Questions and Answers for Employees
Preface. The Department of Health and Human Services (HHS), with the concurrence of the Office of Government Ethics (OGE), has issued final regulations for the National Institutes of Health regarding reporting of certain financial interests, stock divestiture, outside activities, and awards. Three principles guided the crafting of the final regulations:
- The public must be assured that research decisions made at NIH are based on scientific evidence and not by inappropriate influences.
- Senior management and people who play an important role in research decisions must meet a higher standard of disclosure and divestiture than people who are not decision-makers.
- To advance the science and stay on the cutting edge of research, NIH
employees must be allowed interaction with professional associations,
participation in public health activities, and genuine teaching opportunities.
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: How do these rules fit in with the other previously issued rules that govern the conduct of NIH employees?
A1: This is a final rule. Provisions of previously issued rules that are not changed by a subsequent rule remain in effect. In other words, the new rules only affect the previously issued regulations where specifically stated. For example, the broad prohibition against an outside activity with a pharmaceutical or biotechnology company, a grantee institution and a healthcare provider or insurer remains, but the restriction on outside activities with related trade or professional societies has changed.
Q2: When do these regulations go into effect?
A2: These revised regulations go into effect upon publication, and all of the provisions remain in effect unless changed by subsequent regulations.
Q3: Will there be further revisions?
A3: DHHS and NIH have considered the comments submitted in response to the February rule in making the most recent revisions. The regulation will be reviewed by DHHS and NIH within one year to evaluate its continued adequacy and effectiveness in relation to current agency responsibilities.
Q4: Who is covered by the regulations?A4: The new regulations apply to all NIH staff who are employees of the agency. NIH staff who are not employees, i.e., guest researchers, IPA detailees, special volunteers, contractors and non-employee visiting and IRTA/CRTA fellows, are not covered by the regulations although ethics-related contract terms continue to apply.
Q5: What are the penalties for violating these new regulations?
A5: Violating standards of ethical conduct regulations have and continue to carry a broad range of penalties. Applicable personnel rules provide that an employee may receive a reprimand for a minor infraction, but may also be removed from his or her job for the most egregious infractions. If the infraction includes violation of existing criminal laws, criminal sanctions may also apply.
Outside ActivitiesQ6: What types of outside activities are prohibited by the regulations?
A6: The following types of outside activities are prohibited by the regulations with certain exceptions discussed below:
- 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), and health care providers and insurers;
- Compensated teaching, speaking, writing or editing for the above three groups; and
- 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.
Q7: Is there a change to the general outside activity prohibition established in the February rule?
A7: Yes, the prohibition against compensated or uncompensated employment with, and compensated teaching, speaking, writing or editing for, professional or similar associations has been removed. With prior approval, you may, for instance, serve as an officer or board member of a related trade, professional or similar association.
Q8: Are there any restrictions on employment with or teaching, speaking, writing or editing for a political, religious, social, fraternal or recreational organizations?
A8: No, as has always been the case, and provided the activity would be consistent with all other applicable rules, including those related to the use of official time and other resources, you may engage in an outside activity with these types of organizations.
Q9: Do I need prior approval to engage in an activity with these types of organizations?
A9: You need prior approval for activities with these types of organization if you will be compensated for your service, or you will be providing professional services, regardless of compensation.
Q10: Is prior approval required for all other outside activities?
A10: Prior approval is required for employment, self-employed business and other activities involving: 1) a prohibited source; 2) the provision of professional or consultative services; 3) teaching, speaking, writing, and editing that relates to official duties; or, 4) the provision of services to a non-Federal entity as an officer, director or board member, unless the particular activity is exempted from the requirement by the DAEO. Activities that do not fall within one of these categories, such as coaching a youth sports team or scouting activities, do not require prior approval, although all other conduct rules related to outside activities, such as those precluding activities that result in a conflict with official duties, or compensation in relation to HHS-funded activities or certain teaching, speaking and writing activities, and those related to the use of official time and other resources continue to apply.
Q11: May I still accept compensation for teaching a course at a university?
A11: Yes, the new regulation did not change this exception for courses requiring multiple presentations that are part of an established curriculum, and prior approval is also still required for this type of activity. As with all outside activities, prior approval will depend on whether the activity also complies with all other applicable standards.
Q12: What if I am asked to present just one lecture in the type of course described above?
A12: Assuming it complies with all other applicable standards, and prior approval is given, under these new regulations, you may now present and be compensated for such a lecture.
Q13: May I present and be compensated for other types of lectures at grantee institutions?
A13: Yes, a new exception now allows you to give a Grand Rounds lecture if the presentation includes an interactive component, the audience is composed primarily of faculty and students registered in a biomedical or health-related program of study and the topic of the lecture does not relate to your specific official duties. For example, a lecture would be allowed if it is on your general area of expertise but not if it is specifically on your research area at NIH. This distinction is ultimately a judgment call, and you should seek input from your IC DEC for more guidance. Prior approval is required for this type of outside activity.
The exception for compensated teaching, speaking, writing or editing that is part of a Continuing Medical Education program, or other CME-like event remains in effect, as well. As you’ll recall, the exception applies 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 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 the activity also complies with all other applicable standards, such as those precluding activities that result in a conflict with official duties, or compensation in relation to HHS-funded activities or certain teaching, speaking and writing activities, and those related to the use of official time and other resources.
Q14: Are there other new exceptions to the prohibition against employment with a grantee institution or a healthcare provider or insurer?
A14: Yes. With prior approval, you may serve with or without compensation on a grant or scientific review committee, or as a member of a data and safety monitoring board, provided that a SAO does not select or pay the members, the study or program is not supported by NIH funding or agreement, and the activity would not violate limitations on compensated employment in relation to the preparation of documents for submission to HHS and HHS-funded programs.
Q15: May I still engage in and accept compensation for the outside practice of medicine, dentistry, pharmacy, nursing, or similar health-related professional practice?
A15: Yes, this type of activity is still permissible 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 we may impose additional limits on outside professional practice other than those imposed by ethical conduct regulations. NIH employees will be informed if and when additional limitations are established. Prior approval is still required for outside professional practice, and as with all outside activities, prior approval will depend on whether this activity also complies with all other applicable standards.
Q16: Are there still exceptions for writing or editing activities that are published in scientific journals or textbooks?
A16: Yes, this exception has remained 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 not be permissible if a pharmaceutical or biotechnology company funds the publishing activity unless it does so 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.
Q17: 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?
A17: 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 is independent of the prohibited activities provision. See Q&A 10 for a more complete discussion of when prior approval is required. Also, 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. The annual reporting requirement for outside activities that require prior approval (through use of the revised HHS Form 521) that was reinstated in the February rule remains in effect.
Q18: May I serve as an expert witness or a consultant to an organization who is not one of the three 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?
A18: If the underlying client is one of the three prohibited employers (a pharmaceutical, biotechnology or medical device company; a supported research institution; or a healthcare provider or insurer), the regulation prohibits the activity. As with any activity prohibited by the outside activity provision, you may seek a waiver of the prohibition. An exception to the prohibition may be made in certain circumstances. Speak to your IC DEC about such a waiver.
Q19: Under the rules, who is prohibited from owning stock in pharmaceutical and biotechnology companies?
A19: Only senior employees (and their spouses and minor children) are prohibited from owning stock in any one pharmaceutical, biotechnology, or medical device company above a combined total of $15,000. Senior employees (and their spouses and minor children) may not hold interests in healthcare sector funds (those funds with a stated strategy of investing in the pharmaceutical and biotechnology industries) above an aggregate value of $50,000. Senior employees must divest their holdings to below the $15,000 and $50,000 de minimis levels by January 30, 2006, unless an exceptional circumstance is determined by the NIH and DAEO to exist.
Q20: Who are “senior employees”?
A20: Senior employees are defined as: the NIH Director and Deputy Director; direct reports to the NIH Director; IC Directors, Deputy Directors, Scientific Directors, and Clinical Directors in each IC; Extramural Program officials who report directly to an IC Director; and other employees designated as such because they possess equivalent levels of decision-making responsibilities.
Q21: If I’m not a senior employee, will I never be required to divest of my pharmaceutical or biotechnology holdings?A21: The pharmaceutical and biotechnology holdings of non-senior employees will be reviewed on a case-by-case basis in light of the non-senior employee’s official duties, and under certain circumstances, you may be directed to divest specific holdings. At all times, and even in the absence of a case review or direction to divest, employees are subject to the conflict of interest rules that may call for recusal pending a final determination regarding conflict management.
Q22: Rather than selling my stock, couldn’t I simply be recused from any activities involving or affecting the companies in which I own stock?
A22: Recusal may be an option in certain cases, but in order to avoid criminal violations, NIH employees not covered by the prohibited holdings rule will have to adhere to recusal obligations based on the value of the conflicting stocks in their investment portfolios. Employees will be required to know which dollar limit applies, on which type of matter they are working (general or specific), understand the terminology of the de minimis exemptions, recall the exact value of each holding, and comprehend how each company would gain or lose depending on the resolution of the government matter. The more complex a given situation is, the less viable recusal may be. Except in very limited circumstances, senior employees will be required to sell (by January 30, 2006) all pharmaceutical and biotechnology company stock. Similarly, non-senior employees will be required to sell conflicting pharmaceutical and biotechnology company stock as determined by a case-by-case review of the non-senior employee’s official duties and their stock holdings.
Q23: In the past, a waiver under the conflict of interest statute has been issued which allowed me to retain my stock holding and work on a particular matter. Are such waivers still available?
A23: For non-senior employees, a waiver of the statutory conflict of interest provision may be appropriate in certain limited circumstances. You should discuss such possibilities with your DEC.
Q24: How will I know if stock in a particular company is a prohibited holding?
A24: Generally, the 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.
Q25: For senior employees, are there certain types of financial interests excepted from the broad prohibition against pharmaceutical, biotechnology, and other such stock ownership?
A25: Yes, you (or your spouse or minor child) may retain 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). In addition, provided that continued ownership would be consistent with all other conflict of interest rules, you may be permitted to keep stock arising from employment with a pharmaceutical, biotechnology or medical device company, such as a pension or other employee benefit.
In cases of exceptional circumstances, you (or your spouse or minor child) may be granted a written exception to the prohibition. Situations that warrant such an exception may include those that present time-limited circumstances (e.g., for the holdings of a minor child who will reach age 18 within a short period of time), provided any potential conflict can be managed appropriately with recusal and/or waivers.
Q26: Are there special reporting requirements with respect to prohibited holdings?
A26: If you are a public or confidential report filer, or a non-filer who serves as a clinical investigator identified on an NIH clinical study, you must report any prohibited holding you, your spouse or minor child own on the date you file the report. The report is due by October 31, 2005.
Q27: I'm a clinical researcher, but am not a public or confidential filer. Why do I have to report my holdings in pharmaceutical or biotechnology companies?
A27: You, as a clinical researcher, have an especially
important role in research decisions that directly impact upon the
lives of human subjects. Thus, your holdings warrant heightened scrutiny
to ensure unbiased decision-making.
Q28: If I (or my spouse or minor child) am required to sell stock (either by operation of the new regulation for senior employees, or because of the result of a case-by-case review for non-senior employees), I may have to pay a large amount of capital gains tax. Is there a way to defer such a payment?
A28: If you are directed to divest, you will be given information about and the opportunity to apply for a Certificate of Divestiture (CD) from 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.
Q29: Are there any limitations on the receipt of awards by NIH employees?
A29: Yes, 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. The special restriction on awards received by senior employees put in place by the February rule has been eliminated.
Q30: Do I still need to seek prior approval before accepting an award?
A30: Yes, the new regulations do not change that requirement. If the donor does not have matters pending under your official responsibilities, or that of your subordinates, you may accept bona fide awards for meritorious public service if such awards meet the regulatory criteria, and you are individually approved to receive such an award.
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 a party to the matter without authorization
to do so.