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Management Issue 10:
Fostering an Ethical and Transparent Environment

Why This Is a Challenge

Conflicts of interest in the health care system and in Government have been the subject of scrutiny by Congress, the medical community, and the media. With a heightened focus on transparency in the Federal Government and the imperative to use resources efficiently and appropriately, the Department must ensure that employees, grantees, and contractors are free of conflicts of interest or other ethics concerns. However, our work indicates that the Department can do more to ensure that ethics vulnerabilities and transparency issues related to potential conflicts of interest in the health care arena are identified and addressed.

OIG has found that the Department provides limited oversight of conflicts of interest of FDA clinical investigators, NIH grantees, and Federal employees. For example, in a 2011 report, OIG found that 56 percent of the HHS employees' conflict-of-interest waivers in our review were not documented as recommended in Governmentwide Federal ethics regulations, guidance, and the Secretary's instructions. In another review, we found that only 70 of 156 responding NIH grantee institutions had written policies and procedures for addressing institutional conflicts of interest (these policies are not required by law).

CMS continues to rely on an extensive network of contractors to perform essential program functions, and relationships among those contractors and their relationships with CMS raise potential concerns. For instance, OIG found that entities that applied to be CMS's ZPICs, referred to as "offerers," often had business and contractual relationships with CMS and with CMS contractors performing other functions, such as Medicare claims processors. Offerors, subcontractors, and CMS identified 1,919 business and contractual relationships as involving possible conflicts and 16 as involving actual conflicts. CMS does not have a written policy for reviewing conflict and financial interest information submitted by offerors, and such information provided by offerors was not always consistent or complete. For example, some offerors and subcontractors failed to provide requisite information regarding financial interests in other entities, making a fully informed decision difficult, if not impossible.

Under the ACA, HHS has new responsibilities with respect to promoting transparency in the health care industry. For example, under section 6002, HHS will operate a "sunshine" database of information disclosed by applicable manufacturers and group purchasing organizations identifying financial relationships with physicians and teaching hospitals. The ACA also includes provisions that heighten transparency of hospital ownership, nursing facility ownership and management, drug sampling, and drug rebates, as well as provisions that foster more robust consumer information.

Progress in Addressing the Challenge

Scales of justice

OGC has issued guidance concerning waivers to HHS component ethics officials as well as partially implemented a planned increase in both the number of waivers issued to Special Government Employees under 18 U.S.C. §208(b)(3) subject to preclearance by OGC and the scope of the review of such waivers.

To better address identified vulnerabilities related to FDA's clinical investigators FDA now requires companies applying to market drugs, devices, and biologics to submit a complete list of clinical investigators and either certify the absence of a financial conflict of interest or disclose the nature of the financial arrangement to FDA for each clinical investigator. Additionally, FDA updated the Compliance Program Guidance Manual chapter on clinical investigator inspections to help ensure that clinical investigators submit required financial information to sponsors.

Similarly, NIH has taken actions to address conflict-of-interest vulnerabilities identified among NIH grantees. For instance, NIH published a final rule on August 25, 2011, revising 1995 regulations covering financial conflicts of interest for investigators. It addresses a number of issues related to promoting objectivity in research and addresses an OIG recommendation to require grantee institutions to provide details regarding the nature of financial conflicts of interest and the ways in which they are managed, reduced, or eliminated. Additionally, CMS is drafting a standardized, formal written policy to evaluate potential organizational conflicts of interest.

What Needs To Be Done

To encourage an environment of transparency and accountability among contractors, OIG has recommended that CMS: (1) provide clearer guidance in the Request for Proposal to offerors and subcontractors regarding which business and contractual relationships should be identified as actual conflicts and which should be identified as possible conflicts; (2) require offerors and subcontractors to distinguish those business and contractual relationships that they deem to be actual conflicts from those that they deem to be possible conflicts; (3) state whether offerors and subcontractors need to report income amounts, periods of performance, and types of work performed for their contracts with CMS and income amounts generated from key personnel's other employment; (4) create a standardized format for reporting information in the Organizational Conflict of Interest Certificate and require its use by offerors and subcontractors; and (5) develop a formal written policy outlining how conflict-of-interest information provided by offerors should be reviewed by CMS staff.

OIG also recommended that NIH develop regulations governing institutional conflicts of interest, but the final rule did not address our concerns. Instead, in the final rule, NIH states that "[w]e continue to believe that further careful consideration is necessary before PHS [Public Health Service] regulations could be formulated that would address the subject of institutional conflict of interest..." OIG continues to recommend that NIH issue regulations requiring institutions to have a written policy on institutional conflicts. This would provide consistency and clarity to institutions.

The Department should ensure compliance with the Secretary's guidance on conflict-of-interest waivers and their documentation. The Department must issue final regulations and develop effective and efficient operational and technology structures to implement and administer the ACA transparency provisions, including the database required by ACA section 6002. In regard to implementation of section 6002 of the ACA, CMS continues to assess the requirements for this program. CMS should use the additional time it has built into the process by changing the start date for required data collection by applicable manufacturers and group purchasing organizations to January 1, 2013, enabling it to address operational and implementation issues.

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