Applying Behavioral Economics to Clinical Trial Negotiations

While the structure of clinical studies follows logic and reason, the business of clinical trials may not be as rational. Traditional economic thought assumes humans to be rational, self-serving decision-makers; however, the growing field of behavioral economics shows us that rationality might not be our forte. In this article, we will use a framework of behavioral economics to explore how our cognitive biases and subjective experiences impact our decisions, and how becoming aware of these influences can improve our clinical trial negotiations.

What is Behavioral Economics?

We have evolved and adapted mental shortcuts—called cognitive biases—to save time and energy in our decision-making processes. While they can help us easily sort through our best options, any cognitive bias leaves us open to error and can serve as a blind spot in our decision-making process if we lack awareness.

It is important to understand that everyone is influenced by cognitive biases from time to time. Rather than assuming we are all capable of making completely rational decisions, behavioral economics—a field that merges psychology and economics—differs from traditional thought in that it acknowledges humans as thinking, feeling beings with experiences and beliefs that influence our decisions.

The Ultimatum Game

In what has become a classic experiment in behavioral economics, the Ultimatum Game highlights the many subjective underpinnings of human decision-making. The experiment consists of two players: Player One is given a lump sum of money and is told to divide it with Player Two. Player Two has the option to accept or reject the offer. If the offer is rejected, neither Player One nor Player Two receives any of the money. Both players are aware of the rules and the total amount of money. If both players acted to maximize the highest gain for themselves, Player One would always offer Player Two the lowest amount of money, and Player Two would always accept any offer.

Consider how your budget negotiations normally play out—is this what happens? The answer is likely “no.”  Although these behaviors would result in the highest gain for each player given the scenario, overall results of the Ultimatum Game show that Player One tends to offer Player Two approximately half the total sum, and Player Two rejects amounts perceived to be unfair. This probably sounds more like the negotiations you’re used to, and these behaviors show that we are making decisions based on more than just numbers.

More Than Numbers: Common Factors that Affect Decision-Making Behaviors

What are some of these subjective factors that affect our ability to make completely rational decisions? We’ll highlight a few below:

Reciprocity    

Reciprocity commonly occurs during the back and forth of negotiations: a low offer is followed by a high offer, followed again by a low offer and so on. In this cycle, the response is equivalent to the action. The high-to-low, back-and-forth often leads to an increase in start-up time—but keep in mind that reciprocity can also result in positive outcomes. Well-justified, thoughtful proposals tend to be met with thoughtful responses.

Time (temporal) discounting

Time is valuable—especially in a competitive enrollment study. Delays in start-up can also mean delays in the time it takes for the investigational product to go to market. The hidden cost of time is often experienced in clinical trials, and leads to variation of value attributed to the same items at different points in time. Money is treated differently depending on the time in which it is acquired or used, normally with a bias toward the present tense.

Mental Accounting

Mental accounting— the human tendency to subjectively categorize and predict various financial outcomes—is common in clinical trial budget discussions. Instead of focusing on the study budget as a whole, we might focus on each item separately and attribute value to it based on miscellaneous criteria, such as the source of the money and its intended use. When working under the cognitive bias of mental accounting, we may think we’re only focused on the numbers and be unaware of the value judgements impacting our decision-making. This can lead to the bottom line being overlooked.  

 

How Do Negotiation Styles Affect the Way We Make Decisions?

Perhaps unsurprisingly, our overall negotiation “style” impacts the other party’s response as well as the outcome of the negotiation. Next, we’ll highlight the differences between adversarial and collaborative styles of negotiation:

Adversarial Negotiation Style

Traditional thought behind humans as purely rational decision-makers privileges an adversarial negotiation style. Descriptors like “tough,” “hard,” or “doesn’t take no for an answer” tend to be associated with good negotiation skills; however, the adversarial style sets up the outcome to be a win-loss, which can also be perceived as loss-loss.

The adversarial style often includes “anchoring,” which uses a “door in the face” technique to create an extreme anchor point from which the other side must negotiate. The establishment of the anchor is then followed up by a lower request to give the appearance of concession. An example of anchoring in clinical trials can be seen in the initial offer and the initial counter-offer, setting high and low starting points for both sides.

This technique has mixed outcomes given the relational context of the negotiation as it can be read as an insult to the other party. For example, if a sponsor proposes a low budget, the site may feel undervalued and is more likely to respond in an adversarial way by similarly anchoring themselves (an example of reciprocity). This method of negotiating is one cause of extended study start-up times.

Collaborative Negotiation Styles

While the adversarial style tends to focus on each negotiation in a vacuum, a collaborative negotiation style acknowledges the relational context of negotiations and promotes outcomes in which both parties can come out ahead. In individualistic cultures, this can be viewed less favorably by those outside of the negotiation, but a collaborative style is more likely to generate positive outcomes for the negotiators. This approach allows both parties to become aware of the influence of subjective values, and fosters feelings of fairness.

Conclusion

By using behavioral economics to explore how our cognitive biases and subjective experiences impact our decisions, we can begin to negotiate in ways that can create positive change in the business of clinical research. Instead of making demands, approaching negotiations with a collaborative style increases the likelihood that involved parties will work together in the future and might have an easier time accepting each other’s “must-haves.” 

 

 

References:            

1. Samson, A. (Ed.) (2018). The Behavioral Economics Guide 2018 (with an Introduction by Robert Cialdini). Retrieved from http://www.behavioraleconomics.com.

2. Samson, A. (Ed.) (2017). The Behavioral Economics Guide 2017 (with an introduction by Cass Sunstein). Retrieved from http://www.behavioraleconomics.com

Tradeshows: Are They Worth the Investment?

Fall is here, which means tradeshow season is upon us! These industry events are valuable educational and networking opportunities. Even so, registration fees, travel, lodging, and meal expenses for employees require financial planning. With so much to consider in terms of dollars spent, are tradeshows really worth it? This article will explore five reasons why, even with all the added costs, it’s worthwhile for research sites to attend tradeshows.

Reason #1: Assess your messaging

Whether you’re exhibiting at a particular tradeshow or attending without a booth in tow, these spaces offer excellent opportunities for learning about how other research sites present themselves in the industry. Take this opportunity to notice their messaging and assess your own. This doesn’t mean you should focus on pointing out flaws or copying the things you like; just take the time to notice what impact others’ collateral, booth, and staff have on your experience of business side of their site, and consider how your look, feel, and presentation may affect the experience of your audience in the same space. Think about your site’s strengths and try to identify ways to make those stand out.  

Depending on the type of show you attend, you may also have the opportunity to see how sponsors and CROs present themselves. Are there themes that they all seem to follow in their advertising, or are there differences that make one stand out over another? Consider these factors and reflect on how your site might align with their messaging or stand out to them. Are you presenting your strengths to the best of your ability?

Reason #2: Potential partnerships

Simply attending a tradeshow will only get you so far; it’s the networking aspect of these events that can really be a game changer. While tradeshows are great places to generate leads on potential studies, casting a wide net that includes partnerships with other sites can be hugely beneficial. You may not walk away from the tradeshow with a new study using only this tip, but it’s likely to help you in the long run. Tradeshows provide a unique opportunity to surround yourself with professionals from across the industry and from various geographic locations.

Consider your strengths in the industry—are there organizations that might benefit from your area of focus that might also be good resources for you? What about sites in other geographic areas that specialize in your area of research? Perhaps you can share suggestions for effective patient recruitment methods, or you may find that you could be good referral sources for your future studies. Success often depends on networking—so get out there and make connections!

 

Reason #3: Educational Opportunities

Tradeshows aren’t just about the exhibit hall; they’re also great spaces to learn more about the advances in our industry from people who are doing the work. Attending sessions is a great way to explore new areas of interest and make connections, learn different ways of doing familiar tasks, and refresh and revive your investment in the importance of your job. Plus, you can earn continuing education credits by attending sessions—particularly workshop-style sessions—at some industry conferences and tradeshows.

Reason #4: Build Your Reputation

As we’ve mentioned, when you are thinking about attending a tradeshow, you should always keep in mind your strengths— the strengths of your site as a whole and the strengths of individual members of your research team. Chances are, your research team is full of experts who could lead an educational session, and might really enjoy doing so. Sharing knowledge and enriching the experiences of other attendees can have positive ripple effects for the reputation of your organization across the industry.

Think about the industry focus of the tradeshows you’d like to attend and check out the themes of each show. How can your team add to the experiences of other attendees? Are there other organizations you work with that might be interested in co-presenting? When it comes to getting a speaking spot, each show is a little bit different and some have deadlines further out than others, so plan ahead!

 

Reason #5: Connect with People You Only Know Via Email

Reach out to current or prospective industry partners to see which tradeshows they might be attending, and let them know which you plan to attend; if you’ll be in the same place at the same time, schedule a time to meet or make an effort to stop by their booth in the exhibit hall. Often, relationships in our industry are built entirely through conversations happening via the internet across time zones; while the internet is a great tool, these communications alone can lead to miscommunication and misunderstanding—things that have a huge impact on study start-up. In a business world dominated by email, the chance to connect face-to-face really is irreplaceable.  In our industry, trade shows and industry events are the easiest way to make this happen.

 

In Summary

Cost of registration, travel, and other expenses may feel like reasons to avoid tradeshows altogether, but even sending one representative from your site can create ripple effects that will have lasting impacts on future success. The wealth of opportunities for education, networking and industry engagement are nearly impossible to find anywhere else, making tradeshows a worthwhile investment.

Reduce Drug Development Costs Through a Protocol Cost Savings Analysis

Pharmaceutical companies, biotech firms, and anyone in the business of developing new therapeutics knows there is significant pressure to reduce the cost of research and development (R&D) while delivering treatments and devices that safely and effectively alleviate symptoms, deliver medications or cure medical conditions—all while maintaining billing compliance. Luckily, utilizing a Protocol Cost Savings Analysis (PCSA) eases some of that pressure, allowing your organization to focus on creating innovative therapeutics that lead to positive patient outcomes.   

Site Selection Tips: How to Make Your Site Stand Out

In today’s clinical research industry, sponsors are under increased pressure to cut waste and tighten their budgets. This has made the site selection process highly competitive, especially given the market’s rapid trend toward globalization. Luckily, there are steps you can take that can help increase your odds of selection, while simultaneously making your site a more efficient conductor of clinical trials. This article will discuss four tips to help your site stand out in the selection process.

Using Social Media for Patient Recruitment: How to Reach Your Ideal Patient  

Social media is an increasingly popular mode of communication. By 2019, it is estimated that around 2.77 billion people worldwide will have active social media accounts.1 This means that patient recruitment must have a space in the social media world, but with so much information competing for users’ attention online, is it enough to simply place an ad or create a post about your study? While we have written about Facebook’s potential for patient recruitment in previous articles, this post will discuss how to let your ideal patient guide your social media recruitment efforts across a variety of social platforms.

Contract Negotiations: What are the Deal-Breakers?

Contract negotiations are just that—negotiations. Some back and forth is to be expected when building an equitable set of contract terms, but at what point do terms become non-negotiable? Here are five examples of some the major deal-breakers in contract negotiations:

Traditional vs. Digital: Diversifying Patient Recruitment Funds Across Media

As we all know, patient recruitment isn’t a straightforward process, and the investment of time and money can be quite large. While digital media can be an efficient and economical advertising realm, investing solely in digital advertisements could result in a failure to reach many potential patients. Perhaps surprisingly, a one-handed advertising approach could affect your site’s credibility. This blog explores how diversifying your advertising dollars across both traditional and digital media can help you reach potential patients.

Using Facebook Ads for Patient Recruitment: How to Select an Audience

Facebook’s vast and diverse user population provides an invaluable resource for patient recruitment, but without the right audience, it will be nearly impossible for patients to find your study. In this blog, we will discuss how to select the right audience for your ads in order to get the most out of your Facebook advertisements.

Using Facebook Ads for Patient Recruitment: How to Create Ads with Strong Visual Imagery and Good Calls to Action

With over 1.15 billion active users, Facebook is becoming an increasingly important way for clinical research sites to recruit patients for their studies. While patient populations certainly exist on Facebook, connecting with them on the world’s largest social network isn’t always easy. In order for patients to find your study in an online space already saturated with ads, creating advertisements with strong visual imagery and good calls to action is vital.

The Pros and Cons of Different PI Compensation Models

A frequent question asked in our industry is: "How much should we pay investigators for their work on a clinical trial, and what methodology should be used?"  While this question seems straightforward, it is quite complex. The amount and method by which you pay investigators can play a big role in the success, or lack thereof, of your site. 

Clinical Research Coordinators: The Glue that Binds a Clinical Research Program

Clinical research coordinators are an incredibly important part of the clinical research process. Their role has continued to evolve in recent years, as clinical trials have continued to grow in complexity. This evolved role has led to better data collection, greater protocol compliance, and overall improved subject safety. Because of their crucial role, many have come to recognize clinical research coordinators as the glue that binds clinical research programs.

Five Reasons Why Every Clinical Research Site Should Consider Joining a Site Network

For many research sites, navigating the clinical trial landscape can be very intimidating. Site networks offer many benefits to research sites, but here are five main reasons why every clinical research site should consider joining a site network:

May News Roundup: What’s New in Research?

Stem Cells Edited to Fight Arthritis – Read More >

Researchers at the Washington University School of Medicine and Shriners Hospitals for Children have rewired stem cells from mice in an effort to reduce inflammation caused by arthritis and other conditions. These stem cells are developed into cartilage cells that produce a biologic anti-inflammatory drug that may be able to replace arthritic cartilage, protecting joints and other tissues from further damage.

3 Tips for Site Selection

Site selection is a complex process composed of multiple factors on which research sites are evaluated. It may seem as if your success is solely in the hands of sponsors and CROs, but there are several things you can do to help your site get selected on more studies. Here are three tips from the site selection and business development team at PharmaSeek:

3 Tips for Negotiating Advertising Budgets

Advertising plays an important role when it comes to recruiting patients for clinical trials, but it’s often underutilized by sites or not used at all. Whether this is due to a lack of internal staffing or expertise, there is a lot of potential going untapped when sites bypass study advertising.

February News Roundup: What's New in Research?

World’s Smallest Pacemaker Revealed – Read More >

The Micra Transcatheter Pacing System (TPS), a new pacemaker the size of a nickel, can now be implanted in patients with bradycardia to help pump enough blood through the body during physical activity. The tiny device is just 1/10th the size of a traditional pacemaker, and it is currently the only leadless pacemaker approved for use in the United States. The TPS is also unique in that it doesn’t require cardiac wires or a surgical pocket under the skin to deliver a pacing therapy.

Subject Injury Language: What You Need to Know

One of the negative aspects of clinical trials is the possibility that a patient will suffer an injury or illness as a result of their study participation. As such, one of the most important pieces of a contract is the subject injury language. ‘Subject Injury’ is defined as an injury, illness, adverse event/reaction, or death caused by a study subject’s involvement in a clinical research study. Prior to the study, the research site and the study sponsor should come to an agreement on what exactly constitutes a Subject Injury, and who pays in the event of a Subject Injury.

Print Marketing: A Viable Option for Patient Recruitment

As many markers know, the sustainability of print advertisements has been thoroughly questioned in today’s digital age. In June of 2012, Forbes Magazine published an article about this very issue—taking a stance that surprised many at the time. Forbes stated, “While many businesses have completely migrated their advertising efforts to the web because of its cost effectiveness, exposure potential and convenience, print still maintains its stance as a powerful and necessary component of an ad campaign.”