PHOTOGRAPHY: COMSTOCK IMAGES, GETTY IMAGES ILLUSTRATION: PAUL A. BELCI
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Clinical trials represent an opportunity for sponsors and investigators to further medical knowledge and bring new interventions
and discoveries to market. Regulatory standards and shorter trial deadlines present challenges for trials, but equally as
important is the financial risk to the organizations involved. In today's market where a contract between sponsors and service
providers is either based on a fixed fee or per enrollment, it is critical to get the study budget right.
It is well known that research organizations operate with paper-thin margins, and many studies operate with operating losses
"because of unexpected expenses."1 These unexpected expenses can result from recruiting additional patients later by opening new sites late in the process,
only after required enrollment fails to meet project requirements. This can result in time delays, which will add expenses
and extend the trial longer than originally anticipated.
Delays are quite common, with well over half of all clinical trials in the United States missing completion deadlines.2 Variability between budget projections and study realities can make or break the financial outcome of a project in the participating
organization.
Development managers and investigators often overestimate the amount of subjects in any given time period, and underestimate
costs. This difference between a projected value and an actual one represents the variability, or change. For project managers,
variability and risk represent a roadblock to hitting the trial's budgeted financial performance in the long-run, which also
complicates contract negotiations. So, how do project budgets include a reasonable allowance for variability in the accrual and retention of study subjects and
the unexpected costs that can come along in the normal course of a study while not discouraging funding sources? One way is
to build simulation models that can cope with uncertainty by generating thousands of scenarios, which helps give a more realistic
picture of expected trial outcomes.
Risky business
The variety of costs involved in a clinical trial must be closely considered to ensure that adequate allowances are made for
the usual costs of clinical research and to scrutinize the deviations in those things that drive research project costs (e.g.,
regulatory, quality, protocol development). Since clinical trials are a dynamic endeavor with multiple moving parts that directly
impact payments and prices, managers have a lot of variables to consider when establishing a budget.
Table 1. The key assumptions of the simulation model should be clearly articulated.
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It is the dynamic nature of so many expense components that creates the risk of understating project budget expenses and overstating
potential margins from a contract proposal. Perhaps the most critical assumption underpinning the trial budget is that of
the accrual and retention of trial subjects. Missed patient enrollment assumptions can cascade into missed projections for
recruitment, additional supplies, and testing associated with replacing subjects in a study, or support of additional periods
of overhead as a project goes beyond expected time frames.
One of the most common ways to build a clinical trial budget is to take a historical average of expenses from cost accounting
systems, or to develop a "rule of thumb." Historical averages are just that, averages, which vary above or below some value.
Variability in the numbers making up an average can be risky. The average of 45 and 55 is 50, just as it is for 30 and 70.
However, if a budget projection using an average value of 50 uses a historical basis of 30 and 70, the organization may be
in for an unpleasant surprise if the actual result nears either of those two extremes. Knowing the spread and historical frequency
should be taken into account in a comprehensive budget projection.
Table 2. Project managers must closely monitor key assumptions, such as subject recruiting, and modify budgets accordingly.
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Additionally, there are a number of different factors that can influence the amounts expended on a trial that can render even
the best estimate arrived at in this deterministic fashion inaccurate. Clinical project managers need to understand the variety
of costs in a proposed study, and the factors or drivers that influence study costs.
