Industry-specific accounting tools, underpinned in auditable, defensible, and predictable processes, are critical throughout the clinical trial journey - most especially as therapeutics advance to a pivotal Phase 3 trial. Companies that lean into solutions to accelerate, secure, and optimize accounting and FP&A processes in support of the most material line item – R&D spend – are better positioned to rapidly and sustainably scale.
Complexities and materiality compound
The average Phase 3 trial costs $21M vs. $7M for a Phase 1 trial. As trials advance into Phase 3 it is typical to see average per patient costs rise to $70-$80k, equating to tens of millions of dollars for a large study and driving the price tag relative to the other phases. Additionally, this is a juncture where protocol deviations become increasingly material, more endpoints are established/measured and patient enrollment balloons by upwards of 10x. Managing this sweeping acceleration of trial complexity and exposure requires sound financial and accounting processes and software tools to ensure accurate and compliant financial reporting. Sponsors are tasked with managing ever-challenged forecasts, budgets and accruals across vendors, investigators and sites within a compliant framework.
Why the need for Clinical Trial Accounting software?
Depending on internal audit preference and largely due to the volatility, variability and relative size of investigator costs, a significant portion of life science companies use a manual, bottoms-up approach for calculating investigator accruals. Sponsors manually transcribe contracted CTAs costs into excel and then enter in the EDC visit data to translate the financial costs of patient visits each month. This presents a heavy manual lift and resource strain as it requires often a fully-dedicated resource to build and maintain a manual patient tracker and continue transcribing data into excel. Site contracts go stale as soon as there is a protocol amendment, requiring another heavy lift to update contracted costs in the patient tracker. Given the clinical aspect, this generally falls to the resource-constrained clinical team or a junior accounting resource – in both instances, there are better uses of these resources time. In addition to the resource drain, coding manually in excel leads to significantly more errors and could create exposure on the audit side.
Reality of the challenges:
Sponsors default to these manual practices given the lack of timely and accurate third party data. Not all CROs provide vendor estimates for investigator spend. Further, global sites present significant data lag challenges - Even if reliable vendor estimates are provided, they often don’t reflect real-time data. Further, as companies scale and advance clinical programs they need to ratably grow their team to track granularly or sacrifice accuracy in the company's most significant cost category.
Example: One Auxilius customer recently entered a pivotal study. Because of the volume of patients, a clinical operations person was spending 25% of monthly work on manually coding patient data (even at 15% enrollment) to translate to the month-end accrual estimate for accounting counterparts. They onboarded Auxilius to scale this heavy manual process and regained 40 hours a month for the clinical operations team to focus on direct trial management.
What is best practice?
Companies that advance beyond manual excel processes and into an automated tool are gaining quantifiable and immediate value, allowing them to scale R&D programs with informed resource-allocation decisions, budgetary proficiency and greater vendor negotiation leverage.
There’s a better way, by using software built for scale + complexity.
Get in touch with our team to learn more.