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Fair Market Value May Be Safe Harbor

Is Per-Patient Payment for Study a Conflict of Interest?

Reader Question: Is it a conflict of interest if a physician is paid to conduct a study (e.g., $1,500 a subject, or even $5,000 a subject)? Does the amount matter?

Expert Comments:

Many commercial sponsors of clinical trials like to pay physicians on a per-patient basis for the costs of conducting a trial. Paying for their time and effort does not per se pose an insurmountable conflict of interest (COI), but when the payment amounts are out of kilter with the value of services, COI and kickback issues can arise.

Whenever you get a per-patient proposal from a sponsor, try to remember these three little words: fair market value (FMV).

The Food and Drug Administration’s (FDA) financial-disclosure requirements don’t mandate disclosing payments by sponsors to investigators for conducting a trial, but they do prohibit compensation tied to outcome — such as a bonus for a favorable study result. [See 21 CFR Part 54].

Federal regulators also recognize that financial relationships between sponsors and investigators may influence an investigator’s judgment. In fact, the Office for Human Research Protections (OHRP) urges institutions, institutional review boards (IRBs) and investigators to consider the following question when evaluating a clinical trial for COI issues:

Will the investigator “[receive payment per participant or incentive payments, and are those payments reasonable?” — OHRP Financial Relationships and Interests in Research Involving Human Subjects: Guidance for Human Subjects Protection; emphasis added]

So, although per-participant payments aren’t prohibited explicitly, they can raise eyebrows. How to tell the good from the bad? You guessed it — FMV. Or, in the words of the Office of the Inspector General (OIG), “payments for research services should be fair market value for legitimate, reasonable and necessary services.” — OIG Compliance Program Guidance for Pharmaceutical Manufacturers

To apply this rule to a study, first get a handle on exactly what the per-participant fee covers — medical procedures, materials, administration? Next, list the reasonable, fair market value of each item required to do the study, including time estimates for each task multiplied by the regular hourly rate of the professional performing the job. Finally, add them up and compare them to the per-participant price offered.

If the offered price doesn’t cover your costs, then it’s back to the negotiating table. If it’s way too high, it might be tempting to rationalize the difference, but you’re better off compliance-wise to adjust the contract price downward. Even better, show the sponsor the budget you’ve built and draft your contract to base your compensation on materials/services actually provided at your budgeted rates. Then no one can question whether you’ve met the FMV test.

Comments by Kristin H. West, JD, associate vice president and director, Office of Research Compliance, Emory University, Atlanta.

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