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At any point during the process, the prospective member can be eliminated from further consideration for any of a number of reasons, one being that a conflict of interest has been identified which cannot be resolved. If a conflict is not considered serious, it will normally be resolved by restricting the SGE's participation in FDA activities which may relate to this interest.

POLICY FOR MAKING CONFLICT-
OF-INTEREST DETERMINATIONS

In January 1976, FDA issued in draft a staff manual guide in an initial effort to formalize policy and criteria for dealing with SGE conflict-of-interest situations. Most of the SGEs active at the time of our review had been appointed before this policy guidance was formalized. Formerly, FDA had been rendering case by case judgments based solely on the Federal conflict-of-interest statutes and Subpart 1 of the Department's regulation. Because of FDA'S sophisticated programs and extensive use of SGEs, these general guidelines were proven inadequate in resolving conflict-of-interest matters on a uniform and equitable basis.

This guide was issued in draft to be used on a pilot basis because FDA wanted experience with the policy before making it final. The guide described the specific application of the Federal statutes to FDA situations and set forth restrictions on an SGE's participation in FDA activities based on past or existing interests. It also described certain restrictions on outside activities and interests during and after FDA employment.

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Substantial interests which would normally preclude employment fell in three categories: financial assets, consultnt relationships, and research grants and contracts. The

nits specified below applied only to interests involving "products" in the industry "regulated by the particular bureau/office" with which the SGE was being considered for employment.

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Interests below the limits set forth above would not allow unrestricted participation by SGES in FDA matters. The following is a summary of restrictions on an SGE's participation based on past or existing interests.

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a/Restricted from participating in regulatory matters or pro

viding advice on products involving firms in which he has financial interest or firms producing closely competing products. Restrictions are to be made a matter of record on the HEW-410, "Supplemental Information--Expert or Consult

ant."

b/Conflict-of-Interest Review Board must approve employment

and determine degree of participation. (Public disclosure of these cases is currently being used in lieu of a review board.)

c/Restricted from participating in regulatory matters or pro

viding advice regarding the application or problem with which he has an association.

Limitations are also placed on new interests acquired during employment. All increases in financial interests relating to the employing bureau/office must be approved by FDA except for increases in financial assets of $1,000 or less.

The "Confidential Statement of Employment and Financial Interests" is used to collect information on past and present employment relationships such as consultancy or through grants, contracts, and research activities to determine what ties exist with FDA-regulated industry as well as other Federal agencies. Also, information is required concerning promotion and advertising activities and financial interests in products FDA regulates. Neither appointment nor reappointment actions should be processed by the Personnel office without this form complete with a conflict-of-interest determination by the Director, Policy Management Staff.

PUBLIC DISCLOSURE OF CONTROVERSIAL CASES

An SGE's financial interests should be made a matter of public record when they exceed the criteria stated in the staff manual guide, are not explicitly covered by the guide, or involve waivers or special restrictions. The facts and issues surrounding these potentially controversial situations are described in a memorandum available for review in FDA'S

Public Records and Documentation Center (PRDC). The memorandum is commonly referred to in FDA as a PRDC memorandum. It is also known as a four-way memorandum because four signatures are required to formalize the memorandum: (1) the prospective SGES, (2) a responsible line official in the sponsoring bureau/office, (3) the Assistant General Counsel, and (4) the Associate Commissioner for Administration. These memoranda are renewed only when a change occurs in an SGE's employment or financial interests.

FDA believes that public disclosure is the best way to deal with situations involving SGES which may have the appearance of a conflict of interest, particularly since op

, tions which are available in the case of regular employees, such as job reassignment or a divesting of interests are not appropriate. FDA policy is to avoid hiring individuals with interests that would require issuing a PRDC memorandum, if possible. FDA contends that there are situations where available manpower in a specific scientific discipline is limited to a few individuals who have needed qualifications. On reappointments, public disclosure is often the only alternative to terminating the individual in resolving cases involving the appearance of conflicts of interest.

FDA has established a Conflict of Interest Review Board which, in the future, will rule on cases having the appearance of a conflict as well as review and make recommendations to the Commissioner of FDA on policy matters relating to SGE conflicts of interest.

PROBLEMS IN POLICY DEVELOPMENT

FDA believes it is in the forefront of policy development relating to the use of Sges and that this guidance represents a pioneering effort within the Federal Government. According to FDA, however, the development of conflict-of-interest regulations and guidelines for Sges has been exceedingly difficult for the following reasons.

--The present wording of the statutes creates problems

for FDA in a number of areas. For example, there is no
adequate definition as to what constitutes "personal
and substantial" participation, "acting as an agent,"
and what should be considered "too remote and incon-
sequential." FDA believes the statutes did not
anticipate the need to use a large number of SGES
which must be drawn from a limited labor supply in
the scientific and academic community.

--FDA has not found any court precedents in the conflict

of-interest area involving SGES which might serve as a guide in developing policy.

--Many emerging interpretations of the statutes con

flict with each other and it is difficult to determine which viewpoint should be used in developing policy.

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