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Entrepreneurship and Conflict of Interest in Science February 23, 2010 Barbara Barnes, MD Ann Mathias, JD David Smith, J PowerPoint Presentation
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Entrepreneurship and Conflict of Interest in Science February 23, 2010 Barbara Barnes, MD Ann Mathias, JD David Smith, JD David Wehrle, CPA, CIA, CFE. What is a Conflict of Interest?.

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Entrepreneurshipand Conflict of Interestin Science

February 23, 2010

Barbara Barnes, MD

Ann Mathias, JD

David Smith, JD

David Wehrle, CPA, CIA, CFE

what is a conflict of interest
What is a Conflict of Interest?
  • A potential Conflict of Interest (COI) may exist if an individual’s outside interests (especially financial) may affect, or perceive to affect, his/her research, teaching, or administrative activities at the University.
why does conflict of interest management matter
Why does Conflict of Interest management matter?

In order to ensure that research results are free from bias (whether conscious or unconscious) arising from the personal financial interests of the investigators, universities have an obligation to monitor and manage conflicts of interest of their employees.

  • Legal Requirements
  • Public Policy Considerations
  • Public Perception





(& SEC)


Conflict of Candor – Transparency

legal considerations
Legal Considerations
  • PHS/NSF Standard
  • FDA Standard
  • Stark Act
  • Insider Trading Laws
phs nsf standard considerations in tech transfer
PHS/NSF StandardConsiderations in Tech Transfer
  • Federal PHS regulations (NSF has similar guidelines) require the University to maintain written, enforced policies and procedures to manage faculty members’ financial conflicts of interest.
  • A “Significant Financial Interest” exists if a faculty member
    • receives annual remuneration in excess of $10,000 from a company that has an interest in the faculty member’s research, or
    • has an ownership interest in the company that exceeds 5% or $10,000.
the chronicle of higher education
THE CHRONICLEof Higher Education

Baylor College of Medicine Faces NIH Sanctions Over Financial Conflicts

Paul Baskin  Tuesday, January 20, 2010

The NIH has ordered tougher financial disclosures on all grant applications from Baylor College of Medicine, [citing] ”serious concerns” about the college’s compliance with regulations governing conflicts of interest….

The doctors who spoke favorably of Vytorin® included Christie M. Ballantyne…who collected $34,472 during a five-month period…

The NIH informed the institution last month that the agency would impose ‘special award conditions” on all future grants.

tighter phs regulations coming may 1 2010
Tighter PHS Regulations Coming May 1, 2010
  • A combined House and Senate appropriations committee agreed on a 2.3% bump for the NIH, which will have a $31 billion budget this year;
  • The increase is tied to stricter COI regulations, due to be enacted May 1
fda regulations see 21 cfr part 54
FDA RegulationsSee 21 CFR Part 54
  • Clinical investigators testing a drug or device must disclose certain financial interests in the sponsor, drug, or device under study:
    • $25,000 in outside support from the sponsor (including grants to the investigator’s institution);
    • equity/ownership interest in excess of $50,000 in a public company; or any ownership in a non-public company;
    • a proprietary interest of the investigator in the drug or device (e.g., a patent).
  • The FDA will evaluate the disclosed conflict and may take various actions, including requiring further testing with non-conflicted investigators before approving the drug or device. (see 21 CFR Sect. 312.70)
chicago tribune
Chicago Tribune

November 11, 2009

Doctor-drugmaker ties: Psychiatrist

Dr. Michael Reinstein received nearly $500,000 from antipsychotic drug’s manufacturer

  • Company paid him to promote Seroquel®despite misgivings about his research
new york times

F.D.A. Is Lax on Oversight During Trials, Inquiry Finds

January 11, 2009

  • The Food and Drug Administration does almost nothing to police the financial conflicts of doctors who conduct clinical trials of drugs and medical devices in human subjects, government investigators are reporting.
  • Moreover, the investigators say, agency officials told them that trying to protect patients from such conflicts was not worth the effort.
fda warning letter
FDA Warning Letter
  • The FDA sent a warning letter to researcher, Dr. Leslie Baumann, January 11, 2010, regarding promotional statements made in violation of FDA regulations.
stark act
Stark Act
  • The Stark Act relates to physician referral and prescribing practices.
  • The law forbids physicians or their immediate family members from referring patients to a “designated health service” from which the physicians or family members receive “anything of value.”
federal false claims act anti kickback
Federal False Claims Act (Anti-Kickback)
  • Violation for knowingly and willfully offering or paying/soliciting, or receiving remuneration in return for purchasing, leasing, ordering, arranging for, or recommending an item or service paid in whole or part by Medicare/Medicaid
    • Even if the expenditure has a legitimate purpose, there is liability if one purpose is to induce purchases
    • Applies to both the giver and receiver
    • Felony: fine and/or imprisonment
  • Qui tam: actions can be initiated by whistleblowers
false claims cases 1996 2005
False Claims Cases 1996-2005
  • $9.3 billion recovered and > $1 billion paid to whistleblowers
  • Whistleblowers are frequently physicians and executives, 75% of whom are employees of defendants
  • Actions against pharmaceutical companies comprised 4% of cases but 39% of recoveries
i ntegrity in s cience integrity in science watch week of 11 05 2007
INTEGRITYin SCIENCEIntegrity in Science Watch Week of 11/05/2007

Orthopedic Surgeons' Buck-raking ExposedNearly 50 orthopedic surgeons, many affiliated with the nation's top teaching hospitals, each earned over $1 million a year in consulting contracts and royalties from the five companies that make artificial knees and hips. The payment disclosures were posted on the companies' websites last week as part of a $311 million anti-kickback settlement between four of the firms and the U.S. attorney for northern New Jersey.

industry relationships
Industry Relationships
  • In response to concerns over the impact of industry interactions on the prescribing practices of healthcare professionals, the University’s Schools of the Health Sciences and UPMC adopted a policy addressing such relationships:

university coi policies
University COI Policies

Pitt and CMU have policies to address the following concerns:

  • Consulting Work—Conflict of Commitment
  • Management, directorship, or ownership of Start-up Company
  • Research performed by Pitt and CMU for company in which faculty member has an interest
    • Differences in policies are due to the different types of research conducted at our respective institutions.
perspective of the financing party
Perspective of the Financing Party
  • Role of a Director/Officer of a Company—the fiduciary obligation.
  • Need for the Company to evaluate the technology as a business matter—rather than as a purely scientific inquiry.
  • Scientific Advisory Boards for start up companies.
conflict of interest
Conflict of Interest

A research administrator recently received a conflict of interest disclosure from a faculty member who is part owner of a company in the same field as her research. She has 25% of the equity; faculty members in other departments own the remaining 75%. She does some consulting for the company, for which she earns $5,000 a year.

The company recently licensed her invention from the Technology Licensing Office. She expects to receive $20,000 in licensing proceeds next year. The administrator wants to know how to manage this conflict.

  • Further information on the University of Pittsburgh’s Conflict of Interest Policies can be found at: