Pharmaceutical executives readily acknowledge that their industry faces a number of broad challenges, not the least of which
are the escalating costs of developing new drugs and a weak public image.1 Both issues intersect in one area of drug development: clinical grants. Based upon an industry survey of people working
in clinical operations, and an analysis of grant payments from the perspective of standard of care (SOC), this article argues
that cost management and fair market value can be far more effectively addressed than has been the practice to date.
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Clinical grants represent a major and growing cost of developing new drugs. These rapidly increasing costs have been extensively
documented and analyzed,2 and the research suggests that clinical trials are the largest single area of R&D operating expenses, with clinical investigator
grants representing the bulk of these costs. Many drug development managers appreciate the need to control clinical trial
costs. One important, if underappreciated, approach involves avoiding double payments for activities that would be normally
covered by third-party payers (including Medicare and Medicaid in the United States) as part of the standard care that any
patient would receive at that clinical research site, whether or not that patient is part of a clinical trial. While sites
are ethically prohibited from enrolling a patient in a clinical trial if that patient would not otherwise be treated for the
illness being studied, many of these patients would be partially covered by third-party payers as part of the standard of
medical care.
Understanding the standard of medical care, however, can be particularly difficult when studies involve multiple countries.
At one end of the health continuum some countries are moving toward national medical treatment protocols—the UK's National
Health Service is one example. While health care in many countries has one dominant payer, few countries have just one agency
delivering almost all their health care, as is the case in the UK. In sharp contrast, the United States has multiple payers
and health care delivery organizations. Such differences challenge clinical development teams as they seek to establish medical
standard of care guidelines for clinical trial grant payments. In the United States, however, it is easier to establish what
constitutes standard of care through the payment practices of third-party payers.
A second pharmaceutical industry challenge is the changing relationship with physicians. After intense scrutiny from both
within and outside the industry, pharmaceutical companies have now developed more stringent guidelines about what they can
give to prescribing doctors. For instance, new guidelines prohibit gifts of any sort, restrict meals to those associated with
actual medical education, and prohibit industry employees from giving any other objects to medical professionals. Some pharmaceutical industry observers are also concerned about the financial relationship between investigators participating
in clinical trials and the companies sponsoring the trials. These observers have questioned whether the grant amount for a
clinical trial reflects payment only for work performed or whether the payment might be an attempt to influence investigator
behavior. In these instances, the foremost concern is whether investigators are being paid at fair market rates or at inflated
rates that might influence their behavior.3 While some published research links relative grant payment levels with subsequent investigator prescribing behavior, either
of the study drug or all of the sponsor company's drugs, it is obvious that any payment may influence behavior. According
to Morin, the number of physician investigators increased dramatically in the last decade as most research moved from institution-based
settings to practitioners' facilities, where less stringent ethical standards may prevail. An AMA-adopted Report on the Council
on Ethical and Judicial Affairs suggests that some payments to investigators may exceed the fair market value for services
performed, and may influence behavior.4,5
In response to the perception of impropriety in these relationships, the industry has made transparent—through http://ClinicalTrials.gov/—the sites involved in clinical trials. In anticipation of the upcoming act requiring pharmaceutical companies to make public
the total amounts paid to individual physicians for any type of work, most companies have already begun that process.
To address the fair market rate issue in clinical trials, companies often benchmark their payments against industry practices.6 The issue of fair market rates is of immense concern to those engaged in managing clinical studies; they recognize that
there should be no appearance of paying above market rates by the possibility of double paying for medical activities that
would be covered by normal standard of care (SOC) payments.
The University of the Sciences in Philadelphia (USP) and TTC, llc, have been conducting an extensive analysis of why some
clinical trials finish faster than others, with a number of the findings already published.7 This analysis includes:
- Study and site attributes associated with clinical trial studies that complete their work faster
- Role of outsourcing in developing drugs
- Profiles of clinical sites
- Global grant payment practices
- How SOC considerations influence clinical grant payment practices.
On this last point, our research shows that while drug development professionals want to use SOC data to manage clinical grant
costs and to address fair market value, most of the current SOC data sources are limited and time consuming. We argue that,
in the United States, third-party medical reimbursement claims data represent an underappreciated source of potent SOC data,
and we demonstrate how these data provide SOC benchmarks quickly and efficiently. While many companies may incorporate SOC
considerations in their clinical grant budgeting and negotiations, the amount of potential cost savings identified through
insurance claims data are far greater than many may appreciate.
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