Study Compensation and Tax Law

Participant compensation for clinical research has increased over the past couple of years.  The rising gas prices have been a major burden for clinical trial subjects and sponsors have responded by modifying their clinical trial budgets to cover these costs.  For long-term studies, these payments to participants can quickly add up to total hundreds of dollars in compensation over a period of one year or longer.  Many sites and sponsors have therefore inquired about the reporting requirements that must be documented with the Internal Revenue System (IRS), specifically if they are required to provide the IRS Form 1099 to the subjects for their participation in clinical trials.  The following information was provided by the IRS through their Electronic Tax Law Assistance service.

The following question was provided to the IRS system:  "Must payment to clinical trial participants need to be reported by a clinical trial site on a Form 1099-MISC as nonemployee compensation?"

The IRS provided the following answer:  "You are inquiring as to whether the amounts which you pay to participants in clinical trials need to be reported by you on a Form 1099-MISC as non employee compensation.  In most cases, the answer would be no.  This is similar to the issues as to whether payment received for blood donations is reportable.  There have been several court cases and revenue rulings that have established precedent in this area.  You as the payer, however, may need to determine if the individual to whom funds are paid is engaged in the activity as a trade or business.  This most often occurs if you have individuals who repeatedly are called upon by you during the course of the year to participate in such studies, and whose compensation is such that it would be apparent that the primary motive is for profit.  If, however, you have volunteers who only periodically participate in studies, you are not required to issue a payee document at the end of the year."

For more information regarding study compensation and tax law, visit the IRS website at http://www.irs.gov/ and review Publication 525, Taxable and Nontaxable income and Publication 533, Self-Employment Tax.

Central Independent Review Boards and Community Attitudes

The Food and Drug Administration (FDA) requires an Independent Review Board (IRB) to consider "community attitudes" during its review of research.  So what is the FDA's definition of "community attitude" and how can a central IRB have knowledge of a location's attitudes towards research when it reviews submissions from other cities, states or countries? 

The FDA addresses community attitudes in the Non-Local IRB Review section of the FDA Information Sheets.  "The non-local IRB should have adequate knowledge of community attitudes, information on conditions surrounding the conduct of the research, and the continuing status of the research to assure fulfilling the requirements of 21 CFR 56.107, 56.111(a)(3), (a)(7) and (b) for each study site.  The non-local IRB needs to ensure these requirements are met for each location for which it has assumed IRB oversight responsibility.  IRBs need to be knowledgeable about the community from which the participants are drawn to ensure that subject rights will be protected and that the consent process is appropriate for the subject population involved.  The IRB should be sensitive to community laws because state and local laws, as well as community attitudes pertaining to research, may be more restrictive than federal regulations or the prevailing standards of the community where the IRB is located.

FDA Revises Informed Consent Form Requirements

The FDA has updated regulations that require additional language to informed consent form (ICF) documentation.  21 CFR 50.25(c) was updated on January 4, 2012 requiring that the informed consent document disclose the sponsor’s posting of clinical trial information on www.clinicaltrials.gov.  The deadline for this change will take place for applicable studies that are initiated on or before March 7, 2012.

The FDA clearly stated that this requirement will not be applied retroactively to those studies that were initiated prior to March 7, 2012 and defined which studies were required to contain the new language.  The following statement must be reproduced word-for-word in informed consent documents:

“A description of this clinical trial will be available on http://www.ClinicalTrials.gov, as required by U.S. Law[1].  This Website will not include information that can identify you.  At most, the Web site will include a summary of the results.  You can search this Web site at anytime.”

For more information about the FDA’s ICF deadline or a list of clinical trials that apply to this regulation, please visit (http://www.fda.gov/downloads/RegulatoryInformation/Guidances/UCM291085.pdf).

 For an updated Informed Consent Form checklist including the new regulation, you can contact Christina Billias at cbillias@harrisonirb.com .

---

[1] For more information about the U.S. Law, please refer to Section 801 of FDAAA.