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Medical-legal issues to consider with clinical research contracts

The nature of the study
Informed consent
Confidentiality concerns
Indemnification issues
Extent of CMPA assistance
Non-Canadian sponsors

The information in this document is provided for the purposes of general advice, information, and education. The medical-legal information is not intended to provide specific professional medical or legal advice or constitute a "standard of care" for Canadian healthcare professionals. It is not intended to be a substitute for direct consultation with legal professionals or other professional advisors with regard to specific medical-legal issues. Members should not act or abstain from acting based upon information contained in this document without first consulting appropriate professional advisors.

Purpose of this document

In circumstances where a member is being asked to sign an agreement with the sponsor of a clinical trial, the member should have the entire agreement reviewed by his or her own personal legal counsel or, if appropriate, counsel for his or her professional organization.

There are certain medical-legal issues that commonly arise in the context of clinical trials. This document is intended as a summary for members and their legal counsel, to assist in understanding these issues and assessing them in the context of a specific contract. Not all of the issues described here will arise in every research contract, or necessarily in the same manner. It is, therefore, important for members to consult with their own personal or business legal counsel to assess the member's contract.

This document makes reference to policies, guidelines, and codes of ethics, as well as legislative and regulatory requirements that may apply to the conduct of a clinical trial. However, the document is not intended to be a comprehensive description of applicable requirements. Members are encouraged to ensure they are aware of all policies, guidelines, codes of ethics, and regulatory and legislative requirements that apply in their jurisdiction.

1. The nature of the study

1.1 The protocol

Members should carefully review the protocol with their legal counsel.

A formal detailed protocol will normally include:

a detailed description of the objectives of the clinical trial
the methodology and procedures to be used
a summary of the literature and experience of others
where necessary, confirmation of the approval of the Health Products and Food Branch of Health Canada
steps to be taken to inform and obtain the consent of patients

Frequently investigators are required to complete confidentiality agreements in advance of receiving information about proposed new pharmaceutical studies.

1.2 Ethical and regulatory approval
The study should, generally, be developed and proceed in accordance with the guidelines established in the Tri-Council Policy Statement (TCPS), "Ethical Conduct for Research Involving Humans."

Members should also confirm that the trial has obtained any required approvals by Health Canada. The approval of new drugs for use in Canada is governed by Regulations under the Food and Drugs Act, R.S.C. 1985, c. F-27. Part C, Division 5 of the Food and Drug Regulations made under the Act is entitled "Drugs for Clinical Trials Involving Human Subjects." These provisions of the Regulations set out in detail the sponsor's obligations to apply for authorization to sell or import a drug for a clinical trial on humans, to conduct a clinical trial in accordance with good clinical practices, and to keep certain records. The Medical Devices Regulations and the Natural Health Products Regulations have similar rules for clinical trials involving medical devices and natural health products.

For ethical reasons and for the physician's legal protection, a detailed protocol should be submitted to the ethics committee of the institution where the study is to be conducted. In some jurisdictions, this may be a legal requirement.

Members are reminded to review applicable provincial or territorial regulatory authority (College) policies, guidelines, and regulations regarding conflicts of interest. Recruitment of subjects that is contrary to the applicable College policy, guideline, or regulation may give rise to an allegation of professional misconduct. Members should also review the Canadian Medical Association's "Guidelines for Physicians in Interactions with Industry," which provides guidance on avoiding conflicts of interest in these circumstances.

2. Informed consent

Obtaining the informed consent of participants in a clinical trial is of primary importance.

The nature of the interventions to be studied, as well as possible risks associated with them, should be disclosed in greater detail than would be necessary in the course of ordinary patient care.

A disclosure checklist generally includes, but is not limited to:

the purpose and goals of the research project
pertinent aspects of research funding
the procedures to be followed, including specific reference to those aspects that might be considered innovative or experimental
any benefits that might be expected as a result of participation
the probability that the subject may be given a placebo at some time during the course of the research study
known risks, side effects, and discomfort that might be encountered, and the likelihood that a participant will experience them
where the procedure is innovative or experimental in nature, that there may be additional risks not yet known and that expected benefits may not be achieved
alternate procedures that might be available, and the risks and benefits associated with them
that the participant should feel free to ask any questions or raise any concerns
that participants may withdraw from the research project at any time, without prejudicing their right to receive care where the study is being conducted.

It is strongly recommended that the participant's consent be obtained in writing and indeed a written consent may be legally required in some jurisdictions.

2.1 Clinical research involving minors or incapable adults
Additional legal requirements or ethical considerations apply when minors or incapable adults participate in clinical research. Physicians should exercise caution in dealing with such situations. Your legal advisor or provincial regulatory authority should be able to help you identify the additional limitations or requirements applicable to clinical research on minors and incapable adults.

3. Confidentiality concerns

3.1 Subject confidentiality
If other members of the research team or the sponsor will have access to the subject's confidential health information, this should be explained to the subject and his or her express consent to such disclosure should be obtained.

As part of the Health Canada Health Products and Food Branch's "Inspection Strategy for Clinical Trials," federal inspectors have the power under the legislation to obtain access to records in clinical trials subject to the Regulations under the Food and Drugs Act that could potentially contain confidential health information. This should be explained to the subject and, if possible, his or her consent to such disclosure to Health Canada inspectors (if required) should be obtained.

Other likely uses or disclosures of the patient's confidential health information should be explained to the patient and express consent to such uses or disclosures should be obtained.

Physicians should comply with any relevant privacy legislation or College policies that may apply to their research activities that involve the collection, use, or disclosure of subjects' identifiable personal information.

3.2 Confidentiality of research results
The Canadian Medical Association's "Guidelines for Physicians in Interactions with Industry," advise practising physicians not to participate in industry-sponsored research studies unless the study will be registered in a publicly accessible research registry prior to its commencement.

The Tri-Council Policy Statement (TCPS) also addresses this issue. According to the TCPS, all clinical trials should be publicly registered so as to reduce publication bias, eliminate unnecessary duplication, and prevent the suppression of data. In some jurisdictions, physicians may be expressly prohibited from concealing the negative findings of a research project in which they participated.

4. Indemnification issues

Members will often be asked to sign agreements with sponsors of clinical trials that contain indemnification clauses.

Indemnification is a form of promise whereby one person ("A") agrees to compensate another person ("B") should "B" suffer certain kinds of specified harm or loss.

However, an indemnification clause will not prevent a third party (e.g. a subject in a clinical trial) from bringing an action against "B."

4.1 Who is indemnifying whom?
It is important to identify which party is agreeing to provide the indemnity and in whose favour the indemnity clause is drafted. Indemnity clauses can be either unilateral or mutual.

4.1.1 Unilateral indemnity
A unilateral indemnity clause provides that one party ("A") will agree to compensate the other party ("B") for losses or damages sustained by "B."

There are two types of unilateral indemnity clauses:

In favour of the physician: for example, "The sponsor agrees to indemnify and save harmless the investigator...."
In favour of the sponsor: for example, "The investigator agrees to indemnify and save harmless the sponsor...."

A unilateral indemnity in favour of the physician is the best case scenario in a clinical research agreement. However, to determine how comprehensive any indemnity (including a unilateral one) actually is, the scope of the indemnity must still be carefully examined.

A physician involved in a clinical trial at the specific request of a pharmaceutical company and being paid directly for his or her activities by the same company should look to the manufacturer for indemnification in case of any problems.

Where the set-up is a commercial venture, not sponsored by a university or hospital, the entity benefiting from the research should generally assume the obligation to indemnify investigators conducting research for its benefit.

Physicians should be very circumspect about providing a unilateral indemnity in favour of a sponsor of a clinical trial.

4.1.2 Mutual indemnity
A mutual indemnity clause provides that each of the parties will reimburse the other for damages paid as a result of claims arising from certain acts or omissions. For example, "The parties covenant and agree to indemnify and save each other harmless…."

Some agreements may be drafted with two distinct unilateral indemnification clauses (one in favour of the physician and one in favour of the sponsor). In such circumstances, depending on the wording used in each of the clauses, the effect can be the same as having a single mutual indemnification clause in the agreement.

While the concept of mutual indemnification may appear fair, the true effect of such a clause(s) in any agreement can only be assessed once the scope of the indemnification has been examined (see below).

4.2 What kinds of harm or loss will be compensated?
Both mutual and unilateral indemnification clauses should specify what kinds of harm or loss to the indemnified party will be compensated.

Physicians will want to ensure that any indemnity in their favour is comprehensive so that they bear no economic loss. Examples of clauses to look for include:

The sponsor agrees to indemnify and save harmless the investigator from any liability, loss, damage, or expense, including assessable legal fees, ...
The parties covenant and agree to indemnify and save each other harmless from any liability, loss, damage, or expense, including assessable legal fees...
The investigator agrees to indemnify and save harmless the sponsor from any liability, loss, damage, or expense, including assessable legal fees, ... [in this case the indemnity provision is in favour of the sponsor]

4.3 What must the harm or loss be caused by to secure compensation?
Both mutual and unilateral indemnity clauses should set out in clear terms the spheres of responsibility of each of the parties.

Generally, a party should only be liable for those acts for which he or she would be responsible at law, which usually amounts to those acts over which the party has control.

Each party will generally be responsible for the consequences of his or her own negligence, as well as for the negligence of anyone acting under his or her direct supervision or control.

In addition, if one party has control of the design, maintenance, or manufacture of the materials or drugs used in the study, that party should assume any liability arising from faulty design, maintenance, or manufacture.

Examples of clauses to look for include:

The parties covenant and agree to indemnify and save each other harmless from any liability, loss, damage, or expense, including assessable legal fees, arising out of the negligent performance of their respective obligations under this agreement or by anyone for whom they are in law responsible.
The investigator agrees to indemnify and save harmless the sponsor from any liability, loss, damage, or expense, including assessable legal fees, which the sponsor may incur as a direct result of the negligent performance of the investigator's obligations under this agreement.

The scope of the indemnity will often be affected by what the parties' obligations are under the agreement. Physicians should pay particular attention to any administrative or otherwise non-medical duties that they may be assuming under the agreement. As will be discussed below, the CMPA does not in the normal course provide assistance to members with these types of matters and, similarly, will not necessarily assist with respect to indemnities regarding these non-medical matters. Physicians should also ensure that the particular terms of the agreement do not impose overly onerous obligations that will be difficult for them to fulfil.

4.4 Are there any exceptions to the obligation to indemnify?
The scope of the indemnity can also be affected by any enumerated exceptions to the obligation to indemnify. For example, an indemnification clause can be limited to exclude loss that the indemnified party incurs as a result of his or her own negligence:

The sponsor agrees to indemnify and save harmless the investigator from any liability, loss, damage, or expense, including assessable legal fees, which the investigator may incur provided that such liability, loss, damage, or expense does not arise out of the negligence or wilful malfeasance of the investigator.

This exception is important because it essentially renders the indemnity into a contractual restatement of the law with respect to legal liability. At law, a physician is responsible for all reasonably foreseeable damages flowing from his or her own negligent acts or omissions. However, a physician will not generally be responsible for damages caused by the negligence of others.

As a result of this exception, the investigator will not be entitled to compensation for losses incurred as a result of his or her own negligence. While the sponsor will have to indemnify the investigator for losses he or she may suffer as a result of the sponsor's negligence (e.g. if the drug itself is "defective"), the sponsor would be legally responsible for these damages even in the absence of an indemnification clause.

In these circumstances, the real benefit the indemnification clause provides is with respect to payment of legal costs by the sponsor.

4.5 In the event of legal action, are there any mechanisms of cooperation between the parties?
Both mutual and unilateral indemnity clauses should provide for some mechanism of notification and cooperation in any lawsuit that might arise against either of the parties.

These provisions obligate a party who receives notice of a claim to inform the other party and allow that party to participate in its defence. It is also helpful if the physician has the right to retain his or her own legal counsel to defend the action, even if this right must come at the physician's own expense.

In the absence of such terms, it would be possible for a party to settle a claim on disadvantageous terms, in the confidence that it could look to the other party for reimbursement under their agreement. For similar reasons, indemnity clauses sometimes specify that a party may not settle any claims or admit to any liability without the consent of the other. For example:

The parties hereto agree that they shall cooperate with each other in the defence of any such action, including providing each other with prompt notice of any such action and the provision of all material documentation. The parties further agree that they have a right to retain their own counsel to conduct a full defence of any such action.
The sponsor agrees to provide prompt written notice of any claim that might give rise to such liability and to give the investigator the opportunity to retain his or her own counsel to defend such claim.

4.6 What is the extent of CMPA assistance for indemnities given by members?
The CMPA does not generally consider itself bound by indemnities given by members to third parties. However, where an indemnity in favour of a third party specifically relates to the practice of medicine by the member, the member will generally be eligible for assistance from the CMPA. Although the CMPA may assist in the defence of such a claim, it will not necessarily agree as part of that assistance to reimburse third parties for damages they may have paid in relation to such claims and for which they seek to be indemnified by the CMPA member.

The CMPA will not generally assist members with respect to promises of indemnification for administrative or other non-medical obligations that the physician may assume under the agreement.

It is therefore important for the physician to determine exactly what his or her obligations are under the agreement.

4.7 Conclusions
It is preferable if the sponsor of a clinical trial agrees to provide a unilateral indemnification in favour of the physician conducting the study, for example: "The sponsor agrees to indemnify and save harmless the investigator...." However, the breadth of the protection such a clause will provide to a physician often depends upon the obligations of the sponsor under the agreement. The scope of the indemnity will also depend on whether there are exceptions to the sponsor's obligation to indemnify.

If mutual indemnity is requested, the following sample mutual indemnification clause may be appropriate. Members should consult with their legal counsel to consider the appropriateness of this clause in the particular contract under consideration:

The parties covenant and agree to indemnify and save each other harmless from any liability, loss, damage, or expense, including assessable legal fees, arising out of the negligent performance of their respective obligations under this agreement or by anyone for whom they are in law responsible. The parties hereto agree that they shall cooperate with each other in the defence of any such action, including providing each other with prompt notice of any such action and the provision of all material documentation. The parties further agree that they have a right to retain their own counsel to conduct a full defence of any such action.

Again, the breadth of the protection such a clause will provide to a physician will often depend upon what obligations the sponsor assumes under the agreement.

In circumstances where the sponsor insists on the physician providing a unilateral indemnity in its favour, the following wording may be appropriate. Again, members should consult with their legal counsel to consider the appropriateness of this clause in the particular contract under consideration:

The investigator agrees to indemnify and save harmless the sponsor from any liability, loss, damage, or expense, including assessable legal fees, which the sponsor may incur as a direct result of the negligent performance of the investigator's obligations under this agreement. The sponsor agrees to provide prompt written notice of any claim that might give rise to such liability and to give the investigator the opportunity to retain his or her own counsel to defend such claim.

Where non-medical duties form part of the physician's obligations under the agreement, the indemnity in favour of the sponsor could be amended in either a unilateral or a mutual indemnification clause to apply only where the sponsor incurs damage "as a direct result of the negligent provision of medical services by the investigator under this agreement."

In both mutual and unilateral indemnification clauses it will be important to limit the scope of the indemnity the physician is providing to compensation for acts for which the physician would be responsible at law.

Given that the breadth of an indemnification clause will often depend on the specific terms and conditions in the agreement, members should be advised to have the entire agreement reviewed by their own personal legal counsel.

5. Extent of CMPA assistance

The assistance which the CMPA provides to its members is discretionary and determined on a case-by-case basis. However, generally, the CMPA will assist members in the event of medical-legal difficulty arising from clinical work and research. The CMPA will generally extend assistance to members with respect to disputes that arise concerning the member's clinical professional work under the research contract. Disputes related to issues such as recruitment, availability of patients or facilities, and financial matters are not generally considered clinical professional work and members should not expect the CMPA's assistance with such matters. Further, although the CMPA generally extends assistance to members who act as investigators in phase I and II studies where the subjects are patients with medical conditions, CMPA assistance is not generally extended when the subjects are normal, healthy volunteers. In the latter instance, members are advised to seek assistance from the sponsor in the event of medical-legal difficulties.

Generally, to be considered eligible for assistance in medical-legal matters arising from clinical research, members must make reasonable efforts to ensure that:

any approvals from Health Canada required by law have been obtained
the protocol has been reviewed and approved by an appropriately structured Canadian-based independent research ethics board

The CMPA's assistance will normally also extend to any research assistants operating under the direct supervision or control of a member and for whom the member would be legally responsible. This generally excludes employees of the institution or of the sponsor who are members of the research team.

In other words, should the member or research assistants for whom he or she is legally responsible make an error in prescribing or administering a drug in the course of the clinical trial, or in conducting tests as part of the study, the member and his or her research assistants could anticipate that the Association would defend them in any subsequent legal proceedings and pay any damages that might be awarded to a study participant as a result of a court judgment or settlement.

6. Non-Canadian sponsors

Members may be asked to sign agreements that require compliance with foreign (typically American) legislation. Members are encouraged to seek amendments to those agreements to have references to foreign legislation replaced with Canadian legislation, or, alternatively, to obtain copies of the relevant legislation that may govern the agreement and to familiarize themselves with this legislation.

Some contracts contain a provision stipulating that the governing law and jurisdiction of the agreement is a jurisdiction or law that is not the one in which the physician practises. This is not a significant problem if the jurisdiction and governing law stipulated are that of another province in Canada, although having to be a party to proceedings in another province may cause some inconvenience to the physician. What is of greater concern is when the governing law and jurisdiction are stipulated to be that of another country such as the United States. This could expose the physician to significant damage awards, serious disruption of his or her practice, and the possibility that the CMPA may not be in a position to provide assistance in that foreign country. Physicians will want to ensure that when they are a party to an agreement that they attempt to ensure that the governing law and jurisdiction are stipulated to be that of a Canadian province or territory, and preferably, the province or territory in which the physician practises.

The standard governing law and jurisdiction clauses that the CMPA recommends for such agreements are as follows:

Governing Law
The Parties hereby agree that their relationship and the resolution of any and all disputes arising therefrom, including any issues related to this Agreement, shall be governed by and construed in accordance with the laws of the province or territory of __________________ and the laws of Canada applicable therein.

Jurisdiction
The Parties hereby acknowledge that the Study will be conducted in the province or territory of ______________________ and that the Courts of the province or territory of ______________________ shall have exclusive and preferential jurisdiction to entertain any complaint, demand, claim or cause of action whatsoever arising out of this Agreement. The parties hereby agree that if either of them commences any such legal proceedings they will only be commenced in the province or territory of and hereby irrevocably submit to the exclusive jurisdiction of the Courts of the province or territory of ____________________.

The information contained in this document is provided for the purposes of general advice, information, and education. The medical-legal information is not intended to provide specific professional medical or legal advice or constitute a "standard of care" for Canadian healthcare professionals. It is not intended to be a substitute for direct consultation with legal professionals or other professional advisors with regard to specific medical-legal issues. Members should not act or abstain from acting based upon information contained in this document without first consulting appropriate professional advisors.