DavidKorn 

David Kom (B.A., sci, M.D., cl, Harvard University) is the first Vice­
Provost for Research at Harvard University as well as Professor of Patholo­
gy at Harvard Medical School, positions he assumed on November 15, 
2008. Prior to joining Harvard, Dr. Kom had served as the Chief Scientific 
Officer of the Association of American Medical Colleges (AAMC) in 
Washington, D.C. since January 15, 2007, and before that as the Senior 
Vice President for Biomedical and Health Sciences Research at the Asso­
ciation since September 1, 1997. 

Dr. Kom served as Carl and Elizabeth Naumann Professor and Dean of the 
Stanford University School of Medicine from October 1984 to April 1995, 
and as Vice President of Stanford University from January 1986 tO April 
1995. Previously, he had served as Professor and Chairman of the Depart­
ment of Pathology at Stanford, and Chief of the Pathology Service at the 
Stanford University Hospital, since June 1968. Dr. Kom has been Chair­
man of the Stanford University Committee on Research; President of the 
American Association of Pathologists (now the American Society for Inves­
tigative Pathology), from which he received the Gold-Headed Cane Award 
for lifetime achievement in 2004; President of the Association of Pathology 
Chairman; a member of the Board of Directors and of the Executive Com­
mittee of the Federation of American Societies for Experimental Biology; 
and a member of the Board of Directors of the Association of Academic 
Health Centers. 

Dr. Kom was a founder and Chairman of the Board of Directors of the Cali­
fornia Transplant Donor Network, one of the nation's largest Organ Pro­
curement Organizations. More recently, he was a founder of the 
Association for the Accreditation of Human Research Protection Programs, 
a nonprofit corporation created to enhance and standardize the protection of 



human participants in medical and other·scientific. research. He has been a 
member of the Institute of Medicine of the National Academies of Science 
since 1989 and has served on numerous NAS and 10M committees; Dr. 
Kom was a founder of the 10M's Clinical Research Roundtable and is cur­
rently the co-chair of the NAS Committee on Science, Technology and 
Law. In 1996-97 Dr. Kom chaired a Special Subcommittee of the Science 
Board of the Food and Drug Administration to Review the FDA's Intramu­
ral Research Program, for which he received the Commissioner's Special 
Citation and the Harvey W Wiley Medal. From 1984 to 1991 he served as 
Chainnan of the National Cancer Advisory Board, a position to which he 
was appointed by President Reagan. Dr. Kom is a Fellow of the AAAS and 
has served on its Council, and he was a member of the University Grants 
Committee of Hong Kong from 1998-2004, where he was Chairman of the 
Medical Subcommittee. 

Dr. Kom served on the Boards of Directors of the Stanford University Hos­
pital from October 19~2 to April1995, the Children's Hospital at Stanford 
from October 1984 to its closure, and the Lucile Salter Packard Children's 
Hospital at Stanford from October 1984 to April1995. He was a member 
of the Board of Directors of the California Society of Pathologists from 
1983-86. 

Dr. Kom has been a member of the editorial boards of the American Jour­
nal of Pathology, The Journal of Biological Chemistry, and Human Pathol­
ogy, and for many years was an Associate Editor of the latter. He has sat on 
many Society Councils and Boards. He has written many scientific articles, 
ranging from bacteriophage biochemistry and genetics to the biochemistry 
and molecular biology of DNA replication in human cells. During the past 
2 decades his work, writings, and lectures have focused on issues of aca­
demic values and integrity, research integrity, health and science policy, 
and financial conflicts of interest in academic medicine. 



FINANCIAL CONFLICfS OF INTEREST IN ACADEMIC 
MEDICINE: WHENCE THEY CAME, WHERE THEY WENT 

David Kom, M.D. • 

I. INTRODUCTION ................................................................................... 3 
IT. WHAT IS A CONFUCT OF INTEREST? .................................................. 5 

lll. FINANCIAL CONFLICTS OF INTEREST: WHENCE THEY CAME ............ 6 
N. THE ACADEMIC COMMUNITY RESPONDS ......................................... 13 

A. Accreditation Program for Human Research ............................ 13 
B. AAMC Task Force on Clinical Research ................................... 14 

V. FINANCIAL CONFUCTS OF INTEREST, WHERE THEY WENT .......•..•. 19 
VI. ENTER THE NATIONAL INSTITUTES OF HEALTH (Nlll) 

AND THE DIIHS OIG ........................................................................ 21 
Vll. THE ACADEMIC COMMUNITY SHOOTS ITSELF IN THE FOOT ............ 23 
VITI. NEW ACTORS ENTER THE FCOI Mix ................................................ 25 
IX. AGAIN, THE ACADEMIC COMMUNITY RESPONDS ............................ 28 
X. FCOIS IN MEDICAL EDUCATION ....................................................... 28 
XI. THE SCIENTIFIC BASIS OF INFLUENCE AND REciPROCITY: A 

SYMPOSIUM ...................................................................................... 32 
Xll. FINANCIAL CONFUCTS OF INTEREST: WHERE THEY ARE, 

WHERE WE ARE ............................................................................... 34 
Xlll. NIH ISSUES AN ADVANCED NOTICE OF PROPOSED RULE 

MAKING {ANPRM) FOLLOWED BY AN NPRM ................................ 38 
XN. CONCLUDINGREMARKS ................................................................... 39 

I. INTRODUCTION 

Conflicts of interest are endemic in all professions, and the professions 
have over time developed normative behavioral and transactional processes 
to prevent or mitigate the effects of conflicts of interest from unduly influ­
encing professional judgments, choices, and decisions. Consider the scien­
tific method itself, as it evolved nearly five hundred years ago, demanding 
that communications of research findings provide complete descriptions of 
materials and methods used as well as the data obtained, in order to enable 
other scientists "skilled in the art" to test the reproducibility of the results, 
to build upon them or refute them. Perhaps it was because of an innate 

• David Kom, M.D. is the Vice Provost for Research at Harvard University and 
Professor of Pathology at Harvard Medical School. On November 5, 2009, the Annual 
McDonald-Merrill-Ketcham Lecturellndiana Health Law Review Symposium was held at 
Indiana University School of Law-Indianapolis. Dr. David K.om was keynote speaker of the 
event, we are grateful to have this article as an extension of his remarks. Some of the topics 
addressed have been updated by the author since his presentation to capture relevant inter­
vening events. 



4 INDIANA HEAL Til LAW REVIEW [Vol. 8:1 

sense of human frailty that our forebears agreed both that scientific hypoth­
eses (as opposed, for example, to religious dogmas) must be refutable and 
scientific observations, reproducible. Certainly, Sir Francis Bacon recog­
nized these frailties when he wrote in 1620: 

The human understanding is no dry light, but receives 
infusions from the will and affections; whence pro­
ceed sciences which may be called 'sciences as one 
would.' For what a man had rather were true he more 
readily believes . . . . Numberless, in short are the 
ways, and sometimes imperceptible, in which the af­
fections color and infect the understanding.1 

As I note later in this paper, more than 370 years would elapse before Ba­
con's insights would become, in a sense, formally codified by the marriage 
of Traditional Economics, erected on the principle ofhomo economicus, the 
''rational consumer," with Psychology that gave rise to the thoroughly dis­
ruptive discipline of Behavioral Economics. 

It is important to recognize that the Academy provides no refuge. 
Conflicts of interest, the great majority of which do not, at least directly, 
involve money, are ubiquitous, indeed inevitable, in academic life, includ­
ing in academic medicine. As I wrote a decade ago: 

Successful. scientists cannot be totally dispassionate 
about their work, nor can academic medical research­
ers be immune from the jumbled and often intense 
conflicting pressures that envelop them. These pres­
sures, not primarily financial, include the desire for 
faculty advancement, to compete successfully and re­
petitively for sponsored research funding, to receive 
accolades from professional peers and win prestigious 
research prizes, and to alleviate pain and suffering. 
The last, which likely first led the researcher to 
choose an arduous academic career and then persist 
despite its demands, uncertainties, and disappoint­
ments, may be the most enduring pressure of all. All 
of these nonfinancial pressures may generate conflicts 
by creating strong bias toward positive results, and all 
of them may more powerfully influence faculty be-

1. Francis Bacon, NOVUM ORGANUM; WITH OTHER PARTS OF THE GREAT 
INSTAURATION 44 (Peter Urbach & John Gibson eds., 1994). 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 5 

havior than any prospect of financial enrichment.2 

Importantly, these kinds of pervasive academic conflicts are of little 
note or interest to the public. In contrast, financial conflicts of interest 
("fCOis") are well understood by the several different publics that academic 
medicine serves, and during the past three decades, recurring outbreaks of 
attention to fCOis in academic medicine from the media, Congress, and the 
Administration have generated the increasing public concern that academic 
medicine now faces. 

My purpose in this presentation on fCOis in academic medicine is to 
provide a context to help the reader better understand from whence they 
came, where they went, and why they continue to be of such concern to the 
public and so vexing to academic medical institutions and their faculties, 
struggling to balance mixed public messages and conflicting public expec­
tations. 

II. WHAT IS A CONFLICT OF INTEREST? 

There are many defmitions of conflict of interest from which to 
choose, but the one I prefer is that offered in a recent report from the Insti­
tute of Medicine ("10M"), one of the three components of the U.S. National 
Academies of Science: "A conflict of interest is a set of circumstances that 
creates a risk that professional judgments or actions regarding a primary 
interest will be unduly influenced by a secondary interest. "3 A "primary 
interest" for academic medical scientists would be to protect the well-being 
of their patients and the integrity and credibility of their research. A "sec­
ondary interest" could be any of the examples listed above, but for the pur­
pose of this manuscript, a secondary interest will be financial. Thus, an 
academic physician may be receiving payments from a pharmaceutical or 
medical device company that depends on the magnitude of his or her usage 
of the company's products. An academic medical scientist may also have a 
direct financial interest ranging from equity in a start-up company created 
from the discovery or from consulting or speaking payments from a vendor, 
in the outcome of the experiment, whether bench research or, for example, 
an early-phase clinical trial. 

What is appealing about the 10M definition is its clarity that a conflict 
of interest ("COl"), financial or not, is a situation and not per sea judgment 
about the character or actions of an individual. When attempting to address 
fCOis in a university, medical school, or teaching hospital, helping faculty 
and other personnel to understand this point becomes exceedingly im-

2. David Kom, Conflicts of Interest in Biomedical Research, 284 JAMA 2234, 2234-
2237 (2000). 

3. CONFLICT OF INTEREST IN MEDICAL RESEARCH, EDUCATION, AND PRACTICE, 
INSTITUTE OF MEDICINE 46 (National Academies Press, 2009). 



6 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

portant, albeit very difficult. To this point, and recalling my quote from 
Francis Bacon, the noted behavioral economist, Professor George Loewen­
stein from Carnegie-Mellon University, has asserted that traditional eco­
nomics assumes that professionalism and COis are asymmetric motives in 
influencing behavior, and that persons who confront COis are equipped to 
deal with them rationally.4 Behavioral economics posits a more complex 
model of decision-making, one that includes unconscious motives and other 
factors outside the control of a purely rational process. Biases are viewed 
as unconscious, or as many neuroscientists, concerned to avoid references 
to Freudian doctrine, would prefer, ''unwitting" or "beneath awareness." 

III. FINANCIAL CONFLICTS OF INTEREST: WHENCE THEY CAME 

In the aftermath of World War II, inspired by the remarkable "path of 
the war-changing" discoveries (e.g., radar, sonar, napalm, cryptanalysis) 
from university laboratories working under federal research contracts and 
informed by the seminal report, Science: The Endless Frontier,5 authored 
by Vannevar Bush, who in 1940, while serving as the newly installed Presi­
dent of the Carnegie Institution of Washington, had become Director of the 
new federal Office of Scientific Research and Development, the federal 
government made the seminal decision that it had a legitimate role in fund­
ing basic research, and that the funding should flow through universities, 
where the performance of cutting edge research would be conjoined with 
the education of future generations of scientists. Probably no one precisely 
foresaw the enormous, world-leading American basic research enterprise 
that would result, led by what Columbia University Professor and former 
Provost Jonathan Cole has described in his new book, The Great American 
University.6 However, some senior academic leaders, especially from pri­
vate universities, were concerned that "getting into bed with the govern­
ment" in this way would have long-term adverse consequences, threatening 
the Academy's zealously protected autonomy and self-governance, and 
even its academic agenda. In response to these concerns, an agreement was 
negotiated to create what came to be dubbed the "Federal-Academic Re­
search Partnership," under which the universities would retain their exclu­
sive oversight of the conduct of federally sponsored research by their 
faculty members, while acknowledging the government's right to exercise 

4. See The Scientific Basis of Influence and Reciprocity: A Symposium, 2007 Ass'N 
OF AM. MED. COLLEGES, June 7, 2007, (hereinafter Symposium) available at https://services. 
aamc.orglpublications/index.cfm?fuseaction=Product.displayForm&prd _ id=215&prv _id=26 
2. 

5. VANNEVAR BUSH, SCIENCE: THE ENDLESS FRONTIER (1945), available at 
http:/ /www.nsfgov/od/lpa/nsf50/vbushl94S.htm. 

6. JONATHAN R. COLE, THE GREAT AMERICAN UNIVERSITY: ITS RISE TO PREEMINENCE, 
ITS INDISPENSABLE NATIONAL ROLE, WHY IT MUST BE PROTECTED (20 1 0). 



2011] FINANCIAL CONFLICI'S OF INTEREST IN ACADEMIC MEDICINE 7 

due diligence that federal research funds were expended appropriately. 
From this agreement derived the "assurance mechanism" under which uni­
versities had only to "assure" federal research sponsoring agencies that they 
had in place dutifully enforced policies and procedures to enable their com­
pliance with federal requirements. It was doubtless anticipated at the time 
that these requirements would remain relatively few and directed essentially 
exclusively at oversight ofthe expenditures of federal funds. This anticipa­
tion held true for about thirty years. 

But beginning in the mid-1970s and continuing into the 1980s, there 
were an unfortunate series of episodes of scientific misconduct - or fraud -
that involved National Institutes of Health-funded biomedical research 
(''NIH"), some of which involved research on human subjects. These epi­
sodes became highly publicized, and they attracted the attention not only of 
the NIH, but also of the cognizant congressional committees, especially in 
the House of Representatives. In a few of these cases, the perpetrators were 
discovered to have substantial fCOis. A seemingly endless series of acerbic 
congressional hearings ensued, beginning with the Oversight and Investiga­
tions Subcommittee of the House Science Committee in 1981, during which 
the unfortunate conjunction of fCOis with scientific fraud became ever 
more firmly cemented in media coverage and the minds of key Congress­
persons. Arguably, the most compelling embodiment of this conjunction 
was the 1990 report from the House Committee on Government Operations, 
now the House Committee on Oversight and Government Reform,7 which 
catalogued the misconduct cases that had surfaced to date, entitled Are Sci­
entific Misconduct and Conflicts of Interest Hazardous to Your Health? 
The conviction that fCOis lead to research misconduct and, thus, to adverse 
effects on public well-being persists in the minds of the public to this day. 
Put most simply, fCOis are bad; they lead to bad science; and bad science 
can result in harm to the public. 

The cumulative hearings led to two major congressional actions that 
would forevermore alter the painstakingly negotiated terms of the Federal­
Academic Research Partnership and the relationship of academic institu­
tions and their faculty to federal research sponsors: the federal government 
would interpose itself into the oversight of the conduct of federally spon­
sored research by faculty investigators. The first action was contained in 
the 1985 reauthorization of the Public Health Act,8 containing the funda­
mental enabling legislation for the NIH, when Congress directed the Public 
Health Service ("PHS") to write a regulation defining and addressing mis­
conduct in federally sponsored research. This directive, as expected, stimu­
lated great concern among the leadership of academic research institutions 

7. See H.R. REP. No. 688-101 (1990). 
8. Health Research Extension Act of 1985, Pub. L. No. 99-158, §493, 99 Stat. 820 

(1985). 



8 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

and professional scientific societies, and during the next nearly four years, 
there were difficult and often heated interactions between academic leader· 
ship and the PHS. In the forge of these interactions, the academic commu· 
nity came together on the goal of limiting the scope of the federal interest in 
research misconduct as much as possible, and this strategy proved success· 
ful. The final regulation issued in 19899 was essentially confined to three 
behaviors that are relatively unambiguous and universally condemned 
across the community of scholars as research misconduct: fabrication, falsi· 
fication and plagiarism, commonly referred to as "FFP." The regulation 
also established a formal process of institutional response to allegations of 
research misconduct, and it established in the PHS a new Office of Scien­
tific Integrity ("OSI"), charged to oversee these institutional processes, re­
view the institutions' final reports, conclusions and disciplinary actions, and 
pass judgment on the integrity, adequacy, and conclusions of the institu­
tional processes. Shortly after the regulation was issued, the National Sci­
ence Foundation (''NSF"), the second largest federal fonder of academic 
scientific and engineering research, adopted its own misconduct regulation, 
which closely follows that of the PHS.10 

Admittedly, FFP is limited. As the academic leadership desired, the 
rule does not purport to embrace the universe of misdeeds that university 
policies might properly consider "research misconduct," (e.g., authorship 
disputes, harassment of vulnerable members of research teams, sabotage of 
competitors' research, etc.). During the nearly four years of negotiation, 
and continuing through much of the 1990s, there were repeated efforts by 
federal officials and by clusters of academicians to broaden the scope of the 
federal rule. Final resolution did not occur until 2000, when the Office of 
Science and Technology Policy ("OSTP") in the Executive Office of the 
President issued a Notification of Final Policy11 on Research Misconduct 
that made important clarifying changes in the language of the 1988 regula­
tion and reaffirmed the limitation of the rule's scope to FFP. With its pub­
lication in the Federal Register, the "Final Policy" became applicable to all 
federal agencies that sponsor research, Compliance with the rule is man­
aged by the assurance process. Each year, research institutions must assure 
the government that they have in place dutifully enforced misconduct poli­
cies and procedures that are compliant with the regulation, and provide in­
formation about the number of allegations of misconduct they received 

9. Public Health Service, Department of Health and Human Services, Grants, Policies 
of General Applicability, 42 C.F.R. §§ 50.101-607 (2011). 

10. Public Welfare, Regulations Relating to Public Welfare, National Science Founda­
tion, Research Misconduct, 45 C.F.R. § 689 {2010). 

11. Office of Science and Technology Policy, Executive Office of the President; Fed­
eral Policy on Research Misconduct; Preamble for Research Misconduct Policy, Notification 
of Final Policy, 65 Fed. Reg. 76260 (Dec. 6, 2000), available at http://www.sc.doe.gov/ 
misconduct/finalpolicy.pdf. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 9 

during the prior year, and the status of these allegations in the sequential 
institutional response procedures mandated by the rule. 

In 1988, in harshly critical, many called them abusive, congressional 
hearings, led by Congressman John Dingell, then Chairman of the Over­
sight and Investigations Subcommittee of the House Energy and Commerce 
Committee, the matter was first raised of ordering the Department of Health 
and Human Services ("DHHS") to write a regulation addressing :tt::Ois in 
academic and other institutions that receive research and training grants, 
primarily from the NIH. Although formal authorizing language was not to 
appear until 1993,12 the DHHS responded to Mr. Dingell, and the battle 
lines with academe were redrawn. Difficult and often contentious negotia­
tions would go on, and trial balloons would be launched and shot down, for 
nearly seven years before the PHS finally issued its regulation, entitled To 
Ensure the Objectivity of Research, in 1995.13 It is noteworthy that the PHS 
remains to this day the only federal agency to have its own :tt::OI regulation. 
However, similarly to its action with respect to the PHS Research Miscon­
duct regulation, the NSF very soon after issued its own essentially identical 
:tt::OI Guidance. 14 Once again, the government was interposing itself into 
the oversight of the conduct of faculty investigators, and once again, the 
leadership of academic institutions and scientific societies fought to ensure 
that the regulation would be as minimally intrusive as possible. And the 
1995 Rule was indeed light-handed! 

In negotiating this rule, both the government and the academy were 
treading on unexplored terrain. At that time, there were no accepted land­
marks or boundaries, such as specific magnitudes of related financial inter­
ests or specific circumstances generally agreed to create problematic :tt::Ois 
demanding institutional intervention, nor were there processes empirically 
demonstrated to be effective in dealing with :tt::Ois. Neither was there any 
consensus about the relative importance of :tt::Ois as compared to the pleth­
ora of non-financial COis that I earlier addressed in leading faculty re­
searchers to problematic behaviors, including research misconduct. In this 
domain, there was no ready equivalent ofFFP. As described earlier, a COl, 
or :tt::OI, is a set of circumstances that creates a risk (often conditioned as an 
undue risk) of undue influence on professional decisions or actions. The 
existence of an :tt::OI is ultimately a matter of third-party (the "reasonable 
observer'' so favored in law) perception or judgment, and perceptions and 

12. NIH Revitalization Amendments of 1990, H.R. 5661, § 151 (1990) (containing 
authorizing language but did not become law); NIH Revitalization Amendments of 1992, 
H.R. 2507, § 154 (1992) (enacting authorization, however, both the FDA and the NIH were 
already well along in drafting their respective rules). 

13. See 42 C.F.R. §§ 50.101-607 (2010); 45 C.F.R. § 94 (2010). 
14. NATIONAL SCIENCE FOUNDATION, OFFICE OF BUDGET, FINANCE & AWARD 

MANAGEMENT, NATIONAL SciENCE FOUNDATION GRANT POLICY MANuAL, Section 510 
(2005), available at http:/ /www.nsf.gov/pubslmanuals/gpm05 _131/gpm05 _13l.pdf. 



10 INDIANA HEAL1H LAW REVIEW [Vol. 8:1 

judgments are awfully hard to regulate. In the end, after nearly seven years 
of heated deliberations and several rejected federal proffers, the government 
and academic leadership agreed to define, entirely arbitrarily, specific mag­
nitudes of financial interests that relate to an investigator's federally funded 
research as "Significant Financial Interests" ("SFis") (thus, $10,000 or 
more income in a year from, or five· percent equity in, a publicly traded 
company). The institutions would require faculty members annually and 
whenever they submitted a federal research proposal to identify and dis­
close such related SFis, and if the institution determined that the SFI creat­
ed a conflict with the proposed research project, it would deal with the fCOI 
by eliminating, reducing, or managing it before the conflicted investigator 
could begin spending funds from an awarded research grant. The regulation 
required only that the institution notify the funding agency (e.g., the NIH) 
that it had identified an fCOI related to a specific research grant and had 
dealt with it before permitting expenditure of the awarded funds. No fur­
ther details were required, and although the regulation did· empower the 
agency to request additional information, experience showed that this 
would occur infrequently. 

During these prolonged negotiations, public attention to fCOis in bi­
omedical research had begun to wane, but the relative quietude ended ab­
ruptly in the latter 1990s, when a series of scathing federal reports focused 
attention on research involving human subjects and raised questions about 
how effectively the well-being of these research subjects was being protect­
ed under the extant federal regime by academic investigators and their insti­
tutions. First out of the gate was the report of a federal commission15 

chaired by renowned ethicist, Ruth Faden, a Professor and Dean in the 
Johns Hopkins University School of Public Health, that had been charged 
with investigating secret experiments conducted by the U.S. military during 
WWII on U.S. civilian populations. The findings were damning and widely 
publicized. The commission, concerned by their findings of potentially 
dangerous and large-scale exposures of non-consented individuals to irradi­
ation and microbial pathogens, decided toward the end of their investigation 
to conduct a "quick and dirty" examination of the then current state of "in­
formed consent" by collecting informed consent documents from several 
dozen major research institutions. From their review, the commission con­
cluded the informed consent process was seriously defective. 

There followed three highly critical reports, two from the DHHS Of­
fice of Inspector General ("010")16 and one from the then General Ac-

15. ADVISORY COMMTITEE ON HUMAN RADIATION ExPERIMENTS, FINAL REPORT OF THE 
ADVISORY COMMITTEE ON HUMAN RADIATION EXPERIMENTS (U.S. Gov't Printing Office, 
1995). 

16. OFF. OF THE INSPECTOR GEN., DEP'T OF HEALTII AND HUMAN SERV., OEI-01-97-
00193, INSTITUTIONAL REVIEw BOARDS: A TIME FOR REFORM (1998), available at 
http://oig.bhs.gov/oei/reports/oei-01-97-00193.pdf (hereinafter INSTITUTIONAL REVIEW 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 11 

counting Office ("GA0")/7 all ofwhich questioned the robustness and ef­
fectiveness of academic institutions' oversight of and diligence in protect­
ing the wellbeing of their human research subjects, and the adequacy of 
their support for their Institutional Review Boards ("IRBs"). Applicable 
federal regulations18 require that all proposed research on human subjects 
that is not defined in the regulations as "exempt" must be reviewed, ap­
proved, and overseen by an IRB. Prospective research subjects must give 
their "informed consent" willingly and without coercion to participate in the 
research. The regulations and extensive subsequent guidance from the fed­
eral oversight bodies (during the 1990s, the Office of Protection from Re­
search Risks [("OPRR") in NIH]; since 2000, the Office of Human 
Research Protections ("OHRP"), an independent component of the PHS) 
address in great detail what constitutes an acceptable informed consent pro­
cess and its documentation. The IRB closely examines research proposals 
and informed consent documents to determine whether any of the investiga­
tors have fCOis, whether the research is being performed to contribute to 
general knowledge (i.e., to be published), whether experimental risks have 
been appropriately minimized and adequately explained to prospective sub­
jects, and whether the research will necessarily expose the subjects to more 
than minimal risk, and, if so, whether specific modifications of the protocol 
or protective measures must be implemented before the research can pro­
ceed. The primary duty of the IRB system is to protect the well-being of 
human research subjects and ensure that proposed research is conducted in 
conformity with the highest ethical principles as well as scientific standards 
-yet one of the OIG reports proclaimed that the "[IRB system] is in jeop­
ardy."t9 

These federal reports raised a new and pivotal question, previously 
unaddressed, about the ability of IRBs - institutional bodies - to fulfill their 
obligations in circumstances in which their institutions themselves have 
financial interests in proposed research involving human subjects. All of 
the mishaps noted earlier, which had so riveted the attention of the govern­
ment and the media on fCOis in federally sponsored research, had involved 
the fCOis of individual researchers. And the 1995 fCOI regulation ad­
dresses only individual fCOis. But now, in the late 1990s, for the first time, 
the fmancial interests of the institutions themselves - of the universities, the 

BoARDs]; OFF. OF THE INSPECTOR GEN., DEP'T OF HEALTH AND HUMAN SERV., OEI-97-
00197, PROTECTING HUMAN SUBJECTS: STATUS OF REcOMMENDATIONS (2000), available at 
http:l/oig.hhs.gov/oei/reports/oei-01-97-00197 .pdf. 

17. U.S. GENERAL ACCOUNTING OFFICE, GAO/HEHS-96-72, SCIENnFIC RESEARCH: 
CONTINUED VIGILANCE CRITICAL TO PROTECTING HUMAN SUBJECTS (1996), available at 
http://www.gao.gov/archive/1996/he96072.pdf. 

18. The PHS, as well as the scientific community, commonly refers to 45 C.F.R. § 46 
(2010) as the "Common Rule" because of its adoption by seventeen federal agencies that 
sponsor human subjects research; the exception is the FDA, which has its own variant of the 
Common Rule in 21 C.F.R. § 50 (2010). 

19. INSTITUTIONAL REVIEW BoARDS supra note 16, at 4. 



12 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

medical schools, the teaching hospitals - and the fCOis they could generate, 
institutional fCOis, had been placed squarely into the public spotlight. Re­
call that under the terms of the Federal-Academic Research Partnership the 
government had delegated to the academy the principal, if not exclusive, 
authority to oversee faculty conduct of federally sponsored research, but if 
the academy had its own financial interests in that research, did that not 
generate institutional fCOis? And in the presence of such institutional 
fCOis, how could the public be certain the institutional processes and bod­
ies that implemented and assured institutional oversight were not being bi­
ased and could still be trusted? The Clinton Administration early in its 
second term (October 1995) had established the National Bioethics Adviso­
ry Commission (''NBAC") to examine the many ethical issues related to 
human subjects research, and in one of its several reports the Commission 
explicitly called for enhanced institutional management of institutional, 
IRB, and individual fCOis. 20 

Adding to the turmoil of the late 1990s and early 2000s, the heretofore 
low-key OPRR became unusually and publicly active by suspending human 
subjects research, seriatim, in more than a dozen major research universities 
for largely technical violations of Informed Consent and IRB procedures. 
One suspension, at the University of Colorado, lasted nine months. Anoth­
er, at Duke University, sparked a Time Magazine cover showing a human 
research subject cowering in a rodent cage under the banner: How Medical 
Testing Has Turned Millions of Us Into Human Guinea Pigs.21 Widespread 
publicity intensified public and congressional attention to problems in uni­
versities' oversight of human subjects research. Then, between 1998 and 
2001, three research subjects died, respectively, at the University of Roch­
ester, the University of Pennsylvania, and then, Johns Hopkins University?2 

Of these deaths, one in particul~3 attracted extraordinary notice and con­
gressional interest: that at the University of Pennsylvania of a teenager 

20. See 1 NATIONAL BIOETHICS ADVISORY CoMMISSION, REsEARCH INVOLVING HUMAN 
BIOLOGICAL MATERIALS: ETHICAL ISSUES AND POUCY GuiDANCE: REPORT AND 
REcOMMENDATIONS (1999), available at http://bioethics.georgetown.edu/nbaclhbm.pdf; see 
also 2 NATIONAL BIOETHICS ADVISORY COMMISSION, REsEARCH INVOLVING HUMAN 
BIOLOGICAL MATERIALS: ETHICAL ISSUES AND POUCY GUIDANCE: COMMISSIONED PAPERS 
(2000), available at http://bioethics.georgetown.edu/nbaclhbmll.pdf. 

21. Michael D. Lemonick & Andrew Goldstein, At Your Own Risk, TIME, Apr. 22, 
2002, available at http://www.time.com/time/magazine/0,9263, 7601 020422,00.html (dis­
playing cover of magazine issue). 

22. Vera Hassner Sharav, Human Experiments: A Chronology of Human Research, 
ALLIANCE FOR HUMAN REsEARCH PROTECTION, http://www.ahrp.org/history/chronology.php 
(last visited Feb. 2, 2011). 

23. See id.; Gene Therapy: Is There Oversight for Patient Safety?, Before the S. 
Comm. on Health, Education, Labor and Pensions, Subcomm. on Pub. Health, 106 Cong. 
(2000) (statement of Amy Patterson, M.D., Dir. of the Off. of Biotechnology Activities at the 
Nat'l Inst. of Health) available at http://www.hhs.gov/asl/testify/t000202c.html; see also 
Bioethics: Gene Therapy Business: The Tragic Case of Jesse Gelsinger, NEWS WEEKLY, 
Aug. 12, 2000, available at http://www.newsweekly.com.aularticles/2000aug12_bio.html. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE l3 

named Jesse Gelsinger, who was participating in an early-phase gene thera­
PY trial that had received all necessary university approvals, as well as ap­
proval by the FDA for use of the Investigational ·New Drug. But 
examinations ex post revealed that the research team had both taken and not 
taken actions in violation of FDA requirements, and determined the pres­
ence of both individual and institutional fCOis. It is important to note that 
extensive investigations of Gelsinger's death by the FDA and by the Uni­
versity, which convened a high-level commission of outside experts tore­
view the facts of the case, never established any direct linkage of the fCOis 
to this tragedy. Nevertheless, in the perfervid atmosphere of the late 1990s, 
the association was enough to stimulate heated calls for congressional and 
administrative action to strengthen oversight of human subjects research. 

IV. THE ACADEMIC COMMUNITY REsPONDS 

A. Accreditation Program for Human Research 

During the later 1990s, professional organizations representing the 
leadership of universities and academic medicine became understandably 
concerned about the furor over human subjects research, especially after the 
Gelsinger tragedy, and the possible harmful effects of new legislation or 
regulation enacted in such a frenzied and emotional climate. The governing 
Board of the nonprofit professional development organization Public Re­
sponsibility in Medicine and Research ("PRIM&R''), dedicated to promot­
ing ethical behaviors in human and animal research, had begun to deliberate 
the wisdom and realism of establishing a de novo accrediting body for hu­
man research protection programs.24 I became aware ofPRIM&R's delib­
erations while serving (1997-2008) as Senior Vice President for Biomedical 
and Health Sciences Research at the nonprofit Association of American 
Medical Colleges ("AAMC") in Washington, DC, and initially rejected the 
idea as wishful. All academic institutions, but especially medical schools 
and teaching hospitals, undergo a variety of recurrent, separate accreditation 
visits and generally find them very burdensome and expensive, and of une­
ven value. But as the clamor continued to intensify, I became convinced 
that the idea of creating an independent entity to accredit academic human 
research protection programs had merit and could be a very powerful way 
for the academic community to demonstrate its respect for the public con­
cerns, as well as its own concerns and resolution to correct its perceived 
shortcomings. With approval from the AAMC leadership and governance 
and full cooperation from PRIM&R, I succeeded during the next eighteen 

24. Mission, Values, & Vision, PRIM&R, PuBuc RESPONSffiiLI'IY IN MEDICINE AND 
REsEARCH, hUp://www.primr.org/ AboutUs.aspx?id=4463&ekmensel=c580fil7b _ 68 _ 0 _ 4463 _1 
(last visited Jan. 23, 2011 ). 



14 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

to twenty months in enlisting the participation of five additional leading 
nonprofit organizations that represented the major private and public uni­
versity presidents and senior administrators, the life sciences and social and 
behavioral sciences faculties, and a politically influential umbrella organi­
zation whose membership includes all of the patient disease advocacy 
groups and much of the medical vendor industry. These recruits were: the 
Association of American Universities ("AAU"), the National Association of 
State Universities and Land Grant Colleges (''NASULGC"), the Council on 
Government Relations ("COGR"), the Federation of Societies for Experi­
mental Biology ("F ASEB"), the Consortium of Social Science Organiza­
tions ("COSSA"), and the National Health Council ("'NHC"), all of whom 
agreed to support the concept and contribute to the start-up capital needed 
to launch the venture. Importantly, the pharmaceutical industry's DC-based 
lobbying organization ("PhRMA") was also fully supportive of the initia­
tive and agreed to match the AAMC's share of the working capital, but 
PhRMA's leadership decided, wisely, it was best that it not be involved or 
publicly associated with the new organization. With this broad base of sup­
port, the Association for the Accreditation of Human Research Protection 
Programs ("AAHRPP") opened its doors in the fall of 2001, with the seven 
founding organizations serving as trustees, but with an impregnable firewall 
between them and the operations of the new entity, which were overseen by 
its Executive Director and an independent Board of Directors. After a diffi­
cult beginning, in large part due to the academy's aversion to accreditation 
as well as a muting of public concerns, AAHRPP has become a gratifying 
success, winning plaudits from both Congress and the Administration; at 
the time of this writing, nearly 1,100 entities - universities, teaching hospi­
tals, VA hospitals, community hospitals, independent IRBs and Clinical 
Research Organizations ("CROs''), a major pharmaceutical company, and a 
growing number of academic institutions in Asia and Europe - have been 
accredited, 25 and institutions' attention to and, importantly, their invest­
ments in their human research protection programs have increased substan­
tially. Human research protection programs in academia and many in the 
private sector are far more robust, better supported, and deservedly more 
credible today than they were a decade ago. 

B. AAMC Task Force on Clinical Research 

In the fall of 1999 the AAMC leadership decided to form what was to 
become its first Task Force on Financial Conflicts of Interest in Clinical 
Research, which fell under the purview of my team and held its first meet-

25. Press Release, Ass'n for the Accreditation of Human Research Protection Pro­
grams, Inc., AAHRPP has accredited 223 (Dec. 16, 2010), available at http://www.aahrpp 
.orglwww.aspx?PageiD=383. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 15 

ing in the spring, 2000. The Task Force had a roster of twenty-eight mem­
bers representing academic medicine, the biopharmaceutical industries, bio­
ethicists, university general counsels, the presidents of three major disease 
advocacy organizations, distinguished journalists no longer engaged in re­
porting, and a newly retired Congressman who had chaired the NIH Appro­
priations Subcommittee of the House Energy and Commerce Committee. 
The Committee was chaired by William Danforth, MD, who had a long and 
distinguished career as Vice-Chancellor of the Washington University in St. 
Louis ("WUSTL") Academic Medical Center, then Chancellor and finally 
Chairman of the Board of WUSTL.26 The Task Force was to work for 
more than eighteen months and produced two reports: the first, in Decem­
ber 2001, addressed individual fCOis, while the second, in October 2002, 
addressed Institutional fCOis.27 

I digress to make an important point, to which I shall return later in 
this manuscript when I address what I have called the "challenge of public 
expectations"28 that plays out most intensely in the domain of academic 
medicine. As noted, seven members of the Task Force were not associated 
with universities or academic medical institutions, or with industry, and at 
the first meeting of the Task Force it became surprisingly clear how little 
our "civilian members" understood of the processes required in our socio­
economic system to bring a scientific discovery to pubic benefit. Especially 
surprising were the disease advocacy leaders, who devote their lives to ad­
vocating for more money for NIH research on the diseases of interest to 
their members (e.g., cancer, mental illness, AIDS, etc.). They seemed not 
to understand that with the notable exception of the Department of Defense, 
the federal government funds research but not development, which is the 

26. About WUSTL: Facts, History and Traditions: William H. Dariforth, WASHINGTON 
UNNERSITY IN. ST. LoUis, http://www.wustl.edu/about/facts/chancellors/danforth.html (last 
visited Jan. 23, 2011). 

27. See l Ass'N OF AMERICAN MEDICAL COLLEGES, TASK FORCE ON FINANCIAL 
CONFLICTS OF INTEREST IN CLINICAL RESEARCH, PROTECTING SUBJECTS, PRESERVING TRUST, 
PROMOTING PROGRESS: POLICY AND GUIDELINES FOR THE OVERSIGHT OF INDIVIDUAL 
FINANCIAL INTERESTS IN HUMAN SUBJECTS RESEARCH (200 1 ), available at https:/ /www.aamc 
.org/download/75302/data/firstreport.pdf; 2 Ass'N OF AMERICAN MEDICAL COLLEGES, TASK 
FORCE ON FINANCIAL CONFLICTS OF INTEREST IN CLINICAL REsEARCH II: PRINCIPLES AND 
RECOMMENDATIONS FOR OVERSIGHT OF AN INSTITUTION'S FINANCIAL INTERESTS IN HUMAN 
SUBJECTS RESEARCH (2002), available at https://services.aamc.org!publications/showfile.cfm 
?file=version24.pdf&prd _id= 1 06&prv _ id= 117 &pdf_ id=24. Because the AAMC' s prove­
nance is limited to academic medicine, and to avoid political friction with national organiza­
tions that represent university presidents, we limited the scope of these and following 
reports, directed to AAMC members - medical schools, teaching hospitals, and their faculty 
members, by focusing them on human subjects research, even though such research takes 
place elsewhere in a university, for example, in the social and behavioral sciences. Notwith­
standing, the reports and their major recommendations, with few technical exceptions, are 
equally applicable to all academic research and scholarship. 

28. See David Kom, The Challenge of Public Expectations, BosTON REVIEW 

(May/June 20 10), http:/ /bostonreview.net!BR35 .3/kom.php. 



16 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

province of the private sector, and that to develop tangible public benefits 
from scientific discoveries requires that there be an "active interface" be­
tween scientists and their institutions with private sector agents. Once these 
members accepted the need for the interface, however, they still could not 
understand "why money has to change hands," arguing that faculty are well 
paid and engage in professions that bring them great satisfaction and pleas­
ure. Other committee members reminded that we are a capitalist economy 
and discussed the requirements of the Bayh-Dole Act, 29 the expectations of 
venture capitalists, and the fact that many faculty inventions are far up­
stream and absolutely require the inventors • continued engagement to move 
them into the developmental pathway, but I was never certain that we fully 
convinced our doubters. 

The first Task Force report proved to be extraordinarily influential and 
has guided the development of individual fCOI policies in many of our na­
tion's medical schools and major teaching hospitals. The report established 
as its core principles that faculty members must disclose to their institution 
their related fCOis; that institutions must ensure a high standard of review 
of these disclosures; and the rebuttable presumption that a faculty member 
with a related financial interest deemed to be "significant" and to create a 
fCOI should not be permitted to perform research on human subjects?0 

This presumption, however, was not an absolute prohibition and could be 
challenged by the faculty member's demonstration of "compelling circum­
stances.'.31 Although the Task Force did not try to craft a definition of 
"compelling circumstances," it intended that they be evaluated by consider­
ing the nature, magnitude, and "relatedness" to the research of the financial 
interest, and the degree of risk raised by the interest to the wellbeing of hu­
man subjects and the integrity of the proposed research.32 It is my personal 
view that circumstances should be judged ''compelling" only if the research 
could not otherwise be conducted as safely and effectively. Rigorously ap­
plied, this would be a very high standard indeed that would permit relative­
ly few challenges to prevail. The approach recommended by the Task 
Force was intended not to be formulaic and built around "red lines," but 
rather to require institutions to perform stringent risk-benefit assessments, 
much like those routinely performed by an IRB. 33 However, some institu­
tions have concluded that this approach would be too burdensome and ex­
pensive and have chosen to default to less administratively onerous 
approaches structured around absolute prohibitions. 

The Task Force's second report addressed for the first time the prob-

29. Government Patent Policy Act of 1980, Pub. L. No. 96-517, 94 Stat. 3015 (Dec. 
12, 1980). 

30. See 1 Ass'N OF AMERICAN MEDICAL COLLEGES, supra note 27. 
31. Idat1. 
32. !d. 
33. See generally, id. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 17 

lem of institutional fCOis in human research.34 In contrast to individual 
fCOis, with which the academic community had had more than a decade of 
experience, the first publication in a major professional journal to address 
institutional fCOI, of which I am aware, appeared in the New England 
Journal of Medicine in 1994.35 The committee was aware that they were 
stepping onto unplowed ground without guiding precedents, and so it is that 
the title of the fust report chose "Policy and Guidelines for Oversight ... " 
while the second was framed more cautiously as "Principles and Recom­
mendations for Oversight .... "36 

The Task Force report proffered a definition of the problem: an insti­
tutional fCOI exists whenever the financial interests of the institution, or of 
an institutional official or committee, create a risk of unduly influencing 
institutional processes for the review, conduct, or oversight of [human sub­
jects] research.37 The Task Force articulated as a core management princi­
ple that institutional administrative functions and responsibilities related to 
the oversight of [human subjects] research should be cleanly separated from 
those related to financial and investment management and technology li­
censing, and then proceeded to build the institutional report around the 
basic administrative structures and processes articulated in the individual 
policy, including the "rebuttable presumption," simply increasing the 
threshold amounts of income or investment that would be deemed to be 
"significant." This report has had utility in guiding institutional fCOI poli­
cies in academic medical institutions, but aside from separation of their fi­
nancial and academic administrative oversight structures, the report's 
recommendations have been widely shunned by university presidents as too 
unwieldy and intrusive. It is my personal opinion, nearly a decade later, 
that the recommended approach could only be feasible in institutions in 
which the prevalence of institutional fCOis was low. But in today's major 
research universities and academic medical centers, with their robust and 
aggressive technology transfer programs and pursuit of research partner­
ships with industry, the prevalence of such potentially conflicting institu­
tional financial interests is no longer low. 

I earlier described the Federal-Academic Research Partnership, the 
delegation of oversight of the conduct of research to the universities, and 
the "assurance mechanism." Clearly, that partnership was based on trust 
that the universities would discharge their oversight responsibilities dispas­
sionately and without conflicts, and that trust was tested during the late 

34. See 2 Ass'N OF AMERICAN MEDICAL COLLEGES, supra note 27. 
35. Ezekiel J. Emanual & Daniel Steiner, Sounding Board: Institutional Conflict of 

Interest, 332 N. ENG. J. MEn. 262, 262-67 {1995). 
36. 1 AsS'N OF AMERICAN MEDICAL COLLEGES, supra note 27; 2 Ass'N OF AMERICAN 

MEDICAL COLLEGES, supra note 27. 
37. 2 AsS'N OF AMERICAN MEDICAL CoLLEGES, supra note 27, at 2-3. I have inserted 

the brackets to emphasize that the definition is applicable to all academic research. 



18 INDIANA HEAL Til LAW REviEW [Vol. 8:1 

1990s when the issue of institutional fCOis first surfaced as a matter of 
concern in human subjects research. But the credibility of universities as 
socially privileged institutions of public trust and the integrity of university 
research is certainly not limited to research involving human subjects. It is 
worth recalling here an inspiring articulation of the crucial role of universi­
ties in society that I ftrst cited in my aforementioned Journal of the Ameri­
can Medical Association ("JAMA") Commentary a decade ago, the origin of 
which is unknown: 

All true universities, whether public or private, are 
public trusts designed to advance knowledge by safe­
guarding the free inquiry of impartial teachers and 
scholars. Their independence is essential because the 
university provides knowledge not only to its stu­
dents, but also to the public agency in need of expert 
guidance and the general society in need of greater 
knowledge; and ... these latter clients have a stake in 
disinterested professional opinion, stated without fear 
or favor, which the institution is morally required to 
respect.38 

Institutional fCOI remains a critically important challenge, at the heart 
of the "Federal- Academic Research Partnership," to which neither the uni­
versity community, the federal government, nor the public has yet come to 
terms.39 

38. David Kom, Commentary, C01iflicts of Interest in Biomedical Research, 284 
JAMA 2234, 2234 (2000). In my JAMA Commentary, I attributed this language to the 
"Declaration of Principles" issued by the Association of American University Professors in 
1915, when the challenges had to do with tenure, not fCOis. Such was the citation that ac­
companied this language when I first encountered it in a published article that I can no long­
er remember. I only recently learned from the AAUP that the attribution is incorrect, so the 
source is now unknown. I would be proud to claim authorship because I wholeheartedly 
agree with the rhetoric. 

39. In January 2011, the DHHS Office of the Inspector General ("OIG") issued its first 
report entitled Institutional Conflicts of Interest at NIH Grantees. The study was a survey of 
250 awardee institutions, asking whether they had any policies and procedures addressing 
institutional financial interests and conflicts of interest Only 156 institutions replied, of 
which seventy responded positively, and of these only fifty-nine had written Policies and 
Procedures ("P&Ps"). Twenty-one institutions' P&Ps had written definitions oflnstitutional 
financial interests, and of these eighteen also had written definitions of an Institutional Fi­
nancial Conflict of Interest ("IfCOI"). The definitions were variable, with the most common 
elements being institutional equity in private and/or public entities, financial holdings of 
institutional officials overseeing research (including members of research oversight commit­
tees), institutional royalties flowing from intellectual property, and gifts to the institution 
from research sponsors. See OFF. OF TilE INSPECTOR GEN., DEP'T OF HEALTH AND HUMAN 
SERV., OEI-03-09-00480, INSTITUTIONAL CONFLICTS OF INTEREST AT NIH GRANTEES (2011 ), 
available at http://oig.hhs.gov/oei/reports/oei-03-09-00480;pdt: The most common man­
agement strategy, as recommended in the AAMC report, was separation of the administra-



2011) FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 19 

V. FINANCIAL CONFLICTS OF INTEREST, WHERE THEY WENT 

During this first decade of the 21st Century, Congress, the major me­
dia, and the general public have become much more aware and much less 
tolerant of fCOis in individuals, organizations, and professions that assert 
or are generally presumed to have fiduciary responsibilities. With respect 
to universities, academic medical institutions, and the medical profession 
and its vendors, bitingly critical books have been published, such as: The 
Truth About Drug Companies: How They Deceive Us and What to Do 
About It,40 by Marcia Angell; On the Take: How Medicine's Complicity 
With Big Business Can Endanger Your Health,41 by Jerome Kassirer; Uni­
versity, Inc: The Corporate Corruption of Higher Education,42 by Jennifer 
Washburn; and Universities In The Marketplace,43 by Derek Bok. The col­
lapse of the "high tech bubble" at the tum of the century, and the collapse of 
Enron, WorldCom, etc., wiped out jobs and pensions and exposed the cor­
ruption of the accounting profession, which had learned that cultivating 
large consulting practices with their clients was ever so much more lucra­
tive than auditing them. Then, slightly more than half a decade later, the 
Great Recession, which nearly brought down the world's financial systems, 
was the price paid by the public for rampant self-dealing and betrayal of 
fiduciary obligations in the world of high-finance, bond ratings, and mort­
gage lending and securitization. 

In the middle of this decade, Eliot Spitzer, then the Attorney General 
of New York, filed a criminal fraud complaint against the international 
pharmaceutical powerhouse, GlaxoSmithKline C'GSK"), and several of its 
smaller company partners for systematically suppressing the results of 
negative clinical trials designed to evaluate the safety and efficacy of anti­
depressant medications in children and teenagers, populations in which the 
therapeutics had never been tested but were being heavily marketed. 44 That 
the pharmaceutical industry did such things as part of their marketing strat­
egies was not really unexpected, but the filing of the criminal complaint 
most certainly captured the attention of the industry, the medical profession, 

tive oversight of research from financial management, and the most common "remedy" was 
disclosure. The report strongly recommended that NIH regulate lfCOis, and NIH, in its 
response, demurred, writing "institutional conflict of interest is a highly complex issue .... 
Therefore, we will take the OIG's recommendation into consideration as we consider future 
actions on extramural financial conflict of interest." ld. at 24. 

40. MARCIA ANGELL, THE TRUTH ABOUT THE DRUG COMPANIES: HOW THEY DECEIVE 
Us AND WHAT TO DO ABoUT IT (2004). 

41. JEROME KASSIRER, ON THE TAKE: HOW MEDICINE'S COMPLICITY WITH BIG 
BUSINESS CAN ENDANGER YOUR HEALTH (2005). 

42. JENNIFER WASHBURN, UNIVERSITY, INC: THE CORPORATE CORRUPTION OF HIGHER 
EDUCATION, (2005). 

43. DEREK BoK, UNNERSITIES IN THE MARKETPLACE: THE COMMERCIALIZATION OF 
HIGHER EDUCATION (2003). 

44. See Complaint, New York v. GlaxoSmithKline, No. 04-CV-5304 (N.Y. Sup. Ct. 
June 2, 2004). 



20 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

and the public. The complaint was ultimately settled for hundreds of mil­
lions of dollars, and as part of the settlement the companies were forced to 
pledge going forward that they would post on their publicly accessible web­
sites all of the clinical trials they sponsored, without exception. By doing 
so, scholars would be able to identify trials that would never appear in the 
literature, and the FDA, trials that, illegally, had not been reported in new 
drug registration or new drug indication packets submitted by the manufac­
turers for agency approval. This was the first time such a demand had been 
imposed on the industry, and in its aftermath, many of the industry's lead­
ing companies, as well as its DC-based lobbying organization, PhRMA, 
decided to do the same, beginning a long-overdue and most welcome pro­
cess of industry transparency that would only increase in subsequent years. 
Spitzer did not limit his prosecutorial zeal to the pharmaceutical industry, 
but then turned his attention seriatim to the several sectors of the financial 
services industry, in most instances successfully winning large punitive fi­
nancial settlements of charges of betrayal of fiduciary responsibilities, as 
well as commitments to substantial changes in long-established industry 
behaviors and practices. 

Spitzer was succeeded as Attorney General by Andrew Cuomo, who 
turned his attention to financial self-dealing by universities in their Student 
Loan and Overseas Studies programs, respectively. With respect to the 
former, Cuomo illuminated the widespread university practice of promoting 
to their students one or more favored lenders, from which the institution 
would receive guaranteed financial kickbacks. In the Overseas Studies 
Programs, institutional officials were selecting contractors in part on ven­
dors' willingness to provide financial kickbacks directly to them. In both 
instances, Cuomo filed class-action complaints naming many universities, 
and the resulting settlements forced changes in administrative behaviors and 
the cessation of kickbacks. Neither of these well-publicized episodes 
brought favor to the universities or sincerity to their pledges always to put 
the interests of their students first and foremost. 

The events recited here, and perhaps especially the pioneering prose­
cutorial work of AG Spitzer, greatly raised public awareness of the damages 
and suffering that can be caused by covert financial CO Is. Let me offer two 
brief illustrative examples. The first is from an article in the Washington 
Post on January 6, 2008: "The Financial Planning Association .... sued 
over whether brokers could call themselves investment advisors . . . . [a] 
federal apfeals court in DC said no. A stockbroker is a salesperson, not an 
advisor.';<4 The second is from the New York Times on November 21,2009 
and cites from the criminal complaint filed by the State of Ohio against 
Moody's, Standard and Poor's, and Fitch, the "Big-3" bond rating agencies: 

45. Jane Bryant Quinn, Split of Brokers and Advisers Forces Customers to Choose, 
WASH. POST, Jan. 6, 2008, at Fl. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 21 

"We believe that the credit rating agencies, in exchange for fees, departed 
from their objective, neutral role as arbiters ... [and sold their integrity] ... 
to the highest bidder.',46 Rating agencies are paid by the issuers of the secu­
rities they are hired to rate and do not receive their full fees unless the re­
quested rating is provided.47 Such is the assurance system on which the 
financial markets and countless investors depend for independent, credible 
valuation of marketed securities! The failure of the bond rating companies 
is sadly reminiscent of the collapse of the accounting industry a decade ear­
lier. 

VI. ENTER THE NATIONAL INSTITUTES OF HEALTH (NIH) 
AND THE DHHS OIG 

The year 2004-2005 can aptly be called NIH's annus horribilis, a year 
of great embarrassment and punitive fCOI regulations. The NIH is a feder­
al agency nested formally within the PHS within the DHHS. As such, the 
agency might be expected to conform to the stringent fCOI regulations that 
apply to all federal employees. However, in the mid-1990s then Director 
Harold V armus won significant relaxation of these rules, primarily on the 
ground that it would facilitate his ability to recruit and retain top-level basic 
and, especially, clinical investigators from academia. University faculty 
salaries had begun to escalate sharply, especially in medicine and the bio­
medical sciences, and additionally, faculty generally enjoyed a "one-day a 
week" consulting privilege that enabled them to interact with the private 
sector and receive handsome fees. The federal government had in prior 
years partially relaxed compensation limits, especially for federal physi­
cians and physician scientists, but Varmus argued persuasively that relaxing 
the federal fCOI regulations to permit freer consultative activities for full­
time NIH scientists would significantly facilitate NIH's efforts in recruit­
ment and retention of "stars." The modified regulation established an fCOI 
oversight process within the Office of the NIH Director and imposed ap­
propriate boundaries on the relaxed consulting privilege. The key feature of 
the oversight system was disclosure and prior approval. 

In December 2003, the Los Angeles Times published the first in a se­
ries of articles by investigative reporter, David Willman,48 naming senior 
NIH scientists and accusing them of major violations of the agency's re­
laxed fCOI rules. Some of the behaviors described were indeed distressing 
- and would have been equally so for academics, and the articles implied 
that such violations might be widespread among the NIH's senior physi-

46. David Segal, Ohio Sues Rating Firms For Losses In Funds, N.Y. TlMES, Nov. 21, 
2009, atBl. 

47. See id. 
48. David Willman, Stealth Merger: Drug Companies and Government Medical Re­

search, Los ANGELES TIMES, Dec. 7, 2003, at Al. 



22 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

ciao-scientist corps.49 The NIH began an intense review of its fCOI rec­
ords, and the Congressional Oversight Committees scheduled hearings; al­
legations were freely being thrown about, Congress was furious, the DHHS 
was embarrassed and angry, and, in truth, no one at that instant knew how 
widespread these violations might be; the NIH's oversight system seemed 
to have broken down. To try to limit the damage and regain the initiative, 
the US Office of Government Ethics either decided or was ordered to tight­
en the NIH fCOI rules significantly. The revised and truly draconian regu­
lations50 were imposed upon the NIH and took effect immediately: they 
essentially forbade NIH scientists and staff from any consulting interactions 
with or financial holdings in organizations with which the agency interacted 
in any way ("Substantially Affected Organizations ("SAOs")"). It was not 
even clear at the time whether NIH scientists could give lectures at universi­
ties or academic medical institutions that received NIH grants (SAOs), or 
serve as officers in their professional societies or on the editorial boards of 
their professional journals. In the end, the total numbers of wrongdoers 
identified within NIH's ranks proved to but a relative handful, and about a 
year later, the draconian regulation was partially relaxed, although compen­
sated consulting relationships between SAOs and the NIH leadership, offi­
cials in the agency's Extramural Programs, and NIH scientists who conduct 
research on human subjects, the primary recruitment and retention targets of 
V armus' relaxation, remain largely prohibited to this time. 

When the NIH furor was at its height, key congressional leaders wrote 
to then NIH Director Elias Zerhouni to ask, if the new fCOI regulation was 
good for the intramural NIH scientists, why would it not be good as well for 
all the extramural scientists whose research programs and facilities con­
sumed more than eighty percent of the NIH's annual appropriation in the 
form of sundry varieties of Research Project Grants? Publication of this 
inquiry sent tremors through the research universities and academic bio­
medicine. At about that time, two events occurred that are important to this 
narrative: 

1. The DHHS OIG deployed personnel to the NIH campus to keep 
a close eye not only on NIH's internal fCOI management but 
also on the agency's discharge of its oversight responsibilities 
for the extramural community under the 1995 fCOI regulation. 
The OIG contingent settled into the NIH campus, comfortably 
it would seem, since they remain there to this time. 

2. In September 2005, a small group ofleaders from the AAU and 

49. Seeid. 
50. See Supplemental Standards of Ethical Conduct and Financial Disclosure Re­

quirements for Employees oftbe Department of Health and Human Services, 70 Fed. Reg. 
5543 (interim final rule with request for comment), available at http://www.gpo.gov/fdsys/ 
pkg/FR-2005-02-03/pdf705-2029.pdf. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 23 

AAMC constituencies, which included me, convened in DC to 
consider an appropriate response from the university and aca­
demic medical communities to the troubling events occurring at 
the NIH, the public anger provoked, and the interest of key 
Congresspersons to extend the NIH•s punitive fCOI rule to the 
extramural community. The group agreed that research univer­
sities and academic medical centers exist in a "concatenated 
chain of trust and interdependence, •• such that regulatory lapses 
by any one member can bring retribution to the entire commu­
nity in the form of new law or regulation, and they identified as 
one key issue of concern a lack of consistency in fCOI policies 
and practices across our member institutions. A second key 
concern was, and remains, the problem of "clashing mixed 
messages;• or what I have dubbed the "conflict of public expec­
tations;• that is, that academia must be ever more vigorous in 
promoting technology transfer and partnering with the private 
sector while remaining pristine and untarnished by any appear­
ance of fCOI. Because inconsistency in fCOI policies and 
practices posed a danger to all, the group urged the AAMC and 
AAU to combine their efforts and establish a new initiative 
aimed at promoting greater consistency in fCOI practices 
across the academic community. I shall return to this initiative 
shortly. 

VII. THE ACADEMIC COMMUNTIY SHOOTS ITSELF IN THE FOOT 

Perhaps of its own volition, perhaps because the OIG was breathing 
down its neck, the Nlli decided to conduct Targeted Site Reviews ("TSRs,,) 
at eighteen public and private awardee institutions to examine how well 
they were complying with their obligations under the fCOI Regulation. The 
final report, which the Nlli decided to post quietly on its website51 without 
any publicity, lavishly praised the seriousness and diligence the targeted 
institutions were demonstrating in trying to comply with the fCOI Rule. 52 

However, they did report three areas of concern: 
1. The institutions were using too narrow a definition of "investiga­

tor•• with respect to who on a research team must disclose related 
financial interests. 53 [The Rule addresses this point clearly.] 

51. See Notice, National Institutes of Health, Observations from NIH's Targeted Site 
Reviews on Financial Conflict of Interest (Feb. 16, 2007), available at http://grants.nih.gov/ 
grants/guide/notice-files/not-od-07-048.html. 

52. See NATIONAL INSTITUTES OF HEALTH, TARGETED SITE REVIEWS ON FINANCIAL 
CONFLICT OF INTEREST OBSERVATIONS (2007), available at http://grants.nih.gov/grants/policy 
/coi/TSR _Observations_ 2-14-2007 .doc. 

53. ld. at2. 



24 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

2. The institutions were not diligently exercising their obligation 
to report to Nlli every instance in which they had detected and 
dealt with an fCOI in a federal grant recipient. 54 Some institu­
tions had simply "forgotten." for months at a time. [I earlier 
called attention to the simplicity of this requirement as evidence 
of the light-handedness of the Rule.] 

3. The institutions were not satisfactorily discharging their obliga­
tion to monitor subrecipients participating in the funded re­
search. 55 [This issue is admittedly challenging because the 
institutions have no formal oversight authority of their research 
project subrecipients.] 

In spite of the Nlli's effort to downplay its report, the posting was 
noted by the OIG, which launched a formal investigation of Nlli's over­
sight of the 1995 Rule. 56 The OIG Report was sharply critical of the Nlli's 
stewardship, and much of its report focused on that. For example, it found 
that the agency had no idea how many fCOI reports bad been submitted by 
awardee institutions in past years, partly because each Nlli institute was 
collecting reports from its own awardees on paper, and those reports could 
not be found, and partly because Nlli's requirement that all reports to the 
institutes be shared with the Office ofthe Director (''OD") had been widely 
ignored for more than a decade.57 In any event, the OD had no central 
file;58 worse yet, it had no idea how many fCOI reports, required under the 
Rule, the Nlli had received. 59 The OIG issued three recommendations, two 
of them directed at the Nlli, viz., that Nlli greatly increase its efforts to as­
sure intra-agency compliance, and that the OD rapid!~ establish a central 
electronic record system for awardees' fCOI reports. The third recom­
mendation, unexpectedly, turned away from the Nlli and toward the award­
ee community and asserted that the institutions should be required to 
disclose to the Nlli all potential fCOis they detect, and that the Nlli should 
examine the details of the institutions' reviews, decisions, and mitigation 
processes.61 

This last recommendation stunned the academic community because it 
called for fundamental change in the interpretation and implementation of 
the 1995 Rule, and much more intrusive Nlli participation in what had been 
exclusively the prerogative of the institutions: to evaluate their faculty in-

54. Id 
55. Id 
56. See OFF. OF THE INSPECTOR GEN., DEP'T OF HEALTH AND HUMAN SERV., OEI-03-

06-00460, NAT'L INST. OF HEALTH: CONFLICTS OF INTEREST IN EX'IRAMURAL REsEARCH 
(2008), http://oig.hhs.gov/oei/reports/oei-03-06-00460.pdf. 

57. Id at 5. 
58. Id at9. 
59. /d. 
60. Id. at 16. 
61. Id. at 17. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 25 

vestigators' disclosures and make what must be ultimately judgment calls 
about the existence of a fCOI and its magnitude, severity, relatedness to the 
research project, and ultimately, its disposition. Although NIH's response 
made clear thatit had neither the interest nor the capability to manage such 
a workload, it nonetheless soon after (February 2008) requested for the frrst 
time from nineteen awardee institutions detailed information about fCOis, 
about which the institutions had dutifully notified the agency. The OIG had 
showed its hand, and it was not to be for the last time. 

Vlll. NEW ACTORS ENTER THE FCOI MIX 

The NIH's TSRs attracted a new source of attention, from Senators 
Charles Grassley, the then Ranking Member of the Senate Finance Commit­
tee, and Herb Kohl, the then Chairman of the Senate Ageing Committee. 
Both Committees have keen interest in the Medicare program and its costs, 
and the Senators were concerned that fCOis could bias clinical research in 
favor of new and expensive therapeutics produced by the sponsoring com­
panies. Also troubling were the promotional talks extolling new drugs and 
devices, delivered to physician audiences by influential academic specialists 
who neglected to disclose that they were being compensated handsomely 
for these talks by the products' manufacturers. Both Senators turned their 
attention to fCOis in academic medicine. Grassley began by requesting 
information from NIH about the responses to the TSRs NIH had received 
from the visited institutions. At about the same time, Congressmen John 
Dingle and Bart Stupak, members of the Oversight and Investigations Sub­
commi~ of the House Energy and Commerce Committee, sent a letter to 
the Director of the National Cancer Institute ("NCI,.) seeking information 
about a large NCI-sponsored clinical trial designed to evaluate the effec­
tiveness of Computed Tomography ("CT'') chest scans in detecting small 
and putatively operable neoplasms in the lungs. There was considerable 
debate within the medical profession, and concern in Medicare, not only 
about the medical effectiveness but also the cost-effectiveness of such a 
very expensive diagnostic screening technology. But the trial became the 
center of even more controversy when it was learned that the lead Co­
Principal Investigator ("Pf'), a professor of radiology at the Cornell-Weil 
Medical School, and at least one other key participant, had nearly a dozen 
patents filed on key aspects of the screening technology being used, the 
value of which would soar if the technology became accepted for broad 
population screening. Unfortunately, the Co-PI had failed to notifY the NCI 
about her patents when she was being chosen to lead the study, and further 
inquiry revealed that she had often "forgotten" to mention the patents in 
manuscripts she submitted to journals for publication. 

A new actor, then New Jersey Attorney General Christopher Christie, 
also concerned about the medical profession's increasingly cozy financial 
relationships with its vendor industries and their effects on the costs of 



26 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

health care, subpoenaed records of payments to orthopedists from the five 
largest manufacturers of orthopedic devices, declaring these to be illegal 
kickbacks. The manufacturers fairly quickly agreed to settle a civil com­
plaint for multi-hundreds of million dollars (aggregate) in penalties and fur­
ther agreed to post all such payments henceforth on their company websites 
where they would be visible to the public. This was the frrst time that ven­
dors of health products had been forced to reveal to the public their covert 
payments to physician or surgeon customers. The settlement attracted Sen­
ator Grassley, who joined with AG Christie to turn the spotlight onto the 
orthopedists receiving these payments, most of whom, not surprisingly, 
were recognized leaders in academic medicine. Among other queries, the 
investigators asked whether the surgeons had disclosed their payments to 
their patients and to their academic institutions. Grassley and Kohl then 
greatly intensified the inquiry by demanding from pharmaceutical and med­
ical device manufacturers a full accounting of their payments to a named 
group of academic physician leaders during the prior seven years. The phy­
sicians were culled from Psychiatry, Orthopedics and Cardiology and were 
known to the vendor companies as "Key Opinion Leaders," ("KOLs"), be­
cause of their professional eminence and influence in their specialties. The 
Senators then requested from the physicians' academic institutions records 
of the vendor payments the doctors had disclosed to them. For a variety of 
reasons that included differences in accounting periods, or inclusion of ex­
pense reimbursements in vendors' tallies of payments, as well as failure of 
the physicians to report these payments fully and accurately, or at all, there 
inevitably were discrepancies, some modest, more of them large, some very 
large. Finally, Senator Grassley sent formal letters to the target physi­
cian(s), his or her hospital president, and often his or her university presi­
dent, charging failures of the named physicians and surgeons, fully and 
accurately to report their vendor payments from named companies, and 
failure of the institutional systems for capturing these payments to detect 
non-compliance. The Senator rolled out his charges seriatim, in each in­
stance first reading his indictment into the Congressional Record before 
releasing the story to a favored New York Times or Wall Street Journal re­
porter. Grassley's revelations received blaring front-page publicity and 
roiled the involved institutions as well as the accused physicians, and disci­
plinary proceedings ensued for violations of institutional disclosure poli­
cies. 

Whatever other motivations Senator Grassley may have had, he ac­
complished his major objective of demonstrating the frailty and failings of 
institutions' :tt:OI policies and processes based entirely on faculty mem­
bers' disclosures of financial interests that they alone determine should be 
disclosed, and which lack capability to verify completeness and accuracy. 
By doing so, the Senator added fuel to the fire that the OIG had already ig-



2011] FINANCIAL CONFLICI'S OF INTEREST IN ACADEMIC MEDICINE 27 

nited within the Nlli. But for academic medicine a partial remedy looms in 
the recently enacted Health Care Reform Act,62 which contains within its 
voluminous pages the entire Grassley-Kohl Sunshine Act,63 which man­
dates annual reporting by vendors of all of their payments above a de mini­
mis to physicians and health care institutions.64 These payments are to be 
organized and displayed in a publicly accessible register, one may only 
hope in a standardized and useful manner, on a website to be created by the 
DHHS.65 The system. is to become operative in 2013.66 In the meantime, 
many of the major health care vendors have already established company 
sites on which they are listing quarterly or semi-annually all their payments 
to physicians. Some of these sites have been created voluntarily; at least 
eighteen result from costly settlements of criminal complaints of off-label 
promotion of therapeutics, which have typically been accompanied by Cor­
porate Integrity Agreements; the 2 largest settlements involved Eli Lilly in 
2008 for $1.4B and Pfizer in 2009 for $2.3B.67 

Although these actions certainly add welcome and needed transparen­
cy to what had been an entirely covert system for influencing physician's 
therapeutic decisions, it remains to be determined how effective these pub­
lic disclosures will be in altering public perceptions or physician behaviors. 
Two recent examples illustrate the challenge. The first is from the trade 
publication, The Pink Sheet, October 19, 2009. Lilly posted its first quarter 
payments, and the highest paid was a psychiatrist, who reported that "he 
was initially concerned that payment databases could be misleading or used 
to attack a physician's credibility. [He] changed his mind, however, once 
he told his patients about his work with pharma companies and they re­
sponded positively."68 The second, from the Boston Globe, January 23, 
2010, describes a Harvard Medical School faculty physician who resigned 
his faculty and hospital appointments, the latter at the Brigham and Wom­
en's Hospital, to continue his heavy schedule of promotional speeches, for 
which was being paid handsomely as a contracted participant in a GSK 
Speakers Bureau. The US director of media relations for Glaxo was "not 
sure whether [the physician] will be as much in demand as a speaker with­
out the prestigious Brigham and Harvard titles.',69 

62. Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat 119 
(2010). 

63. Physician Payments Sunshine Act of2009, S. 301, 111th Cong. (2009). 
64. S. 301 §2(a)(1). 
65. S. 301 §2(c)(1)(C). 
66. Patient Protection and Affordable Care Act, Pub. L. No. 111-148, §6002, 124 Stat. 

119,689 (2010). 
67. Aaron Kesselheim, et al, Whistle-Blowers' Experiences in Fraud Litigation 

against Pharmaceutical Companies, 362 NEWENG.J.MED. 1832, 1833 (2010). 
68. Lilly Outside "Faculty" Is Headed by 22 Physicians Receiving $50,000 or More, 

THE PINK SHEET, Oct 19, 2009, available at http://www.biopharmatoday.com/2009/l 0/lilly­
outside-faculty-is-headed-by-22-physicians-receiving-50000-or-more.html. 

69. Liz Kowalczyk, Doctor Quits Brigham to Speak for Pay; Partners has Strict Rules 



28 INDIANA HEALTH LAW REviEW [Vol. 8:1 

IX. AGAIN, THE ACADEMIC COMMUNITY RESPONDS 

A few months following the September 2005 gathering of AAU and 
AAMC leaders, the associations formed a joint committee, chaired by Mark 
Wrighton, Chancellor of WUSTL, and comprised of four sitting university 
Presidents or Chancellors and fifteen leaders from the academic medical 
community. As with the prior AAMC Task Force, this initiative came un­
der the purview of my AAMC team. The committee, whose report was 
published in February 2008/0 was charged to begin with the AAMC's prior 
reports on individual and institutional :tt:Ois, define the key issues that 
needed to be addressed, refine and clarify the prior recommendations, and 
provide practical guidance to their communities. The committee's report 
was entitled Protecting Patients, Preserving Integrity, Advancing Health: 
Accelerating the Implementation of CO/ Policies in Human Subjects Re­
search. The committee strongly reaffirmed the 200 l and 2002 recommen­
dations with a few modest refinements, stressed the necessity for more 
consistent policies and practices across academic institutions, and, cogni­
zant of what was happening at the Nlli, warned that time was of the essence 
in fully implementing effective and comprehensive COl policies.71 The 
urgency of this call to action was, in my view, unfortunately somewhat 
blunted by the committee's need to confine its work to Human Subjects 
Research. But as before, the AAU had remained adamant in linking its 
agreement to participate on the committee with retention of the limiting 
condition. 

The Committee's report was entirely heuristic and designed to offer 
practical guidance. The three chapters addressed, respectively, Individual 
:tt:OI, Institutional :tt:OI, and Implementation of :tt:OI Policies, and the five 
Appendices: Model Institutional :tt:OI Policy; an Analysis Template with 
ten Exemplary Case Studies; Definition of Financial Interests in Research; 
Points to Consider; and the Committee Roster.72 This report was envi­
sioned to be a "How To Do It Manual," and so it was. For better or worse, 
it broke little conceptual new ground. 

X. FCOIS IN MEDICAL EDUCATION 

In January 2006, a paper published in JAMA13 by twelve leaders of ac­
ademic medicine, including the then President of the AAMC, berated the 

on Drug-Firm Honoraria, THE BosTON GLOBE, Jan. 23, 2010, at 1. 
70. AAMC-AAU ADVISORY CoMMIITEE ON FINANCIAL CoNFLICTS OF INTEREST IN 

HUMAN SUBJECTS REsEARCH, PROTECTING PATIENTS, PRESERVIN(J INTEGRITY, ADVANCING 
HEALTH: ACCELERATING THE IMPLEMENTATION OF COl POLICIES IN HUMAN SUBJECTS 
REsEARCH (2008), available at www.aau.edu/research!Rpt _AAU-AAMC _ COI_208.pdf. 

71. See id. 
72. Id 
73. Troyen A. Brennan et al., Health Industry Practices that Create Conflicts of Inter­

est: A Policy Proposal for Academic Medical Centers, 295 JAMA 429 (2006). 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 29 

"entitlement" culture that had become so embedded in the medical profes­
sion, under which physicians had become habituated to receiving billions of 
dollars a year in gifts, meals, paid travels to exotic destinations, etc. from 
the pharmaceutical and medical device industries, and to a lesser extent, the 
biotechnology industry. These payments come entirely from the compa­
nies' marketing budgets under the umbrella of "medical education" and 
have been shown repeatedly in proprietary industry studies to be an espe­
cially effective mechanism for winning physicians' uptake of new and typi­
cally very expensive company products, independent of credible (or any) 
data demonstrating that those products were as effective or better than com­
parable therapeutics already on the market, many of which have been thor­
oughly studied over the years and were especially well understand in 
diverse practice settings, and many of which have gone off-patent and be­
come generic. The authors declared these payments create fundamental 
ft:Ois with medical professionalism and urged that they be eliminated from 
the profession, beginning in the academic medical centers, where future 
generations of physicians are nurtured in the science, art, and professional 
standards and ethics of medicine. 74 These unseemly habits and practices 
increase public suspicion of physicians, their institutions, and their profes­
sional organizations, and they undermine confidence in the independence of 
institutional and individual decision making; the altruism of the physician 
and the profession; personal and institutional integrity; the trustworthiness 
of academic medicine across its missions; and the ability and capacity of 
academic medicine to self-regulate. 

Although a few of the nation's leading academic medical centers had 
already begun in 2005-06 to implement new stringent institutional policies 
to eliminate or sharply circumscribe these offending practices, the AAMC 
decided it was appropriate to form a Task Force on Industry Funding of 
Medical Education75 that would include senior officials from the industry as 
well as from academic medicine with the aim of stimulating a productive 
dialogue and the hope of reaching some consensus. This initiative once 
again fell under the direction of my team. The Task Force was chaired by 
Roy V age los, the retired and respected long-time Chairman of Merck, and 
vice-chaired by William Danforth, who had chaired the AAMC's first Task 
Force on ft:Ois. The roster contained in addition to leaders and faculty 
from academic medical centers, medical students and residents, bioethicists, 
members of the public, and four sitting industry CEOs, from Pfizer, Lilly, 
Amgen and Medtronic, respectively. The Task Force was charged to forge 
consensus principles to guide medical schools and teaching hospitals in de-

74. Id at431. 
75. See AsSOCIATION OF AMERICAN MEDICAL CoLLEGES, INDUSTRY FuNDING OF 

MEDICAL EDUCATION: REPoRT OF AN AAMC TASK. FORCE (2008), available at 
https://services.aamc.org/publicationslsbowfile.cfin?file=versionll4.pdf&prd _id=232&prv _ 
id=281&pdf_id=114. 



30 INDIANA HEALTH LAW REviEW [Vol. 8:1 

veloping policies and procedures for managing ·various forms of industry 
support of medical education. The AAMC made clear at the outset its con­
cerns with such industry funding, which included conflict of interest, com­
promise of objectivity and integrity of professional decision-making, 
blurring of marketing and scientific evidence, distortions in prescribing and 
in formulating Practice Guidelines, adverse effects on the ''hidden curricu­
lum" for students and trainees, and the growing body of scientific evi­
dence about influence and reciprocity, and the inadequacy of disclosure 
as a safeguard.76 I boldfaced the last because it was the stimulus for me to 
join with colleagues in organizing a scientific symposium on the topic, 
which took place a few months after the Task Force was launched, and to 
which I return below. 

Over the course of about fourteen months, the Task Force agreed on 
the following important, albeit somewhat aspirational, recommendations: 

1. Academic medical centers should adopt policies consistent with 
the Task force Report to support a learning environment that 
nurtures professionalism. 77 . 

2. To the extent that certain interactions with industry are prohib­
ited within academic medical centers, they should also be pro­
hibited off-site. 78 

3. Industry should not invite academic medical center personnel to 
participate in practices off-site that the medical center prohibits 
on-site.79 

4. Academic medical centers should expect their off-site teaching 
and training partners to adhere to the standards of the medical 
center regarding interactions with industry. 80 

5. Academic medical centers should raise awareness among stu­
dents and faculty of the challenffs to professionalism presented 
by certain industry interactions. 1 

6. Academic medical centers should ensure o~JK>rtunities for stu­
dents to build their critical evaluation skills. 

7. Academic medical centers should increase students' under­
standing of the processes of drug discovery, clinical testing, as-­
sessment of drug and device safety, the difference between 
efficacy and effectiveness, and FDA regulations. 83 

The Task Force also agreed, after much deliberation and debate, that 

76. Id at 1, 3-8. 
77. Id. at 26. 
78. Id. at 17. 
79. ld. at9. 
80. ld. at 10. 
81. Id.atll. 
82. ld. 
83. Id at26. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 31 

academic medical institutions should ban all gifts84; restrict site access by 
pharmaceutical and device representatives (aka "salespersons");85 prohibit 
direct industry funding of Continuing Medical Education;86 require indus­
try- sponsored educational grants for students and trainees to be gifts to the 
medical center and not to individuals;87 ban travel funds from industry for 
merely attending meetings;88 and ban ghostwriting and guest authorship.89 

The Task Force struggled but could not reach consensus on: banning phar­
maceutical samples; faculty and student participation in industry-sponsored, 
non-accredited "educational" programs; and, most contentious of all, facul­
ty participation in industry "Speakers Bureaus." Of the several reports de­
veloped at the AAMC under the direction of my team, I am least able to 
estimate the impact of this report on the academic medical community, alt­
hough I am confident it has been helpful to them in dealing with these diffi­
cult issues in their own institutions and communities. It is very hard to 
break engrained habits and give up engrained expectations! I know for cer­
tain, however, that the participation of the industry CEOs and their top dep­
uties in this often contentious undertaking had a major impact on them: it 
opened their eyes to the firm resolve of the leadership of academic medicine 
to eliminate "business as usual" and begin what will be a long and difficult 
process of eradicating this degrading "culture of entitlement" from the med­
ical profession. 

Most of this manuscript has focused on fCOis in academic biomedical 
research, and the reader may be puzzled by my introduction of fCOis in 
medical education at this point. In part, it was because the narrative has 
been chronological, and this topic hit the AAMC's radar screen and the pro­
fession at this time. But more importantly, the topic does relate directly to 
my predominant research theme: the "culture of entitlement" has aroused 
many critics who find the practices just discussed repellent, and in their out­
rage some of them have taken to demonizing the pharmaceutical industry. 
In my aforementioned Commentary in the Boston Review I wrote: 

Some commentators address these issues by demoniz­
ing pharmaceutical and related vendor industries and 
advocating for marked reduction or even total elimi­
nation of interactions between them and academic 
medicine. Such uncompromising rhetoric has its own 
adverse consequences . . . . I advocate distinction of 
those industry relationships that are largely gratuitous, 

84. Id. at 14. 
85. /d. at 17. 
86. /d. at 19. 
87. /d. at2l. 
88. /d. at 22. 
89. Id. 



32 INDIANA HEALTH LAW REVIEW 

distracting, self-indulgent, and corrupting, and should 
be eliminated, from those that have value and serve 
important public functions.90 

[Vol. 8:1 

Primary among the latter are legitimate research relationships, conducted 
ethically and transparently, between academic medicine and industry that 
are essential to identify and validate new drug targets and facilitate the re­
duction of biomedical scientific inventions into tangible public benefits 
such as new diagnostics, therapeutics, and medical devices. By eliminating 
the "culture of entitlement" that has become so embedded in medical educa­
tion and practice, those relationships between academic medicine and in­
dustry in research that have integrity and are essential can be strengthened 
and flourish and they can be evaluated in their own right rather than being 
smeared and condemned vicariously, as they too often now are. 

XI. THE SCIENTIFIC BASIS OF INFLUENCE AND RECIPROCITY: 
A SYMPOSIUM 

On June 12, 2007, colleagues from the Baylor College of Medicine 
and I organized a symposium to present the latest scientific insights into 
Influence and Reciprocity, and we published a monograph summarizing 
what we had learned.91 We chose this topic because exciting new insights 
are emerging from the neurosciences, behavioral economics and psycholo­
gy that are directly relevant to COis. We were fortunate to assemble four of 
the leading investigators in the field: Read Montague, PhD, then Professor 
of Neuroscience and Director of the Human Neuroimaging Laboratory, 
Baylor College of Medicine; Dan Ariely, PhD, then Sloan Professor of Be­
havioral Economics, MIT Sloan School of Management; George Loewen­
stein, PhD, Herbert A. Simon Professor of Economics and Psychology, 
Carnegie Mellon University; and Max Bazerman, PhD, D.Sc. Economics 
(hon), Jesse lsidor Straus Professor of Business Administration, Harvard 
Business School.92 · 

Montague described the use of fMRI technology in classical behav­
ioral experiments to demonstrate the anatomical correlates of the effects of 
favors and other forms of influence on persons' choices. 93 There are specif­
ic neural pathways in areas of the brain that lie beneath awareness (neuro­
scientists avoid the Freudian connotations of ''the unconscious") that 
consistently respond to favors or other acts of kindness, or even the antici-

90. Kom, supra note 28. 
91. See Symposium, supra note 4. 
92. Space permits only a snapshot of the insights presented, but for those interested, 

the monograph is freely available online. See generally Symposium, supra note 4. 
93. Id at 9-12. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 33 

pation of such, and that influence our choices and decisions.94 There is no 
reason to doubt that these pathways are functional in all human beings, and 
there is reason to suggest that they may be of ancient origin and evolved 
under heavy positive selection. These studies, consistent with prior evi­
dence from psychology, sociology, and behavioral economics, are illumi­
nating the neurological substrates of cognitive behaviors that occur without 
awareness. Some have dubbed these processes "deliberation beneath 
awareness" or "deliberation without intention.'.95 

Ariely summarized a large body of empirical evidence indicating that 
persons can tolerate a limited amount of dishonest behavior without impair­
ing their self-image or self-worth.96 That is, persons' internalized standards 
of acceptable behaviors seem to permit some bounded ''wiggle room" with­
in which limited amounts of dishonest behaviors do not threaten persons' 
image of self.97 Importantly, such "limited amounts" are typically less than 
the maximum that is possible. 98 In other words, persons seemingly will 
cheat if given the opportunity, but just a little. "Mindfulness" appears to 
reduce significantly the amount of dishonest behavior under identical exper­
imental conditions. 99 In one experiment, measurable "mindfulness" was 
accomplished simply by flashing a copy of the Ten Commandments before 
the experimental subjects before the "cheating experiment" began.100 

Loewenstein taught that Traditional Economics assumes that profes­
sionalism and COis are asymmetric motives in influencing behavior, and 
that persons who confront COis are equipped to recognize and deal with 
them rationally.101 Behavioral Economics posits a more complex model of 
decision-making, "one that includes unconscious motives and other factors 
outside the control of a purely rational process" and biases are viewed as 
unconscious (or beneath awareness ).102 Persons reveal a tendency to give 
themselves "moral wiggle room" by selectively seeking out or ignoring in­
formation so as to permit "unethical behavior with an easy conscience.''103 

Disclosure may perversely "give the adviser a 'moral license' for strategic 
exaggeration in the adviser's best interest.''104 

Bazerman reiterated from his own work the concepts of "bounded 
awareness" in decision making and ''bounded ethicality,'' by which he 

94. See id. 
95. See generally Ap Dijksteruis, et al., On Making the Right Choice: The Delibera-

tion-Without-Attention Effect, 311 SCI. 1005 (2006). 
96. See Symposium, supra note 4, at 13. 
97. See id at 13-17. 
98. Seeid 
99. See id 

100. See id. at 16. 
101. See id. at 19. 
102. Seeid. 
103. Seeid. at20. 
I 04. See id at 22. 



34 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

means the systematic and predictable ways in which persons act unethically 
beyond their own awareness.105 Bazerman referenced a quotation from Up­
ton Sinclair: "It is difficult to get a man to understand something when his 
salary depends on his not understanding it106." Bazerman then drew a 
chilling parallel between the professions of medicine and accounting, re­
counting the massive corporate accounting scandals at the tum of the 21st 
Century, and the failure of the accounting profession's fiduciary responsi­
bility to the public.107 He argued that because of the cozy relations between 
the medical profession and its vendors, the profession might be on a similar 
cusp facing loss of public confidence and perceived betrayal of fiduciary 

'b'l' 108 responst 1 tty. · . 

Comment: The pharmaceutical and device industries are well aware of 
the potency of their gifts, paid travels, favors and blandishments to influ­
ence physicians' choices and judgments "beneath their awareness," and 
they have comprehensive proprietary databases that demonstrate the effec­
tiveness of their promotional strategies. The industry especially welcomes 
the vehement denials of susceptibility by their targeted physician "Key 
Opinion Leaders" and their indignation at the very thought they could be 
susceptible to the vendors' blandishments. As one former pharmaceutical 
CEO snorted when invited to the symposium, "We. don't need science! We 
know they [industry's promotional tactics] work! Why the hell do you 
think we spend so many billions of dollars a year supporting them?"109 

Xll. FINANCIAL CONFUCTS OF INTEREST: 
WHERE THEY ARE, WHERE WE ARE 

The OIG, still ensconced on the NIH campus, followed up its earlier 
examination and condemnation of NIH's stewardship of the 1995 Rule by 
turning its attention to the awardee community and requesting from forty­
one awardee institutions "detailed information" about instances of fCOI 
they had reported to the NIH and .after reviewing these submissions, the 
OIG's second report on the topic, issued in November 2009, focused entire­
ly on how the institutions were complying with the Rule.110 The report was 
scathing, its tone often skeptical or incredulous. Key exemplary Findings 
were: ninety percent of the sample rely "solely on the researchers' discre-

105. See id at 25. 
106. Id 
107. Seeid at26. 
108. See id. at 26-27. 
109. Private personal communication, spring, 2007. 
110. See OFF. OF THE INSPECTOR GEN., DEP'T OF HEALTH AND HUMAN SERV., OEI-03-

07-00700, How GRANTEES MANAGE CONFUCTS OF INTEREsT IN REsEARCH FuNDED BY THE 
NATIONAL INSTITIJTES OF HEALTH (2009), available at http:/loig.hhs.gov/oei/reports/oei-03-
07 -00700.pdf. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 35 

tion to determine which of their significant financial interests" should be 
reported to their institutions; 111 almost half the sample does not re~uire that 
their faculty members • reports contain specific financial values; 11 there is 
no routine verification of the information provided; 113 there is lack of doc­
umentation of management strategies used for identified fCOis; 114 the uni­
versities are not required to report their own financial interests with outside 
research-related entities.115 

Among the key Recommendations were that: universities should re­
port to NIH the details of the teO Is that they detect; 116 "collect information 
on all Significant Financial Interests held by" their faculty researchers;117 

develop methods to verify faculty members' reported financial interests;118 

ensure proper documentation and enforcement of the Rule.119 Key Rec­
ommendations to the Nlli were: NIH should increase its oversight and 
should develop new regulations that address institutional jCOis .120 

As their earlier report had clearly signaled, the OIG seemed convinced 
that neither the awardee institutions nor the NIH had taken the 1995 fCOI 
Rule seriously enough or exercised their respectively assigned duties ac­
ceptably. The NIH's failures were in accurate record keeping, comfortably 
remediable within the confines of the Rule; in sufficiently vigorous over­
sight, somewhat vague, and troubling for that; and in its lack of oversight of 
awardee institutions' own related financial interests, that is, their institu­
tional fCOis ("IfCOis"). Because IfCOis were not recognized at the time, 
they are not mentioned in the 1995 Rule, and to address them would require 
a significant revision or rewriting, as the OIG recommended.121 Although, 
because that Rule was so wondrously light-handed, the academic communi­
ty will always become anxious at any mention of its possible revision, I 
would nonetheless argue that NIH could respond reasonably to the OIG's 
recommendations without fundamental upheaval of the current fCOI re­
gime. 

But the failings of the academic community identified by the OIG 
touch on fundamental matters at the heart of the university's relationship 
with its faculty, with the NIH, and with society, all three ofwhich are built 
on trust. Thus, it was natural for the universities to expect their faculty 
members to be dutiful and accurate in reporting their SFis that they deter-

111. /d. at 13. 
112. Id at 13-14. 
113. Id at 14-15. 
114. Id. at 16-17. 
115. Id. at 18. 
116. Id. at 19-20. 
117. Id at20. 
118. Id at 21. 
119. Id. 
120. Id at21-22. 
121. See OFF. OF THE INSPECTOR GEN, supra note 56, at 18. 



36 INDIANA HEALTH LAW REviEW [Vol. 8:1 

mined could be perceived to be related to their federally sponsored research 
proposals, and for many institutions to decide they needed to know only 
where those SFis fell within broad tranches, but not specific amounts. And 
under the terms of the Federal-Academic Research Partnership, it was natu­
ral for the NIH to trust the universities to determine whether reported SFis 
rose to fCOis, and if so, to dispose of them appropriately and notify the 
agency - Nlli saw no need to probe further into the details. After all, part­
ners trust each other! 

As for the universities' relation to society, they have long been ex­
pected, among other functions, to serve as independent, objective, and 
trustworthy sources of expert information and guidance "to the public agen­
cy in need of expert guidance and the general society in need of greater 
knowledge."122 But in the past half-century, and increasingly in recent dec­
ades, universities have come to be expected to serve as engines of socio­
economic development in their communities and regions, sparking the 
growth of new industries built on new knowledge and technologies emanat­
ing from faculty research. This diffusion of new knowledge and "know­
how" occurs in multiple ways, as has been underscored in the newly re­
leased report from the National Academies of Sciences123 - through migra­
tion into the private sector of graduate students and postdoctoral fellows, 
from faculty publications and consulting, from university-industry research 
partnerships, and frpm patenting and licensing faculty inventions. Although 
the last is the smallest share of these mechanisms, it is the most easily quan­
tifiable and thereby, the most visible, and from the perspective of :teO Is, the 
most problematic. The Bayh-Dole Act legally established the university's 
first right to ownership of all faculty Intellectual Property ("IP") arising 
from federally supported research and obligated the institution to promote 
the transfer of that IP into the private sector for development. 124 In the past 
three decades, university engagement in technology transfer has soared, as 
measured by numbers of new patents, licenses, and start-up companies, and 
amounts of royalty revenues. 125 Less publicly visible is the amount of equi­
ty that universities and their faculty-inventors have amassed, especially in 
start-up companies and other early-stage venture capital deals. 

Thus, not only faculty researchers but also their institutions may now 
have substantial financial interests in areas in which the faculty may have 
legitimate ongoing research interests. For the faculty, the 1995 :tCOI Rule 

122. Kom, supra note 38, at 2235. 
123. See COMM. ON MGMT. OF UNIV. INTELLEcTuAL PROP., NATIONAL ACAOEMY OF 

SCIENCES (NAS)., MANAGING UNIVERSI1Y INTELLEcruAL PROPERTY IN Tim PuBLIC INTEREST 

(National Academies Press, 2010). 
124. See Patent and Trademark Act Amendments of 1980, Pub. L. No. 96-517, 94 Stat. 

3015. 
125. See Press Release, Association of University Technology Managers, U.S. Licens­

ing Activity Survey (2010) (on file with author). 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 37 

defines "significant," albeit arbitrarily and without intrinsic validity;126 but 
what would constitute a "significant" financial interest for the university, 
and if there were such, what evidence would one seek to determine that the 
interest rises to IfCOI? Or would that determination, as with individual 
fCOI, rest entirely on perception? But by whom or what official body? 
And, if one could credibly and reproducibly reach the determination of 
IfCOI, what remedies would be appropriate and realistic? By what man­
agement strategies could the existence of such financial holdings be made 
to comport with the role of universities as "independent arbiters of 
knowledge?"127 It is worth noting that more than three decades ago, in 
1979, Harvard University President Derek Bok famously turned down an 
offer of equity shares from three faculty founders of a new start-up biotech­
nology company, assertin~ in essence that a university should not go into 
business with its faculty. 1 Perhaps Bok foresaw the wrenching difficulties 
that lay ahead on such a path and concluded they would not be manageable 
and must therefore be avoided. His statement was truly a "shot heard 
'round the academic research community," and Harvard maintained this 
marvelously principled stance until May 1995, when its governing body 
determined that acceptance of such equity was acceptable. President Bok 
devoted most of his 1979-1980 President's Report to the Members of the 
Board of Overseers to the issue of academic engagement with industry. In 
that address, accessible in the Harvard University Archives, he stated: 
"[T]he causes for concern .... flow from an uneasy sense that programs to 
exploit technological development are likely to confuse the university's 
central commitment to the pursuit of knowledge and learning by introduc­
ing into the very heart of the academic enterprise a new and powerful mo­
tive - the search for commercial utility and fmancial gain."129 The 
academic community has come to no consensus on these knotty issues that 
arise from the "conflict of public expectations" and will only grow more 
intense as the magnitude of federal investments in science, and especially in 
biomedical science, continues to increase, and the public's impatience and 
thirst for tangible benefits - diagnostics, treatments, cures, and solutions to 
a whole array of pressing social problems- continue to rise. 

126. See 45 C.F.R. § 94.3 (2009). 
127. Statement made by U.S. Rep Albert Gore during a small meeting in 1981-82 at­

tended by the Vice President for Federal Relations at the AAU, who communicated it to Dr. 
David Kom shortly thereafter. 

128. See generally DEREK BOK, REPORT OF THE PRESIDENT OF HARVARD COLLEGE AND 
REPORTS OF DEPARTMENTS: 1979-1980, 23-31 (1981), available at http://pds.lib.barvard.edu 
/pds/view/2582287?n= 19039&s=6&printThumbnails=no. 

129. DEREK BOK, REPORT OF mE PRESIDENT OF HARVARD CoLLEGE AND REPORTS OF 
DEPARTMENTS: 1979-1980, 6-7 (1981), available at http://pds.lib.harvard.edu/pds/view/ 
25 82287?n= 19039&s=6&printThurnbnails=no. 



38 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

Xlll. Nlli ISSUES AN ADVANCED NOTICE OF PROPOSED RULE MAKING 

(ANPRM) FOLWWED BY AN NPRM 

In spring 2009, NHI responded to the second OIG Report and Con­
gressional prodding by issuing an ANPRM, 130 soliciting the views of the 
research community on changes to the 1995 Rule based largely on the rec­
ommendations in the OIG Report, and in spring 2010, the agency issued a 
NPRM.131 Each of the Notices received outpourings of comments from an 
anxious academic community, facing up to the reality that the 1995 Rule 
was going to be changed, but perhaps not yet fully grasping that the chang­
es were being brought about largely by their own failures to be dutiful in 
discharging the relatively gentle obligations the Rule had imposed upon 
them. At the time of this writing the NHI had not yet issued its Final Rule. 
The NPRM was gentler than the OIG's recommendations might have pre­
dicted, but it did nonetheless propose some important changes. Among the­
se are: reducing by half the levels of financial interests in publicly trading 
companies that would be deemed significant, 132 and making more clear that 
any equity holdings in a privately traded company would be so deemed;133 

requiring faculty researchers to disclose all of their SFis that might relate to 
their academic responsibilities, 134 and transferring entirely to the universi­
ties the responsibility for determininf which, if any of these, create fCOis 
with federally sponsored research; 13 requiring the institutions to report to 
Nlli details about these fCOis and their disposition of them, including any 
management plans imposed;136 requiring more stringent oversight of the 
fCOis of award sub-recipients;137 requiring training in fCOI for all re­
searchers prior to their initiating federally sponsored research and every two 
years thereafter;138 and requiring institutions to post on their publicly acces­
sible websites a listin~ of all instances in which they had determined the 
existence of a fCOI. 13 What did not appear in the NPRM, but was ques-

130. See NIH Requests Comments on Proposed Amendment of Regulations on theRe­
sponsibility of Applicants for Promoting Objectivity in Research for which Public Health 
Service Funding is Sought and Responsible Prospective Contractors, NAT'L INST. OF 
HEALTH, http://grants.nih.gov/grants/guide/notice-files/NOT-OD-09-099.html {last visited 
Jan. 25, 2011). 

131. See Responsibility of Applicants For Promoting Objectivity in Research For 
Which Public Health Service Funding Is Sought and Responsible Prospective Contractors, 
75 Fed. Reg. 28688 {proposed May 21, 2010), available at http://edocket.access.gpo.gov/ 
2010/pdf72010-11885.pdf. 

132. See, e.g., id. at 28691 {proposing that the cap for SFI's be reduced to $5,000 as 
opposed to the aforementioned $10,000 cutoft). 

133. See id. 
134. Seeid 
135. See id. at 28690. 
136. See id. at 28696. 
137. See id. at 28694. 
138. See id. at 28705-06. 
139. See id. at 28697-99. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 39 

tioned in the ANPRM, was a requirement that institutions develop and im­
plement lfCOI policies. Concerted push back from the community had, in 
my view correctly, convinced the agency that putting such an explicit re­
quirement in the proposed rule would still be premature. 

The community submitted abundant comments in response to the 
NPRM; interested readers can review these ad libitum on the NIH docket. 140 

Numerous modifications, with which I agreed, were requested in the pro­
posed requirements, some of them substantive, many objecting to unduly 
onerous details of implementation. For one example, there was near­
unanimous opposition to the web-posting requirement, mainly on the 
grounds that having a fCOI is per se neither illegal nor a violation of aca­
demic or scientific standards, nor is it a judgment about a person's charac­
ter, and that the postings would yield no legitimate benefit but would 
constitute needless and potentially damaging violations of the privacy of the 
faculty members involved. For me, the most threatening proposal is the 
requirement that institutions provide NIH with details about the instances of 
fCOis they determine, their review processes, their judgments made and 
decisions reached about the relevance and seriousness of the fCOis, and 
their final dispositions by some mix of elimination, reduction, or manage­
ment. Because the determination of fCOI is ultimately a judgment call, as 
are the particulars of its disposition, and there are no black and white lines 
to trespass (as there are, for example, in scientific misconduct), providing 
these details to NIH can only lead to "second-guessing" and disagreements 
by administrators far removed from the scene. In the Comment Letter sub­
mitted from Harvard University dated August 19, 2010 we urged that NIH 
engage the community to develop a formatted template on which mutually 
agreed minimum necessary information would be submitted to the agency, 
uniformly and in all instances.141 "Minimum necessary" is the key to pre­
venting the agency from launching fishing-expeditions that would exceed­
ingly contentious, enormously wasteful of time and resources, as well as 
good will, and lead to no good end. 

XN. CONCLUDING REMARKS 

It is now more than three decades since an unfortunate succession of 
highly publicized cases of scientific misconduct, some coupled with egre­
gious fCOis, brought these behaviors to the attention of the Congress and 
Administration and led to the first federal intrusions into the jealously pro­
tected space of oversight of the conduct of federally sponsored scientific 
research by university faculty. The regulation on Scientific Misconduct 

140. See id. at 28688. 
141. Letter from Harvard University, to the National Institutes of Health (Aug. 19, 

20 10) (on file with the author). 



40 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

was issued in 1989, that on individual Financial Conflicts of Interest, in 
1995.142 The basic contours of those regulations and their carefully negoti­
ated limits to the extent of intrusion have remained substantially unchanged 
during the past more than 2 decades. To quote from my 2000 JAMA. Com­
mentary on fCOis, previously cited: 

Nonfinancial and financial conflicts that can affect re­
search differ in another important way: the oversight 
of nonfinancial conflicts traditionally has been left to 
the academic community and the professions, but dur­
ing the past decade financial conflicts have become a 
shared and contingent responsibility of academe and 
the federal government. The academic community 
has reluctantly acknowledged the government's legit­
imate interest in the issue, while arguing successfully 
that that interest be circumscribed to ensure that re­
search is conducted with integrity and in compliance 
with federal laws and regulations, and that data sup­
porting decisions that affect public health are sound 
and trustworthy. These boundaries, however, are not 
fixed, but contingent on the diligence of the academic 
community in meeting the responsibilities that ac­
company its fiercely defended claim to the privilege 
of self governance and academic freedom. 143 

I submit that the brief history presented here of fCOis in l;lCademic 
medicine, whence they came, where they went, and where they are, pro­
vides vivid substantiation of this admonition. 

As the community awaits the imminent publication of Nlll's new 
Rule on fCOis, continues to debate the significance of fCOis as threats to 
integrity across the scientific disciplines, struggles to identify the least bur­
densome ways of detecting and responding to fCOis effectively but propor­
tionately, and continues to shy away from the perhaps insoluble issue of 
institutional fCOI, I leave the reader to ponder several conundrums that I 
find vexing regarding the academy's conception of the importance offCOis 
in biasing academic work and its response to the federal Rule: 

1. How much attention would the academy give to faculty mem­
bers • outside financial interests and the potential conflicts they 
may raise if it were not for federal concerns and federal regula­
tion? 

2. Accept the propositions that fCOis can threaten the integrity of 

142. See discussion supra Part ill. 
143. Kom, supra note 38, at2234-35. 



2011] FINANCIAL CONFLICTS OF INTEREST IN ACADEMIC MEDICINE 41 

research, the well-being of human and animal research subjects, 
the integrity of the research training environment, the well­
being of students and trainees, individual and institutional repu­
tations, as well as the well-being of the public; that the goal of 
the 1995 Rule is to "promote objectivity in (NIH-sponsored] re­
search,"144 and the Rule nowhere singles out research on hu­
man subjects as being exceptional; but that for the public, 
perceived threats to the wellbeing of human research subjects 
clearly trump all other considerations. What should be the uni­
versities' overarching goals in implementing fCOI policies? 
Should they be more robust than merely to comply with federal 
regulations? 

3. Can/should an institution credibly discriminate among the ele­
ments listed in the preceding bullet, weigh their importance dif­
ferently, and fashion their fCOI policies accordingly. How 
does the importance of protecting research subjects' wellbeing 
compare to that for protecting the integrity of the research liter­
ature? And before answering consider that biased published re­
sults about the efficacy/safety ratio for a new therapeutic or the 
tensile strength of a structural support can harm or kill dozens 
or hundreds, or thousands of persons. 

4. In an era of rapidly increasing understanding of the scientific 
foundations of influence and reciprocity, and of COl, why do 
the government and academy continue to share the pretense that 
they can meaningfully define pre-specified levels of financial 
interests as "significant" irrespective of context? 

5. All fCOI policies begin with the requirement of "disclosure," 
but recent research from Professor George Loewenstein's 
group145 and others shows that disclosure, far from leading a 
recipient to discount advice, can actually increase the stature of 
the adviser and the impact of the advice. How should the acad­
emy deal with this unexpected new insight? 

6. How should the academy deal with the "Conflict of Public Ex­
pectations?" How can universities and academic medical cen­
ters remain trusted, "independent arbiters of knowledge" while 
simultaneously fulfilling steadily intensifying public expecta­
tions that they be engines of economic development in our 
capitalistic economy? Is there an unmet role that the govern­
ment could play in creating "buffer zones" or "safe interfaces" 
that would help to protect the independence and credibility of 
research universities while ensuring that technology transfer 

144. See 45 C.F .R. § 94.1 (2009). 
145. See discussion supra Part XI. 



42 INDIANA HEALTH LAW REVIEW [Vol. 8:1 

thrives? 
7. Can "Assurance" survive as the foundation -of the Federal­

Academic Research Partnership in the 21st Century?