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Since a large proportion of SGES employed by FDA have other employers and financial interests, it is essential that FDA have a sound policy on which to base conflict-ofinterest determinations which provides guidance for all groups under all working conditions and is supported by formalized procedures. For this policy to be of maximum benefit, the system to protect against conflict of interest should make certain that SGES do not participate in activities which, according to this policy, would disqualify them. Potentially controversial cases should be described clearly and consistently in public disclosure memoranda. This chapter discusses problems with FDA's policy guidance and the improvements we believe are needed to make the system more effective.


Our review revealed various errors and points of confusion in the January 1976 draft staff manual guide which required clarification by agency officials. In analyzing the draft guidance, we were also concerned whether all relevant issues had been fully considered. Most of these concerns centered on the SGE's employment ties with FDAregulated industry; employer's financial interests; total involvement with FDA-regulated industry; and the extent that all SGEs were covered by the policy guidance.

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In October 1976, FDA revised its policy guidance (see app. II) based on 9 months of operating experience with formalized policy guidance. FDA believes that in drafting this guide it has satisfactorily resolved the meaning of the statutes as they relate to FDA employment. FDA made some changes based on the concerns we expressed. This policy has not been submitted to the Department or CSC for approval. The new policy guidance:

--Limits investments, employment, grants, and contracts

in a single firm to $5,000 before requiring public disclosure and clarified that in all cases these limits apply only to firms involved with products regulated by the employing bureau/office. A combination of investments and employment relationships in a single firm may also warrant public disclosure even though no single interest exceeds $5,000.

--States that the criteria is not rigid and may be

modified to fit individual situations. For example, where an SGE's university receives funds principally from a firm involved with products regulated by the employing bureau/office, a restriction on an sge's

SGE's participation may be necessary.


--Clarifies the circumstances under which an SGE'S

participation in FDA activities are to be restricted and where public disclosure is required.

While we believe this revised guidance significantly advanced policy development, we still have some concerns. Our primary concern is that the guidance does not provide policy for certain groups of SGES.

--The guidance is directed at SGEs who deal with products

which can be associated with specific firms. But about 60 SGES are members of (1) the National Advisory Food and Drug Committee, (2) the Science Advisory Board, and (3) the Medical Radiation Advisory Committee which do not, or only sometimes, deal with products. In addition, many of FDA's approximately 290 consultants and experts work in areas which transcend any single class of products.

--The guidance does not address what the policy is for

nonvoting industry and consumer representatives to
public advisory Committees who, at their election, may
become SGES. These representatives number about 65
(37 of which are SGES) but collectively hold about
75 positions. One industry representative holds a
position on six panels and another holds a position
on four panels. FDA told us that pending a decision
as to whether it will continue using these represen-
tatives, no new representatives were being appointed.
FDA also said that conflict-of-interest determina-
tions on reappointments will be made on a case by
case basis.

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--The guidance does not address situations where voting

members of committees are selected from FDA-regulated industry. For example, the seven members on the Board of Tea Experts are associated with the tea industry because the legislation establishing this board requires that they be experts in their field. The Technical Electronic Product Radiation Safety Standards Committee requires that 5 of its 15 committee members be selected from the affected industries.

Because the written policy guidance has not been clear for these groups of employees, the practices found in reviewing SGE's case files were inconsistent. Generally, restrictions were not placed on the activities of non-productoriented advisory committee members regardless of their financial interests, whereas consultants were restricted from participating in all matters in which they had employment or other financial interests. The rationale for these decisions was not contained in the case files.

We believe it is simply not sufficient to place limitations only on an SGE's employment and financial interests with firms involved with products the employing bureau/office regulates. Certain diversified firms are involved with products which, to varying degrees, are regulated by more than one FDA bureau/office. Appointing many individuals with considerable financial interests related to FDA activities increases the probability that a conflict-ofinterest situation may occur. Public confidence in FDA'S decisions could be affected adversely if many SGEs are perceived to have significant financial interests related to FDA activities.

We believe that FDA's policy should be clearly stated for SGEs working in non-product-oriented capacities or representing special interests either in a voting or nonvoting role. Further, we believe that FDA's practices in excluding SGES from activities in which they have employment or financial interests should be consistent. In any event, the rationale for the exclusions or nonexclusions should be made clear in their files, to the extent it is not covered in policy guidance.

Revisions needed in form used to
collect financial disclosure information

The "Confidential Statement of Employment and Financial Interest" does not provide FDA with the information needed to apply policy guidance. FDA said they were revising the form which might, among other things, require information on the dollar value of stock holdings, research grants and contracts; consultancy earnings and time periods; and details of past and present involvements in petitions before the agency

FDA officials told us that they had been obtaining supplementary data needed to conduct the conflictof-interest review, in accordance with staff manual guide criteria, without the use of any standardized document or procedure since December 1975.

In addition to not requesting all needed information, various other modifications and revisions to this form would make it more responsive to FDA's needs.

--Clarification is needed concerning how much change can

occur in each category of employment or financial interests before it must be reported and approved by FDA.

--All financial interests in firms or organizations

should be reported, regardless of whether they involve
FDA-regulated products, rather than requesting that
the employee list only organizations which produce or
market products regulated by FDA. In this way FDA would
assume more responsibility for identifying potential
conflict-of-interest situations.

FDA officials stated that they had not revised this form pending approval of policy. Once this is done, FDA will then be in a position to decide the format for gathering the information needed to implement the policy.

Policy needed concerning organizational
level and responsibilities
of reviewing officials

Formalized procedures are needed for reviewing the "Confidential Statement of Employment and Financial Interest" to assure that FDA's policy on conflict of interest is completely and accurately implemented. These procedures would be particularly useful for individuals in bureaus or regional offices who do this work infrequently and need help in understanding what is expected to satisfy the policy guidance.

The responsibilities of the official making the initial conflict of interest recommendation also need to be set forth ::writing, along with his position in the organization. The Director, Policy Management Staff, told us that, in his opinion, this recommendation should be made at the bureau Deputy Director level or above. In two bureaus the official making this recommendation was at the Deputy Director level, but in the other four bureaus this official was the Committee Management Officer, the Executive Officer, an Assistant Director, and a Division Director.

FDA officials agreed that these written procedures would be helpful. However, the development of such procedures would follow approval of policy and revision of the statement.


The responsibility for making sure that committee members do not participate in matters in which they have employment or other financial interests and are to be disqualified rests with the executive secretary of each committee. We were told that the executive secretaries were expected to know what each member of their committees was prohibited from participating in. The tests disclosed instances where executive secretaries did not have all the information needed to carry out this responsibility.

We talked to four executive secretaries, who stated that they check the HEW-410 "Supplemental Information--Expert or Consultant" listing of prohibited firms against the agenda of the meetings to determine whether matters involving the restricted companies are coming before the committee. In cases where the agenda only lists products, it is the responsibility of the executive secretary to relate these products to specific firms involved with them. These officials said that generally the minutes of the committee meetings stated who was disqualified, and in some cases gave the reason, but that there was no standard format used between committees or bureaus.

Three executive secretaries who preside over seven committees stated that since these committees came into existence they collectively could remember only eight occasions in which members of these committees had been disqualified from participating in a meeting. The other executive secretary, who is responsible for three committees, stated that there had never been a case where a member on any of these committees was disqualified from a meeting.

On May 31, 1976, a total of 88 members was on these 10 committees. We matched the restrictions which should have been placed on 80 individuals (based on the conflictof-interest review) with the information in the hands of these executive secretaries. The executive secretaries did not have complete information on restrictions for 11 members and had no information for l member.

We believe that procedures need to be established to make sure that the executive secretaries have ready access to complete and current information on prohibited interest for members of their committees.

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