Rafael Campo

Do clinical trials involving children cost more than those involving adults? Are they more complex? And what are the trends—have pediatric trials become more expensive and complicated than adult ones? Until now, sponsors haven’t been able to answer these questions. In fact, very little has been known about the differences in cost and complexity between pediatric and adult clinical trials. To shed some light on these questions, we recently conducted an extensive analysis of adult versus pediatric trials using Medidata’s PICAS® database, a rich source of data used to help budget clinical studies. Specifically, the analysis focused on differences in study design, protocol complexity and costs per patient (CPP). The results were intriguing.

The PICAS database contains more than 27,000 clinical study protocols and nearly a quarter of a million negotiated investor grants from over 80 countries. Drawing on this wealth of data, our analysis showed that the CPP of pediatric versus adult clinical trials is surprisingly similar. However, adult clinical trials appear to be getting more complex (involving a higher number of procedures). Our analysis also showed that adult trials actually have a lower cost per procedure than pediatric trials. 

We came to these conclusions using a dataset consisting of Phase II and III studies. We further segmented the dataset into two timeframes, 2006-09 and 2010-13, to be able to spot any trends in the cost and complexity of adult versus pediatric clinical trials. Pediatric trials were defined as those with a patient population under 18 years of age. 

Using the PICAS database, we were able to define and measure the costs and complexity of clinical trials in a variety of ways, which helped create a clearer picture of trends in pediatric versus adult studies. In our analysis, we measured:

Protocol complexity – a measure of the effort required by the site staff to implement the clinical procedures included in the study protocol. Also known as site work effort (SWE).

Unique & total clinical procedures – the number of clinical procedures performed on each patient.

CPP – total cost of one patient at one site.  This cost may include the total costs for clinical procedures, other direct costs, IRB fees, overhead and central lab costs.

Cost per procedure – a relative cost for each clinical procedure performed on each patient. This is calculated by dividing clinical procedure total per patient cost by the total number of clinical procedures performed on one patient.
  

Our analysis showed that across all therapeutic areas, the median pediatric CPP was 6%  less than the adult CPP in the 2006-09 dataset. This gap increased only slightly to 9% in the 2010-13 dataset. Both pediatric and adult CPPs were higher in 2010-13 compared with 2006-09, with pediatric CPP increasing 10.8% and adult CPP rising 13.8%.

By contrast, the difference in SWE between pediatric and adult trials was much greater. Between 2006-09 and 2010-13, the complexity of adult clinical trials increased 8 percent, while the complexity of pediatric clinical trials fell 3%. In other words, adult clinical trials were 40% more complex than pediatric trials in the 2010-13 dataset. 

We analyzed this trend further by looking at the number of unique and total procedures performed on each patient. We found the same trend as with the SWE data. Between the 2006-09 and 2010-13 datasets, the number of unique and total procedures in adult clinical trials rose 10 and 15%, respectively. On the other hand, in pediatric trials, the number of unique procedures remained relatively unchanged, while the number of total procedures rose only 3%. By 2010-2013, the median number of unique and total procedures in adult trials was 36% and 58% higher, respectively, than in pediatric trials. 

However, it was when we examined clinical trial costs in the context of trial complexity that interesting insights emerged. By taking  clinical procedure total per patient cost and dividing it by the total number of procedures, we were able to obtain a relative cost for each clinical procedure being performed on a patient throughout the study (i.e. the cost per procedure). For the 2006-09 timeframe, the pediatric cost per procedure was actually 7% higher than for that of adult clinical trials and 50% higher for the 2010-13 timeframe.

This apparent disparity between the cost per patient and complexity in pediatric trials leads us to believe that other factors are behind the higher cost per procedure metrics when compared to adult trials.

While these cost and complexity metrics provide a good start to understanding the differences between adult and pediatric trials, further analysis will be needed to uncover other key trial and operational metrics. And these new metrics could help further improve how we design and conduct both pediatric and adult clinical trials in the future. 

Articles

Pediatric Versus Adult Clinical Trials--Benchmarking the Costs and Complexity

The number of clinical trials conducted globally, as well as the number of countries involved in each study, is increasing at a rapid rate. This trend is imposing significant planning and budgeting challenges for clinical studies managers—on top of the numerous existing issues related to understanding cultural and health care practices around the world. These complications can have profound cost impacts. They include: 									

In almost all cases, budgets are planned in one currency—the currency of the sponsor company. However, the contracts and actual payments are conducted in several other currencies, typically the currencies of the countries where the trials are held. Therefore, the study's financial obligations may include absorbing fluctuations in exchange rates to meet the established contractual requirements.  

During the gap in time between clinical study budgeting and execution of the trial (often a full year), elements can change—such as the scope of the trial or the relative currency strengths—but the budget remains the same. If the budget is adversely affected by currency fluctuations, the trial starts out with less money than is needed and the scope may be cut, adversely affecting the trials results. 

Currency volatility risks are managed by multinational corporations via large departments that use sophisticated tools and employ staff financial experts. However, most companies that sponsor clinical trials are small to mid-size and they have neither the resources nor the expertise to manage currency risk fluctuation. This is a rather new discipline to the clinical trials industry—in typical practice, decision makers are mostly drug development researchers, medical directors or trial managers with little exposure to this field.

Currency Risk Management (CRM) is an emerging discipline for use in clinical trials that addresses these issues. The method features a step-by-step process that sponsors can follow to manage the financial operation of an international trial and mitigate potential cost impacts. 

Sponsors typically acquire funding from internal sources, VC firms or other funds managed by financial institutions. They receive and use this money in installments, throughout the trial process, on a number of activities. Figure 1 outlines the breakdown of a typical clinical trial budget.

Figure 1. A breakdown of clinical trial expenses by activity.			

Approximately 90% of the expenses listed in Figure 1 are usually paid in local currencies.

 While clinical trial managers plan for expenses in one currency, usually their native currency, operational managers often negotiate and strike contracts in the investigative sites native currency that cover several years of operation—in some cases up to 10 years. Obviously currency changes of the site currency vs. native currency can dramatically alter a trial's overall cost. 

Inflation can also cause contracts to change in value. Many long-term contracts account for inflation (for example, those with the National Institutes of Health, NIH) and historical rates are available for estimating possible currency effects with acceptable or reasonable risks.

  However, with currency fluctuations, volatility ranges may go as high as 30% or even 50%; one cannot dismiss such risks when planning a trial, where reliable payments are a key part of site loyalty and retention. 

With the CRM method, sponsors can address the currency fluctuation risks associated with the overall cost of an international clinical trial—be it a sponsor, VC deal or as planned by the sponsor firm itself. While the method may be utilized any time during project development, CRM analysis is best performed prior to signing any contract and consists of four steps: assembling the CRM team, evaluating trial exposure to currency risk, defining "value at risk" budgeting, and applying financial management tools. 

The right team must be assembled to ensure optimal CRM planning. An ideal team consists of the trial manager, medical director, and a finance expert. The financial expert will need to know which countries are being considered for the trial and an assessment of the likelihood of changes to the proposed country line-up, as well as any countries considered as back-ups. 

The CRM team should develop early projections of cash outflows and currency exposure. To accomplish this, planners will need budget estimates based on the costs of conducting the trials in the chosen countries. At this stage, planners are choosing the best countries in which to conduct the trials based on many factors, including cost factors. 

Step three: Defining "value at risk" budgeting

"Value at risk" is a method used by financial planners to assess the relative risk of a currency change in a given country. It requires a systematic assessment of the probability of changes occurring that will cause the currency to change in value relative to another country. With this information, the team can understand the relative need for buying financial insurance to protect the sponsor against losses. 

For example, the CRM team from Maximax International, Inc., a U.S.-based CRO, recently planned a two-year, multisite oncology study in the United States, Canada, France, and Russia. The team defined its "value at risk" budgeting by conducting a thorough analysis of all cost risk issues and exposures. This analysis looked at multiple factors, such as: 					

The VC involved would commit second year payments only if the first year study proved positive and there was no risk of termination at the end of year one

The clinical trial manager was not sure that French sites would meet targeted recruitment and, to compensate, enrollment of Canada or U.S. sites would increase by 30%

The clinical trial manager may add another country to meet target recruitment

For year two, if the study was not terminated, it would definitely incur all planned expenses.

By assessing these commitments, plans and risks—and others—the CRM team was then able to move on to the final stage of the CRM method: applying financial management tools. 

Step four: Applying financial management tools

There are a number of methods offered by financial institutions for insuring for risk. These vary in complexity and sophistication and include: Forward Rate Agreement (FRA), Currency Options (CO), Currency Futures (CF), and Swaps (SW).

 The financial insurance protects against losses if the currency effects turn against the trial and cause the sponsor company to be liable for excessive payments. With the "value at risk" stage complete, the financial member of the CRM team can explore different budgeting plans using clinical trial planning software. 

For example, in the previously mentioned oncology study, the CRM team used a budget-planning tool to come up with initial costs (in USD) for each alternative budgeting plan. Then, taking all study matters into consideration, the planner selected the optimal financial management tools for each alternative. The team conducted a pilot run to find out currency costs of the study using historical data as the "test" data. When applying historical data as a model for future changes in currencies, the total costs of currency fluctuation came out to exceed 32% of the planned cost of the trial in France. While historical data cannot be used to predict the future, they show how use of the CRM method can potentially save significant sums. 

In the end, companies cannot afford to omit the CRM method from clinical trial planning and budgeting. By following the steps outlined here, clinical trial managers can build comprehensive planning models for managing financial operations. As a result, they can overcome budgeting challenges and financial risks associated with the growing use of international trials, meet study goals, save money and—more importantly—help deliver treatments to market quickly and safely. 

is President and Director of Business Development, and

is Executive Director, Quantitative Tools and EDC, at Maximax Pharmaceutical Research, Inc., email: 

 is Manager, Data Quality and Analytics, both for Medidata Solutions Worldwide.

*To whom all correspondence should be addressed. 

1. Estimates are rounded and based on Activity Based Costing method for 196 multicenter studies in several therapeutic areas. They reflect the overall activity costs irrelevant of the entity performing such activities. For example: QC item reflects all quality related activities related to the study. Maximax International, Inc. internal studies, 

2. The 90% figure is the average of services performed in international studies (146 projects) and conducted at international sites. Maximax International, Inc. internal studies, 

 for comprehensive tables of past inflation by month and year. This site also provides information on possible future trends in inflation. 

4. An introductory review of currency risk management methods can be found in Wikipedia at 

http://en.wikipedia.org/wiki/Hedge_(finance)#Types_of_hedging

Step-by-step process for budgeting global trials that uses a Currency Risk Management method.

Rafael Campo

Articles

Pediatric Versus Adult Clinical Trials--Benchmarking the Costs and Complexity

Mastering Currency Fluctuation