A private, clinical stage gene therapy company engaged Danforth’s Clinical Business Operations team to examine and resolve challenges related to the expenses of five clinical studies being managed by one Clinical Research Organization (CRO).
Applying specialized expertise in clinical contracting, including clinical study accruals and related forecasting, the team identified multiple areas to avoid both over-payments and under-accruals. Findings included the following:
- Out-of-scope activities were being performed and were omitted from monthly accrual and forecasting reports. The Danforth team requested accrual data for all activities, including bookkept change notices, avoiding under-accrual of $900,000.
- Inflation cost of $2 million across trials was not included in the Statement of Work, budgets or month-end accrual reports. The Danforth team investigated the impact of inflation on study budgets to avoid under-accrual of $400,000.
- No detail was being provided for investigator grants. The Danforth team performed an audit of investigator grant payments, ultimately uncovering $200,000 in potential over-payments. Specifically, the audit revealed the following:
- Lack of internal controls for duplicate visits (same subject and date); estimated overpayment of $52,000.
- Internal control/process to update (reverse/pay) not functioning; estimated overpayment of $3700.
- Payments made to sites for invoices lacking proper detail or supporting information (for example, a $57,000 hospital stay).
- Payments made to sites for invoices that appear to be for same service/same time period or duplicate items on same invoice; estimated overpayment of $25,000.
- Invoices pending approval and periodic site fees excluded from accrual file, resulting in under-accrual.
- Numerous visits in Electronic Data Capture (EDC) had not been paid due to insufficient data and lack of CRO follow-up to ensure complete and accurate data entry from the sites.
- Internal controls and processes not working as described, including visits deleted from EDC after payment without a credit being issued to site for “deleted” visits; estimated over-payment of $4700.
- Payments to sites for visits and site costs in two different file layouts, lacking fields to cross-check and flag duplicates; estimated overpayment of $3700.
Based on these returns, the client has implemented Danforth’s custom-designed clinical finance tool as a long-term remedy to better predict clinical study spend and forecasting going forward.
Implementing improved practices has led to a better understanding of the client’s clinical study liabilities/accruals and payments with more predictable forecasting. This methodology can also lead to improved relationships with CROs and sites by identifying trends and mitigating conflicts.