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Physicians conducting research on humans using experimental drugs, devices or biologics in which they hold an ownership interest put themselves at great risk for liability and regulatory consequences unless they ensure that various disclosure requirements are met and that the subjects of the research have given adequate, well-documented informed consent. The risks grow larger every day as various federal agencies become more interested in ferreting out what they view as problematic conflicts of interest. One of the underlying assumptions of regulations governing the conduct of clinical trials is that the sponsor of the clinical trial — usually a pharmaceutical, device or biotech company — has a financial interest in the clinical trial’s successful outcome. Thus, under the regulatory scheme of the Food and Drug Administration (FDA), the sponsor has limited direct contact with the subjects enrolled in the clinical trial. The sponsor designs the research protocol and funds and manages the study, but its employees typically do not have direct patient contact. Rather, the sponsor has a regulatory responsibility to select qualified physicians to conduct the clinical trial. These clinical investigators — typically academic physicians or well-known clinicians — have the direct relationship with the subjects and have the primary regulatory responsibility to protect the subjects’ interests. The clinical investigators assess whether a particular patient meets the research protocol’s enrollment criteria or whether the patient should be excluded due to, for example, a pre-existing condition that may make the administration of the experimental drug unsafe. The clinical investigators are charged with ensuring that the subjects provide their informed consent to participate in the study. Ultimately, the investigators administer the study medication and examine the patients during regular visits, gathering information about efficacy and possible side effects. One would be mistaken, however, in assuming that in today’s pharmaceutical, device and biotech industry, the clinical investigator holds no financial interest in the successful outcome of a clinical trial. Often, the investigator holds a patent interest in the matter being studied or holds a significant equity interest in a company that holds the patent. In such cases, the research subjects may arguably benefit because the scientist most familiar with the drug, device or biologic is monitoring its use in the subject. Who is better placed to evaluate the safety and efficacy of the product? An investigator with an ownership interest must also consider, however, the potentially serious issue of a conflict of interest. [FOOTNOTE 1]Can the investigator’s primary focus be the safety of the patient in a clinical trial pivotal to obtaining marketing approval, producing a stream of revenue and, hopefully, yielding a profit? In most cases, the answer to this question is yes, but ignoring the conflict of interest is not an option. The conflict must be recognized and managed — at a minimum through disclosure and at a maximum through the abandonment of either the research or the proprietary interest — to avoid running afoul of regulatory requirements and incurring serious litigation and public relations risks. One need only look to the controversy that arose in the field of gene therapy after reports that researchers held proprietary interests in the biotechnology they were studying in humans — some of whom suffered adverse events and instituted litigation — to understand the import of appropriately assessing and managing the conflicts of interest that arise from ownership interests. Failure to deal appropriately with the conflict of interest can even lead to business consequences, as Wall Street is becoming increasingly cognizant of the import of such issues. Analysts have begun questioning the effect of conflicts of interest on the FDA’s approval of products. [FOOTNOTE 2] FDA REQUIRES DISCLOSURE In regulations that took effect in early 1999, the FDA addressed clinical investigators’ financial conflicts of interests. Sponsors filing a New Drug Application (NDA) now must submit documents for each clinical investigator participating in clinical trials in which efficacy is measured or in which one investigator plays a significant role in a safety determination. Specifically, a sponsor must submit a certification stating that the investigator does not have a reportable financial conflict of interest, and/or a disclosure statement identifying each investigator’s (and his or her immediate family’s) financial conflicts of interest and the “steps taken to minimize the potential for bias resulting” from the conflicts. [FOOTNOTE 3] Reportable financial conflicts of interests include “[a]ny proprietary interest in the tested product,” i.e., a “patent, trademark, copyright or licensing agreement;” and “[a]ny significant equity interest in the sponsor of the covered study,” i.e., “interests in a nonpublicly traded corporation” or “any equity interest in a publicly traded corporation that exceeds $50,000 during the time that the clinical investigator is carrying out the study and for one year” thereafter. [FOOTNOTE 4]Pursuant to amendments to Good Clinical Practice regulations, this conflict-of-interest information must be collected before the start of a clinical trial. [FOOTNOTE 5]In this way, “the sponsor will be aware of any potential problems, can consult with the agency early on, and take steps to minimize the potential for bias.” [FOOTNOTE 6]Absent appropriate certification or disclosure, the FDA will refuse to accept the NDA for filing. The FDA says that it will evaluate the conflicts of interest disclosed “to determine the impact … on the reliability of the study,” taking into account “the size and nature of a disclosed financial interest (including the potential increase in the value of the interest if the product is approved) and steps that have been taken to minimize the potential for bias.” [FOOTNOTE 7]“Study designs that utilize such approaches as multiple investigators …, blinding, objective endpoints, or measurement of endpoints by someone other than the investigator may adequately protect against any bias created by a disclosable financial interest.” [FOOTNOTE 8]If the FDA determines that the interest “raises a serious question about the integrity of the data,” it will audit the data, request additional analyses, request independent studies or refuse to consider the data at all. [FOOTNOTE 9] The regulations prompted numerous questions leading the FDA to issue a draft guidance in 1999. Evidencing the complexity of the issues, the final guidance was only recently published, on March 29. This guidance, in the form of questions and answers, deals with many of the basics of compliance. For example, it provides that a questionnaire to investigators may be an appropriate method of collecting financial information and that the FDA can have access to sponsors’ records during an inspection. The FDA has, however, attempted to clarify one of the more complicated aspects of the regulations: Which company is the sponsor for reporting purposes? What seems to be a relatively straightforward question becomes complicated by the fact that the financial conflict-of-interest information must be collected before the clinical trial begins, which is sometimes years before the NDA is ultimately filed. The FDA requires that “[a]n applicant report financial interests in the sponsor of the covered study.” [FOOTNOTE 10]A sponsor of the clinical study is any party “supporting a particular study at the time it was carried out.” [FOOTNOTE 11]Therefore, if the sponsor of a Phase 2 study is an academic institution, it must collect financial information from its investigators regarding the investigators’ interests in any entity supporting the study or their interest in the tested product, but, in these circumstances, “there will [generally] not be relevant equity interests to report.” Notably, an investigator’s equity interest in a company that does not provide direct support for the study — for example, if the study is funded by the National Institutes of Health — but that holds a proprietary interest in the product being studied is not specifically addressed by the regulations. The FDA’s final guidance also takes pains to assure that, in most circumstances, the financial information collected and disclosed to it will remain protected from public disclosure. The FDA leaves open, however, the possibility of public disclosure if “the public interest clearly outweigh[s] the clinical investigator’s identified privacy interest.” [FOOTNOTE 12] Entities sponsoring clinical trials must set up mechanisms to ensure compliance with these regulations. Added assurances can be gained by including provisions requiring compliance in sponsors’ contracts with clinical investigators and with contract research organizations. The conflict-of-interest provisions should also be addressed at clinical investigator meetings. Even assuming full compliance, it is vital that those auditing clinical trial sites be trained to recognize signs of a conflict of interest affecting data validity, such as excessively high enrollment. A mechanism for reporting such a finding must be available to the auditors in order to forestall the rejection of data by the FDA. While the burden of reporting falls to the entity filing the NDA, investigators with proprietary interests in drug products, devices or biologics have an independent burden of disclosure. Investigators should ensure that provisions in clinical study agreements relating to financial disclosure requirements fairly replicate the requirements of the regulations, and that the agreement affords protection to personal financial information, except as is necessary for compliance. Investigators with proprietary interests in research products should also consider developing a straightforward compliance program of their own to prevent missteps in disclosure and to demonstrate good-faith efforts at compliance in the event of a failure to disclose. Investigators with ownership interests should likewise institute simple mechanisms to demonstrate that the interest is not affecting the data’s validity, such as a periodic audit by an objective third party. The message to take away from the FDA rules is not that investigators with proprietary interests are prohibited from conducting clinical research. Rather, there is an implicit recognition that conflicts of interest may be managed, often by mechanisms already in place in most clinical trials, such as blinding, subinvestigators and objective endpoints. Nonetheless, if the financial conflict is of a significant magnitude, it is wise for an investigator or a sponsor to take greater protective measures, such as involving an independent data-safety monitoring board. INFORMED CONSENT Most would agree that an investigator’s most important responsibility is ensuring that subjects who participate in a clinical trial do so only after having given their informed consent. Failure to obtain informed consent exposes the investigator not only to adverse regulatory action, but also to serious litigation consequences. An increasing consensus is emerging that the investigator’s ownership interest in the product being studied is information that a reasonable patient considering participation in a clinical study would want to know. Such information might be useful to a patient in assessing the objectivity of the investigator in the presentation of available alternative therapies and the risk/benefit ratio of the experimental product. Thus, investigators with a proprietary interest in the product under study must consider the adjustments that need to be made to preserve the validity of a patient’s informed consent, particularly if the consent is being judged with the benefit of hindsight after the occurrence of an adverse event. At a minimum, information about a proprietary interest should be disclosed to the institutional review boards (IRBs) considering the study and the subjects in the clinical trial. The IRB should also be advised of mechanisms used to manage the conflict, such as data-safety monitoring boards, the participation of patient advocates or independent investigators obtaining informed consent. An independent entity charged with patient protection will have reviewed the propriety of the investigator’s participation under all of the circumstances. Further, disclosure to subjects should be drafted into the informed-consent document and must be stated in a manner that explains the import of this financial information. Doing this will provide objective evidence that the patient had knowledge of the investigator’s interest before enrolling in the study. Unfortunately, none of these procedures halts the inevitable challenges in a courtroom, but at least the procedures provide objective evidence that the issue was recognized and addressed. Those with proprietary interests in products face additional challenges when their research interest drives them to perform human-subject research using their own products. Some may argue that investigators — whether or not financially interested in the success of the product under study — have many interests that conflict with the interests of the subjects, namely, funding renewal, public acclaim, career advancement or tenure. Nonetheless, it is now widely recognized that the addition of a direct financial interest can further widen the gap in interests existing between the patient and the investigator.Compliance with these and other entities’ requirements, such as those of the National Science Foundation and the National Institutes of Health, are seemingly onerous and at times may be conflicting. Disclosure, however, is the touchstone of management of conflicts of interest in all cases and should be the default position for any researcher with a proprietary interest in a product. Nina M. Gussack is a partner in the Litigation Department and chairs theHealth Effects Litigation Practice of Pepper Hamilton LLPinPhiladelphia. Gussack may be contacted by e-mail at [email protected]. Karen McDonnell Suddath is an associate in theHealth Effects Litigation Practice Group and may be reached at [email protected]. ::::FOOTNOTES:::: FN1 See Moore v. The Regents of the University of California, 51 Cal.3d 120 (1990). FN2 See, e.g., Jesse Eisinger, “Shorts Have Dim View of Sunrise Technologies’ Success,” www.thestreet.com/pf/ stocks/biotech/764869l.html. FN321 C.F.R. 54.4(a); FDA Forms 3454, 3455. FN4 See21 C.F.R. 54.2(b)-(c). FN5 See21 C.F.R. 312.53 812.43. FN6 SeeFDA Guidance on Financial Disclosures by Clinical Investigators, March 20, 2001, No. 6, at 5, www.fda.gov/oc/ guidance/financialdis.html. FN721 C.F.R. 54.5(a). FN821 C.F.R. 54.5(b). Blinding is the mechanism by which neither the investigator nor the subject knows whether they are receiving the drug under study or the comparative drug or placebo. Endpoints are those variables that are assessed during the study to determine the effects of the drug. FN921 C.F.R. 54.5(c)(1)-(4). FN10 SeeFDA Guidance, supra.n.6, No. 7, at 6. FN11 Id. FN12 Id.No. 29 at 12-13.

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