Put forward best foot in clinical trial negotiations

Know budget details in advance

The reality is that it’s increasingly difficult to make money on clinical trial research, so it’s more important than ever that clinical trial sites develop the skills necessary to negotiate a fair and practical contract with sponsors, a clinical trial expert advises.

"Times have changed," says Linda Strause, PhD, strategic research management consultant and chair of the San Diego Hospice & Palliative Care IRB. Strause also is an adjunct professor at the University of California, San Diego.

"People are not making a lot of money on clinical trials anymore, like some physicians did in the early 1990s," Strause says. "During those times, independent clinical trial centers were making enough money that physicians gave up their medical practices to go into clinical research full time."

The concept of a site management organization came into practice during the early 1990’s, Strause says.

"Clearly, today, in major hospitals and institutions you have to maintain fiscally solvent sites," Strause says. "You don’t want them to lose money, and you don’t want money to become a coercive or compromising issue either—it has become a fine balance."

The key is for a clinical trial site to know its expenses in detail and to use this information when negotiating a contract.

"I think sites are learning, but some need a lot of work to understand the cost of doing clinical trials," Strause says. "It’s not just the procedures they do, it’s the adverse event reporting, responding to data queries, etc., and they very often underestimate the time, staff, and energy it takes to run a clinical trial, so ultimately they will come back and request more money."

The more savvy sites know their own budgets and adjust these according to changes in the clinical trial environment.

"They learned from their mistakes," Strause says. "Someone sits down with the task of saying, Where did I lose money?’ and the next time you adjust appropriately."

The key is to have the confidence to negotiate a budget that might be higher than what the sponsor is hearing from competing sites, but what is necessary for your own site to do this study well, Strause says.

Sponsors may be a little behind on the true cost of a particular clinical trail, but it’s necessary for sites to admit that it just will cost more than the sponsor has suggested, she adds.

"It comes back to communication and conveying honestly what the issues are, including financial and legal issues," Strause says. "Negotiation is more of an art than a science: they know the sponsor is coming in with his or her lowest proposal, and the sponsor knows that some sites are coming in with their highest."

Strause offers these tips on improving the clinical trial negotiation process:

• Learn to work with sponsor’s contract template.

Most of the time, sponsors will send a template to the research institution, Strause says. One disadvantage of using a template that can be changed is the risk of a security breach, Strause notes. "Yet, the advantage is it makes it much easier to change formatting so that an agreement can meet the needs of either party."

"Explore the opportunity to use technology to track changes as a means to facilitate communication."

The electronic template works better than having people write on hard copies, Strause adds." Try to adapt or revise the template to reflect the specific needs of your institution."

Sponsors should try to do that up front by putting in specific requirements to reflect each particular site as much as possible, Strause says.

"As sponsors, we work with a given institution or research site over and over again," Strause explains. "We know some of their requirements, and it shows good faith in negotiation to include the specific language requirements upfront; it says to the site, I respect your needs and understand what you require.’"

For example, state laws vary, so each site’s template should include language pertaining to its state regulations, she notes.

• Work with a master service agreement when feasible.

"Master service agreements are clearly a trend," Strause says. "It’s worth sitting down at the table and hashing out all legal language and making a master, so all you have to do is attach a work order to the master agreement, and that work order talks about the protocol and budget, and that’s what is sent to the sites."

Budgets are attached as an integral part of the master service agreement. "From a site’s perspective, the budget is usually a team project with the study coordinator, principal investigator, and also a finance group," Strause says.

• Put together a thorough budget.

Sponsors develop budgets primarily based on the study procedure calendar, Strause says. They look at what’s going to be done on every visit the patient makes and prepare a visit-by-visit cost, she explains. "Then sponsors put together a whole budget based on a month or 12 months or whatever time frame the protocol dictates. Sites look more at the people and time," she notes. "They want to know how much time will my nurse have to be with this patient and how much time will the doctor have to be with this patient."

Then sites add in the hard numbers, including costs for procedures, and the overhead expenses.

"So we have to come together and reconcile these two pathways," Strause says. "And it’s not always easy because the sponsor cares about how much it will cost every time the patient comes into the study, and the institution wants to know, Do we have our overhead in there?’"

For instance, suppose a sponsor agrees to pay a site $10,000 for each patient who goes through the study, Strause says.

"Representing a sponsor company, I will sit at my desk and wonder how that breaks out on a visit-by-visit basis for every patient who is in the study," she explains. "The institution will say, How does that work out on staffing time/overhead?’"

"When it comes to budgets and details in the contract, the sponsor is focused on the enrollment of an eligible patient, that all the procedures required by the protocol are done, and that quality data are received," Strause says.

On the other hand, sites need to know their own budget details so they can make certain they are negotiating for a contract that will adequately cover their costs, Strause says.

"It’s pretty simple," she says. "If I’m a site, I care about those things as well because that’s my commitment to doing good clinical practice and quality research."

So while sites are focused on the costs pertaining to physician’s and staff’s time, they need to work with the sponsor to ensure that the visit-by-visit budget covers their personnel time and overhead, Strause says.

"The sponsor may not need to know the specific details reflecting a sites cost," she says.

Strong communication is necessary to ensure that a solid and fair budget is reached, Strause adds.

"I worry that sites are paid too little," Strause says.

When Strause negotiates on behalf of sponsors she will send out a minimum budget price as a negotiation starting point, and she is skeptical of sites that sign that immediately.

"If they sign off on it, I’m worried they’ll come back to me later and say, My costs aren’t covered,’ and then we have to amend the contract and negotiate again," Strause says.

"When sites come back to renegotiate their budget and they have patients already enrolled in a study, it’s very challenging for a sponsor," Strause says. "Now the sponsor has ethical issues because many patients on the study have consented for their own altruistic reasons; they have given us this gift of participation, and now the sponsor has to reach an agreement or the sponsor is faced with transferring patients and closing down the site."