Friday, October 30, 2009

Conflicts of Interest - The Power of External Databases (part II)

You may remember that I wrote about this summer about the power of external databases. How Department of Defense and UCLA had encountered compliance, financial, and reputation risk items that might have been prevented with better analytical routines that connected enterprise data with external data.

This month's New England Journal of Medicine features research on Conflicts of Interest Disclosures, specifically by physicians involved with certain Medical Devices, specifically orthopedic devices. Compliance with disclosure requirements was just over 70%, which is noteworthy. It makes me think about reputation risk for Research Universities, and whether their audit and compliance plans should specifically consider monitoring of these disclosures.

When I was in public accounting, we first had simple disclosures that asked if we had read the "Restricted List" which were securities that managers could not invest in because of the firm's audit relationship with those clients. First partners and then eventually all staff began to register all of their investments with the firm, so that conflicts could be detected more easily. After all, having an "on my honor, I promise I haven't invested in...." letter was not enough, and the firm began to require that we register our investments with the Independence Office so that regular comparisons to the "Restricted List" could be made instead. This improved information resulted in quite negative publicity when Conflicts were identified, but this was clearly the right thing to do. (see CFO Magazine circa 2000 for examples)

Back to Conflicts of Interest and medical research. Senator Grassley and others are pushing for Federal Sunshine Act disclosure, and many states now require pharmaceutical and medical device companies to register all payments to physicians for public disclosure. I wonder what will be the trigger to cause Research Universities to keep more than an annual "on my honor, I promise I haven't received any compensation..." letter on file for their faculty, when improved, detailed information on compensation is even more readily available.

What are the implications for Pharmaceutical and Medical Device companies as well?

Joe Oringel
Visual Risk IQ
Charlotte NC, USA

No comments: