In a recent article posted on PharmExec.com, clinical trial spending was the topic of discussion, as billing models industry-wide are changing. Five key conclusions were drawn, including:

(1) The complexity, population heterogeneity and global scale of trials today makes it harder to control unexpected developments that require amendments to trial protocols-both cost time and money.

(2) Cost of drug development overall and the longer lead times imposed by regulatory fiat means that management will no longer tolerate wide variances in the cost of trials against what is budgeted – predictability in spending is key.

(3) Tufts Center for the Study of Drug Development research shows multiple changes to trial protocols, often at the late stage of trials; wide discrepancies among surveyed companies in where budgeting responsibilities are housed; and bewildering contrasts in the kind of tools utilized to manage the spend on trials.  The result is continued bias toward fragmentation and silo thinking at a time when management is demanding more accountability for results.

(4) New ways of measuring results on a consensus basis are required.  Companies are still struggling with how to apply advances in expense tracking technology and software to promote seamless integration of data.

(5) Solutions to the budgeting challenge include more joint planning, departmental coordination and integration, applying findings from other functions and industries, and building better ties to patients. Also important, more collaboration to promote understanding by the main regulatory agencies of the cost curve.

This group comes to consensus on these five key points.  As an organization, we are a proponent of a fixed-price billing model because we feel it can help address many of these exact issues.

Here’s why:

  • A fixed-price CRO model allows you to optimize the efficiency of how you manage your clinical programs with full transparency into your data and study milestones.
  • Reduces overhead on internal accounting and tracking systems over the course of the project.
  • Fosters a friendlier and productive relationship with the customer by virtue of eliminating time wasted on discussions over money.

From a customer’s perspective, the fixed-price model also has tremendous advantages; here’s why:

  • Cost is already determined and customer can budget appropriately for it.
  • Fixed-cost billing helps build that relationship by allowing more focus on the study instead of on negotiating pricing.
  • Customers particularly appreciate not getting hit with costs associated with scope changes that should have been anticipated from the beginning.

The innovative approaches many CROs are turning to are making it possible to successfully use a fixed-price model, moving away from the once traditional variable billing model. A fixed-price CRO model allows you to optimize the efficiency of how you manage your clinical programs with full transparency into your data and study milestones.

For more information on our pricing model perspective and to read our byline titled: “Variable Billing vs. Fixed-Price Models – What Does Your Clinical Trial Stand to Gain?”, click here: http://bit.ly/NPIBVz.