Financial Conflict of Interest (FCOI) Policy
1. Policy Purpose
The purpose of this policy is to establish the requirements and responsibilities associated with identifying and managing financial conflicts of interest to safeguard the integrity of Arsenal Medical, Inc. (“Arsenal” or the “Company”) research and to comply with federal regulations.
This policy has been developed to address and comply with the specific federal agency requirements as defined in the 2011 Revised Financial Conflict of Interest Regulation, Promoting Objectivity in Research (42 CFR part 50 subpart F) (the “FCOI Regulation”). This FCOI Regulation was developed to promote objectivity in research by establishing standards that provide a reasonable expectation ensuring the design, conduct and reporting of research funded under grants or cooperative agreements from the Public Health Service (“PHS”) will be free from bias resulting from Investigator financial conflicts of interest.
2. Application of Policy
This policy applies to all Investigators (including subrecipient investigators), defined below, and key personnel who are planning to participate in or are participating in PHS-funded research (“PHS-Funded Research”).
3. Key Definitions
Corporate Officer means any officer as defined in the Bylaws of the Company including the President or Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).
Executive Team means an employee or consultant of the Arsenal Medical leadership team directly appointed by the CEO.
Institution refers to any domestic or foreign, public or private, entity or organization (excluding a Federal agency) that is applying for or that receives PHS research funding. For this policy, Institution is also considered Arsenal or the Company.
Institution of Higher Education means an educational institution in any State that (a) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate, (b) is legally authorized within such State to provide a program of education beyond secondary education; (c) provides an educational program for which the institution awards a bachelor’s degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree, or awards a degree that is acceptable for admission to a graduate or professional degree program, (d) is a public or other nonprofit institution; and (e) is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted pre-accreditation status by such an agency or association that has been recognized by the Secretary for the granting of pre-accreditation status. See 20 U.S.C. 1001(a) for additional information.
Investigator means the Project Director or Principal Investigator (“PI”) and any other person, regardless of title or position, who is responsible for the design, conduct, or reporting of research funded by a PHS Awarding Component or proposed for such funding, including persons who are subgrantees, contractors, consortium participants, collaborators or consultants. Note that these responsibilities are not limited to the Project Director, Principal Investigator, or key personnel but rather, apply to all individuals who are responsible for the design, conduct, or reporting of research.
Institutional responsibilities means an Investigator’s professional responsibilities on behalf of the Institution, and as defined by 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.
Financial Administrator means the CFO of the Company or designee.
Financial interest means anything of monetary value, whether or not the value is readily ascertainable.
Financial Conflict of Interest (“FCOI”) means a significant financial interest that could directly and significantly affect the design, conduct, or reporting of the PHS-Funded Research.
Manage means taking action to address a financial conflict of interest, which can include reducing or eliminating the FCOI, to ensure, to the extent possible, that the design, conduct, and reporting of research will be free from bias.
PHS Awarding Component means the organizational unit of the PHS providing funding for research. The PHS contains certain divisions of the Department of Health and Human Services (“DHHS”), including the National Institutes of Health (“NIH”), the Food and Drug Administration (“FDA”), and the Center for Disease Control and Prevention (“CDC”). Additional details can be found in the DHHS organizational chart https://www.hhs.gov/about/agencies/orgchart/index.html
PHS-Funded Research means any research funded by a PHS Awarding Component.
Senior/Key Personnel means the Project Director/Principal Investigator (PD/PI) and any other person identified as senior/key personnel by the Institution in the grant application, progress report, or any other report submitted to the PHS Awarding Component by the Institution under the regulation.
Significant Financial Interest (“SFI”) is defined by the regulation as:
(A) 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:
- 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); 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;
- With regard to any non-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, when aggregated, exceeds $5,000, or when the Investigator (or the Investigator’s spouse or dependent children) holds any equity interest (e.g., stock, stock option, or other ownership interest); or
- Upon receipt of income related to intellectual property rights and interests (e.g., patents, copyrights).
(B) Investigators must also disclose the occurrence of any reimbursed or sponsored travel (i.e., that which is paid on behalf of the Investigator and not reimbursed to the Investigator so that the exact monetary value may not be readily available), related to the Company; provided, however, that this disclosure requirement does not apply to travel that is reimbursed or sponsored by a federal, state, or local government agency, an Institution of higher education, an academic teaching hospital, a medical center, or a research institute that is affiliated with an Institution of higher education. The Company’s Employee Handbook related to employee travel requires disclosure of, at a minimum, the purpose of the trip, the identity of the sponsor/organizer, the destination, and the duration. A member of the Company’s Executive Team may determine if further information is needed, including a determination or disclosure of monetary value, in order to determine whether the travel constitutes an FCOI with the PHS-Funded Research.
(C) An SFI 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;
- intellectual property rights assigned to the Institution and agreements to share in royalties related to such rights;
- any ownership interest in the Institution held by the Investigator, if the Institution is a commercial or for-profit organization;
- income from investment vehicles, such as mutual funds and retirement accounts, as long as the Investigator does not directly control the investment decisions made in these vehicles;
- income from seminars, lectures, or teaching engagements sponsored by a federal, state, or local government agency, an Institution of Higher Education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an institution of higher education; or
- income from service on advisory committees or review panels for a federal, state, or local government agency, an Institution of Higher Education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical center, or a research institute that is affiliated with an institution of higher education.
(D) For simplicity, an SFI would exist in the following (non-exclusive) examples:
- the Investigator (or spouse/dependent) has an SFI in an entity that sponsors their research project;
- the Investigator (or spouse/dependent) has an SFI in an entity that produces products (equipment, software, compounds, drugs, devices, etc.) or services used in their research project;
- the Investigator (or spouse/dependent) has an SFI in an entity that develops product or services their research project intends to evaluate or develop; or
- the Investigator (or spouse/dependent) has an SFI in an entity with whom they are consulting in an area that overlaps with or is the main subject of his/her research;
- Significant Financial Interest Disclosure Form (“SFIDF”) – Company form by which required person provides an itemized disclosure statement with regard to SFI categories. The form is submitted to the Financial Administrator upon assignment of work sponsored by a federal, state, or local government grant, yearly thereafter, and when any occurrences of a new SFI arises. Training is required to be completed upon first submission, and every three years unless further education is required. See Exhibit 1.
The FCOI regulation promotes objectivity in research by establishing standards that provide a reasonable expectation that the design, conduct or reporting of research funded under PHS grants or cooperative agreements will be free from bias resulting from Investigator financial conflicts of interest. Institutions are required to implement policies and procedures that are consistent with the regulation; such policies and procedures can reflect institutional priorities and culture so long as they are in full compliance with the requirements of the regulation.
The Company must be able to certify, in each application for funding, that the Company (i) has in effect an up-to-date, written and enforced administrative process to identify and manage FCOI; (ii) promotes and enforces Investigator compliance with the regulation; (iii) manages FCOI and provides initial and ongoing FCOI reports; (iv) agrees to make FCOI and SFI information (including related Institutional reviews and determinations) available to the PHS Awarding Component, promptly, upon request; and (v) fully complies with the regulation’s requirements.
5. Summary of Process
SFIs shall be disclosed on the SFIDF by an Investigator requesting PHS-sponsored funds for a research project or when an SFI arises during the course of research, regardless of whether an SFI exists, all Investigators and Senior/Key Personnel working on PHS-Funded Research are required to submit an SFIDF annually.
It is the PI’s responsibility to ensure those meeting the definition of an Investigator on PHS-Funded Research are identified and make the required disclosures in conjunction with submission of a research proposal, application for human subjects approval, and ongoing SFI disclosure.
The SFIDF and supporting materials are forwarded to the Financial Administrator for review. The Corporate Officers will be responsible for (in consultation with a member of the Executive Team) evaluating and instituting a plan for managing any disclosed financial interests, for producing institutional reports and other required reports to external sponsors and governmental agencies, and for the general administration and enforcement of this policy.
Advance approval by the Financial Administrator is required prior to engaging in government-sponsored research. An SFI review must be completed before any expenses are incurred under an award.
Annual updates are required of all Investigators and Senior/Key Personnel participating in PHS-Funded Research. Any Investigator who has acquired a new or increased financial interest during the course of a research project shall report it to the Financial Administrator within 30 days of discovering or acquiring the interest. Annual updates and newly acquired interests are reported using the SFIDF.
The NIH FCOI Interest tutorial was designed by the NIH to provide education training on what constitutes an FCOI. This course is required for anyone involved with PHS-Funded Research, which includes all Investigators, consultants and employees of Arsenal engaged in PHS-Funded Research or its compliance.
Investigators working on any PHS-Funded Research are required to complete FCOI training:
- Prior to his/her first time engaging in research related to any PHS-Funded Research,
- At least every 4 years, and
- At any time Arsenal revises its FCOI policy and procedures in any manner that affects Investigator requirements.
The course is accessible at https://grants.nih.gov/grants/policy/coi/tutorial2018/story_html5.html. Upon completion of the training, a certificate of completion must be turned into the Financial Administrator. The Investigator should retain a copy for his/her records.
Investigators are also required to complete training on the Company’s FCOI policy on an annual basis.
7. Identification of Persons Required to Disclose an SFI
It shall be the responsibility of the PI of a research project to identify all individuals working on PHS-Funded Research who meet the definition of Investigator and would be required to complete who have an SFI requiring disclosure under this policy and to ensure that a SFIDF is prepared and submitted. In addition, the PI shall be responsible for ensuring that annual updates and disclosures of new or increased financial interests are disclosed. To assist PIs with this responsibility, the Company will send out reporting reminders, SFIDF forms, and receive completed SFIDFs and provide to the Financial Administrator for review, these will occur yearly and just prior to application submissions.
8. Submission and Review of SFIDF
Every individual meeting the definition of an Investigator on PHS-Funded Research must complete a SFIDF at least annually and submit to the Financial Administrator. An initial review of the SFIDF will be conducted by the Financial Administrator to determine whether a potential for conflict of interest exists. If it is determined that there is a potential conflict of interest, then the Financial Administrator will work with a member of the Executive Team to determine what measures are needed to address the SFI identified in the SFIDF. A management plan (“Management Plan”) may be required to outline the terms, conditions and restrictions, if any, to ensure compliance with this policy. The Management Plan may require one or more of the following actions (but not limited to these actions) to be taken in order to manage, reduce or eliminate any actual or potential conflict of interest:
- Public disclosure of significant financial interests;
- Review of research protocols by independent reviewers;
- Monitoring of research by independent reviewers;
- Modification of research plan;
- Disqualification from participation in all or a portion of the research funded;
- Divesture of significant financial interests;
- Severance of relationships that create actual or potential conflicts.
All Management Plans are required to be signed by the Investigator and the Financial Administrator (in consultation with the CEO). Compliance of the management plan shall be monitored by the Financial Administrator and implemented within 60 days of identified FCOI.
9. Annual Reporting and After-Acquired Significant Financial Interests
All Investigators shall provide annual SFIDFs or more frequently if required by the Management Plan or acquired interests. Any Investigator who acquires a new or increased SFI shall promptly submit a new SFIDF within 30 days of discovering or acquiring the new SFI. It is the PI’s responsibility to ensure that any newly acquired Investigator on a research project submits the required SFIDF to the Finance Administrator. The Finance Administrator must report to the PHS Awarding Component any FCOIs within 10 days of notification of new SFIs identified by the PI on either notification report, or annual report, and immediately upon review and determination of any bias found with the design, conduct, or reporting of PHS-Funded Research and to include the requirement to submit a Mitigation Report in accordance with the regulation, and including the following items:
- The name of the Investigator with the FCOI.
- The name of the entity with which the Investigator has an FCOI.
- The nature of the SFI.
- The value of the financial interest.
- Description of how the financial interest relates to the PHS-Funded Research and why the institution determined that the financial interest conflicts with such research.
- Description of the key elements of the Company’s management plan, including other required information.
10. Violations of Conflict of Interest Policy
Investigators are expected to comply fully and promptly with this policy. Whenever a person has violated this policy, including failure to make a required disclosure of financial interests or failure to comply with a requirement of the management plan, the Financial Administrator shall make recommendations to the CEO regarding the impositions of sanctions or disciplinary proceedings against the violating individual. A member of the Executive Team and CEO will review with the employee or Investigator the specific behaviors and consequences that are determined relevant based upon review, and any other administrative actions to assure Investigator compliance, including but not limited to, supervised research activities. A member of the Executive Team and CEO will conduct retrospective reviews within 120 days of the Company determining noncompliance for SFIs not disclosed in a timely manner or previously reviewed or whenever an FCOI is not identified or managed in a timely manner and to document the reviews consistent with the regulation.
In addition, the Company shall follow Federal regulations regarding the notification of the sponsoring agency in the event an Investigator has failed to comply with this policy. The federal agency may take its own action as it deems appropriate, including the suspension of the funding for the Investigator until the matter is resolved. In any case in which the Department of Health and Human Services determines that a PHS-Funded Research project of clinical research whose purpose is to evaluate the safety or effectiveness of a drug, medical device, or treatment has been designed, conducted or reported by an Investigator with an FCOI that was not compliantly managed or reported, the Investigator involved will be required to: (i) disclose the FCOI in each public presentation of the results of the research, and (ii) request an addendum to previously published presentations of the same. Investigator will provide evidence of these disclosures to the Company.
11. Record Keeping
Records of Investigator SFIDFs, and of actions taken to manage actual or potential conflicts of interest, shall be retained by the Finance Administrator for three (3) years from the date the final expenditure report is submitted to the PHS Awarding Component, or as required by 45 CFR 74.53(b) and 92.42(b) for different situations.
12. Sub-recipient Requirements
Sub-award recipients must comply with this policy or provide certification that their organization is in compliance with the Federal policy, 2011 Revised Financial Conflict of Interest Regulation, Promoting Objectivity in Research (42 CFR part 50 subpart F) and that their portion of the research project, as detailed in their sub-award agreement, is in compliance with their institutional policies. Prior to Notification of Award, Company and sub-awards will establish in written agreement which FCOI policy will be followed by which Investigator, and if applicable, certification that the sub-award policy complies with the regulations, requirement to report identified FCOIs in a timeframe that permits the Company to report identified FCOIs to the PHS Awarding Component as required by regulation, or that Company will solicit and review subrecipient Investigator disclosures to enable identification, management and reporting of FCOIs as required by PHS. If an SFI is identified by the sub-award recipient, they are required to notify the Financial Administrator of the existence of the conflicting interest within 30 days of the identification of the interest. In addition, the sub-award recipient must certify and assure that any reported conflicting interest has been managed, reduced or eliminated in accordance with federal regulations.
13. Federal Reporting
The Finance Administrator is responsible for the reporting disposition of matters involving disclosures of SFI in accordance with applicable federal requirements. The following reports are required:
- Initial report – prior to the Company’s expenditure of any funds under a PHS-Funded Research project, the Company must provide to the PHS Awarding Component an FCOI report regarding any Investigator SFI found by the Company to be a financial conflict of interest in accordance with the regulation.
- During on-going PHS-Funded Research projects – the Company shall submit an FCOI report within 60 days after its determination that a new FCOI exists. If a FCOI was not disclosed timely, the Company shall submit a FCOI report to the PHS Awarding Component within 60 days of the discovery, as well as complete a retrospective review within 120 days of discovery of noncompliance.
- Annual FCOI report – For any FCOI previously reported to the PHS Awarding Component, the Company shall provide an annual FCOI report addressing the status of the FCOI and any changes to its related management plan.
14. Public Accessibility Requirements
The Company will provide public access to this policy on publicly accessible page of www.arsenalmedical.com. The Financial Administrator will ensure that any updated versions of this policy are provided for updated posting immediately upon implementation. In addition, an FCOI for any Investigator or Senior/Key Personnel will be posted to this same webpage in compliance with regulation, including the date of posting and (i) the minimum elements as provided in the regulation; (ii) posting within 5 days of a written request; (iii) annual updates, unless written requests are made which should continue to be available; (iv) any updates within 60 days of newly identified FCOI; and (v) remain available for three years from the date the information was most recently updated.