Stop micro-managing CROs
pharmafile | October 15, 2008 | Feature | Research and Development | CRO, contract research, contract research organisation
Contract research organisations are now play a key role in the development of most of the industry's drugs, with some statistics indicating up to 30% faster completion of clinical trials when contracted out, compared with in-house management. As the most expensive stage of drug development, this level of efficiency is of high value to pharmaceutical companies.
But when you hear people talking about CROs, it often seems to be to criticise rather than praise. When things go wrong, it's natural and easy for companies to blame the CRO. Of course the CROs have a different story, and the truth is probably somewhere in between. But what is certain is that CROs are here to stay. So how can clinical trial sponsors get them to deliver what they want?
What goes wrong?
Weak management seemed to be at the top of the list of sponsors' gripes about CROs, according to some research I carried out a few years ago. But on a day-to-day basis, the general office chat tends to highlight other key areas, such as patient recruitment.
CROs are continually being criticised for making promises about recruitment and then failing to deliver. Sponsors are often impressed by CROs' track records in particular therapeutic areas, with CVs to back these up, only to find when the project goes live that most people are in fact new to the field. Often this is because a lot of contracts take so long to negotiate that the people have been deployed elsewhere (or left the company) by the time anything gets going.
A further criticism is that proposals contain all sorts of attractive details about computer systems that put study information at the sponsor's fingertips, when in reality systems are cumbersome, clunky and not kept up to date.
I can approach this from both perspectives. For 13 years I ran my own small CRO, and for the last eight years I've worked as a freelance consultant. My work has mostly been for sponsors but I've also worked for CROs on occasion.
I have seen many things done well and some things done not so well, but the vast majority of people I have worked with have been dedicated to what they are doing. That's not to say that they are always best qualified for what they are doing – they can often be constrained by a lack of the right skills. But most failings arise not because of laziness or lack of probity. There is clearly the potential to raise the game of managing CROs to get much more out of them.
CROs also now encompass a much wider range of vendors than those who manage the investigator sites and deliver study outputs. There are now many specialist suppliers of services that claim to improve efficiency, including electronic data capture, interactive voice response systems, pharmacovigilance, regulatory affairs, quality assurance, drug supply chain (including packaging) and central laboratories.
Most are underpinned by highly developed computer systems, subject to regulatory oversight. The effect is that a typical phase III trial, which almost always involves multinational organisations and multiple services, has reached unprecedented levels of complexity. On top of that, protocols themselves are more complex than ever, placing increased burdens on clinical sites. In such a scenario, can it be surprising that items in a huge ocean of complexity get missed?
Managing change
Senior management often agonise: "If we have contracted out the whole thing to a CRO, why are we spending so much time in managing it ourselves?" This is a very good question, but one which the sponsor's managers should be able to answer themselves. It really comes down to negotiation – the bedrock of project management.
Let me map out the kind of workload which a sponsor typically has when managing CROs. At present, most CROs are encouraging sponsors to agree to unitised contracts. This means that the project budget is built up from units of work, e.g. a site-monitoring visit or a meeting.
The CRO bills the client for units of work done in a period, typically a month. One of the constraints is that if the project runs late, the CRO can't bill as many units. All well and good so far, but does anyone know of a project that didn't change? When a change is forecast, the CRO has to get approval in advance from the sponsor, the work gets done, and then the sponsor has to check what was done against the invoice that comes in.
In reality there is often little time for this process and CROs frequently have to work 'at risk', i.e. they notify the client but can't wait for approval, so have to do the work or hold up the project. They know that if they do hold it up they'll get the blame anyway. Then there are arguments after the event as to whether a unit of work was needed. It's easy to see where the time goes isn't it? This is of course on top of checking each and every one of the planned units being billed, to ensure they are correct.
So what about the high technology service providers? Having been in this business myself, I know how deploying a complex system can become a rod for your own back, as the provider is responsible for what's deployed, but dependent on the sponsor specifying what they want it to do. For this reason technology vendors want sponsors to sign off hugely complex technical specifications. They want to offload the responsibility for performance to the sponsor.
In my experience these specifications can exceed 100 pages. To be able to approve such a document, the sponsor would have to be nearly as expert as the service provider in the technology being used. Then, of course, once the project gets underway there are the inevitable changes, so there are new specifications for the service provider, which have be re-checked and usually corrected. The technical changes will carry costs, which have to be approved. The service provider's business development department then sends a contract modification for signature – and eventually the change gets billed and has to be checked and approved.
I have emphasised the impact of change on workload for a number of reasons. The first is that efforts to minimise change made at the planning stage will save you huge amounts of work later. The mantra for the sponsor should be: "What happens if?" The second is that you might be better off delegating the management of change to your CRO. This proposal will terrify many sponsors, who won't trust CROs to deliver on time and will want to micro-manage the project (hence all the extra work). A third is that most CROs acknowledge that they make a lot of money out of contract modifications. I have known contracts to be accepted that had no prospect of profitability on their own. I am speculating that the projects were so high risk that major change was guaranteed, from which some profit could be made. I can't state categorically that anyone thought like that, but I can't see any other reason why a non-viable contract would have been accepted. The message for sponsors is to do all you can to minimise changes.
Selecting the CRO
Despite all these problems, the contracted-out R&D model does work. There are around 1,100 CROs operating today – a huge choice and a vast range of competence, so it's important to choose the right one for your project. I was surprised recently to find that a sponsor had not thought of asking a CRO for references. These are no guarantee of course, as you will only get the favourable ones, but at least you will rule out the no-hopers, especially if you ask for three referees (as you would when hiring staff).
That's a first line of defence, but we could dig a lot deeper at the proposal stage. I find project management a contentious issue when dealing with CROs. A lot of them charge you for it but do very little (although they often do more than many sponsors do). When they come to the bid defence meeting and tell you how good they are at delivering on time and on budget, just ask them what systems they use and what their processes are. Weak management is the main reason for sponsors' dissatisfaction with CROs, so this should interest us more than expertise within a therapeutic area. In any case, I have seen names of therapeutic specialists put in proposals who were never assigned to the project – they were just there to get the business.
Deliverables-based model
'Pass-through costs' has become an obsession, embedded in dealings with CROs. These are defined as payments that go to subcontractors, particularly investigator grants, but can include a huge range of other (often trivial) costs.
I think the obsession started with sponsors, who felt they were being ripped off by inflated administrative charges and therefore started insisting on a detailed breakdown. This of course adds greatly to the sponsor's workload, because all these costs have to be checked and approved. But the sponsor isn't actually interested in how the job is done, only what the result is (and that includes complying with the prevailing standards).
Let's take the example of a site-monitoring visit. We are not interested in how the cost is split between fees for service and travel; we just want the deliverable (a site visit report). Can't we just agree a package cost for that and forget about how it's derived? In our contract we would just say that there will be X number of site visits at X frequency and to a specified standard.
This model is replicable right across a typical contract. Let's consider another example deliverable, the final clinical database. We could say that we are not even going to define the number of patients in it, and could just leave it to the CRO to do the sample size calculations and come up with a number. This means that they must, of course, know what they are doing, and it will be a brave sponsor who doesn't check the work.
More realistically, we could negotiate a number of patients and say that's how many we need to be evaluated, and leave it to the CRO to decide how many sites they need to achieve that. You should be able to see that the deliverables approach can be used at any level you like. The top level means maximum delegation and minimum work, but needs a very reliable CRO. A low level means detailed breakdown of deliverables, but I think that even at that level there is less work than if you were dealing every day with unitised costs and pass-through charges. All you should need to do is to verify each deliverable and pay for it.
This deliverables-based model is not new, and was to my knowledge used internally (i.e. between departments) in a major pharma company some 15 years ago. The principle is that the supplier gets paid only for deliverables and not for work.
There will of course be objections, mainly from CROs who don't want to accept the risk, but I propose that it's so expensive for sponsors to micro-manage CROs that they will be better off paying them well to manage the risk (via adequate deliverables pricing) and to spend the time saved on rigorously reviewing outputs. I know of managers who don't even have time to read monitoring visit reports because of the administrative workload I have described.
There is a further extension of this model when dealing with multiple vendors. You will have a much harder time trying to juggle half a dozen vendors directly than you will by appointing one to manage the rest. If your clinical CRO claims to be doing the project management, and you have verified that they are up to the task, you should be confident that they can get everyone else to deliver on their agreements.
Right, over to you now – what do you think?
E-mail your comments on this article to pharmafocus@wiley.co.uk
Box: CROs and key R&D facts
The contract research market is huge, with over 20% of worldwide R&D expenditure outsourced in 2006, some $14 billion, and growing at 14-16% annually. A full 45% of the market is held by the top five contract research organisations (CROs).
Some CROs started up as far back as the 1970s, but the market only really started to grow in the late 1980s.
The outsourcing model then was based on urgency, and extreme instability of the supplier cohort, with CROs regularly going out of business (often to the great discomfort of clients).
Some consolidation occurred in the 1990s, with the 'preferred provider' model emerging. CRO revenues flattened around the turn of the millennium, but are now enjoying renewed growth.
* The five largest CROs now hold 45% of the total market. Quintiles is market leader, with
* 14% of the global market share, followed by Covance and PPD, holding 10% each.
* R&D spend has increased by 70% over the last 10 years, while productivity (as measured by output of new drugs marketed) has fallen by 30%.
* Clinical trials account for 34% of global R&D spend, and 30% of staff effort.
* Median duration for clinical trials is over two years (static for the last three years), almost half of which is patient recruitment.
* Patient recruitment from non-core (e.g. Asia, Africa) countries now accounts for 50% of the total.
* Overall drug development time is about 12 years, and has barely changed in the last decade.
Data derived from the CMR International Pharmaceutical R&D Factbook 2007, and The CRO Market Outlook
Les Rose is a freelance writer and clinical science consultant with Pharmavision Consulting. For more information e-mail: lesrose@ntlworld.com
Related Content
Drug development contracts: can lessons be learned from healthcare delivery?
There is a very good question to ask at the beginning of every project: “What …
LabCorp buys Covance for $6.1 billion
US medical diagnostics firm LabCorp has entered the drug development business via a $6.1 billion …
Parexel acquires ClinIntel for trial supply services
Clinical research organisation Parexel has acquired all of the outstanding equity securities of privately-owned ClinIntel, …
