- 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.
Given the collective expertise of study teams comprised of internal and external members, early engagement would contribute to a shared vision, better alignment of effort and incentive around performance goals, and more operationally feasible protocols.
Consistent and More Disciplined Relationship Implementation
Although all participating sponsor companies in our study had entered into strategic, integrated full-service relationships in the past three years, none of the CRO partners were responsible for managing all functional areas supporting an individual phase II or III study. Instead, sponsor companies used a variety of conflicting outsourcing models to support their studies, mixing and matching the use of internal staff, transactional relationships, functional service providers and integrated alliances simultaneously; some sponsor companies varied the types of outsourcing relationship models used on a study-by-study basis.
Tufts CSDD observed a complete lack of standardization about how outsourcing strategy is defined, understood and enforced within organizations. Some strategic partners receive less work than nonpartner CROs; project teams often give non-partner service providers work that already has been contractually promised through a strategic alliance. Although there are situations where these approaches may have been justified, most often they reflect reactive choices made without regard to the company’s overall outsourcing strategy and tactical intent.
Pharmaceutical and biotechnology companies have difficulties standardizing and enforcing consistent outsourcing approaches for a variety of reasons. Many companies are simply too large and too fragmented. Tufts CSDD found that many clinical teams don’t know which outsourcing relationships were used across multi-functional areas for their recently completed studies, suggesting a lack of cross-functional awareness and communication.
Legacy activity underway when new partnerships form is also contributing to the problem. Clinical teams typically have established their own relationships with select service providers and resist handingover existing projects to new partners. Companies going through mergers and acquisitions, in particular, often find themselves forced to allow inconsistent practices across organizational functions to ensure that legacy projects are completed as new models are rolled out.
Another dynamic that contributes to the inconsistent use of multiple sourcing models includes turnover of key senior staff championing, overseeing and implementing collaboration strategies. Partnerships that have not sufficiently been adopted are prone to fall apart when new executives, who might have different ideas about sourcing models, take charge. And many large sponsor companies that have formed strategic outsourcing relationships still have significant inhouse development resources creating internal competition with comparable outsourced resources.
The bottom line - inconsistent approaches are the enemy of efficiency due to the additional direct and indirect incremental costs required to support custom relationships, on an as needed basis, with multiple vendors. In addition, collaborative practice experience and efficiencies are isolated to individual studies and don’t carry across the development portfolio.
Stopping Collaborative Value Leakage
Given expected ongoing growth in demand for outsourcing - combined with pressures to accelerate drug development timelines, improve success rates of investigational chemical entities and biologics, and reduce high and rising R&D costs - sponsor companies must fundamentally change practices that are leading to partnering frictions and inefficiencies. Capturing a higher percentage of collaborative value is essential to the long term viability of the clinical research enterprise. How can this be achieved?
Tufts CSDD is monitoring two major trends that are expected to help drive more consistency and shared team focus. Neither trend will deliver its aspirational goals without senior management buy-in and ongoing involvement.
Growing adoption of adaptive designs holds promise in facilitating a shared line of sight into development planning and study design. Adaptive trial designs offer cross-functional internal/externally sourced teams the ability to shape and anticipate study design changes through scenario planning and trial simulation prior to finalizing the protocol. Rigorous upfront planning will force partnerships to collectively challenge protocol feasibility at the right time.
Patient engagement holds tremendous promise in changing the CROsponsor relationship in a variety of ways including ongoing shared interactions with patient advocacy groups, health care providers and payers to shape development planning; soliciting patient feedback into protocol design to improve feasibility; improving study volunteer access to, and convenience participating in, clinical trials; and performing robust interrogative and predictive analysis of patient health information and real world observational data pre- and post-drug product approval. Patient centricity requires more integrated relationships with health systems and payers to connect with electronic health and medical information and unstructured real world data to support a learning clinical practice-clinical research ecosystem.
Market leading CROs are already anticipating strengthening their investigative site relationships and their access to and use of patient health data. This past February, for example, ICON crossed the forbidden line between project management and study conduct with the acquisition of PMG Research, one of the top investigative site networks in the United States. All of the major CROs appear to be implementing initiatives to strengthen ties with experienced investigative sites. Quintiles Prime and Partner Site programs and INC’s newly launched Catalyst program are but two examples of key initiatives underway.
Covance and Quintiles now have access to large central lab networks that could double as investigative site locations in remote areas throughout the United States. Covance was acquired by LabCorp in November 2014. This acquisition ties Covance to 1,700 LabCorp patient service centers nationwide. In March 2015 Quintiles and Quest Diagnostics responded with an announced partnership giving Quintiles access to Quest’s 2,200 US-based patient service centers. These relationships also give Covance and Quintiles access to massive databases of patient health information. The announced merger of Quintiles with IMS Health in May 2016 is an unusual and bold move designed to build a portfolio of operating services and technologies that leverage rich health care data to serve the converging R&D healthcare ecosystem.
At the same time that many CROs are attempting to proactively innovate under a patient centric operating environment, sponsor companies are also investing in patient centricity innovations including individual company efforts to strengthen investigative site relationships, integrate new technologies and practices and interact with electronic health vendors. Industry consortia (e.g., TransCelerate) are also investing in new approaches to support patient engagement and investigative site management. At the present time, the many initiatives being implemented by sponsors and CROs are not well coordinated and, as a result, may not yield their desired enterprise-wide impact on drug development efficiency and performance.
There is much practical and actionable work to be done to better leverage the value of collaborations. Our research points to two critical areas of opportunity that will yield immediate positive results: systematically engaging CRO partners to participate in planning and study design and consistently implementing outsourcing strategy and tactics across the portfolio. At this time, out of necessity, with increasing adoption of adaptive clinical trials and patient engagement initiatives, sponsors and CROs are uniquely motivated to capture more collaborative value.