Patients and healthy volunteers are often paid for participating in clinical trials. Payment is used to give the volunteers incentive to participate, particularly in studies where the investigational drug is in Phase 1 of clinical trials. Phase 1 studies are conducted to evaluate the safety of the drug in humans, after it has been shown to be safe in animals.
How much the volunteers are paid depends on the length of the study, number of in-patient and out-patient visits, if applicable, travel costs, food and the amount of anticipated discomfort. Phase 1 studies generally compensate healthy volunteers more than patients in Phase 2 or 3 studies because they will not benefit at all from participation. In Phase 1 studies, the drug is being tested for safety only. Many tests are performed to determine the effects of the drug on the body systems including among others the kidneys, liver and heart.
Volunteers can earn thousands of dollars for participating in clinical trials. The question of whether or not the payment must be reported to the Internal Revenue Service at the end of the year is often asked. The informed consent discussed with the volunteer prior to participation should clearly state the amount of compensation, schedule of payments and IRS reporting requirements. Name, address and social security number should be given to the company responsible for making payments. The company should generate a Form 1099-MISC at the end of the year and send a copy to the IRS and recipient.
The law on reporting of clinical trial earnings was not made clear by the IRS until 2008. The IRS requires earning of $600 or more to be reported. A Form 1099-MISC reporting is required. The IRS states in the instructions to Form 1099-MISC that Box 3 should be used to report “(a) payment or series of payments to individuals participating in a medical research study or studies.” All payments to research participants are to be reported in Box 3 of form 1099-MISC.