BioPharma, MedCity Influencers, Hospitals

What is inflation’s impact on clinical trials?

Basic organic chemicals used for the preparation of new medications cost over 54.8% more than they did 12 months ago. Further, with schools and daycare facilities either going fully remote and/or closed, many parents and caregivers had to stay at home, eliminating their availability for study participation.

The global economy has been upended by the pandemic. Rising prices and disrupted supply chains are just a couple of examples of how commerce has been impacted.

The field of clinical research is no exception and has first-hand felt the impact of financial upheaval from the last two years. It takes several years to budget and plan for a clinical trial. Even in the best of times, unexpected costs are likely to occur due to unforeseen challenges with research.

However, in the current market where prices for supplies are rising rapidly and shortages are making it hard to procure needed items in a timely fashion, sites and sponsors are facing a new era of challenges.

So, how has one of the most unpredictable stretches of economic history shaped the clinical trial industry? More importantly, what can industry stakeholders do to manage their budgets and ensure financial stability during such a turbulent era?

Equipment and operating costs

According to the U.S. Labor Department’s Producer Price Index for November, operating costs incurred by U.S. businesses overall are up by 9.6% from the year prior.

Products and services used during a clinical trial have followed these trends. Basic organic chemicals used for the preparation of new medications cost over 54.8% more than they did 12 months ago. A shortage in pipette tips earlier this year not only severely delayed lab testing but also caused a significant upcharge in overall supply costs due to a raw plastic shortage, with at least one company adding in a surcharge of 4.5% to what they charged.

Those who work in the world of medicine will likely recall the panic in the early stages of the pandemic when the world was trying to find personal protective equipment (PPE). Demand for PPE escalated very quickly, outpacing the supply, leading to price gouging — anecdotally, products that would typically cost $100 were sold for upwards of $2,000.

Clinical research-related medical equipment and respiratory care treatment have also spiked in cost due to healthcare’s competing demand for the same materials and compounds to treat Covid patients.

Cost of patient recruitment and retention increases

Recruitment and retention of patients within clinical research has become more of a challenge in recent years; however, the pandemic created a novel barrier for the industry to overcome. With schools and daycare facilities either going fully remote and/or closed, many parents and caregivers had to stay at home, eliminating their availability for study participation. Additionally, potential clinical trial study participants were apprehensive to go to medical facilities if not necessary. Immune-compromised patients, a demographic likely to participate in a clinical trial, were among the most impacted by Covid-19.

Sites and sponsors have long used social media or search engines to support advertisement for trials. However, the quarantine periods required due to the pandemic fostered a rapid shift in how the world conducts business. Companies that lagged in an online presence quickly found a way to reach out to customers virtually. For those companies with a foothold online, many doubled down on those efforts.

However, social media platforms, search engines and other forms of online advertising only have a certain amount of bandwidth to design, process, and display advertisements. As a result, internet advertising costs have increased by 24.2% from June 2020, according to the Bureau of Labor Statistics.

Furthermore, patient retention has become a more expensive undertaking. Part of retaining patients on a study is ensuring they can safely travel to and from the study site to adhere to study conduct requirements. Renting a car since the pandemic has become a more arduous  and costly task, with federal data showing that renting a car for business purposes was 41.5% cheaper in June 2020, while hotel and other lodging prices were lower by 20.5%.

The price tag of patient centricity

The industry pivoted to the emerging trend of decentralized trials and virtual visits to support ongoing studies to meet the needs of patients concerned or unable to physically visit a site.  However, the move to decentralized trials also has its costs. In some instances, sponsors and sites moving into decentralized trials were required to invest in new technologies, which also in many cases included the purchase of new computer hardware and other electronic equipment.

In many cases, investing in these types of new technologies also requires hiring more IT professionals, but the tech industry is struggling with an acute labor shortage. According to a recent survey conducted by  the CNBC Technology Council, 57% of tech executives said finding qualified employees was their company’s biggest concern.

Further exacerbating the situation is the global microchip shortage that has rocked the electronics and computing industries, limiting their supply.

The growing trend of decentralized trials also adds a necessary layer of cyber security and integrity. Sponsors, CROs and sites have all had to ensure that they are doing all they can to keep data secure using multi-level encryption security tools — an added and unforeseen operating cost forcing all partners in the virtual study space to become more technology driven. Additionally, companies that have already purchased cyber security have also faced sticker shock, with premiums rising by 25.5% in the second quarter of 2021 alone, according to the Council of Insurance Brokers and Agents.

Protocol amendments

Along with the other changes borne of the pandemic, the number of contract amendments negotiated between sponsors and sites has increased dramatically. Protocols were amended to either accommodate dosing delays, safety protocols, decentralized visits, and more – in turn creating downstream impacts requiring budget and contract amendments, updated submissions to ethic committees, regulatory authorities, updated patient facing materials, and payment configuration to name a few. A snapshot of costs associated with a protocol amendment that requires contract/budget amendments is estimated at upwards of $2,000 for the administrative effort of amending the contract. If a sponsor or CRO works with 50 separate sites, that’s now an additional $100,000 spent for one protocol amendment simply from an administrative perspective.

How to manage

The clinical trial industry is predicated on partnerships between sponsors, CROs, sites and the patients we all serve. It takes years to conduct studies and all stakeholders must properly align to achieve results.

The industry has changed at warp speed.

What does this look like, especially between sponsors, CROs and sites?

Timeliness and communication is incredibly important between all parties. However, research is only successful when there is data, and data is only received when there are clinical trial participants. No patient enrolled in studies should bear a financial burden to participate in a clinical trial. Efficient payments made to participants to reasonably compensate for their time and/or travel expenses are crucial when targeting patient retention. Sponsors and CROs must make sure payments to sites are promptly made as rising prices can very rapidly create an undue financial burden.

This is a time like no other. The industry of clinical research must take the lessons learned from supply chain and inflation issues now and prevent future disruptions. Disruptions to clinical research ultimately impact the very patients we serve, as delays in study conduct snowball into delays in getting critical, life-saving drugs to market.

Photo: Warchi, Getty Images

Katie has significant experience working on site contracts and budgets for leading contract research organizations and pharmaceutical sponsors. She works consultatively with clients and internal teams to assist in delivering on Greenphire’s data vision for superior study planning.

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.