Faber Daeufer & Itrato recently presented the second in a series of webinars discussing how COVID-19 is influencing drug development contracting strategies. Managing Principal Joe Faber opened the webinar with an overview of the topics to be covered. “Today’s focus is on some of the strategic choices drug development companies should make about their business relationships with CROs, clinical trial sites, and with other participants in the clinical trial ecosystem - all in order to deal with a sponsor’s goals and reacting to the disruptions caused by the pandemic around the suspension of enrollment, the continuing of studies and /or prompt relaunch or restart of studies.”
Gina Wu was the first to present. A member of the clinical development contracting team, Wu supports Faber’s clients sponsoring more complex global clinical studies. She explained that, while force majeure clauses had not generally been seen as a major issue before COVID, they are now popping up in agreements and being more heavily negotiated.
Wu gave a brief explanation of force majeure and how these clauses typically work. “While the operation and interpretation vary across jurisdiction, there are common elements we typically see. There is an event that is unforeseeable and outside the reasonable control of the affected party and it prevents that party from performing an obligation under the agreement. The force majeure clause typically provides a temporary reprieve to the affected party from performing that obligation.” She added that these clauses usually include notification and mitigation requirements, along with obligations to resume performance when possible. They may also provide an additional right to terminate the agreement if force majeure event persists after an established amount of time.
“From a sponsor’s point of view, force majeure clauses are generally more beneficial to the other party - the CRO or the site,” said Wu. “A sponsor’s main obligation is typically to pay them, and payment and payment obligations are often carved out of force majeure clauses. So, unless the sponsor has specific concerns that they may not be able to perform certain obligations other than payment obligations, we don’t typically propose force majeure clauses.”
She said that when the other party does propose inclusion of a force majeure clause, the Faber contract specialists pay specific attention to the terms. This is because the clauses are currently showing up more one sided in favor of the CRO or site than ever seen historically.
“If the agreement is already in place and the party invokes force majeure, we need to look at the clause and what rights and obligations are afforded to each party,” explained Wu. “Even if there is no clause or it’s not applicable, the parties may still discuss how the events affect both parties and how they need to address them.”
For contracts under negotiation, Wu said that the firm looks at how the force majeure event might cause delay or impossibility of performance of the obligations. They want to ensure that the clause is narrowly defined and tailored for specific services. To exemplify this point, she explained that loss of power may be reasonable and acceptable for some force majeure clauses, but not in a situation where a backup electricity source is reasonably expected.
Wu finished her presentation with a warning specific to the pandemic. “Even though we are seeing them more often, we should also ask why the clause is being proposed. At this point in time, COVID-19 and its effects are no longer unforeseeable, which is a crucial factor in force majeure clauses. So, if parties want to address the potential effects of COVID-19, this is really outside scope of force majeure and more within the scope of business continuity.
Jodi Stanfield led the discussion on business continuity and contracting within the clinical trial space. Trained and licensed in the US, but based in Switzerland and with experience as an in-house attorney for a Swiss CRO, Stanfield helps lead the firm’s clinical development contracting team.
“Business continuity and interruption in contracting has really come into spotlight with COVID-19,” said Stanfield. “Historically, site agreements and CRO agreements did not build in contingencies to address business interruptions. It was also rare to need to amend these agreements to address interruptions. Even now, we’re not seeing this issue come up too often with drafting contracts. It is coming up with the need to amend existing agreements and related documents to reflect changes in plans.”
Stanfield explained that business continuity is very fact dependent and clauses should be crafted around the specific circumstances of the current situation. She said the challenge of anticipating potential problems can unintentionally lead to wording that is not specifically narrow, which can provide a get-out jail free card for nonperformance or delay.
For circumstances where business continuity issues arise, Stanfield said that parties need to consider their contingencies and compromises. They need to identify their mission critical and how to achieve it. These considerations help parties proactively define what program changes are necessary and how to best respond to site or CRO requests that may arise.
“When these decisions are made reactively, in response to a particular request, you run the risk of making decisions based on that particular circumstance and not necessarily what’s best for your program at a global level,” explained Stanfield. “Midstream changes involve a lot of discussion and negotiations with the counter party. Likely to touch on issues that both parties feel very strongly about. The more time you can give yourself the better.”
She concluded her presentation with a warning about carefully reviewing any counter party wording toward COVID-19 delay and nonperformance. “These terms may seem reasonable on their face but may actually be a disproportionate response to the COVID-19 challenges actually presented.”
Jill Alverez, who most recently held a senior leadership role in the legal department of a leading biopharmaceutical company and before that was national life sciences practice leader for an AmLaw200 firm, was the next webinar presenter. She spoke about the use of subcontractors to continue or quickly restart a study in a COVID-19 environment. “Currently, sites serve as the focal point for everything happening in a clinical trial, but sponsors are finding that the site centered option is either not available to them or it’s not an option they cannot safely rely on. Sites may no longer be open, or subjects may not be able to go into the sites.”
She said that sponsors have to find another way to make their studies happen, and a decentralized model, which moves the provision of services off site, is one option. “The sponsor and site restructure their relationship,” explained Alverez, “so that the site will be contracting with a number of third-party providers. A number of services will be provided to the subjects, but in an off-site environment.”
Alverez said that subcontracting generally had not been a hot-button issue prior to the pandemic. “Post COVID-19, subcontracting might be a tool that more sponsors are reaching for in order to move the provision of services off site and look more at this decentralized method of continuing the conduct of a study.”
Even though these options offer more flexibility, Alvarez highlighted the importance of ensuring that they are carried out in a compliant manner. She explained that the underlying theme from regulators is that, while they are willing to be flexible, they are not willing to take certain shortcuts, particularly in relation to subject safety and the integrity of the trial.
Alvarez said that sponsors must consider all factors when putting a plan in place, whether developing the plan at the beginning of the study or as the study is going on, negotiations need to include all details around scenarios that may arise.
“At the very least, you want to get in place some kind of agreement between the sponsor and the site. It is easier when done at the start of the study, and it can live a long side the CTA. Have an agreement that spells out all the terms of what you expect the site to be responsible for in terms of its relationship with a third-party provider.”
Alvarez also explored the challenges of implementing a plan in the middle of a study before turning the webinar over to Kori Kaufman.
Kaufman, an associate director in Faber’s contract specialist group, discussed changes to subject notifications in ongoing studies. She addressed the various issues brought on by COVID-19 that affect the ability of subjects to get to study sites. For example, subjects may be in quarantine or lack access to public transportation.
Speaking about some of the guidance being offered by the FDA, Kaufman discussed informed consent. “Informed consent is a process. It is not a document. It is more than just words on a page. What can sponsors do for new subjects that are going to be participating in the trail that are unable to provide consent at a study site?” She went on to outline a few ways to obtain consent during the pandemic. “Electronic consent has been around for quite some time. Post COVID-19, we may see a resurgence of using electronic consent.”
According to Kaufman, parties may have to get a little creative to secure consent. She said that a telephone or video chat may be useful. “You are going to want to have a witness. Ultimately, sites are going to want a signed document. The subjects can print out documents, sign them and send them back. They can take a picture of the signed document and send that back, or we could all go old school and use the mail.”
She also addressed notification of subjects in ongoing trials when changes occur because of the pandemic. “It is critical that all subjects are informed about changes to the study and the monitoring plan that could have an impact on them…Trial participants need to be kept informed of changes to the subject that may impact them and their willingness to participate in the study.”
In conclusion, Kaufman offered one additional consideration. “Documentation of everything you are changing - the processes, the procedures, anything that is related to this pandemic and how you have changed based on the response to getting consent from subjects - is key. It is important not only for your continuity but for your ultimate submissions to the FDA.”
The webinar concluded with the panel providing answers to some of the questions raised by webinar viewers. The firm has included a link to the discussion on its home page. Viewers are reminded that the information provided is not legal advice and should not be construed as such. In addition, viewing the webinar does not create an attorney client relationship with Faber Daeufer & Itrato.
Please click link to view webinar: https://vimeo.com/416053846