Presentation on key aspects of clinical trial agreements, with an emphasis on key clauses that may not get as much attention as normal, including choice of law, confidentiality, material transfers, record retention, termination, etc.

1. FDACounsel.com
How to Negotiate Other Important
Contract Terms
Strategic Research Institute
14th International
Contracting & Negotiating Clinical Trials
September 27 - 28, 2004 ♦ San Diego
Michael A. Swit, Esq.
FDACounsel.com
THE LAW OFFICES OF MICHAEL A. SWIT
539 Samuel Ct., Suite 229
Encinitas, CA 92024
760-815-4762 ♦ fax: 760-454-2979
mswit@fdacounsel.com
www.FDACounsel.com
Stacie S. Switzer
Counsel
TAKEDA PHARMACEUTICALS NORTH AMERICA
475 Half Day Road
Lincolnshire, IL 60069
(w) 847-383-7488
(f)847-383-3481
sswitzer@tpna.com

2. FDACounsel.com 2
Lawyerly Disclaimer
 The views expressed in this slide show,
as well as comments during the related
presentation are solely those of the
presenters and do not necessarily
reflect the position or policy of their
employers or any other person.
 Ms. Switzer and Mr. Swit are not, to
their knowledge, nor after due
investigation, related by blood,
marriage or otherwise…☺.
 Now, on with the show …

3. FDACounsel.com 3
Parties
 Who are the parties to the
Agreement?
 Problems encountered:
 PI as a party to the Agreement
 Problem: Some sites will not recognize an
agreement signed only by the principal investigator.
 Happy medium:
Sponsor: obtain site signature
Site: OK, more control over PI

4. FDACounsel.com 4
Parties …
 Problem: Some sites will not allow
investigator to sign as a party to the
agreement (do not want PI personally liable)
 Happy medium: Have PI sign as “read and
understood” or “acknowledged” (remember, PI
MUST complete and sign 1572 Form which outlines
his obligations in accordance with 21 CFR 312)
Sponsor: not a big issue; PI still owes a fiduciary
duty to all
Site: insulates PI from contractual liability

5. FDACounsel.com 5
Parties …
 Agreement is between CRO and Site/PI
 Problem: Sponsor is not a party (but has obligations
in the trial – see 21 CFR 312)
 Happy medium: Site will want to obtain:
 Evidence of Sponsor/CRO relationship (may have
executed a letter for sites)
 Agency letter between Sponsor & CRO
 Letter of Indemnification -- or better yet
 Combo letter (agency, indemnification, insurance,
subject injury)
Sponsor: should want to ensure control over site
Site: wants to make sure it has remedy vs. Sponsor

6. FDACounsel.com 6
Scope of Work
 Assure a clearly defined and
comprehensive scope of work.
 CTA:
 Protocol
 Specify investigators duties
 Services Agreements:
 Specifications
 Problem: if you don’t, costs may
jump

7. FDACounsel.com 7
Debarment
 Debarment
 What is it?
 Federal Regulations
 Debarment – See 21 USC 335(a) and (b)
 Authorizes FDA to preclude individuals/corporations
form participating in the drug industry in any
capacity whatsoever
 Results from criminal acts such as falsifying data,
bribing FDA officials for preferential treatment
 When filing for drug approval, a drug company
must submit a signed statement that no debarred
person worked on the application (includes
consultants/contractors)
 $1M fine
 http://www.fda.gov/ora/compliance_ref/debar/

8. FDACounsel.com 8
Debarment …
 Disqualification - See 21 CFR
312.70
 Prevents investigator from receiving
investigational drugs
 Results from criminal acts such as falsifying
data and other egregious GCP
 http://www.fda.gov/ora/compliance_ref/bim
o/disqlist.htm

9. FDACounsel.com 9
Debarment …
 Problems
 Qualifying language –this is a federal law
 “To the best of knowledge”
 Happy Medium: Assure due diligence
 Check website
 Contact FDA’s Office of Enforcement for up-to-date
debarment list:
12720 Twinbrook Parkway
Rockville, MD 20852
(301)827-0410
fax: (301)827-0482
tchin@fdaem.ssw.dhhs.gov
 Site: Limit scope of debarment/disqualification to those
individuals performing work on a specific study.
 Institute use of a pre-clinical trial form: PI and any
subinvestigator warrants no debarment of self or persons
working on study
 Sponsor: this is a key provision

10. FDACounsel.com 10
Record Retention
 Record Retention
 Period of time various study records must be
retained
 21 CFR 312.57 (Sponsor’s duties) & 21 CFR 312.62
(Investigator’s duties) –
 vague – could be two years, could be 15 years!
 ICH E6 5.5 (Global Studies)
 Not incorporated into federal law in US (but required for global
studies)
 Retention until:
 2 yrs after last approval of marketing app in an ICH region
and until no pending/contemplated apps -- or
 2 yrs after discontinuation of investigational product.

11. FDACounsel.com 11
Record Retention …
 Problems
 Long retention periods for site (as compared to site
policies or fed law?)
 Where to store records?
 Who pays?
 Destruction of records
 Record retention policies may prohibit destruction
 Happy medium:
 Require sponsor consent to destroy records; or
 Return records to sponsor (to extent allowable); or
 Provide for indefinite retention at a third party
facility

12. FDACounsel.com 12
FDA Inspections
 Inspections
 Right to notice
 FDA may inspect sponsor at “reasonable times”
 FDA may inspect Investigator at “reasonable times”
 Sponsor’s right to be present during FDA
inspection of PI
 Replying to deficiencies
 Contrast this with “audit” right of
sponsor to inspect PI at “reasonable
times”

13. FDACounsel.com 13
Termination
 What is it: ability to cancel or
“escape” performance of the
contract without “breach”
 Problems:
 Ability to terminate without cause (for any
reason)
 Assure this type of termination is in writing. Duty
to provide “reasonable notice” is required under
modern case law; otherwise, contract may fail for
lack of consideration.

14. FDACounsel.com 14
Termination …
 Sponsor: typically wants the right to
terminate w/out cause –
 Site incurs expenses upfront that are “amortized”
across the study (i.e. salary, supplies, advertising,
patient recruitment)
 Happy Medium:
 allow for appropriate remedies (see below)
 specify particular circumstances for termination,
such as:
♦ FDA places a clinical hold
♦ Safety issues
♦ Investigator/site breaches the agreement and
breach not cured w/in time period.
♦ Safe harbor: termination for “business”
decisions

15. FDACounsel.com 15
Termination …
 Site right to termination w/out cause
 May be a duty to subjects to continue
 Termination of site can cause serious delays in getting a
particular drug to market (available to general public)
 Happy medium -- specify circumstances
 Site may terminate:
 PI unable to perform (leaves site) and acceptable replacement
cannot be identified
 FDA places a clinical hold or local IRB withdraws study approval
 Sole discretion of PI, safety of subjects is compromised
SPONSOR – would want IRB concurrence to preclude
arbitrary action
 Sponsor materially breaches agreement and breach not cured
w/in notice period

16. FDACounsel.com 16
Termination …
 Remedies
 Problem: costs of termination (who bears
the costs?)
 Site perspective: Sponsor has the deep pockets and
should bear all costs incurred by site for termination
 Sponsor perspective: direct and consequential costs
of a termination are extremely high (considering each
day of delay in bringing a drug to market). Sponsor
should not be responsible to Site for termination costs
 Is there a happy medium?

17. FDACounsel.com 17
Termination …
 How about: Fixed-price (per patient) to cost-
reimbursement upon termination
 Per patient costs
 Non-cancelable obligations through date of
termination
 Unless: termination due to breach by Site, then
 Fixed-price, per patient (pro-rated)
 But, what if CRO involved? Gets a little
dicier for the sponsor.

18. FDACounsel.com 18
Choice Of/
Governing Law
 Choice of/Governing law
 What is it?
 Law: the state law that will be used in the
event of dispute
 Jurisdiction: The right and power of a
particular court to adjudicate on a matter
 Venue: where a dispute may be resolved

19. FDACounsel.com 19
Choice Of/
Governing Law …
 Problems:
 Customary that the “payer” dictates governing law:
 PI obligations to patients make jurisdictional issues
difficult
 Site attorneys are familiar with own state law and
jurisdiction (argument, if a dispute, parities typically
hire outside counsel)
 Happy medium
♦ Remain silent (issue dealt with IF a dispute –
unlikely)
♦ Chose law of state with a great deal of case law
(e.g., New York) or model corporate
statutes (e.g., Delaware)

20. FDACounsel.com 20
Choice Of/
Governing Law …
 Problems …
 Many public sites cannot negotiate
law/jurisdiction as they are governed by
state statute
 Happy medium:
 Remain silent

21. FDACounsel.com 21
Assignment
 What is it?
 Transfer by a party to a non-party
rights under a contract; or
 Transfer of the rights and duties –
assignment of the contract.

22. FDACounsel.com 22
Assignment …
 Problems
 Sponsor right
 Due to industry climate, sponsor must have the
ability to assign its contracts (take-over, merger,
etc.) without consent
 Site must provide updates/possible
administrative changes to the IRB, other
administration considerations
 Happy medium?
 Sponsor agrees to provide notice of
assignment: what is reasonable?

23. FDACounsel.com 23
Assignment …
 Sites/PI right
 Site/PI picked because of reputation – becomes
personal contract (which is not assignable)
 Sponsor must have control over who is performing the
trial (1572 form is required by the PI; what to do with
subjects currently on protocol?; debarment or
disqualification issues; quality issues)
 May want to require sponsor consent to assign
 assure that Site/PI must provide reasonable notice
so that the protocol can be submitted and approved
by the appropriate IRB; 1572 forms are completed
and signed, a new CTA can be negotiated and
signed

24. FDACounsel.com 24
Publicity
 Publicity
 Sponsor and Site need control over
the use of their respective names
 Problems
 may have federal (e.g., SEC) reporting
requirements
 Requirement to obtain written consent for
each use may be overly burdensome

25. FDACounsel.com 25
Publicity …
 Happy Medium:
 Limit use to “promotional” purposes
 Sponsor – be careful here, though, that there is
not off-label, pre-approval promotion by site
going on that could be attributed to you
 Specify situations in which disclosure is okay
 Mandatory conflict of interest disclosures
 Federal/state/local reporting (sponsor and
amount of funding)
 Internal reporting requirements

26. FDACounsel.com 26
Order of Precedence
 In the event of a conflict between the terms of the
CTA and any attachments (protocol, budget, etc),
what document controls?
 1st view: terms of Protocol govern
 2nd view: terms of Agreement govern
 Problems:
 sometimes “contractual” terms are placed in Protocol:
confidentiality, publication.
 Other duplicate terms are in more than one document:
record retention, inspections, reporting requirements
 Happy medium: Protocol governs scientific conduct of
trial conduct of trial; Agreement governs all else
 Caveat: be careful to define “scientific conduct” carefully
and ensure that no key scientific duty is omitted from
either document

27. FDACounsel.com 27
Authorized Representative
 Similar issue to “Parties”
 Problem:
 Ensure person signing has corporate
authority
 Include a representation that all
necessary approvals to enter contract
have been secured

28. FDACounsel.com 28
Questions?
Write, call, fax or e-mail:
Michael A. Swit, Esq.
FDACounsel.com
THE LAW OFFICES OF MICHAEL A.
SWIT
539 Samuel Ct., Suite 229
Encinitas, CA 92024
office: 760-815-4762 ♦ fax: 760-454-2979
mswit@fdacounsel.com
www.FDACounsel.com
Stacie S. Switzer, Esq.
Counsel
TAKEDA PHARMACEUTICALS NORTH
AMERICA
475 Half Day Road
Lincolnshire, IL 60069
(w) 847-383-7488
(f) 847-383-3481
sswitzer@tpna.com

29. FDACounsel.com 29
About your instructors
Michael A. Swit has over 20 years of experience addressing critical FDA legal and regulatory
issues. His vast and varied experience, which he is now providing as a solo practitioner, includes
serving for three and a half years as vice president and general counsel of Pharmaceutical
Resources, Inc. (PRI) a prominent generic drug manufacturer through its Par Pharmaceutical
subsidiary. He thus also brings an industry and commercial perspective to his representation of
FDA-regulated companies and, to that, effect also counsels on an array of transactional issues
relating to FDA-regulated biomedical industry, including clinical research agreements, mergers &
acquisitions, contract manufacturing, and due diligence inquiries.
While at PRI from 1990 to late 1993, Mr. Swit spearheaded the company’s defense of multiple
grand jury investigations, other federal and state proceedings, and securities litigation stemming
from the acts of prior management. Mr. Swit then served from 1994 to 1998 as CEO of
Washington Business Information, Inc. (WBII) a premier publisher of FDA regulatory newsletters
and other specialty information products for the FDA-regulated community. From May 2001 to
May 2003, Mr. Swit was special counsel in the FDA Law Practice Group in the San Diego office
of Heller Ehrman White & McAuliffe. Before that, he was twice in private practice with
McKenna & Cuneo, from 1988 to 1990 and, most recently, from 1999 to 2001, first in that firm’s
D.C. office and most recently, in its San Diego office. He first practiced FDA regulatory law with
the D.C. office of Burditt & Radzius from 1984 to 1988.
Mr. Swit has taught and written on a wide variety of subjects relating to FDA law including, since
1989, co-directing a three-day intensive course on the generic drug approval process and editing a
guide to the generic drug approval process, Getting Your Generic Drug Approved. He is a member
of the California, Virginia and District of Columbia bars.

30. FDACounsel.com 30
About your instructors …
Stacie S. Switzer is an attorney licensed to practice law in the States of Illinois and Ohio.
She received her Juris Doctorate degree from Capital University Law School and studied
genetics law and European Union law at the University of Glasgow’s School of Law in
Scotland. Stacie completed her undergraduate work in Microbiology and Biochemistry at
the Ohio State University.
Currently, Stacie serves as an attorney in the Legal Department for Takeda Pharmaceuticals
North America, Inc., located near Chicago, Illinois. Stacie primarily supports the clinical
contracting needs of Takeda’s Research and Development function as well as Medical &
Scientific Affairs. Prior to Takeda, Stacie served as a Senior Contracts Officer for
Northwestern University in Chicago, Illinois where she handled the drafting, reviewing,
negotiating, and administration of industry sponsored clinical research.
Stacie has extensive experience in the clinical research arena drafting, reviewing, and
negotiating clinical trial agreements and ancillary clinical agreements (including master,
confidentiality, licensing, material transfer and service agreements). She has presented
workshops and courses on all aspects of clinical trial negotiation. Stacie also co-authored a
publication entitled, “Clinical Trial Contracts: A Discussion of Four Selected Provisions”
for the Association of American Medical Colleges.