HCR 575 Module 7 Assignment 5: Negotiating the Sponsor's Budget Example

Negotiating the LUNG-302 Budget: Plan, Counterproposal and Fallback Positions

Student Name

MS in Clinical Research Management, Arizona State University

HCR 575: Management and Negotiation of Clinical Trial Budgets and Contracts

Instructor Name

Month Day, Year

Negotiating the LUNG-302 Budget: Plan, Counterproposal and Fallback Positions

The Gap

The sponsor's proposed budget pays $11,200 per completed participant, with no start-up fee, no screen failure payment and pharmacokinetic draws paid only on invoice. The site's budget, built from the coverage analysis and time-and-motion estimates, totals $14,850 per participant plus a $12,000 start-up fee. The difference is $3,650 per participant, or about $73,000 for the planned 20 participants.

Interests

Following the principle of separating positions from interests (Fisher et al., 2011), the budget manager identified what each side actually needs.

The shared interest is fast, high-quality enrollment. The site can offer what the sponsor values most, fast activation and a record of meeting targets, in exchange for covering real costs.

Walk-Away Point and Priorities

The site will not accept less than $13,600 per participant, the point at which the trial covers its direct costs and institutional overhead without new staff. Priorities, in order: a nonrefundable start-up fee; payment for research-only procedures identified in the coverage analysis; screen failure payment; per-participant rate.

Counterproposal Email

Subject: LUNG-302 budget, site counterproposal

Thank you for the draft budget. We are eager to activate LUNG-302 and expect to open within 45 days of a final agreement, based on our activation times for the last three oncology trials. To do that sustainably, we propose the following changes. First, a nonrefundable start-up fee of $12,000 to cover IRB review, pharmacy setup and staff training, which occur whether or not we enroll. Second, per-participant payment of $14,200, reflecting the extra CT scans, electrocardiograms and research questionnaires in the schedule of events, which our coverage analysis shows are research costs that cannot be billed to insurance. Third, screen failure payment at the screening visit rate of $1,450, capped at one screen failure for every three randomized participants. Fourth, pharmacokinetic draws and amendment-related costs as invoiceables at the rates attached. We have attached the coverage analysis and cost justification for each item. We are glad to discuss any line.

Planned Trades

Expected Outcome

A realistic settlement is about $13,900 per participant, a $10,000 start-up fee and paid screen failures, which covers the site's costs while saving the sponsor most of the gap it cares about. Documenting each cost from the coverage analysis gives the sponsor's budget team the justification its own managers will require (Pfeiffer & Windscheigl, 2021), and research-only procedures cannot be shifted to insurers under Medicare's clinical trial policy (Centers for Medicare & Medicaid Services, 2007).

Conclusion

Successful budget negotiation rests on preparation: knowing true costs, setting a walk-away point, understanding the sponsor's interests and justifying every request with documents. The counterproposal asks for what the protocol actually costs and offers the sponsor what it values most, a fast and reliable site.

References

Centers for Medicare & Medicaid Services. (2007). National coverage determination for routine costs in clinical trials (310.1). https://www.cms.gov/medicare-coverage-database/view/ncd.aspx?ncdid=1

Fisher, R., Ury, W., & Patton, B. (2011). Getting to yes: Negotiating agreement without giving in (3rd ed.). Penguin.

Pfeiffer, J., & Windscheigl, M. (2021). Managing clinical trials: Budgets and contracts (2nd ed.). LAD Publishers.