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Posted by Michael Jay on Tue, Apr 12, 2011
RxTrials welcomes CenterWatch as a guest blogger who wrote the below post:
The following is excerpted from writer Karyn Korieth’s article “Liability Demands Putting Sites at Risk,” which appears in The CenterWatch Monthly, April 2011 issue.
Liability. Indemnification. Risk. These have emerged as the new four-letter words of clinical trials.
As sites increasingly are being asked to indemnify drug sponsors in order to participate in a clinical study, liability issues have moved to the forefront. Yet since most standard medical or professional liability insurance policies won’t cover these types of agreements, investigators could end up paying damages and costs from indemnification claims out of their own pockets.
For private, community-based investigative sites, which represent three-quarters of the 27,000 investigators regulated by the FDA, indemnification has emerged as one of the most contentious issues in clinical trial contract negotiations.
And since investigators already take on high levels of risk, these added liability concerns could be driving them out of clinical research. In a survey of more than 200 investigators conducted by the Association of Clinical Research Organizations (ACRO), 42% of U.S. investigators said they believe liability concerns deter physician participation in clinical trials, compared to only 20% in Europe. Already, one half of first-time investigators do not conduct a second trial.
Both drug sponsors and investigative sites are worried about liability issues, as the number of lawsuits filed on behalf of study participants claiming they have been injured during participation in a clinical trial increases. In addition, some sponsors have begun to require specific coverage for monetary damages that would allow them to file a claim against a site if the FDA were to throw out data because of protocol deviations
Pressure to indemnify
Peter Sullivan, vice president and principal of the Massachusetts-based Sullivan Group, which provides insurance and risk-management services, said sponsors used to provide broad indemnity language to the various entities involved in the clinical trial process, but now they want to indemnify only for their actions or their manufacturing of the study drug. In addition, during the past few years, sites increasingly have been pressured to indemnify the sponsor to participate in a study. Some small sites sign these cross-indemnification clauses without understanding the legal risk involved.
“Many sites try to do their own contracts,” said Sullivan, who has provided insurance and risk management services to the clinical trials industry for 15 years. “It becomes a problem when they don’t understand the legalese of how to protect themselves. We have seen some sponsors try to pass their negligence onto sites, which raises legal issues, but some people just sign it anyway.”
Investigators and sites say they rarely are asked to indemnify large pharmaceutical companies, but small and mid-sized biopharmaceutical companies routinely include cross-indemnification language in their clinical trial agreements. “Cross-indemnification has become a ‘hot button’ issue recently,” said Darshan Kulkarni, Pharm.D, principal attorney of Philadelphia, Pa.-based law firm Kulkarni. “Sites have started pushing back on this issue. However, if I am a sponsor, it is difficult to say, ‘I will not only cover my mistakes, but also the site’s mistakes.’ There is usually no incentive for a sponsor or CRO to do that.”
While sites agree they should be responsible for their own errors, many feel that asking a small site in a multi-center study to assume risk for a large drug company is unreasonable. Since sponsors could earn millions of dollars from a successfully marketed drug while sites might earn only a few thousand dollars from a study, many investigators believe cross-indemnification is fundamentally inequitable.
The main reason for a physician to avoid indemnifying a sponsor is that most standard malpractice and some professional liability insurance policies won’t cover indemnification agreements. In some states, malpractice companies prohibit physicians from indemnifying sponsors by law. Costs for additional insurance to cover these agreements can be unaffordable for small sites, particularly for private physicians who conduct clinical trials part-time, and it can be difficult to buy these policies since only a small number of underwriting companies are willing to take on the risks. As a result, the investigator could be responsible for any damages and costs paid as a result of indemnification claims; this obligation could include the sponsor’s legal fees and court costs, which could easily exceed $1 million.
Some small sites sign the cross-indemnification agreements because they either don’t understand the risks involved or are afraid of losing the study. “It’s such a competitive environment these days for trials that sponsors really put the squeeze on sites,” said Patricia S. Larrabee, founder and chief executive of New York-based Rochester Clinical Research. “There seems to always be sites willing to accept language that they shouldn’t. You have to be willing to walk away and fight the fight. That is hard. I know some sites that really did not want to sign cross indemnifications but were cornered into doing it. At the end of the day, they wanted to keep their staff employed, so they signed the contract.”
Many physicians who conduct clinical research don’t understand their potential legal exposure and whether clinical trial activities are protected by their standard professional malpractice insurance. In fact, clinical research isn’t covered under most standard malpractice policies. “Malpractice insurance may not specifically cover clinical trials, but many doctors may not know that,” said Michael Jay, vice president of site network RxTrials. “One thing that comes up every time we bring on a new site is whether it has the proper insurance. They usually find out they don’t.”
Said William B. Smith, M.D., president and principal investigator for the New Orleans Center for Clinical Research and Volunteer Research Group, which operates sites in Louisiana and Tennessee, “They say it’s the cost of doing business. But if the cost of doing business is carrying all of this extra insurance and doing all of this extra work, there is less and less left for the site to make it worth doing the study.”