Budget pitfalls can lead to monetary shortfalls

Don’t underestimate trial’s true costs

Before any clinical trial gets under way, the principal investigator and study coordinator must prepare the trial budget, ensuring not only that the investigators and staff have spending guidelines, but also that the site can support the work the trial will require.

Too many times, say experts, sites sign a contract to conduct a trial for a rate far less than what the trial actually costs.

"Most people budget for the best-case scenario, when they should budget for the worst-case scenario," says Curtis Meinert, PhD, director of the Center for Clinical Trials at Johns Hopkins Bloomberg School of Public Health in Baltimore.

"People are afraid to budget for that because they’re afraid the sponsor will tell them to go fly a kite. They think, We’d better not ask for what we need; we’d better ask for what we can get.’ But I keep telling people, they might give it to you for what you’re asking for, and then you’ve got to do it. Ultimately, the world doesn’t care whether or not you had enough money, they care whether you did a decent job," he explains.

Underestimating the amount of clerical and administrative support a trial will require, and miscalculating the costs of research staff and follow-up are just some of the common mistakes researchers make when preparing a budget.

Examining the pitfalls

The key pitfalls in clinical trial budgeting are as follows:

• Performing a less-than-substantive review of the study protocol.

Sure, participating in a multicenter trial of a promising new drug may seem simple, but what does it really involve?

Study coordinators and the principal investigator (PI) must get together and read over the protocol thoroughly to determine exactly what the trial will entail.

Ask these questions:

— Will the study be short-term or long-term?

— Is there one application of treatment or several?

— What kind of follow-up will be required?

— What kinds of tests, procedures, and lab work will be required, and who will conduct the collection of samples and the clinical assessments?

— How much should each staff person be paid for the time spent on the trial?

— How much time will each assessment take?

— If it is a multicenter trial, how much of the data analyzing and processing will be done locally and how much at a central location?

— Will any lab tests be performed at a central lab, or is your facility responsible for them?

Budgeting is an art, not an exact science, Meinert points out. It’s important to get information and input from both the coordinator and investigators.

The study coordinator

Although the PI will be aware of the costs of the clinical aspects of the trial, it is the study coordinator who is responsible for the logistics, he notes.

After reviewing the protocol, the coordinator and/or study team needs to calculate the trial’s direct costs.

Those include: patient visits, procedures, and lab tests, transportation of specimens and reports to other locations, and the personnel compensation for researchers and other staff.

A comprehensive method for determining the cost of all services and procedures will help ensure nothing gets left out.

In developing the budget, the study team should make a list of all the procedures, assessments, and tests that will be needed for each subject. The coordinator can obtain a per-item cost for each service or procedure, then multiply by the expected number of times the test or service will be offered to each enrollee, and then by the number of enrollees.

Hospitals and other facilities usually have reference guides listing the itemized prices for each lab and patient care procedure.

Patient billing and laboratory management personnel are also sources of cost information. The totals for each procedure, test, and service should then be added up to determine a total.

Too much is as bad as too little

• Underestimating administrative costs.

If a PI primarily prepares the budget, he or she may underestimate the costs of providing the needed data processing and analysis, Meinert explains.

"Most people, when they think about budgeting, think about what they need in order to enroll a person, see a person, examine a person, collect data on a person, and get the lab tests done, and various other procedures," he says.

"But they often forget what else is needed to support a trial. A rule of thumb I use is that you have to think of 10%-20% of the overall budget will be related to aspects of processing: data processing, harvesting of data, assembling of data into databases for analysis, editing of data, and so on," Meinert continues.

The study coordinators should prepare a budget that includes compensation for the principal investigator and study coordinator at a minimum, and then a research assistant or data management support staff, if possible, he adds.

• Overestimating the number of subjects.

Meinert recommends always planning for a lower number of subjects than a site feels that it is likely to enroll, he adds.

"Sometimes, it seems that you start a trial and all the patients disappear," he says. "In the planning stages, you expect to find all kinds of people — you say, We see these cases all the time, of course we can enroll people.’ But you start the trial, and that number is a lot lower because of all the exclusion criteria."

If, as is often the case, the research contract calls for a per-subject payment rate, then low enrollment will obviously hurt the site’s ability to support the study.

• Underestimating the time it will take.

Obviously, the coordinator should consider the amount of time each clinical encounter with each subject will take and include the costs of the visits and the clinician’s time in the budget. But what if, as inevitably happens, the visits take longer than expected?

"If the PI gives an estimate of spending one hour with a patient, I go ahead and usually budget for 1½ hours to make some breathing room," says Ramesh Gunawardena, manager of clinical research operations at Beth Israel Deaconess Medical Center in Boston.

Depending on the type of trial, different subjects may require a different number of visits. A patient enrolled in an oncology trial will go through the cycles of receiving the study drug until his or her disease progresses past a certain point. Different subjects will require more or fewer treatment cycles to reach the same endpoint.

Aside from budgeting for the time the actual subject visits will take, coordinators also often forget to consider the amount of time it may take to provide all of the documentation needed.

For example, some studies have complicated patient encounter forms, or long forms for reporting adverse events. When the coordinator reviews the study protocol, he or she should pay attention to whether these forms are simple and easy to understand and fill out, or whether they look like they will consume a significant amount of time.

Study coordinators also often don’t budget enough time to follow the patients after treatments have ended, adds Meinert.

Is your personnel budget sufficient?

• Skimping on personnel.

Of course the biggest expense in any clinical trial will be the personnel — physicians, nurses, and technicians who see and manage the subjects, and the coordinators who manage the trial and data. If a trial gets into financial trouble, it will be this area that will be hit the hardest.

"Whenever there is a budget problem, it seems they always think they can balance the budget with the equivalent of reducing photocopying or not spending so much on postage," Meinert says.

"But if you are ever going to reduce a budget, you’re in the clinical trials business, you’ve got to reduce people, that is where 90% of the cost is," he adds.

Many clinical trials determine personnel compensation based on the number of patients expected to be enrolled. For example, the trial could be scheduled for a year, notes Beth Israel’s Gunawardena.

"The PI gives a number of patients he can see over that time and the percent effort he and his staff will be spending on that trial," he explains.

"He informs us that he can enroll and complete x’ number of patients that year. Then we take the total personnel cost of running the trial and divide it accordingly to get a per-patient amount that is related to personnel compensation. The PI and staff would be compensated on that amount of patients."

If over the course of the study they realize that the number of patients is going to be less than anticipated, they try to make adjustments at that point, he says.

"Sometimes, we catch it early and are able to negotiate with the funding company;, and sometimes, it is not caught until the end of the trial. By then, the trial is running in the red and is not beneficial to the hospital," Gunawardena points out.

One way to circumvent this is the PIs’ willingness to take a pay cut because the study is of important scientific merit.

Some budgeters, however, prefer to calculate the coordinators’ compensation separately from the PI’s, by calculating the percentage of the coordinator’s time that is expected to be devoted to the trial and calculating a percentage of the coordinator’s total salary.

Don’t forget about the costs of benefits

However, our experts warn, it is essential to also calculate the cost of any fringe employee benefits. The trial budget must absorb these as part of the compensation due to the coordinator and other personnel.

This can be accounted for by calculating the percentage of the coordinator’s total time devoted to the trial, taking that percentage from his or her overall salary, then calculating the value of the coordinator’s benefits (accrued vacation time, holidays, sick leave, etc.) and determining what percentage of the coordinator’s overall salary this amount represents.

Adjusting for the time spent on the clinical trial, the percentage of the coordinator’s benefits should be added to the base salary for the clinical trial to arrive at a budgeted amount for coordinator compensation.

For example, say a coordinator’s base salary is $50,000. Adding up all of the coordinator’s duties for the trial and the time it is expected to take over the course of a year, subtract that time from the total number of hours the coordinator works (40.0 hours per week, 10 hours each week devoted to the trial).

You should be able to calculate a percentage of the coordinator’s salary that will be covered by the trial budget (in the above case, 25%). The salary attributed to the project would be $12,500. If the employee’s annual benefits amounted to the equivalent of $10,000 compensation, then $2,500 would be attributed to the trial budget. Total coordinator salary for the trial would be $15,000.

Insurance issues

• Not knowing what procedures are billable to third-party payers and which come out of the budget.

The Centers for Medicaid & Medicare Services (CMS) has solid guidelines on what procedures are considered medically necessary and able to be billed to third-party payers and which are not and must be paid for by the study if performed.

Procedures and services that the subject would receive in the normal course of treatment for his or her illness can be billed to third-party payers. But experimental drugs, procedures, or extra visits or tests that are part of the clinical trial must be paid for separately.

"There are certain things that you do for subjects that are independent of the trial, that you would do as a normal part of caring for that person, so a lot of those things are billable," Meinert explains. "You don’t have to budget for treatment, but you budget for things that are over and above what you do to care for them."

Coordinators must go over the trial protocol and determine what evaluations, tests, services, and procedures are included in the normal care of patients with the specific condition.

The definition of normal care is what CMS and the patient’s payer determine. They must know and budget for the patient encounters, test, and procedures that are outside the scope of normal care.

It’s important to note that even a covered medical service might not be covered for the trial if the protocol requires that the service be performed at a specific time or more frequent time intervals, he adds.

Travel and incidentals

• Forgetting about travel/transportation.

If a site is participating in a multicenter trial, the coordinators and investigators must meet at some point during the course of a trial, and the travel costs (hotel, food, air, etc.) will come out of the trial budget.

A single-site study is no problem — all participating staff can get together in the office.

"If you’ve got 18 clinics participating in a study, then you have to have someplace where you can all meet," Meinert adds. "You have to travel; you’ve got to see the whites of their eyes."

The budget should also include items such as transportation costs for subject follow-up visits, parking stickers, cab vouchers, etc., and the costs of transporting some study information to other sites (e.g., X-rays obtained at other sites and sent to your location, or information collected at your facility that needs to be sent out).

For example, studies of pulmonary function may require that chest X-rays be sent to a central radiologist to be interpreted. There may be additional charges — above the cost of the X-ray itself — for copies to be made and sent out.

• Not calculating indirect costs.

Coordinators must also remember that part of the overhead for their facility should be included in the budget for the clinical trial as indirect costs. Indirect costs of the trial cover such things as use of office space, telephones, computer time, electricity, etc.

Overhead charges are normally set by policy at each institution and are calculated at a percentage of the direct costs of each project.

The study coordinators need to know what their institution’s policy is and what percentage of their direct costs to add to the budget to cover indirect expenses.