Navigating contract negotiations for clinical trials

The importance of contracts in clinical trials cannot be overstated: a good contract can form the basis for a solid relationship between sponsor and supplier, establishing shared goals and driving the research forward. But get it wrong and the contract can be at best unhelpful, at worst detrimental, risking disrupting or derailing the clinical trial. 

Contracts between sponsors and their suppliers should set the course for the relationship and establish the roles and expectations of each party, to guide the project. They clarify key elements like finances, legal considerations, timeline, and governance.

Contract negotiation is the process behind such contracts. Negotiation can align parties and shape contracts until they fulfil their purpose. This makes contract negotiations for clinical trials a critical step in establishing and managing a vendor relationship that supports the research from start to finish, keeping it on track in terms of time and budget.

Here we will explore what contract negotiation is and best practices for the process, as well as looking at the challenges you might encounter and how to overcome them.

In clinical research, the contracts between sponsors, such as biotech and pharmaceutical companies, and their suppliers, including contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs), act as a central point of agreement for the parties involved.

These documents can be long and complex, and compiling and negotiating their content can be a meticulous and laborious process. But given the critical role of contracts in ensuring clinical trial success, it’s important to cover all the elements of the contracting process before getting started. Here are a few to consider.

Scope – The contract must clarify for both parties the work that will be done, including any deliverables and deadlines, tasks and responsibilities, and the performance metrics that will be used to assess progress. When negotiating clinical trial partnerships, it’s important to include the people responsible for the tasks outlined and ensure their buy-in on the scope agreed in the contract.

Finance – Unexpected change orders can have a significant impact on a clinical trial’s finances, so it’s critical to ensure the contract details the cost structure agreed, as well as payment terms. Transparency is key here, and contract negotiations enable both parties to commit to an approach to finance that meets their needs. It’s helpful to include contingencies for unforeseen changes in requirements. Negotiating the approach ahead of time reduces the risk of conflict and misunderstanding later.

Risk – During the whole vendor selection and management process, which includes contract negotiation, risk should a key factor that guides decision-making. In clinical trial agreements, risk may be covered in clauses that fall under the previous sections, as well as those on compliance (regulatory and ethical), quality control, confidentiality and intellectual property, and data ownership, for example. The contract may also set out mechanisms for mitigating risk, specifying liabilities and governance structures.

Clinical research alliance negotiations are critical in the process of setting up relationships that support the successful development of new therapies. Good contract negotiations meet the needs of all parties involved, so that everyone starts the partnership with clarity, working positively towards shared goals.

In the different negotiations, suppliers, sponsors, and CROs have different roles and may be responsible for providing the detail required in the contract. Overall, an effective contracting process will safeguard all stakeholders’ interests and help drive the trial forward.

Sponsor – focusing on the goals of the trial

Ultimately, the sponsor is responsible for the clinical trial, including in compliance terms, so it’s critical that the sponsor organization plays an active role. Alignment with potential partners during the vendor selection process helps pave the way to shared financial and timeline goals.

When negotiating clinical trial partnerships, sponsors represent the trial, ensuring the agreement supports the research in compliance with the relevant regulations. This involves setting out the scope of work and negotiating clear deliverables, along with agreed performance metrics. Sponsors will also need to protect their intellectual property rights and confidentiality in this process.

Supplier – ensuring clear terms

Many suppliers can be involved in clinical research, and their role in contract negotiation is to ensure the terms set out in the contract are clear, achievable, and measurable. Specifically, they will need to negotiate deliverables and tasks expected of them as well as the timelines agreed. For product suppliers, negotiations may include warranty and maintenance, and tech providers may offer service agreements alongside the products themselves.

Suppliers will also focus on the pricing models and payment terms set out in the contract, to ensure they are suitable and sustainable. And quality standards and compliance requirements will be central in negotiations for suppliers, to ensure they take on the necessary responsibilities and are clear about expectations. For smaller suppliers with potentially less leverage, it will be important to ensure the contract provides flexibility and limits liability.

CRO or CDMO – aligning expectations

Larger suppliers and partners, including contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs), may often take a leading role in contract negotiations, with many providing a contract template at the start of the process. Such templates will include terms that are most beneficial for the CRO or CDMO, ensuring their needs are met and risks mitigated.

Regardless of who provides the first draft, their focus during contract negotiation will include establishing realistic timelines and outlining any service level agreements (SLAs). These major suppliers will also be concerned with risk management, including by negotiating dispute resolution mechanisms in the contract. This will help ensure the CRO or CDMO can provide its services effectively while safeguarding its own business.

Clinical trial agreements get the most attention at either end of a project: when it’s starting up, sponsors and suppliers check it meticulously, and if the trial derails and ‘divorce’ is on the cards, it comes back out again. In these cases, as Seuss+ CEO and Co-Founder Kieran Canisius explains, “the letter of the contract is more important than the spirit of the relationship.” At that point, weaknesses in the contract often become clear, leaving one or both parties in a difficult situation.

This is often the reality, despite the positive impact a well-negotiated contract can have throughout the course of a clinical trial. Ideally, clinical trial agreements go beyond the letter to become a “collaboration roadmap.”

When crafting your clinical trial contract negotiation strategy, best practices can help shape each element of the process to ensure the contract is fit-for-purpose for both parties involved, supporting collaboration for the success of the research. Here are some examples.

Communicate and collaborate effectively: To align understanding on the spirit of the contract and encourage behavior that supports it, ensure all team members who will oversee the work take part in the negotiation process. Involvement of legal teams also supports the drafting of the contract.

Ensure transparency throughout the negotiation process: Transparency is an important element to support collaboration and for contract language clarification, increasing the precision of the contract as well as its acceptance. Working with an independent third party can support transparency.

Establish a balanced contract: By involving all relevant stakeholders in the negotiation process and aligning on expectations and goals, it’s possible to achieve a balanced contract that is advantageous to both parties. For this reason, it’s often advisable to work with a third-party’s contract or for sponsors to present the first draft of the contract in the best interests of the clinical trial.

Weak contracts are the result of some common pitfalls in the contract negotiation process. At Seuss+, we believe there is a way to use contract negotiation to establish a successful relationship that can be ended without conflict, if needed.

Pitfall 1: Misaligned expectations – the contract does not center around a shared goal and not all stakeholders are involved, so there is little alignment on what’s expected in terms of deliverables, performance, timelines, and other aspects.

Overcome this challenge by involving all relevant stakeholders in the contract negotiation process and establishing shared goals on which to build the detail of the contract.

Pitfall 2: Inadequate definition – One of the causes of misalignment could be a lack of detail in the contract, particularly around deliverables, tasks, responsibilities, and timelines. Vagueness can lead the clinical trial to run off track.

Overcome this challenge by ensuring the contract is detailed enough to avoid ambiguity, and include details on performance metrics along with a clear timeline and milestones.

Pitfall 3: Ineffective communication – Successful collaboration relies on communication, and without this, there is a loss of alignment, transparency, and understanding. Ineffective communication can lead stakeholders to be less connected with the trial and the shared goals needed for a successful project.

Overcome this challenge by planning a communications strategy that includes all relevant stakeholders in the negotiation process, particularly those responsible for the work set out in the contract.

Pitfall 4: Lack of clarity on risk – The parties involved are unclear about their responsibilities and the proportion of risk they are taking on in the relationship, potentially leading to conflict as the project progresses.

Overcome this challenge by ensuring risk is a central factor in the whole relationship management process, including in contract negotiation. Establish risk-sharing mechanisms that are fair and agreed by both parties, as well as ensuring the trial is compliant with regulations.

>>> Learn about the Impact of Weak Contracts here

“It’s time we looked beyond the fine print and created contracts that truly support the life-saving mission of drug development.” – Kieran Canisius, Seuss+ CEO and Co-Founder

Contract negotiation is a key step in the process of setting up the foundational framework for a clinical trial. Effective contract negotiation can help align stakeholders with a shared goal, create clarity for both parties to reduce risk, save time and costs, and start the relationship off on a positive footing.

The contract negotiation process can be complex, and it is helpful to work with an independent third-party to guide discussions for a mutually beneficial outcome. There are many professional development resources available, as well as consultancy services to strengthen your negotiation skills and capacity.

By supporting clients through the contract negotiation process, Seuss+ aligns the sponsor and supplier, building a contract that supports collaboration for the duration of the trial. And for one US-based global biotech company working on immunology and oncology, for example, we secured a significant discount for the sponsor.

The Seuss+ Contract Negotiation Service ensures your contract is robust, clear, and aligns with your goals, saving you time and resources while protecting the vendor relationship.

Ready to start negotiating? We’re here to help. Contact us to find out more.