A Guide to Reviewing Clinical Trial Agreements

Navigating the complex landscape of clinical trial agreements (CTAs) requires meticulous attention to detail, especially concerning indemnification by Sponsor, indemnification by site, indemnification procedures, and subject injury coverage clauses. Here’s a comprehensive guideline to assist you in reviewing these crucial aspects:

 

1. Indemnification

 

Indemnification is a legal concept where one party agrees to compensate another party for any losses, damages, or liabilities that may arise from specific events or circumstances outlined in a contract or agreement. Essentially, it’s a way to ensure financial protection against potential risks or losses by shifting responsibility from one party to another.

 

Key Points


Contractual Obligations. Parties agree to defend, indemnify, and hold harmless against defined events or situations. “Indemnify, defend, and hold harmless” is a comprehensive legal term often found in contracts, including clinical trial agreements, to outline the responsibilities of one party (the indemnifying party) to protect and compensate another party (the indemnified party) from certain liabilities, losses, or damages.


Let’s break down each component.


Indemnify: This refers to the obligation of the indemnifying party to compensate the indemnified party for any losses, damages, or expenses incurred as a result of specified events or circumstances outlined in the contract. Essentially, it ensures that the indemnified party is financially protected against potential risks or liabilities arising from the actions or omissions of the indemnifying party.


Defend: In addition to providing financial compensation, the indemnifying party also commits to defending the indemnified party against any legal claims or lawsuits related to the specified events or circumstances. This means that the indemnifying party will take on the responsibility of handling legal proceedings, including hiring attorneys, conducting investigations, and representing the indemnified party in court if necessary.


Hold Harmless: This component emphasizes the indemnifying party’s commitment to absolving the indemnified party from any legal or financial burdens resulting from the specified events or circumstances. It essentially means that the indemnifying party assumes full responsibility for any adverse consequences or liabilities, thereby shielding the indemnified party from harm or liability.


Indemnified Parties.  Indemnified parties refer to individuals or entities that are protected under an indemnification agreement. These parties are typically specified within the contract or agreement and are entitled to receive compensation or legal defense from another party, known as the indemnifying party, in case they suffer losses, damages, or liabilities arising from specified events or circumstances outlined in the agreement. Indemnified parties may include individuals, organizations, affiliates, employees, officers, directors, agents, or any other entities identified within the contract as beneficiaries of indemnification.


Indemnifiable Claims.  Indemnifiable claims in the context of clinical research typically refer to those specific situations, events or circumstances outlined in the contract that would trigger the indemnifying party’s (Sponsor or Institution), obligation to compensate or defend the other party against certain types of losses, damages, or liabilities arising therefrom.

 

2. Indemnification by Sponsor:

Whether you’re representing the Sponsor or the Institution, a comprehensive analysis of the indemnification provision is essential. Below, we’ve outlined suggested steps along with commentary on favorable terms for both parties.

 

Steps to Analyze Sponsor’s Indemnification Provision:


Is Sponsor required to “indemnify, defend and hold harmless”?


See comments above. Depending on whether you are representing the Sponsor or the Institution, you will either want to limit it to indemnifying only or requesting the full legal protection. In any case, ensure that there is parity between Institution’s and Sponsor’s indemnification obligations.

 

What entities or people is Sponsor indemnifying?


Sponsor’s Perspective: It’s advantageous to limit the indemnified parties to the Institution, principal investigator, and any personnel directly involved in conducting the study.


Institution’s Perspective: It’s prudent to broaden the scope of indemnified parties to include not only the Institution, principal investigator, and study personnel, but also the Institution’s affiliates, contractors, IRB members, as well as their respective directors, officers, employees, and agents.

 

Is obligation limited to third party claims?


Sponsor’s Perspective: Ideally, the Sponsor’s indemnification obligations should be restricted to claims brought by the study subject or its representatives.


Institution’s Perspective: Indemnification obligations should encompass not only third-party claims but also any claims, losses, damages, costs, and expenses (including reasonable attorney’s fees) incurred.


In both cases, it’s essential to ensure parity between the Institution’s and Sponsor’s indemnification obligations.


Is indemnification mutual?


Considering the distinct responsibilities in clinical trials, indemnity obligations typically cannot be entirely mutual, resulting in separate indemnification clauses for each party in the CTA.


Sponsor’s Perspective: Typically, the Sponsor drafts the CTA, and we suggest including separate indemnification provisions for both the Sponsor and the Institution.


Institution’s Perspective: If the CTA lacks an indemnification obligation for the Institution, it’s advisable not to introduce one. Conversely, if the CTA includes an indemnity clause for the Institution, refrain from removing it.

 

What is Sponsor indemnifying for (scope)?


Sponsor’s Perspective: Narrow the scope to encompass only claims directly resulting from the administration of the study drug in strict accordance with the protocol and agreement, or from properly performed protocol-required procedures.


Institution’s Perspective: Remove the necessity for direct causation and expand the scope to include claims arising from various scenarios: (1) personal injury or death of any study subject caused by (a) the study drug’s use as per protocol and agreement or (b) the performance of any required protocol procedure or Sponsor’s explicit instructions; (2) Sponsor’s utilization or dissemination of study data or results; or (3) acts, omissions, or negligence by the Sponsor, its employees, contractors, or agents pertaining to the study or the Sponsor’s contractual obligations.


Are there appropriate carveouts?


Sponsor’s Perspective: Sponsor should have no obligation to provide such indemnification to the extent that the claim is caused by any Institution’s indemnitee(s)’: (1) failure to adhere to and comply with all specifications and directions set forth in the Protocol; (2) failure to comply with all applicable laws, regulations and guidelines; or (3) if such claim is caused by the negligent or wrongful acts or omissions of Institution’s indemnitees(s).


Institution’s Perspective: Sponsor should have no obligation to provide such indemnification to the extent that the claim is solely caused by Institution’s indemnitee(s)’: (1) failure to adhere to and comply with all material specifications and directions set forth in the Protocol (except to the extent such deviation is reasonable to protect the rights, safety and welfare of the study subjects); (2) failure to comply with all applicable laws and regulations in the performance of the study; or (3) if such claim is directly caused by the negligent or wrongful acts or omissions of Institution’s Indemnitees(s).


Is the language supported by Sponsor’s insurance policy?


Ensure a thorough comprehension of the types of claims covered by your insurance policy.

 

3. Indemnification by Site:

Whether you’re representing the Sponsor or the Institution, a comprehensive analysis of the indemnification provision is essential. Below, we’ve outlined suggested steps along with commentary on favorable terms for both parties.

 

Steps to Analyze Institution’s Indemnification Provision


Is Institution required to “indemnify, defend and hold harmless”?


Depending on whether you are representing the Sponsor or the Institution, you will either want to limit it to indemnifying only or requesting the full legal protection. In any case, ensure that there is parity between Institution’s and Sponsor’s indemnification obligations.


What entities or people are you indemnifying?


Sponsor’s Perspective: It’s advisable to expand the scope of indemnified parties to encompass not only the Sponsor but also affiliates and Contract Research Organizations (CROs), along with their respective directors, officers, employees, and agents.


Institution’s Perspective: Restrict the scope of indemnified parties to solely the Sponsor and its directors, officers, employees, and agents. Unless the CRO is providing a separate indemnity to the Institution, it should not be included as an indemnified party.


Is obligation limited to third party claims?


Sponsor’s Perspective: Indemnification obligations should encompass not only third-party claims but also any claims, losses, damages, costs, and expenses (including reasonable attorney’s fees) incurred.


Institution’s Perspective: Ideally, the Institution’s indemnification obligations should be restricted to third party claims brought by the study subject or its representatives.

 

In both cases, it’s essential to ensure parity between the Institution’s and Sponsor’s indemnification obligations.


Is indemnification mutual?


See analysis above.


What are you indemnifying for (scope)?


Sponsor’s Perspective: Broaden scope of Institution’s indemnification obligations to include: (1) any injury or damages resulting from the negligent or wrongful act or omission on the part of Institution, Principal Investigator or any study personnel; (2) failure of Institution, Principal Investigator or study personnel to comply with the Protocol, this Agreement or any written instructions provided by Sponsor; (3) any case in which the Institution or Principal Investigator fails to obtain an ICF in compliance with the terms of the Agreement or otherwise fails to comply with applicable law; (4) any breach of this Agreement by Institution or Principal Investigator; or (5) failure to conduct the study in accordance with generally accepted medical standards.


Institution’s Perspective: Narrow Institution’s indemnity obligations to third party claims to the extent directly caused by the Institution’s (1) failure to materially comply with the Protocol, and with any other written instructions of Sponsor (except for/other than Protocol deviations necessary to protect the safety, health and welfare of the subject); (2) negligence, recklessness, or intentional misconduct; and (3) failure to comply with all applicable laws and regulations in the performance of the study.


Are there appropriate carveouts?


Sponsor’s Perspective: Institution should have no obligation to provide such indemnification solely to the extent that the claim is directly caused by any Sponsor indemnitee(s)’: (1) failure to comply with all applicable laws; or (2) negligent or wrongful acts or omissions.


Institution’s Perspective: Institution should have no obligation to provide such indemnification to the extent that the claim is caused by Sponsor indemnitee(s)’: (1) failure to comply with the Agreement; (2) failure to comply with all applicable laws and regulations; or (3) negligent or wrongful acts or omissions.


Is the language supported by your insurance policy?


Ensure a thorough comprehension of the types of claims covered by your insurance policy.

 

4. Indemnification Procedures:

 

Key Points


Notice: Parties must provide timely notice of claims.

Defense Control: Indemnifying party controls the defense process.

Cooperation: Indemnified party must cooperate with the defense.

Settlement Approval: Non-monetary settlements require indemnified party approval.

Legal Representation: Indemnified party may hire its own counsel.

Consent for Settlement: Parties must consent to settlements.

 

5. Subject Injury Coverage:

 

A study subject injury refers to any harm or adverse event experienced by an individual participating in a research study or clinical trial. This can include physical injury, adverse events or any negative consequence resulting from their involvement in the study, such as side effects from medication or complications from procedures.

 

The study subject injury clause aims to ensure participant safety, provide clear guidelines for handling injuries, and allocate responsibility for compensation and liability among the parties involved in the research study or clinical trial (i.e., Sponsor, PI and Institution).  

 

As a general rule, the Sponsor is the party responsible for and should cover all costs arising from any injuries suffered by the study subject because of its participation in the study.

 

Steps to Analyze Indemnification for Subject Injury


Is definition of subject injury the same in the indemnification provision and subject injury provision?


Ensuring consistency in the definition of study subject injury across both the indemnification provision and the subject injury provision is important for several reasons:


(1) Clarity and Understanding: Consistency helps to avoid confusion and ensures that all parties involved in the CTA have a clear and unified understanding of what constitutes a study subject injury. 


(2) Alignment of Obligations: A consistent definition ensures that the indemnification obligations outlined in the CTA are aligned with the types of injuries covered under the subject injury provision. This alignment helps to mitigate potential disputes regarding the scope of indemnification and ensures that parties are adequately protected and compensated for study-related injuries.


(3) Fairness and Equity: Consistency promotes fairness and equity in the treatment of study subject injuries by ensuring that all parties are subject to the same standards and definitions. It helps to prevent discrepancies in the treatment of injuries and ensures that participants are fairly compensated regardless of which provision governs their claim.


(4) Regulatory Compliance: Regulatory authorities may expect consistency in the definition of study subject injury across contractual provisions, particularly in the context of clinical trials and research studies. Adhering to consistent definitions helps to ensure compliance with regulatory requirements and guidelines.


What injuries are covered?


Sponsor’s Perspective: Narrow the scope to encompass only physical injuries.


Institution’s Perspective: Expand the scope to include adverse reaction, medical illness, injury or death.


What caused the injury?


Sponsor’s Perspective: Narrow the scope to encompass only claims directly resulting from the administration of the study drug in strict accordance with the protocol and agreement, or from properly performed protocol-required procedures.


Institution’s Perspective: Remove the necessity for direct causation; expand scope to include not only the administration of the study drug but also any placebo, comparator drug or other substance required to be administered by the Protocol; or from procedures required by the Protocol or Sponsor’s or its representatives’ instructions.


Are the carveouts appropriate?


Sponsor’s Perspective: Sponsor’s obligations should not apply to the extent that any such costs or such illness or injury is attributable to: (1) the failure of Institution or any other study personnel involved in the performance of the study (i) to adhere to the terms of the Protocol or any written instructions, or (ii) to comply with applicable laws and governmental requirements and other terms and conditions of this Master Agreement; or (2) Institution’s negligence or willful misconduct; (3) the study subject’s primary disease or any concurrent disease not directly and solely caused by the administration of the study drug in accordance with the procedures specified in the Protocol; and/or (4) the study subject’s failure to comply with written information, instructions, or warnings contained in the Informed Consent executed by such subject or communicated to the study subject by any study personnel.


Institution’s Perspective: Sponsor’s obligations should not apply solely to the extent that any such costs or such illness or injury is directly attributable to:  (1) Institution’s negligence or willful misconduct; (2) the natural progression of an underlying or pre-existing condition or events, unless exacerbated by participating in the study; or (3) Institution’s failure to adhere to and comply with the specifications of the Protocol and all reasonable written instructions furnished by Sponsor for the use and administration of study Drug used in the study, provided that deviations from the Protocol and written instructions resulting from an imminent threat to the health or safety of a study subject that do not cause the injury to the study subject will not disqualify Institution from reimbursement under the provision.


Who determines whether it is a “subject injury”?


Determining whether an event qualifies as a “subject injury” typically engages various stakeholders and adheres to predefined protocols outlined within the research study or clinical trial. The specific methodology for discerning subject injuries may fluctuate depending on factors such as the study protocol, institutional policies, regulatory mandates, and contractual agreements. Incorporating language in the CTA to address this matter can streamline procedures when necessary. In such instances, each party may opt to designate itself as the authority responsible for making this determination.


Coordinate with informed consent subject injury language.


See analysis above.


Reviewing clinical trial agreements demands meticulous attention to detail and legal expertise. By following these guidelines, you can ensure clarity and consistency in contractual agreements.

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