Steps to Functional Service Provider Success

Outsourcing fundamentals for this pick-and-choose model so that both sponsors and service providers win.
Aug 01, 2008

Outsourcing clinical trials has become standard practice in the biotech and pharmaceutical industries as companies strive to develop greater efficiencies while reducing costs, resources, and timelines.1 As the industry's experience with outsourcing has grown, two basic outsourcing models have emerged: the Preferred Provider (PP) relationship and the Functional Service Provider (FSP) relationship.

The Preferred Provider model has been widely adopted by most sponsor companies when planning to fully outsource a study to one clinical research organization (CRO). The Functional Service Provider model is beginning to gain popularity, as many sponsor companies are tasked with finding creative outsourcing strategies that will gain efficiency while saving valuable research dollars.

Initially, the functional outsourcing model was employed for just a few functions (e.g., monitoring or data management).2 Today, however, FSPs provide far more than just monitoring and data management. Rather than outsourcing a complete trial to a single CRO, a growing number of pharma and biotech companies are opting for this outsourcing strategy in regulatory document preparation, investigator contract negotiations, site identification and initiation, biostatistics, medical writing, and more.

Benefits and pitfalls

Because project ownership remains in-house, companies that use functional outsourcing may experience higher levels of quality control yet have access to specific services at a lower overall cost. Sponsor companies benefit from being able to ramp up and draw down resources relative to their development activity levels without affecting their internal head count.

Figure 1. As this clinical study resource and cost report demonstrates, companies utilizing multiple service providers on a study should plan to account for duplicate or overlapping costs for operational elements such as project initiation and study set up.
Figure 1, however, illustrates an often overlooked component of the FSP model: some operational costs, such as project initiation and study setup, will increase due to the multiple service providers involved. Each provider will need to incur costs associated with familiarizing themselves with the project scope, the protocol, and attendance at startup meetings. It's important to take into account the increase in both project management hours and costs resulting from the effort required to oversee and manage functional outsourcing providers.

In some cases, companies have effectively collaborated with functional service providers by negotiating strategic staffing transfers (i.e., they have transferred some of their internal employees to the employ of the FSP team). This arrangement produces a provider team that is already steeped in the sponsor company's culture, processes, and systems. Most companies also find that by focusing on their core competencies and outsourcing other noncore functions, they can better allocate internal resources and operate more efficiently.3 Another advantage is that once companies are relieved of personnel worries, they can give greater attention to their clinical development strategies.

Cultural fit is a major factor in successful sponsor–FSP relationships. Be wary of the vendor with a knight on a white horse attitude. "We know what you want, we are the experts, now leave us alone to deliver," is not a philosophy that fosters collaboration. And collaboration is essential for a partnership to manage changes such as implementing new technologies. A successful partnership requires consideration and assessment of each party's interests; these are essential to addressing such issues as: What happens when the sponsor requires a quick ramp up by the FSP provider due to new development activities? What if there are lulls in the pipeline when the FSP may receive no work? These are issues that require advanced planning and mutual trust.

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