Preparing Budgets for Industry & Federally Funded Clinical Trials

1. Preparing Budgets for Industry & Federally Funded Clinical Trials Gary W. Lingle, CPA Director of Grants and Contracts Kelly Maresh, R.N. Director, Office of Clinical Trials

2. Objectives • To learn the fundamentals in preparing budgets for clinical trials • To address issues in negotiating budgets and payment schedules

3. What is a Budget? Exhibit B – Budget • The number of patients that are required for full participation in the Study is up to a maximum of 24 • The total budgeted cost payable for the Study will be $96,000 based on 24 patients • A separate payment of $2,500 will be payable by xxx for IRB fees • There will be an upfront payment for the first 6 (six) patients for research costs at a maximum total of $4,000 per patient, including 25% overheads applied by the Institute, making a total of $24,000

4. What is a Budget? Exhibit B – Budget Continued • In addition to the administrative and research cost, xxx will also pay $1,000 per patient per cycle for study specific procedures and supplies • For the remainder of patients enrolled in the Study, there will be a maximum research cost of $4,000 per patient, including $1,000 per patient per cycle

5. Why Prepare a Budget? • To assess the true cost of a study • Provide information necessary to negotiate an agreement • Better manage department resources • Ensure compliance with Medicare billing regulations

6. Evaluating the Opportunity • Financial “Cost” Analysis • Is the study financially sound? Study Cost Budget Payments • Academic Analysis • Quality of Science? • Type of Study: Phase I – IV Balance between the two

7. Clinical Trials Billing Compliance • Standard of care versus Research • Identify those procedures that are ‘Standard of Care’ • Billable to third-party payers (insurance, Medicare)

8. Clinical Trials Billing Compliance

9. Clinical Trials Billing Compliance • Ensure processes in place to bill appropriately • Patient registration • ‘Research’ labels on orders • Review institutional accounts within 30 days • Evaluate this process regularly

10. Clinical Trials Billing Compliance • Harmonize relevant portions of study documents • Schedule of Events • Informed consent • Contract

11. Clinical Trials Billing Compliance • Provide detail of study costs in Consent Form and inform study subject of costs for which they will be responsible You will receive compensation for your participation in this research study: Initial Screening Visit (medical history and physical exam): $ 25.00 Completion of Day 1 hospitalization (Baseline Visit): $200.00 Completion of Day 2 Visit $125.00 Completion of Day 7 Visit: $125.00 Completion of Day 14 Visit (Telephone Call): $ 25.00 TOTAL $500.00 You will receive a check from The Methodist Hospital Research Institute within four to six (4-6) weeks of your final visit. Please give your study coordinator your correct mailing address.

12. Clinical Trials Billing Compliance • Why is it important • Medicare’s National Coverage Decision on Clinical Trials • Rush University Medical Center Settlement • OIG Draft Research Compliance Program Guidance

13. Payment Schedules • Up-front payment • Include non-refundable start-up payment • Interim payments • Usually tied to milestones • Include payment for screen failures • Final payment

14. “Forward-Thinking” Budget Development Model

15. Preparation – Know Your Business • Understand and define your “real” costs • Verify institutional charges & fees • Develop annual cost templates & update • Identify all charges related to complex procedures • Review & evaluate past performance metrics • Understand your patient population

16. Performance Metrics

17. Budget Question Developing and managing clinical trial budgets falls within the purview of which clinical research professionals? 1) Department Administrator 2) Principal Investigator 3) Research Nurse 4) Study Coordinator 5) Research Assistants/Technicians 6) All of the above

18. Multi-disciplinary Team Approach Grants & Contracts Department Administrator Study Coordinator Patient Registration Principal Investigator Transaction Control Unit Directors Clinical Lab

19. Partnering for Clinical Trial Success Include those that DRIVE the budget in the budget development process

20. The right set-up will keep an organization from having a wrong setback. ~ John Maxwell

21. Definitions Costs – OMB Circular A-21, D1 • Direct Costs– Those that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy

22. Definitions Costs – OMB Circular A-21, E1 • Indirect or F&A Costs – those incurred for common or joint objectives, and therefore, cannot be identified readily and specifically with a particular sponsored project. It is a calculated composite rate applied to sponsored projects as a percentage of the sponsored project’s direct costs for the purpose of charging the sponsored project its share of the administrative costs.

23. Budget Building Steps • Review most recent protocol & Schedule of Events • Identify those factors that will affect the cost of the study • Number & complexity of visits • Estimated time required for study visits • Procedures to be performed and whether Standard of care or research-related • Resource needs – staff, equipment, supplies • Difficulty in meeting inclusion/exclusion criteria • Build your budget to identify your cost prior to review of sponsor budget

24. Key Elements of a Clinical Trial Budget • Start-up costs • Direct per-patient costs • Variable costs • Study closing costs • Indirect costs

25. Start-up Costs • Protocol Review & Feasibility • Site Qualification Visit • Budget/Contract preparation • IRB Application preparation • Regulatory documents preparation • Source documents development • Investigator’s Meeting attendance

26. Start-up Costs • Pharmacy Start-up Fee/Monthly Service Fee • Site Initiation Visit (SIV) • Staff Training • Recruitment materials development • Advertisement • Telephone, long distance, Fed Ex • Supplies (binders, office supplies, etc)

27. Start-up Costs

28. IRB Fees • Industry-sponsored studies - $2,500 • Industry-funded but investigator-initiated (PI holds IND) - $1,500 • All others - $0 Office of Research Protection

29. Direct Per-Patient Costs Identify procedures as Research or Standard of Care

30. Direct Per-Patient Costs Personnel Cost • Screening • History & Physical • Informed Consent • Patient registration • Study-related procedures (Admin meds, blood draws, visits, CRFs, telephone calls) • Processing lab specimens • Hospital charges (10% annual increase) • Per-Patient Pharmacy charges

31. Direct Per-Patient Costs • Subject payments • Stipends, travel, parking, food • Synchronize with Informed Consent • Must be reasonable • Provide back-up documentation to support the expense

32. Variable Costs • Advertising • Shipping • Dry Ice • Supplies • Unscheduled/extra patient visits • Adverse events filing • Data queries • QA and FDA visits Establish flexibility to cover variable costs as “pass-through” expenses

33. Close-Out Costs • PI time for final signing of Study Documents • Preparation of documents for storage • Long-term records storage • Pharmacy close-out fees • Resolution of data-lock queries after closure of site

34. Indirect Costs (IDC) • Industry – 25% • Federal – 44% • Non-profit org – depends upon their approved rate • Exceptions require approval of VP for Research

35. Commonly Overlooked Items in Budgeting • PI or CRC Fee • Pharmacy Fees • Professional Fees • Screen Failure Fee • Advertisement/Recruitment Fee • Record Retention Fee • Start-up Fees • Query Resolution Fee • Study Closure Fee • Reimbursement for early termination

36. Final Budget Review • Review your budget to make sure you have accurately identified all costs for the life of the project • Compare your budget against the sponsor budget • List non-negotiable start-up costs and IRB fees as line items to be paid per invoice • List variable costs as line items in budget notes. These may be considered “pass-through” expenses and paid per invoice

37. Where Budgeting can Fail • Failure to identify all study-related costs • Failure to identify hidden costs • Failure to verify procedural cost • Failure to accurately estimate personnel time and effort • Failure to negotiate variable costs up front as pass-through expenses • Failure to identify areas of potential risk • Overestimation of enrollment and failure to meet budget projections

38. Where Budgeting can Fail Loss $61,600.00 in projected revenue

39. Summary • Clinical Trial Contracting & Budgeting a key area for efficiencies • Understanding your site and the cost for doing research is a critical first step in preparing clinical trial budgets • Forward-thinking TEAM budget strategies are critical to successful budget development • Ongoing evaluation of the budgeting process adds a scientific element to budgeting and over time, leading to the development of Best Practices

40. For Contract & Budget Guidance, Contact: Office of Grants and Contracts Gary Lingle, CPA Director 713.441.7885 D. Anthony Robinson Budget Analyst 713.441.7886

41. For Clinical Operations & Budget Guidance, Contact: Academic Office of Clinical Trials Kelly J. Maresh, R.N., CCRC Director, Clinical Research 713.441.5981

42. Resources • Rowell JP and Wilson JT. The Six Phases of a Research Site Budget. Monitor, 16:2, 31-34, 2002 • Rowell JP. Preparation is the Key to a Successful Research Budget. Monitor, 19:2, 23-26, 2005 • Cola PA, Brown LM, Ehlert DK. Creating and Managing Clinical Trial Budgets and Award Trends. Monitor, 19:2, 15-19.

43. Resources • Massaro, M. Identifying and Managing Hidden Costs in Clinical Trial Budgets. Monitor, 19:2, 29-30. • How to Grow Your Investigative Site. www.centerwatch.com • Departmental Administrators 101 Certificate Program. www.srainternational.org • Dropkin M, Halpin J. Bookkeeping for Nonprofits: A Step-by-Step Guide to Non-Profit Accounting. Jossey-Bass (2005).