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. 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. 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. 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. 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. 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. 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. 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. 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. 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. REFERENCES
Phillips, C. J. (2005). Health economics: An introduction for health
professionals. Malden, MA: Blackwell Publishing.
