PSP006: Income distribution from NIHR RDN Industry Portfolio Studies

This document provides good practice and contract support for the distribution of income generated through the conduct of NIHR Research Delivery Network (RDN) Portfolio commercial contract clinical research within NHS Organisations in England to incentivise research teams and grow research capacity.

The NIHR RDN supports the healthcare research system which yields real benefits for the NHS, its patients, the Life Sciences Industry and investigators. Ensuring its success is dependent on consistent, fair and balanced funding flow arrangements.

The principles which underpin this model, and could also apply to non-NIHR RDN Portfolio studies, are:

1. Departments and individuals are recognised and incentivised for their contribution

2. All relevant costs incurred are recovered from the Commercial Sponsor

3. Commercial research affords opportunities to fund additional research or research related activities

4. Income from commercial research can be distributed and carried over in line with the finance control procedures of individual NHS Organisations.

5. Involvement of the Regional Research Delivery Networks (RRDNs) in NHS Organisations research planning

6. Overly onerous itemisation and invoicing of study costs are avoided where possible.

The model proposed has been developed and refined from the observed good practice and feedback on the initial NIHR CRN Income Distribution Model released in April 2011.

This Contract Implementation Information is intended to prompt local discussions and consideration of an income management structure to support investigators, NHS service support departments and NIHR RDN research infrastructure.

This document is intended to prompt local discussions and consideration of an income management structure to support investigators, NHS service support departments and NIHR RDN research infrastructure. 

The NIHR RDN supports the fair and balanced distribution of income from NIHR RDN Portfolio commercial research alongside the provision of incentives where possible.

The Department of Health and Social Care (DHSC) considers the support and delivery of industry funded and sponsored research to be a priority. Therefore, it is crucial that all stakeholders are incentivised to participate in industry sponsored research as reflected in this document.

Income from industry sponsored research on the NIHR RDN Portfolio has historically been managed in a wide variety of ways. While this document does not provide prescriptive guidance on how income should be distributed, it is expected that appropriate local systems are in place to allow funding flows from NIHR RDN Portfolio commercial research to support investigator incentives and the local infrastructure provided by RRDNs. 

This support document applies to NHS Organisations providing acute, mental health and tertiary services. 

Over time, the mechanisms in place to support the NIHR RDN's commercial objectives have been further refined by:

• Emerging from a 2006 independent review of the sector (Cooksey report), the UK wide interactive Costing tool (iCT) has defined and applied a single NHS Costing Methodology for commercial research since 2008.

• The methodology was mandated for all NHS Organisations in 2018 through the NHS England National Directive on Commercial Contract Research Studies (and mirrored through the Devolved Administration equivalents), moving it from best practice into UK standard practice. 

• The time and activity based methodology to determine study-specific resource requirements ensures cost coverage and capacity building for commercial research for all NHS Organisations. It is governed by a multi-stakeholder UK Commercial Costing Reference Group, chaired by the NIHR with membership from NHS, Industry and UK national bodies.

• The 2023 independent report (Commercial clinical trials in the UK: the Lord O'Shaunessy review) made specific recommendations to further embed the principles of a national contract value review to remove local negotiation.

Core Concepts:

1. Focused on full cost recovery for all and acknowledging variation across NHS organisations infrastructure and research operations.

2. Provided a starting point for a research Market Forces Factor, under NHS ownership, with oversight from the multi-stakeholder UK commercial costing reference group.

3. Any future changes will be considered in the context of visible and accountable internal distribution of commercial contract values within NHS organisations.

Localised costs embedded within the model agreement (UK)

Activities related to pass-through costs for NHS Organisations are excluded from the interactive Costing Tool (iCT) and now included in the UK model agreement financial arrangements appendix. These include:

• Archiving

• Patient and carer inconvenience payments

• Travel and off-site subsistence payments

• Interpreter/translator costs

This has been developed in partnership with the UK Four Nations Contracting Leads Group and in consultation with stakeholders as part of the work to expand the unmodifiable approach for the model agreement to also include the financial appendix.

Elements listed in the equipment and resources appendix of the relevant model agreement should also be excluded from the iCT. These include support of and provision for:

• Protocol required prophylaxis

• Rescue medications

• Free study drugs/devices

• Non Investigational Medicinal Product (NIMP)

• Software

Requiring a separate contract

The Chief Investigator fee and consultancy involvement is excluded from the iCT and model agreement. This reflects the model agreement representing a study cost to deliver protocol defined activities with participants at the NHS organisation. It:

• Recognises the requirement for a separate, and earlier agreement between CI employing organisation and Sponsor to outline CI activities.

• Represents the development of an existing approach to CI contracts and consultancy agreements in the academic sector.

• The Health Research Authority and devolved administrations have developed a model Commercial Chief Investigator Agreement (mCCIA).  

The iCT provides a clear standard methodology to calculate consistent and transparent prices for the resource associated with delivering each commercial contract study to support both the Life Sciences Industry and the NHS to help minimise setup time related to cost agreement.

Data relating to the single costing methodology is built into iCT, including per-participant costs in addition to standard of care and site level costs incurred in order to participate in a research study. The methodology identifies Agenda for Change rates for specific bands of NHS staff time representing the direct costs. Any overheads are covered by the indirect cost and capacity building elements. Prices for investigations and costs for service departments supporting research are also included. These values are all localised with the research Market Forces Factor (MFF) for the NHS Organisation in which the research takes place. This guidance outlines good practice for appropriate funding flow of these elements to participating departments and supports the establishment of suitable local arrangements.

Only tasks performed by sites in addition to normal or routine patient care should be captured in the iCT. Please refer to the AcoRD guidance to see how cost attribution applies to commercial research.

Further information and support regarding the iCT and the development of its cost structure and values are available on the NIHR Website.

National hourly rates are calculated for the agreed NHS staff bands using the highest salary in the relevant Agenda for Change band, inclusive of Higher Cost of living Allowances which are adjusted to incorporate the NHS employer contributions for National Insurance and pension, as well as the apprenticeship levy from NHS Employers. This is a standard representation of the direct cost to an employing NHS organisation and is used to calculate the template values for all procedural activities that are related to staff time.

Ideally these direct costs should be channelled toward the department or service where the staff member is employed to compensate for the work performed.

For commercial studies involving University staff, an agreement should be in place between the relevant NHS Organisation and University to agree suitable distribution of the NHS Staff Time costs calculated by iCT in order to take account of HEI based costing methodology, e.g. the application of Full Economic Costing (FEC).

An indirect cost rate of 70%, provides a representative value for the running costs of conducting a commercial study that are not already covered by the direct costs (i.e. the real cost of carrying out a research activity). These indirect costs include physical aspects such as:

• Heating

• Lighting

• Building maintenance

• Security

• Central finance

• Human resources

• Corporate and strategic management of the organisation (adherence to national processes for corporate oversight offered by the CEO, the finance director, R&D director and others to ensure efficiency and cost savings within the organisation/unit)

• General study oversight and administration , including:

a. Visit management

b. Investigator, Nurse and coordinator oversight

c. Medical records/worksheet setup

d. Category C and contract amendment activities

e. Change of Sponsor/CRO administration

f.  Financial management of study - invoice generation for all departments

g. General maintenance of study related paperwork (excluding data management)

h. Pre-screening (e.g. note searches) that sites may perform where the CI and Sponsor and CI/reviewer feel it is necessary to make the protocol work and results in significant workload for the participating organisation, covered by NIHR_GPC_076

i. Pre-site selection or feasibility tasks

j. Setup and maintenance of standard NHS finance and IT systems (excluding IT support department setup where additional software installation or quality assurance is required by Sponsor for a study, covered by NIHR_GPC_075

k. Study related communications 

l. Arrangement/attendance at any introduction or qualification meetings

m. Time spent preparing or attending inspections by regulatory bodies

n. Medical record retrieval

o. Internal contacts or paperwork for staff, e.g. honorary contracts or University/Trust agreements for research staff

p. Principle Investigator duty of care responsibilities, including investigator review of safety reporting provided by commercial Sponsor, e.g. annual safety reports

q. Storage space/coordination of equipment/notes  

As these costs are already covered within the indirect cost component associated with direct labour activity, the activities listed above should not be added separately to the iCT. Any staff time associated with investigation activities is already included with the investigation cost and therefore should not be charged separately either, e.g. overnight staffing costs are  covered in the cost of an overnight stay, ECG nursing and upload time is covered in the cost of an ECG in the tariff data.

The distribution of the indirect cost element varies between NHS Organisations: some retain the full amount to cover their indirect costs, while others divide it between the NHS Organisation, the Investigator/Research team and the R&D Department in varying proportions. Being open, realistic and accountable about indirect costs and their distribution builds a trusting and mutually beneficial relationship between research partners and requires strong managerial and financial systems to deliver. 

A capacity building rate of 20%, should be considered as a 'system optimisation' to deliver research as part of care provision. It is applied to all activity types within the iCT. Capacity building is designed to:  

• Build sustainable research infrastructure

• Build capacity to innovate

• Retain skills

• Strengthen organisational capacity and eligibility for projects

The successful utilisation of this element requires significant commitment and resources from all research partners. Examples of uses of the 20% capacity building element include: training courses for staff and employing additional staff members.

This element is separate from 70% indirect costs to enable it to be easily ring-fenced for maintaining, strengthening, adapting and growing sustainable research capacity over the long-term. It is supported by the Health Service Guidelines (HSG) 97-32 'Responsibilities for meeting patient care costs associated with research and development in the NHS', which acknowledges that NHS income derived from commercial contract studies is raised through NHS Income Generation powers for 'improving the health service'.

Market Forces Factor (MFF) is a multiplier designed to accommodate the unavoidable cost differences of providing healthcare across the country by localising the national rates in the iCT dependent on the specific NHS Organisation conducting the activity.

For funding flow, this factor is applied to each element of the costing methodology to provide a true reflection of the cost for that given location (e.g. NHS staff time including MFF; indirect costs including MFF; and Capacity Building including MFF). Ideally this should not be treated as a separate element but an integral part of each cost complement.

The MFF value present in the iCT for English sites is managed by each NHS Organisation themselves and updated upon request, in collaboration with their Regional RDN. Devolved Administrations Market Forces Factors are governed and adjusted by each individual nation and their research office. 

Research Rate Components:

1. Dedicated settings:

a.  Early phase research - Clinical Research Facility (CRF) Experimental Cancer Medicine Centre (ECMC) in England

• CRF (Non and NIHR funded) and ECMC (adult and/or paediatric) locations, recognised by UKCRF Network and RCMC Network respectively

• 2% uplift per setting calculation based on average cost per participant x average number of participants per NHS Organisation = Budget per NHS Organisation average. Service provision fee/overall budget = % uplift

• Included as part of the NHS Organisation multiplier, which would be charged regardless of whether this is run in CRF/ECMC or not, meaning internal recovery will be impacted to enable this to smooth out variances

• This represents study delivery funding, in addition to any existing infrastructure funding from other sources, which is intended to smooth out cost coverage for nation-wide inconsistencies which include internal room hire fees, specialised staff, out of hours provision, crash support access and bespoke approaches within existing settings for novel study requirements

• This incentivises recruitment to support cost recovery for the dedicated setting and being included on all studies at that location, recognises the fixed cost recovery requirements, offsetting the variability of recruitment activity

• This approach can be explored to broaden the definition of this setting to include other NIHR funded infrastructure such as Biomedical Research Centres/Units (BRC/U).

b. Standalone specialised trust

• Additional provisions for paediatric populations, given that the investigational tariff is based on adult participants, and recognition of specialised centres.

2.   Equity of access

a. Population Diversity - an initial, standardised provision is included in the NHS Organisation multiplier to recognise the diverse population accessing care and therefore research

• Linked to Shared Commitment to public involvement in research and NHS England's work on Equality and health inequalities including Core20PLUS5   

• As research can be considered novel care, specific communication support may be required with potential participants during routine care provision to a diverse population

• This is separate to specific campaigns or INCLUDE activities to engage pre-defined communities or cohorts in research for which considerations are referenced in the costing guidance and iCT user resources

• In future, this provision could be stratified based on a specific indicator, for example number of languages spoken at the NHS Organisation.

b. Rurality and Coastal Factor - to deliver more equitable research activity across England's health and care provision

• Testbed approach for how rural and coastal communities can be supported to access research, recognising "the health disparities in coastal communities compared to their inland neighbours, exploring the drivers of poorer health outcomes and the key challenges these regions face" Data Source: Chief Medical Officer's annual report 2021: health in coastal communities.

• Provision recognises that rural deprivation requires a higher level of resources to deliver the same outcomes, starting with an area with the lowest pre-existing MFF values, i.e. the South West Peninsula region.

• High cost area supplements are already incorporated into the hourly rate and the NHSE MFF calculation. This could be considered to partly address the higher cost of living at the other end of the scale.

• In future, this could be used to apply to other regions and NHS organisation.

3.  A local innovative service - e.g. mobile unit or fast track service (including Patient Recruitment Centres) where stated by an individual organisation and nationally supported initiatives such as patient recruitment centres.

4.  Requirement for third party provision, the expectation is that the cost of an investigation or activity, along with its associated overhead, should be sufficient to support such activity if carried out by an external third party contractor. However, it is accepted that due to certain circumstances outside of the NHS Organisation's control, e.g. locality, commercial monopoly or access, some organisations may need to consider the impact on their MFF value.

Produced by and for NHS research finance managers, UKRD has developed guidance intended to support system improvements and better use of research funding by NHS organisations to enhance patient care and experience. The document draws on the experience and knowledge of practicing NHS research finance managers and is offered as guidance. UK Research Finance Guidance page.

The recommended model was initially developed from good practice and has since been refined using implementation feedback. It is offered for consideration and to inform local funding flow decisions for NIHR RDN Portfolio commercial studies.

The implementation of an income distribution model may take several forms:

• A Local RDN-wide model adopted by the Host and all participating NHS Organisations

• NHS Organisation specific models adapted as required to enable implementation within the Host and participating NHS Organisations

• A combination of a RRDN-wide model with specific NHS Organisations adapting the RRDN model as required to enable implementation within that NHS Organisation.

Prior to any recommendations, an initial review of income distribution arrangements within the RRDN Host organisation and participating organisations should be conducted to understand the current position. This review may identify a common approach which is already in place which can be expanded as required. If successful income distribution processes and operational arrangements already exist locally, these should be reviewed to ensure all relevant NIHR RDN recommended model principles of good practice are or can be appropriately accommodated through adaptation.

There is no expectation that RDN funding used to support commercial contract research will be reimbursed to the RRDN central budget, and RRDN Managers should not seek to recover this funding.

The wide reach of tasks covered by the 70% indirect costs component supports the splitting of this value to enable representative but practical distribution to the relevant parties involved in delivering the commercial research and may vary for each NHS Organisation.

The NIHR RDN Income Distribution model recommended approach is:

1. Half of the indirect cost element stays with the NHS Organisation to cover the indirect costs which enable the NHS Organisation to carry out the underlying operations of conducting research and contribute to any variability between the negotiated prices where required. Additionally, this percentage may be used to supplement or incentivise individual NHS Organisation departments, as per local agreements.

2. Half of the indirect cost element is designated for the Principal Investigator (PI) and provides a method to incentivise participation in commercial research. This amount should be allocated to a commercial research cost centre or similar supervised research account within the NHS Organisation finance system, through which the Principal Investigator has a decision making capacity in the use of the funds in line with the NHS Organisation practices and finance control procedures.

The “equal split” approach is the recommended approach, however local arrangements may support different splits to be used and agreed locally to suit each NHS Organisation’s needs. These percentages should be developed and agreed based on the NHS Organisation’s methods for recovering indirect costs and the degree of efficiencies and savings that are realised to make available as incentives. The alternative split should be evidenced with supporting data from NIHR RDN Portfolio commercial studies to demonstrate the involvement or requirement for the proposed proportion of income. The implication of agreeing alternative approaches to the equal split recommended in this model should be considered for each NHS Organisation individually, e.g. the impact of reducing the percentage available to the Investigator and team. The following table shows examples of some alternative splits in use at NHS Organisations:

Split #1

• 50% to PI

• 25% to Clinical Division

• 25% to R&D

Split #2

• 65% to PI

• 20% to add to staff costs

• 15% to R&D

Split #3

• 70% to PI

• 30% to NHS Organisation

Split #4

• 75% to PI

• 25% to NHS Organisation

Split #5

• 36% to PI

• 32% to Clinical Division

• 32% to R&D to fund commercial trial support costs

Split #6

• 80% to the service or support department involved in the activity

• 20% to R&D

NOTE: The distribution split of the indirect cost element assumes that all direct staff costs and the cost of investigations are paid direct to the NHS Organisation as per the arrangements of the relevant model Clinical Agreement and where these costs are incurred by support departments or external providers; the costs are paid or passed through as per local agreement.

The previous version of this model recommended that the Capacity Building element was pooled from all RRDN Delivery organisations and held under the control and management of the Regional Research Delivery Network Board (removing instances where this element has been used as a surrogate for Network staff costs). In practice, this was not found to be applied and was instead retained by the NHS Organisation where the money was generated, which is reflected in this revised model.

The intended use of the Capacity Building element within the NHS organisation should be clearly documented to support and evidence its reinvestment in research in line with the overarching intention to ‘improve the health service’. It is recommended for the NHS Organisation to involve the RRDN in defining the application of this element and ensure consideration and inclusion of the wider research community needs and national research ambitions.

Regardless of RRDN involvement, it is best practice for NHS Organisations to have some form of expenditure plan for the capacity building element with supporting accounting processes to manage and evidence the distribution. This could be incorporated into existing reports or plans to minimise duplication. For example, the expenditure plan may include:

• an aggregate expenditure for large-scale, long-term resource and infrastructure projects (e.g. funding additional staff posts, building resource in research constrained departments or services)

• small-scale department or unit-specific plans as part of an open local competition/application process (e.g. development of training programmes, part-funding of department specific research posts, “buying-out” or reserving “blocks” of research time in departments and units)

• a mixture of both.

In the event that consensus cannot be reached locally on the best use of Capacity Building income, the funds should be distributed back to the NHS Organisation service support departments and clinical units in the exact amounts that they each generated through their involvement in commercial contract studies.

Feedback to date has shown an income distribution model is most effective when all income values are transparent to all departments involved through good local accounting allocations, clear distribution rule application and central NHS Organisation oversight (e.g. by the R&D Department). While income is distributed back to individual departments to support engagement in commercial research, the use of this income should be managed and monitored through spending plans which are reviewed and approved centrally by the NHS Organisation. This approach ensures an integrated approach to research development across the NHS Organisation. Consideration may be needed to distinguish NIHR RDN Portfolio studies from non-portfolio studies if using different approaches for income distribution.

In line with any formal financial advice sought by the NHS Organisation, local agreements should be used to manage the carryover of funds generated from commercial contract research, which may be key to raising the profile of research within the NHS Organisation.

Staff time²

• Staff time hourly rates distributed to the department where the staff member is employed to cover the cost of their involvement in the research

70% indirect costs²

• Half (or other agreed value) collected and collated for allocation to the NHS Organisation for indirect cost coverage i.e. the real costs of conducting research

• Half (or other agreed value) collected and collated for allocation to the Principal Investigator managed account as financial incentive to reinvest in further research

20% capacity building²

• Collected, collated and reinvested by the NHS Organisation, in consultation with the RRDN, to build sustainable research and innovation capacity to the benefit of all research partners

Template value²

• Distributed to the service support department where the investigation was conducted to cover the cost of their involvement in research

20% capacity building²

• Collected, collated and reinvested by the NHS Organisation, in consultation with the RRDN, to build sustainable research and innovation capacity to the benefit of all research partners

Staff time²

• Staff time hourly rates distributed to the department where the staff member is employed to cover the cost of their involvement in the research

70% indirect costs²

• Collected and collated for allocation to the NHS Organisation Pharmacy for indirect cost coverage i.e. the real costs of conducting research within the Pharmacy

20% capacity building²

• Collected, collated and reinvested by the NHS Organisation, in consultation with the RRDN, to build sustainable research and innovation capacity to the benefit of all research partners

Department/ task fee

• Template value:

  • Distributed to the department where the set-up task was performed/ costs incurred, e.g. R&D, service support department, Clinical Research Facility or Primary Care Patient Identification Centre to cover the cost of their involvement in the research

The following information has been compiled from regional network feedback regarding the initial model release in April 2011.

Who should be involved?

• Getting the right people to discuss the guidance has been a big barrier to implementation and making the change happen, e.g. R&D staff may be receptive to the discussions, but Finance staff engagement may be needed to implement.

• Involve team members from NHS Organisation management, service support departments and R&D Offices to support open discussions.

• Involve the National Specialty and Settings Leads (NSSLs), the Local RRDN Directors and Board as well as the finance leads in the Trusts. RDNCC Directors can help to endorse the model for application across the NHS Organisations.

• Involve the investigator in discussions. Making investigators aware of the potential distribution principles can further support implementation and give support to the splitting of the indirect cost element, but care should be taken not to raise expectations and create conflict between the investigator and R&D.

When should we discuss?

• Support the initiation of local discussions with this document as guidance rather than a prescriptive process.

• Local discussions should also take place within the RRDN to compare and consider a common income distribution model to present to all Partner organisations.

• Frequent discussions and ongoing monitoring can raise the priority.

• Give member trusts time and freedom to consider how the model could work for them.

What should we consider?

• Be prepared to invest significant effort and dialogue to encourage NHS Organisations to be transparent with their funding models and costs.

• Education regarding the interactive Costing Tool and principle of the tool may be useful introduction to the discussions.

• Relate the benefits of the model to the audience.

• Compare the model to previous cost or distribution approaches e.g. one NHS Organisation enables consultants to receive 80% of the total per patient fee.

When could flexibility be needed?

• Hospital structure may dictate requirement for adoption of a locally agreed model, e.g. Large Teaching Hospital vs a District General Hospital, the involvement of a Clinical Research Facility (CRF), or use of University staff and/or facilities.

• Depending on the level of commercial income, which may vary over time, affecting the priority of the model within a particular NHS Organisation.

• Different numbers of studies may affect the format of the most appropriate model.

• Complexity or the size of the study may require bespoke arrangements to ensure principles are applied proportionally.

• Different approaches may be needed to accommodate the variety in types of researchers in the NHS Organisation e.g. some NHS Organisations have experienced that their academic researchers prefer to have the money ring fenced, whilst their NHS researchers want the infrastructure (i.e. ward space, theatre space, nurse, admin).

How could this be incorporated?

• Create and document the local version of the distribution model.

• If an NHS Organisation-wide model cannot be agreed, an alternative is to use a per study approach to generate a study-specific document to detail the local distribution for each study, which is signed off by R&D and PI once the study contract is signed off.

What should we consider?

• Recognition of other incentives is important, e.g. access to RDN infrastructure or gaining pre-selected site status.

How could we reach an agreement?

• The RRDN could initially gather information regarding the income distribution status of all member NHS Organisations.  This could be used by the RRDN along with this Performance and Operating Framework (POF) Support Document (PSP) to work towards a single common solution, if possible, with agreed areas for potential adaptation.

• Ask each NHS Organisation R&D Department to confirm whether they are broadly in agreement with the proposed income distribution model.

• Consult with R&D departments, NHS Organisation management and investigators of each Delivery NHS Organisation to determine if the proposed model can support or improve existing arrangements.

• Consult each NHS Organisation to generate an individual policy for their NHS Organisation.  This could be the single common solution proposed by the RRDN, if possible, or a variation as necessary.  Without adequate consultation, it is unlikely a single agreement will be reached.

• Approaches may be NHS Organisation-wide or on a per study basis depending on what works best for each NHS Organisation.

• Acquire high level policy sign off, e.g. NHS Organisation board approval.

What support is available?

• Utilise support of the RRDN as necessary for a consistent approach.

• The RRDN may be able to provide contacts in areas where a model has been successfully implemented.

• Understand which Investigators have ‘research’ included in their job plans or descriptions or where this appears in the Directorate’s business plan to help leverage support for agreeing a funding model.

What should we consider?

• Reaching consensus locally on use of monies may be difficult and a default position should be discussed for when this occurs e.g. if no decision can be reached the funds are transferred to the R&D department.

• Consideration of the NHS Organisations local processes for managing commercial income from NIHR RDN Portfolio research should be assessed to ensure the model is workable from a practical aspect.

• The benefits of involving the RRDN in the decision making for spending of capacity building income.

• Ensure all departments are able to function effectively to support research, as this has been identified as a stumbling block when looking to implement a model.

• Investigate if the NHS Organisation are invoicing quickly and accurately for commercial income due.

• Investigate if commercial income can be clearly identified as a separate income line by the NHS Organisation.

• The recovery of network costs is an integral part of a transparent model to avoid duplication of funds and consideration should be given to recover this where possible, or offset where deemed more appropriate.

• Avoid upsetting any current arrangements that were effective, find a way to incorporate them instead.

How can we embed income distribution?

• Following local agreement, the model should be translated into real financial accounting and allocation through the NHS Organisation’s budget management, invoice and credit control systems.

• Encouraging the NHS Organisation’s departments to work together rather than individually in silos e.g. avoiding departments invoicing sponsors individually.

• Engaging R&D finance resource helps to build stability and find effective solutions.

• Promote a balance between local recovery of costs while aiming to avoid onerous itemisation and invoicing of study costs.

• Ensure the data systems to support tracking of income are available to the NHS Organisation.

• Implement requirement for the NHS Organisation to report to their own Board and RRDN with information regarding how the capacity building element has been invested locally or the plans for the expenditure.

• While a standard format for the model clinical trial agreements financial appendix content is being developed nationally, encourage the display of costs within this to support the income distribution model. This should be achieved with minimal impact on the Sponsor, i.e. an internal process.

• Perform an analysis of the resources being used currently on all the commercial studies that are actively recruiting (from financial, operational and workforce development perspectives) to determine their effectiveness. Understand their funding streams to help evidence further improvements, which could be made when supported by a robust income distribution model.

What benefit can we promote?

• Recognition of the contribution each stakeholder makes to the health research system.

• Improving research income management benefits all stakeholders.

• One NHS Organisation puts all the Industry income into one pooled holding account, where investigators can make applications for funds to support research they wish to carry out.

• Reinforce the need to ensure that public funding is not subsidising commercial activity and how the model could support this.

• Capacity building funds could be used to:

  • support clinicians write grants or support clinical study groups to increase studies led by local clinicians

  • support Patient, Public Involvement and Engagement (PPIE) members who are key to recruitment

  • support dedicated areas of activity: as an example and NHS ambulance service trust used the capacity building from the study to support the paramedics to 'get involved in research' programme where paramedics were actively approached and given training and education on how research works with the ambulance service.

  • distribute by directorate e.g. an imaging department hiring mobile Magnetic Resonance Imaging (MRI) units to avoid delays for the procedures, or pharmacy using it to support increases in staffing levels.

What should we consider?

• Reluctance or capacity restraints may create challenges when considering individual study costing and capacity planning. 

• Encouragement of self-sufficiency i.e. looking at commercial income to support future studies rather than the RDN initially, which frees up funds to support other research.

• Support NHS Organisations to have a clear idea of their commercial income and ability to account for all elements of this by putting local finance teams in contact across the RDN or with other RRDNs to understand how this could be achieved.

The NHS Organisation and the University should establish arrangements within their local Memorandum of Understanding or service level agreements to recover costs incurred through the involvement in commercial contract studies, which may also include honorary employment contracts where appropriate.

Universities should not recover additional indirect costs to those in the interactive Costing Tool where the research is taking place on NHS premises, for example applying a University overhead value on top of the costing template total.

Reconciling any discrepancies in staff time costs identified in the interactive Costing Tool, for example in line with Full Economic Costing, should be done in accordance with the local agreements referenced above between the NHS Organisation and the University. The University cost recovered should not exceed those agreed by the NHS Organisation with the Sponsor for the University staff.

CRFs and NIHR infrastructure are key assets in the clinical research environment. If any activity or review is led by the CRF then the money should flow through to these units and departments where and when the activity has occurred. This should be agreed locally between the CRF and the R&D departments during set-up and should not impact on the Sponsor discussions.

Individual cost centres may need to be created to allocate the funds accordingly and the requirements should be discussed with the CRF to ensure this is fit for purpose.

Feedback from an Income Distribution Survey through the UKCRF group in 2013 demonstrated the majority of respondents would be keen to allocate the costs to the CRF on a visit-by-visit basis, i.e. visit one takes place in out-patients clinic and visit two in the CRF. Consequently, visit one costs go to the outpatients department (for further distribution as per the NHS Organisation’s income distribution model for task splits) and visit two costs go to the CRF.

The survey also showed that the NHS Organisation’s Finance department, R&D Office or CRF staff are all involved in supporting the invoicing for commercial contract studies against the contract, and thus all relevant staff should be involved in the implementation discussions to fully understand the processes already established and how they can work together.

Consideration may also need to be given to CRFs using the CRF intensity tool, in particular how this can be used to support income distribution.

²All costs inclusive of NHS England (NHSE)/Devolved Administration  Market Forces Factor for the Trust

The money generated from industry sponsored studies is a valuable source of income for NHS Organisations. This income can be used to encourage key research stakeholders to develop capacity for new commercial, collaborative and/or non-commercial research within the NHS Organisation and support future income generation.

This document recommends key principles and good practice for the distribution of income from industry sponsored studies to support local agreement of a suitable approach for each NHS Organisation.

The model proposed in this POF Support Page is based on piloted cases and feedback.

The NIHR RDN aims to ensure that systems to manage and distribute commercial income work towards and achieve the strategic research priorities outlined by the Department of Health and Social Care. A critical part of achieving these objectives will be making sure that investigators and service support departments in the research system are sufficiently incentivised and reimbursed.

• Why shouldn’t the NHS Organisation keep all the indirect costs?

The indirect cost element package is set within the NIHR RDN interactive Costing Tool at a level which captures these costs incurred by the NHS Organisation, but also ensures a margin for flexible financial management. Best practice has shown that there is capacity within this to incentivise investigators if the NHS Organisation also retains the direct costs and delivers an efficient service.

• Can our NHS Organisation change the distribution percentages?

The distribution percentages utilised in this model can be changed to any equivalent of the 70% indirect costs that works for your local arrangement as demonstrated in the examples provided in this support document.

• Is there an expectation that some of the money should go to the NIHR RDN for management of the Feasibility and Eligibility Process?

Payment for the management of NIHR RDN Feasibility and Eligibility Process is a separate consideration to the practices outlined in this document. The funding to the NIHR RDN for provision of such cross-cutting Study Support Services is provided through the funding allocation from the Department of Health and Social Care. 

BRC: Biomedical Research Centre

CEO: Chief Executive Officer

CI: Chief Investigator

CRF: Clinical Research Facility

CRN: Clinical Research Network (now RDN)

CRO: Contract Research Organisation

DHSC: Department of Health and Social Care

ECG: Electrocardiogram

ECMC: Experimental Cancer Medicine Centres

FEC: Full Economic Costing

HEI: Higher Education Institution

HSG: Health Service Guidelines

iCT: interactive Costing Tool

I&E: Income and Expenditure

ISHPs: Independent Sector Healthcare Providers

LCRN: Local Clinical Research Network (now RRDN)

mCCIA:  model Commercial Chief Investigator Agreement

MFF: Market Forces Factor

MRI:  Magnetic Resonance Imaging

NHS: National Health Service

NIHR: National Institute for Health and Care Research

NSSLs: National Specialty & Settings Leads

PI: Principle Investigator

POF: Performance & Operating Framework

PSP: POF Support Pages

PPIE: Patient, Public Involvement and Engagement

R&D: Research and Delivery

RDN: Research Delivery Network

RRDN: Regional Research Delivery Networks

UKCRF: The UK Clinical Research Facility Network

UKRD: UK Research & Delivery

Directions to the following supporting resources:

The RDN Study Support Service Effective Study Start-up process provides a local mechanism ensuring that each researcher on each study has a prompt to discuss income management for the study at their site and has an opportunity to influence the distribution.

Research Delivery Management community hub site

Direct link to the Study Support Section of the hub site

Contractual requirements for the reporting of values for aggregate commercial income, invoices raised and outstanding debits can be found in PSP007: RRDN Minimum Financial Controls. (This PSP is currently undergoing refresh and will be available asap).

Version number: 1.3 

Effective from date: November 2024

Change(s) from Version 1.0:

• 5. Recommended Model for Income Distribution from NIHR CRN Portfolio Commercial Studies - Recovery of NIHR CRN staff costs

  • • Updated to reflect that there is no expectation that CRN funding used to support commercial contract research will be reimbursed to the LCRN central budget.

    • Changes from version 1.1 nomenclature to reflect change from CRN to RDN and LCRN to RRDN

Changes from Version 1.2

Refresh made to Sections 1 to 5 in order to reflect the changes with using the National Contract Value Review (NCVR).