T H E   N I H   C A T A L Y S T     S E P T E M B E R   –  O C T O B E R   2005


by Fran Pollner


by Celia Hooper

NIH DirectorElias Zerhouni

Final conflict-of-interest (COI) rules for NIH employees took effect August 31, 2005, well within the one-year time limit for re-evaluation set in the interim final rules issued in early February.

The final rules recast the stopgap prohibitions related to financial interests in pharmaceutical and biotech companies and other "substantially affected organizations" (SAOs) such that automatic divestiture is required only of senior-level NIH employees—approximately 200 NIH employees (see the summary to the right).

They also maintain the blanket ban on outside consulting and other activities with SAOs, NIH-supported research institutions, and health-care providers and insurers. But they restore—with prior approval—the ability of NIH scientists to pursue those intellectual interactions and other activities with professional scientific organizations that are generally deemed to be crucial to advancing biomedical research and the NIH public health mission.

On August 25, NIH Director Elias Zerhouni announced the imminent release of the final rules, first in an e-mail to the NIH community and two hours later in a press telebriefing, which was attended by reporters from major daily newspapers and scientific publications.

The final rules, he said, achieve the "right balance [in] protecting the agency’s integrity without imposing burdens" on NIH scientists. The proscriptions in the interim final rules were "too broad," he said, noting, however, that "the ban on outside consulting with industry will remain in force." He did not rule out revisiting the consulting issue should more sophisticated safeguards against the actual and perceived risks of such connections be developed.

HHS and the Office of Government Ethics, in consultation with NIH leadership, considered more than 1,300 comments from NIH scientists and others in crafting final regulations that would

Protect the integrity of NIH science

Maintain the public’s trust that NIH science is untainted by conflicts of interest

Not impose unfair and unnecessary hardships on NIH scientists and other employees

Not jeopardize NIH’s ability to recruit and retain the best scientific minds or, consequently, the NIH public health mission.

Many of the revisions embraced in the final rules reflect the criticisms and cautionary concerns emanating from the NIH community regarding the interim final rules (see The NIH Catalyst, Special Reference Issue, February 22, 2005).

Linking divestiture of financial holdings in SAOs to the level of decision-making responsibility and removing "impediments to normal academic interactions" were oft-voiced suggestions with which NIH leadership agreed.

Zerhouni observed that 12,000 of the 18,000 NIH employees are now relieved of blanket disclosure requirements but must still be alert to a potential conflict arising from a new responsibility or a new acquisition.

In addition to the reporting and divestiture rules that apply to the 200 or so senior employees, about 6,000 NIHers will be required to report their financial holdings in SAOs. This cohort includes individuals who file either confidential or public financial disclosure reports and also clinical investigators involved in IRB-approved NIH clinical research protocols.

Zerhouni emphasized the wisdom of the case-by-case approach to recognizing and managing potential conflict of interest among these 6,000, as opposed to the broad-brush divestiture requirements in the interim final rule. 

Asked whether the rules were subject to further revisions, Zerhouni responded that though these rules are final, "we are always reviewing; the issues are always evolving."

Note: The deadline for public and confidential filers and clinical investigators to report their holdings in SAOs is October 31, 2005.

The deadline for divestiture for senior employees is January 30, 2006.

The rules and a lengthy explanatory preamble appear in the August 31, 2005, edition of the Federal Register and can be viewed at this website


In an electronic memo to all NIH employees August 25, NIH Director Elias Zerhouni announced the release of final regulations governing conflict-of-interest (COI) for NIH empoyees, including stock ownership (and other financial interests), outside consulting (and other outside activities), and acceptance of gifts associated with awards.

Highlighted below are some of the most significant changes from the interim final rules issued in February 2005 (see The NIH Catalyst, Special Reference Edition, February 22, 2005).

Additional COI information can be found at the NIH Ethics website and includes a summary of the final regulations and a Q & A for NIH employees.

The Changes

The following is adapted from the DDIR Bulletin Board, August 2005.

Divestiture of Financial Interests in Substantially Affected Organizations: The interim final rules called for some 6,000 NIHers, their spouses, and minor children–staff who file disclosure forms–to divest all stocks in pharmaceutical, biotech, medical device, and other companies interested in or affected by the work of by NIH, known technically as "substantially affected organizations," or SAOs. All other NIH staff had to divest these stocks if their holdings in any one such company were in excess of $15,000, which is also the government-wide "de minimis" standard.

The new rule requires only that about 200 of the most senior NIH leaders (IC directors, their deputies, scientific directors, clinical directors, extramural staff who report directly to an IC director, and the NIH director and those who report directly to him) or the NIH director)—and their spouses and minor children—divest their aggregate SAO holdings down to (and maintain them at or below) the "de minimis" $15,000 for any one company. Also, those same employees may hold a total of $50,000 in pharmaceutical, biotechnology, and healthcare-related sector funds.

The roughly 6,000 staff members who are not "senior" but who file confidential or public disclosure forms, and also those investigators who do not file either disclosure report but who are listed on clinical protocols, will be required to report the amount of each of their SAO holdings, but divestiture will only be required when this is the appropriate way to manage a conflict between a holding and what the employee does in his or her job.

Accepting Prizes: Awards offered to senior employees will be considered under the same standard applied to all other employees since the interim rule. That is, all employees may be approved to accept both bona fide awards and associated gifts provided that the group awarding the prize cannot be affected by the employee's duties or those of his or her subordinates. The NIH Ethics Office maintains a growing list of bona fide awards posted at this website.

Each nomination for a prize must be reviewed and approved to assure that the group awarding the prize is not affected by the duties of the prize recipient or his or her subordinates.

Outside Activities: As before, outside activities such as consulting for SAOs, grantees, and contractors and health-care providers and insurers are prohibited. Significantly, however, outside activities with professional organizations can now be allowed with prior approval. This change would permit NIH scientists to serve as an officer or board member for a professional society.

Activities unrelated to NIH's mission, such as hobbies, arts, sports, manual labor, child care, and secretarial work, even if compensated, are allowed, and do not need to be pre-approved unless the work is for a prohibited source, such as a pharmaceutical company or grantee.

Of course, longstanding rules precluding outside activities that conflict with duties or misuse of official time and other resources continue to apply, as do special provisions surrounding religious and political activities.

Other changes in the rules permit giving a single general lecture in a regularly scheduled university course (as well as multiple lectures) or a Grand Rounds lecture, even at a grantee institution. These activities must be approved in advance.

Compensation for teaching, speaking, or writing may be allowed if the subject matter is within one’s area of expertise but not the subject of one’s current research or recent work and is approved in advance, and if any funds from SAOs (or supported research institutions or health-care providers or insurers) to support these activities are unrestricted.

The rules also allow compensated outside service on a non-NIH scientific review committee or data and safety monitoring board, as long as an SAO, such as a pharmaceutical or biotech company, does not select or pay the board members and the program is not NIH- or HHS-funded.

Outside medical practice is still allowed, as is writing or editing for peer-reviewed journals or textbooks, again subject to prior approval, and provided any SAO financial contribution is unrestricted.

Official Duties: As always, there is a wide range of activities that may be allowed within the scope of one’s official duties, with permission in advance from one’s supervisor.


The NIH Assembly of Scientists (AOS), which had issued a statement quite critical of the interim final rules (see The NIH Catalyst, Special Reference Edition, February 22, 2005), registered its satisfaction with the modified regulations, "especially [those] easing the restrictions on interactions and holding leadership positions with professional societies."

In a statement issued after the NIH director’s announcement, the organization also applauded the lifting—"for all but the most senior NIH employees"—of the requirement to "divest financial holdings in medical or pharmaceutical companies by employees and their families when no conflict of interest exists with their professional duties at the NIH."

"We are gratified that, as the preamble to the regulations notes, the revisions proposed by the AOS, and NIH scientists more generally, were influential in shaping these regulations," the group stated.

The AOS anticipates collaborating with NIH leadership in implementing the regulations "in a way that minimizes the paperwork burden on scientists"—and in any future process to revisit the "blanket prohibitions on consulting and almost all other outside activities with medical and pharmaceutical companies." It also intends to work with NIH leadership in "addressing the other major challenges that affect morale of NIH employees."


The current Interim Executive Committee of the NIH Assembly of Scientists will be replaced by a more formal AOS Council to be elected in October of 2005.

Twelve of the 24 seats on the Council will be up for election this year, and the other 12 in the fall of 2006; each member will serve a two-year term. The members will represent at least 12 different Institutes and Centers and will include at least one tenure-track investigator, at least one staff clinician, and at least one staff scientist. The Council will select six of its members to also serve a one-year term on the Assembly's Executive Committee.

To nominate oneself or a colleague for election in October to a seat on the AOS Council, e-mail Cynthia Dunbar .

No one will be placed on the ballot without his or her consent.

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