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Cost

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The cost of a project in clinical trials if outsourced to a CRO is defined solely by the latter. Different methods are used by different CROs for that, but the idea is one and the same: to express the volume of work in discrete units, for which price is known. After this is done, it is just a matter of multiplying the number of units by their cost.

In reality the sponsor very often chooses the CRO that offers the lowest cost, which is a very questionable approach due to the following reasons:

1. Some CROs tend to underbudget to have a competitive advantage, which leads to a drastic cost increase throughout the course of the trial.

2. The cost is only one project target – there are three more as we have discussed and all of them are interrelated. So if a lower cost CRO is selected, there is a higher probability that quality will be lower and timelines will not be observed…

The cost is paid to the CRO based on the sponsor-CRO contract. There are the following main types of contracts:

1. Fixed price contract, which is also usually milestone-driven. The cost of a study is fixed upon agreement at the beginning of the study and may be subject to change only if there is a real change in scope – additional countries and sites, increased number of patients, unplanned protocol amendments, and so on. The CRO is paid upon achieving milestones, which may be site activation driven (first site activated, 50% of sites activated, last site activated, etc.), patient recruitment driven (first patient in, 50% of patients enrolled, last patient in, etc.), subject visits driven, data driven (last page verified, database locked, etc.) Fixed price contracts are a bit tricky though. Whether the CRO spends less or more effort on the study, the contract is not recalculated. The point is that the second situation (the CRO spends more) is easily tolerated by the vast majority of sponsors, but the first one (the CRO spends less) is harder to accept psychologically, and the sponsor may ask to recalculate the budget. Whether to do it or not is the CRO’s decision.

2. Unit-based (unitized contract) – the whole budget is divided into units. Once a unit is completed, the CRO is paid for it. An example of a unit may be one monitoring visit or, say, 10 monitoring visits performed.

3. Time and material type of contracts came from construction. In this case CRO is paid simply based on the effort spent according to timesheets.

4. Mixed contracts. For example, the contract may be fixed price milestone-driven with some units – usually monitoring visits or site audits – introduced.

Project Management in Clinical Trials

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