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Beginner’s Guide to Budget Negotiation

Budget negotiation is an integral part of a clinical trial’s success. Proper clinical trial financing ensures a site’s internal costs are covered, facilitates better negotiation, and leads to more compliant practices. With the per patient cost in clinical trials averaging around $41k, it is critical to begin with an internal budget appropriately capturing the estimated costs. This internal budget can be used as a baseline when working with the sponsor to achieve appropriate funding.

How to Develop an Internal Budget

Before requesting any edits to the sponsor’s budget template, it is recommended for an institution to develop an internal budget. This budget details the estimated costs associated with conducting the clinical trial. The process begins with a thorough review of the coverage analysis completed by the site and study documents provided by the sponsor (i.e., protocol, informed consent, and sponsor budget). The coverage analysis outlines which items and services are billed to insurance and which items are paid for by the study sponsor.

The research items in the analysis then translate into the direct per patient costs within the internal budget. Additional underlying costs include the time and effort from research staff such as the investigator, study coordinator, and data management. Consider other costs, such as:

Once the internal budget is complete and reviewed for accuracy, it’s time to begin the negotiation.

Best Practices for Budget Negotiation

Prior to contacting the sponsor, redline the sponsor’s proposed budget template to better align with site study costs. Don’t forget to also redline the payment terms commonly found in the clinical trial agreement. It’s important to note negotiations could occur with a contract research organization (CRO) rather than a sponsor. Sponsors may hire a CRO to participate in the negotiation for them and serve as a proxy, similar to Advarra’s role with research institutions.

Regardless of the point of contact, stay consistent and aim for a set negotiation timeline goal. It’s likely there will be several rounds of negotiation with edits required at each counter. In these situations, it’s important to effectively and efficiently communicate. Remain firm on non-negotiable items and maintain flexibility on those items allowing for negotiation. Respond in a timely manner and follow up with the sponsor as needed to keep the timeline on track. Finally, make sure to avoid double billing during negotiations. This occurs when two payments are made for an item or procedure. For instance, the sponsor pays for an item that is also billed to Medicare (as otherwise highlighted in the coverage analysis). This is a major compliance concern and should be avoided at all costs. Once the budget is finalized, the process moves onto the contracts team (if needed) and other study team members for signature routing.

Negotiation Strategies

In a perfect world, sponsors would have unlimited funding for all foreseeable site expenses. However, in lieu of the effect dedicated by an institution, sponsors dedicate just as much time (or more) to properly outline the costs of their clinical trial. If rates fall too low or certain fees are not included, be transparent. Provide reasoning or documentation showing the need for any costs in question. This may include current procedural terminology (CPT) codes relating to specific services, a signed PDF acknowledging the extensive review needed to confirm the expense, or the reallocation of other fees to make up for areas of deficit.

Budget negotiation is an arduous and laborious task with the potential to delay anticipated timelines. Be sure to promptly respond to any sponsor inquiries. If the sponsor has slow response times, follow up with them as needed via email or phone. Institutions facing continued sponsor pushback or delayed timelines should utilize an established internal escalation plan. In the same regard, your institution may encourage the sponsor/CRO to escalate required fees for further review. Through it all, remember to maintain a good relationship with the sponsor. A successful negotiation requires mutual benefit.

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