Utilizing a Protocol Cost Saving Analysis to Reduce Drug Development Costs
Over the years, studies have been conducted to ascertain the cost of research and development (“R&D”) required to bring a new drug to market. Experts disagree on the exact amount, but the consensus is that the figure is in the hundreds of millions to over a billion dollars. Pharmaceutical companies, biotech firms and anyone in the business of developing new therapeutics knows there is significant pressure to reduce the cost of R&D, while still delivering safe and effective treatments that alleviate symptoms or cure a medical condition.
Currently, many research institutions utilize a coverage analysis to determine which elements of a research protocol can be billed to a patient’s insurance as routine and customary care and/or billable under Medicare national/local coverage determinations. To remain compliant, institutions cannot bill a patient’s insurance for protocol items that are not routine and customary, as those items have to be paid for by the study sponsor. Additionally, the institution cannot bill insurance for procedural items that are being paid by the study sponsor as documented in the final study budget. Failing to remain compliant with their billing practices can expose the research institution to significant penalties and fines, as well as reputation risk.
To reduce costs, a handful of pharmaceutical manufacturers have recently begun incorporating the basic elements of a coverage analysis into protocol development activities. This Protocol Cost Savings Analysis (“PCSA”) is typically performed during the final phase of protocol development. What exactly is a PCSA? Simply put, the PCSA is a comprehensive review of clinical procedures and other protocol items with a focus on determining billable items under the Medicare Clinical Trial Policy (National Coverage Determination 310.1).
Most pharmaceutical companies are not familiar with coverage regulations nor do they incorporate such information into their protocol design, study budgeting and start-up activities. Understanding billing compliance can lead to reduced costs and streamlined budget negotiations. The ability to align protocol procedures with routine care provides for the offset of R&D expenses since these items are reimbursed by governmental (i.e., Medicare) or private, third-party payers. Reducing overall R&D costs is a benefit all around, with positive financial impacts for sponsors and researchers, ultimately leading to more treatment options for patients.
The clinical study team creates the protocol draft based upon the planned design of the study and desired study end-points. Thereafter, a comprehensive PCSA is conducted to identify slight protocol modifications that will increase the number of reimbursable events. For example, shifting the date of a PET scan could result in that procedure being deemed as routine and customary care for a patient participating in a study. These recommendations are shared with the clinical team who determine whether the changes will impact the intended clinical outcomes for the research study. Not surprisingly, even simple modifications can yield significant cost savings when applied to all patients participating in the study.
Performing a PCSA is only the first step to ensuring the cost savings are recognized by the study sponsor. In order for the savings to be realized, this information needs to be passed to budget negotiators to ensure they properly account for these activities when negotiating study budgets with research sites. Typically, this information is denoted in the budget grid as standard of care (“SOC”). It is important to note that it is the research site’s responsibility to determine which items are billable to their patients. As such, the SOC information shared in the initial budget grid should be viewed as an input to the budget negotiation process as opposed to a final determination on which protocol items can be billed to insurance.
Once the budget has been finalized with a site, there is one remaining step that needs to be completed to ensure billing compliance. Specifically, the final budget grid and site’s coverage analysis need to be aligned with the clinical trial agreement (“CTA”) and informed consent form (“ICF”) drafts to ensure consistency in representations being made to the patient. Although it is the site’s responsibility to ensure alignment of these documents, the sponsor will benefit from reduced amendments to fix these issues after the site has been initiated.
Even in the absence of utilizing a PCSA to inform protocol design, significant cost savings can be accrued by utilizing a PCSA to draft the original budget grid. By designating some procedures as SOC, the sponsor will begin to engage a site in dialogue about which research procedures can be billed to insurance. Additionally, providing this information to the sponsor’s budget negotiators moves them away from a fixed cost per patient mindset, and ultimately can contribute to additional cost savings.
PCSA in Action - Oncology Case Studies
You may be asking what are the real dollars to be saved when instituting a PCSA for a study? The financial implications can be significant. A recent PCSA on a two-arm oncology study, conservatively estimated that the sponsor had the opportunity to realize more than $4 million dollars in cost savings. In another case, the sponsor had the opportunity for reducing the cost by nearly $2 million dollars with the approach described herein, not including cost savings accrued from 12 conditional procedures considered routine care per Medicare regulations and guidelines. In yet a third study, it was estimated that the sponsor could attain over $1.7 million dollars in savings based on the PCSA. The alignment of the budget and PCSA has also proven to reduce negotiation timelines, leading to significant cost savings through decreased time and effort for both institutions and sponsors.
The numbers do not lie-there are significant savings to be had by performing a comprehensive PCSA at the time the protocol is drafted. Equally important, once the protocol is finalized, it is important to understand where clinical trial procedures overlap with routine care such that those items are billed to the patient’s insurance. These considerations allow sponsors to experience significant time savings during the start-up phase of a study by aligning the protocol/protocol events, CTA, budget grid and ICF. The negotiation team will appreciate not having to make changes to the documents and will be armed with the PCSA that identifies what is considered routine care. Ultimately, staff time and effort savings also add to the bottom line along with a reduction in per patient costs.