Leveraging Technology to Streamline the Budgeting Process  

By Jessica Dolfi

April 10, 2012 | Guest Commentary | A 2009 report by Thompson Centerwatch cites contract/budget negotiation and approval as the leading cause of delays in study starts. In fact, contract and budget negotiations cause more delays than the recruitment and enrollment of patients. With life science companies being pressured to do more with less, the hunt for increased efficiency is widespread. Life science companies that embrace technology to improve manual processes like site budgeting and contracting can lower their times to get studies started, improve management oversight, and increase the ability to make timely decisions, which ultimately leads to more favorable results.  

Developing the appropriate budget  

Accurate budgets that reflect fair market value for services performed are more readily accepted by sites. Fair market value budgets can speed negotiations and also represent the best pricing to meet the requirements of the Sunshine Act—a recent federal legislation that requires reporting on payments made by life science companies to physicians.   

In my experience consulting with dozens of life science companies, it is apparent that many methods of budget development used today do not result in fair market value pricing. Many pharmaceutical and biotechnology companies rely on the experience of employees or data from past studies. Others rely on public price lists, such as Medicare's fee schedule. Using historical data introduces errors from limited experience and out of date information. Companies that rely on Medicare pricing often discover their initial offers to the site are far below clinical trial prices, and have no reference for ex-US prices. This can lead to extended rounds of budget negotiations and widely disparate final study costs from site to site. As companies move into new therapeutic areas and geographies, limited personal experience often does not cover the breadth required for a new trial.   

I have found that developing an accurate budget begins with a clear understanding of the protocol. Complexity is a metric of a protocol that I have found to be extremely important in setting the budget. Recently, I have worked with a software tool that tracks the actual complexity of the protocol under development in comparison to protocols for similar studies. Given that complexity is a measure of the work required of a site, this information is useful in understanding fair market value pricing as it guides adjustments to be made that lower or increase the allowable budget, depending on the protocol. I find that the integration of study design data, such as complexities in a budgeting tool helps eliminate errors and increase understanding between the protocol creation and budgeting processes.   

I also use tools that guide the development of clinical trial budgets, which draw from industry databases of negotiated clinical trial costs. Since the costs are negotiated and appear on contracts as the agreed prices for the site’s work, their use in creating new budgets helps immeasurably in assuring accuracy as well as fair market value.   

Streamline the negotiation process  

A recent Medidata (2011) survey revealed that over 75% of responding sponsor companies use email and spreadsheets to conduct negotiations, while only 8% use an online technology solution. As with most manual processes, the widespread use of emails as ad hoc tracking systems exposes the process to errors and makes tracking negotiation statuses difficult.   

Technology solutions for the online negotiation of the budget centralize the negotiation information and records, creating a "single source of truth" for the budget and associated documents. Further, management visibility is increased by having a central collection point where the status of negotiations for all studies with all sites can be reported. This up to date information helps in decision making when sites are slow to respond or ask for too much of an increase over a proposed cost. In these cases sites can be dropped and new sites engaged who may be more amenable to an agreement.   

Utilize standards and technology to improve process steps and reporting  

Most sponsors responding to Medidata's 2011 survey reported using standardized contract language with some, but not all, sites. When using a standardized contract template, the survey reveals the average number of review cycles is only 1.75, whereas without a template the review cycles double to 3.5. Clearly, a 50% reduction in time can be extremely valuable to life science companies.   

Yet contract review was only the third most time consuming process. At the top of the list was reviewing multiple versions of budgets, followed by internal budget review and approval. Online systems easily track multiple versions, or changes made through the versions, eliminating human error as well as providing an auditable record of the negotiations.   

Realizing EfficienciesClinical trial budgeting and negotiation continues to be much more of an art than a science; and the importance of human discussion and mutual understanding are essential to the process. However the human part can be greatly aided through automating processes that support the negotiators at work. Recent innovations that automate these processes offer much promise in removing budget and contract negotiation from its current position as the worst offender among several that delay the site recruitment process.   

Technology solutions are key resources to alleviate some of the pressures in the contract and budget negotiation process. Online negotiation systems provide real-time status and insight into the negotiation progress for management and multiple departments within a life science company. Integration of the payment schedules with the payment modules of a Clinical Trial Management Systems (CTMS) will also provide visibility into cash flow status and facilitate adherence to Sunshine Act payment reporting requirements.   

Process efficiencies are realized when sponsors use compatible software systems to develop a sound protocol, a fair market value budget, and negotiate the budget and contract online. Taken together, all of these systems potentially remove the primary cause of delay in study start, but also free up time so that staff can focus on the successful implementation of clinical trials.  

Jessica Dolfi is a senior business consultant with Medidata Solutions Worldwide. She can be reached at jdolfi@mdsol.com.