In the past, those responsible for acquiring and deploying software for important corporate functions would begin internal discussions with the tried and true question: Should we buy or should we build it? This question was quite rational and fostered extensive discussion. However, for major applications at almost any company, the debate is over. 

Few companies today would consider building their own general accounting ledger system or a customer relationship system—even if their core business was software development. High-quality, reliable, and sophisticated software exists for all major types of enterprise corporate functions and is designed to be customized and integrated with other systems while still being commercial, off-the-shelf software (COTS). 

For the record, I am not trying to imply that such software is always ideal or bug and frustration free. But it is generally available in a robust and scalable form that is a good match for the needs of customers. In addition, the last few years have brought an additional question: Should we rent? 

Going back a few decades, corporate IT in large companies may have considered a buy vs. build decision for just about any software contemplated. At the time, COTS may have been difficult to use, prone to problems and data loss, and somewhat limited in functionality and customization. The alternative—to direct an internal team or external consultants to build a customized product with exactly the functionality needed—seemed a very attractive alternative. 

Some home grown systems functioned quite well for many years in corporate environments. However, the systems would often require ongoing maintenance and expansion to meet the growing needs of the business, and eventually those systems became a source of significant corporate expense and user frustration. In a scenario that repeated itself from industry to industry, from application to application, a few COTS applications in each area would eventually emerge as being modern, robust, and fully featured. 

While the COTS might not have had exactly the functionality desired or exactly fit the process being used, it was compelling enough to purchase and deploy. Often, it would take several major upgrades until the COTS application was "perfect" for the organization, and sometimes it simply required an evolution from users who were accustomed to the old, custom system to new users without any previous experience. 

In the end, the elimination of internal maintenance, support, and development—as well as user frustration—typically made the migration from a custom software system to COTS a winning proposition for the company. 

While each industry is different, the general evolution of software deployment is very similar between them, though it may drastically differ in the pace and timing. As we have already seen, software may arise from internal projects, consulting engagements or commercial offerings with limited functionality and flexibility. 

Some companies will build their own solutions (occasionally more than once!) and passionately feed and care for them. Other companies will pilot one or more of the existing solutions, finding none satisfactory. If the software has a large market and/or is horizontal (i.e., applicable in many industries), vendors will invest in and continue to improve their software. And for a time, many vendors may appear with competing solutions. Eventually, a few products/vendors will emerge from the competing vendors as the choice for most of the buyers. 

Over time, this lead may shift from company to company, and disruptive technologies/companies may emerge from the pack and take the lead. The major theme, however, is consolidation and concentration of the market, which creates the level of customer support necessary to sustain these companies. 

The concentration that occurs is almost universal because it is driven by recurrent market forces. Buyers focus on the companies with the best combination of features and services and look for products that are used by many other companies. These companies have more money to develop and expand their product, and thus become even more attractive to the buyers. 

The focus on two or three products in a market is a winning proposition for almost everyone involved. The buyers get richer products and better services, especially if there is meaningful competition. The vendors can grow their companies, always staying alert for the competition. The only ones who lose are the companies that are not one of the leaders or acquired by a leader. 

There are many areas in which the there are fewer vendors or less mature solutions to meet emerging or important needs of companies. Also, in some areas there may be a group of vendors/COTS with no particular leader, or a series of custom built products. This often happens where there isn't a large enough market and/or enough critical mass of customers to drive any particular solution to a leadership position. These are often referred to as boutique markets or boutique software products. These markets are the primary place today where IT departments may drive a buy versus build discussion. 

The argument to build a solution, whether internally or with consultants, will arise from arguments that the specific needs of a company are unique or that none of the COTS products available on the market have the right functions. This reasoning may be true in some cases, but often these types of conclusions arise from some faulty assumptions and/or political considerations. 

Reluctance on the part of the organization to examine and change processes to meet those of an adequate COTS solution may lead to a custom solution that "bronzes the baby shoes"—linking poor business processes and workflow to the software for years to come. And the cost of developing and supporting a custom solution are often underestimated by orders of magnitude. In addition, the "imperfect" COTS solutions from existing vendors may be of higher quality and enforce better business processes than the planned custom software. 

Over the past 10 years, a dramatic change has entered the software market, enabled entirely by the emergence of the high bandwidth, universally accessible, and security enabled Internet. 

The Internet enabled the development of a business/software deployment model known as Software as a Service (SaaS), whereby enterprise software can be deployed from a central server by a third party. SaaS is deployed on a central server, either as an individual instance for each customer or in one large multitenant application. The software and its installation is managed entirely by the software vendor, and companies can use the software with little more than some initial configuration and training for users. 

One of the best known examples of SaaS is 

, which provides customer relationship management (CRM) for the sales force entirely as a service. 

 has made dramatic inroads with CRM customers, from the largest to the smallest companies, taking substantial market share away from longstanding traditional CRM software. 

The SaaS model dramatically disrupts the classic buy vs. build debate in several ways. First, SaaS software is typically offered as a subscription, with terms varying from one year to several years. SaaS software doesn't require a substantial upfront cost for building software or licensing, and the cost of using the software can be easily projected over several budget cycles. 

Next, the deployment of SaaS software doesn't require an army of IT and database professionals to manage the software and its users. Companies whose core competence isn't information technology no longer have to find and hire experts in the particular software being deployed or mange the peaks and valleys of demand for these resources. This is especially important for small companies such as biotechs. For large companies, a long-term analysis often shows a substantial savings in total cost of ownership when using SaaS. For these reasons, the SaaS model has been very successful in a wide range of companies, from the Fortune 500 to the 10 person startup. 

The SaaS model also provides the opportunity to try software before committing to it. Since the cost of buying and installing software is eliminated with SaaS, companies can pilot or choose to work with a particular solution without making a permanent commitment to that solution. This flexibility provides the opportunity to migrate to a new solution when a better one appears or another emerges with better functionality or services. 

Given the advantages of SaaS, why do some companies continue to buy and install enterprise software in many cases? There are many answers to this question that vary from legitimate business considerations to problematic internal politics. 

One of the most common points of resistance to SaaS software is a perceived need to manage software and data internally. IT organizations in companies often feel that they can do a better job at building and/or managing software than an external vendor. Although this may be true in some cases, a careful vendor selection through recent references and the use of service level agreements (SLAs) can provide assurance of quality and responsiveness. 

Some software needs are, indeed, highly specific and unique for an organization. In this case, it is highly unlikely that software of any type, whether licensed or delivered by SaaS, will be available or adequately supported/updated over time. The economics of developing software of this type simply don't make sense. With eyes wide open to the total costs of ownership, companies with this issue may choose to build the software themselves or with consultants.  

Any company that comes to the conclusion that they have a particular software need or process that is unique enough to require custom software should consider this conclusion very carefully. Every company thinks that their process or industry is unique, but the large majority of internal processes fit nicely into existing software and often can benefit from standardization. 

Another aspect of internal resistance to SaaS (and also, more traditionally licensed software) is the "Manhattan Project" complex that sometimes drives IT organizations to build software themselves. A major project, which includes substantial staff and budget increases and corporate-wide participation, can be very attractive to an IT organization. It is essential, in evaluating the need for such a project, that the real need be weighed against the substantial costs and high historical failure rates of these types of projects. 

As always, biopharmaceutical companies create value through innovation in science and medicine. Today, this type of innovation requires substantial management of data, processes, and information. Though this management is part of the core competence and even competitive advantage of the best biopharmaceutical companies, the development of the software required for this no longer needs to be. Today, the buy vs. build decision has been replaced, in the majority of circumstances, with buy vs. rent. 

MD, PhD, is the founder and chairman of Phase Forward, 880 Winter Street, Waltham, MA 02451, (888) 703-1122, 

Articles

Technology Viewpoint

With the option to rent, the buy vs. build debate over software is kaput when it comes to major applications.

The Classic Software Debate Takes a Turn

EDC continues to be a topic of discussion and exploration for many companies involved with clinical trials. While surveys of last year noted that EDC implementation had arrived, implying a static event, the truth is that EDC is an ongoing process of implementation, learning, changing, and upgrade.What else is true is the high number of companies that truly are making that move from paper-based trials to eClinical trials with EDC.  

 spoke to two people responsible for EDC and data decisions at their respective organizations: one a European-based pharmaceutical company; the other a small, start-up medical device company, also based in Europe. Their products in development are different, the size of their organizations are different, but when push came to shove, both realized they needed the function of an electronic Case Report Form (CRF). And each has found numerous benefits in using the Web-based solution they chose. 

Alastair Clewlow, head of clinical data and document management 

Ballerup, Denmark, with worldwide locations

Update to Web-based system to eliminate PDF issues

EDC implementation is a journey, not a destination. What was good two years ago becomes archaic, then companies move to the next level of innovation. In that journey, LEO Pharma is no exception. LEO Pharma, a Denmark-based independent research company, focuses on dermatology, coagulation, and nephrology, and has offices in over 40 countries. Currently, the company has five active studies, with an expected 12 by year's end. 

 spoke with Alastair Clewlow, head of clinical data and document management at LEO Pharma regarding its EDC journey. 

In 2001, the company realized its old system would be unable to keep pace with new quality validation requirements, setting the stage to purchase a new, commercial product. Based on previous difficulty in collecting data in one format from multiple CROs, the company chose Oracle Clinical. 

At that point, its clinical trials were still paper-based. "We were aware of EDC/RDC. We knew we wanted to eventually adopt RDC/EDC because of the ability for collecting quicker and cleaner data. We were also aware that RDC [remote data capture] was a component to Oracle Clinical, but we weren't sure how easy it was to get it up and running," explained Clewlow. Because RDC is integrated into Oracle Clinical, it was easy to launch and left the company only to develop the processes required to move from paper data collection to remote and electronic data collection among the varying sites. 

The company deployed Oracle Remote Data Capture in 2005 and achieved benefits including the elimination of in-house data entry; no expenses for printing, distribution, and filing of CRFs; and a decrease in last patient visit to database lock from six to 12 weeks to one to two weeks. LEO Pharma has kept pace with Oracle's updated RDC versions. But it is Oracle's latest version, RDC 4.5.3, that has left Clewlow impressed. 

"It's no secret that the PDF technology in Oracle RDC has been difficult to troubleshoot," said Clewlow. These issues were related to Adobe Acrobat reader and plug-ins. RDC 4.5.3 is HTML-based, so implementation of software is no longer an issue and sites only need their Web browser for access. According to Clewlow, the functions and features between 4.5.2 and 4.5.3 are not significantly different, and users were allowed to use the old version even with the availability of the new. There was no overnight migration and this allowed LEO Pharma's CRAs and sites to switch over to the HTML-based version when they felt comfortable. 

Clewlow says they have seen significant benefits already with the new version. The CRF pages are opening in approximately half the time. "We did approximate timings on how long it took to get in the system, open, log in, and enter data in the new version versus the PDF. Speed is dependent on a number of things including the local PC, internet access, but we are seeing quicker open rates," said Clewlow. 

Another measure Clewlow took was of the amount of time it took data to be entered after the patient visit. With the old version, 85% of the data was entered within one week of the visit. That number has now jumped to 95%. This finding, however, can't be solely attributed to the new version. 

At the same time it moved to RDC 4.5.3, LEO Pharma also redesigned its CRFs. In another by-product of moving from paper-based trials to etrials, the company discovered it was including a lot of "white space" and unnecessary information into the electronic CRF. For example, Clewlow said in one dermatology trial, there was a page of detailed definitions for the assessment of disease severity. In using a paper-CRF while sitting with a patient, this might make sense looking for definitions and flipping through pages. Translated to electronic, however, led to a lot of time spent scrolling through unnecessary information. "Those definitions can be found in the protocol, or presented elsewhere," said Clewlow. "By getting rid of them in the electronic version, the CRF is actually 75% less in size." Adopting features that electronic offers and not just replicating the paper process is another factor of the EDC journey. 

A final note to the bookmark, hyperlink process for the Patient Data Reports collected for submission. Clewlow noted that version 4.5.3 has all the bookmarking and hyperlinking capability needed. "Previously, it took easily a month to do the scanning and treatments for a paper-based trial. That in itself pays for the upgrade," says Clewlow. 

"Two years ago, the EDC market leaders may have had better products and features," said Clewlow. "But now Oracle's latest version compares well to them." 

Anuschirawan Hekmat, PhD, vice president of quality management & regulatory affairs 

Move from paper-based CRFs to eCRFs on a Web-based system

For this medical device start-up, its first foray into EDC began with a six to nine month evaluation period of about 12 EDC products. In the end, Retina Implant AG decided on OpenClinica, an open source software with open standards. "I thought it was the easiest for a start-up. We could use open source and host it ourselves on our server," explained Anuschirawan Hekmat, PhD, vice president of quality management & regulatory affairs at Retina Implant AG. "We could build, modify repeatedly, and use our own CRFs. Ease of use with OpenClinica was the major feature." 

Not to mention the cost of hosting fees. For Hekmat, numbers of $50,000 USD a year to host its EDC system seemed more in line with the big pharma companies and their larger budgets. For the German medical device start-up, the money spent on purchasing a Web server, hiring an IT consultant to set up OpenClinica, and investing in future training seemed more practical. 

Last summer, Retina Implant started using OpenClinica for its latest trial, which is comprised of 11 studies. Currently, five of those studies have acquired subjects and are up and running with the OpenClinica CRF process. Randomization of study subjects are done outside OpenClinica, as it doesn't have this feature. So far, Hekmat is appreciative of the flexibility of the platform, its ease of use among the global site staff, and the ability to view data in real-time via the Web browser. 

Hekmat believes the flexibility to create, edit, and upload the CRFs to the sites is crucial in the European medical device world, which is predicated on incremental proof-of-concept studies. In 2003, Retina Implant AG was founded with the goal to place the first fully functioning electronic retinal prosthesis for visually handicapped and blind people. "In the United States, the IDE is based on the model and the design is frozen. Then they test it in trials. With our retinal product in Europe, we test it in one patient at a time. It is in controlled use and we do the changes in pilot trials and make changes quickly, but in a controlled fashion using a process validation and qualification model" explained Hekmat. "With our product, people who were totally blind are able to see a white plate on a black tablecloth. But it won't stop there, we want them to be able to read a large print newspaper." For Hekmat, the versatility to obtain clinical data is what is going to get the company to that point with its subjects. 

Hekmat describes the use of OpenClinica as "self-evident." "For the sites, it's easy to set up the trials. One form follows the other and proceeds from there. It is obvious to set up the case report forms," says Hekmat. 

Rapid data analysis by viewing eCRFs in real-time is also a plus. The data is exported into Excel, which factored into Hekmat's decision for OpenClinica. He wanted an application that would be easily integrated with other applications, and believes the Excel avenue offers that. The rest of the studies at Retina Implant are currently paper-based, and will be moving over to the eCRFs soon. 

Hekmat recently took some training classes at Akaza Research's Cambridge, MA, facility, although he maintains it is possible to use OpenClinica without training. He believes the online support manual and SOPs offer the installation recommendations needed to get it up and running easily. However, he also said that there is the potential to run into problems if you don't use a specialist to set up the system. 

Akaza Research provides the open source software and provides support, training, and consulting services to users of the free software. Ben Baumann, director of business development at Akaza, says that it is the smaller biotechs, sponsors, and CROs, as well as academia, government, universities, and cancer centers that are registering to download OpenClinica at 

. "The price point is accessible," said Baumann. "It allows them to be more competitive to do research when they have their own systems." 

News

The story of two very different companies' transition to electronic.

Adventures in Web-Based EDC

, PhD, will lead the development of biomarkers through Phases I-IV in his new role as vice president of scientific affairs at 

' (King of Prussia, PA) global central lab network. 

 (Research Triangle Park, NC) senior management team has two new players: 

, senior vice president of global marketing and chief marketing officer, and 

, senior vice president of communication and patient recruitment. 

 (Brentwood, TN) hired three new staff members. New hires include 

, marketing communications research specialist; and 

 (Boston, MA) promoted 11-year company veteran 

, MD, to chief operating officer. Dr. Goldberg previously served as president of two of Parexel's three business segments: Clinical Research Services and Perceptive Informatics, which he will continue to oversee in his new role. 

After 17 years with the Center for Drug Evaluation and Research, 

 (Cincinnati, OH) to serve as principal CMC consultant in the company's regulatory affairs and quality group.

 (Chapel Hill, NC) announced the election of 

, director of its Massachusetts office and senior statistical scientist, to the 

Biopharmaceutical Section of the American Statistical Association

 (ASA). Dr. Monti will serve a three-year term as ASA's Chair-Elect in 2009, Chair in 2010, and Past-Chair in 2011.

, MBA, is the new director of clinical programming at 

 (Wayne, PA), where he will oversee all statistical programming projects and initiatives.

, a Turnhout, Belgium-based biopharmaceutical company formed in 2007, appointed two new members to its senior management team: 

 senior director of clinical operations and 

 clinical research project manager. Both women bring years of management experience to their new positions.

 (Cambridge, MA), "one of the most experienced clinical research professionals in the field" has joined the company with the recent addition of 

 as senior director of clinical operations and data management.

. (Ft. Lauderdale, FL) as vice president of technical operations. He most recently served as director of research & development informatics at Amgen (Thousand Oaks, CA).

A new Cardiac Scientific Advisory Board made up of global experts will advise 

 (Dublin, Ireland) Warrington, PA-based Medical Imaging division. Members include 

, MD, of the University of California, San Francisco; 

, MD, chief of clinical research in cardiology at Harvard's Beth Israel Deaconess Medical Center; 

, MD, PhD, of John Radcliffe Hospital in Oxford and Oxford professor of cardiac ultrasound; and 

, MD, associate professor of medicine at Harvard Medical School and director of noninvasive cardiology at Brigham and Women's Hospital in Boston.

 (San Ramon, CA) Prism software for being able to publish results from a nine month, Phase IIa Alzheimer's trial in less than seven weeks after last patient visit.

In a new public–private partnership, New York's 

 (Rockville, MD) will develop a national data repository of thousands of ECG recordings for use by academic and industry researchers. The goal of the Telemetric and Holter Electrocardiogram Warehouse (THEW)—as it will be known—is to improve cardiac safety monitoring in R&D through more precise measurement methods.

 (Tucson, AZ) announced they have formed an alliance that will increase the number of service offerings available to both companies' clients.

 (Waltham, MA) is integrating its InForm integrated trial management system with 

 (Boston, MA) imaging transport network to create a solution that removes the post office from the process of shipping trial images to core labs. With the new solution, sponsors can track, manage, and send images electronically and labs can enter their analysis data directly into the Inform system.

 (Stamford, CT) Register, a Web-based regulatory solution that streamlines the management and tracking of global product submissions. And now—as the result of a recent comarketing deal—Register users have the option to use A4L (ALiCE for Labeling), 

 (Toronto, ON) XML-based global labeling solution.

 (Sydney) received Frost & Sullivan's Australian CRO of the Year award as part of its Excellence in Healthcare Awards series for the Asia Pacific Region. According to Frost & Sullivan, Novotech won the award based on its significant revenue increase between 2005 and 2007, investments in IT capabilities, and its geographic expansion.

 (Brentwood, TN) took home three awards at the Healthcare Communication & Marketing Association's (HCMA) annual conference. From a pool of 900, HCMA selected the company as Best of Show for its "Have Patients!" campaign, for which it also won a Gold award—one of two it received.

 (Mountain View, CA) is one of the Top 50 Women Owned Businesses in Silicon Valley according to the 

. The CRO ranked 7th on the list, up two spots from last year's 9th.

Center for Information & Study on Clinical Research Participation

 (Princeton, NJ) received the award for "Supporting the Development of Educational Materials" for its collaboration with CISCRP on brochures about the risks and benefits of clinical trial volunteerism.

 (London, UK) walked away from the 44th DIA Annual Meeting with 

 (Redmond, WA) 2008 Pharmaceutical and Life Sciences Award in the category of Discovery & Product Innovation. The award recognized the pharma company's success with Thermo Scientific's Nautilus Laboratory Information Management System, which is built on Microsoft's Visual Studio.NET.

 magazine's 2008 list of 100 Best Places to Work in Information Technology. It was a first for Quintiles, which gave credit to the company's IT staff and its own efforts to attract whom it described as the best in the field.

Formalized training in the use of medical imaging in clinical trials is what the new 

Blinded Reader and Investigator Training Institute

 (BRITI) offers. Training and testing modules are provided online and locally to individuals or groups (blind readers, CRAs, clinicians, etc.) and cover topics such as clinical development, evaluation criteria, and regulatory requirements.

 (Wayne, PA) celebrated a milestone last month when StartingPoint—its global submission document authoring template suite—gained its 100th user. The company also recently outlined the integration strategy for ViewPoint Quantum, the next version of its enterprise process management system. The strategy: Connect data that support electronic submissions by connecting widely used document management systems to ViewPoint Quantum.

 (Mountain View, CA) has entered a new business market and broadened its suite of services available to existing clients with the expansion of its reporting and analysis service offerings to include preclinical & statistics, and data management.

 launched the first site management organization (SMO) in New Zealand, 

. The new SMO will conduct late phase studies for most diseases outside of cancer.

 (King of Prussia, PA), a physician-owned marketing firm that traditionally works with pharma on point-of-care branding applications, has expanded to include a patient recruitment division: SMI Clinical Trials. 

 will spearhead the division as director of patient recruitment.

 (Craigavon, UK) announced the establishment of a new division. The new company, Almac Discovery, will focus on early discovery and development of both cancer therapies and biomarkers, and plans to out license or partner on projects before or at proof-of-concept stage.

A paper on the use of mobile technology in capturing osteoarthritis patient data is now available from 

Centre of National Research on Disability and Rehabilitation Medicine

 (Queensland, Australia). "Electronic Data Capture Using the WOMAC NRS 3.1 Index: A Pilot Study of Cellular Technology in OA" can be downloaded as a PDF for free at 

 (London, UK, and Waltham, MA) recently welcomed new members to its Clinical Advisory Board. Five clinical and scientific experts now make up the board, including CRF Inc.'s own Rachael King, who chairs it.

Industry news focusing on the people and organizations who work in the clinical trials profession.

Business and People Update August 2008

Increasingly pharmaceutical and biotechnology firms are starting to explore the effectiveness of their outsourcing strategies. Outsourcing the many different aspects of drug development is not a new phenomenon and over the past two decades there is tangible evidence of a change in the way in which both providers and outsourcers approach outsourcing. 

PHOTOGRAPHY: GETTY IMAGES  ILLUSTRATION: PAUL A. BELCI 

The primary driver for this change in ethos and strategy is the need for the pharmaceutical industry to firstly understand the trends and forces within their own market sectors and then rethink their own approaches to both growth and cost management. This article reflects on the changes in strategic outsourcing and considers the mechanisms that have driven outsourcing from a commodity function to a model of partnership and risk sharing. 

There are a number of varying estimates on the size of the outsourcing marketplace but it was estimated in 2006 that the value of the drug development sector for the outsourcing industry was more than $10 billion.

  Another report proposes that the annual growth rate for pharmaceutical R&D outsourcing between 2001 and 2010 will be 16.3% per annum, resulting in a total market value of $36 billion by the end of this period.

  Whichever set of figures is used, there is no doubt that pharmaceutical R&D outsourcing is big business. 

There is, however, pressure on the manufacturers and owners of proprietary pharmaceutical and biotechnology medicines to reduce their costs while maintaining margins. This is becoming more pertinent, as rising R&D costs coupled with the large number of blockbusters that are losing their patent protection force an almost continual strategic and business model review. In its 2008 Outlook, Tufts Center for the Study of Drug Development quoted that the estimated cost to develop a new biopharmaceutical has surpassed the $1 billion mark.

  evenly between the preclinical and clinical phases of drug development, both of which use outsourced service providers to facilitate progression of the product along the drug development pipeline. 

While focus on shareholder value and increasing developmental costs are high on the list of forces driving the outsourcing market, they are not the sole factors. There are also perceived crises in both the sales and marketing and R&D function of the pharmaceutical industry, all of which are having an impact on how the sector responds. The consequence of all these factors coming together has resulted in a slow down in the productivity of pharmaceutical and biotechnology companies,

  with a significantly reduced level of products entering the drug development pipeline. 

To combat this, the strategy of choice during the early 2000s was mergers and acquisitions. This was seen as a key mechanism to improve research and development productivity; however, the result was a concerted period of consolidation among the top players. This has not been as fruitful as anticipated and the delta between where they are and where they wanted to be has not been sufficiently breached. Indeed, IMS Health reported in March 2008 that during 2007 the U.S. pharmaceutical market experienced its lowest growth rate since 1961. This has been attributed directly to the loss of exclusivity on branded products, the fewest number of new product launches, and increased safety issues and withdrawals of a number of products. 

As the pharmaceutical and biotechnology industries evolve, there is a tangible influence being exerted on the role of the outsourcing market in the resolution of these drivers. With evolution comes a cultural shift in the attitude of the industry toward vendors such as CROs, who are becoming a far more integrated part of a product's development. 

Outsourcing has traditionally been viewed as a commodity, primarily due to the fact that there was little differentiation across the sector. To a degree this has been a consequence of the approach that the top tier CROs have taken toward meeting the perceived need of the customer through being "one-stop shops." The outcome has meant that there was very little differentiation in terms of both portfolio and quality of the end product. Coupled with the fact that scientific equipment required for high-end discovery carried with it an expensive cost price, it was traditionally the regulatory driven high resource, low technicality work that was outsourced. Sponsor companies wanted to control the amount of proprietary information that was available to the vendors and often the relationship was based around a-need-to-know basis. 

Flipping to the barriers, it could be suggested that these are in the main more emotive than practical. It is human nature to hang on to what is tried and tested, and the thought of allowing someone else to have input into the development of the next big thing (and potentially a share of the profits) remains a significant hurdle that needs to be overcome. If we are to consider the perceived barriers to outsourcing R&D, it is easy to understand where this resistance is coming from. 

It may be desirable to have an integrated pharmaceutical company, however, the current economic climate dictates that sustaining such an overhead requires a large portfolio of good revenue generating products. As we have already noted, the lack of products entering into the pipeline coupled with diminishing patent protection and the hunger of the generics marketplace to have their own products in the market puts a strain on these revenues. Since 2003, while global pharmaceutical sales increased year on year the level of growth has correspondingly decreased year on year from 10.3% to only 6.4% in 2007.

  It is inevitable that something has to change. 

The classic model of outsourcing has been described as being a slave/master relationship—a description the pharmaceutical and biotechnology industry will possibly feel is somewhat harsh. In this model, the pharmaceutical and biotechnology sectors have utilized a nonstrategic and short-term approach of outsourcing on a fee for service basis. As dated as this concept may seem, it is popular. Data indicates that as recently as 2001, outsourcing was conducted in a nonstrategic, piecemeal fashion, simply outsourcing to meet a short-term resource shortage without considering the long-term perspective. It facilitates internal cost control and deals tactically with capacity requirements on a short-term focus that over time is supposed to provide cost reduction. 

While providing a short-term fix, the fee for service approach does little to build effective lines of communication, nor does it seek to build any sense of a long-term relationship or loyalty between the two parties. And over time, the fee for service relationship ultimately becomes frustrating for both. On the side of the CROs, there is the lack of visibility of a long-term commitment and fluctuating capacities. On the side of the outsourcer, there are increased prices and long lead times. 

In response, the biopharm industries have sought time to implement a more strategic approach to outsourcing. The aim: to promote an internal procurement approach that narrowed down the pool of possible vendors to a select few that would gain preferred supplier status. This would be based on a number of measurable criteria, including capacity, capability, quality, compliance, price, and culture. This approach has the potential for more strategic relationships that move toward a long-term understanding rather than a pick and mix approach involving multiple vendors that sometimes provide the same service but to different departments. 

From the CRO perspective, preferred provider relationships provide an opportunity for longer term forecasting and opportunities to secure continued and repeat business. This in turn provides smoother cash flows and potential for investment in the service and new areas of interest. 

With the vendor organizations focusing more and more on value added components, the dynamic of the agreement is changing and the transformation of the relationship to more of a partnership is becoming reality. The success of the model is contingent on the gradual erosion of the barriers that are noted in Table 1. When all parties involved share a common perspective on how partnerships work and have a strong commitment to making it work for the mutual success of both parties, the barriers become less of an obstacle. 

Table 1. Factors understood to be the main drivers and barriers for companies when it comes to outsourcing. 

Both parties should also be comfortable with the fact that a working partnership means sharing not just the risks but also the rewards and successes of the outcome. The systems and processes involved in the project will often be intertwined, and there may even be a sharing of resources in critical phases. 

In reality, the shift from commodity to partnership has failed to gather as much momentum as would have been hoped. There is still continued mistrust and a lack of faith in the value that properly constructed relationships between the pharmaceutical industry and CROs can provide. On the other side of the fence, the CROs feel that while it is in principle a partnership arrangement, the terms and conditions of the actual contract are those of the client, information does not always flow as readily as hoped, and internal management resources at the sponsor's end are not always sufficient to effectively manage the relationship. 

However, there are a number of strategic alliances and agreements between biopharm companies and outsourcing service providers that stand testament to the willingness of both parties to meet, share, and understand the dynamic of the relationship. The success in these alliances is the understanding that both parties come to the table with a clear area of expertise and capability and are afforded the latitude to control the processes that they are responsible for, focusing on their core competencies, and taking a back seat where and when required. Be it through risk sharing or facility for service arrangements, these arrangements work at the most basic level because there has been a mutual investment in the relationship by both parties. 

With over 100,000 scientists estimated to be employed worldwide by contract outsource providers, there is no lack of experience or capability within the vendor community. The real value for the pharmaceutical and biotechnology industries will not be through seeking to place all their eggs in the same basket through the old one-stop shop approach. Nor will it be through the fee for service arrangement. Rather, they need to seek out both large and small service providers that understand the needs of their customers and that add value to services through innovation. Sponsors can begin to leverage synergies in areas such as bioanalysis, pharmacogenomics/pharmacogenetics, and bioinformatics, where additional information can be brought to the development process. 

By working with each other rather than against each other, the shift from commodity to partnership will be truly realized and, as a consequence, both parties will see the benefit. 

 is general manager of Tepnel Research Products and Services, Appleton Place, Appleton Parkway, Livingston, West Lothian, EH54 7EZ, United Kingdom, 

 (Biopharm Knowledge Publishing, United Kingdom, 2006). 

Pharmaceutical R&D Outsourcing Strategies: An Analysis of Market Drivers and Resistors to 2010

3. J.A. DiMasi and H.G. Grabowski, The Cost of Biopharmaceutical R&D: Is Biotech Different? 

4. Tufts Center for the Study of Drug Development, 

Feature Article

Can the historical industry and vendor service relationship change to one where both parties benefit?

Outsourcing's Evolution from Commodity to Partner

The FDA Amendments Act of 2007 (FDAAA) is the most sweeping legislation affecting drug regulation in decades. It dwarfs PDUFA and constitutes major reform on multiple levels, transforming drug development and commercialization in the United States. The first wave of Risk Evaluation and Mitigation Strategies (REMS) mandated under FDAAA are due next month to the FDA to help ensure drug benefits outweigh risks. While this form of FDA oversight is not new, determining which drugs will be considered for REMS is a science that continues to evolve. 

A REMS program describes precisely how a drug will be prescribed in such a manner to help assure safe use and outlines the mechanisms by which prescribers and patients will be warned of the major risks associated with the drug. A timetable for submission of REMS assessments is also included, often with mandates related to risk communication, restricted distribution and dispensing, patient monitoring, and enrollment in patient registries. Under FDAAA, a REMS may be requested if the FDA believes a drug's risk–benefit balance may be shifting toward unfavorable. 

The March 27th Federal Register notice identifying 16 "deemed drugs" may have led some to believe that only those drugs requiring a Performance Linked Access (PLA) system would be considered for REMS. However, the most recent product approvals (post-FDAAA passage) make it clear that drugs with only a Medication Guide are considered for REMS. Moreover, these approved REMS include specifications regarding the frequency of reporting and, perhaps more importantly, the content of the assessment, or REMS program evaluation. 

For example, the REMS for one recently approved drug specified that the assessment must include:  

A survey of patients' understanding of the serious risk

A report on periodic assessment of the distribution and dispensing of the Medication Guide in accordance with regulations

A report of failures to adhere to distribution and dispensing requirements, and actions taken to address noncompliance.

The FDA's new authority may hasten the approval of at least some drugs, but most importantly the FDA is clearly willing to exercise its new authority and will certainly expect compliance. 

REMS are new only in name. The concept, formalized via statutory language in FDAAA, has a rich history. The basic concept of maintaining access to the benefit that a drug can offer while minimizing its risk has long been central to prescription drug regulation, even for drugs with risk profiles that put them in a special category. 

The evolution of REMS as a paradigm has now reached a stage where REMS programs routinely encompass multiple elements and functions. Not all functions apply to all REMS programs—there is no one-size-fits-all approach. Moreover, REMS programs evolve over time. Understanding the structural and operational elements of REMS, knowing how and when to apply each element, and creating workable, integrated, systems-based approaches whereby REMS functions are built into commercialization structures is not simple. 

These programs by their very nature are likely to be in constant flux. The landscape on which they exist evolves and the programs themselves must inevitably evolve and adapt, not only to incorporate new technologies but to help assure that the three-legged stool of benefit, risk, and burden remains balanced. 

Vice President of Risk Management and Postmarketing Programs, Covance 

A Closing Thought

REMS are new only in name. The basic concept has long been central to drug regulation.

Balancing the Three-Legged Stool

Impressive. That's one way to describe DIA's 44th Annual Meeting held inside the Boston Convention & Exhibition Center from June 22–26. In a time when most folks are keeping their purse strings tight and travel to a minimum, DIA managed to pull off its most well-attended U.S. annual meeting to date. In total, 8900 professionals from 56 different countries were in attendance, with some traveling from as far as Singapore and Taiwan. But for all its international flare, this year's meeting definitely showcased the city that served as its backdrop. 

CDER Director Janet Woodcock, MD, (mid) who received DIA's Distinguished Career Award, along with keynote speakers Kathy Giusti, MBA, and Dennis Ausiello, MD.			

Case in point: the plenary keynote speakers, who both have ties to the Boston area. First to address the packed session was Dennis Ausiello, MD, Jackson professor of clinical medicine at Harvard Medical School and chief of medicine at Massachusetts General Hospital. Dr. Ausiello expounded on the need for industry and academic collaboration to improve today's highly expensive and productivity-deficient R&D paradigm. What academia can bring to the table, says Ausiello, is a scientific nimbleness and an innovative environment where unsuccessful R&D fails fast. But forming a collaborative enterprise between both parties requires changing the cultural mindset that understanding disease is an academic pursuit and curing disease is a business. That's the "biggest challenge we face in bringing both together," said Ausiello. 

Perhaps no one better understands the value of collaborative R&D than second keynote presenter and Harvard Business School alumnae Kathy Giusti, MBA. Collaboration and fund raising are the cornerstones of the business model she employs as founder and chief executive officer of the Multiple Myeloma Research Foundation and the Multiple Myeloma Research Consortium. The effort for a cure involves patients, who populate the indispensable tissue bank, databanks, and clinical trials; academic research centers; and biotech and pharma companies. Funding, which Giusti described as continuous, is filtered into three areas: basic science (20%), validation (30%), and trials (50%). It's a concerted effort that's tracked with an eagle eye all along the R&D continuum and one that's produced four FDA approved drugs so far. Giusti credits this success to the group's clear understanding of all the entities that work in drug development. "[It's] a 360-degree, high-standard, very focused business model," noted DIA's Worldwide Executive Director Linda McGoldrick. "We should all look at it and say 'hmm,' and certainly learn from it." 

An additional multitrack plenary provided an update on the Food and Drug Administration Amendments Act (FDAAA) to promote drug safety. In terms of progress, CDER's Sandra Kweder, MD, Rear Admiral, U.S. Public Health Deputy Director, Office of New Drugs, compared FDAAA to a big ship that's trying to turn. Adding to the challenge is the fact that steering the ship is an understaffed crew who, although have more authority as a result of the Act, find themselves in unclear waters. In particular, uncertainty surrounds postmarketing surveillance efforts regarding study requirements and timelines. And it will be awhile, according to Dr. Kweder, before clear standards are in place for Risk Evaluation & Mitigation Strategies. 

One thing FDA is certain of is that improved drug safety in the United States is contingent upon good postmarketing data collection and surveillance. To that end, explained panelist Mark McClellan, MD, PhD, chair of the Regan-Udall Foundation, FDA is moving toward a more life-cycle approach to drug management. Said McClellan, "It's simply not possible to design any premarket study to answer some safety questions." 

Amidst the hustle and bustle of this year's Meeting, DIA's McGoldrick remained mindful of why so many industry professionals, exhibitors (850), and speakers (1100) gathered in Boston. It was to make a difference in patients lives. As she put it, "that's all that matters at the end of the day."—

Highlights and insights from DIA's 44th Annual Meeting.

DIA Adds More History to Boston

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.

 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. 

PHOTOGRAPHY: GETTY IMAGES ILLUSTRATION: PAUL A. BELCI 

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).

 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. 

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, 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. 

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. 

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.

 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. 

Here's an example to illustrate the ramifications of advanced planning. A mid-size biotech deployed the FSP model for selecting a vendor for EDC. The sponsor was careful to evaluate potential FSPs months prior to implementing EDC on a specific program or study. They sent comprehensive RFPs six to nine months prior to final selection, scheduled capabilities demos, and selected a short list of preferred vendors on whom they performed complete vendor selection audits to ensure due diligence and appropriate fit within the organization. The sponsor requested pricing on a full program (four studies) in order to see if they would obtain cost reductions on subsequent studies due to the efficiencies gained. These efficiencies were seen in database development and programming, eCRF screen designs, and several other data management services where the EDC provider could provide reduced pricing by recycling the previous study material with minor modifications for the subsequent studies. 

Once the right FSP vendor was identified, they negotiated the Master Service Agreement terms carefully to ensure that they established balanced obligations and a clear definition of all parties' roles and responsibilities, appropriate governance for issue resolution, and communication between the two organizations. This upfront evaluation process ensured that they selected the right vendor for the best price and that they wasted no time on vendor selection activities when they needed to begin work on the first EDC study. 

A mid-sized pharma company used a similar approach. "When our organization made the decision to use FSPs for data management, we did so in a structured and deliberate way. The head of the Data Management Group knew the capabilities, skills, and cultural profile that he needed in a provider for this approach to work effectively for his team and the company overall. He identified potential providers and carefully evaluated them from multiple perspectives. Face-to-face interactions were essential to the evaluation and final decision. The importance of understanding providers and how they work in their own environments cannot be overemphasized."

No partnership is perfect, so occasionally the effort to work with an FSP results in a negative experience. This can sour future prospects for using FSPs in other functional areas throughout the whole organization. The solution, however, is not to abandon this outsourcing strategy but rather to reexamine and refine the provider selection process to ensure better choices as well as communicate lessons learned to other functional areas in real time. 

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

Applied Clinical Trials-08-01-2008

The Classic Software Debate Takes a Turn

Adventures in Web-Based EDC

Business and People Update August 2008

Outsourcing's Evolution from Commodity to Partner

Balancing the Three-Legged Stool

DIA Adds More History to Boston

Steps to Functional Service Provider Success

Industry Squirms Under Antitrust Spotlight

August Global News

How We Fail to Use CROs Effectively