Chris Chan, Vice President of Financial Planning and Analysis, IGM Bioscience
In the final installment of this three-part series on clinical finance, Chris Chan, vice president of financial planning and analysis at IGM Biosciences, discusses how to leverage the role of clinical finance for clinical trial success. Part 1 — “Why is clinical finance so difficult?” — can be found here. Part 2 — “Why is clinical finance so important?” — is here.
“If you go too hard to the left, you'll end up turning right.” – Doc Hudson, “Cars”
Or essence over form.
A common question is, “Where should clinical finance be located?” My answer, like Peter, Paul, and Mary, is “Wherever the wind blows.” As I mentioned earlier, I started my career in clinical finance on clinical teams because CMOs found interacting with finance too painful. A few years later, due to company restructuring, I was transferred to the corporate accounting group. During both tenures, I did the same work and made the same contributions as the same beloved angel. Later companies observed clinical finance functions existing under clinical, finance/FP&A, accounting, and even project management. One company had a clinical accounting group as part of the accounting department. After the group manager left, the team was transferred to me and FP&A. Again, there is no change in the output or quality of the work. In some cases, responsibilities may be divided into separate groups. For example, financial accruals and field payment processing are under accounting, budgeting/forecasting is under clinical, purchase orders are under procurement, and so on. Due to the chimeric cross-fertilization nature of this function, it essentially does not matter where it resides. The most important consideration is that the role player has sufficient knowledge across the different functions and the ability and patience to bridge them effectively.
“Guys, we can't fight here. This is a war room!” – President Merkin Muffley, “Dr. Strangelove”
or ensuring clinical and financial harmony.
As indicated before, clinical and financial affairs are peas in a pod, piano keys are ebony and ivory, it is essential that the Tom Hanks and Peter Scolari sitcom…you get the point. I am. It is not uncommon for the finance department to be expected to “oversee” other departments. One of my previous CFO boyfriends was frustrated by large discrepancies in clinical budgets and instructed me to “stop being nice and find out how they failed.” did. My answers are: (a) The clinical team and I developed the budget together, so I had similar responsibilities. (b) Pursuing tougher relations may win short-term battles but may lose wars. (c) I have a kind and gentle personality. (d) We are working together as a team to improve our processes going forward. Clearly, positive relationships between any work team are important and desirable. However, the world of clinical trials is so complex, unpredictable, and volatile that clinical and financial partnerships are especially essential.
It is important for finance departments to understand that financial numbers do not drive clinical decisions, but rather help support and enhance those decisions. Similarly, clinicians need to understand that finances are not a barrier and that appropriate financial support will strengthen and accelerate their efforts. In other words, a harmonious, symbiotic relationship is the key to maximizing efficiency and results.
“One does not merely step into Mordor.” – Boromir, The Lord of the Rings: The Fellowship of the Ring
Or always go for the easiest path.
Like Sam and Frodo relentlessly heading towards Mount Doom, clinical finance must constantly strive to implement the most efficient and painless methodologies when it comes to clinical finance processes. The more burdensome the process, the more likely it is that bad data will occur. A good example of this is the notoriously painstaking process of estimating the actual costs of a clinical trial, also known as accrual accounting. Since there is no standard methodology, saving up a large amount of money for studying can be as painful or as easy as it is up to you. You can count each grain of sand on the proverbial beach, or you can make a reasonable estimate using rational methods. Imperfect but reasonable models are quite acceptable as long as you have reasonable data. Some companies use a model that requires multiple clinical personnel to spend many hours per month to provide the necessary information. Other companies use a simple straight-line accrual method that takes only a few minutes to complete. Very often, the effort required is enormous, yet the result remains virtually the same.
Another way to make life easier for your clinical partners is to always try to create models that can take advantage of readily available data. For example, if the inputs required by the model are included in a study summary report that the clinical team has already created and distributed, the clinical team can simply add financials to the email distribution list. Additionally, finance-related “sausage-making” tasks should be handled by finance personnel whenever possible. Financial needs are typically not a top priority for clinical teams, so these processes may be better owned and managed by finance personnel with more motivation and expertise. For example, in my experience, it is always desirable for the finance department to own the surveyor's field budget and field visit calculations. These calculations do not require any special clinical knowledge. Therefore, the finance department is responsible for updating and owning the budget and accrual models, and the clinical department is responsible for providing a copy of executed facility contracts and patient registration data to the finance department. This maximizes the strengths and efficiency of both teams.
The conclusion is
Having an effective clinical finance function is essential for any biopharmaceutical organization, and especially for clinical-stage biotechnology companies. Although the organizational structure is flexible, the most important attribute is that clinical and financial functions work harmoniously and synergistically, allowing each group to focus on its strengths and priorities. It has a huge impact on improving corporate productivity, efficiency, and human well-being. Like becoming a Jedi Knight, investing time and attention into improving your biopharma company's clinical financial operations is worth the effort.
About the author:
When Chris Chan was a kid, he wanted to be Bruce Lee or a Jedi Knight. He ended up doing the next closest thing and becoming an expert in biotech finance. Chris has worked for biopharmaceutical companies of various shapes and sizes over his 30 years (approximately four times Al Capone's entire prison tenure), primarily in his FP&A and clinical/R&D finance areas of the company. I'm here. He has presented at numerous conferences and has written multiple articles on drug development budgeting, financial accruals, and outsourcing. He currently crunches numbers in his VP of FP&A at IGM Biosciences. When he retires, he wants to be Bruce Lee or a Jedi Knight.
