Industry-Sponsored Research Week
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Industry research contracts getting more complex, require a more flexible approach


By David Schwartz
Published: February 13th, 2018

The contracts that govern industry-sponsored research agreements are more challenging to negotiate than they used to be, and they’ll probably be more challenging still in the future — because sponsored research itself keeps getting more complex, sophisticated and diverse, contracting experts say.

Successfully adapting to that complexity requires more flexibility in what universities will accept as final terms — and maintaining that flexibility is increasingly complicated, too. Who determines the limits of flexibility? Who makes the call each time it comes up?

The answer to those questions may differ on every campus, but there does appear to be a consensus around some rules of the contracting road: researchers should be involved in the negotiation process, and the university should always be willing to walk away from a deal that it just can’t stomach.

“I wouldn’t say the contents of SRAs are changing due to universities’ level of experience,” says Andrew R.O. Watson, PhD, CLP, senior director of technology transfer at Oregon Health & Science University, Portland. “But the contents are changing as we see more complex deal structures versus the straightforward SRA.”

Watson says these are typical scenarios where agreements are gaining complexity:

  • More deals are incorporating an onsite presence of the corporate sponsor, “perhaps even to the point of conducting some of the work at the university themselves.”
  • More deals involve a sponsor’s very specific, detailed demand for reports on the research in progress, with the “until they receive the data or information or reports exactly in the format they desire,” Watson says.
  • More agreements are adding new legal clauses in response to recent court decisions or other federal regulations, and as a result “the agreements are becoming much longer,” he reports.

Craig A. Reynolds, executive director in the University of Michigan at Ann Arbor’s Office of Research and Sponsored Projects, agrees. “I would say contracts have changed as a result of the increasing complexity and innovative nature of the research partnerships that the contracts are intended to enable — multi-party research agreements, membership agreements, consortia, unique funding mechanisms and the like.”

As complexity increases in industry SRAs, negotiators are dealing with some new twists. “One ‘growth industry’ in sponsored research contracting is the need to address sharing of data,” Reynolds says, “whether from or with the sponsor, or between or among collaborators. Data seems to be more deeply embedded in every transaction, and the need for appropriate controls is key and time-consuming — especially when dealing with patient or human subject research data.”

Another area that Watson sees as becoming more contentious involves “issues around overhead costs the university incurs and around sponsors that are unwilling to pay full overhead costs.” At OHSU, he explains, “our standard overhead rate is 57%, which, from research I’ve done, is about average across universities in the U.S. However, companies more and more frequently like to pay less than our standard overhead rate.”

Watson adds: “The other trend I’ve started to see is that SRAs for non-clinical work are starting to follow what has been done in the industry-sponsored clinical trial arena in that more companies are preferring to put in place Master Agreements. While MAs can streamline downstream research projects, the university’s flexibility on key language provisions in the master contract are diminished — as now the university must contemplate all types of research projects that may fall under the agreement. This therefore limits what universities can agree to, which is often not understood that well by company sponsors.”

No matter how much they change, though, and how many new landmine issues riddle industry SRAs, contract negotiators can almost always count on one trend to endure, Reynolds and Watson agree: challenges with intellectual property.

A detailed article on the increasing complexity of industry research agreements appears in the February issue of Industry-Sponsored Research Management. To subscribe and access the full article, along with the publication’s entire archive of best practices and proven strategies for attracting and managing corporate partnerships, CLICK HERE.  

Posted under: Industry-Sponsored Research Week

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