MANAGING LEGAL RISK IN CROSS-BORDER TRANSACTIONS INVOLVING CLINICAL TRIALS

Transcription

1 MANAGING LEGAL RISK IN CROSS-BORDER TRANSACTIONS INVOLVING CLINICAL TRIALS JOSEPHINE WAN-WEN HADIKUSUMO, LL.M LEGAL COUNSEL, ASIA-PACIFIC The views expressed herein are solely those of the author and do not necessarily reflect the official policy, position or opinions of PharmaNet Development Group, Inc. and its affiliates

2 Agenda Defining Legal Risk and Legal Risk Management Typical Challenges in Cross-Border Transactions Key Contractual Issues in Clinical Trial Agreements Case-Studies The Role of the Legal Risk Manager The Way Forward Page 2

3 Defining Legal Risk and Legal Risk Management LEGAL RISK These include legal action, government or penal action, non-enforceability of contracts, loss of ownership or rights, loss or damage to property, loss of financial protection or security. LEGAL RISK MANAGEMENT The process of identifying and understanding potential legal threats to an ASSET, deciding on the acceptable RISK level, mitigating the identified threats so as to bring them down to the acceptable risk level, and balancing the risks in a way best-suited to the company s business objectives. THE MANAGEMENT PROCESS The objective of the process is to alleviate risk of loss to a company or person due to a defective transaction, failure to comply with applicable laws and regulations, uncertainty in, or unenforceability of rights and obligations, claims made or other liability, and failure to adequately protect assets. Page 3

4 Typical Challenges in Cross-Border Transactions Conflict of laws Jurisdiction Language barriers Time-zone issues Third party rights Legal Representative issues Enforcement of awards or judgment Lack of clarity in domestic legislations Cultural norms & ethics issues Insurance issues Currency controls Data protection Intellectual property rights protection Page 4

5 Key Contractual Issues in Clinical Trial Agreements Case Studies Points to Note: Language of the agreement Lost in translation issues; prevailing language Case Study: Taiwan Use of standard template Protracted negotiation process; unfavourable terms. Case Study: Australia Local entity requirement/use of middle party Increased risk to local representative; inability to enforce agreement without the cooperation of the local representative. Case Study: Australia, India Governing law Contractual terms may be incompatible and unenforceable under local law. Case Study: The Philippines Page 5

6 Key Contractual Issues in Clinical Trial Agreements Indemnity Points to Note (continued): Insufficient coverage; requirement under 5.8 and of ICH GCP guidelines. Some countries require the indemnity from a local entity, hence the need to procure insurance and to ensure the local entity is a named insured. Case Study: Australia Confidentiality Protection for third-party confidential information sometimes required. Case Study: Singapore Third-party rights Not recognised, or require express stipulation in some countries; if beneficiary is not a party to the contract it would not be able to enforce it. Case Study: India and Malaysia Intellectual property rights Different requirements for protection; express stipulation required. Case Study: Taiwan and China Arbitration ICC Rules not accepted worldwide; awards impossible or difficult to enforce in countries that did not ratify the NY Convention. Case Study: Taiwan Page 6

7 Key Contractual Issues in Clinical Trial Agreements Insurance GST/VAT Points to Note (continued): Requirement under 5.8 and of ICH GCP guidelines, but the guidelines refer to applicable local laws and many countries do not expressly stipulate the quantum requirements while others do. Case Study: Australia and Thailand. Certain countries require GST to be paid even if services or results are to be enjoyed outside of the country, and others allow exemptions. Structuring the language to accommodate specific countries prevent risk of loss in terms of money and time. Case Study: Australia Execution of agreement Some countries require a stamp/seal for an agreement to be valid; eg. government hospital in South Korea Case Study: Korea Compliance with local & international regulations ICH GCP, Human protection, US FCPA, etc. Case Study India Page 7

8 The Role of the Legal Risk Manager Understand business model and objectives as a whole in order to determine the best way to add value from a legal perspective and to avoid typical pitfalls; assist in legal-commercial negotiations. Ensuring compliance with external regulatory authorities and agreed contractual terms; outsourcing to external legal counsel to meet compliance objectives; mitigating risks from legal, regulatory or contractual non-compliance. Identifying potential legal risk in existing model and future ventures; determining risk value and creating solutions to mitigate these risks; providing legal support and advice to operations and management. Compiling known data on risk and solutions (datacapture) and establishing protocols and SOPs to regulate internal and external high-risk transactions; knowledge development. Page 8

9 The Way Forward Taking stock : Understand the company s core business and what its daily activities entail. Identifying assets and risks. Plugging the holes : Develop solutions to ensure enforceability and determine acceptable fallback provisions and governing laws. Also identify non-negotiable clauses based on your analysis in Step 2. Rinse and Repeat : Companies evolve and with growth and diversity in business activities will come new risks. Laws change too. Regular updates help to ensure continued compliance and lower risk. Step 1 Step 2 Step 3 Step 4 Step 5 Boundary-testing : Evaluate each clause in existing global template to determine practical and legal enforceability in a specific country. Process-building : Capturing the data gleaned from past research and experience and educating business units on the legal risk-management rationale and process. Page 9

10 THE END Thank You. Josephine Hadikusumo, LL.M Legal Counsel, Asia Pacific PHARMANET PTE LTD 3 Anson Road, #09-02/03 SpringLeaf Tower Singapore Direct: Jhadikusumo@pharmanet.com Page 10