Department of Health and Human Services
 
OFFICE OF 

 
INSPECTOR GENERAL 

 
 
 
 
 
 
 
 
NATI  ONAL INSTITUTES OF 

 
H :  C
EALTH    ONFLICTS OF 

 
 
I E
NTEREST IN  XTRAMURAL 

 
  R  
ESEARCH 

 
 
 
 
 
Daniel R. Levinson 
  
Inspector General 

 
January 2008 
 
OEI-03-06-00460 
   
Office of Inspector General 

 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452,  
as amended, is to  protect the integrity of  the Department of Health and Human Services 
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components:  
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services  for HHS, either by  
conducting audits with its  own audit resources or by overseeing audit work done by others.   
Audits examine the performance of HHS programs and/or its grantees and  contractors  
in carrying out  their respective responsibilities and are intended  to provide independent  
assessments of  HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement  and  promote economy and  efficiency throughout HHS. 
Office of Evaluation and Inspections  
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  Specifically, these evaluations focus on preventing fraud,  waste,  or  
abuse and promoting  economy, efficiency, and effectiveness  in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative  
investigations  of  allegations of wrongdoing  in HHS  programs or to HHS  beneficiaries  
and of unjust enrichment by  providers.  The investigative  efforts  of OI lead to  criminal  
convictions, administrative sanctions,  or  civil monetary penalties.  
Office of Counsel to the Inspector General 
The  Office of Counsel to the Inspector General (OCIG)  provides  general legal services  to  
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support in OIG's internal operations.   OCIG imposes program exclusions and civil 
monetary penalties  on health care providers and litigates  those actions  within HHS.   
OCIG also  represents OIG in the global settlement of  cases  arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to  the health care  
community,  and issues fraud alerts  and other industry  guidance.  
   
   
 
  E X E C U T I V E   S U M M A R Y  
OBJECTIVES 
1. 	  To determine the number and nature of financial conflicts of 
interest reported by grantee institutions to the National 
Institutes of Health (NIH). 
2. 	  To determine the extent to which NIH oversees grantee 
institutions financial conflicts of interest. 
BACKGROUND 
NIH research grants are awarded through 24 Institutes and Centers 
(Institutes) that have grant-making authority.  Each Institute is 
responsible for the daily management and oversight of its grants, and 
each has its own grants management office that handles the grants 
oversight and administrative functions.  Institutes follow the grants 
management policies outlined in the NIH Grants Policy Statement 
developed and implemented by NIHs Office  of Extramural Research 
(OER).  OER provides grantees with  information about relevant policies 
and regulations through its Web site  and through outreach activities 
such as targeted site reviews, regional seminars, and a bimonthly 
newsletter. OER also develops and maintains information  systems 
related to extramural research grants administration.    
Pursuant to Federal regulations, each grantee institution receiving NIH 
funds must have a written policy for identifying financial conflicts of 
interest and ensuring that conflicts will be managed, reduced, or 
eliminated. Grantee institutions must certify that they have written 
and enforced administrative processes to identify and manage, reduce, 
or eliminate conflicting interests.   They must also certify that existing 
conflicts of interest (but not the nature of the interest or other details) 
will be reported to the Public Health Service awarding component prior 
to the expenditure of any funds under that award; that these conflicts 
have been managed, reduced,  or eliminated; and that any subsequently 
identified conflicts will be reported and the conflicts will be managed, 
reduced, or eliminated, at least on an interim basis, within 60 days of 
identification. 
We requested information regarding the receipt and oversight of 
grantee institutions financial conflict-of-interest reports from OER and  
the 24 Institutes with grant-making authority. 
  OEI-03-06-00460   NATIONAL  INSTITUTES OF  HEALTH:   CONFLICTS OF  INTEREST IN  EXTRAMURAL  RESEARCH   i   
   
E X E C U T I V E   S U M M A R Y
   
FINDINGS 
NIH could not provide an accurate  count of the financial         
conflict-of-interest reports that it received from  grantees during 
fiscal years 2004 through 2006.  NIH provided us with 438 financial 
conflict-of-interest reports for fiscal years (FY) 2004 through 2006.  
However, this number does not represent the total number of conflicts of 
interest reported by grantee institutions because NIHs Institutes and 
OER were unable to provide us with all of the actual conflict-of-interest 
reports they received from grantee institutions.   
NIH does not have a central source that can provide a total count of 
financial conflict-of-interest reports  because OERs database of financial 
conflict-of-interest reports is incomplete.  Although the Institutes are 
asked to send all conflict-of-interest reports to OER, we found that OER 
and the Institutes did not send us the same reports for the 3-year 
period.     
NIH is not aware of the  types of financial conflicts of interest that  
exist within grantee institutions because details are not required to 
be reported and most conflict-of-interest reports do not state the 
nature of the conflict.   Although Federal regulations require grantee 
institutions to report financial conflicts of interest, the regulations do 
not explicitly require the nature of  the conflict or other details to be 
reported.  At least 89 percent of financial conflict-of-interest reports did 
not state the nature of the conflicts or how they would be managed.   
Because these reports contain minimal detail, grants officials have little 
information on which to follow up.   
We determined that 30 of the 438 reports we reviewed included detailed 
financial conflict-of-interest descriptions.  These reports described cases,  
for example, in which investigators have intellectual property 
associated with the grant research or financial interests in companies 
that are subcontractors on the research grants.  Fifteen reports 
provided a detailed description of  how conflicts would be managed, 
reduced, or  eliminated.  These methods included disclosing the financial 
conflicts of interest in presentations and publications related to the 
research and appointing independent faculty members to provide  
oversight  of the grant research or  to review research reports.    
The information we reviewed in the 45 reports that did contain detailed  
information regarding the nature and management of conflicts could 
assist NIH officials in making a determination as to whether followup 
with the grantee institutions is necessary.     
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Many Institutes primary  method of oversight is reliance on grantee 
institutions  assurances that financial conflict-of-interest regulations 
are followed. According to the NIH Grants Policy Statement, the 
grantees roles and responsibilities have assumed greater importance as 
NIH relegates greater decisionmaking authority to grantees. Many 
Institutes rely on the good faith of the grantee institutions to ensure  
compliance with Federal financial conflict-of-interest regulations, rather  
than directly overseeing or reviewing grantee institutions management 
of financial conflicts of interest. 
We found that the majority of the Institutes do not have any  proactive 
methods for ensuring that grantees have financial conflict-of-interest 
policies. Several Institutes stated that they rely solely on information 
published by OER to ensure that grantees have  conflict-of-interest  
policies in place. OER provides grantees with information about the 
relevant policies and regulations through its Web site. OER also 
conducts outreach activities, such as targeted site reviews, regional 
seminars, and a bimonthly newsletter to grantee institutions.      
Institutes infrequently and inconsistently follow  up on reported 
financial conflicts of interest. Our review found very few cases in which 
Institutes followed up with grantee institutions regarding the nature of  
a financial conflict of interest and/or  the management plan for a 
financial conflict of interest.   
RECOMMENDATIONS 
NIH provides billions of dollars to institutions in the form of research 
grants. It is imperative that the funds provided to grantee institutions 
be used appropriately and that the research conducted using these  
funds not be biased because of any conflicting financial interests of 
investigators. Although the responsibility of complying with Federal 
financial conflict-of-interest regulations ultimately falls to the grantee 
institution, NIH, as an oversight body, should take a more  active role in  
overseeing financial conflicts of interest among grantee institutions.      
We recommend that NIH: 
Increase oversight of grantee institutions to ensure their compliance  
with Federal financial conflict-of-interest regulations.   
Require grantee  institutions to provide details regarding  the nature 
of financial  conflicts of  interest and how they  are managed, reduced,  
or eliminated.   
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E X E C U T I V E   S U M M A R Y   
Require Institutes to forward to OER all financial conflict-of-interest 
reports that they receive from grantee institutions and ensure that 
OERs conflict-of-interest database contains information on all  
conflict-of-interest reports provided by  grantee institutions.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
NIH stated that all of our findings were correct and concurred with two 
of our three  recommendations.  NIH did not concur with our 
recommendation to require grantee  institutions to provide details 
regarding the nature of financial conflicts of interest and the way in 
which they  are managed, reduced, or eliminated.  NIH believes that 
although it is vital to maintain objectivity in research, responsibilities 
for identifying and managing financial conflicts of interest must remain  
with grantee institutions. Furthermore, NIH stated that its collection 
of specific details of the nature and management of financial conflicts of 
interest would effectively transfer the responsibility for managing 
financial conflicts of interest from the grantee institutions to the 
Federal Government. 
The Office of Inspector General (OIG) continues to recommend that NIH 
should collect details of the nature and management of financial 
conflicts of interest as part of its oversight responsibility of grantee 
institutions. Collection of this information can be accomplished without 
interfering with grantee institutions legal responsibility for managing 
financial conflicts of interest.   
We continue to recommend that NIH work with the Secretary of the 
Department of Health and Human Services to amend the current  
regulation and that NIH use its authority pursuant to  
42 CFR  50.604(g)(3) to request details regarding the nature and 
management of financial conflicts of interest at grantee institutions. 
 
       
  OEI-03-06-00460   NATIONAL  INSTITUTES OF  HEALTH:   CONFLICTS OF  INTEREST IN  EXTRAMURAL  RESEARCH   iv   
B A N N E R   2 N D   P A G E  
  T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
  
 
 
I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1 
  
 
 
F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9 
  
NIH could not provide an accurate count of financial     
             
conflict-of-interest reports  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9 
  
 
NIH is not aware of the types of financial conflicts of interest 

that exist at grantee institutions . . . . . . . . . . . . . . . . . . . . . . . . . .  11 
  
 
Many Institutes primary method of oversight is reliance on 
      
grantee institutions assurances that regulations are followed. . .  13 

 
   
R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16 
  
Agency Comments and Office of Inspector General Response . . .  18 

 
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19 

  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19 
  
 
A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23 
  
 
 
   
   
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OBJECTIVES 
1. 	  To determine the number and nature of financial conflicts of 
interest reported by grantee institutions to the National 
Institutes of Health (NIH). 
2. 	  To determine the extent to which NIH oversees grantee 
institutions financial conflicts of interest. 
BACKGROUND 
Each grantee institution receiving NIH funds must have a written 
policy for identifying financial conflicts of interest and ensuring that 
conflicts will be managed, reduced,  or eliminated. Because outside 
activities may create actual or perceived conflicts of interest, it is 
essential that conflict-of-interest issues be addressed not only among 
NIH intramural researchers but also among extramural researchers 
receiving NIH grants.  With 80 percent of NIH funding allocated for 
extramural research grants, it is critical that any existing or potential 
financial conflicts of interest be identified, disclosed, eliminated, 
reduced, and/or  managed by grantee institutions. 
National Institutes of Health Grants Administration and Oversight 
NIH, located within the Department of Health and Human Services 
(HHS), is the primary Federal agency responsible for conducting and  
supporting medical research. Organized into 27 Institutes and Centers 
(Institutes), NIH receives billions of dollars annually to support its 
mission. In fiscal year (FY) 2007, the total NIH appropriation was over 
$29.2 billion, 80 percent of which was distributed through almost 
50,000 competitive grants to more than 325,000 researchers at over 
3,000 universities, medical schools, and other research institutions 
across the country and around the world.1    
Twenty-four of the twenty-seven Institutes have grant-making 
authority.  Each of these 24 Institutes is responsible for managing and  
overseeing its grants, and each has its own grants management staff 
that handle these functions. Grants management specialists within 
each Institute are responsible for the day-to-day management of a 
portfolio of grants. The chief grants  management officer (grants officer) 
 
1 NIH budget information. Available online at www.nih.gov/about/budget.htm. Accessed 
April 27, 2007. 
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I N T R O D U C T I O N   
of each Institute is the NIH official responsible for the business 
management and other nonprogrammatic aspects of the award.     
Institutes follow the grants management policies outlined in the NIH 
Grants Policy Statement developed and implemented by NIHs Office  of  
Extramural Research (OER).  OER also develops and maintains 
information systems related to extramural research grants  
administration. 
Financial Conflicts of Interest    
Federal regulations at 42 CFR Part 50, Subpart F, establish standards 
to ensure that the design, conduct,  or reporting of research funded 
under Public Health Service (PHS) grants will not be biased by any 
conflicting financial interest of an investigator.  The regulations at      
42 CFR  50.605(a) provide that a conflict of interest exists when the 
designated official at the grantee institution reasonably determines 
that a significant financial interest  could directly and significantly 
affect the design, conduct, or reporting of the PHS-funded research.   
Pursuant to 42 CFR  50.603, a significant financial interest is defined 
as anything of monetary value, including, but not limited to, salaries or 
other payments, equity interests, and intellectual property rights.  The 
regulation excludes from this definition salaries or other payments from  
the investigators institution, income from public or nonprofit entities 
for selected services, salaries or other payments for services not 
expected to exceed $10,000 in a 12-month period from other sources, and 
equity interests not exceeding $10,000 in fair market value and not 
representing more than 5-percent ownership interest in any single 
entity. 
Responsibility of Grantee Institutions    
According to the NIH Grants Policy Statement, grantee institutions 
must have written standards of conduct that establish safeguards to 
prevent employees, consultants, or members of governing  bodies from  
using their  positions for purposes that are, or give the appearance of 
being, motivated by financial gain for themselves or for others with 
whom they have close ties. 
Pursuant to 42 CFR Part 50, Subpart F, each grantee institution 
receiving NIH funds must have a written policy for identifying financial 
conflicts of interest and ensuring that conflicts will be managed, 
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reduced, or eliminated. 2  These guidelines must also indicate how 
outside activities, relationships, and financial interests are reviewed by 
responsible and objective institution officials. Pursuant to                    
42 CFR  50.604, each institution must: 
(a)  Maintain an appropriate written, enforced policy on conflict of  
interest . . .  and inform each investigator of that policy, the 
investigators reporting responsibilities, and of these 
regulations. If the institution carries out PHS-funded research 
through subgrantees, contractors, or collaborators, the 
institution must take reasonable steps to ensure that 
investigators working for such entities comply with this 
subpart. . . .  
(b)  Designate an institutional official(s) to solicit and review 
financial disclosure statements from each investigator who is 
planning to participate in PHS-funded research.  
(c)   (1) Require that by the time an application is submitted to 
PHS, each investigator . . . planning to participate in the    
PHS-funded research has submitted to the designated 
official(s) a listing of . . . known significant financial interests 
(and those of his/her spouse and dependent children): (i) that 
would reasonably appear to be affected by the research . . . and 
(ii) in entities whose financial interest would reasonably 
appear to be affected by the research. (2) All financial 
disclosures must be updated during the period of award, either  
on an annual basis or as new reportable significant financial 
interests are obtained. 
(d)  Provide guidelines . . . for the designated official(s) to identify 
conflicting interests and . . . ensure that such conflicting 
interests will be managed, reduced, or eliminated. 
(e)  Maintain records of all financial disclosures and all actions 
taken by the institution with respect to each conflicting 
interest for at least 3 years from the date of submission of the 
final expenditures report. . . . 
(f)   Establish adequate enforcement mechanisms and provide for 
sanctions where appropriate. 
 
2 Small Business Innovation Research Program  and Small Business Technology Transfer 
Program Phase I awardees are not subject to these Federal conflict-of-interest regulations. 
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(g)  Certify . . . that: 	(1) there is in effect  . . . a written and 
enforced administrative process to identify and manage, 
reduce, or eliminate conflicting interests . . . (2) prior to the 
institutions expenditure of any funds . . . the institution will 
report to the PHS awarding component the existence of a 
conflicting interest (but not the nature of the interest or other 
details) found by the institution and assure that the interest 
has been managed, reduced or eliminated . . . and, for any  
interest that the institution identifies as conflicting 
subsequent to the . . . initial report . . . the report will be made 
and the conflicting interest managed, reduced, or eliminated, 
at least on an interim basis, within 60 days of that 
identification; (3) the institution agrees to make information 
available, upon request, to the HHS regarding all conflicting 
interests identified by the institution and how those interests 
have been managed, reduced,  or eliminated to protect the 
research from bias. 
The NIH Grants Policy Statement and the NIH grant application 
explain the financial disclosure responsibilities of grantees.3 By signing 
a grant application, the designated representative of the grantee 
institution is certifying that the applicant organization will comply with 
all applicable assurances and certifications referenced in the 
application, including those related to financial conflicts of interest. 
Grantees can find more information about their responsibilities 
regarding conflicts of interest on the OER Web site, which contains 
multiple links to additional conflict of interest resources.4 Information 
on OERs Web site includes the NIH Guide for Grants and Contracts; 
NIH Regional Seminars, which provide education and training on 
regulations and policies; and the NIH Extramural Nexus, a bimonthly 
newsletter from OER that provides  updates on  NIH policies and 
activities. OER also conducts presentations regarding financial conflicts  
of interest at professional meetings.   
 
 
3 NIH Grants Policy Statement. Available online at 
http://grants.nih.gov/grants/policy/nihgps_2003/index.htm.  NIH grant application. 
Available online at http://grants.nih.gov/grants/funding/phs398/PolAssurDef.pdf. Both 
accessed August 22, 2007. 
4 Available online at http://grants1.nih.gov/grants/policy/coi/index.htm. 
Accessed May 3, 2007. 
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I N T R O D U C T I O N   
National Institutes of Health Oversight of Financial Conflicts of Interest 
Although OER and Institutes share responsibility for outreach to and 
education of grantees with regard to  financial conflicts of interest, each 
Institute must directly oversee its grantees in this regard.  Grantees 
must inform their respective funding Institutes grants officer of any 
financial conflicts of interest before spending any NIH funds under a 
new grant. Conflicts identified during the grant period must be 
reported to the grants officer within 60 days of identifying them.  These 
reports must indicate whether the financial conflict of interest has been 
managed, reduced, or eliminated.  Institutes are asked, but not 
required, to forward reports of grantee financial conflict of interest to 
OER. OER developed an internal database in 2004 to capture the 
financial conflict-of-interest reports  forwarded by the Institutes to OER; 
the database contains data from FY 2000 to the present.   
Institute procedures for reviewing financial conflict-of-interest reports  
are based on guidance posted on the internal NIH Grants Management  
Infonet How-To Web site.  This guidance states that the Institutes 
should share reports with the appropriate Institute personnel; send a 
letter acknowledging receipt of the reported financial conflict of interest 
to the grantee; send a copy of the report to the Director of the Division of  
Grants Policy and Oversight, Office of Policy for Extramural Research 
Administrations within OER and ensure that all correspondence 
relating to the conflict is maintained in the official file; and request 
additional information from the grantee and take corrective  action, if 
necessary.  
National Institutes of Health Targeted  Site Reviews 
In FY 2006, the Office of Policy for Extramural Research 
Administration began conducting targeted site reviews of grantee 
institutions. The targeted site review program is part of NIHs 
oversight responsibilities and was developed to  determine whether:     
(1) grantee institutions are fully and correctly implementing the 
financial conflict-of-interest regulations at 42 CFR Part 50, Subpart F; 
and (2) reporting requirements are  being met.   NIH conducted              
18 targeted site reviews in FY 2006.  The 18 grantee institutions 
reviewed represented approximately $4 billion in research grant awards  
for FY 2005.5  NIH reported that the $4 billion represented 
 
5 Observations from NIHs FY 2006 Targeted Site Reviews on Financial Conflict of 
Interest. Available online at http://grants1.nih.gov/grants/policy/coi/index.htm. Accessed 
June 8, 2007.  
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I N T R O D U C T I O N   
approximately 25 percent of total research grant awards for FY 2005.  
NIH found no instances of intentional noncompliance by grantee 
institutions but found that more emphasis is needed on the appropriate 
definition of investigator as listed at 42 CFR  50.603.  NIH observed 
that grantee institutions have the most difficulty identifying and 
reporting financial conflicts that arise after the start of the research 
project and obtaining disclosures from investigators who join the project 
after its inception.6  Other compliance issues included (1) not having 
provisions in place to ensure that identified conflicts are reported to  
NIH by subgrantees through the prime grantee, (2) not having a 
consistent reporting process in place, (3) submitting grant applications 
prior to collecting significant financial interests information from 
investigators, and (4) expending grant funds prior to reporting 
identified financial conflicts of interest to NIH.7  
METHODOLOGY 
Scope 
This study is limited to NIHs oversight of financial conflicts of interest 
among grantee institutions.  Although NIH also allocates funds to 
contractors,  we focused only on grantees because the majority of NIH  
funding is allocated for research grants.  In addition, NIH contractors 
are required to adhere to a separate set of Federal regulations  
governing conflicts of interest. 
Data Sources and Data Collection  
We collected information from the 24 grant-making Institutes at NIH 
and from OER.  We requested the following information:   
(1) Copies of all financial conflict-of-interest reports as well as  
documentation related to these reports that the 24 grant-making 
Institutes received from grantee institutions during FYs 2004 through 
2006. 
(2) Copies of all financial conflict-of-interest reports and associated  
documentation that OER received from Institutes during FYs 2004 
through 2006. 
 
6 Ibid. 

7 Ibid. 

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(3) An electronic copy of  the OER database that houses the financial 
conflict-of-interest reports forwarded  by the Institutes to OER.  
We also sent surveys to the Director of the Division of Grants 
Compliance and Oversight and the grants officers at each of the          
24 grant-making Institutes. The Director and all 24 grants officers 
responded to our survey. Our questions covered topics such as how 
these offices ensure that financial conflicts of interest are reported to 
them; what policies and  procedures for overseeing grantee conflicts of 
interest exist; and whether there are procedures in place to ensure that 
reported financial conflicts of interest have been managed, reduced, or 
eliminated.    
Data Analysis 
Some financial conflict-of-interest reports mentioned conflicts related to 
more than one grant. In these cases, we considered the conflicts 
mentioned for each grant to be a separate report. 
We compared the records in OERs database to the paper copies of 
financial conflict-of-interest reports  we received from OER to determine 
whether any paper reports were not entered into the database and 
whether there were entries in the database for which we did not receive 
corresponding paper reports. We then compared both OERs paper 
reports and  electronic entries with the paper reports we received from  
the Institutes to determine what reports OER and Institutes had in 
common. Combining all paper reports gave us a total of 438 unique 
financial conflict-of-interest reports  for our review and analysis.8 OERs 
database contained 30 entries for which we did not receive 
corresponding paper reports from either OER or the Institutes.     
From the survey data, we determined the frequency of responses to 
closed-ended survey questions and  reviewed and categorized responses  
to open-ended survey questions. 
Limitations 
For our analysis, we used the 438 financial conflict-of-interest reports 
that were received in paper form. The 30 electronic entries  in OERs 
database for which there were no corresponding paper reports were  
eliminated from our analysis because we did not have the source  
documentation to verify them. 
 
8 OER and Institutes submitted some financial conflict-of-interest reports that were 
outside our timeframe and  were therefore not included in our analysis. 
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I N T R O D U C T I O N   
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
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  F I N D I N G S  
NIH provided us with                
NIH could not provide an accurate count of the 
438 financial conflict-of-interest 
financial conflict-of-interest reports that it 
reports for FYs 2004 through 
received from grantees during fiscal years 2004 
2006: 73 for FY 2004, 139 for   
through 2006 
FY 2005, and 226 for FY 2006. 
However, these numbers may not truly represent the total number of 
conflicts of interest reported by grantee institutions.  NIHs Institutes 
and OER were unable to provide us with paper copies of all of the actual 
conflict-of-interest reports received from grantee institutions.  Some of  
the Institutes were also unable to provide an accurate count or even an 
estimate of the reports that they received during the 3-year period.   
According to OER, the Institutes are the official receipt point for 
financial conflict-of-interest reports from grantee institutions.  The 
Institute is responsible for reviewing reports, determining whether 
further specific information is needed, and maintaining documentation.  
OER provided the following explanation for why Institutes were unable 
to provide all of the conflict-of-interest reports requested:  
. . . the majority of [Institutes] maintain these reports with 
individual grant files by grant number.  Unfortunately, because 
NIH has approximately 40,00050,000 active grant awards at any 
given time, and each grant file contains thousands of pages of 
documents,  finding every conflict of interest notification would 
require searching manually each individual grant file.9  
NIH does not have a central source that could provide a total count of 
financial conflict-of-interest reports because the Office of Extramural 
Researchs database of financial conflict-of-interest reports is incomplete 
OERs database is the only centralized database in NIH that contains 
conflict-of-interest reports from across the Institutes.  OER asks, but does 
not require, Institutes to forward to it the financial conflict-of-interest 
reports that they receive.  Because the Institutes are not required to 
provide OER with conflict-of-interest reports, OER maintains that its 
database is not the official repository for all financial conflict-of-interest 
reports and that Institutes are responsible for maintaining documentation.   
We found that OERs database of financial conflict-of-interest reports was 
incomplete.  We found that 27 conflict-of-interest reports among the       
 
9 E-mail correspondence, dated March 21, 2007, from the Director of the Division of  
Grants Compliance and Oversight regarding the Office of Inspector Generals request for all 
conflict-of-interest reports. 
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F I N D I N G S  
276 provided to us by OER were not included in its database.  Although all 
24 Institutes responded to our survey that they forward the reports to  
OER, we received an additional 36 financial conflict-of-interest reports 
from the Institutes that were not provided to us by OER.  Table 1 below 
shows the number of reports received from the  Institutes and OER.      
 
Table 1.   Number of Financial  Conflict-of-Interest Reports Provided 
by  NIH for FYs 2004 Through 2006  
Source of Financial Conflict-of-Interest Reports   Number of Reports  
Provided by Institutes and OER  126 
Provided by Institutes only   36 
Provided by  OER only   276 
Total  438 
Sources: NIH, 13 Institutes, and OER. 
 
Nearly half of the Institutes were unable to provide any financial disclosure  
reports for fiscal years 2004 through 2006 
Thirteen of the twenty-four Institutes provided us with 162 financial 
conflict-of-interest reports for FYs 2004 through 2006.  Eleven 
Institutes did not provide any reports for the 3-year period.10 The       
162 reports provided by the 13 Institutes may not represent all of the 
reports they received from grantee institutions.  According to NIH, some  
of the Institutes may have provided  only those reports that were readily 
accessible.11   
Besides requesting the actual conflict-of-interest reports, we also asked  
the Institutes to provide us with the number of reports that they had  
received for FYs 2004 through 2006.  For 2006, 11 Institutes were able 
to provide us with the number of reports, 10 provided estimates, and      
3 could provide neither.  For FYs 2004 and 2005, four Institutes were 
 
10 One of the eleven Institutes sent conflict-of-interest reports but not for the                 
FYs 20042006 period. 
11E-mail correspondence, dated March 21, 2007, from the Director of the Division of  
Grants Compliance and Oversight regarding the Office of Inspector Generals request for all 
conflict-of-interest reports. 
 
 
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F I N D I N G S  
unable to provide us with any information.  Therefore, we cannot 
determine an actual or estimated number of reports that the Institutes 
received from grantee institutions during these years. 
Conflict-of-interest reporting information is not readily available even from 
Institutes that have tracking systems 
Thirteen of the twenty-four Institutes indicated that they have systems 
for tracking  the financial conflict-of-interest reports that they receive 
from grantees.  Five of these Institutes systems were developed 
sometime in FY 2007. Of the 11 Institutes that were not able to provide 
us with conflict-of-interest reports for FYs 2004 through 2006, five had 
tracking systems and three had systems that captured financial  
conflict-of-interest reports for all 3 years.  
To retrieve information  or to  obtain a count of past financial        
conflict-of-interest reports, 11 Institutesincluding 3 that indicated 
they had tracking systemsreported that they would have to search 
through individual paper or electronic grant files.  Five Institutes 
indicated that they would retrieve this information from OER.   
 
NIH is not aware of the types of financial  Although Federal regulations 
conflicts of interest that exist within grantee  require grantee institutions to 
institutions because details are not required to  report financial conflicts of 
interest, the regulations  do not 
be reported and most conflict-of-interest reports 
require them to report the 
do not state the nature of the conflict   
nature or other details of the 
financial conflict of interest.  
Because these reports contain minimal detail, grants officials do not  
know what type of conflicts exist and have little information on which to 
follow up. 
The majority of reports did not list which individuals associated with 
the grants had the reported conflicts  of interest.  Of the 438 financial 
conflict-of-interest reports we received, 99 stated that the primary 
investigators had conflicts and 51 stated that others had conflicts.12   
From the information presented in the remaining 288 financial             
conflict-of-interest reports, we could not determine who had conflicts. 
 
12 The primary investigator is the individual, designated  by the grantee, responsible for 
the scientific or technical aspects of the grant and for day-to-day  management of  the project 
or program.  
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FF	 II NN DD II NN GG
  SS  
Although 93 percent of reports (408) did not detail the nature of the 
financial conflicts of interest, we reviewed 30 reports that included 
detailed descriptions. Some of the financial conflicts of interest that 
were detailed include: 
 	  investigators who invented technology or have intellectual 
property associated with the grant research, 
 	  investigators who have relationships with or financial interests 
in companies that are subcontractors on the grants, 
 	  investigators whose spouses are subcontractors of the grant, 
and 
 	  a grantee institution holding patents on technology used in the 
grant research and exclusively licensing the intellectual 
property to  a company whose investors/owners  are 
investigators on the grant. 
Eighty-nine percent of reports (388) did not explain how conflicts are 
managed but provided general statements saying that the financial 
conflict of interest would be managed, reduced, or eliminated. The 
remaining 50 reports provided a description of how conflicts would be 
managed, reduced, or eliminated. Two-thirds  of these reports stated  
that the conflicts would be managed through a process of disclosure but 
did not explain how the conflicts would be disclosed. Fifteen reports 
provided more detailed descriptions of how conflicts would be managed, 
reduced, or  eliminated. These methods included disclosing the financial 
conflicts of interest in presentations and publications related to the 
research, appointing independent faculty members to provide oversight  
of the grant research or to review research reports, recusing 
investigators from the grants, and terminating relationships with 
companies.  
The type of information  we reviewed in the 30 reports that detailed the 
nature of conflicts and the 15 reports that detailed the management of 
conflicts could assist NIH officials in determining whether followup with 
the grantee institution is necessary. However, we found five cases in 
which a grantee institution resubmitted reports  because NIH felt that 
the information originally provided was too specific or detailed. These 
five letters from the grantee institution stated that an assistant grants 
compliance officer at NIH advised a grantee that the previously 
submitted conflict-of-interest report included too much information.    
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F I N D I N G S  
To address the NIH officers concerns, the grantee institution submitted 
abbreviated versions of the reports.  
According to the NIH 
Many NIH Institutes primary method of oversight is 
Grants Policy
reliance on grantee institutions assurances that 
Statement, the 
financial conflict-of-interest regulations are followed  
grantees roles and 
responsibilities have assumed greater importance as NIH relegates 
greater decisionmaking authority to  grantees.   While each Institute is 
responsible for the overall management of the  grants it funds, the 
responsibility for promoting objectivity in research lies with the grantee 
institution. The designated representative of the grantee institution is 
responsible for ensuring that the grantee organization complies with 
applicable Federal laws and regulations.  Many Institutes rely on the 
good faith of the grantee institution to ensure compliance with Federal 
financial conflict-of-interest regulations, rather than directly overseeing 
or reviewing grantee institutions management of financial conflicts of 
interest.            
The majority of the Institutes do not have any proactive methods to ensure  
that grantees have financial conflict-of-interest policies 
Grantee institutions are required to  certify in all NIH grant applications 
that they are in compliance with 42 CFR Part 50 Subpart F and, thus, 
have a financial conflict-of-interest policy in place.  Ten Institutes 
indicated that the only  method they use to  ensure that grantees have  
these polices is the grantees self-certification of compliance  on the initial 
grant applications.  Five Institutes stated that they rely solely on 
information published by NIH and/or OER to ensure that grantees have 
financial conflict-of-interest policies in place.  OER provides Institutes and  
grantees with information about the relevant policies and regulations 
through its  Web site.  OER also conducts outreach activities, such as 
targeted site reviews, regional seminars, and a bimonthly newsletter to 
grantee institutions.  Two Institutes reported that they do nothing to 
ensure that grantees have financial conflict-of-interest policies in place.       
Some Institutes use some type of outreach method to ensure that grantee 
institutions have conflict-of interest-policies.  Three Institutes use site  
visits and training seminars to ensure that grantee institutions have 
policies in place.  One Institute reported that it follows up with grantees if  
it has any concerns.  Three other Institutes reported that they use more  
than one of the methods described above. 
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FFF III NNN DDD III NNN GGG
  SSS  
Many  Institutes rely solely  on grantees assurances that they are 
appropriately  reporting and managing, reducing, or eliminating financial 
conflicts of interest 
Nine Institutes indicated that they rely solely on the grantees to ensure 
reporting of financial conflicts of interest. Another four Institutes rely  
on the grantee institutions self-certification of compliance on the grant 
applications. An additional four rely on the grant applications and/or 
the information published by NIH (including OER) to ensure that 
grantees are reporting conflicts. 
Five Institutes reported using a number of methods, including outreach,  
training, and site visit activities, to ensure that grantees are reporting 
conflicts. One Institute follows up with grantees that it believes may 
have reporting problems. For the remaining Institute, we could not 
determine from its response how it ensures that grantees are reporting 
conflicts. 
When asked what procedures they have for ensuring that financial 
conflicts of interest are  being managed, reduced, or eliminated,           
17 Institutes answered that they rely on grantees to do this. Four  
Institutes stated they do follow up or remind grantee institutions in 
acknowledgment letters about this requirement. Two rely on published 
NIH policies. One Institute uses a checklist when reviewing grant 
renewal applications to ensure that grantee institutions have 
procedures in place. 
Institutes infrequently and inconsistently follow  up on reported financial 
conflicts of interest 
Although OER has followed up with grantee institutions during the 
small number of targeted site reviews it has performed (18 in FY 2006), 
in our review of the documentation, we observed very few instances in 
which Institutes followed up with grantee institutions regarding the 
nature or management of financial conflicts of interest. Instead, we 
found internal memorandums from one Institute that stated, . . . if you 
have any concern that this [conflict] could harm  the project,  we can ask  
for additional information, however, this would only be done in 
rare/exceptional situations. . . . An  internal memorandum from  
another Institute stated, We should  not follow up for additional details 
about the nature of the conflict or how it was managed unless there is 
sufficient programmatic  concern to do so. 
Our survey results confirm that some Institutes do not follow up on 
reported financial conflicts of interest. Eight Institutes stated that they  
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F I N D I N G S  
never needed to follow up with grantee institutions regarding reported 
financial conflicts of interest.  In addition, Institutes varied  on what 
types of information they would request when following up with grantee 
institutions. Seven Institutes stated that they would request additional 
information from grantee institutions such as investigators names, 
grant numbers, and financial conflict-of-interest policies.  Five  
Institutes indicated that if followup was needed, they would ask for 
additional information  regarding the nature of the financial conflict of 
interest and/or how the financial conflict of interest would be managed.  
Two Institutes indicated that they would request a combination of  
information described above.  Another two Institutes did not respond to 
our question about followup with grantees. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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  R E C O M M E N D A T I O N S  
RECOMMENDATIONS 
NIH provides billions of dollars to institutions in the form of research 
grants. It is imperative that the funds provided to grantee institutions 
be used appropriately and that the research conducted using these  
funds not be biased because of any conflicting financial interests of 
investigators. The responsibility of complying with Federal financial 
conflict-of-interest regulations ultimately falls to the grantee 
institutions.  However, as an oversight body, NIH should take a more  
active role in overseeing financial conflicts of interest among grantee 
institutions.     
We recommend that NIH: 
Increase Oversight of Grantee Institutions To Ensure Their Compliance With 
Federal Financial Conflict-of-Interest Regulations  
OER and each of the grant-making Institutes should expand oversight 
activities to ensure that grantee institutions have financial          
conflict-of-interest policies and procedures that comply with Federal 
regulations.  Options to implement this recommendation could include 
increasing site visits by OER and Institutes collecting and reviewing 
grantee institutions financial conflict-of-interest policies. 
Require Grantee Institutions To Provide Details Regarding the Nature of 
Financial Conflicts of Interest and How  They Are Managed, Reduced, or 
Eliminated 
It is difficult to determine whether followup with grantee institutions is 
warranted if the details regarding the nature and management of financial 
conflicts of interest are not collected.  Although the current regulations 
authorize NIH to seek additional information regarding any conflicting 
interest and how the interest was managed, grantees are initially required 
to report so  little information that NIH would rarely have reason to even  
know that it should request follow-up information.  Collecting basic details 
regarding the nature of financial conflicts of interest and how they are 
managed might enable NIH to question whether certain conflicts could  
affect the grant research being conducted.  Collecting this information 
might also enable NIH to determine whether grantee institutions are 
appropriately managing specific types of financial conflicts of interest. 
We recommend that 45 CFR  50.604(g)(2) be amended to require grantee 
institutions to report certain details to the appropriate HHS public health 
research funding agencyin this case NIHabout any conflicting 
financial interest and how it was managed, reduced, or eliminated.  
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R E C O M M E N D A T I O N S  
Enough details should be provided so that NIH can identify concerns and  
adequately monitor whether grantees are complying with the regulatory 
requirements to identify and manage conflicts.  We recognize that this 
regulation is applicable to all Public  Health Service research grants or 
cooperative agreements.  Because NIH is responsible for the largest share 
of public health research funding, we recommend that NIH work with the 
Secretarys Office to amend the current regulation.  In the meantime, we 
recommend  that, after a grantee submits a report identifying the existence 
of a conflict, NIH use the current regulatory authority at  
42 CFR  50.604(g)(3) to request details about the particular financial 
conflict of interest and how it was managed,  reduced, or eliminated. 
Require Institutes To Forward to OER All Financial Conflict-of-Interest 
Reports That They Receive From Grantee Institutions and Ensure That 
OERs Conflict-of-Interest Database Contains Information on All        
Conflict-of-Interest Reports Provided by Grantee Institutions 
Although  OER  asks Institutes to forward financial conflict-of-interest  
reports to OER, Institutes are not required to do so.  A central repository 
for financial conflict-of-interest reports would enable NIH to have a more 
accurate picture of the number and nature of financial conflicts of interest  
reported to NIH.  The absence of financial conflict-of-interest reports from  
grantee institutions does not necessarily indicate a problem. However, 
with a complete and comprehensive OER conflict-of-interest database, 
NIH can look at reporting and management trends and thus focus 
training and outreach efforts on grantee institutions where it sees 
potential issues or problems.  Therefore, Institutes should  be required to 
send all conflict-of-interest reports to OER for inclusion in its database. 
NIH staff informed us that OER had recently developed a Web-based  
financial conflict of interest tracking and monitoring system for internal 
NIH use. Institute grants management and program staff will be able 
to enter their own records and view financial conflict-of-interest reports  
across NIH.  The database will remind grants management personnel to 
send an acknowledgment to the institution and a copy of the report to  
OER. The database is in the testing phase and NIH expects to make its 
use mandatory in 2008. 
We recommend that this new system capture the following information  
about each grant listed on a conflict-of-interest report:  the grant 
number; the name of investigator or other individual or entity with the 
financial conflict of interest; a description of the nature of the conflict; 
and a description of how the  conflict is managed, reduced, or  eliminated. 
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RR EE CC OO MM MM EE NN DD AA TT II OO NN SS  
In the future, NIH also plans to permit grantee institutions to 
electronically submit financial conflict-of-interest reports through eRA 
Commons, which is NIHs Web-based system that grantees use to  
conduct their extramural research administration business 
electronically. 
AGENCY COMMENTSAND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
NIH stated that all of our findings were correct and concurred with two 
of our three  recommendations. NIH did not concur with our 
recommendation to require grantee  institutions to provide details 
regarding the nature of financial conflicts of interest and the way in 
which they  are managed, reduced, or eliminated. NIH believes that 
although it is vital to maintain objectivity in research, responsibilities 
for identifying and managing financial conflicts of interest must remain  
with grantee institutions. NIH also points to 42 CFR Part 50, Subpart 
F, which assigns responsibility for identifying and managing financial 
conflicts of interest to grantee institutions rather than to the Federal 
Government. Furthermore, NIH stated that its collection of specific 
details of the nature and management of financial conflicts of interest 
would effectively transfer the responsibility for managing financial 
conflicts of interest from the grantee institutions to the Federal 
Government. The full text of NIHs comments is presented in the 
Appendix. 
The Office of Inspector General (OIG) continues to recommend that NIH 
should collect details of the nature and management of financial 
conflicts of interest as part of its oversight responsibility of grantee 
institutions. Collection of this information can be accomplished without 
interfering with grantee institutions legal responsibility for managing 
financial conflicts of interest.    
We continue to recommend that NIH work with the Secretary of the 
Department of Health and Human Services to amend the current  
regulation and that NIH use its authority pursuant to 
42 CFR  50.604(g)(3) to request details regarding the nature and 
management of financial conflicts of interest at grantee institutions. 
 
 
 
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  A P P E N D I X
Agency Comments 
 
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  A C K N O W L E D G M E N T S
This report was prepared under the  direction of  Robert A. Vito, Regional 
Inspector General for Evaluation and Inspections in the Philadelphia 
regional office, and Linda M. Ragone, Deputy Regional Inspector 
General. 
Tanaz Dutia served as the team leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Philadelphia 
regional office who contributed to this report include  Diane Epstein and 
Maria Johnson, and central office staff who contributed include Ayana 
Everett. 
 
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