ADMINISTRATIVE PROCEDURE

Clinical Trial (Industry-Sponsored) Research Agreements and Payments

Introduction

The University handles industry-sponsored clinical trials differently from other types of sponsored projects for several reasons. The sponsor negotiates the rate they will reimburse the researcher for each patient in the study. This rate is often governed by industry norms rather than actual costs of doing the research. In addition, the actual number of dollars received from the sponsor may vary greatly from the proposed amount because the number of participants recruited for the study could vary from the estimated number. Therefore, the University handles these types of sponsored projects as follows:

Submitting the Proposed Agreement to Sponsored Projects Administration (SPA)

All proposed industry-sponsored clinical trial agreements must be processed through established procedures, regardless of any tentative understanding between the principal investigator (PI) and the sponsor. These procedures include fulfilling all compliance requirements, completing a Proposal Routing Form (PRF), and obtaining department head, dean, and administrative/compliance approvals. Review by the department head, dean, and administrative personnel is essential to ensuring that the University can provide the space and resources needed to conduct the project. The PI may not enroll patients until the contract is executed and IRB approval has been obtained.

SPA recognizes that these types of projects may need to be approved quickly. To speed up the process, the PI may use the following expedited procedures:

  1. Submit the preliminary documents to SPA.

    The PRF is prepared but signed only by the PI.

    If obtaining an ink signature: Click on "do not route electronically," click the "submit" button (beneath the Comment box), print a PDF copy, and have the PI sign the Approvals and Certifications section.

    If obtaining electronic signatures: In the "approval chain" section, center the PI's Internet ID and willi478 (Internet ID of Laura Williams - Grant Administrator in SPA). Then click "submit." After the PI approves it, it routes to Laura Williams in SPA. After her review of the contract, she will return the PRF to the preparer, where it can reside during the negotiation process.

    Then deliver a hard copy of the PRF (f paper), the draft contract and protocol, and a draft budget to SPA.

    Note: If work needs to begin and expenses (not related to patient enrollment) must be incurred before the contract is fully negotiated and signed, the PI must complete a Preaward/Advance Account Request Form, have it signed, and deliver it to SPA for account setup.

  2. SPA reviews the contract and will work with the sponsor to finalize acceptable language.

    The grant administrator will take special care to ensure adequacy of payment terms for the work to be done and in defining the schedule and acceptance for deliverables.

  3. Complete protocol and budgetary negotiations and submit documents to SPA.

    Once the PI completes negotiation on the protocol, finalizes budgets, etc., retrieve and update the PRF (note: only the original preparer can retrieve the PRF). Add a comment in the mailing instructions section indicating that this contract was already submitted to SPA for pre-review.

    Then submit it to the department and college for review and approval, and deliver to SPA the contract, finalized budget, and protocol for final processing.

  4. SPA completes final review and processes contract.

    Note: SPA will not approve the contract until it receives the fully signed PRF, finalized budgets, protocol, and if relevant, updated contract.

Start-Up Costs

In these types of projects, a substantial amount of work is put into planning the project and developing the protocol that is used in the proposal. When the contract is negotiated, the University asks for start-up costs so that the sponsor agrees to pay these expenses before any case report forms or invoices are submitted. These start-up costs include work on meeting regulatory requirements and attending investigator's meetings. They can be charged to the project when the PI establishes a preaward account to charge the start-up costs. If the project accountant or research coordinator is unable to process project expenses because the project start date does not include the date of service for the expense:

  • If start-up costs are included in the approved budget: If the sponsor-approved final budget reflects planned start-up costs that will be incurred prior to the effective date of the agreement, SPA will generate a revised NOGA. The NOGA will retain the project start and end dates as detailed in the agreement, but SPA will add a clarification comment to the NOGA (e.g., "This revised NOGA recognizes allowable budgeted start-up costs incurred between ______ [date of first pre-award expense] and the Effective Date of the clinical trial agreement."). SPA will then change the program dates to reflect the date of first pre-award expense, and a note of "start-up date" will be added to the program comments field.
  • If start-up costs are not included in the approved budget: If start-up expenses are incurred but were not included in the sponsor-approved final budget, the PI will be required to send a letter or e-mail to SPA to certify that the costs were reasonable, allocable, and directly related to start-up activities for the clinical trial. The PI is then required to get the approval of their department head, or their dean if the PI is the department head. A revised NOGA will then be generated by SPA. The NOGA will have the project start and end dates as detailed in the agreement, but SPA will add a clarification comment to the NOGA (e.g., "This revised NOGA recognizes allowable but non-budgeted start-up costs incurred between ______ [date of first pre-award expense] and the Effective Date of the clinical trial agreement. The PI has certified these costs as reasonable, allocable, and directly related to start-up activities for the project."). SPA will then change the program dates to reflect the date of first pre-award expense.

Setting Up the Project Account

The University's financial system is set up to show the expected revenue on one side of the ledger and actual expenses on the other. At the end of the project, revenue should equal expenses. However the University recognizes that actual revenue for industry-sponsored clinical trials may vary greatly from the original anticipated amount due to any number of reasons (e.g., ability to recruit participants). Therefore, there will be a total award estimate listed on the Notice of Grant Award (NOGA) and in the proposal system. This figure will be used for reporting purposes and may differ from the information contained in the financial system.

Allocating Costs

PIs must charge costs appropriately. Researchers who receive funding from multiple sources need to be aware of the additional risks this situation presents to the institution. To ensure that costs are properly allocated, when a new project starts using shared resources, the PI should meet with the appropriate department personnel to determine how supplies, personnel, and other costs will be allocated or re-allocated to each project. They must document what resources are shared and how allocations changed. For example, if a piece of equipment was shared by two projects and now will be used by three projects, the document must show that allocations changed from 50% to 33% for each project. This documentation can be in the form of a note and must be in all three project files for audit purposes.

Sponsor Payments

Payment benchmarks for clinical trial studies vary greatly. PIs and/or study coordinators should meet with the departmental administrator or accountant at the beginning of the project to review the specific payment benchmarks for their individual study. Sponsored Financial Reporting (SFR) will automatically invoice for any non-refundable start-up payment due upon contract execution. In addition, whenever a benchmark has been met, a message must also be sent to deliver@umn.edu in SFR. SFR will book a receivable and send out an invoice for payment. The message must contain the following information:

  • EFS contract number
  • Sponsor
  • Sponsor account number
  • Principal investigator
  • What benchmarks have been met (e.g., number of patients who had case report forms submitted)
  • Anticipated payment

Oversight

As with any sponsored project, the PI is responsible for reviewing the project account on a monthly basis to ensure that expenses are being charged correctly and the project is progressing at an expected pace.

  1. In the financial system, if no contract/payment schedule benchmarks have been met and invoiced, no revenue will show in the financial reports. Therefore, the account will have significant deficits unless the sponsor is invoiced on a timely basis. The department is responsible for working with SFR to bill the sponsor appropriately (see above under "Sponsor Payments).
  2. On a regular basis, SFR will monitor invoice activity. If the project has had no invoices or payments during the past quarter, SFR will follow up with the PI and department administrator.

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