Clinical Trials: a Break in the Tradition of the Past Few Years
Borys F. Danevych, Kateryna O. Halenko
In the recent decade Clinical trials (ÑT) have been developing fast in Ukraine. The Ukrainian CT market has evolved into an attractive sphere for pharmaceutical and CRO companies. With its up-to date legislation and harmonization with international standards, including Helsinki Declaration and ICH Guideline for Good Clinical Practice, dense population, high level of competency and professionalism among healthcare professionals and a far-reaching system of medical institutions (Sites) Ukraine has been steadily attracting more and more CTs each year, binging in billions of dollars into the healthcare system.
The last two years have been marked with a slight drop in popularity of Ukraine as a platform for CTs. However, while the factors that contribute to it may scare off investors, we do not find them absolutely unavoidable or unmanageable. Here is some on-hands experience on the obstacles that occur most often during CTs and that should be taken into account while doing this business in Ukraine.
Drafting the Clinical Trial Agreement (CTA) — what to keep in mind
The fact is that in truth it is actually a set of agreements instead of just one, which is traditional in Western companies.
In the accustomed (Western-country) system CTA is concluded between sponsor (or its representative), site and the principle investigator/investigators.
Such scheme is not acceptable both from legal and practical points of view. Ukrainian legislation states that it is mandatory to conclude separate agreements between Sponsors and Principle Investigators, between Sponsors and the Site, between Sponsors and Investigators. Correspondingly, such clause as responsibility of the Site for the actions of the Investigator is not logical in present conditions.
Also there is another peculiarity of the Ukrainian healthcare system: the rudimentary character of private sector. Thus, almost 95% of sites are either state or public. This can prove to be a problem for USA companies because of the FCPA requirements. In this Act the term “government official” has a very extended meaning. Thus, any individual (including investigators) employed by the state/public Site is deemed to be a “government official”. In connection with this there can occur special requirements for awarding and paying a fee to such individuals, because any type of payout, that may stimulate the beneficiary to adopt a positive decision for the company, may be regarded as a corrupt act.
Another characteristic feature is the non-profit status of the majority of the sites, which does not permit those sites to issue invoices for their services. In this case it is generally recommended to use payoffs on grounds of Acceptance Certificates, signed by the parties of the CTAs.
Special issues
The companies interested in conducting CTs in Ukraine may face some difficulties with the customs service while importing investigational medicinal products, laboratory kits and other equipment that might be necessary for a successful clinical trial. The legislation to date stipulates that all of the abovementioned objects are subject to VAT at the point of crossing the border. While the situation with laboratory kits and equipment is more or less clear in terms of customs value, the customs value of the investigational medicinal products that are not registered and, strictly speaking, are not intended for sale or even consumption other than for the purposes of the CT, is the constant “battlefield” between the “budget-fillers” and the initiators of the CT. Ukrainian customs authorities often do not take the Sponsor-defined prime cost for customs value, insisting instead on additional evaluation of customs value based on shop prices for analogical medicinal products (or products that contain similar active substances), approved for marketing in Ukraine. Such additional evaluation can in some cases raise the customs value many tens of times, which, correspondingly, raises the VAT base. This leads to difficulties in planning of the budget of the clinical trial and in the general increase of the budget for the sum of the VAT to be paid.
For the moment there is a discussion on the new Tax Code that should be introduced shortly. The Draft Code in question is being drafted with the assistance of market players, which might help stabilize the situation. Currently there is a discussion on including a stipulation in the Tax Code under which all of the materials for CT will be exempt of VAT. Thus, should such stipulation be included, there is hope that the situation will change for the better. However, for the moment there are no guarantees that the Draft Tax Code will soon be submitted to Parliament for readings and adoption or that it will contain the discussed provisions.
Last year also brought some changes into relations of the sponsor and the investigators. Earlier, taking into account that the investigator de facto was rendering services to the sponsor concerning scientific research, it was recommended for the Investigator to have the status of an individual entrepreneur. Such status is more preferable from the point of view of the controlling (tax) agencies, and it will also systemize tax payments.
Now CT regulations state that the investigators are to be employed by the site, which might make the remuneration system more complex. Thus, the investigators refuse to register as private entrepreneurs since they are the employees of the site. This issue may be important from the point of view of tax agents, because in case the Investigator does not have the entrepreneur status, and the CTA is concluded between Investigators and Ukrainian legal entities, it is the latter who have to pay taxes for the remuneration of the Investigators.
Also many sponsors may be used to the fact that traditional conditions of CTA include automatic transferal of IP rights for all kinds of intellectual property to the Sponsor if such property was created while the CT were held.
Ukrainian legislation states that copyright and rights for inventions (not including property that was created on the grounds of employment relations between Investigator and Sponsor) may be transferred only pursuant to including respective provisions into CTAs on transfer of IP rights. Such transfers should also be paid. This is why it is recommended to include to CTA clause, which states the duty of the Investigator to immediately transferr to the Sponsor or other defined person all intellectual and/or industrial property rights, including copyrights, arising from the conducting of the clinical trial and necessary documents. It is also advisable to state, that the payment for such transfers is included in the fee of the Investigator under the CTA.
There is also a question on execution of the Informed Consent that may arise in connection with children being subjects of Clinical trials. Informed Consent should be signed by parents or guardians before a child turning 18 or gaining civil capacity. Moreover, the informed consent has to be signed by both parents. It may be signed by one of them only in case the other party is physically absent or has been incapacitated or deprived of parental rights.
The previous question is tightly connected with the fact that the Civil Code of Ukraine still does not mention the possibility of conducting clinical trials with respect to children under 18 and incapable persons.
In July 2009 the Ministry of Healthcare of Ukraine introduced for debate the Draft Act On Changes in the Civil Code of Ukraine. This Draft Act allows clinical trials of medicinal products involving children under 18 and legally incapable persons on the condition that parents or guardians have conceded. Thus, the Draft Act should eliminate the discrepancy between the Civil Code and the On Medicinal Products Act of Ukraine which stipulates that clinical trials may be conducted with regard to children and incapable persons and, in case of adoption, will serve as the “green light” to clinical trials involving children and incapable persons. However, it has not been adopted yet.
It should also be mentioned that the procedure of approvals of the clinical trials is not yet honed to perfection. As the approval incorporates collaboration between State Pharmacological Centre of the Ministry of Healthcare and the Ministry itself, and taking into account that the interrelations between those two bodies are not thoroughly regulated, this may cause some delays and general inconveniences for the initiator of the clinical trial. However, these issues are being actively discussed now, and so the problem may be solved soon by issuance of an internal regulation regarding the procedures.
Insurance
It should be mentioned that the policy of foreign pharmaceutical companies concerning liability insurance incorporates issues that cannot be implemented in Ukraine.
Firstly, it is customary to include liability insurance if the Investigators and other medical personnel that take part in CT. Such requirement is absent in Ukrainian legislation. What is more, local insurance companies mostly do not have the required insurance, which practically renders it aimless to execute such agreements.
One more problem can occur concerns the acceptance of the insurance agreement by the CT regulatory authorities. Unfortunately, some authorities lack trust in insurance companies. This might not be altogether unreasonable, though a lot of factors contribute to it. The insurance companies in our country lack experience in indemnity insurance, especially in the field of clinical trials. Thus, their understanding of the specifics of such insurance, of what may be called risks, of exclusions from the insured events, may be restricted to general terms and conditions. The unclear insurance regulations also add confusion for the insurers.
Moreover, the controlling bodies have exercised much control over every sponsor in terms of insurance agreement, as every insurance agreement is analyzed before is granted permission for a clinical trial.
The pretext is generally the care for the patients’ health and safety. However, the demands of the controlling bodies may sometimes harbor different aims.
The situation could changed for the better in the event of controlling bodies adopting a model insurance agreement. This will definitely improve the situation with indemnity insurance for CTs.
Yet, disregarding the difficulties, the progress is evident. And hopefully, in some years Ukraine will serve as first base for clinical trials in post-CIS countries.
