Why Outsource Clinical Development Programs?

Today’s blog comes to use from Lisa Miele, a Managing Partner at Collaborative Management Solutions, LLC. Her company provides outsourcing and management consulting for a variety of pharmaceutical and biotech companies as well as Clinical Research Organizations. Prior to starting her company, Lisa worked for 12 years as a Vice President at PRA International. During her tenure at PRA, Lisa worked in both operations and business development. She earned her MBA from American University in Washington DC and her BA in education from The Catholic University of America. Her contributed article and contact information follow below.

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Today, most pharmaceutical and biotechnology companies are challenged with slowing sales, expiring patents, intense competition and rising research and development costs. In fact, R&D expenditures are rising at a rate far exceeding that for new product approvals. Furthermore, recent safety concerns have left agencies more cautious about the drugs they approve. When faced with these challenges, many pharma/biotech companies recognize they must reduce clinical drug development costs while at the same time shortening overall development timelines. To accomplish this goal, U.S. pharmaceutical companies are relying on contract research organizations (CROs) to support the clinical trials mandated by the FDA and thus bring their therapies to market faster.

The global clinical trials market is worth an estimated $10 billion and is expected to continue to grow over future years. Over the past 13 years I have worked within the clinical development arena. During my tenure, I have questioned many top executives as to their reasoning for outsourcing clinical development. The most common rationales I have come across are as follows:

  • Additional capacity and expertise - Filling gaps where internal resources or expertise no longer exist
  • More effective and efficient conduct which results in savings of both time and money
  • Capitalizing on the niche service offerings and technologies offered by CROs such as electronic data capture and global reach
  • Reducing/sharing financial risk by limiting capital investments

CROs were initially set up as service providers of solely clinical trial conduct. More specifically, their focus was on clinical trial site selection, qualification and monitoring. However, over the past two decades most CROs have expanded their service offering to provide complete management of the drug development process. By and large most CROs now provide a full range of global clinical development services including protocol development, clinical trial services, medical monitoring, safety reporting, data management and statistical analysis.

When selecting a CRO, pharma/biotech companies should focus on the CRO’s therapeutic, scientific, technical, patient recruitment and geographical capabilities. In addition, evaluation of the CRO’s size, service offering, cost models, current relationships and customer satisfaction should be considered.

Once a “transactional provider” is selected, common sources of conflict include:

  • Replacement of staff presented during the bid process
  • CRO not being upfront about problems that arise during the conduct of a project
  • Poor communication between the pharma/biotech project team and the CRO project team
  • Lack of defined expectations at the onset of a clinical trial
  • Frequent occurrence of large volume change orders
  • Pharma/biotechs fail to include CRO as true part of project team

In general, the CRO and pharma/biotech industries have yet to consistently develop mature relationships. Most of these relationships tend to be transactional in nature where the CRO is viewed as solely the arms and legs of execution rather than as a strategic resource.
The benefits of outsourcing to a CRO can be increased significantly if a pharma/biotech company develops a long term strategic relationship with the CRO. These “preferred provider” relationships or “strategic alliances” allow the CRO an opportunity to contribute to the overall development of multiple compounds as well as to provide strong value to their clients. In exchange, the pharma/biotech company should expect to see the following:

  • Cost efficiencies – reduced fixed costs
  • Harmonization of processes and standards
  • Technology integration
  • Reduction of change orders
  • Emphasis on continual improvement
  • CRO resources become extension of pharma/biotech team
  • Long term planning which results in increased capacity
  • Formal governance structure to manage relationship
  • Introduction of rate cards or large volume discount scales
  • Increased accountability of CRO
  • Dedicated staff

In order for the successful shift from transactional to strategic relationships to take place, there must be interest, support and involvement at the executive level within both the CRO and pharma/biotech company. A focus and acceptance on “change” within the pharma/biotech company is equally imperative. As the outsourcing market is expected to increase in years to come, it is imperative that CROs and pharma/biotech companies find ways to successfully collaborate on development and execution of global drug development programs.

Lisa Miele, MBA
Managing Partner
Phone/Fax: (732) 741-2669
Email: lisa@cmsolns.com