CONTRACT RESEARCH


Hard Truths about Executing Outsourcing Relationships


Kenneth Getz Director and Associate Professor


Mary Jo Lamberti Senior Research Fellow


Tufts Center for the Study of Drug Development


By far the fastest growing area of R&D spending is outsourcing. Exceeding $60 billion in 2016, sponsor company spending on contract R&D services is growing at six times the annual rate of spending on internal staff, infrastructure and technology support. Indeed, by 2017, according to the Tufts Center for the Study of Drug Development (Tufts CSDD), contract research services will overtake all other areas as the largest category of R&D spending.


Clearly pharmaceutical and biotechnology reliance on outsourcing is high and increasing. Sponsor companies have continued their push to lower their fixed operating costs while leveraging capacity and expertise to help manage dramatic growth in drug development pipelines. There are now an estimated 12,300 active small and large molecules in industry-funded R&D up from 9,700 in 2010.


The number of companies with at least one active drug in development has also risen considerably – from 2,200 in 2010 to nearly 3,300 in 2015. The proportion of small to large companies sponsoring active R&D activity has completely reversed with the former funding more than 60% of the active pipeline today. Fifteen years ago, the top 50 largest pharmaceutical companies were funding the majority of active compounds in development. Many of the 3,000+ sponsor companies are small with very limited infrastructure and experience taking an active pharmaceutical ingredient (API) through development, registration and commercialization. As such, they are even more dependent on support from contract research organizations (CROs).


Although there are numerous indicators that demand for contract research services will continue to grow and despite evolving models that sponsors have implemented over the years to improve CRO performance, many pharmaceutical and biotechnology companies maintain the view that CROs are not only necessary but also problematic. Often encountering study conduct and data management delays including poor recruitment and retention rates, slow response to escalated issues and high numbers of change orders, many sponsors continue to press the perennial questions: Is our investment in outsourcing money well spent? Could we have gotten higher levels of performance out of our CRO partners?


Anecdotally, sponsor and CRO executives frequently point to the lack of trust and insufficient communication as the major factors challenging sponsor-CRO relationship productivity. Scholarly assessments con-ducted by Tufts CSDD suggest that there are also more tangible areas – largely related to the execution of sponsor-CRO relationships - contributing to collaborative inefficiencies and ineffectiveness.


Tufts CSDD studies show that pharmaceutical companies aren’t fully invested in their alliances and they inconsistently use a variety of competing outsourcing relationship models. The piecemeal approach to outsourcing


that sponsor companies employ lacks discipline and creates internal conflict ultimately compromising the ability of integrated, multi-functional alliances to offer higher levels of efficiency and performance at lower cost.


Tufts CSDD recently examined outsourcing practices in 43 individual phase II and III clinical studies conducted by nine sponsor companies. Tufts CSDD also conducted interviews with 19 representatives from pharmaceutical and biotechnology companies across 15 companies. Interviews focused on practices, systems and processes that have been put in place to manage partnerships with external service providers. Although our focus was primarily on the use of clinical development services outsourcing, many of the insights apply to contract service use across the R&D continuum.


The results of this work suggest that CROs remain vendors, not partners. Practical insights from these two studies focus on two core areas that would help shift the CRO into a more collaborative role that better leverages their skills and experience: Accommodation of CRO input into development planning and protocol design, and more consistent and disciplined implementation of collaborative relationships.


Development Planning and Study Design


A recent Vantage Partner study found that less than one-out-of-seven (14%) CROs regularly participate in upfront planning and study design discussions. Vantage Partners noted that when CROs are given insight into upfront planning, they are far better at assigning resources and scaling up team capacity to accommodate program requirements. Tufts CSDD research echoes these findings. More than 80% of CROs report that their efforts to communicate suggestions to improve protocol design executional feasibility are rarely if ever accommodated by sponsor companies.


Under these relationship conditions, key measures to track CRO performance and effectiveness are therefore misaligned. Although CROs lack a role in, and input into protocol design, CRO performance is intimately tied to it. Sponsor companies report that the most frequent key performance indicators to which CROs are evaluated include enrollment speed (34%), data quality (27%) study start-up speed (18%) and the number of change orders (14%), all areas that are highly dependent on protocol design. Tufts CSDD studies demonstrate unequivocally that protocol complexity – such as the number of study endpoints; the number of unique procedures and their frequency; the number of eligibility criteria; and the number of visits – is highly correlated with study conduct performance and efficiency. The more complex the study design, the poorer the performance. Moreover, protocol complexity is associated with a higher number of unplanned, unbudgeted and disruptive protocol amendments.


Pharmaceutical Outsourcing | 18 | July/August 2016


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