Excerpt From Book: The Four Villains of Clinical Trial Agreement Delays and How to Defeat Them: Addressing CTA Delays Comprehensively by Débora S. Araujo
Imagine with me for a moment you are your favorite superhero, charged with the task of saving the world from villains such as the Joker, Lex Luthor, Doctor Doom, and the Green Goblin. You would not be very effective—or much of a superhero, for that matter—if you only took one of them out while letting the others roam free. In the same way, as an industry, we cannot effectively tackle the issue of delays in the execution of clinical trial agreements (CTAs) by only addressing one or two of the “villains” contributing to this industry-wide problem.
In this book, we will explore the different villains who contribute to CTA negotiation delays and provide some practical ways to address each of them. By tackling the different factors contributing to this industry-wide issue concurrently, we can accelerate the change that we, as an industry, and our patients desperately need.
Lights, Camera, Action!
I know the topic of CTA negotiations may not be a sexy one for most people (except the few like me), yet it is one that can have an incredible impact in the lives of countless families. If you work day in and day out with CTA negotiations, you may not think of it as purposeful, life changing, or heroic. However, I challenge you to look beneath the surface to the compounded impact it can have for hundreds of thousands of patients and their families, both now and in the years to come. I further challenge you to see yourself as a type of superhero, charged each day with the mission of defeating the villains who could keep a dad from seeing his kid’s next birthday, a family from sharing another holiday together, or a child from enjoying just being a kid with his friends for another summer. It may seem like a bit of a stretch—maybe even somewhat idealistic—but if we don’t see ourselves as existing to make a difference, to serve and solve a problem, what is the point of our lives? I believe, even in the world of CTAs, we can make a difference.
As my favorite superhero, Wonder Woman, said, “If it means interfering in an ensconced, outdated system to help just one woman, man, or child … I’m willing to accept the consequences”
Let’s do this.
Villain #1: Ineffective Site-Budget Negotiations
Villain Name: THE NUMEROR
There is a right and a wrong in the universe. And the distinction is not hard to make.
If you are involved in study start-up, you have likely seen many instances in which the sponsor/CRO and site have agreed on the legal language of the CTA only to experience delays due to the proposed budget. Following are some ways to effectively deal with this villain. Some approaches might be a better fit for certain organizations, and other approaches might be more appropriate for others. The important thing is to be aware that there are options today that can drastically improve site-budget negotiations for any organization. Let’s explore a few of these.
How to Defeat This Villain
Provide Procedure-Level Budgets to Sites
Imagine for a moment that you are a contractor. A potential client comes to you and says he wants you to build a three thousand-square-foot, five-bedroom, three-bathroom house and will give you two hundred dollars for the entire project. After your initial instinct to tell him that he is out of his mind (or worse), your next reaction would likely be to ask him how he imagined two hundred dollars could cover all costs as well as what was included in his cost estimate.
In the same way, investigator sites are many times perplexed when they receive the sponsor’s initial budget proposal containing sponsor expectations of what the study will cost to run from the site side. Sites are perplexed for two main reasons. First, the proposed budget usually does not match the actual costs of running the study at their site. (We will discuss this point later in the chapter.) And second, there is very little transparency into what the cost provided by the sponsor includes. This second point often happens when sponsors send a site budget only showing either a total per-visit or a total per-patient cost.
This makes it very challenging for sites to compare “apples to apples” what the sponsor is offering for each study’s protocol-required procedure or task against their internal analysis of what it will cost. Instead, this issue can be easily addressed if the sponsor provides a budget proposal that links each protocol-required procedure or task to a specific cost.
I can almost hear the obvious objection to this approach: will this not further delay negotiations if negotiations will now be made at the procedure level? My honest answer from personal experience in various sponsors, site-side experience, and feedback from numerous colleagues in the industry is no. If the budget proposal sent to the site is built within fair market value costs and all the procedures and tasks required by the protocol’s schedule of events table, there should not be a huge variation between the sponsor and site costs. If there is a huge discrepancy, then either the sponsor or the site is making incorrect assumptions that should be addressed and resolved in the process of the negotiation. A simple conference call between the parties can help clarify the root of any discrepancies. If an agreement is still not reached, then it may not be a good partnership to pursue. The point is that a certain level of transparency is the right foundation on which to build negotiations and should not be viewed as a bottleneck.
Sponsors can provide CTA documents, including the site budget, along with other required start-up documents prior to the prestudy visit. This will ensure sites have ample time to contrast the proposed budget against their internal coverage analysis and negotiate as needed without impacting regulatory document submissions. Many sites will not be able to submit internal regulatory documents without first going through CTA documents and negotiations.
Customize Budgets while Maintaining Fair Market Value
Many global sponsors and CROs develop one standard site budget for a country (some even use the same budget template for all countries) and send it out for site review without taking into consideration geographical locations, institution size, and other pertinent information. This increases the number of days sites will need to revise the budget proposal with more appropriate and site-specific numbers. It also increases the number of days required to obtain the necessary internal sponsor approvals to revise the budget items.
Starting out with a robust, accurate, and equitable site budget based on geographical location, institution size, and site intelligence can shrink the number of days needed for the back-and-forth among sponsor, CRO, and site. Sponsors should consider the differences in health-care costs among global geographical locations, even within a country. There are also industry tools and technologies that allow you, to a certain degree, to tailor the site budget to specific institutions.
Objections to this approach are usually rooted in the fear of not maintaining fair market value (FMV). To clarify, maintaining FMV while producing more accurate and robust site budgets can be achieved if the sponsor/CRO consistently applies a standard process and can show proper documentation to prove they have followed this process in the event of an audit.
The key here is setting up an excellent initial structure to ensure a consistent process that is replicated for all sites while considering their unique differences. This is the foundation of maintaining FMV. This solution may require some time up front to build the infrastructure, but it will also prove to be amazingly effective in speeding up site-budget negotiations and defending FMV during an audit.
Why Is Fair Market Value (FMV) Important in CTA Negotiations?
The importance of the FMV topic can be traced back to a regulation published in 2003 by the Office of Inspector General (OIG). The regulation was titled “OIG Compliance Program Guidance for Pharmaceutical Manufacturers” and stipulated that payments for research services should be fair market value for legitimate, reasonable, and necessary services. Unfortunately, regulators never provided clear guidelines on how exactly fair market value should be obtained. This has left both sponsors and sites in a tough spot; they still are required to abide by the regulation and can suffer steep fines for not doing so but have received no clear direction as to how to do this.
FMV and the Real Estate Comparison
One of the important questions to ask when establishing and reviewing the market value of anything is this: “What are most reasonable people willing to pay for something comparable?” Think about how home appraisal values are established in real estate. An owner looking to sell a home may have installed gold chandeliers and heated marble floors, but if comparable homes (in size, number of rooms, and age) in the neighborhood are selling for $100,000, this home is likely to be appraised at a similar value despite what the owner believes it is worth. This is not to say that someone cannot offer to pay $1 million for this home. It simply means that the higher offer would be outside of the market value concept. In real estate, this is not common, but it is acceptable. Generally, the value of an item or service is determined by what the market is willing to pay for it. However, in the realm of clinical research, the word fair makes things more complicated.
The word fair takes the concept of market value a step further to include reasonableness, appropriateness, supporting documentation, and consistency, among other concepts. It is important to understand this difference to avoid a potential perception of bribery and impropriety when setting and negotiating study-site budgets. Remember that just because something is market value because someone is willing to pay a certain amount for it does not necessarily mean it is also fair market value.
Additional Regulations and Guidance on Fair Market Value
The anti-kickback statute generally prohibits offering, paying, soliciting, or receiving remuneration to induce or reward referrals for items or services payable by government health-care programs, including Medicare and Medicaid.
42 CFR §411.351
Fair market value means the value in arm’s-length transactions, consistent with the general market value. “General market value” means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement.
Sunshine Act and Open Payments
The Physician Payments Sunshine Act is part of the Affordable Care Act and requires that payments made by pharmaceutical and device companies to physicians and teaching hospitals be made available to the public through a searchable database. This program is overseen by the Centers for Medicare and Medicaid Services and is made available yearly on their website (CMS.gov). Payments include speaking fees, gifts, travel, research, and meals.
Stark Law: “Entities that employ or contract with physicians must ensure their agreements are structured to comply with the federal Ethics in Patient Referrals Act (“Stark”) if they intend to bill Medicare for services rendered or referred by the physicians.”
Negotiate Master Site Budgets
For those sites with which the sponsor has already negotiated master clinical trial agreements (CTAs), it may be beneficial to establish a master site budget as well. By coming to an agreement on certain routine costs and fees, the return on investment of that negotiation time may prove to be invaluable in expediting future trials with that site. This approach may be worth piloting with frequently used strategic partnerships and networks to test its effectiveness for your specific organization. The key here is that both parties be willing to use the negotiated amounts for the established timeframe and not attempt to re-negotiate as this defies the purpose of such master negotiations. Nevertheless, if used appropriately by both parties it can streamline the process significantly.
Start with Previously Approved Fees
If a master site budget is not a possibility, and if workload permits, simply customizing each site’s budget (using previously negotiated and agreed-upon costs) prior to distribution may slash negotiation time. Overhead, fixed fees, and other appropriate costs are many times not protocol specific; customization of these items can help start negotiations on a good note as well as reduce the back-and-forth. To be clear, this does not mean that a sponsor should provide the same site budget used for a previous study to the same site without regard for the current study protocol. This does mean that certain fixed and at times routine procedures can be proactively used when developing new site budgets for a new study after recent negotiations with the same site. Continue reading…
 Wonder Women #170
 Goldfarb M., Norman. “Journal of Clinical Research Best Practices”, vol. 12 no. 8, (2016). https://firstclinical.com/journal/2016/1608_Budget_Negotiation.pdf
 Snyder, A. “Fair Market Value Conundrum: Solutions for Sponsors and Sites.” Applied Clinical Trials Home. October 16, 2017. Accessed February 28, 2018. http://www.appliedclinicaltrialsonline.com/fair-market-value-conundrum-solutions-sponsors-and-sites?pageID=1.
 Stanger, K. C. Stark Requirements for Physician Contracts. www.hhhealthlawblog.com. http://www.hhhealthlawblog.com/2014/12/stark-requirements-for-physician-contracts.html (Retrieved October 14, 2017)