Guidance

Excess treatment costs in non-commercial research: guidance for researchers, funders and administrators

Published 5 December 2024

Applies to England

Background

Introduction

This document provides guidance for the process of managing excess treatment costs (ETCs) for research falling within the responsibilities of NHS commissioners in England. It has been jointly agreed by:

• the Department of Health and Social Care (DHSC)
• the National Institute for Health and Care Research (NIHR)     
• NHS England

Separate arrangements are in operation for ETCs in research for public health interventions that are not commissioned by NHS commissioners in England. See NIHR’s researcher guidance for public health and social care ETCs.      

Definition of ETCs

A research study may result in care that differs from standard treatment in the NHS or is delivered in a different location. The associated NHS treatment costs may be less than or greater than the cost of standard treatment. If greater, the difference between the NHS treatment costs and the cost of the standard treatment is referred to as the NHS ETCs.

A single national model for administering and funding NHS ETCs      

In 2024, with the help of NHS England and the NIHR Research Delivery Network (RDN), DHSC carried out a review of the ETC management model to seek further opportunities for simplifying the system for researchers, funders and administrators. The recommendations from the 2024 review built on the work carried out in November 2017, as part of the NHS England, NIHR, DHSC and Health Research Authority (HRA) consultation on proposals to better manage ETCs in the NHS in England.

From 5 December 2024, DHSC introduced, and assumed sole operational responsibility for, a single national system for NHS ETCs in England with funding responsibility from 1 April 2024. The system covers ETC costs relating to non-commercial research associated with both locally commissioned services (that is services commissioned by integrated care boards - ICBs) and any nationally commissioned services, including the NHS England specialised commissioning function.

The system will be managed on behalf of DHSC by the NIHR RDNCC (RDN Coordinating Centre). 

This guidance builds on the original Guidance on the national management model for England published by NHS England in September 2021. The new guidance has been updated in December 2024 to reflect the adapted single national system for administering and funding NHS ETCs.

This guidance should be read in conjunction with the NIHR’s ETC information on the process for managing ETCs. See a process flow chart for non-commercial studies that have ETCs.

Eligibility for ETC funding and ETC payments

Eligibility for ETC funding

DHSC has taken on responsibility from 1 April 2024 for funding ETCs associated with research into services which are either locally commissioned by ICBs or which are nationally commissioned services, including the NHS England specialised commissioning function (with the exceptions discussed in the paragraphs below). 

Studies that are eligible for consideration for ETC funding are defined in the Health Service Guidance (HSG) (97) 32. Typically, this includes studies that are funded by national government agencies (including NIHR), as well as:

• UK Research and Innovation (UKRI), including the Medical Research Council (MRC)
• other parts of central government
• members of the Association of Medical Research Charities (AMRC)

or which are fully funded by the European Union (EU).

ETC applications that are in scope of the adapted national system include:

• studies with low cost ETCs, where total ETCs are under £1 million per study, or average ETCs per participant are below £20,000
• studies with high cost ETCs, where total ETCs exceed £1 million per study and/or average ETCs per participant are above £20,000, subject to the additional conditions below

For research evaluating delivery of new or amended NHS services (for example, in a real-world setting), where costs are above the high cost thresholds, DHSC will convene a group that includes relevant NHS England and NHS expertise. This group will agree whether:

• the study is of value
• its costs are deemed reasonable and proportionate to the study’s potential value in informing future clinical care
• any additional costs that would fall to DHSC are affordable by it or its NHS partners

All of these requirements need to be met for the study to proceed. Cases can be referred for additional senior review as necessary.

Historically, HSG (97) 32 set out the responsibilities for meeting patient care costs, including ETCs, associated with research and development in the NHS. This included guidance for eligibility for ETC funding based around organisations that award research funding.

The DHSC eligibility criteria for NIHR RDN support policy sets out the criteria for eligibility of studies for NIHR RDN support. The criteria in this eligibility policy are broader than those defined in HSG (97) 32, such that NIHR partner organisations that may not be UK registered charities may be eligible for RDN support, but not ETC funding.

In addition, the NIHR RDN eligibility policy also provides for studies, classified as ‘non-commercial’, which are initiated by non-commercial investigators, with research funding provided by commercial organisations - referred to as investigator-initiated, commercial-collaborative studies.

This means that ETCs for studies that are included in the NIHR RDN Portfolio associated with services which are either locally commissioned by ICBs or which are nationally commissioned services, including the NHS England specialised commissioning function, will be paid on a bi-annual basis as per their recruitment and ‘per participant value’ (PPV) (subject to provider thresholds and high cost study review).

As is current practice, the ETCs for the following studies will continue to be automatically reimbursed for studies in which the research costs (as defined in HSG (97) 32) are fully (or majority) funded by:

• NIHR
• UKRI
• another government department
• an AMRC member
• two or more the above funders in combination
• the EU    

Eligibility for ETC payments

Provider sites incurring ETCs should be delivering routine NHS services or patient care services as part of specific and time-limited programmes.

ETC attribution, costing and validation

The online SoECAT (schedule of events cost attribution tool) guidance includes video tutorials and linked resources to assist at each stage of the application process (an NIHR Learn account is required to access and enrol onto the module).

Overview of the process

Attribution

The SoECAT for clinical research is a spreadsheet-based application whose purpose is to capture the different activities associated with clinical research at the research site level and attribute them accordingly as ‘research activities’, ‘support activities’, or ‘treatment activities’, in line with the Attributing the costs of health and social care research and development (AcoRD) national guidance document.    

Guidance on when a SoECAT is required can be found in the full SoECAT guidance referred to above. A SoECAT is required by NIHR and NIHR non-commercial partner research funders where the call for applications for funding relates to studies that may involve participants under an NHS or health and social care duty of care.

A SoECAT should be completed for the research cost funding application for any non-commercial or investigator-led commercial-collaborative study intended for the NIHR RDN Portfolio. This applies even where the funder is not an NIHR non-commercial partner funder (that is, where an application for adoption of the study to the portfolio will be required).

Some funding calls may attract both applications for studies that require SoECAT completion and applications for studies where SoECAT completion is unnecessary. In these circumstances the default position is that the SoECAT should be submitted for all applications, but where completion is not needed this should be documented within the SoECAT submission, as required by the SoECAT guidance, and ratified by an AcoRD specialist.

SoECATs should also be completed for applications for research awards that fund a programme of activity such as NIHR programme grants for applied research.

See the eligibility criteria for NIHR RDN support.

Costing

The SoECAT includes functionality that calculates a proposed average ETC PPV for studies within the English ETC management model. The SoECAT is a cost attribution tool and is not intended to be used as a tool to derive true site level costs.

Further information on this distinction is provided in the SoECAT guidance.

Application stage

Once an ETC value has been calculated and the SoECAT authorised by the NIHR AcoRD specialist, it should be submitted with the application for research funding in accordance with the instructions for that funding call.

Confirmation of site specific ETC value

For studies with low cost ETCs, the sponsor will be responsible for providing RDNCC with information to ensure the appropriate sites are reimbursed for their ETCs. The RDNCC will then - using the SoECAT and information provided by the sponsor - provide to the sponsor a breakdown of the costs that will be attributed to the relevant sites. The ETC payments will be based on recruitment data and the average ETC PPV.

For studies with high cost ICB and specialised commissioning ETCs, DHSC would take advice, which may include, as required:       

• an NHS England specialised commissioning financial assurance assessment (to be completed within 20 working days) on high cost specialised commissioning ETC applications (to reduce any remaining duplicate costs that are already paid for via tariff or other existing NHS payments). The day on which the SoECAT and protocol have both been sent to NHS England (england.highcostetc@nhs.net and recipient addresses to be agreed with NHS England) will count as day zero
• as now, in parallel to the specialised commissioning financial assurance assessment, DHSC will review high cost specialised commissioning applications (also to be completed within 20 days, concurrently alongside any NHS England high cost specialised commissioning financial assurance assessment)
• for high cost ICB ETCs, a relevant clinical expert designated by DHSC will carry out an independent clinical review of any high cost ICB or nationally commissioned service ETC applications

For studies involving services commissioned by other NHS England commissioners and for public health studies commissioned by local authorities, where there is an equivalent excess intervention cost, the ETC PPV generated by the SoECAT will also be used to help inform the final agreed value. The other NHS England commissioned services refer to armed forces, health and justice and primary care. Find out more about NHS England’s commissioned services.

For guidance on managing ETCs for research into public health interventions commissioned by non-NHS organisations in England, see Researcher guidance for public health ETCs.

Before applying for research funding for eligible studies that will incur ETCs

To ensure the attribution of study activities complies with the DHSC AcoRD guidance, study teams are actively encouraged to contact their local clinical research network (LCRN) for support from a designated AcoRD specialist to complete the SoECAT.

The AcoRD specialist in the lead LCRN (meaning the LCRN that takes overall responsibility for the study within the NIHR RDN) must authorise the SoECAT before submission of the funding application for it to be validated.

Researchers should contact their LCRN as early as possible to request attribution support. The absolute minimum time required to ensure sign off by the submission date is 20 working days before the submission of a funding application.

A maximum of 10 additional working days (before funding submission) from confirmation of AcoRD specialist reviewer is suggested to provide leeway for any amendments or escalations to be resolved.

Should any significant disagreements on attribution arise between researchers or sponsors and AcoRD specialists, the RDN attribution support and review standard operating procedure will be applied to escalate these cases.

When research funding has been agreed or awarded

For low cost ETC studies, once a study is awarded funding and the set-up has been confirmed and approved in the RDN’s central portfolio management system (CPMS), the RDN will liaise with the chief investigator and sponsor and within 10 working days obtain agreement on an appropriate payment model. This time period does not include prolonged delays by researchers responding to questions.

For high cost ETC studies:

• if the research funding application is successful and the ETCs for the study exceed the high cost threshold, the research funder must notify the NIHR RDN (etc.helpdesk@nihr.ac.uk ) and High Cost Review team at DHSC (highcostetcs@dhsc.gov.uk) and NHS England (england.highcostetc@nhs.net ) to trigger the high cost ETC review process
• funders will award research funding ‘in principle’ pending DHSC’s review and approval of the high cost ETCs associated with the research study

In parallel, when a researcher receives confirmation that research funding ‘in principle’ is awarded, the research team must inform the lead LCRN’s AcoRD specialist for the study, as denoted on the front of the authorised SoECAT form.

If funding ‘in principle’ has been awarded dependent on changes to the study design, the team must inform the AcoRD specialist so that any subsequent changes to the attribution of study activities are reflected, if appropriate, in an amended and authorised SoECAT.

Where the study will incur ETCs, this contact will trigger the process followed by AcoRD specialists to determine whether the study is categorised as having ‘high cost’ ETCs (see section ‘Studies with high cost ETCs’).

The AcoRD specialist will inform the research team of the outcome and next steps (see additional supporting information).

IRAS submission for HRA and Health and Care Research Wales (HCRW) approval and application for RDN support

Where a SoECAT was submitted in application for research cost funding, the AcoRD specialist authorised SoECAT (authorised to reflect change requests made by the funder, or other changes, if necessary) should be submitted as part of the integrated research application system (IRAS) form document set when applying for research approvals, and subsequently as part of an application for NIHR RDN support.

If the study includes more than one type of site, the authorised SoECAT should be duplicated by the study sponsor under the direction of the HRA. This should reflect the number of site types, and activities removed from each that are not relevant to that site type.

The SoECAT should also be included in the UK local information pack shared by the sponsor or their authorised delegate with their NHS research sites, to support those sites in making arrangements to deliver the study.

Full details are provided in the SoECAT guidance.

ETC payment mechanisms

Payment principles

The standard model is that ETC payments are calculated using study participant recruitment data multiplied by the final approved average ETC PPV.      

The ETC funding system does not allow for ETCs incurred in advance of participant recruitment - so called ‘up-front’ costs - to be paid.

Researchers should manage and plan studies appropriately to ensure that costs are not incurred unnecessarily. This includes using robust recruitment estimates to feed into per participant ETC calculations. Purchasing drugs in batches can also help to minimise potential waste. Researchers are expected to minimise the cost of drugs and devices to the NHS by seeking discounts from manufacturers where possible.

Subject to preserving the integrity and independence of the study, the use of lower cost generic or biosimilar options should be considered. Where costs relate to staff recruitment to deliver an intervention, the number of staff recruited and/or trained should be proportionate to the expected participant recruitment to recover these costs.

It is vital that providers ensure study recruitment data in the NIHR RDN CPMS is accurate and up to date within the specified NIHR data cut deadline dates. This will ensure providers are reimbursed. Any recruitment uploaded after the datacut will not be paid.       

All study recruitment and site data must undergo quality assurance within RDN before this data is approved for use in ETC payment calculations. Recruitment data recorded in the NIHR RDN CPMS as ‘provisional’ data - that is, data that has not been confirmed - will be excluded from the ETC payments.

Payments from LCRNs on behalf of ICBs

Using data on the NIHR RDN CPMS, on a quarterly basis ETC reimbursement payments are calculated, and payment schedules produced setting out the amounts to be paid to each site for each study. Payments are calculated using the average ETC PPV agreed for each study and the provider level recruitment data for that study, recorded and confirmed in CPMS. That is to say: payments are made on a per participant basis based on recruitment, bi-annually in arrears. Payments are subject to the provider threshold applied to an organisation (see section provider thresholds). ETC payments are made to providers by the RRDN host organisation. For these studies, information on cumulative ETCs relating to recruitment is available through the NIHR open data platform (ODP).

This enables providers to visualise the data and monitor their ETC spend against the threshold and ETCs due for reimbursement once the threshold has been reached. RRDN hosts do not require the submission of invoices to generate a payment.

Payments from NHS England specialised commissioning

From 1 April 2024, the specialised commissioning studies have been moved onto the RDNCC national system - the current intention is to maintain the existing RDNCC process and incorporate the specialised commissioning studies into the national system.

The specialised commissioning studies will be treated in the same way as the existing ICB studies and will be assigned a payment model. The ETC payments are then calculated on a site basis, which the study team chose through the payment model. The ETC payments are then aggregated. Each site is then divided into either a ‘provider threshold’ or a ‘minimum payment trigger site’. The ETC payments will be paid to each RRDN, and the RRDNs will be asked to make the payments to the sites on a bi-annual basis, in arrears, as per the existing ICB process. This will be based on confirmed participant recruitment data captured in CPMS (number of participants recruited in the previous 6 months multiplied by the payable average ETC payment agreed following the additional financial assurance process).    

Provider thresholds

For all providers other than primary care providers, an annual threshold is applied for ETCs. Primary care services (and therefore providers) are defined as:

• general practice services
• general dental services
• community pharmacy services
• optometry services

These providers are exempt from the provider threshold.

Where thresholds are applicable (see table 1 below), in each financial year providers are expected to absorb ETCs incurred up to the value of their individual threshold. Once the threshold value has been reached, any further ETCs incurred by the provider will then be reimbursed.

For the avoidance of doubt, from 1 April 2024 the threshold is only relevant to ETCs for ICB-commissioned studies and ETCs for studies for which NHS England is the responsible commissioner.

The value of the annual NHS provider threshold is taken as a percentage of total operating income for the provider or a set amount, whichever is the greater. DHSC will review the thresholds on an annual basis. The threshold data is published on the NIHR ETC Google website under the ‘Partner Organisations Provider Threshold’ tab and released before the start of each financial year. This is then distributed to the network as a bulletin and through other key stakeholder groups. These can also be viewed in the NIHR ODP.

In considering thresholds, DHSC will have taken into account that many studies generate excess treatment savings (which providers can retain as a result of participating in research). This is in addition to the time and costs eliminated by not needing to negotiate ETCs locally for relatively small sums, where the administrative costs to providers and commissioners related to agreeing payments outweigh the cost of the ETC itself.

If services are subcontracted by an NHS provider that has been allocated a threshold, the respective providers are expected to agree how the ETCs will be funded within the limits of the threshold. It is expected that where payments are being passed between organisations, the relevant parties will have valid contractual arrangements. In addition, it is expected that the provider transferring funds will have carried out due diligence for the quality of care delivered by the provider receiving ETC payments.

For independent sector healthcare providers (ISHPs), companies that qualify as small companies under the Companies Act 2006 have their thresholds set to zero. For all other ISHPs (excluding residential care homes and nursing homes), DHSC set a fixed threshold before each financial year. The value of the threshold can be obtained from NIHR ETC helpdesk (etc.helpdesk@nihr.ac.uk).

Table 1: annual thresholds to be applied to different types of providers incurring ETCs

Organisation	Threshold value
NHS trusts	Predetermined before the financial year (a % of total operating income)
Primary care, general practice services, general dental services, community pharmacy services, optometry services	No threshold
Independent sector healthcare providers (ISHPs) or companies (not including charities, hospices, residential care homes and nursing homes)	Fixed threshold predetermined before the financial year
Charities and hospices	No threshold
Residential care homes and nursing homes	No threshold
Higher education institutions (HEIs)	No threshold

An HEI, as a study sponsor, may act as a payment co-ordinating organisation distributing ETC payments to primary care providers. This is because, in this instance, no thresholds will be applied; primary care providers do not have thresholds applied to them. It is expected that HEIs would not be undertaking this role to research providers where thresholds are applied.

Primary care minimum cumulative payments

A minimum payment trigger is applied for ETCs incurred by primary care providers. This is not a threshold under which primary care providers must absorb ETCs but a value for cumulative ICB ETCs that must be reached before ICB ETCs are automatically paid. This has been introduced to prevent the cost of processing ETC payments outweighing the actual cost of the ETCs.

The ETC value will be paid bi-annually once the minimum payment trigger is reached.

Any ETCs that were not paid because the payment trigger had not been reached will be paid in full at year end.

Studies with high cost ETCs

The ETC model implemented in October 2018 includes a high cost threshold that has been introduced to enable DHSC and NHS England to review studies with high cost ETCs and assure the value of the study to the NHS before the agreement of ETCs. This model has been updated in December 2024 to reflect the single national system for managing ETCs.

The high cost threshold

A high cost ETC threshold applies to all studies eligible for ETC funding. The current value of the high cost threshold is defined as either the total ETC costs exceeding £1 million per study and/or where the average ETC per participant is above £20,000. The threshold applies to total ETCs incurred across England.    

Funders have been asked to notify NIHR RDN and DHSC when a study with ETCs above the high cost threshold is awarded funding. This identification process will run in parallel to the AcoRD specialist identifying these studies, ensuring all studies that require a review are identified as soon as possible.

Criteria for assessment of clinical alignment

A relevant clinical expert designated by DHSC will carry out an independent clinical review of high cost ICB or ​nationally commissioned service ​ETC applications on case-by-case basis, before agreement to fund ETCs.

The following criteria will be used to assess clinical alignment:

• is the level of proposed ETC investment proportionate to the potential future patient benefits in terms of clinical and/or patient outcomes? Would the treatment have a reasonable chance of being adopted into future routine NHS care given its expected relative benefit and cost?

• does the study replicate research already undertaken or due for publication and therefore offer no or limited additional value to patients and the NHS in terms of understanding the evidence base and developing future clinical commissioning policy?

• is the study in an important clinical area but misaligned with NHS England’s and/or DHSC’s understanding of the treatment regime or patient cohort that might be best prioritised for further study?
• is the study design satisfactory? For example, is it sufficient to produce findings likely to be of material use in future clinical commissioning policy determination, have opportunities been taken to explore the use of the best value product (for example, biosimilars), is there evidence that the recruitment target and timetable is realistic?

Assessment of clinical alignment

As of 5 December 2024, for high cost ETC studies where the ETCs relate to ICB-commissioned services or NHS England specialised commissioning services, an assessment of clinical alignment will be undertaken on a case-by-case basis by a relevant clinical expert designated by DHSC.

The possible outcomes of the assessment are:

• clinical alignment agreed and therefore ETC funding is agreed
• clinical alignment is in question - there will be discussion and negotiation with the lead investigator or sponsor and funder to attempt to agree any changes to the protocol or methodology that will enable alignment to be agreed
• agreement to changes to ensure clinical alignment and ETCs funding is agreed
• following discussion and negotiation, agreement to amend the study to bring into clinical alignment is not possible - ETCs will not be funded

NIHR RDN will notify funders of the decision directly.

Further information

Further information on costing your research is available on the ETC web pages on the NIHR website. For further ETC general or study specific queries please contact etc.helpdesk@nihr.ac.uk.