[Federal Register Volume 60, Number 132 (Tuesday, July 11, 1995)]
[Rules and Regulations]
[Pages 35810-35819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16799]




[[Page 35809]]

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Part III





Department of Health and Human Services





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Public Health Service



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Office of the Secretary



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National Science Foundation





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42 CFR Part 50



45 CFR Part 64



Objectivity in Research; Investigatory Financial Disclosure Policy; 
Final Rule and Notice

  Federal Register / Vol. 60, No. 132 / Tuesday, July 11, 1995 / Rules 
and Regulations  

[[Page 35810]]


DEPARTMENT OF HEALTH AND HUMAN SERVICES

Public Health Service

42 CFR Part 50

Office of the Secretary

45 CFR Part 94

RIN 0905-AE01


Objectivity in Research

AGENCY: Public Health Service and Office of the Secretary, HHS.

ACTION: Final rule.

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SUMMARY: The Public Health Service (PHS) and the Office of the 
Secretary, HHS, are promulgating regulations establishing standards and 
procedures to be followed by institutions that apply for research 
funding from the PHS to ensure that the design, conduct, or reporting 
of research funded under PHS grants, cooperative agreements or 
contracts will not be biased by any conflicting financial interest of 
those investigators responsible for the research.
    Under the rules, investigators are required to disclose to an 
official(s) designated by the institution a listing of Significant 
Financial Interests (and those of his/her spouse and dependent 
children) that would reasonably appear to be affected by the research 
proposed for funding by the PHS. The institutional official(s) will 
review those disclosures and determine whether any of the reported 
financial interests could directly and significantly affect the design, 
conduct, or reporting of the research and, if so, the institution must, 
prior to any expenditure of awarded funds, report the existence of such 
conflicting interests to the PHS Awarding Component and act to protect 
PHS-funded research from bias due to the conflict of interest.

EFFECTIVE DATE: October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Dr. George J. Galasso, Associate 
Director for Extramural Affairs, National Institutes of Health, 
Building 1, Room 552, 9000 Rockville Pike, MSC 0154, Bethesda, MD 
20892-0154. The telephone number is (301) 496-5356 (this is not a toll-
free number).

SUPPLEMENTARY INFORMATION: On June 28, 1994 the Department of Health 
and Human Services (HHS) published proposed regulations (59 FR 33242) 
to ensure that PHS-funded research would not be compromised by 
financial interests of investigators that could be reasonably expected 
to bias the design, conduct or reporting of the research. In addition 
to setting forth proposed rules requiring institutional procedures for 
the disclosure and management, reduction or elimination of Significant 
Financial Interests that would reasonably appear to be directly and 
significantly affected by the research funded by PHS, or proposed for 
funding, the Notice of Proposed Rulemaking (NPRM) raised several 
specific questions about alternatives for implementing the pertinent 
statutes and for ensuring that PHS-funded research is not compromised 
by any financial conflicts of interest.
    The NPRM was published in the Federal Register at the same time the 
National Science Foundation (NSF) published its Investigator Financial 
Disclosure Policy and reflected coordination between the two agencies. 
Since that time, we have continued to work closely with the NSF to 
ensure that the NSF policy and our regulations do not impose disparate 
requirements upon the many institutions that receive funding from both 
agencies. Elsewhere in this separate part in this Federal Register, the 
NSF is issuing changes in its policy necessary to maintain consistency 
with this final rule, and the changes we have made to conform to the 
NSF policy are referenced in the discussion that follows. The agencies 
intend to continue their cooperation by working together to develop 
common guidance, including a set of questions and answers, to help 
institutions implement conflict of interest policies that comply with 
both HHS and NSF requirements.
    During the 60 day comment period that ended on August 28, 1994, the 
PHS received 102 comments on the NPRM. Most of the comments were 
generally supportive of giving the applicant institutions primary 
responsibility for identifying and resolving financial conflicts of 
interest that could directly and significantly affect the PHS-funded 
research. The comments are summarized below under the headings: Changes 
in the NPRM; Comments Not Resulting in Any Changes; and Responses to 
Questions on Alternatives.

Changes in the NPRM

    A summary of the changes made in the regulations as proposed on 
June 28, 1994, follows.
    1. In the section titles, Secs. 50.601, 50.602, 50.605 and several 
other sections,\1\ references to ``Significant Financial Interests'' or 
``Significant Financial Interests of the type described in 
Sec. 50.605,'' have been changed to refer to a conflict of interest or 
conflicting financial interests. This change has been made in response 
to many of the comments. It was pointed out that this change will make 
the HHS regulations consistent with the NSF regulations and that the 
institutions can only manage the conflict, not the financial interests.

    \1\ Only the sections in 42 CFR part 50 are referenced. Similar 
changes have been made in the regulations at 45 CFR part 94 which 
will apply to contracts.
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    2. In response to several comments, the ``Purpose'' sections in the 
grants and the contracts regulations have been rewritten to make them 
more concise and parallel.
    3. A reference to Sec. 50.604(a) has been added to the 
``Applicability'' section. As explained more fully in paragraph 6 
below, this change and the change in Sec. 50.604(a) clarify that the 
regulations apply to Investigators carrying out the PHS-funded research 
for subgrantees or contractors of the awardee institution.
    4. In response to several comments, the definition of 
``Investigator,'' has been amended to delete the phrase ``at the 
Institution.''
    5. The definition of ``Significant Financial Interest'' in 
Sec. 50.603 has been changed in several respects. Clause (i) has been 
split so that ownership interests are now referenced in a new clause 
(ii). Some commenters felt that it was not clear whether the 
requirement that an institution be an applicant under the SBIR program 
modified both ownership interest and salary, royalties or other 
remuneration.
    The exception for financial interests in business enterprises has 
been split to clarify that the per annum measurement applies only to 
salary, royalties or other payments not reasonably expected to exceed 
$10,000 per annum. In addition, the dollar limits have been changed 
from $5,000 to $10,000 and the applicability of the alternative 
measures of $10,000 in value or five percent ownership interest, has 
been clarified. These changes have been made in response to a large 
number of comments stating that the $5,000 limit was too low. A 
majority of those comments indicated that $10,000 would be an 
appropriate figure, particularly since the experience of state 
universities in California, and some other universities, is that 
interests up to this amount do not raise conflict of interest concerns.
    The reference to determining the value of equity interests on the 
basis of public prices or other reasonable measures of fair market 
value was adapted from a similar provision in the proposed FDA rule on 
conflict of interest (59 FR 48708 et seq., September 22, 1994).
    6. Section 50.604(a) has been revised to clarify that the 
Institution must 

[[Page 35811]]
maintain an appropriate written, enforced conflict of interest policy 
(this parallels NSF language) and that the Institution must make 
reasonable efforts to ensure compliance with the regulations by 
Investigators working for subgrantees and contractors, either by 
including those Investigators in the Institution's policy or by 
receiving appropriate assurances from their employers. This latter 
change was recommended in several comments and is consistent with 
current regulations and policies on the applicability of grant terms 
and conditions to subgrantees and contractors.
    7. In response to many comments, paragraph (a)(3) (redesignated as 
paragraph (c)) of Sec. 50.604 has been changed from requiring the 
institution to ``ensure'' that investigators have disclosed all 
Significant Financial Interest to simply ``require'' disclosures by 
each investigator. In addition, in response to several comments and for 
uniformity with the NSF guidelines, this paragraph has been revised to 
require disclosure, by the time an application is submitted to PHS, of 
those Significant Financial Interests attributable to the Investigator 
that would reasonably appear to be affected by the research, including 
interests in entities whose financial interests would reasonably appear 
to be affected by the research. This change eliminates the need to 
cross-reference the description of a conflict interest in 
Sec. 50.605(a). Also, the changes in this section and in 
Secs. 50.604(c) and 50.605(a) will result in a slightly broader 
disclosure by the Investigator than under the NPRM. The institutional 
official(s) will review the disclosures and determine which disclosed 
interests could directly and significantly affect the design, conduct 
or reporting of the research, necessitating the management, reduction 
or elimination of the conflict of interest. In addition, in response to 
a significant number of comments, the reference to ``pendency'' of the 
award has been changed to ``period'' of the award.
    Paragraph (a)(5) of Sec. 50.604 (redesignated as paragraph (e)) has 
been changed to delete the requirement that records be identifiable to 
each award, and to refer to the applicable retention requirements in 
the HHS grants administration regulations. The former change has been 
made for conformity with the NSF policy, and the latter change 
clarifies that the recordkeeping requirements of these regulations are 
intended to be consistent with the HHS grants administration 
regulations. The change in paragraph (f) of Sec. 50.604 (formerly 
paragraph (a)(6)) has also been made for conformity with the NSF 
policy.
    8. In response to many comments, Sec. 50.604(a)(7)(ii), now 
redesignated as (g)(2), has been revised to reduce the burden on 
institutions and ensure that the application does not have to state 
whether a conflict of interest has been found. Rather, the provision 
now requires the applicant to certify that action will be taken, prior 
to the institution's expenditure of any funds under the award, to 
report to the PHS awarding component the existence of a conflicting 
interest and assure that the interest has been managed, reduced or 
eliminated in accordance with the regulations. The commentors felt that 
review of an application would be biased if the application indicated 
there was a conflict of interest and that, in any case, it would not be 
feasible for an institution to review the disclosed financial interests 
and determine whether a conflict of interest was present in the limited 
time available prior to submission of the application.
    In addition, the previous Sec. 50.604(a)(8)(i) has been 
incorporated into Sec. 50.604(g)(2) with minor changes. Many commentors 
felt that the 60 day period for management of a conflict of interest 
found after the award should be doubled. However, the 60 day period 
does not seem unreasonable, since we have clarified that it is measured 
from the time the institution identifies the conflict of interest and 
that only interim action is required by the end of the 60 day period. 
As stated in the NPRM, section 493A of the PHS Act imposes a continuing 
obligation on awardees to identify conflicts of interest in clinical 
research projects and report their management, reduction or 
elimination. This and other statutory requirements for clinical 
research have been applied to all PHS-funded research in order to avoid 
confusion and provide for uniform PHS reporting requirements. We would 
not expect this reporting requirement to be burdensome, as only a few 
conflicts of interest are likely to be identified after the award.
    Section 50.604(a)(8)(ii) has been incorporated into Sec. 50.606(b), 
because the review of records referenced in the former section is 
directly related to the inquiry into actions regarding conflicts of 
interest addressed in the latter section. Section 50.604(a)(8)(iii) has 
been deleted as duplicative of the statement in the definition of 
``Significant Financial Interest'' (Sec. 50.603), that salary, 
royalties or other remuneration from the institution is not considered 
a Significant Financial Interest. Under current regulations and 
policies governing applications for PHS research grants, if the 
applicant receives non-PHS grant support for the same project to be 
supported by the PHS award, the grant must be listed in the ``Other 
Support'' section of the application for PHS support.
    9. Section 50.605(a) has been revised to clarify that the 
institutional official(s) must identify and manage, reduce or eliminate 
any conflicts of interest. Consistent with the language in the NSF 
guidelines, this provision states that a conflict of interest exists 
when the designated official(s) reasonably determines that a 
Significant Financial Interest could directly and significantly affect 
the design, conduct, or reporting of the PHS-funded research. As noted 
above in the discussion of the changes to Sec. 50.604(c), Investigators 
must disclose those Significant Financial Interests that would 
reasonably appear to be affected by the research and the institutional 
official must decide which of those interests are conflicting under the 
standard prescribed in Sec. 50.605(a). This change is intended to more 
clearly define and limit the types of financial interests that must be 
managed, reduced or eliminated because they are considered to be 
conflicting interests.
    In response to a few comments, the clause introducing the examples 
of methods for managing, reducing or eliminating conflicts has been 
clarified by adding after ``include,'' the phrase ``but are not limited 
to.''
    10. In Sec. 50.606, the first sentence has been deleted because it 
essentially duplicated the provision in proposed Sec. 50.604(a)(6). In 
the next sentence, the term ``employee'' has been changed to the 
defined term ``Investigator'' and, in response to a comment, the phrase 
``or to be taken'' has been added at the end of the sentence. In 
addition, paragraph (b) has been rewritten to incorporate 
Sec. 50.604(b), because the two provisions were somewhat duplicative.
    11. Many commentors were concerned about what they considered to be 
a significant underestimation of the annual reporting and recordkeeping 
burden. In response, burdens have been further reduced by raising the 
dollar threshold for financial interests that are considered 
Significant Financial Interests subject to the regulations, and by 
amending Sec. 50.604(g)(2) to require the reporting of a conflict of 
interest and its management, reduction or elimination only after an 
award has been made (but before any expenditure of funds). In addition, 
the estimated annual reporting and record keeping burden has been 
recalculated in light of these changes and the public comments.
    12. Many commentors urged uniformity with the NSF guidelines, but 

[[Page 35812]]
    indicated the pursuit of that end should not interfere with necessary 
changes to the NPRM . As noted above, many of the changes result in 
greater uniformity between these regulations and the NSF guidelines. 
The few remaining differences between these regulations and the NSF 
guidelines are based upon requirements in section 493A of the PHS Act, 
42 U.S.C. 289b-1, and differences between the grant programs and 
experiences under those programs.
    The effective date for these regulations, October 1, 1995, is the 
same as the effective date for the NSF guidelines. Although some 
commentors felt that a longer lead time would be necessary to enable 
institutions to prepare for implementation of the regulations, we 
believe the time period provided is ample, particularly because 
institutions have had since June 28, 1994, to prepare for 
implementation of the similar provisions of the NSF guidelines and 
because many institutions already have conflict of interest procedures.

Comments Not Resulting in Any Changes

1. Title

    Two commentors felt that the title of the regulations should be 
changed to focus upon investigator financial disclosure or conflict of 
interest. These are not inappropriate titles, but we have chosen to 
focus the title upon the desired outcome of the review of investigator 
financial disclosures, that is, objectivity in the design, conduct and 
reporting of the research.

2. Section 50.602 Applicability

    Several commentors recommended that the regulations be limited to 
clinical research. As explained in the preamble to the NPRM, experience 
indicates that financial conflicts of interest can arise in all types 
of research. It is expected that the risk of a conflict of interest 
will be higher in clinical research than in other types of research, 
but we have concluded that the latter risk is sufficiently likely that 
pertinent financial interests should be disclosed and reviewed.
    In response to a specific request for comments on the NSF exemption 
from its conflict of interest policy for grantees employing fifty 
persons or less, it was generally agreed by those responding that PHS-
funded investigators working for small entities may be just as subject 
to conflicts of interest as investigators working at large 
institutions. This view is consistent with the PHS experience referred 
to in the preamble of the NPRM. The NSF experience has differed, 
apparently because of the differences between the research funding that 
is provided to small entities by HHS and NSF.

3. Section 50.603 Definitions

    Investigator. There were diverse comments on the definition of the 
term, ``Investigator.'' Although one commentor supported the approach 
of the NPRM of leaving it to the institutions to determine who are 
persons ``responsible for the design, conduct, or reporting'' of the 
PHS funded research, others felt that the definition should offer more 
guidance on who would fall within that category. It was recommended 
that the term be limited to Principal Investigators, Co-Principal 
Investigators, and faculty collaborators and that students and 
technical staff be excluded. It was also recommended that 
administrators be excluded by limiting the definition to the 
``scientific design'' of the research. The definition of Investigator 
has not been changed, except for deleting the phrase ``at the 
institution,'' as explained above. The degree to which individuals are 
responsible for the design, conduct, or reporting of the PHS-funded 
research will vary. In some circumstances students, technical personnel 
and administrators may not be ``responsible,'' but in other 
circumstances, they may be, in that they are given responsibility for a 
task that could have a significant effect on the design, conduct or 
reporting of the research. Based on their knowledge of the specific 
circumstances, we believe the institutions are in the best position to 
determine who is responsible for the design, conduct or reporting of 
the research to such a degree that his/her financial interests should 
be reviewed.
    Significant Financial Interest. As noted above, the public comments 
led to several changes in this definition. There were a number of other 
detailed comments that were not adopted, primarily because they would 
have: Complicated the definition and its application (e.g., have 
different threshold levels for publicly traded equity interests and 
those not so traded, differentiate between large and small companies, 
and adopt criteria for determining reasonably anticipated future 
value); led to a long, cumbersome list of additional exclusions (e.g., 
exclude copyright that is not licensable, mutual funds, pensions, and 
reimbursement for expenses); or were based upon a misunderstanding of 
the definition and its effect (some apparently did not understand that 
any remuneration an investigator receives from the applicant 
institution was excluded). Some commentors questioned the exclusion of 
ownership interests in SBIR applicants. No change has been made in 
response to that comment because we believe such ownership interests 
are apparent to PHS funding agencies based on the application. 
Furthermore, the exclusion does not prohibit institutions from adopting 
more rigorous standards, if they wish to do so.
    The definition of Significant Financial Interest alone does not 
delineate what the investigator must disclose or what the institution 
must manage, reduce or eliminate. The Investigator must consider all 
Significant Financial Interests, but need disclose only those that 
would reasonably appear to be affected by the research proposed for 
funding by the PHS, including the Investigator's financial interest in 
entities whose interests would be affected. Following this disclosure, 
the institutional official must determine, on the basis of the 
regulatory standard, whether there are conflicting interests that need 
to be managed, reduced, or eliminated. We think it is appropriate to 
have a relatively broad range of financial interests considered by the 
Investigator in making his/her determination of those that must be 
disclosed. In this manner, broad consideration of possibly conflicting 
interests is assured with minimal burdens, since only a limited number 
of interests need to be disclosed and an even smaller number will need 
to be managed, reduced or eliminated.
    There were a number of comments recommending different thresholds 
than those that were adopted, including a threshold adjusted for 
inflation. The threshold amounts adopted were recommended in many 
comments and seem to represent a reasonable balance between the need to 
consider a broad range of financial interests and the burdens imposed 
upon the investigators and the institutions.
4. Section 50.604

    Many commented that the requirement for updating financial 
disclosures (in Sec. 50.604(c) of these regulations) needed to be 
clarified. The provision, which has not been changed, except for a 
minor word change, states that financial disclosures must be updated 
during the period of the award, either on an annual basis or as new 
reportable Significant Financial Interests are obtained. We believe 
this language is reasonably clear in conveying that the institutions 
have the option of adopting either of two methods for investigators to 
report changes in financial interests during the 

[[Page 35813]]
period of the PHS award: reporting on an annual basis any changes in 
the previously reported financial interests; or requiring investigators 
to update disclosures as new reportable Significant Financial Interests 
are obtained. An annual reporting requirement would serve as a reminder 
for investigators to review their prior disclosures, but it might be 
burdensome if in fact there are no changes and it could result in 
delayed reporting as compared to the alternative. This burden would be 
eliminated by the other reporting alternative, but there would be no 
annual reminder to investigators to review and update their 
disclosures. The weighing of these factors and the decision are left to 
the institutions. The reference to ``new reportable Significant 
Financial Interests'' is intended to include financial interests that 
become reportable due to an increase in value that meets the reporting 
threshold, as well as the acquisition of new interests that are 
reportable. Of course, both types of interests are subject to 
disclosure by the investigator only if they meet the criteria in 
Sec. 50.604(c).
    It was recommended that the requirement in Sec. 50.604(g)(2) for 
the reporting to the PHS Awarding Component of the existence of a 
conflicting interest be changed to conform with the NSF approach that 
requires such reporting only ``if the institution finds that it is 
unable to satisfactorily manage an actual or potential conflict of 
interest.'' As stated in the NPRM, section 493A of the Public Health 
Service Act requires that institutions report conflicting interests for 
clinical research projects. To avoid disparate requirements for 
clinical and nonclinical research, the regulations apply this reporting 
requirement to all PHS-funded research.

5. Section 50.606

    One commentor felt that the notification required in paragraph (a) 
should go to HHS, rather than to the PHS Awarding Component. Because 
PHS Awarding Components are responsible for the award and have 
delegated authority, it is appropriate for those components to receive 
notifications and to act on them. On the other hand, paragraph (b) 
refers to HHS inquiries into institutional procedures and actions 
because such audit type activities may be conducted by HHS components 
other than the awarding agencies. As is made clear in the definitions, 
the term HHS encompasses all components of the Department, including 
the PHS Awarding Components.
    A number of commentors objected to the requirement for submission 
of records to the HHS, fearing that the confidentiality of such records 
could not be assured. 45 CFR 74.53 already gives the HHS a right of 
access to all records pertinent to grants, which would include the 
records relating to financial conflicts of interest of investigators 
carrying out the PHS-funded research. It is expected that the PHS 
funding agencies will not often require the submission of records or 
retain copies from audits at the institution, but when that occurs the 
records will be maintained confidentially. In addition, although a few 
commentors objected to the reference to suspension of funding pending 
the resolution of a conflicting interest determined by the PHS awarding 
agency as biasing the objectivity of the research, that provision has 
been retained and a reference to the regulatory authority for the 
suspension has been added. Such suspension action would be necessary to 
protect Federal funds only in unusual situations, but we believe 
awardees subject to the regulations should be notified of the potential 
for such action.

Responses to Questions on Alternatives

    The NPRM requested specific comments on the following issues: (1) 
Whether the regulations should address institutional conflicts of 
interest, as well as individual conflicting interests and, if so, how; 
(2) what types of financial interests should be disclosed; (3) whether 
the disclosed financial interests should include financial interests in 
products that would compete with the product or potential product of 
the PHS-funded research; (4) whether an employee's equity or other 
nonsalary financial interests in an applicant institution should be 
excluded from the definition of Significant Financial Interest; and (5) 
whether there should be an exemption for all compensation other than 
that tied to the outcome of the research. Most of the commentors 
addressed at least some of these issues. Those comments are summarized 
below.

Institutional Conflicts

    Those addressing this issue were nearly unanimous in concluding 
that the regulations should not address the institutional conflict of 
interest issue because of the need to carefully consider that issue 
through a separate process. We agree with that conclusion. The comments 
on the alternatives for addressing institutional conflicts of interest 
will be considered separately from this rulemaking.
Competing Products

    Over 30 commentors opposed any requirement for disclosing financial 
interests in entities or products that would compete with the PHS-
funded research. Twelve commentors supported investigator disclosure of 
such competing entities or products, but some felt that the disclosure 
should be limited to those financial interests in competitors or 
competing products known to the investigator. As revised, the 
regulation would not specifically require the disclosure of such 
interests, but, depending upon the circumstances, those interests might 
come within the definition of the financial interests that must be 
disclosed. In clinical research, it is probable that a financial 
interest in a product that competes with the product being evaluated 
could reasonably appear to be affected by the PHS-funded research. Such 
a relationship is much less probable where the PHS funding is for basic 
research.

Types of Financial Interests Disclosed

    Most of the comments on this issue are summarized above in the 
discussion of comments on the definition of Significant Financial 
Interests and on the financial interest that must be disclosed. The 
financial interests to be disclosed must be known to the investigator 
and determined by him/her to be a financial interest that would 
reasonably appear to be affected by the PHS-funded research or to be a 
financial interest in an entity whose financial interest would 
reasonably appear to be affected by the research. This criterion would, 
in most cases, require that the financial disclosure be relevant to 
biomedical research or health care, as was recommended by one 
commentor, but the disclosure would not necessarily be limited to those 
fields, because other types of financial interests could reasonably 
appear to be affected by the PHS-funded research.

Exclusion of Financial Interests

    There were few specific comments on the questions relating to the 
exclusion from the definition of Significant Financial Interest of 
equity interests in, or compensation from, the applicant institution. 
The general comments on the definition emphasized the need for limiting 
disclosures to financial interests related to the research proposed for 
PHS funding. We are retaining the exclusion for all remuneration paid 
to an investigator by an applicant institution and the exclusion of any 
ownership interest in the applicant institution if it is an 

[[Page 35814]]
applicant under the SBIR or STTR program. We have not expanded the 
exclusion for ownership interests to encompass all institutions, 
because we believe there may be situations in which an ownership 
interest in a for-profit applicant could be in conflict with the 
investigator's responsibility for the conduct of the PHS-funded 
research and that ownership interest should be subject to appropriate 
institutional review. Experience under the regulations may prove this 
reasoning to be incorrect. If so, we will consider appropriate 
amendments to the regulations.

Regulatory Impact

    The Department has concluded that this rule is not economically 
significant under Executive Order 12866 and that it thus does not 
require the development of a comprehensive benefit-cost analysis. While 
we agree with comments received that the initial estimate of 
implementation costs was low, none of these comments indicated that the 
costs would exceed $100 million annually; in addition, changes made in 
the final regulations will reduce implementation costs. Commentors did 
not provide any evidence that the rule will hamper desirable research 
or otherwise have an adverse effect on the conduct of research under 
PHS-funded grants or on the consequent technological progress that is 
so important to the Nation's economy.
    Executive Order 12866 requires that the Office of Management and 
Budget (OMB) review all regulations that may create a serious 
inconsistency with or otherwise interfere with an action taken or 
planned by another Federal agency. This rule was thus reviewed by OMB 
and coordinated with the policy of the NSF on this subject (see the 
notice of technical changes in NSF policy published elsewhere in this 
separate part of this Federal Register.
    The Department prepares a regulatory flexibility analysis, in 
accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 
chapter 6), if a rule is expected to have a significant impact on a 
substantial number of small entities. Although we have not followed the 
NSF approach of exempting entities with 50 or fewer employees, we have 
concluded that the regulation will not have a significant impact on 
small entities. Any such effect is mitigated by the provisions of the 
regulations and the fact that the regulations impose obligations 
primarily on those receiving grants that can be used, in part (amounts 
for indirect costs), to offset the costs of compliance with the 
regulatory requirements. The regulations do not apply to SBIR and STTR 
Phase I applications. These programs are for small businesses and the 
Phase I grants are for limited amounts. Phase II grants are for larger 
amounts and thus more funds would be available for meeting the costs of 
compliance. Furthermore, we have changed the regulations to reduce 
burdens and costs of compliance for all entities subject to the 
regulations by eliminating more financial interests from consideration 
and by reducing burdens upon institutions through changes in the 
certification requirements. Institutions do not have to take action to 
identify, report and manage conflicting interests until after being 
notified by the PHS Awarding Agency of its decision to award funds.
    For the same reasons, this rule will not create an unfunded mandate 
on State-owned institutions and thus would not trigger the requirements 
of Executive Order 12875 on ``Enhancing the Intergovernmental 
Partnership.'' The proposed rule has been changed to significantly 
reduce burdens on institutions and, as noted above, institutions will 
be able to use amounts awarded for indirect costs to meet the costs of 
implementing the regulations.
Paperwork Reduction Act

    The final rules contain information collection requirements that 
are subject to review by OMB under the Paperwork Reduction Act of 1980. 
The title, description, and respondent description applicable to the 
information collection are shown below with an estimate of the annual 
reporting and recordkeeping burden. These estimates have been revised 
in light of the comments on the proposed rules and the changes in the 
regulations. Consistent with the comments and a thorough consideration 
of the potential burdens imposed by the reporting, recordkeeping and 
disclosure requirements of the regulations, the statement of the burden 
has been reduced from that stated in the NPRM, based upon changes in 
the regulations that will significantly reduce the burdens on 
institutions and upon more accurate estimates of the burdens imposed by 
specific requirements.
    The mean hours per response for initial reports of conflicts of 
interest have been significantly increased to account for the review by 
the institution of all the financial disclosures relating to an award. 
Although not more than 200 reports of conflicts of interest are 
expected, the institutions will need to review all financial 
disclosures associated with PHS funding awards to determine whether or 
not any conflicts of interest exist. Thus, the total burden of 16,000 
hours is based on estimates that it will take, on the average, four-
fifths of an hour to review each of the 20,000 financial disclosures 
associated with PHS funding awards. If the number of disclosures is 
reduced because of the increase in the amount of the threshold for 
significance, the burden may be an overestimate.
    The burden for subsequent reports of conflicts (made during the 
twelve month period after the initial report) is significantly less, 
because we do not expect many additional reportable conflicts and there 
will be only a limited number of disclosures to review.
    We have significantly reduced the respondent number for reporting 
that failure of an investigator to comply with the institution's 
conflict of interest policy has biased the design, conduct or reporting 
of the research (Sec. 50.606(a)). We have estimated there will be no 
more than five such instances and we think that is a generous estimate.
    For recordkeeping, we have listed the number of files expected to 
be necessary, rather than the number of institutions, because it will 
result in a more accurate estimation. The 20,000 figure is based upon 
35,000 awards annually, reduced to account for those investigators who 
will not have any disclosures (no files are required to be established) 
and those investigators with more than one award. We have estimated it 
will take four hours, on the average, for the establishment and 
maintenance of each file. Although we believe this to be a very 
generous estimate, we note that it will include the time of both 
administrative and clerical personnel.
    The burden figures for informing each investigator of the 
institution's policy are based upon 2,000 recipient institutions and 20 
hours for the performance of this function. This time burden could be 
reduced even further if institutions choose to inform investigators 
through a notice in the grant application procedures. This method of 
notification would be acceptable because the regulations do not specify 
the method of notification.
    The financial disclosures burden estimate (Sec. 50.604(c)) is based 
upon an investigator figure of 35,000 with an average response time of 
one hour. We believe experience may show that the number of disclosures 
will be significantly less because of the increases in the reporting 
threshold. Note that we have not attempted to calculate the overall 
hours spent by the institution to establish the necessary 
administrative mechanisms to comply with the regulations. The estimates 
are for burdens imposed by disclosure, 

[[Page 35815]]
reporting and recordkeeping requirements, not all activities of an 
institution that may result from the regulations.
    Title: Responsibility of Applicants for Promoting Objectivity in 
Research for which Public Health Service (PHS) Funding is Sought.
    Description: The regulations would require each applicant/offeror 
Institution to establish procedures to identify and manage, reduce, or 
eliminate any conflicting financial interest of an Investigator 
involved in the design, conduct or reporting of the research for which 
PHS funding is sought.
    Description of Respondents: Public and private non-profit 
institutions, small business, and other for-profit organizations and 
investigators working for such institutions, businesses and 
organizations.

                               Estimated Annual Reporting and Recordkeeping Burden                              
----------------------------------------------------------------------------------------------------------------
                                   Applicable                                                                   
     Applicable section of         section of       Total      Mean hours  Total hours  Total hours             
       regulation 42 CFR         regulation 45    number of       per         42 CFR       45 CFR    Total hours
                                      CFR        respondents    response                                        
----------------------------------------------------------------------------------------------------------------
Reporting:                                                                                                      
    50.604(g)(2) (initial       94.4(g)(2)               200         80.0       14,000        2,000       16,000
     report of conflict of                                                                                      
     interest).                                                                                                 
    50.604(g)(2) (subsequent    94.4(g)(2)                30          2.0           54            6           60
     reports of conflict of                                                                                     
     interest).                                                                                                 
    50.606(a).................  94.6(a)                    5         10.0           40           10           50
                                                ----------------------------------------------------------------
      Total...................  ...............  ...........  ...........  ...........  ...........       16,110
Recordkeeping:                                                                                                  
    50.604(e).................  94.4(e)               20,000            4       72,000        8,000       80,000
                                                ----------------------------------------------------------------
      Total...................  ...............  ...........  ...........  ...........  ...........       80,000
Disclosure:                                                                                                     
    50.604(a).................  94.4(a)                2,000         20.0       36,000        4,000       40,000
    50.604(c).................  94.4(c)               35,000            1       31,600        3,400       35,500
                                                ----------------------------------------------------------------
      Total...................  ...............  ...........  ...........  ...........  ...........       75,000
      Total Burden............  ...............  ...........  ...........  ...........  ...........      171,110
----------------------------------------------------------------------------------------------------------------

    In accordance with the requirements of the Paperwork Reduction Act 
of 1980, the Department of Health and Human Services has submitted the 
information collection requirements cited above to OMB for review and 
approval. Organizations and individuals desiring to submit comments on 
the information collection requirements and the estimated burden should 
direct such comments to the information address cited above and to: 
NIH/PHS Desk Officer, Office of Information and Regulatory Affairs, 
OMB, New Executive Office Building, room 10235, 725 17th Street NW., 
Washington, DC 20503.
Catalogue of Federal Domestic Assistance

    The rule will affect all extramural research, research and 
development, and research and development support funded by the Public 
Health Service. Questions about the rule should be directed to Dr. 
George J. Galasso, Associated Director for Extramural Affairs, National 
Institutes of Health, Building 1, Room 552, 9000 Rockville Pike, MSC 
0154, Bethesda, MD 20892-0154. The telephone number is (301) 496-5356 
(this is not a toll-free number).

List of Subjects

42 CFR Part 50

    Grant programs--health; Conflict of interest; Medical research; 
Behavioral, biological, biochemical, psychological and psychiatric 
research.

45 CFR Part 94

    Government procurement.

    Dated: March 13, 1995.
Philip R. Lee,
Assistant Secretary for Health.

    Approved: May 17, 1995.
Donna E. Shalala,
Secretary.

    Accordingly, 42 CFR part 50 and 45 CFR subtitle A are amended as 
set forth below:
    1. Subpart F is added to 42 CFR part 50 to read as follows:
Subpart F--Responsibility of Applicants for Promoting Objectivity in 
Research for Which PHS Funding Is Sought
Sec.
50.601  Purpose.
50.602  Applicability.
50.603  Definitions.
50.604  Institutional responsibility regarding conflicting interests 
of investigators.
50.605  Management of conflicting interests.
50.606  Remedies.
50.607  Other HHS regulations that apply.

    Authority: 42 U.S.C. 216, 289b-1, 299c-3.

Subpart F--Responsibility of Applicants for Promoting Objectivity 
in Research for Which PHS Funding Is Sought


Sec. 50.601  Purpose.

    This subpart promotes objectivity in research by establishing 
standards to ensure there is no reasonable expectation that the design, 
conduct, or reporting of research funded under PHS grants or 
cooperative agreements will be biased by any conflicting financial 
interest of an Investigator.


Sec. 50.602  Applicability.

    This subpart is applicable to each Institution that applies for PHS 
grants or cooperative agreements for research and, through the 
implementation of this subpart by each Institution, to each 
Investigator participating in such research (see Sec. 50.604(a)); 
provided, that this subpart does not apply to SBIR Program Phase I 
applications. In those few cases where an individual, rather than an 
institution, is an applicant for PHS grants or cooperative agreements 
for research, PHS Awarding Components will make case-by-case 
determinations on the steps to be taken to ensure that the design, 
conduct, and reporting of the research will not be biased by any 
conflicting financial interest of the individual.

[[Page 35816]]



Sec. 50.603  Definitions.

    As used in this subpart:
    HHS means the United States Department of Health and Human 
Services, and any components of the Department to which the authority 
involved may be delegated.
    Institution means any domestic or foreign, public or private, 
entity or organization (excluding a Federal agency).
    Investigator means the principal investigator and any other person 
who is responsible for the design, conduct, or reporting of research 
funded by PHS, or proposed for such funding. For purposes of the 
requirements of this subpart relating to financial interests, 
``Investigator'' includes the Investigator's spouse and dependent 
children.
    PHS means the Public Health Service, an operating division of the 
U.S. Department of Health and Human Services, and any components of the 
PHS to which the authority involved may be delegated.
    PHS Awarding Component means the organizational unit of the PHS 
that funds the research that is subject to this subpart.
    Public Health Service Act or PHS Act means the statute codified at 
42 U.S.C. 201 et seq.
    Research means a systematic investigation 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 and product development. 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.
    Significant Financial Interest means anything of monetary value, 
including but not limited to, salary or other payments for services 
(e.g., consulting fees or honoraria); equity interests (e.g., stocks, 
stock options or other ownership interests); and intellectual property 
rights (e.g., patents, copyrights and royalties from such rights). The 
term does not include:
    (1) Salary, royalties, or other remuneration from the applicant 
institution;
    (2) Any ownership interests in the institution, if the institution 
is an applicant under the SBIR Program;
    (3) Income from seminars, lectures, or teaching engagements 
sponsored by public or nonprofit entities;
    (4) Income from service on advisory committees or review panels for 
public or nonprofit entities;
    (5) An equity interest that when aggregated for the Investigator 
and the Investigator's spouse and dependent children, meets both of the 
following tests: Does not exceed $10,000 in value as determined through 
reference to public prices or other reasonable measures of fair market 
value, and does not represent more than a five percent ownership 
interest in any single entity; or
    (6) Salary, royalties or other payments that when aggregated for 
the Investigator and the Investigator's spouse and dependent children 
over the next twelve months, are not expected to exceed $10,000.
    Small Business Innovation Research (SBIR) Program means the 
extramural research program for small business that is established by 
the Awarding Components of the Public Health Service and certain other 
Federal agencies under Pub. L. 97-219, the Small Business Innovation 
Development Act, as amended. For purposes of this subpart, the term 
SBIR Program includes the Small Business Technology Transfer (STTR) 
Program, which was established by Pub. L. 102-564.


Sec. 50.604  Institutional responsibility regarding conflicting 
interests of investigators.

    Each Institution must:
    (a) Maintain an appropriate written, enforced policy on conflict of 
interest that complies with this subpart and inform each Investigator 
of that policy, the Investigator's reporting responsibilities, and of 
these regulations. If the Institution carries out the PHS-funded 
research through subgrantees, contractors, or collaborators, the 
Institution must take reasonable steps to ensure that Investigators 
working for such entities comply with this subpart, either by requiring 
those Investigators to comply with the Institution's policy or by 
requiring the entities to provide assurances to the Institution that 
will enable the Institution to comply with this subpart.
    (b) Designate an institutional official(s) to solicit and review 
financial disclosure statements from each Investigator who is planning 
to participate in PHS-funded research.
    (c)(1) Require that by the time an application is submitted to PHS 
each Investigator who is planning to participate in the PHS-funded 
research has submitted to the designated official(s) a listing of his/
her known Significant Financial Interests (and those of his/her spouse 
and dependent children):
    (i) That would reasonably appear to be affected by the research for 
which PHS funding is sought; and
    (ii) In entities whose financial interests would reasonably appear 
to be affected by the research.
    (2) All financial disclosures must be updated during the period of 
the award, either on an annual basis or as new reportable Significant 
Financial Interests are obtained.
    (d) Provide guidelines consistent with this subpart for the 
designated official(s) to identify conflicting interests and take such 
actions as necessary to ensure that such conflicting interests will be 
managed, reduced, or eliminated.
    (e) Maintain records of all financial disclosures and all actions 
taken by the Institution with respect to each conflicting interest for 
at least three years from the date of submission of the final 
expenditures report or, where applicable, from other dates specified in 
45 CFR 74.53(b) for different situations.
    (f) Establish adequate enforcement mechanisms and provide for 
sanctions where appropriate.
    (g) Certify, in each application for the funding to which this 
subpart applies, that:
    (1) There is an effect at that Institution a written and enforced 
administrative process to identify and manage, reduce or eliminate 
conflicting interests with respect to all research projects for which 
funding is sought from the PHS,
    (2) Prior to the Institution's expenditure of any funds under the 
award, the Institution will report to the PHS Awarding Component the 
existence of a conflicting interest (but not the nature of the interest 
or other details) found by the institution and assure that the interest 
has been managed, reduced or eliminated in accordance with this 
subpart; and, for any interest that the Institution identifies as 
conflicting subsequent to the Institution's initial report under the 
award, the report will be made and the conflicting interest managed, 
reduced, or eliminated, at least on an interim basis, within sixty days 
of that identification;
    (3) The Institution agrees to make information available, upon 
request, to the HHS regarding all conflicting interests identified by 
the Institution and how those interests have been managed, reduced, or 
eliminated to protect the research from bias; and
    (4) The Institution will otherwise comply with this subpart.

[[Page 35817]]



Sec. 50.605  Management of conflicting interests.

    (a) The designated official(s) must: Review all financial 
disclosures; and determine whether a conflict of interest exists and, 
if so, determine what actions should be taken by the institution to 
manage, reduce or eliminate such conflict of interest. A conflict of 
interest exists when the designated official(s) reasonably determines 
that a Significant Financial Interest could directly and significantly 
affect the design, conduct, or reporting of the PHS-funded research. 
Examples of conditions or restrictions that might be imposed to manage 
conflicts of interest include, but are not limited to:
    (1) Public disclosure of significant financial interests;
    (2) Monitoring of research by independent reviewers;
    (3) Modification of the research plan;
    (4) Disqualification from participation in all or a portion of the 
research funded by the PHS;
    (5) Divestiture of significant financial interests; or
    (6) Severance of relationships that create actual or potential 
conflicts.
    (b) In addition to the types of conflicting financial interests 
described in this paragraph that must be managed, reduced, or 
eliminated, an Institution may require the management of other 
conflicting financial interests, as the Institution deems appropriate.


Sec. 50.606  Remedies.

    (a) If the failure of an Investigator to comply with the conflict 
of interest policy of the Institution has 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 funded 
project.
    (b) The HHS may at any time inquire into the Institutional 
procedures and actions regarding conflicting financial interests in 
PHS-funded research, including a requirement for submission of, or 
review on site, 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 and/or other information that may be available, the PHS 
Awarding Component may decide that a particular 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, reduced, or eliminated the conflict of interest in 
accordance with this subpart. The PHS Awarding Component may determine 
that suspension of funding under 45 CFR 74.62 is necessary until the 
matter is resolved.
    (c) 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 conflicting 
interest that was not disclosed or managed as required by this subpart, 
the Institution must require the Investigator(s) involved to disclose 
the conflicting interest in each public presentation of the results of 
the research.
Sec. 50.607  Other HHS regulations that apply.

    Several other regulations and policies apply to this subpart.
    They include, but are not necessarily limited to:

42 CFR Part 50, Subpart D--Public Health Service grant appeals 
procedure
45 CFR Part 16--Procedures of the Departmental Grant Appeals Board
45 CFR Part 74--Uniform Administrative Requirements for Awards and 
Subawards to Institutions of Higher Education, Hospitals, Other Non-
Profit Organizations, and Commercial Organizations; and Certain 
Grants and Agreements with States, Local Governments and Indian 
Tribal Governments
45 CFR Part 76--Government-wide debarment and suspension (non-
procurement)
45 CFR Part 79--Program Fraud Civil Remedies
45 CFR Part 92--Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments

    2. A new part 94 is added to 45 CFR, subtitle A, to read as 
follows:

PART 94--RESPONSIBLE PROSPECTIVE CONTRACTORS

Sec.
94.1  Purpose.
94.2  Applicability.
94.3  Definitions.
94.4  Institutional Responsibility Regarding Conflicting Interests 
of Investigators.
94.5  Management of Conflicting Interests.
94.6  Remedies.

    Authority: 42 U.S.C. 216, 289b-1, 299c-3.


Sec. 94.1  Purpose.

    This part promotes objectivity in research by establishing 
standards to ensure there is no reasonable expectation that the design, 
conduct, or reporting of research to be performed under PHS contracts 
will be biased by any conflicting financial interest of an 
Investigator.


Sec. 94.2  Applicability.

    This part is applicable to each Institution that seeks PHS funding 
for research and, through the implementation of this part, to each 
Investigator who participates in such research (see Sec. 94.4(a)); 
provided that this part does not apply to SBIR Program Phase I 
applications.


Sec. 94.3  Definitions.

    As used in this part:
    Contractor means an entity that provides property or services for 
the direct benefit or use of the Federal Government.
    HHS means the United States Department of Health and Human 
Services, and any components of the Department to which the authority 
involved may be delegated.
    Institution means any public or private entity or organization 
(excluding a Federal agency)
    (1) That submits a proposal for a research contract whether in 
response to a solicitation from the PHS or otherwise, or
    (2) That assumes the legal obligation to carry out the research 
required under the contract.
    Investigator means the principal investigator and any other person 
who is responsible for the design, conduct, or reporting of a research 
project funded by PHS, or proposed for such funding. For purposes of 
the requirements of this part relating to financial interests, 
``Investigator'' includes the Investigator's spouse and dependent 
children.
    PHS means the Public Health Service, an operating division of the 
U.S. Department of Health and Human Services, and any components of the 
PHS to which the authority involved may be delegated.
    Public Health Service Act or PHS Act mean the statute codified at 
42 U.S.C. 201 et seq.
    PHS Awarding Component means an organizational unit of the PHS that 
funds research that is subject to this part.
    Research means a systematic investigation 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 and product development. As used 
in this part, the term includes any such activity for which funding is 
available from a PHS Awarding Component, whether 

[[Page 35818]]
authorized under the PHS Act or other statutory authority.
    Significant Financial Interest means anything of monetary value, 
including but not limited to, salary or other payments for services 
(e.g., consulting fees or honoraria); equity interests (e.g., stocks, 
stock options or other ownership interests); and intellectual property 
rights (e.g., patents copyrights and royalties from such rights). The 
term does not include:
    (1) Salary, royalties, or other remuneration from the applicant 
institution;
    (2) Any ownership interests in the institution, if the institution 
is an applicant under the SBIR program;
    (3) Income from seminars, lectures, or teaching engagements 
sponsored by public or nonprofit entities;
    (4) Income from service on advisory committees or review panels for 
public or nonprofit entities;
    (5) An equity interest that when aggregated for the Investigator 
and the Investigator's spouse and dependent children, meets both of the 
following tests: Does not exceed $10,000 in value as determined through 
reference to public prices or other reasonable measures of fair market 
value, and does not represent more than a five percent ownership 
interest in any single entity; or
    (6) Salary, royalties or other payments that when aggregated for 
the investigator and the investigator's spouse and dependent children 
over the next twelve months, are not reasonably expected to exceed 
$10,000.
    Small Business Innovation Research (SBIR) Program means the 
extramural research program for small business that is established by 
the awarding components of the Public Health Service and certain other 
Federal agencies under Public Law 97-219, the Small Business Innovation 
Development Act, as amended. For purposes of this part, the term SBIR 
Program includes the Small Business Technology Transfer (STTR) Program, 
which was established by Public Law 102-564.


Sec. 94.4  Institutional responsibility regarding conflicting interests 
of investigators.

    Each Institution must:
    (a) Maintain an appropriate written, enforced policy on conflict of 
interest that complies with this part and inform each Investigator of 
that policy, the Investigator's reporting responsibilities, and of 
these regulations. If the Institution carries out the PHS-funded 
research through subcontractors, or collaborators, the Institution must 
take reasonable steps to ensure that Investigators working for such 
entities comply with this part, either by requiring those Investigators 
to comply with the Institution's policy or by requiring the entities to 
provide assurances to the Institution that will enable the Institution 
to comply with this part.
    (b) Designate an institutional official(s) to solicit and review 
financial disclosure statements from each Investigator who is planning 
to participate in PHS-funded research.
    (c)(1) Require that by the time an application is submitted to PHS, 
each Investigator who is planning to participate in the PHS-funded 
research has submitted to the designated official(s) a listing of his/
her known Significant Financial Interests (and those of his/her spouse 
and dependent children):
    (i) that would reasonably appear to be affected by the research for 
which PHS funding is sought; and
    (ii) in entities whose financial interests would reasonably appear 
to be affected by the research.
    (2) All financial disclosures must be updated during the period of 
the award, either on an annual basis or as new reportable Significant 
Financial Interests are obtained.
    (d) Provide guidelines consistent with this part for the designated 
official(s) to identify conflicting interests and take such actions as 
necessary to ensure that such conflicting interests will be managed, 
reduced, or eliminated.
    (e) Maintain records of all financial disclosures and all actions 
taken by the Institution with respect to each conflicting interest for 
three years after final payment or, where applicable, for the other 
time periods specified in 48 CFR part 4, subpart 4.7.
    (f) Establish adequate enforcement mechanisms and provide for 
sanctions where appropriate.
    (g) Certify, in each contract proposal, that:
    (1) there is in effect at that Institution a written and enforced 
administrative process to identify and manage, reduce or eliminate 
conflicting interests with respect to all research projects for which 
funding is sought from the PHS;
    (2) prior to the Institution's expenditure of any funds under the 
award, the Institution will report to the PHS Awarding Component the 
existence of any conflicting interest (but not the nature of the 
interest or other details) found by the Institution and assure that the 
interest has been managed, reduced or eliminated in accordance with 
this part; and, for any interest that the Institution identifies as 
conflicting subsequent to the Institution's initial report under the 
award, the report will be made and the conflicting interest managed, 
reduced, or eliminated, at least on an interim basis, within sixty days 
of that identification.
    (3) the Institution agrees to make information available, upon 
request, to the HHS regarding all conflicting interests identified by 
the Institution and how those interests have been managed, reduced, or 
eliminated to protect the research from bias; and
    (4) the Institution will otherwise comply with this part.


Sec. 94.5  Management of conflicting interests.

    (a) The designated official(s) must: Review all financial 
disclosures; and determine whether a conflict of interest exists, and 
is so, what actions should be taken by the institution to manage, 
reduce, or eliminate such conflict of interest. A conflict of interest 
exists when the designated official(s) reasonably determines that a 
Significant Financial Interest could directly and significantly affect 
the design, conduct, or reporting of the PHS-funded research. Examples 
of conditions or restrictions that might be imposed to manage conflicts 
of interest include, but are not limited to:

(1) Public disclosure of significant financial interests;
(2) Monitoring of the research by independent reviewers;
(3) Modification of the research plan;
(4) Disqualification from participation in all or a portion of the 
research funded by the PHS;
(5) Divestiture of significant financial interests, or;
(6) Severance of relationships that create actual or potential 
conflicts.

    (b) In addition to the types of conflicting financial interests 
described in this paragraph that must be managed, reduced, or 
eliminated, an Institution may require the management of other 
conflicting financial interests, as the Institution deems appropriate.


Sec. 94.6  Remedies.

    (a) If the failure of an Investigator to comply with the conflict 
of interest policy of the Institution has 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 funded 
project.

[[Page 35819]]

    (b) The HHS may at any time inquire into the Institutional 
procedures and actions regarding conflicting financial interests in 
PHS-funded research, including a review of all records pertinent to 
compliance with this part. HHS may require submission of the records or 
review them on site. 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 and/or other information that may be 
available, the PHS Awarding Component may decide that a particular 
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, reduced, or eliminated the 
conflict of interest in accordance with this part. The issuance of a 
Stop Work Order by the Contracting Officer may be necessary until the 
matter is resolved.
    (c) 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 conflicting 
interest that was not disclosed or managed as required by this part, 
the Institution must require disclosure of the conflicting interest in 
each public presentation of the results of the research.

[FR Doc. 95-16799 Filed 7-10-95; 8:45 am]
BILLING CODE 4140-01-M