Top legal and ethics officials in the Department of Health and Human Services have repeatedly allowed government scientists to engage in lucrative consulting deals with pharmaceutical and biotechnology companies while ignoring the concerns of lower-level ethics officers, according to evidence presented at a House subcommittee hearing yesterday.

In one highlighted case, top HHS officials during the Clinton administration insisted that the director of the National Cancer Institute, Richard D. Klausner, be deemed eligible to receive a $40,000 award from the University of Pittsburgh even though the university is a major NCI grant recipient -- and despite the fact that the institute had just settled a lawsuit brought against it by a Pitt researcher, on terms favorable to the university.

At a minimum, the proximity of those events gave the appearance that Klausner was being rewarded by the university for helping to settle the suit, said ethics officers who told the subcommittee yesterday they were uncomfortable with the arrangement but were pushed by HHS general counsel to endorse it.

In a more recent case, a pair of scientists employed by the NCI and the Food and Drug Administration were twice approved to do outside consulting for a California technology company even though that company appears to be in competition with a Maryland firm that already had a formal arrangement with the government to use the same scientists' expertise.

How is it, the subcommittee chairman, James C. Greenwood (R-Pa.), asked, that the scientists were allowed to profit personally from a deal that may have undercut a taxpayer-funded public-private collaboration?

Representatives' descriptions of these and other examples punctuated a tense five-hour hearing that significantly widened a congressional investigation into possible conflicts of interest in the federal biomedical enterprise.

The investigation by the Energy and Commerce subcommittee on oversight and investigations -- and others ongoing by the General Accounting Office, the Office of Government Ethics and the HHS inspector general -- has prompted National Institutes of Health Director Elias A. Zerhouni to make substantial changes in the way that agency approves and tracks its scientists' outside endeavors, which can add hundreds of thousands of dollars to researchers' annual income.

Yesterday the questions spilled over to the FDA, where ethics officers recently approved a request by agency scientist Emanuel Petricoin to accept payments from a company trying to develop products that would plausibly be regulated by the agency.

Officials there also approved Petricoin's request to accept free travel and an honorarium to speak at a beach resort conference sponsored by ImClone Systems Inc. and Bristol-Myers Squibb Co. -- two companies not only regulated by FDA but also at the heart of the recent Martha Stewart scandal surrounding the cancer drug Erbitux. (Petricoin later decided not to take the trip.) "These decisions are the opposite of what people have the right to expect from their ethics officials," said Rep. Henry A. Waxman (D-Calif.).

In response to congressional inquiries, acting FDA Commissioner Lester M. Crawford said yesterday that he has issued a new policy requiring that center directors -- not lower-ranking officials -- review all employee requests for outside work.

Crawford also has initiated an internal review of such arrangements involving FDA employees. And Zerhouni has begun to seek information on the amount of money NIH employees have received in their outside deals -- information that has until now been incomplete.

As with other cases of possible conflict of interest raised by the committee in recent months, none of the scientists involved has been accused of breaking government ethics rules, which vary by agency but generally forbid federal employees from directly leveraging their positions in ways that lead to real or perceived personal gain.

Greenwood expressed suspicion that the prize Klausner received -- the Dickson Prize for Medicine -- was a payoff for his cooperation with the University of Pittsburgh. The prize was given to Klausner in 1997 for work he did before 1995 -- a breach of university rules that say the prize is to be given for work in the current year, Greenwood said.

"Giving the prize to Klausner in 1997 was like giving the Academy Award to a well-liked actor who just didn't happen to make any movies that year," Greenwood said.

Edgar Swindell, who in 1997 was acting director of the HHS ethics division, told the subcommittee he and other ethics officers were under strict orders from then-HHS General Counsel Harriet S. Rabb to assess such requests in purely legal terms, without regard to concerns about ethics or "how this might appear on the front page of The Washington Post." Those ethics rules, while warning about appearances of conflict, allow federal officials to receive "bona fide" awards even from grantee institutions.

"So even though this is the ethics division, you're not supposed to use any ethics," Rep. Joe Barton (R-Tex.) fumed.

"It's not a decision I look back on with fondness or pride," said Swindell, now HHS's associate general counsel for ethics.

Swindell said he has not felt the same pressure to approve marginally acceptable ethics decisions since the arrival of the Bush administration. But he conceded that he helped prepare the now controversial waiver that current HHS Secretary Tommy G. Thompson signed allowing then-Medicare administrator Thomas A. Scully to negotiate outside employment while he was still in his government position. In December Scully joined an Atlanta law firm that represents drug makers, hospitals and other health care businesses.

The FDA's Petricoin and NCI researcher Lance Liotta told the subcommittee they saw no conflict, at least at first, when they requested and received ethics approval to consult for Biospect of South San Francisco, a company developing technologies that may aid disease detection. The two were already part of a federal partnership in which they spend some of their government time collaborating with Bethesda-based Correlogic Systems.

The two scientists did not tell either company they were working for the other because, Liotta said, "there was no overlap in my mind." But Greenwood noted that the two companies' descriptions of their business goals are very similar, and that Correlogic's co-founder complained to the NCI when he found out about the Biospect deal.

Although ethics officials had twice approved the dual arrangements, both scientists terminated their Biospect arrangements last week because, they said, they began to see evidence that Biospect's business plan was evolving in a way that might constitute a conflict of interest for them.

Both Liotta -- who an NIH official said earned as much as $45,000 from the Biospect deal -- and Petricoin were accompanied yesterday by their lawyers.

The subcommittee also focused on the growing number of NIH employees hired under "Title 42," a special provision that boosts their salaries while allowing them to sidestep certain reporting requirements for outside collaborations.

Zerhouni has recently sought to tighten financial reporting requirements for many of those hired under that provision but has argued for the importance of allowing NIH scientists to earn competitive salaries and in some cases to do outside consulting.

Several subcommittee members said they are giving serious consideration to banning all such arrangements.