Untying the Outsourcing Knot - Pharmaceutical Executive

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Untying the Outsourcing Knot
Outsourcing promises to be a major strategy for pharma in the years to come. But too often, it doesn't work the way it should. To get an expert's view, Pharm Exec talked with industry veteran Jon Koch, vice president of clinical operations, Americas, for Charles River Laboratories about the problems companies most often encounter when working with CROs. Here, Koch illuminates the top five—and provides some suggestions for sponsor companies to help keep their CRO relationships on track.


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Outsourced clinical trials offer pharma companies many benefits—cost control, flexibility, speed, and access to specialized expertise, to name just a few. A recent survey by Cambridge Healthtech Advisors found that 38 percent of pharma companies expected to outsource 60 percent or more of their clinical development work by 2006, and 45 percent of companies expected to outsource at that level by 2008. (See "A Sunny Forecast for CROs".)

There's just one problem: a variety of challenges face pharma companies and sponsors. Communication is missed, costs slide out of control, small problems become crises.

Clearly, contract research organizations (CROs) and their pharma company clients need to find better ways to manage outsourced research. So, with the aid of a major pharma client, Charles River Laboratories undertook a series of informal surveys of both client companies and other CROs to identify the errors that cause outsourcing relationships to go off track and how to correct them.

There was striking agreement between the problems reported by sponsors on the one hand and suppliers on the other. The two lists may have varied a bit in language and emphasis, but both prominently featured these five problems:
  • poor expectation management
  • lack of ongoing support and attention from the project team
  • lack of objective performance measures and accountability
  • issue escalation failure
  • loss of "lessons learned" benefits.

Poor Expectation Management Across the board, expectation management was the top problem cited by both sponsors and suppliers. There are several key warning signs of poor expectation management. Problems don't receive attention proportional to their importance. The smallest issues get communicated quickly because teams feel comfortable managing small conflicts. But larger, more serious issues get handled slowly. There are frequent negative surprises. And as issues emerge, both parties discover that there is no defined path or time frame for getting them resolved.

Everyone would like projects to go perfectly every time, but in the dynamic R&D environment, it's impossible to foresee everything. There need to be plans for dealing with the various types of events that may crop up.

To solve expectation management problems, companies need to:

Document The industry is comfortable living with contracts, but at the end of the day it's impossible capture everything in a contract. Therefore, it is important to have a list that defines the "softer" side of the relationship, documenting expectations that don't necessarily find their way into a contract.

Keep the lines open It is common for the relevant parties at suppliers and sponsors to meet and greet at the beginning of a project. But that isn't enough. With the industry's many mergers, many CROs have had the experience of calling to resolve a problem only to discover that a study director or other executive has moved on to a different position in the organization. It is important to "keep the contacts warm," as one client puts it—to ensure that on a monthly or quarterly basis, people are just picking up the phone to make sure that dialogue still exists, the contact is still in the same position, and still has the same authority.

Get executive support A key part of expectation management is ensuring that decisions can be made as necessary. That can be undermined if the designated decision makers aren't confident in their ability to act. Make sure that higher-level managers in fact agree and that they make their agreement known.

Revisit the contract There has been a trend in recent years toward simplified contracts. That has mostly been a good thing, but in some cases there's been a loss of necessary detail. Some companies are hesitant to include mutual metrics as part of contracts, but they are probably making a mistake. Both companies should be accountable for hitting goals, and contracts are an important way to accomplish that.


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