Ohio District Court Ruling Against Medpace Could Set Bar for MSAs

29-Apr-2013 - Last updated on 30-Apr-2013 at 07:01 GMT

With a ruling that could have implications for any CRO looking to understand its rights under a MSA (master services agreement) with a sponsor, a federal district court in Ohio has ruled against CRO Medpace.

The trial involved Biothera, a biotech company, hiring Medpace to manage the clinical trials of the development of the cancer therapy Imprime, which is currently in Phase II and III trials for different indications. However, Medpace allegedly failed to live up to its contractual obligations or agreed-upon milestones with Biothera, and in February 2012, Biothera terminated its MSA with Medpace and assumed responsibility for managing the trials.

A MSA is typically agreed upon before a trial begins and provides background for the way a CRO will conduct research, and it can provide guidance for if or when a relationship between a CRO and sponsor ends.

In this particular case, after the MSA was terminated, Biothera asked Medpace to turn over all of the documents and data related to the Imprime trials, but Medpace refused the request, according to the US District Court ruling from earlier this month.

While Medpace admits that Biothera's lawyer sent a letter in March 2012 requesting the trial data and documents, Medpace denies that it had any obligations under the MSA to return the trial data to Biothera.

Medpace claimed that a section of the MSA governing Biothera’s payment obligations for cancelled task orders related to the clinical trials justified Medpace’s refusal to turn over the materials from the trials.

However, US District Judge Timothy Black ordered that “even if Biothera breached [the section of the MSA] by failing to pay Medpace amounts due, the MSA still requires Medpace to turn over the Trial Property. Medpace can and did bring a claim against Biothera for breach of contract, which will be resolved by this litigation. However, the MSA does not permit Medpace to withhold Biothera’s property. The MSA unambiguously provides that, even in the event of Biothera’s breach.”

Judge Black continued noting that the MSA “was not a contract for the sale of goods and did not confer title of the Trial Property on Biothera. Instead, the MSA simply acknowledged that the Trial Property provided to (and even to the extent improved by) Medpace was and would always remain the exclusive property of Biothera. Biothera would own the Trial Property even absent the MSA.”

In terms of damages, Biothera claimed that Medpace’s refusal to provide the documents and data over nine months forced the company to incur about $3m in costs and fees related to re-creating portions of the trial data kept by Medpace.

The court ruled in favour of Biothera, noting that “there is no support for a finding that Biothera’s damages are speculative.”