Budget Development and Negotiation

In deciding whether to conduct a clinical trial, three questions should be asked: (1) Does the protocol provide scientific value? (2) Can subjects be recruited? (3) Does the budget support the work to be performed? If your response is “No” to each of these questions – then decline trial participation.

Trial budget estimation: Request a draft budget and the full protocol from the sponsor as soon as you are approached to conduct the trial. You need the full final protocol in order to make an accurate budget estimation. You can roughly estimate the budget while waiting for the sponsor’s budget, but you need to have access to the final protocol. Always compare the amount provided by the sponsor with your own budget. The sponsor’s budget is usually as a flat rate per patient enrolled, such as US$8,000 per patient including indirect costs.

Itemize the costs: The per hour cost for study site staff, clinical examinations, laboratory test etc. varies between institutions and countries. The same is true for the administrative cost and the cost for the ethics committee review, and the start-up cost for the research pharmacy and clinical laboratory. However, the indirect fee on the direct cost should be the same across all sites regardless of the location. The first rule to remember is that a clinical trial budget should cover all trial-induced costs – both direct and hidden costs. The investigator should define the standard of care items in the study protocol against research-related items.

Budget cost sections

Fixed study site costs or start-up costs: These costs should be paid before the study begins. They are independent of the number of subjects recruited and are non-refundable.

Administrative cost: This includes both start-up costs and annual administrative costs for the development and negotiation of the trial agreement and budget; the initial ethics committee review fee and continuing review fee; and protocol amendment review fees; set-up costs and annual cost for the reach pharmacy; and set-up costs and annual cost for the clinical laboratory.

Costs related to subject visits: The investigator should identify all direct and hidden cost items that are induced by the trial at each subject study visit. Since each site visit commonly is different from other site visits, the cost of each visit should be defined. The sponsor is subsequently billed for each unique completed site visit according to the pre-defined cost for each study visit.

Indirect costs: Indirect costs or overhead is the cost that the study site/institution covers to maintain the building, the site space, electricity, cleaning, equipment, etc. An indirect fee of 25% is commonly adopted on all direct cost as listed above. An indirect fee above 25% is often subject to objections by the sponsor.

Specific budget considerations: Persons who are experienced in estimating clinical trial budgets are well aware of the cost items that less experienced persons may overlook. A few examples to illustrate this point: increased salaries and operating cost over time, unscheduled visits, site audits by the sponsor, data query resolutions and storage of research records. Another topic that is becoming increasingly important to determine is the site’s responsibility for electronic data capture of the study data and the sites’ involvement in the so-called risk-based monitoring.

Costs not included: Subject referral costs are not permitted for inclusion in the budget for another doctor who refers a subject to the study site and the trial. However, other doctors are allowed to refer potential subjects without a referral fee. A site should not be awarded a bonus payment for fulfilling a certain subject recruitment number. Doing so could increase the pressure on the subjects to participate and also increase the risk for violation of the inclusion/exclusion criteria.


Trial budget tips/considerations: Please note that if you have forgotten to include an item in the budget, the sponsor is not obliged to pay for this item. If a protocol amendment changes the work load or adds new clinical procedures, then the clinical trial budget should be re-negotiated. If the sponsor allows more patients to be enrolled in a study, the site should be prepared to make more payments for potential screening failures. When preparing your trial budget, you’ve asked for more money than you need, so you can reduce costs and satisfy the sponsor during the negotiation. You can consider increasing the cost of some items to be able to reduce the cost of other items during the budget negotiation. The sponsor should also allow other items to be invoiced, e.g. costs relating to advertising, travelling, and equipment, etc. For multi-year trials, consider adding an inflation rate of 2-3% per study year to the per-completed-subject cost.

Budget negotiation tips: When negotiation the trial budget use the words, “Our costs of participating in the trial” to be clear that you will not take part in the trial if the costs are not fully covered. Your internal trial budget will likely differ from sponsor offer. Do not allow any internal budget topics to be shared with the sponsor. Your internal costs may limit negotiation of future projects, since sponsors retain a database of previously negotiated budgets. Finally, do not be afraid to re-open the budget negotiation before the clinical trial agreement has been signed or at the protocol amendment stage.

Ideal payment schedule: The ideal payment schedule includes (1) non-refundable start-up payment; (2) regular payments with realistic milestones, and (3) final payments made at the sponsor’s close-out visit.

Payment tracking tips: Be clear about when and how the payment will be made, i.e. the billing calendar. The terms should be included in the clinical trial agreement. Many times the study site receives a payment late, meaning the site has to cover the trial cost before receiving the payment from the sponsor. A good practice is to request periodic payment reports from the sponsor to ensure that all information submitted by the site was received and that the payment has been directed to your site. Note that many sponsors miss payments to the study site. Some sponsors rely on the investigator or the study site to invoice all the visits, which means the sponsor will not have the responsibility for any outstanding payment.