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  1. 1. ECONOMIC AND FINANCIAL ISSUES IMPACTING CLINICAL TRIALS BY ARI ARMAGAN
  2. 2. INTRODUCTION-WHAT IS HEALTH ECONOMICS- HOW IS IT IMPORTANT TO CLINICAL TRIALS? • Health economics is important as it pertains to clinical trials in order to best allocate funds, budgets, and using strategies that best benefit the financial health of the clinical trial. • This includes the best avenue of funding for clinical research, and how to minimize the right costs without jeopardizing the clinical trial. • Because healthcare supply is limited and demand is limited, concepts such as scarcity, efficiency and equity must be applied in clinical research trials in order to address the problems that come with different economic and financial issues in clinical trials. • “The term efficiency is used by economists to consider the extent to which decisions relating to the allocation of limited resources maximizes the benefits for society and has been defined as ‘maximising well-being at the least cost to society’”. (Phillips, 2005).
  3. 3. CLINICAL TRIAL FUNDING • Avenues of clinical trial funding = NIH (federal government grants), grants/funding from institutions (usually those dedicated to the treatment of a disease), and private donors. • NIH government grants do not have to be paid back and are continuous throughout the life of a clinical trial. • Given based on merit and potential future success of a clinical trial. • Stringent application process. • Dependent on financial state of the federal government, so may not be enough sometimes.
  4. 4. CLINICAL TRIAL FUNDING • Funding from private institutions are also typically grants which do not have to be paid back. • Usually those dedicated to the cure/treatment of a certain disease, like the Alzheimer’s foundation. • Less bureaucracy and paperwork than government grants/not merit based. • Are not continuous, so may run out in between a clinical trial.
  5. 5. CLINICAL TRIAL FUNDING • Private donors-tend to result in the biggest amount of funding. • No requirements such as those with the NIH or other governmental bodies. • Not continuous regardless of whether a clinical trial is successful or not. • Too much reliance on private donors may make less eligibility or funding from governmental bodies like the NIH.
  6. 6. COSTS • Different costs are essential in identifying and reducing so not to jeopardize the clinical trial. “Because resources are scarce, choices have to be made between competing claims on the resources.” (Phillips, 2005). • Costs can be direct, indirect, tangible or intangible, and fixed or variable • Direct costs come from the direct use of healthcare services ( such as purchasing pharmaceuticals) • Indirect costs are those costs that are not related to the use of healthcare services (such absenteeism, patient recruiting, staffing issues, etc.). • Intangible costs are those that cannot be physically measured (such as measuring the quality of healthcare). • Tangible costs are those that can be physically measured (such as purchase of healthcare equipment). • Fixed costs are those that do not vary with the use of healthcare (such as leasing property, utility costs, etc.) • Variable costs vary with the use of health care (such as the cost of pre-screening a potential trial subject.
  7. 7. MEASURING AND MITIGATING COSTS • The best costs to be reduced to not jeopardize the clinical trial are those not tied to healthcare delivery services, so that the quality of the clinical trial and accuracy of data are not in any way reduced. • The best type of cost to reduce thus far will be indirect costs, since reducing these costs also benefit the clinical trial (such as reducing absenteeism). • Fixed costs should also be targeted to be reduced, since these also do not have to do with healthcare delivery (since they are present no matter what). • This include using a less expensive property for a clinical trial, reducing utilities and other expenses by using cheaper vendors. • Direct costs that have to be reduced should be done with the utmost care so that the resulting health care delivery be as similar as it would have been regardless. • For example, in deciding to purchase generic medication or equipment from another country to cut costs, it must be made sure that these medication and/or equipment are held to the
  8. 8. MEASURING AND MITIGATING COSTS • Different strategies in identifying and reducing costs include cost- minimisation analysis, cost-utilization analysis, cost effective analysis and financial liablity analysis. • The human capital approach can be beneficial in the measurement of costs associated with reducing or controlling indirect costs such as those related to productivity. “The human capital approach considers the value of a potentially lost production resulting from a disease in terms of absenteeism, reduced productivity.” (Phillips, 2005). • Thus, after measuring indirect costs using the human capital approach, it can be better known how or how much to reduce costs that are indirect (such as how much costs result from absenteeism versus other indirect costs and how much they can be reduced for a big enough impact in reduction overall).
  9. 9. ECONOMIC EVALUATION/FINANCIAL LIABILITY ANALYSIS • Cost-effectiveness analysis and cost-minimization analysis comes into play in reducing costs while maintaining and increasing efficiency in the delivery of healthcare. • Economic evaluation seeks to ask the question whether or not a new clinical trial will prove a treatment to be at least as effective as ones already available. • Thus, the economic evaluation process will evaluate how many risks are involved in developing a particular drug or treatment, how successful it will be compared to ones already available, and if ultimately the treatment will give more benefits than costs in the long run. • Can save money in not undertaking or continuing a clinical trial if there are too many costs, if the costs are greater than the benefit, or if the clinical trial is projected not to be successful in the long run regardless.
  10. 10. ECONOMIC EVALUATION/FINANCIAL LIABILITY ANALYSIS • Financial liability analysis can be an overlooked process that can be largely beneficial to a clinical trial or any healthcare operation. • This process is similar to the economic evaluation process, but focuses on which liabilities can appear in the future of the clinical trial (rather than analyzing costs and benefits that comes with economic evaluation). • Financial liabilities are more disastrous than costs, and if neglected can do great harm to the financial health of clinical trial if not adequately predicted or mitigated using financial liability analysis. • Financial liability analysis looks at all liabilities, not just costs from an financial perspective, such as hazards that may occur in the clinical trial to patients or staff. • Can not only save money by not conducting a clinical trial with too many hazards, but also potential lawsuits If an unforeseen adverse event could have happened to potential trial subjects.
  11. 11. PREVENTING FINANCIAL LIABILITIES • Financial liability analysis should be part of the budgeting process in order to best organize resources to prevent or mitigate these liabilities from taking place. • This includes mandatory training of appropriate clinical research staff on financial liability analysis so personnel can adequately prepare for, prevent, and respond to any potential financial liabilities from occurring or getting worst. • Financial liabilities can also occur in the form of audits done by the United States Department of Justice and this is particularly important since they are becoming even more forceful regarding this issue in clinical trials. • Thus, training staff (particularly those in charge of budgeting) in combating this issue and preventing an audit from taking place as well as successfully responding to a potential audit should be paramount and resources should be dedicated to combat this issue.
  12. 12. REFERENCES Phillips, C. J. (2005). Health economics: An introduction for health professionals. Malden, MA: Blackwell Publishing.

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