Keys to Successfully Negotiate Site Budgets and Contracts

Study budgets and contracts are complex business processes. Both are generally created by the sponsor and provided to the site; however, the authors regularly advise study sites that neither document is set in stone and should be approached as a work-in-progress. Negotiating a budget to compensate the site for all research costs and obtaining an acceptable contract requires careful review of multiple study documents to identify all costs, deliverables, and sponsor expectations. This article reviews keys to successfully manage the budget and contract process at the study site.

Budget Preparation

Budget preparation includes the review of the protocol, informed consent, lab and pharmacy manuals, and the clinical trial agreement (CTA). Each of these documents contains information related to research costs.

The protocol provides information on the procedures and assessments for study visits, safety or follow-up visits, and fees attached to a visit or procedure. The Schedule of Events (SE) lists the study visits, including procedures and assessments to be performed at each visit. Use the SE as a starting point to determine the procedures and assessments required at each visit. Review footnotes as these might indicate additional testing for situations such as out-of-range lab values creating additional costs. Examine the detailed description of each of assessment and procedure to identify what is included for determining cost. For example a study visit may include a physical exam. The protocol content will provide specific details of what is included in the physical and other requirements such as the physical must be performed by a physician. These details are important in determining costs.

The informed consent provides information on subject compensation. Generally the site compensates the subject so this cost must be included in the site budget. When study visits are lengthy there may be additional costs for snacks or meals or for subjects traveling a considerable distance lodging.

Pharmacy and lab manuals provide information on the requirements for set-up, storage and handling of product, and staff requirements. Special requirements such as mixing of a drug or special storage will result in additional costs. The lab manual should identify which labs will be processed on site and which labs are sent to a central lab as well as the processing for on-site labs and the shipping of central labs. If these manuals were not provided to you initially, be sure to request them from the sponsor so that you have this additional information to properly formulate your budget.

The CTA defines the responsibilities of the sponsor, the site, and the investigator. It details what is provided by the sponsor (including study supplies, recruitment materials, investigational product, and equipment). The items that will be provided at the sponsor’s expense are identified either within the body of the CTA or in the budget exhibit. Site deliverables such as recruitment goals for the site, the number of screen failures compensated by the sponsor, record storage requirements, and completed case report forms (“CRFs”), are defined in the CTA and these too need be included as costs in the site budget. The budget will be based on the recruitment goal agreed upon by sponsor and site. The CTA should provide the details of monitoring visits including frequency of visits, expected time on site, materials to be reviewed, and expectations of staff time. Staff time for monitor visits should be included in the site budget.

Procedure and Assessment Costs

Procedure and assessment costs must include staff hours to perform the tasks. Staff time including benefits needs to be added to the procedure/ assessment to establish the total cost. With this information the site is able to identify the cost to the site for each study visit. Simply add the total costs of all procedures at a visit for total visit cost. Then add the costs of each study visit to obtain the total per subject cost. Use the agreed upon subject recruitment goal and multiply this by total subject cost to determine to total cost of routine subject visits.

In addition to visit costs there are other costs to conduct the study. Indirect costs include utilities, facilities and administration (overhead) that are driven by institutional policy. There is a start-up cost to the site, whether or not the site enrolls a subject. This should be an upfront non-refundable payment to cover site set-up, protocol specific training, review of protocol and other study documents, IRB submissions, review of patient charts for screening, and site initiation meetings. During the study, the site will incur other costs including subject recruitment, preparing for and supporting monitor visits, serious and unexpected adverse event reporting and adjudication, investigator review and rating of severity and relation to study drug of adverse events, submitting continuing reviews to the IRB, data entry, subcontractor payments, shipping and handling of specimens, record storage and destruction, protocol amendments, unscheduled and follow-up visits, study closeout, and return of unused investigational product. These costs may be included as items in the budget or may need to be invoiced when they occur. The budget should detail the items to be invoiced and the amount of each.

Costs of Doing Business and Research Costs

When identifying study budget costs, the site must determine the research costs and the costs of doing business. Generally, if the site incurs the expense regardless of the study, it is a cost of doing business and should be absorbed by the site. If the cost incurred is due to the conduct of the specific study it is a research cost and should be reimbursed by the sponsor.

An often tedious but necessary part of developing the study budget is determining the responsible payment party for each of the research costs. This is too complex to cover extensively in this article, but in general:

  • Standard of care costs specific to the disease or condition being studied are billed to the insurance carrier, but are based on the subject’s health insurance policy.
  • For studies that qualify under the Medicare Clinical Trial Policy and the Patient Protection Affordable Care Act, 2010, some costs may be billed to Medicare. Qualification criteria and reimbursable costs can be found at
  • Costs related directly to the research/study are the responsibility of the study sponsor.

Use a fee schedule or charge master to determine the costs of procedures for your site. Items that are not on the charge master, such as the informed consent process, doing quality of life assessments, or other surveys, need to be determined by the site based on staff time required to complete these tasks.

Budget Comparisons

The completed site budget should be compared to the sponsor budget for discrepancies. Transfer data from the site budget to the sponsor’s budget template. Budgets should be reasonable and reflect fair market value of the cost of procedures and services in your geographic area. Indirect costs and revenue expectations are defined by the institution. The site should have documentation based on the site’s history of similar studies to justify costs not reflected in the sponsor’s budget.

Clinical Trial Agreements

The Clinical Trial Agreement (CTA) is a legal and binding document between the site and the sponsor or clinical research organization (CRO), and possibly the principal investigator, depending on site preference. It should be carefully reviewed to ensure that it is fair and balanced and protects the site. Contracts are written in legalese that may be difficult to understand. One of the keys to ensuring that the CTA is fair and equitable and the site is protected is to understand what you are agreeing to. If the contract contains terms that you do not understand ask for clarification and continue to ask until you understand the term, or change it to a term that you understand and with which you can agree.

Language and Intent

Check the contract for a list of definitions of key terms and words that are used in a unique way in the contract. The definition or word may not be familiar or what you would use in that situation. (Windschiegl, 2015) For that reason, contract definitions are important and should be scrutinized to make sure that you can agree to that use. If there is not a list of definitions request one be included.

Contracts are written at a very high reading level, and are often difficult to understand. Negotiate for language and terms that you understand and that are not more than what is needed to protect the interests of all parties. For example, watch for broad, general terms such as “any and all,” as this includes everything, whether listed or not listed, even things that you may not have contemplated. Replace these terms with the specific expectations. Replace “immediately” with “promptly” as immediately indicates that the site will drop everything. Another term is “best effort” meaning the site will do whatever is possible and then go above and beyond. Replace with “reasonable efforts” or “commercially reasonable efforts.” As you go through the contract keep a list of negotiated language that you like for use in future contract negotiations. Be aware of words that are CAPITALIZED in a contract. These mean something to the sponsor. Make sure you understand the meaning, why they are capitalized, and that these are included in the definitions.

Money Matters

Payment and budget issues are the number one reported problem between sites and sponsors. (Pfeiffer, 2014, Schulman, et. al, 2002, and Mello, et al, 2005) Payment plans should be clearly defined in the CTA. Sponsor payments may be by subject, by visit, by milestone, by month or quarter, or by invoice. Understand how the site will be paid, so that you can better predict your cash flow. What triggers payments? For example, are payments triggered by completed CRFs? If so, do these need to be reviewed and approved by the monitor prior to payment? What is the frequency of payment? How are invoiced items handled? Once the sponsor receives the invoice what is the time for payment to the site (30 days, 60 days)? Make sure that the payment terms are financially feasible for the site. If there is a lag time in payments is the site able to cover the expenses until payment is received?

Define Confidentiality

It may be to the sponsor’s benefit to define confidentiality in vague terms. However, to minimize the chances of accidental disclosure of confidential information it is important that it be clearly identified. All confidential information provided by the sponsor should be clearly marked on each page, as pages tend to get separated. Confidential information shared orally should be put in written format and identified as confidential within a reasonable time frame.

Legal Protections

Indemnification protects the contract parties from liability for subject injury, harm or death due to the negligent or wrongful actions of the other party. In addition, indemnification should protect the site staff and officers from liability for harm or injury to a subject as long as they conduct the trial according to the protocol. Sites typically also would like to be protected if a sponsor is accused of an illegal use of others’ intellectual property or operating a study without government approval.

Sponsors are usually willing to provide some form of indemnification for all studies, even if it is only for wrongful and negligent acts. There should be a provision addressing indemnification, even if it is to say that the parties have agreed to forego indemnification protection. It is a best practice for a site to identify its specific indemnification requirements and to ask for them during the contract negotiation process. For the site it is important to understand the sponsor’s expectations during monitoring visits. The contract should include language that monitoring visits will be conducted during the site’s business hours, include reasonable advanced notice, and be under the institution’s oversite.

Contracts are governed by the state. If there are issues with the CTA that require arbitration or result in legal ramifications, these will occur in the state of jurisdiction. Depending on the state of jurisdiction this could require travel and time away from business. The CTA should state where disputes will be litigated, and if remote from the site, whether these costs will be covered by the sponsor. It is acceptable to request that the site’s state be used as the parties’ “choice of law.”

The contract term should be stated explicitly. It is typically the date from which the CTA is officially signed by all authorized parties through the end date of the Study at that site. Reasons for and notice of termination of the contract should be spelled out. Either party should be able to terminate the contract with agreed upon notification. Reasons for termination should be defined including termination for no reason. Many times contracts must be extended and the process for extending the contract should be defined.

When a subject is injured or harmed due to their participation in the study, medical costs related to the injury should be covered by the sponsor. It is essential that this be defined consistently in the CTA as well as in the consent form.

Negotiation and Communication

Successful negotiation requires communication by both parties. Each party has priorities and negotiation involves give and take. When entering into negotiations prepare a list of priorities that includes site needs and wants. Top priorities are those that the site requires for the study to be financially feasible. Be prepared with data and documentation to justify your requests. Examples might include the costs of conducting similar studies, history of meeting and exceeding recruitment goals, meeting study timelines, and specific costs of procedures at your site. When communicating, be responsive and follow-up with the other party in a timely manner. Preparation and practice assist in successful negotiation. Success is not a “winner take all” situation, but reaching an agreement that is acceptable to both parties.


  1. Windschiegl, M. (2015). PFS Clinical Coverage Analysis and Contracting Workshop. Scottsdale, AZ.
  2. Mello, M., Phil, M., Claridge, B., & Studdert, D., (2005). Academic medical centers standards for clinical trial agreements with industry. NEJM, 352, 2202 – 2210.
  3. Pfeiffer, JP. (2014) Clinical Trial Agreements: Negotiation and Management. Scholars Press. Germany.
  4. Schulman, K., Seils, D., Timbie, J., Sugarman, J., Dame, L., Weingurt, K., Mark, D., & Callif, R. (2002) A national survey of provisions in clinical trial agreements between medical schools and industry sponsors. NEJM, 347, 2160-2162.
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