Accruals rely on accurate and timely information, yet many sponsors don't receive the data at the right time when they rely on vendors and third-party entities. And even if they do, they are stuck wondering if the data reflects what occurred: your CRO might claim one meeting happened last month while your ClinOps leader assures you it didn’t, calling into question the veracity of the data overall. To accurately gauge the financial state of a trial, sponsors are confronted with a tough choice: should they rely on third party estimates, or should they build their own internal view?
The dynamic nature of clinical trials creates an accruals headache
A key stumbling block for sponsors, according to Clinical Trials Arena, is lack of visibility: “Accruals, calculated monthly, estimate the entire value of clinical trial activity. The challenge of accounting for all the various stakeholders and players involved in a clinical trial is…an onerous task.” Sponsors typically depend upon CROs to provide accrual estimates for the work they and their third-party vendors have performed in each month or quarter against budget. They are equally dependent upon vendor estimates to maintain accurate forward-looking forecasts shift as trials progress.
Vendor estimates are a source of friction because not all vendors provide them. Or if they do, it can take weeks. Why? For CROs with antiquated tools, estimates require manual work. For this reason, getting them can feel like pulling teeth, or can lag to the point of uselessness. Sponsors can negotiate for CROs to provide them with vendor estimates, but if they aren’t cemented into the final contract, CROs will often charge sponsors for access to their estimate on an ongoing basis (our clients have reported ranges from $10-20k). Estimates can also come in varying formats across months or quarters, leading to inconsistencies in reporting that can be indicative of quality issues or a lack of comprehensiveness. And unless the CRO uses EDC (electronic data capture) data to construct a real-time view of what's happening at sites, there can be significant variability between estimates (which seem to be ballparks at best) and eventual invoices (which can lag up to 18 months).
Owning your view of the world
In many cases, the sponsor chooses not to rely solely on the CRO-provided data but rather calibrates against their own internal forecast – and then additionally cross references certain data components against known sources such as IRT, EDC and CTMS reports and systems. Often sponsors maintain spreadsheets with their own calculations and estimates of what they think was performed and a forecast of remaining work. These workbooks can be as simple as a few lines, one for each major vendor broken down by service fees, pass through costs and investigator fees, each spread over time, or they can be as complex as spreading each budgeted task for each vendor over time, based on an enrollment curve, or other perceived spend patterns or drivers. Forecasting in excel can be a lifeline, but accurate models depend on reliable inputs, and continued updates and configuration from those who built them. Not surprisingly, nearly 40% of sponsors report that Excel fails to meet their forecasting needs due to protocol complexity, limitations in data interoperability, difficulty reforecasting, and because models are error prone (see below). This “owned view” could be more accurate than vendor forecasts, but it also requires a great deal of manual work to tally, transfer, and maintain.
In the end, auditors want sponsors to rely on the best available information. There may be competing views on what constitutes “best available” but as a sponsor, it may be in your best interest to augment what you are being told by vendors with your own data and analysis. In our view, there’s a simple solution: have it both ways. Ensure you receive and review vendor estimates. They are often wrong and there will be discrepancies. However, you should have your own view of the world, so create your own estimates and forecast with the most current, clinically informed data you can. Flexibility and comprehensiveness will serve to true up your financial reality, so find an approach or technology that allows you to look at different data to assess the project holistically. If you have access to better data than the vendor estimate, discuss it with your auditor.
When striving for best available, sponsors need quality data to inform a solid and substantive accrual framework.
Where good data meets good process, confidence and compliance follow.