CONFLICT OF INTEREST

The talk here in Atlanta is all about the New York Times' front page article on the failure of Emory University psychiatry professor Dr. Charles Nemeroff to report $1.2 million in income he received from drug makers.

Dr. Nemeroff, one of our country’s most influential psychiatrists who earned more than $2.8 million consulting with drug makers from 2000 to 2007, failed to report his income to his university and violated federal research rules, according to documents provided to congressional investigators. Sen. Charles Grassley (R-IA), ranking member of the Senate Finance Committee, is leading investigations of academic research with the intention of curbing inappropriate relationships and conflicts of interest. He, along with Sen. Herb Kohl (D-WI), Chairman of the Special Committee on Aging, has introduced the Physician Payment Sunshine Act, S. 2029, for transparency in drug industry payments to physicians, requiring pharmaceutical drug, medical device and biotechnology companies to publicly list payments over $500 they make to doctors in return for time and expertise with product development, research and training.

There is a serious question of whether payments alter medical judgment in ways that benefit companies at the expense of patients. Can Dr. Nemeroff put the welfare of the public before personal benefit?

Dr. Nemeroff was head of his department (before he voluntarily resigned), has written over 850 research reports, is editor in chief of the journal Neuropsychopharmacology, and is a successful fundraiser. He was instrumental in securing generous gifts for Emory from Smith-Kline Beecham Pharmaceuticals and Wyeth-Ayerst Pharmaceuticals beyond funds that financed him. He has sought funding from many other companies for the university.

Let me digress here a moment for those who might not appreciate the need for conflict of interest rules for nonprofits. A conflict of interest surfaces when a board member or staff member has a personal interest that clashes with the interests of the organization or where a board or staff member has divided loyalties (also known as a “duality of interest”). Situations arising out of a conflict of interest can result in either inappropriate financial gain or the appearance of a lack of integrity by the organization, both damaging to the organization -- in this case Emory and, by extension, people who may rely on unbiased appraisals of pharmaceutical materials or devices by Emory doctors.

Avoid the possibility that those in positions of authority with your organization may receive an inappropriate benefit by adopting a conflict of interest policy. While not fail safe or required by the Internal Revenue Service to obtain tax-exempt status, the IRS (and I) strongly urge nonprofits to develop conflict of interest policies which all board members, staff, consultants and volunteers must sign. The IRS has published a suggested conflict of interest policy, included in the instructions for completing Form 1023 (the Application for Recognition of Exemption under Section 501(c)(3) the IRS Code). This detailed and comprehensive policy is published as Appendix A starting on page 25 of http://www.irs.gov/pub/irs-pdf/i1023.pdf

How hard is it for any organization to rein in a successful fundraiser? What elements of transparency need to be in place to determine conflicts?

As Emory has found out, policing conflicts of interest is no easy matter. Perhaps we in non-profit organizations can learn a lot from this reassessment of academic/industry relationships.