Untying the Outsourcing Knot

June 1, 2005
Jon Koch

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-06-01-2005, Volume 0, Issue 0

Pharma trial sponsors and their CROs should enlist the support of high-level executives to make sure designated decision makers are fully confident in their ability to act.

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.

Lack of Team Support

Expectation management is all about communication. But lack of team support is a problem rooted more in execution and metrics. The warning signs are familiar:

  • Performance deviates from expectations or contractual obligations

  • Decisions are made slowly, so issues take too long to be resolved

  • Financial or contractual issues linger, or there are unidentified scope changes

  • Senior management is involved late and is pressured for quick decisions.

The problem in many cases is that management gives most of its attention to the project up-front. The project teams within both companies get lots of attention at the beginning and are set on their path. But it's easy for these teams to get lost in day-to-day execution and lose sight of broader goals.

A Sunny Forecast for CROs

What happens when they lose sight? Several sponsor companies in the survey told similar stories: They were working with a CRO, and three-quarters of the way through the study, there was a scope change or financial amendment to the project that almost doubled costs.

Support is often (mis)handled today, but there successful models to follow. The key differences have to do with how senior management, outsourcing/contracts, and account management approach the project. In a successful model, those people stay in touch throughout the duration of the project, ideally on a quarterly basis, or even more often in some cases. The idea is not to use up a lot of executives' time, but rather to establish a continuous cycle of visibility.

To make this work, it is essential to put in place mechanisms that force interactions at all levels and across functions. The following five mechanisms have proven effective:

  • correlated performance reviews

  • project halfway point assessments

  • planned financial meetings

  • project steering committees
  • post-study evaluations.

Participants can include senior management, the outsourcing, contracts or finance departments, project representatives, and quality assurance. A benefit of any of these mechanisms is that they put upper-level managers together with project-level teams. Occasionally, when project-level teams work closely together, they may hesitate to raise concerns or give critical feedback because they must get along with each other. People from the next level up will tend to be more objective and better able to handle the issues.

Lack of Performance Measures

One concern raised by companies is that day-to-day, week-to-week, and month-to-month performance isn't visible. If there's low visibility of performance, or it's difficult for executives to really understand the performance measures, it's a sign that those metrics were never established—or simply aren't being followed.

For instance, one metric in clinical trials is how many case report pages are completed, but still out in the field. It's a basic number that can identify a backlog. If too large a backlog of pages builds up, it will be a struggle to meet a database lock deadline. Yet, surprisingly, some sponsors and CROs don't track pages.

Sponsors seem to have two philosophies of metrics. In one, the company outsources its research and holds the CRO accountable to timelines, milestones, and so forth. The sponsor company, meanwhile, doesn't hold its own internal team accountable in the same way. This creates the frustrating situation when a CRO meets its deadline, submits material to the sponsor expecting a three-day turn-around, and then waits weeks for a response. (CROs, of course, do similar things to sponsors.)

Some smaller companies are starting to adopt a different philosophy. They don't differentiate: They hold their internal team to the same expectations for timely completion and turn-around and feedback as their CRO. That trend needs to accelerate.

To solve the problem of missing objective measures:

  • Performance measures should be identified at the proposal stage and be included in the contract

  • Tracking mechanisms must be in place prior to the initiation of the study

  • Both parties should agree on predefined assessment points
  • Results should be reviewed at multiple levels.

From the sponsor perspective, a handful of metrics are particularly important: timeline, action completion and follow-up, scope control, budget management, and turnover. In addition, depending on the scope of the study, site and patient enrollment may also be key. Increasingly companies are creating "dashboards" to give executives a quick overview of what is going well and what is not.

Escalation Failure

As problems emerge, team members need to bring them up through the hierarchy to the proper level so they can be resolved. But survey participants said that often didn't happen. Sometimes issues languished to the point of jeopardizing critical path activities. Other times, teams struggled to identify parties who were empowered to make decisions on scope of work, quality, or risk/benefit ratios.

It is crucial to have a highly defined escalation path naming specific points of contact and their authority to resolve various sorts of problems. Once the areas of concern have been identified, the paths mapped, and the whole plan agreed upon, it is important to test it before the study, making sure that people are aware that they're part of the path and understand their responsibility in it. Again, higher-level executives need to understand and support the plan in advance.

Loss of Lessons Learned

Clinical research organizations today handle hundreds or thousands of trials at a time. And in a rapidly changing environment, they frequently learn valuable lessons, either about things that went wonderfully and can possibly be replicated elsewhere, or about things that went badly and should be avoided in the future. But often at the end of studies, sponsors and providers are both so geared to moving on to the next step that they skip the process of looking at what went right and what went wrong. When that happens, lessons are lost—mistakes are repeated across projects, providers, and sponsors; and experience becomes dependent on people rather than becoming institutional.

Solutions include:

  • Enforce the need for documentation

  • Instill openness and collaborative resolution from the start

  • Periodically survey the team for clear examples of what is and isn't working

  • Review collective materials at study conclusion and take appropriate actions.

Because so many lessons get lost at the ends of projects, it might be useful to build in a capture mechanism earlier in the cycle. Some pharmaceutical companies use a midway review. They select a point halfway through the study and have a formal dialogue between internal employees and their CROs about what's been successful, what hasn't, how things can be improved, and what ideas could be used elsewhere.

In our own organization, we have conducted an standard operating procedure sharing exercise. Our client was managing the trial itself. The scientific results delivered by the company and by our organization were the same, but there were differences in various areas of service or activities that led to either faster results or more effective results. Both companies got together and shared policies and standard operating procedures, and both came away with some useful ideas.