Principal investigators (“PIs”) are healthcare providers that are routinely engaged by healthcare entities for their experience and expertise related to the technical and financial management of clinical research studies and trials. PIs play a vital role in all stages and aspects of clinical research trials, including overseeing the grant application process, adhering to the financial plan presented in the proposal, and reporting progress to the project sponsor, among various others. Understanding the proper way to construct these agreements is important. Challenges include: determining if fees are consistent with fair market value and commercially reasonable, understanding if the physicians are required to document time and services prior to receiving payment, and confirming there is no overlap of payments between compensation for clinical trial services and other compensation arrangements, as well as many other issues.
There have been several initiatives by the government and industry to increase transparency and disclosure regarding payments to physicians for services provided to these companies. These include the Physician Payment Sunshine Provision (“PPSP”) which require manufacturers and group purchasing organizations in the life sciences industry to report to Centers for Medicare & Medicaid Services (“CMS”) virtually any transfer of value or payment to physicians and/or academic medical centers (“AMC”). This and other initiatives are expected to continue, while the need for physician involvement to provide consulting services remains important. Based on regulatory guidance, fees should be derived based on a sound methodology reflecting the terms of the arrangement and relevant value drivers. Value drivers for these services include 1) market reimbursement if the services are clinical in nature, 2) expertise required, including specialty and experience, 3) recognition of the provider, with higher rates supportable for national recognized versus regionally recognized providers, and 4) the time required for these services as most arrangements are based on hours worked.