Contracts Associates is proud to announce that Joanna Brougher has been named Editor-in-Chief of The Journal of Commercial Biotechnology .  We at CA will be submitting several articles over the next year or so, in an effort to continue to highlight changes and industry trends that will affect clinical trial contracting best practices.

Please feel free to submit ideas or queries directly to Joanna by emailing her directly at jbrougher@contractsassociates.com.

And I cannot end this post without wishing Joanna well at the USTA 2015 National Championship Adult 18 & Over Championships in Palm Springs on October 9th!

 

 

I had the pleasure of attending the 2nd Annual ACI’s Women Leaders in Life Sciences Law meeting in Boston last week. While I originally registered to ensure that stay on top of the latest developments in the law that affect our Life Science community, I ended up getting a lot more out of the, for lack of a better word, “personal” disclosures, shared by the women leaders who spoke.

There were a lot of interesting exchanges and factoids, among them:

1. PhRMA has only 30 member companies.
2. Little-known effect of the ACA: Insurance companies have created “access tiers” for certain health plans so that, while the Affordable Care Act prevents them from denying one insurance for a pre-existing condition, only certain “tiers” will cover high-cost disease states. Consequently, the plan sold to a person who would have otherwise been denied, could cost more. I thought that the whole point of the “non-discrimination” clause was to to ensure :non-discrimination”?
3. 22 US States have enacted their own, “Right to Try” (Abigail Alliance) laws. These laws allow patients to try unapproved drugs, after a successful Phase 1. There may be conflict with the FDA regs in some states but these conflicts are addressed on a case-by-case basis.
4. Five countries have enacted or updated new Global Transparency Laws in the  past year. France, Denmark, Slovenia, Romania and Estonia have updated guidelines for paying any health care provider in those countries.
5. “No. But being the only woman in the room makes people remember you, for a long time”  – Response to the following question, posed to a US District Court Judge, “Have there been any circumstances where being the only woman in the room, in a high-stakes meeting, actually contributed to a resolution or in some way helped further your cause?“

There was just not enough time to get into detail regarding those states that have passed “tissue property laws”, which restrict use of research tissue and bestow ownership of the tissues upon, in most cases, the patient, but those have to considered. We at CA will be doing a deep-dive into these new states laws and will provide an analysis here.

Thanks to the speakers who took the time to come to Boston for such a great conference; I am looking forward to next year’s meeting in Paris.

 

 

We have been asked what might the effect of the US Supreme Court’s upcoming decision on the Patient Protection Affordable Care Act of 2010 (PPACA), might be on our clients. The sections of the law that most impact clinical site and vendor agreements are: 1) Section 6002 which requires industry to report to CMS any payments or other transfers of value they furnish to physicians and teaching hospitals, and 2) the Medicare Secondary Payer Rule for reporting payments for treatment of study subject injuries.  As an industry, we have no way of knowing what effect the outcome of the SCOTUS decision will be but we’ll be paying attention to the impact it will have on these two requirements, specifically.

The US Health and Human Services website has a nice snapshot of PPACA, as it exists today, and I am including it here, as any discussion ultimately devolves into a jumbled dialogue of sorts, that is really just a bunch of talking points that we counter to the best of our knowledge. This is very high level but the full law can be viewed here. Despite the “buzz”, in my opinion, the law is easy to understand. One may fundamentally disagree with certain of its terms but it is an easy read for any native English speaker.

From HHS:

About the Law

The Affordable Care Act puts consumers back in charge of their health care. Under the law, a new “Patient’s Bill of Rights” gives the American people the stability and flexibility they need to make informed choices about their health. View Key Features of the Affordable Care Act or read a year-by-year overview of features.

Coverage

• Ends Pre-Existing Condition Exclusions for Children: Health plans can no longer limit or deny benefits to children under 19 due to a pre-existing condition.
• Keeps Young Adults Covered: If you are under 26, you may be eligible to be covered under your parent’s health plan.
• Ends Arbitrary Withdrawals of Insurance Coverage: Insurers can no longer cancel your coverage just because you made an honest mistake.
• Guarantees Your Right to Appeal: You now have the right to ask that your plan reconsider its denial of payment.

Costs

• Ends Lifetime Limits on Coverage: Lifetime limits on most benefits are banned for all new health insurance plans.
• Reviews Premium Increases: Insurance companies must now publicly justify any unreasonable rate hikes.
• Helps You Get the Most from Your Premium Dollars: Your premium dollars must be spent primarily on health care – not administrative costs.

Care

• Covers Preventive Care at No Cost to You: You may be eligible for recommended preventive health services. No copayment.
• Protects Your Choice of Doctors: Choose the primary care doctor you want from your plan’s network.
• Removes Insurance Company Barriers to Emergency Services: You can seek emergency care at a hospital outside of your health plan’s network.

Content created by Assist. Sec./Public Affairs – Digital Communications Division Content last reviewed on November 14, 2014

 

My topic is: “Legal and Contracting Strategies That Maximize Partnerships and Ensure a Successful Due Diligence Process” Hope to see some familiar faces there. I am looking forward to offering guidance on formulating a contracting strategy that makes responding to diligence request memos as painless as possible!     view speaker profile

Jon: We loved working with you and we are very happy with our new pictures!

Looking forward to re-connecting with some of our clients and other industry colleagues on Monday, May 5th at the MA BIO CRO Symposium. I will be facilitating one of the Roundtable discussions: “Legal and Contracting Strategies That Maximize CRO Partnerships and Ensure Success”.  Please stop by to say “hi” if you are attending.

I cannot thank Diana S. (one of our clients) enough for sending us our own copy of the Sports Illustrated Boston Marathon retrospective! We were working on a project together that fateful week and, although her office is in New Jersey, I really felt as if we were experiencing the bombing, manhunt and lockdown together.

For those of you who do not live in Boston, this may not seem like a big deal but copies of this SI edition flew off of the shelves and, as much as I wanted to have one, I could not find one. Luckily, Diana’s husband works for SI; proving once again that it is good to have friends with connections!

 

 

 

Whether or not it makes sense to waive all indirect and consequential damages in a services agreement is a question for another day (we think it is not, by the way) but a recent ruling in Biotronik v. Conor Medsystems Ireland calls into question a contract term that we thought was enforceable: a limitation of liability clause that precludes consequential damages.

Before we get into this ruling, it is worth mentioning that Contracts Associates prefers to exclude limitation of liability provisions from contracts in order to preserve the availability of all types of damages permitted under law for claims our clients may against the other party. It just does not seem like sound practice to advise one not to avail oneself of remedies provided by contract law that has carved out adequate remedies for centuries.

Back to the ruling: As contract attorneys, we advise our clients what is means to agree to a clause that precludes recovery for consequential damages which are generally  accepted to be: damages for business interruption, loss of use, data, revenue or profit, whether arising out of breach of contract, tort (including negligence) or otherwise, regardless of whether such damages were foreseeable and whether or not the breaching party was advised of the possibility of such damages.

Here is a synopsis of the case:

Biotronik (the distributor), agreed to purchase stents manufactured Conor, for resale and paid Conor a transfer price for each stent, calculated as a percentage of Biotronik’s net sales. In 2007, Conor recalled its stents from the market and paid Biotronik in accordance with the “Recall” section of the contract. Despite the fact that the contract had a provision restricting the parties to general damages and prohibiting either from obtaining “any indirect, special consequential, incidental or punitive damage”, from the other, Biotronik sued under a theory of breach of contract and sought as its sole damages $100 million in profits it claimed it would have made reselling the stents over the remaining term of the agreement.

Lower courts relied on the contract’s limitation of liability clause but a divided Court of Appeals reversed, and held that, under this particular contract, Biotronik’s lost profits were general (direct), not consequential, damages, and therefore not barred under limitation of liability clause in the parties’ agreement.   

The twist here is that the Court of Appeals made the distinction between lost profits of the non-breaching party that flow from collateral transactions—separate agreements with third parties (which remain firmly on the side of being “consequential”) and lost profits that flow from a provision in the agreement between the two parties themselves 9in this case, the pricing terms). The Court ruling appears to allow lost profits to be considered direct damages only where the profits at issue flow directly from the parties’ relationship under the contract.

Put another way, the Court found that because the whole point of the contract (the “essence of the contract”) was to resell the stents and the manufacturer agreed to use the distributor’s resale price as a benchmark for the dollar amount it would receive from the distributor,  the lost profits suffered by the distributor after the recall flowed directly from the transfer price (paid to the manufacturer) and were therefore direct/general and by definition, recoverable damages. This is surely a $100 million surprise to the manufacturer.

We have clients that sell kits and other goods to distributors and we are currently working on drafting contract terms to protect them. As always, we are here to help our clients navigate these issues. Call us at 617.275.8080 if we can be of any assistance.