URBANA, ILLINOIS — Cancer researcher John Mendelsohn, president of the University of Texas MD Anderson Cancer Center in Houston, has come under fire in the past month for sitting on the corporate boards of both Enron and ImClone while directing the medical center. As corporate funding for university research rises, so do financial conflicts of interest, and ethicists and officials alike are scrambling to keep corporate funding from eroding public trust in research institutions.

In December 2000, the University of Nottingham accepted $5.3 million from British American Tobacco, a multinational tobacco company, to establish Britain's first 'International Centre for Corporate Social Responsibility'. At the time of the award, the company was battling several lawsuits alleging among other things that it knowingly caused fatal diseases to smokers. It was also under investigation for aiding tobacco smugglers.

Throughout Britain, the reaction came like a swift kick in the pants. Within a year, a major cancer research charity yanked a £1.5 million donation from the university and gave it to another school. A member of the European parliament quit the university; antismoking campaigners called for students to boycott the university. Cancer researcher David Thurston moved his team to another university; Richard Smith, editor of the British Medical Journal, resigned his post as an adjunct professor of medical journalism at Nottingham; and the BMJ supported him in an editorial, writing that "some universities are accomplices in the tobacco epidemic."

The university defended its decision to accept tobacco funding, saying that tobacco was legal; that ethical guidelines would keep the research from being tainted, and that they would spend the money to benefit society. Indeed, the money is funding two faculty positions, including a visiting professor from the developing world, competitive scholarships, and a teaching program in the business school. But the school's arguments swayed few in the biomedical research community.

The events at Nottingham are an extreme example of what can happen when research institutions fail to deal effectively with conflicts of interest. As corporate funding for university research rises, so do financial conflicts of interest among individual faculties, and most universities have rules that purport to deal with the problem. But several studies have raised serious questions about institutions' willingness and ability to police themselves. Meanwhile, entire institutions like Nottingham University are coming under fire for having their own conflicts that could undermine public trust in their research. As government raises its eyebrows, institutions are creating new guidelines and scrambling for cover. And ethicists and officials alike are scrambling to keep corporate funding from eroding public trust in research institutions.

Much has been written about individual conflicts of interest, such as paid speeches, paid consulting agreements and positions on corporate boards, and part ownership of the company sponsoring an investigator's research, although institutions are still feeling around for effective policies. But Lisa Bero, a pharmacologist and health policy expert at the University of California, San Francisco, said, "A much bigger concern [than individual conflicts] is who's driving the whole research agenda and who's planning it. Now we have to worry if those people are influenced by a corporate agenda." Although hard data on such institutional conflicts are scarce, she adds, scrutiny is increasing as more cases come to light.

In some cases, such as Nottingham, institutions are reaping millions in corporate money from a questionable donor. In other controversial cases, companies are trying to buy into entire academic departments. At the University of California, Berkeley, Swiss agricultural biotechnology giant Novartis agreed in 1998 to pay $25 million to the Department of Plant and Microbial Biology, in exchange for first right to license about a third of the department's discoveries. Company representatives have a vote, albeit a minority vote, on the committee that decides how the money will be spent.

Few US schools, however, are following Berkeley's lead, in part because of the uproar sparked by the deal. But other institutional conflicts remain. Sometimes, top officers hold financial positions in companies that donate heavily to universities or benefit from faculty research. For example, MD Anderson accepted more than $200,000 in donations from Enron while Mendelsohn sat on Enron's board and directed the cancer center. (Mendelsohn minimizes the conflicts, saying that Enron's donations were an insignificant part of MD Anderson's $1.4 billion operating budget, according to a report last week in The New York Times).

Mendelsohn also sat on the board of ImClone Systems, a biotechnology company under investigation by the US Securities and Exchange Commission for misleading investors about the potential of a new anticancer drug. Mendelsohn's reputation as a researcher remains unblemished but his dual position — as top officer of a research center and corporate board member of a major donor — is the sort of conflict many ethicists frown on.

Other conflicts arise, Bero said, when a university patents technology arising from a faculty discovery, then licenses it to a company that turns it into a product. Both the investigator and the institution itself may partly own the company, thus benefiting financially from the sale of the product. The question that arises, she said, is "whose interests do these individuals have at heart?"

The question arose in the notorious case of Jesse Gelsinger, who died in a gene therapy clinical trial at the University of Pennsylvania in 1999. The head of the trial, James Wilson, held a patent on the technique used to insert the therapeutic gene, and both he and Penn held equity in a company called Genovo that Wilson founded to commercialize the technology. The case did not violate university or National Institutes of Health guidelines because Wilson did not recruit or care for patients in the trial, and Genovo did not fund the trial.

Such cases, and media reports, are prompting the US government to take a hard look at the problem. A December report from the General Accounting Office — the investigative watchdog of the US House of Congress — surveyed policies at five universities. The report blasted the institutions for poor record-keeping and inconsistent policies, and called for increased government supervision. The US Department of Health and Human Service — parent agency of the National Institutes of Health — is also planning to issue new guidelines by summer to deal with financial conflicts.

Now that government is sitting up and taking notice, US institutions are scrambling for cover. An October report from the Association of American Universities (AAU), which represents 63 top universities in the US and Canada, called for more supervision of financial conflicts of interest, including disclosure of corporate funding sources and financial interest, and rules barring financial interests in research involving human subjects, unless "compelling circumstances" exist to do otherwise. The Association of American Medical Colleges, which represents most major US medical schools, issued a report in December calling for similar restrictions and better record keeping. A second report, on institutional conflicts, is due to published in the summer of 2002. "At this point, most institutions are in turmoil," said Mildred Cho, a senior researcher at Stanford University's Center for Biomedical Ethics, Palo Alto, California.

Despite all the hand wringing, some experts still doubt that industry funding has steered research institutions off track. Arthur Caplan, director of the Center for Bioethics at the University of Pennsylvania, acknowledges that there's more reward these days for discoveries that can be commercialized, and increased scrutiny is needed. But he said federal funding, particularly for biomedical research, is still very strong in the US. "In my view, it isn't true that the university has become a pawn of industry."

But Cho said that corporate funding is slowly changing the culture at major research institutions. "The traditional role used to be seen as creating new knowledge, and in the biomedical arena the focus was on basic research." Now, there's more focus on commercializable discoveries and applied research in general. "All of those things," she said, "change the way people think about the role of the university."