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SYSTEM OF PUBLIC DISCLOSURE
NEEDS TO BE FORMALIZED

PRDC memoranda make public the facts and issues surrounding potentially controversial situations. There are approximately 680 SGEs with one or more employment or financial interests. FDA told us that in using the criteria set forth in the January 1976 draft staff manual guide they determined that certain information on 43 SGEs should be publicly disclosed. As of August 31, 1976, 38 memoranda were on file in FDA'S Public Records and Documentation Center, 3 were in process, and 2 more were finalized but were not on file. Most of these memoranda covered reappointments (only 6 cover initial appointments) and were processed in the last year.

FDA has not developed written procedures setting forth what information PRDC memoranda should include and in what format. FDA officials told us that many practices had changed since this system became effective early in 1975.

Inconsistencies in the nature and format of the information presented in the memoranda, in our opinion, diminished their effectiveness.

--In about one-half of the cases, the dollar amount of

the employment or financial interest was not stated
or the time frame (when applicable) relating to the
interest was not indicated.

--In about 80 percent of the cases, the memoranda did

not state either the committee's function in relation
to the financial interest or whether this interest
is even a matter which comes before the employing
committee.

--In about 40 percent of the cases neither the function

of the committee was discussed nor was any mention
made as to whether the interest would be of concern
to it.

In many instances, public disclosure of matters described in the PRDC memoranda was not required.

--In certain cases there was no indication that the

interests (financial assets, consultantships,
grants and contracts) involved products in the
industry regulated by the employing bureau or

office. In some cases, the statement was made
that neither the company nor product came before
the SGE's committee. According to the staff
manual guide criteria, only interests in the em-
ploying bureau/office, above a specified dollar

limit, require public disclosure.
--In some cases involving contracts and grants, the

SGE's university was the recipient and it appeared
that they were controlled by members of the faculty
other than the SGE. The staff manual guide states
that these interests are "too remote to affect the
integrity of the employee's services."

--Based on the dollar criteria set forth in the staff

manual guide, public disclosure was not required for 4 of the 11 SGES having stock interests disclosed in these memoranda. Public disclosure was also not required based on dollar criteria in two cases in-' volving contracts and grants.

On the other hand, we found that certain financial interests were up to 12 times the criteria limits and potential conflict-of-interest situations were not publicly disclosed.

--In one case the final conflict-of-interest determina

tion was made on the condition that certain items
were to be disclosed in a PRDC Memorandum. This
memorandum was not completed and FDA officials
could not explain why.

--In another case an SGE reported that he was involved

with two research grants totaling $500,000 from FDA-
regulated firms. He was prohibited from participating
in activities relating to these companies because
this research related to the work he was doing for
FDA. However, this situation was not publicly dis-
closed in a PRDC memorandum. FDA officials advised
us that a PRDC memorandum would be completed if this
indivdual was reappointed.

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We also found that there was no procedure to make sure that all finalized PRDC memoranda were available for public review. Further, there was no requirement that the memoranda on file be renewed upon the receipt of updated statements.

We found that two of the finalized memoranda were apparently lost after being sent to the Public Records and Documentation Center. of the memoranda on file, five were

more than 1 year old and there was no indication in the file as to whether the information was still current.

FDA officials advised us that PRDC memoranda were updated only when there was a change in the financial information on file. In the absence of a change, they are to remain on file indefinitely with no notation being made on the memoranda that the information is still current.

Conclusion

FDA needs to formalize its procedures to make sure that the facts surrounding potentially controversial cases are presented in a clear and consistent manner.

The memoranda should:

--State why FDA believes the interest is being made a

matter of public record.

--Indicate the relationship between the interest and

the work done by the SGE.

--Provide other relevant data, such as the dollar amount

of the interest and the period applicable to the interest, if appropriate.

--Follow a consistent format for presenting the informa

tion.

--If more than 1 year old, indicate through periodic

notations that the information is still current.

We believe that the matters made public in these memoranda should be consistent with FDA policy. Further, the trigger mechanism for the preparation of these memoranda should be consistently applied. Describing interests far below the dollar criteria required by FDA policy gives a misleading impression as to what the criteria is and what interests are routinely made public based on this criteria.

REVIEW OF FINANCIAL DISCLOSURE STATEMENTS

We reviewed case files covering a total of 906 SGEs who were active as of May 31, 1976, or were appointed or reappointed between May 31 and July 31, 1976. Generally, we found that financial disclosure statements were being filed by SGEs and reviewed by FDA in a timely manner and in accordance with FDA policy. As discussed below, however, we found cases where (1) statements were missing, (2) conflict-ofinterest determinations were tardy, (3) financial disclosure information was not current at the time of appointment, and (4) required information was either not recorded or unclear.

On a selected basis, we reviewed several of these files in greater detail to gain a better overall perspective as to the effectiveness of FDA's system. This aspect of our review showed (1) that conflict-of-interest determinations were not always documented and (2) inconsistencies in the restrictions placed on the activities of SGES. As discussed in chapter 4, we found two cases which, according to FDA criteria, should have been publicly disclosed but which were not. The majority of the errors we found occurred before FDA formalized its policy guidance in January 1976.

MISSING STATEMENTS

There was no "Confidential Statement of Employment and Financial Interest" in the file for five SGES for any reappointment cycle since the SGEs were initially appointed between October 1972 and September 1973. All of these members were on the Medical Radiation Advisory Committee in the Bureau of Radiological Health which has a total of 13 members. Members of this committee are given appointments for the full period they are expected to serve rather than a series of l-year appointments. The Director, Policy Management Staff, was not aware that appointments were being made beyond l year intervals and had not established a mechanism to alert him each year when it was time for the SGE to submit another financial disclosure statement. This official told us that such a procedure had been developed since we brought this problem to his attention.

TARDY CONFLICT-OF-INTEREST
DETERMINATIONS

FDA policy requires all statements to be reviewed and a final conflict-of-interest determination made before an SGE's appointment. We found four cases, however, in which

the final conflict-of-interest determination was made after the beginning of the appointment period. In three of these cases, the period between the appointment and determination date was less than 1 week, but in one

in one case it was 39 days. After we brought these cases to their attention, FDA officials stated they took action to assure that there would not be a recurrence of this problem.

FINANCIAL DISCLOSURE INFORMATION
NOT CURRENT AT TIME OF APPOINTMENT

There is no maximum length of time which may elapse between the effective date of the information submitted (when the SGE dates the statement) and the start of the appointment period. The criteria informally applied by the Director, Policy Management Staff, is that this total period should not exceed 6 months. We found eight cases where this period was over 6 months, three of which were over 7 months. In an additional 44 cases, the time frame from the date the statement was signed to the first review was between 4 and 6 months.

We believe that a policy needs to be established designating the maximum period of time permissible between the effective date of the financial disclosure information and the beginning of the appointment period. In cases where the statement is submitted by the SGE 6 months in advance of the start of his appointment, which is acceptable under present criteria, this data can be up to 18 months old before his appointment period ends and if reappointed, is required to submit a new statement.

REQUIRED INFORMATION EITHER
NOT RECORDED OR UNCLEAR

Required information was not always recorded on the statements, including conflict-of-interest determinations.

--In six cases, the applicant had not dated the state

ment and there was no way to determine the effective date of the information.

--In eight cases, the first review official (respon

sible line office in the bureau/office) had not signed, dated, or indicated a conflict-of-interest recommendation on the statement.

--In three cases, the second review official (Director,

Policy Management Staff) had not signed, dated, or indicated a conflict-of-interest determination on the statement.

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