“Surfing Clinical Trial Agreements: Beware What Lurks Beneath the Surface ”

“Surfing Clinical Trial Agreements: Beware What Lurks Beneath the Surface” Ronald F. Polizzi, MBA, CRA Thomas Jefferson University Associate Director, Contracts Brian N. Squilla, MBA University of Pennsylvania Administrative & Financial Officer Pathology & Laboratory Medicine Department – School of Medicine

Negotiations Just Aren’t Easy

Goals and Objectives • Contentious clauses • Tantalizing terms • Costing concerns • Payment plans • Simple systems • Cash Flow (payment schedule) • Questions • Margaritaville

Names of Parties/Signature Recitals Scope of Services Notices Publication Confidentiality Data Intellectual Property Insurance Indemnification Subject Injury Term and Termination Use of Name/Publicity Governing Law/Venue Other terms Terminology Contractual Terms

Parties and Signature • Names of parties/signature • Does contract name and address all parties? • Full name, primary business address, jurisdiction of formation (existence) • Include individuals, sponsor, institution, sites, CRO • Distinguish roles (third party hospital or CRO) • Who signs for third party hospital? • PI/employee or not? • Corporate resolution • Read & agreed/acknowledged/understood

Recitals • Whereas/background • Subject matter • Helpful context • Sponsor description • Provide high level synopsis and framework for interpretation by parties and court • Institution purpose • Non profit • Tax exempt • Education • Research

Scope of Services • Be as specific as possible to include performance standards/timeline • Consideration/quid pro quo • Promise to act or refrain from acting in exchange for an act, inaction or promise • One party can not bind a third party without being an agent of the third party • Who is signing the agreement? • Indemnification? • Institution and sponsor have regulatory obligations and protocol specific obligations • PI will adhere to conditions imposed by the local IRB • FDA, ICH, HIPAA, Monitoring

Scope of Services, cont’d • Contractual Issues! • Work shall not begin without IRB approval • Informed consent • Sponsor may modify protocol with IRB approval • Provide option to terminate • Protocol deviation for medical necessity • Indemnification • Protocol conflicts with contract – protocol should prevail regarding science - all else CTA

Scope of Services, cont’d • Sponsor compliance • Patient safety/drug safety • Request sponsor to assume responsibility for their own legal compliance • Choose a qualified PI • Providing PI with information required to adhere to the protocol • Maintain and report adverse events to PI • HIPAA

Notices • Purpose is to assure both parties that communications have been received • Force majeure, breach, amendment, termination • The contract must clearly state other party must provide notice – defined process • Be clear where notices are to be sent • Use generic titles • Do not allow notice to be given by • Fax, email, or any informal means • Require overnight courier, US or certified mail

Publication • Institution can not accept language that restricts publications • Fulfill mission, free scholarly exchange, knowledge • Without bias, irrespective of funding source • Tax exempt status – operate in public interest • What is it? • Methods, data, results of the study • For what? • Poster sessions, abstracts, conferences, journals • When? • Database lock, completion at your site, at all sites

Publication • What does the Sponsor want? • Protect its proprietary information and complete the trial • Prevent unfavorable or neutral results • What might the Sponsor want? • Limit the publication of negative data • Suppress or minimize negative results • Who can publish; what and when • Define institution’s right to publish results arising from its participation • Define sponsors right of review and comment • Define time frames for submission to sponsor for review and comment • Delay – not to exceed on average 90 days • Multi center delay not to exceed 12 months

Confidentiality • Define confidential information • Inclusion/exclusion • Sponsor wants broad definition • All information disclosed to the study and developed by the study • Institution wants narrow definition • Decrease risk of exposure • Why? Must carve out for publication and any IP developed • Information must be identified in writing • If verbal, reduce to writing (15 days) • Endeavor to mark, use best efforts to mark • Right to refuse • Institution to take reasonable precautions • Institution to treat as if it were its own confidential information

Confidentiality • What does the institution want? • Copy for non-commercial, archival, educational purposes • To report to government or internal committees as required by accrediting agencies, etc • To publish study results • To possibly disclose to third party payors • What are the time restrictions? • Ensure a reasonable time period (3, 5, 7 years) • Address exceptions • Third party disclosure • Required by law, advance notice, and opportunity for sponsor to limit or narrow exposure

Data • Sponsor owns case report forms (CRF’s) • Sponsor owns • Other protocol required reports, drugs, supplies, devices • Institution owns • Original records including medical record and lab notebooks (source documentation) • Institution retains right to use data for its internal research, patient care and academic purposes including publications

Intellectual Property • Sponsor ownership – direct performance • Sponsor’s protocol – usually multi center study • Phase? • Sponsor’s expense (they are paying institution) • If need be assist sponsor at their expense • Non-exclusive, non-transferable, royalty-free license for internal research, educational, and patient care purposes • Institution ownership – outside the protocol scope • File patent on your own, or at request of sponsor at their expense • Provide sponsor 6 month opportunity to negotiate exclusive, royalty bearing license

Insurance • Sponsor will maintain adequate insurance coverage and provide evidence • Institution will maintain adequate insurance coverage and provide evidence • May be limited by state law • Coverage for indemnification • Coverage for subject injury • Insurance limits set according to risk • Set according to phase and type • Silence is an option

Indemnification • Promise to pay or reimburse another for a loss/expense • Hold harmless • Agreement not to sue another • Defend • One party agrees to defend by retaining counsel and paying for the costs of the defense • Sponsors protocol, drug, device • Contract states institution must follow protocol, written instructions • CRO? • Typically separate letter of indemnification (subject injury)

Indemnification • Institution wants sponsor to defend, indemnify, hold harmless: (very broad) • All liabilities, demands, damages, expenses, loss, including • Claims resulting from protocol performance Results or use of data, publication • Identify all parties, sites, etc • Don’t indemnify sponsor if possible • Public institutions can not • Sponsor wants from institution prompt notice, full cooperation • Negligence (failure to follow protocol), willful misconduct (allow for protocol deviation) • Institution must follow applicable laws, regulations

Indemnification • Permit sponsor to defend • Assist sponsor at sponsor’s expense • No admission of wrongdoing • Notice provisions • Promptly versus specified timeframe • Alternatives • Silence • Allocation of risk • Each party responsible for its own actions • Neither party will have an obligation for the other party’s acts

Subject Injury Informed consent must match contract. • Sponsor responsible for injuries resulting from patients participation in the study • Cover the broadest of potential injuries and expenses • Will institution accept third party billing? • Define limitations • No underlying illness, negligence, deviation, subject not adhering to instructions • Sponsor will reimburse what party?

Term and Termination • Term • Effective date • Specified date or upon execution of last party to sign • Expiration • Upon completion of all activities (final report, data finalized) • Termination • Either party may terminate • By sponsor upon notice • By institution • Emergence of safety issue/subject welfare • Sponsor to pay pro rata or non-cancelable obligations • Breach • Replacement of investigator

Use of Name/Publicity • Limitations on use of names, symbols, marks, logotypes • Consider needs for advertisements, press release, promotional activity • Require prior written approval other than limited to identification of institution, investigator, sponsor, protocol number, title, and funding amount • Permit to use in internal reports and fed grant applications

Governing Law/Venue • What is it? • Choice of law or conflict of laws • This determines which state or country’s law governs the contract, or which laws their courts will apply • Choice of jurisdiction or venue • This determines where disputes are resolved • Remember • State institution limited to their state laws • Decisions/decisions • Use “without regards to conflict of laws provisions” • Choice of venue should be site location • Silence - distributes risk evenly • Usually place of performance

Other Terms • Representation (fact) / Warranty (guarantee) • Research “as is” • Avoidable phrases • Best efforts – use all available resources • Satisfactory acceptance, to the satisfaction, or upon satisfactory completion – highly subjective • Time is of the essence – on time is material

Clinical Research Agreement Study Research Institution, University, Non-Profit, Organization Funding, Support, Grant Clinical Trial Agreement Trial Services Contractor, Vendor, Provider, Business Associate Payment Non-Commercial Terminology Use Don’t Use

What Does the Commercial Market Want? • High Quality • Low Cost (the price they have to pay) • As soon as possible • Market Perceptions: • Paying for University Perks • Lack of control of our costs • They think we view companies as “Banks” from which we withdraw funds

Determining Financial Feasibility • Revenue is determined by the sponsor • Fixed price contracts • Payment made based on milestone • Cost is determined by individual site • Salary, benefits, supplies, services • Establish a payment that covers all costs • Review the protocol and CT agreement • Interview investigator and/or CRC to cost-out the study

Schedule of Events

Effective Budget Negotiation and Implementation • What we negotiate today affects us tomorrow! • Careful review of the protocol and correct estimation of work involved • Understand the payment terms • Know the milestone and what triggers payments • Learn the process for accurate invoicing • Tracking payments

Payment Terms: Initial Payment • Initial payment should cover • The gap in cash-flow until the sponsor pays for visit-related activities • The cost related to staff time and supplies prior to the first subject enrollment and successful completion of the first milestone. • Must include: • IRB fees • Preparing regulatory documents • Training • Record retention • Pharmacy set-up fee • Advance payment

Payment Terms: Milestones • Vary depending on the type of study and the payment terms • Based on subject data provided to the sponsor and/or protocol activities conducted • Not based on completed phases of each subjects • Invoicing requirements are not recommended • Best practice: Frequency of payments are generally monthly or quarterly

Payment Terms: Final Payment • Generally withheld until • Data are provided to the sponsor • All queries are resolved

What is the Price v. Cost? • What do we mean by Price? • The value the market places on your product • The amount of money paid for the product • What do we mean by Cost? • The total amount of dollars incurred to produce the product. Please note: Indirect cost is fiction when it comes to pricing your product. Price is based on our value.

Who Negotiates Price and How? • Sponsors… are price insensitive in relative terms. • Avoid engaging in negotiation of expenses or any details. • Most sponsors are aware of the value of working with institutions, but we need to try to get “discount” pricing. • Reducing the price should reduce the work. • Change the discussion; discuss our price as their cost. • Our price is a total. • Include indirect rates in all elements of the budget rather than as a separate line item. • Discuss F&A as facilities and general admin.

Cost Budget • Putting a cost budget together….where do you start? • Sponsor should provide a budget template, but don’t be forced to use the template • Use your template FIRST – handout • Fit your budget into the sponsor’s format after your financial feasibility is complete • Develop an Excel document to manage all processes

Budget Template – Revenue

Budget Template – Patient Payments

F & A costs • Don’t forget about your F&A (indirect) cost? • Know your facilities F&A rates • Tip: show total cost to complete trial – this price includes F&A. • Show F&A as a percentage of total cost • It looks better to state “Our price is made up of 20% in indirect costs” than “Our cost is based on 40% indirect rate.”

Cost Budget • Read the protocol • Review the schedule of assessments and compare it with the protocol requirements • Review the protocol and correct estimation of work involved • Cost-out the time all parties will be involved in each process • Determine demands on the CRC and PI • How long will the CRC be with the patient? (Tip: Include time to evaluate subjects who don’t meet enrollment criteria) • What paperwork needs to be done when the patient leaves? (Tip: Include time for paperwork for subjects who drop out of the study prior to meeting milestones) • What is the cost for time spent (hourly) for the CRC and PI? • How much monitoring does the sponsor require of the CRC and PI to maintain data integrity?

Budget Development • Don’t forget your one-time costs! Other potential study expenses to consider: • Training/Seminars/Conferences (directly related to the research projects) • Travel expenses • Institutional Review Board (IRB) fees • Investigational Drug Service (IDS) fees • Advertising/Recruitment • Sub-contracts and Service Contracts (e.g., instrument maintenance) • Clinical Research Computing Unit (CRCU) fees • Biostatistics and Epidemiology consulting fees (Cont’d)

Budget Development • External Monitor or Contract Research Organization (CRO) • Monitoring time, site visit and site initiation costs (may include travel) • Screen failures • Supplies (e.g., blood collection tubes, chemicals, dry ice, centrifuges, mass spectrometers, liquid simulation counters) • Technology (e.g., telephone, computer) • Shipping/Packaging Supplies (e.g. dry ice) • Archival fees and medical record pulls

If All Else Fails – Call the Boyz We will make them an offer they just can’t refuse!

Questions? Ronald F. Polizzi ronald.polizzi@jefferson.edu 215-503-2127 Brian N. Squilla squilla@mail.med.upenn.edu 215-898-8065

“Surfing Clinical Trial Agreements: Beware What Lurks Beneath the Surface ”