Presentation on key aspects of clinical trial agreements, with an emphasis on clauses impacting indemnification, confidentiality, material transfers, record retention, ownership of data,

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Understanding Contracts in the
Clinical Research Process
North Texas Chapter
Association of Clinical Research Professionals
FALL SYMPOSIUM
October 16, 2004
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

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Subtitle ?
Do you really
Understand what you either just
signed or were just asked to sign?
Or …
Everything you always wanted to
know about study contracts in 90
minutes?

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What we will go over …
 Part I -- Various kinds of contracts
encountered in the clinical research
context
 Part II -- Key contract clauses, with an
emphasis on the actual clinical trial
agreement:
 What they do
 Pros and cons
 Different views of what’s important – e.g.,
site vs. sponsor

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PART I
FREQUENTLY ENCOUNTERED
CONTRACT TYPES

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The Various Contracts You
May Meet in Your Journey
 Clinical Trial Agreement
 Others Types of Contracts:
 Confidentiality Agreement
 Letter of Intent
 CTA
 Master Agreement
 Indemnification Agreement (Letter of
Indemnification – Unilateral)
 Consulting Agreement
 Material Transfer Agreement

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Confidentiality Agreement
 Confidentiality Agreement (AKA:
Non-disclosure Agreement) (“CDA” or
“NDA”)
 What is it? An agreement designed to
protect proprietary and confidential
information from misuse by those who
have learned of them.
 Circumstance: Prior to entering into CTA
or master agreement. Review of
information to determine whether to
participate in a study.

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Confidentiality Agreement
 Core terms for effective management.
 determine scope of CDA, definition of what is confidential
and proprietary information, labeling of information,
period of confidentiality, end date.
 CDA should be merged into, or be superceded by, CTA if
a CTA is executed. For academic centers where center is
not a party to the CDA, be sure to exclude CDA from CTA
– as the terms may be against center policy. Assure
people working on the study are bound.
 Tips: Validity of CDA if signed personally by
Investigator (If investigator is party to CDA
– university/entity may not recognize the
CDA as binding)

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Letter of Intent (“LOI”)
 What is it? A letter from one party to another
acknowledging a willingness and ability to do business.
 Core Terms and effective management: confidentiality,
indemnification, insurance, payment
 Tips and traps.
 This usually is NOT a “contract” and cannot be enforced. Be
sure to follow up with a contract.
 Include a term for automatic renewal to avoid amendments
 Personally, I don’t like them because, if worded correctly, still
may be binding and, if not binding, may waste a lot of time in
negotiating
 Circumstance used? Work to be done on a project during
contract negotiations. LOI evidences serious intent
assume certain obligations/duties until the contract is
executed.

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Master Service
Agreements
 What is it? A Master Agreement provides the
framework of terms and conditions governing
specified current and future clinical activities
between two parties for a particular period of time.
Each project subject to the terms/conditions of
Master is set forth in an attachment outlining study
specific info.
 Circumstance: A sponsor conducts many clinical
trials at a particular site. Master agreement with
core terms is executed and each study is defined in
an attachment to the Master Agreement. Advantage:
cuts down on time/expense of negotiating basic
contract terms.

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Master Service
Agreements …
 Core terms and effective management: same as the
counterpart CTA, Services Agreement. Specific end date.
 Attachment: also known as “task order”, “work order”,
“addendum”, “letter of agreement”, “clinical trial request
form”
 Includes study specific info, exceptions to master agreement terms,
protocol, budget, informed consent
 Tips:
 Maintain local files of Master Agreements for reference.
Provide copy of master with each task order executed to
the investigator.
 track end dates/automatic renewals for renegotiation or
termination.
 Be very careful with Task Order negotiation that it does not
modify a key term of the MSA

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Letter of Indemnification
 What is it? A letter from one party to another
outlining the liability and indemnity obligations of
the parties. Liability v. Indemnity
 Liability – condition of being responsible for a possible
or actual loss
 Indemnity- a contractual right under which loss is
shifted from a party passively at fault to the party that
is primarily or actively responsible
 Example – Physician at a medical center is carrying out clinical
study for a pharmaceutical sponsor in accordance with sponsor’s
protocol. A research subject is injured. Sponsor is primarily
responsible as it is sponsor’s protocol. Therefor, the sponsor
agrees to take “responsibility” for any claims made against the
investigator. Reimbursement for expenses.
 Often is a key clause in a CTA or MSA

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Letter of Indemnification
…
 Circumstance: CRO contracts directly with a site –
sponsor is a third party beneficiary of the contract,
but is not a party to the contract. LOI executed
between the sponsor and the site. Actual research
site is different from contracting party.
 Core terms and effective management: scope of
indemnity (limitation on claims), indemnities,
subject injury, insurance provision
 Tips and Traps:
 certificates of insurance
 additional insured status
 Types of negligence (simple vs. gross) and intentional
wrongdoing
 Public institutions may not legally be able to provide

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Consulting Agreements
 What is it? Additional activities beyond normal
scope of employment, and based in the appropriate
discipline for which the individual receives additional
compensation during the contract year
 Circumstance: Investigator is assisting in the design
of a study and/or study protocol, operational
expertise or press/network value.
 Core terms and effective management: scope of
services, IP terms, term of agreement with specific
end dates. For academia, right to termination (what
if PI leaves?)

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Consulting Agreements …
 Tips and traps:
 Academic consultants:
 if consultant is a university faculty member, look to university
policy or guidelines prior to execution.
 University/academic center often needs to be involved if one of
the following apply: conduct of research (not merely advisory),
services performed as part of university commitment, use of
university resources
 Conflicts of interest -- clinical research
consulting agreements, especially involving
academia, may create a conflict of interest.
 Be sure this conflict is managed appropriately.

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Material Transfers
Agreement (“MTA”)
 What is it? Agreement controlling the transfer –
often without charge -- of material such as study
drug, devices, biologics (cell lines, DNA/RNA, human
tissue) from one party to another.
 MTA defines the legal rights of the entity donating the
material as well as the recipient with respect to the
material and any derivatives.
 Circumstance: Investigator-initiated trial where
party is supplying drug/device and no funding. Also
seen in collaborative settings (two academic
centers)

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Material Transfer
Agreements …
 Core terms: rights and restrictions to
use of material, patent and licensing
terms,
 Effective management: MTA’s
sometimes executed in conjunction with
another agreement – e.g., MTA for
transfer of drug and CTA for study.
Assure documents are consistent.
 Tips and Traps: IP counsel and
Technology Transfer officers are good
resources for these agreements.

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PART II
FREQUENTLY-ENCOUNTERED
CONTRACT CLAUSES

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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

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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

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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

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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

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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/

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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

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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

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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.

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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

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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”

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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.

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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

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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

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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?

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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.

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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

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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)

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

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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.

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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?

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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

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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

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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

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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

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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

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General Tips and Traps
 Know the parties
 Commercial sponsor vs government
 Academia v independent lab or individual site
 Important to recognize that the type of agreement
you are looking at may not be titled correctly.
Example: research v. services
 Going Global?
 Take the Plunge. Hire outside counsel to perform
contract review: country/province specific laws
governing clinical research and privacy.
 Watch terminology – define with care – e.g., when is
a clinical trial completed?
 Write in plain English!!

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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

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About your instructor
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.

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Acknowledgements
The speaker gratefully acknowledges the help of Stacie
Switzer, Esq., Corporate Counsel at Takeda
Pharmaceuticals, and Nina Cannon, J.D.
Manager, Contracts Management , at the Duke Clinical
Research Institute/Duke University, whose recent
presentation at the SRI Institute 14th Annual Clinical Trials
Contracting Conference formed the basis for much of Part I
of this presentation. Part II, in turn, is based on a joint
presentation that I prepared with Ms. Switzer for the same
conference.