Clinical Outsourcing Report

A new study details best practices

By Jeremy Spivey

Clinical outsourcing has become a common practice in the pharmaceutical industry, and almost all large drug developers outsource some aspects of the clinical trial process.

If properly managed, outsourcing’s benefits far exceed the challenges created by vendor management. Outsourcing helps control costs, alleviates the need for expensive infrastructure and mitigates internal trial management problems such as turnover and limited therapeutic area experience. If not properly managed, however, outsourced trials drive unexpected and unbudgeted overruns in trial costs and timelines.

Veteran development and sourcing teams have found themselves on both sides of outsourcing’s promise. The following five suggestions are based on research conducted by Cutting Edge Information and presented in the recent report, “Strategic Clinical Outsourcing: Managing Costs and CROs.”

Use Full Package Outsourcing

Trial management philosophies continue to evolve, with many large sponsors are trending towards full-service contracts. In these contracts, CROs provide a suite of services across the trial spectrum, which may include everything from data management to the delivery of trial supplies. Sourcing executives who preferred full package outsourcing reported several advantages over niche provider outsourcing:

• Coordination among vendor groups is stronger when they are employed by the same company.
• Blame shifting is impossible when one company owns full, or nearly full, responsibility for a project’s budget and timelines.
• Relationships between sourcing managers and CROs are stronger and develop more quickly when the same parties are involved in planning, execution and problem resolution throughout the course of a trial.
• If a single sponsor company represents a significant portion of a CRO’s revenue, it is more likely to have its problems resolved quickly and satisfactorily.

In our recent study, 58% of surveyed companies reported using full service trial management for a majority of their outsourced trials, as shown in Figure 1. And of 11 categories of CRO activities, 10 of them were more commonly outsourced as part of a larger package of outsourced activities; only site selection is more commonly handled by niche providers, which sometimes have stronger relationships with regional physicians.

Figure 1: Percentage of companies outsourcing activities in a majority of trials Source: Cutting Edge Information

Preference for full service providers was not universal, however. Despite reporting that much of her time was taken up by managing niche vendors, one sourcing director preferred them to larger full package providers. The work was of higher quality, she felt, because the smaller firms were more familiar with their clinical specializations and could more quickly resolve local difficulties arising in the trial process. Additionally, her own smaller company faced difficulty gaining the attention of larger CROs when quick action was necessary. As the allure of multimillion-dollar contracts with global pharmaceutical companies attracts CROs, smaller companies must be sure that vendors will devote the necessary time to their needs.

Consider Preferred Vendors

Verifying a CRO’s capabilities may consume valuable time in the proposal process. After contracting, training external staff to use technical systems and data collection processes required by a client company can also add tremendous time pressure.

To minimize these challenges, some companies limit outsourced work to preferred vendors. These companies are pre-screened, known to internal stakeholders, and have completed satisfactory work in the past. As a result, the selected CRO is familiar with a client’s processes, technical infrastructure and culture. When using a preferred vendor, contract negotiation time is cut by as much as half, and the time between contract signing and trial initiation is also reduced. The time savings continue once the study is underway.

Opinions on preferred vendors, however, are decidedly mixed. One executive was pleased with the fact that contracted rates can be locked for years, which saves a substantial amount of money over long-term trials. Others feel that preferred vendors are really only necessary when a client requires CROs to use the sponsor’s own processes and systems; the training costs, in terms of both time and money, are otherwise too high.

Still other clinical leaders feel that preferred vendors grow complacent once they attain a contract. The fear is that vendors’ attention will falter as they go about attracting new customers. Another executive who works at a large company said outsourcing often drives layoffs in clinical groups — and CROs are quick to snatch up the experienced clinical personnel. Teams may find that preferred CROs have a number of formal employees on staff. In this case, the company started hiring employees back to rebuild its internal clinical group.

To maintain a positive relationship with preferred vendors, a clinical development manager recommended structuring the payments to reward performance throughout the course of a trial. While contracts at her company involved upfront fees and progress payments, 10% of the payment was reserved until after the trial was fully completed and analyzed. In other arrangements, some money is dependent on regulatory approvals. These approaches compensate CROs and provide the cash needed to run trials, but they offer a significant incentive to continue motivating vendors.

Another executive who manages sites globally for a top 20 company said her team has switched from preferred vendors to a ‘qualified vendor’ system. Vendors have to be trained in sponsor processes before they are qualified, but the list of possible vendors is much longer than a typical preferred vendor list.

This system works much better for this company because its primary outsourcing focus is the use of niche providers to perform regionally specific or highly technical tasks. Because these tasks may vary significantly, the company needs more CROs than the four or five vendors that it had on the previous preferred vendor list.

Manage the Proposal Submission Process

While most surveyed companies are happy with the number of proposals they receive during each phase of the review process, many are displeased with the difficulty they have selecting candidates. This problem almost always arises due to the difficulty in comparing contracts.

Several executives stressed the need to get an apples-to-apples comparison of CRO tasks, but few have found a feasible way to get it. One executive has had success in requiring CROs to fill out a proposal template. Others pointed out that even this approach can mislead, as work units vary from vendor to vendor; a monitoring unit, for instance, does not encompass the same tasks at all CROs. In order to compare companies’ quotes directly, the sponsor and the vendor must be on the same page when it comes to task definitions.

At one top company, a contracts group collects proposals and standardizes them before the study team even sees them. Members of the contracts group are familiar with their company’s trial requirements and the practices of many CROs, so they are able to prevent misunderstandings. While standardization added a step to the evaluation process, the team is pleased with its ability to compare different costs and fees.

Track Trial Budget with Respect to Trial Completeness

While all companies have tools in place to track trial budgets, some teams reported that budgeting numbers can be misleading. Trials progressing more rapidly than planned may be on budget despite appearing otherwise; some tracking systems won’t recognize that the trial will end sooner than projected. Conversely, trials that appear well within budget may be running over if they have fallen behind.

Figure 2: Importance of Relationship Management when selecting CROs Source: Cutting Edge Information

Although most groups attempt to correct this discrepancy, some have formalized the process. At one company, a finance team member at a regional office had developed a spreadsheet that tracked the projected unit-hours required for tasks versus the overall completeness of the trial. A director of outsourcing was impressed with the spreadsheet and is now formalizing its use across trials globally. This type of system allows a company to track unit-hour costs, overall trial cost and project timelines simultaneously.

Build Strong Communications Skills

Despite every attempt to prevent contract disputes and trial errors, they will occur due to the complexity of clinical trials. Executives at a range of sponsor companies ranked communication skills as the most important of all CRO traits, as seen in Figure 2.

A CRO’s willingness to admit errors and focus on solutions can mean the difference between study success and failure. Although simple conversations solve many day-to-day problems, bigger issues require triage as quickly as possible. Access plays a role; sponsors want to be sure that they can reach senior CRO executives, if necessary, to fix problems. When large issues stand unresolved for too long, they have the added effect of souring sponsor-CRO relationships — and creating a dysfunctional trial environment.

Jeremy Spivey is a senior research analyst at Cutting Edge Information. This article was adapted from the report, Strategic Clinical Sourcing: Managing Costs and CROs, available at www.cuttingedgeinfo.com.