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Owners and managers of small businesses frequently fail to adequately address legal issues. This failure may stem from being busy with other matters, unaware of or insensitive to legal c

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

oncerns, or reluctant to spend the money to hire an attorney. Unfortunately, such businesses may end up incurring substantial expenses or liabilities that could have been avoided with go

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

d legal planning.

Following are ten key legal mistakes frequently made by small businesses:

1. Failure to Prepare Corporate Minutes.
To preserve the shield protecting shareh

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

olders from personal liability for corporate debts, a corporation must observe formalities such as preparing regular minutes of the Board of Directors and the shareholders. The lack of m

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

nutes also can jeopardize the validity of various corporate tax deductions, particularly in the areas of officer compensation and benefits.

2. Failure to Update Purchase Order and Inv

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ice Forms.
The lack of proper legal provisions in these forms could place the company in a weak legal position in the event of a payment or other dispute with a customer.

3.

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

Lack of Nondisclosure Agreements with Employees and Contractors.
Much of the value of many start-ups resides in their intellectual property. Solid nondisclosure agreements are e

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

sential to protect that property.

4. Lack of Current Buy-Sell Agreement.
Almost any business with more than one owner should have a buy-sell agreement. A buy-sell agreement

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

efines what happens upon the death, retirement, or termination of employment of one of the owners, or when an owner desires to sell his or her interest in the business. The absence of a

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

buy-sell agreement can result in unintended consequences or a legal quagmire in such circumstances.

5. Lack of Up-to Date Employee Manual.
An employee manual sets forth workp

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ace rules and policies and procedures relating to the employment relationship. The lack of a satisfactory manual increases the risk of misunderstandings or legal violations, which can re

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ult in expensive employee disputes, lawsuits, and governmental penalties. In addition, a manual needs to be updated frequently to deal with changes in the law.

6. Failure to Document

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

Transactions Between Corporation and Owners.
Shareholders often enter into transactions with their corporations, such as leases of real or personal property or loans to or from

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

he corporation. The failure to satisfactorily document these transactions (as with the neglect to prepare regular minutes) can weaken the corporate liability shield or lead to adverse ta

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

consequences.

7. Failure to Update Corporate Articles and Bylaws.
Articles and bylaws need to be reviewed and modified from time to time to take account of legal changes. O

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

therwise, the corporation could find itself in violation of corporate laws or subject to cumbersome and outmoded corporate procedures.

8. Lack of Stock Option or Other Equity Plans
ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust
.
The absence of well-designed equity incentive plans can make it harder for a business to attract, motivate, and retain employees. A poorly drafted plan also could result in unexpe
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
ted liability or expense for the corporation.

9. Inadequate Estate Planning.
With a closely held business, estate planning by the owners must be done in conjunction with over
.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
all business planning. The lack of suitable estate planning documents can result in costly probate proceedings or unnecessary estate taxes.

10. Failure to Conduct Legal Review of Web
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip
ite.
Depending on the nature of its business, a company should include appropriate terms and conditions, copyright notices, legal disclaimers, and a privacy policy in its website

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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E-Folder - Legal Planning for Small Businesses: Ten Biggest Mistakes

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