As clinical research and manufacturing expand globally, pharmaceutical and medical device companies face increased risk of noncompliance with the US Foreign Corrupt Practices Act (FCPA), an anti-bribery law enacted in 1977. Although more than 30 years old, the FCPA has nevertheless ensnared several global pharmaceutical and medical device companies in recent years, resulting in costly fines, collateral expenses, and reputational damage.

Pharmaceutical and medical device companies may be especially vulnerable to FCPA risks when conducting overseas clinical trials involving third parties, such as clinical research organizations (CROs) or other intermediaries. According to the terms of the FCPA statute, noncompliance by a company's agents or representatives can put the company at risk itself. Many pharmaceutical and medical device companies have not taken appropriate steps to mitigate that risk. 

Among other things, the FCPA outlaws bribing foreign officials in an effort to secure business. The law applies to US-based companies and companies whose securities trade on US exchanges. It also applies to third parties acting on behalf of such companies, such as vendors, suppliers, contractors, agents, and other intermediaries, as well as individuals, including non-US citizens. The FCPA requires all of these entities to maintain proper books and records, and to put in place controls designed to prevent bribery and the accounting fraud often used to hide it. Some other countries have also adopted statutes similar to the FCPA—if not tougher—suggesting that a global compliance framework is essential for multinational corporations. 

FCPA enforcement activities have increased steadily in the past decade, particularly for pharmaceutical and medical device companies, and this trend is unlikely to change any time soon. In November 2009, the Assistant Attorney General for the US Justice Department's criminal division announced that the Justice Department will sharpen its focus on dealings between pharmaceutical companies selling their products overseas. The Justice Department also plans to redouble efforts to prosecute pharmaceutical companies that try to bribe foreign officials to obtain preferential treatment for their products. 

Because many clinical trials for drugs approved by the US Food and Drug Administration (FDA) take place outside of the United States, this trend of newly strengthened enforcement directly affects pharmaceutical research activities. Many health care providers (HCPs) that offer research assistance may be working for government healthcare programs or institutions, or for state-owned enterprises, and may therefore be deemed to be "foreign government officials" under the terms of the FCPA. 

In addition to investigating companies' direct interactions with foreign government officials, US authorities are more closely scrutinizing their use of third-party intermediaries. The FCPA does not allow companies simply to ignore actions taken by third-party providers. As companies expand their research activities into emerging markets with higher known corruption risks, and as they rely more heavily on CROs to manage research activities abroad, their ability to effectively manage both direct and indirect bribery risks is critical.  

An "out-of-sight, out-of-mind" approach to compliance can have serious consequences. Criminal and civil penalties can cost millions and immeasurably damage a company's reputation. In addition to assessing monetary fines and penalties, US authorities may require companies to retain independent, government-appointed monitors as part of any deferred prosecution agreement. Although the government appoints these monitors, the company is required to pay their fees, which can be in the tens of millions of dollars. Monitors may have access to corporate records and be able to impose additional FCPA-related compliance requirements, which can add further to the overall cost of any settlement. Individuals may also face financial damages, loss of reputation, and even prison terms.  

Any payment to an HCP considered to be a government official under the FCPA can create risk, but not all payments do. In the case of research activities, payments that reasonably compensate an HCP for providing a valuable, needed service generally are not viewed as a FCPA risk so long as the payment is not intended to unduly influence the HCP. Likewise, payment of standard, documented fees to government officials as required to conduct research activities would also not be viewed as a FCPA risk. 

The challenge lies in ensuring that a company has taken the necessary steps to demonstrate that its interactions and payments in all markets are appropriate, and that the individuals acting on its behalf throughout the world are compliant with the company's standards for managing FCPA-related risks. This challenge is further complicated because many interactions with HCPs and other government officials for research-related activities are increasingly being managed through a CRO, particularly in parts of the world where companies have less experience and fewer resources. In those regions, a company's ability to ascertain compliance by a CRO may be limited for a variety of reasons (see "Common Challenges" sidebar). For example, it may be that the agreement between the company and the CRO does not specifically address the company's expectations regarding compliance with the FCPA and other relevant anti-bribery statutes; or that the agreement does not allow the company to review the CRO's activities for compliance with specific legal requirements. Even if the agreement does contain such provisions, the company may not have enough appropriately trained resources to monitor the CRO for compliance in all relevant markets. In addition, CRO personnel may not understand how the FCPA applies to their activities, and therefore may not implement controls to mitigate risk. This is particularly challenging in markets where making improper payments to government officials is common or even "a way of doing business." 

Companies can take several important actions to reduce anti-bribery risk when using a CRO (see "Managing the Risks" sidebar).

Managing the Risks First, they should adopt a comprehensive corporate FCPA/anti-corruption policy that addresses the activities of employees and third parties acting on the company's behalf. Second, they should conduct documented due diligence before engaging a CRO to identify any potential FCPA red flags (see "Potential FCPA Red Flags" sidebar). Due diligence should include gaining an understanding of the substantive activities that the CRO will be engaging in on behalf of the company and its relationships with foreign government officials, as well as assessing the CRO's processes and controls for ensuring compliance with anti-bribery laws. Third, the written agreement with the CRO should require the CRO to comply with the company's FCPA/anti-bribery policy and to provide training to its employees on the applicable compliance policies, and should allow the company the right to audit the CRO's activities for compliance with the policy. It should also allow the company to terminate the agreement for violation of these terms. Finally, the company should conduct periodic, documented assessments of the CRO's activities to ensure that the CRO complies with the FCPA/anti-bribery policy.

As global enforcement of the FCPA and other anti-bribery laws intensifies, companies engaged in clinical trials must be aware of compliance requirements—and the risks of noncompliance. A comprehensive anti-corruption program, including controls that address CRO activities, can help ensure compliance and mitigate the risks of noncompliance with FCPA and other anti-bribery laws. 

www.appliedclinicaltrialsonline.findpharma.com

 in September 2010. The views expressed herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP. 

Articles

Partnerships in Clinical Trials

Noncompliance with the US Foreign Corrupt Practices Act carries heavy penalties.

Beware of Costly Consequences

The pharmaceutical world has not been immune to the global economic situation and, like many sectors, is undergoing a phase of massive restructuring. The aims of these initiatives are no great surprise: reduce costs, improve efficiencies, shorten product development time lines, and bring an increasing number of innovative products to the market as rapidly as possible while maintaining excellent standards. What can pharmaceutical companies and CROs do to achieve these goals and make their global organizations more successful than they are today, and what are the key challenges faced by them?

For all organizations, regardless of industry sector, people are their greatest asset. In such challenging times, all companies have an ever-increasing dependence on their people. For CROs—essentially service organizations—people, their skills, and experience are the key product, with processes and systems in place merely supporting the functions of the team. Investment in these individuals and teams ensures that organizations build, retain, and develop a wealth of knowledge, experience, and flexibility as well as fostering a vitally important level of trust between employees and employers. Trust, and its value in keeping an organization thriving, cannot be underestimated; never more so than in an uncertain climate. Trust between people is also vital for the quick rebuilding and development of new departments, and providing an environment that nurtures and encourages teams to deliver results at the highest level.  Steps must be taken by people within organizations to form new partnerships and new networks on both local and global levels to create a new culture, based on trust, to successfully ride the economic rapids. The human factor plays a bigger role in this than any other. 

By building trust, forming successful partnerships, and making people across the world feel a real sense of belonging to a caring, highly reputable, and progressive professional organization, everyone can be successful. It's really all about people and how you deal with them. Getting the best expertise on board, training and developing the talent, and placing a high degree of trust in all people will inevitably create an exceptional talent pool to form or re-create a global organization. Creating a vision, making each person feel valued and part of the local picture as well as a key player in the global picture is essential. Showing progression in the organization, developing people, and creating leaders of the future, helps to build and quickly rebuild great organizations. 

To be successful, CROs must be prepared to adapt and enlarge their geographic coverage to suit the expanding requirements of their clients. Trust again comes in to play here. Due to the very real and significant costs involved to set up within these regions, the CRO may be taking a rather large leap of faith that its client will provide opportunities for an equally significant return on that investment. With drug development efforts shifting to emerging markets such as the Middle East and India—areas where local cultural differences, regional regulations, and language barriers exist—dependence on local personnel and their expertise is a key driver to success, and developing trusting relationships in these areas poses an even greater challenge. Here, extensive use of communication tools such as face-to-face meetings, integrating the east and west parts of the world to form cohesive project teams, and simply keeping everyone motivated, pose great challenges. It is important for Western management to understand how things function at a local level and it's important for Western-based teams to integrate with their coworkers in emerging markets and quickly establish high degrees of trust. With this comes loyalty, respect, and unison in efforts to achieve common global, as well as local, goals. Some of the key challenges facing expanding organizations are fully appreciating the local ways of working, being able to adapt these to the international standards, and sharing the corporate vision with local experts in the emerging markets or elsewhere. Success at meeting these challenges is an indicative feature of high-performing and successful global teams. 

As a consequence of attempting to become established in new geographies quickly and provide new products or service offerings on a global basis, organizations are striving to develop new partnerships with local players. How many of these organizations and their management really know how to work in the spirit of a partnership? How many actually take the bold step to move from transactional, sub-contractor type deals to pure partnership deals where risks and rewards are shared by both parties? This movement away from a transactional emphasis—where the focus can be on a single sale, with little emphasis on customer service—to a relationship emphasis with a focus on customer retention, an orientation to customer values, and with customer service of the highest priority to all employees is a prime example of relationship marketing. Relationship marketing is about forming a two-way interaction between client and supplier and focuses on retaining and maintaining that relationship. In organizations where relationship marketing is the focus, there is much greater emphasis on customer care and involvement, exemplified by a "customer chain" where every member of the staff and all systems and processes within the organization are geared toward satisfying the client. Indeed, the ultimate goal of this manner of interacting with clients is to nurture and develop the relationship through the various stages of a "loyalty ladder" and progress a client from the very beginning when they may be classed as a prospect, through to a stage when the client and supplier very much view each other as key partners and an integral component of each other's business. Partnerships take immense efforts and this word is often used too loosely. While many partnerships are successful, very many fail, to the mutual disappointment of both parties. 

So, what is the essence of a long-standing winning partnership? Again, trust must form the basis. New, stable partnerships should be formed for mutual benefit, but each party's goals, and what each party hopes to get out of the partnership, must be clearly understood from the outset. This requires a high degree of openness, frank discussions, and above all, trust, between both parties. Partnerships require efforts from both parties and recognition that a process of learning has to take place. Each party has strengths and weaknesses, and no one is perfect. Successful partnerships can be durable and long-lasting once there is a real understanding between both parties on their common objectives and what each party can gain from each other to benefit their organization and to create a win/win situation for all. 

Essential ingredients for a successful partnership include the careful planning of strategy, executing projects, mutually adapting and modifying goals in response to changing business needs, resolving disagreements with understanding, participating, and being accountable for risks on both sides. This is more challenging when there are geographic and cultural differences to consider—it is essential that from the very outset of a relationship with a new client or a new project with an existing client that both parties are completely honest, upfront, and fully comprehensive when it comes to developing an initial proposal. For a CRO/pharma relationship, this approach really does provide the most effective basis for a truly engaging and successful collaboration on a project. Discussing realistic time lines; milestones goals; and aims, and really making an effort to identify potential issues and systems to handle them before they arise. This serves the dual purpose of allowing both organizations to completely plan for any eventuality. The open and honest approach begins to nurture and grow the trust that is so important. 

The ongoing trend toward mergers and acquisitions among larger pharmaceutical and biotech companies shows no sign of abating in 2011. Going hand in hand with this trend is the "super pharma" strategy to be risk averse, leading to R&D budgets being slashed (for example, Pfizer has recently announced the closure of its UK-based facility as part of the reorganization of its R&D capacity across the world) and new compounds being bought after completion of Phase I or II. However, this gap in the market for innovative drug discovery is readily being filled by "baby biotechs" which, in turn, has opened up unique opportunities for CROs to work with these companies. With the entire future of their organizations reliant on perhaps one or two candidate compounds, these baby biotechs will be looking to partner with a CRO that truly understands them and who they can trust implicitly with the running of their clinical trials. Those CROs that can demonstrate that they have fully embraced the concept of relationship marketing and all it entails will have significant advantages over their competitors who are lagging behind. 

The building of a successful partnership should allow the relationship to continue despite what could be viewed as major changes in either party's circumstances. Indeed, one global CRO had to reevaluate its partnership with a major pharmaceutical company after it had undergone a large merger process. When given the opportunity to rebid to continue providing CRO services, the decision had to be made on whether to take the gamble of significantly lowering costs from the pre-merger level as requested by the new pharmaceutical company. There was potential, but most certainly no guarantee, of significantly increasing the number and range of studies that the sponsor would provide them.  The CRO had worked closely in the past with the client and developed an excellent working partnership and high level of trust and was successful in its bid to continue providing CRO services to the pharmaceutical company. 

Another prime example of an almost symbiotic relationship is a CRO and pharmaceutical company who have developed a unique "insourcing" partnership. The pharmaceutical company was anxious to save on the costs involved in running clinical studies but at the same time, wanted to maintain a high level of control over the staff that worked on its studies and ensure that it continued to be managed according to its protocols and processes. The CRO therefore agreed to employ, on a permanent and full-time basis, the client's clinical trial staff who would continue in their existing roles. The arrangement allowed the client to continue performing clinical trials with full control and transparent and upfront costs, and the ability to scale up or down depending on requirements. The arrangement obviously required a great deal of trust on the part of the CRO and further enhanced and integrated the partnership between the two organizations. 

Once a relationship is established with a client, how should it be maintained and developed? In my opinion, effective communication is the key. Regular, ongoing, and open communication deepens and strengthens the trust between client and supplier. The methods used can be very much dependent on the preferences and circumstances of the individuals involved (some clients may prefer an e-mail, others may feel that a telephone call is preferable). My own inclination is toward regular telephone updates; this can eliminate the to-ing and fro-ing that can so exemplify e-mail communication (and make us wonder if it really is as time-saving as we believe) as well as allowing for a far more personal touch. Cold, matter of fact, black and white text simply does not convey any real emotion and intentions can often be misconstrued. Indeed, the ideal situation would be regular face-to-face meetings, but in the pharmaceutical industry, with CROs and their clients possibly not even located on the same continent, let alone in the same time zone, this is rarely possible. In these situations, major industry exhibitions and conferences are the perfect situation to make face-to-face contact, touch base, and strengthen professional relationships. In the interim, regularly scheduled calls allow for updating of ongoing projects, discussion of potential projects in the pipeline, and avoids a habit forming whereby the client only receives calls to communicate problems. 

This continuing reference to "open" communication and interaction is not unintentional. On those, hopefully rare, instances where it is necessary for either party to report an issue that has the potential to adversely affect the outcome of a study, it's vital that this is reported as quickly, thoroughly, and openly as possible. No attempt should be made to cover up any issues as ultimately, in the long term, this will simply lead to more problems. The trust that has been so carefully developed should not be put at risk by omissions. Honesty, as so often is the case, really is the best policy. 

PhD, is President and CEO of ClinTec International, 133 Finnieston Street, Glasgow, UK, e-mail: 

The importance of openness and loyalty cannot be overlooked when cultivating a parternship.

Build Trust with Honesty and Communication

Two years ago, i3 Statprobe and Eli Lilly embarked on a functional services provider (FSP) relationship that had i3 taking over the majority of Lilly's US data management work. In September 2010, the two companies expanded their FSP relationship with i3 taking on US-based medical writing, biostatistics, and statistical programming. Aarti Shah, PhD, Vice President of Statistics and Advanced Analytics Hub at Eli Lilly told 

 "Having a good relationship and being able to leverage that relationship was very critical. This is a true partnership. We don't view them as a vendor." 

As the relationships between CROs and sponsors evolve and become more strategic, the i3-Lilly partnership appears as an example of how these FSPs really work. 

Gregg Dearhammer, Group President, i3 Statprobe and i3 Drug Safety, gives Lilly a lot of credit for being on the forefront of these initiatives and making them work. "We have a committed, robust governance structure with multiple points between that allows both companies to have strategic alignment on all levels," explained Dearhammer. He also says that keys to the successful relationship, on which they are able to build, are a clear commitment from senior level management to these relationships, and Lilly's ability to walk the walk. "Our discussions aren't always happy, but we are always able to deal with each other as professionals, and we are committed to working through any issues." 

Shah concurred and said that the FSPs are part of Lilly's FIPNET (fully integrated pharmaceutical network) strategy to move forward in its portfolio development. For i3, Dearhammer explained that it recognized FSPs and more strategic relationships to be the trend and, for the past four years, has supported this structure as its business model. i3 has approximately 12 more active FSPs besides Lilly, with varying degrees of complexity. "We are getting more requests every week from sponsors that look at our relationship with Lilly and are re-evaluating how they do business," said Dearhammer. Dearhammer has started to see a change in sponsors' view of drug development.  

Since last spring, interest in FSPs has been increasing, as sponsors realize they have to be more strategic. "They have to choose what they are good at and focus on that—bringing the science and the molecule to market—and leave the process to us," said Dearhammer. "They are looking at more strategic ways to save on costs." 

In the immediate future, with the transition of the next phase of operations moving over to i3, Shah doesn't envision any problems. "With this transition, there will be no interruption in portfolio delivery," she said. "We have the experience with them and we are confident that it will be successful." 

 October 21, 2010. inVentive Health announced the acquisition of i3 Statprobe on January 20, 2011.

The partnership is an example of how CROs and sponsors interact in the ever-evolving clinical trial industry.

FSP Relationships: i3 Statprobe and Eli Lilly

A significant trend in the biopharmaceutical industry has been the evolution in the nature of outsourcing and the business relationships between sponsors and service providers.  

Until recently, the majority of these relationships were based on project-by-project outsourcing models. While they produced significant savings, these transaction-based approaches are reaching the limit of their capacity to reduce costs and increase operational efficiency.  

Faced with continuing financial and competitive pressures, many biopharmaceutical companies are embracing strategic partnerships, designed to deliver greater benefits throughout the development life cycle. 

The more forward-looking the sponsor-service provider relationship, the more strategic attributes it is likely to contain. Service providers have migrated from dominant tactical outsourcing through a series of constructs:   

Preferred providerships are characterized by a limited number of suppliers who are pre-selected, but still compete for projects through a bid defense process.  

Functional service provider models can range from simple staffing assignments to relationships that include foward-looking components.  

Strategic partnering is characterized by deeper commitment and mutual investment in the relationship. These relationships tend to include participation in longer term planning, including from a scientific, not just a resource planning perspective. The number of providers sharing work tends to be very small, perhaps one or two. The time and cost associated with bid defenses can be greatly reduced or even eliminated. Strategic partnerships tend to have well-developed governance constructs that involve senior management from both companies. Importantly, there is an open collaboration on development practices to standardize and achieve efficiencies.  

These strategic partnerships involve longer-term relationships focusing on areas of product development where the most valuable improvements can be achieved, including project oversight cost reductions and time savings. Achieving those savings requires a new, long-term, partnership paradigm characterized by deeper, more complex relationships.  

Under such a strategic development partnership, a service provider would deliver a broad array of services or focus on a particular development function or geography. This strategic partnership model helps biopharmaceutical companies greatly increase operational efficiency by focusing their internal resources on the highest priorities—such as discovery research and product marketing—while relying on their partners for a broad array of specialized knowledge and infrastructure, such as in-depth therapeutic-area expertise, clinical trial experience, global patient and investigator resources, and regulatory knowledge.  

The strategic mix of internal and external resources is even more efficient longer term because the commitment between partners allows savings to increase and accrue over time. The long-term commitment also allows for investments in data integration, standardized protocols, study start-up procedures, document templates, and other efficiencies that can dramatically reduce clinical study times—an area where even modest improvements can save millions of dollars. 

In one strategic partnership, Parexel worked with a sponsor on a mutual commitment of resources to develop best practices, optimize technology utilization, and implement data standards. Communication pathways were clearly defined as part of a carefully constructed governance model that oversees the partnership. The partnership was characterized by flexibility and innovation in finding the most efficient ways to work together. In another case, using a creative and collaborative approach with the client, Parexel was able to outperform the CMR industry benchmark by 35 percent on study start-up and by 75 percent in subject recruitment. Cycle times were reduced by working together on design and utilizing proprietary study start up and patient recruitment tools. Costs were reduced by minimizing oversight and aligning technologies. The cost benefits were shared and cycle time reductions exceeded expectations. 

Stronger strategic development partnerships will fuel the transformation of outsourcing to an outcome-based approach, with shared risks and rewards.  

Sponsors will increasingly give their strategic development partners more freedom to provide desired results using the best available resources. If the service provider can deliver results within the required time frame, budget, and quality, the sponsor will not have to be intimately involved in the details of particular services. Without the need to manage those services on a day-to-day basis, biopharmaceutical companies will be able to significantly reduce their overhead costs and concentrate their resources on other priorities, like basic innovation research, product acquisitions, or market expansion. 

The growing emphasis on outcome-based partnerships will also change the economic foundation of the relationships between biopharmaceutical companies and service companies, with contracts increasingly based on fixed-price models. This is a logical outgrowth of the trend toward long-term partnerships, with biopharmaceutical companies contracting for a specific result and the service provider having the flexibility to decide how best to produce that result within the contracted price and deadline. Inherent in this approach is the concept that the service provider would benefit financially if the project can be completed quicker and more cost-effectively—but also risk reduced profitability if the project takes longer or costs more to complete. The investments required for service companies to achieve greater efficiency throughout the development process with investments that benefit both parties are only possible if there is a multi-year commitment that includes the sharing of rewards as well as risks. 

  As biopharmaceutical companies have evolved toward broader strategic partnerships, service providers have also evolved to meet the industry's growing demand for global reach.   

These needs have accelerated due to the globalization of clinical research, driven in part by requirements to access larger patient populations, reduce expenses of conducting studies, and reach new emerging end-markets, such as in the Asia/Pacific region. 

Larger, more complex global development programs have required service providers to have greater size and global scope to provide the services their partners need. Service providers with worldwide infrastructures and local regulatory and clinical expertise have demonstrated that global development strategies can bring sponsors significant cost and time efficiencies to the entire clinical trial process, while also providing high quality clinical data for faster regulatory approval of new therapies in these growing markets.  

In addition to the globalization of development, supporting the movement toward strategic partnering and outcomes-based outsourcing have been key advances in technologies to facilitate trials.  

An improvement process has been created over time, with globalization fueling technology innovation and further technology progress providing the ability to conduct trials in more countries.  

Technologies to facilitate global trials clearly reduce associated time and cost. Strategic partnering has accelerated a growing convergence trend that is blurring the distinction between "technology" and "service" companies, as providers expand their capabilities to meet the needs of sponsors.  

The depth of this convergence is not easily achieved overnight. In fact, as an example, in 1998, Parexel created an advanced technologies group, and in 2000 founded Perceptive Informatics, a leading eClinical solutions provider, following the acquisition of ClinPhone in 2008. That early emphasis on advanced technologies helped Parexel to continue to bring greater efficiency to clinical trials for its clients. 

The next stages of achieving operational effectiveness requiring advanced technology combined with clinical expertise and global resources, have brought about the use of the term eCRO. eCROs can provide a broad range of clinical development services that are fully enabled by technology. It is important for sponsors to be able to access an integrated, advanced platform of eClinical technologies combined with clinical experience and a global infrastructure to reduce the time and cost of clinical development. 

Looking ahead to the niche-buster paradigm

The biopharma industry appears to be undergoing fundamental changes with the era of the single-minded quest for blockbuster drugs waning.  

The emerging paradigm is focused more on therapies that address specific disease areas. Commercial success will ultimately depend on moving a larger number of compounds through the discovery and clinical development gates into the market. It takes a different kind of R&D strategy to make this all work. 

With this shift to the niche-buster model, large biopharmaceutical companies have significantly increased their investment in small companies as a means of diversifying and expanding their pipelines. Some industry analysts estimate that small companies own as much as 60 percent of the intellectual property that is currently under development today. This transfer is expected to drive additional outsourcing demand going forward, as the small biopharma companies have no option but to outsource many of the activities they need to get done.  

Compared with the functional, transactional, and preferred provider types of outsourcing that have prevailed in our industry to this day, strategic relationships are a better fit for the emerging niche-buster R&D paradigm.  

The new strategic partnership model will continue to place significant burden on service providers to build and maintain the vast array of expert resources necessary to tackle wide-ranging development responsibilities.  

The changing nature of biopharmaceutical development should accelerate the recognition among key development stakeholders—sponsors, regulators, patients, the medical community, and healthcare payers—that the service industry has the ability to take on this burden and assemble the resources necessary to manage complex development programs on a global scale, with a high level of efficiency and quality. 

Service providers will continue to bring more innovation to study design and execution. Evolving strategic partnerships will continue to lead to new operating procedures and best practices that leverage expertise, advanced technology, and global capabilities. The result will be greater innovation and accelerated development times that will bring novel therapies more quickly to patients in need around the world. 

 This article was adapted from an article that appeared in the November 2010 supplement 

 is Chairman and CEO, Parexel International, 195 West Street, Waltham, MA.

Greater product value and innovation accomplished with sponsor-service relationships.

Strategic Partnerships Evolve

As pharmaceutical companies are tackling more complex issues, they are looking for allies to help them navigate these challenges. This requires more of a partnering approach, whether that means portfolio management, financial risk-sharing, outsourcing an entire function, and/or both clinical development and commercialization in non-traditional and emerging markets.  

How can outsourcing be expected to help transform R&D? And, in turn, what are the barriers to transforming R&D?

John Ratliff (President and COO, Quintiles): 

We've had success primarily because we can manage clinical trials and commercialization projects predictably, and with greater efficiency based on the scale of our operations. We are now conducting more clinical trials than any other entity. This allows for faster, smarter decision making, allowing biopharma to focus its resources on its priority products.  

We're also able to develop new models and endpoints, for example, through the use of biomarkers. Biomarkers can be game-changers within product development. Quintiles recently worked with a customer to improve the robustness of a reagent they had developed internally for use in an early phase setting. 

In parallel, a diagnostic company built a kit for the assay that would be used to stratify patients in global Phase II and III trials. Our experience with the prototype assay and global laboratory network allowed us to work seamlessly with the diagnostic company to deploy the kit in our laboratories. We then were able to bridge the gap between biopharma and diagnostic companies with seamless development and deployment of an assay. 

This enables the customer to enroll fewer patients in the Phase II trial because they will be able to pre-select those patients with the highest probability of responding to the candidate drug while maintaining the same statistically powered trial. In short, this use of a biomarker can make development faster and less expensive. If the kit pans out in Phases II and III, it can then be employed by the pathology community in selecting patients for the therapy once the drug receives approval. 

The most daunting barrier to transforming R&D in the biopharmaceutical industry is legacy. Biopharma has worked with an approach for many years that worked quite successfully with blockbuster drugs. It's tough to change a model that has brought success and saved or enhanced literally millions of lives. Today, as they're getting into some of the more complex disease areas, our customers are feeling the pressures of ballooning costs, patent cliffs, and a regulatory environment which has become increasingly demanding. All of these factors combine to form huge barriers. 

Facing all of these pressures, biopharma companies are faced with choosing what they will and won't do as a future strategy. A big factor there is identifying their actual intellectual property. It's here that we as the outsourcing community bring a lot to the table. 

The ability to operate successfully in emerging markets could be a barrier. We've attempted to anticipate both the problem and the opportunity by employing 20,000-plus employees in 60 countries. Large global trials require a large number of participants, often in the tens of thousands. This makes access to patients critically important now and in the future. To aid access we've developed online resources such as 

When it comes to R&D, what are the opportunities to improve the return on product development and approval expenditures?

James Macdonell (VP of Solutions, Patni Life Sciences):

 Undoubtedly, the most important decisions are the efficacy and safety decisions to select the research initiatives that will survive the regulatory process attrition and yield newly approved drugs with a substantial portion of the patent protection period still intact. These decisions must be made as early in the development process as possible.  

Continuing to invest in a compound that ultimately fails gets progressively more costly as the investment continues. Early correct selection of "approvable compounds" is the most important means to improve the return on product development and approval expenditures. It is not a matter of "failing fast" but rather "succeeding fast." 

The second most important control point is to reduce the duration of the clinical study. Extended phases and delayed activities including selection of the clinical research organizations; patient recruitment; data collection; data cleaning; adverse event analysis; statistical studies; and submissions and requests for additional research all add to the duration, cost, and loss of return on the clinical investment. The third control point is improved efficiency, improved data management, improved access to existing data, and optimizing investments that are not product development oriented. 

There are best practices in clinical and clinical IT that drive improvements on the return on product development, reduce duration of studies, and yield the efficiency improvements stated above. These include:  

Utilizing the best or even multiple approval mechanisms for compounds including optimizing the use of opportunities dictated in the following areas: the 1984 Hatch-Waxman Act; Priority Review—Section 112, FDAMA of 1997; Fast Track—the Food and Drug Administration Modernization Act (FDAMA) of 1997; the US Orphan Drug Act (ODA) of 1983; and the FDA Accelerated Approval (AA) Regulations of 1992. 

Optimization of clinical studies or clinical portfolio management requires BPI modeling and simulation tools and techniques to balance staffing and budget plans. These techniques are necessary to analyze and plan allocation of resources and assets while avoiding risk—not handling workload. 

Aggressive adoption and adherence to the emerging standards for clinical data: CDISC, SDTM, ODM, ADaM, and ultimately Health Level Seven (HL7). 

Embarking on an integrated clinical IT environment for CTMS, CDM, AER, RDE, statistical analysis systems, submission systems, archiving, and data storage systems. 

Accumulating all past clinical data, building the clinical data warehouse in the aforementioned IT environment, and selecting the analytical tools for clinical data mining and analytics. 

Using past clinical studies, data, and samples as the basis for investigations and targeted studies. 

Considering advanced technologies (cloud, VM, mobility tools, outsourced networks, SaaS, etc.) to advance clinical effectiveness and efficiency.  

As senior management turns its attention to these initiatives, a company's outsourcing partner's capability in clinical studies, clinical applications, technology, and regulations, along with its ability to deliver strategic services at optimal pricing, will be critical to the provider's success. 

What has been the impact of the growing prominence of India and China, which both showed significant GDP growth despite the financial turmoil in United States and Europe? 

Stewart Geary, MD (VP and Global Safety Officer, Eisai Company, Japan):

 My personal view is that it points to two important ways forward for the industry: First, China and India are growing as markets for pharmaceuticals with prospects for sustained growth rates much higher than in the developed world as their economies grow and the percentage of the economy devoted to healthcare increases. Both of these large countries have a diversity of domestic manufacturers and marketers of pharmaceuticals. Foreign companies bring to the markets a wealth of experience in clinical development and reputations for quality and consistency in manufacturing which give them potential advantages if they can provide products at accessible prices. Second, and related to the key question of providing innovative pharmaceuticals at prices healthcare systems can afford, both India and China need to be integrated into pharmaceutical supply chains in ways that assure quality and lower the "costs of goods" for multinational pharmaceutical manufacturers for both small molecule drugs and newer "large molecule" biologicals. Neither high quality nor low cost are accomplished without careful planning—the companies who learn to achieve both sides of this combination reliably will have an important tool in overcoming the patent treadmill that the industry currently finds itself struggling to outrun. Although the development of new medicines which create significant advances in patient care will always be key to our industry, I believe we are too quick to assume that everything else that goes into delivering medicines of high quality to patients falls automatically into place. Working to be successful in China and India while at the same time harnessing those countries' abilities for the international pharmaceutical market may help the industry take this lesson to heart. Large pharmaceutical companies would be wise to devote more resources to developing their presence in these markets than their current world market share suggests. Smaller venture companies should keep in mind therapeutic areas such as chronic hepatitis or infectious diseases, which are of greater importance to the developing world. Both smaller and larger companies need to understand when and how to—and, equally important, when not to—go to these markets for clinical trial sites used in global new drug applications.  

With healthcare reform now a reality, drug makers are facing comparative effectiveness and outcome-based pricing as lawmakers seek to expand healthcare access while cutting costs. How does a CRO work with sponsors to determine which drugs are likely to fail and determine the best strategy? What is their role in establishing a clear biosimilars pathway in the United States? 

Josef von Rickenbach (Chairman and CEO, Parexel International):

 The passing of the healthcare reform bill in the United States has removed some of the overhang on the industry. For biopharmaceutical and CRO industries, healthcare reform will be neutral to positive overall. One benefit for the biopharmaceutical industry is that roughly 30 million new customers will now have some type of insurance coverage to pay for prescription drugs. 

Based on several market dynamics, including healthcare reform, we have seen an increasing focus in our consulting area related to guiding clients with reimbursement and market access strategies. Companies need to understand the needs of both regulators and payers if they want to achieve commercial success. Our experts help biopharmaceutical companies understand market access implications during development, in order to better leverage evidence-based or outcome-based medicine, and eliminate access hurdles by demonstrating patient, payer, and provider value. 

The healthcare reform bill has also created a regulatory approval pathway for biosimilars with a requirement for extensive clinical testing. Our experts are assisting companies in discussing their development plans with regulatory authorities, then deciding on whether to participate in the biosimilar opportunity or pursue traditional biologics license application pathways instead. We've worked on half of all biosimilars on the market today and have supported the first approval for a biosimilar product in Europe. 

How has outsourcing continued to evolve in your sector during the past 18 months and why?

Evan Demestihas, MD (CEO, The Medical Affairs  Company):

 In the last several years we have seen a significant shift in the outsourcing of medical science liaison type of personnel (MSLs). It is now much more common in the realm of R&D compared to its traditional roots within company's commercial-side medical affairs departments. Outsourced MSLs continue to be deployed as field-based medical affairs resources supporting both peri-launch and commercially available products, with the common objective of educating their key opinion leader physician audiences on the disease state, treatment options and, in an unsolicited manner, new product developmental advancements that may significantly alter the current standard of care. It is without question that the industry has recognized the MSL, whether outsourced, internal, or a mix of both is a proven strategy in support of launching and/or supporting a company's commercial portfolio. 

As product candidates have become more advanced, having complicated clinical trial protocols as part of their design, R&D executives have come to recognize the traditional administrative-type clinical research associate (CRA) resource they utilize (the majority of which is outsourced) simply do not possess the clinical skill sets necessary for educating principal investigators, site personnel, and surrounding community physicians about these complex protocols, disease states, and inclusion/exclusion patient criteria. Expanding upon the proven MSL clinical resource concept, R&D has deployed clinical trial liaisons (CTLs)—individuals distinct from CRAs in that they are significantly more educated and knowledgeable around the scientific premise for the clinical studies being conducted. CTLs provide valuable insight to practicing physicians who are then in a better position to refer appropriate patients to be considered for enrollment in the study. This of course can lead to quicker enrollment and eventually more timely completion of pivotal trials that can significantly hasten the approval process. The financial impact of an earlier NDA filing are obvious and many organizations have become increasingly aware of the significant value CTLs can provide. 

As the pressures on R&D have accelerated over the last several years, the outsourcing of this function has become more commonplace. Unable and/or unwilling to hire internal personnel to provide this valuable service, pharma has evolved the model of outsourced MSLs to now include outsourced CTLs. Contract medical organizations have significant expertise in effectively managing these personnel and clearly understand the regulatory and compliance factors critical to their proper use to the extent that outsourced CTLs are now one of the fastest growing segments of the contract field-personnel sector. 

, produced by Advanstar Communications' Pharma/Science Group. 

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