The Ins and Outs of Clinical Trials – Termination

Clinical trials are costly, involve numerous parties and depending on the phase of the trial, are a lengthy process.

Although it’s unpleasant to talk about how to end a relationship before it’s even begun, a frank and complete discussion at the outset on how a contract is to be terminated amicably will benefit all parties involved.

In this post, we’ll address a termination provision that a sponsor, typically a pharmaceutical company, can exercise and negotiate. Such provision is particular to a clinical trial agreement and which can be challenging to negotiate with other parties to the agreement, i.e. the institution (i.e. a hospital or clinic) and Principal Investigator (PI) (i.e. a doctor or researcher).

The potentially contentious wording of the termination provision often will attempt to give the sponsor the ability to terminate the agreement for safety, toxicity, business or any other reasons.  

The wording “business or any other reasons” provides a very broad right of termination so the institution and PI may resist having such wording in the  termination clause.

Instead, the institution and PI are likely to prefer wording indicating that a clinical trial is only terminated for specific customary reasons, such as for ethical reasons relating to efficacy, safety and/or feasibility of a trial.

However, where possible, the sponsor should insist on keeping such broad wording. It’s unrealistic and impractical to list all ethical situations in which it makes strategic sense to terminate the trial.

Here are few reasons a sponsor could terminate

  • Subject recruitment failure. This could be because the institution is inadequate, or the target subjects are so rare that it’s difficult to recruit the required sample, or the recruitment can’t happen at a reasonable rate so it’s unfeasible to continue a trial.
  • Subject enrolment hasn’t started even when a clinical trial agreement is signed.
  • Postponement of a trial due to lack of funding.
  • Discontinuing use of a particular institution or PI.
  • The PI can no longer work in the trial and an adequate replacement cannot be found.
  • Termination for reasons specified in the clinical trial protocol.

Having this termination right would also give a sponsor leverage when negotiating with the institution and/or PI to ensure that the institution and/or PI do not enrol certain subjects even if they pass the trial screening criteria.

This might become necessary if a subject fails to comply with their study duties or has personal circumstances that affect their ability to participate, such as relocation or a change in job, or for health and safety reasons that the subject is unwilling to accept.

The clinical trial agreement should also set out general consequences of termination, such as obliging the PI to cease enrolling patients upon termination, and cease performing procedures under the protocol to the extent medically permissible and appropriate to do so.

Other outcomes of termination include:

  • Requesting that all unused investigational medicinal products, materials and equipment provided to the institution and PI be returned to sponsor or destroyed as directed by the sponsor.
  • Determining final compensation payments for institution and PI.
  • A statement to the effect that the sponsor should not be obliged to continue to supply the investigational product after termination.
  • The completion of various close out activities such as notifying the regulatory authorities, ethics committees and institutional review boards of the termination.

Termination clauses aren’t necessarily the most straight forward matters to negotiate, but these clauses must be drafted thoroughly because it’s those clauses that are the most carefully reviewed once a relationship starts to go wrong.

From the sponsor’s perspective, given the variety of circumstances that could give rise to termination in a clinical trial context, it’s worth having those difficult conversations up front as this can save a great deal of time, trouble and expense further down the line.


The information in this blog post is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from JAG Shaw Baker or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter.

The post was written by Sharmela Thevarajaha, Associate at JAG Shaw Baker.

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