Contractual Liability and Clinical Trial Reimbursement in Italy

Contractual Liability and Clinical Trial Reimbursement in Italy

By: Christopher J. Asakiewicz, Esq. and Anna Pinkhas, Esq. [1]

In the Italian Ministerial Decree of July 14, 2009 (the “Decree”) the Ministry of Labour, Health and Social Policy sets forth a number of statutory requirements relating to insurance in human clinical trials conducted in Italy. In order to safeguard the clinical participants the Decree expanded on and formulized into law a requirement previously established by the European Union, which provides that a clinical trial can be initiated in the Member States only when provisions have been made for insurance or indemnity to cover the liability of the investigator and sponsor towards clinical trials subjects. [2] However prudent and protective of clinical participants the Decree is, its implementation into Italian law has led to significant delays in the negotiation of the indemnification clauses in clinical trial agreements because of improper interpretation, an interpretation that delays the introduction of possible life saving medicines into the country and the European marketplace.

Indemnification is a critical part of the clinical trial agreements between clinical trial sponsors, investigational sites and, sometimes, the principal investigator. Generally, indemnification language in any agreement seeks to impute liability to a contractual party for acts or omissions and to defend, hold harmless and compensate the other party for any loss that such party may suffer during the performance of the contract that results from said acts or omissions. Indemnification provisions in a clinical trial agreement differ among varying sponsors and investigational sites. Generally, the provisions are mutual. A mutual indemnification provision will have the sponsor indemnify for personal injury or illness to study patients that relates to the study or the study drug, and likewise, the other party will indemnify the sponsor for any negligence or willful misconduct for which it is responsible.

Drafting and negotiating an indemnification clause can be both difficult and tedious, as the clause’s meaning is particularly important during litigation. Frequent confusion, however, between indemnification and study subject reimbursement further complicates and delays negotiations. A clinical trial agreement generally also includes a provision where the sponsor agrees to reimburse the institution for any reasonable and necessary medical expenses incurred by the investigational site for the treatment of patients’ illness or injuries related to the study or the study drug.  The purpose of such subject injury language is to address reimbursement of expenses incurred to treat an adverse event. [3] This reimbursement language is meant to swiftly compensate such injuries without regard for party fault so the patient can receive care immediately or continue to receive the highest standard of care.

Indemnification, on the other hand, is to assume responsibility and the costs incurred in litigation or from claims that resulted from the fault attributable to the wrongdoing of the indemnifying party. Although these two scenarios are clearly distinguishable, confusion arises over the Italian regulation because of misunderstanding about the nuances of indemnification as compared to subject injury reimbursement. The Decree states that the promoter, or the sponsor, of the clinical trial shall provide insurance to cover “any civil liability of investigator and promotor of the clinical trial, without excluding any damage which may be unintentionally caused by accident e/o be attributed to negligence, imprudence or inexperience.” [4] In other words, the clinical trial sponsor is required by the Decree to be insured to sufficient limits for not only willful or reckless conduct, but also for negligent unintentional acts or omissions. [5] Many Italian sites interpret this language to mean they are not responsible for their own negligence and therefore remove their indemnification obligation of the sponsor, the promotor, from the clinical trial agreements. However, the Decree only governs reimbursement to study subjects by the insured in the event of injuries, and does not limit contribution as well as the investigational site’s indemnity of the sponsor for those third party claims which fault is attributable to either it or its actors.

Article 1 states: “The insurance policy is to grant specific cover in connection with the reimbursement of damages caused to the subjects by the clinical trial activities throughout the entire duration thereof.”

[6] The Decree’s purpose is therefore not to forgive or excuse liability, but only to safeguard participants by ensuring that a damaged party obtains reimbursement immediately. It is incorrect to interpret the legislation’s purpose as being a limit on the scope of the Institution’s liability with respect to its own actions, as the Decree further states “[t]his restriction shall not in any event impair the right of the damaged party to seek reimbursement of damages from the person liable therefor.” [7] Exclusion language which relates to negligence, imprudence or inexperience of the investigator serves to make the insurance policy a no-fault policy, assuring participants appropriate compensation and reimbursement for their injuries or illness without having to litigate the cause of the injury or prove fault. [8]

The patient’s clinical trial injury and treatment expenses will be immediately reimbursed by the policy. But, as the Decree does not limit the remedies at law, and corresponding insurance policy’s only purpose is to compensate the participant immediately, the site can still be held liable by a court for its actions. In the situation, when the sponsor was required to compensate, but is not the determined cause, the sponsor is entitled seek contribution or indemnity for such actions’ expenses from those actors responsible. The Italian Civil Code also supports the notion that the site can still be held liable, as Article 2053 provides that any willful or negligent conduct, causing an unjust harm to third parties, obliges the tortfeasor to compensate the damages. [9]

To resolve this confusion between indemnification and clinical trial injury reimbursement, the authors recommend that a sponsor with sites operating in Italy, (i) obtain an insurance policy covering all treatment expenses incurred by patients and associated with injuries related to the study drug or protocol procedures, and (ii) ensure that any indemnification provision in the clinical trial site’s contract does not exclude the institution or the investigators from liability. The Italian Civil Code and Decree are both in agreement that those persons liable for causing harm to a third party are obligated to compensate for those damages. The sponsor through clinical trial insurance can therefore immediately reimburse the patient’s costs, then, in accordance with the mutual indemnification, the sponsor or the insurer may seek to subrogate or recoup through contribution such expenses which are attributable to the investigational site or investigator and outside the sponsor’s control. [10]

---

[1] DISCLAIMER: Both authors are admitted to practice law in the state of New Jersey and draft and negotiate international clinical agreements as well as counsel on patient disclosures for pharmaceutical companies. The views and opinions expressed are solely those of the authors and shall not be attributed to any other party, company or entity. The expressed opinions are for informational purposes only, and not meant to nor intended to be an advertisement, solicitation, legal advice, authority nor services of any kind to any Client, including any person or entity in any state, country or sovereign nation. Such information is not meant to create an attorney-client relationship. the reader must not act nor rely upon these materials without seeking professional legal counsel.

[2] See Art. 3(2)(f) Directive 2001/20, of the European Parliament and of the Council of  4 April 2001 on the approximation of the laws, regulations and administrative provisions of the Member States relating to the implementation of good clinical practice in the conduct of clinical trials on medicinal products for human use, 2001 O.J. (L 121) 34, 37 ( “provision has been made for insurance or indemnity to cover the liability of the investigator and sponsor. “); See also Art. 3(1)(f) Decreto Legislativo, 24 June 2003, n. 211, G.U. 09 Aug 2003 (It.) (”provision has been made by the trial sponsor for insurance to cover the third-party liability of the investigator and the sponsors in the event of claims for damages by trial subjects.”).

[3] “adverse event” means any untoward medical occurrence in a patient or clinical trial subject administered a medicinal product and which does not necessarily have a causal relationship with this treatment.

[4] Art. 1(2) Decreto Ministeriale 14 July 2009, n. 213, G.U. 14 September 2009 (It.) (Italian Ministerial Decree, Minimum requirements for insurance policies which safeguard participants to clinical trials of medicinal products.).

[5] See Art. 2(2) D.M. n. 213/2009 (It.) (”Insurance shall provide for an insured limit for the reimbursement of damages not lower than Euro 1 million per participant, although the following minimum limits for each individual protocol are required, not less than: a) Euro 5 million if trial participants are less than or equal to 50; b) Euro 7 million five hundred thousand if the trial participants are more than 50 but less than 200; c) Euro 10 million if the trial participants are more than 200.”).

[6] Art. 1(2) D.M. n. 213/2009 (It.) (emphasis added).

[7] Art. 1(6) D.M. n. 213/2009 (It.) (emphasis added).

[8] “no-fault insurance” is any type of insurance contract under which insured’s are compensated for losses, regardless of fault in the incident generating said losses.

[9] Art. 2043 Codice civile [C.c.] (It.) (Italian Civil Code).

[10] See Blacks Law Dictionary (9^th ed. 2009) (1) (SUBROGATION “1. The substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor.”).

The Identity Theft Smoke Screen: Data Mining of Prescription Drug Records and Personal Data Privacy

[Ed Note: We are pleased to welcome a guest article from Christopher J. Asakiewicz, J.D. He graduated from Seton Hall Law in 2011 with a concentration in Health Law, recently passed the New York Bar Exam (congratulations!) and works for ImClone Systems Corporation, an affiliate of Eli Lilly and Company, drafting and negotiating various clinical documents and patient disclosures with both US and ex-US institutions as well as central and local investigational review boards (IRBs). During law school he worked  at Saint Vincents Catholic Medical Centers of New York (SVCMC) in the department of legal affairs, and prior to pursuing a legal education, managed phase IIIB/IV international clinical trials for Pfizer Inc. in the areas of neurology and neurodegenerative diseases.]

Personal data privacy once again has taken front stage in Sorrel v. IMS Health, Inc.[1] Vermont passed the Vermont Confidentiality of Prescription Information Law that allows doctors which prescribe drugs to patients, to decide whether pharmacies can sell their prescription drug prescription records.[2] IMS Health as well as other health information companies contested the law, arguing that the law poses a restriction on commercial speech as access to such information helps pharmaceutical companies market their drugs effectively to doctors. The Supreme Court is now tasked with determining the constitutionality of the restriction on access to prescription information with regards to our First Amendment. [3]

However, this post is focused on the secondary effects asserted in amici curiae briefs supporting the petitioners of allowing companies to purchase such information, specifically the concern of data privacy and patient re-identification. [4] Under the Health Information Portability and Accountability Act (HIPAA), personal health information is de-identified by your local pharmacy prior to such information being shared with any third party. By de-identifying the data, your personal data cannot, it is believed, be linked or traced back to you. De-identifying your health information is a way for covered entities to share your information without your consent or authorization and in accordance with the law. The information once shared is completely anonymized. After the transfer to a third party, like IMS Health, your information is solely data of zeros and ones that translate to dates of dispensing and drug names. No longer does your prescription record list your name or month or day of birth. [5]

Briefs in the case assert that data mining firms could, hypothetically, create profiles based on these de-identified prescription records. Such prescription profiles would constitute certain patient’s prescription habits, including an individual’s medication types, pharmacies visited and dates dispensed. The briefs argue that linking and mining further public information to these drug profiles could result in patient re-identification.

IMS Health, Inc., of course, asserts that it has no knowledge of any patient re-identification and it protects such records with all the security privacy measures set forth under HIPAA and as strengthened by Health Information Technology for Economic and Clinical Health Act (HITECH). So what is the issue, I ask?

A pharmaceutical company does not need nor want to know who you are. Aggregate data is more beneficial to a marketing company, rather than just one record with your name on it. What benefit would a company get from a record that says, John Doe, DOB: 01-Jan-1984? The company could send you a mailer, but under the current regulations, you can opt out of the marketing material and it stops there. However, what helps a pharmaceutical company is aggregate datasets that say Dr. Jane Doe, MD writes 100 scripts for Lipitor ® a month. No one cares if the patients are unidentifiable, and most likely, the pharmaceutical company wants to keep it that way. Not only will the de-identified data be cheaper to buy, but it also assures the third party purchasing the data that it is not aiding a HIPAA violation.

Last, it is also asserted that there is no penalty for re-identification of personal health data, but there are stark penalties under HIPAA for “a person who knowingly … (1) uses or causes to be used a unique health identifier; (2) obtains individually identifiable health information relating to an individual; or (3) discloses individually identifiable health information to another person.” [6] If the offense is committed with the intent to sell, transfer or use the individually identifiable health information for commercial advantage, the penalty could be up to $250,000 and 10 years imprisonment. [7] If claims are brought against companies, like IMS Health, the companies will surely argue they are not covered entities subject to the penalties under HIPAA; however, this does not prevent civil lawsuits against them.

What will happen if a breach occurs due to patient re-identification? Most likely, the current healthcare environment where many companies are acting under corporate integrity agreements or deferred prosecution agreements, promotes reporting, if not out of altruistic purpose at least a compliance purpose. With this said, once reported to both the Department of Health and Human Services, Office of Civil Rights, as well as, in most states, the Secretary of state, privacy and confidentiality laws require notification to be provided to the patient that has been re-identified. This patient whose privacy rights have been infringed can then bring an individual civil claim against the organization responsible for the disclosure of their health information as well as the collateral damages caused by the unauthorized disclosure. Now, what company today wants to get involved with this type of bad publicity?

In conclusion, just because the possibility exists that a patient can be re-identified with data mining practices, does not mean that our current environment will foster such. The nine Justices of the Supreme Court need to be more concerned with the First Amendment and the commercial speech implications of their ruling, rather than amici curiae briefs supporting public policy positions based on unwarranted fears of patient information disclosure.[8]

I therefore urge you to put yourself in the role of your favorite Justice and consider if you should be more concerned that a company is going to buy your prescription records and try to determine that you took amoxicillin for a sinus infection when you were five years old, or if that company would rather purchase all the information you posted on Facebook ® or other social networking sites, including all the locations you have checked in. Which do you think is more useful to market its products? It is with this mindset that you must consider if the regulation directly advances the governmental interest “in protecting the public health of Vermonters, … the privacy of prescribers and prescribing information” and is no more extensive than necessary to serve that interest. [9]

---

[1] Petition for Writ of Certiorari, Sorrel v. IMS Health, Inc., 131 S. Ct. 857, No. 10-779, Dec. 13, 2010.

[2] Vt. Stat. Ann. tit. 18, § 4631 (2010).

[3] See Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980).

[4] Brief of Electronic Privacy Information Center (EPIC) et. al. as Amici curiae supporting Petitioners, Sorrel v. IMS Health, Inc., 131 S. Ct. 857, (2011) (No. 10-779), 24-9, available at, http://www.atg.state.vt.us/assets/files/10-779%20EPIC%20amicus%20Sorrell.pdf; Latanya Sweeney, Simple Demographics Often Identify People Uniquely (Carnegie Mellon University, Data Privacy Working Paper No. 3, 2000), available at, http://dataprivacylab.org/projects/identifiability/paper1.pdf.

[5] Privacy Rule of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. No. 104-191 (1996), 45 C.F.R. §§ 164.312(e)(2)(ii), 164.514(b)(2)(i) (2010).

[6] 42 U.S.C. § 1320d-6(a)(1)-(3).

[7] Id. § 1320d-6(b).

[8] Brief of Electronic Privacy Information Center (EPIC) et. al. as Amici curiae supporting petitioners, Sorrel, 131 S. Ct. 857, (No. 10-779).

[9] See Vt. Acts & Resolves No. 80, § 17 (2007) (Confidentiality of Prescription Information); Vt. Acts & Resolves No. 89, § 3 (2008) (amending Act 80).