Forecasting the cost of clinical drug and medical device trials has never been easy, and as trials become more complex, estimating (and re-estimating) these costs becomes even more challenging.
Lack of accurate forecasts has serious schedule and cost implications. By impeding effective cash management, inaccurate projections can lead to disruptions and delays that cost sponsors and CROs some serious cash and jeopardize the development of life-changing new products.
A good budget is critical at the outset of every trial, but on Day 1 that budget becomes a forecast as you begin accounting for enrollment of new sites, protocol amendments, and change orders. At that point, even the best-conceived budget becomes a historical artifact, and what really matters is creating a real-time rolling forecast.
That’s because all trials are moving targets — and the more complicated and global they become, the more they challenge our forecasting acuity. In a recent survey, more than half of sponsors asked to rate their companies’ ability to predict trial costs gave themselves poor marks. Nearly a third said they were somewhat or very unconfident in their forecasting ability, while fewer than 14 percent were very confident. Most respondents were between neutral and somewhat confident.
The top challenge: Globalization
The biggest obstacle is globalization. As trials encompass more countries, their complexity increases dramatically. Factor in multiple currencies, differing tax structures and government fees, widely varying regulations, and unfamiliar sites, and the forecasting task becomes far more fraught with complications and risk.
The result is inevitably a loss of fidelity that diminishes your ability to manage cash, without which you can’t pay investigators and meet other expenses. Cash flow problems are a big part of why more than 80 percent of clinical trials experience delays ranging from one to six months, and why just 10 percent of trials conclude on time.
Sponsors surveyed on how much variance between forecasted and actual data they consider acceptable generally put the differential at 5 to 10 percent, though they’d rather the figure be down around 3 percent. A 10 percent variance, after all, can account for hundreds of thousands of dollars a month.
While most reforecasting challenges are largely beyond our control, we often hamstring ourselves by relying on manual systems that are not up to the task. Seventy percent respondents to a recent Bioclinica survey identified Microsoft Excel as their primary tool for budgeting and forecasting. While Excel has earned its place as a worldwide standard financial accounting platform, it falls well short of meeting the highly specific needs of clinical trials.
About 20 percent have tried creating their own system in house, while the remaining 10 percent use off-the-shelf software tailored, to some degree, to meet our industry’s unique demands.
In recent years, Premier Research has designed a number of purpose-built budgeting and forecasting tools around these very needs. Our goal is to eliminate the practice of collating data from multiple sources and inputting the information into spreadsheets, thereby saving time and avoiding errors that can multiply over thousands of site visits.
With these tools, you can see what’s happening in the moment as study parameters change, adjust to factors such as site performance and patient enrollment, and reallocate funds as needed. We can automatically reforecast on the basis of actual data, allowing our operations people to spend less time analyzing spreadsheets — and provide immediate visibility of budget-versus-actual variances allows accurate reforecasting of expenses to improve cash management.
And it’s working: Through these efforts, we have consistently achieved a less than 5 percent differential between forecasted and actual data.
Our solution also supports prompt and accurate site payments, something critically important to the sites you depend on — 70 percent of which identify late payments as a source of recurring financial hardship.
We offer this capability as part of our full-service trials and as a standalone service to any sponsor or CRO looking to maximize productivity, minimize surprises, and get valuable new therapies to market faster.
Accurately forecasting the cost of clinical trials is an increasingly elusive goal as studies grow larger and more complex. We’re seeing good results in applying custom-built solutions that have great potential to improve accuracy and enhance the effectiveness this vital, life-changing work.