Introduction to which they must adhere to. Since each


Clinical trials are
research based studies that  are
performed to determine whether a drug, device, or medical procedure (depending
on the stage of the study) is safe and effective. A complete set of trials that
would include all phases may cost hundreds of millions of dollars which is
usually paid for by a sponsor such as a government agency or a for-profit
company. Increasingly, clinical trial activities are contracted out to service
providers such as an academic medical center (AMC),
a contract research organization (CRO), or a physician’s practice and this outsourcing
requires negotiation and execution of CTAs.  Therefore, a clinical trial
agreement (CTA) is required between the sponsor and the organization to conduct
the clinical trial. This article will examine several critical points to
consider when drafting and negotiating a CTA from the perspective of an AMC.

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It is important to
note that a CTA is essentially a document 
that  governs the relationship
between the sponsor that may be providing the study drug or device, the
financial support, and proprietary information and the organization that will
conduct the trial, providing result, or further intellectual property. The CTA
is crucial because it sets forth each party’s responsibilities with respect to
the conduct of the study and identifies the deliverables. Thus, substantial
time and effort may be necessary to draft and negotiate these types of

When drafting and
negotiating a CTA, it is vital that the parties have an in depth knowledge of
the relevant laws and regulations which may impose additional requirements upon
them, but may not be stipulated verbatim in the CTA. Furthermore, parties need
to be aware of and comply  with the
internal organizational policies and procedures to which they must adhere
to.   Since each study is unique, each
CTA must be viewed individually, although there are certain key elements that
are common among them all. Although not limited to these, the below key
elements in a CTA can be of utmost importance especially where an AMC is one of
the parties involved:

 ·       Parties:  In a CTA, it
is crucial to identify the party with whom the AMC is negotiating with. This
may sound odd, but it is vital to ensure that the party is a legal entity. In
addition, the corporate identifier and address should appear in the agreement.
The individual signing the agreement must be an authorized representative of
that organization who can legally bind it to perform the obligations stated in
the agreement.   It is also important to
identify the Investigator who is assigned to conduct the study and whether the
Investigator is an employee of the organization. Otherwise, the Investigator
may be considered party to the agreement whose personal obligations, as well as
liabilities, must be included in the agreement.


·       Services: The agreement has to set forth the
parties’ mutual rights and obligations in connection with the conduct of the
study. Therefore, it is important that the agreement clearly and succinctly
reflects what each party will be responsible for. The language in the CTA should
be vague or general, the wording must be exact and precise; otherwise a party’s
expectations or understanding may be misplaced and the agreement may be


·       Laws: The life sciences is a highly regulated industry
subject to local, state,  and federal
laws and regulations.  In addition, if
the sponsor is a foreign entity, there may be a host of other laws and
regulations that would influence the agreement. 
The laws and regulations may include laws related to subject injury, adverse
events, publications, privacy, data retention, confidentiality, intellectual
property, and insurance requirements. Again, the type of organization
conducting the study may determine whether the organization may be subject to
additional policies, which may require a certain position with respect to
certain contractual terms.


·       Intellectual Property: Allocation of
ownership rights of the data and inventions, which may result from the services,
may depend on the type of organization conducting the study and thus,  influence what rights the parties seek in the
agreement.  For example, the terms in the
agreement may recognize each party’s rights to solely and/or jointly developed
inventions. These rights may also burden the parties with greater future
responsibilities, financial expenses, or involvement in future patent
prosecution.  In a CTA, the parties may
also briefly address license negotiation terms. Since an AMC may be the recipient
of federal funding and/or enjoy non-profit designation, the AMC must ensure it
does not violate any laws or regulations it is subject to.   


·       Payments and payment schedule: Since a for-profit company will pay the AMC
for the conduct of a trial, consideration is an essential element in the CTA.
The payment amount(s) and the frequency thereof should appear in the CTA,
whether in the body or as an exhibit to the CTA.  Accordingly, a carefully drafted budget is
indispensable to a CTA and will ensure that the payments referenced in the
agreement are accurate.


·       Insurance/Indemnification: A court judgment, or
even being named in a lawsuit, can debilitate or result in financial loss for
any entity. Thus, a CTA  should address
whether a party will indemnify, defend and/or hold harmless the other party.
Depending on the type of organization conducting the study, the conditions of
indemnification will be crucial and the agreement should explicitly set forth
the conditions including the notice and cooperation requirements.  Furthermore, it will be the party’s insurance
coverage and even its liquidity which will determine how much and to what
extent a party may actually fulfill the indemnification obligations it
undertakes.  Therefore, the CTA should
address the fact that each party, i.e. the sponsor and the AMC must carry
insurance in the type and amount appropriate and customary for the conduct and
sponsorship of the trial or maintain a comparable program of self-insurance. In
addition, if one of the contracting parties is a foreign entity, it may have coverage
limitations or additional insurance obligations or requirements.


·       Subject Injury: When negotiating a CTA the parties need
to assign responsibility in the event a study participant is injured as a
result of participating in the clinical trial. There are several questions
which will determine whether the sponsor should pay the medical bills of the
study participant, such as what type of study is being conducted, what is the
phase of the study, whether the product FDA-approved, if the use of the product
is off-label, if the use is considered standard of care, if federal or foreign
laws specify who is responsible, and whether 
a private insurer would pay for the costs? Answers to these questions
will enable the parties to assess who should bear the responsibility of subject


·       Period of performance and timelines: When do the parties’
responsibilities commence and when do they terminate? From reporting adverse
events to inventions, from routing regulatory notices to reports, from
terminating the agreement to proposing a publication, from safeguarding
confidential information to returning it, from invoicing to payments, the
agreement is replete with time-frames governing the activities. Therefore, it
is important to negotiate time-frames that are realistic. Failure to adhere to
the time-frames in the agreement may result in nonpayment, the study protocol
being withheld, or breach of the agreement.


·       Confidentiality: A CTA will set forth the parties’ confidentiality
obligations.  Since it is most likely
that the parties had previously entered into a
confidentiality disclosure agreement (CDA), the CTA may reflect similar terms.
Thus, similar to a CDA, the CTA will define what information is confidential or
not and the circumstances under which the information may be used or disclosed
to third parties. Defining what is confidential is important. For example,
trade secrets are often included in the definition; however, the reality is
that trade secret law affords a trade secret protection until it is disclosed
or reversed engineered. Accordingly, a trade secret should not be included as
confidential information. In addition, the CTA should stipulate the duration of
the obligation of confidentiality, as well as what will happen to tangible
Confidential Information after the study ends or is terminated.    


·       Ownership of data, record keeping, and access: Normally, all rights
in the completed case report forms, any electronic databases required to be
created under the Protocol, and any reports prepared by the AMC for the
sponsor  is the property of the Sponsor.
However, the AMC conducting the study should negotiate to retain “access”
to  such information for internal
purposes. Thus, the CTA should address ownership and use rights by each of the
parties. In addition, the CTA should define how and when the sponsor may audit
the data.


Publications and Presentations:  Publication rights included in a CTA may
depend on the type of organization conducting the clinical trial.  The CTA will set forth a review period by the
sponsor of the manuscript and the review may allow the sponsor to request
deletion of confidential information, provide comments or even request a delay
of the publication so that the sponsor can seek patent protection. When
negotiating publication, it is important for an AMC to adhere to its mission
and thus, safeguard its freedom to publish and disseminate information. It is
also essential to ensure that any proposed use of the publication by the
sponsor be subject to copyright laws. Since the sponsor’s use of the
organization’s name may improve it’s market share, it is important to limit how
a party’s name may be used by the other party.       



Drug discovery and development is one
of the major activities in the life sciences industry.  It is also extremely costly with significant
portion of these costs covering the Phase I/II/III trials and related
activities.  Thus, the importance of drug
discovery and development warrant a well-drafted CTA that precisely describes
and acknowledges responsibilities, terms of collaboration, requirements for
payment and reimbursement, publication and intellectual property terms,
indemnification and or insurance, subject injury coverage, guidelines for
dispute resolution, grounds for termination of contract, and possibility of
amending contract terms in the future, etc. Otherwise, it would just be too
cumbersome and expensive to make any significant changes to the CTA after the clinical
trial has begun or worse already completed.