Sites, sponsors need to reduce time spent on clinical trial agreements

Contract and budget negotiations were biggest cause of trial delay

Clinical trial contract and budget negotiations were cited most often in 2005 as the reason trials were delayed, and this was a change from 2003, according to Thomson CenterWatch in Boston.

"According to CenterWatch’s survey, in 2003 the most often cited cause of delay was patient recruitment and enrollment," says Norman M. Goldfarb, managing partner of First Clinical Research in Palo Alto, CA. Goldfarb 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), Dec. 3-6 in Boston.

"The bottom line is it takes an academic site over three months, on average, to sign a clinical trial agreement," Goldfarb says. Community-based and free-standing investigative sites take about 35 days, on average, to negotiate these agreements, he adds. This bogs down the whole clinical trial process, Goldfarb notes.

Sponsors are becoming more concerned about the delays caused by the budget and contract process, says J. Mark Waxman, JD, a partner with Foley & Lardner in Boston. Waxman also spoke about clinical trial agreements at the PRIM&R conference.

"There are a lot of trials out there and to find the right patients and to go through the informed consent process for all of those trials is a significant undertaking," Waxman says.

From a clinical trial site’s perspective, there are three key issues to keep in mind, Waxman says. These involve having the right team, doing budget homework, and arranging a fair payment schedule, Waxman says.

Sites that sign agreements drafted by sponsors without negotiating often do not have experience recruiting research participants, further costing sponsors’ time and money, Goldfarb says.

"There is about a 35% research site turnover every year," Goldfarb says. "These sites are not experts at good clinical practice, and they often are not good at enrolling subjects. In the average study, 30% of research sites enroll zero subjects."

Sites that enroll zero participants still cost sponsors an average of $15,000 to $20,000 each, he says. This makes the process inefficient, since that same money could have been spent on the successful sites, Goldfarb says.

"You could pay the good sites higher fees, which would motivate them to enroll more subjects and allow them to put more resources into the study," Goldfarb explains. "You would get more and better data as a result."

A slow contract negotiation process is costly and inefficient for clinical trial sites and sponsors, so it’s in everyone’s interest to shorten the time spent on clinical trial agreements, Goldfarb says. "Both sides need the appropriate expertise for negotiation, and both sides need to delegate authority and escalate negotiations appropriately," he says. "The sponsor should start with as realistic a contract template as it can stomach. The sites need to decide what the critical issues are and focus their negotiating time on those issues."

Goldfarb offers these suggestions for how the contract negotiation process could be shortened:

Manage the process solutions. Each sponsor has its own clinical trial template, and they leave it to sites to find the missing information and draw attention to the wording they find objectionable, Goldfarb says.

Since many sites cannot afford to hire lawyers to comb through these documents, they may end up signing the agreement without fully understanding the financial implications. As a result, the site might become unhappy with the sponsor by the trial’s end, and trust between the site and sponsor is jeopardized.

A potential solution is for sponsors and sites to work with a model clinical trial agreement, Goldfarb suggests.

Goldfarb has created the Model Agreement Group Initiative (MAGI) for that purpose. MAGI has members from over 500 organizations in the clinical research industry. Information about MAGI is at the First Clinical Research Web site at www.firstclinical.com. "MAGI’s model agreement has multiple choices," Goldfarb says. "Some choices are sponsor-friendly, some are site-friendly, some are neutral, and some are just different approaches to the problem," Goldfarb says.

The model clinical trial agreement includes commentary that explains the differences. For example, a comment in the indemnification section suggests that sites could indemnify sponsors to the limit of their insurance coverage."

Sponsors can adapt MAGI language to meet their own objectives, and sites will have a better idea of what the contract means because it’s written in clear and familiar language, Goldfarb says.

A site manager might say of a contract that uses MAGI language, "I’ve seen this clause, and it’s acceptable," or "I’ve seen this clause, and I’m not happy about it, so I will propose an alternative from the MAGI and see if the sponsor accepts that," Goldfarb says. This streamlines the process and provides clearly stated alternatives to the ambiguous language that often is found in clinical trial contracts.

Set expectations and schedules. The negotiation process should be managed with objectives, schedules, and setting expectations, he says.

For example, a sponsor could tell a clinical trial site that they have three weeks in which to reach an agreement, and if no agreement is made within that time period then all negotiation is over, Goldfarb suggests.

This will require the sponsor and site to work as a team during the negotiation process, he adds. If the site is too busy with other studies to take the time necessary during contract discussions, then it should pass on the study and not even begin the negotiation process, Goldfarb says.

Within the three-week deadline, the first milestone could be to have the site review the sponsor’s contract draft and respond with issues and proposed language within seven days. Then the sponsor would have one week to respond. The last week can be spent resolving any remaining issues, Goldfarb explains. "I don’t know why they don’t take this approach," he says. "Perhaps they don’t want to take a chance on losing an investigator they want, but the cost they pay is a big delay in the trial."

Understand payment triggers. Clinical trial agreements are complex, and the area that pertains to payment triggers illustrates this point.

Clinical trial payments by sponsors are triggered at different points. There often is a start-up fee as a nonrefundable partial reimbursement for the cost of getting a clinical trial started, Goldfarb says.

"Often, there are also advances," he says. Sponsors might advance a site the entire fee for one subject and deduct that portion from future payments, Goldfarb says. "The bulk of payments are activity-based, so when a subject comes for a visit, the site earns some set amount," Goldfarb says. "The fourth category includes miscellaneous fees, such as reimbursement for advertising, IRB fees, and payment for unusual incidents."

Activity-based fees can be problematic if they are timed according to the site monitor’s inspection of case report forms, Goldfarb says. If the monitor visits once every eight weeks, and payment is quarterly, visits may not be paid for six months, he notes.

"Another issue is the hold-back by sponsors of 10% or more of fees until all data queries are resolved," Goldfarb says.

"Hold-backs are a reasonable strategy to ensure cooperation by sites, but not when the hold-back is 27% and the payment date is left open-ended," Goldfarb says.

For-profit sites often operate on profit margins as low as 5% to 10%, and academic sites often target a break-even balance sheet, he says.

"So it’s possible on a cash basis that the study is cash flow negative until the hold-back percent is collected, and that might take another six months," Goldfarb says.

• Build trust in sponsor-site relationship: Problems occur in the negotiation of payment schedules because sponsors know that about a 30% of sites will never enroll any subjects, and many more miss their enrollment commitment, Goldfarb says. Since they anticipate that inefficiency, they are reluctant to write big checks at the start of a trial, he notes.

Likewise, sites are reluctant to invest in internal quality control when it doesn’t increase the fees they can charge.

"The solution is to create long-term relationships between sponsors and sites so both parties can trust each other," Goldfarb says. "These are often called preferred provider relationships."

"If a sponsor has a site that always delivers the goods, it will feel more comfortable with larger start-up fees and smaller hold-backs," he says. "So you need to focus on building that relationship with them."

This sort of trust could lead to sites receiving partial payment before the monitor has checked all of the data.

While that might seem like a remote possibility, such trust already has been demonstrated in other industries. For example, there is an auto manufacturing plant that pays its suppliers as soon as they provide electronic notification that they’ve shipped the product to the plant, Goldfarb says.

"They wire the funds to the supplier without inspecting or even counting what is delivered because they have complete trust," Goldfarb says. "Sometimes there’s a bad part or a miscount, but the cost that is avoided with this approach more than pays for those smaller problems."