October 2003 Bulletin

Clinical Research Compliance 101

What every clinical investigator should know about research agreements

By Robert E. Wanerman, JD, MPH

Manufacturer-sponsored projects now account for a majority of research funding in the United States. Opportunities for physicians to participate in research projects have never been greater. This is particularly true in orthopaedics, where many inventions and innovations are the direct result of surgeons’ own professional experiences. Research agreements can be complex because they must deal with issues including human subject protections, the Healthcare Insurance Portability and Accountability Act (HIPAA), conflicts of interest, informed consent, intellectual property, publication and compensation.

This article will focus on several basic compliance concepts related to the conduct of clinical trials and the compensation of investigators that should be part of every sponsored project.

Government and industry guidelines

The standards for the content of research agreements have been made more rigorous as a result of guidance published by both the federal government and groups representing research sponsors, such as drug and device manufacturers. These guidelines borrow many of the concepts that are familiar in compliance programs and in agreements for providing patient care services. They have taken on greater importance in light of the coverage available under the Medicare program for a range of costs associated with clinical trials conducted under an Investigational Device Exemption, an Investigational New Drug application and federally funded grants. In general, these guidelines focus on minimizing risks under federal and state anti-kickback, health care fraud and false claims laws.

Carefully examine the compensation

The starting point for any compliance review of a research agreement is an examination of the scope of work required and the compensation being offered. In general, projects should involve a written protocol and should identify the investigator as having the necessary expertise to undertake the research.

Undefined agreements to fund research may be difficult to distinguish from potentially risky forms of compensation, such as kickbacks or unreported discounts. If the sponsor offers compensation, both parties should take reasonable steps to ensure that it represents fair market value for the services performed. This can be accomplished in some cases by thorough documentation, particularly in case report forms.

In addition, investigators should be aware that the amount of any compensation might trigger obligations under FDA regulations to disclose the compensation and the measures taken to minimize potential conflicts of interest. If any of the contemplated services can be billed to the Medicare program, these amounts should also be taken into account.

The form of any compensation is an important factor in determining compliance with fraud and abuse laws as well as FDA requirements. For example, offers of stock in the sponsor, intellectual property rights in any invention or other forms of non-cash compensation such as equipment may not reduce the risk that the investigator has received something of value in exchange for or to induce business between the parties that may be billable to a federally funded health care program.

A second area of particular concern for the federal government is whether or not a research agreement contains any obligations or expectations that go beyond evaluating the efficacy of a device or drug. For example, in one case a manufacturer offered unrestricted “grants” after a health plan agreed to place particular products on its formulary. The government alleged that the “grants” were attempts to reward the plan in exchange for its business and to circumvent the provisions of the Social Security Act that require disclosures to the federal government of discounts and Medicaid pricing.

The case led to a large settlement and the imposition of a corporate integrity agreement by the government.

Recruitment, post-market research and consulting risks

A third area of concern involves recruitment practices. In some clinical trials, recruiting appropriate subjects can be difficult or impractical unless subjects are offered some compensation for their participation. However, under the Social Security Act, the Secretary of Health and Human Services (HHS) can impose a civil monetary penalty on any individual or entity that offers or pays anything of value as an incentive to receive services covered under the Medicare program from a particular provider or practitioner. As a result, the incentives provided to Medicare beneficiaries in the form of coverage for participation in clinical trials may be offset by the policies that discourage compensating volunteers. Although HHS is aware of the problem, it has not signaled any willingness to create an exception to the law that would include payments to beneficiaries in sponsor-funded clinical trials.

The guidance published by the HHS Office of Inspector General also singled out postmarket research as an area of concern. While premarket research is an indispensable part of the FDA clearance process for drugs and devices, some postmarket research may be perceived as an attempt to promote sales of the product. As a result, there may be an increased risk that funding related to postmarket research is actually an incentive to induce or reward product sales, which can create a special risk of violating the anti-kickback statute. Nevertheless, postmarket research may be an important tool in refining and improving existing technology. One way to minimize this problem is to verify with the sponsor that its research projects are administered separately from its marketing department.

Finally, some research agreements may cover the period after the clinical trial is complete and the data is available for use by the sponsor. Even though the time frame may change, the need for safeguards against inappropriate compensation remains the same. If additional consulting services are sought by the sponsor, the terms should be designed to ensure that the scope of work is accurately defined, the compensation is consistent with fair market value, and that the agreement is not tied to the value or volume of business between the practitioner (or any entity the practitioner is affiliated with) and the sponsor.

This article is provided for informational purposes and should not be relied upon as legal advice.

Robert E. Wanerman, JD, MPH, is counsel at Reed Smith LLP, Washington, D.C. He can be reached at (202) 414-9242 or via e-mail at rwanerman@reedsmith.com


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