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Clinical Trial Budget Negotiations: A View From Each Side

A key component to the success of a clinical trial is opening a site for recruitment, which requires accelerated startup times. Delays in budget negotiations and site startups can dramatically alter these timelines. For a closer look at clinical trial budget development, read our blog Developing a Clinical Trial Budget Following Medicare’s Clinical Trial Policy and Device Regulations.

From the sponsor’s perspective, managing budget negotiations at multiple sites is a monumental task, addressing numerous, often conflicting funding requests from sites. In this blog, we’ll describe a case study of how clinical trial budget negotiations can be viewed by both parties: sites and sponsors.

In this example, Sites A, B, and C are selected to participate in the same clinical trial. However, each site has its own unique methodology to develop and negotiate a clinical trial budget that meets their specific site’s needs.

Budget Preparation on Site Budget Negotiations with Sponsor
Site A
  • US-based site in the same city as Site B
  • Prepares budget based on internal coverage analysis process (understanding what items may/may not be covered by Medicare and other insurers)*
  • Notes not all standard of care (SOC) items/services are covered by Medicare and requests additional sponsor funding to cover these items/services
  • Budget negotiations become challenging due to the requested coverage for SOC items/services
  • After numerous rounds of back-and-forth redlines in emails (time delays) the site and sponsor reach a standstill; negotiations are escalated, and a conference call is scheduled
Site B
  • US-based site in the same city as Site A
  • Requests higher rates for items/services in the budget, including fees for conducting the actual procedures and inflation costs over the life of the trial
  • Requests additional funding for a specific lab test not performed locally
  • Does not address SOC items/services and accepts what is noted on the sponsor’s budget
  • Budget negotiations are “quick and easy”
  • Budget is approved, and the contract is executed in a timely manner
Site C
  • US-based site in a different state on the opposite coast from Sites A and B
  • Prepares budget based on local coverage analysis process, understanding what items may/may not be covered by Medicare and other insurers*
  • Notes many SOC items/services are likely to be covered by Medicare except for a few
  • Budget negotiations are smooth as the site is only asking for a few additional SOC items
  • Budget is approved, and the contract is executed in a timely manner

*Medicare is considered the “Gold” standard and, oftentimes, commercial healthcare insurers follow its coverage decisions.

To prepare for the conference call and provide justification for their budget, Site A pulls together Medicare’s rules and regulations, applicable local coverage determinations (LCDs), and copies of correspondences with their local Medicare Administrative Contractor (MAC) regarding coverage for items and services for this clinical trial. Sometimes this type of discussion will be effective, and the budget is negotiated. Other times, there is further escalation to the sponsor’s legal department and senior leadership, where the same documentation and discussion occurs again before deciding whether to provide the requested funds.

What Is Really Going on in the Above Scenarios?

Site A creates great delay and frustration on both sides. What went wrong with Site A’s negotiations? How can two sites from the same city request such different budgets, and how can Site A and Site C vary so much in what is considered SOC?

LCDs vary by region, explaining the difference in SOC coverage for Site A and Site C.

The difference between Site A and Site B stems from institutional processes—Site A appears to have a consistent process in place to evaluate Medicare’s coverage of items and services for the conduct of a clinical trial. On the other hand, Site B may not have a process in place to evaluate Medicare’s coverage of items and services for the conduct of a clinical trial, or their process may be less well-defined, or they may have different interpretations of what is covered.

The sponsor may not understand Medicare’s coverage and impact on drug and device clinical trials and the differences in LCDs. It’s also possible they cannot afford to provide this additional funding to the site. This disconnect can create angst and negative financial implications for both sides. At best, the site and the sponsor agree on a budget, and, at worst, the sponsor or the site opt not to participate in the study. This is a disappointment for all parties, including potential participants interested in participating in the clinical trial.

Education and communication are key components a site can use when working with its sponsors. Sites can prepare a resource toolbox for sponsors and provide it as early as possible—sometime after the confidential disclosure agreement (CDA) is executed and before budget negotiations commence. This toolbox helps maintain positive working relationships, prevents surprises for both sides, and avoids wasted resources in developing and negotiating a budget that may not get approved. Possible resources for the toolbox include copies of the regulations, summary statements, white papers, journal articles, and a flow chart/diagram of your institution’s specific processes. While the toolbox takes time to develop up front, it saves valuable time during budget development.


The negotiation of a clinical trials budget is a time-consuming and often daunting task for sponsors and sites. Inaccurate budgets result in astronomical financial losses for both sides. Moreover, budget negotiation delays themselves can have negative financial impacts, creating frustration and loss of goodwill. And we cannot forget participants may also incur losses: if a study they planned to volunteer for is significantly delayed or will not open at all, this could negatively impact their health and hope. If communication is open and expectations are addressed early in the site selection process, budget development and negotiations can be streamlined and virtually seamless.

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