Federal Register: May 21, 2010 (Volume 75, Number 98)

DOCID: fr21my10-23 FR Doc 2010-11885

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Veterans Affairs Department

CFR Citation: 42 CFR Part 50

Docket ID: [Docket Number: NIH-2010-0001]

RIN ID: RIN 0925-AA53

NOTICE: Part II

DOCID: fr21my10-23

DOCUMENT ACTION: Notice of proposed rulemaking.

SUBJECT CATEGORY:

Responsibility of Applicants for Promoting Objectivity in Research for Which Public Health Service Funding Is Sought and Responsible Prospective Contractors

DATES: Comments must be received on or before July 20, 2010 in order to ensure we will be able to consider the comments when preparing the final rule.

DOCUMENT SUMMARY:

The Department of Health and Human Services (HHS or the Department) and the HHS Public Health Service (PHS), proposes to amend its regulations on the Responsibility of Applicants for Promoting Objectivity in Research for which PHS Funding is Sought and Responsible Prospective Contractors. Since the promulgation of the regulations in 1995, biomedical and behavioral research and the resulting interactions among Government, research institutions, and the private sector have become increasingly complex. This complexity, as well as a need to strengthen accountability, have led to the proposal of amendments that would expand and add transparency to investigator disclosure of significant financial interests, enhance regulatory compliance and effective institutional oversight and management of investigators' financial conflicts of interests, as well as NIH's compliance oversight.

SUMMARY:

Health and Human Services Department

SUPPLEMENTAL INFORMATION

Proper stewardship of Federal funds includes ensuring objectivity of results by protecting Federallyfunded research from potential bias due to investigator financial conflicts of interest (FCOI).

I. Background

In 1995, the PHS and the Office of the Secretary of HHS published regulations at 42 CFR Part 50 Subpart F and 45 CFR Part 94 (the regulations), that are designed to promote objectivity in PHSfunded research.\1\ The current regulations are applicable to Institutions that apply for or seek PHS funding for research (except for Small Business Innovation Research (SBIR)/Small Business Technology Transfer Research (STTR) Phase I applications) and, through implementation of the regulations by these Institutions, to each Investigator participating in the research. Generally, under the current regulations:
\1\ 48 CFR Subpart 9.1, ``Responsible Prospective Contractors,'' and 48 CFR Subpart 9.5, ``Organizational and Consultant Conflicts of Interest,'' also address conflicts of interest in Federallyfunded projects. These provisions apply only to acquisitions, not to grants or cooperative agreements.

  • The Institution \2\ is responsible for complying with the regulations, including maintaining a written and enforced policy; managing, reducing, or eliminating identified conflicts; and reporting identified conflicts to the PHS Awarding Component. The reports denote the existence of a conflicting interest and the Institution must assure that it has been managed, reduced, or eliminated.
    \2\ ``Institution'' is currently defined under 42 CFR Part 50, Subpart F, as any domestic or foreign, public or private, entity or organization (excluding a Federal agency), and under 45 CFR Part 94 as any public or private entity or organization (excluding a Federal agency) (1) that submits a proposal for a research contract whether in response to a solicitation from the PHS or otherwise, or (2) that assumes the legal obligation to carry out the research required under the contract. 42 CFR 50.603; 45 CFR 94.3.
  • Investigators \3\ are responsible for complying with their Institution's written FCOI policy and for disclosing their Significant Financial Interests \4\ (SFIs) to the Institution.
    \3\ ``Investigator'' is currently defined under the regulations as the principal investigator and any other person who is
    responsible for the design, conduct, or reporting of research (or, in the case of PHS contracts, a research project) funded by PHS, or proposed for such funding. For purposes of the regulatory
    requirements relating to financial interests, the term
    ``Investigator'' includes the Investigator's spouse and dependent children. 42 CFR 50.603; 45 CFR 94.3.
    \4\ ``Significant Financial Interest'' is currently defined under the regulations as anything of monetary value, including but not limited to, salary or other payments for services (e.g., consulting fees or honoraria); equity interests (e.g., stocks, stock options or other ownership interests); and intellectual property rights (e.g., patents, copyrights and royalties from such rights). The term does not include: (1) Salary, royalties, or other remuneration from the applicant institution; (2) any ownership interests in the institution, if the institution is an applicant under the SBIR/STTR programs; (3) income from seminars, lectures, or teaching engagements sponsored by public or nonprofit entities; (4) income from service on advisory committees or review panels for public or nonprofit entities; (5) an equity interest that when aggregated for the Investigator and the Investigator's spouse and dependent children meets both of the following tests: Does not exceed $10,000 in value as determined through reference to public prices or other reasonable measures of fair market value, and does not represent more than a five percent ownership interest in any single entity; or (6) salary, royalties, or other payments that when aggregated for the investigator and the investigator's spouse and dependent children over the next twelve months, are not expected (or, in the case of PHS contracts, are not reasonably expected) to exceed $10,000. 42 CFR 50.603; 45 CFR 94.3.
  • The PHS Awarding Components \5\ are responsible for overseeing
    [[Page 28689]]
    Institutional compliance with the regulations.
    \5\ ``PHS Awarding Component'' is currently defined as the/an organizational unit of the PHS that funds [the] research that is subject to the regulations. 42 CFR 50.603, 45 CFR 94.3.

    Ensuring objectivity in research requires a commitment from Institutions and their Investigators to:

  • Completely disclose,
  • Appropriately review, and
  • Robustly manage identified conflicts.

    The purpose of the existing regulations is to ensure that there is no reasonable expectation that the design, conduct, or reporting of PHSfunded research will be biased by any Investigator FCOI.

    Since the publication of these regulations, the pace by which new discoveries are translated from the research bench into effective treatment of patients has accelerated significantly and the biomedical and behavioral research enterprise in the United States has grown in size and complexity. For example, an analysis of financial support of biomedical research from 1994 to 2004 \6\ showed that funding increased from $37.1 billion in 1994 to $94.3 billion in 2003. Fifty seven percent of the funding in 2003 came from industry sources. At the same time, relationships between individual academic researchers and industry have also increased from 28% in a 1996 survey \7\ to 52.8% in a survey conducted in 2007.\8\
    \6\ Moses H et al, JAMA; 2005; 294:13331342
    \7\ Blumenthal D et al, N Engl J Med; 1996; 335:17349

    \8\ Zinner DE et al, Health Aff; 2009; 28:181425.

    Researchers frequently work in multidisciplinary teams to develop new strategies and approaches for translating basic research into clinical application, thus hastening discovery and advancing human health. In addition, these newer translational strategies often involve complex collaborations between investigators and the private sector.

    The growing complexity of biomedical and behavioral research; the increased interaction among Government, research institutions, and the private sector in attaining common public health goals while meeting public expectations for research integrity; as well as increased public scrutiny, all have raised questions as to whether a more rigorous approach to Investigator disclosure, management of financial conflicts, and Federal oversight is required. Consequently, we previously published an Advance Notice of Proposed Rulemaking (ANPRM) in the Federal Register on May 8, 2009 (74 FR 2161021613), inviting public comment on potential changes to the regulations.

    The ANPRM invited comment on the following major areas of the regulation:

    1. Expanding the scope of the regulation and disclosure of interests

    2. Definition of ``significant financial interest'' (including questions regarding the appropriate de minimis threshold and exemptions to the definition)

    3. Identification and management of conflicts by Institutions

    4. Assuring institutional compliance

    5. Requiring Institutions to provide additional information to the PHS

    6. Institutional conflict of interest

    After careful consideration of the comments received in response to the ANPRM and further deliberation within the Department, we are proposing substantial revisions to the current regulations, detailed below. The specific comments to the ANPRM are discussed in the relevant sections describing the proposed changes to the regulations. We believe that the proposed revisions would expand and add transparency to investigator disclosure of SFIs as well as enhance regulatory compliance and effective FCOI oversight.

    II. Description of Proposed Revisions

    The following provides a more detailed discussion of the proposed revisions to the current regulations in the order that they would appear in 42 CFR Part 50, Subpart F and 45 CFR Part 94.

    Purpose (42 CFR 50.601; 45 CFR 94.1)

    We are proposing minor revisions to the text of this section. These revisions reflect a broader effort to improve internal consistency with regard to the use of various terms and phrases throughout these regulations. As a general matter, along with the more substantive changes to the regulations discussed further below, we are seeking to use this rulemaking proceeding as an opportunity to refine the current text of the regulations to improve clarity and readability for users. Applicability (42 CFR 50.602, 45 CFR 94.2)

    The current regulations at 42 CFR Part 50, Subpart F, are applicable to each Institution that applies for PHS grants or cooperative agreements for research and, through implementation of the regulations by each Institution, to each Investigator participating in such research.\9\ The current PHS contracting regulations at 45 Part 94 similarly apply to each Institution that seeks PHS funding for research and, through implementation of the regulations, to each Investigator who participates in such research. In neither case do the regulations currently apply to SBIR/STTR Phase I applications.
    \9\ In those few cases where an individual, rather than an institution, is an applicant for PHS grants or cooperative agreements for research, PHS Awarding Components will make caseby case determinations on the steps to be taken to ensure that the design, conduct, and reporting of the research will not be biased by any conflicting financial interest of the individual.

    When the existing regulations were published as a final rule in 1995, it was acknowledged in the preamble that SBIR/STTR Phase I applications ``are for limited amounts.'' \10\ Since that time, the size of these awards has increased and the amounts are not insignificant expenditures of public funds. For example, the median amount of an NIH Phase I award increased from approximately $99,000 in 1995 to approximately $182,000 in 2009. In addition, Phase I awards are often used to leverage Phase II funding or significant outside financial support, and a significant proportion of Institutions receiving Phase I funding from NIH, in particular, already have Phase II awards (approximately 200 Institutions in 2008 and 2009). As a result, it would be reasonable to conclude that many Institutions with Phase I awards will be required to implement these regulations in due course.

    \10\ 60 FR 35810, 35814 (July 11, 1995)

    In light of these factors, we asked in the ANPRM whether the scope of the regulations should be expanded to cover SBIR/STTR Phase I applications. Many of the respondents to the ANPRM indicated that any and all applications and proposals for PHS funding should be subject to the regulations, including SBIR/STTR Phase I applications. For the reasons stated above and the sentiment expressed in public comments on the ANPRM, we are proposing to broaden the applicability of the regulations by eliminating the current exception for SBIR/STTR Phase I applications.

    We also propose to add language in this section clarifying that the regulations continue to apply once the PHSfunded research is underway (i.e., after the application process). Finally, we are proposing to make minor revisions to the text of this section as part of a broader effort to improve internal consistency in the use of various terms and phrases throughout the regulations and, where feasible, consistency between the text of 42 CFR Part 50, Subpart F, and 45 CFR Part 94. Definitions (42 CFR 50.603, 45 CFR 94.3)

    We propose to add several new definitions in this section of the regulations, revise some of the existing
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    definitions, and remove one definition, as follows:

    1. Contractor. We propose a minor revision to the current definition of ``Contractor'' in 45 CFR 94.3 that would clarify that the term applies to an entity that provides property or services ``under contract'' for the direct benefit or use of the Federal Government.

    2. Disclosure of significant financial interests. This definition would be new and would mean an Investigator's disclosure of significant financial interests to an Institution. We propose to include this definitionalong with the definition of ``FCOI report'' belowbecause of the confusion that can result from the seemingly interchangeable use of the terms ``disclosure'' and ``report'' with regard to
    communications from an Investigator to an Institution and, correspondingly, from an Institution to the PHS. We propose to use the phrase ``disclosure of significant financial interests'' to describe the communication that occurs between an Investigator and the Institution requesting SFI information from the Investigator as part of its compliance with these regulations. We intend for the term ``FCOI report'' to describe communications from an Institution to the PHS regarding FCOI.

    3. FCOI report. This definition would be new and would mean an Institution's report of a financial conflict of interest to a PHS Awarding Component. We propose to add this new definition for the reasons described above regarding the ``disclosure of significant financial interests'' definition.

    4. Financial conflict of interest. This definition would be new and would mean a significant financial interest that could directly and significantly affect the design, conduct, or reporting of PHSfunded research. Although this definition would be ``new'' in the sense that it is not listed in the current definitions sections (42 CFR 50.603 and 45 CFR 94.3), the definition is consistent with language contained elsewhere in the current regulations. Specifically, subsection (a)(1) of the current 42 CFR 50.605 and 45 CFR 94.5 provides that a ``conflict of interest exists when the designated official(s) reasonably determines that a Significant Financial Interest could directly and significantly affect the design, conduct, or reporting of the PHS funded research.'' We propose to incorporate a modified version of this text into a freestanding financial conflict of interest definition in order to improve the clarity and readability of the regulations.

    5. Financial interest. This definition would be new and would mean anything of monetary value or potential monetary value. We propose adding this new definition as a companion to our proposed revision of the ``significant financial interest'' definition, described below. In the current regulations, the ``significant financial interest'' definition incorporates the phrase, ``anything of monetary value.'' In the new definition of ``financial interest,'' we propose adding the phrase ``or potential monetary value'' to capture financial interests that may not have monetary value currently, but could become valuable in the future. This proposed definition could apply, for example, to an ownership interest that an Investigator may hold in a small startup company.

    6. Institution. We propose to revise the current definition of ``Institution'' in 42 CFR 50.603 to refer specifically to an Institution that is applying for, or that receives, PHS research funding. We propose this revision to clarify the entities and organizations to which the requirements in 42 CFR Part 50, Subpart F would apply. We propose corresponding changes to the current definition of ``Institution'' in 45 CFR 94.3 to maintain consistency, where feasible, between the text of 42 CFR Part 50, Subpart F, and 45 CFR Part 94.

    7. Institutional responsibilities. This definition would be new and would mean an Investigator's professional responsibilities on behalf of the Institution including, but not limited to, activities such as research, research consultation, teaching, professional practice, institutional committee memberships, and service on panels such as Institutional Review Boards or Data and Safety Monitoring Boards. We propose to add this new definition because, as described further below, we are proposing to modify the ``significant financial interests'' definition and Investigator disclosure obligations such that the SFIs being disclosed are those that reasonably appear to be related to the Investigator's ``institutional responsibilities'' as defined.

    Under the current regulations, an Investigator generally is obligated to disclose SFIs on a projectspecific basis (i.e., interests that would reasonably appear to be affected by the research for which PHS funding is sought, or in entities whose financial interests would reasonably appear to be affected by the research). We believe that the proposed shift to a focus on ``institutional responsibilities'' in the regulations would provide Institutions with a better understanding of the totality of an Investigator's interests and would result in more consistent identification, evaluation, and management of any identified conflicts. We also believe that the revised approach would be consistent with the current practices at many institutions, which require investigators to disclose interests annually and/or on an ongoing basis, regardless of specific research projects that are underway. We welcome public comment on the specific elements that should (or should not) be included in an ``institutional

    responsibilities'' definition.

    8. Investigator. We propose to revise the definition of ``Investigator'' to clarify that it means the PD/PI as well as any other person, regardless of title or position, who is responsible for the design, conduct, or reporting of research funded by the PHS, or proposed for such funding, including persons who are subgrantees, contractors, collaborators, or consultants (or, in the case of PHS contracts, subcontractors, collaborators, or consultants). We propose these revisions based on our observations regarding the current regulations and the proper application of the ``investigator'' definition. Although we have developed regulatory guidance on this issue with regard to grants and cooperative agreements (see NIH ``Frequently Asked Question'' A.7 at http://grants.nih.gov/grants/ policy/coifaq.htm), we believe that further clarification in the regulations themselves is warranted.

    We have also revised this definition to eliminate reference to the Investigator's spouse and dependent children. As described further below, we propose to include reference to an Investigator's spouse and dependent children in the revised ``significant financial interest'' definition.

    9. Manage. This definition would be new and would mean to take action to address a financial conflict of interest, which includes reducing or eliminating the financial conflict of interest, to ensure that the design, conduct, or reporting of research is free from bias or the appearance of bias. We propose adding this definition as part of a wider reconsideration of the concepts of managing, reducing, and eliminating a FCOI. In the current regulations, these concepts are typically listed separately (see, e.g., 42 CFR 50.604(g), 45 CFR 94.4(g)), suggesting that reducing or eliminating a FCOI may not be the same as managing a FCOI. We believe that it would be more appropriate to consider the reduction or elimination of a FCOI as alternate means of managing a FCOI, depending on the circumstances. Thus, in a hypothetical example where an Institution has concluded that an Investigator's ownership interest in a company is a FCOI, the Institution
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    could manage the FCOI by requiring the Investigator to reduce his or her ownership interest by some appropriate amount, or to sell the ownership interest in its entirety.

    10. PD/PI. This definition would be new and would mean a project director or principal investigator of a PHSfunded research project. We propose to use ``PD/PI'' in the regulation in circumstances in which we may have traditionally used the term ``principal investigator'' (e.g., in the proposed ``investigator'' definition, as revised).

    11. PHS. We propose to revise the definition of ``PHS'' to include a specific reference to the National Institutes of Health. NIH is part of the Public Health Service and provides a substantial amount of research funding to Institutions, however, it is not otherwise referenced specifically in these regulations. We want to clarify for Institutions applying for, or receiving, research funding from the NIH that they are subject to these PHS regulations.

    12. Research. We propose to revise the definition of ``research'' to include a nonexclusive list of examples of different types of PHS funding mechanisms to which the definition applies. As revised, the definition would include any activity for which research funding is available from a PHS Awarding Component through a grant, cooperative agreement, or contract whether authorized under the PHS Act or other statutory authority, such as a research grant, career development award, center grant, individual fellowship award, infrastructure award, institutional training grant, program project, or research resources award.

    13. Significant Financial Interest. We propose to revise substantially the definition of ``significant financial interest'' (SFI). Under the current regulations, a SFI means anything of monetary value, including but not limited to, salary or other payments for services (e.g., consulting fees or honoraria); equity interests (e.g., stocks, stock options or other ownership interests); and intellectual property rights (e.g., patents, copyrights and royalties from such rights). The term does not include: (1) Salary, royalties, or other remuneration from the applicant institution; (2) any ownership interests in the institution, if the institution is an applicant under the SBIR or STTR programs; (3) income from seminars, lectures, or teaching engagements sponsored by public or nonprofit entities; (4) income from service on advisory committees or review panels for public or nonprofit entities; (5) an equity interest that when aggregated for the Investigator and the Investigator's spouse and dependent children meets both of the following tests: does not exceed $10,000 in value as determined through reference to public prices or other reasonable measures of fair market value, and does not represent more than a five percent ownership interest in any single entity; or (6) salary, royalties, or other payments that when aggregated for the investigator and the investigator's spouse and dependent children over the next twelve months, are not expected (or, in the case of PHS contracts, are not reasonably expected) to exceed $10,000.

    We propose to revise the definition of ``significant financial interest'' as follows, incorporating the proposed definitions of ``financial interest'' and ``institutional responsibilities'' described above:
    ``Significant financial interest means, except as otherwise specified in this definition: ``(1) A financial interest consisting of one or more of the following interests of the Investigator (and those of the Investigator's spouse and dependent children) that reasonably appears to be related to the Investigator's institutional
    responsibilities:
    ``(i) With regard to any publicly traded entity, a significant financial interest exists if the value of any remuneration 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. For purposes of this definition, remuneration includes salary and any payment for services not otherwise identified as salary (e.g., consulting fees, honoraria, paid authorship, travel reimbursement); equity interest includes any stock, stock option, or other ownership interest, as determined through reference to public prices or other reasonable measures of fair market value;
    ``(ii) With regard to any nonpublicly traded entity, a significant financial interest exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or the Investigator (or the Investigator's spouse or dependent children) holds any equity interest (e.g., stock, stock option, or other ownership interest); or
    ``(iii) Intellectual property rights (e.g., patents, copyrights), royalties from such rights, and agreements to share in royalties related to such rights.
    ``(2) The term significant financial interest does not include the following types of financial interests: salary, royalties, or other remuneration paid by the Institution to the Investigator if the Investigator is currently employed or otherwise appointed by the Institution; any ownership interest in the Institution held by the Investigator, if the Institution is a commercial or forprofit organization; income from seminars, lectures, or teaching engagements sponsored by a federal, state, or local government agency, or an institution of higher education as defined at 20 U.S.C. 1001(a); or income from service on advisory committees or review panels for a federal, state, or local government agency, or an institution of higher education as defined at 20 U.S.C. 1001(a).''

    This revised SFI definition would differ from the current SFI definition in a number of respects.

    Institutional responsibilities: As indicated in the discussion of the ``institutional responsibilities'' definition above, SFIs subject to disclosure by an Investigator to an Institution would be those that reasonably appear to be related to the Investigator's ``institutional responsibilities'' and would not be specific to a particular PHSfunded research project. As a result, when read in conjunction with the revised Investigator disclosure requirements under 42 CFR 50.604 and 45 CFR 94.4 (discussed below), we anticipate that the revised SFI definition would result in the disclosure by Investigators to Institutions of a wider array of interests on a more frequent basis. This proposed approach is consistent with many of the comments we received in response to the ANPRM, which supported expansion of the SFIs that should be disclosed by Investigators to Institutions.

    Monetary threshold: The revised SFI definition also would lower and, in some circumstances, eliminatethe existing monetary thresholds for disclosure. Under the current regulations, a SFI does not include an equity interest that when aggregated for the investigator and the investigator's spouse and dependent children, meets both of the following tests: Does not exceed $10,000 in value, and does not represent more than a five percent ownership interest in any single entity. Similarly, a SFI does not include payments (e.g., salary) that when aggregated for the Investigator and the Investigator's spouse and dependent children over the next twelve months are not expected to exceed $10,000. The revised definition would differentiate between remuneration to the Investigator (and the Investigator's spouse and dependent children) from a publicly traded entity and remuneration from a nonpublicly traded entity. With regard to a publicly traded entity, a
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    monetary threshold of $5,000 would apply to the aggregated value of any remuneration received from the entity in the twelve months preceding disclosure and the value of any equity interest as of the date of disclosure. With regard to a nonpublicly traded entity, a monetary threshold of $5,000 would apply to any remuneration received from the entity in the twelve months preceding disclosure; in addition, however, a SFI would exist with regard to any equity interest in the entity, regardless of value.

    In a hypothetical example, the proposed changes to the monetary threshold would operate as follows. Assume an Institution has required an Investigator, who conducts biomedical research at the Institution, to complete a form disclosing her SFIs. Among the Investigator's financial interests are the following: $3,000 in consulting fees that she has received in the past twelve months from Pharmaceutical Company A; stock in Pharmaceutical Company A held by her husband worth $2,500 as of the date of disclosure; and stock options she holds in StartUp Company B, a private biotechnology firm whose only products are in the early research and development stage. Assuming that these financial interests reasonably appear to be related to the Investigator's institutional responsibilities, the Investigator would be required to disclose them as SFIs. A SFI in Pharmaceutical Company A would exist because the aggregated value of her remuneration for the past twelve months and her husband's equity interest in the company exceeds $5,000 ($3,000 + $2,500 = $5,500). A SFI in Startup Company B would exist because the Investigator would have an obligation to disclose any ownership interest in a nonpublicly traded entity, even if the interest has only potential monetary value as of the time of disclosure.

    We recognize that lowering the monetary threshold, as proposed, is not without cost. In particular, while we believe that certain elements of the revised ``significant financial interest'' definition would make the disclosure and review obligations of Investigators and Institutions more efficient, we recognize that incorporating a lower monetary threshold is likely to lead to increased administrative burden on Investigators and Institutions because more financial interests are likely to be subject to disclosure and review. For this reason, we considered a variety of alternatives for the proposed regulations including a threshold that would be approximate to the current standard (i.e., $10,000), a significantly lower threshold for all types of financial interests (e.g., $100), as well the current proposal.

    We declined to propose a threshold equivalent to the current standard because we do not believe that this approach would be consistent with our statutory mandate to revise the regulations for the purpose of ``strengthening Federal and institutional oversight and identifying enhancements, including requirements for financial disclosure to institutions * * *.'' Public Law 111117, Div. D, Tit. II, sec. 219, 123 Stat. 3034 (2009). In addition, when we raised this question in the ANPRM, a majority of respondents who addressed this question favored lowering the monetary disclosure threshold. These responses were consistent with our own sense that Institutions would welcome greater transparency regarding Investigator financial interests because additional information would help them to better manage identified FCOI. Thus, for example, even if an Investigator's disclosed SFIs falling below the current monetary threshold would not themselves result in new FCOI determinations, the information could provide context for the Institution's management of higher value SFIs that the Institution determines are FCOI.

    Given the arguments in favor of lowering the monetary threshold, we analyzed whether a significantly lower threshold (e.g., $100) would be appropriate for all types of financial interests. Although there has been limited study on the effect of the exact monetary value of an Investigator's financial interests on the integrity of his or her research, the authors of at least one journal article note, ``a large body of evidence from the social sciences shows that behavior can be influenced by gifts of negligible value.'' \11\ In addition, recent legislative initiatives have incorporated low monetary thresholds in comparable circumstances. For example, the disclosure provisions that apply to applicable manufacturers of drugs and other covered items with regard to transfers of value to physicians and teaching hospitals under title VI, section 6002, of the recently enacted Patient Protection and Affordable Care Act, Public Law 111148, generally apply to transfers of value of $10 or more.
    \11\ Dana Katz, Arthur L. Caplan, and Jon F. Merz, ``All Gifts Large and Small,'' Am. J. of Bioethics, summer 2003, vol. 3, no. 3, at 39, 39.

    Notwithstanding these arguments for a significantly lower monetary threshold, we are concerned that the administrative costs associated with disclosure and review of all but negligible financial interests would outweigh the intended benefit of these regulations in promoting objectivity in research. For example, given the existing (and proposed) obligation on Investigators to update SFI disclosures during the period of award, we believe it would be a challenge for Investigators and Institutions alike to comply with this provision every time a new, all butnegligible financial interest was obtained by the Investigator.

    We welcome comment on all aspects of the proposed ``significant financial interest'' definition, including comments regarding the appropriate balance between the costs that may be associated with expanding the number of financial interests subject to disclosure as a result of a lower monetary threshold versus the potential benefits that might be expected to result from the lower threshold.

    Timing: As indicated in the example above, the revised SFI definition would also change the timing for determining whether remuneration represents a SFI. The current regulations exclude aggregated payments (including salary and royalties) that are ``not expected to exceed'' (or, in the case of PHS contracts, are ``not reasonably expected to exceed'') the monetary threshold ``over the next twelve months.'' Under the revised definition, at issue is remuneration (including salary and any payment for services not otherwise identified as salary) received from an entity ``in the twelve months preceding the disclosure.'' We believe this change would help Institutions and Investigators to determine more accurately whether or not a financial interest represents a SFI because the payments have already occurred and are likely to have been documented. Moreover, to the extent an Investigator receives additional remuneration from an entity after completing an initial SFI disclosure, such remuneration would be subject to the Investigator's ongoing disclosure obligations assuming the relevant monetary threshold were exceeded. This issue is addressed further in the discussion of 42 CFR 50.604, 45 CFR 94.4 below.

    Examples of payment for services: The current definition references as examples of payments for services, receipt of consulting fees, or honoraria. We propose to add ``paid authorship'' and ``travel reimbursement'' as additional examples in the revised definition. With regard to ``paid authorship,'' in particular, although there should be little question that receipt of payment from an entity in exchange for the drafting of a
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    publication constitutes payment for services, we believe it is important to reference this form of payment specifically in the regulations. This practice has come under increasing scrutiny in recent years and we wish to make it clear to Institutions and Investigators that such activity may be subject to the disclosure and reporting requirements depending on the circumstances of a given case, such as the amount of payment.

    Royalties & Intellectual Property: Under the existing regulation, royalties are included among the ``payments'' subject to the $10,000 threshold. Under the proposed regulations, the $5,000 threshold would apply to equity interests and ``payment for services,'' which would include salary but not royalties. Royalties nevertheless would be potentially subject to disclosure, as would other interests related to intellectual property. Specifically, the revised definition would potentially apply to any of the following: Intellectual property rights (e.g., patents, copyrights), royalties from such rights, and agreements to share in royalties related to intellectual property rights. As discussed further below, however, royalties received by the Investigator from the Institution would still be excluded from the SFI definition if the Investigator is currently employed or otherwise appointed by the Institution.

    Exclusions: We propose to modify the types of interests that are specifically excluded from the SFI definition. For example, the revised definition would only exclude income from seminars, lectures, teaching engagements, if sponsored by a federal, state, or local government agency, or an institution of higher education as defined at 20 U.S.C. 1001(a). Similarly, income from service on advisory committees or review panels would only be excluded if from a federal, state, or local government agency, or an institution of higher education as defined at 20 U.S.C. 1001(a). Thus, income from nonprofit entities other than institutions of higher education for the types of activities described above would be subject to the SFI definition. We are proposing this change due to the growth of nonprofit entities that sponsor such activities since the current regulations were promulgated in 1995. Some of these nonprofit entities receive funding from forprofit entities that may have an interest in the outcome of the Investigators' research (e.g., foundations supported by pharmaceutical companies or other industrial sectors). As a result, we believe it would promote objectivity in biomedical and behavioral research if income in excess of the relevant monetary threshold received from such nonprofit entities for teaching and advisory committeerelated activities were included within the SFI definition and disclosed by Investigators to Institutions for their review. Under the current 1995 exclusions to the SFI definition, income from such entities for the abovedescribed activities would not be disclosed.

    In developing the proposed exclusions to the SFI definition, we considered various alternatives, including whether the exclusions described above should be limited solely to income from federal, state, or local government agencies (i.e., income from institutions of higher education for such activities would be covered by the SFI definition). However, given that many academic Investigators engage in seminars, lectures, teaching engagements, as well as service on advisory committees or review panels at academic Institutions other than those at which they are employed, we concluded that the burden of requiring disclosure of the income from these activities outweighed the potential benefit to be gained from such disclosures.

    With regard to the current exclusion for any ownership interests in the institution if the institution is an applicant under the SBIR or STTR programs, we propose to broaden this exclusion to include any ownership interest in the Institution held by the Investigator if the Institution is a commercial or forprofit organization (whether or not an SBIR/STTR applicant). This proposed change is based primarily on the recognition that ownership in one's own company not only is generally an inherent and understood financial interest, but also is an interest that the Institution is already in a position to know without having to request an Investigator to include it in a disclosure of SFIs.

    For similar reasons, we do not propose to make substantive changes to the current exclusion for salary, royalties, or other remuneration paid by the Institution to the Investigator, other than to limit the exception to circumstances in which the Investigator is currently employed or otherwise appointed by the Institution. With regard to current employees and appointees, we believe not only that these financial interests are inherent and understood, but also that an Institution is in a position to know this information without having to request Investigators to include it in a disclosure of SFIs. However, other Investigators (e.g., subrecipient Investigators) may be involved with a PHSfunded research project who were previously affiliated with an Institution (e.g., former employees) but who still receive remuneration from the Institution (e.g., royalty payments). Although an Institution presumably maintains information regarding payments to all third parties, it may not be obvious to institutional officials reviewing a SFI disclosure from a subrecipient Investigator under these circumstances that recent payments have been made to the subrecipient Investigator. By limiting the exclusion to Investigators who are currently employed or otherwise appointed by the Institution, as proposed, an Institution could avoid having to investigate, as a matter of course, possible Institution payments to every subrecipient Investigator participating in a PHSfunded research project.

    We welcome comment on the proposed exclusions to the SFI definition, including, for example, whether the proposed exclusion for income from teaching and advisory committeerelated activities should be expanded to apply to all public or nonprofit entities (similar to the current regulations) or to specific categories of public or non profit entities, or further narrowed to apply solely to federal, state, or local government agencies. We are particularly interested in comments about the balance between the cumulative burden of the inclusion of nonprofits (or certain categories of nonprofits) in conjunction with defining SFIs to include institutional
    responsibilities and the potential benefit to be gained from such disclosures.

    14. Small Business Innovation Research (SBIR) Program. We propose to remove the current definition for the SBIR Program. In light of the proposed removal of reference to the SBIR program from the ``Applicability'' section and the ``significant financial interests'' definition, discussed above, the SBIR definition would no longer be necessary in the revised regulations, as proposed.
    Responsibilities of Institutions Regarding Investigator Financial Conflicts of Interest (42 CFR 50.604, 45 CFR 94.4)

    We propose to revise substantially the regulation addressing the responsibilities of Institutions regarding Investigator FCOI.

    Subsection (a) of the current regulation provides, in part, that each Institution must maintain an appropriate written, enforced policy on conflict of interest that complies with the regulations. We propose to revise this provision to require an Institution
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    not only to maintain an uptodate, written, enforced policy on FCOI that complies with the regulations, but also to make such policy available via a publicly accessible Web site. We believe these revisions would foster greater transparency and accountability with regard to institutional policies. The revised provision would also clarify that if an Institution's policy on FCOI includes standards that are more stringent than the regulations, the Institution shall adhere to its policy and shall provide FCOI reports regarding identified FCOI to the PHS Awarding Component in accordance with the Institution's own standards. Although we have developed regulatory guidance on this issue with regard to grants and cooperative agreements (see NIH ``Frequently Asked Question'' B.4 at http://grants.nih.gov/grants/policy/ coifaq.htm), we believe that further clarification in the regulation itself is warranted.

    The current subsection (a) also requires, in part, that each Institution must inform each Investigator of its policy on conflict of interest, the Investigator's disclosure responsibilities, and of these regulations. We propose to address this requirement as a new subsection (b), and to add to this new subsection an Investigator training requirement. Specifically, we propose that Institutions shall require Investigators to complete training regarding the Institution's FCOI policy, the Investigator's responsibilities regarding disclosure of FCOI, and the regulations, prior to engaging in PHSfunded research and, thereafter, at least once every two years. This proposal is consistent with the comments of a majority of the respondents to the ANPRM, who supported adding an Investigator FCOI training requirement.

    The current subsection (a) also states that if the Institution carries out the PHSfunded research through subgrantees, contractors, or collaborators (or, in the case of PHS contracts, subcontractors or collaborators), the Institution must take reasonable steps to ensure that Investigators working for such entities comply with the regulations, either by requiring those Investigators to comply with the Institution's policy or by requiring the entities to provide assurances to the Institution that will enable the Institution to comply with the regulations. We propose to create a new subsection (c) that would provide a substantially expanded clarification of an Institution's obligations with regard to PHSfunded research carried out through a subrecipient (e.g., subgrantee, contractor, or collaborator or, in the case of a PHS contract, a subcontractor or collaborator). In the ANPRM, we included a question that asked whether specific requirements related to FCOI identification, management, and reporting should be established for subrecipients. This question was based, at least in part, on the concern that awardee and subrecipient Institutions may not fully recognize their responsibilities related to the regulations. Many ANPRM respondents stated that they comply with the current version of subsection (a) by requiring a subrecipient to certify to the awardee Institution that its FCOI policy complies with the applicable Federal regulations and, in those cases when a subrecipient cannot provide a certification, requiring the subrecipient to comply with the awardee Institution's policy. We believe that this type of approach provides a useful means of reinforcing compliance with the regulations.

    Therefore, we propose to include as part of the new subsection (c) the following requirements: An Institution that carries out the PHS funded research through a subrecipient must incorporate as part of a written agreement with the subrecipient legally enforceable terms that establish whether the FCOI policy of the awardee Institution or that of the subrecipient applies to the subrecipient's Investigators. If the subrecipient's FCOI policy applies to subrecipient Investigators, the subrecipient shall certify as part of the agreement that its policy complies with the regulations. If the subrecipient cannot provide such certification, the agreement shall state that subrecipient Investigators are subject to the FCOI policy of the awardee Institution. If the subrecipient's FCOI policy applies to subrecipient Investigators, the agreement shall specify time period(s) for the subrecipient to report all identified FCOI to the awardee Institution. Such time period(s) shall be sufficient to enable the awardee Institution to provide timely FCOI reports, as necessary, to the PHS. If subrecipient Investigators are subject to the awardee Institution's FCOI policy, the agreement shall specify time period(s) for the subrecipient to submit all Investigator disclosures of SFIs to the awardee Institution. Such time period(s) shall be sufficient to enable the awardee Institution to comply timely with its review, management, and reporting obligations under the regulations. Subsection (c) would also require that the Institution must provide FCOI reports to the PHS regarding all FCOI of all subrecipient Investigators consistent with the regulations. We believe that the addition of the above text in the new subsection (c) would help clarify for Institutions and their subrecipients the requirements of both parties in these relationships and promote greater compliance with the regulations.

    Subsection (b) of the current regulation requires that an Institution must designate an institutional official(s) to solicit and review financial disclosure statements from each Investigator who is planning to participate in PHSfunded research. In the ANPRM, we asked whether large Institutions (defined as greater than 50 employees) should be required to establish an independent committee to review financial disclosures, and require that committee to report to an organizational level within the Institution that is not conflicted by the shortterm financial interests of the Investigator or Institution. After considering the responses, we weighed the complexity of the issues that can arise in reviewing financial interests and evaluating conflicts, as well as the potential practical difficulty in determining which Institutions would fall within a ``large'' Institution definition and which would not. As a result, we do not propose to change the redesignated subsection (d). That being said, however, we strongly encourage each Institution to form a committee of adequate size and scope to review Investigator SFI disclosures and assess comprehensively the potential conflicts that may arise in the Institution. In addition, since reviewing Investigator financial disclosures for potential FCOI can involve many complex issues, we recommend that Institutions consult available resources from the Federal government (e.g., NIH materials posted at http://grants.nih.gov/grants/policy/coi/) or other public resources (e.g., materials prepared by academic and professional associations or other scientific organizations).

    The current subsection (c) requires that by the time an application is submitted to the PHS, each Investigator who is planning to participate in the PHSfunded research has submitted to the designated official(s) a listing of his/her known SFIs (and those of his/her spouse and dependent children): (i) That would reasonably appear to be affected by the research for which PHS funding is sought; and (ii) in entities whose financial interests would reasonably appear to be affected by the research. All financial disclosures must be updated during the period of award, either on an annual basis or as new reportable SFIs are obtained. In the ANPRM, we asked whether this [[Page 28695]]
    requirement should be expanded to require disclosure by Investigators of all SFIs that are related to their institutional responsibilities. Many respondents to the ANPRM were in favor of expanding the SFIs that should be disclosed by the Investigator. As indicated in the above discussion of the ``significant financial interest'' definition, the proposed revision would capture as part of the definition itself the concept that a ``significant financial interest'' is one that reasonably appears to be related to the Investigator's ``institutional responsibilities.'' Accordingly, we propose to revise the current subsection (c) language as part of a redesignated subsection (e) with the understanding that the scope of Investigator disclosures would no longer be project specific, but would (consistent with the revised SFI definition) pertain to the Investigator's institutional
    responsibilities. As part of the new subsection (e), we are also proposing to revise and clarify an Investigator's annual and ongoing ad hoc disclosure obligations.

    Specifically, in addition to requiring that each Investigator who is planning to participate in the PHSfunded research disclose to the Institution's designated officials the Investigator's SFIs (and those of the Investigator's spouse and dependent children), the Institution also would have to require that each Investigator who is participating in the PHSfunded research submit an updated SFI disclosure: (1) At least annually during the period of the award, including disclosure of any information that was not disclosed initially to the Institution or in a subsequent SFI disclosure, and disclosure of updated information regarding any previouslydisclosed SFI (e.g., the updated value of a previouslydisclosed equity interest); and (2) within thirty days of acquiring a new SFI (e.g., through purchase, marriage, or inheritance). Although the current regulations include a requirement regarding the updating of financial disclosures (see current subsection (c)(2)), we believe that the revisions proposed above will provide Institutions and Investigators with greater specificity as to the timing of disclosures that are required after an Investigator's initial SFI disclosure to the Institution.

    The existing subsection (d) requires an Institution to provide guidelines consistent with the regulations for the designated official(s) to identify conflicting interests and take such actions as necessary to ensure that such conflicting interests will be managed, reduced, or eliminated. We propose to reorganize and expand this requirement in a redesignated subsection (f) to clarify an Institution's obligations. First, the guidelines to be provided by an Institution for the designated institutional officials would be required to address two related tasks, specifically, determination of whether an Investigator's SFI is related to PHSfunded research and, if so related, whether the SFI is a FCOI. Under the current regulations, the Investigator bears the responsibility for determining the relatedness of a SFI to the PHSfunded research as part of the disclosure process (42 CFR 50.604(c), 45 CFR 94.4(c)). As discussed above, however, the proposed regulations would revise the definition of ``significant financial interest'' to address ``institutional responsibilities'' and, as a result, SFIs subject to disclosure by an Investigator to an Institution would not be specific to a particular PHSfunded research project. Consistent with these proposed changes, the responsibility for determining whether an Investigator's SFI is related to PHSfunded research would shift to the Institution. This subsection would provide that an Investigator's SFI is related to PHS funded research when the Institution, through its designated officials, reasonably determines that the SFI: (1) Appears to be affected by the PHSfunded research; or (2) is in an entity whose financial interest appears to be affected by the research.

    To provide clarification regarding the determination of whether an Investigator's SFI is a FCOI, the redesignated subsection (f) would incorporate modified language moved from subsection (a)(1) of the current 42 CFR 50.605 and 45 CFR 94.5. Specifically, this subsection would provide that a FCOI exists when the Institution, through its designated officials, reasonably determines that the SFI could directly and significantly affect the design, conduct, or reporting of the PHS funded research. As discussed above, the proposed regulations would also incorporate a definition of ``financial conflict of interest'' that is similarly based on this language.

    With regard to the current requirement in subsection (d) regarding FCOI management responsibilities, we propose to include this requirement in a separate subsection (g) and clarify that the requirement includes management of any financial conflicts of a subrecipient Investigator pursuant to the new subsection (c), described above. We also propose to crossreference the Institution's revised management responsibilities that we propose in 42 CFR 50.605(a), 45 CFR 94.5(a), including development and implementation of a management plan and, if necessary, a mitigation plan. Additional discussion of these proposed revisions is addressed below. As a related matter, we propose to include a new subsection (h) that crossreferences the Institution's revised and expanded reporting requirements in the proposed new subsection 42 CFR 50.605(b), 45 CFR 94.5(b).

    Subsection (e) of 42 CFR 50.604 currently requires an Institution to maintain records of all financial disclosures and all actions taken by the Institution with respect to each conflicting interest for at least three years from the date of submission of the final expenditures report or, where applicable, from other dates specified in 45 CFR 74.53(b) for different situations. Correspondingly, subsection (e) of 45 CFR 94.4 currently requires an Institution to maintain records of all financial disclosures and all actions taken by the Institution with respect to each conflicting interest for three years after final payment or, where applicable, for the other time periods specified in 48 CFR part 4, subpart 4.7. We propose to revise this requirement in a redesignated subsection (i) of both 42 CFR 50.604 and 45 CFR 94.4 to include a responsibility to maintain records relating to all Investigator disclosures of financial interests and the Institution's review of, or response to, such disclosures (whether or not a disclosure resulted in the Institution's determination of a FCOI). We believe that this proposed revision would help clarify for Institutions our intent for the record retention obligation to apply not only in cases in which the Institution has identified a FCOI, but to all Investigator SFI disclosures whether or not such disclosure generated a response by the Institution.

    The existing regulations require at subsection (f) that Institutions establish adequate enforcement mechanisms and provide for sanctions where appropriate. We propose to revise this obligation in a redesignated subsection (j) to require an Institution to establish not only adequate enforcement mechanisms and provide for employee sanctions, but also to provide for other administrative actions to ensure Investigator compliance as appropriate.

    We propose to revise and, in some respects, shorten the certification requirement currently set forth in subsection (g). In a redesignated subsection (k), the revised requirement would require an Institution to certify that the Institution (1) has in effect at that Institution an uptodate, written,
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    and enforced administrative process to identify and manage FCOI with respect to all research projects for which funding is sought or received from the PHS; (2) shall promote and enforce Investigator compliance with the regulations' requirements including those pertaining to disclosure of SFIs; (3) shall manage FCOI and provide initial and ongoing FCOI reports to the PHS consistent with the regulations; (4) agrees to make information available, promptly upon request, to the HHS relating to any Investigator disclosure of financial interests and the Institution's review of, or response to, such disclosure, whether or not the disclosure resulted in the Institution's determination of a FCOI; and (5) shall fully comply with the requirements of the regulations. Notably, this revised subsection would eliminate much of the current certification language regarding an Institution's reporting obligations. In the existing regulations, the certification requirement in subsection (g) essentially provides the primary source of an Institution's reporting responsibilities regarding FCOI. As described further below, we propose a substantial revision and expansion of the reporting requirements and, thus, propose to move the discussion of such requirements to a newly revised subsection 42 CFR 50.605(b), 45 CFR 94.5(b).
    Management and Reporting of Financial Conflicts of Interest (42 CFR 50.605, 45 CFR 94.5)

    We propose to revise and expand substantially the current regulation regarding management of FCOI to address requirements for both management and reporting of FCOI.

    The existing regulations require, at subsection (a), that an Institution's designated official(s) review all financial disclosures and determine whether a conflict of interest exists. If so, the official(s) must determine what actions should be taken by the institution to manage, reduce or eliminate such conflict of interest. Under the existing regulation, a conflict of interest exists when the designated official(s) reasonably determines that a SFI could directly and significantly affect the design, conduct, or reporting of the PHS funded research. Subsection (a) also provides examples of conditions or restrictions that might be imposed to manage conflicts of interest, specifically, public disclosure of SFIs, monitoring of research by independent reviewers, modification of the research plan,
    disqualification from participation in all or a portion of the research funded by the PHS, divestiture of SFIs, or severance of relationships that create actual or potential conflicts.

    We propose to revise the above language as part of a redesignated subsection (a)(1) to require that, prior to the Institution's expenditure of any funds under a PHSfunded research project, the designated officials of an Institution shall, consistent with subsection (f) of the preceding section (42 CFR 50.604 or 45 CFR 94.4): Review all Investigator disclosures of SFIs; determine whether any SFIs relate to PHSfunded research; determine whether a FCOI exists; and, if so, develop and implement a management plan that shall specify the actions that have been, and shall be, taken to manage such FCOI. The most significant change in the above proposed text is the introduction of a management plan requirement. Although the existing regulations require Institutions to manage FCOI, the term ``management plan'' is not used. While many Institutions currently may develop and implement management plans as a means of fulfilling their FCOI management responsibilities, we believe that explicitly incorporating this requirement into the regulations would further help to prevent the introduction of bias into PHSfunded research across the research community. We have not proposed to specify comprehensively in this subsection what elements must be included in a management plan, however, as indicated in the discussion of subsection (b) below, the expanded reporting requirements that we propose would include an obligation to report a description of certain ``key elements'' of the Institution's management plan in certain FCOI reports. Another change in this subsection would be the deletion of the current sentence that describes when a financial conflict of interest exists. As discussed above, a modified version of this sentence would be moved to the redesignated subsection (f) of 42 CFR 50.604 and 45 CFR 94.4, as well as incorporated into a definition of ``financial conflict of interest'' in 42 CFR 50.603 and 45 CFR 94.3.

    The revised subsection (a)(1) would also include the following updated and expanded list of examples of conditions or restrictions that might be imposed to manage a FCOI: Public disclosure of FCOI (e.g., when presenting or publishing the research); for research projects involving human subjects research, disclosure of FCOI directly to participants; appointment of an independent monitor capable of taking measures to protect the design, conduct, and reporting of the research against bias, or the appearance of bias, resulting from the FCOI; modification of the research plan; change of personnel or personnel responsibilities, or disqualification of personnel from participation in all or a portion of the research; reduction or elimination of a financial interest (e.g., sale of an equity interest); or severance of relationships that create actual or potential financial conflicts. Among the differences from the current text would be the addition of a specific example in the human subjects research context. The ANPRM posed a number of questions related to the issue of whether the regulations should be amended to require specific approaches to management of FCOI related to certain types of research or alternatively, specific types of financial interests or FCOI. After considering the comments, we agree with the majority of the respondents that this approach would not account for the full range of research projects as well as the large contextual variation in circumstances in which FCOI may arise. As a result, the proposed revised regulations would impose uniform FCOI management responsibilities, regardless of the type of research, financial interest, or identified FCOI at issue.

    In addition to revising the current regulation as described above, we also propose to introduce two new subsections that clarify an Institution's obligations in situations in which an Institution becomes aware of a SFI after the PHSfunded research is already underway. Specifically, new subsection (a)(2) would require that whenever, in

    FOR FURTHER INFORMATION CONTACT

    Jerry Moore, NIH Regulations Officer, Office of Management Assessment, National Institutes of Health, 6011 Executive Boulevard, Suite 601, MSC 7669, Rockville, MD 208527669, telephone 3014964607, fax 3014020169, email jm40z@nih.gov, concerning questions about the rulemaking process and Dr. Sally Rockey, NIH Deputy Director for Extramural Research, concerning substantive questions about the proposed rule, email FCOINPRM@mail.nih.gov.