3 steps to prepare for contract negotiations

Know your own costs is key goal

Clinical trial sites often are concerned about their ability to negotiate meaningfully with large companies, an expert says.

When negotiations are with small and new sponsors, sites also worry about what would happen in the event of a major lawsuit if the drug or device hurts a participant, says J. Mark Waxman, JD, a partner with Foley & Lardner in Boston. Waxman spoke about clinical trial agreements at the 2005 Annual HRPP Conference, held by the Public Responsibility in Medicine & Research (PRIM&R) and the Applied Research Ethics National Association (ARENA).

"Sites should logically discuss with their negotiation partner the value they bring to the task," Waxman says. "And with smaller sponsors they should decide how much business risk they’re willing to take."

Waxman suggests clinical trial sites improve their budget and contract negotiations with sponsors by following these three key steps:

1. Put the right team in place.

"First of all, you have to make sure you have the team in place to do the trial," Waxman says. "That seems obvious, and that means they’re trained and have competence and the ability to perform, including the ability to enroll the necessary population."

2. Know the budget in advance.

"One of the things that sites often don’t do before they get started is to really make sure there’s a budget, a method of keeping track of all the costs before they begin," Waxman says.

Determining costs is very important because there often are different payers involved, Waxman says. For example, the Medicare rules about what can be charged to Medicare are complicated, he says.

"The same thing is true with managed care contracts," Waxman says. "Carefully read to see what can be charged and what can’t be charged."

Sites should check contracts to determine which charges would be reimbursed by third-party payers, he notes.

"You really have to look at these things before you start the trial to understand which box to check, which charges go where," Waxman says. "This also will help you determine whether this will be a trial where you lose money or make money."

3. Require payment as costs are incurred.

"In the best of circumstances, sites ought to be paid at the time the costs are incurred or shortly thereafter," Waxman says.

For example, a site would want a start-up fee to cover the initial costs, and then it would want periodic payments as trial costs are incurred, Waxman says.

If a site has difficulty enrolling an adequate number of participants and the trial must be dropped, then there should be something in the agreement that spells out what would happen in this event, Waxman says. Sites need to think about this possibility because sponsors are thinking about it, Waxman adds.

"This would be a matter of negotiation, and it goes back to the original comment I made which is that you have to be pretty clear you can get this done," Waxman says.