Market Insight - How to manage clinical grant costs
This article was originally published in Scrip
Clinical trial sponsors understand the strategic importance of containing costs. But are they paying enough attention to the clinical grant management function? Dr Harold E Glass and Karen Hollander discuss.
Soaring R&D costs present a major challenge for the pharmaceutical industry. Site selection in a large Phase III study is guided by a set of geographic, cost, medical and marketing considerations. In addition, clinical investigators are often instrumental in the adoption of new drugs by other physicians. Many physicians consider financial compensation to be a very important reason for deciding to take part in a specific clinical trial. Yet no data suggest that higher grant payments to sites shorten the time needed to complete a study. Nor do they improve trial quality. Instead of looking to use increased payments as a short-cut to improving clinical trial performance, companies must focus on managing costs effectively.
grant levels
The authors' research points to workload as a key determinant in how much a clinical grant site gets paid for its work. Simply put, more complex studies require more site time and resources. Yet, there may often be major differences in the relative amounts paid to clinical investigators for similar trials.
Why the difference? Some countries and regions are more expensive places to live and to treat patients. Some sites have different overhead and cost structures. For example, office-based physicians often charge less than academic medical centres. The novelty of the study compound can also affect costs: many investigators will accept lower grant levels if they have the opportunity to work on innovative new compounds. The prevailing marketplace also contributes to how much companies pay for clinical trials. When many studies compete for a fixed number of investigators, grant levels rise. Also, some sites with expertise, reputation and negotiating skills will demand premium prices in the investigator marketplace. And, not to be overlooked, some sites are simply better at negotiating than others.
a closer look
The authors asked 1,005 US investigators to rate 12 potential reasons that might drive their decision to participate in a Phase III clinical trial of a new compound. An analysis showed that the responses to the 12 items could be grouped around three common underlying dimensions: medical innovation, financial considerations and the nature of the organisation running the study. While the desire to participate in medical innovation was the major reason for taking part in clinical trials, payment was also rated as very important, or important, to a large number of the investigators.
Reason for investigator participation in clinical trials | Very important (% respondents) | Important (% respondents) |
to supplement the revenues/income of my practice/institution/department | 43 | 30 |
the timeliness with which the organisation running the study makes payments | 40 | 26 |
the amount of money required by my site to start the study until we receive payment from the organisation running the study | 30 | 24 |
more for your money
Recognising that financial compensation plays an important role for many clinical trial physicians, and knowing that paying higher rates will not ensure faster trials or better data, companies must improve the ways they manage their payments to clinical investigators. The following outlines some steps that companies can take.
A dedicated central grant management function
Because clinical trial agreements are expensive, pharmaceutical R&D organisations want to get the most value for their clinical grant spending. For this reason, senior drug development management is moving toward some form of a distinct, fully staffed and centralised grant management function, often as part of a central clinical outsourcing unit. Working with the project teams and field clinical operations units, the centralised grant management function assembles the grant budget for the individual projects and tracks performance against overall and project budgets.
Grant management skills and knowledge
Successfully planning, budgeting and negotiating clinical grants requires experienced staff with a variety of skills and knowledge. For example, grant managers must combine good communications skills (for both internal and external relations), with exceptional financial acumen. They must know how drugs are developed, and fully understand the structure and processes involved in the design and implementation of a clinical trial. Effective grant spending also requires grant managers to know the market rates for clinical grants. To avoid any perception of a conflict of interest, grant managers from the sponsor company should have access to fair market rates for clinical research, and appreciate how important it is to pay those rates to physicians conducting such work.
effective budgeting
Companies can avoid some common mistakes that may lead to over-budgeted clinical studies. For instance, it is essential that grant managers know the actual market rates for all the countries involved in a study and avoid the mistaken notion that they must pay all sites the same rate. What a company pays the most expensive country in a multinational study is not the rate for each country participating in the study. Knowing market rates and discussing them with a country's clinical operations personnel and informed professionals results in a better budget.
Another common mistake arises when a company thinks only in terms of total cost-per-patient. In effectively managing a clinical grant budget, a company should not base payments on every patient receiving the full array of study services. Companies need to focus on better initial planning and on regular budget updates that provide up-to-date information on actual drop-out rates. Inaccurate screening and poor assumptions about drop-out rates can dramatically affect budgeting assumptions and the actual cost-per-patient paid to investigators. If necessary, companies need to challenge the clinical team's assumptions about screening failure and drop-outs.
Using cost-per-visit financial agreements gives the sponsor pharmaceutical company greater financial flexibility. Such agreements factor in reduced payments for patients who drop out of the study, thus obviating the need to negotiate drop-out rates after the fact.
Just as problematic are over- and under-funding. Clinical studies may run behind their originally budgeted and planned schedule, with actual payouts falling short of the clinical grant budget. Under-budgeted projects can force project teams to request additional funding.
Over-budgeted projects create problems because budgeted money is frequently spent money; over-budgeting a clinical grant can lead to wasteful spending. For instance, funds may be used inefficiently or they may remain blocked for long periods, unable to be reallocated to other studies that could use the funds more effectively.
Conversely, when a study's costs grow too high, a company may need to revisit the protocol design. First, the grant management group must tell the study team and therapeutic areas how the design is affecting study costs, possibly prompting the study team to reconfigure the protocol consistent with the company's long-term medical and marketing needs.
Such a forthright discussion between company and clinical trial group can cut non-critical procedures/activities and reduce redundancy. Far from being a contentious exchange, this process should recognise that project costs can change over time. What seemed to be routine costs at the time the company constructed the budget may grow in scope when conducted multiple times with many patients. The financial impact may be far more substantial than the company anticipated in the study design phase. This is common for oncology studies where one must be clear to indicate when to perform a procedure rather than rely upon standard-of-care information when it becomes available.
Wherever possible, budgeters should incorporate standard-of-care assumptions into all budgets and site agreements. Why? Because the grant agreement does not need to cover costs related to standard-of-care. Other sources may reimburse the investigator those procedures.
Ultimately, companies must constantly have a clear sense of the cost components of a clinical budget, which include the flowsheet of medical procedures; the other direct, non-flow sheet, costs such as wages and salaries and pharmacy; and overhead, if relevant. In creating an effective study budget, companies need solid information for the flowsheet. Then they must know what makes up the other direct costs and overhead, add the appropriate funds for screening failures, and subtract the appropriate funds for drop-outs. In estimating site staff costs, for example, companies must know the time a staff member actually uses, and then merge that information with up-to-date salary information for all those involved in managing and conducting the study.
Throughout the budgeting process, effective grant managers will often work closely with the individual country operations involved in a clinical trial. Grant managers should be ready to explain to the countries, and to the investigators, how the company has constructed the grant budget. Sharing the rationale behind the financial levels in the cost-per-patient and per-visit figures, and the individual components of the figures can go a long way toward facilitating site agreements. As one experienced grant manager puts it: "The project team and investigators may not always agree with you. But the chances improve a lot if they understand how you came up with the budget numbers that you did."
conclusion
Clearly, companies seeking to manage their study costs must look closely at their clinical grant costs and exercise sound financial oversight. Good financial management requires that clinical development professionals appreciate the complex relationship between the pharmaceutical companies and clinical investigators, including the need to pay at fair market rates. Moreover, there are a number of organisational and managerial processes that companies can undertake to improve the management of clinical grants. Ultimately, managing clinical grants well requires an attitude that combines good business sense with an understanding that pharmaceutical R&D strives to bring to market new drugs that can help patient populations around the world. Clinical trial investigators, engaged in vital research, play a major role in this process. Society, pharmaceutical companies, clinical investigators and patients will all reap the benefits of adequately budgeted, well-managed clinical grants.
Dr Harold E Glass is professor at USP and president of TTC. Karen Hollander is a clinical trial cost expert at Novartis Pharmaceuticals. Email: [email protected] and [email protected].