Re:

Sponsor-Initiated Clinical Trials Research Overhead Rate Change Effective November 1, 2005

The overhead rate for industry sponsor-initiated clinical trials will increase from 22.5% to 26.0% (applied to total direct costs) effective November 1, 2005.

The prior rate was established prior to 1990 and required updating to be consistent with a current NIH derived rate. Also, internal overhead costs have increased, and the new rate will help provide funds to support improvements to clinical trials administration. The incremental 3.5% (i.e., difference between 22.5% and the new 26% rate) will be used to fund administrative improvements as the medical school takes on new responsibilities for pre-award, contracting, etc.

Please note that the new 26% rate is applicable only to "sponsor-initiated" clinical trials. A "sponsor-initiated" clinical trial is one where the sponsor owns the protocol and indemnifies the institution against risks associated with the conduct of the protocol.

To help minimize the impact of the increased rate on studies where budget and contract negotiations are well underway, implementation of the sponsor-initiated clinical trials rate of 26% will be phased in as follows:

• As of November 1, 2005 for any new sponsor-initiated clinical trial for which the budget negotiations with the sponsor have not yet been finalized.
• For trials for which the budget has already been negotiated with the sponsor at the 22.5% overhead rate, but for which the contract negotiation and/or IRB approval is not finalized prior to November 1, 2005, the 22.5% negotiated rate will still be honored.  As of January 1, 2006 all clinical trial project budgets must include the new 26% overhead rate.

If you have any questions about the application of the clinical trials rate, please contact Vikki Jenkins (Ext. 48713), Sally Shupien (Ext. 48785) or your assigned Industry Contracts Officer in the Office of Clinical Trials.

Sincerely,

Roberto Peccei
Vice Chancellor