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International Clinical Trials

Don’t Take it for Granted

Investigator grant payments are typically the single greatest expense in a clinical trial budget, often accounting for 40 to 60 per cent of the total budget. As a result, it would seem logical for biopharmaceutical sponsors to allocate an appropriate level of resources to manage this expense – and yet, most organisations have never had the wherewithal or focus to give this significant expense item the attention it deserves.

While many advances have been made to the operational conduct of clinical trials over the last few years, the financial and business aspects have not seen similar improvement. The reality is that the clinical and data components have rightfully taken precedence over research operations. Whether it is study feasibility modelling, enhanced recruitment techniques, or improvement of the clinical data model, these critical mechanisms have been in the spotlight of clinical development advancement.

Prioritising needs is a tough challenge, as sponsors are faced with constant pressures to accelerate enrolment, grow investigator relationships and control costs, while contending with diminishing pipelines and escalating regulatory requirements. The investigator grant payment is a seemingly simple part of the clinical trial engagement equation – the site and associated resources must be compensated for the work they perform under a clinical trial agreement for a given protocol. But, for those who have had the pleasure – or, in some cases, displeasure – of working with investigator grant payments, the process is far from simple. There are several factors that contribute to the complexity of processing investigator grant payments globally.

Decentralised Approach

In accordance with the scope of a programme, global trials may involve multiple local entities to facilitate clinical operations. Moreover, depending on the global presence of the sponsor, the local entities may be represented by one or more CROs with offices in different countries. As such, there are significant logistical challenges to the aggregation of data, both operational and clinical, related to multi-national trials – be it harmonising lab normal ranges, or trying to manage investigator grant spend. When trials have sites spread across the globe, the clinical trial agreements with them may be written to remit in a variety of local currencies.

Considering clinical projects are typically funded, either internally or to third-party vendors, in only one or two currencies, the aggregation of fi nancial data presents challenges to the many local entities that may be involved in managing the clinical programme. Providing any level of corporate financial reporting on millions of euros, dollars, or any combination of other currency exchanges, can be problematic. This decentralised approach also tends to introduce often debilitating delays to financial reporting and cash flow management, which is of critical importance in today’s resource constrained environments.

Multiple Payees

In many countries, simply providing payment to the institution is not suffi cient due to the fi nancial arrangements and organisational structures of the participating sites. It is not uncommon for sites to request payment to multiple parties on a varying schedule in accordance with the study flow chart. For example, you may pay the investigator during all visits, but may need to also pay the pharmacist or radiologist directly for the subject visits where their services are required. These arrangements will then involve the execution of multiple contracts for each site, which also contributes to the study initiation cycle times, as well as additional tracking complexities for distributing grant payments to the sites. Moreover, diligence must be conducted to ensure the many payees are registered appropriately, otherwise there may be tax implications. With these models, the number of payments, tracking and fi nancial management also increases exponentially, especially if systems and processes are not in place to effi ciently handle these extra complications in the payment calculation and distribution processes.

Disruptive Accounts Payable Process

In the US, for example, the routine accounts receivable/ payable function is disrupted to accommodate the unique nature of trial payments. In fact, in most cases in the US, investigator grant visit payments do not involve the physical raising of an invoice by the investigator site at all. Rather, payments are generated by assessing completion of subject visit milestones as indicated by any number of data sources – most preferably electronic data capture (EDC). The rationale for this practice is that grant payments should be tied to work performed, which is primarily indicated by completed visits (or some variation) in the EDC, clinical trial management system (CTMS), interactive voice response system, and so on. What complicates this process is that most investigator sites are not highly efficient business organisations and the tracking of visits, as well as the completion of electronic case report forms, is an intensive undertaking that requires sound administrative structure, which is often lacking at medical facilities that are required to enrol patients in clinical trials.

Lack of Systems

Many sponsors and CROs continue to use standalone spreadsheets and databases to manage grant calculations – increasing financial risk and the probability of error. Moreover, while some traditional CTMS may include payment modules, these components are typically designed to be ‘plain vanilla’ and cannot adapt to the increasing complexities of today’s protocols and the mid-study changes. Some 69 per cent of all protocols have at least one amendment which are not easily managed by manual spreadsheets, databases and plain vanilla systems, especially on a decentralised, global scale (1). Lastly, because there is little or no integration with accounts payable once a grant is calculated, manual processes have to be used to complete the transaction.

Tax Issues

While the calculation of the investigator grant payment is certainly complicated enough, the process is further burdened with tax requirements, most specifi cally value-added tax (VAT) and withholding tax (WHT). As with the exchange of other goods and services, these taxes are an inherent part of global commerce, with the US as the exception for VAT. The autogeneration of payments, absent the raising of an invoice by the site, is feasible in the US because there are no VAT regimes to further complicate the process. A key challenge with respect to VAT and WHT is the structuring of the clinical trial agreement. With average VAT rates of 10-29 per cent, there is significant financial risk with the total grant budgets. Both VAT and WHT requirements inject further complexity into what is already a fragmented global process.

Foreign Exchange Risk

As touched on previously, there are inherent challenges in dealing with sites spread throughout the world in a given trial. The key components that drive currency risk with grant payments are the originating funding currency and the number of times conversions are required based on the terms agreed to in the clinical trial agreement with the site. It is most prudent, as a means of managing risk, to limit the number of currencies for clinical trials. For example, European Union (EU) countries all have their own respective currencies; however, effi cient electronic banking transactions of the Euro can be facilitated via the Single Euro Payments Area (SEPA), which includes 27 EU Member States plus Iceland, Norway, Liechtenstein, Switzerland and Monaco (2). The utilisation of the SEPA network enables single currency management in all network countries, which eliminates the need to conduct currency exchanges for grant payments. While the EU has a unique currency structure, similar tactics can be applied elsewhere by leveraging stronger, more stable currencies in lieu of more volatile local currencies where at all possible.

Transparency/Aggregate Spend Compliance

In an effort to allay concerns about conflicts of interest between physicians and the pharmaceutical and medical device industries, regulatory agencies are implementing controls and reporting requirements. The US has been an initial driver in terms of concept and implementation through its Physician Payment Sunshine Provision of the Patient Protection and Affordable Care Act (Sunshine Act), however many countries are developing their own policies with similar goals. Moreover, legislation is already in place in France, the Netherlands, Australia and Japan. The US Sunshine Act will, upon issue of the imminent final guidance, require manufacturers of drugs, devices, biologicals and medical supplies to begin recording all physician payments, including payments made for clinical trial research. These additional regulatory burdens are causing significant consternation in the industry because the fragmented processes that have been in place for so long are now being challenged.

With the US Sunshine Act, otherwise referred to as ‘aggregate spend’, the requirement is for consolidation of payment data at the healthcare provider level – which equates to the investigator level, as it relates to research. The challenge with this requirement is that grant payments for clinical trial research are typically made to investigative sites – the payees – rather than to the physicians themselves. These new reporting requirements represent yet another disruption to traditional practices to the clinical operations model; in this case, payee data being located in sponsor/CRO enterprise resource planning systems, while the investigator data is typically found in the CTMS or other similar clinical-oriented systems. The aggregation requirements necessitate the marriage of the payee with the investigator, which has raised concerns among many sponsors. In addition, many sponsors engage with multiple CROs or internal subsidiaries for global trials, which exacerbate the consolidation issues with respect to decentralised processes. These disparate data sources, combined with the manual processes many organisations rely on to track this crucial information, make it extremely difficult and labour-intensive to collect and accurately report aggregate spend data in accordance with Sunshine Act requirements – not to mention the yet to be defined transparency requirements of countries worldwide.

Moving Forward

The challenges to global investigator grant payments are a complex aspect of managing clinical trials that traditionally has been overlooked. When not addressed in a standardised, centralised manner, the results can range anywhere from regulatory non-compliance and fi nancial opportunity loss, to dissatisfi ed investigators who lose interest in trials. While central labs and EDC providers have empowered sponsors and CROs with global consolidation solutions to their critical clinical data, most organisations have not extended efforts to achieve similar controls over their significant study grant financials. With the continuing pipeline pressures and financial resources receiving the utmost scrutiny, it may be time to consider a harmonised approach to investigator grant payments as well.

References

1. Getz et al, Measuring the incidence, causes and repercussions of protocol amendments, Drug Information Journal, 45(3): pp264-275, 2011

2. Visit: www.europeanpaymentscouncil.eu


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Kevin Williams is Vice President, Corporate Development and Marketing, at CFS Clinical, where he is responsible for driving the continued growth of the company through marketing and strategic enhancement. Prior to this role, Kevin has been a leader from both a business development and operations perspective, responsible for the development, delivery and growth of investigator contract and grant payment services. Kevin joined CFS in 2006 from Merck and has more than 15 years of experience in pharma and healthcare. He holds a BS in Health Science from Lock Haven University and an MBA/MS with a focus in healthcare administration and finance from Temple University, Philadelphia.
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