Pharmaceutical companies sponsoring clinical trials are mindful of the importance of regulatory compliance – particularly where regulations are undergoing reform, such as the new UK regulations coming into force in April 2026 – and ensuring the safety and well-being of participating patients. However, the risk that clinical trials give rise to contractual disputes often garners less attention. These issues may arise with co-development partners, co-sponsors or licensors, CROs, clinical sites, or technology providers.

Common causes of contractual disputes arising out of clinical trials include delays in trial timelines and disagreements regarding whether milestones have been met and associated payments triggered. Delays may impact downstream development and commercialization plans and increase costs, leading to disputes about which party is responsible. Unanticipated adverse events or a failure to show efficacy could lead to termination of development and disputes over issues, including:

• whether the party responsible for the study exerted the contractually required efforts;
• the adequacy of the study design; and
• whether the termination was valid.

Failure to obtain regulatory approval may also lead to disagreements over whether contractual obligations have been met. Disputes may also arise over data ownership, reporting obligations, or the regulatory strategy to be pursued by the parties.

Clinical trial disputes can result in significant financial losses, particularly if development is stopped. Short of such an extreme result, protracted disputes can damage relationships and hinder future collaboration, which is vital in a sector where long-term partnerships among life sciences companies and CROs help drive success.

We recommend clear contract drafting to mitigate these risks, including, for example:

• defining trial timelines and specific milestone obligations and specifying each party's responsibilities;
• defining the requisite efforts standard (e.g., commercially reasonable efforts) that each party must use in carrying out its obligations; and
• including an appropriate dispute resolution clause, such as an escalating negotiation process to permit off-ramps and confidential arbitration.

Should a potential dispute arise, parties can optimize their chances of obtaining a successful outcome by seeking legal advice early, being mindful of the documents they create, and utilizing the protection of legal privilege, where available. Identifying appropriate expert witnesses at an early stage may also provide an opportunity for independent evaluation that could head off a dispute. Internal contemporaneous records documenting efforts and decision-making processes – including those related to study design and implementation – may provide valuable evidence to support compliance with contractual obligations.