Keep your eye on the details. Too much big picture thinking about the type of pharmaceutical outsourcing arrangement best suited to your needs—full-service versus function specific—may well be a costly distraction in terms of money, time, project success, and your professional reputation.

When it comes to the outsourcing of pharmaceutical and biotech development and manufacturing, stick to the basics: determine who does what — and when — put it in writing, and make sure it’s understood and agreed to by all players on both sides of the relationship.

“There can be many assumptions in the [manufacturing] technology transfer process,” says Robert Haggerty, vice president for quality at Hyaluron Contract Manufacturing (Burlington, Mass.). “I usually require all background information to be submitted in writing to get us all on the same page quickly. Also, many different departments are involved from the customer company. A primary contact with each organization is critical for the flow of consistent information.”

Harder than It Looks
And unless you’re a big gun with lots of experience managing pharmaceutical outsourcing projects, there’s a good chance that you’ll underestimate the time that a contract service provider requires (Fig. 1). There’s also a good chance that your understanding of both the contractor’s capabilities and its role in the success of your project will be different than that of the contractor (Fig. 2). Miscommunication and misalignment are two words that come up repeatedly when consultants and practitioners relate outsourcing war stories, whether the nature of the outsourcing is clinical development, involving contract research organizations (CROs), or manufacturing, involving contract manufacturing organizations (CMOs).

“There is often an underestimation of time and involvement,” says Haggerty. “Some of the smaller organizations have highly skilled personnel in a distinct discipline who now have much broader responsibilities in their new startup company. Startup companies have fewer staff members to accomplish the same amount of work in a given timeframe as larger companies. Underestimations of what it will take to achieve the work can lead to significant stress for all involved as the timelines have already been set. We work very hard to identify all needs for customers.”

Relationship management is key on both sides of any outsourcing project and it’s the fundamentals that must be communicated and aligned.

The Basics
“There is basic blocking and tackling that’s missing” from many pharmaceutical outsourcing relationships, says Todd Hintze, a principal at the consultancy Everest Group (Dallas). “Specifically, governance and performance metrics.”

Hintze says that to formulate better outsourcing partnerships, you must understand the context of outsourcing versus staff augmentation. In outsourcing, the goal is to develop solutions jointly, which implies a sharing of risk and reward. Staff augmentation is one reason sponsors use a contract service provider, but it’s far from the only one.
In true outsourcing, the sponsor transfers ownership of a business process to a supplier, says Hintze. That transfer of control is what distinguishes the outsourcing concept from that of simple staff augmentation, in which the sponsor retains control of the process.

“Outsourcing focuses on the ‘what’ and not the ‘how’,” says Hintze. The buyer does not tell the supplier what to do but, rather, focuses on communicating the results it wants to buy. The buyer leaves the process of accomplishing these results to the service provider.

Metrics Count
Managing such an outsourcing relationship, of course, requires different techniques than those used to manage a staff augmentation contract. Both require metrics put in place as a bellwether to warn managers when projects drift off course.

“Metrics are not meant to be a baton used to beat the CRO into submission,” says Hintze. The idea is to create a mode of preventing the CRO from failing, rather than an environment in which you catch it failing. “You need a handful of performance metrics—not a ton—and consequences for both parties if they are not met,” he says.
Clinical site satisfaction is an example of a performance metric applicable in a sponsor/CRO relationship. A sponsor company may or may not use the same CRO for future studies, but it will likely use the same clinic. So the sponsor must watch the CRO’s relationship with the clinic, making sure that the CRO doesn’t place the sponsor/clinic relationship in jeopardy.

Site Satisfaction Surveys
“So I require the CRO to come back regularly with site satisfaction surveys,” says Hintze. “Make sure the investigator is satisfied with the work of [the] CRO. In some instances, there have been impacts [when the investigator was dissatisfied]. The CRO had poisoned the well, and the sponsor couldn’t go back to that clinic.”

Other metrics can be more objective and quantitative. Are payments timely? Hintze says he is aware of sponsors making clinic-related prepayments to CROs, only to have the CRO hold those payments, causing late payment to the investigator.

The point is that metrics must be defined up front. Hintze notes what he labels a “disturbing trend,” based on annual Everest Group CRO effectiveness surveys, of fewer sponsor and CRO respondents indicating that metrics had been defined prior to contract award.

“Few [sponsor/CRO relationships] have robust and well-enforced metrics,” says Hintze (Fig. 3, p. 17).

Metrics vs. Model
What has perhaps taken some sponsor focus away from the basics of managing outsourcing relationships is what might be called model distraction. Some service providers, in their zeal to differentiate their offerings from competitors’, have gone to great lengths to illustrate the advantages and disadvantages of traditional full-service outsourcing of clinical trials versus the outsourcing of particular clinical functions. And it appears that many of those charged with managing such relationships within sponsor companies have taken the bait.

“If I look across all [of Everest’s] pharmaceutical clients, they seem to be fascinated about this [full-service versus functional service provider] topic. Some get caught up in the hype of ‘what’s the right model for me?’” says Hintze . “That’s second-order business. Focus on the basics.”

Diverging Expectations
Another one of the basics is managing expectations. Interpreting the survey results, Hintze says he sees “a significant divergence of sponsor and CRO expectations” in how sponsors will work with service providers over the next two to three years.

Chief among those expectations is the extent to which sponsors plan to rely on CROs as enterprise partners, though differences are apparent across all types of outsourcing approaches. Among CRO respondents, 62% said that they expect sponsors’ relative use of CROs as enterprise partners to increase or greatly increase, whereas only 27% of sponsor respondents said they see it that way.

A similar, albeit less marked, divergence can be seen in responses concerning the functional and full-service outsourcing approaches. In both cases, CRO respondents and their sponsor counterparts remain about 20 percentage points apart in their expectations.
DifferENT Visions

Concerning the more traditional outsourcing approaches—staff augmentation and task outsourcing—CRO and sponsor respondents see much closer to eye to eye.
Such divergent thinking “will go as far as the market lets it,” says Hintze. But he adds that clinical trials in general have become a lot more well controlled.

In fact, he says that after years of experimentation, sponsors are beginning to focus on what he sees as a preferred CRO engagement model: Exclusive models are generally reserved for task outsourcing; full-service models are prevailing as the dominant engagement approach, despite the mighty efforts of the functional service provider model advocates. And, despite the wishful thinking of some CRO executives, enterprise partnerships are rarely formed.

High Value Combination
But that’s not stopping CROs from making business deals that might attract sponsors. In late August, data management solutions provider Phase Forward (Waltham, Mass.) announced a multi-year alliance deal with CRO AAIPharma Inc. (Wilmington, N.C.), in which AAIPharma will offer services based on two Phase Forward products: the InForm Integrated Trial Management electronic data capture (EDC) system and the Clintrial clinical data management product used for collecting, managing, and reviewing electronically captured and paper-based study data.

“As EDC adoption continues, it’s important that we offer technology that sponsors view as industry standard, while also supporting those clients requiring a solution that supports both electronic and paper-based trials,” says Anne Wiles, senior vice president for data systems and processes at AAIPharma, in a company announcement.

Theory versus Practice
Despite the intricacies of outsourcing theory, business appears to be booming. The CRO Encorium Group, Inc. (Wayne, Pa.), for example, landed three contracts this summer: one with a Japanese biotech company, another with an Israeli company, and the third involving a Phase 2 trial for a client that has yet to be named.

Encorium announced in July that it had signed a $1.7-million contract with the unnamed Japanese biotech company for a Phase 2 clinical trial of a drug designed to treat major depressive disorder, or clinical depression. Encorium’s role will involve multiple services, including program consulting, project management, site management and monitoring, data management, biostatistical support, and medical writing.

Kai E. Lindevall, MD, PhD, Encorium’s president for international operations, said in an announcement that the company is “seeing increasing interest within the Japanese biopharmaceutical industry” for both drug development services and geographic reach.

Diabetes Treatment
Encorium also inked a deal with Oramed Pharmaceuticals, Inc. (Jerusalem, Israel), in which it will help develop the oral delivery specialist’s lead product for treatment of diabetes mellitus: an orally ingestible soft gel insulin capsule. Encorium will assist Oramed in the design and oversight of a scientific and regulatory plan for the filing of the drug maker’s oral insulin product worldwide. Initial focus is on the opening of an investigational new drug application (IND) and its subsequent filing with the United States Food and Drug Administration.

The third Encorium deal was announced in late June, and it involves a $3.8-million contract with an unnamed client for a Phase 2 clinical trial of an antiviral agent designed to treat herpes zoster (shingles). The disease is caused by reactivation of the varicella zoster (chicken pox) virus (VZV), sometimes decades after exposure to naturally occurring or vaccine type VZV. Some 500,000 to 1 million cases of zoster are diagnosed annually in the U.S., and about 20% of people who have had chicken pox will get zoster.
In the deal, Encorium will provide multiple services, including program consulting, project management, site management and monitoring, data management, biostatistical support, and medical writing.

Miller is a frequent contributor to PFQ. Reach him at geo.miller1@verizon.net.