Clinical Resource Management: New Strategy Minimizes Co-Employment Risk inVentiv Clinical Solutions LLC The approval of a new drug candidate is typically impacted by hundreds, if not thousands, of people during the development cycle. Without talented people, the clinical development plan is often delayed, over budget, and — in the worst case scenario — unable to secure FDA approval. Therefore, effective deployment of the right personnel is critical. Successful pharmaceutical, medical-device, and biotech companies strive to find and retain the highest-quality personnel. But outsourcing companies, universities, and other employers recruit from the same pool of high-quality workers, which creates an increased demand for talent and drives up personnel costs. This highly competitive employment market has spawned a variety of employer/employee relationships, including: part-time and flex-time employment options; contractors/consultants; and strategic resource/insource groups. The proliferation of alternative working relationships has led to increased government scrutiny that has narrowed the options available to companies looking to acquire and retain talent. One of the most significant and least-understood risks encountered in addressing these challenges is co-employment. Co-employment is a term recognized by the courts and administrative agencies that refers to situations in which two employers may be responsible for an employee’s work or working conditions. Relationships Can Be Affected Despite legal concerns, there is a move toward and acceptance of alternative forms of working relationships using flexible resources and a variety of nontraditional structures. In addition, companies are experiencing increased pressure to find personnel with a high level of specialty in today’s tight labor market. These factors have pushed co-employment into the forefront of discussions between clients and service providers. Courts and administrative agencies will consider several key criteria in allocating responsibilities between client and outsourcing firm, including: who controls the working environment, including when, where, and how the work is performed; who recruits, screens, and hires the worker?; who provides the worker with benefits?; who is the employer for tax purposes?; and is the assignment for a specific period of time or indefinite? The client and service provider must address these issues when determining the nature and scope of the relationship between the parties. While avoiding co-employment legal liability is not completely possible, the value of outsourcing far exceeds the risk if the parties understand the potential problems and agree at the outset how risks will be addressed. Implementing a Successful Outsourcing Strategy There is pressure in the clinical-development market to create higher success rates on new molecules while lowering costs requires companies to use creative approaches. Companies have outsourced clinical-development functions for years; however, today’s scarce resources necessitate careful resource planning to ensure the trial is executed smoothly and without issue. To minimize co-employment risk, some general practices to consider are: • A professionally written agreement • Clear definition of roles, responsibilities, duties, and processes of the client and services company • Frequent communications from both companies to workers that are consistent with proper protocol • Early investigation and resolution of employee issues • Training and reminders for both companies and workers on procedures for resolving problems • Periodic review of policies and procedures relating to employee issues • Evaluating the use of 1099/W-2 versus contracted employees • Establishing clear roles and responsibilities of the services company and the client • Using a strategic resource group approach in which the services provider manages all aspects of the supportive infrastructure Conclusion Regardless of the need, implementing the right set of processes and procedures that maximize compliance with employment laws and regulations and provide for a dynamic and exciting work environment will avoid unnecessary complications in clinical development. Using outsourcing companies can minimize co-employment risk while providing a highly effective and flexible solution to meet your clinical development needs. While avoiding co-employment legal liability is not completely possible, the value of outsourcing far exceeds the risk if the parties understand the potential problems and agree at the outset how risks will be addressed. Michael L. Hlinak President and CEO, inVentiv Clinical Solutions Bonnie Knowles Managing Director, Smith Hanley Consulting Nick Demling Managing Director, MedFocus Staffing

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