Federal Agencies Generally Meet Requirements for Disclosure and
Review of Financial Interests Related to Lyme Disease (22-JUN-01,
GAO-01-787R).
Some Lyme disease patients and some of their organizations are
concerned that federal agencies and advisors involved in
decisions regarding the funding of Lyme Disease research and the
approval of products related to Lyme disease may have financial
interests that may affect, the recommendations from Centers for
Disease Control (CDC), funding from National Institutes of Health
(NIH), and approval from Food and Drug Administration (FDA). This
report reviews (1) the financial interests that CDC, NIH, and FDA
employees and members of advisory committees working on Lyme
disease have reported and (2) how these agencies addressed any
potential conflicts of interest identified in those reports. GAO
found that CDC, NIH, and FDA have generally met the requirements
for disclosure and review of financial interests related to Lyme
disease. Employees and Special Government Employees (SGE's)
working on Lyme disease-related activities have reported
financial holdings in, and arrangements with, health sector
firms, travel paid for by health sector firms, and patents
related to Lyme disease. Program officials and agency officials
reviewed the interests of the employees and determined that they
did not present conflicts.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-787R
ACCNO: A01242
TITLE: Federal Agencies Generally Meet Requirements for
Disclosure and Review of Financial Interests Related to Lyme
Disease
DATE: 06/22/2001
SUBJECT: Diseases
Federal funds
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GAO-01-787R
GAO- 01- 787R Lyme Disease Financial Interests
United States General Accounting Office Washington, DC 20548
June 22, 2001 The Honorable Christopher J. Dodd The Honorable Rick Santorum
United States Senate
The Honorable Virgil H. Goode, Jr. The Honorable Joseph R. Pitts The
Honorable Christopher H. Smith House of Representatives
Subject: Federal Agencies Generally Meet Requirements for Disclosure and
Review of Financial Interests Related to Lyme Disease
Some Lyme disease patients and some of their organizations are concerned
that federal employees and advisors involved in decisions regarding the
funding of Lyme disease research and the approval of products related to
Lyme disease may have financial interests in firms that could benefit from
these decisions. Specifically, the patients and their organizations are
concerned that these interests may affect the Centers for Disease Control
and Prevention?s (CDC) recommendations about the diagnosis, treatment, and
prevention of Lyme disease, the National Institutes of Health?s (NIH)
funding of research on the disease, and the Food and Drug Administration?s
(FDA) approval of products related to Lyme disease. For example, they are
concerned that agency officials and advisors involved in FDA?s decision to
approve an application to license a Lyme disease vaccine may have had
financial interests in firms that would benefit from its licensure.
Federal requirements concerning financial conflicts of interest at CDC, NIH,
and FDA are set by laws and regulations, which are implemented in accordance
with the policies of each agency and the Office of Government Ethics (OGE).
1 These requirements generally apply to all agency employees, including
those special government employees (SGE) appointed to federal advisory
committees. 2
You requested that we review (1) the financial interests that CDC, NIH, and
FDA employees and members of advisory committees working on Lyme disease
have reported and (2) how these agencies addressed any potential conflicts
of interest identified in those reports.
1 OGE, an executive branch agency, was established by the Ethics in
Government Act of 1978 (P. L. 95- 521), and established as a separate agency
in 1988. 2 SGEs are temporary or intermittent employees who perform services
with or without compensation.
SGEs serving on advisory committees may advise the agency on actions to be
taken, but program officials make any final decisions.
GAO- 01- 787R Lyme Disease Financial Interests 2 To respond to this request,
we interviewed agency officials and reviewed all financial
disclosure forms of relevant CDC, NIH, and FDA employees and SGEs working on
Lyme disease from fiscal years 1996 through 2000. For purposes of this
review, ?employees? refers to those permanent agency employees working on
Lyme disease in decision- making roles. We confined our review to specific
divisions/ institutes with Lyme disease activities: CDC?s Division of Vector
Borne Infectious Diseases; NIH?s National Institute of Allergy and
Infectious Diseases; and FDA?s Center for Biologics Evaluation and Research.
?SGEs? refers to those temporary employees serving on advisory committees
related to Lyme disease. We included only the SGE voting members attending
specific advisory committee meetings. Our review included an examination of
financial interests, as disclosed on the forms, including holdings, travel
reimbursements, consulting, and income from patents to determine if these
pose potential conflicts. 3 We recorded the number and types of holdings,
but not specific dollar values, as OGE does not require that they be
included in the forms. In addition to disclosure forms, we examined agency
travel records. We identified patents that name CDC, NIH, and FDA employees
currently working on Lyme disease through a review of public patent records,
and we recorded the income received from those patents. We reviewed both the
federal and agency- specific policies, laws, and regulations used by CDC,
NIH, and FDA to monitor and control the influence of outside interests on
decision- making. We also reviewed reports issued by OGE of each agency?s
general compliance with federal ethics requirements. We did not
independently obtain information on the financial interests or travel of the
relevant employees and SGEs. Our work was conducted in accordance with
generally accepted government auditing standards from June 2000 through May
2001.
In summary, we found that CDC, NIH, and FDA have generally met the
requirements for disclosure and review of financial interests related to
Lyme disease. Employees and SGEs working on Lyme disease- related activities
have reported financial holdings in, and arrangements with, health sector
firms, travel paid for by health sector firms, and patents related to Lyme
disease. In general, more SGEs, whose primary employment is elsewhere,
reported financial interests than did employees. Employees of FDA reported
no financial interests in health sector firms. As required, the agencies?
officials have reviewed and cleared the financial interests of employees and
SGEs working on Lyme disease- related activities. Program officials and
agency officials reviewed the interests of the employees and determined that
they did not present conflicts. However, program officials determined that
many of the interests of SGEs who served as advisors did pose potential
conflicts. In every case where a potential conflict was identified, the
program officials submitted a formal waiver request, in accordance with a
statutory provision that allows individuals to serve if the need for their
services outweighs the potential for a conflict of interest. In each
instance, agency officials granted the waivers. OGE has reviewed the
activities of the agencies? ethics offices and said that they generally
comply with applicable statutes and regulations. OGE?s reviews were general
and did not specifically address conflicts of interest related to Lyme
disease.
We provided a draft of this letter to the Department of Health and Human
Services for review. The department stated that it had no comments.
33 We considered interests in a broad range of health sector firms as
potentially posing conflicts for CDC and NIH employees and NIH SGEs because
CDC and NIH research on Lyme disease could affect many pharmaceutical and
biotechnology firms. The reported interests of FDA employees and FDA and CDC
SGEs were considered potentially conflicting if they related to a for-
profit health sector company that is currently regulated as a vaccine
company by FDA, because these individuals had responsibilities related only
to the Lyme disease vaccine.
GAO- 01- 787R Lyme Disease Financial Interests 3
Background
Potential conflicts of interest arise in all government agencies. To limit
the potential conflicts arising from financial relationships, OGE issues
regulations regarding the financial interests of employees and SGEs of the
executive branch in accordance with various laws dealing with conflicts of
interest and agencies may establish policies to implement those
requirements. Under the Ethics in Government Act, executive branch employees
and SGEs are generally required to file a financial disclosure report with
their agency. The disclosure process is intended to make agency officials
aware of the potential conflicts of the employees and SGEs. Potential
conflicts of interest may be particularly likely to occur among SGEs, whose
primary employment is elsewhere, and very likely related to the expertise
qualifying them to be an SGE. All relevant financial interests are to be
reported, which could include financial holdings, salaries, fees, honoraria,
outside positions, income from investments, or other financial agreements,
travel reimbursement, and royalties from personally held patents. 4 See
enclosure I for more information on financial disclosure policies relevant
to employees and SGEs.
Agency officials are required to review each financial disclosure report to
determine whether a financial interest constitutes a potential conflict. A
disqualifying interest may include significant financial holdings by the
employees or SGEs, or their spouse, minor child, or general partner. If such
an interest is identified, the employees or SGEs are prohibited from
participating in the relevant matter, unless they receive a waiver. If no
waiver is granted, they must recuse themselves from the matter or divest
themselves of their financial interest.
SGEs serving on advisory committees may be eligible for a waiver if a
determination is made that the potential for a conflict is outweighed by the
need for the services of the SGE advisor. 5 Program officials request the
waiver, which agency officials may choose to grant. For the advisory
committees relevant to Lyme Disease, CDC?s Executive Secretary of the
Advisory Committee on Immunization Practices requests a waiver from CDC?s
Deputy Ethics Counselor; NIH National Institute of Allergy and Infectious
Diseases? Director of Extramural Activities requests a waiver from the
Institute?s Deputy Ethics Counselor; and FDA?s Chief of Advisors and
Consultant Staff requests a waiver from FDA?s Senior Associate Commissioner.
As a condition of the waiver, CDC and FDA must, and NIH may, publicly
disclose, at the beginning of each committee meeting, the financial
interests of advisors for whom waivers have been granted.
In addition to financial holdings, conflicts of interest could potentially
arise when the agency, on behalf of its federal employees, accepts payment
for travel from nonfederal sources. Agencies are authorized, within certain
parameters, to accept such payments. 6 This travel must relate to the
employee?s official duties, and typically involves the employee?s
participation in meetings or conferences. Payments may be in- kind 7 or
provided through other means, such as reimbursement of expenses. It is the
responsibility of agency officials to determine whether the travel payment
represents a conflict of interest.
4 Those who file financial disclosure forms do not have to report certain
minimal sources of income, such as earned income with a value of less than
$200. 5 Other employees may be eligible for a waiver if the potential
conflict is determined to be unlikely to
affect the integrity of the employees? services to the government. 6 The
payments may include transportation, food, lodging, and related expenses,
such as taxi fare (see
31 U. S. C. 1353; 41 C. F. R. pt. 304- 1). 7 A payment is in- kind when it
involves something other than cash, such as an airplane ticket.
GAO- 01- 787R Lyme Disease Financial Interests 4 The payment of royalties to
a federal employee for an invention developed in a federal
laboratory is another type of financial interest subject to certain rules. 8
If an invention is developed in a federal laboratory, the federal agency
normally retains the title to the invention and can license it to others who
may then commercialize it. If the agency receives royalty income from
inventions licensed to companies that commercialize them, the royalties are
distributed according to statute. When federal employees are named as
inventors on federally- held patents, they may receive income derived from
these royalties. Inventors receive, through their agencies, the first $2,000
in royalties and at least 15 percent of receipts thereafter, up to $150,000
annually per person. 9 The remaining royalties are allocated to either the
laboratory or agency from which the patent originated, or the U. S.
Treasury. The employee- inventor is permitted to engage in commercialization
activities if they are consistent with agency conflict- of- interest
regulations and standards of conduct .
Employees and SGEs Working on Lyme Disease Have Reported Interests in Health
Sector Firms
Eight of the 17 (47 percent) relevant CDC and NIH employees whose forms we
reviewed reported financial interests in health sector firms-- but not
necessarily firms developing or producing Lyme disease products-- and 45 of
the 87 (52 percent) SGEs working with CDC, NIH, and FDA on the disease
reported such interests. (See table 1.) FDA employees reported no financial
interests in health sector firms; however, one employee received patent
royalties that were unrelated to Lyme disease. Most of the health- related
financial interests that employees and SGEs disclosed were investments,
consulting and advising fees, speaking and writing honoraria, and patents.
In addition, SGEs also disclosed interests related to contracts and grants,
employment, and expert witness fees. Requests for travel reimbursement were
primarily to attend professional meetings and monitor progress on
cooperative agreements with other organizations.
Table 1: Financial Interests Summary, Fiscal Years 1996 Through 2000 Agency
and type of employee
Financial holdings and arrangements in/ with health sector firms?
Travel paid for by health sector firms?
Royalty income from personally held patents?
Named in federal patents (reported in public records)?
Royalty income from federal patents?
employee Yes Yes No Yes No CDC
SGE Yes N/ A Yes N/ A N/ A employee Yes Yes No Yes Yes NIH
SGE Yes N/ A Yes N/ A N/ A employee No No No Yes Yes FDA
SGE Yes N/ A Yes N/ A N/ A SGE = special government employee N/ A = not
applicable Source: GAO analysis of CDC, NIH, and FDA confidential financial
disclosure forms.
8 These payments are governed by the Stevenson- Wydler Technology Innovation
Act of 1980 (P. L. 96480), as amended, which was enacted to encourage the
commercial use of technologies developed in the federal laboratory system. 9
Any amount above that requires presidential approval (15 U. S. C. 3710c( a)(
3)).
GAO- 01- 787R Lyme Disease Financial Interests 5 CDC Employees and SGEs
Working on Lyme Disease
CDC employees reported financial interests in health sector firms. CDC
provided us with 52 of the expected 57 annual confidential financial
disclosure forms from 12 employees working on Lyme disease, covering fiscal
years 1996 through 2000. Six of the 12 employees reported at least one
interest in a health sector firm on at least one of their yearly financial
disclosure forms. Further, CDC provided us with 19 forms documenting the
request and approval of travel expenses from nonfederal sources for
personnel working on Lyme disease. Eight of these trips were paid for by
health sector firms, generally in connection with federally approved
Cooperative Research and Development Agreement research under the
StevensonWydler Technology Innovation Act of 1980, as amended. Academic or
other nonprofit institutions paid for the other 11 trips.
CDC employees working on Lyme disease are listed on two Lyme disease-
related patents( 1) a patent filed by BioMeriuex, Inc., that resulted from
Cooperative Research and Development Agreement work to develop a chemical
potentially useful in developing diagnostic methods and (2) a 1993 joint
patent between CDC and the SmithKline Beecham Corporation 10 on compositions
useful in the diagnosis and prevention of Lyme disease. CDC program
officials stated that no CDC- owned Lyme disease patents have been licensed.
CDC has not distributed any royalty payments to employees working on Lyme
disease. In addition, CDC employees working on Lyme disease did not report
any royalty income from nonfederal patents related to Lyme disease.
CDC SGEs also reported financial interests in health sector firms. CDC
provided us with all 12 confidential financial disclosure forms from the 12
SGEs serving at the 1998 meeting of the Advisory Committee on Immunization
Practices where the Lyme disease vaccine was discussed. Six of the 12 SGEs
reported at least 1 interest related to a vaccine firm.
NIH Employees and SGEs Working on Lyme Disease NIH employees reported
financial interests in health sector firms. NIH provided us with 20 of the
expected 23 annual financial disclosure forms from five employees working on
Lyme disease from 1996 through 2000. On those forms that we received, two of
the five employees reported at least one health sector interest. One of
these two employees reported a single health sector investment, while the
other reported numerous interests.
There were also several instances of travel expenses incurred by NIH
employees paid to NIH by nonfederal organizations. NIH provided us with 45
documented instances of payment of NIH employee travel expenses from
nonfederal sources for employees working on Lyme disease. Of these, 41 were
to attend or speak at conferences and seminars, and the remaining 4 were to
attend other meetings. Three of the trips were paid for by for- profit firms
and 41 by nonprofit organizations. One form, for travel reimbursement to
speak at a conference, did not indicate the sponsor.
There are six patents related to Lyme disease on which NIH employees working
on Lyme disease are listed as inventors. The patents relate to the
laboratory detection of Borrelia burgdorferi, the organism that causes Lyme
disease. Four of those patents are assigned to the Department of Health and
Human Services. Certain of these patents result in royalty payments, and NIH
has distributed royalty income to its employees named in the
10 SmithKline Beecham is now a part of GlaxoSmithKline.
GAO- 01- 787R Lyme Disease Financial Interests 6 department?s Lyme disease
patents. Specifically, NIH distributed a total of $7,000 to $10,000
to each of three employees working on Lyme disease from 1996 to 2000. We
found no evidence that NIH employees working on Lyme disease received
royalty income from patents related to Lyme disease that are not federally
owned.
SGEs at NIH also reported financial interests in health sector firms. NIH
provided us with 32 confidential financial disclosure forms from 32 SGEs
serving on the National Advisory Allergy and Infectious Diseases Council
from fiscal years 1996 through 2000. The SGEs disclosed their interests on
the standard form prior to the first meeting at which they served. An
abbreviated form intended to update the initial report was filed for each
subsequent meeting. 11 Eighteen of the 32 SGEs reported at least 1 interest
in a health sector firm on their initial financial disclosure form, and 10
of those SGEs reported more than 3 interests. We reviewed 140 abbreviated
forms; a change in interests was declared on 41 of these forms from 17 of
the 32 SGEs.
FDA Employees and SGEs Working on Lyme Disease FDA employees with
responsibilities for products related to the Lyme disease vaccine reported
no financial interests in health sector firms that manufacture vaccines. FDA
provided us with all 41 expected annual financial disclosure forms from 15
employees, covering fiscal years 1996 through 2000. One employee did report
patent royalties, but the patent was unrelated to Lyme disease.
FDA employees with responsibilities for products related to the Lyme disease
vaccine reported no travel payments from vaccine firms. FDA provided us with
evidence of 16 cases in which FDA received travel reimbursement from
nonfederal sources for travel by employees working on Lyme disease;
nonprofit organizations or foreign governments provided all of these
payments.
FDA SGEs did report relevant financial interests in vaccine- related firms.
FDA provided us with financial disclosure forms for members of its Vaccines
and Related Biologic Products Advisory Committee. It provided a form from
each of the 22 SGEs serving in the 1996 meeting where a Lyme disease vaccine
was discussed, and a form from each of the 21 SGEs serving in the 1998
meeting where the committee advised approval of a vaccine for Lyme disease.
For the 1996 meeting, 8 of the 22 SGEs reported at least 1 interest, and 2
of those listed more than 3 financial interests. For the 1998 meeting, 13 of
the 21 SGEs reported at least 1 interest on their financial disclosure form,
and 6 of those SGEs reported more than 3 interests.
Potential Conflicts Have Been Waived by Agency Officials
CDC, NIH, and FDA officials reviewed the financial interests of the relevant
employees and SGEs working on Lyme disease. The officials found that the
interests of the employees did not constitute potential conflicts of
interest. Potential conflicts of interest were identified for some SGEs, and
program officials requested waivers in those cases, emphasizing the need for
the person?s expertise. For each request, agency officials granted waivers
indicating that the need for the SGE?s services outweighed the potential for
a conflict of interest created by the SGE?s financial interests. All three
agencies indicated that they screen the financial interests of candidates
for membership on the advisory committees in advance, minimizing the
possibility that an SGE will have interests that cannot be waived. OGE has
reviewed the
11 The National Advisory Allergy and Infectious Diseases Council meets three
times a year.
GAO- 01- 787R Lyme Disease Financial Interests 7 ethics programs of these
agencies, including the extent to which they comply with conflict-
ofinterest
regulations, and found them to be sound. The OGE reviews were general and
did not specifically address conflicts of interest related to Lyme disease.
Centers for Disease Control and Prevention CDC officials judged that the
financial interests of employees working on Lyme disease did not pose
conflicts of interest. However, CDC was not able to provide us with some of
the forms we expected to receive, and some of those we did obtain contained
irregularities. For the 57 employee financial disclosure forms we expected,
5 were missing and 5 lacked signatures indicating review. The 10 forms that
had irregularities were from 6 employees: one employee had 2 missing forms
and 1 form lacking a signature; one employee had 2 missing forms; one
employee had 1 missing form and 1 form lacking a signature; and 3 other
employees each had 1 form with a missing signature. The remaining 47 forms
were appropriately signed, indicating that they were reviewed by agency
officials. In addition, the requests for travel paid by nonfederal
organizations did not indicate whether officials approved the travel before
the travel date.
Agency officials judged many of the interests of SGEs serving on CDC?s 1998
Advisory Committee on Immunization Practices 12 as creating potential
conflicts. CDC program officials requested waivers for all of the SGEs for
whom such an interest was identified, indicating the need for their services
on the 1998 committee. The requests cited financial interests, some of which
were identifiable as vaccine- related, and others of which were not. In
addition, they acknowledged additional interests not explicitly named in the
request. CDC officials signed the financial disclosure forms and indicated
their agreement with the need for the SGE?s services by checking a box and
signing the waiver document. CDC officials signed all 12 SGE financial
disclosure forms that we reviewed.
CDC officials told us that waiver requests are rarely refused because
program officials screen the financial interests of potential advisors. They
stated that individuals with particular vaccine- related financial interests
that CDC would not consider waiving are screened out of potential
membership. For example, vaccine company employees are not appointed to the
Advisory Committee on Immunization Practices. The agency is in the process
of revising its appointment standards to formalize this screening process
with a written list of disqualifying financial interests.
During the past decade, OGE conducted two reviews of CDC?s ethics
procedures, in 1994 and 1999. The reviews were agencywide and not specific
to the Lyme disease program. Moreover, the reviews were focused on
administrative processes and did not assess the appropriateness of
particular actions. In 1994, OGE commended CDC?s system for reviewing and
approving outside activities, the public financial disclosure system, the
ethics counseling services, and the ethics education program. In spite of
the generally favorable review, OGE found some specific weaknesses
concerning outside activity approval, confidential financial disclosure
report review, ethics training materials, and travel expense payments. In
1999, OGE concluded that CDC had made several improvements, but suggested
that further improvements were necessary. For example, OGE noted, as we have
in this letter, that forms were often not entirely filled out. CDC responded
to OGE with evidence of the actions that it had taken to comply with the
various recommendations, such as copies of its training tools and
procedures.
12 CDC?s Advisory Committee on Immunization Practices, composed of external
experts, develops written recommendations for the routine administration of
new vaccines, including those intended to protect against Lyme disease, to
pediatric and adult populations, along with schedules regarding periodicity,
dosage, and contraindications applicable to the vaccines.
GAO- 01- 787R Lyme Disease Financial Interests 8 National Institutes of
Health
NIH officials determined that the financial interests of employees working
on Lyme disease did not constitute potential conflicts of interest. NIH was
not able to provide us with some of the financial disclosure forms we
expected to receive, and some of the travel requests that we obtained
contained irregularities. For the employee financial disclosure forms we
expected, three were missing, two of which were from one employee. All 20
financial disclosure forms we obtained were signed, indicating review by
agency officials. The requests for travel paid by nonfederal organizations
indicated that 8 of the 45 forms were approved after the travel date. Five
of the remaining forms were signed but had no approval date indicated.
Agency officials determined that many of the interests of SGEs serving on
NIH?s National Advisory Allergy and Infectious Diseases Council 13 could be
potentially conflicting. NIH program officials requested waivers during the
first year of service for all SGE members that served on the advisory
committee. In addition, when abbreviated forms were filed for subsequent
meetings, program officials requested a waiver when new interests were
identified. The waiver requests we reviewed included health sector interests
and often cited general financial interests that were not identifiable as
health- related, such as personal home mortgages. NIH officials signed the
financial disclosure forms and indicated that the need for the SGE?s
services outweighed the potential conflict of interest by checking a box and
signing the waiver document, which included an explanation of the need for
the services. For the SGE financial disclosure forms, NIH officials signed
31 out of 32, indicating their review of the financial interests. The
remaining form was unsigned. NIH officials signed all abbreviated forms on
which a change in interests was identified.
NIH officials told us that over the past 5 years, officials at the National
Institute of Allergy and Infectious Diseases have not denied a waiver
request for an SGE?s potential conflict of interest. They also informed us
that this was due to a screening process by program officials designed to
eliminate those individuals who, due to their interests, would be unlikely
to be granted a waiver.
During the past decade, OGE conducted two ethics reviews of NIH. The earlier
review was conducted from December 1994 through March 1995 and involved the
National Institute of Allergy and Infectious Diseases. The most recent
review was conducted from November 1999 through March 2000 and involved the
National Institute of Arthritis and Musculoskeletal and Skin Diseases.
During both reviews, OGE stated that NIH administers a sound ethics program.
However, OGE did make some recommendations in 1995 regarding SGEs,
confidential disclosure forms, and outside activity requests. For example,
it recommended that NIH ensure that ethics officials annually collect
confidential financial disclosure reports from SGEs. In the 2000 report, OGE
found, as we have in this letter, that waivers were often requested for all
interests on the confidential financial disclosure forms, rather than being
selectively requested for only those interests that would be disqualifying.
In response, NIH stated that it held a training program for committee
management officials to help them differentiate between interests that are
potentially related to NIH work and those that are not. NIH officials said
that internal ethics program reviews will now include a random review of
advisory committee waivers to determine if only potentially disqualifying
interests are mentioned, thereby enabling officials to assess the relevance
of the requests for waivers.
13 NIH?s National Advisory Allergy and Infectious Diseases Council, composed
of external experts, provides advice on the funding of grants in light of
agency priorities, provides policy advice, reviews programs, and provides
advice on program announcements for the National Institute of Allergy and
Infectious Diseases, the institute that oversees NIH Lyme disease research.
GAO- 01- 787R Lyme Disease Financial Interests 9 Food and Drug
Administration
FDA employees reported having no financial interests in health- related
companies. The agency maintains a list of financial holdings and types of
activities that are prohibited for its employees. FDA provided us with all
of the forms for employees that we expected to receive. FDA officials signed
all of these forms, indicating their review of financial interests. The
computer printout the agency provided indicated that these employees had
travel expenses paid by nonfederal organizations on 22 occasions, but this
printout did not contain information about approval dates.
Prior to each of the two meetings we reviewed, agency officials determined
that some of the interests of SGEs serving on FDA?s Vaccines and Related
Biological Products Advisory Committee 14 were potentially conflicting,
given the specific topics to be discussed at each meeting. The program
officials? requests for waivers referred only to those interests related to
the meeting?s agenda, including consideration of the Lyme disease vaccine,
that met FDA?s criteria for a potentially conflicting interest. Program
officials did not request waivers for five SGEs with interests unrelated to
the meeting topic. FDA officials granted waivers for the 12 SGE committee
members serving in 1996 and 1998 for whom waivers were requested. FDA
provided us with all of the SGE financial disclosure forms we expected to
receive. FDA officials signed and dated all the financial disclosure forms
prior to the meetings, and indicated their agreement that the need for the
SGE?s services outweighed the potential conflict of interest by checking a
box and signing the waiver request.
FDA officials told us that very few waiver requests are denied because of an
informal screening process by program officials prior to nominating
individuals to serve on an advisory committee. In soliciting potential
committee members, program officials inform them of the kinds of financial
interests that would be disqualifying. At this stage, many potential members
decide not to participate further in the process. If individuals do not
disqualify themselves, then they are asked to complete the financial
disclosure forms. When a potentially conflicting interest is disclosed on
this form, then the program officials evaluate the need for the expertise of
this individual in deciding whether to proceed to request a waiver.
In a 1997 OGE review of the FDA ethics program, OGE reported that it found
the program to be efficient, effective, and in compliance with applicable
statutes and regulations. OGE identified few technical and no substantive
deficiencies with regard to the confidential financial disclosure system.
Further, OGE specifically commended FDA?s SGE and travel policies. For
example, it commended officials in FDA?s Office of Financial Management for
ensuring that the acceptance of travel and related expenses from nonfederal
sources by FDA employees is approved in advance and that payment is made
either in- kind or reimbursed by check payable to the U. S. government. Due
to what OGE calls ?the excellent condition of the ethics program,? it did
not issue formal recommendations or require FDA to respond.
Agency Comments
We provided the Department of Health and Human Services the opportunity to
comment on a draft of this letter. The department chose not to provide
comments. The department?s response is reprinted in enclosure II. However,
the department did provide technical comments, which we incorporated where
appropriate.
14 FDA?s Vaccines and Related Biological Products Advisory Committee,
composed of external experts, advises FDA on the licensing of vaccines,
including those intended to protect against Lyme disease, by evaluating data
concerning the safety, effectiveness, and use of vaccines.
GAO- 01- 787R Lyme Disease Financial Interests 10
Concluding Observations
There are requirements that are intended to avoid undue influence from
potential conflicts of interest on federal activities and decisions. These
specify that financial interests be disclosed and subsequently reviewed by
relevant officials. Our review of the available evidence shows that CDC,
NIH, and FDA have generally met these requirements for employees and SGEs
with responsibilities related to Lyme disease. At each agency, officials are
required to review the financial interests of both employees and SGEs. The
practice of screening the financial interests of candidates for advisory
committees prior to appointing them as an SGE may, in part, explain why
agency officials granted all the program officials? requests for waivers for
SGEs serving on advisory panels. The system of disclosure and review
generally appears to be functioning as intended at each of these agencies.
- - - - - - - We will send copies of this letter to the Secretary of Health
and Human Services, the Director of CDC, the Acting Director of NIH, the
Acting Principal Deputy Commissioner of FDA, and others who are interested.
The letter will also be available on GAO?s home page at http:// www. gao.
gov. If you have questions or would like additional information, please call
me at (202) 512- 7250. Marcia Crosse, Donald Keller, William Hadley, and
Julian Klazkin made major contributions to this letter.
Janet Heinrich Director, Health Care- Public Health Issues Enclosures
Enclosure I Enclosure I GAO- 01- 787R Lyme Disease Financial Interests 11
Financial Interest Policies
Government employees, including special government employees (SGEs), are
required to disclose relevant financial interests in accordance with the
Ethics in Government Act, the Office of Government Ethics (OGE) regulations,
and the policies of each agency.
Employees
Employees of the executive branch may not participate in a particular
government matter that has a direct and predictable effect on their
financial interests. The effect does not have to be financially significant
or immediate, but it does have to be directly related to the matter, and not
due to speculative events, which may or may not occur and which are
independent and unrelated to the matter under consideration. Financial
interests include the interests of the employee, the employee?s spouse or
minor children, the employee?s business partner, an outside organization in
which the employee is involved as an employee, officer, or director, or an
organization in which the employee is negotiating future employment.
However, OGE regulations exempt certain financial interests. Such interests
include diversified mutual funds and public securities of modest value.
Certain employees with high- level responsibilities in the executive branch
are required to complete a Public Financial Disclosure Report, while less
senior employees are required to file an annual Confidential Financial
Disclosure Report. Federal regulations govern the information that may be
requested. In accordance with those regulations, filers of the confidential
financial disclosure report are required to provide descriptions, but not
dollar values, of their financial interests. For the requirements of the
confidential financial disclosure form, filled out by almost all of the
employees whose forms we examined, see table 2.
Table 2: Reporting Requirements of the 1999 OGE Confidential Financial
Disclosure Report Section Reporting requirements
Part I: Assets and Income For self, spouse, and dependent children: (1)
assets with a fair market value greater than $1,000 or producing greater
that $200 income; and (2) sources of earned income such as fees, salaries,
and honoraria over $200 ($ 1,000 for spouses). No earned income need be
reported for dependent children. Part II: Liabilities For self, spouse, and
dependent children: liabilities over $10,000,
excluding a mortgage on the filer?s personal residence. Part III: Outside
Positions For self: any positions (employee, officer, director, or
consultant), whether
or not compensated, which are held during the reporting period. Part IV:
Agreements and Arrangements
For self: agreements or arrangements for current or future employment,
leaves of absence, continuation of payment by a former employer, or
continuing participation in an employer?s benefit plan. Part V: Gifts and
Travel Reimbursements For self, spouse, and dependent children: gifts or
travel reimbursements
received from one source totaling $250. Source: OGE.
If the relevant agency official determines that one of the reported
interests represents a potential conflict of interest, one of the following
actions must take place. First, the employee can disqualify him( her) self
from the particular matter. Second, the employee can divest him( her) self
of the interest. Third, an agency?s official may grant a waiver if the
employee?s reported financial interests are not so substantial that they
would affect the integrity of the decision- making process.
Enclosure I Enclosure I GAO- 01- 787R Lyme Disease Financial Interests 12
Special Government Employees
An SGE is an officer or employee who is retained, designated, appointed, or
employed by the government to perform temporary duties, with or without
compensation, for not more than 130 days during any period of 365
consecutive days. SGEs who serve on federal advisory committees 15 make
recommendations to the agencies and are subject to supervisory control. They
must file an OGE Confidential Financial Disclosure Report when they are
appointed. Centers for Disease Control and Prevention and National
Institutes of Health SGEs complete the standard form, but OGE has granted
the Food and Drug Administration (FDA) permission to substitute its own
form, the FDA Confidential Financial Disclosure Report. (See table 3.)
Table 3: Reporting Requirements of the FDA Confidential Financial Disclosure
Report for SGEs Section Reporting requirements
Investments Firm, type of investment, owner of investment, number of shares,
current value, percentage of net worth. Employment Firm, relationship,
position in firm, date that employment or negotiations
began. Consultant / Advisor Firm, topic/ issue, amount received, dates,
relation to products being
discussed. Contracts / Grants / Cooperative Research and Development
Agreements
Type of agreement, product under study and indicated use, amount of
remuneration to self and institution, time period, sponsor, role, awardee,
relation to products being discussed. Patents / Royalties / Trademarks
For self and firm, relation to products being discussed. Expert Witness
Firm, issue discussed, amount received, relation to products being
discussed. Speaking / Writing Firm, topic/ issue, amount received, dates,
relation to products being
discussed. Past Financial Interests Firm, product, financial involvement,
role, dates, relation to product being
discussed. Other Involvements Identify anything that would give the
appearance of a conflict, which has not
been disclosed. Source: FDA.
SGEs appointed to federal advisory committees are typically experts in their
respective fields. Consequently, they may have substantial outside
employment and other interests related to the subject areas for which the
government desires their services. Due to the temporary nature of their
appointment, it is unlikely that they would divest themselves of their long-
term financial interests. A liberalized waiver provision specifically
applicable to SGE?s serving on federal advisory committees was enacted in
1989. 16 This provision gives the agency broad discretion to grant a waiver
based on the determination that the need for an SGE?s services outweighs the
potential for a conflict of interest created by the financial interest
involved. Waivers are requested and granted within the agencies.
15 The Federal Advisory Committee Act (P. L. 92- 463, as amended) provides
the framework for the establishment of committees that can furnish expert
advice, ideas, and diverse opinions to officers and agencies in the federal
executive branch. Generally, the Act applies to any committee made up of at
least one non- federal employee that provides advice to an agency in the
executive branch. 16 18 U. S. C. 208 (b)( 3).
Enclosure II Enclosure II GAO- 01- 787R Lyme Disease Financial Interests 13
Agency Comments From the Department of Health and Human Services
(290073)
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