California has had some of the nation’s most rigorous conflict of interest rules for public employees, from annual reporting to caps on outside income. Surprisingly, the University of California (UC) System hasn’t had a standard reporting format for all campuses since those laws came into effect in 1974, and there has been no true oversight confirming compliance system-wide.
According to an in-depth article by Annie Waldman, education writer at ProPublica, a non-profit news agency with the mission to expose abuses of power and betrayals of the public trust, millions of dollars go unreported by professors at the various campuses at the university.
The Currently Fractured System
The lack of candor about outside income could be shortchanging the university—and, ultimately, California taxpayers. That’s because, alone among public universities nationwide whose policies were reviewed by ProPublica, the University of California requires most of its 4,000-plus health sciences faculty to turn over to it any earnings above an annual cap of $40,000 or 40% of their base pay, whichever is higher. (The relatively few faculty who do not participate in the university’s specialized health sciences compensation plan are exempt from this requirement.)
The department retains a fraction of the money above the threshold and returns the rest to the professor as bonus compensation or to support conferences and other academic activities. The extent of its slice varies from one department to the next; for example, the department of medicine at UC San Francisco keeps up to 20% of income over the threshold.
In 2016, auditors sampled about 300 faculty from UC Irvine’s law, business and engineering schools, as well as five health sciences departments, and found that 7% of faculty didn’t submit any disclosure forms. A quarter of faculty submitted their reports late or didn’t list the dates. “Compliance issues go undetected” because of a fractured system for tracking or monitoring conflicts, the audit found.
Conflicts of Interest and Commitment
The University of California has traditionally lacked a central reporting system for conflicts. The university divides them into two categories: conflicts of interest, or when professors’ personal—and often financial—interests could influence their professional responsibilities, and conflicts of commitment, when outside activities pull them away from their academic duties. Up until this past year, most campuses collected disclosures of outside employment with paper forms. Each campus collects at least three different types of financial disclosure, and for the most part, each department reviews its faculty’s outside employment reports.
In 2020, the university should complete implementing a major initiative across campuses, known as the Outside Activity Tracking System, to improve reporting of outside activities and address potential conflicts, spokesperson Stett Holbrook said in an email. It also plans in 2020 to “institute more formalized and focused auditing of disclosures,” Holbrook said. The new system makes reporting easier by employing “a simple, interactive format,” and provides faculty with training and education on disclosure policies, he said.
While this plan is commendable, there is the question of what should be done about recouping what has been uncollected to date.
A Telling UC Irvine Audit
At UC Irvine, according to a 2017 audit, the dean’s office takes 5%. It has at least 20 health sciences departments, each of which has its own policy, and may take as little as 5% or as much as 40%. The audit of 38 of the campus’s 800 plus full-time health faculty found that its school of medicine had lost $114,000 in revenuein one year due to underreporting by 11 professors. Based on the audit’s findings, underreporting may cost the university millions of dollars a year.
The lack of disclosure extends beyond the Irvine campus. Among the many examples reported by ProPublica: at UCLA, Dr. Richard Finn, an assistant professor of hematology and oncology, reported outside income of exactly $40,000 during the 2016-17 academic year. Federal records show that he earned at least $99,000 from pharmaceutical companies that year. Finn did not respond to questions about his industry ties.
That same year, at UC San Francisco, Dr. Shane Burch, an associate professor of orthopedic surgery, reported $19,556 in outside earnings, whereas federal records show he earned $160,000 from medical device makers for consulting, teaching and speaking during that time. Burch, who acknowledged that he owed money to the university from his outside consulting, said that the university’s policies have been unclear and poorly explained. “The University of California might have put it in the fine print, but none of us understood it,” Burch said.
Not So Reputable Institutions
Not only are the universities losing income, but their reputations are at risk. A secret conflict of interest even put one UC faculty member behind bars—against the university’s wishes.
Tatsuya Suda, a former UC Irvine computer science professor, pleaded guilty in state court in 2014 to a felony conflict of interest charge for accepting secret payments from a Japanese company that was also funding his research. Suda was sentenced to more than 280 days in jail and ordered to pay more than $400,000 in restitution and costs to the university. He served about half of his sentence. Suda, who now runs his own information technology firm, did not respond to repeated requests for comment.
Dr. Neal Hermanowicz has led the movement disorders program at the University of California’s Irvine campus, where he earns more than $380,000 a year in salary and bonuses. The widely respected expert on Parkinson’s and Huntington’s diseases adds to his income by consulting for drug companies.
Approved in 2016, the drug pimavanserin, better known by its trade name, Nuplazid, has been associated with more than 2,000 patient deaths and 10,000 other adverse events, according to FDA data—figures that one expert has called an “important warning signal.” But for Hermanowicz, those concerns were overblown.
Hermanowicz became one of the drug’s primary advocates. Besides serving as an investigator in the trials, he also published several studies on its safety and efficacy. The FDA’s clinical review reached a different conclusion. Conducted in 2016 by Dr. Paul Andreason, it found an increased risk of harm and death. Nuplazid failed two clinical trials, and patients experienced double the rate of adverse events of those on a placebo. Based on reviews of similar drugs, Andreason determined that Nuplazid’s safety profile was “not adequately safe” for treating Parkinson’s-related psychosis.
Last year, an FDA analysis found no “new or unexpected” safety risks related to Nuplazid. Hermanowicz has continued to publish studies supporting Nuplazid, to lead medical education courses sponsored by Acadia Pharmaceuticals, the drug’s manufacturer, and to receive large consulting payments from the drug maker without disclosing them to the university.