A clinical trial budget will have several items labelled as pass-through costs. The typical contract language requires the site to invoice those items with 3rd party receipts attached and no markup applied. The number of items sites are responsible for invoicing is increasing significantly.
For sites, each item flagged as a pass-through cost in the study budget creates an additional expense to the site for which they are not reimbursed. The higher the number of invoiceable items in a study, the more sites are subsidizing the clinical trial out of their own pockets.
Every clinical trial CRO or Sponsor has a different process and unique requirements for a site to collect reimbursement for pass-through expenses. Gone are the days of invoicing with a 30-day payment term. Regardless of whether the contract states invoices will be reimbursed within 45, 60 days or 90 days, the invoices are never paid on time. Often these receivables are outstanding for 6, 12 months or more.
Is it really an issue though? How much money does this really cost sites?
Let’s dig deeper.
Here’s a list of pass-through costs for a sample study:
- Participant reimbursement
- Participant food, lodging
- IRB submission fee:
- IRB annual submission fee
- IRB amendment submission fee
- IRB close-out fee
- Dry ice
- Study related supplies and expenses (lab supplies not provided by central lab, courier fees that are mistakenly billed to site)
- IP destruction
- Advertising for recruitment
- Rescue medications
- Serum Pregnancy Test done locally
- Biopsy – local pathology
- Quantiferon-TB Gold done locally
- PPD skin test done locally
- Hematology and biochemistry done locally
- … numerous other labs done locally
- Chest x-ray
- CT scan
- MRI
Add these costs up over the course of the study and the expense can be in the tens of thousands of dollars. That’s just for one study. If the typical site has 20 studies ongoing, you can imagine the amount of money that is outstanding just from pass-through costs alone.
The reality for sites in clinical trials is that pass-through expenses cost sites money in several ways:
- Administrative costs
Sites employ staff to track, process and invoice pass through costs. They must exactly follow the instructions in the contract for creating and sending invoices. Even with this meticulous approach, many invoices will simply just be rejected. The site staff must then follow-up, find out why it was rejected and resubmit. The next problem is that the site usually doesn’t have a person at the sponsor or CRO to connect with about invoicing. They are typically given a general email address inbox and frequently get no response when sending questions or requesting updates. As a result of the delays in not receiving the payments for the invoices, the site staff member must follow up many times over the coming months. I would estimate that for every invoice a site creates, sends, resends, follows up on… likely takes 15 to 30 min of site staff time. 20 or so invoices in a study can add up to 8 hours or more just for invoicing per study.
- Financing costs
Since the delay in receiving payment for invoices is far more than the standard 30 days, the site pays interest for several months on the money spent on pass-through expenses. These delays multiply the expense of the ever-increasing invoiceable items. Combine this with high interest rates, the cost to the site is significant.
- Bad dept
Occasionally a sponsor or CRO delays so long in paying an outstanding invoice, they become uncollectible. There could be an invoiceable expense that a site incurs where there is a difference in interpretation of the contract language and the sponsor or CRO refuses to pay. As well, if a site takes too long to invoice, the sponsor or CRO may just reject the expense. In addition, there are situations where sponsors go out of business and then it’s impossible to collect on the fees. In all these cases, the site ends up absorbing the cost.
- Opportunity costs
Since the site must spend money and resources on collection of reimbursement for pass through costs, there are opportunities that the business cannot proceed with due to lack of funds. It means that although the site might need another coordinator to help with recruitment or expansion, the site simply cannot afford to bring one on. It also limits the ability of the site to raise wages for existing staff. Due to the increasing costs related to invoicing, the site must increase other study fees. This can result in the site missing out on studies they would otherwise like to participate in.
- Miscellaneous Costs
The older debt becomes, the harder it gets to collect and the more expensive it becomes. The staff member at the site escalates the situation to the site leadership and now the site is paying additional people to try to resolve the situation. The site also ends up paying additional accounting costs related to the outstanding receivables.
Potential Solutions:
Avoid pass through costs whenever possible. Using the example study above, there are many items the sponsor listed as pass-through that didn’t need to be pass through:
- Participant reimbursement: tracking visits and reimbursing participants costs the site money and the overhead cost in the budget should be applied to participant reimbursement. Alternatively, sponsors can use a vendor to reimburse participants – just keep in mind that some of those vendors require quite a bit of administrative work by the site and charge the participant a fee to access the funds.
- Dry Ice: incorporate the cost of the dry ice in the reimbursement for the labs at the visit where dry ice is required.
- IP destruction: include the cost of IP destruction in the IP dispensing / collection fees
- Local labs, MRI, CT Scan, x-ray: Cover these in the budget and pay automatically upon entry of the results in the EDC.
Using strategies like this, pass-through costs are reduced significantly and the site is saved considerable expense and time.
Sponsors and CROs need to be aware of the negative impact pass-through costs have on clinical trial sites. If site-centricity and being the sponsor/CRO of choice are important, companies will tackle the issues surrounding pass-through cost invoicing and improve the situation for sites.
Clinical Research 
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