It is interesting that the CRO industry has grown to many billions of dollars per year in revenue, but its biopharmaceutical customers have done so little to prepare themselves to manage well the activities done on their behalf. Those for whom these outsourced services are being performed– the clinical development operations managers, the research physicians, the data managers – have usually never been trained in the oversight of outsourced tasks, how to evaluate potential service providers, or how to use them efficiently. This situation invites inefficiency, not only in dollar terms, but scientifically, in terms of access to and retention of proprietary data, real-time knowledge of status and performance, and the ability to assess and reflect on development program progress and strategy.

Oversight of outsourced providers is mandated by regulation. The most that biopharmas have done usually is to designate contracting/purchasing department to do the oversight – a department with little or no clinical development professional background. This separation of oversight from those with the greatest internal knowledge, and greatest vested interest in the performance, is a common but damaging error.

As recent highly publicized reports have emphasized, the use of CROs has not reduced cost or shortened timelines. Indeed, at the executive level, performance is not the concern, but rather only the trading of fixed costs for variable ones. Some would call this a cynical bargain, or at least a cold financial choice. This is not unique to biopharma, but perhaps it is more concerning considering the importance of our work to human health.

 The Contract Will Fix Everything

In theory the contract between a vendor (CRO or software provider) and a sponsor should be the reference for both sides in case of doubts. In reality the contract complicates and obstructs vendor oversight management.

The lack of domain knowledge in the contracting department, and the lack of time for input from the in-house experts, increases the risk of suboptimal contract issues. These will not get noticed until execution. For instance, if the in-house experts have not been asked for their advice on payment triggers (or did not looked at them), you can frequently find payments for the wrong items (e.g., query resolution, per visit, per data check, etc.) and high costs for rather repetitive tasks (for instance, programming of tables, listings, and figures). Overall it seems that too often there is a high tolerance for failed milestones anyway, as eventually the sponsors just “want to get things done”.

As the contracts department gets more powerful, their natural „legalistic“ and procedural focus can alienate providers and create extended delays, especially when dealing with large providers with robust legal departments themselves. Indeed, study startup times are growing as studies in complex therapeutic areas increasingly rely on hospitals which have their own efficiency issues.

Meanwhile, one of the long outstanding controversies has not been resolved – should or can sponsors write incentives and penalties into their outsourcing contracts?  If so, how should they be written and executed?

 The Mismatched Business Goals

The most overarching issue in vendor management is the operational mismatch between service providers and their customers. There is the biopharma on one side – a complex organization with its multi-million dollar projects and with the target to bring their medical innovations as quickly as possible to market. And on the other side there are the CROs, which are more organized like a “unit of work” factory, for which (as publicly traded service companies or private equity driven enterprises) quarterly cashflow goals are the most important.

At the base level, sponsors have drugs to develop (at very high cost and risk of failure); service providers on the other hand simply have bodies to keep busy. Indeed, efficiency is not an inherently desirable goal for a service provider whose contracts are time-based.

This is not about company size, since some CROs are bigger than many biopharmas. It is more about the incompatibilities of company cultures. Changes of priorities, project success and project failures are common when working for a sponsor. Biopharmas have worked hard over the last 15 years to tear down intracompany silos and to attract and develop broadly qualified people. Vendors tend to lag behind in this regard. In practice this leads to significant expectation mismatches. Where the sponsor expects flexibility and a solution-focused approach, CROs often have a more formalistic, “one step after the other” approach, and silo thinking is much more pronounced than on the sponsor side. Eventually, this may become an important hurdle for collaboration. So the question should be how to jump the hurdle, rather than whose fault it is.

 Efficient CRO Oversight – Where To Start?

Depending on the status and preparedness of a clinical development organization, it will take time and effort to develop and implement a (new) vendor oversight strategy. So where to start? What to do first?

The answer begins by doing your homework, i.e., understand your experiences‘ success and failures and the reasons for them, assess your typical contract language, and establish your medium- and long-term intended outsourcing strategies. This will lead to identifying areas for internal process optimization. If, for instance, your study start-up processes are not working well, this may become a roadblock for better vendor management. If a company’s electronic Case Report Form (eCRF) design is not optimal, this may lead to site dissatisfaction and unnecessary costs. There may be misalignment between a sponsor’s and the more „advanced“ state of your CRO’s standards and processes.

The metrics which guide you to understanding and judging CRO performance may also need revision – most sponsors use too many metrics, and the data on which they are based is too out-of-date or inaccurate. A proper streamlined approach to defining and collecting those metrics will inform all steps of the process, from original project design to contracting to oversight and learning.

Ultimately, all aspects of the sponor-CRO collaboration should be captured in a vendor oversight plan. This plan will be the guidance for everyone, and together with your completed homework, this should give you a good start into knowing what needs to be done for you to achieve proper risk-based vendor oversight.

 Successful CRO Oversight

The guiding principle for a healthy sponsor/vendor relationship is that the sponsor (big or small, experienced or naïve) should govern the relationship with its service providers. Although most vendors will insist they are your „partners”, in fact managing sponsor/provider communication and control from a position of accepted authority is key for the biopharma sponsor. Collaboration should never mean abdication: the authority needs to be natural and fact-based.

In our experience clinical development organizations are typically not prepared and not staffed to set up a successful vendor oversight management strategy. Instead sponsors jump to another vendor or another outsourcing model. There is never time or money to set up something sustainable from scratch. In consequence the learning from suboptimal experiences is never applied or considered relevant. This creates a succession of suboptimal experiences, which all clinical development organizations can no longer afford. To discuss these issues further and how we can help, please reach out to Waife & Associates (www.waife.com) by emailing Detlef Nehrdich (nehrdich@waife.com) or Steve Shevel (shevel@waife.com).