Re-posted from the Cross-Border Biotech Blog
A provocative post by Matthew Herper at Forbes’ The Science Business Blog this week argues that special protocol assessments (SPAs) should be public. SPAs are the FDA’s way of pre-approving a clinical trial design, so that a company can conduct its trials secure in the knowledge that the FDA won’t later withhold approval based on a design flaw.
SPAs are currently ”confidential communications” not subject to public disclosure, but Herper argues for congressional action to put them into the public record:
“It might take an act of Congress to allow the FDA to make SPAs public, but that should happen. This would increase their value to biotechnology firms who are trying to raise money and prevent run-of-the-mill stock buyers from getting fleeced.”
The event that triggered Herper’s call for new legislation is yesterday’s revelation that Seattle-based Cell Therapeutics deviated from an agreed protocol in 2008. Herper characterizes this mainly as the FDA’s failure for leaving SPA disclosures “entirely up to the company” and says the confidentiality protection “represents one way in which the regulator fails to make sure investors have information they need.”
However, as much as I’m a fan of government transparency, the responsibility to investors lies with the company not with the FDA. To the extent details of an SPA are material, they should be disclosed. Ongoing developments with respect to clinical trials should likewise be assessed as part of a company’s disclosure controls and procedures and disclosed as necessary.
Did Cell Therapeutics fail in this duty? Unclear. As an article by Adam Feuerstein pointed out on Feb. 1, Cell Therapeutics did disclose that they halted enrollment in the trial early. However, the company did continue to reference the SPA in subsequent press releases.
Would FDA publication of the SPA have helped? Also unclear. The FDA’s guidance on SPAs (pdf) says, clearly:
“Failure of a sponsor to follow a protocol that was agreed upon with the Agency will be interpreted as the sponsor’s understanding that the protocol assessment is no longer binding on the review division.”
So I’m not sure what would have been added by having the SPA available.
My bottom line: Companies that fail to disclose material developments or that misrepresent material facts will subject themselves to liability to their shareholders. Herper’s hope is that disclosure by the FDA would “prevent run-of-the-mill stock buyers from getting fleeced,” but absent evidence that securities laws are failing to provide adequate incentives or remedies, I’m not convinced that forcing these confidential FDA communications open to public scrutiny would help investors or patients.
Jeremy Grushcow is a Foreign Legal Consultant practising corporate law at Ogilvy Renault LLP. He has a Ph.D. in Molecular Genetics and Cell Biology. His practice focuses on life science and technology companies.