture, he noted how the Harvard Medical School 2009-2010 Report on Conflicts of Interest and Commitment clearly asserted that, “Interactions between academic and industry are crucial to science and to facilitating the translation of knowledge from the research bench to the patient bedside.” Then, his lecture went on to look at 1) the history of conflict of interest regulation, 2) weak & false evidence justifying regulation and high cost policies, and 3) why regulation of physician-industry relationships originates and persists.

Part of his presentation showed a chart examining “Articles per year concerning conflicts of interest,” which showed that since 1990, there has been a tremendous spike, something Stossel referred to as a “Conflict of Interest Mania.”

Stossel also presented a slide on a study he conducted of papers published in the Journal of the American Medical Association (JAMA) and the New England Journal of Medicine (NEJM) Concerning Physician-Industry Relationships.  His slide noted that of the articles examined between 1999 and 2009:

• 96% of articles showed physician-industry relationship risks, while only 4% showed relationship benefits
• Only 44% provided evidence or relationships risk, while 100% showed evidence of relationship benefits
• 76% drew inferences about patient outcomes based on relationship risks, however 0% drew evidence about relationship benefits
• Only 43% acknowledged an alternative viewpoint with respect to relationship risks, while 100% showed an alternative viewpoint on relationship benefits; and
• Only 3% critiqued alternative viewpoints of relationship risks, while 100% critiqued alternative viewpoint for relationship benefits.

The lecture then discussed how policies now mandate “massive confession and prophylactic rules,” which affect every aspect of medicine.  He noted:

• All corporate payments to physicians are disclosed
• Peer-to-peer speaking is prohibited (i.e. Harvard and Partners Healthcare)
• Physician-industry relationships preclude editorials, journal review articles, or service on guideline or FDA review panels
• No gifts, however trivial
• Heavily restricted payments for meals and travel
• Samples and detailing prohibited or limited
• And payments for value are eliminated or limited

Moving along, Stossel noted how the mania surrounding conflicts of interest use allegations to justify conflict of interest regulations.  These critics make arguments such as:

• Industry’s profits exceed value added
• Industry’s marketing is fundamentally deceptive
• Industry relationships degrade and bias research and cause physicians unwittingly to promote or prescribe unsafe and / or unnecessarily expensive products that harm patients; and
• Payments to physicians for time or work erode “professionalism” and public trust

Consequently, he then moved on to show how physician-industry collaboration has produced significant value, through longer life-expectancy, and better survival rates for severe and chronic disease such as cancers, HIV, and heart disease.

Nevertheless, Stossel showed a number of slides quoting famous academic researchers and leaders of medical institutions who ascribe to the belief that physician-industry collaboration is harmful for the reasons noted above.  Moreover, Stossel specifically addressed one study in particular that critics of industry point to, the Wazana study, and recognized that despite the study’s claims about harm to patients, “no study analyzed by Wazana used patient outcome measures.”

However, Stossel recognized how such viewpoints are misguided considering:

• There has been no decrease in the esteem with which physicians are held by the public in the past 20 years
• 90% of citizens surveyed believe physicians and industry should work together; and
• Most patients in cancer trials have no concern about their physicians commercial relationships

Additionally, Stossel’s lecture explained how conflict of interest rules and regulations are a “purposeless resource diversion.” He noted how the “redundant industry, health center, state and impending federal (“sunshine act”) payment disclosure registries are:

• Expensive
• Inaccurate
• Almost useless; and
• Abusive

Forbes Article

Interestingly, the author noted that Stossel’s lecture “was well-attended.”  However, the real news he noted, “was the three sentence email received by members of the Case Western faculty prior to Stossel’s lecture — a nastygram sent by a colleague at the neighboring Cleveland Clinic.

Subject line: “Re: Medicine Grand Rounds — Tuesday September 13th” (i.e. Stossel’s talk).  Body of the email (in full): 

”This guy is an embarrassment to the medical profession.  Can’t believe you would have him provide Grand Rounds.  Your trainees deserve better.”

The Forbes article noted how this kind of email, written by industry’s leading critic Steve Nissen, attempted to discredit Dr. Stossel. 

The author noted that Nissen used an “ad hominem attack (baseless) against Stossel merely because he is an industry critic.  The article noted how “the critique was especially striking given that Stossel’s academic credentials are far more robust than most (if not all) of the Pharmascolds, including in particular a number of medical journal editors who have little original academic record to speak of, and have achieved almost all their considerable fame and now academic prominence by climbing on board the conflict-of-interest bandwagon.”

Moreover, the article recognized that, “the relatively small fraction of Stossel’s academic publications that do speak to conflict-of-issue issues strike me as all the more remarkable given the obvious comfort level that many medical journals (and their peer reviewers) have for confirmatory papers in this space, and their natural reluctance to publish (and arguably validate) disfavored arguments such as Stossel’s.”

Accordingly, the author recognized that with regards to Nissen, “the medical profession deserves better.”  

Rather than challenging the arguments of Dr. Stossel, Dr. Nissen used a ad hominem slight of hand to discredit those he disagrees with.  In the end thanks to the email the lectures were packed and students were able to learn the value of the relationships with industry.

Physician Payment Sunshine Act: CMS Misses Deadline - Creating Confusion

 
As we have noted many times on this website, the Physician Payments Sunshine Act (Sunshine Act), which was included in the Patient Protection and Affordable Care Act, will have a tremendous impact on all aspects of the healthcare industry, particularly research, consulting, drug/device development, marketing, advertising, clinical trials, education, and even continuing medical education (CME).

Consequently, after the Sunshine Act was passed in 2010, the burden for writing the rules and regulations was passed on to the Centers for Medicare and Medicaid Services (CMS).  Between March 2010 to the present, CMS has held only one (1) event related to the Sunshine Act: a Special Open Door Forum on Transparency Reports and Reporting of Physician Ownership or Investment Interests.”

As mandated by the Affordable Care Act, the deadline to draft the regulations was October 1, 2011.  Clearly, CMS has failed to meet this deadline, and Senators Charles Grassley (R-IA) and Herb Kohl (D-WI), who are the authors and sponsors of the Sunshine Act, are not happy about it.

In fact, Senators Kohl and Grassley yesterday sent a letter to Donald Berwick, MD, Administrator of CMS, complaining about CMS’s failure to issue the proposed rules.

We should note however, that once a regulation is finished, it must go over to the Office of Budget and Management (OMB), which can take up to 30 days to review and suggest changes.

Kohl and Grassley Letter

At the beginning of their letter, the Senators explicitly recognized that, “many interactions between the pharmaceutical and medical device industries and medical professionals are beneficial to medical science and lead to innovation.”  However, this comment was short lived.

Grassley and Kohl went on to explain how, “the Sunshine Act was developed after numerous investigations and hearings revealed that large sums of money were going to physicians for sometimes questionable purposes.”  Of course, the Senators failed to explain that many of these investigations never led to any criminal prosecutions and were eventually dropped or no outcome was rendered.  They also make it appear as if such practice was widespread, when in fact, it was only a few bad apples. 

Nevertheless, the Senators maintained that, “Congress passed the Sunshine Act in response to growing concerns over industry payments to physicians and their potential negative effects on patient care and efforts to restrain healthcare costs.”  They cite no data about such concerns, except for articles from the Wall Street Journal and New York Times, hardly empirical evidence of a “growing concern.”

Details of the Sunshine Act

The Senators then went on to explain the provisions of the Sunshine Act, which we have explained in detail many times.

Under the provisions of the law, manufacturers are required to report to the Secretary of the Department of Health and Human Services (HHS) all payments to physicians, including consulting fees, honoraria, travel, and entertainment, for public disclosure by the Secretary.  The Secretary is then instructed to include the identity of the manufacturer, the physician, and the drug or device associated with the payment on the internet. 

An additional provision requires manufacturers and group purchasing organizations (GPOs) to report all ownership or investment interests held by physicians or members of their family, also for public reporting by the Secretary. 

Manufacturers and GPOs are required to start complying with the law by collecting data beginning January 1, 2012, and must begin reporting this information to the government on March 31, 2013.  Beginning on September 30, 2013, the details of these payments are to be made available to the public.  Violations of the disclosure requirements can result in civil monetary penalties ranging from $1,000 to $100,000.  

Consequently, Kohl and Grassley noted that, “in order to ensure that manufacturers had adequate time to comply, the law required that the Secretary establish procedures not later than October 1, 2011, describing how manufactures are to submit information and how the information will be made available to the public.” 

In addition, in establishing these procedures the Secretary was required to “consult with the Inspector General, affected industry, consumers, consumer advocates and other interested parties to ensure that the information made available to the public is presented in the appropriate context.” 

Accordingly, Kohl and Grassley asserted that, “The deadline for establishing procedures has passed and there has not been, to our knowledge, adequate consultation with either industry representatives or consumer advocates.”

As a result, the Senators told Berwick they were “concerned with CMS’s failure to implement the statutory provisions on time with clear guidance, standards and definitions” because this “will create confusion among both manufacturers and consumers, potentially placing taxpayer dollars at risk.”

Specifically, while many of the large pharmaceutical and medical device manufacturers, universities, and even the National Institutes of Health (NIH) have already begun to implement disclosure policies voluntarily, the Senators “are concerned that smaller companies are waiting for clarity and direction from CMS and will find the lack of timely guidance burdensome and costly.” 

They recognized that, “prompt federal guidance is urgently needed to ensure a smooth path toward increasing disclosure, eliminating conflicts, and ultimately providing patients with the tools they need to make informed health choices.”

Additionally, Grassley and Kohl noted how in a conference call with their staff on Friday, September 23, 2011, CMS assured the Senators that CMS had sent the proposed rule over to OMB for review.  Accordingly, in order to monitor their progress on the proposed rules, the Senators asked CMS to answer the following questions in writing no later than October 14, 2011:

1. What is your timetable for implementing the Sunshine Act?
2. When did you originally send the proposed rule to OMB?  Please include any dates that follow-up was conducted and for what reason.
3. Why have you failed to meet the statutory deadline?
4. What is the anticipated release date of the preliminary regulations?  How long will the regulations be open for comment as required by the statute? What is your timeline for issuing final regulations? 

In addition, the Senators asked Berwick to have the appropriate CMS officials contact their staff no later than October 7 to schedule an in-depth briefing on these issues and an open discussion on a path forward that allows both a timely implementation and a robust comment period.

Discussion

One could tell pretty early on that implementation of this provision was not going well.  Earlier this year we had a meeting with key White House personnel on healthcare reform.  When mentioned the Sunshine provision, and was greeted with a blank stare. They had no idea what this was and seemed surprised this provision made it in the bill.  

Another sign that things were not going well was last December, when CMS published their list of tasks for the implementation of the Affordable Care Act.  Section 6002, the Sunshine provision was not on the list.  

Finally, from the town hall forum, it was clear that the CMS personnel were still trying to figure it how the disclosure and reporting system would work.  The public open forum (conference call) on Sunshine was the only public open forum that CMS held since its enactment, and it was never listed again on their website.  

With Berwick having no chance of confirmation, (he is a recess appointment) and leaving at the end of the year, it is doubtful that the pressure that Senator’s Grassley and Kohl are applying will do much good. 

Moreover, it is important to recognize that Grassley and Kohl explicitly acknowledged that to date, “there has not been … adequate consultation with either industry representatives or consumer advocates.”  This means that even when the proposed rule comes, it could be fundamentally flawed from the start because there has not been adequate input from affected stakeholders.  Particularly, the Senators recognized the tremendous disadvantage that smaller companies are facing because of CMS’s failure to consult with interested and affected parties.

It is interesting that Grassley and Kohl are already admitting, even before the proposed rule comes out, that CMS’s failure will place “taxpayer dollars at risk” by creating “confusion among both manufacturers and consumers.”

In the end, it is likely that OMB is going through CMS’s proposed rule and scratching their heads.  One thing they must do in their analysis is essentially a cost-benefit analysis.  Like many other provisions contained in the Affordable Care Act, OMB will be looking for how much money CMS will have to spend to implement this program, staff, resources, oversight, etc., as well as how much it will take to maintain such a program over the years.

Implementing the Sunshine Act will cost hundreds of millions, if not billions of dollars, especially given there are  61,156 Medical Equipment & Device Companies in the U.S., 16,834 Pharmaceutical Companies and subsidiaries, and almost 1,000 Biotech Companies, and this does not even include distributors and wholesalers all potential reporting entities.   Not to mention the thousands of hospitals and over 600,000 physicians that will be reported on. 

At the end of the day, the real question is simple: who is going to use this data, and how is it going to save money in the American health care system? How is it going to improve patient care? How is it going to make our system more efficient and cost effective?  Or is this just a waste of taxpayer dollars?  Do patients really care? 

Given that the authors of the Sunshine Act can’t answer these questions, and are already worried about putting taxpayer dollars at risk, maybe it’s time Obama takes his Executive Memorandum about reviewing regulations (and getting rid of bad ones), and applies it to the Sunshine Act, before it’s too late.

ProPublica Dollars for Docs Campaign of Shame II: Coming to Your Local Media Outlet September 8th

 
In the old west posters were put up around town looking for criminals and wanted men.  Today, industry critics are assembling wanted posters and list of who they consider their enemies, but this time it is hard working doctors as opposed to criminals.  They are seeking to shut down the relationships between physicians and industry scientists working on cures with their Dollars for Docs “campaign of shame.”  

Almost one year ago, the infamous and so-called “investigative journalist” shop known as ProPublica, published its Dollars for Docs database.  The database combined seven pharmaceutical companies’ payment data and created a searchable site to see how much a particular doctor was paid. 

Of course, the website and media stories that followed failed to portray such payments in an objective manner and offered minimal, if any context of such payments, publishing numerous articles about only the potential negative consequences of physician-industry payments and collaboration.

Consequently, ProPublica announced this week that it is preparing a major update to its Dollars for Docs database on September 8, 2011.

In doing so, ProPublica privately invited “news organizations to participate in a roll-out of stories based on the new data.”  In other words, ProPublica is getting ready to attack more hardworking physicians who educate their peers, conduct clinical research, and consult with industry to ensure that Americans have the most advanced treatments and medicines. 

In fact, ProPublica is “offering the data in advance to all interested news organizations that agree to withhold publication of their stories prior to the launch of their update.”

ProPublica said it “will make the data available on Aug. 22, under an embargo that lifts at 9 p.m. on Sept. 7.”  In addition, ProPublica stated that they can provide media sources “with payment data for the state or states you cover, as well as a guide to using the data,” and reporters Charles Ornstein and Tracy Weber will also be available to offer advice and tips.  Essentially, ProPublica will be feeding their stories and biased viewpoints to local media sources.

In the past, local media sources simply would do a “search” on the ProPublica database for doctors in their area, and then publish a one-sided article critical of industry.  Such articles were hardly if ever “objective,” and almost never included an opposing viewpoint showing the value of physician-industry collaboration.

According to their email, ProPublica will publish an updated version of their searchable database of payments that will now include data from 12 drug companies (about 40 percent of the U.S. market). The new information includes a full year of data from eight of those companies, allowing the first head-to-head comparisons of the fees paid by those companies. ProPublica “guaranteed” local media sources that its articles and update will “have a local angle of interest to your audience.”

Clearly all ProPublica cares about is getting media sources to expand the reach of their shame campaign, not truthful and objective journalism.

In addition, ProPublica claimed in their email that, “conflicts of interest in medicine have been a major issue for the past several years,” and noted how the Physician Payment Sunshine Act was enacted as part of the Affordable Care Act to address these so called “conflicts.”  The Sunshine Act requires pharmaceutical and medical device companies to post all payments to physicians of $10 or more, with certain exceptions.  They noted that while, “some companies have started doing so before then, either voluntarily or as the result of legal settlements, the payments listed on the companies’ individual sites are not easy to search and analyze.” A reason they use to justify the creation of their database, which they claim is “easy to use.”

The real question is, of what value is “analyzing” such payments?  Will analyzing such payments lead to better patient outcomes? Will drugs, devices or treatments get to patients sooner and through FDA approval faster?  Will clinical trials be conducted more safely and efficiently because payment data is now available?  Or will the publishing of such payments have the opposite effect?  Will posting physicians name chill the willingness of researchers to do research, educate their peers, and consult with companies? Will the added costs of transparency have any benefits to outweigh the administrative and resource burdens?

ProPublica asserts that its database has now “become even more useful for consumers.” But in what way? Is there any research to show that over the past year, since ProPublica published its first data, that patients are safer and healthier? No. ProPublica has not offered one shred of evidence to show that their database has done anything positive to make Americans safer or healthier.

Instead, ProPublica just wants to ostracize physicians who collaborate with industry and make lifesaving treatments and scientific discoveries.  They want people to “see which doctors in your communities have stopped speaking on behalf of drug companies and which have recently joined up.” And for what? Will this mean that patients will stop seeing their doctors, or will they ask their physicians why they take the time out of their busy schedules and family lives to educate other physicians, conduct clinical trials, and do research and consulting?

Ultimately, ProPublica will continue to abuse and slant the portrayal of physician-industry collaboration, throwing sand into the gears of medical and scientific progress, harming patients and leading to Americans and patients suffering.  In the coming weeks, we will be getting comments from local physicians who work and collaborate with industry to offer the counterpoint to ProPublica to highlight the tremendous value physician-industry collaboration brings to patients and America.

National Institutes of Health Final Rule on Conflict of Interest Summary

 
This week, the U.S. Department of Health and Human Services (HHS) issued an updated 144 page Final Rule on conflict of interest, providing a framework for identifying, and managing investigators’ financial conflicts of interest. Staff from the National Institutes of Health (NIH) worked with others in HHS to revise the 1995 regulations to update and enhance the objectivity and integrity of the research process.

HHS Secretary Kathleen Sebelius noted that the “financial conflict of interest rules must keep up with the times if we are to maintain our leadership role in the global scientific community.”

The final rule amends the PHS regulations ``Responsibility of Applicants for Promoting Objectivity in Research for which PHS Funding is Sought’’ (42 C.F.R. Part 50, Subpart F) and ``Responsible Prospective Contractors’’ (45 C.F.R. Part 94).  A full description of the changes and final rule are below.

Major changes to the regulations include the definition of significant financial interest (SFI), the extent of investigator disclosure, the information reported to the Public Health Service (PHS) awarding component, the information made accessible to the public, and investigator training. For example, the revised regulations:

• Require investigators to disclose to their institutions all of their significant financial interests related to their institutional responsibilities.
• Lower the monetary threshold at which significant financial interests require disclosure, generally from $10,000 to $5,000.
• Require institutions to report to the PHS awarding component additional information on identified financial conflicts of interest and how they are being managed.
• Require institutions to make certain information accessible to the public concerning identified SFIs held by senior/key personnel.
• Require investigators to complete training related to the regulations and their institution’s financial conflict of interest policy.

NIH Director Dr. Francis S. Collins asserted that, “The NIH is committed to safeguarding the public’s trust in federally supported research that is conducted with the highest scientific and ethical standards.” He added that, “Strengthening key provisions of the regulations with added transparency will send a clear message that NIH is committed to promoting objectivity in the research it funds.”

The regulations will be implemented no later than 365 calendar days after publication of the final rule in the Federal Register.  The 1995 regulations were revised after a review of public comments from the advance notice of proposed rulemaking and the notice of proposed rulemaking.

An Institution applying for or receiving PHS funding from a grant, cooperative agreement, or contract that is covered by this rule must be in full compliance with all of the regulatory requirements herein:

• No later than August 24, 2012; and
• Immediately upon making its institutional Financial Conflict of Interest (FCOI) policy publicly accessible as described herein 

In the interim, Institutions should continue to comply with the 1995 regulations and report Investigator FCOIs to the Public Health Service (PHS) Awarding Component as required in the 1995 regulations. 

For information concerning questions about the rulemaking process contact Jerry Moore, NIH Regulations Officer, Office of Management Assessment, National Institutes of Health, 6011 Executive Boulevard, Suite 601, MSC 7669, Rockville, MD 20852-7669, telephone 301-496-4607, fax 301-402-0169, email jm40z@nih.gov. 

For substantive questions about the rule contact Dr. Sally Rockey, NIH Deputy Director for Extramural Research FCOICompliance@mail.nih.gov. 

We have summarized the rule and provided some comments in the remainder of this article.

Background 

In 1995, the PHS and the Office of the Secretary of HHS published regulations at 42 CFR Part 50, Subpart F and 45 CFR Part 94 (the 1995 regulations), that are designed to promote objectivity in PHS-funded research. The 1995 regulations cover Institutions that apply for or seek PHS funding for research (except for Small Business Innovation Research (SBIR)/Small Business Technology Transfer Research (STTR) Phase I applications) and, through implementation of the regulations by these Institutions, to each Investigator participating in the research. Generally, under the 1995 regulations: 

• The Institution is responsible for complying with the regulations, including maintaining a written and enforced FCOI policy; managing, reducing, or eliminating identified conflicts; and reporting identified conflicts to the PHS Awarding Component. The reports denote the existence of an FCOI and the Institution’s assurance that it has been managed, reduced, or eliminated.
• Investigators are responsible for complying with their Institution's written FCOI policy and for disclosing their SFIs3 to the Institution.
• Maintaining objectivity in research requires a commitment from Institutions and their Investigators to completely disclose, appropriately review, and robustly manage identified conflicts.
• The PHS Awarding Components are responsible for overseeing institutional compliance with the regulations. 

The purpose of the 1995 regulations was to ensure that there is no reasonable expectation that the design, conduct, or reporting of PHS-funded research will be biased by any Investigator FCOI. Since the publication of the 1995 regulations, the pace by which new discoveries are translated from the research bench into effective treatment of patients has accelerated significantly, and the biomedical and behavioral research enterprise in the United States has grown in size and complexity. 

Researchers frequently work in multidisciplinary teams to develop new strategies and approaches for translating basic research into clinical application, thus hastening discovery and advancing human health. In addition, these newer translational strategies often involve complex collaborations between Investigators and the private sector. 

Consequently, NIH cited recent studies from the Association of American Medical Colleges and the Association of American Universities (AAMC/AAU), which highlighted the increasing complexity of the financial relationships between biomedical researchers and industry and the possible ramifications of those relationships.  NIH noted that, “these relationships, now encouraged in many forms, may involve financial linkages that are entirely benign but will in other cases carry the potential to create serious conflicts of interest.” 

NIH also cited a “recent study of the Institute of Medicine (IOM) on Conflict of Interest in Medical Research, Education, and Practice, which stated that, “physicians and researchers must exercise judgment in complex situations that are fraught with uncertainty.” 

Despite citing primarily anti-industry sources, NIH acknowledged that, relationships between industry and academia/physicians “have produced important benefits, particularly through research collaborations that improve individual and public health.”   

NIH also recognized “that translating basic research into clinical application is critical for advancing human health, and this process requires fruitful collaborations among government, academia, and industry.”  Accordingly, NIH emphasized that the final rule is not “designed to prevent or hinder relationships among government, academia, and industry. Rather, the revisions are aimed at facilitating such relationships by increasing transparency and accountability so that the resulting research is considered objective and in the interest of the public.” 

NIH also acknowledged the limitations of the research cited above. Nevertheless, NIH provided no evidence to support its reasoning and rationale and instead, only pointed to “increased public concern evidenced by statements and correspondence from members of Congress” and maintained that, “widespread relationships with industry have created significant risks that individual and institutional financial interests may unduly influence professionals’ judgments about the primary interests or goals of medicine.” 

Accordingly, NIH claimed that, “such conflicts of interest threaten the integrity of scientific investigations, the objectivity of medical education, and the quality of patient care.” 

Notice of Proposed Rulemaking (NPRM) 

A number of factors led to HHS deciding to explore the need to revise the 1995 regulations, including the growing complexity of biomedical and behavioral research; the increased interaction among Government, research Institutions, and the private sector in attaining common public health goals while meeting public expectations for research integrity; as well as increased public scrutiny. These issues have raised questions as to whether a more rigorous approach to Investigator disclosure, institutional management of financial conflicts, and federal oversight is required. 

HHS published an Advance Notice of Proposed Rulemaking on May 8, 2009. After analyzing public comments, HHS published a Notice of Proposed Rulemaking on May 21, 2010, to amend the 1995 regulations by expanding and adding transparency to Investigators’ disclosure of SFIs, enhancing regulatory compliance and effective institutional oversight and management of Investigators’ financial conflicts of interests, as well as HHS’ compliance oversight.  During the 90 day comment period that ended on August 19, 2010, NIH received 136 unique comments on the NPRM and the Extension Notice. Major changes to the 1995 regulations proposed in the NPRM included: 

• Expanding the scope of the regulations to include SBIR/STTR Phase I applications.
• Amending the definition of SFI to include a de minimis threshold of $5,000 for disclosure that generally applies to payments and/or equity interests as well as any equity interest in non-publicly traded entities.
• Excluding income from government agencies or Institutions of higher education for seminars, lectures, teaching, or service on advisory or review panels.
• Expanding Investigator disclosure requirements to include SFIs that are related to an Investigator’s institutional responsibilities, with Institutions responsible for determining whether a disclosed SFI relates to the research for which PHS funding is sought and constitutes an FCOI.
• Enhancing the information on an FCOI reported by the Institution to the PHS Awarding Component to include the information required under the 1995 regulations plus the value of the financial interest or a statement that a value cannot be readily determined, the nature of the FCOI, a description of how the FCOI relates to PHS-funded research, and key elements of the Institution’s management plan.
• Requiring that before spending funds for PHS-supported research, an Institution must post on a publicly accessible Web site information on SFIs of senior/key personnel that the Institution determines are related to the PHS-funded research and constitute an FCOI. 

FINAL RULE 

The final rule amends the PHS regulations “Responsibility of Applicants for Promoting Objectivity in Research for which PHS Funding is Sought’” (42 C.F.R. Part 50, Subpart F) and ``Responsible Prospective Contractors’’ (45 C.F.R. Part 94).  The purpose of the rule is to “promote objectivity in research by establishing standards that provide a reasonable expectation that the design, conduct, and reporting of research funded under Public Health Service (PHS) grants or cooperative agreements will be free from bias resulting from Investigator financial conflicts of interest. 

The final rule is applicable to each Institution that is applying for, or that receives, PHS research funding by means of a grant or cooperative agreement and, through the implementation of this subpart by the Institution, to each Investigator who is planning to participate in, or is participating in, such research; provided, however, that this subpart does not apply to SBIR Program Phase I applications. 

In those few cases where an individual, rather than an Institution, is applying for, or receives, PHS research funding, PHS Awarding Components will make case-by-case determinations on the steps to be taken, consistent with this subpart, to provide a reasonable expectation that the design, conduct, and reporting of the research will be free from bias resulting from a financial conflict of interest of the individual. 

Definitions 

The final rule changes and clarifies several definitions. 

• Disclosure of significant financial interests means an Investigator’s disclosure of significant financial interests to an Institution. 

NIH intended the term “disclosure” to capture communication from an Investigator to an Institution regarding SFIs, whereas the term “report” captures communication from an Institution to the PHS Awarding Component regarding FCOI. 

• Financial conflict of interest (FCOI) means a significant financial interest that could directly and significantly affect the design, conduct, or reporting of PHS-funded research. The term “significantly” in this context means that the financial interest would have a material effect on the research, which we believe appropriately fulfills the intent of the regulations, i.e., to maintain objectivity in PHS funded research. 

NIH noted that, institutions may include a variety of criteria in the review of Investigators’ SFIs and the determination of whether they constitute an FCOI with the PHS-funded research, including those suggested by respondents. 

• FCOI report means an Institution’s report of a financial conflict of interest to a PHS Awarding Component. 
• Financial interest means anything of monetary value, whether or not the value is readily ascertainable. 
• Institution means any domestic or foreign, public or private, entity or organization (excluding a Federal agency) that is applying for, or that receives, PHS research funding. 
• Institutional responsibilities means an Investigator’s professional responsibilities on behalf of the Institution, and as defined by the Institution in its policy on financial conflicts of interest, which may include for example (but not limited to): activities such as research, research consultation, teaching, professional practice, institutional committee memberships, and service on panels such as Institutional Review Boards or Data and Safety Monitoring Boards. 

NIH noted that, “income from any activity that is related to the Investigator’s institutional responsibilities as defined by the Institution that meets the monetary threshold must be disclosed.” 

• Investigator means the project director or principal Investigator and any other person, regardless of title or position, who is responsible for the design, conduct, or reporting of research funded by the PHS, or proposed for such funding, which may include, for example, collaborators or consultants. 

NIH eliminated the reference to the Investigator’s spouse and dependent children in this definition because they believed such reference was more appropriate to include in the SFI definition, below.

• Manage means taking action to address a financial conflict of interest, which can include reducing or eliminating the financial conflict of interest, to ensure, to the extent possible, that the design, conduct, and reporting of research will be free from bias.

NIH explained that it does “not intend to imply that every FCOI must be eliminated; the goal of the regulations is to ensure appropriate management so as to maintain objectivity of the research.” 

• PD/PI means a project director or principal Investigator of a PHS-funded research project; the PD/PI is included in the definitions of senior/key personnel and Investigator under this subpart. 
• Research means a systematic investigation, study or experiment designed to develop or contribute to generalizable knowledge relating broadly to public health, including behavioral and social-sciences research. The term encompasses basic and applied research (e.g., a published article, book or book chapter) and product development (e.g., a diagnostic test or drug). As used in this subpart, the term includes any such activity for which research funding is available from a PHS Awarding Component through a grant or cooperative agreement, whether authorized under the PHS Act or other statutory authority, such as a research grant, career development award, center grant, individual fellowship award, infrastructure award, institutional training grant, program project, or research resources award. 
• Senior/key personnel means the PD/PI and any other person identified as senior/key personnel by the Institution in the grant application, progress report, or any other report submitted to the PHS by the Institution under this subpart. 

Significant Financial Interest (SFI) 

The final NIH rule states that, Significant financial interest means: 

• A financial interest consisting of one or more of the following interests of the Investigator (and those of the Investigator’s spouse and dependent children) that reasonably appears to be related to the Investigator’s institutional responsibilities: 
• With regard to any publicly traded entity, a significant financial interest exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure and the value of any equity interest in the entity as of the date of disclosure, when aggregated, exceeds $5,000. For purposes of this definition, remuneration includes salary and any payment for services not otherwise identified as salary (e.g., consulting fees, honoraria, paid authorship); equity interest includes any stock, stock option, or other ownership interest, as determined through reference to public prices or other reasonable measures of fair market value; 
• With regard to any non-publicly traded entity, a significant financial interest exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or when the Investigator (or the Investigator’s spouse or dependent children) holds any equity interest (e.g., stock, stock option, or other ownership interest); or 
• Intellectual property rights and interests (e.g., patents, copyrights), upon receipt of income related to such rights and interests. 
• NIH expressed concern that with regard to “paid authorship,” that, “Investigators may have accepted payment from private entities, in return for allowing their names to be used as authors on publications for which they had very limited input”—“ghostwriting.”  Accordingly, NIH explained that, “such activity may be subject to the disclosure and reporting requirements depending on the circumstances of a given case, such as the amount of payment.” 

NIH noted that, to the extent an Investigator receives additional remuneration from an entity after completing an initial SFI disclosure, such remuneration would be subject to the Investigator’s ongoing disclosure obligations assuming the monetary threshold was met or exceeded. 

In addition to disclosing SFIs received in the 12 months preceding the disclosure, Investigators are required to disclose new SFIs to the Institution within 30 days, and if payments received after the initial disclosure give rise to an SFI that is determined to be an FCOI by the institutional official(s), the Institution is required to submit an FCOI report to the PHS Awarding Component. The final rule also includes a requirement for annual updates. 

NIH explained that the $5,000 threshold would apply to equity interests and “payment for services,” which would include salary but not royalties.  NIH noted that, “royalties nevertheless are potentially subject to disclosure, as are other interests related to intellectual property.” Specifically, the threshold of $5,000 applies to any of the following: 

• intellectual property rights (e.g., patents, copyrights)
• royalties from such rights, and
• agreements to share in royalties related to intellectual property rights.  

However, as discussed further below, royalties received by the Investigator from the Institution would still be excluded from the SFI definition if the Investigator is currently employed or otherwise appointed by the Institution. 

Since income related to an intellectual property interest may be received before a patent is issued, NIH noted that, it “would expect institutional policies to require disclosure upon the filing of a patent application or the receipt of income related to the intellectual property rights or interests, whichever is earlier.”  Therefore, NIH explained that, “unlicensed intellectual property that does not generate income is excluded.” Nonetheless, such interests have the potential to become significant and generate income, at which point they would become subject to the regulations. 

NIH noted that Institutions are free to expand upon these requirements in their institutional policies and when considering whether an SFI is an FCOI with regard to the PHS-funded research. 

Travel

Investigators also must disclose the occurrence of any reimbursed or sponsored travel (i.e., that which is paid on behalf of the Investigator and not reimbursed to the Investigator so that the exact monetary value may not be readily available), related to their institutional responsibilities.  

Travel that is reimbursed or sponsored by a federal, state, or local government agency, an Institution of higher education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an Institution of higher education is not subject to this disclosure requirement. 

NIH’s final rule requires that the Institution’s FCOI policy specify the details of this disclosure, which will include, at a minimum: 

• The purpose of the trip
• The identity of the sponsor/organizer
• The destination, and
• The duration  

Although the regulations do not require disclosure of the monetary value of the sponsored or reimbursed travel, in accordance with the Institution’s FCOI policy, the institutional official(s) will determine if further information is needed, including a determination or disclosure of monetary value, in order to determine whether the travel constitutes an FCOI with the PHS-funded research. 

NIH noted that, depending on the source of funding and other circumstances (e.g., destination, duration) of specific travel, the Institution may consider whether that sponsored travel could affect the design, conduct, or reporting of PHS-funded research.

Excluded From “Significant Financial Interest” 

The term significant financial interest does not include the following types of financial interests: 

• Salary
• Royalties, or
• Other remuneration paid by the Institution to the Investigator if the Investigator is currently employed or otherwise appointed by the Institution, including:
  • Intellectual property rights assigned to the Institution and agreements to share in royalties related to such rights;
  • Any ownership interest in the Institution held by the Investigator, if the Institution is a commercial or for-profit organization;
  • Income from investment vehicles, such as mutual funds and retirement accounts, as long as the Investigator does not directly control the investment decisions made in these vehicles;
  • Income from seminars, lectures, or teaching engagements sponsored by a federal, state, or local government agency, an Institution of higher education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an Institution of higher education; or
  • Income from service on advisory committees or review panels for a federal, state, or local government agency, an Institution of higher education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an Institution of higher education. 

NIH noted that if a private organization is acting as a contractor to the federal, state, or local government agency, for the purposes of these regulations, such income is excluded from the definition. 

The 1995 regulations excluded from the SFI definition any ownership interests in the Institution, if the Institution is an applicant under the SBIR Program. As proposed in the NPRM, NIH broadened the exclusion to cover any ownership interests in the Institution if the Institution is a commercial or for-profit organization (whether or not the Institution is an applicant under the SBIR Program). 

A few respondents requested further clarification, of situations in which an Investigator is employed by an Institution and also has equity in a for-profit company. In those cases, his or her equity would only be excluded from disclosure requirements when the for-profit company is the Institution that is applying for, or that receives, the PHS research funding in which the Investigator is participating. 

NIH also clarified that intellectual property rights assigned to the Institution and agreements to share in royalties related to such rights are also excluded from the SFI definition.

NIH provided guidance in the form of Frequently Asked Questions on the NIH Web site recognizing that interests in a pooled fund such as a diversified mutual fund may be sufficiently remote that it would not reasonably be expected to create a conflict of interest for a PHS-funded Investigator.

Small Business Innovation Research (SBIR) Program 

The 1995 regulations were applicable to each Institution that seeks or receives PHS funding for research and, through implementation of the regulations by each Institution, to each Investigator participating in such research. However, the 1995 regulations excluded SBIR/STTR Phase I applications because of the expectation that such applications “are for limited amounts.”  Because the size of these awards has increased since 1995, NIH proposed in the NPRM to include SBIR/STTR Phase I applications in the revised regulations. 

However, in the final rule, NIH determined that this change from the 1995 regulations could create an undue burden.  NIH noted that SBIR/STTR companies are small in size (with the average NIH SBIR/STTR company having approximately 20 employees and many have only 1-3 employees), and these companies tend to be limited in resources. Accordingly, NIH found the argument to be compelling that the investment required to comply with the regulations could create a disproportionate burden on small businesses. 

Responsibilities of Institutions regarding Investigator financial conflicts of interest 

The final rule requires that each institution maintain an up-to-date, written, enforced policy on financial conflicts of interest that complies with this subpart, and make such policy available via a publicly accessible Web site.  If the Institution does not have any current presence on a publicly accessible Web site (and only in those cases), the Institution must make its written policy available to any requestor within five business days of a request. If, however, the Institution acquires a presence on a publicly accessible Web site during the time of the PHS award, the requirement to post the information on that Web site will apply within 30 calendar days. 

If an Institution maintains a policy on financial conflicts of interest that includes standards that are more stringent than this subpart (e.g., that require a more extensive disclosure of financial interests), the Institution must adhere to its policy and must provide FCOI reports regarding identified financial conflicts of interest to the PHS Awarding Component in accordance with the Institution’s own standards and within the timeframe prescribed by this subpart. 

The final rule requires that each institution inform each Investigator of the: 

• Institution’s policy on financial conflicts of interest
• The Investigator’s responsibilities regarding disclosure of significant financial interests, and of these regulations, and
• Require each Investigator to complete training regarding the same prior to engaging in research related to any PHS-funded grant and at least every four years, and immediately when any of the following circumstances apply:
  • The Institution revises its financial conflict of interest policies or procedures in any manner that affects the requirements of Investigators;
  • An Investigator is new to an Institution; or
  • An Institution finds that an Investigator is not in compliance with the Institution’s financial conflict of interest policy or management plan. 

Information and other resources developed by NIH, which will be updated as appropriate, are available as resources for the new regulatory training requirement and can be accessed through the NIH Web site’s Financial Conflict of Interest page at http://grants.nih.gov/grants/policy/coi/. 

If the Institution carries out the PHS-funded research through a subrecipient (e.g., subcontractors or consortium members), the Institution (awardee Institution) must take reasonable steps to ensure that any subrecipient Investigator complies with this subpart by: 

• Incorporating as part of a written agreement with the subrecipient terms that establish whether the financial conflicts of interest policy of the awardee Institution or that of the subrecipient will apply to the subrecipient’s Investigators.  Additional rules about subrecipient’s investigators can be found in the rule.  
• Providing FCOI reports to the PHS Awarding Component regarding all financial conflicts of interest of all subrecipient Investigators consistent with this subpart, i.e., prior to the expenditure of funds and within 60 days of any subsequently identified FCOI. 

The final rule requires that each institution designate an institutional official(s) to solicit and review disclosures of significant financial interests from each Investigator who is planning to participate in, or is participating in, the PHS-funded research. 

The final rule requires that: 

• Each Investigator who is planning to participate in the PHS-funded research disclose to the Institution’s designated official(s) the Investigator’s significant financial interests (and those of the Investigator’s spouse and dependent children) no later than the time of application for PHS-funded research. 
• Each Investigator who is participating in the PHS-funded research to submit an updated disclosure of significant financial interests at least annually, in accordance with the specific time period prescribed by the Institution, during the period of the award. Such disclosure must include any information that was not disclosed initially to the Institution, or in a subsequent disclosure of significant financial interests (e.g., any financial conflict of interest identified on a PHS-funded project that was transferred from another Institution), and must include updated information regarding any previously disclosed significant financial interest (e.g., the updated value of a previously disclosed equity interest) 
• Each Investigator who is participating in the PHS-funded research to submit an updated disclosure of significant financial interests within thirty days of discovering or acquiring (e.g., through purchase, marriage, or inheritance) a new significant financial interest. 

The final rule requires that each institution provide guidelines for the designated institutional official(s) to determine whether an Investigator’s significant financial interest is related to PHS-funded research and, if so related, whether the significant financial interest is a financial conflict of interest. An Investigator’s significant financial interest is related to PHS-funded research when the Institution, through its designated official(s), reasonably determines that the significant financial interest: 

• Could be affected by the PHS-funded research; or
• Is in an entity whose financial interest could be affected by the research.  

The Institution may involve the Investigator in the designated official(s)’s determination of whether a significant financial interest is related to the PHS-funded research. A financial conflict of interest exists when the Institution, through its designated official(s), reasonably determines that the significant financial interest could directly and significantly affect the design, conduct, or reporting of the PHS-funded research. 

The final rule requires that each institution take such actions as necessary to manage financial conflicts of interest, including any financial conflicts of a subrecipient Investigator. Management of an identified financial conflict of interest requires development and implementation of a management plan and, if necessary, a retrospective review and a mitigation report. 

The final rule requires that each institution provide initial and ongoing FCOI reports to the PHS. 

The final rule requires that each institution maintain records relating to all Investigator disclosures of financial interests and the Institution’s review of, and response to, such disclosures (whether or not a disclosure resulted in the Institution’s determination of a financial conflict of interest) and all actions under the Institution’s policy or retrospective review, if applicable, for at least three years from the date the final expenditures report is submitted to the PHS or, where applicable, from other dates specified in 45 CFR 74.53(b) and 92.42 (b) for different situations. 

The final rule requires that each institution establish adequate enforcement mechanisms and provide for employee sanctions or other administrative actions to ensure Investigator compliance as appropriate. 

The final rule requires that each institution to certify, in each application for funding to which this subpart applies, that the Institution:

1.  Has in effect at that Institution an up-to-date, written, and enforced administrative process to identify and manage financial conflicts of interest with respect to all research projects for which funding is sought or received from the PHS; 
2. Must promote and enforce Investigator compliance with this subpart’s requirements including those pertaining to disclosure of significant financial interests; 
3. Must manage financial conflicts of interest and provide initial and ongoing FCOI reports to the PHS Awarding Component consistent with this subpart; 
4. Agrees to make information available, promptly upon request, to the HHS relating to any Investigator disclosure of financial interests and the Institution’s review of, and response to, such disclosure, whether or not the disclosure resulted in the Institution’s determination of a financial conflict of interest; and 
5. Must fully comply with the requirements of this subpart. 

Management and reporting of financial conflicts of interest 

Prior to the Institution’s expenditure of any funds under a PHS-funded research project, the designated official(s) of an Institution must: 

• review all Investigator disclosures of significant financial interests;
• determine whether any significant financial interests relate to PHS-funded research;
• determine whether a financial conflict of interest exists; and, if so,
• develop and implement a management plan that must specify the actions that have been, and must be, taken to manage such financial conflict of interest. 

Examples of conditions or restrictions that might be imposed to manage a financial conflict of interest include, but are not limited to: 

• Public disclosure of FCOI (e.g., when presenting or publishing the research);
• For research projects involving humans, disclosure of FCOI directly to participants;
• Appointment of an independent monitor capable of taking measures to protect the design, conduct, and reporting of the research against bias resulting from the FCOI;
• Modification of the research plan;
• Change of personnel or personnel responsibilities, or disqualification of personnel from participation in all or a portion of the research;
• Reduction or elimination of the financial interest (e.g., sale of an equity interest); or
• Severance of relationships that create financial conflicts 

Whenever, in the course of an ongoing PHS-funded research project, an Investigator who is new to participating in the research project discloses a significant financial interest or an existing Investigator discloses a new significant financial interest to the Institution, the designated official(s) of the Institution must, within 60 days: 

• review the disclosure of the significant financial interest;
• determine whether it is related to PHS-funded research; determine whether a financial conflict of interest exists; and, if so,
• implement, on at least an interim basis, a management plan that must specify the actions that have been, and will be, taken to manage such financial conflict of interest. 

Depending on the nature of the significant financial interest, an Institution may determine that additional interim measures are necessary with regard to the Investigator’s participation in the PHS-funded research project between the date of disclosure and the completion of the Institution’s review. 

Whenever an Institution identifies a significant financial interest that was not disclosed timely by an Investigator or, for whatever reason, was not previously reviewed by the Institution during an ongoing PHS-funded research project (e.g., was not timely reviewed or reported by a subrecipient), the designated official(s) must, within sixty days: review the significant financial interest; determine whether it is related to PHS-funded research; determine whether a financial conflict of interest exists; and, if so: 

• Implement, on at least an interim basis, a management plan that must specify the actions that have been, and will be, taken to manage such financial conflict of interest going forward; 
• In addition, whenever a financial conflict of interest is not identified or managed in a timely manner including failure by the Investigator to disclose a significant financial interest that is determined by the Institution to constitute a financial conflict of interest; failure by the Institution to review or manage such a financial conflict of interest; or failure by the Investigator to comply with a financial conflict of interest management plan, the Institution must, within 120 days of the Institution’s determination of noncompliance, complete a retrospective review of the Investigator’s activities and the PHS-funded research project to determine whether any PHS funded research, or portion thereof, conducted during the time period of the noncompliance, was biased in the design, conduct, or reporting of such research. 

The Institution is required to document the retrospective review; such documentation must include, but not necessarily be limited to, all of the following key elements: 

1. Project number;
2. Project title;
3. PD/PI or contact PD/PI if a multiple PD/PI model is used;
4. Name of the Investigator with the FCOI;
5. Name of the entity with which the Investigator has a financial conflict of interest;
6. Reason(s) for the retrospective review;
7. Detailed methodology used for the retrospective review (e.g., methodology of the review process, composition of the review panel, documents reviewed);
8. Findings of the review; and
9. Conclusions of the review. 

Based on the results of the retrospective review, if appropriate, the Institution must update the previously submitted FCOI report, specifying the actions that will be taken to manage the financial conflict of interest going forward. If bias is found, the Institution is required to notify the PHS Awarding Component promptly and submit a mitigation report to the PHS Awarding Component. 

The mitigation report must include, at a minimum, the key elements documented in the retrospective review above and a description of the impact of the bias on the research project and the Institution's plan of action or actions taken to eliminate or mitigate the effect of the bias (e.g., impact on the research project; extent of harm done, including any qualitative and quantitative data to support any actual or future harm; analysis of whether the research project is salvageable). 

Thereafter, the Institution will submit FCOI reports annually. Depending on the nature of the financial conflict of interest, an Institution may determine that additional interim measures are necessary with regard to the Investigator’s participation in the PHS-funded research project between the date that the financial conflict of interest or the Investigator’s noncompliance is determined and the completion of the Institution’s retrospective review. 

Whenever an Institution implements a management plan pursuant to this subpart, the Institution must monitor Investigator compliance with the management plan on an ongoing basis until the completion of the PHS-funded research project. 

Prior to the Institution’s expenditure of any funds under a PHS-funded research project, the Institution must ensure public accessibility, via a publicly accessible Web site or written response to any requestor within five business days of a request, of information concerning any significant financial interest disclosed to the Institution that meets the following three criteria: 

• The significant financial interest was disclosed and is still held by the senior/key personnel as defined by this subpart; 
• The Institution determines that the significant financial interest is related to the PHS funded research; and 
• The Institution determines that the significant financial interest is a financial conflict of interest. 

The information that the Institution makes available via a publicly accessible Web site or written response to any requestor within five business days of a request, must include, at a minimum, the following: 

• the Investigator’s name;
• the Investigator’s title and role with respect to the research project;
• the name of the entity in which the significant financial interest is held;
• the nature of the significant financial interest; and
• the approximate dollar value of the significant financial interest (dollar ranges are permissible: $0-$4,999; $5,000-9,999; $10,000 - $19,999; amounts between $20,000-$100,000 by increments of $20,000; amounts above $100,000 by increments of $50,000), or a statement that the interest is one whose value cannot be readily determined through reference to public prices or other reasonable measures of fair market value. 

If the Institution uses a publicly accessible Web site, the information that the Institution posts must be updated at least annually. In addition, the Institution must update the Web site within 60 days of the Institution’s receipt or identification of information concerning any additional significant financial interest of the senior/key personnel for the PHS-funded research project that was not previously disclosed, or upon the disclosure of a significant financial interest of senior/key personnel new to the PHS-funded research project, if the Institution determines that the significant financial interest is related to the PHS-funded research and is a financial conflict of interest. 

The Web site must note that the information provided is current as of the date listed and is subject to updates, on at least an annual basis and within 60 days of the Institution’s identification of a new financial conflict of interest. If the Institution responds to written requests for the purposes of this subsection, the Institution will note in its written response that the information provided is current as of the date of the correspondence and is subject to updates, on at least an annual basis and within 60 days of the Institution’s identification of a new financial conflict of interest, which should be requested subsequently by the requestor. 

Information concerning the significant financial interests of an individual must remain available, for responses to written requests or for posting via the Institution’s publicly accessible Web site for at least three years from the date that the information was most recently updated. 

In addition to the types of financial conflicts of interest as defined in this subpart that must be managed pursuant to this section, an Institution may require the management of other financial conflicts of interest in its policy on financial conflicts of interest, as the Institution deems appropriate. 

Reporting of financial conflicts of interest 

Prior to the Institution’s expenditure of any funds under a PHS-funded research project, the Institution must provide to the PHS Awarding Component an FCOI report regarding any Investigator’s significant financial interest found by the Institution to be conflicting and ensure that the Institution has implemented a management plan in accordance with this subpart. In cases in which the Institution identifies a financial conflict of interest and eliminates it prior to the expenditure of PHS-awarded funds, the Institution must not submit an FCOI report to the PHS Awarding Component. 

For any significant financial interest that the Institution identifies as conflicting subsequent to the Institution’s initial FCOI report during an ongoing PHS-funded research project (e.g., upon the participation of an Investigator who is new to the research project), the Institution must provide to the PHS Awarding Component, within sixty days, an FCOI report regarding the financial conflict of interest and ensure that the Institution has implemented a management plan in accordance with this subpart. 

Where such FCOI report involves a significant financial interest that was not disclosed timely by an Investigator or, for whatever reason, was not previously reviewed or managed by the Institution (e.g., was not timely reviewed or reported by a subrecipient), the Institution also is required to complete a retrospective review to determine whether any PHS-funded research, or portion thereof, conducted prior to the identification and management of the financial conflict of interest was biased in the design, conduct, or reporting of such research. Additionally, if bias is found, the Institution is required to notify the PHS Awarding Component promptly and submit a mitigation report to the PHS Awarding Component. 

Any FCOI report must include sufficient information to enable the PHS Awarding Component to understand the nature and extent of the financial conflict, and to assess the appropriateness of the Institution’s management plan. Elements of the FCOI report must include, but are not necessarily limited to the following:

•  Project number;
• PD/PI or Contact PD/PI if a multiple PD/PI model is used;
• Name of the Investigator with the financial conflict of interest;
• Name of the entity with which the Investigator has a financial conflict of interest;
• Nature of the financial interest (e.g., equity, consulting fee, travel reimbursement, honorarium);
• Value of the financial interest (dollar ranges are permissible: $0-$4,999; $5,000-$9,999; $10,000-$19,999; amounts between $20,000-$100,000 by increments of $20,000; amounts above $100,000 by increments of $50,000), or a statement that the interest is one whose value cannot be readily determined through reference to public prices or other reasonable measures of fair market value;
•  A description of how the financial interest relates to the PHS-funded research and the basis for the Institution’s determination that the financial interest conflicts with such research; and
• A description of the key elements of the Institution’s management plan, including:
  • Role and principal duties of the conflicted Investigator in the research project;
  • Conditions of the management plan;
  • How the management plan is designed to safeguard objectivity in the research project;
  • Confirmation of the Investigator’s agreement to the management plan;
  • How the management plan will be monitored to ensure Investigator compliance; and
  • Other information as needed. 

For any financial conflict of interest previously reported by the Institution with regard to an ongoing PHS-funded research project, the Institution must provide to the PHS Awarding Component an annual FCOI report that addresses the status of the financial conflict of interest and any changes to the management plan for the duration of the PHS-funded research project. 

The annual FCOI report must specify whether the financial conflict is still being managed or explain why the financial conflict of interest no longer exists. The Institution must provide annual FCOI reports to the PHS Awarding Component for the duration of the project period (including extensions with or without funds) in the time and manner specified by the PHS Awarding Component. 

In addition to the types of financial conflicts of interest as defined in this subpart that must be reported pursuant to this section, an Institution may require the reporting of other financial conflicts of interest in its policy on financial conflicts of interest, as the Institution deems appropriate. 

Remedies and Enforcement 

If the failure of an Investigator to comply with an Institution’s financial conflicts of interest policy or a financial conflict of interest management plan appears to have biased the design, conduct, or reporting of the PHS-funded research, the Institution must promptly notify the PHS Awarding Component of the corrective action taken or to be taken. The PHS Awarding Component will consider the situation and, as necessary, take appropriate action, or refer the matter to the Institution for further action, which may include directions to the Institution on how to maintain appropriate objectivity in the PHS-funded research project.

PHS may, for example, require Institutions employing such an Investigator to enforce any applicable corrective actions prior to a PHS award or when the transfer of a PHS grant(s) involves such an Investigator.

The PHS Awarding Component and/or HHS may inquire at any time before, during, or after award into any Investigator disclosure of financial interests and the Institution’s review (including any retrospective review) of, and response to, such disclosure, regardless of whether the disclosure resulted in the Institution’s determination of a financial conflict of interest. An Institution is required to submit, or permit on site review of, all records pertinent to compliance with this subpart.

To the extent permitted by law, HHS will maintain the confidentiality of all records of financial interests. On the basis of its review of records or other information that may be available, the PHS Awarding Component may decide that a particular financial conflict of interest will bias the objectivity of the PHS-funded research to such an extent that further corrective action is needed or that the Institution has not managed the financial conflict of interest in accordance with this subpart. The PHS Awarding Component may determine that imposition of special award conditions under 45 CFR 74.14 and 92.12, or suspension of funding or other enforcement action under 45 CFR 74.62 and 92.43, is necessary until the matter is resolved.

In any case in which the HHS determines that a PHS-funded project of clinical research whose purpose is to evaluate the safety or effectiveness of a drug, medical device, or treatment has been designed, conducted, or reported by an Investigator with a financial conflict of interest that was not managed or reported by the Institution as required by this subpart, the Institution must require the Investigator involved to disclose the financial conflict of interest in each public presentation of the results of the research and to request an addendum to previously published presentations.

Consistent with the NPRM, we have also revised this section to clarify that if an Institution’s policy on FCOI includes standards that are more stringent than the regulations, the Institution must adhere to its policy and must provide FCOI reports regarding identified FCOI to the PHS Awarding Component in accordance with the Institution’s own standards within the time periods required in the regulations.

Although the regulations do not specify a standardized federal reporting form, as suggested by one respondent, the regulations identify necessary elements of the report (e.g., 42 CFR 50.605(b)(3) and 45 CFR 94.5(b)(3)), and NIH provides a framework for reporting those elements through its online reporting system.

Regulatory Impact Analysis

NIH asserted that the cost of implementing the amended regulations is an allowable cost that may be eligible for reimbursement as a Facilities and Administrative cost on PHS-supported grants, cooperative agreements and contracts. However, NIH also recognized that “in some instances, current cost principles may limit an Institution’s ability to recover costs under the Facilities and Administrative cost mechanism.”

Discussion

These rules will be especially burdensome on small to midsized medical schools, and grant recipient hospitals.    NIH admits that in “some instances institutions will not be able to recover costs".  This is one more example of the federal government setting up significant unfunded requirements that will necessitate additional training, and countless hours of staff time at a time when they are under resourced.    

In their preamble NIH states that “these rules are not designed to prevent or hinder relationships among government, academia and industry”.  Though it objectively hard to see how compliance to these rules won’t hinder that relationship

It is unclear from reading these rules that NIH has an expectation of public health benefit with the exception of increased transparency (providing “congress” with more information) and oversight.  Will this decrease the cost of new medicines and time that a treatment will get to waiting patients or it will have the opposite effect? 

There has been a cry that there is no website reporting requirement from those who want to end all relationships with industry and research.  It is hard to understand where they are coming from.  These rules will create more administrative and bureaucratic positions for those who make their livelihoods on conflict of interest regulations.    It shows the true colors of those calling for restrictions and that it has nothing to do with improving patient’s lives.   

The collection of this information is not in itself bad.  The problem is those who have received financial information on researchers in the past have distorted it in the press to promote their own personal agendas.

 Rules like these only accelerate the movement of research from the US to places like China, India and Europe, where they are not putting restrictions and feel the need to reveal everything about everyone.  These economies understand that financial interests are not necessarily conflicts and focus on bringing more treatments, jobs and cures to their countries.  A lesson we will look back at and wonder what spell had we come under to get us to adopt such rules and run out our best and brightest.