Clinical Trial Indirect Costs

University of Washington Correspondence

INTERDEPARTMENTAL

February 12, 1997

To: Acting Dean John Coombs
Dean Sue T. Hegyary
Dean Sidney D. Nelson
Dean Gilbert S. Omenn
Dean Paul B. Robertson

From: Lee L. Huntsman
Acting Provost

Subject: New Policy on Clinical Trials

Over a year ago, Dean Fialkow asked me to chair a committee to review a number of issues related to the clinical trial activities in the School of Medicine. The committee addressed these issues over the better part of a year, and the results were summarized in a set of recommendations submitted to Dean Fialkow, dated July 2, 1996 (see copy attached). He, in turn, invited the appropriate offices to consider implementation of some of these recommendations. Two primary issues surfaced: the need to reduce the processing time for clinical trial proposals (including Human Subjects Office review) and the need to revisit our indirect cost policy for clinical trials. (The School of Medicine has since decided to appoint someone to coordinate clinical trials in the School.)

After detailed consideration, we now plan to change our indirect cost policy for clinical trials. As the attached memo from Vice Provost Kwiram outlines (see detailed outline for exceptions), we plan to change the indirect cost rate for all industry-sponsored clinical trials to a non-negotiable 25% of Total Direct Costs (TDC) for fixed-price clinical trials. This is justified in part by the fact that many clinical trials take place predominantly in hospital space where the normal University indirect cost rates do not apply, and in part by the nature of fixed-price contracts which significantly reduces the accounting and reporting burden.

This new rate will apply to all bona fide clinical trial studies at the University. In addition, efforts will be made to expedite Human Subjects Reviews and Grant and Contract processing for industry-sponsored clinical trials. You should consult with Office of Sponsored Programs for further details.

Finally, the successor committee, known as the Clinical Trial Working Group, is exploring the feasibility and advisability of creating at the UW a mechanism to handle large-scale, multi center clinical trials. Such an initiative should be organized in a manner so as to serve all the Health Science units. If you have views or questions about these developments, please contact the current chair of the Clinical Trial Working Group, Professor Walter Stamm.

c: Dr. Richard L. McCormick
Mr. Donald W. Allen
Mr. Weldon E. Ihrig
Dr. Alvin L. Kwiram
Mr. Craig Purkey
Dr. Walter E. Stamm
Dr. Stephen C. Woods

University of Washington Correspondence

INTERDEPARTMENTAL

January 30, 1997

To: Lee L. Huntsman
Acting Provost

From: Alvin L. Kwiram
Vice Provost for Research

Subject: Clinical Trials Indirect Costs

This is a follow-up to my November 7, 1996 memo, addressed to Acting Dean John Coombs, on the subject of "Clinical Trial Report Recommendations." In that memo, I addressed the implementation of a number of recommendations from the "Report of the ad hoc Committee on Industry-Sponsored Clinical Trials," which we believe will help achieve a more effective clinical trials program and facilitate the work of the faculty in winning such awards and carrying out their research activities. One remaining issue was the indirect cost policy on clinical trials. We have since received from the Office of Financial Management a general estimate of the potential cost impact that would follow from a change in the clinical trials indirect cost policy, so we can now address this issue.

The proposed changes in indirect cost rate policy are limited to clinical trials, defined as follows:

A prospective controlled study designed to assess the safety and efficacy of identified and specific new drugs, devices, treatments, or preventive measures in humans by comparing two or more interventions or regimens.

The following indirect cost rate will be applicable to industry sponsored, fixed price, clinical trials.

Indirect Cost Rate
Under $1 million direct costs per year 25% of total direct costs (TDC)

$1 million direct costs or more per year Rate to be negotiated by OFFICE OF SPONSORED PROGRAMS based on
specific space usage and other
factors

The rate structure above does not affect federally sponsored clinical
trials, which are normally performed on a cost reimbursement basis, rather
than fixed price. Federal trials also have certain costing restrictions
and regulations with a requirement for a final fiscal report at the
conclusion of the project. For these projects, the University will
continue to use the appropriate federal negotiated indirect cost rate
applicable to the location of the research (refer to Grants Information
Memorandum 13 for current rates). Federal clinical trials located in
Health Sciences space should be considered on-campus. If the trial is in
the University Medical Center (clinical) space, the project should be
considered off-campus. As discussed in GIM 13, the location is determined
by where the predominance of salaries are paid. For projects over
$250,000 direct costs, that are located in more than one location,
multiple rates are to be used (see GIM 13, Appendix B).

Department chairs, administrators, and deans will have to assume
responsibility to evaluate whether a proposed clinical trial in fact
meets the criteria to be classified as such.

During committee discussions, an IRB or Processing Fee was discussed as
one option for industry sponsored awards. The idea was that such a fee
would be justified based upon additional costs the University would incur
for industry clinical trials, e.g. additional costs in OFFICE OF SPONSORED PROGRAMS, including the Human Subjects Division. and a Clinical Trials
Coordinating Center in the School of Medicine. The concept has merit in
that there will be some revenue loss to the University with implementation
of the new indirect cost rate structure while at the same time additional
costs will be incurred given the implementation of the new procedures.
Such a fee structure seems well justified, but we will analyze this
further after the new procedures are in place and we have developed
sufficient experience to assess the relevant cost considerations.

The new indirect cost rate for industrial clinical trials will be
effective March 1, 1997. Indirect cost rates under existing agreements
that have been accepted under the current policy will continue until those
agreements expire. These proposed changes have been discussed with and
agreed to by representatives from the School of Medicine.

I think the steps we have already implemented, together with the change in
indirect cost policy as noted above, should allow clinical trials to be
conducted more effectively at the UW.

c: Donald Allen
Ann Anderson
Rich Andrews
John Coombs
John Des Rosier
Daniel Dorsa
Harlan Patterson
Craig Purkey
V'Ella Warren