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Impact and Value Report

 

Contents

This document, “NIHR Clinical Research Network: Impact and Value Assessment” has been prepared by KPMG LLP (“KPMG”) solely for University of Leeds in accordance with specific terms of reference (“terms of reference”) agreed between University of Leeds (“the Beneficiary”), and KPMG dated 1 March 2016. KPMG LLP wishes all parties to be aware that KPMG’s work for the Beneficiary was performed to meet specific terms of reference agreed between the Beneficiary and KPMG and that there were particular features determined for the purposes of the engagement.

KPMG does not provide any assurance as to the appropriateness or accuracy of sources of information relied upon and KPMG does not accept any responsibility for the underlying data used in this report.

The document should not be regarded as suitable to be used or relied on by any other party wishing to acquire rights against KPMG (other than the Beneficiary) for any purpose or in any context. Any party other than the Beneficiary that obtains access to this document or a copy (under the Freedom of Information Act 2000, the Freedom of Information (Scotland) Act 2002, through the Beneficiary’s Publication Scheme or otherwise) and chooses to rely on this document (or any part of it) does so at its own risk. To the fullest extent permitted by law, KPMG does not assume any responsibility and will not accept any liability in respect of this document to any party other than University of Leeds.

The opinions and conclusions expressed in this document are those of KPMG and do not necessarily align with those of University of Leeds.

Glossary

 

ABPI: Association of the British Pharmaceutical Industry Industry sponsored: all commercial and investigator initiated studies sponsored by industry (i.e. a pharmaceutical company or medical device company)
ARSAC: Administration of Radioactive Substances Advisory Committee IRAs: Integrated Research Application System
CRO: Contract Research Organisation LCRN: Local Clinical Research Network
CRN: Clinical Research Network MHRA: Medicines and Healthcare products Regulatory Agency
CTA: Clinical Trials Authority NHS: National Health Service
CTD: Clinical Trials Directive NHS Trusts: Covers all types of NHS Trusts including Foundation Trusts, Acute Trusts, Ambulance Trusts and Mental Health Trusts.
CSP: Coordinated System for gaining Permissions NIHR: National Institute of Health Research 
EU: European Union  NIHR CRN: National Institute of Health Research Clinical Research Network
FTE: Full Time Equivalent NOMS: National Offender Management Service
FY: Financial Year nRCF: Network Research Capability Funding
GCP: Good Clinical Practice ONS: Office of national Statistics
GVA: Gross Value Added Other care providers: An inclusive term to account for primary care providers.
HFEA: Human Fertilisation and Embryology Authority RCT: Randomised Control Trial
HSC: Health and Social Care R&D: Research and Development
HRA: Health Research Authority  Sponsor companies: An inclusive term for all companies funding commercial research. This includes (but is not limited to) pharmaceutical companies, biotech companies and medical device companies.
HTA: Human Tissue Authority UK: United Kingdom

 

Executive summary

 

The importance of clinical research to the UK is recognised by Government1, but there are challenges to realising the benefits. The National Institute of Health Research (NIHR) Clinical Research Network (CRN) was established to help overcome these challenges and support the successful delivery of clinical research in the UK.

Clinical research in the UK is essential for improving care for patients, providing evidence on the efficacy of new healthcare treatments.2 Prior to 2006, the UK clinical research environment faced some critical challenges in meeting the commitment in the NHS constitution to “promote, conduct and use research to improve the current and future health and care of the population”.3

In response, the Department of Health launched a Government strategy for health research: Best Research for Best Health. 4 A key action of this was to establish the NIHR CRN. The CRN comprises of a central Coordinating Centre and 15 Local Clinical Research Networks which work together to support the initiation and delivery of high-quality research. It provides the infrastructure and study support services that enable clinical research to take place in the NHS.5

This report considers the impact and value of the CRN – it considers the economic impact of all clinical research activity supported by the CRN, the monetary benefits to the NHS and the value added by the CRN’s support services.

The CRN has identified a need to demonstrate the impact of clinical research studies brought onto the CRN Portfolio and the value for money delivered. To assist in this, the CRN commissioned KPMG to undertake research and analysis to understand the economic impact of its activities.

In this report, we consider the role for Government support in the clinical research market and the regulatory challenges facing the industry. We quantify the economic impact of the activities within the CRN research portfolio as well as the other monetary benefits to NHS Trusts. These include the revenues received from sponsor companies due to commercial studies as well as cost saving to the NHS due to pharmaceuticals provided for free for commercial studies.

This KPMG report estimates that in financial year (FY) 2014/15, CRN supported clinical research activity generated £2.4 billion of gross value added (GVA) and almost 39,500 jobs in the UK.

We assess economic impact in terms of GVA which is a measure of the contribution of an individual investment, producer, industry or sector to the economy. It is the value of outputs from production minus intermediate consumption (the value of the goods and services consumed as inputs to the production process).

The analysis is based on standard economic impact methodology set out in HM Treasury’s Green Book6 and draws on Office for National Statistics guidance on the calculation of gross value added7 .

We also estimate the employment impact in terms of the number of jobs created as a result of the CRN-supported clinical research activity. We estimate that in the period April 2014 to March 2015 (FY 2014/15) clinical research activity supported by the CRN generated a total of £2.4 billion GVA and almost 39,500 jobs. This includes £778 million as a result of noncommercial activity8 , £1.6 billion due to commercial activity9 and £21 million as a result of the CRN’s Coordinating Centre’s activities. This includes the direct GVA and employment impacts, as well as those generated in the supply chain and the wider economy. These impacts are summarised below.

Figure 1: Estimated economic impact in summary10

In addition to the economic impact of clinical research activity, we the NHS benefits from additional revenues and cost savings, totalling an estimated £192 million.

We found that, for commercial studies, NHS Trusts receive an average of £6,658 in revenue from sponsor companies, and a pharmaceutical cost saving of £5,250 per patient recruited to each clinical study. This equates to estimated totals of £176 million of commercial income and £16 million of pharmaceutical cost savings across the commercial CRN Portfolio for FY 2014/15.

Figure 2: Monetary benefits to NHS Trusts

Our analysis is based on data from a range of sources, including information provided directly by NHS Trusts and the CRN, publically available data on the commercial industry, non-commercial funding information, and the application of evidence based assumptions. Most significantly, challenges in obtaining relevant data from NHS Trusts means that our estimates are based on data relating to a sample of sites, scaled up to provide an estimate of the impact across the CRN Portfolio of studies. While the sample provides broad geographical and specialty coverage, it should not be considered a representative sample. The figures in this report should therefore be considered indicative of the expected impact of the clinical research activity supported by the CRN, rather than being exact measures.

There are also a number of additional impacts of the CRN that generate significant benefits for the market that are not quantified.

To understand these impacts, we consulted with 40 stakeholders selected in collaboration with the CRN to ensure coverage of all stakeholder-types – sponsor companies, NHS Trusts, CRN, LCRN and charities. Consultation was confidential and all reporting has been done in aggregate. The key messages from stakeholders are summarised below.

— The CRN has paved the way for a higher profile of the clinical research market in the UK which has attracted commercial attention.

— The LCRN infrastructure (the ‘frontline’ staff) is integral to the delivery of clinical research, particularly for non-commercial studies. 

— Staff involved with CRN clinical research benefit from training offered by the CRN. This represents a sizable cost saving to NHS Trusts and other care providers.

— The CRN has improved study set-up time and processes. The pace with which recruitment can commence after study set-up was cited as a benefit of the CRN support and infrastructure.

— The CRN enables greater access for sites and patients. Sponsor companies pointed out the CRN introduced them to sites they otherwise would not have reached out to.

— The use of CRN costing templates and model agreements has process efficiencies for some stakeholders and positive impacts on the market in terms of transparency in pricing.

— Collaborative benefits, such as sharing of best practice and the use of CRN specialty leads to enhanced collaboration, was noted as a significant added-value.

— The independence of the Coordinating Centre to monitor performance and allocate funding is a benefit for the market and provided a ‘critical friend’.

— There are also a number of wider positive benefits in particular benefits to infrastructure, the learning and skill development of clinicians, improved quality of care and health outcomes for patients as well as quicker uptake of new treatments in the UK.

These impacts, although not easily quantified, are seen by stakeholders as critical to the successful deliver of effective clinical studies in the UK. Looking forward, stakeholders said the CRN should prioritise input from a local level regarding clinical research pipeline planning, undertake further patient engagement activity as well as consider how value can be delivered in the future beyond establishing working relationships between stakeholders. Sponsor companies and NHS Trusts stated, in establishing these relationships, the CRN had been integral. However, going forward the value was going to be derived from building on these relationships.

This study provides a baseline of the economic impact of the CRN. Going forward, the CRN wishes to carry out ongoing monitoring and evaluation to measure the impact and value of its activity.

For several data sources used in this report, data extraction has been a resource intensive process and in some areas the available data has not been comprehensive. This is the result of the following issues:

— difficulty for NHS Trusts to provide data. This is primarily because data is usually held in a non-aggregate form by NHS Trusts so extraction is resource intensive.

— commercial sensitivity regarding provision of data for sponsor companies, CROs and for NHS Trusts (relating to commercial studies).

We have consolidated the lessons learned from data collection as part of the report to produce a proposed action plan setting out what data are needed in order to carry out a similar exercise in the future and how they can best be captured, taking into account the data availability and resource limitations we have identified as part of this report. 

Introduction

Clinical research in the UK

Clinical research undertaken in the UK provides evidence on the efficacy of new healthcare treatments. It helps the NHS to improve the care given to patients. 11

Patients benefit from clinical research, in particular through the additional treatment options that it makes available to them. 12 Recognising this, the NHS Constitution13 commits to the “promotion, conduct and use of research to improve the current and future health and care of the population” and to ensure patients from every part of England are made aware of research that is of relevance to them. 14

However, historically, the routes through which clinical research was conducted and funded were complex. Between 1990 and 2006, a number of reviews and reports identified challenges to the UK health research environment in England. 15 In response, the Department of Health launched a Government strategy for health research: Best Research for Best Health. 16 A key action as part of the strategy was to establish a National Institute for Health Research, which subsequently launched in April 2006, to centralise research activity support services – to do this, the NIHR provides infrastructure, faculty, research and systems. 17 The NIHR CRN18 was created too as part of the infrastructure of this support.19

The CRN’s remit is to support the delivery of high-quality clinical research in the NHS. Its purpose is to provide efficient and effective support for the initiation and delivery of funded research in the NHS. Some of this research is funded by the NIHR, but most is funded by NIHR non-commercial partners20 and industry. 21

The CRN’s structure includes:

— the Coordinating Centre, the central study support resources that manage performance data submissions, facilitate training and a range of activities across the UK; and,

— 15 Local Clinical Research Networks who provide on-the-ground infrastructure to assist with the delivery and recruitment for studies.

These are collectively referred to as the CRN unit in this report and both work together with shared principles, values and behaviours.22 It funds research posts in the NHS, provides training to front-line staff, provides funding to meet the costs of some research facilities as well as providing practical help in identifying and recruiting patients.

Those clinical research studies that meet the specified eligibility criteria are added onto the CRN Portfolio of studies and are able to receive study support from the CRN. Between April 2014 and March 2015, a total of 1,869 new studies were added to the CRN Portfolio, with over a third of these sponsored by commercial companies. 23 In the same year, 618,453 patients were recruited onto Portfolio studies, representing just over one per cent of the population of England.

Whilst it is difficult to estimate the exact proportion of all England-based clinical studies supported by the CRN due to the lack of comprehensive data covering all UK studies, there are some sources which provide an indication of this proportion. Based on these sources we estimate that the CRN supports around 70 per cent of all clinical research studies (including those which are ineligible for funding).

The EU Clinical Trials Register is a compulsory register for all pharmaceutical-based interventional studies, and provides data on studies conducted in the UK. Based on this database, we estimate that the equivalent studies on the CRN Portfolio make up around 50 per cent of all pharmaceutical-based studies undertaken in the UK. 24

The MHRA also holds a record of all Clinical Trial Authorisation (CTA) approvals, which are required for all investigational studies of medicinal products carried out in the UK. The MHRA estimates that 88 per cent of studies it approves25 are supported by the CRN.

Information gathered directly from stakeholders as part of this study suggests that the overall proportion falls somewhere between these estimates, and suggests that the CRN provides support to around 70 per cent of all clinical research studies. Information from stakeholders suggests that the figure is higher for commercial studies (estimated at 90 per cent) than for non-commercial studies (estimated at 60 per cent). 26 However, the proportion of noncommercial studies supported by the CRN would be expected to be higher if ineligible studies (including most PhD studies) were excluded from the total. 27 

The context of this study

The CRN was allocated £284.6 million for FY 2014/15 and FY 2015/16 by the Department of Health to support its activities and infrastructure.

In 2015/16 the CRN also received Network Research Capability Funding (nRCF) of £9.9m from the Department of Health. Of this approximately £6m of "flow-through" funding was allocated with the intention of incentivising success in commercial studies. 28

For 2016/17, nRCF will no longer be allocated. Instead the CRN has been allocated core funding of £290.6m, made up of flat funding of £284.6m from the previous core allocation, together with £6m provided specifically for the commercial incentivisation "flow-through" element.

This funding allocation supports clinical research posts in the NHS, and provides the required training, so that researchers benefit from access to experienced ‘front-line’ staff who support the delivery of studies. The funding also provides for the costs of using facilities (such as scanners and x-rays) needed in the course of clinical research and practical help in identifying and recruiting patients onto Portfolio studies.

Going forward, the CRN needs to demonstrate the impact of clinical research studies brought onto the CRN Portfolio and the value for money delivered. This is particularly important in the current climate of fiscal austerity. In particular, HM Treasury and Government departments are putting a greater focus on the financial and economic returns to Government spending.29 However, evidence of the value and impact of clinical research in the UK is difficult to quantify, and in particular the specific contribution of the CRN. To assist in building this evidence base, the CRN commissioned KPMG to undertake research and analysis to understand the economic impact of its activities.

In particular, the CRN asked KPMG to assess:

1 The economic contribution made to the UK economy through clinical research activity supported by the CRN;

2 A measure of the payments made to NHS Trusts for commercial studies; and

3 The value to the NHS of pharmaceuticals used as part of industry-sponsored studies. This study focuses on the immediate economic and wider impacts generated from clinical research activity itself, rather than the outcomes of the research. We also examine the role of the CRN and the value it adds to the clinical research market.

This report is structured as follows:

— We first consider the overall economic impact, in terms of gross value added (GVA)30 and employment generated through the CRN Portfolio of clinical research studies.

— We then quantify other monetary benefits to the NHS resulting from clinical research activity. This includes cost savings from pharmaceutical products provided free by sponsor companies as well as commercial income payments to NHS Trusts.

— Next, we consider the value added by the CRN within the clinical research market. We consider the wider benefits and contributions made by the CRN and, in particular, its additionality (i.e. the net impact after making allowances for what would have happened in its absence).

— Finally, since this analysis may serve as a baseline for future assessments by the CRN and for other impact studies, we present an Action Plan recommending what data should be collected going forward to help measure the CRN’s future economic contribution.

Clinical research in the UK

Challenges and reforms in the UK clinical research market

The UK is an established market for clinical research.

The global market for clinical research is estimated to be worth £38 billion ($63 billion).31 The UK is a prominent location for this activity. In FY 2014/15, total health related R&D spending (both commercial and non-commercial) was estimated to be in the region of £8.5 billion. 32 Of this:

— 48 per cent of this was spent by commercial companies;

— 32 per cent by higher education providers;

— 15 per cent by public sector research institutes; and

— 5 per cent by the private non-profit sector.

Over the past five years, there appears to have been an overall increase in the volume of studies, but the picture is mixed across phases of study and clinical specialties.

Looking across a range of data sources33, there appears to have been a small increase in the total number of clinical studies carried out in the UK over the last five years, there is an inconsistent picture across sources, none of which provide a comprehensive view. There is also a mixed picture in terms of growth in the volume of clinical research studies across different phases of study and in different clinical specialties with some seeing growth, whilst other have seen a decline.

MHRA data shows this ‘mixed growth’ picture indicating growth varies by phase. Data of approved studies, as per MHRA records, suggests that since 2010 there has been a decline in Phase 1 and Phase 4 study applications, while the number of Phase 2/3 applications has grown. 34

Figure 3: Applications received by MHRA, by phase for interventional studies using a pharmaceutical product

Showing a similarly mixed picture across clinical specialties, the Association of the British Pharmaceutical Industry (ABPI) reports on therapeutic focus where the UK has historically performed strongly compared with other European countries. It finds that the UK has seen a small growth in commercial oncology studies since 2010 while over the same time period, commercial studies relating to the nervous system and cardiovascular treatments have declined.35

However, the UK has remained competitive in these fields relative to its European neighbours and the UK has gained competitive strength against Germany and France in particular. 36

The UK and Europe have faced increasing competition from a growing number of global competitors. 37

The UK is facing increasing competitive pressure due to a growing number of global competitors, predominantly from China and Brazil (in East Asia and South America). 38 Growth in the market share in these regions and the subsequent increase in expertise means companies can now confidently undertake commercial clinical research studies in less historically established markets. The change in the number of clinical research studies across different regions globally can be seen in Table 1. Most regions have experienced growth in the number of clinical research studies, with the most significant growth seen in Asia and the Americas. 39

The market share of the UK has declined as a result of this expanded marketplace. 40 This competitive pressure is considered to be mainly based on cost efficiencies, the burden of set-up, quality of health care facilities and the size of the potential patient pool. 41

Views from Contract Research Organisations (CROs) and sponsor companies consulted as part of our study reflects this competitive pressure. Half of those we spoke to reported that the proportion of global studies allocated to the UK over the past five years has decreased or not changed. 42

To remain competitive, the UK has made significant improvements to the regulatory environment, making it more competitive and attractive to commercial companies.

In January 2011, the Academy of Medical Sciences published its regulatory and governance review of health research: A new pathway for the regulation and governance of health research. 43 The review made a number of recommendations to transform the regulatory environment in the UK, to reduce the time taken to set-up studies and to facilitate research. 44

In response, the Government, in its 2011 Plan for Growth, announced the creation of a new single health research regulatory agency to streamline regulation and improve the cost effectiveness of studies.45

The Health Research Authority (HRA) was established in December 2011 to promote patient health and streamline regulation. 46 The HRA approval comprises a review by a Research Ethics Committee as well as an assessment of regulatory compliance and related matters. 47 This replaces the need for local checks of legal compliance and related matters by each participating organisation (or site) in England. For researchers, this has meant elimination of duplicate application routes, a reduction of paperwork and an overall shortening of time to complete the approvals process. 48

The Integrated Research Application System (IRAS) is a single system for applying for the permissions and approvals for health and social/community care research in the UK. This is a single point of entry for permissions, which vary depending on the type of clinical research (see Box 1 below for more detail).

Box 1: Review Body Approvals Required for Clinical Research

The regulation of health research provides participants with assurance that research is of high quality, safe and ethical. To do this, there are various types of approvals relevant for different types of research. These are briefly summarised below and are all accessed from the IRAS.

1. HRA Approval – a review by a NHS Research Ethics Committee and assessment of regulatory compliance and related matters.

2. NHS management permission in Scotland, Wales or Northern Ireland – researchers who wish to conduct research in the NHS in Wales or Scotland, or Health and Social Care (HSC) in Northern Ireland must obtain NHS (or HSC) management permission.

3. Research Ethics Committee – review applications for research and given an opinion about the proposed participant involvement and whether the research is ethical. There are various different types of REC.

4. Medicines and Healthcare products Regulatory Agency (MHRA) – clinical trial authorisation (Investigational Medicinal Products) – a Clinical Trial Authorisation (CTA) is required for any clinical trial of an investigational medicinal product to be conducted in the UK.

5. Medicines and Healthcare products Regulatory Agency (MHRA) – Notice of No Objection (Medical Devices) – an application to MHRA Devices is required where the study is a clinical investigation of a medical device undertaken by the manufacturer.

6. Confidentiality Advisory Group – provides independent expert advice to the HRA and the Secretary of State for Health on whether applications to access confidential patient information without consent should or should not be approved.

7. National Offender Management Service (NOMS) – if the project is with Prisons or Probation Trusts, an application to NOMS will be required.

8. Administration of Radioactive Substances Advisory Committee (ARSAC) – for research involving administration of radioactive materials which are additional to normal care.

9. Human Fertilisation and Embryology Authority (HFEA) – for research involving human embryos and gametes.

10. Human Tissue Authority (HTA) – under the Human Tissue Act 2004, storage of material from a human body consisting of or including cells for scheduled purposes.

Source: HRA. 2016. Available at: http://www.hra.nhs.uk/research-community/before-you-apply/determinewhich-review-body-approvals-are-required/

Alongside these UK-based changes, there have also been reforms to relevant EU legislation. The EU Clinical Trials Directive (CTD) was adopted in 2001. The new directive was seen as controversial49 and was criticised by sponsor companies, researchers and a range of stakeholders due to its disharmonised interpretation across EU countries, high associated costs, delays and the administrative and regulatory burdens of doing clinical studies in different member states. 50 It was found that from 2007 to 2011 the number of applications to carry out clinical studies in the EU fell by 25 per cent, set-up costs increased significantly and the occurrence of delays to the launching of studies rose by 90 per cent. 51

The EU Clinical Trial Regulation has since replaced the EU CTD and entered into force on 16 June 2014. Key provisions include:

— a new streamlined process to authorise the launch of new clinical studies based on the submission of a single application;

— introducing a lighter regulatory regime for studies conducted with medicines already authorised and which pose only a minimal risk compared to normal clinical practice;

— simplify reporting requirements sparing researchers from submitting largely identical information on the conduct of the study separately to various bodies; and — recognise that a study can be led by more than one organisation, formally introducing the term ‘co-sponsorship’.

The new regulation aims to address the shortcomings of the EU CTD, speeding up the process for authorising new clinical studies and reducing the administrative burden associated with conducting studies.

Despite these significant improvements, there remain challenges for the UK clinical research market.

The UK continues to face competitive pressure from its European neighbours (particularly Germany, France and Poland) and, more substantially, from global competitors with cost advantages. Changes to the UK regulatory environment since 2011 have gone some way to enable growth in UK clinical research, however this comparative advantage is likely to be challenged by other countries also implementing reforms and incentives to attract research. Continued Government support will be valuable in this space to attract further research and provide services to overcome any barriers due to the research environment.

The UK’s planned exit from the EU has also created uncertainty for the clinical research market. The ABPI has warned Brexit could affect patient access to clinical research as well as uncertainty around the regulatory landscape. 52 The ABPI states UK studies could face delays as sponsor companies would deprioritise the UK for a more harmonised approach inside the EU. Some sponsor companies have also warned of the impact, calling for the UK to provide certainty regarding how it would replace European regulations or risk delays in developing crucial medicines. 53

The case for Government support

The nature of the clinical research market means that, despite improvements to the regulatory environment, there remains a role for Government.

Although there have been significant improvements to clinical research regulations to minimise regulatory barriers in the UK, there still exist challenges to study start-up, information asymmetries regarding site feasibility, barriers to collaboration amongst stakeholders and positive spillovers from clinical research that mean that without Government support there will be underinvestment in effective clinical research. 54 In recognition of this, in 2006 the CRN was established as part of the wider NIHR organisation following the Government’s strategy for health research: Best Research for Best Health.

This section explores why Government support is necessary in the UK clinical research market and how the ways in which the CRN provides this support.

BOX 2: THE ECONOMIC RATIONALE FOR GOVERNMENT SUPPORT

Before Government takes any action to support or intervene in a market, there must be a clear need which it is in the national interest for Government to address. The underlying rationale would be either on efficiency grounds (where the market does not itself deliver the most efficient outcome) or equity grounds (where Government has distributional objectives).55

The rationale for intervention on efficiency grounds is generally the result of a “market failure”. A “market failure” is the inability of a market economy to reach certain desirable outcomes. 56 Market failures can occur for a number of reasons. 57 These are summarised below:

- Externalities: this refers to any unintended consequences of market activities that are not properly priced by the market. For example, pollution. A firm producing goods or services may pollute the atmosphere but would not pay for the cost of this pollution. Externalities can be negative (like pollution) or positive. Clinical research would be an example of the existence of positive externalities in the form of positive health benefits, with the market price and returns to research not accounting for the future potential benefits to society from clinical research.

- Co-ordination problems: these are most likely to occur when there are a large group of stakeholders who: are heterogeneous; have unknown shared interests; have high initial costs of coordination; or, no incentive or mechanism in place to facilitate information sharing or co-ordination.

- Imperfect information: this occurs when important information is not well distributed or understood by stakeholders in the market. Information can be ‘asymmetrical’ meaning it is unevenly spread across market participants. For example, one stakeholder has full information and knows the full quality of a good or service and in comparison another does not know its true quality or value. In this instance, the latter stakeholder has a disadvantage in the market and the market will not operate optimally.

- Imperfect competition: this occurs when there are few players in a market they have more power than in cases where there are many players. This means they can set their own prices or block other players from entering the market. This is known as imperfect competition.

These are all examples of market failure and are instances which can justify Government intervention or support. This is usually in the form of regulation or subsidies and taxation. It can also be monitoring the market or the provision funding. The type of intervention will vary on the context and what is considered to be most appropriate to the sector.

In the instance of the clinical research market, the most relevant market failures are the presence of positive externalities, co-ordination problems and imperfect information.

Source: New Economics Foundation and Greater London Authority

There are co-ordination challenges across stakeholder groups in identifying appropriate sites. In the absence of Government support, there are information asymmetries regarding site feasibility.

For sponsor companies, information asymmetries exist regarding site feasibility – this takes into account the appropriateness of local patient pools, resources constraints due to demands from existing studies as well as information on specialty expertise.58 Without Government support, there is a risk sponsor companies would continue to return to the same sites for clinical research with little opportunity for other sites and patients to participate59.

The impact of this could be twofold. Firstly, there is a risk clinical research could be concentrated in particular geographical areas in the UK. Access to clinical research for a greater number of sites and patients across the UK is beneficial to allow equal access for all patients as well as a more representative patient pool. Secondly, sponsors would be less able to identify the best sites to conduct studies in terms of the appropriateness of the patient pool and the expertise of clinicians. As a result, studies may not achieve their optimal outcome.

The CRN is uniquely placed to overcome these information asymmetries, enabling greater co-ordination between stakeholders in the market.

Delays to study start-up influence location decisions by sponsor companies. 60 Minimising these ensures the UK is competitive globally.

Study start-up is a main factor influencing location decisions, but has been viewed as labour intensive, costly and time-consuming. 61 Ensuring the UK achieves quick start-up times is important to maintain its global competitiveness. 62

Improvements to regulatory processes have reduced time delays, although there remain factors that can also influence the extent to which these delays occur. These include resource constraints at a site level or delays with negotiations in contracts between sites and funders. Without external support, these competing priorities would mean a higher chance of delays in study start up.

The CRN provides significant support with study start-up and site feasibility. For example, by providing model templates for contractual agreements and costing, providing site feasibility insights and LCRN frontline staff. One of the CRN’s high level objectives is to reduce the time taken for eligible studies to achieve NHS Permission through the Coordinated System for gaining NHS Permission (NIHR CSP). 63 Recent performance data shows that 79 per cent of eligible studies are obtaining these permissions within 40 calendar days. 64 This is an improvement from 2010 where the median time was 92 days. 65 Government support in this space ensures the UK remains competitive with setup times.

There are also benefits from collaboration – in the absence of Government support there is a lack of incentives for this to take place.

Clinical research is a highly collaborative process66 and the benefits from collaboration in the clinical research market are significant. These include the sharing of best practice, knowledge and expertise. At the individual organisation level, there is a lack of the incentive or ability to implement these practices, but through external (Government) support the benefits of these network effects can be realised.67

The CRN has undertaken a number of engagement activities to enable such collaboration. For example, in 2012, the CRN piloted the Funder Engagement Programme with 12 funding bodies to explore how collaboration between researchers and sponsors at the beginning of research could minimise delivery problems allowing for a more integrated research environment. 68 Initiating this sort of collaboration is a key benefit from the Government support within the market.

Wider spillover benefits also exist, including increased expertise within NHS Trusts and improved treatment pathways. Government support is needed to ensure these can be realised.

There are also wider spillover benefits69 generated from clinical research activity. For example, increased expertise within NHS Trusts benefits patients who are not directly involved with the research and improved treatment pathways and adoption of new treatments benefits future patients.

Left to the market, the decisions to invest in commercial research do not fully take into account the wider social impacts of clinical research, meaning that the level of investment would be below the socially optimal level. Government funding and support is required to encourage further activity to realise these wider spillovers benefiting the market and UK patients.

In the absence of Government support, there would be a lack of collaboration, knowledge sharing or efficiencies from consistent processes.

The CRN plays an important role in ensuring the full benefits of clinical research are realised. The following section further describes the CRN’s activities and the support services it provides to the UK clinical research market.

Overview of the CRN’s activities

The CRN is a unique model internationally, providing 15 local networks and a national Coordinating Centre that together support clinical research delivery and performance. It was set up to enable a world-class health research system in the UK, with high-quality clinical studies.

The CRN is led nationally by a Coordinating Centre and operates through 15 Local Clinical Research Networks (LCRNs)70 that support the delivery of research within the CRN Portfolio across 30 clinical specialties which encompass all clinical areas in the NHS.

The CRN Portfolio includes both commercial71, non-commercial72 studies and industry supported studies. 73

In 2015/16, 1,787 new studies were added onto the CRN Portfolio. Of these, 650 were commercial and 1,137 were non-commercial. The number of open studies on the Portfolio for 2015/16 was 5,185 studies (1,113 commercial and 4,072 non-commercial).

Using data collected by KPMG from a number of NHS Trusts74, we estimate that this represents approximately 62 per cent of all non-commercial studies in the UK and 88 per cent of all commercial studies.

Using an alternative source of information to estimate this proportion (the EU Clinical Trials Register for the UK75) suggests that overall, for both commercial and non-commercial interventional studies, the CRN Portfolio makes up roughly 50 per cent76 of all interventional studies by volume. This proportion is lower than the estimates we have gathered from NHS Trusts. This is likely to be due to the inclusion of PhD studies, which are not usually eligible for CRN support, within the EU Clinical Trials Register.

BOX 3: ELIGIBILITY CRITERIA TO QUALIFY FOR CRN SUPPORT

There are key eligibility criteria that commercial and non-commercial research studies must meet to qualify for CRN support.

1) The study must have a clear research question that applies systematic and rigorous methods.

2) It must already have full research funding that meets all of its research costs.

Most non-commercial studies are automatically eligible for CRN support if funded by NIHR non-commercial Partners. Key to this criteria is that the research funding is awarded as a result of open competition across England with high quality peer review, that it funds research that is of clear value to the NHS and that the priorities, needs and realities of the NHS are considered.

Other non-commercial and commercial studies are also potentially eligible. This includes:

• investigator initiated, commercial-collaborative studies;

• non-commercial studies funded by overseas governments;

• non-commercial studies funded by overseas charities; and,

• other high quality studies.

Due to this criteria for non-commercial studies, studies undertaken by PhD candidates are usually not eligible for CRN support. This is important to note when comparing the volume of studies in the CRN Portfolio and in the UK in general.

Commercial contract research is also eligible for support if it meets the definition of ‘research’ and receives NHS Research Ethics Committee approval and NHS permission prior to initiation at individual sites. Commercial studies that are eligible for CRN support require full funding from industry.

The Coordinating Centre and LCRNs provide assistance with establishing the feasibility of studies, such as early feedback on protocol development, site identification and site intelligence. It also supports study setup and performance management.

As well as administrative support and advice, the CRN provides infrastructure to deliver research within the Portfolio, including dedicated clinical time for research and industry managers in each of the 15 LCRNs.

Training and support for research delivery staff, including Good Clinical Practice (GCP), is also provided by the CRN. Since the CRN began delivery, almost 100,000 individuals have completed the CRN GCP training.

Figure 4 maps these activities for both the commercial and non-commercial aspects of the clinical research market. For commercial studies, the relevant stakeholders include NHS Trusts and non-NHS sites who deliver the clinical research study as well as the sponsor companies who are funding the study and CROs which may be commissioned to manage the delivery of the studies. For non-commercial studies the relevant stakeholders are similarly NHS Trusts and non-NHS sites delivering the study, as well as the non-commercial sponsor of the study. 

Figure 4: CRN study support for both commercial and non-commercial studies

Our report looks in more detail at a number of these activities and the impacts generated from them, with particular consideration of the role of the CRN in generating such impacts.

Economic impact of the CRN’s clinical research activity

This KPMG report estimates the gross value added77 and employment in the UK from CRN supported clinical research activity. We estimate that in the period April 2014 to March 2015 (FY 2014/15) this activity generated a total of £2.4 billion gross value added and almost 39,500 jobs.

In this section, we describe our approach to estimating the economic impact of clinical research supported by the CRN, drawing on the recognised economic impact analysis methodologies set out in HM Treasury’s Green Book. 78 We then present our findings in terms of the total gross value added (GVA) and employment impacts generated by this activity.

A framework to estimate economic impact

The framework we have applied captures the contribution of CRN supported clinical research activity to the UK economy and more widely through a range of channels.

We first consider the economic contribution in terms of its GVA contribution including direct, indirect and induced impacts.

GVA measures the contribution to the economy of an individual producer, industry or sector, net of intermediate consumption (for example goods and services that are used in the production process).

It is a measure of the economic value of the services. 79

The clinical research activity supported by the CRN directly adds GVA to the UK economy through the employment it generates within NHS Trusts80 and other care providers, universities, sponsor companies, CROs and within the CRN itself.

GVA at the industry or organisational level can be measured through two different approaches: the income approach and the production approach. 81 We adopt the income approach which defines GVA as follows:

We treat clinical research activity, both within the public sector, and within private sector R&D teams, as non-profit making. We, therefore, approximate the GVA impact by using data on payroll costs, representing the employee compensation element of GVA. The payroll costs associated with those involved directly in clinical research therefore represents the direct GVA impact.

Through this direct activity, there is also wider economic activity through the associated supply chains. For example, this could include suppliers of medical supplies or providers of management information systems in the case of NHS Trusts and care providers. Each of these suppliers also has their own suppliers, and so the economic activity perpetuates across the economy. This activity generated through supply chains is the indirect GVA generated by the CRN supported clinical research activity.

Induced GVA is also generated in the economy arising from additional economic activity generated by the direct and indirect employees spending a proportion of their wages in the UK economy. As part of our economic framework, we also consider these induced impacts.

We also consider the employment generated by the CRN supported clinical research activity.

Another measure of economic activity is the employment generated as a result of the clinical research being undertaken in the UK. Staff are employed by different stakeholders to set-up and run the clinical research activity within both the commercial and non-commercial arms of the Portfolio. This is the direct employment impact and is measured on a full time equivalent (FTE) basis.

Similar to indirect GVA contributions, the additional economic activity generated by the clinical research activity in the supply chain also results in additional domestic employment: indirect employment impacts.

Further ‘induced’ employment is generated by the additional economic activity resulting from the direct and indirect employees spending a proportion of their earnings.

We have estimated indirect and induced GVA and employment impacts using official multipliers.

We estimate indirect and induced GVA and employment impacts using sector specific GVA and employment multipliers sourced from the ONS82 and Scottish Government. 83 The sector specific Type I and Type II GVA multipliers used in this calculation were sourced from the Scottish Government, because the ONS does not produce Type II multipliers.

The impact by stakeholder type

A range of stakeholders are involved in clinical research supported by the CRN, through which GVA and employment impacts are generated. These stakeholder types are mapped out in Figure 5 below.

We also consider the level of their involvement across various study phases and as a result, where we would expect each to generate economic impacts in terms of commercial and noncommercial studies.

Figure 5: Categories of stakeholders involved in CRN supported clinical research

The economic framework to estimate the direct, indirect and induced impacts is consistent across all stakeholders.

However, the appropriate data sources and, therefore, the specific approaches, do vary. We distinguish these approaches as either top-down or bottom-up.

A top-down approach starts with high level data and makes relevant assumptions to capture the relevant activity we are estimating.

On the other hand, a bottom-up approach uses granular data at an individual level to scale up to capture the relevant activity to be estimated.

A description of each of these stakeholder groups, available data and our approach for each is detailed in Table 2. During the process of the study, we sought to gather data directly from all stakeholders to use a bottom-up approach. However, we faced a number of challenges in obtaining this data from CROs and sponsor companies which led us to adopt a top-down approach as the most robust approach based on the data available. Key learning from the data collection process feeds into the action plan detailed in Section 8.

Based on these estimates of direct GVA, we then applied sector specific ONS multipliers to estimate the indirect and induced impacts. 84 Multipliers, as developed by the ONS, estimate the resultant impact on the supply chain and wider economy as a result of the direct GVA

Limitations of our approach

The main limitation to this approach is data availability, in particular data regarding sponsor companies activities and non-commercial activity by universities or NHS Trusts.

Lack of data available from sponsor companies and CROs prevented a bottom-up approach – a preferred approach85. In the absence of this, a top-down approach has been adopted which, as described above, is the most robust approach possible given the data available.

While we were able to obtain data from NHS Trusts to allow a bottom-up approach to be applied, in the timescales available to us it was only possible to collect data from a selection of NHS Trusts. These NHS Trusts were selected to ensure coverage geographically (both in London and outside of London) as well as a range of sizes and specialty expertise. However, the sample, and data collected, was also driven by which NHS Trusts would engage with us on the research and it therefore should not be considered a representative sample.

The analysis has been conducted for a single year only - FY 2014/15. This was due to data availability but prevents a year-on-year comparison. The Action Plan in Section 8 details recommendations to ensure analysis can be undertaken in future years to allow changes to be monitored over time.

The final limitation of this analysis is that it represents the gross rather than net impact of studies supported by the CRN. We provide a qualitative assessment of the additionality of the CRN in Section 7, but, given the lack of a clear counterfactual it has not been possible to quantify the extent to which this activity would be generated in the absence of its support.

The remainder of this section describes the estimation results. Further detail on the approach can be found in Appendix 1.

Results of our economic impact analysis

Our analysis estimates the economic impact for all commercial and noncommercial research activity supported by the CRN is £2.4 billion in GVA and almost 39,500 jobs in FY 2014/15.

This includes £778 million as a result of non-commercial activity, £1.6 billion due to commercial activity and £21 million due to the CRN Coordinating Centre’s activities. In the following sections we provide more detail on each of these strands of activity and their subsequent impact on the UK economy and employment.

The economic impact of non-commercial research activity supported by the CRN

For FY 2014/15, we estimate the total GVA impact of non-commercial clinical research activity supported by the CRN to be £778 million.

This GVA impact is made up of:

— £396 million attributed to activity within NHS Trusts and other care providers (using LCRN infrastructure); and 

— £382 million due to the research activity undertaken at universities and by other principle researchers (supported by grant funding).

We estimate non-commercial clinical research activity supports 18,340 jobs in the UK.

— 11,593 of the employment created (in FTE) is attributed to activity within NHS Trusts and other care providers (using LCRN infrastructure); and

— 6,747 of the employment created (in FTE) is due to research activity undertaken at universities and by other principle researchers (supported by grant funding).

The breakdown of total GVA and employment by direct, indirect and induced impact is shown in Figure 6.

The economic impact of commercial research activity supported by the CRN

For FY 2014/15, we estimate the total economic impact of commercial clinical research activity supported by the CRN to be £1.6 billion.

This GVA impact is made up of:

— £137 million attributed to activity within NHS Trusts and other care providers; and

— £1.5 billion due to investment by sponsor companies and CROs.

We estimate the employment impact of commercial clinical research activity is 20,755 jobs in the UK economy.

— For NHS Trusts and other care providers, this is a 1,795 direct FTE employment impact, with an additional 225 FTE and 399 FTE due to indirect and induced impacts.

— For sponsor companies and CROs, this is 10,179 in direct FTE employment and 5,779 and 2,378 in indirect and induced employment impact (FTE).

The breakdown of total GVA and employment by direct, indirect and induced impact is shown in Figure 7.

The economic impact of CRN Coordinating Centre activities

For FY 2014/15, we estimate the total economic impact of the CRN Coordinating Centre, including its supply chain and wider economic impacts, to be £21 million in total GVA and 283 in jobs – 170 directly employed and 113 due to indirect and induced impact.

The breakdown of total GVA and employment by direct, indirect and induced impact is shown in Figure 8.

6 Monetary benefits to NHS Trusts

In addition to the economic impact of clinical research activity, NHS benefits from additional revenues and cost savings.

We find that, for commercial studies, NHS Trusts receive an average of £6,658 in revenue, and a pharmaceutical cost saving of between £4,700 and £5,780, per patient recruited.

This equates to estimated totals of £176 million of commercial income and £16 million of pharmaceutical cost savings across the commercial CRN Portfolio for FY 2014/15.

This section considers two of these key benefits – payments to NHS Trusts for commercial studies and the cost saving to the NHS as a result of the pharmaceutical products provided free by sponsor companies.

Payments to NHS Trusts

Commercial clinical research is often commissioned by a sponsor company, or initiated by an investigator and then sponsored by industry. During the course of the study, the investigators and research sites receive payments from the sponsor companies and these payments represent a significant income stream, particularly for NHS Trusts.

Income to NHS Trusts from commercial studies cover the costs of staff time used in undertaking the study as well as, in some cases, indirect costs (such as overheads) and capacity building which is ring fenced to build sustainable research and innovation capacity.92 Secondary care providers (such as NHS Trusts) and primary care providers (such as GP practices) all benefit from income generated by commercial clinical research.

There is currently limited data held centrally by the CRN relating to the ‘per patient payment’ to NHS Trusts for commercial clinical research activity. To obtain this information we have therefore collected data directly from NHS Trusts to provide further insights into this value and how it varies by type of study.

A framework to estimate the per patient commercial payment

Previous work carried out by the CRN to generate estimates of the per patient payment found information to be incomplete and not easily accessible.

An internal piece of work, undertaken in January 2016, looked to identify the average per patient payment relating to commercial studies. Commercial study costing templates93 were used as the source of collecting this information. This work identified that many study records held by the CRN94 did not include final costing templates. In cases where costing templates were available, the Business Analysts from the Business Development & Marketing Team within the CRNCC said it was difficult to find within the databases due to the quantity of files held for each study and inconsistency in the labelling of files.

Noting these challenges with CRN centrally held information, the approach we took involved reaching out to NHS Trusts directly to gather further information on:

— total budget estimated per patient; and

— on a per patient basis, the subtotal for both indirect costs and capacity building included in the total budget.

Although we recognise other bodies also deliver studies (for example, primary care providers such as GP surgeries), the focus for this piece of work focused on gathering information from NHS Trusts as this represents the majority of the Portfolio. In our Action Plan (see Section 8), we recommend further work to gather similar information from other care providers. We approached ten NHS Trusts as part of this report and received a sample of costing templates or aggregate data capturing the above variables from three NHS Trusts. These NHS Trusts vary in size in terms of their research capacity and are all located outside of London.

The above information was accessible for most NHS Trusts, however it was only held in aggregate form by 1. This meant for the other three NHS Trusts, this data had to be extracting from the costing templates manually for the purpose of this report. Recommendations to improve this if the CRN replicates this analysis going forward are detailed in Section 8.

Based on the information extracted against the above variables, we estimate the average per patient payment across all studies. We also consider how this varies by different types of studies, particularly by:

— the clinical specialty95 the study falls within;

— whether a study is interventional96 or observational97 in nature; and

— the phase98 of the study. 

Limitations of our approach

This analysis is based on data collected from a selection of NHS Trusts. As stated above, these NHS Trusts were selected to ensure geographical and specialty coverage however this should not be considered a representative sample. Interpretation of how the per patient payments vary by specialty should also be interpreted with caution. The sample size (~400 studies) is split across 30 specialties. The smaller sample for individual specialties means that the average and median estimates are more vulnerable to the impact of outlier studies (for example, studies with extraordinarily high or low per patient payments). It should also be noted that this analysis is based on the planned per patient payment information supplied by the NHS Trusts contained within the commercial costing template. This planned per patient payment should, in theory, be consistent with actual per patient payments, however there was insufficient data available as part of this research to assert this.

1.3 Per patient payments received by NHS Trusts and other care providers

Our estimates show the average per patient payment is estimated to be £6,658. This varies significantly, particularly by specialty type. Aggregated data across the commercial CRN Portfolio for FY 2014/15 suggests total commercial revenue to Trusts in the region of £176 million.

From the sample of costing templates and aggregate information obtained from NHS Trusts, we estimate the average per patient payment to be £6,658. Figure 9 illustrates the distribution of this average per patient payment, with the diagram showing the median value, of £5,000 per patient, the upper and lower quartiles and the extremes.

As can be seen, the distribution shows a downward skew, i.e. there is a concentration of results at the lower end of the range, indicated by the fact that the median value is below the mean. The mean value is pulled upwards by a small number of very high per patient payments and therefore is not as representative of the ‘typical’ study as the median value.

Higher per patient payments are noted for the following specialties: musculoskeletal disorders (£9,800 per patient, on average), cancer (£8,733 on average); neurological disorders (£8,500 on average) and hematology (£8,100 on average).

The per patient payment for interventional studies far exceeds that received for observational studies – on average £7,300 compared with £1,500. This reflects the greater need for staffing resources for interventional studies.

For FY 2014/15 we estimate total commercial revenue to NHS Trusts to be in the region of £176 million.

The total commercial revenue covers the costs directly associated with undertaking clinical studies, including direct staff costs and investigation costs, as well as a capacity building element, which is ring fenced to build research resources within NHS Trusts. This capacity building element represents a direct benefit to NHS Trusts of participating in commercial research. The NIHR CRN commercial costing template states a 20 per cent capacity building element should be added to the study costings. 99 This is not mandatory, and in some instances a higher value will be applied. However using 20 per cent as a lower limit, we estimate that at least £35 million of the total commercial revenue is allocated to capacity building.

6.2 NHS cost saving

As well as financial revenues to NHS Trusts generated from commercial studies, there are further financial benefits to the NHS in the form of cost savings through the provision of pharmaceutical products by sponsor companies for clinical research. Our report quantifies these cost savings and identifies how they vary across studies. There are two routes through which the NHS may benefit from the provision of pharmaceutical products used as part of clinical research by sponsor companies.

1 Industry-sponsored clinical research studies testing pharmaceutical products provide NHS Trusts and patients with free access to these pharmaceuticals and treatments. This means the NHS Trust does not incur the cost of the standard treatment that the patient would have otherwise received (in the absence of the study). This represents a direct cost saving to the NHS.

2 Some industry-sponsored clinical research studies deliver value beyond this cost saving. Some studies provide NHS Trusts and patients with free access to more expensive pharmaceuticals that may be licensed in other indications, but are now being trialed in a new disease-area. In the absence of the study, patients would not have access to these more expensive and potentially effective pharmaceuticals. In this case, the value to the NHS stretches beyond the cost saving of standard treatment to the additional value of using these effective pharmaceuticals. This additional value will only be valid for some studies, and we consider what this additional value is using a case study.

It is important to note that although we focus on pharmaceutical cost saving and value for this report, there will also be similar savings generated by the use of medical devices. Data to quantify the cost of standard treatment using devices on a per patient basis is not available from public data and so this could not be quantified for this report.

6.2.1 A framework to estimate the cost saving of the standard treatment

In many studies, particularly in the case of randomised controlled trials (RCTs), there is ‘clinical equipoise’, meaning that there is substantial uncertainty about the expected efficacy of the pharmaceutical products being trialled. For most studies this means that, other than the revenues received by NHS Trusts, the main source of financial impact will be the cost saving in instances when NHS Trusts do not incur the cost of the standard treatment. It is this specific cost saving that we consider in this section of the report.

These cost savings are relevant for industry-sponsored or supported interventional studies using pharmaceutical products. Since 2010 a total of 2,059 interventional commercial pharmaceutical studies and 582 interventional industry-supported pharmaceutical studies have been entered onto the CRN Portfolio.

Not all commercial or industry-supported studies result in this type of cost saving – in some cases, the study drug may be used in conjunction with the standard treatment drug so the standard treatment cost is still incurred by the NHS. In other cases, there may be no drug used as part of the standard treatment so in this instance the use of the study drug does not represent any drug cost saving. For this analysis, we consider a cost saving to occur only when the use of the study treatment drug replaces the use of the standard treatment drug.

These three scenarios are mapped out in Figure 10 below. The scenario where cost savings to the NHS will be attributed is highlighted in red.

The approach to estimating the cost saving first considers which Scenario the study relates to, before using the study protocol to extract information on the name of the standard treatment drug, the maximum dosage and the duration of treatment. Zenrx, a pricing database for approved pharmaceutical products, is then used to extract information on the price for the standard treatment. We have done this for a sample across all specialties, as well as a deep dive into oncology.

Limitations of our approach

This approach considers the cost saving to the NHS due to the cost of the standard treatment pharmaceutical product only. It does not consider any other wider cost savings based on the trial treatment protocol.

The sample was randomly selected across the CRN Portfolio with information on standard treatment for these studies extracted from study protocols. It should be noted these protocol documents do not consistently record information on the treatment name (or dosage and duration of treatment). This means the sample, although randomly selected, is constructed based on those study protocols that had named the standard treatment pharmaceutical product.

A number of assumptions have also been applied regarding patient characteristics (for example, body weight) to estimate the standard treatment cost in some cases. These assumptions are based on population averages, but may differ from the actual patient characteristics, and therefore the actual treatment costs. Further details can be found in the technical annex.

As with the per patient payment data, interpretation of how the average cost saving varies by specialty should also be interpreted with caution. When split by the 30 specialties, the smaller sample size for individual specialties means there is the potential for extreme values to bias the average or median value.

The cost saving to the NHS

We estimate the total cost saving attributable to the CRN Portfolio is £16 million.

This is derived from an estimated average standard treatment pharmaceutical cost saving to the NHS within a range of £4,700-£5,780100 per patient across all specialties. For oncology studies, this saving is higher, in the range of £11,500- £14,000101 per patient.

The table below shows the total sample considered and how studies are distributed across the treatment scenarios identified. Roughly a third of cross-specialty studies sampled, and a quarter of oncology studies samples resulted in a cost saving. 

Figure 11: Average cost saving, for all specialties and oncology

Looking across the broad sample, the specialties with higher associated costs included neurological disorders and cardiovascular diseases. A full breakdown by specialty will not be robust because of the sample size – i.e. when we break the sample down to the 30 specialty areas, there is insufficient numbers of studies to ensure the estimate is robust.

The findings above for oncology studies are consistent with a UK-based study by Liniker et al (2013)103 that looked at the treatment costs associated with 27 studies in a single NHS Trust over a 2-year period. The study assessed patients who entered into oncology clinical studies involving investigational medicinal products in 2009 and 2010. Their treatment was analysed to identify the treatment costs versus the equivalent standard of care the patient would have received in the absence of the study. They found commercial studies represented an average cost saving of £9,294 per patient – an estimate slightly below the average found for our oncology deep-dive. These differences may be due to the variation in location (i.e. across multiple sites), variation in approaches taken by different investigators or inherent differences in the sample (i.e. different disease under study and treatment options).

A similar study in Taiwan found the saving per participant was in the region of US$3,900 per participant104, equivalent to £2,410. 105 This study similarly found oncology studies to be associated with higher cost savings.

Using the above estimates of the average cost saving to the NHS, we estimate that the cost saving attributable to the CRN Portfolio is £16 million.

We scaled up the cost saving based on the number of patients participating in pharmaceutical industry-supported studies. As we assume that only 35 per cent of these studies result in a cost saving to the NHS (i.e. Scenario 3), we apply this same proportion to the number of patients. 106

We then used the average cost saving per patient for all specialties (£5,250) to scale up to capture the cost saving for the whole Portfolio (it is estimated there are 11,780 patients who receive study treatments that represent a cost saving to the NHS).

BOX 4: ADDITIONAL VALUE BEYOND THE COST SAVING TO THE NHS

As well as the direct cost saving, there is also potential additional value generated by the use of the pharmaceutical products provided by industry as part of these studies. This may be because:

- patients are provided with access to effective pharmaceutical products that are licenced for other disease areas but being trialled in a new disease area;

- patients are provided with access to effective pharmaceutical products that are licenced in other countries, but being trialled in the UK for approval here;

- patients are provided with access to effective pharmaceutical products that are not yet licenced; or

- patients are provided with access to effective pharmaceutical products that are not currently standard treatment of care in the NHS.

It is important to note that this value will only be valid for some studies.

As part of this report, we have considered 8 oncology studies where it has been identified that one of the scenarios above applied. To quantify the value of the treatment pharmaceuticals to the patients we adopted the same approach as detailed in Section 6.2.1 but in this case applied to both the study treatment and the standard of care treatment. This involved:

- extracting information on the standard treatment pharmaceutical product from the study protocol, including details on the standard dosage and duration of treatment.

- extracting information on the study treatment pharmaceutical product from the study protocol, including details on the standard dosage and duration of treatment.

- cross-referencing the details of these products on the Zenrx database to extract information on their market value.

Bringing together the estimated market value of the study treatment and the standard treatment, on a per patient basis, we were able to estimate the additional value of access to the study treatment (the difference between these two estimates).

Across our limited sample we found the average additional value to be £57,735 per patient with a median value of £33,089. The additional value varies significantly however, from around £2,000 for one breast cancer treatment up to £234,822 for one prostate cancer study. While we cannot draw conclusions about the overall value generated by these types of studies, our sample does provide an indication of the substantial additional value to patients of access to more expensive treatments.

As patients become more research savvy, and are more aware of the study pharmaceutical products available, the ability to attract clinical research and be able to offer the preferred pharmaceutical products to patients becomes more and more important.

Source: KPMG analysis. 

Added value of the CRN

The impacts quantified in this report demonstrate the significant economic and financial value generated through clinical study activity supported by the CRN. We now consider the role of the CRN in supporting and enhancing this value, as well as the extent to which the activity of the network generates wider benefits to the clinical research market.

Additionality107 considers the net, rather than gross, impact after making allowances for what would have happened in the absence of Government support. As set out in HM Treasury’s108 Green Book, consideration of additionality is key to economic appraisals.

In this context, the additionality of the CRN within the clinical research market is not easily quantified. Capturing what the clinical research market would look like in the absence of the CRN support is not possible because of the multitude of factors impacting the UK clinical research market since 2011 (as discussed in Section 3). Stakeholders we spoke with also commented that it was not possible to make a judgement about the clinical research landscape in the absence of the CRN. We know that the number of studies on the CRN Portfolio has increased over time (as seen in Figure 12). However, the extent to which these studies would have been undertaken anyway, outside of the Portfolio, is very difficult to distil. 

In the absence of a robust counterfactual against which to compare impact, our analysis of the added value of the CRN draws primarily on qualitative stakeholder consultation, combined with case studies providing specific examples of how the CRN generates value.

We consulted 40 stakeholders, selected in collaboration with the CRN.

The selection of stakeholders ensured we spoke with all relevant stakeholder groups, and achieved a mix of stakeholders within each. For NHS Trusts, we sought to speak to those located across the UK (inside London and outside of London) and with different levels of involvement in clinical research. For example, we sought to speak to NHS Trusts with a wellestablished clinical research reputation as well as those who are less established. For sponsor companies and CROs, we also tried to speak to those of ranging sizes and specialty focus. A full list of the stakeholders, their organisations and job titles are listed in 0.

Details of the consultation questions can also be found in Appendix 3.

In this section, we first provide a summary of the stakeholder responses. We then, based on the results of our stakeholder consultation, consider in more detail the added value of each of the CRN’s key services, particularly:

— the LCRN infrastructure;

— the CRN Coordinating Centre;

— study setup and site feasibility assistance; and

— model templates for commercial costing and agreements.

Summary of stakeholder responses

During stakeholder consultation, we identified the different routes to, and types of, impact attributable to the CRN.

Figure 13 summarises the routes to impact as identified by stakeholders during consultation.

Figure 13: The added value of the CRN as identified by stakeholders

These impacts are broad and range from cost savings for NHS Trusts, to increased employment and growth opportunities to improved health outcomes for patients. 

Stakeholders pointed out the interlinking and reinforcing nature of some of these benefits. They also reported that the extent to which these benefits are realised hinges on the volume of activity being undertaken.

On the volume of studies, there were mixed views regarding the role of the CRN. Among some stakeholders, particularly industry sponsors, there was a view that while the CRN provides a range of support to ease the process of setting up and running clinical studies, the volume of clinical research in the UK would remain broadly the same without the CRN. Some other industry sponsors, however, recognised it was difficult to disentangle what the landscape would look like without this established resource, meaning that this comparison is difficult to make.

An overall observation by all stakeholders was that the CRN has paved the way for a higher profile of the clinical research market in the UK. This was identified for both the international market for commercial research as well as within the UK and its funding landscape. It has also enabled more professionalism amongst Trusts, as highlighted by one Trust (quoted to the right). It was said that this had helped the NHS Trust increase its capacity to undertake studies, and income from studies.

“The CRN has been a catalyst to raise the profile of clinical research and give professionalism to the whole commercial endeavour.”

NHS Trust

A number of positive wider spillovers, or externalities109, as a result of clinical research activity within NHS Trusts were also noted by stakeholders. These positive benefits are also noted in relevant academic literature. They include benefits to infrastructure, the learning and skill development of clinicians, as well as a quicker uptake of new treatments. This academic evidence of these impacts is presented below.

Improvements in infrastructure are recognised by Krzyzanowska et al. (2011)110 as a benefit of research. This report recognises that medical devices provided for by clinical research activity can have positive externalities for the non-study environment. This is particularly beneficial in resource-poor settings. Similar benefits were attributed to the acquisition of new skills for clinicians. 111 A study by Europe Economics finds that participation in studies builds general human capital for physicians, enhancing their skills to the benefit of patients. 112

Other studies have also found that countries which participate in clinical research are quicker to adopt new treatments – meaning patients are able to access new and effective treatments more quickly. 113 This has been noted as particularly beneficial in oncology and cardiology. 114

Another key benefit highlighted by stakeholders, in particular by NHS Trusts, is the improved quality of care and health outcomes for patients. There were benefits identified in terms of changing treatment pathways for patients, which could have cost savings for the NHS. It was argued that these benefits, although a by-product of the research, were furthered by the activity of the CRN. Some examples of these benefits can be seen in Case Study 1 below.

“The change in care pathway is the result of research and dramatic improvements in outcomes for patients can be noted as a result…”

CRN personnel

Case Study 1: Developing second line treatment for bladder cancer

This case study focuses on how support for one study can lead to additional industry interest in a particular research field. This additional interest can result in more studies, thus increasing the chance of improved treatment for patients and cost savings to the NHS.

Prior to 2012, there had been little research focused on bladder cancer in the UK. In 2012, a randomised phase 2 non-commercial study was added to the CRN Portfolio to investigate a study drug (pazopanib) in relapsed or progressive bladder cancer in comparison to standard treatment (weekly paclitaxel). The study recruited 131 patients. Although the study drug itself was not deemed successful, the study had two positive by-products which were important for bladder cancer research in the UK.

First, the study enabled the collection of the largest dataset on the control arm (which was standard treatment). This provided more robust insights to be gained into the effectiveness of the standard treatment.

Second the study proved that rapid recruitment onto bladder cancer studies was possible – a factor that attracted industry attention. The successful recruitment in this study led to further studies being commissioned by industry.

In particular, one industry-supported non-industry sponsored study was a randomised two-arm comparison study of a maintenance drug (lapatinib) versus placebo after first-line chemotherapy for patients with advanced or metastatic bladder cancer. 455 patients were recruited into the study, the results of which showed that maintenance therapy is possible for bladder cancer. A researcher for the study said the study allowed them to collect a large tissue biorepository which allowed biomarker testing – this involves looking at measurable indicators that indicate the severity or presence of some disease state.

Another study is testing a new agent (atezolizumab) which has already been licenced in the USA for secondline treatment. 115 It is expected this will, in time, be standard care in the UK as well. Previously, no secondline treatment has been available for bladder cancer patients.

The researcher for the study said that while it was not possible to determine what the impacts of this particular treatment would be for the UK, the introduction of a second line treatment would be expected to reduce hospital admissions, improve survival rates, lower the use of primary and palliative care by these patients as well as reduce the use of palliative radiology. All of these have associated cost savings for the NHS.

Source: KPMG stakeholder engagement.

One sponsor company pointed to evidence that showed research-active organisations deliver health care that is associated with a higher quality of care. This was attributed to the standard processes implemented when undertaking research being, in general, of a higher standard (a by-product of the training that is required by clinical research undertakings).

All stakeholders also said the benefits of clinical research activity extend beyond those sites participating in research. This was because of the benefits related to the furthering of 115 Second line treatment is treatment given when the initial treatment (first-line therapy) doesn’t work, or stops working knowledge, development of new treatments and a subsequent change in treatment pathways (as seen in the Case Study 2 below).

 

Footnotes