[Federal Register: May 21, 2010 (Volume 75, Number 98)]
[Proposed Rules]               
[Page 28687-28712]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21my10-23]                         


[[Page 28687]]

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Part II





Health and Human Services Department





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42 CFR Part 50

45 CFR Part 94



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Responsibility of Applicants for Promoting Objectivity in Research for 
Which Public Health Service Funding Is Sought and Responsible 
Prospective Contractors; Proposed Rule


[[Page 28688]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 50

45 CFR Part 94

[Docket Number: NIH-2010-0001]
RIN 0925-AA53

 
Responsibility of Applicants for Promoting Objectivity in 
Research for Which Public Health Service Funding Is Sought and 
Responsible Prospective Contractors

AGENCY: Department of Health and Human Services.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Health and Human Services (HHS or the 
Department) and the HHS Public Health Service (PHS), proposes to amend 
its regulations on the Responsibility of Applicants for Promoting 
Objectivity in Research for which PHS Funding is Sought and Responsible 
Prospective Contractors. Since the promulgation of the regulations in 
1995, biomedical and behavioral research and the resulting interactions 
among Government, research institutions, and the private sector have 
become increasingly complex. This complexity, as well as a need to 
strengthen accountability, have led to the proposal of amendments that 
would expand and add transparency to investigator disclosure of 
significant financial interests, enhance regulatory compliance and 
effective institutional oversight and management of investigators' 
financial conflicts of interests, as well as NIH's compliance 
oversight.

DATES: Comments must be received on or before July 20, 2010 in order to 
ensure we will be able to consider the comments when preparing the 
final rule.

ADDRESSES: Individuals, organizations and institutions interested in 
submitting comments identified by RIN 0925-AA53 and Docket Number [NIH-
2010-0001] may do so by any of the following methods:

Electronic Submissions

    You may submit electronic comments in the following way:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     To ensure timely processing of comments, NIH is no longer 
accepting comments submitted to the agency by e-mail.

Written Submissions

    You may submit written comments in the following ways:
     Fax: 301-402-0169.
     Mail: Jerry Moore, NIH Regulations Officer, Office of 
Management Assessment, National Institutes of Health, 6011 Executive 
Boulevard, Suite 601, MSC 7669, Rockville, MD 20852-7669.
    Instructions: All submissions received must include the agency name 
and Regulatory Information Number (RIN) [0925-AA53] and docket number 
[NIH-2010-0001] for this rulemaking action. All comments may be posted 
without change, including any personal information provided.
    Docket: For access to the docket to read background documents or 
comments received concerning this rulemaking action, go to the 
eRulemaking.gov Portal: http://www.regulations.gov and follow the 
instructions provided for conducting a search, using the docket number 
[NIH-2010-0001].

FOR FURTHER INFORMATION CONTACT: Jerry Moore, NIH Regulations Officer, 
Office of Management Assessment, National Institutes of Health, 6011 
Executive Boulevard, Suite 601, MSC 7669, Rockville, MD 20852-7669, 
telephone 301-496-4607, fax 301-402-0169, e-mail jm40z@nih.gov, 
concerning questions about the rulemaking process and Dr. Sally Rockey, 
NIH Deputy Director for Extramural Research, concerning substantive 
questions about the proposed rule, e-mail FCOI-NPRM@mail.nih.gov.

SUPPLEMENTARY INFORMATION: Proper stewardship of Federal funds includes 
ensuring objectivity of results by protecting Federally-funded research 
from potential bias due to investigator financial conflicts of interest 
(FCOI).

I. Background

    In 1995, the PHS and the Office of the Secretary of HHS published 
regulations at 42 CFR Part 50 Subpart F and 45 CFR Part 94 (the 
regulations), that are designed to promote objectivity in PHS-funded 
research.\1\ The current regulations are applicable to Institutions 
that apply for or seek PHS funding for research (except for Small 
Business Innovation Research (SBIR)/Small Business Technology Transfer 
Research (STTR) Phase I applications) and, through implementation of 
the regulations by these Institutions, to each Investigator 
participating in the research. Generally, under the current 
regulations:
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    \1\ 48 CFR Subpart 9.1, ``Responsible Prospective Contractors,'' 
and 48 CFR Subpart 9.5, ``Organizational and Consultant Conflicts of 
Interest,'' also address conflicts of interest in Federally-funded 
projects. These provisions apply only to acquisitions, not to grants 
or cooperative agreements.
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     The Institution \2\ is responsible for complying with the 
regulations, including maintaining a written and enforced policy; 
managing, reducing, or eliminating identified conflicts; and reporting 
identified conflicts to the PHS Awarding Component. The reports denote 
the existence of a conflicting interest and the Institution must assure 
that it has been managed, reduced, or eliminated.
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    \2\ ``Institution'' is currently defined under 42 CFR Part 50, 
Subpart F, as any domestic or foreign, public or private, entity or 
organization (excluding a Federal agency), and under 45 CFR Part 94 
as 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. 42 CFR 50.603; 45 CFR 94.3.
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     Investigators \3\ are responsible for complying with their 
Institution's written FCOI policy and for disclosing their Significant 
Financial Interests \4\ (SFIs) to the Institution.
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    \3\ ``Investigator'' is currently defined under the regulations 
as the principal investigator and any other person who is 
responsible for the design, conduct, or reporting of research (or, 
in the case of PHS contracts, a research project) funded by PHS, or 
proposed for such funding. For purposes of the regulatory 
requirements relating to financial interests, the term 
``Investigator'' includes the Investigator's spouse and dependent 
children. 42 CFR 50.603; 45 CFR 94.3.
    \4\ ``Significant Financial Interest'' is currently defined 
under the regulations as 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/STTR programs; (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 
(or, in the case of PHS contracts, are not reasonably expected) to 
exceed $10,000. 42 CFR 50.603; 45 CFR 94.3.
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     The PHS Awarding Components \5\ are responsible for 
overseeing

[[Page 28689]]

Institutional compliance with the regulations.
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    \5\ ``PHS Awarding Component'' is currently defined as the/an 
organizational unit of the PHS that funds [the] research that is 
subject to the regulations. 42 CFR 50.603, 45 CFR 94.3.
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    Ensuring objectivity in research requires a commitment from 
Institutions and their Investigators to:
     Completely disclose,
     Appropriately review, and
     Robustly manage identified conflicts.
    The purpose of the existing regulations is to ensure that there is 
no reasonable expectation that the design, conduct, or reporting of 
PHS-funded research will be biased by any Investigator FCOI.
    Since the publication of these regulations, the pace by which new 
discoveries are translated from the research bench into effective 
treatment of patients has accelerated significantly and the biomedical 
and behavioral research enterprise in the United States has grown in 
size and complexity. For example, an analysis of financial support of 
biomedical research from 1994 to 2004 \6\ showed that funding increased 
from $37.1 billion in 1994 to $94.3 billion in 2003. Fifty seven 
percent of the funding in 2003 came from industry sources. At the same 
time, relationships between individual academic researchers and 
industry have also increased from 28% in a 1996 survey \7\ to 52.8% in 
a survey conducted in 2007.\8\
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    \6\ Moses H et al, JAMA; 2005; 294:1333-1342
    \7\ Blumenthal D et al, N Engl J Med; 1996; 335:1734-9
    \8\ Zinner DE et al, Health Aff; 2009; 28:1814-25.
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    Researchers frequently work in multidisciplinary teams to develop 
new strategies and approaches for translating basic research into 
clinical application, thus hastening discovery and advancing human 
health. In addition, these newer translational strategies often involve 
complex collaborations between investigators and the private sector.
    The growing complexity of biomedical and behavioral research; the 
increased interaction among Government, research institutions, and the 
private sector in attaining common public health goals while meeting 
public expectations for research integrity; as well as increased public 
scrutiny, all have raised questions as to whether a more rigorous 
approach to Investigator disclosure, management of financial conflicts, 
and Federal oversight is required. Consequently, we previously 
published an Advance Notice of Proposed Rulemaking (ANPRM) in the 
Federal Register on May 8, 2009 (74 FR 21610-21613), inviting public 
comment on potential changes to the regulations.
    The ANPRM invited comment on the following major areas of the 
regulation:
    1. Expanding the scope of the regulation and disclosure of 
interests
    2. Definition of ``significant financial interest'' (including 
questions regarding the appropriate de minimis threshold and exemptions 
to the definition)
    3. Identification and management of conflicts by Institutions
    4. Assuring institutional compliance
    5. Requiring Institutions to provide additional information to the 
PHS
    6. Institutional conflict of interest
    After careful consideration of the comments received in response to 
the ANPRM and further deliberation within the Department, we are 
proposing substantial revisions to the current regulations, detailed 
below. The specific comments to the ANPRM are discussed in the relevant 
sections describing the proposed changes to the regulations. We believe 
that the proposed revisions would expand and add transparency to 
investigator disclosure of SFIs as well as enhance regulatory 
compliance and effective FCOI oversight.

II. Description of Proposed Revisions

    The following provides a more detailed discussion of the proposed 
revisions to the current regulations in the order that they would 
appear in 42 CFR Part 50, Subpart F and 45 CFR Part 94.

Purpose (42 CFR 50.601; 45 CFR 94.1)

    We are proposing minor revisions to the text of this section. These 
revisions reflect a broader effort to improve internal consistency with 
regard to the use of various terms and phrases throughout these 
regulations. As a general matter, along with the more substantive 
changes to the regulations discussed further below, we are seeking to 
use this rulemaking proceeding as an opportunity to refine the current 
text of the regulations to improve clarity and readability for users.

Applicability (42 CFR 50.602, 45 CFR 94.2)

    The current regulations at 42 CFR Part 50, Subpart F, are 
applicable to each Institution that applies for PHS grants or 
cooperative agreements for research and, through implementation of the 
regulations by each Institution, to each Investigator participating in 
such research.\9\ The current PHS contracting regulations at 45 Part 94 
similarly apply to each Institution that seeks PHS funding for research 
and, through implementation of the regulations, to each Investigator 
who participates in such research. In neither case do the regulations 
currently apply to SBIR/STTR Phase I applications.
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    \9\ 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.
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    When the existing regulations were published as a final rule in 
1995, it was acknowledged in the preamble that SBIR/STTR Phase I 
applications ``are for limited amounts.'' \10\ Since that time, the 
size of these awards has increased and the amounts are not 
insignificant expenditures of public funds. For example, the median 
amount of an NIH Phase I award increased from approximately $99,000 in 
1995 to approximately $182,000 in 2009. In addition, Phase I awards are 
often used to leverage Phase II funding or significant outside 
financial support, and a significant proportion of Institutions 
receiving Phase I funding from NIH, in particular, already have Phase 
II awards (approximately 200 Institutions in 2008 and 2009). As a 
result, it would be reasonable to conclude that many Institutions with 
Phase I awards will be required to implement these regulations in due 
course.
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    \10\ 60 FR 35810, 35814 (July 11, 1995)
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    In light of these factors, we asked in the ANPRM whether the scope 
of the regulations should be expanded to cover SBIR/STTR Phase I 
applications. Many of the respondents to the ANPRM indicated that any 
and all applications and proposals for PHS funding should be subject to 
the regulations, including SBIR/STTR Phase I applications. For the 
reasons stated above and the sentiment expressed in public comments on 
the ANPRM, we are proposing to broaden the applicability of the 
regulations by eliminating the current exception for SBIR/STTR Phase I 
applications.
    We also propose to add language in this section clarifying that the 
regulations continue to apply once the PHS-funded research is underway 
(i.e., after the application process). Finally, we are proposing to 
make minor revisions to the text of this section as part of a broader 
effort to improve internal consistency in the use of various terms and 
phrases throughout the regulations and, where feasible, consistency 
between the text of 42 CFR Part 50, Subpart F, and 45 CFR Part 94.

Definitions (42 CFR 50.603, 45 CFR 94.3)

    We propose to add several new definitions in this section of the 
regulations, revise some of the existing

[[Page 28690]]

definitions, and remove one definition, as follows:
    1. Contractor. We propose a minor revision to the current 
definition of ``Contractor'' in 45 CFR 94.3 that would clarify that the 
term applies to an entity that provides property or services ``under 
contract'' for the direct benefit or use of the Federal Government.
    2. Disclosure of significant financial interests. This definition 
would be new and would mean an Investigator's disclosure of significant 
financial interests to an Institution. We propose to include this 
definition--along with the definition of ``FCOI report'' below--because 
of the confusion that can result from the seemingly interchangeable use 
of the terms ``disclosure'' and ``report'' with regard to 
communications from an Investigator to an Institution and, 
correspondingly, from an Institution to the PHS. We propose to use the 
phrase ``disclosure of significant financial interests'' to describe 
the communication that occurs between an Investigator and the 
Institution requesting SFI information from the Investigator as part of 
its compliance with these regulations. We intend for the term ``FCOI 
report'' to describe communications from an Institution to the PHS 
regarding FCOI.
    3. FCOI report. This definition would be new and would mean an 
Institution's report of a financial conflict of interest to a PHS 
Awarding Component. We propose to add this new definition for the 
reasons described above regarding the ``disclosure of significant 
financial interests'' definition.
    4. Financial conflict of interest. This definition would be new and 
would mean a significant financial interest that could directly and 
significantly affect the design, conduct, or reporting of PHS-funded 
research. Although this definition would be ``new'' in the sense that 
it is not listed in the current definitions sections (42 CFR 50.603 and 
45 CFR 94.3), the definition is consistent with language contained 
elsewhere in the current regulations. Specifically, subsection (a)(1) 
of the current 42 CFR 50.605 and 45 CFR 94.5 provides 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.'' We propose to incorporate a modified version of this 
text into a freestanding financial conflict of interest definition in 
order to improve the clarity and readability of the regulations.
    5. Financial interest. This definition would be new and would mean 
anything of monetary value or potential monetary value. We propose 
adding this new definition as a companion to our proposed revision of 
the ``significant financial interest'' definition, described below. In 
the current regulations, the ``significant financial interest'' 
definition incorporates the phrase, ``anything of monetary value.'' In 
the new definition of ``financial interest,'' we propose adding the 
phrase ``or potential monetary value'' to capture financial interests 
that may not have monetary value currently, but could become valuable 
in the future. This proposed definition could apply, for example, to an 
ownership interest that an Investigator may hold in a small start-up 
company.
    6. Institution. We propose to revise the current definition of 
``Institution'' in 42 CFR 50.603 to refer specifically to an 
Institution that is applying for, or that receives, PHS research 
funding. We propose this revision to clarify the entities and 
organizations to which the requirements in 42 CFR Part 50, Subpart F 
would apply. We propose corresponding changes to the current definition 
of ``Institution'' in 45 CFR 94.3 to maintain consistency, where 
feasible, between the text of 42 CFR Part 50, Subpart F, and 45 CFR 
Part 94.
    7. Institutional responsibilities. This definition would be new and 
would mean an Investigator's professional responsibilities on behalf of 
the Institution including, but not limited to, activities such as 
research, research consultation, teaching, professional practice, 
institutional committee memberships, and service on panels such as 
Institutional Review Boards or Data and Safety Monitoring Boards. We 
propose to add this new definition because, as described further below, 
we are proposing to modify the ``significant financial interests'' 
definition and Investigator disclosure obligations such that the SFIs 
being disclosed are those that reasonably appear to be related to the 
Investigator's ``institutional responsibilities'' as defined.
    Under the current regulations, an Investigator generally is 
obligated to disclose SFIs on a project-specific basis (i.e., interests 
that would reasonably appear to be affected by the research for which 
PHS funding is sought, or in entities whose financial interests would 
reasonably appear to be affected by the research). We believe that the 
proposed shift to a focus on ``institutional responsibilities'' in the 
regulations would provide Institutions with a better understanding of 
the totality of an Investigator's interests and would result in more 
consistent identification, evaluation, and management of any identified 
conflicts. We also believe that the revised approach would be 
consistent with the current practices at many institutions, which 
require investigators to disclose interests annually and/or on an 
ongoing basis, regardless of specific research projects that are 
underway. We welcome public comment on the specific elements that 
should (or should not) be included in an ``institutional 
responsibilities'' definition.
    8. Investigator. We propose to revise the definition of 
``Investigator'' to clarify that it means the PD/PI as well as any 
other person, regardless of title or position, who is responsible for 
the design, conduct, or reporting of research funded by the PHS, or 
proposed for such funding, including persons who are subgrantees, 
contractors, collaborators, or consultants (or, in the case of PHS 
contracts, subcontractors, collaborators, or consultants). We propose 
these revisions based on our observations regarding the current 
regulations and the proper application of the ``investigator'' 
definition. Although we have developed regulatory guidance on this 
issue with regard to grants and cooperative agreements (see NIH 
``Frequently Asked Question'' A.7 at http://grants.nih.gov/grants/
policy/coifaq.htm), we believe that further clarification in the 
regulations themselves is warranted.
    We have also revised this definition to eliminate reference to the 
Investigator's spouse and dependent children. As described further 
below, we propose to include reference to an Investigator's spouse and 
dependent children in the revised ``significant financial interest'' 
definition.
    9. Manage. This definition would be new and would mean to take 
action to address a financial conflict of interest, which includes 
reducing or eliminating the financial conflict of interest, to ensure 
that the design, conduct, or reporting of research is free from bias or 
the appearance of bias. We propose adding this definition as part of a 
wider reconsideration of the concepts of managing, reducing, and 
eliminating a FCOI. In the current regulations, these concepts are 
typically listed separately (see, e.g., 42 CFR 50.604(g), 45 CFR 
94.4(g)), suggesting that reducing or eliminating a FCOI may not be the 
same as managing a FCOI. We believe that it would be more appropriate 
to consider the reduction or elimination of a FCOI as alternate means 
of managing a FCOI, depending on the circumstances. Thus, in a 
hypothetical example where an Institution has concluded that an 
Investigator's ownership interest in a company is a FCOI, the 
Institution

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could manage the FCOI by requiring the Investigator to reduce his or 
her ownership interest by some appropriate amount, or to sell the 
ownership interest in its entirety.
    10. PD/PI. This definition would be new and would mean a project 
director or principal investigator of a PHS-funded research project. We 
propose to use ``PD/PI'' in the regulation in circumstances in which we 
may have traditionally used the term ``principal investigator'' (e.g., 
in the proposed ``investigator'' definition, as revised).
    11. PHS. We propose to revise the definition of ``PHS'' to include 
a specific reference to the National Institutes of Health. NIH is part 
of the Public Health Service and provides a substantial amount of 
research funding to Institutions, however, it is not otherwise 
referenced specifically in these regulations. We want to clarify for 
Institutions applying for, or receiving, research funding from the NIH 
that they are subject to these PHS regulations.
    12. Research. We propose to revise the definition of ``research'' 
to include a non-exclusive list of examples of different types of PHS 
funding mechanisms to which the definition applies. As revised, the 
definition would include any activity for which research funding is 
available from a PHS Awarding Component through a grant, cooperative 
agreement, or contract whether authorized under the PHS Act or other 
statutory authority, such as a research grant, career development 
award, center grant, individual fellowship award, infrastructure award, 
institutional training grant, program project, or research resources 
award.
    13. Significant Financial Interest. We propose to revise 
substantially the definition of ``significant financial interest'' 
(SFI). Under the current regulations, a SFI 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 or STTR programs; (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 (or, in the case of PHS contracts, are 
not reasonably expected) to exceed $10,000.
    We propose to revise the definition of ``significant financial 
interest'' as follows, incorporating the proposed definitions of 
``financial interest'' and ``institutional responsibilities'' described 
above:
    ``Significant financial interest means, except as otherwise 
specified in this definition: ``(1) A financial interest consisting of 
one or more of the following interests of the Investigator (and those 
of the Investigator's spouse and dependent children) that reasonably 
appears to be related to the Investigator's institutional 
responsibilities:
    ``(i) With regard to any publicly traded entity, a significant 
financial interest exists if the value of any remuneration received 
from the entity in the twelve months preceding the disclosure and the 
value of any equity interest in the entity as of the date of 
disclosure, when aggregated, exceeds $5,000. For purposes of this 
definition, remuneration includes salary and any payment for services 
not otherwise identified as salary (e.g., consulting fees, honoraria, 
paid authorship, travel reimbursement); equity interest includes any 
stock, stock option, or other ownership interest, as determined through 
reference to public prices or other reasonable measures of fair market 
value;
    ``(ii) With regard to any non-publicly traded entity, a significant 
financial interest exists if the value of any remuneration received 
from the entity in the twelve months preceding the disclosure, when 
aggregated, exceeds $5,000, or the Investigator (or the Investigator's 
spouse or dependent children) holds any equity interest (e.g., stock, 
stock option, or other ownership interest); or
    ``(iii) Intellectual property rights (e.g., patents, copyrights), 
royalties from such rights, and agreements to share in royalties 
related to such rights.
    ``(2) The term significant financial interest does not include the 
following types of financial interests: salary, royalties, or other 
remuneration paid by the Institution to the Investigator if the 
Investigator is currently employed or otherwise appointed by the 
Institution; any ownership interest in the Institution held by the 
Investigator, if the Institution is a commercial or for-profit 
organization; income from seminars, lectures, or teaching engagements 
sponsored by a federal, state, or local government agency, or an 
institution of higher education as defined at 20 U.S.C. 1001(a); or 
income from service on advisory committees or review panels for a 
federal, state, or local government agency, or an institution of higher 
education as defined at 20 U.S.C. 1001(a).''
    This revised SFI definition would differ from the current SFI 
definition in a number of respects.
    Institutional responsibilities: As indicated in the discussion of 
the ``institutional responsibilities'' definition above, SFIs subject 
to disclosure by an Investigator to an Institution would be those that 
reasonably appear to be related to the Investigator's ``institutional 
responsibilities'' and would not be specific to a particular PHS-funded 
research project. As a result, when read in conjunction with the 
revised Investigator disclosure requirements under 42 CFR 50.604 and 45 
CFR 94.4 (discussed below), we anticipate that the revised SFI 
definition would result in the disclosure by Investigators to 
Institutions of a wider array of interests on a more frequent basis. 
This proposed approach is consistent with many of the comments we 
received in response to the ANPRM, which supported expansion of the 
SFIs that should be disclosed by Investigators to Institutions.
    Monetary threshold: The revised SFI definition also would lower--
and, in some circumstances, eliminate--the existing monetary thresholds 
for disclosure. Under the current regulations, a SFI does not include 
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, and does not 
represent more than a five percent ownership interest in any single 
entity. Similarly, a SFI does not include payments (e.g., salary) 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. The revised definition would differentiate between 
remuneration to the Investigator (and the Investigator's spouse and 
dependent children) from a publicly traded entity and remuneration from 
a non-publicly traded entity. With regard to a publicly traded entity, 
a

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monetary threshold of $5,000 would apply to the aggregated value of any 
remuneration received from the entity in the twelve months preceding 
disclosure and the value of any equity interest as of the date of 
disclosure. With regard to a non-publicly traded entity, a monetary 
threshold of $5,000 would apply to any remuneration received from the 
entity in the twelve months preceding disclosure; in addition, however, 
a SFI would exist with regard to any equity interest in the entity, 
regardless of value.
    In a hypothetical example, the proposed changes to the monetary 
threshold would operate as follows. Assume an Institution has required 
an Investigator, who conducts biomedical research at the Institution, 
to complete a form disclosing her SFIs. Among the Investigator's 
financial interests are the following: $3,000 in consulting fees that 
she has received in the past twelve months from Pharmaceutical Company 
A; stock in Pharmaceutical Company A held by her husband worth $2,500 
as of the date of disclosure; and stock options she holds in Start-Up 
Company B, a private biotechnology firm whose only products are in the 
early research and development stage. Assuming that these financial 
interests reasonably appear to be related to the Investigator's 
institutional responsibilities, the Investigator would be required to 
disclose them as SFIs. A SFI in Pharmaceutical Company A would exist 
because the aggregated value of her remuneration for the past twelve 
months and her husband's equity interest in the company exceeds $5,000 
($3,000 + $2,500 = $5,500). A SFI in Start-up Company B would exist 
because the Investigator would have an obligation to disclose any 
ownership interest in a non-publicly traded entity, even if the 
interest has only potential monetary value as of the time of 
disclosure.
    We recognize that lowering the monetary threshold, as proposed, is 
not without cost. In particular, while we believe that certain elements 
of the revised ``significant financial interest'' definition would make 
the disclosure and review obligations of Investigators and Institutions 
more efficient, we recognize that incorporating a lower monetary 
threshold is likely to lead to increased administrative burden on 
Investigators and Institutions because more financial interests are 
likely to be subject to disclosure and review. For this reason, we 
considered a variety of alternatives for the proposed regulations 
including a threshold that would be approximate to the current standard 
(i.e., $10,000), a significantly lower threshold for all types of 
financial interests (e.g., $100), as well the current proposal.
    We declined to propose a threshold equivalent to the current 
standard because we do not believe that this approach would be 
consistent with our statutory mandate to revise the regulations for the 
purpose of ``strengthening Federal and institutional oversight and 
identifying enhancements, including requirements for financial 
disclosure to institutions * * *.'' Public Law 111-117, Div. D, Tit. 
II, sec. 219, 123 Stat. 3034 (2009). In addition, when we raised this 
question in the ANPRM, a majority of respondents who addressed this 
question favored lowering the monetary disclosure threshold. These 
responses were consistent with our own sense that Institutions would 
welcome greater transparency regarding Investigator financial interests 
because additional information would help them to better manage 
identified FCOI. Thus, for example, even if an Investigator's disclosed 
SFIs falling below the current monetary threshold would not themselves 
result in new FCOI determinations, the information could provide 
context for the Institution's management of higher value SFIs that the 
Institution determines are FCOI.
    Given the arguments in favor of lowering the monetary threshold, we 
analyzed whether a significantly lower threshold (e.g., $100) would be 
appropriate for all types of financial interests. Although there has 
been limited study on the effect of the exact monetary value of an 
Investigator's financial interests on the integrity of his or her 
research, the authors of at least one journal article note, ``a large 
body of evidence from the social sciences shows that behavior can be 
influenced by gifts of negligible value.'' \11\ In addition, recent 
legislative initiatives have incorporated low monetary thresholds in 
comparable circumstances. For example, the disclosure provisions that 
apply to applicable manufacturers of drugs and other covered items with 
regard to transfers of value to physicians and teaching hospitals under 
title VI, section 6002, of the recently enacted Patient Protection and 
Affordable Care Act, Public Law 111-148, generally apply to transfers 
of value of $10 or more.
---------------------------------------------------------------------------

    \11\ Dana Katz, Arthur L. Caplan, and Jon F. Merz, ``All Gifts 
Large and Small,'' Am. J. of Bioethics, summer 2003, vol. 3, no. 3, 
at 39, 39.
---------------------------------------------------------------------------

    Notwithstanding these arguments for a significantly lower monetary 
threshold, we are concerned that the administrative costs associated 
with disclosure and review of all but negligible financial interests 
would outweigh the intended benefit of these regulations in promoting 
objectivity in research. For example, given the existing (and proposed) 
obligation on Investigators to update SFI disclosures during the period 
of award, we believe it would be a challenge for Investigators and 
Institutions alike to comply with this provision every time a new, all-
but-negligible financial interest was obtained by the Investigator.
    We welcome comment on all aspects of the proposed ``significant 
financial interest'' definition, including comments regarding the 
appropriate balance between the costs that may be associated with 
expanding the number of financial interests subject to disclosure as a 
result of a lower monetary threshold versus the potential benefits that 
might be expected to result from the lower threshold.
    Timing: As indicated in the example above, the revised SFI 
definition would also change the timing for determining whether 
remuneration represents a SFI. The current regulations exclude 
aggregated payments (including salary and royalties) that are ``not 
expected to exceed'' (or, in the case of PHS contracts, are ``not 
reasonably expected to exceed'') the monetary threshold ``over the next 
twelve months.'' Under the revised definition, at issue is remuneration 
(including salary and any payment for services not otherwise identified 
as salary) received from an entity ``in the twelve months preceding the 
disclosure.'' We believe this change would help Institutions and 
Investigators to determine more accurately whether or not a financial 
interest represents a SFI because the payments have already occurred 
and are likely to have been documented. Moreover, to the extent an 
Investigator receives additional remuneration from an entity after 
completing an initial SFI disclosure, such remuneration would be 
subject to the Investigator's ongoing disclosure obligations assuming 
the relevant monetary threshold were exceeded. This issue is addressed 
further in the discussion of 42 CFR 50.604, 45 CFR 94.4 below.
    Examples of payment for services: The current definition references 
as examples of payments for services, receipt of consulting fees, or 
honoraria. We propose to add ``paid authorship'' and ``travel 
reimbursement'' as additional examples in the revised definition. With 
regard to ``paid authorship,'' in particular, although there should be 
little question that receipt of payment from an entity in exchange for 
the drafting of a

[[Page 28693]]

publication constitutes payment for services, we believe it is 
important to reference this form of payment specifically in the 
regulations. This practice has come under increasing scrutiny in recent 
years and we wish to make it clear to Institutions and Investigators 
that such activity may be subject to the disclosure and reporting 
requirements depending on the circumstances of a given case, such as 
the amount of payment.
    Royalties & Intellectual Property: Under the existing regulation, 
royalties are included among the ``payments'' subject to the $10,000 
threshold. Under the proposed regulations, the $5,000 threshold would 
apply to equity interests and ``payment for services,'' which would 
include salary but not royalties. Royalties nevertheless would be 
potentially subject to disclosure, as would other interests related to 
intellectual property. Specifically, the revised definition would 
potentially apply to any of the following: Intellectual property rights 
(e.g., patents, copyrights), royalties from such rights, and agreements 
to share in royalties related to intellectual property rights. As 
discussed further below, however, royalties received by the 
Investigator from the Institution would still be excluded from the SFI 
definition if the Investigator is currently employed or otherwise 
appointed by the Institution.
    Exclusions: We propose to modify the types of interests that are 
specifically excluded from the SFI definition. For example, the revised 
definition would only exclude income from seminars, lectures, teaching 
engagements, if sponsored by a federal, state, or local government 
agency, or an institution of higher education as defined at 20 U.S.C. 
1001(a). Similarly, income from service on advisory committees or 
review panels would only be excluded if from a federal, state, or local 
government agency, or an institution of higher education as defined at 
20 U.S.C. 1001(a). Thus, income from non-profit entities other than 
institutions of higher education for the types of activities described 
above would be subject to the SFI definition. We are proposing this 
change due to the growth of non-profit entities that sponsor such 
activities since the current regulations were promulgated in 1995. Some 
of these non-profit entities receive funding from for-profit entities 
that may have an interest in the outcome of the Investigators' research 
(e.g., foundations supported by pharmaceutical companies or other 
industrial sectors). As a result, we believe it would promote 
objectivity in biomedical and behavioral research if income in excess 
of the relevant monetary threshold received from such non-profit 
entities for teaching and advisory committee-related activities were 
included within the SFI definition and disclosed by Investigators to 
Institutions for their review. Under the current 1995 exclusions to the 
SFI definition, income from such entities for the above-described 
activities would not be disclosed.
    In developing the proposed exclusions to the SFI definition, we 
considered various alternatives, including whether the exclusions 
described above should be limited solely to income from federal, state, 
or local government agencies (i.e., income from institutions of higher 
education for such activities would be covered by the SFI definition). 
However, given that many academic Investigators engage in seminars, 
lectures, teaching engagements, as well as service on advisory 
committees or review panels at academic Institutions other than those 
at which they are employed, we concluded that the burden of requiring 
disclosure of the income from these activities outweighed the potential 
benefit to be gained from such disclosures.
    With regard to the current exclusion for any ownership interests in 
the institution if the institution is an applicant under the SBIR or 
STTR programs, we propose to broaden this exclusion to include any 
ownership interest in the Institution held by the Investigator if the 
Institution is a commercial or for-profit organization (whether or not 
an SBIR/STTR applicant). This proposed change is based primarily on the 
recognition that ownership in one's own company not only is generally 
an inherent and understood financial interest, but also is an interest 
that the Institution is already in a position to know without having to 
request an Investigator to include it in a disclosure of SFIs.
    For similar reasons, we do not propose to make substantive changes 
to the current exclusion for salary, royalties, or other remuneration 
paid by the Institution to the Investigator, other than to limit the 
exception to circumstances in which the Investigator is currently 
employed or otherwise appointed by the Institution. With regard to 
current employees and appointees, we believe not only that these 
financial interests are inherent and understood, but also that an 
Institution is in a position to know this information without having to 
request Investigators to include it in a disclosure of SFIs. However, 
other Investigators (e.g., subrecipient Investigators) may be involved 
with a PHS-funded research project who were previously affiliated with 
an Institution (e.g., former employees) but who still receive 
remuneration from the Institution (e.g., royalty payments). Although an 
Institution presumably maintains information regarding payments to all 
third parties, it may not be obvious to institutional officials 
reviewing a SFI disclosure from a subrecipient Investigator under these 
circumstances that recent payments have been made to the subrecipient 
Investigator. By limiting the exclusion to Investigators who are 
currently employed or otherwise appointed by the Institution, as 
proposed, an Institution could avoid having to investigate, as a matter 
of course, possible Institution payments to every subrecipient 
Investigator participating in a PHS-funded research project.
    We welcome comment on the proposed exclusions to the SFI 
definition, including, for example, whether the proposed exclusion for 
income from teaching and advisory committee-related activities should 
be expanded to apply to all public or non-profit entities (similar to 
the current regulations) or to specific categories of public or non-
profit entities, or further narrowed to apply solely to federal, state, 
or local government agencies. We are particularly interested in 
comments about the balance between the cumulative burden of the 
inclusion of non-profits (or certain categories of non-profits) in 
conjunction with defining SFIs to include institutional 
responsibilities and the potential benefit to be gained from such 
disclosures.
    14. Small Business Innovation Research (SBIR) Program. We propose 
to remove the current definition for the SBIR Program. In light of the 
proposed removal of reference to the SBIR program from the 
``Applicability'' section and the ``significant financial interests'' 
definition, discussed above, the SBIR definition would no longer be 
necessary in the revised regulations, as proposed.

Responsibilities of Institutions Regarding Investigator Financial 
Conflicts of Interest (42 CFR 50.604, 45 CFR 94.4)

    We propose to revise substantially the regulation addressing the 
responsibilities of Institutions regarding Investigator FCOI.
    Subsection (a) of the current regulation provides, in part, that 
each Institution must maintain an appropriate written, enforced policy 
on conflict of interest that complies with the regulations. We propose 
to revise this provision to require an Institution

[[Page 28694]]

not only to maintain an up-to-date, written, enforced policy on FCOI 
that complies with the regulations, but also to make such policy 
available via a publicly accessible Web site. We believe these 
revisions would foster greater transparency and accountability with 
regard to institutional policies. The revised provision would also 
clarify that if an Institution's policy on FCOI includes standards that 
are more stringent than the regulations, the Institution shall adhere 
to its policy and shall provide FCOI reports regarding identified FCOI 
to the PHS Awarding Component in accordance with the Institution's own 
standards. Although we have developed regulatory guidance on this issue 
with regard to grants and cooperative agreements (see NIH ``Frequently 
Asked Question'' B.4 at http://grants.nih.gov/grants/policy/
coifaq.htm), we believe that further clarification in the regulation 
itself is warranted.
    The current subsection (a) also requires, in part, that each 
Institution must inform each Investigator of its policy on conflict of 
interest, the Investigator's disclosure responsibilities, and of these 
regulations. We propose to address this requirement as a new subsection 
(b), and to add to this new subsection an Investigator training 
requirement. Specifically, we propose that Institutions shall require 
Investigators to complete training regarding the Institution's FCOI 
policy, the Investigator's responsibilities regarding disclosure of 
FCOI, and the regulations, prior to engaging in PHS-funded research 
and, thereafter, at least once every two years. This proposal is 
consistent with the comments of a majority of the respondents to the 
ANPRM, who supported adding an Investigator FCOI training requirement.
    The current subsection (a) also states that if the Institution 
carries out the PHS-funded research through subgrantees, contractors, 
or collaborators (or, in the case of PHS contracts, subcontractors or 
collaborators), the Institution must take reasonable steps to ensure 
that Investigators working for such entities comply with the 
regulations, 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 the 
regulations. We propose to create a new subsection (c) that would 
provide a substantially expanded clarification of an Institution's 
obligations with regard to PHS-funded research carried out through a 
subrecipient (e.g., subgrantee, contractor, or collaborator or, in the 
case of a PHS contract, a subcontractor or collaborator). In the ANPRM, 
we included a question that asked whether specific requirements related 
to FCOI identification, management, and reporting should be established 
for subrecipients. This question was based, at least in part, on the 
concern that awardee and subrecipient Institutions may not fully 
recognize their responsibilities related to the regulations. Many ANPRM 
respondents stated that they comply with the current version of 
subsection (a) by requiring a subrecipient to certify to the awardee 
Institution that its FCOI policy complies with the applicable Federal 
regulations and, in those cases when a subrecipient cannot provide a 
certification, requiring the subrecipient to comply with the awardee 
Institution's policy. We believe that this type of approach provides a 
useful means of reinforcing compliance with the regulations.
    Therefore, we propose to include as part of the new subsection (c) 
the following requirements: An Institution that carries out the PHS-
funded research through a subrecipient must incorporate as part of a 
written agreement with the subrecipient legally enforceable terms that 
establish whether the FCOI policy of the awardee Institution or that of 
the subrecipient applies to the subrecipient's Investigators. If the 
subrecipient's FCOI policy applies to subrecipient Investigators, the 
subrecipient shall certify as part of the agreement that its policy 
complies with the regulations. If the subrecipient cannot provide such 
certification, the agreement shall state that subrecipient 
Investigators are subject to the FCOI policy of the awardee 
Institution. If the subrecipient's FCOI policy applies to subrecipient 
Investigators, the agreement shall specify time period(s) for the 
subrecipient to report all identified FCOI to the awardee Institution. 
Such time period(s) shall be sufficient to enable the awardee 
Institution to provide timely FCOI reports, as necessary, to the PHS. 
If subrecipient Investigators are subject to the awardee Institution's 
FCOI policy, the agreement shall specify time period(s) for the 
subrecipient to submit all Investigator disclosures of SFIs to the 
awardee Institution. Such time period(s) shall be sufficient to enable 
the awardee Institution to comply timely with its review, management, 
and reporting obligations under the regulations. Subsection (c) would 
also require that the Institution must provide FCOI reports to the PHS 
regarding all FCOI of all subrecipient Investigators consistent with 
the regulations. We believe that the addition of the above text in the 
new subsection (c) would help clarify for Institutions and their 
subrecipients the requirements of both parties in these relationships 
and promote greater compliance with the regulations.
    Subsection (b) of the current regulation requires that an 
Institution must designate an institutional official(s) to solicit and 
review financial disclosure statements from each Investigator who is 
planning to participate in PHS-funded research. In the ANPRM, we asked 
whether large Institutions (defined as greater than 50 employees) 
should be required to establish an independent committee to review 
financial disclosures, and require that committee to report to an 
organizational level within the Institution that is not conflicted by 
the short-term financial interests of the Investigator or Institution. 
After considering the responses, we weighed the complexity of the 
issues that can arise in reviewing financial interests and evaluating 
conflicts, as well as the potential practical difficulty in determining 
which Institutions would fall within a ``large'' Institution definition 
and which would not. As a result, we do not propose to change the 
redesignated subsection (d). That being said, however, we strongly 
encourage each Institution to form a committee of adequate size and 
scope to review Investigator SFI disclosures and assess comprehensively 
the potential conflicts that may arise in the Institution. In addition, 
since reviewing Investigator financial disclosures for potential FCOI 
can involve many complex issues, we recommend that Institutions consult 
available resources from the Federal government (e.g., NIH materials 
posted at http://grants.nih.gov/grants/policy/coi/) or other public 
resources (e.g., materials prepared by academic and professional 
associations or other scientific organizations).
    The current subsection (c) requires that by the time an application 
is submitted to the 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 SFIs (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. All financial disclosures must be updated 
during the period of award, either on an annual basis or as new 
reportable SFIs are obtained. In the ANPRM, we asked whether this

[[Page 28695]]

requirement should be expanded to require disclosure by Investigators 
of all SFIs that are related to their institutional responsibilities. 
Many respondents to the ANPRM were in favor of expanding the SFIs that 
should be disclosed by the Investigator. As indicated in the above 
discussion of the ``significant financial interest'' definition, the 
proposed revision would capture as part of the definition itself the 
concept that a ``significant financial interest'' is one that 
reasonably appears to be related to the Investigator's ``institutional 
responsibilities.'' Accordingly, we propose to revise the current 
subsection (c) language as part of a redesignated subsection (e) with 
the understanding that the scope of Investigator disclosures would no 
longer be project specific, but would (consistent with the revised SFI 
definition) pertain to the Investigator's institutional 
responsibilities. As part of the new subsection (e), we are also 
proposing to revise and clarify an Investigator's annual and ongoing ad 
hoc disclosure obligations.
    Specifically, in addition to requiring that each Investigator who 
is planning to participate in the PHS-funded research disclose to the 
Institution's designated officials the Investigator's SFIs (and those 
of the Investigator's spouse and dependent children), the Institution 
also would have to require that each Investigator who is participating 
in the PHS-funded research submit an updated SFI disclosure: (1) At 
least annually during the period of the award, including disclosure of 
any information that was not disclosed initially to the Institution or 
in a subsequent SFI disclosure, and disclosure of updated information 
regarding any previously-disclosed SFI (e.g., the updated value of a 
previously-disclosed equity interest); and (2) within thirty days of 
acquiring a new SFI (e.g., through purchase, marriage, or inheritance). 
Although the current regulations include a requirement regarding the 
updating of financial disclosures (see current subsection (c)(2)), we 
believe that the revisions proposed above will provide Institutions and 
Investigators with greater specificity as to the timing of disclosures 
that are required after an Investigator's initial SFI disclosure to the 
Institution.
    The existing subsection (d) requires an Institution to provide 
guidelines consistent with the regulations 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. We propose to reorganize and expand this 
requirement in a redesignated subsection (f) to clarify an 
Institution's obligations. First, the guidelines to be provided by an 
Institution for the designated institutional officials would be 
required to address two related tasks, specifically, determination of 
whether an Investigator's SFI is related to PHS-funded research and, if 
so related, whether the SFI is a FCOI. Under the current regulations, 
the Investigator bears the responsibility for determining the 
relatedness of a SFI to the PHS-funded research as part of the 
disclosure process (42 CFR 50.604(c), 45 CFR 94.4(c)). As discussed 
above, however, the proposed regulations would revise the definition of 
``significant financial interest'' to address ``institutional 
responsibilities'' and, as a result, SFIs subject to disclosure by an 
Investigator to an Institution would not be specific to a particular 
PHS-funded research project. Consistent with these proposed changes, 
the responsibility for determining whether an Investigator's SFI is 
related to PHS-funded research would shift to the Institution. This 
subsection would provide that an Investigator's SFI is related to PHS-
funded research when the Institution, through its designated officials, 
reasonably determines that the SFI: (1) Appears to be affected by the 
PHS-funded research; or (2) is in an entity whose financial interest 
appears to be affected by the research.
    To provide clarification regarding the determination of whether an 
Investigator's SFI is a FCOI, the redesignated subsection (f) would 
incorporate modified language moved from subsection (a)(1) of the 
current 42 CFR 50.605 and 45 CFR 94.5. Specifically, this subsection 
would provide that a FCOI exists when the Institution, through its 
designated officials, reasonably determines that the SFI could directly 
and significantly affect the design, conduct, or reporting of the PHS-
funded research. As discussed above, the proposed regulations would 
also incorporate a definition of ``financial conflict of interest'' 
that is similarly based on this language.
    With regard to the current requirement in subsection (d) regarding 
FCOI management responsibilities, we propose to include this 
requirement in a separate subsection (g) and clarify that the 
requirement includes management of any financial conflicts of a 
subrecipient Investigator pursuant to the new subsection (c), described 
above. We also propose to cross-reference the Institution's revised 
management responsibilities that we propose in 42 CFR 50.605(a), 45 CFR 
94.5(a), including development and implementation of a management plan 
and, if necessary, a mitigation plan. Additional discussion of these 
proposed revisions is addressed below. As a related matter, we propose 
to include a new subsection (h) that cross-references the Institution's 
revised and expanded reporting requirements in the proposed new 
subsection 42 CFR 50.605(b), 45 CFR 94.5(b).
    Subsection (e) of 42 CFR 50.604 currently requires an Institution 
to 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. Correspondingly, subsection (e) of 
45 CFR 94.4 currently requires an Institution to 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. We propose to revise this requirement in a 
redesignated subsection (i) of both 42 CFR 50.604 and 45 CFR 94.4 to 
include a responsibility to maintain records relating to all 
Investigator disclosures of financial interests and the Institution's 
review of, or response to, such disclosures (whether or not a 
disclosure resulted in the Institution's determination of a FCOI). We 
believe that this proposed revision would help clarify for Institutions 
our intent for the record retention obligation to apply not only in 
cases in which the Institution has identified a FCOI, but to all 
Investigator SFI disclosures whether or not such disclosure generated a 
response by the Institution.
    The existing regulations require at subsection (f) that 
Institutions establish adequate enforcement mechanisms and provide for 
sanctions where appropriate. We propose to revise this obligation in a 
redesignated subsection (j) to require an Institution to establish not 
only adequate enforcement mechanisms and provide for employee 
sanctions, but also to provide for other administrative actions to 
ensure Investigator compliance as appropriate.
    We propose to revise and, in some respects, shorten the 
certification requirement currently set forth in subsection (g). In a 
redesignated subsection (k), the revised requirement would require an 
Institution to certify that the Institution (1) has in effect at that 
Institution an up-to-date, written,

[[Page 28696]]

and enforced administrative process to identify and manage FCOI with 
respect to all research projects for which funding is sought or 
received from the PHS; (2) shall promote and enforce Investigator 
compliance with the regulations' requirements including those 
pertaining to disclosure of SFIs; (3) shall manage FCOI and provide 
initial and ongoing FCOI reports to the PHS consistent with the 
regulations; (4) agrees to make information available, promptly upon 
request, to the HHS relating to any Investigator disclosure of 
financial interests and the Institution's review of, or response to, 
such disclosure, whether or not the disclosure resulted in the 
Institution's determination of a FCOI; and (5) shall fully comply with 
the requirements of the regulations. Notably, this revised subsection 
would eliminate much of the current certification language regarding an 
Institution's reporting obligations. In the existing regulations, the 
certification requirement in subsection (g) essentially provides the 
primary source of an Institution's reporting responsibilities regarding 
FCOI. As described further below, we propose a substantial revision and 
expansion of the reporting requirements and, thus, propose to move the 
discussion of such requirements to a newly revised subsection 42 CFR 
50.605(b), 45 CFR 94.5(b).

Management and Reporting of Financial Conflicts of Interest (42 CFR 
50.605, 45 CFR 94.5)

    We propose to revise and expand substantially the current 
regulation regarding management of FCOI to address requirements for 
both management and reporting of FCOI.
    The existing regulations require, at subsection (a), that an 
Institution's designated official(s) review all financial disclosures 
and determine whether a conflict of interest exists. If so, the 
official(s) must determine what actions should be taken by the 
institution to manage, reduce or eliminate such conflict of interest. 
Under the existing regulation, a conflict of interest exists when the 
designated official(s) reasonably determines that a SFI could directly 
and significantly affect the design, conduct, or reporting of the PHS-
funded research. Subsection (a) also provides examples of conditions or 
restrictions that might be imposed to manage conflicts of interest, 
specifically, public disclosure of SFIs, monitoring of research by 
independent reviewers, modification of the research plan, 
disqualification from participation in all or a portion of the research 
funded by the PHS, divestiture of SFIs, or severance of relationships 
that create actual or potential conflicts.
    We propose to revise the above language as part of a redesignated 
subsection (a)(1) to require that, prior to the Institution's 
expenditure of any funds under a PHS-funded research project, the 
designated officials of an Institution shall, consistent with 
subsection (f) of the preceding section (42 CFR 50.604 or 45 CFR 94.4): 
Review all Investigator disclosures of SFIs; determine whether any SFIs 
relate to PHS-funded research; determine whether a FCOI exists; and, if 
so, develop and implement a management plan that shall specify the 
actions that have been, and shall be, taken to manage such FCOI. The 
most significant change in the above proposed text is the introduction 
of a management plan requirement. Although the existing regulations 
require Institutions to manage FCOI, the term ``management plan'' is 
not used. While many Institutions currently may develop and implement 
management plans as a means of fulfilling their FCOI management 
responsibilities, we believe that explicitly incorporating this 
requirement into the regulations would further help to prevent the 
introduction of bias into PHS-funded research across the research 
community. We have not proposed to specify comprehensively in this 
subsection what elements must be included in a management plan, 
however, as indicated in the discussion of subsection (b) below, the 
expanded reporting requirements that we propose would include an 
obligation to report a description of certain ``key elements'' of the 
Institution's management plan in certain FCOI reports. Another change 
in this subsection would be the deletion of the current sentence that 
describes when a financial conflict of interest exists. As discussed 
above, a modified version of this sentence would be moved to the 
redesignated subsection (f) of 42 CFR 50.604 and 45 CFR 94.4, as well 
as incorporated into a definition of ``financial conflict of interest'' 
in 42 CFR 50.603 and 45 CFR 94.3.
    The revised subsection (a)(1) would also include the following 
updated and expanded list of examples of conditions or restrictions 
that might be imposed to manage a FCOI: Public disclosure of FCOI 
(e.g., when presenting or publishing the research); for research 
projects involving human subjects research, disclosure of FCOI directly 
to participants; appointment of an independent monitor capable of 
taking measures to protect the design, conduct, and reporting of the 
research against bias, or the appearance of bias, resulting from the 
FCOI; modification of the research plan; change of personnel or 
personnel responsibilities, or disqualification of personnel from 
participation in all or a portion of the research; reduction or 
elimination of a financial interest (e.g., sale of an equity interest); 
or severance of relationships that create actual or potential financial 
conflicts. Among the differences from the current text would be the 
addition of a specific example in the human subjects research context. 
The ANPRM posed a number of questions related to the issue of whether 
the regulations should be amended to require specific approaches to 
management of FCOI related to certain types of research or 
alternatively, specific types of financial interests or FCOI. After 
considering the comments, we agree with the majority of the respondents 
that this approach would not account for the full range of research 
projects as well as the large contextual variation in circumstances in 
which FCOI may arise. As a result, the proposed revised regulations 
would impose uniform FCOI management responsibilities, regardless of 
the type of research, financial interest, or identified FCOI at issue.
    In addition to revising the current regulation as described above, 
we also propose to introduce two new subsections that clarify an 
Institution's obligations in situations in which an Institution becomes 
aware of a SFI after the PHS-funded research is already underway. 
Specifically, new subsection (a)(2) would require that whenever, in the 
course of an ongoing PHS-funded research project, a new Investigator 
participating in the research project discloses a SFI or an existing 
Investigator discloses a new SFI to the Institution, the designated 
officials of the Institution shall, within sixty days: Review the SFI 
disclosure; determine whether it is related to PHS-funded research; 
determine whether a FCOI exists; and, if so, implement, on at least an 
interim basis, a management plan that shall specify the actions that 
have been, and will be, taken to manage the FCOI. This subsection would 
additionally provide that, depending on the nature of the SFI, an 
Institution may determine that additional interim measures are 
necessary with regard to the Investigator's participation in the PHS-
funded research project between the date of disclosure and the 
completion of the Institution's review.
    A new subsection (a)(3) would provide that whenever an Institution 
identifies a SFI that was not disclosed timely by an Investigator or, 
for whatever reason, was not previously reviewed by the Institution 
during an ongoing PHS-funded research project

[[Page 28697]]

(e.g., was not timely reviewed or reported by a subrecipient), the 
designated officials shall, within sixty days: Review the SFI; 
determine whether it is related to PHS-funded research; determine 
whether a FCOI exists; and, if so: (A) Implement, on at least an 
interim basis, a management plan that shall specify the actions that 
have been, and will be, taken to manage such FCOI going forward; and 
(B) implement, on at least an interim basis, a mitigation plan which 
shall include review and determination as to whether any PHS-funded 
research, or portion thereof, conducted prior to the identification and 
management of the FCOI was biased in the design, conduct, or reporting 
of such research. This subsection would additionally provide that, 
depending on the nature of the SFI, an Institution may determine that 
additional interim measures are necessary with regard to the 
Investigator's participation in the PHS-funded research project between 
the date that the SFI is identified and the completion of the 
Institution's review.
    Our interest in proposing new subsections (a)(2) and (a)(3) is 
based, at least in part, on our experience working with awardee 
Institutions and our general impression that some Institutions may be 
more diligent about addressing potential FCOI at the onset of a PHS-
funded research project than after the work is already underway. We 
also believe it is important to address in the regulations 
circumstances in which an Institution, for whatever reason, has not 
timely reviewed a SFI, particularly when such SFI is later determined 
to be a FCOI. In such circumstances, it is of course important for an 
Institution to manage the FCOI going forward, however, there is also a 
critical need to review and determine whether any bias was introduced 
into the research during the period of time prior to review and 
management of the FCOI. We have proposed to address this need in 
subsection (a)(3) by introduction of a ``mitigation plan'' requirement. 
We have not proposed the specific elements of a mitigation plan because 
we believe different circumstances may necessitate different measures. 
In some instances, for example, it may be sufficient to review a matter 
internally within a given research department, while in other instances 
it may be appropriate to have individuals outside the department or 
outside the Institution review and determine whether the design, 
conduct, or reporting of the research in question was biased by a 
belatedly-identified or belatedly-reviewed FCOI.
    New subsection (a)(4) would require that whenever an Institution 
implements a management plan pursuant to the regulations, the 
Institution must monitor Investigator compliance with the management 
plan on an ongoing basis until the completion of the PHS-funded 
research project. This subsection would dovetail with the new 
subsections (a)(2) and (a)(3), described above, by ensuring that the 
management actions taken by an Institution at the time a FCOI is 
identified continue to be followed by the Investigator(s) involved 
going forward through the duration of the project.
    We propose to introduce at subsection (a)(5) an important and 
significant new requirement to help the biomedical and behavioral 
research community monitor the integrity and credibility of PHS-funded 
research and underscore our commitment to fostering transparency, 
accountability, and public trust. Specifically, we are proposing to 
amend the regulations to require that, prior to the Institution's 
expenditure of any funds under a PHS-funded research project, the 
Institution shall make available via a publicly accessible Web site 
information concerning any SFI that meets the following three criteria: 
(A) The SFI was disclosed and is still held by the PD/PI or any other 
Investigator who has been identified by the Institution as senior/key 
personnel for the PHS-funded research project in the grant application, 
contract proposal, contract, progress report, or other required report 
submitted to the PHS; (B) the Institution determines that the SFI is 
related to the PHS-funded research; and (C) the Institution determines 
that the SFI is a FCOI.
    As part of this new subsection, we would require that the 
information posted include, at a minimum, the following: The 
Investigator's name; the Investigator's position with respect to the 
research project; the nature of the SFI; and the approximate dollar 
value of the SFI (dollar ranges would be permissible; less than 
$20,000; less than $50,000; less than $100,000; less than or equal to 
$250,000; greater than $250,000), or a statement that the interest is 
one whose value cannot be readily determined through reference to 
public prices or other reasonable measures of fair market value. We 
propose to require the Institution to update the posted information at 
least annually. We would also require the Institution to update the Web 
site within sixty days of the Institution's receipt or identification 
of information concerning any additional SFI that was not previously 
disclosed by the PD/PI or senior/key personnel for the PHS-funded 
research project, or upon the disclosure of a SFI by a new PD/PI or new 
senior/key personnel for the PHS-funded research project, if the 
Institution determines that the SFI is related to the PHS-funded 
research and is a FCOI. We would also require that information 
concerning the SFIs of an individual subject to this subsection (a)(5) 
shall remain available via the Institution's publicly accessible Web 
site for at least five years from the date that the information was 
most recently updated.
    We are aware that this proposed public disclosure requirement was 
not discussed in the ANPRM. However, given the number and scope of 
public disclosure initiatives that have emerged since the ANPRM was 
developed, we believe it is appropriate to include such a provision in 
this Notice of Proposed Rulemaking. For example, similar disclosure 
initiatives already are underway at some Institutions and 
pharmaceutical companies, and some states have implemented similar 
disclosure requirements legislatively. In addition, at the federal 
level, the recently enacted Patient Protection and Affordable Care Act 
(Affordable Care Act), Public Law 111-148, includes several public 
disclosure provisions. Of greatest relevance, title VI, section 6002, 
of the Affordable Care Act generally requires designated manufacturers 
of covered drugs, devices, biological or medical supplies to submit 
certain information to HHS regarding certain payments made to 
designated physicians and teaching hospitals annually beginning March 
31, 2013, and generally requires the Secretary of HHS to make such 
information publicly available through an Internet Web site annually 
beginning not later than September 30, 2013. This section of the 
Affordable Care Act includes similar provisions that generally apply to 
information concerning ownership or investment interests held by 
designated physicians in designated manufacturers and group purchasing 
organizations. In addition to these institutional and legislative 
initiatives, many scientific journals require authors to publicly 
disclose information regarding their research-related financial 
relationships, and many scientific organizations impose similar 
requirements with regard to speakers at scientific meetings and 
conferences.
    We recognize that the proposed public disclosure requirement would 
place an additional administrative burden on Institutions, and would 
also impact the privacy of Investigators who have information related 
to their personal financial interests posted publicly to the extent 
such interests are

[[Page 28698]]

determined to be FCOI. Consequently, it is important to identify the 
optimal balance between these more onerous impacts and the imperative 
to preserve the integrity of the public's investment in biomedical and 
behavioral research.
    Therefore, we considered several alternatives to the proposed text 
of subsection (a)(5), including:
    1. No requirement that Institutions publicly disclose 
Investigators' SFI.
    2. A requirement that an Institution shall make available via a 
publicly accessible Web site information concerning any SFI disclosed 
to the Institution and still held by the PD/PI or any other 
Investigator who has been identified by the Institution as senior/key 
personnel for the PHS-funded research project in the grant application, 
contract proposal, contract, progress report, or other required report 
submitted to the PHS.
    The first alternative--i.e., no requirement for public disclosure--
has the advantage of reducing the burden on Institutions and the 
privacy impact on Investigators. However, this alternative would not 
promote as much increased transparency or accountability and, given the 
increasing number of other public sources of at least some of this 
information, we are unconvinced that this alternative would be 
sufficient to assist the PHS in strengthening oversight and ensuring 
proper management of potential bias from FCOI. The second alternative--
i.e., requiring public disclosure of all SFIs held by certain 
Investigators--has the advantage of providing the public with more 
complete information that aligns and harmonizes with information other 
sources (e.g., disclosures in journals, at meetings, and in accordance 
with the Affordable Care Act). Expanding the public disclosure 
requirement in this manner, however, could increase the administrative 
burden on the Institutions in some respects (due to an increase in 
volume of posted information) and raise privacy concerns among impacted 
Investigators given the increased scope of financial interest 
information, not all of which is related to PHS-funded research, that 
would be made publicly available. This requirement also risks 
strengthening the misperception that all SFI constitute FCOI.
    The text proposed in subsection (a)(5) is an attempt to balance the 
concerns presented by these and other alternatives by including a 
public disclosure requirement, but limiting it to public disclosure of 
SFIs determined by the Institution to be related to the PHS-funded 
research and to be FCOI. We believe that including a public disclosure 
requirement in these regulations would be advantageous because, among 
other reasons, the information would derive directly from the 
Investigator and the Institution (as opposed to a third party not 
involved in the PHS-funded research) and the information can be updated 
timely. In addition, confining the public disclosure requirement solely 
to those SFIs determined by the Institution to be related to the PHS-
funded research and to be FCOI limits the amount of Investigator 
financial information that is made publicly available. We recognize, 
however, that limiting the requirement for public disclosure in this 
manner does risk strengthening the misperception that any FCOI 
necessarily causes bias, which should not be the case if the FCOI is 
sufficiently managed by the Institution.
    We welcome comment on the proposed requirement set forth in the new 
subsection (a)(5) and the alternatives described above, as well as 
suggestions for modifying the proposed regulation language or 
suggestions for other alternative approaches.
    Subsection (b) of the current regulation provides that, 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. We propose to maintain this 
requirement using slightly modified language in a new redesignated 
subsection (a)(6).
    In place of the existing subsection (b), we propose to include a 
substantial revision and expansion of Institutions' existing FCOI 
reporting requirements. As indicated above, the certification 
requirement in the existing 42 CFR 50.604(g), 45 CFR 94.4(g), 
essentially provides the primary source of an Institution's FCOI 
reporting responsibilities under the current regulations. The existing 
provision requires--as part of the Institution's certification in each 
contract proposal or application for funding to which the regulations 
apply--that, 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 
the regulation; 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.
    A new subsection (b)(1), as proposed, would continue the existing 
regulation's requirement with regard to the timing of initial FCOI 
reports and reference the proposed management plan requirements 
addressed in the above discussion of subsection (a). Specifically, an 
Institution would be required, prior to the Institution's expenditure 
of any funds under a PHS-funded research project, to provide to the PHS 
Awarding Component a FCOI report regarding any Investigator SFI found 
by the Institution to be conflicting and ensure that the Institution 
has implemented a management plan in accordance with the regulations.
    Similarly, a new subsection (b)(2) would continue the existing 
regulation's requirement with regard to timing of follow-up FCOI 
reports with examples of when such reports may be required as well as 
reference to the proposed management plan and mitigation plan 
requirements addressed above in the discussion of subsection (a). 
Specifically, the regulation would require that for any SFI that the 
Institution identifies as conflicting subsequent to the Institution's 
initial FCOI report during an ongoing PHS-funded research project 
(e.g., upon the participation of a new Investigator in the research 
project), the Institution shall provide to the PHS Awarding Component, 
within sixty days, a FCOI report regarding the FCOI and ensure that the 
Institution has implemented a management plan in accordance with the 
regulations. Where such FCOI report involves a SFI that was not 
disclosed timely by an Investigator or, for whatever reason, was not 
previously reviewed by the Institution (e.g., was not timely reviewed 
or reported by a subrecipient), the Institution also would be required 
to provide with its FCOI report the mitigation plan implemented by the 
Institution to determine whether any PHS-funded research, or portion 
thereof, conducted prior to the identification and management of the 
FCOI was biased in the design, conduct, or reporting of such research.
    In the ANPRM, we requested comment on whether Institutions should 
be required to report additional information to the PHS Awarding 
Component and if so, what kind of information would provide valuable 
data to the PHS Awarding Component in evaluating these reports and the 
potential risk of bias in the conduct of research. Many respondents 
supported such a requirement and indicated that

[[Page 28699]]

reporting additional information would allow for enhanced oversight by 
the PHS Awarding Component.
    Consistent with these public comments, we are proposing a new 
subsection (b)(3) that would identify the information that must be 
included in the FCOI reports required under subsections (b)(1) and 
(b)(2), described above. Specifically, any FCOI report required under 
these subsections would be required to include sufficient information 
to enable the PHS Awarding Component to understand the nature and 
extent of the financial conflict, and to assess the appropriateness of 
the Institution's management plan. As proposed, elements of the FCOI 
report shall include, but are not limited to the following:
     Project/Contract number;
     PD/PI or Contact PD/PI if multiple PD/PI model is used;
     Name of the Investigator with the FCOI;
     Nature of the financial interest (e.g., equity, consulting 
fee, travel reimbursement, honorarium);
     Value of the financial interest (dollar ranges would be 
permissible: $0-$4,999; $5,000-$9,999; $10,000-$19,999; amounts between 
$20,000-X$100,000 by increments of $20,000; amounts above $100,000 by 
increments of $50,000), or a statement that the interest is one whose 
value cannot be readily determined through reference to public prices 
or other reasonable measures of fair market value;
     A description of how the financial interest relates to the 
PHS-funded research and the basis for the Institution's determination 
that the financial interest conflicts with such research;
     A description of the key elements of the Institution's 
management plan, including:
    [cir] The role and function of the conflicted Investigator in the 
research project;
    [cir] The rationale for including the conflicted Investigator in 
the research project;
    [cir] The conditions of the management plan;
    [cir] How the management plan will safeguard objectivity in the 
research project;
    [cir] Confirmation of the Investigator's agreement to the 
management plan;
    [cir] How the management plan will be monitored to ensure 
Investigator compliance;
    [cir] Other information as needed.
    We welcome public comment on the FCOI report elements that we 
propose to include in the new subsection (b)(3).
    We propose to introduce in a new subsection (b)(4) a new 
requirement to provide follow-up reports in cases in which an FCOI has 
been previously identified and reported. Specifically, the regulation 
would require that for any FCOI previously reported by the Institution 
with regard to an ongoing PHS-funded research project, the Institution 
shall provide an annual FCOI report that addresses the status of the 
FCOI and any changes to the management plan to the PHS Awarding 
Component for the duration of the PHS-funded research project. The 
annual FCOI report would be required to specify whether the financial 
conflict is still being managed or explain why the FCOI no longer 
exists. The regulations would require the Institution to provide annual 
FCOI reports to the PHS Awarding Component for the duration of the 
project period (including extensions with or without funds) in the time 
and manner specified by the PHS Awarding Component. If this provision 
were to be implemented as part of a Final Rule, we anticipate that PHS 
Awarding Components would provide guidance to Institutions regarding 
the specific mechanics for filing annual FCOI reports.
    Finally, we propose in a new subsection (b)(5) language with regard 
to FCOI reporting that is similar to the language for FCOI management 
proposed in the redesignated subsection (a)(5), described above. 
Namely, we propose that in addition to the types of financial conflicts 
of interest as defined in the regulations that must be reported 
pursuant to this section, an Institution may require the reporting of 
other FCOI, as the Institution deems appropriate.

Remedies (42 CFR 50.606, 45 CFR 94.6)

    We propose limited revisions to the existing regulation regarding 
remedies. Subsection (a) currently provides that 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. We propose to 
revise this requirement such that it applies if an Investigator's 
failure to comply with an Institution's FCOI policy or a FCOI 
management plan appears to have biased the design, conduct, or 
reporting of the PHS-funded research.
    In subsection (b), we propose to incorporate language regarding the 
Department's right of inquiry and access to records that is consistent 
with the proposed certification provision in 42 CFR 50.604(k)(4), 45 
CFR 94.4(k)(4), discussed above. Specifically, subsection (b) would 
provide that the HHS may inquire at any time (i.e., before, during, or 
after award) into any Investigator disclosure of financial interests 
and the Institution's review of, or response to, such disclosure, 
whether or not the disclosure resulted in the Institution's 
determination of a FCOI. Similar to the existing regulations, an 
Institution would be required to submit, or permit on site review of, 
all records pertinent to compliance with the regulations.
    Subsection (b) would also be revised to clarify the types of 
actions that may be taken if a PHS Awarding Component decides that a 
particular FCOI will bias the objectivity of the PHS-funded research to 
such an extent that further corrective action is needed or that the 
Institution has not managed the FCOI in accordance with the 
regulations. With regard to grants and cooperative agreements, in 
particular, subsection 50.606(b) would specify that the PHS Awarding 
Component may determine that imposition of special award conditions 
under 45 CFR 74.14 or suspension of funding or other enforcement action 
under 45 CFR 74.62 is necessary until the matter is resolved. 
Correspondingly, subsection 94.6(b) would specify for PHS contracts 
that the PHS Awarding Component may determine that issuance of a Stop 
Work Order by the Contracting Officer or other enforcement action is 
necessary until the matter is resolved.
    We propose to revise subsection (c) to add that 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 FCOI that was not managed or reported by the 
Institution as required by the regulations, the Institution must not 
only require the Investigator involved to disclose the FCOI in each 
public presentation of the results of the research, but also to request 
an addendum to previously published presentations.
    We propose additional minor revisions to this section as part of a 
broader effort to improve internal consistency with regard to the use 
of various terms and phrases throughout these regulations and, where 
feasible, consistency between the text of 42 CFR Part 50, Subpart F, 
and 45 CFR Part 94.

Other HHS Regulations That Apply (42 CFR 50.607)

    We propose minor revisions to the list of other HHS regulations 
that apply to

[[Page 28700]]

update changes that have been made in the CFR location or title of the 
existing references in this section. In the course of our review, we 
considered whether this section was necessary, or whether it should be 
deleted as potentially confusing to readers with regard to the scope of 
additional regulations that may apply to a given Institution or 
Investigator. We welcome comment on whether the regulations should be 
further revised to delete this section.

III. Institutional Conflict of Interest

    Institutional conflict of interest is a subject that is not 
specifically addressed in the current regulations. Because this is a 
topic of increasing interest to the Department as well as in the 
research community, we invited public comment in the ANPRM on the 
possible revision of the regulations to address institutional conflict 
of interest. In particular, we asked (a) how ``institutional conflict 
of interest'' would be defined, and (b) what an institutional conflict 
of interest policy would address in order to assure the PHS of 
objectivity in research.
    The comments that we received in response to these questions 
demonstrated a variety of viewpoints on this complex issue and, in 
particular, the extensive differences in administrative structure among 
Institutions that receive PHS funding. As a result, we believe that 
further careful consideration is necessary before PHS regulations could 
be formulated that would address the subject of institutional conflict 
of interest in the same comprehensive manner as the proposed 
regulations regarding Investigator FCOI. Because we believe it is 
important to revise the existing regulations regarding Investigator 
FCOI in a timely manner, our proposed revisions to the text of the 
regulations are limited to the subject of Investigator FCOI.
    Notwithstanding this limitation, we welcome comment on whether the 
regulations should be further revised to require Institutions, at a 
minimum, to adopt some type of policy on institutional conflict of 
interest, even if the scope and elements of the policy remain undefined 
in the regulations. For example, in addition to the changes we have 
proposed herein to subsection (a) of 42 CFR 50.604 and 45 CFR 94.4, 
discussed above, this subsection could be further revised to require 
that each Institution shall maintain up-to-date, written, enforced 
policies on Investigator financial conflicts of interest and 
institutional conflict of interest that comply with this subpart, and 
make such policies available via a publicly accessible Web site. If 
this additional revision to subsection (a) were to be incorporated, 
further corresponding revisions to the regulations would be made as 
necessary, e.g., to the Purpose section (42 CFR 50.601, 45 CFR 94.1).
    Whether or not final regulations includes further revisions to 
address institutional conflict of interest, the Department will 
continue to consider the issue carefully and may propose in the future 
more comprehensive revisions to the regulations to address this 
subject.

IV. Regulatory Impact Analyses (RIA)

    The following is provided as public information.

Analysis of Impacts

    We have examined the impacts of the proposed amendments to 42 CFR 
Part 50 Subpart F and 45 CFR Part 94 under Executive Order 12866, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order 12866, 
Regulatory Planning and Review, directs agencies to assess all costs 
and benefits of available regulatory alternatives and, when regulation 
is necessary, to select regulatory approaches that maximize net 
benefits (including potential economic, environmental, public health 
and safety, and other advantages; distributive impacts; and equity). 
The Executive Order defines an economically significant regulatory 
action as one that would have an annual effect on the economy of $100 
million or more. Based on our analyses, we believe that the proposed 
amendments to the regulations do not constitute an economically 
significant regulatory action under this definition.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of the 
rule on small entities. For the purposes of this analysis, small 
entities include small business concerns as defined by the SBA, usually 
businesses with fewer than 500 employees. Approximately 2800 \12\ such 
organizations apply for research funding annually, of which 
approximately 1300 \13\ are awarded funds. The only proposed change to 
the current regulations that pertains to applicant organizations is the 
proposed removal of the exemption for SBIR/STTR Program Phase I 
applications in sections 50.602 and 94.4, respectively. This would 
affect approximately 2000 small business concerns that apply for SBIR/
STTR Program Phase I funding. All other proposed changes to the 
regulations apply only to the approximately 1200 small business 
concerns that receive PHS funding (under both the SBIR/STTR Program 
Phase I and Phase II programs). The cost of implementing the amended 
regulations is an allowable cost eligible for reimbursement as a 
Facilities and Administrative cost on PHS-supported grants, cooperative 
agreements and contracts. This generally offsets the cost burdens of 
implementation. Therefore, we do not believe that the proposed changes 
to the regulations would have a significant economic impact on a 
substantial number of small entities. Our analysis is further supported 
by the small number of FCOI reports submitted to NIH by small business 
concerns--four reports were submitted in FY2008 and ten in FY2009. 
Finally, we considered the impact of the proposed requirement for 
Investigator training every two years on small entities. For the 
current regulation, NIH developed training materials that Institutions, 
including those that small businesses, can use which are available on 
the NIH Web site at http://grants.nih.gov/grants/policy/coi/index.htm. 
NIH will continue to update the training materials when the Final Rule 
is published to ameliorate the burden on Institutions, including small 
businesses.
---------------------------------------------------------------------------

    \12\ All applicant Institution numbers are based on the number 
of Institutions that applied for NIH funding in FY2008.
    \13\ All awardee Institution numbers are based on the number of 
Institutions that were awarded NIH funding in FY2008.
---------------------------------------------------------------------------

    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation with base year of 1995) in any one year.'' The current 
inflation-adjusted statutory threshold is approximately $142 
million.\14\ The agency does not expect that the proposed amendments to 
the regulations will result in any 1-year expenditure that would meet 
or exceed this amount.
---------------------------------------------------------------------------

    \14\ Bureau of Labor Statistics inflation calculator.
---------------------------------------------------------------------------

    Though the proposed amendments will not result in the expenditures 
listed above, we do discuss the effects of the amendments elsewhere in 
this preamble.

[[Page 28701]]

Benefits
    The proposed amendments to the regulations on the Responsibility of 
Applicants for Promoting Objectivity in Research for which PHS Funding 
is Sought (42 CFR Part 50, Subpart F) and Responsible Prospective 
Contractors (45 CFR Part 94) would expand and add transparency to 
investigator disclosure of Significant Financial Interests as well as 
enhance regulatory compliance and effective oversight of financial 
conflicts of interest.
Costs
    Approximately 5000 Institutions that apply for PHS funding annually 
would be subject to the amended regulations. The only proposed change 
to the current regulations that pertains to applicant organizations, 
however, pertains to a subset of applicant organizations and that is 
the proposed removal of the exemption for SBIR/STTR Program Phase I 
applications in sections 50.602 and 94.4, respectively, which would 
affect approximately 2000 small business concerns. The remaining 
proposed amendments would affect the approximately 2800 organizations 
(of all types, including small businesses) that are awarded PHS funding 
annually and, through the implementation of the regulations by the 
Institutions, to the estimated 40,500 Investigators participating in 
PHS-funded research that have Significant Financial Interests. The cost 
of implementing the amended regulations is an allowable cost eligible 
for reimbursement as a Facilities and Administrative cost on PHS 
supported grants, cooperative agreements and contracts. This generally 
offsets the cost burdens of implementation for the affected 
Institutions and through their implementation of the regulations, to 
the Investigators. That said, we are including a description of the 
projected costs of the proposed amendments to the regulations for 
general information.

----------------------------------------------------------------------------------------------------------------
                                                                 Frequency of    Estimated cost     Estimated
 42 CFR Part 50  Subpart F/    New proposed      Number of         response       per response     annual cost
       45 CFR Part 94          requirement?     respondents        (annual)           \15\             \16\
----------------------------------------------------------------------------------------------------------------
50.602/94.2................  Only for SBIR/   Total: ~5,000    NA.............  NA.............  Total estimated
                              STTR Phase I     applicant                                          annual cost
                              applicants.      Institutions                                       $$12,047,525.\
                                               and 2,800                                          19\
                                               awardee
                                               institutions
                                               \17\ and an
                                               estimated
                                               40,500
                                               investigators.
                                              New:
                                               Approximately
                                               2,000
                                               applicant
                                               Institutions
                                               and 700
                                               awardee
                                               Institutions.\
                                               18\
50.604/94.4
    (a)....................  Only making the  2,800 \20\.....  1..............  $665...........  $1,862,000.
                              policy public.
    (b)....................  Only the         Institutions:    Institutions: 1  Institutions:    Institutions:
                              training         2,800 \21\.     Investigators:    $105.            $294,000.
                              component is    Investigators:    0.5.            Investigators:   Investigators:
                              new.             40,500.\22\.                      $17.5.           $708,750.
                                                                                Total: $122.5..  Total:
                                                                                                  $1,002,750.
    (c)(1).................  n--clarificatio  700 \23\.......  1..............  $35.00.........  $24,500.
                              n of current
                              requirements.
    (d)....................  y..............  2,800 \24\.....  1..............  $35............  $98,000.
    (e)(1).................  n but scope has  40,500 \25\....  1..............  $70............  $2,835,000.
                              changed.
    (e)(2).................  n..............  40,500.........  1..............  $17.50 \26\....  $708,750.
    (e)(3).................  n..............  1,000 \27\.....  1..............  $17.50.........  $17,500.
    (f)....................  n but scope has  2,800 awardee    1..............  $35.00.........  $98,000.
                              changed.         Institutions.
    (i)....................  n..............  2,800 awardee    1..............  $140...........  $392,000.
                                               Institutions.
50.605/94.5
    (a)(1).................  Requirement to   2,800 awardee    1..............  $35 for review   $4,217,500.\29\
                              develop a        institutions.\                    of 40,500
                              management       28\                               disclosures
                              plan.                                              and $2,800 for
                                                                                 developing
                                                                                 management
                                                                                 plan for 1,000
                                                                                 identified
                                                                                 FCOI.
    (a)(2).................  n..............  1,000 \30\.....  NA \31\........  NA.............  NA.
    (a)(3).................  y..............  500 \32\.......  1..............  $105...........  $52,200.
    (a)(3)(i)..............  n..............  50 \33\........  1..............  $2,800 \34\....  $140,000.
    (a)(3)(ii).............  y..............  50 \35\........  1..............  $280 \36\......  $14,000.
    (a)(4).................  y..............  1,000 \37\.....  12.............  $35............  $420,000.
    (a)(5).................  y..............  2,800..........  1..............  $35 \38\.......  $98,000.
    (b)(1).................  n but amount of  Included in      NA.............  NA.............  NA.
                              information      50.605(b)(3)/
                              reported has     94.5 (b)(3)
                              changed.         below.
    (b)(2).................  y..............  100 \39\.......  1..............  $70............  $7,000.
    (b)(3).................  y..............  1,000..........  1..............  $35............  $35,000.\40\
    (b)(4).................  n but scope has  1,000..........  1..............  $17.50 \41\....  $17,500.
                              been clarified.
50.606/94.6

[[Page 28702]]


    (a)....................  n--but scope     20 \42\........  1..............  $350...........  $7,000.
                              has been
                              clarified.
    (c)....................  n--only the      50 \43\........  3 \44\.........  $10.50.........  $525.
                              addendum to
                              previously
                              published
                              presentations
                              is new.
----------------------------------------------------------------------------------------------------------------

Alternatives
    The key alternative to the proposed amendment of these regulations 
would be to continue to operate under the current regulations. In the 
intervening years since the regulation was promulgated, Investigator 
collaborations have become more complex and public scrutiny has 
increased significantly creating an environment that would benefit from 
a regulation with more effective means for management and oversight. If 
we continue to operate under the current regulations, we would then 
lose the opportunity to implement enhanced institutional management of 
Investigator financial conflicts of interests related to PHS-funded 
research, increased oversight by the PHS funding component, and 
enhanced transparency. We believe that the incremental increase in the 
cost of implementing the proposed regulation is outweighed by the 
benefits of these changes and that the proposed regulation will 
strengthen public trust in PHS-funded research. With regard to 
alternative approaches to particular requirements in the regulations, 
we have indicated in various provisions of the preamble to this Notice 
of Proposed Rulemaking the basis for the Department's proposed approach 
versus alternatives. (See, e.g., section III regarding institutional 
conflicts of interest.)
---------------------------------------------------------------------------

    \15\ Average burden hours x $35/hour based on recent NIH cost 
analyses.
    \16\ Number of respondents x estimated cost per response.
    \17\ Based on FY2008 numbers.
    \18\ Will be newly covered by the regulations under the proposed 
expansion to include the SBIR/STTR phase I program.
    \19\ Sum of all the columns below.
    \20\ Assumes 2,800 awardee Institutions and 19 hours per 
institution for formulating and maintaining the policy. Also assumes 
that all awardee Institutions already maintain a public Web site. 
Therefore, posting the policy to the Web site is an incremental 
cost.
    \21\ Assumes that 2,800 awardee institutions: 1. Inform 
investigators about the policy on an annual basis by sending a 
notification to all investigators = 1 hour and 2. Annually adapt 
NIH-provided training materials to Institutional needs = 2 hours.
    \22\ Assumes 40,500 Investigators undergo 1 hour of training 
every two years. This refers to FCOI training only and is based on 
the use of training materials developed by the NIH and adapted to 
the Institution's needs.
    \23\ An estimated maximum 25% of Institutions may have sub-
recipients in any one year--assuming 1 hour per Institution to 
incorporate the requirement of the regulations into an already 
existing written agreement.
    \24\ Assumes that 2,800 awardee institutions solicit disclosures 
on an annual basis by sending a notification to all investigators.
    \25\ The financial disclosure burden estimate is based upon an 
investigator figure of 40,500 with an average response time of 2 
hours.
    \26\ Assumes that updating a disclosure takes less time/effort 
and therefore costs less than creating a new one.
    \27\ Assumes that only a small number of the 40,500 
investigators will have a new SFI in any year.
    \28\ Although not more than 1,000 reports of Conflict of 
Interest are expected annually, the 2,800 responding institutions 
must review all financial disclosures associated with PHS-funded 
awards to determine whether any conflicts of interest exist. Thus, 
the review cost of $1,417,500 is based upon estimates that it will 
take on the average 1 hour to review each of 40,500 financial 
disclosures associated with PHS-funded awards. The cost for 
developing a management plan for identified FCOI is estimated at 80 
hours x 1,000 cases x $35/hour = $2,800,000.
    \29\ $4,252,500 for review plus $2,800,000 for developing 
management plans = $7,052,500.
    \30\ Based on 50.604/94.4 (e)(3) above.
    \31\ The cost is included in 50.605/94.5 (b)(2) below.
    \32\ Assumes that this is a rare occurrence, based on prior 
experience.
    \33\ Assumes only a fraction of the newly identified SFIs will 
constitute FCOI.
    \34\ Development of management plan.
    \35\ Assumes only a fraction of the newly identified SFIs will 
constitute FCOI.
    \36\ Assumes the mitigation plan will be adapted from the 
management plan developed in 50.605/94.5 (a)(3)(i) above and 
therefore will cost less than developing an entirely new plan.
    \37\ Based on previous assumption of 1,000 FCOI reports 
annually.
    \38\ Assumes that all awardee Institutions already maintain a 
public Web site. Adding the required information is an incremental 
cost. However, updating annually does have a cost.
    \39\ The cost of subsequent reports of conflicts is 
significantly less, because we do not expect many additional 
reportable conflicts and there will be only a limited number of 
disclosures to review.
    \40\ Assumes 1,000 FCOI reports annually x 1 hour x $35/hour to 
prepare the report/complete an NIH-provided web form.
    \41\ Assumes it takes less time to update a report than to 
create a new one.
    \42\ This was originally estimated in the 1995 Final Rule to be 
no more than 5 instances that the failure of an investigator to 
comply with the institution's conflict of interest policy has biased 
the design, conduct or reporting of the research. ``Objectivity in 
Research, Final Rule'' 60 FR 132 (July 11, 1995) pps. 35810-35819. 
This estimate, and others were increased in 2002 ``due to increased 
numbers of institutions and investigators.''
    \43\ Number based on 50.605/94.5 (a)(3)(i)--of those only a 
fraction will relate to a project of clinical research whose purpose 
is to evaluate the safety or effectiveness of a drug, medical 
device, or treatment, but we are calculating the maximum assumed 
cost.
    \44\ Assumes an average of 3 publications annually.
---------------------------------------------------------------------------

Paperwork Reduction Act

    This proposed rule contains requirements that are subject to OMB 
approval under the Paperwork Reduction Act of 1995, as amended (44 
U.S.C. chapter 35). Sections 50.604(a), 50.604(b), 50.604(c)(1), 
50.604(d), 50.604(e)(1), 50.604(e)(2), 50.604(e)(3), 50.604(f), 
50.605(a)(1), 50.605(a)(3), 50.605(a)(3)(i), 50.605(a)(3)(ii), 
50.605(a)(4), 50.605(a)(5), 50.605(b)(1), 50.605(b)(2), 50.605(b)(3), 
50.605(b)(4), 50.606(a), 50.606(c); 94.4(a), 94.4(b), 94.4(c)(1), 
94.4(d), 94.4(e)(1), 94.4(e)(2), 94.4(e)(3), 94.4(f), 94.5(a)(1), 94.5 
(a)(3), 94.5(a)(3)(i), 94.5(a)(3)(ii), 94.5(a)(4), 94.5(a)(5), 
94.5(b)(1), 94.5(b)(2), 94.5(b)(3), 94.5(b)(4), 94.6(a), and 94.6(c) 
contain reporting and information collection requirements that are 
subject to OMB approval under the Paperwork Reduction Act.
    Sections 50.604(i), and 94.4(i), contain recordkeeping requirements 
that are subject to OMB review under the Paperwork Reduction Act. The 
title, description, and respondent description of the information 
collection and recordkeeping requirements contained in this proposed 
rule have been submitted to OMB for review. Other organizations and 
individuals desiring to submit comments on the information collection 
and recordkeeping requirements should send their comments to: (1) Mikia 
Currie, Project Clearance Officer, National Institutes of Health, 
Rockledge Center 1, 6705 Rockledge Drive, Room 3509, Bethesda, MD 
20817, telephone 301-594-7949 (not a toll-free number); and (2) the 
Office of Information and Regulatory Affairs, OMB, OIRA_
submission@omb.eop or by fax to 202-395-6974, and mark ``Attention: 
Desk Officer for the National Institutes of Health, Department of 
Health and Human Services.'' After we obtain OMB

[[Page 28703]]

approval, we will publish the OMB control number in the Federal 
Register.
    Following are details of the estimated burden of implementing the 
proposed regulations.

----------------------------------------------------------------------------------------------------------------
                                                                 Frequency of
42 CFR Part 50 Subpart F/45    New proposed      Number of         response      Average burden   Annual burden
        CFR Part 94            requirement?     respondents        (annual)          hours          hours \45\
----------------------------------------------------------------------------------------------------------------
50.602/94.2................  Only for SBIR/   Total: ~5,000    NA.............  NA.............  Total estimated
                              STTR Phase I     applicant                                          burden hours:
                              applicants.      Institutions                                       344,215.\48\
                                               and 2,800
                                               awardee
                                               institutions
                                               \46\ and an
                                               estimated
                                               40,500
                                               investigators.
                                              New:
                                               Approximately
                                               2,000
                                               applicant
                                               Institutions
                                               and 700
                                               awardee
                                               Institutions.\
                                               47\
50.604/94.4
    (a)....................  Only making the  2,800 \49\.....  1..............  19.............  53,200.
                              policy public.
    (b)....................  Only the         Institutions:    Institutions: 1  Institutions: 3  Institutions:
                              training         2,800 \50\.     Investigators:   Investigators:    8,400.
                              component.      Investigators:    0.5.             1.              Investigators:
                                               40,500.\51\.                                       20,250.
    (c)(1).................  n-clarification  700 \52\.......  1..............  1..............  700.
                              of current
                              requirements.
    (d)....................  y..............  2,800 \53\.....  1..............  1..............  2,800.
    (e)(1).................  n but scope has  40,500 \54\....  1..............  2..............  81,000.
                              changed.
    (e)(2).................  n..............  40,500.........  1..............  0.5 \55\.......  20,250.
    (e)(3).................  n..............  1,000 \56\.....  1..............  0.5............  500.
    (f)....................  n but scope has  2,800 awardee    1..............  1..............  2,800.
                              changed.         Institutions.
    (i)....................  n..............  2,800 awardee    1..............  4..............  11,200.
                                               Institutions.
50.605/94.5
    (a)(1).................  Requirement to   2,800 awardee    1..............  1 hour per       120,500.\58\
                              develop a        institutions.\                    disclosure to
                              management       57\                               review plus 80
                              plan.                                              hours per
                                                                                 identified
                                                                                 FCOI to
                                                                                 develop
                                                                                 management
                                                                                 plan.
    (a)(2).................  n..............  1,000 \59\.....  NA \60\........  NA.............  NA.
    (a)(3).................  y..............  500 \61\.......  1..............  3..............  1500.
    (a)(3)(i)..............  n..............  50 \62\........  1..............  80 \63\........  4,000.
    (a)(3)(ii).............  y..............  50 \64\........  1..............  8 \65\.........  400.
    (a)(4).................  y..............  1,000 \66\.....  12.............  1..............  12,000.
    (a)(5).................  y..............  2,800..........  1 \67\.........  1..............  2,800.
    (b)(1).................  n but amount of  Included in      NA.............  NA.............  NA.
                              information      50.605(b)(3)/
                              reported has     94.5 (b)(3)
                              changed.         below.
    (b)(2).................  y..............  100 \68\.......  1..............  2..............  200.
    (b)(3).................  y..............  1,000..........  1..............  1..............  1,000.\69\
    (b)(4).................  n-scope has      1,000..........  1..............  0.5 \70\.......  500.
                              been clarified.
50.606/94.6
    (a)....................  n-scope has      20 \71\........  1..............  10.............  200.
                              been clarified.
    (c)....................  n-only the       50 \72\........  3 \73\.........  0.3............  15.
                              addendum to
                              previously
                              published
                              presentations.
----------------------------------------------------------------------------------------------------------------

Environmental Impact

    We have determined that this action is of a type that does not 
individually or cumulatively have a significant effect on the human 
environment. Therefore, neither an environmental assessment nor an 
environmental impact statement is required.

[[Page 28704]]

Catalogue of Federal Domestic Assistance
---------------------------------------------------------------------------

    \45\ Number of respondents x average burden hours x frequency of 
response.
    \46\ Based on FY2008 numbers.
    \47\ Will be newly covered by the regulations under the proposed 
expansion to include the SBIR/STTR phase I program.
    \48\ Sum of all the columns below.
    \49\ Assumes 2,800 awardee Institutions and 19 hours per 
institution for formulating and maintaining the policy. Also assumes 
that all awardee Institutions already maintain a public Web site. 
Therefore, posting the policy to the Web site is an incremental 
burden.
    \50\ Assumes that 2,800 awardee institutions: 1. Inform 
investigators about the policy on an annual basis by sending a 
notification to all investigators = 1 hour, and 2. Annually adapt 
NIH-provided training materials to Institutional needs = 2 hours.
    \51\ Assumes 40,500 Investigators undergo 1 hour of training 
every two years. This refers to FCOI training only and is based on 
the use of training materials developed by the NIH and adapted to 
the Institution's needs.
    \52\ An estimated maximum 25% of Institutions may have sub-
recipients in any one year--assuming 1 hour per Institution to 
incorporate the requirement of the regulations into an already 
existing written agreement.
    \53\ Assumes that 2,800 awardee institutions solicit disclosures 
on an annual basis by sending a notification to all investigators.
    \54\ The financial disclosure burden estimate is based upon an 
investigator figure of 40,500 with an average response time of 2 
hours.
    \55\ Assumes that updating a disclosure takes less time/effort 
than creating a new one.
    \56\ Assumes that only a small number of the 40,500 
investigators will have a new SFI in any year.
    \57\ Although not more than 1,000 reports of Conflict of 
Interest are expected annually, the 2,800 responding institutions 
must review all financial disclosures associated with PHS-funded 
awards to determine whether any conflicts of interest exist. Thus, 
the review burden of 40,500 hours is based upon estimates that it 
will take on the average 1 hour for an institutional official to 
review each of 40,500 financial disclosures associated with PHS 
funded awards.. The burden for developing a management plan for 
identified FCOI is estimated at 80 hours x 1,000 cases = 80,000 
hours.
    \58\ 40,500 for reviewing disclosures from 40,500 Investigators 
plus 80,000 for developing management plans for 1,000 identified 
FCOI.
    \59\ Based on 50.604/94.4 (e)(3) above.
    \60\ The burden is included in 50.605/94.5 (b)(2) below.
    \61\ Assumes that this is a rare occurrence, based on prior 
experience.
    \62\ Assumes only a fraction of the newly identified SFIs will 
constitute FCOI.
    \63\ Development of management plan.
    \64\ Assumes only a fraction of the newly identified SFIs will 
constitute FCOI.
    \65\ Assumes the mitigation plan will be adapted from the 
management plan developed in 50.605/94.5(a)(3)(i) above and 
therefore will take less time/effort than developing an entirely new 
plan.
    \66\ Based on previous assumption of 1,000 FCOI reports 
annually.
    \67\ Assumes that all awardee Institutions already maintain a 
public Web site. Adding the required information is an incremental 
burden. However, updating annually does have a burden.
    \68\ The burden for subsequent reports of conflicts is 
significantly less, because we do not expect many additional 
reportable conflicts and there will be only a limited number of 
disclosures to review.
    \69\ Assumes 1,000 FCOI reports annually x 1 hour to prepare the 
report/complete an NIH-provided Web form.
    \70\ Assumes it takes less time to update a report than to 
create a new one.
    \71\ This burden was originally estimated in the 1995 Final Rule 
to be no more than 5 instances that the failure of an investigator 
to comply with the institution's conflict of interest policy has 
biased the design, conduct or reporting of the research. 
``Objectivity in Research, Final Rule'' 60 FR 132 (July 11, 1995) 
pps. 35810-35819. This burden estimate and others was increased in 
2002 ``due to increased numbers of institutions and investigators.''
    \72\ Number based on 50.605/94.5(a)(3)(i)--of those only a 
fraction will relate to a project of clinical research whose purpose 
is to evaluate the safety or effectiveness of a drug, medical 
device, or treatment, but we are calculating the maximum assumed 
burden/cost.
    \73\ Assumes an average of 3 publications annually.
---------------------------------------------------------------------------

    The Catalogue of Federal Domestic Assistance numbered programs 
applicable to this proposed rule are:

93.113--Environmental Health
93.121--Oral Diseases and Disorders Research
93.142--NIEHS Hazardous Waste Worker Health and Safety Training
93.143--NIEHS Superfund Hazardous Substances--Basic Research and 
Education
93.172--Human Genome Research
93.173--Research Related to Deafness and Communication Disorders
93.187--Undergraduate Scholarship Program for Individuals from 
Disadvantaged Backgrounds
93.209--Contraception and Infertility Research Loan Repayment 
Program
93.213--Research and Training in Complementary and Alternative 
Medicine
93.220--Clinical Research Loan Repayment Program for Individuals 
from Disadvantaged Backgrounds
93.233--National Center on Sleep Disorders Research
93.242--Mental Health Research Grants
93.271--Alcohol Research Career Development Awards for Scientists 
and Clinicians
93.272--Alcohol National Research Service Awards for Research 
Training
93.273--Alcohol Research Programs
93.279--Drug Abuse and Addiction Research Programs
93.280--National Institutes of Health Loan Repayment Program for 
Clinical Researchers
93.281--Mental Health Research Career/Scientist Development Awards
93.282--Mental Health National Research Service Awards for Research 
Training
93.285--National Institutes of Health Pediatric Research Loan 
Repayment Program
93.286--Discovery and Applied Research for Technological Innovations 
to Improve Human Health
93.307--Minority Health and Health Disparities Research
93.310--Trans-NIH Research Support
93.361--Nursing Research
93.389--National Center for Research Resources
93.393--Cancer Cause and Prevention Research
93.394--Cancer Detection and Diagnosis Research
93.395--Cancer Treatment Research
93.396--Cancer Biology Research
93.397--Cancer Centers Support Grants
93.398--Cancer Research Manpower
93.399--Cancer Control
93.701--Trans-NIH Recovery Act Research Support RECOVERY
93.702--National Center for Research Resources, Recovery Act 
Construction Support Recovery
93.837--Cardiovascular Diseases Research
93.838--Lung Diseases Research
93.839--Blood Diseases and Resources Research
93.846--Arthritis, Musculoskeletal and Skin Diseases Research
93.847--Diabetes, Digestive, and Kidney Diseases Extramural Research
93.853--Extramural Research Programs in the Neurosciences and 
Neurological Disorders
93.855--Allergy, Immunology and Transplantation Research
93.856--Microbiology and Infectious Diseases Research
93.859--Biomedical Research and Research Training
93.865--Child Health and Human Development Extramural Research
93.866--Aging Research
93.867--Vision Research
93.879--Medical Library Assistance
93.891--Alcohol Research Center Grants
93.989--International Research and Research Training

List of Subjects

42 CFR Part 50 45 CFR Part 94

    Colleges and universities, Conflict of interests, Contracts, 
Financial disclosure, Grants-health, Grants programs, Non-profit 
organizations, Research, Scientists, Small businesses.

    For the reasons set forth in the preamble, the Department proposes 
to amend 42 CFR chapter I, subchapter D, part 50, subpart F and 45 CFR 
subtitle A, subchapter A, part 94 as follows:

TITLE 42--GRANTS AND AGREEMENTS

PART 50--POLICIES OF GENERAL APPLICABILITY

    1. Revise Subpart F to read as follows:

Subpart F--Promoting Objectivity in Research

Sec.
50.601 Purpose.
50.602 Applicability.
50.603 Definitions.
50.604 Responsibilities of Institutions regarding Investigator 
financial conflicts of interest.
50.605 Management and reporting of financial conflicts of interest.
50.606 Remedies.
50.607 Other HHS regulations that apply.

Subpart F--Promoting Objectivity in Research

    Authority:  42 U.S.C. 216, 289b-1, 299c-4; Sec. 219, Tit. II, 
Div. D, Pub. L. 111-117, 123 Stat. 3034.


Sec.  50.601  Purpose.

    This subpart promotes objectivity in research by establishing 
standards that provide a reasonable expectation that

[[Page 28705]]

the design, conduct, and reporting of research funded under PHS grants 
or cooperative agreements is free from bias resulting from Investigator 
financial conflicts of interest.


Sec.  50.602  Applicability.

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


Sec.  50.603  Definitions.

    As used in this subpart:
    Disclosure of significant financial interests means an 
Investigator's disclosure of significant financial interests to an 
Institution.
    FCOI report means an Institution's report of a financial conflict 
of interest to a PHS Awarding Component.
    Financial conflict of interest means a significant financial 
interest that could directly and significantly affect the design, 
conduct, or reporting of PHS-funded research.
    Financial interest means anything of monetary value or potential 
monetary value.
    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) that is applying 
for, or that receives, PHS research funding.
    Institutional responsibilities means an Investigator's professional 
responsibilities on behalf of the Institution including, but not 
limited to, activities such as research, research consultation, 
teaching, professional practice, institutional committee memberships, 
and service on panels such as Institutional Review Boards or Data and 
Safety Monitoring Boards.
    Investigator means the PD/PI and any other person, regardless of 
title or position, who is responsible for the design, conduct, or 
reporting of research funded by the PHS, or proposed for such funding, 
including persons who are subgrantees, contractors, collaborators, or 
consultants.
    Manage means to take action to address a financial conflict of 
interest, which includes reducing or eliminating the financial conflict 
of interest, to ensure that the design, conduct, or reporting of 
research is free from bias or the appearance of bias.
    PD/PI means a project director or principal investigator of a PHS-
funded research project.
    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, including the 
National Institutes of Health.
    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, 
cooperative agreement, or contract, whether authorized under the PHS 
Act or other statutory authority, such as a research grant, career 
development award, center grant, individual fellowship award, 
infrastructure award, institutional training grant, program project, or 
research resources award.
    Significant financial interest means, except as otherwise specified 
in paragraph (1) of this definition:
    (1) A financial interest consisting of one or more of the following 
interests of the Investigator (and those of the Investigator's spouse 
and dependent children) that reasonably appears to be related to the 
Investigator's institutional responsibilities:
    (i) With regard to any publicly traded entity, a significant 
financial interest exists if the value of any remuneration received 
from the entity in the twelve months preceding the disclosure and the 
value of any equity interest in the entity as of the date of 
disclosure, when aggregated, exceeds $5,000. For purposes of this 
definition, remuneration includes salary and any payment for services 
not otherwise identified as salary (e.g., consulting fees, honoraria, 
paid authorship, travel reimbursement); equity interest includes any 
stock, stock option, or other ownership interest, as determined through 
reference to public prices or other reasonable measures of fair market 
value;
    (ii) With regard to any non-publicly traded entity, a significant 
financial interest exists if the value of any remuneration received 
from the entity in the twelve months preceding the disclosure, when 
aggregated, exceeds $5,000, or the Investigator (or the Investigator's 
spouse or dependent children) holds any equity interest (e.g., stock, 
stock option, or other ownership interest); or
    (iii) Intellectual property rights (e.g., patents, copyrights), 
royalties from such rights, and agreements to share in royalties 
related to such rights.
    (2) The term significant financial interest does not include the 
following types of financial interests: Salary, royalties, or other 
remuneration paid by the Institution to the Investigator if the 
Investigator is currently employed or otherwise appointed by the 
Institution; any ownership interest in the Institution held by the 
Investigator, if the Institution is a commercial or for-profit 
organization; income from seminars, lectures, or teaching engagements 
sponsored by a federal, state, or local government agency, or an 
institution of higher education as defined at 20 U.S.C. 1001(a); or 
income from service on advisory committees or review panels for a 
federal, state, or local government agency, or an institution of higher 
education as defined at 20 U.S.C. 1001(a).


Sec.  50.604  Responsibilities of Institutions regarding Investigator 
financial conflicts of interest.

    Each Institution shall:
    (a) Maintain an up-to-date, written, enforced policy on financial 
conflicts of interest that complies with this subpart, and make such 
policy available via a publicly accessible Web site. If an Institution 
maintains a policy on financial conflicts of interest that includes 
standards that are more stringent than this subpart (e.g., that require 
a more extensive disclosure of financial interests), the Institution 
shall adhere to its policy and shall provide FCOI reports regarding 
identified financial conflicts of interest to the PHS Awarding 
Component in accordance with the Institution's own standards.
    (b) Inform each Investigator of the Institution's policy on 
financial conflicts of interest, the Investigator's responsibilities 
regarding disclosure of significant financial interests, and of

[[Page 28706]]

these regulations, and require each Investigator to complete training 
regarding same prior to engaging in PHS-funded research and, 
thereafter, at least once every two years.
    (c) If the Institution carries out the PHS-funded research through 
a subrecipient (e.g., subgrantee, contractor, or collaborator):
    (1) Incorporate as part of a written agreement with the 
subrecipient legally enforceable terms that establish whether the 
financial conflicts of interest policy of the awardee Institution or 
that of the subrecipient applies to the subrecipient's Investigators.
    (i) If the subrecipient's financial conflicts of interest policy 
applies to subrecipient Investigators, the subrecipient shall certify 
as part of the agreement that its policy complies with this subpart. If 
the subrecipient cannot provide such certification, the agreement shall 
state that subrecipient Investigators are subject to the financial 
conflicts of interest policy of the awardee Institution;
    (ii) If the subrecipient's financial conflicts of interest policy 
applies to subrecipient Investigators, the agreement shall specify time 
period(s) for the subrecipient to report all identified financial 
conflicts of interest to the awardee Institution. Such time period(s) 
shall be sufficient to enable the awardee Institution to provide timely 
FCOI reports, as necessary, to the PHS;
    (iii) If subrecipient Investigators are subject to the awardee 
Institution's financial conflicts of interest policy, the agreement 
shall specify time period(s) for the subrecipient to submit all 
Investigator disclosures of significant financial interests to the 
awardee Institution. Such time period(s) shall be sufficient to enable 
the awardee Institution to comply timely with its review, management, 
and reporting obligations under this subpart.
    (2) Provide FCOI reports to the PHS regarding all financial 
conflicts of interest of all subrecipient Investigators consistent with 
this subpart.
    (d) Designate an institutional official(s), to solicit and review 
disclosures of significant financial interests from each Investigator 
who is planning to participate in the PHS-funded research.
    (e)(1) Require that each Investigator who is planning to 
participate in the PHS-funded research disclose to the Institution's 
designated official(s) the Investigator's significant financial 
interests (and those of the Investigator's spouse and dependent 
children).
    (2) Require that each Investigator who is participating in the PHS-
funded research submit an updated disclosure of significant financial 
interests at least annually during the period of the award. Such 
disclosure shall include any information that was not disclosed 
initially to the Institution pursuant to paragraph (e)(1) of this 
section, or in a subsequent disclosure of significant financial 
interests, and shall include updated information regarding any 
previously-disclosed significant financial interest (e.g., the updated 
value of a previously-disclosed equity interest).
    (3) Require that each Investigator who is participating in the PHS-
funded research submit an updated disclosure of significant financial 
interests within thirty days of acquiring a new significant financial 
interest (e.g., through purchase, marriage, or inheritance).
    (f) Provide guidelines consistent with this subpart for the 
designated institutional officials to determine whether an 
Investigator's significant financial interest is related to PHS-funded 
research and, if so related, whether the significant financial interest 
is a financial conflict of interest. An Investigator's significant 
financial interest is related to PHS-funded research when the 
Institution, through its designated officials, reasonably determines 
that the significant financial interest: Appears to be affected by the 
PHS-funded research; or is in an entity whose financial interest 
appears to be affected by the research. A financial conflict of 
interest exists when the Institution, through its designated officials, 
reasonably determines that the significant financial interest could 
directly and significantly affect the design, conduct, or reporting of 
the PHS-funded research.
    (g) Take such actions as necessary to manage financial conflicts of 
interest, including any financial conflicts of a subrecipient 
Investigator pursuant to paragraph (c) of this section. Management of 
an identified financial conflict of interest requires development and 
implementation of a management plan and, if necessary, a mitigation 
plan pursuant to Sec.  50.605(a).
    (h) Provide initial and ongoing FCOI reports to the PHS as required 
pursuant to Sec.  50.605(b).
    (i) Maintain records relating to all Investigator disclosures of 
financial interests and the Institution's review of, or response to, 
such disclosures (whether or not a disclosure resulted in the 
Institution's determination of a financial conflict of 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.
    (j) Establish adequate enforcement mechanisms and provide for 
employee sanctions or other administrative actions to ensure 
Investigator compliance as appropriate.
    (k) Certify, in each application for funding to which this subpart 
applies, that the Institution:
    (1) Has in effect at that Institution an up-to-date, written, and 
enforced administrative process to identify and manage financial 
conflicts of interest with respect to all research projects for which 
funding is sought or received from the PHS;
    (2) Shall promote and enforce Investigator compliance with this 
subpart's requirements including those pertaining to disclosure of 
significant financial interests;
    (3) Shall manage financial conflicts of interest and provide 
initial and ongoing FCOI reports to the PHS consistent with this 
subpart;
    (4) Agrees to make information available, promptly upon request, to 
the HHS relating to any Investigator disclosure of financial interests 
and the Institution's review of, or response to, such disclosure, 
whether or not the disclosure resulted in the Institution's 
determination of a financial conflict of interest; and
    (5) Shall fully comply with the requirements of this subpart.


Sec.  50.605  Management and reporting of financial conflicts of 
interest.

    (a) Management of financial conflicts of interest.
    (1) Prior to the Institution's expenditure of any funds under a 
PHS-funded research project, the designated officials of an Institution 
shall, consistent with Sec.  50.604(f): Review all Investigator 
disclosures of significant financial interests; determine whether any 
significant financial interests relate to PHS-funded research; 
determine whether a financial conflict of interest exists; and, if so, 
develop and implement a management plan that shall specify the actions 
that have been, and shall be, taken to manage such financial conflict 
of interest. Examples of conditions or restrictions that might be 
imposed to manage a financial conflict of interest include, but are not 
limited to:
    (i) Public disclosure of financial conflicts of interest (e.g., 
when presenting or publishing the research);
    (ii) For research projects involving human subjects research, 
disclosure of financial conflicts of interest directly to participants;
    (iii) Appointment of an independent monitor capable of taking 
measures to

[[Page 28707]]

protect the design, conduct, and reporting of the research against 
bias, or the appearance of bias, resulting from the financial conflict 
of interest;
    (iv) Modification of the research plan;
    (v) Change of personnel or personnel responsibilities, or 
disqualification of personnel from participation in all or a portion of 
the research;
    (vi) Reduction or elimination of the financial interest (e.g., sale 
of an equity interest); or
    (vii) Severance of relationships that create actual or potential 
financial conflicts.
    (2) Whenever, in the course of an ongoing PHS-funded research 
project, a new Investigator participating in the research project 
discloses a significant financial interest or an existing Investigator 
discloses a new significant financial interest to the Institution, the 
designated officials of the Institution shall, within sixty days: 
Review the disclosure of significant financial interests; determine 
whether it is related to PHS-funded research; determine whether a 
financial conflict of interest exists; and, if so, implement, on at 
least an interim basis, a management plan that shall specify the 
actions that have been, and will be, taken to manage such financial 
conflict of interest. Depending on the nature of the significant 
financial interest, an Institution may determine that additional 
interim measures are necessary with regard to the Investigator's 
participation in the PHS-funded research project between the date of 
disclosure and the completion of the Institution's review.
    (3) Whenever an Institution identifies a significant financial 
interest that was not disclosed timely by an Investigator or, for 
whatever reason, was not previously reviewed by the Institution during 
an ongoing PHS-funded research project (e.g., was not timely reviewed 
or reported by a subrecipient), the designated officials shall, within 
sixty days: Review the significant financial interest; determine 
whether it is related to PHS-funded research; determine whether a 
financial conflict of interest exists; and, if so:
    (i) Implement, on at least an interim basis, a management plan that 
shall specify the actions that have been, and will be, taken to manage 
such financial conflict of interest going forward;
    (ii) Implement, on at least an interim basis, a mitigation plan 
which shall include review and determination as to whether any PHS-
funded research, or portion thereof, conducted prior to the 
identification and management of the financial conflict of interest was 
biased in the design, conduct, or reporting of such research. Depending 
on the nature of the significant financial interest, an Institution may 
determine that additional interim measures are necessary with regard to 
the Investigator's participation in the PHS-funded research project 
between the date that the significant financial interest is identified 
and the completion of the Institution's review.
    (4) Whenever an Institution implements a management plan pursuant 
to this subpart, the Institution shall monitor Investigator compliance 
with the management plan on an ongoing basis until the completion of 
the PHS-funded research project.
    (5)(i) Prior to the Institution's expenditure of any funds under a 
PHS-funded research project, the Institution shall make available via a 
publicly accessible Web site information concerning any significant 
financial interest disclosed to the Institution that meets the 
following three criteria:
    (A) The significant financial interest was disclosed and is still 
held by the PD/PI or any other Investigator who has been identified by 
the Institution as senior/key personnel for the PHS-funded research 
project in the grant application, contract proposal, contract, progress 
report, or other required report submitted to the PHS;
    (B) The Institution determines that the significant financial 
interest is related to the PHS-funded research; and
    (C) The Institution determines that the significant financial 
interest is a financial conflict of interest.
    (ii) The information that the Institution makes available via a 
publicly accessible Web site shall include, at a minimum, the 
following: The Investigator's name; the Investigator's position with 
respect to the research project; the nature of the significant 
financial interest; and the approximate dollar value of the significant 
financial interest (dollar ranges are permissible: Less than $20,000; 
less than $50,000; less than $100,000; less than or equal to $250,000; 
greater than $250,000), or a statement that the interest is one whose 
value cannot be readily determined through reference to public prices 
or other reasonable measures of fair market value.
    (iii) The information that the Institution makes available via a 
publicly accessible Web site shall be updated at least annually. In 
addition, the Institution shall update the Web site within sixty days 
of the Institution's receipt or identification of information 
concerning any additional significant financial interest that was not 
previously disclosed by the PD/PI or senior/key personnel for the PHS-
funded research project, or upon the disclosure of a significant 
financial interest by a new PD/PI or new senior/key personnel for the 
PHS-funded research project, if the Institution determines that the 
significant financial interest is related to the PHS-funded research 
and is a financial conflict of interest.
    (iv) Information concerning the significant financial interests of 
an individual subject to this paragraph (a)(5) shall remain available 
via the Institution's publicly accessible Web site for at least five 
years from the date that the information was most recently updated.
    (6) In addition to the types of financial conflicts of interest as 
defined in this subpart that must be managed pursuant to this section, 
an Institution may require the management of other financial conflicts 
of interest, as the Institution deems appropriate.
    (b) Reporting of financial conflicts of interest.
    (1) Prior to the Institution's expenditure of any funds under a 
PHS-funded research project, the Institution shall provide to the PHS 
Awarding Component a FCOI report regarding any Investigator significant 
financial interest found by the Institution to be conflicting and 
ensure that the Institution has implemented a management plan in 
accordance with this subpart.
    (2) For any significant financial interest that the Institution 
identifies as conflicting subsequent to the Institution's initial FCOI 
report during an ongoing PHS-funded research project (e.g., upon the 
participation of a new Investigator in the research project), the 
Institution shall provide to the PHS Awarding Component, within sixty 
days, a FCOI report regarding the financial conflict of interest and 
ensure that the Institution has implemented a management plan in 
accordance with this subpart. Where such FCOI report involves a 
significant financial interest that was not disclosed timely by an 
Investigator or, for whatever reason, was not previously reviewed by 
the Institution (e.g., was not timely reviewed or reported by a 
subrecipient), the Institution shall also provide with its FCOI report 
the mitigation plan implemented by the Institution to determine whether 
any PHS-funded research, or portion thereof, conducted prior to the 
identification and management of the financial conflict of interest was 
biased in the design, conduct, or reporting of such research.
    (3) Any FCOI report required under paragraphs (b)(1) or (b)(2) of 
this section shall include sufficient information to enable the PHS 
Awarding Component to

[[Page 28708]]

understand the nature and extent of the financial conflict, and to 
assess the appropriateness of the Institution's management plan. 
Elements of the FCOI report shall include, but are not limited to the 
following:
    (i) Project/Contract number;
    (ii) PD/PI or Contact PD/PI if a multiple PD/PI model is used;
    (iii) Name of the Investigator with the financial conflict of 
interest;
    (iv) Nature of the financial interest (e.g., equity, consulting 
fee, travel reimbursement, honorarium);
    (v) Value of the financial interest (dollar ranges are permissible: 
$0-$4,999; $5,000-$9,999; $10,000-$19,999; amounts between $20,000-
$100,000 by increments of $20,000; amounts above $100,000 by increments 
of $50,000), or a statement that the interest is one whose value cannot 
be readily determined through reference to public prices or other 
reasonable measures of fair market value;
    (vi) A description of how the financial interest relates to the 
PHS-funded research and the basis for the Institution's determination 
that the financial interest conflicts with such research;
    (vii) A description of the key elements of the Institution's 
management plan, including:
    (A) The role and function of the conflicted Investigator in the 
research project;
    (B) The rationale for including the conflicted Investigator in the 
research project;
    (C) The conditions of the management plan;
    (D) How the management plan will safeguard objectivity in the 
research project;
    (E) Confirmation of the Investigator's agreement to the management 
plan;
    (F) How the management plan will be monitored to ensure 
Investigator compliance;
    (G) Other information as needed.
    (4) For any financial conflict of interest previously reported by 
the Institution with regard to an ongoing PHS-funded research project, 
the Institution shall provide an annual FCOI report that addresses the 
status of the financial conflict of interest and any changes to the 
management plan to the PHS Awarding Component for the duration of the 
PHS-funded research project. The annual FCOI report shall specify 
whether the financial conflict is still being managed or explain why 
the financial conflict of interest no longer exists. The Institution 
shall provide annual FCOI reports to the PHS Awarding Component for the 
duration of the project period (including extensions with or without 
funds) in the time and manner specified by the PHS Awarding Component.
    (5) In addition to the types of financial conflicts of interest as 
defined in this subpart that must be reported pursuant to this section, 
an Institution may require the reporting of other financial conflicts 
of interest, as the Institution deems appropriate.


Sec.  50.606  Remedies.

    (a) If the failure of an Investigator to comply with an 
Institution's financial conflicts of interest policy or a financial 
conflict of interest management plan appears to have biased the design, 
conduct, or reporting of the PHS-funded research, the Institution shall 
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 inquire at any time (i.e., before, during, or after 
award) into any Investigator disclosure of financial interests and the 
Institution's review of, or response to, such disclosure, whether or 
not the disclosure resulted in the Institution's determination of a 
financial conflict of interest. An Institution is required to submit, 
or permit on site review of, all records pertinent to compliance with 
this subpart. To the extent permitted by law, HHS will maintain the 
confidentiality of all records of financial interests. On the basis of 
its review of records or other information that may be available, the 
PHS Awarding Component may decide that a particular financial conflict 
of interest will bias the objectivity of the PHS-funded research to 
such an extent that further corrective action is needed or that the 
Institution has not managed the financial conflict of interest in 
accordance with this subpart. The PHS Awarding Component may determine 
that imposition of special award conditions under 45 CFR 74.14 or 
suspension of funding or other enforcement action 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 financial 
conflict of interest that was not managed or reported by the 
Institution as required by this subpart, the Institution shall require 
the Investigator involved to disclose the financial conflict of 
interest in each public presentation of the results of the research and 
to request an addendum to previously published presentations.


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:

2 CFR Part 376--Nonprocurement Debarment and Suspension (HHS)

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 
Nonprofit Organizations, and Commercial Organizations

45 CFR Part 79--Program Fraud Civil Remedies

45 CFR Part 92--Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State, Local, and Tribal Governments

TITLE 45--PUBLIC WELFARE

    2. Revise Part 94 to read as follows:

PART 94--RESPONSIBLE PROSPECTIVE CONTRACTORS

Sec.
94.1 Purpose.
94.2 Applicability.
94.3 Definitions.
94.4 Responsibilities of Institutions regarding Investigator 
financial conflicts of interest.
94.5 Management and reporting of financial conflicts of interest.
94.6 Remedies.


    Authority:  42 U.S.C. 216, 289b-1, 299c-4.


Sec.  94.1  Purpose.

    This part promotes objectivity in research by establishing 
standards that provide a reasonable expectation that the design, 
conduct, and reporting of research performed under PHS contracts is 
free from bias resulting from Investigator financial conflicts of 
interest.


Sec.  94.2  Applicability.

    This part is applicable to each Institution that solicits, or that 
receives, PHS research funding by means of a contract and, through the 
implementation of this part by the Institution, to each Investigator 
participating in such research.

[[Page 28709]]

Sec.  94.3  Definitions.

    As used in this part:
    Contractor means an entity that provides property or services under 
contract for the direct benefit or use of the Federal Government.
    Disclosure of significant financial interests means an 
Investigator's disclosure of significant financial interests to an 
Institution.
    FCOI report means an Institution's report of a financial conflict 
of interest to a PHS Awarding Component.
    Financial conflict of interest means a significant financial 
interest that could directly and significantly affect the design, 
conduct, or reporting of PHS-funded research.
    Financial interest means anything of monetary value or potential 
monetary value.
    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) that solicits, or 
that receives, PHS research funding.
    Institutional responsibilities means an Investigator's professional 
responsibilities on behalf of the Institution including, but not 
limited to, activities such as research, research consultation, 
teaching, professional practice, institutional committee memberships, 
and service on panels such as Institutional Review Boards or Data and 
Safety Monitoring Boards.
    Investigator means the PD/PI and any other person, regardless of 
title or position, who is responsible for the design, conduct, or 
reporting of research funded by the PHS, or proposed for such funding, 
including persons who are subcontractors, collaborators, or 
consultants.
    Manage means to take action to address a financial conflict of 
interest, which includes reducing or eliminating the financial conflict 
of interest, to ensure that the design, conduct, or reporting of 
research is free from bias or the appearance of bias.
    PD/PI means a project director or principal investigator of a PHS-
funded research project.
    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, including the 
National Institutes of Health.
    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 part, the term includes any such activity for which research 
funding is available from a PHS Awarding Component through a grant, 
cooperative agreement, or contract, whether authorized under the PHS 
Act or other statutory authority, such as a research grant, career 
development award, center grant, individual fellowship award, 
infrastructure award, institutional training grant, program project, or 
research resources award.
    Significant financial interest means, except as otherwise specified 
in this definition:
    (1) A financial interest consisting of one or more of the following 
interests of the Investigator (and those of the Investigator's spouse 
and dependent children) that reasonably appears to be related to the 
Investigator's institutional responsibilities:
    (i) With regard to any publicly traded entity, a significant 
financial interest exists if the value of any remuneration received 
from the entity in the twelve months preceding the disclosure and the 
value of any equity interest in the entity as of the date of 
disclosure, when aggregated, exceeds $5,000. For purposes of this 
definition, remuneration includes salary and any payment for services 
not otherwise identified as salary (e.g., consulting fees, honoraria, 
paid authorship, travel reimbursement); equity interest includes any 
stock, stock option, or other ownership interest, as determined through 
reference to public prices or other reasonable measures of fair market 
value;
    (ii) With regard to any non-publicly traded entity, a significant 
financial interest exists if the value of any remuneration received 
from the entity in the twelve months preceding the disclosure, when 
aggregated, exceeds $5,000, or the Investigator (or the Investigator's 
spouse or dependent children) holds any equity interest (e.g., stock, 
stock option, or other ownership interest); or
    (iii) Intellectual property rights (e.g., patents, copyrights), 
royalties from such rights, and agreements to share in royalties 
related to such rights.
    (2) The term significant financial interest does not include the 
following types of financial interests: Salary, royalties, or other 
remuneration paid by the Institution to the Investigator if the 
Investigator is currently employed or otherwise appointed by the 
Institution; any ownership interest in the Institution held by the 
Investigator, if the Institution is a commercial or for-profit 
organization; income from seminars, lectures, or teaching engagements 
sponsored by a federal, state, or local government agency, or an 
institution of higher education as defined at 20 U.S.C. 1001(a); or 
income from service on advisory committees or review panels for a 
federal, state, or local government agency, or an institution of higher 
education as defined at 20 U.S.C. 1001(a).


Sec.  94.4  Responsibilities of Institutions regarding Investigator 
financial conflicts of interest.

    Each Institution shall:
    (a) Maintain an up-to-date, written, enforced policy on financial 
conflicts of interest that complies with this part, and make such 
policy available via a publicly accessible Web site. If an Institution 
maintains a policy on financial conflicts of interest that includes 
standards that are more stringent than this part (e.g., that require a 
more extensive disclosure of financial interests), the Institution 
shall adhere to its policy and shall provide FCOI reports regarding 
identified financial conflicts of interest to the PHS Awarding 
Component in accordance with the Institution's own standards.
    (b) Inform each Investigator of the Institution's policy on 
financial conflicts of interest, the Investigator's responsibilities 
regarding disclosure of significant financial interests, and of these 
regulations, and require each Investigator to complete training 
regarding same prior to engaging in PHS-funded research and, 
thereafter, at least once every two years.
    (c) If the Institution carries out the PHS-funded research through 
a subrecipient (e.g., subcontractor or collaborator):
    (1) Incorporate as part of a written agreement with the 
subrecipient legally enforceable terms that establish whether the 
financial conflicts of interest policy of the awardee Institution or 
that of the subrecipient applies to the subrecipient's Investigators.
    (i) If the subrecipient's financial conflicts of interest policy 
applies to subrecipient Investigators, the subrecipient shall certify 
as part of the agreement that its policy complies with this part. If 
the subrecipient cannot

[[Page 28710]]

provide such certification, the agreement shall state that subrecipient 
Investigators are subject to the financial conflicts of interest policy 
of the awardee Institution;
    (ii) If the subrecipient's financial conflicts of interest policy 
applies to subrecipient Investigators, the agreement shall specify time 
period(s) for the subrecipient to report all identified financial 
conflicts of interest to the awardee Institution. Such time period(s) 
shall be sufficient to enable the awardee Institution to provide timely 
FCOI reports, as necessary, to the PHS;
    (iii) If subrecipient Investigators are subject to the awardee 
Institution's financial conflicts of interest policy, the agreement 
shall specify time period(s) for the subrecipient to submit all 
Investigator disclosures of significant financial interests to the 
awardee Institution. Such time period(s) shall be sufficient to enable 
the awardee Institution to comply timely with its review, management, 
and reporting obligations under this part.
    (2) Provide FCOI reports to the PHS regarding all financial 
conflicts of interest of all subrecipient Investigators consistent with 
this part.
    (d) Designate an institutional official(s) to solicit and review 
disclosures of significant financial interests from each Investigator 
who is planning to participate in the PHS-funded research.
    (e)(1) Require that each Investigator who is planning to 
participate in the PHS-funded research disclose to the Institution's 
designated official(s) the Investigator's significant financial 
interests (and those of the Investigator's spouse and dependent 
children).
    (2) Require that each Investigator who is participating in the PHS-
funded research submit an updated disclosure of significant financial 
interests at least annually during the period of the award. Such 
disclosure shall include any information that was not disclosed 
initially to the Institution pursuant to paragraph (e)(1) of this 
section, or in a subsequent disclosure of significant financial 
interests, and shall include updated information regarding any 
previously-disclosed significant financial interest (e.g., the updated 
value of a previously-disclosed equity interest).
    (3) Require that each Investigator who is participating in the PHS-
funded research submit an updated disclosure of significant financial 
interests within thirty days of acquiring a new significant financial 
interest (e.g., through purchase, marriage, or inheritance).
    (f) Provide guidelines consistent with this part for the designated 
institutional officials to determine whether an Investigator's 
significant financial interest is related to PHS-funded research and, 
if so related, whether the significant financial interest is a 
financial conflict of interest. An Investigator's significant financial 
interest is related to PHS-funded research when the Institution, 
through its designated officials, reasonably determines that the 
significant financial interest: Appears to be affected by the PHS-
funded research; or is in an entity whose financial interest appears to 
be affected by the research. A financial conflict of interest exists 
when the Institution, through its designated officials, reasonably 
determines that the significant financial interest could directly and 
significantly affect the design, conduct, or reporting of the PHS-
funded research.
    (g) Take such actions as necessary to manage financial conflicts of 
interest, including any financial conflicts of a subrecipient 
Investigator pursuant to paragraph (c) of this section. Management of 
an identified financial conflict of interest requires development and 
implementation of a management plan and, if necessary, a mitigation 
plan pursuant to Sec.  94.5(a).
    (h) Provide initial and ongoing FCOI reports to the PHS as required 
pursuant to Sec.  94.5(b).
    (i) Maintain records relating to all Investigator disclosures of 
financial interests and the Institution's review of, or response to, 
such disclosures (whether or not a disclosure resulted in the 
Institution's determination of a financial conflict of interest), for 
at least three years from the date of final payment or, where 
applicable, for the time periods specified in 48 CFR part 4, subpart 
4.7.
    (j) Establish adequate enforcement mechanisms and provide for 
employee sanctions or other administrative actions to ensure 
Investigator compliance as appropriate.
    (k) Certify, in each contract proposal to which this part applies, 
that the Institution:
    (1) Has in effect at that Institution an up-to-date, written, and 
enforced administrative process to identify and manage financial 
conflicts of interest with respect to all research projects for which 
funding is sought or received from the PHS;
    (2) Shall promote and enforce Investigator compliance with this 
part's requirements including those pertaining to disclosure of 
significant financial interests;
    (3) Shall manage financial conflicts of interest and provide 
initial and ongoing FCOI reports to the PHS consistent with this part;
    (4) Agrees to make information available, promptly upon request, to 
the HHS relating to any Investigator disclosure of financial interests 
and the Institution's review of, or response to, such disclosure, 
whether or not the disclosure resulted in the Institution's 
determination of a financial conflict of interest; and
    (5) Shall fully comply with the requirements of this part.


Sec.  94.5  Management and reporting of financial conflicts of 
interest.

    (a) Management of financial conflicts of interest.
    (1) Prior to the Institution's expenditure of any funds under a 
PHS-funded research project, the designated officials of an Institution 
shall, consistent with Sec.  94.4(f): Review all Investigator 
disclosures of significant financial interests; determine whether any 
significant financial interests relate to PHS-funded research; 
determine whether a financial conflict of interest exists; and, if so, 
develop and implement a management plan that shall specify the actions 
that have been, and shall be, taken to manage such financial conflict 
of interest. Examples of conditions or restrictions that might be 
imposed to manage a financial conflict of interest include, but are not 
limited to:
    (i) Public disclosure of financial conflicts of interest (e.g., 
when presenting or publishing the research);
    (ii) For research projects involving human subjects research, 
disclosure of financial conflicts of interest directly to participants;
    (iii) Appointment of an independent monitor capable of taking 
measures to protect the design, conduct, and reporting of the research 
against bias, or the appearance of bias, resulting from the financial 
conflict of interest;
    (iv) Modification of the research plan;
    (v) Change of personnel or personnel responsibilities, or 
disqualification of personnel from participation in all or a portion of 
the research;
    (vi) Reduction or elimination of the financial interest (e.g., sale 
of an equity interest); or
    (vii) Severance of relationships that create actual or potential 
financial conflicts.
    (2) Whenever, in the course of an ongoing PHS-funded research 
project, a new Investigator participating in the research project 
discloses a significant financial interest or an existing Investigator 
discloses a new significant

[[Page 28711]]

financial interest to the Institution, the designated officials of the 
Institution shall, within sixty days: Review the disclosure of 
significant financial interests; determine whether it is related to 
PHS-funded research; determine whether a financial conflict of interest 
exists; and, if so, implement, on at least an interim basis, a 
management plan that shall specify the actions that have been, and will 
be, taken to manage such financial conflict of interest. Depending on 
the nature of the significant financial interest, an Institution may 
determine that additional interim measures are necessary with regard to 
the Investigator's participation in the PHS-funded research project 
between the date of disclosure and the completion of the Institution's 
review.
    (3) Whenever an Institution identifies a significant financial 
interest that was not disclosed timely by an Investigator or, for 
whatever reason, was not previously reviewed by the Institution during 
an ongoing PHS-funded research project (e.g., was not timely reviewed 
or reported by a subrecipient), the designated officials shall, within 
sixty days: Review the significant financial interest; determine 
whether it is related to PHS-funded research; determine whether a 
financial conflict of interest exists; and, if so:
    (i) Implement, on at least an interim basis, a management plan that 
shall specify the actions that have been, and will be, taken to manage 
such financial conflict of interest going forward;
    (ii) Implement, on at least an interim basis, a mitigation plan 
which shall include review and determination as to whether any PHS-
funded research, or portion thereof, conducted prior to the 
identification and management of the financial conflict of interest was 
biased in the design, conduct, or reporting of such research. Depending 
on the nature of the significant financial interest, an Institution may 
determine that additional interim measures are necessary with regard to 
the Investigator's participation in the PHS-funded research project 
between the date that the significant financial interest is identified 
and the completion of the Institution's review.
    (4) Whenever an Institution implements a management plan pursuant 
to this part, the Institution shall monitor Investigator compliance 
with the management plan on an ongoing basis until the completion of 
the PHS-funded research project.
    (5)(i) Prior to the Institution's expenditure of any funds under a 
PHS-funded research project, the Institution shall make available via a 
publicly accessible Web site information concerning any significant 
financial interest disclosed to the Institution that meets the 
following three criteria:
    (A) The significant financial interest was disclosed and is still 
held by the PD/PI or any other Investigator who has been identified by 
the Institution as senior/key personnel for the PHS-funded research 
project in the grant application, contract proposal, contract, progress 
report, or other required report submitted to the PHS;
    (B) The Institution determines that the significant financial 
interest is related to the PHS-funded research; and
    (C) The Institution determines that the significant financial 
interest is a financial conflict of interest.
    (ii) The information that the Institution makes available via a 
publicly accessible Web site shall include, at a minimum, the 
following: The Investigator's name; the Investigator's position with 
respect to the research project; the nature of the significant 
financial interest; and the approximate dollar value of the significant 
financial interest (dollar ranges are permissible: Less than $20,000; 
less than $50,000; less than $100,000; less than or equal to $250,000; 
greater than $250,000), or a statement that the interest is one whose 
value cannot be readily determined through reference to public prices 
or other reasonable measures of fair market value.
    (iii) The information that the Institution makes available via a 
publicly accessible Web site shall be updated at least annually. In 
addition, the Institution shall update the Web site within sixty days 
of the Institution's receipt or identification of information 
concerning any additional significant financial interest that was not 
previously disclosed by the PD/PI or senior/key personnel for the PHS-
funded research project, or upon the disclosure of a significant 
financial interest by a new PD/PI or new senior/key personnel for the 
PHS-funded research project, if the Institution determines that the 
significant financial interest is related to the PHS-funded research 
and is a financial conflict of interest.
    (iv) Information concerning the significant financial interests of 
an individual subject to this paragraph (a)(5) of this section shall 
remain available via the Institution's publicly accessible Web site for 
at least five years from the date that the information was most 
recently updated.
    (6) In addition to the types of financial conflicts of interest as 
defined in this part that must be managed pursuant to this section, an 
Institution may require the management of other financial conflicts of 
interest, as the Institution deems appropriate.
    (b) Reporting of financial conflicts of interest.
    (1) Prior to the Institution's expenditure of any funds under a 
PHS-funded research project, the Institution shall provide to the PHS 
Awarding Component a FCOI report regarding any Investigator significant 
financial interest found by the Institution to be conflicting and 
ensure that the Institution has implemented a management plan in 
accordance with this part.
    (2) For any significant financial interest that the Institution 
identifies as conflicting subsequent to the Institution's initial FCOI 
report during an ongoing PHS-funded research project (e.g., upon the 
participation of a new Investigator in the research project), the 
Institution shall provide to the PHS Awarding Component, within sixty 
days, a FCOI report regarding the financial conflict of interest and 
ensure that the Institution has implemented a management plan in 
accordance with this part. Where such FCOI report involves a 
significant financial interest that was not disclosed timely by an 
Investigator or, for whatever reason, was not previously reviewed by 
the Institution (e.g., was not timely reviewed or reported by a 
subrecipient), the Institution shall also provide with its FCOI report 
the mitigation plan implemented by the Institution to determine whether 
any PHS-funded research, or portion thereof, conducted prior to the 
identification and management of the financial conflict of interest was 
biased in the design, conduct, or reporting of such research.
    (3) Any FCOI report required under paragraphs (b)(1) or (b)(2) of 
this section shall include sufficient information to enable the PHS 
Awarding Component to understand the nature and extent of the financial 
conflict, and to assess the appropriateness of the Institution's 
management plan. Elements of the FCOI report shall include, but are not 
limited to the following:
    (i) Project/Contract number;
    (ii) PD/PI or Contact PD/PI if a multiple PD/PI model is used;
    (iii) Name of the Investigator with the financial conflict of 
interest;
    (iv) Nature of the financial interest (e.g., equity, consulting 
fee, travel reimbursement, honorarium);
    (v) Value of the financial interest (dollar ranges are permissible: 
$0-$4,999; $5,000-$9,999; $10,000-$19,999; amounts between $20,000-
$100,000 by increments of $20,000; amounts above $100,000 by increments 
of $50,000), or a statement that the

[[Page 28712]]

interest is one whose value cannot be readily determined through 
reference to public prices or other reasonable measures of fair market 
value;
    (vi) A description of how the financial interest relates to the 
PHS-funded research and the basis for the Institution's determination 
that the financial interest conflicts with such research;
    (vii) A description of the key elements of the Institution's 
management plan, including:
    (A) The role and function of the conflicted Investigator in the 
research project;
    (B) The rationale for including the conflicted Investigator in the 
research project;
    (C) The conditions of the management plan;
    (D) How the management plan will safeguard objectivity in the 
research project;
    (E) Confirmation of the Investigator's agreement to the management 
plan;
    (F) How the management plan will be monitored to ensure 
Investigator compliance;
    (G) Other information as needed.
    (4) For any financial conflict of interest previously reported by 
the Institution with regard to an ongoing PHS-funded research project, 
the Institution shall provide an annual FCOI report that addresses the 
status of the financial conflict of interest and any changes to the 
management plan to the PHS Awarding Component for the duration of the 
PHS-funded research project. The annual FCOI report shall specify 
whether the financial conflict is still being managed or explain why 
the financial conflict of interest no longer exists. The Institution 
shall provide annual FCOI reports to the PHS Awarding Component for the 
duration of the project period (including extensions with or without 
funds) in the time and manner specified by the PHS Awarding Component.
    (5) In addition to the types of financial conflicts of interest as 
defined in this part that must be reported pursuant to this section, an 
Institution may require the reporting of other financial conflicts of 
interest, as the Institution deems appropriate.


Sec.  94.6  Remedies.

    (a) If the failure of an Investigator to comply with an 
Institution's financial conflicts of interest policy or a financial 
conflict of interest management plan appears to have biased the design, 
conduct, or reporting of the PHS-funded research, the Institution shall 
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 inquire at any time (i.e., before, during, or after 
award) into any Investigator disclosure of financial interests and the 
Institution's review of, or response to, such disclosure, whether or 
not the disclosure resulted in the Institution's determination of a 
financial conflict of interest. An Institution is required to submit, 
or permit on site review of, all records pertinent to compliance with 
this part. To the extent permitted by law, HHS will maintain the 
confidentiality of all records of financial interests. On the basis of 
its review of records or other information that may be available, the 
PHS Awarding Component may decide that a particular financial conflict 
of interest will bias the objectivity of the PHS-funded research to 
such an extent that further corrective action is needed or that the 
Institution has not managed the financial conflict of interest in 
accordance with this part. The PHS Awarding Component may determine 
that issuance of a Stop Work Order by the Contracting Officer or other 
enforcement action 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 financial 
conflict of interest that was not managed or reported by the 
Institution as required by this part, the Institution shall require the 
Investigator involved to disclose the financial conflict of interest in 
each public presentation of the results of the research and to request 
an addendum to previously published presentations.

    Dated: March 26, 2010.
Francis S. Collins,
Director, National Institutes of Health.
    Approved: April 14, 2010.
Kathleen Sebelius,
Secretary.
[FR Doc. 2010-11885 Filed 5-20-10; 8:45 am]
BILLING CODE 4140-01-P