Transcript Entrepreneurship and Conflict of Interest in Science Barbara Barnes, MD

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?

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?
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.
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

Legal Requirements
Public Policy Considerations
Public Perception
Conflict of Candor – Transparency
USPTO
NIH
Investors
(& SEC)
FDA
University
Legal Considerations
 PHS/NSF
Standard
 FDA Standard
 Stark Act
 Insider Trading Laws
PHS/NSF Standard
Considerations 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

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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
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
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

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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 nonconflicted investigators before approving the drug or device.
(see 21 CFR Sect. 312.70)
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

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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

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
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)

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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
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$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
INTEGRITY in SCIENCE
Integrity in Science Watch Week of 11/05/2007
Orthopedic Surgeons' Buck-raking Exposed
Nearly 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
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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:
http://www.coi.pitt.edu/IndustryRelationships/index.htm
University COI Policies
Pitt and CMU have policies to address
the following concerns:
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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

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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
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.
Questions?

Further information on the University
of Pittsburgh’s Conflict of Interest
Policies can be found at:
http://www.coi.pitt.edu