Massachusetts biotechnology coalition contract issues for biotech attorneys thursday march 12 2009
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Massachusetts Biotechnology Coalition Contract Issues for Biotech Attorneys Thursday, March 12, 2009. Agenda: Introductions: C. Elizabeth O’Keeffe, JD, MPH, CHC Maria D. Buckley, Of Counsel, Nutter McClennen & Fish, LLP Stephen B. Harris, Life Sciences Sr. Specialist, Chubb & Son

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Massachusetts biotechnology coalition contract issues for biotech attorneys thursday march 12 2009
Massachusetts Biotechnology CoalitionContract Issues for Biotech AttorneysThursday, March 12, 2009

  • Agenda:

  • Introductions:

    • C. Elizabeth O’Keeffe, JD, MPH, CHC

    • Maria D. Buckley, Of Counsel, Nutter McClennen & Fish, LLP

    • Stephen B. Harris, Life Sciences Sr. Specialist, Chubb & Son

    • Colleen Surrette Sproul,JD, Principal, Contracts, Associates, Inc.

  • What contracts? (E. O’Keeffe)

  • Boilerplate (E. O’Keeffe)

  • Transactional Contracts; Funky Clauses (M. Buckley)

  • Insurance and Indemnification (S. Harris)

  • In-House Perspective; Triage; Resources (C. Sproul)

  • Q:A

Massachusetts biotechnology coalition contract issues for biotech



Services Agreements






*Contracts on behalf of sponsor (donated by dotted line)


Blue = CTA

Orange = Service Agreement

Green = Regulatory “agreement”

Informed Consent


**May or may not be a written agreement - depends on whether IRB is commercial, local, centralized, etc




Third party vendors (e.g., labs)

Cro contract issues
CRO Contract Issues

  • Sponsor may want CRO to handle CTAs because of:

    • Speed

    • Cost

    • Strength of CRO’s relationships with research sites/investigators

  • However, Sponsors may have problems with CROs protecting Sponsors’ interests?

    • CRO sometimes want to get contract in place quickly and not expend resources in lengthy negotiations

    • CRO may not have adequate legal expertise

Cro contract issues1
CRO Contract Issues

  • If CRO is allowed to contract on the Sponsor’s behalf, contractual controls can help protect Sponsor’s interests

  • Range of Possibilities

    • CTA template

      • Sponsor provides template for CRO use

      • CRO provides CTA template for Sponsor review and approval

    • CRO authority to negotiate

      • Only extends to certain provisions

      • CRO must submit all changes to Sponsor for review and approval

    • Notification of changes and amendments


Traditionally, lawyers use the term “boilerplate” to refer to any standardized, “one size fits all” provision

Classic examples:

The choice of law provision

The notice provision

The force majeure provision

The assignment and delegation provision


Supply a road map

Serve housekeeping functions (matters of secondary importance)

“Boilerplate” is a misnomer as applied to these provisions and that lying in wait within each of them are significant business and legal issues.


Anatomy of a contract

Standard sections

Recommended language

Practical, operational and legal perspectives


Recitals (a/k/a “WHEREAS clauses”) supply helpful context.

Describe the who, why and how.

A very high-level synopsis of the agreement and provide a framework for interpretation of the agreement by the parties and/or the court.

Recitals are non-binding, unless specifically incorporated.

“The recitals shall be incorporated by reference in this agreement as if full set forth herein.”

Magi approach www firstclinical com

  • Parties & Recitals

  • __________ (“Sponsor”), a {form of entity} organized under the laws of {State}, __________ (“Site”), a {form of entity} organized under the laws of {State}, and __________ (“Investigator”), Site’s {employee/contractor}, enter into this Agreement (“Agreement”) whereby Sponsor engages Site and Investigator to conduct clinical research on ______________ (“Study {Drug/Device/Biologic}”) according to the provisions of this Agreement and Protocol __________.[1,2,3,4,5,6,7,8,9]

Term termination
Term & Termination


Effective date

As of a specified date or

Upon execution by last party to sign

Automatic termination (a.k.a. “Expiration”)

Specific date

Completion of all study related activities

“End of study” needs to be clarified

IRB closure at site?

Sponsor close out visit?

Data analysis from all sites in multi-center study?

Term termination cont
Term & Termination (Cont.)

Initiated termination:


Generally 3-5 different ways for Sponsor to terminate

Includes a ‘no cause’ out for Sponsor


Usually a way for site to terminate to protect the safety of subjects

Termination for breach:

Material breach of agreement; provide opportunity to cure

Magi approach
MAGI Approach

  • 12. Effective Date, Term & Termination

  • 12.1. Effective Date

  • This Agreement becomes effective when signed below by all parties, on the date of the last signature.[1]

  • 12.2. Term

  • Unless terminated earlier, this Agreement will expire when (a) Site has submitted all CRFs to Sponsor, has resolved all data clarification queries, and submitted the closeout report to the IRB and Sponsor; and (b) all payments, reimbursements and refunds have been made.

  • 12.3. Termination

  • The parties may terminate this Agreement under the following circumstances: Breach. Upon material breach by a party, the other party may terminate this Agreement provided that the other party fails to cure the breach within 20 days after notice.[1,2] Subject Safety. Either party may terminate immediately based on Subject safety or welfare concerns, e.g., if the informed consent form required by the IRB/IEC or other party is unacceptable, or if the IRB terminates the Study at the Site. Alternatively, Parties may agree that Site will discontinue enrolling Subjects and attempt to agree if and how the Study will proceed at the Site. Insolvency. Either party may terminate immediately upon notice by the other party that it has filed for protection under any bankruptcy laws, has been declared insolvent, ceases or threatens to cease to carry on its business, or an administrator or receiver has been appointed over all or part of its assets. Investigator Successor. Either party may terminate if Investigator is unable for any reason to continue in that role and the parties are unable to agree upon a successor. Government Exclusion. Site may terminate immediately if Sponsor is excluded from any FDA, OHRP or Medicare/Medicaid, or other state or federal government program.

  • [3]Without Cause. Either party may terminate without cause, upon 20 days’ prior notice.

  • [4]Upon termination, Site will immediately stop enrolling Subjects and, subject to protecting Subject safety and welfare, cease Study activities and complete its normal Study completion responsibilities.

Governing law venue
Governing Law/Venue

Choice of law determines which state or country’s law should govern the contract

Choice of venue determines where disputes are resolved

State institution limited to their state laws

Use: “without regard to its conflict of laws provisions”

Silence – remove the clause

Where is the work being done? Many states will apply this

Magi approach1
MAGI Approach

  • 14.1. Governing Law & Jurisdiction

  • The laws of _________ govern this Agreement. The Courts of ____________ have legal jurisdiction, without regard to conflict-of-laws provisions.[1,2,3,4,5,6,7]


What is it?

Ability to assign contract to another party

May be prohibited or limited to written consent


By institution/investigator

Qualifications of new investigator/staff

Indemnification, confidentiality and IP provisions enforceable against all parties

By Sponsor/CRO

Continuity of obligations

Overall, ensure full assignment of responsibilities:


Study completion and reporting

Negotiating and drafting the assignment and delegation provision the anti assignment clause
Negotiating and Drafting the Assignment and Delegation Provision: The Anti-Assignment Clause

A Typical, but Flawed, Anti-Assignment Clause:

“This Agreement shall not be assigned by either party without the consent of the other party”.

A clause that prohibits solely the assignment of the contract, without any reference to rights under the contract, presumptively prohibits only the delegation of duties

Contract rights
Contract Rights Provision:

  • Today, contract rights are freely assignable, with certain limited exceptions

  • This general rule completely reverses earlier common law doctrines and reflects, in large part, the role that contract rights play in a modern credit-based economy

Magi approach2
MAGI Approach Provision:

  • 14.7. Assignment

  • Any party may assign this Agreement to an Affiliate or in connection with the merger, consolidation or sale of all or substantially all of its assets, upon 30 days’ prior written notice to the other party, provided that the Affiliate or acquirer agrees to assume all responsibilities and obligations under this Agreement. Any other assignment of this Agreement, and the associated rights and obligations, requires the prior written consent of the other party. If Site or Investigator terminates this Agreement, it will assign to Sponsor its contracts with subcontractors, if any, so Sponsor can continue study without that party.

  • 14.8. Delegation

  • Site may delegate Investigator duties under this Agreement according to Section 3.6. Investigator may delegate his/her duties under this Agreement according to Section 3.8. The parties may delegate other duties under this Agreement to third-parties, provided, however, that (a) such third parties perform such duties in a manner consistent with this Agreement, and (b) the delegating party remains fully responsible for such third parties’ performance under this Agreement.[1]

Entire agreement modification
Entire Agreement/Modification Provision:

What is it?

Ensures that the contract represents the entire understanding of the parties with respect to the subject matter.

Must incorporate protocol, exhibits, schedules, addendum, etc.

Assures that assurances outside the contract are not enforceable.

Issues with modifications:

Must be in writing.

Must be signed by proper parties.

Must properly integrate with core agreement.

Putting it all together
Putting It All Together Provision:

Contract Goals:

  • Record parties’ agreement

  • Merger provisions increases certainty in terms set forth

Magi approach3
MAGI Approach Provision:

  • 14.3. Entire Agreement; Modifications

  • This Agreement, together with any attachments or exhibits, sets forth the entire understanding among the parties about the Study. Any prior agreements, promises or representations, whether oral or written, such as agreements of confidentiality, have no force or effect. Any modification or waiver to this Agreement must be in writing and signed by all parties to this Agreement. However, IRB-approved changes to the Protocol are incorporated by reference into this Agreement, subject to agreement on appropriate budget modifications.[1]

Contract logistics
Contract Logistics Provision:

Proof before you send/sign

Copy/paste errors

Templates getting switched

Emails vs. Hard copy

Who keeps signed originals?

Post termination obligations
Post-termination Provision: Obligations

  • Return/destruction of confidential information

  • Safeguarding PHI

  • Return of case report forms, unused drug/device and related equipment and supplies

  • Surviving obligations (e.g., IP, use of name, confidentiality, indemnification)

Massachusetts biotechnology coalition contract issues for biotech

Thank you! Provision: