Proposed FDA Guidance on Financial Disclosure and the Physician Payment Sunshine Regulations – Divergent Paths and Duplicated Efforts

(This article is adapted from a research paper written by Abraham Gitterman, Research Associate at Rockpointe who graduates magna cum laude today from the University of Maryland, Francis King Carey School of Law.)

 
In 1999, the Food and Drug Administration (FDA) began collecting financial disclosure information of clinical investigators.  In 2001, FDA issued a Guidance for Industry: Financial Disclosure by Clinical Investigators to assist manufacturers with determining what to report in FDA applications for product approval.  In 2011, FDA released draft guidance to update the 2001 guidance, in response to issues raised by a report from the Office of the Inspector General(OIG) for the Department of Health and Human Services (HHS).   

In February of this year, FDA finalized this guidance, after considering 13 comments from individuals and entities.  The guidance comes in a question and answer format. 

The timing of the final guidance comes at an interesting time: the same month that CMS issued its final rules to implement the Physician Payment Sunshine Act, which will make most, if not all payments to clinical investigators from manufacturers, public—although on a delayed schedule (see our story on Sunshine Research payments).  Comments on the final guidance can be submitted here. 

Interestingly, the final FDA guidance highlights the unique regulatory regimes that clinical investigator face when it comes to disclosing financial conflicts of interest (FCOI).  There are now three sets of regulations and accompanying guidance that researchers must follow—in addition to any institutional or professional disclosure obligations—National Institutes of Health (NIH), FDA, and Sunshine.  While FDA’s guidance does not reference NIH or Sunshine regulations, it is likely that federal prosecutors and these agencies will make use of each other’s data once it is publicly available through the Sunshine database. 

This article discusses some of the interplaying and overlapping requirements, points out several differences, and highlights implications and problems such differences may create for researchers.   

FDA Guidance and Regulations 

The guidance describes: (1) The sponsor’s responsibility to collect the financial disclosure information prior to an investigator participating in a study and ensure that all required forms and attachments are submitted in marketing applications, (2) what is meant by “due diligence” in obtaining financial disclosures from investigators, and (3) how FDA will review financial disclosure information.  FDA also reiterates its policy on public release of individual clinical investigator financial disclosure information and states its intention to provide summary information about clinical investigator financial interests/arrangements in the new product reviews FDA posts for an approval decision. 

FDA’s Financial Disclosure by Clinical Investigators regulation requires applicants who submit a marketing application for a drug, biological product or device to submit certain information concerning the compensation to, and financial interests and arrangements of, any clinical investigator[1] conducting clinical studies covered by the regulation.[2]  The regulation applies to any clinical study (foreign or domestic) of a drug, biological product or device in humans submitted in a marketing application or reclassification petition that the applicant or FDA relies on to establish that the product is effective (including studies that show equivalence to an effective product) or any study in which a single investigator makes a significant contribution to the demonstration of safety (such as a safety study designed to address a particular safety concern and conducted by a small number of clinical investigators).[3]   

Sponsors are not required to submit such information for clinical investigator financial interests or arrangements in IND or IDE applications, however, they must collect the required information before a clinical investigator participates in a clinical study and submit this information when the applicant submits a marketing application containing the results of the covered clinical study.[4]  FDA considers the financial disclosure information and the methods the sponsor used to minimize bias during the review of marketing applications to assess the reliability of the clinical data.[5]  FDA promulgated such regulations in 1999 in part because the Office of the Inspector General (OIG) of HHS reported in June 1991[6]that FDA failed to have a mechanism for collecting FCOI information and due to increased public scrutiny. 

Under the applicable regulations,[7] an applicant is required to submit to FDA a list of all clinical investigators[8] who conducted covered clinical studies and to identify those who are full-time or part-time employees of the sponsor of each covered study.[9]  Sponsors[10] must obtain clinical investigator financial information before allowing the clinical investigator to participate in a covered clinical study.[11]  Applicants must certify the absence of certain financial interests and arrangements of clinical investigators that could affect the reliability of data submitted to FDA, or they must disclose the size and nature[12] of those financial interests to FDA and identify steps taken to minimize the potential for study bias resulting from the interest.[13]   

For each clinical investigator who was not a full time or part time employee of a sponsor of the clinical study, the applicant must either certify that no financial interests or arrangements described in 21 CFR § 54.4(a)(3) exists, or completely and accurately disclose the nature of those interests and arrangements to the agency and describe any steps taken to minimize the potential for bias resulting from those interests and arrangements.[14]  Applicants may certify that they acted with due diligence[15] if they are unable to obtain such information and must explain why.  

There are five disclosable financial interests and arrangements that sponsors must report, for investigators (including spouse and dependent children).[16]   

1. Any compensation made to the investigator by any sponsor of the study in which the value of compensation could be affected by study outcome.   
2. A proprietary interest in the tested product including, but not limited to, a patent, trademark, copyright or licensing agreement.   
3. Any equity interest in any sponsor of the study (e.g., stock options), whose value cannot be readily determined through reference to public prices.   
4. Any equity interest in any sponsor of the covered study if the sponsor is a publicly held company and the interest exceeds $50,000 in value.[17]  Both the third and fourth requirements apply to interests held during the time the clinical investigator is carrying out the study and for one year following completion of the study.[18]   
5. Finally, significant payments of other sorts (SPOOS), which are payments that have a cumulative monetary value of $25,000 or more made by any sponsor of a covered study to the investigator or the investigator’s institution, during the time the clinical investigator is carrying out the study and for one year following completion of the study, to support activities of the investigator.  SPOOS include a grant to the investigator or to the institution to fund ongoing research (e.g., for lab activities and equipment) or compensation in the form of actual equipment for the lab or clinic.  SPOOS also includes payments, retainers and honoraria from a sponsor to a clinical investigator for activities such as participating on committees, providing consultation, or serving as a preceptor.[19]  These payments do not include payments for the cost of conducting the clinical study of the product under consideration or clinical studies of other products, under a contractual arrangement.  Payments made to the institution that are not made on behalf of, and are not specifically targeted towards the investigator, are not reportable.   

Similarly, payments that meet the same criteria and are made to other researchers at the institution, who are not part of the covered study, do not need to be reported.  Generally, reasonable payments made to investigators to cover reimbursable expenses such as transportation, lodgings and meals would not need to be tracked, whereas entertainment costs would be tracked as SPOOS.  Travel costs associated with transporting and/or providing lodgings, entertainment costs, and meals for family members of investigators, as well as other payments that exceed reasonable expectations, should be tracked and reported as SPOOS.  Industry ethical codes, however, limit or prohibit many of these payments.[20] 

FDA may refuse to file a marketing application that does not contain the required financial information or certifications.[21]  If FDA determines that the financial interests of any clinical investigator raise a serious question about the integrity of the data, FDA may (1) initiate an audit of the investigation data derived from the investigator in question; (2) request that the applicant submit further analyses of data; (3) request that the applicant conduct additional independent studies to confirm the results of the questioned study; and (4) refuse to treat the study as providing data that can be the basis for an FDA action.[22]   

In addition, an investigators compliance with their institutional policies or procedures “is not a substitute for compliance with 21 CFR Part 54.”  Applicants must maintain records of such information for two years after the date of approval of the application and must permit FDA to have access to such records and to copy such records at reasonable times or during a bioresearch monitoring program inspection.  Finally, FDA will protect clinical investigators’ financial information, notably their equity interests, from public disclosure unless FDA finds (on a case-by-case basis) a financial interest “so affecting the reliability of a study as to warrant its public disclosure during evaluation of the study by an advisory panel.”[23]   

NIH Regulations 

In 1995, the Public Health Service (PHS) and the U.S. Department of Health and Human Services (HHS) promulgated regulations designed to promote objectivity in PHS-funded research and to ensure that there was no reasonable expectation that the design, conduct, or reporting of PHS-funded research was biased by any investigator FCOI.[24]  The regulations covered institutions that apply for or seek PHS funding for research and to each investigator participating in the research.[25]  Because auditing the potential conflicts of each grantee would be impossible, NIH relies on institutions to comply with the regulations, including maintaining a written and enforced FCOI[26]policy; managing, reducing, or eliminating identified FCOIs through written and enforced administrative processes; and reporting identified conflicts and how they have been managed to the PHS Awarding Component prior to the expenditure of any funds.[27]  Investigators, on the other hand, are responsible for complying with their institution’s written FCOI policy and for disclosing their significant financial interests (SFIs) to the institution.   

As the complexity of medical research and interactions with industry grew, institutions were unable to keep up with the reporting and oversight of such relationships.[28]  As a result, NIH amended the 1995 regulations in 2011by expanding and adding transparency to investigators’ disclosure of SFIs and enhancing regulatory compliance and effective institutional oversight and management of investigators’ FCOIs.  The finalized rule, defined FCOI as a SFI that could directly and significantly[29]affect the design, conduct, or reporting of PHS-funded research.  NIH defined an SFI as a financial interest[30]consisting of one or more of three interests of the investigator (including spouse and dependent children) that reasonably appears to be related to the investigator’s institutional responsibilities.[31] 

First, a SFI exists with regard to any publicly traded entity, if the value of any remuneration[32] received from the entity in the twelve months preceding the disclosure and the value of any equity interest in the entity as of the date of disclosure, when aggregated, exceeds $5,000.  Second, a SFI exists with regard to any non-publicly traded entity if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or when the investigator (or spouse or dependent children) holds any equity interest (e.g., stock).  Finally, a SFI exists with regard to intellectual property rights and interests (e.g., patents), royalties from such rights, and agreements to share in royalties from such rights.  Additionally, royalties would be excluded from the SFI definition if the investigator is currently employed or otherwise appointed by the institution.[33] 

Investigators must also disclose the occurrence of any reimbursed or sponsored travel, related to their institutional responsibilities.[34]  NIH’s final rule requires that the institution’s FCOI policy require the disclosure of at least: (a) the purpose of the trip; (b) the identity of the sponsor/organizer; (c) the destination, and (d) the duration.  The regulations do not require disclosure of the monetary value of the sponsored or reimbursed travel.  Such information may be required, however, if an institution determines that the source of funding and other circumstances (e.g., destination, duration) of the specific travel is necessary to determine whether the travel constitutes an FCOI.  Finally, payments to investigators from private entities, in return for allowing their names to be used as authors on publications for which they had very limited input—“ghostwriting”—may be subject to the disclosure and reporting requirements depending on the circumstances of a given case, such as the amount of payment.” 

Investigators must disclose additional remuneration they receive from entities after completing an initial SFI disclosure on an ongoing basis, assuming the monetary threshold is met or exceeded, and update their disclosures annually.  Investigators are also required to disclose new SFIs to their institution within 30 days, and if payments received after the initial disclosure give rise to an SFI that is determined to be an FCOI by the institutional official(s), the institution is required to submit an FCOI report to the PHS Awarding Component.  

These regulations have particular prominence as several high-profile investigations were conducted by Congress and news organizations into the failure of several prominent academic researchers and their failure to adequately or completely disclose their financial interests.  

In 2008, the U.S. Senate Finance Committee, under the direction of Senator Charles Grassley, began investigating the financial relationships that academic researchers in medical institutions had with manufacturers.  The investigations uncovered several researchers who had accepted funding from both the NIH and various manufacturers, but failed to fully or properly disclose the extent of their financial ties to their respective institutions, and the institutions failed to monitor their faculty for conflicts.  For example, congressional investigators found that three child psychiatrists from Harvard University[35] who were awarded federal research grants received several hundred thousand dollars in consulting fees from manufacturers, which they failed to report to Harvard.  Investigations also revealed similar discrepancies at Brown University,[36] Stanford University,[37] University of Texas,[38] University of Cincinnati,[39] and Emory University.[40]   

The Physician Payment Sunshine Act  

These events led Senators Grassley and Herb Kohl to introduce the Sunshine Act.  With respect to research, the Sunshine Actallows CMS to grant a delay in publication for payments related to: (1) research[41] on, or development of, a new drug, device, biological, or medical supply, or a new application of an existing drug, device, biological, or medical supply or (2) clinical investigations regarding a new drug, device, biological, or medical supply.  CMS finalized, however, that payments in connection with research related to new applications of existing products will not be subject to delayed publication unless the research activities that resulted in the payment were not within the scope of a “clinical investigation.”[42]  Payments for pre-clinical research, which includes “laboratory and animal research that is carried out prior to beginning any studies in humans, including FDA’s defined phases of investigation,” are also eligible for delayed publication, but payments for “business development activities” are not. 

For the research payment to qualify for delay, it must be subject to a written agreement,[43] contract or a research protocol.  CMS will not publish the payment, and such data will not be subject to disclosure under 5 U.S.C. § 552, or any similar Federal, State, or local law, until FDA approves, licenses, or clears the product under research or four years after the date of payment, whichever comes first.  AMs still report the payment, but indicate to CMS annually its eligibility for delay.   

Payments will be made public even if a product never received FDA approval, licensure or clearance.  AMs must report the: (a) name of the research study; (b) name(s) of any related covered products; and (c) identifying information about each physician investigator.[44]  AMs must also report the total amount of the research payment, including costs associated with patient care such as diagnostics, exams, laboratory expenses, time spent by healthcare professionals treating the patient and managing the study, and the provision of study products or other in-kind items. 

When reporting research payments, AMs must separately report travel, meals, speaking, or other segregable activities, unless such payments are included in the written agreement and paid for through the large research contract.  Finally, AMs may also voluntarily submit contextual information about the research and the ClinicalTrials.gov identifier.   

Recommendations and Conclusion 

The increased regulation and requirements to disclose FCOIs creates a tremendous burden for researchers and institutions that are repetitive, overlapping but not-identical, and time-consuming.  Nevertheless, institutions that receive PHS funding can manage FCOIs in a number of ways: (1) public disclosure of the FCOI (e.g., when presenting or publishing the research); (2) disclosure of the FCOI directly to human participants; (3) appointment of an independent monitor capable of taking measures to protect the design, conduct, and reporting of the research against bias resulting from the FCOI; (4) modification of the research plan; (5) change of personnel or responsibilities, or disqualification of personnel from participation in all or a portion of the research; (6) reduction or elimination of the financial interest (e.g., sale of an equity interest); or (7) severance of relationships that create FCOI.   

Institutions that sponsor or oversee clinical trials for marketing applications for an FDA product must also take steps to minimize bias.  FDA will consider elements of the study design, including the method of randomization, the level of blinding (e.g., double-blind), the presence or absence of a control group, whether placebo or active, the nature of the primary and secondary endpoints (objective, subjective), the method of endpoint assessment, the method of evaluation (including whether someone other than the disclosing investigator measured the endpoints), and whether non-disclosing investigators participated in the study.[45]   

FDA may also consider the total number of investigators and subjects in the study; the number and percentage of subjects enrolled by the disclosing investigator; information obtained from on-site inspections; the data (including adverse events) of the disclosing investigator compared to other investigators in the study, any reanalysis of the data performed by either the applicant or FDA that excludes the disclosing investigator’s results; and whether the results were replicated over multiple studies.[46]   

Institutions will also need to resolve the differences between NIH, FDA and Sunshine regulations regarding the reporting of any reimbursed or sponsored travel related to investigators’ institutional responsibilities or other activities (speaking, consulting, etc.).  Discrepancies between Sunshine Act, NIH and FDA disclosures could lead to NIH freezing grant money for a particular researcher or entire institution, or FDA delaying or rejecting a product application.   

Institutions must also update their own disclosure and FCOI policies.  First, FCOI policies must be proportional.  Policies should not be overly restrictive or burdensome such that they unnecessarily interfere with the conduct of legitimate research or severely limit research-industry relationships.  Second, COI policies must be transparent.  Researchers and applicable staff must be able to comprehend and have access to the policies to ensure fair implementation.   

Third, COI policies must clearly indicate who is responsible for monitoring, enforcement and revision.  Institutions and responsible officials must regularly update COI policies to account for new practices, relationships, arrangements, and to account for past failures or success. Institutions can identify areas of weakness and confusion by evaluating researcher’s understanding of COI policies annually through tests and training.  Lastly, COI policies must be fair and apply equally to all relevant groups within an institution, including faculty, medical staff and senior officials, students, residents, fellows, members of institutional committees (e.g., IRBs, formulary, device and purchasing committees, and guideline panels). 

Finally, researchers, institutions and manufactures must closely analyze research agreements to ensure compliance with the anti-kickback statute (AKS) and to resolve differences between NIH, FDA and Sunshine disclosure requirements to avoid a product from being delayed or denied.  Additionally, researchers must be aware that the new reporting requirements may jeopardize their membership on NIH study groups, FDA advisory committees,[47] professional medical associations (including senior positions, e.g. chairs), and guidelines committees.   

Researchers also need to pay close attention to the related covered product associated with a research payment because CMS can share this data with OIG or DOJ, who could begin or enhance investigations into off-label promotion and any related false claims associated with such payments.  Additionally, such payments could call into question the sufficiency of research data or journal articles used to support the safety and efficacy of off-label uses, causing FDA to reject a new indication.  Such payments could also raise concerns about the data and research submitted to CMS to obtain listings in the medical compendia to establish that off-label uses are medically accepted and thereby eligible for federal healthcare reimbursement.[48]    

In light of the increased focus on transparency of physician-industry relationships and the renewed calls for more openness in research transactions, all stakeholders must work together to ensure that patient’s best interest and public health remain at the forefront.  At the same time, such transparency must not inhibit scientific discovery and collaboration in ways that could reduce beneficial relationships, stigmatize researchers, and ultimately, harm patients. 

*This article is adapted from a research paper written by Abraham Gitterman, Research Associate at Rockpointe and a Recent Law Graduate at the University of Maryland, Francis King Carey School of Law.