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									           Compliance Issues in Overseas
            Health and Research Projects

     Clinton D. Hermes                                                   Jan E. Murray

                        This presentation does not constitute legal advice.
     The views expressed are the presenters’ own and do not necessarily express the views of
                   St. Jude Children’s Research Hospital or Cleveland Clinic


•   Case Examples
•   Practical Considerations
•   Legal Issues
•   Doing Business Internationally
•   Regulation of International Research
•   Putting the Pieces Together

           Case Examples:
        What Types of Projects?
• Institution is coordinating center in multi-site clinical trial
  involving sites in Brazil and Eastern Europe, funded by
• Institution-employed PI performs investigator-initiated
  study of a malaria treatment drug in Laos, funded by
• Institution receives USAID grant for capacity-building in
  preventive medicine in Malawi
• Institution enters into contract to manage hospital in


      Why the Developing World

 • Growth in Research
        • Fewer competitive trials;Treatment-
          naïve subjects
        • Motivated subjects and investigators
        • Disease-specific study needs
        • Countries trying to attract clinical
          research, e.g., China, India, Malaysia,

   Why The Developing World

• Growth in other arrangements
  • Growing array of relationships with the
    developing world that range from education
    initiatives to hospital management to hospital
  • Many countries in the developing world are trying
    to improve their health care systems or capitalize
    on medical tourism


       International Projects:
         Legal and Practical
 International Research
On the Ground: Africa


On the Ground: Africa

On the Ground: SE Asia


On the Ground: SE Asia

     On the Ground: India


On the Ground: Latin America

On the Ground: Latin America


On the Ground: Eastern Europe

                Case Examples:
               What Types of Risk?
      • Overseas projects look prestigious but can be
        massively complicated       failure to carry out
        programmatic responsibilities
      • Liability issues loom at home and abroad
         – tort and contract
         – regulatory
         – criminal
      • Political / safety risks
      • Tenuous infrastructure, both financial and
        managerial, of local partners


           Practical Considerations
    • Project wind-down and exit should be anticipated at the
    • Obtain local legal counsel: select carefully and pay
      attention to political connections
    • Security plans
       – risk assessment
       – physical security assessment
    • Approval of host government needed or desired? With
      whom to negotiate?

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    Practical Considerations (Cont'd)

    •   Managing subcontractors, vendors, people
    •   Currency issues
    •   Real estate
    •   Immigration/visa and work permit issues
    •   Shipment and storage issues
    •   Other supply and inventory concerns
    •   Importance of high-level visits from home base

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    Corporate Form and Registration
    • What gives you the right to operate in host country?
      – register institution as foreign entity, NGO, etc. in-
      – create an in-country subsidiary
      – create a U.S. subsidiary and register it in-country
      – operate through in-country subcontractors and
        vendors to eliminate need for in-country legal
      – exemption via MOU?

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      Insurance and Indemnification

    • What kinds of insurance?

    • Indemnification from whom, and for what?

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              Benefits and Payroll

    • Eligibility for health, retirement, disability,
      and other
      – U.S. citizen-employees?
      – foreign nationals (host country)?
      – third-country foreign nationals?
    • Payroll taxes – same questions

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                        Labor Laws
    • Some U.S. labor laws apply to U.S. citizens even in
      foreign countries
       – Title VII of the Civil Rights Act of 1964 (“Title VII”)
       – Americans with Disabilities (“ADA”)
       – Age Discrimination in Employment Act (“ADEA”)
    • Foreign labor laws can be incredibly complex and pro-
    • Resolution of conflicts between U.S. employment laws
      and foreign employment laws
       – Foreign Laws Defense (29 U.S.C. §623(f)(1), 42
         U.S.C. §2000e-1(b), and 42 U.S.C. §12112(c)(1))

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       Foreign Corrupt Practices Act
    • Anti-bribery provisions – unlawful to offer or make a
      payment of anything of value to a foreign official for the
      purpose of influencing that official
    • DOJ takes broad interpretation of “foreign official”
       – Including employees of state-owned or controlled
         entities (e.g., hospitals or medical clinics)
    • 2005 DOJ/SEC enforcement actions against U.S. DME
      providers in China led to $4.8M in penalties
    • Corruption indices

      Other Foreign Laws and
    U.S. Laws Applicable Abroad

• Must have clear understanding of local laws, regulations,
  and corruption risks
• Proactive involvement of local counsel and others
  familiar with the local culture
• Implement employee codes of conduct and training
• Ensure adequate senior management oversight


• Depending on the entity and its arrangements, it could be subject
  to certain tax liabilities
   – U.S.
       • income tax
       • related or unrelated business income
   – foreign
       • VAT on goods and equipment
       • employment taxes
       • import taxes
       • “service fees,” “duties,” “costs,” “levies,” etc.
• Income tax treaties:
   – USAID
   – “regular”
• Look for foreign law tax exemptions
       U.S. Export Control Laws
       And Foreign Transactions
• The U.S. imposes numerous controls on exports and
  other transactions with foreign countries and individuals
• EAR and ITAR
• U.S. persons may not participate in an unsanctioned
• Broad embargoes prohibit transactions with certain
  countries or individuals
• Specially Designated Nationals List


         International Research
            Laws and Norms
   •   ICH GCP
   •   CIOMS
   •   Declaration of Helsinki, Nuremburg Code
   •   ICCPR (Article 7)
          • Only global legally binding treaty to discuss human
          • Article 7 of the ICCPR states that “[no one shall be
            subject to torture or to cruel, inhuman or degrading
            treatment or punishment. In particular, no one shall
            be subjected without his free consent to medical or
            scientific experimentation.”
          • Limits

   Conducting Research under the
           Common Rule

  • Common rule applies to any research funded by
    Health and Human Services or other federal
  • FWA requires statement that all research will be
    conducted in accordance with the Common Rule
  • International sites and submission of FWA


   Conducting Research under the
       Common Rule cont’d.
• Institutional Review Board
  • Regulation places responsibility for approval,
    monitoring and, if warranted, termination of
    human subjects research in an institution
  • Regulation specifies basis for approval
  • Part 46 specifies the composition of the IRB in
    terms of balance along gender, expertise and
  • Requires maintenance of records that can be
    reviewed by OHRP

  Conducting Research under the
      Common Rule cont’d.
• Informed Consent
  • Explain that the subject is being asked to
    participate in research
  • Explain risks, benefits of the research and
    alternative treatments
  • Explain confidentiality
  • Assure that consent is freely given and
    appropriately documented
  • Explain when subject participation might be
    terminated and what other information subject will
    be given


Conducting Research Subject to
      FDA Regulations

• 21 CFR Parts 312, 50, 56: adaptation of
  the Common Rule for clinical trials
  involving drug marketing approval
  regulated by FDA
• 21 CFR Part 812 regulates device

  Conducting Research Subject to
     FDA Regulations cont’d.
• 21 CFR Part 312
  • Specifies requires for phases of investigation in
    support of Investigational new drug (IND)
    application and information to be generated on
  • Specifies the responsibilities of sponsors and
  • Details record-keeping and reporting
  • States agency’s authority over clinical


  Conducting Research Subject to
     FDA Regulations cont’d.
• 21 CFR Part 50
  • Details requirements on informed

• 21 CFR Part 56
  • Sets forth authority and operation of
    Institutional Review Board

 Conducting Research Subject to
    FDA Regulations cont’d.
Proceeding under FDA regulations
• FDA standards on international research
  – Some foreign studies must meet same FDA
    regulations that apply to similar studies in the U.S.
      • IND (investigational new drug)
      • IDE (investigational device exemption)
  – FDA may accept data from non-IND and non-IDE
    foreign studies if study conforms to the more
    stringent of:
      • ICH GCP
      • the laws and regulations of the country in which
        research was conducted

     Conducting Research under
Internationally Harmonized Standards
• GCPs
  • Adopted as guidance by the FDA
  • Recognized as an international standard
  • Adopted formally by many countries and may be
    imposed on purely academic trials involving
    pharmaceuticals (e.g., European Union)

     Conducting Research under
Internationally Harmonized Standards
• GCPs cont’d.
  • Founded in 1990, International Conference on
    Harmonization of Technical Requirements for the
    Registration of Pharmaceuticals for Human Use
    (ICH) by US, European Commission, Japan
  • Based on industry/government collaboration so
    includes representatives of trade association and
    regulatory agencies


     Conducting Research under
Internationally Harmonized Standards
• GCPs cont’d
  • Good Clinical Practices (GCP) developed by ICH
    Expert Working Group and endorsed by ICH
    Steering Committee in April, 1996
  • US, CPMP of EMEA and the Japan Ministry of
    Health, Labor, and Welfare adopted as guidance
    in 1997
  • GCPs have been adopted as a framework for
    conducting clinical trials with some modifications
    by 17 of the world’s wealthiest countries
    (represented by founding members)

     Conducting Research under
Internationally Harmonized Standards
• GCPs cont’d.
  • Observer countries Australia and Canada have
    adopted modified GCPs
  • ICH adopted a Global Cooperation Group to
    expand adoption of ICH guidelines in non-ICH
  • Even where not formally adopted in a jurisdiction,
    ICH has become the de facto standard for
    conduct of clinical trials world-wide
       Association of South-East Asian Nations (ASEAN)
       Pan American Health Organization (PAHO)


     Conducting Research under
Internationally Harmonized Standards
• GCPs cont’d.
  • Principles
     • Primacy of the rights, safety and well-being of individuals
       versus industry and science
     • Necessity for scientifically sound design reduced to writing in
       clear, detailed protocol
     • IRB or Ethics Committee review
     • Use of qualified investigators
     • Importance of freely given informed consent
     • Accurate and verifiable recording and reporting of clinical trial
     • Preservation of subject’s confidentiality
     • Observation of GMPs

     Conducting Research under
Internationally Harmonized Standards
• GCPs cont’d.
  • Section 1: definitions
  • Section 2: principles
  • Section 3: IRB/IEC structure, authority and
  • Section 4: Investigator responsibility and
  • Section 5: Sponsor responsibilities; management
    of trial; use of qualified personnel and contractors


     Conducting Research under
Internationally Harmonized Standards
• GCPs cont’d.
  • Sections 6 and 7: content and structure of clinical
    trial protocol and Investigator’s Brochure; protocol
    is keystone document; describes the trial design,
    objectives, endpoints, identification of data to be
    recorded on the CRFs.
  • Section 8: Essential trial documents

    Conducting Research in the
        European Union
• European Commission adopted a Directive
  harmonizing aspects of conducting clinical trials
  - April 4, 2001-2001/20/EC
• Member states were required to adopt
  legislation implementing the Directive at the
  latest by May 1, 2004
• Directive is complemented by a set of Guidelines
  that provide more detail
• Few states met the May 1 deadline; still
  considerable difference among states on


    Conducting Research in the
        European Union
  • European database on clinical trials
  • Provide standardized information on trials to EC
    and Competent Authorities (CA) in Member
  • Must have unique EUDRACT number to make
    submissions to ECs and CAs
  • Linked to EU database on Suspected
    Unexpected Serious Adverse Reactions

    Conducting Research in the
        European Union
• Authorization of Clinical Trial by CA
   • Must submit a request for authorization to the CA of the
     Member state where trial is to be performed
   • Standard application form; cover letter by sponsor or
     sponsor’ legal representative or facilitator; protocol; IB;
     Investigational Medicinal Product Dossier
   • Must be reviewed within 60 days (or longer for gene
     therapy or somatic cell therapy)
   • Approval may be implicit or written (must be written for


    Conducting Research in the
        European Union
• Submission to Ethics Committee
   • Trial cannot commence until the competent EC
     has issued a favorable opinion
   • Directive establishes streamlined EC review—
     one EC opinion per state regardless of number of
     sites in the state
   • Sponsor or PI may apply
   • Letter; Protocol; IB; IMPD; additional information
     (country-specific) and other non-mandatory
     information (e.g., project summary, ethical issues;

     Conducting Research in the
         European Union
• GCP Directive 2005/28/EC
   • Provided further guidance on application of GCPs
     and discussed relaxed regulation of non-
     commercial research
   • Most member states do not treat non-commercial
     research differently under the directives
   • Application to academic (non-commercial)
     research has been very controversial; increased
     bureaucracy and cost


            Human Subjects
          Research Regulations
• Is the project HSR?
• Home institution IRB review and approval
   – local context knowledge?
• Local IRB review and approval required?
   – laws in host country may require additional approvals
   – see OHRP listing of foreign laws
   – international standards depending on setting and type of
• Setting up local IRB and securing FWA
• Training/capacity building in HSR
• Operation of local IRB: degree of oversight, review of
  adverse events and protocol modifications, adequacy of
  local IRB’s policies and procedures

          Ethical Challenges

 • See September and October 1997 articles in
   NEJM, NBAC report
 • Host country benefit and capacity building
    – Research needs versus needs of host country(ies)
 • Consent
 • Standard of care during/after trial
      Access to care
      What type of care?
 • Treatment of non-research injuries/illnesses
 • Strength of ethical and regulatory review


   Putting the Pieces Together:
      Institutional Oversight

So, how do you manage all these issues,
 given the (necessarily) entrepreneurial
 nature of researchers? Do you know
 where your institution is operating?

   Putting the Pieces Together:
  Institutional Oversight (Cont'd)

• Need to “capture” the award before it happens –
  feasibility analysis and input
• Importance of ongoing home institution involvement in
• Develop system that encourages and facilitates
  communication between PI and home institution
  throughout project
• Avoid PI making unguided decisions or taking
  uninformed actions that create problems further down
  the line


   Putting the Pieces Together:
  Institutional Oversight (Cont'd)

• Is grant within the competence of the PI and co-
• Is PI the appropriate person for cementing
  relationships with grant officers/agency contacts?
• Who will monitor PI actions, to assure they are
  consistent with grant terms and goals?
• Budget preparations, and assuring ongoing
  compliance with budget lines: who is checking and
  who approves?

                    Pre-Award Process

• Establish review policy for groups within
  organization to be involved and to give input from
  the beginning
• Make review process simple and timely
• Identify relevant groups and assign tasks and roles
   – What issues and problems should they be looking
   – What is their authority on certain matters?
   – What tasks are they responsible for?


   Key Institutional Stakeholders
• Internal infrastructure should identify key
  stakeholders and the topics they should consider –
  for example:
   –   HR
         • Project staffing
         • Payroll
   –   Benefits
         • Plan participation
   –   Finance
         • Bank accounts
         • Budget
         • Tax recoupment?
   –   Grant & Contracts [lead department; maintain competitiveness]
         • Tangible assets
         • Subawards, purchased services agreements, and leases
         • Subrecipient monitoring?
   –   General Counsel & Risk Management
         • Tax, insurance, and other legal matters, including corporate form / registration
         • Hiring/managing local counsel
   –   Office of Research Compliance / IRB
         • Human subjects research
   –   PI Department Chair or Dean?
            Post-Award Process

• Establish system to disseminate relevant information to
  the necessary groups
• Ensure relevant entities are kept up to date on
• Groups are responsible for responding to questions
  related to their business area in an informed manner
• Communication should flow smoothly among
  departments throughout the duration of the project


   Creating the Network to Get
          the Job Done
 • CRO
     – Selection
     – Contracting
 • Investigators and other key study personnel
 • Local counsel
     – When needed
     – How to hire

Creating the Network to Get
  the Job Done (Cont’d)
  • Governments
  • Community Advisory Boards
  • Local medical practitioners /
  • Laboratories
  • Security firms, accounting firms,
    shipping companies, "expediters,"
    supply companies, staffing agencies,
    and other ancillary services
  • Insurance and indemnification


     Red Flags for Potential
 •   Sustained activism
 •   Financial irregularities and the FCPA
 •   Government inquiries
 •   CRO performance delays, cost overruns, quality
     issues, or loss of key personnel
 •   Significant study team turnover
 •   High LTFU rates/mobile subject populations
 •   State Department Warnings
 •   Rapid Currency Fluctuations

             Checklist for Anticipating and
              Avoiding Common Pitfalls
•       Government acceptance and compliance with local laws
           Many study documents will have national legal content,
           for example:
             ◦ Protocol
             ◦ Labeling
             ◦ Consent form
             ◦ Compensation for injury provisions
           BUT, government acceptance does not equal ethical review
•       Proactive PR
           Engaging the community, the activists, and the shareholders
             ◦ Community advisory boards, fact-finding missions, education
             ◦ Bristol-Meyers Squibb announced in its corporate governance
               reports that its protections for human subjects of clinical trials
               are approved by the Calvert Group
           Help host nation define standard of care and ethical benchmarks


            Checklist for Anticipating and
          Avoiding Common Pitfalls (Cont'd)
    •    Reactive PR
             Have Q&As and press statements ready
             Document all your careful decisions
               ◦ Who participated in study design? In subject selection and
                 recruitment? Informed consent?
               ◦ What approvals were obtained from the national
               ◦ How were the CRO/sites/investigators selected?
    •    Security
    •    Financial monitoring and currency issues
    •    Infrastructure building and backup
    •    Benefit strategy
             Ensure documented medical followup of subjects after study
             to monitor adverse events related to trial interventions
             Communicate to all constituents what you will give back

 Checklist for Anticipating and
Avoiding Common Pitfalls (Cont'd)

  • Consent
  • Extra protections
       Human rights monitors?
  • Training of local study personnel
  • High-level visits from home base
  • Exit strategy


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