Questions and Answers for Employees
Supplemental Standards of Ethical Conduct and Financial Disclosure Requirements
Please note that this document is intended to be a helpful guide. If you have questions about the details of these provisions or how these rules might apply to you, please contact your ethics official.
Q1: When do these regulations go into effect?
A1: These interim final regulations go into effect upon publication, and all of the provisions remain in effect unless changed by subsequent regulations. As noted in the preamble to the regulations, DHHS intends to evaluate certain provisions in the rule, including those regarding outside activities and financial holdings, within the next year. DHHS will consider the comments submitted and the knowledge gained from the first year of implementation when deciding what, if any, provisions to revise.
Q2: Who is covered by the regulations?
A2: The new regulations apply to all federal NIH employees, except Special Government Empoyees. As was the case in the past, the rules apply to non-FTE personnel to the same extent the prior rules applied.
Q3: What are the penalties for violating these new regulations?A3: Violating the standard of conduct regulations have carried and still do carry a broad range of penalties. The Table of Penalties states that an employee may receive a reprimand for minor infractions, but may also be removed from their jobs for the most egregious infractions. If the infraction includes violation of existing criminal laws, criminal sanctions may also apply.
Q4: What types of outside activities are prohibited by the new regulations?
A4: The following types of outside activities are prohibited by the new regulations with certain exceptions discussed below:
1) Compensated or uncompensated employment, including consulting and scientific and other board service, with substantially affected organizations (generally defined as pharmaceutical and biotechnology companies), supported research institutions (generally defined as grantees and contractors), health care providers and insurers, and related trade, professional or similar associations;
2) Compensated teaching, speaking, writing or editing for the above four groups; and
3) Self-employed business activity that involves the sale or promotion of products or services of a substantially affected organization or a health care provider or insurer.
Q5: How do I know if an organization is one which I may not engage in employment with or compensated teaching, speaking, writing or editing for?
A5: We are working on a list of readily identifiable organizations that fall within each category described above. We anticipate having this list available electronically. However, as no list can be entirely comprehensive, please contact the NIH Ethics Office at (301) 402-6628 for a determination in your particular case.
Q6: What’s included in the definition of employment?
A6: Employment means any form of non-Federal employment or
business relationship involving the provision of personal services
by the employee. It includes but is not limited to personal services
as an officer, director, employee, agent, attorney, consultant,
contractor, general partner or trustee.
Q7: If I’m currently engaged in a prohibited activity, when do I have to stop?
A7: You must stop the activity within 30 days of the effective date of the regulations. If you need more time to responsibly complete your obligations with respect to the activity, you may apply for an additional 60 day extension beyond the initial 30 days. Your request must be in writing and submitted to the appropriate Ethics Office before the expiration of the initial 30 days. Extensions of more than 90 days will not be granted.
Q8: If I have a signed agreement to consult and have to stop, what do I tell the company?
A8: New regulations applicable to all NIH employees prohibit consulting by NIH employees with pharmaceutical, biotechnology, and other companies involved in the research, development, or manufacture of medical devices, equipment, treatments, preparations, or product, grantee institutions, health care providers and insurers, and related trade, professional and similar organizations. If you do not cease these activities, you will be in violation of law.
Q9: Are there any restrictions on employment with or teaching, speaking, writing or editing for a political, religious, social, fraternal or recreational organization?
A9: No. However, if the activity is compensated other than reimbursement of expenses or the position held with the organization requires the provision of professional services (e.g., accounting, legal or medical), then prior approval is required before you may engage in this type of activity as with all outside activities. As with all outside activities, prior approval will depend on whether this activity also complies with all other applicable standards.
Q10: Can I still accept compensation for teaching a course at a university?
A10: Yes, the new regulation did not change this exception, if it is a course requiring multiple presentations that is part of the established curriculum of an institution of higher learning, and prior approval is also still required for this type of activity. As with all outside activities, prior approval will depend on whether this activity also complies with all other applicable standards.
Q11: Can I still engage in and accept compensation for the outside practice of medicine, dentistry, pharmacy, nursing, or similar health-related professional practice?
A11: Yes, if such professional practice involves the personal provision of care, treatment, or other health-related professional services to or in connection with individual patients. As has always been the case, there are certain limitations associated with the provision of such services, and prior approval is required. Also, we may impose a limit on the number of hours that an employee may be permitted to engage in an outside professional practice. We will inform you if and when these limitations are established. As with all outside activities, prior approval will depend on whether this activity also complies with all other applicable standards.
Q12: Can I accept compensation for employment that is limited to clerical or similar services even if this kind of employment is with one of the four types of organizations discussed above?
A12: Yes, if the employment is limited to clerical or similar services (such as cashier or janitorial services) in retail stores, such as supermarkets, drug stores, or department stores, and you obtain prior approval for the activity. As with all outside activities, prior approval will depend on whether this activity also complies with all other applicable standards.
Q13: Can I be compensated for teaching, speaking, writing or editing that is part of a Continuing Medical Education program, or other CME-like events?
A13: Yes, if the teaching, speaking, writing or editing is on a broad, general topic within your area of expertise based on your educational background or experience. The activity has to be part of an accredited CME or CME-like program, and may be permissible even if funded by a pharmaceutical or biotechnology company but only if such funding is through an unrestricted educational grant. Again, you must obtain prior approval to undertake any activity of this nature. As with all outside activities, prior approval will depend on whether this activity also complies with all other applicable standards.
Q14: Are there any exceptions for writing or editing activities that are published in scientific journals or textbooks?
A14: Yes, if the writing or editing activities are for publication in a scientific journal, textbook, or similar publication that subjects manuscripts to scientific peer review or a substantially equivalent editorial review process, and you obtain prior approval. This kind of activity will be permissible if a pharmaceutical or biotechnology company funds the publishing activity as long as the company is involved only as an unrestricted financial contributor and exercises no editorial control. As with all outside activities, prior approval will depend on whether this activity also complies with all other applicable standards.
Q15: If the activity is not prohibited by the new regulations, or falls within one of the exceptions, do I still need to seek prior approval to engage in the activity?
A15: Yes, the requirement for prior approval of outside activities such as providing consultative or professional services, including service as an expert witness, and teaching, speaking, writing or editing that relates to your official duties has not changed. Furthermore, you are now required to seek prior approval for other types of activities. Approval to engage in any outside activity will only be granted for up to one year. You will be required to reapply for approval if you want to extend the activity past 12 months.
Q16: May I serve as an expert witness or a consultant to an organization who is not one of the four types of prohibited employers, such as a law firm or a marketing and research firm, but the organization's client is, for example, a pharmaceutical company?
A16: Guidance on this topic will be issued shortly. For now, each case must be reviewed individually by the appropriate ethics official.
Q17: Do the new rules prohibit me from owning stock in pharmaceutical and biotechnology companies?
A17: Yes, if you file either a public or confidential financial disclosure report you (and your spouse and minor child) may not own stock in a pharmaceutical, biotechnology, or other company involved in the research, development or manufacture of medical devices, equipment, preparations, treatments, or products. If you are a non-filer, you (and your spouse and minor child) may own a combined total of up to $15,000 in stock in any one such company.
Q18: Why do I have to sell stock in companies that are not involved in or affected by my official duty work?
A18: Please see the preamble to the published regulation for a complete answer to this question. In particular, we note that the pharmaceutical, biotechnology and related industries are constantly changing. Because of this, it is very difficult to be completely sure that any one pharmaceutical or biotechnology company is not involved or affected by your official duties. This is especially true since the conflict of interest laws require that you not work on matters that affect the companies in which you own stock as well as matters that affect those companies’ competitors.Q19: Rather than selling my stock, couldn’t I simply be recused from any activities involving or affecting the companies in which I own stock?
A19: Under the new rules, recusal has been determined not to be an acceptable remedy with respect to a conflict arising from stock ownership at NIH. Under these new regulations, NIH does not allow an employee’s portfolio to dictate which official duty matters she may participate in. The interests of the NIH, and thus the public health, must always be first.
Q20: How will I know if stock in a particular company is a prohibited holding?
A20: Generally, the new regulations define a prohibited holding as stock in pharmaceutical, biotechnology, and other companies involved in research, development, or manufacture of medical devices, equipment, preparations, treatments or products and other substantially affected organizations. If you have questions regarding your holdings, please contact your ethics official.
Q21: Are there certain types of financial interests excepted from the broad prohibition against pharmaceutical, biotechnology, and other such stock ownership?
A21: Yes, you may be permitted to keep stock arising from pre-federal service employment with an entity on the list, such as a pension or other employee benefit. Your spouse and minor child may also be permitted to keep stock in the form of a pension or other employee benefit arising from employment with a company on the list. You (and your spouse and minor child) may also retain such stock that is held by a diversified mutual fund (e.g., S&P 500 index fund) or a non-health care or non-health care related sector fund (e.g., an energy or communications sector fund). Last, in cases of exceptional circumstances, you (or your spouse or minor child) may be granted a written exception to the prohibition. We will issue guidance regarding the procedure for requesting such an exception.
Q22: Are all employees who file financial disclosure reports prohibited from holding any stock in a substantially affected organization?
A22: All public and confidential financial disclosure report filers (and their spouses and minor children) are prohibited from owning stock in substantially affected organizations. However, an individual or class of individuals who file confidential financial disclosure report filers may be excluded from the total prohibition and permitted to hold up to $15,000 worth of stock in any one company provided no other conflict arises. These employees will generally hold positions that are not involved in intramural research or extramural funding programs, such as Human Resource Specialists. We will let you know if any such classes of individuals are exempted.
Q23: Are there special reporting requirements with respect to prohibited holdings?
A23: Within 60 days of the effective date of these regulations, you will be required to report any prohibited holding you, your spouse or minor child owned on the effective date of these regulations. All employees will soon receive explicit instructions on how to report these holdings.
Q24: If I (or my spouse or minor children) own a prohibited holding, when must I sell it?
A24: Generally, you (and your spouse and minor child) must sell your stock within 150 days of the effective date of the regulations. However, an extension to that deadline may be granted.
Q25: If I (or my spouse or minor child) am required to sell stock, we’ll have to pay a large amount of capital gains tax. Is there a way to defer such a payment?
A25: Yes, if you qualify, you may be issued a Certificate of Divestiture (CD) by the Office of Government Ethics. A CD provides for the nonrecognition of capital gains tax in the case of sales to comply with conflict of interest requirements. You will be required to submit specific, detailed information with your CD request. We will issue information shortly regarding CDs. Please note you will NOT be given a CD if you sell your stock PRIOR to receiving the CD. Please do not sell any stock pursuant to the prohibited holding provision until we issue more information on CDs and you have time to review it, perhaps with your tax advisor.
Q26: Are there any limitations on the receipt of awards by NIH employees?
A26: Yes, if you are a senior employee you will most likely not be able to receive gifts with an aggregate market value of more than $200 that are an award offered by an entity that is or seeks to do business with the NIH, seeks official action from the NIH, conducts activities substantially affected by the NIH, or may be affected by the performance or nonperformance of your official duties. If you are a non-senior employee, you may not be able to receive gifts with an aggregate market value of more than $200 that are an award offered by an entity with matters pending under your official responsibility.
Q27: How is “senior employees” defined for purposes of the award provision?
A27: Senior employees means the Director and the Deputy Director of the National Institutes of Health; members of the senior staff within the Office of the Director who report directly to the NIH Director; the Director, the Deputy Director, Scientific Director, and Clinical Director of each Institute and Center within NIH; Extramural Program Officials who report directly to an Institute or Center Director; and any employee with equivalent levels of responsibility who is designated as a senior employee by the designated agency ethics official or the NIH Director, in consultation with the designated agency ethics official.
Q28: If I’m not a senior employee, are there any restrictions placed on me with respect to the receipt of awards?
A28: As always, NIH employees may not accept gifts with an aggregate market value of more than $200 that are an award from entities that may be affected by the performance or nonperformance of their official duties. The new regulations do not change that rule, but make it clear that you may not accept such gifts from entities doing business under your official responsibility, even if you take no action on any matter involving the award donor.
If you are not a senior employee or you do not have official duty matters involving the donor, you may accept bona fide awards for meritorious public service if such awards have been reviewed by an independent advisory committee (the NIH Advisory Committee to the Director) and are recommended for approval because they meet the regulatory criteria, and you are individually approved to receive for such an award.
Q29: Do I still need to seek prior approval before accepting an award?
A29: Yes, the new regulations do not change that requirement.
Q30: Will any exceptions be granted to the prohibition that applies to senior employees?
A30: A senior employee may apply for an exception that would allow him to accept gifts with an aggregate market value of more than $200 that are an award. We anticipate such exceptions being made when very prestigious awards such as the Nobel Prize and the Lasker Award or other awards that confer an exceptionally high honor in fields of medicine or scientific research are bestowed.
Q31: What will happen if I do not get prior approval to accept an award?
A31: You may be subject to administrative discipline for violation of these regulations, and could be required to forfeit the award.
Q32: What will happen if I accept a prohibited award?
A32: You may be subject to administrative discipline for violation of these regulations, and could be required to take various remedial actions including forfeiting the award.
Q33: Is there a cooling off period after I accept an award?
A33: Yes, for one year after you receive an award you may not participate in a specific party matter where the award donor is or represents party without authorization to do so.
Q34: Is there an annual reporting requirement with respect to outside employment or activities?
A34: Yes, on February 28 of each year you will be required to file with the appropriate ethics office a report of your outside activities. This report will be due on April 29 for 2005 only. We will issue more information on this shortly.