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Comments on Ethics

Statement of

The Food and Drug Administration
Department of Health and Human Services


the Subcommittee on Oversight and Investigations
House Committee on Energy and Commerce

May 18, 2004


Mr. Chairman and members of the Committee, like its sister agencies in the United States Department of Health and Human Services (HHS or the Department), the Food and Drug Administration (FDA or Agency) is a public health agency. But FDA is unique in the Department because it is primarily a regulatory agency.

As a result, for more than three decades FDA has had an aggressive disclosure and review process designed to ensure that its employees do not have any conflict of interest involving companies and entities that FDA “significantly regulates.” To maintain the public trust in its public health work, FDA has placed reasonable restrictions on the financial and employment ties between FDA employees and the entities it regulates.

At this time, the Agency is confident that the specific matter described in this statement is isolated. FDA fully anticipates that, when completed, the review of outside activity requests that we have commenced will determine that the Agency’s professional scientists and administrators uniformly comply with the Agency’s stringent ethics requirements and that they conduct their regulatory work in fair, unbiased and impartial manner.


As a regulatory agency, FDA has a compelling need to monitor and impose reasonable restrictions on the financial and employment ties of our employees. FDA meets this standard through strict regulations governing financial interests and outside activities for all employees of the Agency. Applicable laws and regulations include the Standards of Ethical Conduct for employees of the Executive Branch (Title 5, Code of Federal Regulations (CFR), section 2635), Title 18, United States Code (USC) section 202-209, and the Department’s supplemental standards of conduct (5 CFR §5501).

HHS’s Supplemental Regulations contain FDA-specific provisions that establish prohibited financial interest rules for employees required to file a public disclosure report (using form SF 278) or a confidential financial disclosure report (using form OGE 450), and rules for seeking approval of outside activities. The prohibited interest regulations have been in effect since the early 1970’s and supersede the Office of Government Ethics’ (OGE) general rules on financial holdings. Under these FDA-specific regulations, employees who are required to file a public or a confidential financial disclosure form are prohibited from holding a financial interest in any organization that is significantly regulated by FDA. This prohibition extends to the employee’s spouse and minor child(ren), since their financial interests are imputed to the employee under 18 USC 208. These employees also are generally prohibited from employment with a “significantly regulated” organization.

FDA has established an Ethics Program to help ensure that the decisions employees make in their official capacity are not tainted by a conflict of interest or an appearance of a conflict of interest. FDA’s Ethics Program is an integral part of the Agency’s overall operations. The program is fully staffed and dedicated to providing advice and assistance to FDA employees on ethics related laws and regulations. The Ethics and Integrity Staff are subject matter experts on the laws and regulations that form the framework of the FDA Ethics Program.


As a consequence of our strict Supplemental Regulations, employees who are required to file a public or confidential financial disclosure report are prohibited from having employment with “FDA significantly regulated organizations.” In addition, public and confidential filers may not participate in consulting activities with any significantly regulated firm. There is a very narrow exception to this broad prohibition, which is limited to the practice of medicine, pharmacy, dentistry, etc. The purpose of this exception is to allow employees to maintain their professional skills and licenses.

FDA employees are required to seek advanced approval for all outside employment and certain outside activities with the following exceptions: participation in activities of a political, religious, social, fraternal, or recreational organization (unless the position held requires the provision of professional services or is performed for compensation other than the reimbursement of expenses). Outside activities that require approval include, but are not limited to, self-employment activities, office holding in professional societies, teaching, writing and speaking activities, consultant or contracting work.


Dr. Emanuel F. Petricoin is a confidential filer in FDA’s Center for Biologics Evaluation and Research (CBER or the Center). His duties at FDA do not include reviewing pending applications for approval of new medical products.

In September 2002, Dr. Petricoin requested approval of an outside activity to provide consulting services to Biospect, Inc. The request was reviewed and approved in October 2002 by the Director, Division of Management Services, CBER. At that time CBER reviewed available information on the company to determine whether FDA regulated Biospect’s activities, and we concluded that they were not FDA-regulated.

During a recent review of outside activity requests, CBER questioned the approval of this outside activity. The Center inquired about the current status of the company’s business and whether an outside activity with this company is appropriate and approvable. Further review of Biospect, Inc. identifies the company as an emerging life science company that develops and identifies protein biomarker patterns. FDA consulted with HHS and subsequently determined that Biospect, Inc. participates in activities that are significantly regulated by FDA, and therefore outside activities with this company are prohibited for public and confidential filers.

On Friday, May 7, 2004, Dr. Jesse Goodman, Director of CBER met with Dr. Petricoin and advised that because Biospect, Inc. is now considered significantly regulated by FDA, Dr. Petricoin must immediately cease all activity with respect to Biospect, Inc. Upon being informed of this, Dr. Petricoin immediately and voluntarily agreed to end all activity with Biospect, Inc. Accordingly, approval for this specific outside activity has been withdrawn and this outside activity has ended.


Since 1970, review of FDA employees’ requests to participate in outside activities has occurred within the FDA centers, at levels below that of the Center Director. This was based on the premise that individual FDA organizations are more knowledgeable about the official duty activities of their employees and therefore are better able to identify outside activities that may present conflict of interest concerns. Within CBER, the approving authority was delegated to the Director, Division of Management Services.

FDA now believes that this delegation should be at a higher level. Consequently, on May 6, 2004, the Acting Commissioner issued an interim policy regarding the approval of outside activities. Under this policy, FDA Center Directors must review and, if an activity is allowed, approve all outside activity requests for employees within their centers. The Commissioner of Food and Drugs will be the approving official for employees in the Office of the Commissioner, and the Associate Commissioner for Regulatory Affairs will approve all requests for the employees of the Office of Regulatory Affairs.

In addition, in light of recent questions about possible conflicts of interest involving HHS agencies, the Acting Commissioner of Food and Drugs has directed a comprehensive review of all current outside activity requests for all FDA employees. Each request is being reviewed for compliance with applicable laws and regulations by Jeffrey M. Weber, Associate Commissioner for Management, Dr. Norris Alderson, Associate Commissioner for Science, and the FDA’s Office of Management Programs, Ethic and Integrity Staff. Once that review has been completed, FDA will issue a final policy on the review and approval of outside activities.


FDA’s commitment to the highest ethical standards in its dealings with regulated entities remains constant. FDA is confident that the current review of FDA employees’ outside activities will show that the nation is well served by the dedication of FDA’s expert scientists and physicians and their demonstrated ability to conduct the public business fairly and impartially. At FDA, we are committed to the maintaining the highest ethical standards to assure that the decisions employees make in their official capacity are not tainted by a conflict of interest or an appearance of a conflict of interest.