T H E   N I H    C A T A L Y S T      F E B R U A R Y  22, 2005

The New Signals on the Regulation Road


by Celia Hooper

The long introduction preceding the Supplemental Standards of Ethical Conduct and Financial Disclosure Requirements describes stringent restrictions intended as heavy-duty tarnish remover for NIH. Yet buried within the document are provisions aimed at another critical aspect of NIH’s luster: encouraging NIH scientists to continue scholarly exchanges.

Six pages into the supplemental information, we read, "the Department is especially mindful of the need for substantive interaction with-in the scientific community." Later paragraphs also mention the importance of prizes, which "not only raise the visibility of the scientist, but also enhance the reputation of his or her institution and research area."

Behind these endorsements of scholarly exchange and recognition, the rules include tightly fitted provisions by which NIH staff can maintain academic vitality and remain active, contributing members of the larger community of scientists.

Outside Activities http://ethics.od.nih.gov/topics/Revised5501.htm

Traffic Advisory: Many of the specific rules of the road are still being worked on (see "What We Don’t Know Yet"), and more guidance—including specific procedures and deadlines—will be forthcoming in the weeks ahead. The most critical step right now is to stop—or not start—any activities that are forbidden under the new rule (see "Road Closed" below). If you need to request a time extension to wrap up a now-banned commitment, you must make this request in writing to your ethics officer by March 5, 2005. You will be in violation of the rules if you fail to submit a request and persist in the activity.

Yield sign: While other rules or your supervisor may not allow you to proceed, the new rule offers the greatest freedom for official duty activities. These are interactions that NIH staff may pursue—with a supervisor’s approval—as part of their NIH duties because they benefit NIH. Once approved—and without any compensation beyond your regular government paycheck—you may:

Present your research at a scientific conference

Conduct a site visit

Serve on editorial or professional society boards (note: you may need some special waivers, and you cannot have fiduciary responsibilities in the outside organization)

Give a lecture or workshop on your research at a company, university, or nonprofit institute

Exchange research materials


Participate in a CRADA

Teach a course

Edit publications

Hold a patent and receive royalties from an invention that arose from NIH work

To encourage scientists to pursue these uncompensated official duty activities, the rules say the NIH administration will strive to accommodate speaking activities "that might previously have been considered less directly connected to agency mission." Travel reimbursement from your host is permitted. The NIH Office of Financial Management is reviewing NIH-wide guidance on "348" travel.

Scenic highway: Of course, the rules also allow you the freedom to be an unpaid volunteer in your free time in areas outside NIH’s purview. You may teach, speak, write, edit, or otherwise serve in a political, religious, social, fraternal, or recreational organization.

You may accept reimbursement of expenses for this work. You don’t need approval from NIH—unless you are providing professional services (such as legal, accounting, or medical services) or are getting compensation beyond reimbursement of expenses.

Stop sign: If you want to engage in an outside scientific activity, you will first need to stop and request and receive approval from your ethics official. While procedures are still being worked out, you should allow plenty of time for this.

As a general guide, your request to do an outside activity will be denied if it would mean you would have to disqualify yourself from your work duties because of resulting conflicts. They will also turn down activities that would violate statutes, including those that prohibit using your government position for private gain (see "Guiding Principles.").

But within those bounds, there are a number of compensated outside activities that the rule says can be performed with prior approval.

For the most part, these are activities that help scientists maintain their skills, credentials, and professional reputation. If it doesn’t conflict with NIH responsibilities or significantly overlap with your NIH work, your ethics officer can approve:

Teaching a course (including in your field) that is part of a school’s regular curriculum

Providing medical, dental, nursing, or pharmaceutical treatment of patients

Writing or editing a peer-reviewed scientific publication—provided the funds don’t come from an inappropriate source

Teaching or moderating an accredited CME or CME-type course—again provided the funds don’t come from a biasing source

Moonlighting in clerical, retail, janitorial, and other nonprofessional jobs

When he or she reviews your request for permission for these outside activities, your ethics officer will look closely at the particulars to be sure there is no conflict or appearance of conflict between the activity and your NIH responsibilities. Approvals are granted only for one year–you have to reapply every 12 months to continue with an ongoing activity.

Get your license: Everyone must file a report on all outside activities—whether or not you had previous approval for them—by April 29, 2005. The annual reporting date in future years will be February 28.

Road closed: With the exception of the "stop sign" activities above, you can’t perform an outside activity for an organization that is materially affected by NIH’s work.

These prohibited organizations include biotech and pharmaceutical companies (and other companies involved in research, development, or manufacture of medical devices, equipment, treatments, or other products), NIH grantee institutions and contractors, health care providers or insurers, trade or professional organizations, and nonprofit health lobbying groups. A preliminary list of "prohibited organizations" is being prepared and will be available through a link from the NIH Ethics page.

"Outside activity" includes any type of employment or business relationship where you provide a service, including consulting, serving on a board, paid teaching, speaking, writing, or editing. You also can’t be a self-employed sales agent or advertiser for one of these prohibited organizations.

You have until March 5 to end any "road-closed" relationships, although if you need more time to exit, you can request a 60-day extension in writing from your ethics office. You have to submit your extension request before March 5.


Narrow bridge: As always, the new rules pertain only to awards for what you do as a government worker and awards that come from organizations that are affected by NIH. So, go ahead, claim your bowling team’s trophy for the most gutter balls, or that blue ribbon for prize dahlias at the county fair. Your church gave you a potted plant for filling in for the choir director when she had a baby—no problem!

Stop sign: Unless you are a senior employee (see below), you can, with prior approval from your ethics office:

Accept a prize or gift of $200 or less

Accept one of the prescreened prizes and awards for scientific achievement or meritorious public service

A preliminary list of potentially approvable prizes endorsed by the Advisory Committee to the Director will be available through a link from the NIH Ethics page.

You must get approval in advance to receive the award. You won’t be allowed to accept the award if it comes from an organization that has applications, grants, research collaborations, CRADAs, or other matters that have been or might in the future come before you or someone who reports to you.

For a year after you accept the award, you cannot be involved in any business that involves the award donor. If you fail to get prior approval for an award or accept a prohibited award, you could be required to forfeit or return the award, have it removed from your CV, and suffer other administrative discipline.

No entrance: Senior employees are prohibited from accepting an award worth more than $200 from any entity that has dealings with NIH. This includes anyone who might seek to do business with NIH, file a grant application, or be engaged in activities that are significantly affected by what NIH does.

Senior employees include the NIH director, directors of the institutes and centers, and anyone who reports directly to the directors (deputy directors, scientific directors, clinical directors, and extramural program officials). Other people who have equivalent levels of responsibility or who are designated as "senior" also fall under this tighter prohibition.

Entrance by special permit only—Or maybe we should call this the Fondest Dream Exception: Senior officials can apply for an exception to receive competitive prizes worth more than $200. Such exceptions would probably be granted for "very prestigious awards such as the Nobel Prize and the Lasker Award. . . " See ya in Stockholm!

Stock Holdings

The new rules on stock ownership are perhaps the most unexpected part of the new rules. The rule’s preliminary information says the changes spring from growing influence of NIH on medical research and the industries based on it. Also mentioned are the complex and rapidly changing interrelationships of companies today and the difficulty of evaluating the potential influence of each scientist’s work on industry and vice versa. At the NIH Town Meeting, NIH Deputy Director Raynard Kington said simply, "The world has changed."

Specific concerns that are mentioned are that ownership of stock "would cause a reasonable person to question the impartiality or objectivity with which NIH programs are administered," and that NIH staff might make investments based on information that was not publicly available.

Caution! As this special issue of The NIH Catalyst goes to press, NIH ethics officials are strongly urging people NOT to divest their stocks yet. Please watch for further information as they work out more details on specific procedures, exceptions, and deadlines.

Another key point is that if you are required to divest and would incur a capital gains tax from that, you may apply for a certificate of divestiture that permits you to trade your prohibited investment for an allowed asset and defer the tax until you sell the new asset. You must apply for this certificate before you trade the stock. All NIH employees will be required to report on ownership of restricted stocks by April 4. Please watch for further information on how, what, when, and where to report.

Green light: All NIH staff may own any amount of broadly based mutual funds and individual stocks that are not in NIH-related companies—provided the stock ownership doesn’t conflict with official duties. NIH is developing a list of restricted stocks (see below).

If you came to NIH from a previous job in industry and you or your spouse or child (under age 18) have a benefits portfolio from that job that includes biotech or pharmaceutical stocks, you may be able to keep the stock.

If your spouse is working for a biotech or pharmaceutical company and receiving stock as a result, he or she may continue to hold the job and likely the stock. (The NIH spouse would not be allowed any responsibilities at NIH that involved the spouse’s employer, of course.)

Vehicle weight limits ahead: Mutual funds emphasizing biomedically related stocks ("sector funds") and stocks on the restricted list are limited for some NIHers and completely disallowed for others. Stocks on the restricted list will likely include:

Pharmaceutical companies

Biotech companies

Medical device companies

Research companies that develop medical or health care products

Biomedical research companies

Health care providers

Health insurance companies

Companies providing biostatistical services

Companies conducting behavioral or psychological research

NIHers who are "nonfilers," that is, who do NOT file financial disclosure forms (SF278 or OGE Form 450) are in the limited category. They, their spouse, and their children under age 18 together may invest up to $15,000 in any stocks on the restricted list.

There is no limit on the total number of stocks nonfilers may invest in, but the total holdings of restricted stocks must account for less than half of the total of the family’s combined investment portfolio. In addition, the family’s combined holdings in a company must constitute less than 1 percent of the total outstanding equity of a company.

The $15,000 "de minimis" level of holdings is based on the value of the stock when the market closed on February 3, 2005, providing you meet the de minimis test during the transition period. You don’t have to divest of shares if the stock increases in value after February 3, and the $15,000 limit will go up if the government-wide de minimis level is raised.

Stop and turn back: NIH employees and their spouses and minor children who file either the public disclosure or the confidential disclosure forms ("filers") may not own stocks on the restricted list, unless an exception applies. Filers must report these stock holdings by 60 days from the time the rule went into effect, and then have 90 days from that time to divest of all prohibited stocks. Extensions to both of these deadlines may be granted.

Possible detours: The rules open a few exceptions permitting some staff that would otherwise be disallowed from holding any banned stock to hold de minimis levels:

NIH ethics officials are studying whether some groups of NIH staff, such as purchasing agents who are "filers" because of their procurement responsibilities, may be counted as "nonfilers" when it comes to stock holdings.

Under "exceptional circumstances," the NIH Director and DHHS ethics officials may grant an individual a written exception to the rule on stock holdings, provided the exception would not be illegal or undermine public confidence in NIH objectivity. More guidance on how to submit a request will be out soon. n



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