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Risk Management 360: Risk Management in Clinical Trials

In their years working with life sciences companies – large and small – Medmarc’s risk managers have evaluated numerous medical devices and pharmaceuticals as well as their manufacturing and distribution operations and FDA compliance histories. From these experiences, our team of risk managers has developed a unique perspective on this innovative and growing industry. Life sciences companies operate in a heavily regulated and litigated environment. Through studying these companies’ successes, and their missteps, the authors of this series have discerned common trends that can influence a company’s products liability exposure. This series will discuss these trends and what companies can do to manage the products liability risks they create.

Risk Management in Clinical Trials

Human clinical trials—medical research testing the efficacy of a particular drug or device, or a particular use for that drug or device, on a specific human population—are crucial to the development of safe medical products. However, inherent to the testing of an unapproved product on a population is a risk of bodily injury that can arise from the product that is being tested.  With bodily injury often comes products liability.

This article discusses how products liability that arises from a clinical trial can be mitigated with the right practices and when the sponsor and principle investigator are dedicated to the integrity of the trial, the safety of trial subjects, and compliance with the various laws and regulations that govern the conduct of clinical research.  We will explore clinical trials by looking at the parties involved, where products liability exposure can arise during a trial, what mistakes company-sponsors make to create liability, and how those mistakes can be avoided.

The Parties


Clinical trials are initiated by the sponsor. The sponsor is often, but not always, the developer or manufacturer of the product that will be tested. The sponsor may also be a government agency or academic institution seeking to further an area of treatment, or a private organization looking to commercialize a product it has licensed for financial gain. The sponsor is ultimately responsible for all aspects of the clinical trial, though it may designate other parties to carry out certain functions of the trial’s organization and execution. For instance, the sponsor may enlist a healthcare or academic institution to physically carry out the trial, once designed. The sponsor is also the party responsible for filing the appropriate application with the FDA (either an Investigational New Drug Application (IND) or Investigational Device Exemption (IDE), depending on the type of product being tested) and obtaining approval for the trial’s inception. Among the other responsibilities of the sponsor (under 21 CFR 312.50) are:

  • Selecting qualified investigators;
  • Providing them with the information they need to conduct the investigation properly;
  • Ensuring proper monitoring of the investigation;
  • Ensuring that the investigation is conducted in accordance with the general investigational plan;
  • Maintaining an effective IND or IDE; and
  • Ensuring that the FDA and all participating investigators are promptly informed of significant new adverse effects or risks.

Institutional Review Board

The Institutional Review Board (IRB) is crucial to the integrity of a trial, and IRBs are required by the FDA to sanction the conduct of trials. IRBs are ethics committees composed of a minimum of five members formally designated to oversee clinical trials. It is the role of the IRB to review the trial protocols prior to the commencement of the trial and ensure that procedures for patient selection and the conduct of the trial are ethically sound. It also reviews informed consent documents to ensure they adequately inform participants of risks involved in their participation in the trial. The IRB remains involved for the duration of the trial and monitors adverse events. The IRB is endowed with the authority to withdraw its approval of a study at any time during the trial if it determines that the study has deviated from approved protocols or otherwise violated ethical boundaries.

Trial Site & Principle Investigator

The trial site is the location, such as a hospital or clinic, where trial subjects will be treated.  Most studies involve multiple trial sites.  One of the first decisions the trial sponsor must make is where the trial is to be conducted. Site selection is crucial not only because it greatly impacts the monitoring costs the sponsor will have to undertake, but it can also weigh on the quality and reliability of the data coming out of the study. Several factors are considered in the selection of a trial site including the track record of the site with previous, similar trials, the experience and qualifications of the on-site study coordinator and other staff, the geographic location of the site (or sites) (for instance, is it in an area in which the disease that will be studied is prevalent) and its accessibility to relevant patient populations, and the regulatory history of the site(s).

Typically, but not always, the principle investigator comes with the site. The principle investigator is the individual who actually conducts the clinical investigation and leads the team of other investigators (if the trial is large enough to require other investigators). That is, it is at the direction of the principle investigator that the drug or device is dispensed to or used on a trial subject. Other responsibilities of the principle investigator are:

  • Documenting the delegation of study responsibilities to qualified research staff;
  • Supervising the performance of the study and overseeing the study staff; and
  • Ensuring that all study procedures are conducted in accordance with the study protocol and Good Clinical Practices (GCPs).

Products Liability Risk in Clinical Trials: Sources of Liability

Products liability is a legal doctrine that makes the developer, manufacturer, and seller of a product potentially liable for bodily injury and property damage arising out of the use of that product. In the clinical-trial setting, it is bodily injury to a trial subject that most often imposes liability on one or all of the parties responsible for conducting the study. This article focuses on products liability exposure of the trial sponsor and/or the manufacturer of the product being tested (if the manufacturer is not the trial sponsor).

Product Causes Injury to Trial Subject

The most obvious source of products liability in a clinical trial is an injury to a trial subject resulting from the use of the product being tested. As the product or the use of the product being tested is unapproved, test subjects should understand and appreciate that there is a risk of an adverse effect. The problem, from a liability perspective, comes when that risk is not understood or appreciated by the subject. Participants who are enrolled in the trial but do not exactly meet carefully established enrollment criteria pose an additional risk, as the cost-benefit of the product’s use becomes distorted if the participant does not actually have the condition which the product is intended to treat, or has some other underlying health condition (either undisclosed by the participant, undiscovered at enrollment, or both) that may present complications.

Negligence of Clinical Investigators Causes Injury to Trial Subject

Even when the product being tested performs as expected, trial subjects can still suffer injuries at the hands of a negligent clinical investigator. Although the proximate cause of the injury might be the investigators’ negligence, the trial sponsor will likely still face liability based on any of several possible causes of action alleging negligent hiring, failing to properly vet investigators, or negligent training or supervising of the trial site and/or subjects.

Other Factors That Can Present or Augment Liability

Once there are grounds for products liability—however tenuous—there are a number of factors which can exacerbate liability and compromise the defendant party’s defense position. Below are two such factors.

Unethical Practices

There are several guidelines for ethical practices in clinical trials. The two most prominent are those of the Declaration of Helsinki and the World Medical Association, both promulgated to protect trial subjects. If a plaintiff can show that a sponsor deviated from these widely-accepted ethical norms, it certainly paints the sponsor in a bad light to the jury and likely increases the chances of a plaintiff verdict.

Unethical practices include, for example, failing to cease the trial as soon as a negative risk/benefit balance for the tested product is established, and not making arrangements for post-trial access to the tested product. (According to the Declaration of Helsinki, at the conclusion of the study, all trial participants should be assured access to the best proven therapy identified by the study and post-trial access arrangements must be described in the trial protocols.)

Financial Fraud

Another factor that can seriously inhibit a sponsor’s defense position in the event of a claim is the presence of any undisclosed financial connection through which the trial site, investigator, or IRB could stand to gain financially from a certain outcome from the trial. This can also make the accused party open to allegations of fraud, which can have the added consequence—if proven—of invalidating the data gathered in the study.

How to Avoid and Mitigate Liability: Key Risk Management Practices

Preventing a Common Error: Draft Excellent Informed Consent Forms

Informed Consent is the document which trial participants must sign prior to their participation in the trial. The purpose of this document is to make participants aware of the trial process and—most importantly—what risks they are assuming by virtue of their participation.  The document is very important in a products liability context.  Failing to construct the informed consent document is one mistake that clinical trial sponsors make frequently.  If an adverse effect arises that is outlined as a possibility in the informed consent documents, the trial sponsor is given some legal protection from a products liability suit, as the risk was foreseeable and accepted by the participant. Conversely, if a participant experiences an adverse effect that is seriously different in scope and kind from what was outlined in the informed consent document, the sponsor may face liability. There is a basis for liability when a risk is not reasonably foreseeable to the injured party, and/or when it could be reasonably foreseeable to the sponsor/manufacturer and adequate steps weren’t taken to communicate, mitigate, or eliminate the risk.

A good informed consent form clearly and fully conveys the risks of the trial to the participant. It also discloses the methods of testing, sources of funding, any possible conflicts of interest, institutional affiliations of the researcher, and the anticipated benefits of the study. There are regulatory requirements covering both form and substance of the document, which can be found in 45 CFR 116-117. Regarding the style of the document, the sponsor should be mindful of the following guidelines to ensure the contents of the document are is fully accessible and understandable to the participant:

  • Use a conversational and non-technical tone.
  • Write in second person (“you”) rather than first (“I”) or third (“the participant”).
  • Consider the background of those likely to participate in the clinical trial. Is it necessary to have the informed consent form available in other languages?
  • The language should be no more complex than what can be easily understood with an 8th grade reading level. (There is a feature on Microsoft Word and other software that determines the reading level of written language.)
  • Consider having a focus group read and comment on a draft of the informed consent prior to actually using it.
  • Make the format reader-friendly. Use section headings and small paragraphs to break the document up into more accessible pieces1.

Preventing a Common Error: Select Participants Carefully

Establishing participant eligibility criteria carefully is very important in avoiding unforeseen adverse effects. There can be significant pressure to enroll subjects quickly in order for the trial to begin, but relaxing eligibility criteria can spell disaster for parties conducting the trial later on. Investigator compensation should not be linked to number of participants enrolled or enrollment by a certain date as this can incentivize enrollment of non-qualified participants. Compensation also must be considered with respect to participants. Payments provided to participants, if any, should be reasonable. Payments that are too high may be overly enticing, and there is concern that it blinds potential participants to the risk and/or incentivizes them to misrepresent their health attributes in order to make them eligible for the study. In its guidance document “Payment and Reimbursement to Research Subjects,” the FDA states that “the IRB should review both the amount of payment and the proposed method of and timing of disbursement to assure that neither are coercive or present undue influence.”2

Furthermore, participants must not be allowed to self-identify the characteristics or conditions that make them appropriate candidates for the study. Instead, the presence of these characteristics or conditions should be independently verified either through review of their medical records or, better, through verification by diagnostics performed by independent clinicians.

Preventing a Common Error: Ensure Qualification and Experience of Investigators and Clinical Staff

The selection of qualified investigators is also of the utmost importance in maintaining the integrity of the trial and results, ensuring the safety of participants, and avoiding liability. The investigators have great and direct responsibility for the execution of the trial, and as such, it is important to only use those who have the appropriate education and experience. Investigators should have extensive training in Good Clinical Practices and experience in conducting trials of similar size and scope. Additionally, scrutiny needs to be given to investigators’ financial disclosures to ensure that no investigator has any financial stake in the outcome of the trial.

All investigators must sign and submit an FDA Form 1572 (“Statement of Investigator) to the trial sponsor.3 This form requires commitment from investigators that they will:

  • Personally conduct or supervise the trial;
  • Inform any patients, or any persons used as controls, that the products are being used for investigational purposes;
  • Report any adverse experiences that occur to the sponsor;
  • Ensure that all associates, colleagues, and employees assisting in the conduct of the study are informed about their obligations in the safe conduct of the trial;
  • Maintain adequate and accurate records and make those records available for inspection in accordance with 21 CFR 312/68;
  • Ensure that the IRB is responsible for the initial and continuing review and approval of the clinical investigation;
  • Not make any changes in the research without IRB approval (except where necessary to eliminate apparent immediate hazard to human subjects).

Preventing a Common Error: Employ Robust and Comprehensive Contracts with the Trial Site and Investigators

One of the best risk management tools companies have at their disposal is the use of contracts.  However, it is common for parties to proceed into clinical trials without appropriate contracts in place. In the clinical-trial setting, contracts with all involved parties are absolutely imperative. Contracts can and should lay out the procedures and respective obligations of the parties in the event of an adverse effect. It should also contain mutual indemnification provisions whereby the sponsor is indemnified by the trial site and principle investigator, respectively, for losses arising out of each party’s own negligence. In addition, each party should be required by contract to carry insurance sufficient in kind and amount of limits to fully cover any potential losses. Ideally, the sponsor will want to require that it be named as an additional insured on the other party’s policy. Proof of compliance with this requirement in the form of certificates of insurance should be provided to the involved parties.

Preventing a Common Error: Obtain and Maintain Sufficient and Appropriate Insurance

The importance of the parties involved in conducting the clinical trial having sufficient insurance cannot be underestimated. It needs to be understood that even strict adherence to appropriate standards and regulations and employment of best practices can only curtail, but not eradicate, a company’s exposure to liability. In addition to or as part of the sponsor’s products/completed operations policy, it is helpful to have a “no-fault” medical expenses coverage that allows the insured to dispense with potential claimants before and without requiring them to seek compensation more formally. This kind of coverage (often called “med pay”) does not require an actual claim in order for the insured to have coverage. Instead, it offers the insured the ability to seek reimbursement from the carrier for “medical expenses” for trial subjects involved in the insured’s trial up to a certain amount of limit before and without a determination that the insured is legally obligated to pay such expenses.

Understanding that many trials are conducted outside of the United States, it is important for the sponsor to understand local insurance requirements in the country where the trial is being held. Each country has specific laws which dictate which insurance carriers are authorized to conduct business there—so-called “admitted carriers.” Typically, sponsors must have clinical trial insurance from a locally-admitted carrier in order to begin a trial in that country.

Preventing a Common Error: Selecting and Vetting Your IRB

Given the seriousness and magnitude of the IRB’s role, it is immensely important that IRBs are vetted thoroughly and selected carefully prior to the commencement of a trial. Many IRBs are located at academic institutions and so may come with the trial site that is selected. Whether the IRB is independent or part of the institution that has been selected for the trial site, the sponsor needs to vet the IRB appropriately and ensure its compliance with the framework set out in 45 CFR 46 with respect to membership (45 CFR 46.107) and records (45 CFR 46.115). First and foremost, the IRB should be registered with the Department of Health and Human Services and have a clean record with the FDA. This means not having any recent Warning Letters or inspections that have not been closed out. The IRB should also be accredited with another reputable organization. The Association for the Accreditation of Human Research Protection Programs, Inc. (AAHRP) is the most prominent such organizations.

The sponsor should also inquire as to how active the IRB plans to be and scrutinize its workload to ensure that it will have sufficient time and membership to monitor the trial at every stage.


Big or small, emerging or experienced, companies seem to make the same mistakes in clinical trials, and these mistakes can put trial subjects at risk and expose the companies to liability. The most common of these mistakes are failing to adequately communicate risks in a manner understandable to the subjects in informed consent documents, under-vetting the IRB and/or clinical investigators, not employing contracts with the trial site and clinical investigators, and under-insuring the trial. By being mindful of how these mistakes can manifest into liability and undertaking the measures outlined above, involved parties can ensure the greatest possible safety to participants, and thereby reduce their chance of facing products liability.

1 Many of these and others can be found in FDA’s draft guidance document Informed Consent Information Sheet: Guidance for IRBs, Clinical Investigators, and Sponsors (July 2014).

2 Office of Good Clinical Practice, updated Jan. 25, 2018. Available at:

3 21 CFR 312.53(c).

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