Guest Column | February 20, 2018

How To Negotiate Study Budgets Like A Pro

By Kunal Sampat, Senior Manager, Clinical Research, Abbott Vascular

How To Negotiate Study Budgets Like A Pro

Are you a clinical site that finds budget negotiations with a clinical research organization (CRO) or sponsor an uphill battle?

Or do you work at a sponsor or CRO where you feel sites are making up study budget numbers or are never happy with any budget proposal?

In this article, I’ll share insights on how sponsors and CROs set up overall study budgets and discuss five secrets to getting your dream budget approved.

For the purpose of this article, a study budget is defined as the total compensation a sponsor or CRO offers to a site for each enrolled patient. In other words, a study budget is the per-patient grant amount for all protocol-required study visits and procedures.

How Do Sponsors/CROs Set Up Study Budgets?
Understanding how study budgets are created is the foundation of any study budget negotiation. It will give you perspective on what to expect and how to effectively proceed with your negotiations. Think of this as homework before you take the actual exam.

Study Design Can Affect The Per-Patient Study Budget

Generally speaking, sponsors will allocate a higher per-patient grant amount for new product approval studies and indication expansions because new products and broader label indications create an opportunity for the sponsor to generate more revenue, assuming the product receives regulatory approval and is then sold commercially. So, sponsors consider such pre-approval clinical studies as an R&D investment for their future growth.

On the other hand, post-approval studies that are a regulatory requirement for new product or indication approval are funded less adequately. Such studies are generally an additional expense or overhead for the sponsor.

Senior Management Sets Study Budget Parameters

When you are working with a contract associate at the sponsor or the site, usually the person you’re interacting with isn’t the one who created the study budget template. This may be a no-brainer, but there is no point in getting upset with the messenger for not creating a reasonable budget proposal.

Senior leadership is responsible for reviewing and approving the average per-patient amount. The reason for this is simple: The cost to enroll patients in a study is approximately one-third the total cost of clinical study. That’s a lot of money for any clinical study.

When study budget parameters are created, i.e., the per-patient grant amounts are set, cost of living differences may be overlooked. Furthermore, if any treatments or visits in the protocol are reimbursed by public or private insurance, the sponsor will not want the site to double dip and get paid twice, which would be illegal.

A Pot Of Money Is Assigned By Senior Leadership
When a medical product company’s leader doesn’t have a clinical background, chances are the total amount assigned to conduct a clinical study may not be adequate or reflect the reality of work involved.

To make things complicated, in addition to a non-clinical senior leader, the company’s financial leader, such as the chief financial officer (CFO) or controller, may significantly influence how much money gets allocated to a clinical study.  

After the sponsor company works out the financial numbers, the total budget available to conduct a clinical study may actually be quite limited. In such cases, the clinical study team needs to come up with a creative clinical study design, including lowering the amount that gets paid to sites.

For most studies, the three biggest costs are site costs, which include the per-patient grant, labor costs, and clinical vendor costs. This should provide insight on how and where financial resources are spread for a given clinical study.

Fair Market Value (FMV) Is More Than A Buzzword

Sometimes, it may seem that sponsor or CRO personnel are brushing off the site’s counterproposal and using FMV as an excuse. The truth is that FMV is more than a buzzword.

If you think about it, sponsors are selling their medical products to the same physicians or institutions that may also be participating in a clinical study. If a sponsor is paying a site more money than it can justify for a given clinical study, the sponsor may be inviting some legal trouble. The bottom line is that sponsors don’t want to be perceived as giving away money to their customers via clinical study grants.

Additionally, sponsors/CROs are thinking about how their decisions will have an impact on their company brand. Nobody wants to be in the news for overcompensating sites for a clinical study.

Lastly, there are strict regulations and compliance policies that impact FMV. For example, there is the United States Anti-Kickback Statute ,which “prohibits the knowing and willful payment of ‘remuneration’ to induce or reward patient referrals.”

5 Secrets To Getting Your Budget Approved

Now that you understand how clinical study budgets are set, I’ll share five secrets on how you can get your study budget approved.

Most of these strategies are relevant to sites looking to increase their study budget and sponsors or CRO personnel trying to control and manage clinical trial costs.

1. Don’t Make Up Your Budget Numbers

As site, sponsor, or CRO personnel, you want to avoid making up study budget numbers. If you don’t truly know the cost for a specific task, develop well-thought out assumptions.

For instance, if you’re trying to decide how much money to offer for completion of a case report form (CRF), first determine how many CRF fields need to be completed. Then determine the amount of time it will take to complete each of these fields and then multiply the total time by an hourly rate for a research coordinator.

The secret here is be objective about your numbers. It will help your negotiations go much more smoothly and get you closer to your dream budget.

2. Take Time To Create A Well Thought Out Enrollment Plan

An excellent way for a site to ensure it gets its dream budget approved is to paint a clear picture of what actions it’ll be taking to contribute toward study enrollment.

You’ve already been invited to participate in the study. You’ve accepted the sponsor or CRO’s invitation. Now why not go all in and enroll patients? The first step to successful enrollment is an enrollment plan.

An enrollment plan will allow you to negotiate a higher per-patient grant amount. Even a one-page plan can be your competitive advantage. Very few sites, if any, are actually investing the time to create such a study and a site-specific enrollment plan.

Furthermore, putting an enrollment plan in writing allows you and your team to get on the same page as to how your site will enroll patients in the study. Internal alignment also increases your site’s chance of enrolling well on the study, which in turn will lead to increased total revenue for your site for a given study. It’s a win-win situation for the site, sponsors, and CROs.

3. Don’t Send Redlines Just Because You Have To

If you think the proposal is reasonable, just go ahead and approve it. It’s already challenging enough to get sites activated for enrollment. So, don’t let the study budget delay site activation.

4. Talk Less, Listen More

If you’re on a budget negotiation call, listen and ask questions. After asking a question, pause. It’s OK if there is silence during the call. The silence simply means the other person is thinking through what you just said. It’s tempting to fill the silence with words, but it’s best if you just keep quiet.

Here are some questions sites, CROs, or sponsor personnel can ask during budget negotiations:

  • How can we make this work so it’s a win-win for both of us?
  • Since we’re not able to reach agreement on the budget, what do you recommend we do?
  • Can you provide the breakdown for this cost/line item? It will help me make a more informed decision.

The answers to these questions will help you get closer to the final study budget.

5. Keep Your Emotions Under Control

This is my favorite secret, but it’s much harder to put this into practice.
In most cases, the money being negotiated doesn’t belong to the sponsor/CRO personnel responsible for budget negotiations. The site personnel negotiating the budget probably don’t get to keep the money, either. For this reason, there is no point in getting frustrated during budget negotiations.

In fact, I would challenge you to ask yourself, “If money wasn’t an issue, what would be the fair thing to do here?”

If you cannot come to an agreement, say “I’ll review it with my team” or “I’ll think about what you’ve shared and get back to you.” You can always buy some extra time to reflect on your conversations before making a decision.

Do you have a favorite budget negotiation strategy? Leave me a message in the Comments section below.

About The Author:

Kunal Sampat is a senior manager, clinical research at Abbott Vascular and also the founder of the Clinical Trial Podcast, a podcast and blog platform for clinical research professionals. His goal is to help you accelerate your clinical research career and be a more effective leader. He enjoys connecting like-minded people, introducing new ideas, and immersing himself in an environment of continuous learning. You can find him on LinkedIn.

Note: This article reflects the author’s personal opinions and has nothing to do with his place of employment.