Budgets should reflect the study’s true cost
Compare detailed budget with sponsor’s offer
Each clinical trial site and research office struggles with constructing a budget that is realistic and comprehensive, but if this process is done correctly it can help with sponsor negotiations.
"It takes a whole team to put together a true cost budget," says Shirley M. Warren, BA, CCRC, clinical research administrator at the University of Kentucky Clinical Research Organization in Lexington. "At the University of Kentucky we work as a team with the grant manager, nurse coordinator, and budget negotiator working in tandem until the budget is negotiated," Warren says. "Then the negotiator steps out."
The key is for the budget to reflect the study’s true cost at the end, Warren notes. This is done through trial and error, plus hard work.
"As we get better at constructing budgets we look at the budgets and the time the study will take; and with each budget we try to get closer to real costs and real time," Warren says.
"You have to know realistically what it costs to do a study and what your institution allows for indirect costs," Warren says. "For instance, at the University of Kentucky the indirect costs are 26%, so that’s what we ask sponsors to pay," she says. "If a sponsor comes back and says that another institution has accepted this budget, then that may be true, but if one is aware of all the Medicare policies and knows what the institutional standard of care is and you have that documented, then you have an answer for the sponsor."
No one wants to risk doing anything that would be found as a problem in a federal audit, Warren says.
"Whomever I am negotiating with I want to do repeat business, and I want to do an honest job on my end," Warren says.
"If we go in and do faulty grants management and lose money then the data may suffer because you’re operating on a shoestring budget," Warren says. "So know your costs and justify those costs."
One area to note is labor, which is where sites often short-change themselves, she notes. "It takes a lot longer to conduct a study than everyone anticipates," Warren says.
For one, the initial budget should be reviewed by the study coordinator and grants manager, whose job is to confirm that those charges are directed in the right direction. Together, they look at the cost estimates and see how these are applied as the study is underway, Warren says.
If the sponsor’s protocol lists some items as standard of care, then these are separated in negotiations and on the budget flow sheet, Warren says.
For example, on an oncology study in which a patient already sees the physician for certain procedures and visits, those items are deemed standard of care, Warren says.
Clinical trial sites should not determine standard of care lightly, she says.
"A clinical research associate works up the detailed budget and takes it to the physician, who is the principal investigator, and together they determine what is standard of care in their clinic," Warren explains. "Then we use that document as our guide for the complete budget development."
An Excel spreadsheet works well for storing standard of care and other budget items, says.
"We have come up with a spreadsheet that has a majority of the tasks already there," Warren says. "All we do is type in the procedure codes, and it loads in what we need."
Another alternative is to use commercial fiscal management software programs, and the university is exploring that option, Warren adds.
It’s also important for the investigator’s entire team to know and agree on which procedures are grant-oriented and which are standard of care, Warren says.
"Once the budget is developed appropriately on the front end it’s much easier for the grants manager to look at the standard of care form and compare with which procedures the sponsor will be paying for," Warren says.
Another way to improve the budget process is to negotiate the best possible terms in the contract, she says.
"What one wants to do is make sure the cash flow part of the contract is such that you don’t get paid all at the end," Warren says. "Establish the cash flow so that a good amount of funds are coming in early on because the majority of the trial time is spent at the front end."
For instance, it’s not unusual for a site to spend $10,000 on the recruitment and IRB submission portion, Warren says.
"So make sure those contracts and milestones of payment are not cash-deprived while conducting the operation," she says.
Then when patients are enrolled in the trial and the bills are coming in, the grants manager’s responsibility is to make certain the hospital and other providers are paid, Warren says.
"Once that is done, there are milestones for each patient, and we proactively look at that and invoice the sponsor," Warren says.
If there’s a cost that’s not anticipated in the budget, then it’s time to talk with the sponsor about it, saying that there was a negotiation error and here’s the cost-sharing way of meeting that additional cost, Warren explains.
It helps to have written best practices and a matrix with timelines and benchmarking information, Warren says.
The matrix would note milestones and help a clinical trial site keep track of progress toward goals.
"Once a study reaches the final milestone, the study is closed out, and, generally, we like to get a small percentage, between 10 to 20 percent at the end," Warren says. "The 80 to 90 percent of the per patient study budget has been paid as patients are enrolled and tracked through the study procedures."
The final payment should be paid when the clinical trial site completes its work and not when all of the sites in a multi-site trial are finished, Warren notes.
"If you have to wait for all centers to have data in before you get final payment, that could take months," she says.
Each clinical trial site and research office struggles with constructing a budget that is realistic and comprehensive, but if this process is done correctly it can help with sponsor negotiations.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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