A sponsor's perspective in negotiating fair terms
A sponsor's perspective in negotiating fair terms
Sponsor asks for itemized list of costs
Sponsors and clinical trial sites often disagree on what type of contract payment terms are fair and reasonable.
Part of this disagreement is due to the nature of the industry and its poor success statistics. But part of it also is due to the lack of clear communication about expectations, needs, and goals.
"If both sites and sponsors can recognize each other's non-financial goals then that can help a lot in terms of insuring a more smooth study," says Shawn Gibbs, JD, contract manager with C. R. Bard Inc., a device company based in Murray Hill, NJ. Gibbs was a scheduled speaker about the sponsor's perspective in contract negotiations at the MAGI 2009 Clinical Research Conference West, held Oct. 4-7, 2009, in San Diego, CA.
Gibbs describes some of the major negotiating sticking points between sponsors and sites:
• Initial payments: "From the sponsor's perspective, I look at it as the clock starts once a decision is reached by the site that they'll participate in the study," Gibbs says. "We recognize the amount of work and preparation that sites put in up front."
When sites begin adding in ancillary costs, the issue gets hazy, he notes.
"Very often, if a site requires what I consider a large start-up payment, I ask them to break it down," Gibbs says. "From a compliance perspective, we need to know it will go toward [actual] work."
For instance, a sponsor might not feel obliged to pay for contract review and budget review time on the site's itemized list.
"I see it as each site is evaluating whether to enter into this agreement or whether they want to work with the sponsor, so for the sponsor to pay for someone at the site to review the agreement or budget seems a bit skewed," Gibbs says.
IRB work, pharmacy fees, and regulatory preparation are legitimate start-up costs, and sponsors recognize these, he adds.
"We view IRB fees as pass-through fees," Gibbs says.
The sponsor asks that IRB fees be invoiced and will pay the IRB directly, he adds.
"But it's a good idea to stay away from those things that incur costs on both sides," Gibbs says. "If you put an offer on a house, you don't pay the other side to review your offer; these are preparatory business concerns."
• Marketing, recruiting, advertising fees: "Advertising is more prevalent in drug trials than in device trials," Gibbs says.
"Device trials are done more in hospitals with patients who are receiving investigatory devices as part of their standard care," he says. "For drug trial advertising, my experience is that sites would use up their budget very quickly and then try to get more money out of you."
Clinical trial sites should use their advertising budgets more wisely, Gibbs suggests.
"They should put on their public relations hat and say, 'Where are these ad dollars going to be most effective? Is it in the newspaper ad or online advertisement or radio or TV spot?" he says. "It involves determining what is the best medium for reaching your target population."
• Milestone payments: "Whenever possible, sites should use electronic data capture which would help in speeding up milestone payments," Gibbs says.
"The sponsor wants clean data, so if it requires the monitor to go out and do 100 percent source documentation and to collect the case report form (CRF) on paper, then it's a time-consuming process," he explains. "If you build in electronic data capture, the query rate should be lower, and you should be able to ensure sites have met their visits or enrollment."
One point of negotiation should be how fast a site is paid, whether it's each quarter or each month, Gibbs says.
"Sites would like monthly payments," he adds.
• Screen failures: "At the beginning of a trial, I think the sponsor owes sites an obligation to make an honest appraisal of what they expect screen failure rates to be and how much work is going to be built into screening activities before subjects essentially are consented and enrolled," Gibbs says.
Occasionally, an investigator will have screened a patient, given the person informed consent, and then are about to enroll the patient when a problem is discovered, and the patient has to be excluded from the study.
"This is a case that is out of the site's hands and the sponsor's hands, and the site should be rewarded for the work the site put into handling that patient," Gibbs says.
"We like to pay a flat rate per screen failure, and we take the total enrollment and divide it by the number of sites," Gibbs says. "Each site is capped in the number of screen failures."
The cap is necessary because it encourages sites to do diligent pre-screening prior to enrollment, he adds.
• Hold-back payments: Sponsors shouldn't hold-back payments until all sites are enrolled, Gibbs says.
"I'd take the hold-back payments on a site-by-site basis," he says. "If you've locked all queries out of one site then I would think you'd move forward and make that final payment."
The sponsor's driving goal is to obtain clean data. The final payment's purpose is to encourage sites to cooperate as they're wrapping up the database, Gibbs explains.
"From the sponsor's perspective, there may be times when they made the final payment and then had to go back in and make another query," he says. "And sometimes they found sites have moved on and might not realize the sense of urgency the sponsor has in getting the database locked."
But sponsors also should not penalize efficient and successful sites for other sites' lack of management, so the hold-backs should be made according to how each site has performed and not on a group performance basis, Gibbs says.
• Unanticipated costs: These types of costs could include frequent protocol amendments, which require extra work, or higher than anticipated screen failures.
A site might need ancillary equipment to run the study, such as a refrigerator for a drug study, Gibbs says.
"These are the kinds of things we would work with sites to make sure they have what they need," he says. "Maybe we'd lease you a refrigerator for the duration of the study."
Or if the screen failure rate is 15%-20% higher than anticipated, then the sponsor might have to adjust for that, Gibbs says.
"Some sites like to put in clauses for inflation, and I think that's difficult and very complicated to manage," he notes. "If it's a long study, maybe eight to 10 years, then I can understand it more, but from an accounting perspective, it would be very difficult to keep up with the inflation rate."
When sponsors are funding trial sites overseas, there might be unanticipated costs related to currency fluctuation, Gibbs says.
"It can have an impact on trial costs, and sponsors generally are amenable to paying for non-cancelable expenses," he says. "We'll reimburse you for those costs; those are fair things."
Sponsors and clinical trial sites often disagree on what type of contract payment terms are fair and reasonable.Subscribe Now for Access
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