Overview Current Concerns in Clinical Research • Clinical Trial Funding

Current Concerns in Clinical Research
American Health Lawyers Association
2011 Annual Meeting
June, 2011
Eve Brunts
[email protected]
• Clinical Trial Funding
– Mandated Coverage for Clinical Trial Services
– Section III of the Medicare, Medicaid and SCHIP
Extension Act of 2007
• Regulatory
– New Drug Safety Reporting Rule
– Data Falsification Proposed Rule
– HIPAA Privacy Rule Proposed Research Modifications
• Compliance
– Insider Trading
– Financial Conflicts of Interest
– Compliance and Enforcement Initiatives
Mandated Commercial Coverage for
Clinical Trial Services
• Medicare clinical trial policy has expressly covered clinical trial
services since 2000
– “Routine costs” of “qualifying clinical trials”
– Treatment of complications in all clinical trials
• Commercial health plan coverage of clinical trial services has
depended on:
– State mandated benefit laws addressing clinical trials
– Individual plan scope of benefits/health plan medical necessity
• No certainty or consistency in coverage
Mandated Commercial Coverage for
Clinical Trial Services
• Federal health care reform legislation imposes focused
coverage mandate for clinical trial services on commercial
health plans
– Section 1201 of the Patient Protection and Affordable Care Act (ACA)
added Section 2709 of the Public Health Service Act (Section 2709)
• Coverage mandate uses terminology and concepts from
Medicare clinical trial coverage policy but is more limited than
Medicare coverage
• Coverage mandate effective for plan years beginning January
1, 2014
Mandated Commercial Coverage for
Clinical Trial Services
• Basic Coverage Mandate: Group health plans and health
insurance issuers offering group or individual health insurance
may not:
– Deny a “qualified individual” the right to participate in an “approved
clinical trial”
– Restrict coverage of “routine patient costs” of items and services
provided in connection with the clinical trial
– Discriminate against a qualified individual due to the individual’s
participation in a clinical trial
Mandated Commercial Coverage for
Clinical Trial Services
• Routine Patient Costs: Services that are typically covered
for a qualified individual not in a clinical trial (consistent with
the plan coverage) except the following:
– Investigational item, device, or service
– Services provided solely for data collection and analysis and not used in
the patient’s direct clinical management
– Services that are clearly inconsistent with “widely accepted and
established standards of care” for the diagnosis
• Note: Medicare definition of “routine costs” also includes:
– Treatment of complications
– Services required for provision of investigational item/service
– Incremental, medically necessary care
Mandated Commercial Coverage for
Clinical Trial Services
• Qualified Individuals: Health plan members must be eligible
to participate in an approved clinical trial
– Participation in the clinical trial is appropriate based on the trial protocol
and the individual’s condition as shown by:
• Determination of participating provider in the health plan; or
• Individual provides medical and scientific information
Mandated Commercial Coverage for
Clinical Trial Services
• Approved Clinical Trial: Phase I-IV clinical trial aimed at
preventing, detecting or treating cancer or another lifethreatening disease or condition (i.e., a disease or condition
from which death is probable if the course of the disease or
condition is not interrupted)
– Funded or approved by certain federal agencies or departments or
cooperative groups/centers of same (including the National Institutes of
Health, the Centers for Disease Control and Prevention, the Agency for
Health Care Research and Quality, and the Centers for Medicare &
Medicaid Services)
– Conducted under an investigational new drug application (IND) that is
reviewed by the Food and Drug Administration (FDA)
– A drug trial that is exempt from IND application requirements
• Note: Medicare clinical trial coverage mandate is not limited
to cancer or life-threatening conditions but many state
coverage mandates are
Mandated Commercial Coverage for
Clinical Trial Services
• Provider Participation
– No requirement for out-of-network coverage
– Plan may require use of in-network providers
• Grandfathered Plans
– Requirements do not apply to grandfathered plans (i.e., plans that an
individual was enrolled in on the date that ACA was enacted, regardless
of whether coverage is renewed thereafter)
Mandated Commercial Coverage for
Clinical Trial Services
• Impact on Clinical Trial Operations
– Consistency in commercial health plan coverage
• Variation in scope of benefits
• Limited scope of mandate (cancer or other life-threatening disease or
– Budgeting and contracting practices
• Enhance ability to estimate clinical trial costs if increased consistency
– Eliminate financial barriers to recruitment/participation for cancer or lifethreatening disease trials
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
• Medicare Secondary Payor (MSP) law mandates certain
coordination of benefits
– Medicare can only be the secondary payor - not the primary payor - on a
health care claim if certain types of other coverage are available
• Other coverage includes liability insurance (such as self-insurance)
• Section 111 of MMSEA does not change MSP coordination of
benefits principles but establishes new reporting requirements for
insurers who pay as primary payor on a health claim
• Section 111 is intended to enable Medicare to identify when
Medicare paid for a claim as primary and another insurer or other
party should have paid
– Example: Medicare pays for care to Medicare patient injured in auto
accident and patient later wins settlement that covers medical bills
Section 111 of the Medicare Medicaid
and SCHIP Extension Act of 2007
• Section 111 generally requires certain insurers (referred to as
Responsible Reporting Entities (RREs)) to:
– Determine whether an individual who has filed a claim for expenses
related to health care services is entitled to Medicare benefits
– If the individual is entitled to Medicare benefits, electronically report the
individual’s name and information about the claim and injury to the
Medicare program
• RREs must report payments as:
– Ongoing responsibility for medicals (ORM)
• Responsibility to pay, on an ongoing basis, for health care expenses
associated with a specific claim
– Total payment obligation to claimant (TPOC)
• Single lump sum payment
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
• Section 111 applies to payments made by a clinical trial sponsor to
cover health care expenses for research-related injuries
• Centers for Medicare & Medicaid Services (CMS) clinical trials
alert (May 26, 2010)
When payments are made by sponsors of clinical trials for
complications or injuries arising out of the trials, such payments
are considered to be payments by liability insurance (including selfinsurance) and must be reported. The appropriate Responsible
Reporting Entity (RRE) should report the date that the
injury/complication first arose as the Date of Incident (DOI). The
situation should also be reported as one involving Ongoing
Responsibility for Medicals (ORM).
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
• Registration: RREs required to register with CMS once
reasonable expectation of claims to report
• Timing: RREs began submitting ORMs on quarterly basis
beginning April 1, 2011
• Time Period: Report health care expenses for which a clinical
trial sponsor had ongoing responsibility as of January 1, 2010
or assumes responsibility on or after January 1, 2010
• Reportable Events: ORMs reported when ORM is assumed
and when ORM is terminated
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
• Information: Information on the injured party; the injury,
incident, or illness; self-insurance information; plan
information; information on the injured party’s attorney or
representative (where applicable); and information on the
settlement, judgment, award, or other payment
• Penalty: Fines of $1,000 for each day of noncompliance per
claim plus any other legal penalties that may apply plus
recoupment of any payment for health care expenses from
the RRE if Medicare mistakenly made payment
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
• Current Issues
– Data integrity concerns
– Access to information on past payments
– Unclear guidance
– Systems capability
• Impact on Clinical Trial Operations
– Clinical trial agreement address obligations of investigators and clinical
sites to obtain and provide needed information
– Informed consent form and HIPAA authorization address disclosure of
information to sponsor for required reporting
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
• Other Consequences
– MMSEA Section 111 clinical trial alert operates as affirmation of CMS 2004
position on clinical trial sponsor status as self-insured liability insurer for
MSP purposes
– CMS letter (April 13, 2004) addresses Medicare coverage of complications
from investigational procedure when trial sponsor promises to pay for
research-related injuries “provided that these services are not covered by
another payor”
• MSP rules render Medicare benefits secondary to benefits payable by a third
party payor even if the third party payor (i.e., research sponsor) states that its
benefits are secondary to Medicare or otherwise limits its payments to Medicare
– Interpretation was subject to widespread challenge by sponsors,
healthcare providers and patients and status uncertain pending further
CMS guidance but now Section 111 guidance
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
The Medicare statute precludes payment when
“payment has been made or can reasonably be
expected to be made under a liability insurance
policy or plan (including a self-insured plan).
An entity that engages in a business, trade or
profession shall be deemed to have a selfinsured plan it if carries its own risk (whether by
a failure to obtain insurance, or otherwise) in
whole or in part.” 42 U.S.C. § 1395(b)(2)(A)(ii).
The clinical trial sponsor’s agreement with trial
participants that it will pay for medically
necessary services related to injuries
participants may receive as a result of
participation in the trial constitutes a plan or
policy of insurance under which payment can
reasonably be expected to be made in the
event such an injury occurs. A liability
insurance policy or plan must make payment
without regard to an individual’s Medicare
eligibility. 42 C.F.R. § 411.32(a)(1). Therefore,
Medicare will not make payment it if is aware of
a situation such as you described.
Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007
While your e-mail to Mr. Olenick was
phrased as a hypothetical question,
we urge you to advise any of your
clients that may have failed to make
primary payments for services related
to injuries sustained by Medicare
beneficiaries in the course of their
participation in clinical trials that CMS
is willing to work with them to resolve
their payment obligations with
minimal inconvenience to participants
and their health care providers.
Safety Reporting for Drugs
• Food and Drug Administration (FDA) implemented new
adverse event and other safety reporting requirements
– Investigational new drug (IND) studies at 21 C.F.R. Part 312
– Bioavailability and bioequivalence studies at 21 C.F.R. Part 320
• Requirements effective March 28, 2011
• Revisions to post-marketing clinical trials postponed
Safety Reporting for Drugs
• Intent of New Requirements
– Ensure only relevant information reported to FDA
• Sponsor analyze relevance
– Improve monitoring by requiring expedited reports of certain safety
– Ensure consistency with other safety reporting guidance
• International Conference on Harmonisation of Technical Requirements for
Registration of Pharmaceuticals for Human Use (ICH)
• World Health Organization’s Council for International Organizations of
Medical Sciences (CIOMS)
• Guidance adopted by the European Union
Safety Reporting for Drugs
• Prior Requirements
– Research sponsors notify FDA and investigators of:
• Any adverse experience associated with the use of the drug that is both
serious and unexpected (15 days routine or 7 days expedited)
• Any finding from tests in laboratory animals that suggested significant risk
for humans
– Over-reporting of single events (creating “white noise”) with no context
Safety Reporting for Drugs
• Adverse Event: Untoward medical occurrence that is
associated with use of a drug in humans (even if not drug
• Suspected Adverse Reaction: Adverse event for which
there is a “reasonable possibility” (evidence to suggest a
causal relationship) that event was caused by the drug
• Adverse Reaction: Suspected adverse reaction if reason to
conclude the drug caused the event
Safety Reporting for Drugs
• Causality (“Reasonable Possibility”)
– Single occurrence of an event that is uncommon and known to be
strongly associated with drug exposure
– One or more occurrences of an event that is not commonly associated
with drug exposure, but is otherwise uncommon in the population
exposed to the drug
– Aggregate analysis of specific events observed in clinical trial indicating
events occur more frequently in the drug treatment group than in a
concurrent or historical control group
• Known consequences of underlying disease or condition
• Other events that commonly occur in the study population independent of
drug therapy
Safety Reporting for Drugs
• Serious Adverse Event or Suspected Adverse Reaction:
Adverse event or suspected adverse reaction which (as
determined by the investigator or sponsor) results in:
– Death
– Life-threatening adverse event
– Inpatient hospitalization or prolongation of hospitalization
– Persistent or significant incapacity to, or substantial disruption of, the
ability to perform normal life functions
– Congenital anomaly/birth defect
– Important medical event that may jeopardize the subject and require
medical or surgical intervention to prevent such outcomes
Safety Reporting for Drugs
• Unexpected Adverse Event or Suspected Adverse
Reaction: Adverse event or suspected adverse reaction
– Is not mentioned in the investigator brochure (or not mentioned for the
particular drug) or is not mentioned at the specificity or severity that
– If no investigator brochure, is inconsistent with the risk information in the
general investigational plan or otherwise inconsistent with the
information in the current application
Safety Reporting for Drugs
• IND safety report to the FDA and all participating investigators
within 15 calendar days:
– Suspected adverse reactions (evidence to suggest causal relationship
with drug) that are both serious and unexpected
– Findings from epidemiological studies, analysis of multiple studies, or
clinical studies, even if not conducted by the sponsor or under an IND,
that suggest a significant risk to humans exposed to the drug
– Findings from animal or in vitro testing, even if not conducted by the
sponsor, that suggest a significant risk in humans exposed to the drug
– Clinically important increases in the rate of a serious suspected adverse
reaction over the rate listed in the protocol or investigator brochure
Safety Reporting for Drugs
• Sponsor report to FDA of any unexpected fatal or lifethreatening suspected adverse reaction within 7 calendar
– Life-Threatening Suspected Adverse Reaction: Suspected adverse
reaction which places the patient or subject at immediate risk of death
(as determined by the investigator or sponsor)
Safety Reporting for Drugs
• Sponsor Monitoring of Safety Information
– Prompt review of all relevant safety information obtained or otherwise
received by the sponsor from any foreign or domestic sources
• Clinical or epidemiological investigations
• Animal or in vitro studies
• Reports in the scientific literature
• Unpublished scientific papers
• Reports from foreign regulatory authorities
• Reports of foreign commercial marketing experience for drugs not marketed
in U.S.
– Annual literature searches
• Sponsor analysis of safety information
Safety Reporting for Drugs
• Investigator Reports
– Immediately report any “serious adverse event” to the sponsor
• Provide the sponsor with his or her assessment of the possibility that the
drug caused the event
• Sponsor decide what is reportable taking into account investigator
– Report nonserious adverse events as required by the timetable set forth
in the protocol
Safety Reporting for Drugs
• Issues
– Alternative Reporting
– Unblinding
– Study Endpoints
– Investigator Brochures
– Bioavailability or Bioequivalence Study (Not under IND)
• Serious adverse event within 15 days
• Fatal or life-threatening adverse event within 7 days
– Marketed Drugs under IND
– Investigator-Initiated Clinical Trials
– Consistency
– Enforcement
• FDA exercises enforcement discretion until September 28, 2011
Food and Drug Administration
Data Falsification Proposed Rule
• Food and Drug Administration (FDA) issued proposed rule
requiring sponsors to report to FDA suspected data
falsification (February, 2010)
– Ensure data integrity
– Protect study subjects
• Proposed rule intended to “clarify” sponsor reporting
• Requirements would be incorporated into investigational new
drug application regulations (21 C.F.R. Part 312)
Food and Drug Administration
Data Falsification Proposed Rule
• General Requirement
– Sponsor must report when “any person has, or may have, engaged in
the falsification of data in the course of reporting study results, or in the
course of proposing, designing, performing, recording, supervising, or
reviewing studies conducted by or on behalf of a sponsor or relied on by
a sponsor”
• Obligation to report “possible” falsification
• No particular “information threshold” established
• No need to determine intent
– No reporting of errors (typos)
Food and Drug Administration
Data Falsification Proposed Rule
• Process
– Report to applicable FDA center (e.g., Center for Drug Evaluation and
– Report “promptly” but no later than 45 calendar days after the sponsor
becomes aware of the information (before, during or after completion of
– Report information about person potentially falsifying data and nature of
• Key Terms
– Falsification of data means creating, altering, recording, or omitting data
in such a way that the data do not represent what actually occurred
• Making up data, altering data, misrepresenting data, or omitting data
– Data includes individual facts, tests, specimens, samples, results,
statistics, items of information, or statements made by individuals
Food and Drug Administration
Data Falsification Proposed Rule
• Response and Penalty
– Reports may lead to administrative actions (e.g., disqualifying an
investigator) or enforcement actions (e.g., criminal proceedings)
– Failure to report possible falsification of data might constitute a violation
of Section 301(e) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 331(e)) (concerning failure to make a required report) or 18
U.S.C. 1001 (concerning the submission of a false statement to the
federal government)
Food and Drug Administration
Data Falsification Proposed Rule
• Open Issues
– FDA response to information reported
• Referral to enforcement agencies
– Public access to information reported
– Response to reports not substantiated (rehabilitation of reputations)
– Protection for sponsors reporting
Food and Drug Administration
Data Falsification Proposed Rule
• Impact on Clinical Trial Operations
– Sponsor may impose enhanced reporting obligations on investigators and
clinical sites
– Sponsor may implement enhanced monitoring and auditing of clinical
sites (although FDA states agency “does not intend to impose any
additional monitoring responsibilities”)
– Sponsor may need to ensure appropriate communication channels to
make sure suspicions/information escalated appropriately
– Sponsor may want information if report made about activities in
connection with another study
HIPAA Privacy Rule Proposed
Research Modifications
• Health Information Technology for Economic and Clinical
Health Act (HITECH Act)
– Covered entity and business associate may not receive direct or indirect
payment in exchange for disclosure of protected health information
(PHI) unless valid HIPAA authorization permitting exchange of payment
for disclosure
– Exception if sale is for research purposes and if the price charged for
the PHI reflects the costs of preparation and transmittal of the data
– Effective 6 months after implementing rule (not yet issued)
• U.S. Department of Health and Human Services (HHS) issued
proposed rule to implement HITECH Act amendments (July,
– Proposed rule on prohibition on sale of data and research exception
basically tracks statutory language
– Comments requested on types of permissible costs
HIPAA Privacy Rule Proposed
Research Modifications
• Proposed rules would also address “compound” authorization
for multiple research activities
• Current:
– Single compound research authorization permitted for multiple research
studies (e.g., a research study collects information for the study itself
and collects and stores PHI in a central repository for future research)
– Exception: Single compound research authorization is not permitted if
the provision of research-related treatment is conditioned on only one
of the authorizations
• Example: Single research authorization not allowed for interventional clinical
trial and storage of collected blood and associated PHI for future research if
access to interventional trial (and research-related treatment) conditioned
upon signing the authorization for both research activities
• Impedes collection of data/specimens during one clinical trial for other uses
HIPAA Privacy Rule Proposed
Research Modifications
• Proposed: Single compound research authorization permitted
for multiple research activities even if access to researchrelated treatment for only some activities conditioned upon
signing the authorization
– Authorization must clearly differentiate between the conditioned and
unconditioned research activities
– Authorization must clearly allow the individual the option to opt in to the
unconditioned research activities (e.g., individuals may choose to
participate in interventional clinical trial but not allow blood and
associated PHI to be used for another clinical trial)
– Flexibility
• Separate page
• Separate signature
• Check box
• Cross references
HIPAA Privacy Rule Proposed
Research Modifications
• Proposed rules would also address authorization for future
• Current: Research authorization must specify research for
which PHI (alone or in connection with specimens) will be
– Impedes collection for future unspecified research
– Level of specificity required for future research unclear
– Possible need for additional authorizations
HIPAA Privacy Rule Proposed
Research Modifications
• Proposed: HHS considering whether to modify its
interpretation that a research authorization be research-study
– Comments requested on three options:
• Option 1. Authorization must adequately describe future research “such that
it would be reasonable for the individual to expect that his or her protected
health information could be used or disclosed for such future research”
• Option 2. Same as Option 1 but require certain disclosure statements if
future research may encompass certain types of sensitive research activities
(e.g., genetic analyses or mental health research) that may alter an
individual's willingness to participate in the research
• Option 3. Authorization must include certain specified elements or
– Modification would not affect right of subject to revoke authorization
HIPAA Privacy Rule Proposed
Research Modifications
• Impact on Conduct of Studies
– Streamline acquisition of data and specimens for future research during
current research
– Greater flexibility in use of data and specimens obtained from research
– Potential that data and specimen repositories less likely to offer access
– Greater scrutiny of clinical research based on existing data
• Payments to investigators/clinical sites for research involving existing data or
collection of data
Insider Trading
• Government “crackdown” on securities fraud involving “expert
networks” used by the investment community
– Expert networks match professionals with expertise and insight into a
particular industry with investment firms
• Numerous enforcement actions initiated by Securities and
Exchange Commission (SEC) and U.S. Department of Justice
- Professionals serving as experts
- Employees of investment firms
- Expert networks
- Investment firms
• Enforcement actions allege “insider trading” based on provision
of confidential information by experts to investment community
– Professional experts include an investigator involved in clinical research
Insider Trading
• Success or failure of clinical trials involving a new drug or
device in development can impact the value of the company
developing the product
• Company representatives and numerous third parties involved
in the clinical trial may have access to information about the
progress of the clinical trial
• Confidentiality is often required by law or contract but
maintaining confidentiality can prove difficult
– Obligations not understood/communicated
– Significance of information not realized
Insider Trading
Clinical Research Information Flows
Research Sponsor
Clinical Research
Data Monitoring
Steering Committee
Clinical and Research
Insider Trading
• Insider Trading: No purchasing or selling securities while in
possession of material, nonpublic information (MNPI) in
breach of a duty to the company issuing the securities, the
company’s shareholders, or the source of the information.
• Three Theories
– Traditional: Employee or other corporate agent learns inside
information about corporation and trades on the information
– Tipper/Tippee: Insiders “tip” an outsider about MNPI for personal gain
and outsider trades on the information
– Misappropriation: Person misappropriates confidential information in
breach of a duty owed to the source of the information and trades on the
Insider Trading
• Benhamou Case
– Allegations
• French physician (Yves Benhamou, M.D.) was member of steering
committee and lead investigator in France for clinical trial of unapproved
– Confidentiality agreements
• Expert network matched Benhamou with hedge fund firm as consultant and
hedge-fund portfolio manager later retained
• Benhamou allegedly “tipped” the portfolio manager about a setback in the
clinical trial several days before any public announcement by company
• Hedge funds sold stock before announcement and avoided nearly $30
million in losses
Insider Trading
• Benhamou Case
– Outcome
• Benhamou has reportedly pled guilty to securities fraud and other charges
and is cooperating with federal investigators and prosecutors
• Hedge-fund portfolio manager has been arrested on securities fraud charges
• Hedge fund paid a $33 million settlement without any admission of
wrongdoing reportedly
Insider Trading
• Government enforcement focus on insider trading involving
expert consultants may warrant reconsideration of practices of
researchers, research institutions and sponsors
• Researchers
– Understand distinction between professional and industry insight that
can be shared with investors and confidential information that cannot be
– Understand insider trading obligations
Insider Trading
• Research Institutions
– Educate researchers about insider trading restrictions and their
application to researchers
– Require researchers to disclose relationships with expert networks and
the investment community
– Review relationships between researchers and the investment
– Restrict relationships between researchers and the investment
community (e.g., for the duration of a clinical trial)
– Review language in consultant agreements between researchers and
the investment community
– Communicate confidentiality provisions in clinical trial agreements and
obtaining assurances from researchers that obligations will be met
Some recommendations addressed in E. Topol and D. Blumenthal, Physicians and the
Investment Industry, 293 JAMA 2654 (June 1, 2006).
Insider Trading
• Research Sponsors
– Review procedures to ensure that all third parties with likely access to
clinical trial information during clinical trial are identified and
confidentiality agreements in place
– Revise standard confidentiality provisions in clinical trial agreements
• Acknowledgement of status as “insiders” who have gained MNPI
• Agreement not to engage in transactions, or advise others to engage in
transactions, involving researcher sponsor stock until the clinical trial results
are public
• Flowdown of provisions
– Require researchers and other parties to disclose any relationships with
the investment community
– Ensure that confidentiality obligations are discussed in investigator
Financial Conflicts of Interest
• Concern
– Widespread focus on potential conflicts of interest in research created by
financial relationships between pharmaceutical and medical device
industries and researchers
– Integrity of research in question
– Public safety concerns for subjects in research and for patients
prescribed marketed products approved based on research
– Lack of confidence in government oversight
• Evidence of Concern
– Research industry reports
– Congressional scrutiny
– Federal and state legislation
– Conflicts of interest regulations
– Government reviews
– Enforcement action
Financial Conflicts of Interest
• Public Health Service (PHS) has proposed changes to its
financial conflict of interest regulations (42 C.F.R. Part 50)
(May, 2010)
• Current PHS conflict of interest regulations apply to
institutions that seek or receive PHS funding
– Maintain a written and enforced financial conflict of interest policy
– Identify and address financial conflicts of interest
– Report identified conflicts to PHS
• Focus on investigator financial relationships
• Investigator discloses “significant financial interests” and
institution determines whether interests create financial
conflict of interest and then responds (management and
Financial Conflicts of Interests
• PHS Proposed Regulations
– Expanded Scope of Significant Financial Interests
• Investigator financial interest that reasonably appears to be related to the
investigator's institutional responsibilities (i.e., his or her professional
responsibilities on behalf of the institution whether or not involving research)
• Publicly-Traded Entity. Aggregate value received in the twelve months
preceding the disclosure and the value of any equity interest in the entity as
of the date of disclosure exceeds $5,000
• Non-Publicly Traded Entity. Aggregate value received in the twelve
months preceding the disclosure exceeds $5,000 or investigator holds any
equity interest
• Intellectual Property Rights. Rights (e.g., patents, copyrights), royalties
from such rights, and agreements to share in royalties related to such rights.
• Focus on prior twelve month period (rather than future twelve month period)
Financial Conflicts of Interests
• PHS Proposed Regulations
– Narrowed Exclusions from Significant Financial Interests
• Salary, royalties, or other payments paid by the institution to a currently
employed or contracted investigator
• Ownership interest in the institution held by the investigator
• Income from seminars, lectures, teaching engagements, service on advisory
committees or review panels sponsored/paid by a federal, state, or local
government agency, or an institution of higher education as defined at 20
U.S.C. 1001(a)
– No longer exclusion for such income from all non-profits
Financial Conflicts of Interests
• PHS Proposed Regulations
– Expanded Institution Responsibilities
• Post its written policy on financial conflicts of interest on its website
• Report to PHS in accordance with internal definition of conflicts of interest if
broader than regulations
• Provide training (not just inform) investigators of financial conflicts of interest
policy its policy
• Ensure investigator disclosures at application, annually, and upon change
• Determine whether a significant financial interest is related to research and,
if so, whether the interest creates a financial conflict of interest
• Ensure each subcontractor (through a legally enforceable written contract)
adheres to institution or subcontractor financial conflicts of interest policy
and also manage any disclosed conflicts
Financial Conflicts of Interests
• PHS Proposed Regulations
– Enhanced Management and Reporting of Conflicts of Interest by
• Manage financial conflicts of interest through formal management plan
before expending PHS research funds and monitor investigator compliance
with plan
• Use expanded mechanisms recognized for management of a financial
conflict of interest (e.g., to include disclosure to subjects)
• Respond promptly to obtain disclosures of, or review, new significant
financial interests, including mitigation plan if interests not timely disclosed or
• Disclose on publicly accessible website significant financial interest currently
held by a senior researcher that relates to PHS-funded research if financial
conflict of interest
• Submit expanded information in a financial conflict of interest report to PHS
(including a description of the nature of the conflict of interest)
• Provide annual updates to financial conflict of interest reports
Financial Conflicts of Interest
• Open Issues on PHS Proposed Regulations
– Revisions to institution policies and practices
– Implementation time frame
– Institutional conflicts of interest
– Consistency with other financial disclosure obligations
Financial Conflicts of Interest
• Current FDA Financial Disclosure Requirements (21 C.F.R. Part
– Sponsor must identify all clinical investigators in clinical studies submitted in
support of marketing application and disclose any financial interests with
investigators (spouse and dependent child) during study and for one year
after study
– Financial Interests
• Compensation if value of compensation could be affected by study outcome
• Proprietary interest in investigational product (e.g., a patent, trademark, copyright
or licensing agreement)
• Equity interest in the sponsor of the study (i.e., any ownership interest, stock
options, or other financial interest whose value cannot be readily determined
through reference to public prices)
• Equity interest in a publicly held company that exceeds $50,000 in value
• Other significant payments that have a cumulative monetary value of $25,000 or
– “Due diligence” exemption if unable to obtain information
Financial Conflicts of Interest
• Current FDA Financial Disclosure Requirements
– Sponsor must indicate any steps taken to minimize bias on disclosed
financial interests
– FDA evaluates financial interests disclosed and steps taken to minimize
• Audit data
• Request further analysis of data
• Request additional independent studies
• Treat data as not adequate
Financial Conflicts of Interest
• No current FDA requirement to disclose financial relationships in
informed consent forms but FDA acknowledgment IRBs may
• FDA Guidance
“FDA’s financial disclosure regulations (21 CFR Part 54) . . . . do NOT require the
informed consent document to contain any statements about the investigator’s financial
arrangements with the sponsor of the covered study.
Having said that, FDA’s regulations at 21 CFR 56.109 (b) state that the ‘. . . IRB may
require that information, in addition to that specifically mentioned in 21 CFR 50.25, be
given to subjects when in the IRB’s judgment the information would meaningfully add to
the protection of the rights and welfare of subjects.” Thus, an IRB may develop its own
policies with respect to financial interests or arrangements, and any expectations the IRB
has with respect to sharing such information with study subjects.”
(GCP Questions Email Response (March 26, 2008))
Financial Conflicts of Interest
• Review of FDA Oversight
– HHS Office of Inspector General (OIG) Report, Food and Drug
Administration’s Oversight of Clinical Investigators’ Financial Information
(January, 2009)
• Limited number of financial interests disclosed
• No certainty financial disclosure forms submitted for all investigations
• Financial disclosure information missing (due diligence exemption)
• Review of financial interests not always documented
• Action not always taken on disclosed financial interests
• Need for:
– Early submission of financial disclosure information
– Provision of complete information for all investigators
– Consistent review of, and response to, financial information disclosed
Financial Conflicts of Interest
• Enforcement Action
– Synthes, Inc. Settlement with New Jersey Attorney General (2009)
• Allegations that physician investigators for medical device company had
investments in device and company failed to disclose financial interests to
• Settlement involved reimbursement of fees and costs related to investigation
and voluntary assurances
• Selection of clinical investigators based on qualifications
• Fair market value payment not tied to outcome of clinical trial or in form of
company stock/stock options
• Procedures for diligent collection of financial interest information
• Disclosure of financial interest information to clinical sites and subject and on
website (upon product approval/clearance)
• New Jersey Attorney General letter to FDA
Financial Conflicts of Interest
Yet, despite the fact that Synthes’
failure to adequately disclose these
interests should have been obvious
from even a cursory review of its FDA
submissions, the FDA did nothing to
regulate these conflicts. A number of
disclosure forms were signed and
dated, but were otherwise left blank.
Others indicated that the clinical
investigator had a significant equity
interest in the product, but did not
attach the requisite details. But the
FDA approved Synthes’ applications
for premarket approval without any
delay or further inquiry into this issue.
Financial Conflicts of Interest
I am gravely concerned about the
conflicts of interest that pervade the
medical device industry – particularly
with respect to high-risk devices –
and their deleterious effects upon
Financial Conflicts of Interest
• Impact on Clinical Trial Agreements
– Increased emphasis on clinical site assuring prompt and accurate
disclosure and updates of financial interests to sponsors
• Impact on Informed Consent Forms
– Increased emphasis on language on financial relationships in informed
consent form
– If language included, need to ensure language meaningful to subject and
objective (e.g., not indicate that investigator or clinical site has a “conflict
of interest”)
– Key concepts
• Investigator/institution benefit financially
• Nature of financial relationship
– Example: Financial support to cover costs of research
• Clinical site/IRB determine that financial benefit not likely to affect subject
safety or study
Compliance and Enforcement Initiative
• Clinical research activity is government focus
• Expansion in subjects of enforcement activity
– Research sponsors
– Research institutions
– Investigators
– IRBs
• Expansion in government agencies involved
– Federal and state
• Common compliance concerns and themes emerge
Compliance and Enforcement
• Common Compliance Concerns
– Objectivity in Medical Decisions
• No illegal remuneration that can taint clinical decisions
• Examples: Seeding trials/pay to prescribe
– Integrity in Product Approval/Research Process
• Research results are not biased
• Public and government not misled into thinking product is safer than product
• Examples: Objectivity of researchers/unauthorized distribution of
unapproved product/falsification of data/non-compliant adverse event
– Accuracy of Product Claims
• Consumers and health care professionals not rely on misinformation
• Examples: Delayed dissemination/misrepresentation of clinical trial
Compliance and Enforcement
• Common Compliance Concerns
– Medical Necessity of Care
• Public and government not pay for care for which efficacy not demonstrated
• Examples: Claims submitted for unproven, off-label uses
– Protection of Patients
• Rights of subjects participating in research are not compromised
• Examples: Lack of appropriate review of research or failure to obtain
informed consent
– Protection Government Funds
• Government not charged inappropriately
• Examples: Providers billing government and sponsor for same
services/costs charged inappropriately to grants
Compliance and Enforcement
• Common Compliance Themes
– Expansion in research activity subject to enforcement action
– Routine imposition of research compliance obligation in corporate
integrity agreement with sponsors (FDA regulatory compliance and
relationships with healthcare professionals)
– Increased responsibility for investigators and research sponsors and
increased liability for failure to fulfill responsibilities
– Increased legal exposure for individuals (whether investigators or
sponsor representatives)
– Disclosure, management or elimination of financial conflict of interests
– Global focus with foreign clinical trials (and Foreign Corrupt Practices