Contract Accord 15: Personal Conflicts of Interest

Accord Revision Date: November 2019
Page Updated: January 2020

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OVERARCHING PRINCIPLE: OBJECTIVITY IN RESEARCH

The complexities of research and interdependencies among sponsors, researchers, students, administrators, and government to facilitate, conduct, and review research prompt multiple relationships that may create conflicting loyalties or responsibilities for individual researchers. Some of these relationships provide a researcher with a significant financial interest (SFI). (See Side Bar below for more information on SFI.) An SFI that reasonably may cause the researcher to bias their design, conduct, or reporting of research is referred to as a conflict of interest (COI). This Contract Accord is focused on COI caused by relationships between Companies and University researchers that impact research supported in some way by a Company.

The modifiers included in many University COI policies that require reporting and management of COIs are important to this discussion. Significant means that the interest is sufficient to influence or appear to influence opinions, behavior, or actions. Personal means that the interest affects the researcher but is also typically extended to impute the interests of, at least, the researcher’s immediate family to the researcher. Financial means that the interest may cause the researcher to make or lose money. Finally, conflict means that the personal financial interest could cause opinions, behaviors, or actions that bias the research. Note that all SFIs are COIs. The core reason for identification and management of COIs is that personal financial gain can be a motivator for unethical behavior and, if left unchecked, can cause a researcher to bias research to benefit their personal interests. This conflict between promoting personal interests and “doing the right thing” is the essence of COI management.

COIs are a fact of life. They are not prejudged to be good or bad, but knowledge about them allows Companies, administrators, other researchers, research participants, students, and ultimately the public to assess a researcher’s motivations, thereby promoting confidence in the integrity of the research. Relationships between a researcher and a Company that sponsors their research (through financial or other support of the research, such as provision of materials, access to facilities, or Company personnel) may involve a COI. Such relationships include a University researcher’s ownership interest in the Company, an employment or consulting relationship between the researcher and the Company, and the researcher’s role, even if unpaid, as an officer or on an advisory board or board of directors of the Company. These relationships are often beneficial in promoting mutual understanding of each other’s needs and culture and can lead to other kinds of beneficial relationships, such as collaborative or sponsored research, student placements, material transfers, data exchanges, and institutional gifts. In the medical device and pharmaceutical industry, direct clinical evaluation of new technologies by inventors with SFIs related to the invention may present a COI challenge. Yet, the expert opinion, feedback, and involvement of the inventors may be indispensable to the efficient and successful development of the new medical technology. (For additional information about COI, see UIDP Principled Partnerships Guide.)

The situations covered by University COI policies may not be well understood by Companies. Similarly, University researchers may not understand which kinds of relationships Companies would like to know about. Knowledge and management of COI helps to provide a mutual understanding of the University’s and Company’s perspectives about COI. Such awareness helps ensure an environment that promotes faithful attention to high ethical standards for the design, conduct, and reporting of research, education of students, care of patients, and evaluation of technologies.

Side Bar

Most research Universities are familiar with the regulations adopted by the Public Health Service (PHS) called “Responsibility of Applicants for Promoting Objectivity in Research for which PHS Funding is Sought,” codified at 42 CFR Part 50, Subpart F. Excerpts from §50.603 Definitions. appear below:

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.

Financial interest means anything of monetary value, whether or not the value is readily ascertainable.

Significant financial interest means:

(1) 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:

(i) 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;

(ii) 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

(iii) Intellectual property rights and interests (e.g., patents, copyrights), upon receipt of income related to such rights and interests.

(2) 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; provided, however, that this disclosure requirement does not apply to 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. The Institution’s FCOI policy will 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. 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.

(3) 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.

Additional Information on financial conflicts of interest can be found here.

FEDERAL REGULATIONS

Both Universities and Companies proposing or receiving federal research funding are subject to federal regulations that govern the following:

disclosure and management of personal COIs and SFIs;
who must disclose what to whom;
when disclosures must take place;
where and how disclosed information will be maintained; and
whether disclosures are publicly available.

For example, revised federal regulations went into effect regarding the disclosure of SFIs to the Public Health Service (PHS) for federal grants under “Responsibility of Applicants for Promoting Objectivity in Research for which PHS Funding is Sought” and federal contracts under “Responsible Prospective Contractors.”^1,2 Many University foundations and other non-profit organizations have adopted these regulations as the basis of their institutions’ personal COI policies and extended their compliance with these regulations to all grants and sponsored projects. NIH Director Francis Collins described the need for such regulations: “The public trust in what we do is just essential, and we cannot afford to take any chances with the integrity of the research process.”³ Other federal agencies also have COI policies that grantees and contractors should be aware of when accepting funds. [Insert circular image from Principled Partnerships. No caption necessary.]

For Companies, federal disclosure regulations also include Section 6002 of the Affordable Care Act⁴ (ACA, often referred to as “The Sunshine Act”), which creates greater transparency around the financial relationships of manufacturers, physicians, and teaching hospitals by requiring that information be reported annually to the Centers for Medicare & Medicaid Services (CMS). Information required to be reported by applicable manufacturers of covered drugs, devices, biologicals, and medical supplies (those for which payment is available under Medicare) includes payments or other transfers of value made by manufacturers to physicians and teaching hospitals. Applicable manufacturers and applicable group purchasing organizations (GPOs), as defined by the ACA, must report certain ownership or investment interests held by physicians or their immediate family members. Applicable GPOs must also report payments or other transfers of value made to physician owners or investors if they held ownership or an investment interest at any point during the reporting year. CMS collects, aggregates, and publishes the data they receive on a public website.⁵ CMS explains the motivation for this legislation:

“Collaboration among physicians, teaching hospitals, and industry manufacturers can contribute to the design and delivery of life-saving drugs and devices. However, while some collaboration is beneficial, payments from manufacturers to physicians and teaching hospitals can also introduce conflicts of interests.”⁶

INDUSTRY PERSPECTIVE

Companies need to know that a project they are sponsoring and the intellectual property (IP) that is being used, may be developed, or may be licensed as a result is not complicated or undermined by a researcher’s potential SFIs. Companies expect that a University’s policies require disclosure of COIs and that the University has processes in place to implement these policies and manage the COIs appropriately. Companies trust that University researchers are familiar with their institutions’ disclosure requirements and are forthcoming in providing information to the Company. Companies would like access to COI information obtained by the University from researchers. Companies seek to understand how University COI policies apply to it before they commit to sponsoring or collaborating on a project or licensing a technology.

Consulting agreements are probably the most common external relationships of researchers that could prompt concerns for Company sponsors, since consulting agreements often convey IP rights and require protection of confidential information. Researchers who enter into consulting or other agreements in exchange for a personal financial benefit are generally asked to perform services within the area of expertise of their University employment. Consulting agreements with external entities could conceivably impact the researcher’s industry-sponsored research and the resulting IP rights and obligations under the related Sponsored Research Agreement (SRA). Descriptions of services in these consulting agreements should be specific and distinguish the external consulting activities of the researcher from those activities the researcher engages in while conducting the research and acting within the scope of his or her University employment. This separation should be reviewed and managed appropriately by the University to avoid negative impacts on industry-sponsored research. By being proactive, Companies and researchers can further mitigate the risk of creating a COI that may be unmanageable or entering into agreements that, practically speaking, cannot be implemented. Companies that retain researchers as consultants also expect that researchers seek appropriate counsel before entering into consulting agreements to ensure compliance with relevant University policies and further protect the researcher, Company, and potential results and IP outcomes of the consulting arrangement.

Companies can suggest and help with strategies, together with their University collaborators, that mitigate the potential risks posed by external relationships between Companies and researchers who are also conducting related projects in their capacity as a University employee. For example, a risk-reducing and transparent mitigation strategy might include preservation of the researcher’s or inventor’s personal role in technical evaluation research, but under the direct observation of a mutually acceptable independent chaperone. The chaperone would monitor key phases of product research and assessment, such as appropriate patient enrollment, clinical care, appropriate use of students, conduct of research procedures, recording of events and outcomes, and preparation and presentation of academic manuscripts and lectures. In situations where the researcher has an SFI in the sponsoring Company, a researcher may need an independent (peer or higher) University researcher to oversee the administration of the funds to the researcher, or to act as the principal investigator on ongoing research sponsored by the Company to help mitigate the risk of conscious or unconscious bias.

Companies expect that a University’s policies extend to all key personnel involved in a sponsored project or license agreement, including trainees, students, technicians, and University employees responsible for reviewing and approving sponsored projects and licenses. Key personnel refers to those responsible for the design, conduct, and reporting of the research.

When a researcher is also an officer, director, manager, employee, or contractor for an external Company, a fiduciary duty is presumed to exist. Therefore, divided loyalties between that Company and the University may be confusing for a researcher and may be hard to untangle. Universities expect that full-time faculty members’ primary loyalty is to the University, but violation of a fiduciary duty to a Company could cause serious damage to a Company’s IP rights, competitive position, or good will. Companies expect that a researcher understands the significance of a fiduciary duty and that these relationships and obligations are appropriately disclosed to and managed by the University COI office and comport with University policies. Companies expect that researchers engaged in projects are held to at least as high a standard of ethical conduct to which the Company’s employees are held. Companies may wish to include a provision in an SRA or other collaboration agreement requiring that University employees engaged in the project abide by the Company’s COI (or Code of Business Conduct) and ethics policies to the extent that they are not inconsistent with University policies and the researcher’s University employment agreement.⁷

UNIVERSITY PERSPECTIVE

The activities of University researchers are subject to a myriad of federal, state, and local government laws and regulations, the policies of their employing University, and the guidelines, ethics and norms of their individual professional associations. These regulations, laws, and policies describe who must disclose, under what circumstances disclosures are made, when those disclosures are made, to whom disclosure are made, how and when disclosed situations must be managed, public availability of certain disclosed information, and consequences for failure to comply with the disclosure requirements.

Universities’ COI policies presume researchers will maintain a high degree of integrity when participating in entrepreneurial activities that require disclosure by the researcher. Many Universities also encourage researchers to actively participate in entrepreneurial activities, as Universities recognize the inherent value to the University in doing so. COIs are the natural outgrowth of University researchers successfully doing the following:

developing and licensing IP;
being recognized as highly qualified by Companies; and
partnering with—and in some cases establishing—external Companies.

Disclosing an outside activity does not necessarily mean a researcher has a COI. Educating faculty and researchers is critical to avoid discouraging industry-sponsored or collaborative research, consulting, or other beneficial relationships with Companies.

A violation of University COI policy is generally handled as an employment issue as it does not constitute research misconduct as defined by the Department of Health and Human Services,⁸ although undisclosed or unmanaged COIs can make research misconduct more likely. Universities, Companies, and researchers all need to increase their awareness of the risks associated with undisclosed or unmanaged COIs so those issues can be appropriately managed or mitigated, allowing professional and academic integrity to remain intact.

Universities require faculty and staff to disclose external activities that are related to their University employment and duties, including SFIs.⁹ Universities also require disclosure of SFIs in conjunction with a University’s processes for review and approval of proposals to conduct sponsored research prior to acceptance of an award, issuance of a subaward, or granting of a license to University-owned technology. University policies and practices vary on these points across Universities as well as within Universities. For instance, many Universities hold research using human subjects to a more stringent COI standard than other research.

The timing of the researcher’s consulting relationship with a Company sponsor may impact whether or how the potential COI is managed. For example, a researcher may be asked to provide advice to a Company about how the theoretical aspects of their University research might be applied to a particular problem that the Company is facing. The researcher would likely be able to engage in this consulting activity provided that the researcher does not violate confidentiality obligations to the University or to other Companies and that they do not disclose details of unprotected IP or IP licensed to a third party that belongs to the University.

The goal of a University COI review and management system is to ensure that the personal interests of an individual do not unduly influence their primary obligations to science, the University, the Company, colleagues, patients, and students. University COI committees are charged with reviewing disclosures submitted to them and rendering reasonable judgments as to whether the financial interests disclosed could directly and significantly affect the design, conduct, or reporting of the proposed project (or other projects). If a COI is deemed to exist, the COI committee, with suitable consultation and notification, attempts to design an administrative oversight or other needed mechanism to manage the specific conflict situation. Universities use a variety of mechanisms to manage COIs, including requiring the following:

disclosure of financial interest to the public, other research participants, and subjects;
disqualification from participation in all or part of the research;
divestiture of all or part of the SFI;
limiting participation of students or human subjects; and
monitoring or verification of research by independent reviewers.

If the COI is unmanageable, the COI committee will require actions to divorce the research from the SFI causing the COI, such as terminating of the relevant consulting agreement, divesting in related stock, or withdrawing from participating in the related University research project.

When a researcher who is an inventor is involved with a Company that was formed to further develop the invention (often referred to as a “start-up company”), the inventor’s involvement in the start-up company can pose unique challenges for the University, the start-up company, and the inventor. The success of the start-up company may depend on the ongoing participation of the researcher in the further development of the technology, as well as in the promotion of the start-up company to investors and other participants. The University should carefully review and manage any COIs related to the researcher’s participation, financial and fiduciary interests in the start-up company (particularly with respect to use of University facilities), the start-up company’s employment of students, and the time commitment of the researcher. Many Universities have developed policies and procedures for handling COIs stemming from SFIs as well as institutional interests in these start-up companies.

Although much of this discussion has focused on SFIs at the intersection of researchers and Companies, Universities also review and manage COIs that include commitment and supervisory conflicts. In a conflict of commitment, a researcher’s external activities negatively impact or impede the time a researcher is expected to devote to their University research and duties. In a supervisory conflict, a researcher supervises an employee, or a student, who has a financial interest in the same external Company as their supervisor, is a co-inventor on licensed IP, or has launched a start-up company with their supervisor. In all of these circumstances, awareness and education is of paramount importance.

Institutional COIs (ICOIs) are also a concern for Universities that require review and management. In addition to direct ICOIs that arise when the University itself has an interest in a Company that sponsors research or has other involvements with the University, indirect ICOIs include SFIs of a University official with the authority to act on behalf of the University. These SFIs of University officials are managed both as personal COIs and ICOIs when they might affect or reasonably appear to affect institutional processes for the design, conduct, reporting, review, administration, or oversight of research, or oversight of a University unit, students, or employees. ICOIs include the following:

a University’s interest in significant royalties or licensing fees from a Company commercializing University technology (e.g., successful pharmaceutical, device, new process, machine, chemicals) that also sponsors research at the University;
major gifts to a University or the University foundation;
gifts to a subunit of the University where the donor Company is also a sponsor of University research; and
where a Company sponsor of research is also a University vendor.

In all instances, the goal of identifying and managing or eradicating ICOIs is to protect both the University and the Company from even the appearance of bias, as well as to protect the integrity of research outcomes and other University activities and decision making.

Universities do not generally ask about how a particular sponsored project might impact the Company’s competitors. Similarly, while most Universities ask for researchers to disclose outside activities related to the Company sponsoring the research and subcontractors engaged on the project by the University, they might not ask a researcher to disclose relationships they may have with the Company’s competitors. Although Universities would not necessarily know who a Company’s competitors are, provisions in university-industry agreements, such as the statement of work, IP license, or option provisions, and the publication review clauses (if strategically prepared) can allow a Company to assess the effect of these provisions in light of their competitors.

Most University COI policies recognize and enforce some set of general principles that define “good citizenship” for their employees and provide a basis for assessing the impact and scope of a COI. A typical set of these principles might be:

Full-time employees owe their primary loyalty and effort to the University.
Employees should not use their position to benefit self, family, or business associates or to the detriment of the University.
Use of University resources requires explicit agreement and payment.
Intellectual property generated in the performance of an employee’s duties is owned by the University, and appropriate disclosure to the University is expected.
Faculty members are expected to abide by the rules of their own units or departments in addition to University policies, state laws, and federal laws.
Disclosure to supervisors, colleagues, and trainees of outside interests related to one’s work is expected.
A University employee should not disclose or use the University’s confidential information for the benefit of outside entities or interests.
A University employee should not disclose an outside entity’s confidential information to other University employees without appropriate formal agreements.

PRINCIPLES

COI disclosure and management helps to preserve the public trust in the knowledge discovered and disseminated by the University. COI disclosure and management also protect the University, researchers, and Company from the appearance of bias or other forms of undue influence affecting research results.
University researchers must disclose any external SFIs so that conflicts can be appropriately reviewed and managed.
Universities should disclose to the Company if they have identified a COI related to a project.
SFIs of a person’s spouse, significant other, dependent children, and business partners are presumed to affect a person in the same way that their own personal SFIs do and should be appropriately reviewed and managed.
Conflicted persons both in Companies and Universities may be required to recuse themselves from deliberations or decisions that could promote their personal financial benefit, but they also should, at a minimum, disclose their COIs to the other deliberators or decision-makers.
Review and finalization of agreements should be done by objective representatives of both parties as an arm’s length negotiation.
Researchers’ financial and management interests in their own Companies should be disclosed to the sponsors of related research.
Universities should be clear about management of COIs involving University employees acting as consultants and particularly recognize the timing of the consulting agreement with the Company sponsor (i.e., before, during, or after the conduct of the sponsored project).
Agreements should clarify the applicability of University or Company policies, including COI policies, when using faculty on sabbatical or scientific visitors from Companies.
Companies and University researchers should be aware of potential delays and considerations of COI committees that may affect their project.
Companies should respect that University interactions with Companies are not all centrally recorded and that the sponsored projects, tech transfer offices, or the research team may not know all the relationships a University or researcher has with a Company or its competitors.

OUTLIERS

The following topics are not covered in this Contract Accord:

Interplay between foreign influence and COI regulations;
FDA policies regarding investigator and Company responsibilities for COI; and
COI related to service on institutional review boards (IRBs), FDA panels, peer review committees, or advisory boards. (For more information on COI and advisory boards, see UIDP Maximizing the Benefits of Advisory Boards Quick Guide.)

FOOTNOTES

[1] Refers to Public Health Service of the U.S. Department of Health and Human Services, and any components of the PHS to which the authority involved may be delegated, including the National Institutes of Health (NIH).45 USC Part 94, § 94.3

[2] 45 C.F.R. Part 94

[3] http://grants.nih.gov/grants/policy/coi/

[4] 42 CFR Parts 402, 403

[5] Searchable website https://openpaymentsdata.cms.gov/search/physicians/by-name-and-location

[6] Medicare Program Integrity: Screening Out Errors, Fraud, and Abuse, Hearing before the Subcommittee on Oversight & Investigations of the Committee on Energy and Commerce, House of Representatives, 113^th Congress, Second Session, June 25. 23 (2014).

[7] Universities will generally not agree to comply with a Company’s internal COI, Code of Business Conduct, or ethical programs. To do this, University research staff would be subject to widely varying standards and processes in addition to the policies and practices of their University employer. It would be extremely difficult for the University to become sufficiently familiar with such standards for each Company and to monitor select faculty for compliance with the particular standards of the particular Company. Faculty with multiple industry-sponsored projects would be potentially subject to conflicting standards.

[8] https://ori.hhs.gov/definition-misconduct

[9] SFIs of an employee’s spouse, dependent children, and business associates (as this group is defined in the University’s COI policy) are imputed to the employee and also must be disclosed and managed.

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