By Carolyne Hathaway, John Manthei and Cassie Scherer
BioWorld Perspectives Contributing Writers

Editor's note: Carolyne Hathaway and John Manthei are partners at Latham & Watkins. Manthei also is global co-chair of the Health Care and Life Sciences Practice Group. Cassie Scherer is an associate at the law firm.

To remain competitive, drug, device and biotechnology companies must continually pursue innovative new products and product improvements. Clinical trials are essential to the development of new medical products and require the investment of tremendous time and resources — with no guarantee of success. In 2007, biotechnology and pharmaceutical companies spent approximately $58.8 billion on research and development efforts,¹ with clinical trials typically consuming 40 percent or more of the research and development budget.²

This enormous investment in time and money has caused drug companies to explore opportunities to lower the costs and shorten the timelines of their clinical trial programs. It is, therefore, no surprise that pharmaceutical companies in the U.S. have steadily increased the number of clinical trials they conduct overseas, with a focus on jurisdictions promising cost savings and recruitment efficiencies, such as those located in Central and Eastern Europe (CEE).³ While U.S. companies can realize significant benefits by conducting a clinical trial in the CEE and other foreign jurisdictions, they also must consider the myriad of legal, regulatory, ethical and cultural questions they will invariably encounter in setting up and conducting a clinical trial abroad. U.S. companies also must be aware that FDA is increasing its scrutiny of foreign clinical trial data. In April 2008, FDA amended its foreign clinical trial regulations to ensure "the quality and integrity of foreign clinical data supporting FDA decision making on product applications and to help ensure the protection of human subjects participating in foreign clinical trials." ⁴

Taking Clinical Trials Abroad
Faced with slow enrollment rates, increased competition for potential subjects and rising patient and institutional costs, clinical trial sponsors have set their sights abroad. In 2007, the Tufts Center for the Study of Drug Development predicted that lead pharmaceutical companies will conduct up to 65 percent of their clinical trials abroad in the next few years.⁵ Indeed, the number of clinical trials conducted in the CEE has grown at an average annual rate of 20 percent.⁶

Clinical trial sponsors consider patient populations in CEE countries to be attractive to trial subjects for a number of reasons, including: easier access to potential subjects; the ability to recruit patients more quickly from an expanded potential subject pool; lower overall trial costs; the availability of eager and qualified investigators; and the increased likelihood that enrolled subjects will complete a study. In addition, CEE countries offer sponsors access to subjects who are "clean" of confounding medications, facilitating rapid and steady enrollment, and permitting sponsors to accelerate the recruitment process and obtain results more quickly.

However, U.S. companies that are considering sponsoring clinical trials at foreign sites face several obstacles. Not all CEE countries have fully implemented European Union (EU) rules and regulations governing clinical trials and data privacy or merged the requirements of the EU Directives with their existing laws and regulations.⁷ As a result, sponsors conducting multi-national trials face variations in the legal and regulatory requirements from country to country. They also confront varying and perplexing local regulations, cultures, traditions, levels of government oversight, resources, regulatory structure, and the obvious difficulty of communicating in different languages.⁸ These differences in the requirements and expectations in each country in which a study may be conducted can delay the start of trials and impede a sponsor's ability to meet timelines for completion. The result is an increase in costs as sponsors struggle to untangle these regulatory and cultural complexities, satisfy their legal and ethical obligations, protect their confidentiality and intellectual property interests, and ensure that the data generated by the sites will be acceptable to FDA.

Practical Considerations
To obtain approval to market a new drug in the U.S., a sponsor must submit a new drug application (NDA) with sufficient clinical trials data to demonstrate that its drug is safe and effective for the proposed use(s). The clinical development process is costly and lengthy, and a sponsor must carefully consider whether conducting a clinical trial in whole, or in part, overseas will provide a cost-effective and efficient means of generating clinical data acceptable to FDA. The following are some key considerations and issues that sponsors should address before choosing to conduct a foreign clinical study.

A. Deciding Whether to Conduct the Overseas Clinical Trial Under an Investigational New Drug Application (IND)
A clinical trial that includes both U.S. and foreign trial sites will require an effective IND. An IND provides the necessary FDA authorization to distribute an unapproved new drug for use in clinical trials. ⁹ Sponsors that choose to initiate a trial in which all the clinical sites will be located abroad have the option of submitting an IND to FDA, but need not do so. Submission of an IND for the study will result in FDA review of the protocol and the assurance that FDA will remain in communication with the sponsor during the clinical trial process. However, obtaining an effective IND for a foreign clinical study also will result in an additional layer of regulation, which can be confusing and burdensome — particularly to foreign sites and investigators who may be unfamiliar with U.S. regulations. In addition, FDA's amended regulations require non-IND foreign trials to be conducted pursuant to good clinical practices, under independent ethics committee oversight, and subject to FDA inspection — thus eliminating some of the flexibility previously associated with non-IND foreign trials.

B. Identifying Experienced Contractors and Clinical Research Organizations (CROs)
U.S.-based sponsors of overseas trials spend an increasing amount of their R&D budgets on CROs to help manage and oversee clinical trials.¹⁰ FDA regulations permit a sponsor to transfer to a CRO some, or all, of the sponsor's responsibilities in conducting clinical trials.¹¹ A CRO that has experience with trials in the local country and knows the language can facilitate the timely and efficient performance of the study. However, ceding responsibility for the clinical study to a third party also entails significant risks. Most importantly, a CRO is a service provider with multiple clients, and thus may not share the sponsor's commitment to the study. In addition, an inexperienced CRO can confront challenges with the language, local requirements and resources, problem solving skills, and U.S. regulatory requirements.

As a result, when considering CROs, a sponsor should not necessarily look for the "best offer" financially, but instead should focus on the CRO that offers significant experience, will devote adequate resources, and is highly knowledgeable about local laws, sites and investigators. Further, in contracting with a CRO, a sponsor should generally maintain control over the project team. Sponsors should commit the time and effort up front to ensure that the CRO contract specifically describes the services to be performed and the associated budget.

C. Managing Idiosyncratic Foreign Sites and Investigators
U.S.-based sponsors often are frustrated by the time and effort it takes to retain foreign sites and investigators on terms acceptable to the parties. Sites and investigators may raise esoteric and idiosyncratic requests and issues when negotiating and executing clinical trial agreements and addressing other aspects of the trial. For instance, the site may request that the sponsor enter into a separate agreement with each entity involved in the study at the site, including investigators, sub-investigators, pharmacies and study nurses, in order to allow for individualized budgets and payments. Such requests raise important legal and practical issues that must be addressed by the sponsor, and may delay contract negotiation and execution.

Other common issues that arise in contract negotiations with foreign sites and investigators include: 1) the laws and language that will govern the agreement; 2) ensuring proper translations of the agreement; 3) the availability, scope and coverage of indemnification for the sites' and investigators' negligence or misconduct; 4) the adequacy of the sites' insurance coverage and compliance with local insurance requirements; 5) protection of intellectual property and confidentiality; 6) ethical considerations relating to the human subjects; and 7) data publication rights. Careful and early consideration of these issues, and accurately reflecting the parties' understanding of how the issues will be addressed in the clinical trial agreements, will help mitigate the risk of disputes or miscommunications after the trial has commenced.

Conclusion: Lessons Learned
Conducting a clinical trial overseas can benefit a U.S.-based sponsor, but also is fraught with potential pitfalls. A sponsor can mitigate these risks by considering the following suggestions:

A. Start Early
A sponsor should anticipate "bumps in the road" when conducting trials in foreign jurisdictions. Compared to conducting studies in the U.S., setting up clinical trials overseas will almost assuredly require the investment of more time, effort and resources. If done correctly, however, the up-front investment may be offset by the rapid and steady enrollment of subjects and the collection of data once the study commences.

B. Ensure Regulatory Compliance
With extensive and potentially overlapping regulatory requirements that may be imposed on a multi-national trial, sponsors should take steps early to assess their strategic goals and options and to identify and develop compliance plans that address all applicable laws.

C. Focus on Clinical Trial Agreements
Clinical trial timelines may be delayed unexpectedly if the sponsor is unable to execute the agreements necessary to allow sites and investigators to participate in the trial. Sponsors should be alert to potential areas of conflict and pay close attention to the drafting and negotiation of clinical trial agreements, even if a CRO for the study has primary responsibility for the contracts.

D. Steer Clear of Inexperienced CROs
Sponsors should seek CROs that have experience in the local jurisdictions and have successfully identified and managed sites and investigators in the relevant countries. The premium of such experience often outweighs the lower cost that may be offered by a less-experienced and less-qualified CRO.

E. Maintain Control
Sponsors should not cede the right to manage and control the clinical study to a third party vendor. A sponsor should consider maintaining control over the study through regular updates and meetings with CROs, and retaining contractual authority over the study team. Sponsors should retain the right to review and approve changes to the sites, investigators and study agreements, in order to prevent changes from occurring without its knowledge.

By understanding the regulatory landscape, anticipating potential issues, and investing the time and resources up front to identify and assemble the resources to address them, sponsors may realize the benefits of an expanded pool of potential clinical trial subjects, cost savings, and increased efficiency by conducting their clinical trials at sites in the CEE and other jurisdictions outside the U.S.

Notes

1. Pharmaceutical Research and Manufacturers of America (PhRMA), "R&D Spending by U.S. Biopharmaceutical Companies Reaches Record $58.8 Billion in 2007" (March 24, 2008).
2. Kermani, Faiz. "CROs Stand to Benefit from Dramatic Rises in Pharma R&D Spending," Clinical Trials Today, Nov. 6, 2006.
3. The CEE includes, among others, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania and Slovakia.
4. Human Subject Protection; Foreign Clinical Studies Not Conducted Under an Investigational New Drug Application, 73 Fed. Reg. 22,800, 22,813 (April 28, 2008).
5. Tufts Center for the Study of Drug Development, "Despite Development Challenges, Drug Developers Have Reason to be Optimistic" (Jan. 3, 2007).
6. Barnes, Kirsty. "CROs March Towards Eastern Europe," Outsourcing-pharma.com, Jan. 31, 2006. In 2006, the pharmaceutical market in CEE countries was estimated to be $9.20 billion. It has grown rapidly over the past few years and is likely to reach around $14 billion by 2010. Sylvia Miriyam Findlay, "Central and Eastern Europe Pharmaceutical Industry - An Overview," Pharmalicensing, Jan. 18, 2007.
7. Phillip Ward, "European Clinical Trial Regulations Undergo a Slow Revolution," Pharmaceutical Regulatory Guidance Book (July 2006).
8. See Concar, David. "A Bitter Pill: Exporting Drug Trials to the Developing World," Amnesty International Magazine (Summer 2003).
9. See generally 21 C.F.R. pt. 312.
10. Sponsors spent 17 percent of their total development budget on CRO services in 2007, up from 14 percent in 2001. Getz, Kenneth and Zuckerman, Rachael. "Clinical Research Outsourcing: Moving from transactional to strategic partnership-based outsourcing," Contract Pharma (June 2008).
11. 21 C.F.R. § 312.52.

Published: March 12, 2009