WASHINGTON - Scientists on the government payroll could be subject to individual investigations to determine if financial collaborations interfere with their altruistic research unless changes in regulations are not made, lawmakers said.

Senators on the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education sent a warning Thursday to officials at the National Institutes of Health in Bethesda, Md., that staff should not enter into financial agreements with private companies or they'll face tougher laws to be passed by Congress.

The most recent round of congressional scrutiny comes on the heels of a Los Angeles Times article published last December alleging improprieties in collaborative agreements between NIH scientists and drug companies. Typically, arrangements include corporate payments for expert advice and are required to occur on personal time.

However, critics argue that corporate structures are growing more complex, and that NIH institute chiefs with access to federal dollars might not realize companies they have relationships with could own or control other companies competing for NIH grants. As of last week, there were 242 active collaborations, according to NIH data.

"NIH has historically been successful because of its outstanding record of excellence through independent scientific inquiry and its reputation for high integrity. But recently, the relationships of NIH employees with outside entities have raised the concerns of Congress and the media about conflicts of interest. Our public health mission - written in law - is too important to have it undermined by any real or perceived conflicts of interest," NIH Director Elias Zerhouni testified to subcommittee members.

Zerhouni personally started reviewing ethics rules and policies last July when a House committee raised questions about NIH staff receiving monetary lecture awards, he told the Senators.

"I was advised by NIH ethics officials that the receipt of lecture awards is proper under federal ethics regulations in specific circumstances," he said.

In addition to a personal review, Zerhouni said he established a new "trans-NIH ethics advisory committee in the office of the director to provide independent peer review of outside relationships and advice for improvements in our policies and procedures. I advised all senior managers to exercise great prudence in entering into any arrangement that could reflect poorly on NIH or create the appearance of conflict, even in cases where the arrangements are permitted by law."

Subcommittee Chairman Sen. Arlen Specter (R-Pa.) asked Zerhouni if a blanket suspension of active collaborations was possible until the subcommittee had time to fully investigate the individual cases. "I will defer to the director of the [Office of Government Ethics], but the current regulations do not allow that," Zerhouni replied.

"Press reports have implied that NIH and its employees willfully used alternative federal pay systems to avoid disclosing their outside activities. This is simply not true. Outside activities are internally disclosed to ethics officers and supervisors. But it is true that federal rules sometimes do not allow public disclosure of that information. I believe that this needs to be revisited, as transparency and full disclosure are core requirements of any viable process of oversight of these relationships," Zerhouni told the subcommittee.

"Clearly, even though real conflict may not have occurred, it is obvious that our practices lead to a perception of widespread conflicts that needs to be corrected as soon as possible," he added.

One of the researchers named in the Los Angeles Times article, Stephen Katz, told the Senators that the "carefully crafted story paints a very different and entirely inaccurate picture." Katz is the director of the NIH's National Institute of Arthritis and Musculoskeletal and Skin Diseases.

"These allegations of misconduct on my part are misleading, grossly inaccurate, and filled with false innuendo," Katz said. "The manner in which the story misrepresented my actions deliberately led the reader to an entirely false impression about my conduct."

Ranking minority member Sen. Tom Harkin (D-Iowa) told NIH scientists that the current collaborations they maintain with private companies "shortchanges the public."

"The findings you publish often go to applied research in other areas, and while I realize there's a need to share what's going on with the private sector to keep medicine advancing, it's important to keep your hands clean," Harkin said.

"There's a perception, whether true or not, that research is skewed when a scientist gets money from the private sector," he added. "While in government service, a scientist should not be compensated from other sources. If they want to go and get employment in the private sector, that's fine. It happens everyday."

The article focused on Katz's relationship with two companies: Advanced Tissue Sciences, of Coronado, Calif., and Schering AG, of Berlin.

"On the matter relating to Advanced Tissue Sciences, I had recused myself and made no decisions regarding their application or grant," Katz said. "In keeping with NIH policies, the recusal was sent to the deputy director for extramural research at NIH, who had responsibility for making decisions regarding this company.

"I share Dr. Zerhouni's view that the NIH must uphold the highest standards for scientific excellence and ethical practices and believe that my career in government service has been exemplary in this regard," added Katz.

"As the regulations are written now, I am loath to say a blanket suspension is possible," said Marilyn Glynn, acting director of the Office of Government Ethics (OGE) in Washington, an executive agency responsible for directing policies to prevent conflicts of interest among federal executive branch officers and employees.

"I want to know why a scientist at NIH isn't required to disclose financial arrangements, who makes more than the vice president of the United States, who is required to disclose his finances," Specter said.

"Public financial disclosures are required based on a government employee's level of authority, not on the pay scale they fall under," Glynn explained.

One possible solution the OGE could pursue is to model a regulation for the NIH based on an existing regulation for researchers at the FDA, noted Edgar Swindell, associate general counsel in the ethics division of OGE.

"The FDA already has a conflict-of-interest regulation regarding monetary relationships, but they are a regulatory agency and NIH is not. But that is one option," he said.

"We don't want to micro-manage, but we're prepared to change the law covering conflicts of interest and investigate all of these collaborative arrangements if you don't," Specter said in response.

Specter said the OGE "has had too constrained a view on regulations" and said "individual investigations would be painstaking, but something we are willing to do."

"Funding for NIH, which has seen five years of substantive increases, is different than any other agency within the government's budget, but allegations of improper conduct will only help my constituents who argue for a cut in funding," Specter added.