Budgeting For Clinical Trial 17july05

Budgeting for clinical Trial
Dr Deven Parmar MD
“NUMEROUS “DOOM AND gloom” stories in the trade
press recite the litany of problems facing the research
industry: shrinking pharmaceutical company research
budgets, more competition among investigators and
CROs over available clinical studies, and the threat of
governmental intervention.”
-Drug Information Journal 1996
Historical Background
 clinical research was primarily the
province of medical school departments
and of physicians who conducted
studies in addition to operating a full
clinical practice.
 Clinical trials were not the primary
focus of either of these groups but were
an ancillary operation or a sideline, and
the revenues from these clinical trials
were not relied upon to meet the basic
expenses of the medical school or
physician’s office.
 No financial pressure.
Now…
 On the major stock exchanges one can now invest in
companies which are in the business of conducting
clinical trials.
 In addition, a myriad of CRO now do business in the
United States and Europe;
 professional investigators (MDs, PhDs, PharmDs, and
others) operate single or multisite centers;
 professional institutional review boards advertise their
timeliness and speed in the review of clinical protocols;
 investigators join together and form affiliations for the
conduct payment of certain types of clinical trials; and
 medical schools and medical centers establish the
equivalent of corporate offices devoted to the
promotion of clinical trials as a means to generate funds
for the university or medical center as a whole.
Preparing the Budget:
Defining “Real” Costs
 Common fixed costs: laboratory, x-ray, EKG,

etc.
 Related costs: phlebotomy fees, supplies,
specimen processing fees
 Drug costs: investigational drug
management/dispensing, alternative or
adjunct drugs
 Subject costs: travel, parking, time
compensation
 Ancillary costs: travel, pager/phone,
administrative (copying, long distance phone)
Cont’d…
 Marketing costs: radio, newspaper ads, etc.
 Study Personnel: research

nurse/coordinator, investigator
 budget by time estimate or milestone (per
visit,etc)
 use actual salary values
 Institutional Fees:
 IRB
 Contracting
 Overhead or indirect costs
 Record Retention Fees
Cont’d…
 “Hidden” costs:
 Time/cost to obtain special reports
 Copy cost for X-rays, MRIs etc.
 Cost increases for studies that go on later
than one year
- inflation, health system price increases,
etc.
 Personnel costs

screening, training of staff, failed enrollment, etc
 Cost of starting enrollment late Cont’d…
 “Hidden” costs:
 Sponsor imposed costs -
 monitoring visits
 – poorly trained monitors
 – monitor turn-over during course of study
 inefficient handling of study queries and
data corrections
 processing amendments
Cont’d…
Evaluating the Trial Opportunity
 Business Analysis:
 Financially sound study?
 Cost of doing trial < Budget payments
 Academic Analysis:
 Quality of the Science?

Phase I, II > Phase III, IV
 Right Answer: balance between
the two
Cont’d…
Evaluating the Trial Opportunity
 Evaluate long term financial risk of the

study
 financially “positive” at first, financially
“risky” later
 Participate in financially “risky” trial?
 Interest in disease state or investigational
agent

Investigator/Department decision
 Novel therapeutic intervention

only accessible in clinical trial Cont’d…
 Differentiate AMC within the community
Clinical Trial Budgeting Issues
 Define study costs vs. standard of

care
 a priori determination works best
 who does this?
 Investigator, IRB, other committee?
 specify major study costs in consent
form
 if grant will not support, notify subject
they are responsible
 billing process - document study
payments Cont’d…
 Clinical trial budgets are usually fixed

 usually broken into “per subject” payments

payments prorated based on subject completion
 must “back into” sponsors bottom line
 overhead/indirect costs may be included in
fixed budget
 Study costs increase over the time the
study is underway
 study could become financially “risky”
Cont’d…
: Challenges
 Accounting for subject screening

costs
 May be unpredictable
 many times not listed in budget
 Screening failures
 reimburse as a ratio of enrolled subjects
 reimburse only a fixed number
 usually reimbursed at end of trial
 Understand payments for “partial”
or “nonevaluable” subjects
Cont’d…
: Challenges
 Recovering cost for sponsor decisions

 placing studies “on-hold”
 closing studies early
 Payment milestones based on monitor
visits
 dependent on monitor’s schedule and
efficiency
 Differentiate study payments vs. normal
charge/payments in billing system
 list research as another “payor”
Cont’d…
: Challenges
 Incentive payments
 many times not included in study
contract
 how to handle appropriately?
 Include in study contract
 Conflict of interest issues
 IRB concerns
 Go directly to investigator?

Place in educational fund?

Institutional policy
Cont’d…
: Challenges
 Study account residual money

 Who controls disposition of left over
Rs?
 May be motivation for investigator to
participate in trial
 Incentive for investigator not to “cost
account” study?
 Tax consequences for non-profit MCs?
Cont’d…
:Strategies
 Budget development process

 Negotiating the budget
 During the course of conducting
the study
Cont’d…
:Strategies
 Budget Development Process

 Understand costs at your site
 Use standardized cost templates
 Define “research costs” for procedures,
etc.
 Choose “good” studies

Financial outcome based on objective
assessment
Cont’d…
:Strategies
 Budget Development Process

 Know your “break even” point
 How long can you go without enrolling
your 1st subject?
 Plan to make periodic financial
evaluations
 – Get insight from experienced
clinical research staff

Expertise of the person creating the
budget
 need clinical and financial perspective
Cont’d…
:Strategies
 Negotiating the Budget

 Fixed per subject payment?
 May still be negotiable
 Overhead or indirect cost included?
 Understand “one-time” costs
 IRB fee, etc
 Establish flexibility to cover “pass
through” costs
 procedures (f/u CT scans, MRI, etc)
Cont’d…
:Strategies
 Negotiating the Budget
 Negotiation tools:
 Past performance by investigator or site
 Data base of potential subjects
Cont’d…
:Strategies
 Negotiating the Contract

 Initiation or start-up payment
 Negotiate as “non-refundable” to cover
screening/enrollment costs
 Evaluate payment
schedule/milestones based on your
cost
Cont’d…
:Strategies
 During the Conduct of the Study

 Know where your costs are
 Keep track of screening/enrollment costs
 Use research “CPT codes” for study
procedures
 Evaluate “break even” point
 Define criteria to end study at your
site
 Make a business decision
Cont’d…
Summary
 Identify all study-related costs a priori

 Address the issues specific to your
site
 Experienced CT budgeting staff may
be best strategy
 however, maintain a relationship with
investigator
 Continue to assess CT finances during
the conduct of study

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Budgeting for clinical Trial

 Common fixed costs: laboratory, x-ray, EKG,

 Study Personnel: research

 Evaluate long term financial risk of the

 Define study costs vs. standard of

 Clinical trial budgets are usually fixed

 Accounting for subject screening

 Recovering cost for sponsor decisions

 Study account residual money

 Budget development process

 Budget Development Process

 Budget Development Process

 Negotiating the Budget

 Negotiating the Budget

 Negotiating the Contract

 During the Conduct of the Study

 Identify all study-related costs a priori

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