Maximizing the Value of CRO Relationships

Open collaboration, commitment and mutually agreed upon goals will accelerate the value of CRO alliances

By Joshua Schultz, Corporate Vice President, Parexel International

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Strategic partnerships with clinical research organizations (CROs) can deliver multiple benefits for biopharmaceutical companies of all sizes by reducing direct and indirect costs, improving efficiencies and accelerating speed to market. However, such relationships require open collaboration; mutual investments in time, process improvements and technologies; robust, multi-level governance; and a commitment to long-term success to achieve their maximum potential.

Cost Savings and Strategic Partnerships
Until recently, biopharmaceutical companies engaged CROs in project-by-project, transactional relationships to lower costs, utilize internal resources more efficiently and decrease risk. These relationships were similar to outsourcing relationships that have been used for decades in other industries. Although transactional models can reduce fixed costs and improve operational efficiencies to a degree, they typically cannot deliver the high levels of operational efficiencies needed to meet the challenges of today’s changing biopharmaceutical research and development (R&D) landscape.

In recent years, sponsor relationships with CROs have evolved into more committed and complex multi-year strategic partnerships designed for multiple studies. These partnerships leverage the CRO’s resources and experience and deliver broad-based solutions across the clinical development continuum. In these partnerships, CROs generate direct cost reductions by establishing rates that incorporate expected partnership efficiencies or volume discounts that enable shared savings driven by the long-term nature of the relationship and a larger amount of work.

Streamlined contract structures and pre-negotiated rates dramatically reduce study delays associated with completing contracting activities, request for proposal (RFP) completion times and competitive bidding. Additional cost-savings result from dedicated staffing, training efficiencies, better utilization of resources, up-front study design and innovations.

Quantifying Indirect Costs Savings
Direct cost savings represent only a fraction of total savings possible from a well-constructed, long-term strategic partnership. Most savings can be derived from reducing the level of sponsor project oversight, improving cycle times, building trust and accountability and having easier data access.

Compared to traditional transactional models, oversight cost reduction can be dramatic. Partnership-level agreements that define key project management criteria — such as agreed-upon quality standards, project metrics, governance, shared incentives and improved communications — can dramatically reduce the need for extensive hands-on management, while still assuring a high level of information exchange about each project’s progress. Duplication of effort can also be reduced because the CRO can take over many of the day-to-day project tasks, allowing sponsor employees to focus on other priorities. As a result, strategic partnerships can increase the average sponsor-to-CRO oversight ratio from 1:3 to 1:8 and even 1:15 — equivalent to saving up to 20% of a CRO’s professional fees for a typical project.

Accelarating Cycle Times
One of the greatest areas of potential savings in a strategic relationship results from reducing development timelines driven by operational improvement and the streamlining of the processes necessary to develop the study protocol. Compared to transactional outsourcing in which the CRO relationship typically starts later in the development process, in a strategic partnership the CRO’s experience and expertise can be accessed before the protocol is approved. Early CRO involvement can also help with designing trials that focus on results that support regulatory approval, reimbursement and market access.

The CRO can help develop more efficient protocols or operational plans that can significantly reduce a study’s overall time and cost. In addition, CRO partners can increase speed by investing in operational improvements such as clinical report form (CRF) libraries, study start-up templates, data transfer specifications, contract backup language, automation and technology integration. All of these documents can be approved before a study begins.

The time and costs of product development can also be reduced by using technology to automate tasks and improve visibility to data, leveraging the CRO’s global presence to access patients and expertise that might be difficult to access locally, and the bundling of services across a program or a compound.

Measuring Drivers of Value
Strategic partnerships have become a value-driven approach to clinical development focused on reducing sponsor oversight while retaining quality, accessing innovation and driving faster cycle times. Metrics to accurately measure and demonstrate a partnership’s value should be defined at the beginning of the relationship, and then measured throughout the course of each project to demonstrate their health and progress.

Among metrics that should be defined and measured at the beginning of an engagement are: financial success, operational improvements (study milestones, cycle times, productivity, quality, etc.), innovation metrics around improvements in processes and technology, and stakeholder analyses to provide an overview of partnership goals and progress.

Maximizing Value of a CRO Relationship
Maximizing the value of a relationship with a CRO requires addressing the following four steps:

1. Understand that mutual investments are necessary. Both sponsor and CRO must invest in processes, technology and systems alignment. Investments aren’t necessarily financial in nature and are often based on defining goals, anticipating issues and measuring results. In addition, investments in partnership-level agreements that define how teams should interact and effectively manage change can help build the trust necessary to advance the relationship.

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