Michael Darowski, partner, McDermott Will & Emery and Derek Safadi, trainee reflect on a recent case as they analyse CRO agreements in clinical trials.
The recent High Court case of Cardiorentis AG v IQVIA Limited and another (EWHC 250 (Comm) (10 February 2022) (Butcher J)) demonstrates the ever-present risks to contract-research organisations (CROs) and their clients.
The long and highly technical judgment in Cardiorentis, in particular, highlights the necessity for clear, well-drafted and bespoke legal documentation for all parties when outsourcing research to CROs.
In Cardiorentis, Cardiorentis AG engaged IQVIA, a CRO, to conduct clinical trials. After disappointing results, Cardiorentis claimed that IQVIA had committed various failures that resulted in a significant number of ineligible subjects being included in the clinical trial, which made the data unreliable and of little value. IQVIA counterclaimed for unpaid invoices for completed services and withheld access to trial data, which the legal documentation permitted despite also stating that the data was owned by Cardiorentis.
Summary of the claim
The below is a snapshot of Cardiorentis’ claim in the English Courts, leading to a trial lasting almost seven weeks:
· Breach of contract (in particular, the general service agreement (GSA) and the clinical quality agreement (CQA)), including allegations that:
o IQVIA failed to provide services to the agreed standard of care (which was set by a clause referring to “the standard of care customary in the contract research organization industry” and by section 13 of the Supply of Goods and Services Act 1982).
o IQVIA failed to meet its contractual obligation to conduct source-document verification for all of the data.
o The CQA was not governed by the laws of England and Wales, but rather by North Carolina law. Cardiorentis further argued that several terms (express and implied) were breached by IQVIA.
· Negligent breach of duty (in relation to the services and representations about the services).
· A claim under the North Carolina Unfair and Deceptive Practices Act.
· A claim for injunctive relief that IQVIA should give Cardiorentis access to the data and information generated in the trial.
Result of the case
· Cardiorentis’ claim for damages failed, but it successfully obtained an injunction that it should have access to data relating to the study.
· The court found that it was not necessary to distinguish between the standard “customary in the contract research organisation industry” and a standard of reasonable skill and care. In this case, what was customary was largely set out within the legal documentation.
· The judge concluded that the achievement of 100% source-document verification was not a contractual requirement. Rather, the obligation was subject to the general standard of care and a requirement that it be conducted in a timely manner (no specific timeframe had been agreed).
· The data produced was robust and interpretable despite some deviations from protocols. Moreover, the court concluded that there is no specific number of deviations that make a study unreliable. The negative outcome of the study accurately reflected the effect of the drug.
· The court also provided useful commentary on wasted costs incurred by Cardiorentis on the study and claimed as damages by setting out a “Scientific Community Test”. In brief, costs are not wasted if the study yielded an answer that satisfied the scientific community (and, in practical terms, such an answer would also suffice to satisfy the relevant regulators). In this case, the data was satisfactory, so costs were not wasted.
Despite the highly technical judgement, what remains abundantly clear is the importance of contracts to provide clarity on the obligations and options for recourse of both parties. Whilst some of the issues were fact-specific and so may not affect future disputes, the dispute nonetheless underlines the wide array of complex issues that can arise when engaging with CROs.
Arbitration: a good option in these cases?
The judgment also provides a detailed description of the parties’ performance of the contract and the product that was the subject of the clinical trial. Given the potentially sensitive information revealed, the question arises of whether the parties would have been better served by referring their dispute to arbitration. By agreeing in their contract to arbitrate any disputes, the parties could have avoided details becoming public, as arbitration is generally confidential, and hearings take place behind closed doors.
Other advantages offered by arbitration would be a highly enforceable final award, a more streamlined process with more limited document discovery, and a much shorter—and thus less costly—hearing.