1. FDA Counsel.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 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 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 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 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.