Today's Mission Critical: Making Sense of Spending on Clinical Trials - Pharmaceutical Executive


Today's Mission Critical: Making Sense of Spending on Clinical Trials

Pharmaceutical Executive

Treiber: We have to meet a certain profit and revenue target and the trial spending feeds into that. Failure to meet the thresholds ratchets all the way down through the organization.

Popovici: Our target is linked to the overall R&D budget performance. Management acknowledges that you cannot run each study or program at the same threshold. It's the overall target that counts. The efforts we make around budget transparency and balancing between the different programs facilitates reaching that R&D goal.

Looney: I want to ask Andy Grygiel how ClearTrial sees the budgeting environment for companies today. Are the views expressed so far in accordance with what you see from clients?

Grygiel: There is significant pressure on staying within those budget variances. We see considerable interest in our software tools that help companies prepare accurate—and defensible—trial budgets. Another priority is building platforms that integrate functions and allow for the optimal exchange of information—information that is accessible and understood. Success in budgeting is mostly about having a common vocabulary. Technology is advancing to make that happen, seamlessly.

It is surprising, however, that few companies are seeking to apply this technology to understand the many marginal differences that occur through the full budget lifecycle, in terms of what was contracted for and what was actually delivered or spent.This can add up and the question should arise, if we performed these tweaks, what kind of additional savings or efficiencies could we expect? It's a question that's just not being asked.

Looney: Do trial budgets figure in thinking at the top of the "c-suite." Wouldn't the typical CEO say getting to registration is what counts and if you have to spend more to get there, then the end justifies the means?

Guzman: Trial costs have advanced to the point that they can affect the revenues you expect to obtain once a product is commercialized. The NPV calculation matters and leaders are appropriately focused on that.

Getz: The new reality is that trials are so long and expensive, just as more pressure is put on companies to deliver results in the short term. The CEO has to ensure a balance between the two. Like everything else, the clinical trial has to evidence value in supporting the path to commercialization, efficiently, and at lowest possible cost. In the days when there were blockbusters able to command multiple billions of dollars in sales, companies could overlook a 40 percent variance in trial budgeting. Today, margins are often razor thin so you don't wish to be saddled with a big overhang from the trial, especially as many of these trials are now Phase IV—post marketing.

Looney: With the Tufts study now out, are there other areas where the Center can make a contribution around budget awareness?

Treiber: Scrutiny is needed around the complexity of the trial protocol. Industry is collecting massive amounts of data at considerable cost, and often little of it is actually used.

Getz: The Center is about to publish a study that estimates the economic cost of unused protocol trial data. There is so much clutter in protocol designs today. Companies collect data that is not tied to the primary or secondary endpoint because it is assumed that regulators will want to have it. Or that adding a single procedure to the protocol might be useful sometime in the future. The point is the cost of doing all of these tertiary and exploratory procedures really adds up.

Looney: What are the key organization and functional skills that are required to address many of the environmental issues we have discussed and keep pace with rapid changes in the trial process? Do you have the proper resources to excel?

Guzman: Coordination is a critical element in the trial manager's toolkit. Clinical operations, therapeutic programs, and finance all have to work together to build more efficiency into what has become a very complex process, with many moving parts. Getting the right information to the right people, at the right time is vital, and that information must include the financial implications of every decision that we make on a trial. What we see often in the long range planning around new compounds is a heavy focus on the science. And that is appropriate because if there is no scientific merit, why waste time and resources? Increasingly, however, the costs of development are such that true scientific merit may be unclear for an early stage asset, when you are putting a price tag on getting it to Phase III.

Treiber: I would add oversight capabilities to the armamentarium. We have a lot of people who are good at running trials but not so good at overseeing progress and certifying results. The latter cannot really be taught; it comes with experience. And, generally, the industry does not have enough of these people.

Looney: How does the regulatory agency viewpoint on risk affect your mandate and the workload in financing good clinical trials?

Getz: The FDA and also the EMA have lately been very busy, particularly in defining the relationship between risk and benefit. When the agencies act, it usually leads to higher costs to industry. This is because an action by the FDA with the goal of streamlining an activity actually tends to motivate companies to allocate more resources. The one area where this may not hold true is risk-based monitoring. The FDA and the EMA hope to see companies ease study monitor burden through a risk-based approach versus 100 percent source data verification. Given that CROs are the primary provider of monitoring services, with a growing percentage of relationships under preferred pricing arrangements, I expect to see CROs reduce their study monitor headcount in anticipation of risk-based approaches. This practice will boost CRO profitability, but it may ultimately reduce overall monitoring capacity.


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