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Home Back Issues No. 11: Research Compliance: O.K. to accept iPod, gadget, or gift certificate?

Jan 11

No. 11: Research Compliance: O.K. to accept iPod, gadget, or gift certificate?

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Research Compliance:

O.K. to accept iPod, gadget, or gift certificate?

Reader Question: Often times I see vendors offer an iPod or other gadget or gift certificate if you purchase a certain amount of product. What are the rules regarding this when you are using federal grant dollars and work in a public University? Are the rules different depending on funding source or
your employer?

Expert Comments:

When a vendor offers an iPod, gift certificate or another similar incentive for purchasing a product, it’s tempting to quote the old maxim “don’t look a gift horse in the mouth.” But, looking long and hard at “this horse’s teeth” could save you a lot of trouble down the trail, whether federal or private funds are involved

First of all, many institutions -- public and private – have policies in place that flat out prohibit accepting gifts or incentives of any type from vendors. In fact, federal agencies (such as NIH) often require their grant recipients to put in place policies that prohibit employees from using their positions for purposes that are, or appear to be, motivated by a desire for private gain. These institutional policies are particularly stringent for health care providers in order to prevent possible violation of Stark or Anti-Kickback laws. Even policies that permit gifts of nominal value in some instances, usually won’t “wash” when the gift is related to a particular transaction or activity. So in this case, given that the “gift” is directly dependent on purchasing a certain amount of product, any de minimis exception is unlikely to apply.

In addition to institutional policies, if federal (and in many cases, state) dollars are involved, then the fact that an employee received a gift or incentive in connection with a purchase could cast a shadow on whether or not the cost of the purchase should be an allowable expense to the grant. Although these standards differ in their specifics, they all generally require that purchase transactions be at “arm’s length” to ensure that they are competitive. These procurement standards themselves also may expressly prohibit employees and agents of the grant recipient from accepting gratuities or anything of monetary value from vendors or contractors.

So, is there any way to save this “gift horse”? Yes – ask the vendor to apply whatever it would have spent on iPods or gift cards as a discount to the purchase price instead. Such action on your part drives home that you select vendors solely on the basis of price and product, and helps you avoid any appearance of impropriety or perceived conflict of interest. And, if you are successful in getting a discount, remember to let your grants and contracts administration folks know, so that they can make sure they account for it appropriately under any cost accounting principles.

Comments by Kristin H. West, J.D., Associate V.P. and Director, Office of Research Compliance, Emory University Atlanta

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Comments (26)
written by Beatrice FedUp, January 06, 2010
Some of us scientists used to earn tuition by working summers in department stores, and we thus know "the real world". Were the rest of you out catching frogs and dissecting them? Briefly, sometimes merchant "A" is GIVEN "stuff" by manufacturer "B" because B wants to publicize his product to purchasers of "A". It didn't COST "A" anything to get it. "A" is just passing it along to you as a freebie. So how can you ask "A" to discount anything by the price of the freebie, if the freebie had no price. Obviously a lot of male PIs have never bought at perfume counters, where along with your purchase of scent you get a "free" tote bag or "free" lipstick as a bonus. Sorry to be sexist--I know dumb does not respect gender.
written by Ralph W ,MD, January 08, 2010
Bea, you may know your lipsticks, but you don't know beans about the real world of sales BRIBERY! The question posted is NOT talking about some freebie or extra value of the product of no personal use to you. For example, if your supplier of buffer chemicals has a year-end sale and offers you an extra 5 kg of buffer free if you buy 20 kg, that is just a pure commercial "bargain". There is no ethical problem--since that added 5 kg of buffer holds no PERSONAL enticement for you. Howver, if the dealer were to offer you--personally--a free iPhone if you bought 500 kg of buffer for the lab, THAT wold be a violation since you, and not the lab, would enefit from the "free" toy. Get it now?.
written by Terri, January 08, 2010
Ralph, it's obvious you don't wear lipstick. The "bonus" tube can be either an inducement--if offered to inspire perfume purchase, or it can be a simple, extra "Thank You" (lagniappe)placed in your shopping bag AFTER you already decided to buy the perfume. Main point: it's hard to tell from the object alone what the motive was in giving it.
written by smee, January 12, 2010
so, if I regularly buy antibodies from company A and they have a promo, buy three of these antibodies and get a free camera, ipod, porsche, I cannot buy these antibodies at the same price I have been buying them for the last four years? Now, if I never bought a product from company B, and they offer me an ipod to buy their product, that I could see as being improper
written by kiss, January 12, 2010
It's actually quite simple. Just be true to yourself - did the personal gift make you alter your purchase decision? (your choice of vendor, product, quantity, time, or price) If so, it is improper, and most likely violates some laws and bylaws.
written by estanfo1, January 12, 2010
Why would a company entice any of us with an iPod or a gift certificate. What we all need is legimate grants to cover our research, travel, educational expenses, etc. I am not one who feels that a pen sways my clinical judgement but offering me an iPod is beyond what I need from a company. The motive is clear on that and we should be able to see the difference without being policed.
written by Michael B, January 12, 2010
This is particularly poignant for me. In 2005 I purchased a new powerbook at my university bookstore, and as an incentive, apple was offering a free iPOD with every powerbook purchased at $1399.99. Unfortunately for book keeping purposes the invoice read $1399.98 for the computer and $.01 for the iPOD. When the invoice was submitted to purchasing I received a query from our compliance officer who asked me why I had purchased an iPOD on my federal grant. She wouldn't accept the explanation that it was a free incentive since it had been recorded as $.01, and the end result was that I ended up paying out of pocket for the computer and the "free" iPOD.
written by mvlbennett, January 12, 2010
I sent several emails to the NIH Office of Research Integrity concerning this practice. They did not respond for reasons about which I can only speculate. I am delighted to see the issue brought up here; in my view this is bribery. In smee's scenario, smee benefits from company A's attempt to bribe others. You cant really fault smee for that. Kiss suggests that in a position of conflict of interest one should do the right thing. The generality of that behavior is why there are regulations on conflict of interest. Estanfo1 talks like a PI; what about the lab technician who makes many of the ordering decisions? Regulations where a discount is provided if the kickback is not accepted make a great deal of sense to me, even if they were rarely enforced.
written by ugaprof, January 12, 2010
Very simply, the ""freebies"" become the property of the institution, not the individual. If not given to an individual, it isn't a bribe.
written by Vikas, January 12, 2010
This is still not clear cut. What if you make a regular purchase at regular price, but the vendor is offering, to all customers, a free ipod? Two things: (1) You were going to make the same purchase anyway. You did not change your mind about the vendor, product, or quantity due to the promo. You were not induced or enticed by the promo. (2) The free gift is for all customers, applied uniformly, nothing specific to you or your lab. Would it be unethical to accept the ipod? Does not seem to me that way.
written by fiddler, January 12, 2010
Although Kiss's advice seems sound, I've seen two promising careers destroyed over these issues. In both cases, the individuals swore that they had followed their conscience and would do so again. Unfortunately, a better question to ask yourself is, "could this potentially be perceived as conflict of interest". If the answer is yes, it is best to graciously decline.
written by RKS, January 12, 2010
I don't police my lab but I'm guessing my technicians that place orders are occasionally getting freebies- most often small things like t-shirts etc. Since I don't benefit personally, I feel this is fine as long as it doesn't get out of hand, i.e. purchasing of reagents in a non-competitive manner. To some extent, I feel this is one of the few perks the technicians have working in an academic environment for lower pay than industry.
written by Sam, January 12, 2010
Should one not accept free candy and pens at exhibits at meetings because it may influence you purchasing decisions? It just seems to me that many cases are borderline and a simple way of dealing with it is to limit "presents" above a maximum value or % of the purchase.
written by kartalov, January 12, 2010
It is very simple actually. Just follow two rules: 1) Don't do anything you are not willing and able to get up in court and defend. 2) If there are ""freebies"", don't put them in your pocket. Instead consider them ""lab property"". To make the point clear, stamp your institution's name on it.
written by AG, January 12, 2010
Really where is the line between a promotional item (such as a pen at a meeting) and a bribe? The IPOD rebate is a case in point. Everyone is offered the incentive, not just the person purchasing. The cost to manufacture the IPOD for Apple is probably not much more than the cost of a pen with a logo (the retail cost of the IPOD has more to do with demand and costs to develop the software). Speaking as someone who has received a free IPOD with the purchase of a computer, in between placing the order and receiving the IPOD the software became outdated. But I could spend $50 (or something like that) to get it updated it I wanted to. I figured that Apple would rather offer up outdated IPODs for free rather than pay someone to update the software on each IPOD in storage. In this case is this a promotion (like a pen) or an bribe?
written by KML, January 12, 2010
Sam, I understand, pens seem silly to account, but apparently they are enough to influence physicians' recommendations for drug brands. Our institution changed the conflict of interest policy to "zero tolerance", because of the debates about what that maximum value or % should be. What amount would be influential? What amount(or freebie) would catch the eye of a patient, or a participant in a study? What amount would matter to the New York Times?
written by PI in MD, January 12, 2010
I am a ""special"" shopper, both in home as in lab life. I prefer % off your purchase or free consumables for the lab. With regard to more personal items, e.g. T-shirts, coffee mugs, to me what matters most is: Do you NEED the lab item the freebee is linked to. If yes, the lab can go ahead with the purchase. Just have it ""evenly"" distributed over the lab people. Not one has all T shirts and another person none. Problem with more expensive ""freebees""(e.g.iPods), is that a high $$ purchase is needed of one particular kind of item. Can that be justified? Will this ALL be used, OR will part of that purchase remain unused and/or expire? Then Who will ""get"" the ""free"" item? The lab or the PI???? The best specials are when you buy an item and you get ""free"" consumables to use for your lab. That makes most sense for me, especially with the tight budgets.
written by Deane Waldman, January 12, 2010
A key (not THE key) element is the researcher's credibility, specifically, the ability if reader's of the researcher's work to believe is his or her objectivity. Many years ago, I was offered money from a catheter company to investigate a catheter they had developed. I rejected their money but did study their catheter and found it very good. I published that. Had I accepted their money (even though it was no personal gain at all), my findings would have been in question. To preserve our credibility, researchers should not accept anything, repeat anything, that might be construed as creating a conflict of interest. Deane Waldman, MD MBA University of New Mexico Professor of Pediatrics, Pathology and Decision Science
written by mightythor, January 12, 2010
Institutions can't be bribed?
written by xxt4, January 12, 2010
I think it depends on the value of the gift. If the product is good and the incentive gift is just a ball-pen, T-shirt, coffee mug, or a small bag, it's ok; if the value of a gift is more than $20, should aoide accepting it.
written by Rosr, January 12, 2010
Show you accept freebies from exhibitors' booths at national or regional meetings?
written by IowaSciEd, January 13, 2010
1) As an earlier commentor noted, studies have found that even the seemingly insignificant gift of a pen can influence purchasing decisions 2) When it comes to conflict of interest - the guidelines always state conflict, or the APPEARANCE of conflict for a reason 3) Try to explain to Senator Grassley when he comes after your institution that the iPod or t-shirt you got for free doesn't matter.
written by David, January 25, 2010
Next week's question is biased towards research. I would prefer that you ask, "How many hours may I devote to research once I satisfy my teaching obligations?"
written by ekp2e, January 25, 2010
This depends on what percent of the PIs job is obligated to the research project. If 50%, then the equivalent full-time teaching assignment should be reduced by half (similarly, for 25% research effort,reduce teaching by 25%). This release is essentially "agreed to" when the university signs off on a grant application which states that a certain portion of the PIs time will be devoted to the research tasks.
written by Moshe, February 18, 2010
So when you go to a conference and you get a 'welcome packet' that has a pen from company X and a USB Memory Stick from company Y, ..., are you supposed to throw them away? Maybe you shouldn't even go to the conference because they are bribing you to come with these 'welcome packets'. I agree with previous comments that ANYTHING (including those welcome packet gimmes) is the property of whomever PAID for it. So all those pens and t-shirts should technically be given to an office manager responsible for allocating office supplies. An iPod is the same thing, someone may find use for it for recording notes or augmenting presentations ... One last note to Michael B, could you just pay them $0.01 for the iPOD so the grant isn't 'paying' for it?
written by Guest, April 20, 2010
Regarding "free" IPODs, why not use them for lab purposes? I use mine to back up data, as a graphics calculator, PDF reader, word processor, web browser etc. Another option I've seen from others working with human participants is to offer the IPOD up in a lottery in return for experiment participation (having received ethics approval first of course). If free gifts are offered then use them for research whenever possible.

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