What standard of care in cro agreements?

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The recent High Court case of Cardiorentis AG v IQVIA Limited and another (EWHC 250 (Comm) (February 10, 2022) (Butcher J)) demonstrates the pervasive risks to contract research organizations (CROs) and their customers.

The long and highly technical judgment in Cardiorentisin particular, highlights the need for clear, well-drafted and tailored 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 various failures that resulted in the inclusion of a significant number of ineligible subjects in the clinical trial, rendering the data unreliable and of little value. IQVIA counterclaimed for unpaid invoices for completed services and denied access to the trial data, which the legal documentation allowed although it also stated that the data belonged to Cardiorentis.

Complaint Summary

Below is an overview of Cardiorentis’ claim in the English courts, which led to a trial that lasted almost seven weeks:

  • Breach of contract (specifically, the General Service Agreement (GSA) and the Clinical Quality Agreement (CQA)), including allegations that:
    • IQVIA failed to provide services in accordance with the agreed standard of care (which was set by a clause referring to “the usual standard of care in the contract research organization industry” and by Section 13 of the Supply of Goods and Services Act 1982).
    • IQVIA failed to meet its contractual obligation to conduct source document verification for all data.
    • The CQA was not governed by the laws of England and Wales, but rather by the law of North Carolina. Cardorentis further claimed that several terms (express and implied) were breached by IQVIA.
  • Negligent breach of duty (in connection with the Services and representations regarding the Services).
  • A claim under the North Carolina Unfair and Deceptive Practices Act.
  • A request for an injunction that IQVIA should give Cardorentis access to data and information generated as part of the trial.

Result of the case

  • Cardorentis’ claim for damages was unsuccessful, but she successfully obtained an injunction requiring her to have access to data relating to the study.
  • The court concluded that it was not necessary to distinguish between the standard “customary in the industry of contract research organizations” and a standard of reasonable skill and care. In this case, what was customary was largely spelled out in legal documentation.
  • The judge concluded that obtaining 100% verification of the source documents was not a contractual requirement. Rather, the obligation was subject to the general standard of care and the requirement that it be performed in a timely manner (no specific time frame had been agreed).
  • The data produced was robust and interpretable despite some deviations from the protocols. Additionally, the court found that there is no specific number of deviations that renders a study unreliable. The negative result of the study accurately reflects the effect of the drug.
  • The court also provided helpful comments on the unnecessary costs Cardiorentis incurred for the study and sought damages by establishing a “community scientific test”. In short, the costs are not lost if the study yielded an answer that satisfies the scientific community (and, in practical terms, such an answer would also be enough to satisfy the regulators concerned). In this case, the data was satisfactory, so the costs were not wasted.

Lessons learned

Despite the highly technical judgment, what remains abundantly clear is the importance of contracts in clarifying both parties’ obligations and recourse options. While some of the issues were fact-specific and therefore may not affect future disputes, the dispute nevertheless underscores the wide range 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 of the product that was the subject of the clinical trial. Given the potentially sensitive information revealed, the question arises whether the parties would have been better served by submitting their dispute to arbitration. By committing in their contract to arbitrate any dispute, the parties could have avoided the details becoming public, as arbitration is usually confidential and hearings are held behind closed doors.

Other advantages offered by arbitration would be a highly binding final award, a more streamlined process with more limited discovery of documents, and a much shorter and therefore less expensive hearing.

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