Change Orders: What can sponsor companies do to reduce its inevitable impact on clinical trials?

8th November 2016 (Last Updated July 18th, 2018 13:04)

Kieran Prior explores what can be done to minimise the impact of change orders

Change Orders: What can sponsor companies do to reduce its inevitable impact on clinical trials?

Due to the complicated clinical trial process, it is seen as standard for change orders to occur throughout a trial of any size. Whether it be due to health care reforms, slow enrolments rates or new medical information, change orders have become part and parcel of the clinical trial process, and can often be a point of tension internally between operational and financial teams, as well as between the sponsor and vendor.

The revenue impact of change orders can be very significant, with huge amounts of additional revenue being generated for CROs via change orders, and when early study closures or the scope of the study decreases the CROs will often provide little or no refund. With change orders representing a large source of revenue, it is imperative that sponsors manage and forecast their trials effectively to minimize the impact of change orders.

Forecasting more accurate timelines

Timeline alterations are often the key reason behind change orders taking place, so to forecast accurate timelines can reduce the likelihood and impact of such alterations. Sponsors need to take a realistic approach to timeline formation, and ensure that board level executives are educated to the needs and resources required to effectively run the trial and understand the reasons for the timelines that have been put together.

Sponsor need to ensure they are planning early, and take time to ensure everything is accounted for. This means that teams need to avoid rushing through this planning phase, as tempting as it is to move forward with starting the trial as soon as possible. Rushing will created confusion which will lead to errors being made and inevitably lead to change orders. When it comes to preparing timelines, sponsor teams need to rely on past experiences – not just from previous trials within this company, but using experiences from across the team.

The timeline planning stage should involve the vendors you are working with. They may have more capability and experience in certain areas and will therefore be able to provide insight into timelines for certain aspects of the trial

Another key aspect of managing timelines and avoiding change orders is developing strong lines of communication. Transparency is of the upmost importance – any potential issues or high-risk areas need to made apparent to internal and external stakeholders. No one likes surprises, so communication process across all teams on a global level need to be implemented.

Combating the impact of change orders at the contract development stage

Sponsors need to be aware that vendors will often underbid on proposals, counting on change orders taking place and benefiting from revenue there so companies need to pre-negotiate at the contract stage the cost impact when alterations occur – these needs to be agreed upon and become a typical part of the contract stage.

However, no matter how much work is done in preparation, change orders are inevitable and can often be recognized quite early before they occur. It is imperative that as soon as an upcoming change order is identify this notification is passed on to all relevant parties (including financial teams and CRO teams) as early as possible.

Companies need to understand that this is an issue that is not going to go away and accommodating for the financial impact of change orders and ensure that these considered in budget plans from the start. Clinical Operations teams also need to recognize that the onus is on them to put together a full and effective protocol and not treat change orders as a strategy for adding in some extra work they perhaps didn’t consider at the outset. Conversely to this, service providers need to take due care and diligence to ensure they fully understand the scope of work that is required. Once the trial has begun and patients start being treated, it is too late to clarify the scope of work and details of the payment structure. An slight exception to this is that sometimes change orders can be agreed upon up-front – when perhaps budgets for certain aspects of the trials have not yet been defined – this is a case when change orders can actually be used to the advantage of the sponsor. Either way, sponsors and vendors need to be transparent about change orders, and to not be surprised about when they occur but in fact pre-empt their impact and prepare accordingly.

A final consideration is that of change orders within a long-term strategic partnership model. When engaging in a strategic outsourcing model, transparency and communication is of course a key part of this partnership. Vendors should have a more active role in identifying the change orders early on and hopefully in this more partnership-focused model both the number and impact of change orders would be reduced.