CROs: Mission Possible

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Taren Grom, Editor

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MISSION ANALYSTS … JOSEPH AVELLONE,M.D. President and CEO,Veritas Medicine Inc., Cambridge, Mass.;Veritas Medicine is a leading provider of Internet and patientdatabase services to identify and recruit patients into appropriate clinical trials ALFRED G.CHILDERS,PH.D. Principal and president of administration, Magellan Laboratories Inc. Research Triangle Park, N.C.; Magellan is a pharmaceutical development organization (PDO) providing a complete range of analytical testing and development services to the pharmaceutical and biotechnology industries JOHNCLINE.President.etrials Inc., Morrisville, N.C.; etrials offers efficient datamanagement products and services for collecting, monitoring,and assessing quantitative and qualitative study data; etrials leads healthcare and pharmaceutical companies through the critical processes involved in turning a technology into a solution, successfully migrating clients from paperbased to electronic datacapture methods ERIC F. HAYASHI.VP,corporate development,Radiant Research, Kirkland,Wash.; Radiant Research is a privately owned company that owns and operates more than 40 clinicalresearch sites that conduct Phase IIV clinical trials for pharmaceutical,biotechnology,medical device, and contract research organizations LORI KAISER.Director of marketing, TherImmune Research Corp., Gaithersburg, Md.;TherImmune Research is a fully integrated CRO that provides drugdevelopment services to the pharmaceutical and biotechnology industries, specializing in providing complete IND packages and delivering highquality non clinical and clinical studies and analytical, infectious disease, immunology,and pathology services to its clients CANDACEKENDLE,PHARM.D.Chairman and CEO,Kendle International Inc., Cincinnati; Kendle is a global provider of clinical development, regulatory/validation consulting, and medicalcommunications services to the pharmaceutical and biotechnology industries VINCENT LAGROTTERIA. Executive director of sales and marketing,Medifacts International, Rockville, Md.; Medifacts International is a leader in the global management of cardio vascular, renal, pulmonary,and CNS clinical development programs for the pharmaceutical, biotechnology,and medicaldevice industries COLINMILLER,PH.D.VP,business CROS: MISSIONpossible BY TAREN GROM Cost, time,capability, and risk all impact the CROsponsor relationship. By going back to basics and concentrating on the fundamentals of outsourcing, the industry can develop strategies that address these complexities, benefiting both CROs and sponsors. 10 M a y / J un e 200 2 PharmaVOICE We are all working to get through the development process and TO LAUNCHA PRODUCTASQUICKLYAS POSSIBLE.A partnership effort can result in best strategies for both the CRO and the sponsor. Dr.Candace Kendle CRO partnerships Companies decide to outsource to create and then capture value, the mission being to find equitable solutions that benefit each party with out further complicating the relationship. How ever, according to industry experts, the value to the drug company has been declining at the same time profitability for the CRO has been eroding. Despite best efforts by pharmaceutical spon sors and outsourcing providers it is inevitable that changes will occur, no matter how accu rately the specifications at the beginning of a project are defined. Sponsors may redefine their needs, unforeseen delays may jeopardize the timeline, new services may impact the budget, and personnel turnover may affect communica tion and decision making. Managing these changes, and minimizing disruption to the pro ject, becomes the mission to building and maintaining successful relationships. To compete effectively in today’s business environment, companies rely on these strate gic alliances to link their resources with those of other corporations, to give them access to core competencies not in their domain. How ever, industry statistics reveal that fewer than 50% of the alliances between large and small firms survive four years. The mission, there fore, is to develop management tools and met rics to increase the value of the alliance. Silos between various functional teams must come down in order to industrialize the tradi tional laboratorybased system of drug discov ery and development, say industry experts. In such an environment, research managers will be more concerned than ever about efficient infor mation sharing and effective use of time and resources and parallel development. The out sourcing environment must become one that is less hampered by rigid definitions of responsi bility; one that seeks to encourage more effi cient flows of data, information, and knowl edge; and one that demands more productive allocation of resources. The challenges are many. But through an analysis of the components that provide the architecture of the sponsorCRO relationship, by drilling down to find solutions that benefit each party, the mission of accelerating drug development in a timely and costeffective means is more than just possible. Industry experts stress developing these solutions is imperative to meeting the various demands of today’s business environment and filling the pipeline for the future. development,BioImagingTechnologies Inc., Newtown,Pa.;BioImaging is an Image Core Lab,which is dedicated to the management of medical images that support the product development process of the pharmaceutical, biotechnology,and medicaldevice industries MICHAEL MINOR.Director,outsourcing operations, Pfizer Inc., NewYork;Pfizer discovers, develops,manufactures,and markets leading prescription medicines for humans and animals, and many of the world’s bestknown consumer products STEVE NELSON. Director and team leader of outsourcing operations, Pfizer Inc., NewYork; Pfizer discovers, develops,manufactures,and markets leading prescription medicines for humans and animals, and many of the world’s bestknown consumer products RICK PIAZZA,PHARM.D.VP, strategic business development,Araccel Corp., Horsham,Pa.; Araccel provides eclinical solutions for the pharmaceutical and biotechnology industries MICHAEL ROSENBERG,M.D.CEO,Health Decisions Inc., Chapel Hill, N.C.; Health Decisions is a provider of worldwide comprehensive clinicalresearch services, including new processes, software, and use of the Internet, which reduce the time required for clinical evaluation and registration of drugs and devices to pharmaceutical, government,and nonprofit organizations CHRISTOPHER SPEH.President,Resource Solutions Inc., Research Triangle Park, N.C.; Resource Solutions is a specialty CRO providing quality trials management,clinical monitoring,and QA services encompassing broadbased clinical R&D support to pharmaceutical,biotechnology,and bio– pharmaceutical sponsors in the fields of oncology,pain,and neuroscience BILL TAAFFE.President and CEO,North American Operations, Icon Clinical Research, Philadelphia; Icon offers a variety of Phase I to IV support services, which can be offered on a standalone basis, or as part of fullservice clini calresearch management and has offices in North America,Europe, the Pacific Rim, Argentina,and Israel capable of conducting clinicalresearch studies ranging from small local trials to large global programs in a wide range of therapeutic areas JOHN R.VOGEL,PH.D. Consultant, John R. Vogel Associates Inc.,Wailea, Hawaii; John R. Vogel Associates is a drugdevelopment consultancy that works with pharmaceutical companies and pharmaceutical service providers in the U.S., Europe,and Asia to enhance results achieved through outsourcing JOSEF H.VON RICKENBACH.Chairman and CEO,Parexel International,Waltham,Mass.; Parexel is one of the largest contract pharmaceutical outsourcing organizations in the world,providing a broad range of knowledgebased contract research, medical marketing,and consulting services to the worldwide pharmaceutical,biotechnology,and medicaldevice industries STEVEZISSON.Managing editor,CenterWatch, Boston;CenterWatch is a publishing and infor mation services company used by patients, pharmaceutical,biotechnology,medicaldevice companies,CROs,and research centers The ideal client relationship is to meet with various levels of the client’s organization regularly, TORECEIVE FEEDBACK FROM ALL LEVELS. Service providers need to hear from every level within an organization. Josef H.von Rickenbach 11 PharmaVOICE M a y / J un e 2002 CRO partnerships COST analysis VOGEL. There is pressure toward the commoditization of CRO ser vices. The pharmaceutical industry recognizes that it is spending increasing amounts of money on CRO services. And as the amount of these monies increases, there’s increased focus on cost. The phar maceutical industry has begun to centralize the purchasing of its CRO services through contractmanagement groups. One of the mandates of these groups is to look at potential cost savings. Both sponsors and CROs would do well to distinguish between value and price and focus more on value than just on price. There is an over all trend by the pharmaceutical industry to try to pull the cost of CRO services down. TAAFFE. The interactions/relationships between sponsors and CROs have changed considerably over the past few years. In an effort to streamline and formalize the process most sponsors now require CROs to conduct all business aspects of a study or program with an outsourcing/procurement department. In the past, all mat ters were discussed with the operations director or medical director. This new initiative has introduced CROs to a formal RFP process with detailed bid grids and elaborative biddefense meetings. This has brought order to what was a very loose process. But in many cases the system is very time con suming and costly to both parties. The focus on cost considerations and cost com parisons can reach excessive levels of finesse and often contribute to, instead of, reduce development costs. We have probably gone too far in trying to impose controls. Because clinical research is a “fuzzy” busi ness it does not lend itself to unitprice costing. Also, there are no standard defini tions of the units used. Consequently it is almost impossible for a sponsor to compare bids on a taskbytask basis. The bid grids never match a CRO’s costing system and the CRO will then artificially break down its customary calculation amounts into the desired cost items. Because of this exercise numerous assumptions have to accompany every bid. KENDLE. Some sponsors really do understand this is not a com modity business, we are in the research and development business. And, by definition, the response of the patient to the drug is unknown. The need in the marketplace is unknown. The competi tive space is pretty gray. From entry into man to the marketed prod uct also is a very gray area. We are all working to get through the development process and to launch a product as quickly as possible. A partnership effort can result in best strategies for both the CRO and the sponsor. MILLER.There are three dynamic factors in a clinical trial — time, quality, and cost — of which we have to choose two. Enlightened clients appreciate that dynamic and appreciate that quality comes at a cost. That makes a big difference in terms of team building and putting a relationship together. MINOR. Developing economical, flexible systems and having skilled employees able to interface with myriad sponsor programs is crucial. Every sponsor has their own unique way of doing things. CHILDERS. There has to be high quality in terms of science and systems, there has to be a timeliness component, a communication quotient, and there has to be profitability. A company has to be profitable, that’s not to say overly profitable, but we have to be prof itable to be healthy. We have to negotiate contracts that are favor able for both sides. We can’t just take work because we need work for revenue and not be profitable. Profitability has to be there. It’s not a dirty word, it has to support both sides. TIME analysis MILLER. Client expectations and timelines are two big challenges. Many new clients do not appreciate the components of medical imaging and how much upfront work needs to be done to get the site up and ready. Often, we are brought in too late to get ahead of the front end of a clinical trial or we are brought in to do socalled salvage operations or obtain images from a trial that already has been completed. NELSON.Managing sponsor expectations is vital, CROs don’t push back. We’ll come up with a very optimistic timeline, especially for things like patient recruitment. The CRO should push back and tell us we’re being overly optimistic. This would help win the trust of sponsors in terms of estimating project time, cost, and quality. KAISER. CROs are finding it more and more difficult to meet the timelines for clients due to capacity issues. Whether we partner with large biotech and pharma companies with multiple parallel track drugs in their pipelines or small biotech companies that need full drugdevelop ment capabilities, being able to meet their timesensitive needs may become a chal lenge. We are continually looking at ways to expand our capacity. 12 M a y / J un e 200 2 PharmaVOICE CROs should propose solutions to bottlenecks based on experience rather than wait for the sponsor to develop the answers independently.The CRO needs to be proactive and be a partner in that particular program and come forward with ways to streamline the project, rather than wait for us, the sponsor, to fall. THE CROSNEEDTOGETOVERTHE PERCEPTIONTHATTHE SPONSOR IS ALWAYS RIGHT, BECAUSEWE ARE NOT. Michael Minor CRO partnerships LAGROTTERIA. A big challenge facing our industry is the lead time needed to build a relationship and gain an understanding of a sponsor’s needs for a clinical study or consulting service. We typi cally get called in pretty late in the game. In our relationships that we’ve been able to develop into a partnership, we are able to get in early and discuss different programs that are going on in the future. That’s extremely helpful in terms of resourcing, staffing, and gain ing a better understanding of the client’s culture. SPEH. Management at pharma sets timelines for submissions. These objectives often are established with Wall Street in mind. The way to meet these objectives is to ensure that the company has products completing the FDAapproval process on a fairly regular, and ideally accelerated basis. Because drug development is such a lengthy process the end points are established very early on. The dif ficulty comes into play in deriving a protocol that is going to satis fy the needs of the pharmaceutical company and satisfy the agency requirements — those interim steps take time. There’s a lot of jock eying that goes on to ensure that the protocol that ultimately sees the light of day is going to stand up to FDA scrutiny and is going to achieve what the company is seeking in the package insert. There’s a lot of very intense activity that takes place between the time the dates are set and the time that the studies actually get under way. Start dates often slip because the pharma company hasn’t gotten FDA approval, or perhaps it’s struggling with other issues, but the back end typically remains firm. Pharma companies find their teams are as strapped for time at startup as CROs. It’s not that the companies are trying to penalize the CROs, it’s just a very com plex process to move ideas from the preclinical design stage into an IND and then ultimately into studies. Clearly, the longer we have to plan and work with a sponsor to identify the best locations for sites and monitors, the best combination of experience and skills, the better that’s going to be for the sponsor. Sometimes the timing just isn’t there. On the service side, we have to respect that — the process is complex and we have to be prepared to respond. VONRICKENBACH.Due to client timelines, we often have a very short timeframe to assemble a client proposal for a particular pro ject. We suggest to clients two stages of competition for a project. The first relates to the design of the project allowing creative and professional thinking to take its course. The final stage focuses on the con struction of the project. CAPABILITY analysis MINOR. It seems the biggest lament when we discuss the outcome of an outsourced project with a team is that the CRO “didn’t get it.” A part of that is our own problem. As a spon sor we need to give the CRO the right information and succinct directions as to what we’re looking for. AVELLONE.The CRO can’t be everything. The tasks of the CRO, which can involve every aspect of clinical trials short of patient recruitment, are complex. The CROs’ challenge going forward is to differentiate themselves. Even as the leaders in the industry grew up, they often grew out of different core competencies. Some differenti ated themselves on the basis of having the ability to enter foreign countries on behalf of trial sponsors, some were good at data collec tion and analysis. As the industry matures, the larger ones increas ingly will find it difficult to differentiate themselves. In the future, one way to differentiate themselves will be to take on the role of cen tralized, coordinated patient recruitment, with us, or on their own. Either way, specialized patient recruitment is going to have to be a big part of solving the total riddle for pharma going forward. KENDLE. The hallmark is around process improvement. We are maturing as an industry in the buying and selling of services, but we have a long way to go with regard to the shaping of the services. We are in a highly regulated environment, with a base of products that is changing rapidly due to advancements in science. These advancements are continuing to shape the products and services CROs can offer. CHILDERS. Pharmaceutical and biotech companies don’t always realize that there is a tremendous amount of talent and expertise within CRO com panies and they need to continue to seek out this expertise. The advantage to biotech companies and virtual compa nies is that they get access to a large array of scientists with different exper tise. It’s very hard for them to duplicate this same expertise in house. We allow our clients to spend their money on the 14 M a y / J un e 200 2 PharmaVOICE The ideal relationship is where sponsors treats us as an extension of their operations.That has to work from the contract all the way down to the projectmanagement level with the appreciation that we are ALL PROFESSIONALS DOINGA JOB. Dr.Colin Miller CRO Market Concentration 100% 75% 50% 25% 0% 1996 1998 2000 Top CROs Rest of Market Source: Company Reports and CenterWatch Analysis 53% 47% 50% 50% 46% 54% CRO partnerships development of a potentially successful drug, rather than on the bricks and mortar. By using a CRO, companies get a whole onslaught of different talent and even if they need them 5% of the time, they have them at their disposal to help move their compounds through the pipeline quickly. VOGEL.From the CROs’ point of view, they have to be more selective in what they take on. They need to recognize that some projects may not be a good fit for them. In the long run, they would earn the sponsor’s respect by declining projects that aren’t a good fit for their expertise. Some projects fail simply because, in part, the provider may not have been a good choice for that partic ular project. Also, providers need to clarify exactly what the spon sor’s expectations are. There is a tendency to try to be reassuring and accommodating to a prospective client. The problem is this can often mask exactly what the sponsor is expecting of the provider. Sponsors tend to focus on process more than outcome because they believe that the process is the shortterm approach to achieving the desired outcome. CROs, and most service providers, tend to focus on the end result. The discrepancy occurs when the sponsor is expecting the CRO to follow a particular set of procedures, which may not be similar to those that the CRO typically uses and may not be the most effective approach for the CRO. When CROs choose to follow their own procedures, sponsors can become alarmed because they notice that there’s a discrepancy between what they expected and what they are observing. Sponsor then try to impose process on the CROs. There needs to be much more open and frank conversations about whether sponsors are going to be focused on process or whether they clearly can define the outcome and buy into the CRO using its own process. ROSENBERG.There is an increasing requirement to bring exper tise to the process, rather than just turning the crank. The CRO needs to be able to bring some capability to the project that the sponsor doesn’t have. There are two elements to that. One is the technology component. Secondly, currently the most common model, especially among big phar ma, is to use outsourcing as a rent abody approach. But increasingly, what companies are looking for is an organization that can offer the overall goal of improving the efficiency of the development process. KAISER. We want to understand the client’s longterm goals. By understanding their goals, we can help them plan for the future. This may mean working with a client to create a strategic drug development plan as well as providing them with all of the inte grated services to implement the plan. The best way to forge long term relationships is by listening to and understanding the client and producing timely, qualitydriven work. To be effective, all par ties have to be on the same path. PERSONNEL analysis MINOR. Sometimes the teams that are presented at the beginning of a project change dynamically over time. Being flexible enough and having people with a good book of skills to be able to plug and play is difficult. Turnover is too high. Along with that is having the right cohort of workers ready to do the job when the sponsor requests them. A misperception on the sponsor’s part is thinking that CROs have a workforce that is ready to go at the snap of the fingers and that they can be there forever. VOGEL.CROs need to focus on ensuring greater stability in their organizations. There’s a lot of mobility among drugdevelopment personnel — at sponsors and CROs. But it’s particularly alarming to sponsors when they see turnover in the technical staff at a provider. In my discussions, sponsors continually ask how they can avoid turnover with providers. While turnover can’t be totally eliminated, the prob lem could be minimized if, one, the provider brought the spon sor into the picture earlier. That is to say, advise the sponsor of pending changes and perhaps offer the sponsor a selection of 16 M a y / J un e 200 2 PharmaVOICE THE CROS’CHALLENGE GOING FORWARD IS TODIFFERENTI ATETHEMSELVES. In the future, one way to differentiate them selves will be to take on the role of centralized, coordinated patient recruitment, with us, or on their own.Either way, specialized patient recruitment is going to have to be a big part of solving the total riddle for pharma going forward. Dr.Joseph Avellone The best way to forge longterm relationships is by listening to and understanding the client and producing timely, qualitydriven work.To be effective, ALL PARTIES HAVE TOBEONTHE SAME PATH. Lori Kaiser CRO partnerships potential replacements for a particular staff member. The present practice seems to result in the sponsor being the last to know about a change in staffing. That just adds insult to injury. That’s part of an even larger problem, in that there appears to be great reluctance on the part of CROs to disclose problems to a sponsor early on. This results in the sponsor not being able to sug gest, or buy into, alternative solutions. And cer tainly, this weakens the amount of trust between the two organizations. CROs don’t tell the spon sor they have resource problems, and often they will choose what they think is the best selection of things to advance and which things to put on a slower track. That often is not parallel to what the sponsor’s choice would have been. Or, the sponsor finds out about a problem at the last moment and doesn’t understand what happened, and this erodes trust in the relationship. SPEH. At the moment, the biggest challenge is timing: finding very experienced, very competent professionals when our pharma ceutical sponsors need them. Our sponsors expect us to bring a high level of experience when we take on a study for them. Because study needs usually do not develop in smooth cycles, we find it’s a challenge to continue to be able to identify people who have a high level of experience at just the right time. There are a couple of rea sons for this. A major factor is simply the number of studies being put out to bid. There was a period when a number of programs were pulled as pharmaceutical sponsors were going through con solidation. In the past 12 to 18 months, many of these programs have come out and hit the street. That has put a lot of pressure on CROs simply to iden tify and bring staffs into play who are capable of handling this bolus of work. As the market expands, so too does the demand. For our particular sec tor, when multiple projects emerge at the same time, that inevitably will strain resources of the most experienced monitors. TACTICAL analysis VOGEL.One of the drivers of cost in drugdevelopment outsourc ing is efficiency. Drugdevelopment outsourcing is highly ineffi cient and both sponsors and providers share the blame in terms of that inefficiency. On the sponsor side, sponsors tend to be very tac tical in their outsourcing and use CROs as a lastminute, fingerin thedike solution to a shortfall in resources. Sponsors ought to be more strategic and decide what are the core competencies that they want to retain in house and what are the services that CROs could provide as well, or better. Sponsors need to include outsourcing in their clinicaldevelopment plan so that they anticipate the need of a CRO several months prior to the actual initiation of the project. Typically there is a lastminute rush to find a CRO because a pro ject is starting imminently. That tactical approach leads to misun derstandings and other relationship problems. The tactical rather than the strategic approach is the first mis take sponsors make. The second is that sponsors don’t put as much time and effort into designing a relationship with the CRO as they do in designing the deal. I think sponsors believe if they get all the terms in the contract, that will ensure that the project will go smoothly. It’s the relationship between the 17 PharmaVOICE M a y / J un e 2002 I VIEW OUTSOURCING AS PARTNERINGVERSUS CONTRACTING,which is like purchasing. In outsourcing, we’re looking for ways to help each other get what we want more efficiently and effectively. Contracting or purchasing is more tactical — every single time we have to recreate the wheel.Products or services are viewed more like commodities.Outsourcing is more strategic in nature and allows everyone to take a longerterm view. Vincent Lagrotteria Sponsor CRO Usage in the Next Five Years Decrease Greatly Decrease Somewhat Stay the Same Increase Somewhat Increase Greatly 0% 10% 20% 30% 40% 50% 60% Source: CenterWatch Survey of Pharmaceutical Companies,2000 0% 6% 35% 53% 6% Percent who expect usage to: CRO partnerships two teams, understanding of roles and responsibilities, having a clear communication plan, an under standing of how problems will be resolved, and what metrics will be used to evaluate the progress of the project, that are the tools for suc cess. There isn’t enough emphasis placed on those. VON RICKENBACH. Parexel is working with many large pharma companies, as well as the emerging biotech companies. We share their challenges. One challenge is the significant number of patent expirations facing many of our large clients. This places enormous pressure on these drug companies. Compounding this pressure is the challenge of ushering new blockbusters rapidly into the drugdevel opment pipeline. This may result in decision making weighted more toward the short term than long term in areas such as portfolio pri oritization, project cancellations, etc. KENDLE.The CRO industry is a maturing marketplace. Pharma ceutical companies and the larger biotech companies, as buyers, are more sophisticated. They are looking for strategic approaches. And, as a group of CROs, we are more sophisticated sellers. We are work ing strategically to develop partnerships, services, and a business mix that the customer wants in the right framework of pricing and timing. All of these factors point to a more mature marketplace compared with even five years ago. MINOR. I don’t think sponsors really think about the burden they have in developing working relationships with CROs.Projects are rou tinely looked at as tactical rather than as strategic endeavors. Status reporting, financial reporting, and developing communication infor mation exchanges are a burden to the sponsor to create. If a company doesn’t continue to use the resources it has managed for a project, it loses them. There’s not a lot of strategy or thought about what’s the next project a company can roll a CRO to, especially in companies that are compartmentalized and therapeutically aligned, since there is lim ited exchange outside the compartments. It’s incumbent upon the CRO to be able to present those opportunities back to the sponsor, and then use that leverage to continue utilizing a trained staff for repeated work. It’s really incumbent on the CRO to know the client. VOGEL.The problem is that, to a great extent, drug development is steered by clinical teams. And the clinical teams tend to exist as their own therapeutic silos — some have greater insights about out sourcing than others. Because work is being done through these teams, sponsors tend to be individually projectoriented — or have a transactional orientation. They are doing oneoffs, rather than looking at longterm goals. Sponsors are not devel oping relationships that anticipate a series of needs or events that occur over a course of many years. Outsourcing between pharma and CROs tends to be very transactional. HAYASHI. Study sponsors need to develop a more sophisticated approach to selecting investigative sites based on more sophisticated relational databases, rigorous metrics, and per formance heuristics. DataEdge has found that in an average clinical trial about onethird of the sites enroll almost zero patients, one third of the sites enroll about 20% of the patients, and the top third, which they call the “super sites,” enroll 80% of the patients. Sponsors need to be more focused on the quality of the site and the ability of the site rather than the quantity of sites. It’s common knowledge that 80% of projects fail to meet their originally target ed enrollment deadlines and clearly the cost of this lost time is enor mous. Two culprits — both solvable — are a broken siteselection process and misguided investments, or lack thereof, in participant recruitment activities. Part of the reason a more advanced study conduct methodology doesn’t exist is that, until now, there have been no site management organizations with the operational abili ty to be utilized as they were originally conceived; and specialized patientrecruitment companies are just now emerging successfully. LEVERAGE analysis MINOR. Most of the major CROs will tell us what percentage of their revenue is generated from a single source, or from different sources. There’s a relatively small subset of sponsors that big CROs deal with routinely. That’s a good thing, because CROs recognize that they have core competencies that they know plug in well with Pharmacia, AstraZeneca, or Pfizer for particular areas. They don’t want to spread thin their expertise or experience by delving into other areas, where it can take a long time to achieve that same expertise and success. CHILDERS. Whether intentional or unintentional, larger clients tend to receive additional benefits from outsourcing. Some clients tend to outsource large programs or multiple projects that, over time, allow contractors the ability to create a relationship and share more knowledge across the lines of communication. Individual onesytwosy type testing does not always allow time to cultivate a strong relationship. Hence, they will get the expert science and cor rect data, but they are not getting the time and attention from the consulting side because there’s just not enough revenue to provide for that. NELSON. CROs need to speak up if an inefficiency is identified. We have a huge number of processes that we like our partners to adhere to. But if we are behind the curve and there’s an opportuni ty to seize a new process we’d like to know about it. CROs need to show an ROI of bottleneck solutions in terms of real dollars, not opportunity costs. If a CRO can demonstrate to us what the real value of change would be, what it would really cost us — and that’s usually in time — that has real value, especially for the marketing 20 M a y / J un e 200 2 PharmaVOICE There has to be high quality in terms of science and systems, there has to be a timeliness component,a communication quotient, and there has to be profitability. WEHAVETONEGOTIATECONTRACTSTHATARE FAVORABLE FORBOTH SIDES.Profitability has to be there. It’s not a dirty word, it has to support both sides. Dr.Alfred Childers CRO partnerships folks, who need rapid access to the information from our studies to promote products and beat the competition. VON RICKENBACH. The ideal client relationship is to meet with various levels of the client’s organization regularly, to receive feed back from all levels. Sometimes client management is very happy with the completed work, but at another level, managers aren’t as satisfied. Service providers need to hear from every level within an organization. At the same time, these meetings can be used for prospective thinking in terms of new projects or implementing advanced technologies. Fortunately, this process is beginning to occur with increasing frequency. Additionally, we can provide input to support clients in innovative ways through the tools, approaches, methodologies, and technologies that we have available to us. In a smallclient environment, such as emerging biotech companies, the needs are quite different. Very often, a small or young company may not know what it needs to know to be successful or the questions it should be asking. MINOR. CROs should propose solutions to bottlenecks based on experience rather than wait for the sponsor to develop the answers independently. The CRO needs to be proactive and be a partner in that particular program and come forward with ways to streamline the project, rather than wait for us, the sponsor, to fall. The CROs need to get over the perception that the sponsor is always right, because we are not. CROs need to leverage successful endeavors across sponsor divisions to effectively utilize trained staff for repeat performances. This basically reduces costs by reducing the training burden. VONRICKENBACH.An important aspect is the development strat egy. Drug development is complex. Many small companies don’t have experienced inhouse staff or institutional knowledge about what to do, how to approach the FDA, how to interface with foreign agencies, how to liaise with medical centers, how to develop opin ion leaders, or communicate with patient groups or reimbursement players. If a client company fails to coordinate these activities at the start of a project, it may delay or miss crucial milestones as the pro ject unfolds. This forces the company to redo certain portions of the project and incur costly delays. NELSON. There needs to be a seamless team optimum approach with no redundant resources. There are a lot of redundancies in pro jects on the sponsor side that duplicate resources on the vendor side. When we outsource, there are a tremendous amount of resources applied to review and accept the deliverables when they come in. That’s not necessary. If everybody understands what the objectives are, and is properly incentivized to get the project done and run it on schedule, that will help foster a team and we won’t need redun dant resources. MILLER.The ideal relationship is where the sponsor treats us as an extension of their operations. That has to work from the contract all the way down to the projectmanagement level with the apprecia tion that we are all professionals doing a job. The trust that’s built up in this type of environment enables us to give them the best pos sible outcome, not just from a financial standpoint, but from a qual ity aspect. If there’s trust, the client relies on us to get the job done without micromanaging, but appropriate reporting and checks need to be built in. STAKEHOLDER analysis VOGEL. Outsourcing represents a considerable change in the role that inhouse pharma people play. These are highly technical peo ple, who may lack the skills to manage a relationship with an out sourcing provider. They were hired to perform technical tasks, not manage business relationships. Outsourcing represents a real change in these people’s job descriptions. It’s only recently that the pharmaceutical industry has begun to support inhouse workshops and training programs on how to outsource more effectively. Phar ma’s middle and senior management need to better understand out sourcing. They need to better understand best practices for out CRO partnerships sourcing. And they need to support their own technical staffs in managing outsourced projects. MINOR.Every sponsor has a request it sends out that basically asks for the same information, but in different ways. I think if we, as an industry, maybe with PhRMA and the new CRO organization, were to establish some dataexchange standards for information it would be a whole lot easier. This would have to work both ways. CROs could provide their core competencies. Sponsors also would have to identify the core areas they are evaluating. TAAFFE.Everyone agrees a formal process is required. But it could be simple. In many aspects the CRO industry can be compared with other outsourced activities: legal, finance, and market ing. In these situations detailed bid grids and price per task are not used. Ven dors are chosen based on experience and skills, a deliverable is set, a price is agreed on, and the contract awarded. MINOR. We need an open communication framework, adaptive IT architectures, transparent costing, and shared training. We have to be able to exchange ideas and information with each other openly. We can’t hide things from each other. CROs need to become more a part of the internal sponsor team. The communication framework has to be multi layered. There has to be communication between operations, but there also has to be man agementtomanagement communication. If there’s an issue at the operational level, where one side is not performing, the manage ment group has to be able to step in and say, `sponsor, you’re not performing, you are holding us back.’ We do that to the CRO, but they don’t do that back to us. SUPPLIER analysis ZISSON. With so much competition among so many CROs from niche to large players, pricing pressures remain a concern. Center Watch surveys show that 41% of sponsors said they expect to use smaller and niche CRO services more frequently in the coming years. Another 41% of sponsors said they would use a combination of niche and large fullservice CROs. Less than one in five sponsors reported they plan to use large fullservice CROs more frequently. So the big CROs must overcome the sense that they are too distant and bureaucratic and the smaller CROs must continue to provide personal service while finding a way to seem larger and offer the same technological advantages as the large CROs. KENDLE. The industry is much more predictable now. Anytime an industry matures, there’s a group of leaders that offers a broad base of services or a fairly large base of business. There always will be niche providers. The hallmark of a maturing industry is a broader base of services on a broader volume of business. There’s some hope this year that the IPO window will open, at least a bit, and there are companies that hope to enter the public marketplace. This is anoth er sign of a healthy market. VOGEL.The biggest challenge for the CRO industry is that it has to figure out what it wants to be. I say this because there are basi cally three strata of CROs — the great big ones, the midsize ones, and the small ones. The great big CROs are trying to figure out where the profitability is in drugdevelopment services. To that end, many of the big CROs are moving more toward the early clin The interactions/relationships between sponsors and CROs have changed considerably over the past few years. In an EFFORTTO STREAMLINE AND FORMALIZETHE PROCESS most sponsors now require CROs to conduct all business aspects of a study or program with an outsourcing/procurement department.This new initiative has introduced CROs to a formal RFP process with detailed bid grids and elaborative biddefense meetings. Bill Taaffe CRO partnerships ical and preclinical segments of drug development as opposed to Phase II and Phase III studies. There’s a perception that there’s a greater profit margin there. But, it appears that the fastestgrowing component of drug development is Phase IV. Sponsors are increas ingly concerned about expanding the area under the sales opportu nity curve, which means when their drug is approved and launched into market, they want to launch with the strongest market pene tration possible. For that reason, sponsors are increasingly concerned with late Phase IIIb and early Phase IV studies, which are designed to position the drug in the marketplace. That’s a very strong seg ment, and some CROs are looking at that area. There’s also recent activity between some of the larger CROs and ad agencies. ZISSON.Today, CROs have to be more nimble than ever to match the needs of their clients. It’s not one size fits all. That’s why CROs have expanded their services to marketing and discovery as a way to customize their offerings to sponsors. All of this value hinges on the collaborative effectiveness of the relationship. CHILDERS. It is a challenge getting the right message to pharma that the CRO industry is very healthy. There are some very strong players in the CRO industry, and as with any industry, there are some weak players. The scientifically strong and financially healthy companies are moving forward and continue to grow, and although a few CROs were unsuccessful and have closed shop, their failures should not overshadow the many successes of other CROs getting drugs to market. HAYASHI.One of the biggest challenges we face is the current site selection paradigm. The existing siteselection process is an investi gatorcentric rather than a performancecentric one. In other words, most sponsors revolve their site selection around the principal inves tigator’s CV rather than an investigative site’s performance record. Yet, any site — and for that matter any principal investigator — will say it’s the site infrastructure that is the key success factor in executing most clinical trials. Nevertheless, sponsors focus on select ing individual investigators who repeatedly fail to perform rather than selecting the investigative sites that consistently outperform — regardless of any one individual. This is akin to selecting a hotel based on the hotel manager rather than recognizing it is a Marriott operated hotel. VOGEL.The reason the CRO industry dramatically began to grow 10 or 15 years ago is that sponsors needed assistance with Phase II and Phase III clinical development. They needed monitoring, data management, analysis, and to some extent reportwriting services. I have some real questions as to whether that’s a very profitable business for big CROs to be in. And I think they do too. The smaller CROs have less overhead to deal with. They have less oper ating costs and they seem to be a little more focused on what I call the core clinicaldevelopment activities — conducting Phase II, Phase III studies and providing monitoring, data management, and biostatistics. A few years ago, I stated publicly that I was somewhat concerned as to whether midsize CROs would prosper, because I didn’t know if they could attract enough business to cover their operating costs. In the past few years, they’ve been doing very well. It seemed for awhile that the larger CROs were grabbing a greater percentage of the business through approaches such as preferred provider relationships, etc., and the midsize CROs lost some market share. But in the past few years, my per ception is that the big CROs are losing some market share to the midsize CROs. I think the notion of preferred provider relation The interactions/relationships between sponsors and CROs have changed considerably over the past few years. In an EFFORTTO STREAMLINE AND FORMALIZETHE PROCESS most sponsors now require CROs to conduct all business aspects of a study or program with an outsourcing/procurement department.This new initiative has introduced CROs to a formal RFP process with detailed bid grids and elaborative biddefense meetings. CRO partnerships ships is being redefined. Initially a lot of the deals were cut between CROs and pharma based on vol ume discounting. Many of these deals failed because sponsors didn’t achieve the discounts they anticipated and CROs didn’t achieve the volume of business they anticipated. We are still seeing pre ferred provider or strategic relationships between sponsors and CROs, but they are much more focused on developing masterser vice agreements, trying to facilitate the front end of the contract, trying to develop longerterm relationships, and developing effi cient processes that allow the two companies to work more effec tively together across a range of projects. KAISER. We’re focused on building longterm relationships and exceeding our client’s needs. We’d rather have fewer clients with multiple projects than have hundreds of clients with one project per client. This requires a continual focus on good communications, quality work, and delivering on time. TECHNOLOGY analysis PIAZZA.There is an interest and an acknowledgement of the need for technology solutions to help the drugdevelopment process. There are several areas of electronic solutions for clinical trials, from patient recruitment to discovery tools and techniques to electronic submissions. CROs increasingly are being requested by their clients to offer electronic solutions. If CROs can offer electronic means of doing trials they might be able to achieve higher margins than they can by using oldfashioned paper methods. Whether or not the client specifically requests EDC, the CRO often has the ability to use whatever means it wants to get to the end result more effec tively. I don’t think there’s a company that is not evaluating or looking at EDC solutions. From the CRO perspective, I think things have changed in the last few years. Early on, these systems were seen only as direct competitors to the paper process, the bread and butter of CROs, impinging on their paper process, their datamanagement process. In the last two years, CROs have come to the conclusion that they need to get on board with electronic solu tions — EDC and other esolutions are not a flash in the pan, they are here to stay. CROs believe that they need to take part in the technology evolution to maintain a competitive advantage and to be on the cutting edge. MINOR.We have a tremendous amount of pressure from our upper management to engage new technologies and use them to our advantage. We are looking at EDC, we’re looking at ways to push our RFPs and contract development through the Web, and make mutually agreed practices available, so that we can prenegotiate processes with our vendor pool, and post them so they become working manuals for projects and programs. PIAZZA. There needs to be process reengineering. Things will get done differently, but that doesn’t mean people lose jobs. There was a fear that CRAs would lose their jobs because all the data would be reviewed remotely, electronically, and there would be no need for CRAs. That’s ridiculous, because there is still a need to review the data in person to maintain quality, ensure against fraud, and review source documentation. ZISSON. Web technology is both an opportunity and a threat to the CRO industry. The role of the study monitor, who provides a lot of revenue for CROs, will change. The paperbased process remains 24 M a y / J un e 200 2 PharmaVOICE Senior managers are under pressure to report to the stockholders as to how they are improving the efficiencies of the organization.Over the years, the pharmaceutical companies have gleaned all of the efficiencies they can from the paper process.So the next step is COLLECTING DATA BETTER. John Cline TECHNOLOGY IS A FORCETOBE RECKONEDWITH. It elevates the role of our monitors, it enables us to bring efficiencies to sponsors and true economies of reducing the number of visits, reducing the time at site.There are real economies,but as with everything it will take time to adopt.And, technology has to be adopted in a thoughtful and strategic way. Christopher Speh CRO partnerships inefficient and technology will help reduce inefficiencies. As those changes take hold, the role of the CRA will have to expand and focus on activities that support a more effective relationship with investi gators, site personnel, and sponsors. Or CROs could potentially lose a great source of revenue from monitoring, which will be reduced as technology is adopted. CROs have already taken an active role in Web technology and will continue to partner, acquire, and compete with those vendors. They may even help consolidate the fragment ed electronic data capture industry. ROSENBERG. The main issue with EDC is that it’s sold on the promise of completing studies faster. But other elements must be in place to allow the technology to function well — most notably, the processes that allow quicker response to incoming information. These processes tend to be largely beyond the control of EDC ven dors, and the consequence is that these systems generally don’t work very well. There are other issues, too, related to workflow in sites. MINOR. My observation is that not all sponsors are ready to embrace the Web for trials. There are too many platforms with var ied results. There’s little guidance from the FDA or from PhRMA about what standards we should start to look at. This makes it very difficult to get consistent results using the Web for trials. CLINE.Philosophically, the use of technology also requires simulta neous process change. Technology can create as many problems as it solves. Therefore, technology plus process change equals success. Electronic data capture has been around, in some form or another, for 10 or 12 years. Less than 10% of trials are done electronically, but that’s changing rapidly. There are a lot of efficiencies that CROs can glean and pass on to their customers by using EDC. As more and more drugs become available through genomics and proteomics, even the CROs will have trouble sourcing the right people to do the outsourcing work for their clients. A CRO or pharmaceutical company using EDC will be able to produce more work for whomever the client is, either internal or external. PIAZZA. All of the different electronic solu tions that are being highlighted right now — EDC, clinicaltrial management systems, sub mission systems, adverseevent collection sys tems — had been separate, unique products and applications. These are now becoming integrated systems that talk to each other and work as a single system. Sponsors won’t have to go to different places to get little pieces of data here and there. The integration of electronic systems is getting more popular and is in more demand, and that’s going to continue to grow. ROSENBERG.The way EDC works at the site is that the data have to be collected on a piece of paper and then be entered into the sys tem. That turns the site personnel into data entry clerks, for at least part of their time. These are expensive clinical support people, who do not like to do data entry and are not particularly good at it. We were among the first in the industry to do EDC trials back in 1993, but we have backed off EDC because it generally does not work well from a site perspective. We’re doing almost all of our studies with machinereadable paper CRFs that utilize optical markread tech nology, not optical character read. We find that this system, coupled with the other elements we have, works far better than the systems in the field that use EDC as the sole component, and we have exten sive performance metrics that reflect this fact. The real bottom line has to be how fast does the technology enable a study and a devel opment program to be completed. The system must focus on user issues and a host of other elements to arrive at a solution that bene fits the bottom line — getting submissions in faster. CLINE. Technology wasn’t very friendly up until four or five years ago. As the adoption of technology becomes more prevalent, I think doctors, who have used computers as part of their everyday life, are not only are going to drive the EDC business, but the total elec tronification of their practices. VOGEL. I am amazed that we haven’t made EDC ubiquitous at this point. EDC has been around for more than 20 years. The problem is not a technical issue, 26 M a y / J un e 200 2 PharmaVOICE Managing sponsor expectations is vital, CROS DON’T PUSHBACK.We’ll come up with a very optimistic timeline, especially for things like patient recruitment.The CRO should push back and tell us we’re being overly optimistic.This would help win the trust of sponsors in terms of estimating project time, cost, and quality. Steve Nelson It’s common knowledge that 80% of projects fail to meet their originally targeted enrollment deadlines and clearly the cost of this lost time is enormous.TWO CULPRITS — both solvable — are a BROKEN SITESELECTION PROCESS AND MISGUIDED INVESTMENTS,or lack thereof, in participant recruitment activities. Eric Hayashi CRO partnerships it’s a relational issue. Its adoption has to do with the fact that health care professionals are paperandpencil oriented rather than com puteroriented. This is changing as new generations of healthcare professionals are coming in. I think EDC also is complicated by IT people in pharma who tend to want to have their own processes rather than buy offtheshelf solutions. Again, this goes to efficien cy. I think if a CRO or a network of sites were all using the same EDC system, and simply set up a way to translate or integrate their system with the sponsor system, there would be tremendous effi ciency. CLINE.Senior executives at pharmaceutical companies are mandat ing to their therapeutic area heads that they must do “Xpercent” of trials electronically. Senior managers are under pressure to report to the stockholders as to how they are improving the efficiencies of the organization. I firmly believe that, over the years, the pharma ceutical companies have gleaned all of the efficiencies they can from the paper process. So the next step is collecting data better. VOGEL. I think the pharmaceutical industry and CROs have been very slow to integrate technology into drug development. There’s a lot of good stuff out there. For example, using computer model ing to design more efficient clinical trials. Twenty years ago, peo ple were writing clinical protocols without any idea of the statisti cal probability that the protocol could actually detect an active drug. People used to write protocols without statisticians being involved and without knowing the power of the protocol. Now, it’s commonplace. The question becomes can we get to the next step and use computer models to actually run the trial in a virtual sense to evaluate different scenarios? If so, we could better design the protocol, evaluate entrance or exclusion criteria, and project enroll ment based on different criteria. Sponsors tend to develop proto cols by what I call successive approximation. They write the ideal protocol, start the study, find that they are having problems find ing pristine patients, then they amend the protocol. It takes a lot of time and effort at the regulatory agency to review all of the amendments. This causes a lot of disruption in having to redefine the project with the CRO. Computer modeling might be able to help in this regard. CLINE. Technology can significantly reduce monitoring costs if companies redo their processes. Right now, monitors have to get on a plane and go to Oklahoma City to look at paper case report forms. But if I am that same monitor, I can sit at the home office, go online, and do four or five different sites in a day. The monitor would then only have to physically go to the sites when source doc umentation verification was needed. Monitoring is a very, very big piece of the total trial process. The winners of tomorrow are going to be those CROs and pharmaceutical companies that adopt tech nology, and more importantly, adopt process change. These compa nies will be light years ahead. TAAFFE. CROs can make a real impact on the timelines of drug development. They have finetuned the process with stateofthe art technologies and are not delayed by competing internal priori ties. It is the only thing they do. The real gain for companies in using a CRO is the value of time saved because the study is com pleted more quickly. HAYASHI. Etechnologies frankly have created more work at our sites than sponsors realize. Most RDE technologies, for example, simply shift the dataentry tasks to the site rather than what previ 27 PharmaVOICE M a y / J un e 2002 CRO partnerships ously was performed by a datamanagement group. We have to enter all the data now, before they did that. We have to deal with the dataentry system glitches, before they had to deal with that. We still develop source documents and transcribe those source doc uments into the remote dataentry systems. However, from a com petitive standpoint, this works to our advantage because all of our sites, as a SMO, are supported by a sophisticated IT infrastructure and have the ability to work with any RDE/EDC platform. SPEH.We have to be careful of false economies in relation to tech nology. There’s no doubt in an electronic environment that all of the data, after the internal checks, will be clean for the most part. If a sponsor is using an electronic platform and using it appropriately, a site can be closed and the data locked within a couple of weeks. The false economy comes in because there’s a major investment up front to ensure that the sites are outfitted with the equipment, training, and capability to work effectively in an electronic environment. Much of the work, which was formally the responsibility of the sponsor or data group, is now being pushed to the site. And the sites aren’t necessarily compensated. The sites bear a real cost, whether it’s covered in the budget or not. Typically, a sponsor will capitalize the site if the site doesn’t have the technology but that’s the least expensive of the options. From the sponsor’s view, they are com pressing two job functions into one. In the old days, the site coor dinator was expected to manually collect data on casereport forms or datacollection forms, which went to the datacollection group, either at the sponsor, a data firm, or CRO where those reports were key punched. Two functions were being undertaken to deliver one set of data. What the sponsor sees, and what the data groups are say ing, is that those two functions are now compressed into one. In the view of the sponsors, the sites aren’t being asked to do any more than they were doing before. In the site’s view, there are still two functions — the data collection and the data input. There is a dis connect between what the site perceives and what the sponsor is perceiving based on what the eplatform groups are telling them. Clearly if these technologies are applied appropriately at the site and within the sponsor setting there can be real efficiencies. But I’m not certain that we’ve yet translated those into economies. These days time is much more valuable to a sponsor than cost, so there are very real potential benefits to sponsors using technology in this way. KENDLE. Web technology is not helping much, although we all wish it would. Our customers are still fairly uncomfortable with data collection and data security outside the medical affairs and medical marketing arena. Collecting data over the Web on a mar keted product is entirely different than trying to collect data on yettobe approved products. We were so hopeful that patient recruitment would be done via the Web. Yes, we can get some touchyfeely data on actual patients who might be out there, but the really hard work of finding the appropriate patient hasn’t been greatly improved by the Web. We’re just not there yet. We can collect a lot of names, but whether or not they qualify is the real issue. SPEH.Technology is a force to be reckoned with. It elevates the role of our monitors, it enables us to bring efficiencies to sponsors and true economies of reducing the number of visits, reducing the time at site. There are real economies, but as with everything it will take time to adopt. And, technology has to be adopted in a thoughtful and strategic way. We’ve seen some sponsors mandate the adoption of an etechnology platform, and the clinical teams have to figure out a way to make it work. That’s not a strategic decision, that’s a tactical decision that may or may not have applications for the study being pursued, and could be a costly mistake. 28 M a y / J un e 200 2 PharmaVOICE The company, which was founded in 1992 by Lloyd Baroody and Izabela Roman,M.D.,Ph.D., will continue to operate under its own name and management. According to Joe Torre, chairman and CEO of Torre Lazur McCann Healthcare, a McCannErickson WorldGroup company, the acquisition of Target is Torre Lazur McCann’s own first entry into the clinicalresearch field. Lloyd Baroody,CEO of Target,says,“Because Torre Lazur McCann andTargethave thesame typeofpharmaceutical,biotech,andmed icaldevice company customers, Joe and I see many collaborative opportunities in our joining this leading global healthcare group. There are significant untapped synergies that can result from com bining CRO services with the wide array of complementary services offered by theTorre Lazur McCann constellation of companies.” Target is involvedwithaclientwhileadrug still is in development. TLM’s worldwide group of complementary specialized services also includes such companies as Complete Medical Group (U.K.) and Sci entific Frontiers (U.S.) in scientific and medical publishing, Caudex (U.K.) and MPE,CMS and HealthVizion (all U.S.) in medical education, Magister (U.K.) andGlobalResearchandMigliaraKaplan (bothU.S.) in consulting and market research.TLM’s group also includes commu nications and ad agencies comprising twoglobal networks. AdAgencies Look to CROs for Expanded Sponsor Relationship t orre Lazur McCann Healthcare WorldWide, a global healthcare marketing communications, medical education, clinical publish ing and consulting group, has acquired Target Research Associ ates Inc., a contract research organization. Torre Lazur is the latest agencyentrant into the CROarena.Torre Lazur follows OmnicomGroup Inc., which in 1999 purchased a sig nificant minority stake in Scirex Corp.; Interpublic Group of Compa nies Inc., also in 1999 purchased International Pharmaceutical Research, to be part of its Lowe McAdams Healthcare unit; WPP’s CommonHealth formeda joint venture through its HLSClinical Sys tems division with Advanced Biologics LLC; and Gerbig/Snell Weisheimer &Associates Inc. formed a strategic alliance with PharmedicaResearch Inc.(GSW no longer has a formal alliance with PharmedicaResearch,nowcalledRegistrant Inc.,but still workswith the company on select projects.) This vertical integration model is one way for an ad agency and a CRO to focus on the full commer cialization needs that sponsors have. Target, which is based in New Providence, N.J., with addition al offices in Philadelphia and Chicago, provides the traditional CRO services of clinicalstudy development and management, monitoring,data management,biostatistical analyses,and medi cal writing. CRO partnerships 30 M a y / J un e 200 2 PharmaVOICE KENDLE.If there’s any competitive advantage around technology, it’s around technology used to manage a project worldwide. After that, advantages are in worldwide learning — elearning — or in the med ical affairs and medical marketing collection of data over the Internet. CLINE.Ultimately, technology is only going to get better. What is really exciting is getting drugs to market quicker. I think some times the industry loses sight of that. We actually do social good on top of being a forprofit business. People get hung up on technolo gy, but just as important is service to the client. A lot of technolo gies will get a CRO or pharma company to its ultimate goal, but the question is how quickly does the technology get them there? And, at what pain level? PERCEPTION analysis CHILDERS.There’s a misconception in thinking of contracting as a way to lower costs simply by hiring cheaper staff. Cheaper shouldn’t be the focus. A product worth investing in should be worked on by a professional and skilled staff. A CRO’s cost structure is no different, it can simply be utilized more effi ciently as it is a job we do day in and day out. It’s all about seizing the opportunity to get more products developed. With outsourcing there’s a tendency to think about finding an equal partner who has something to contribute. KAISER. When someone says contract research it doesn’t have a positive spin. We like to say drugdevelopment service provider, because we’re trying not to be a feeservice based entity. We’re try ing to provide more than a onetime deal. MILLER. It takes time to build good interpersonal relationships between a client and a vendor. There has to be the expectation that both sides are going to make mistakes since we are all human. What’s important is how these mistakes are handled, and how we move forward to avoid repeating them. This is predicated on the fact that we are working towards the same common goal. VON RICKENBACH. We view ourselves as a biopharmaceutical outsourcing company, rather than a contracting company. Con tracting implies more of a temporary performance of certain tasks rather than a partnership with a longerview perspective. LAGROTTERIA. I view outsourcing as partnering versus contract ing, which is like purchasing. In outsourcing, we’re looking for ways to help each other get what we want more efficiently and effectively. Contracting or purchasing is more tactical — every sin gle time we have to recreate the wheel. Products or services are viewed more like commodities. Outsourcing is more strategic in nature and allows everyone to take a longerterm view. With out sourcing everybody is on the same side of the table looking at the problems or issues together, anticipating and coming up with con tingency plans and looking for ways to get the job done a lot more smoothly. A contracting arrangement puts us on opposite sides of the table. TAAFFE. There have been many conferences debating different approaches to better CRO/sponsor “partnerships.” The consensus opinion is that it would be advantageous if there was a relationship where the CRO was involved with the sponsor in their annual port folio planning. In this way resource planning and allocation would be optimized, matching the program with the appropriate skills. This would be true outsourcing where there would be leverage of core competencies. What we have now is probably closer to con tracting and outtasking than it is to real outsourcing. SPEH. The relationship between pharma and CROs is changing. There are sponsors that are more progressive than others. Sponsors that view these relationships not as a oneway relationship, but as a way to share information in a meaningful way with their vendors, are finding that their projects are more successful than the sponsors that continue to outsource studies in the same way they contract for paint ing or grass cutting. Clinical research is differ ent, it’s more complex, and the more pharma ceutical sponsors embrace a fuller relationship with their vendors, the more they benefit. KENDLE. Outsourcing has a broader feel. Whereas contracting implies fixed service or a smaller amount of business or a shorter time interval. Kendle was one of the first companies in our industry; we predate the CRO label. We wanted to be referred to as a consultant; we didn’t want to be called a contract research organization. Then, we all got comfortable with the contracting word, which implies buying a group of services. And now, we’re more comfortable with the outsourcing word, because again it signifies the depth of the relationships we have with our customers. RISK analysis SPEH. There’s a lot of talk about risk sharing. When it’s broken down, I’m not sure it’s really delving into either risk or sharing. What we have found is there are some sponsors who have tried to elaborate that term in their contracts. One sponsor wanted to out source all of the risk of the program along with all of the studies in that program. On the face, that sounds like a pretty good deal. The CRO has the opportunity to make some money by bringing in the program successfully. But by outsourcing all that risk, the CRO has to have a crystal ball that is better than the sponsor’s in antici pating and responding to unintended world events. To think that a CRO’s crystal ball is any better than a sponsor’s is faulty. Addi tionally, the sponsor effectively has become totally dependent on the CRO to deliver the product. That may sound attractive, con sidering the pressure on pharmaceutical companies to meet Wall Street, shareholder, and seniormanagement expectations, but in fact this introduces a whole new level of risk in the sponsor envi ronment. Because the sponsor has outsourced the program risk, it has now insourced a strategic risk that a program may not be delivered successfully. If the company were doing the program itself or working in a more traditional, collaborative way with the The CRO needs to be able to BRING SOMECAPABILITYTO THE PROJECTTHATTHE SPONSORDOESN’T HAVE.There are two elements to that. One is the technology component. Secondly,currently the most common model,especially among big pharma, is to use outsourcing as a rentabody approach.But increasingly, what companies are looking for is an organization that can improve the overall goal of improving the efficiency of the development process. Dr.Michael Rosenberg CRO partnerships 32 M a y / J un e 200 2 PharmaVOICE CRO, it would be able to step in and take midstudy corrective action to get a program back on track. In my view, a CRO that bids aggressively on a program like that, and is willing to face that kind of risk, is a bit desperate for the business. PIAZZA. For everyone to be successful, partnerships between ven dors and CROs need to be structured so that everybody gets what they need. Everybody needs to be profitable, and everybody needs to have systems that they can use routinely and effectively. This may be easier said than done because there’s still the thought by CROs that if they use systems, they might lose their mar gins, their people, their control. And the vendor is thinking, if we part ner with CROs do we lose whatever advan tage we had within the sponsor organizations? Do we become more of a third party to the sponsor? MINOR. Sharing in risks means that every body has something on the line. It’s not just one sided. I don’t know that anybody is doing that well or doing it consis tently. The contract should not be the technical manual for a project, that should reside in the domain of the operational group. We have started to look at ways to collect and document the processes, and negotiate the pro cesses with the CROs. When Pfizer has a request for proposal to put out, basically we know, on both sides, what resources are going to be engaged, how long it will take to create a deliverable to our stan dard, and what the makeup and the documentation of the deliver able will be. From that perspective, we can prenegotiate prices without going to a preferred vendor pool. We established a set of working guidelines that any company working with Pfizer can fol low. Then we simply look for the best team to execute. It takes price out of the equation. CHILDERS. I like to work off opportunity. We can’t be fearful, we have to look from an opportunistic standpoint of how to do things better and faster for our clients. Fear can force us to make bad deci sions, in which the benefits of a collaboration are pushed further away. There is a choice, an opportunity to do good or instead to try to ensure that any potential downside is covered in a contract. Con tract initiation has drastically increased over the years, everyone is looking to create the infallible supercontract that in the end can delay a project start and potentially increase the time it takes to get a product to market. Magellan wouldn’t be a company today had we listened to the overriding fears instead of the opportunities. ROSENBERG.Risk sharing is a great concept but one that is diffi cult to execute. The reason why it’s difficult to execute, is that in drug development there are always twists and bumps and we never know when they are going to come, but we know they’ll come some time. KAISER. For smaller companies, the benefit of the shared risk/shared reward is that if they don’t have the money or the back ing to move forward, this is where we can help them. We can pro vide the services that they need to get them where they are going. This is a way that a biotechnology company or small virtual com pany can move forward. LAGROTTERIA. Over the past few years, with the development of more formalized outsourcing divisions within many pharmaceuti cal companies, the concept of “risk sharing” on clinicaltrial pro grams has arisen. Usually, this concept relates to meeting mutual ly defined development milestones, with the CRO “sharing” the risk by tak ing a financial incentive upon meeting the mile stone or a financial “risk” for failing to meet the milestone. Such mile stones are commonly first patient in, last patient out, a locked database, final report, etc. We have suc cessfully engaged in this risksharing model with several pharmaceutical companies. The keys to success for “risk sharing” are found in the word “sharing.” Both the con tract research organization and the pharmaceutical client are agreeing to take responsibility for key deliverable items on the timeline. This shared responsibility places the program into a con text that is mutually acceptable, and ultimately drives toward pro gram success. Underlying the success of any program is almost militarylike precision in project management, with obstacles identified and resolved before they impede the critical path. We think that we have proven that we have the human management and technical and clinical skills to make “risk sharing” a “winwin” for our clients. VON RICKENBACH. The term “risksharing deals” is a bit of a misnomer in the sense that whenever a company shares risk, it also expects to share the rewards. These arrangements really should be called “riskandreward.” From my perspective, some of these arrangements have proven successful, while others have not. Mov ing forward, particularly with the advent of new drug technolo gies, there may be attractive opportunities for companies like Parexel to enter into these types of riskandreward sharing arrangements with clients. KENDLE. Risk sharing outside of equity is not an area where we’ve found business partnerships. We do not have equity sharing partnerships. We know some of our competitors do, but that’s an entirely different issue. And, it’s very product specific and situa tion specific. I think we would take the approach many of our competitors have taken; that is, if it were the right opportunity, we would do it. That’s entirely different than risk sharing around developing another company’s product without the benefit of equity. # PharmaVoice welcomes comments about this article. Email us at feedback@pharmalinx.com. Expected Usage of Full and Niche CROs Which type of CROdo you expect to use more frequently in the next several years? Combination 41% FullService CRO 18% Niche Service CRO 41% Source:CenterWatch Survey of Pharmaceutical Companies,2000 Companies decide to outsource to create and then capture value, the mission being to find equitable solutions that benefit each party without further complicating the relationship. However, according to industry experts, the value to the drug company has been declining at the same time profitability for the CRO has been eroding. Despite best efforts by pharmaceutical sponsors and outsourcing providers it is inevitable that changes will occur, no matter how accurately the specifications at the beginning of a project are defined. Sponsors may redefine their needs, unforeseen delays may jeopardize the timeline, new services may impact the budget, and personnel turnover may affect communication and decision making. Managing these changes, and minimizing disruption to the project, becomes the mission to building… Sidebars: CRO Market Concentration Sponsor CRO Usage in the Next Five Years Ad Agencies Look to CROs for Expanded Sponsor Relationship Expected Usage of Full and Niche CROs MISSION ANALYSTS … Joseph Avellone, M.D. President and CEO, Veritas Medicine Inc., Cambridge, Mass.; Veritas Medicine is a leading provider of Internet and patient-database services to identify and recruit patients into appropriate clinical trials Alfred G. Childers, Ph.D. Principal and president of administration, Magellan Laboratories Inc. Research Triangle Park, N.C.; Magellan is a pharmaceutical development organization (PDO) providing a complete range of analytical testing and development services to the pharmaceutical and biotechnology industries John Cline. President. etrials Inc., Morrisville, N.C.; etrials offers efficient data-management products and services for collecting, monitoring, and assessing quantitative and qualitative study data; etrials leads healthcare and pharmaceutical companies through the critical processes involved in turning a technology into a solution, successfully migrating clients from paper-based to electronic data-capture methods Eric F. Hayashi. VP, Corporate Development, Radiant Research, Kirkland, Wash.; Radiant Research is a privately owned company that owns and operates more than 40 clinical-research sites that conduct Phase I-IV clinical trials for pharmaceutical, biotechnology, medical device, and contract research organizations Lori Kaiser. Director of Marketing, TherImmune Research Corp., Gaithersburg, Md.; TherImmune Research is a fully integrated CRO that provides drug-development services to the pharmaceutical and biotechnology industries, specializing in providing complete IND packages and delivering high-quality non-clinical and clinical studies and analytical, infectious disease, immunology, and pathology services to its clients Candace Kendle, Pharm.D. Chairman and CEO, Kendle International Inc., Cincinnati; Kendle is a global provider of clinical- development, regulatory/validation consulting, and medical-communications services to the pharmaceutical and biotechnology industries Vincent Lagrotteria. Executive Director of Sales and Marketing, Medifacts International, Rockville, Md.; Medifacts International is a leader in the global management of cardio­vascular, renal, pulmonary, and CNS clinical-development programs for the pharmaceutical, biotechnology, and medical-device industries Colin Miller, Ph.D. VP, Business Development, Bio-Imaging Technologies Inc., Newtown, Pa.; Bio-Imaging is an Image Core Lab, which is dedicated to the management of medical images that support the product-development process of the pharmaceutical, biotechnology, and medical-device industries Michael Minor. Director, Outsourcing Operations, Pfizer Inc., New York; Pfizer discovers, develops, manufactures, and markets leading prescription medicines for humans and animals, and many of the world’s best-known consumer products Steve Nelson. Director and Team Leader of Outsourcing Operations, Pfizer Inc., New York; Pfizer discovers, develops, manufactures, and markets leading prescription medicines for humans and animals, and many of the world’s best-known consumer products Rick Piazza, Pharm.D. VP, Strategic Business Development, Araccel Corp., Horsham, Pa.; Araccel provides e-clinical solutions for the?pharmaceutical and biotechnology industries Michael Rosenberg, M.D. CEO, Health Decisions Inc., Chapel Hill, N.C.; Health Decisions is a provider of worldwide comprehensive clinical-research services, including new processes, software, and use of the Internet, which reduce the time required for clinical evaluation and registration of drugs and devices to pharmaceutical, government, and non-profit organizations Christopher Speh. President, Resource Solutions Inc., Research Triangle Park, N.C.; Resource Solutions is a specialty CRO providing quality trials management, clinical monitoring, and QA services encompassing broad-based clinical R&D support to pharmaceutical, biotechnology, and bio–pharmaceutical sponsors in the fields of oncology, pain, and neuroscience Bill Taaffe. President and CEO, North American Operations, Icon Clinical Research, Philadelphia; Icon offers a variety of Phase I to IV support services, which can be offered on a stand-alone basis, or as part of full-service clinical-research management and has offices in North America, Europe, the Pacific Rim, Argentina, and Israel capable of conducting clinical-research studies ranging from small local trials to large global programs in a wide range of therapeutic areas John R. Vogel, Ph.D. Consultant, John R. Vogel Associates Inc., Wailea, Hawaii; John R. Vogel Associates is a drug-development consultancy that works with pharmaceutical companies and pharmaceutical service providers in the U.S., Europe, and Asia to enhance results achieved through outsourcing Josef H. von Rickenbach. Chairman and CEO, Parexel International, Waltham, Mass.; Parexel is one of the largest contract pharmaceutical outsourcing organizations in the world, providing a broad range of knowledge-based contract research, medical marketing, and consulting services to the worldwide pharmaceutical, biotechnology, and medical-device industries Steve Zisson. Managing Editor, CenterWatch, Boston; CenterWatch is a publishing and information services company used by patients, pharmaceutical, biotechnology, medical-device companies, CROs, and research centers

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