Frequently Asked Questions about UC Berkeley’s Conflict of Interest Policy and Procedures
- What are “financial interests” under the UCB Conflict of Interest Policy?
- Who must disclose? What financial interests must be disclosed?
- What is the difference between a financial interest in a sponsor, and a related financial interest?
- Does a financial interest related to research doom the research project?
- If I have a financial interest in an outside company and that outside company wants to apply for an SBIR or STTR grant can I participate?
- Who reviews financial disclosures?
- What is a financial conflict of interest in research?
- I have a financial interest in an outside company. Does that mean that the company cannot sponsor my research project at UCB?
- Is a financial interest automatically a conflict of interest?
- Are there set rules as to what constitutes a conflict of interest, or general guidelines for investigators as to what may or may not be acceptable financial interests?
- What happens if the Conflict of Interest Committee determines that a conflict of interest exists?
- Can the 700-U and the PHS and NSF financial disclosure forms be used interchangeably?
- Why are there separate procedures for disclosing financial interests under awards from non-governmental entities (profit and non-profit) and government agencies?
- How often does the Conflict of Interest Committee meet? How long does approval take?
- Are my financial interests treated confidentially?
- Can you tell us what the Conflict of Interest Committee has recommended in some typical cases?
1. What are “financial interests” under the UCB Conflict of Interest Policy? For purposes of UCB’s conflict of interest procedures, a financial interest is anything of economic value, including a fiduciary relationship with an outside entity. While not an exhaustive list, examples of financial interests include positions such as director, officer, partner, founder, consultant or manager of an entity (whether paid or unpaid)*; scientific advisory board or technical advisory board membership; salaries; consulting income; stock or stock options (vested or not vested); honoraria; gifts; loans; and travel payments.
Disclosable income does not include monies received from the University of California. It also does not include monies derived from licensing fees or royalty income paid to UC by the research sponsor. Salary paid by the University is not considered disclosable personal income even if it is derived from support provided by the research sponsor.
*Please note: Under University of California policy (APM 025) faculty must have prior approval to hold salaried or managerial positions in outside organizations. Under State of California, Federal regulations, and University of California policy, the faculty Conflict of Interest Committee must review disclosure of economic interests prior to acceptance of research gifts, grants or contracts or certain material transfer agreements (MTAs). This review is conducted independent of the Dean’s approval under APM 025.
2. Who must disclose? What financial interests must be disclosed? Persons with principal responsibility for a research project (under State of California regulations) and Principal Investigators, Co-Principal Investigators, and other individuals who have responsibility for the design, conduct, or reporting of a project (under Federal regulations) must disclose financial interests in non-governmental entities that are supporting the research. Research support can be in the form of grants, contracts, subcontracts or subgrants, gifts, donated equipment or supplies and some material transfer agreements. Additionally, disclosures of financial interests related to research and research training are required when the research is supported by certain federal agencies, including NIH and NSF, or by sponsors who require review under federal guidelines such as the American Cancer Society, the American Heart Association, the California Institute for Regenerative Medicine, the International Vaccine Institute, and some UC Programs. When the grant application is submitted, a conflict of interest disclosure form (700-U or NSF or PHS financial disclosure forms) should be used to disclose the financial interest and submitted with the proposal to the Sponsored Projects Office.
The threshold levels of financial interests that must be disclosed are outlined in the relevant Conflict of Interest procedures accessible at http://researchcoi.berkeley.edu.
3. What is the difference between a financial interest in a sponsor, and a related financial interest? A financial interest in a sponsor is a relationship between the PI or other project personnel and the sponsor (either directly, through a spouse, registered domestic partner or dependent child). Some examples are equity holdings in the sponsor, a directorship or management position with the sponsor, income or gifts received from the sponsor, employment of or financial ownership in the sponsor by a spouse.
A related interest is one where an individual’s financial interest in an entity other than the sponsor might appear to be directly and significantly affected by the design, conduct, or reporting of the sponsored project.
Some examples of related financial interests include situations in which:
- an individual has assigned to a third party rights to an invention that will be used in the sponsored project;
- an organization in which an individual has a personal financial interest will be supplying a product for use in a sponsored project;
- an entity in which an individual has an interest will act as a subcontractor, consortium member, supplier of goods or services, or lessor under a prime sponsored award; and
- an entity in which an individual has a financial interest is likely to advance its commercial efforts as a result of the proposed research.
4. Does a financial interest related to research doom the research project? No. A financial interest does NOT automatically constitute a conflict that precludes the acceptance of research support. The UCB Conflict of Interest Committee and the Vice Chancellor for Research have determined that financial interests must be assessed within a specific factual context and that most conflicts of interest can be reduced, eliminated or managed. Please also see FAQ #9.
5. If I have a financial interest in an outside company and that outside company wants to apply for an SBIR or STTR grant can I participate? Yes, but generally not in both the research being conducted by the company and research to be conducted at UCB (as the academic collaborator). Please see: http://researchcoi.berkeley.edu/sbirsttr.html.
As these UCB guidelines indicate, the Principal Investigator for the small business and the Principal Investigator for the subcontracted work to UCB must be different individuals. However, if a UCB faculty member owns a small business entity, that individual may not bring research into his/her own laboratory under a SBIR or STTR subcontract from that same small business. Additionally there must be a very clear distinction between activities that are performed at UCB and activities performed at the small business site, and all work done using the campus facilities must be consistent with APM 020 Regulation #4. Generally this means that the UCB portion of the project should be focused on long-range exploratory work without immediate commercial value.
6. Who reviews financial disclosures? The campus Conflict of Interest Committee is a panel of faculty members from disciplines across the campus. They review positive disclosures of financial interests to determine whether these interests constitute significant conflicts of interest that must be eliminated, reduced or managed before research support can be accepted. If they determine that the research support may be accepted, the Committee then also determines an appropriate strategy for management of any significant conflict.
7. What is a financial conflict of interest in research? A financial conflict of interest in research is a situation in which an objective layperson might perceive that an individual’s financial relationships may compromise the individual’s professional judgment in conducting, analyzing, or reporting research. For example, an investigator may have a financial conflict of interest if he or she is a consultant to the company sponsoring research in his or her laboratory. Another example is a faculty member who owns significant equity in a company whose product he or she wants to test.
8. I have a financial interest in an outside company. Does that mean that the company cannot sponsor my research project at UCB? No. However it does mean that the financial interest(s) must be disclosed and reviewed by the Conflict of Interest Committee.
Appended to the UC policy on “Disclosure of Financial Interest in Private Sponsors of Research” are guidelines that outline some principles that the review committee considers in their deliberations (http://www.ucop.edu/academic-personnel/_files/apm/apm-028.pdf, see section on “Guidelines for Disclosure and Review of Principal Investigator’s Financial Interest in Private Sponsors of Research”).
The first principle is the avoidance of situations in which investigators may have the opportunity to influence the design, conduct or reporting of research in ways that could lead to personal gain or give advantage to firms in which they have a financial interest. Other important principles are that the research is appropriate to the University, that the teaching and research environment is open, and that investigators have the freedom to publish. Finally, there must be assurances that University facilities and resources are used appropriately.
How does that translate into actual reviews? Consider for instance a case where the research is very closely aligned with the interests of the research sponsor, and/or the PI is the inventor of technology licensed to the sponsor and now being further developed within the PI’s lab. The involvement of students, assurance that the research will not hamper their progress toward degree, and the PI and students’ ability to openly and freely publish results, are all evidence that the teaching and research environment is open.
Another example, deals with the appropriate use of University facilities and resources. University resources such as supplies, equipment, facilities and staff time may not be used for personal gain. Faculty may conduct research sponsored by companies that they own or in which they have other financial interests (subject to Conflict of Interest Committee review). However, investigators may not use University facilities, including their own laboratories or other campus resources or staff to conduct private business, including consulting. In such a case, questions may arise about the appropriateness of the research and whether the sponsored project is actually research and development with academic and educational value. Once again, the involvement of students or post doctoral fellows, assurances that the research will not hamper those students’ progress toward degree, and the PI and students’ ability to openly and freely publish results, are all critical indicators.
Please also see FAQ #9.
9. Is a financial interest automatically a conflict of interest? Not necessarily. This may be a matter of semantics. Some argue that any financial interest in a company automatically puts the individual into a situation where there is a conflict with his or her research responsibilities. Nevertheless it is important to note several points:
First, the threshold for reporting includes some financial interests that are of such low value and/or limited duration that they do not meet the definition of disclosable interests. For example, the thresholds for reporting gifts from non-governmental donors or financial interest in non-governmental sponsors of grants or contracts is gifts of $50 or more, income of $500 or more, or loans with a balance of $500 or more within the 12 months prior to the date the award was made. Under the State of California Political Reform Act of 1974, section 81000, et seq., public officials are prohibited from participating in governmental decisions when personal financial interests may be affected by those decisions. All University of California employees and officials are officials subject to these provisions. Applicable UC policies and guidance are located on the web at http://www.ucop.edu/academic-personnel/_files/apm/apm-028.pdf and http://www.ucop.edu/general-counsel/legal-resources/index.html. Federal regulations for the Public Health Service (PHS) set the threshold for reporting differently depending on whether the entity where the financial interest lies is public or private, publicly or non-publicly traded, whether the financial interest is in intellectual property rights and interest or sponsored travel (http://researchcoi.berkeley.edu/phs.html) The National Science Foundation has different thresholds than the PHS (http://researchcoi.berkeley.edu/nsf.html).
Please also see FAQ #1.
Second, some disclosable interests are so small or inconsequential that the research support can be accepted with no further action. An example is the open market purchase of small amounts of stock in a large public company or ownership of stock through mutual funds.
The UCB Conflict of Interest Committee also reviews financial conflict of interest disclosures for human subjects research (http://researchcoi.berkeley.edu/cphscoi.pdf and http://researchcoi.berkeley.edu/cphscoiform.pdf). Individuals who have independent roles in projects and who are responsible for the design, analysis, conduct, or reporting of the research performed (or to be performed) under a human subjects protocol must disclose financial interest in or association with the sponsor of the project or the company or other entity supplying materials, drugs or devices for the project. Monetary thresholds are the same as those under the State of California disclosure requirements.
Finally, almost all disclosed financial interests and resulting conflicts of interest can be reduced, eliminated or managed so that the research support can be accepted. To date there have been few exceptions to this. The exceptions represent very unusual and complex situations in which the investigator played multiple roles. For example, consider a situation in which the Principal Investigator is the owner of a small company and is also its Director of Research. The company now wants to sponsor research on campus, which involves the testing, and improvement of its proprietary equipment, on loan for the duration of the project, as a part of a graduate student thesis project. This is conflicted because the PI of the UCB project is also a line officer in the sponsoring company and has significant ownership. The conflict is even more significant because a graduate student is involved in the work. The conflict is not easily manageable because the PI and the company management are the same person. Although such situations rarely happen, the COI committee concluded that this significant conflict was not manageable and did not approve the project.
10. Are there set rules as to what constitutes a conflict of interest, or general guidelines for investigators as to what may or may not be acceptable financial interests? The Conflict of Interest Committee reviews each financial disclosure in accordance with the University of California Guidelines for Disclosure and Review of Principal Investigator’s Financial Interest in Private Sponsors of Research (Academic Personnel Manual Section 028-10, Disclosure of Financial Interests and Management of Conflicts of Interest, National Science Foundation Awards (NSF), or Disclosure of Financial Interests & Management of Conflicts of Interest, Public Health Service Research Awards (PHS)). In general, the Committee asks: are the research interests and the private interests kept separate; is the research appropriate to the University; is the teaching and research environment open; is there freedom to publish; have licensing agreements been appropriately reviewed; and are University facilities used appropriately. The Committee then determines whether the financial interest represents a real or perceived conflict of interest, and if so, whether any action should be undertaken to eliminate, reduce, or otherwise manage the conflict. The Committee applies standards that have evolved over time, based on their prior experience, the appearance of new types of conflicts, and input from the local and national research community.
Some illustrative case studies are included at the end of these FAQs.
11. What happens if the Conflict of Interest Committee determines that a conflict of interest exists? If the Committee determines that the disclosed financial interests constitute a real or perceived conflict of interest, they will recommend actions designed to eliminate, reduce, or manage the conflict. In some instances, the Committee may simply recommend disclosing the interest in all publications and presentations. Depending on the facts, the Committee may also recommend other measures such as divestiture of all equity interest in the sponsor or elimination of any consulting arrangement with the sponsor. Additional measures may include the appointment of an ad hoc faculty oversight committee, with the express responsibility to safeguard the interests of students working on the project.
12. Can the 700-U and the PHS and NSF financial disclosure forms be used interchangeably? No. The Form 700-U is a State-mandated form that must be completed by Principal Investigators when support for research is received from non-governmental (e.g., for-profit and non-profit) entities. The federal disclsoure forms were developed by UCB to comply with federal regulations.
13. Why are there separate procedures for disclosing financial interests under awards from non-governmental entities (profit and non-profit) and government agencies? There are separate State of California laws and Federal regulations each with its own set of requirements for disclosure and review, and its own reporting thresholds.
14. How often does the Conflict of Interest Committee meet? How long does approval take? The Committee generally meets once per month. In most cases, unless the committee needs additional information to make a decision, approval letters are issued within seven to ten business days after the Committee meeting.
15. Are my financial interests treated confidentially? The details of personal financial interests reported to the campus are treated sensitively and shared only on a need to know basis within the University. The decision of the Conflict of Interest Committee may be shared with University officials as deemed necessary. In cases relating to projects involving human subjects, the recommendation will be shared with the IRB. It may also be shared with the research sponsor if requested. Other than these mandated disclosures or limited internal disclosures, the information is treated as confidential. However, under California law and PHS regulations, information disclosed to the University must be made available to the public upon request.
16. Can you tell us what the Conflict of Interest Committee has recommended in some typical cases? The following examples are intended for general guidance only. It is important to remember that cases are individually reviewed, and subtle differences in the nature and magnitude of the financial interest(s), in combination with the investigator’s role in the research study, the type of research being conducted and the clarity and completeness of the disclosure, may affect the Committee’s determinations and recommendations.
Case #1: Investigator’s financial interest is relatively modest.
If the financial interest in the sponsoring entity is a small amount of income or a travel reimbursement or honoraria (typically under $2,000) for one-time consulting, the Committee may simply recommend acceptance of the award with no stipulations.
Case #2: Same situation as Case #1 but investigator has an ongoing consulting relationship with the sponsor and/or equity is also involved.
If the financial interest in the sponsor includes any of the above, but the investigator anticipates an ongoing consulting relationship with the research sponsor and/or has an equity holding in the research sponsor, then the Committee, in addition to reviewing the consulting agreement between the research sponsor and the investigator, would recommend that the investigator disclose these interests in presentations and publications. The Committee may require review and approval of the disclosure statement prior to its use, and will require evidence of those disclosures having been made in subsequent reviews.
Case #3: Situations involving investigator ownership of or managerial responsibilities to the company, which will sponsor the research.
In cases where the investigator is a founder, an owner or has another position managing the research or commercial direction of the company, the Committee looks at a variety of facts surrounding the case. These include the extent of the investigator’s equity holdings in the company, or the investigator’s role in the company, e.g., is the investigator directing the research agenda or has this been transferred to regular management, is the spouse of the investigator the CEO or other officer, is the company a new start-up or has venture capital been secured, is the investigator serving as a paid consultant to the company, how closely does the research project overlap with the immediate commercial interests of the sponsor? The Committee is especially concerned with safeguarding the interests of students in the conflicted investigators’ laboratory. In this example, if the UCB research goals are distinct from the immediate commercial goals of the company the Committee might require disclosure of interests in writing to all members of the UCB research group, disclosure of interests in all papers and presentations as well as the formation of an ad hoc oversight committee of faculty specifically charged with safeguarding the interests of the affected graduate students.
Case #4: Situation where a faculty member has majority equity ownership as well as scientific and fiscal responsibility for a company, which is proposed as the subcontractor for a major portion of the work in a campus processed NIH grant with the investigator as PI. In addition the company employs the spouse of the investigator.
In cases where the investigator is the founder, retains complete control over the scientific and fiscal management of the company, and supervises both company (spouse) and University personnel, the Committee has determined that the ability of the investigator to disentangle his/her corporate and academic responsibilities is seriously compromised; research results and activities could be seriously biased because of the conflicting financial interest of both investigator and spouse in the success of the company. All of the concerns relative to Case #3 still exist. The Committee further determined that the investigator could not reasonably decide on the suitability of the company as the subcontractor or supervise and direct the company activities of the employee spouse. In this example, the Committee suggested several management possibilities, including industrial leave for the investigator or the re-submission of the proposal by the company and appointment of another campus Principal Investigator to direct the campus portion of the project. As none of these was deemed satisfactory to the investigator, the conflict of interest was declared unmanageable and the research project did not move forward.