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Practice Tip: Keys to Successful Negotiation of Clinical Trial Agreements

By Michelle M. Bufano and Natalie H. Mantell

Clinical (human) trials are essential to pharmaceutical companies that develop and market new drugs. They are required by the United States Food & Drug Administration (“FDA”) both prior to approval of the drug for marketing, and during post-approval marketing, as a means of evaluating the drug's safety and efficacy. Without clinical trials, a drug will not reach the market. Clinical trial agreement (“CTA”) negotiation has become the most common cause of delay in studies. Because the cost of bringing a new drug to market is astronomical, pharmaceutical companies typically lose millions of dollars per week as a result of any delay in the process.

In order to conduct a clinical trial, a pharmaceutical company (the “Sponsor” of the trial) typically contracts with hospitals and universities (the clinical trial “Sites” or “Institutions”) and at times physicians (“Investigators”) to conduct research. The resulting clinical trial agreement can cover many topics, including, but not limited to, each party's duties, payment terms, payment amounts, confidentiality, ownership of intellectual property, publication rights and financial responsibility for any injuries caused. As is true with many contracts, huge financial gains and losses can result based on the wording.

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