Budgeting for Clinical Trials 101

Why Develop an Internal Budget?

Developing an internal budget can be a complex process, but it’s important for many reasons. First, the internal budget allows the research office to see the actual cost to conduct a study. Additionally, the internal budget is often more detailed than the budget provided by the sponsor. Your internal budget might vary from other institutions due to specific processes, and it can be built in an excel document or directly into a CTMS. Developing an internal budget allows for additional comments and clarifications that may not be possible to add to the sponsor’s template. Lastly, an internal budget can be formatted to meet any specific internal needs. A good example of this might be including specific formulas to account for how much money should be allocated to the PI, the nurse or coordinator, or to cover various departmental fees.

Internal Budgeting Process Overview

When building your internal budget, it’s important to start with a coverage analysis (CA) and follow those designations. For compliance reasons, you cannot budget for items that have been marked as standard of care (SOC) and billable in the CA. If you are building your budget in a CTMS, this step isn’t necessary, as it is done automatically in the system. Once you add your actual costs to the internal budget, you will need to edit the sponsor budget based on the internal budget and CA. The sponsor budget template is what will be used to negotiate your costs with the sponsor until you have a finalized budget that is agreeable to both parties, and is compliant with all applicable rules and regulations. Having a finalized budget is not the last step. It is imperative to confirm that all documents including the CA, internal budget, sponsor budget, contract, and consent form are consistent.

Internal Budget Processes and Requirements

There are a few requirements for building an internal budget. First, it is recommended that you have a standard template for all internal budgets. This will help the billing office, coordinator, and anyone else using the document to become familiar with a consistent format. Next, determine the price for all items and services required by the protocol. There are also many costs associated with running a clinical trial that are not related to a specific procedure. Some common examples include informed consent, adverse events, and patient surveys. The hourly rates of the PI, nurses, and coordinators should be used, along with accurate time estimations to calculate the cost of these non-procedural items. Your institution likely also has a unique overhead that should be applied on top of these internal costs. Lastly, you’ll want to account for any other administrative costs, which may include charges from individual departments such as pharmacy, radiology, or pathology. It is important to develop a consistent research admin fee schedule for all industry-sponsored trials. Some common admin fees include start up, close out, archiving, annual maintenance, and serious adverse event reporting. Determining a comprehensive internal cost for each trial is necessary so the feasibility of the trial can be analyzed. If you are the person responsible for negotiating the budget, it is important to know who has the ultimate responsibility for approving the budget if it falls below your bottom line. If you don’t know the lowest amounts you can accept, it can significantly delay the negotiation process, which can ultimately affect patient care.

When building the internal budget, it can be helpful to match the grid to the sponsor budget as closely as possible. For example, if the sponsor budget is built out for six cycles, you should make sure the internal is built out for six cycles as well so you’re calculating the correct per patient total. Accurately budgeting for those non-procedural items as previously mentioned is vital, as they can take significant time to collect. Make sure to also include PI time for any items that require the PI to actively participate. The internal budget is a great place to make comments and clarify when and why an item may be considered invoiceable.

Incorporating an Internal Budget into a Sponsor Budget

Once the internal budget has been developed, it is time to edit the sponsor’s budget accordingly. For compliance reasons, the most important step is to make sure you update designations so any item marked SOC in the internal budget is now marked SOC in the sponsor budget. There are generally two approaches institutions take after receiving the initial sponsor budget: some accept payments for any item the sponsor is offering, whereas some perform a CA and only accept sponsor payment for items they cannot bill to a patient’s insurance. If the same person does not complete both the CA and the budget, this will require careful communication. Take time to update the dollar amounts as required and add in any missing line items. Most sponsor templates have multiple formulas, and it’s important to double check that all formulas are correct. If the sponsor hasn’t provided the payment terms, request these to review as well. Most payment terms will need to be edited to match the new amounts and administrative fees requested on the budget document.


Building an internal budget and reconciling it with the sponsor’s budget can be a difficult task, but it is an important part of any clinical trial. If you have any questions about the budgeting process, feel free to contact us. To learn more about budgets, check out our recent webinar on editing budgets for better billing compliance.