Financing Clinical Trials – Q&A

Scott Palmese
Director of Clinical Operations, BTC Network
February 18th, 2016

Following his recent webinar, “Financing Clinical Trials: Appropriate Compensation and Allocation of Study Budgets,” Scott Palmese of BlueTheory Clinical Trials responds to attendee questions, addressing start-up fees, fair market value, monitor change fees and more. 

Can you front-load the budget to try getting the most of what you want right away, since the first couple cycles are more difficult and time consuming?

 This is the reason why we suggest negotiating for both refundable and non-refundable start-up fees. While the non-refundable start-up fee goes towards the things you’d normally associate with start-up, the refundable start-up fee is utilized to help you with the first few screens so you are not footing the bill and hoping to be reimbursed later. Typically, we would ask for at least the equivalent of one completed patient and would tell the sponsor that the fee is refunded if we do not enroll by a certain date. That way there is less risk to the sponsor, so they are more likely to approve the fee. Unfortunately, every sponsor does not approve this extra fee, however, we have been successful with this more often than not as long as we provide justification. The sponsor would not have to make another payment for completed visits until the amount owed has exceeded what has already been paid out in the refundable start-up. In the long run, the sponsor is not paying you anything more than they would have, however, the advance payment helps immensely with cash flow at the start of a study.

Many industry sponsors tell us that extra fees are a “cost of doing business.” How would you counter this?

 It’s all about the justification! We get this all the time from sponsors, and we always make sure to provide reasoning for all of our requests. We provide justification for all pass-through fees and even break down some of the more common pass-through fees (such as start-up) even further so the sponsors understand how we are getting our proposed amounts. Sometimes we have had to get on the phone with sponsors to walk through our sites’ needs and start-up procedures in order to get approval on certain fees. When we add fees, we typically provide some language regarding the staff involved, estimated time spent and anticipated challenges to the site that we feel the additions will help alleviate.

How does fair market value come into play when negotiating budgets?

 Fair market value is definitely a starting point when it comes to negotiation, however, lately we have seen that initial sponsor offers do not take into account all costs associated with each line item, including cost of the procedure, staff involved and time involved. As staff and time also incur expense, it is not unfair to increase the sponsors’ initial offers to pay for this, as well. This is necessary for sites to not operate at a loss. While some sponsors may argue that proposed amounts are above fair market value, it again comes down to justification – if you can justify your higher costs, you are more likely to receive higher amounts.

Any advice on the monitor change fee? How do you justify it and how much would you usually ask for?

 Typically we would classify monitor change fees (and not-for-cause audit fees, etc) as a conditional fees, so these fees are put into the budget only in the event that they are incurred.  When explaining the fee to the sponsors, we let them know that if there is no monitor change, the fee would not be due. Typically we start at a fee of about $700 per occurrence and justify by explaining that the fee is going towards the numerous hours that the study coordinator must review with each new monitor. These conditional fees are not always approved, but it never hurts to try and it is always better to get them in your budget up front rather than asking for them later.

What is the standard amount of time it should take to complete a budget? What is a good time range to provide to the sponsor when asked?

 In our experience, it should typically take no longer than 2 weeks to completely finalize a contract and budget. When sponsors ask us for a time range, we always say <2 weeks. When a site is first provided with a budget proposal, you should immediately respond to the sponsor contact to give them a timeline for your first offer of no more than 72 hours (48 hours is better!). Remember that many sites take weeks to send back offers, and this is not good practice. The sponsors get very frustrated when sites take too long to review budgets and you will be less likely to get higher amounts if it takes you months to finalize. The only times it should take longer than 2 weeks are when the sponsor takes longer than normal to get back to you on an offer. Typically, budgets go back and forth an average of 3-4 times before we come to the final version. It’s also very important to remember that your interactions with the sponsor during budget negotiation leave just as much of an impression as your performance with enrollment, so don’t get off to a bad start by dragging out the budgeting process!


Learn More

Want to learn more about financing clinical trials? Watch our free on-demand webinar “Financing Clinical Trials: Appropriate Compensation and Allocation of Study Budgets.”

Budgeting Financial Management