Part of an array of steadily growing pressures that face the industry, compliance requirements continue to increase in importance in pharmaceutical operations. Regulatory oversight and enforcement actions on a variety of compliance issues, including conflicts of interest, rising product prices, product safety, distributor agreements, and direct-to-consumer advertising are increasing, and this trend shows little sign of abating. At the same time, concerns about drug safety are driving rigorous regulatory scrutiny, especially during the approval process, as recent news reports indicate.

  Compounding these challenges, the industry is also dealing with pipeline issues; although R&D has increased, the number of new products submitted to the FDA has been dropping since the late 1990s.

Instead of planning only for regulatory required compliance reporting, this new situation presents companies with an opportunity to use knowledge gained through compliance across the pre- and postmarket spectrum. One particular area, pharmacovigilance (PV), can use increasing compliance requirements related to safety and adverse event reporting to redefine traditional safety monitoring methods and to make compliance part of a comprehensive business strategy—not only to make drugs safer, but also to add value to pharmaceutical product portfolio management and help capture the full clinical and economic value messages of a product. This article discusses how companies, from a strategic viewpoint, can use data generated from compliance requirements as an opportunity to transform PV and enhance their ability to incorporate economic and clinical value considerations into a product's lifecycle. 

Quite often compliance to regulatory requirements has been viewed as a nuisance and burden.

  Instead of viewing new compliance requirements as simply adding to reporting burdens, however, a well formulated strategic approach can focus on the intent of the rules, and use them to transform and improve an organization.  

For many companies there are immediate steps PV groups can take to go beyond basic compliance. For example, companies routinely collect data on calls received from patients or physicians with questions about a product, and are required to maintain a database of spontaneous adverse event reports on marketed products. Compliance requires companies to collect and report this information, but a larger opportunity exists here to enhance the use of data collected and redefine the use of existing data.  

Besides fulfilling reporting requirements, the company typically determines whether calls were answered in a timely manner or whether sufficient staffing was available to handle the volume of calls. Unfortunately, these administrative efforts do not take advantage of the opportunity presented by the requirement to maintain a call center and database of adverse events.  

The point is that this data by itself is not necessarily strategic, but it can be used in a strategic manner, and this situation illustrates how to use a compliance requirement to greater strategic advantage. For example, companies may use call center data for trend analysis for incremental improvements, but we are proposing using the data as an element in strategic portfolio management, helping to guide companies' investments in new technology. This orientation uses existing and new compliance requirements to go beyond minimal collection or reporting obligations.  

This information can be used to help develop a strategic product improvement focus by creating a clearer picture of what is happening with patients, health care providers, and the drug, and by identifying trends and opportunities in the market. The process can be formalized so that PV data is a critical piece of the data used in strategic market planning. PV can partner with R&D and strategic marketing to analyze the issues that arise frequently and use the information proactively. For example, PV could identify and track the issues raised in questions the call center receives, including those questions that do not involve reportable issues. 

PV may need to assist by identifying the type of data needed for analysis in order for a call center to improve their intake process to make sure as much information as possible is collected. Besides identifying signals, PV will be able to contribute to labeling and provide additional risk-benefit information to help doctors and patients with decisions to use products. Also the information can be used to develop or expand educational material for physicians and patients to address specific issues. These efforts are aimed at reducing negative outcomes, avoiding misuse of the drug, and improving patient compliance. 

Improved methods of evaluating drugs also can help in providing marketing information on differentiation, for example, by identifying safety advantages and/or better risk information for physicians and patients, and improving safety as a result.

By understanding issues patients face, PV can also help expand market knowledge in a strategic manner by using this information as insightful market research data. R&D and strategic marketing can be an internal customer of PV data. With this strategic perspective the data may point to issues that require further examination, or identify pipeline feedback and trends that point to unmet market needs—and new product opportunities, a critical need for many companies. In this way, PV can help transform the business by using this data to drive product innovation and education. 

Call centers provide an opportunity to gain true market insight, and the data PV collects can be used in ways beyond compliance driven AE reporting and signal detection. It should be used as market research data. Product complaints and patient compliance issues can provide insight into a target patient population and their future needs. This data on a target group might suggest that a different delivery method could improve compliance (e.g., from IV administered drug to oral, or providing a method to enable home vs. doctor office administration), as well as help with the development of specific, tailored information for a target group. 

Understanding patient perceptions, especially regarding risk/benefit, could indicate the type of product with a higher likelihood of doctor and patient acceptance and identify niche therapy opportunities for R&D. This data can provide great customer insights if viewed as market research. 

Expanding the use of data acquired in a pharma company's contact center to strategically expand market knowledge illustrates one way a PV group can go beyond basic compliance reporting. Compliance can act as a stepping stone by using this data gathering requirement to leverage the information to identify unmet needs in the market and new product opportunities. 

These efforts are not just part of integrating safety data, but help address larger issues facing the industry. They are steps toward transforming the business at a time when the industry faces rising product development costs and greater pricing sensitivity. The number of new drugs approved by the FDA is on a downward trend despite steadily increasing R&D expenditures.

  At the same time payors are increasing their pressure on companies to incorporate economic and clinical value considerations into a product's lifecycle from development through marketing. PV is in a position to leverage the use of this frontline data to support other parts of the business in their planning processes.

The larger transformative potential in broadening PV's involvement is that it can help provide a better understanding of the needs of all stakeholders, from patients to physicians to payors. By using resources a company already has in place, such as call center data, PV can act strategically to better identify unmet medical needs and determine potential areas of therapeutic focus that can help drive disciplined portfolio investment decisions.  

Much of PV's focus is on creating a structured, integrated approach to risk management and incremental improvements to existing products. This step is important, but too narrow a view might prevent pharmacovigilance from developing economic and clinical value market insights that have transformative potential. Ultimately, clinical and economic value underlies compliance issues and drug safety—and reflects the true strategic imperative in the pharma industry. Compliance from this viewpoint is a tool that can be used to leverage capabilities to create new benefits. 

Using data proactively will enable pharmacovigilance to contribute economic and clinical value and significant competitive advantage. Given the compliance demands for improved data collection and analysis and increasing adverse event reporting requirements, this approach provides the framework for ensuring transparent compliance processes and can help transform the business by using data to drive product innovation, patient safety, and education.

, is a Senior Consultant at Numerof & Associates, Inc., Four CityPlace Drive, Suite 430, St. Louis, MO 63141, email: 

1. K. Winstein, "Late Drug Approval Linked To Safety Issues," 

2. Food and Drug Administration, CDER Facts and Figures, August 8, 2007. H. Bethan, "2007 FDA drug approvals: a year of flux," 

3. K. Getz, "Drowning in the Sea of Regulatory Compliance," 

http://appliedclinicaltrialsonline.findpharma.com/appliedclinicaltrials/Sites+Articles/Drowning-in-the-Sea-of-Regulatory-Compliance/ArticleStandard/Article/detail/401621

4. S. Gottlieb, "Drug Safety Proposals And The Intrusion Of Federal Regulation Into Patient Freedom And Medical Practice," 

5. Government Accountability Office, New Drug Development: Science, Business, Regulatory, and Intellectual Property Issues Cited as Hampering Drug Development Efforts, p. 4 (GAO, Washington, DC, November 2006).  

Articles

Partnerships in Clinical Trials

Help desk centers offer sponsors the chance to mine valuable PV data.

Using Compliance Data for Strategic Advantage

The biopharmaceutical industry has been relatively slow to embrace the advantages of long-term strategic partnerships that have benefited many other industries. Until recently, the majority of relationships between biopharmaceutical companies and CROs or other service providers were based on more traditional, project-by-project outsourcing models. For the most part, however, these transaction-based approaches have reached the limit of their capacity to reduce costs and increase operational efficiency. 

Facing intense competitive and financial pressures to accelerate product development while continuing to cut costs, many biopharmaceutical companies are moving beyond such narrowly focused relationships and exploring new types of strategic partnerships designed to deliver a much higher level of benefits throughout the product development lifecycle. This next partnership stage typically involves longer-term relationships with a small number of service partners that focus on the areas of product development where the most valuable improvements can be achieved: project oversight cost reductions and time savings. 

Leveraging partnerships that are more strategic allows biopharmaceutical companies to greatly increase 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. By understanding and embracing this new paradigm of strategic partnerships, biopharmaceutical companies can maximize their investments, accelerate product development, and gain a competitive edge at a time when even a small advantage can deliver significant marketplace dividends. 

Under the functional service partnership model, a biopharmaceutical company contracts with a service provider to deliver specific functions, such as data management, biostatistics, study monitoring, or regulatory affairs. Functional service partnerships go beyond the typical outsourcing relationship, with the partners usually establishing closer ties to improve efficiency and communications. This approach has a proven track record of reducing costs—especially if the services can be provided in lower-cost regions of the world. However, there are oversight and management costs associated with tying together the various functional components into an efficient process that are often not well captured or understood by sponsors or CROs. 

The preferred partner model is currently the most popular partnership approach, under which a biopharmaceutical company preselects a limited number of partners to utilize for its outsourcing projects. Preferred partner arrangements often include lower pre-established rates among the qualified providers, so the cost reductions are built in and the proposal and contract management process is faster and simpler. 

While these two types of partnerships are important aspects of the evolving CRO/sponsor relationship, the more traditional variants of these partnerships do not fully address the two areas of greatest value for sponsors: reduced oversight and time savings. Both of these models can require significant management oversight by the biopharmaceutical company to monitor contract and quality performance. More important, the more traditional incarnations of these models do not involve the level of investment that would optimize the relationship for improving speed and innovation at the strategic level of product development—the area where the vast majority of partnership cost savings are available. 

Achieving those savings requires a new partnership paradigm that requires deeper and more complex relationships between a biopharmaceutical company and a small number of partners, usually no more than two or three. Under such a strategic development partnership, a CRO would typically provide a broad array of services encompassing multiple therapeutic areas, business functions, geographies, and compounds over a period of years. While these relationships offer savings from lower contracted rates and a streamlined contracting process, the benefits of a strategic development partnership go much further. 

The strategic development partnership model reduces internal sponsor oversight requirements because oversight is built into the contract through agreed-upon quality specifications, project metrics, and close communication between the partners. In addition, there is usually a substantial up-front investment in mutual processes, defined inputs and outputs, and technology support that reduces oversight from the sponsor. These partnerships also increase efficiency through consolidation of activities, because a strong, long-term commitment between the partners allows efficiencies to increase and accrue over time. The most significant savings from a strategic development relationship result from reductions in development times driven by investments in processes, data assets, integration between the various functional areas, and templates that enable much of the "churn" in a typical relationship to be eliminated. Creation of case report form (CRF) libraries, study start-up regulatory document templates, data transfer specifications, and investigator contracts with deep back-up language are examples of investments that can dramatically reduce the time required to execute clinical studies.  

Strategic partnerships also enable sponsors and CROs to go well beyond the typical arm's length relationship for a study, so they can begin to share data and experiences that support the creation of sophisticated operational plans based on the combined expertise of the two organizations.  

Even modest time savings during product development can significantly reduce a sponsor's development costs. For a critical path study, it is conservatively estimated that each one-day reduction in study time saves a sponsor more than $1 million. Over the course of multiple studies, a major biopharmaceutical company could cut development costs by tens of millions of dollars annually—at a time when such savings are absolutely vital for continued success in the highly competitive pharmaceutical marketplace. 

While strategic development partnerships are usually associated with major biopharmaceutical companies, similarly beneficial relationships are possible between smaller, research-based biopharm companies and CROs. In this scenario, the relationship might cover a wide range of services, but focus on the development of just one or two compounds. A strategic partnership can be particularly valuable for small companies that lack the internal clinical or regulatory resources to move their products from the lab to the market. The partnership provides the expertise to compete with larger companies, or to provide the solid clinical data that is needed to sell or license a product to a larger company. 

While the savings from strategic development partnerships can be substantial, they are not automatic. The benefits of such a partnership can only be achieved if the partners can forge a mutually advantageous relationship that drives the savings. There are several proven success factors that should be incorporated into the relationship to help maximize the benefits for both parties:  

 A robust governance structure supports efficient decision-making, planning, and reporting. It also builds trust and reinforces the desired pathways to ensure that the partnership's goals are achieved as planned. Using three tiers of governance—executive level, operational level, and team level—provides a clear path for the escalation and resolution of issues, and helps ensure that the visibility of key issues is not obscured by day-to-day concerns. 

 Open communication and information transparency are essential to build and maintain trust in a strategic partnership. This begins with a well-defined scope of the partnership, with actions tied to specific benefits. A clear scope of work accelerates the achievement of partnership benefits and reduces the cost of managing the relationship. Identifying key points of sponsor/CRO contact throughout the relationship is another critical but often overlooked activity to build a successful partnership. Strong communication links are supported by a regular and sustained flow of information between peers at every level: within the project; between similar job functions at the sponsor and CRO; between therapeutic area experts; and between teams on a country-to-country basis. Dedicated relationship staff at the sponsor and the CRO helps both parties maintain their focus on the success of the partnership.

 A precise set of meaningful metrics is the best way to drive performance and produce the desired benefits of a partnership. These metrics should include shared measurements that are similar or identical at the sponsor and the CRO, including:

Operational metrics, such as timeliness, productivity, and quality measurements

Innovation metrics, such as process improvements and technology integration

Partnership metrics, such as new business gained and profitability across the portfolio

Metrics should also focus on targeted outcomes. Successful partnerships are based on achieving specific business results for each party over time. Partners should be constantly mindful of the overall goal of the relationship by focusing on strategic outcomes and the long-term value of the partnership, and not just on immediate tactical benefits.

Technology and infrastructure integration.

 Efficient data exchange is critical for a strategic development partnership. At its most basic level, integration begins with the sharing of metrics data and the reprogramming of firewalls and other technologies to remove data exchange barriers. Over time, strategic partners would be expected to establish links between key data systems, as well as purchase technologies that work in harmony. Eventually, a convergence of technologies might be expected, with both partners using the same systems, which would be closely linked to facilitate data sharing and joint decision making (based on access to the same information at the same time).

 Effective partnerships implement standardized "best practices" and procedures that uniformly guide every activity and connect the partners at critical junctures to maximize the efficiency of the relationship. Harmonized processes allow the sponsor and the CRO to better understand the "rules of the road" and eliminate the need to reinvent standards for every project. At the same time, each party must remain flexible and allow the partnership to develop and evolve to accommodate unanticipated changes in the partnership and the marketplace.

Shared accountability is also a vital characteristic of successful strategic partnerships.  

The benefits and risks of the partnership must be clearly understood at the beginning of the relationship, with the partners developing a comprehensive benefits proposition that covers costs, revenue, risks, and timing. Each party must be committed to sharing accountability for both the risks and rewards of the partnership. 

Given the unrelenting economic pressures on the industry, biopharmaceutical companies will continue to leverage strategic partnerships to reduce costs and speed up development. The importance of transaction-based outsourcing will continue to decrease, and relationships such as preferred provider partnerships will likely evolve into stronger strategic development partnerships in the years ahead as biopharmaceutical companies strive to gain a competitive advantage in a difficult marketplace. In addition, mixed partnership models that incorporate aspects of functional service provisioning, strategic development partnerships, and one-time transactional outsourcing for specialized needs are likely to evolve to achieve the best aspects of various types of partnering models. 

To accommodate the evolving partnership requirements of sponsors, CROs must continue to expand and upgrade their service offerings. Greater size and global scope will be essential, as will depth of therapeutic expertise and technology resources. New development innovations will also be needed to accelerate time to market. Equally important, CROs must bolster their ability to be more self-directed so they can help their partners reduce oversight costs and build trust. 

Although the future of the biopharmaceutical industry will remain challenging, the new paradigm of strategic partnerships offers viable, proven pathways to overcome the obstacles and achieve success despite the challenges. 

 is Corporate Vice President, Clinical Research Services, for Parexel International, 200 West Street, Waltham, MA 02451-1163, email: 

Communication, metrics, and technology integration are just some areas to address.

What to Examine in the Strategic Partnership

Strategic relationships with CROs have typically been the exclusive domain of large biotechnology and pharmaceutical firms with multi-millions to spend on clinical trials. However, the face of the biopharm world is being altered by smaller firms, and the strategic relationships between the small- to mid-sized biopharmaceutical company have taken a new form. Now, growing biopharm companies are working with specialized CROs for gains in efficiency and cost effectiveness. 

Rather than being the small fish in a big pond, emerging firms are actively elevating their status by testing the waters of strategic partnerships with their CRO. Many of the benefits of working with a CRO that accrue to larger organizations are even more important for the smaller research sponsor that likely has limited resources. These resources include:   

Capitalizing on the capabilities of a CRO allows sponsors to focus on their own core strengths rather than organize, create, and administer a complete clinical trial themselves.

Optimally designed trials that are conducted correctly the first time are crucial for success. CROs have the expertise to design trials that achieve stated clinical, regulatory, and commercial objectives in a focused manner.

However, it may be difficult for an emerging firm to elicit the level of attention needed from a large CRO to achieve these benefits.  

At Clinipace, we have been successfully exploring the full range of a strategic relationship with Inspire Pharmaceuticals, a biopharmaceutical company focused on developing and commercializing prescription products for ophthalmic and pulmonary diseases. 

With one or two drugs, Inspire was able to work directly with investigative sites to manage clinical trials. Generally, the company had been reluctant to outsource the management of studies. Inspire felt that it was good at developing relationships with investigators and had worked hard to build and maintain those relationships. They felt that inserting a big CRO into the mix would dilute the relationship with those sites. 

But as Inspire's portfolio grew, the company began to realize that time spent managing trials was time taken from development and other core competencies. While the company had worked with larger CROs in the past, Inspire felt the time was right to be more strategically engaged with its CRO partners. 

Inspire had previously deployed Clinipace's technology-based research software solutions and thus had established a good working relationship with its executive team. Chad Ice, Senior Director of Clinical Research at Inspire, has significant experience working with large CROs, and he knew the particular aspects and dynamics of those relationships that worked, and those that didn't. In this case, lessons learned from the strategic working relationship between Inspire and Clinipace ran along several important themes.  

 Larger CROs tend to offer line item services that get added to every contract, even when they might not be the best fit for a smaller customer or project. As a result, a smaller research sponsor may be paying for services that they don't need, or bearing a disproportionate overhead burden. A smaller CRO has the ability to tailor its services to the specific needs of the sponsor. This has the added benefit of building trust since the sponsor doesn't feel nickel-and-dimed with line items. 

 One crucial element in driving a successful study is focusing on the importance of building and maintaining strong working relationships between experienced site monitors and the sponsor team. Clinical staff should serve as technology advocates, acting as extensions of the sponsor's staff, actively participating in team meetings and decisions.  

 Usually, a project with a larger CRO is based on strict adherence to an agreed upon scope of work. Anything outside that scope must be negotiated and submitted in a contract addendum. Smaller CROs have the flexibility to make changes without calling in the contract professionals and lawyers. Small tweaks to deliverables and deadlines can be made by mutual agreement among team members based on real-time information.  

 Successful business relationships often hinge on transparent information exchange and successful personal relationships—the kind that come from trust, honesty, and open communication. Trial visibility and two-way communication at the highest level aren't always possible with a larger CRO where there are too many layers of managers to navigate. Responsiveness at the top also goes a long way toward avoiding problems and mitigating risk.  

 Rather than depend on volume for efficiency gains, smaller CROs seek innovative new technologies and processes that often can't be introduced into larger CROs with entrenched procedures. For example, our technology platform brought together multiple sources of data that would have otherwise needed manual intervention. And, because smaller CROs tend to be private companies they don't have to focus on quarterly results, but can instead offer price reductions. 

According to Ice, "We especially like having the ability to communicate directly with senior members of the Clinipace team. It is important to us that we are important to them. As much as we value open communication, trial visibility is equally important as many program decisions must be made internally." 

Much as this sounds like it all benefits the sponsor, the smaller CRO has a lot to gain from forging strategic partnerships as well. Some key benefits to the CRO include:  

Increased learning opportunities. For all CROs, each engagement is a learning experience rather than just a repetition of established tests and trials, but larger CROs are less likely to operationalize these experiences in their standard operating procedures. Discovering new efficiencies, methodologies, and capabilities can lead to an improved work environment that could promote staff retention.

Shared appreciation of the entrepreneurial spirit. CROs and their sponsors enjoy a shared entrepreneurial spirit. Both understand the need to tightly manage cost and risk without constraining innovation and creativity. This allows the CRO to push some limits and engage the sponsor in ways that a larger CRO or sponsor couldn't.

Stability in tough economic times. Strategic alliances are likely to be longer term than contract engagements. A longer term commitment from a sponsor provides the smaller CRO with stability and the ability to make investments in expertise or equipment that will enhance their overall service offerings.

As relationships among sponsors and CROs of all sizes change from contract to collaboration, smaller CROs can distinguish themselves by becoming market leaders. The combination of visibility, personalization, and lower overhead will make the CROs more attractive as emerging company sponsors place higher value on skills and operational expertise, not just capacity. 

For any biopharm firms considering this kind of relationship, the following tips may help develop that type of partnership:  

Don't be afraid to ask for what you want—your CRO should be willing and able to accommodate requests.

Be open to exploring new ideas that may enhance efficiencies and improve your business processes.

Be willing to negotiate on schedule and deliverables as new or unexpected situations arise.

Participate in team building activities or other opportunities to engage staff from both companies.

And finally, keep the channels of communication open, flowing, and respectful. 

 is Vice President at Clinipace, 3800 Paramount Parkway, Suite 100, Morrisville, NC 27560, email: 

: This article originally appeared as an Online Extra at 

How changing times require a new approach to partnerships.

Why Emerging Pharmas and CROs Need Each Other

There are five common mistakes pharmaceutical, biotech, and medical device companies make when selecting a CRO to conduct a clinical study. You want a real partnership with your CRO based on facts versus perception. Making any one of the following five mistakes could have a negative impact on your clinical study.  

Going with a company you've always used "just because"

Pharmaceutical, biotech, and medical device companies face new competitive, regulatory, and economic challenges. Instead of automatically assigning new studies to the CRO you've always used, try a new approach. If you're looking for a different result and you're using the same CRO, it's time to try something new. The best CROs will welcome the challenge of addressing how they can help you conduct a faster, safer, compliant clinical study. 

Going with a big name CRO because it is a safe choice

When it comes to choosing a CRO, size matters. Small to mid-sized sponsors might think it's a prudent decision to award their study to a large CRO because of the resources available to them. However, a small sponsor company is unlikely to get a large CRO's "A Team" because most large CROs assign their top people to their largest clients." 

Mistaking therapeutic experience with study management expertise

Sponsors want CROs with relevant experience in their indications, but therapeutic experience does not guarantee study management expertise and high quality data delivered. Avoid the pitfall of putting therapeutic experience above study management expertise or past success in other clinical studies. A good study manager will deliver a successful study with or without the therapeutic experience. 

We get what we pay for. Going with the lowest bid can lead to numerous changes of scope, which can blow up your budget. Make sure the CRO bids your project thoroughly, including all aspects of running a study. Ask the CRO to anticipate changes to the number of sites and study design and have them provide sample cost estimates in the proposal. Most CROs will just provide an hourly rate. An hourly rate needs to include an estimate of the hours required to complete the task. Most studies will have changes and knowing some of them up front will save you money down the road. A good CRO will plan for changes of scope and include the sample costs in the original bid.  

Choose the CRO that will staff the best team for your study. Every CRO is likely to propose its best team for your study, but will you really get them? Months can pass between awarding and beginning a study. Do not base your decision on CVs and study personnel submitted during the bidding phase because you have no control over whether those submitted will still be employed at the CRO or available for your study when it begins. Ask for the track record of the study manager assigned to your project. How many studies have they started and completed in the past two years? 

is Executive Director of  West Coast Operations at DSP Clinical Research email: 

Viewpoint

What not to do when choosing a CRO partner.

Top 5 Partnering Mistakes

Today, the key to clinical trial management depends on a site's ability to successfully manage financial data and their trials portfolio with greater business acumen. Successful financial results require sites to smartly select studies that maximize the strategic and financial goals, and to effectively manage budgets, patient accrual, and collection. This will ensure an increased cash flow and improve a site's bottom line. 

According to Parexel International, 2007 was a record year for study starts, which represented an increase of 12% from the prior year.

  Industry spending on clinical trials also is rising. Comprehensive costs of developing a new drug have steadily increased over time. In 2006, the total costs to bring a new drug to market were approximately $1.2 billion. At the same time, the number of sites greater than one month behind subject enrollment targets was 70% to 72%. This has created continued pressures for both sponsors and CROs to manage costs, while demanding greater overall efficiency from sites. 

Sites also are being pressed for improved performance and lower costs during a time when they are realizing decreased compensation from procedures. Reasons for this include: requests from regulatory agencies for larger amounts of data to support submissions; an increase in the number of unique procedures between 2000 and 2007; and a growing number of complex trials and procedures. All of these add to the operational requirements for sites. 

In taking a high level view at the business side of clinical research, sites are facing significant challenges. Reported margins for sites increased from 11% in 1999 to 14% in 2004. However, when taking into account the full cost of conducting clinical trials research, the current profit margin for sites has decreased—the average reported profit margin for sites is now approximately 2%. At the same time, payment cycle time frames are extremely long in terms of payment receivables. Site receivables currently are reported to average about 118 to 140 days. 

In the case of one hospital, between 1995 and 2000 its Office of Research was able to break even. By 2005, however, the hospital subsidized $1.29 for every dollar of revenue from research. Of that site's approximately 75 active protocols, just 35 had revenues in 2004. And of the 35 protocols with revenue, seven accounted for 50% of the total revenue. 

The driver was not the result of those managing the studies, but a direct result of a strategic decision to accept more studies. While the volume increased, the result was overtaxing the system. The time spent by study coordinators on upkeep of the studies (i.e., adverse event reporting, IRB continuing reviews, sponsor inquiries, etc.) limited the time available to enroll and manage patients in the study. 

In the end, operating a sustainable clinical research venture requires applying key business principles, including smartly selecting studies (i.e., portfolio management), developing solid budgets, achieving enrollment targets, and monitoring and collecting cash from sponsors. 

The Clinical Trials Office (CTO) of Columbia University College of Physicians and Surgeons and New York-Presbyterian Hospital, like many other academic CTOs, is realizing increased competition for the best studies, the challenge of tracking multiple sponsor contracts, and pressure to maintain the bottom line. Columbia needed a way to show value and that it was not losing money in its clinical trials. Additionally, Columbia University's Cancer Center created a sense of urgency with an upcoming NIH/NCI review that required a way to capture data in a central location. At that time, data was located in a variety of different areas. 

"About three to four years ago, when the Cancer Center began evaluating more efficient data management systems, we also decided to take a closer look, as we knew our organization needed a more effective means of managing data," said Susan Adler, Applications Administrator, Columbia University Medical Center, CTO department. "As it turned out, Columbia had a clinical trial management system already in place. The Cancer Center was using that system, but the CTO was not." Adler was part of a project team tasked with reviewing that system to evaluate whether it met Columbia University's needs. 

"We had a list of over 100 items we needed to evaluate to determine whether we were effectively managing our clinical trials," said Adler. "We needed to determine whether we were capturing all possible revenue to ensure we were not losing money. After a thorough investigative process, we concluded that our existing CTMS system could not manage financial transactions, which was a problem, so we needed to find another CTMS system." 

Columbia University contracted with Allscripts, Inc, for its EHR system, which offers StudyManager's CTMS system to its EHR customers. "Once we discovered StudyManager was part of our Allscripts package, we realized we had a system available to us that we weren't using and decided to give it a closer look," said Adler. "The project team put StudyManager through the same evaluation process we put the other CTMS system through, and quickly found it met all the requirements we needed to accurately capture and report all our financial data." 

As part of a pilot phase, Columbia initially rolled out the CTMS to three areas: Vascular Surgery, Nephrology, and Liver Disease and Transplantation divisions, and found it to be a manageable system. 

The project team found that a CTMS allowed the CTO to transition from spreadsheets and paper-based processes to a single, centralized database that provides tracking and reporting features, allowing their department to capture data they could not previously capture. "I was able to reconcile our financial data including catching up on outstanding invoicing issues right away. It is now much easier to track patient status and finances across multiple areas," said Adler. 

"We're able to look at groups of information and identify areas we need to improve," said Adler. "For example, we created a dashboard that shows the enrollment status of patients, and looks at trending patterns. At one point we saw we were recruiting at 50% to 60% (of targeted enrollment), which we quickly knew needed improvement. Having access to this type of data makes us attractive to sponsors." 

The ability to manage studies across the entire research operation also helps keep a busy CTO on track. "The software also helps us evaluate specific studies, which is critical when you are contracting and negotiating as many as 20 different studies at a time. In some cases, we can tell if we are going to lose money on a specific study and evaluate what we need to change before signing the final contract." 

Additionally, hundreds of patients interact with Columbia University's clinical partner for ancillary testing each year. As a result, payment reconciliation and processing is a huge challenge. The CTMS provided the only efficient way of labeling, tracking, and reconciling invoices and payments per study. 

One of the limitations for CTMS is having the right data in the system. Columbia used the CTMS vendor's support team to migrate data into the CTMS system and design the reporting structure and reports, thereby reducing the burden on existing staff. 

Said Adler, "We also entered closed studies into StudyManager and were able to recoup some of the costs from those studies. Simple things like knowing when to invoice and being able to evaluate specific studies gives us the tools we need to be successful, and prove that our clinical trials make financial sense for our enterprise." 

The transition for Columbia's CTO allowed it to manage its portfolio and help it strike a better balance between the need to ensure the studies meet sites' mission while ensuring studies within the portfolio are profitable. This balanced portfolio approach is critical to all sites and can be accomplished by evaluating a potential study based on two parameters: strategic impact and financial impact. 

To apply these measurements, it's important to define strategic alignment, which can mean different things to different sites. For some, it is best science or getting in the best patients; for other sites it may be taking on studies that are best for long-term strategies or attracting the best sponsors. However a research site defines "strategic alignment," the goal of the portfolio management matrix is to reinforce the need to consider the financial and nonfinancial implications of each study on the portfolio and balance those implications with the long-term goals of the organization. 

A feasibility analysis is a critical mechanism to implement the portfolio management strategy. While a feasibility analysis needs to be customized to your site and the approach to your management of clinical research, it can be a tool to quickly help evaluate potential studies to determine strategic fit and financial potential. Sites should conduct a high-level feasibility analysis prior to dedicating time to the budget, contract, and other reviews. This can be done through a committee review, simple one-page forms, select individuals to screen studies, etc. Some good questions to ask in a feasibility analysis include: 									

How would you rank the level of scientific interest in this study relative to existing studies?

How could patients benefit from this study?

Are there available patients that would meet the inclusion or exclusion criteria?

How many patients are expected to be enrolled?

What is the time frame for enrollment and what factors will impede enrollment?

What is the expected financial impact of this study?

When the right study is selected, the "BAC" methodology can be implemented. It is comprised of three parts: 					

B—Budgets that are accurate and fully loaded and milestones reflect the timing of expenses

A—Accrual targets are reasonable and patients and visits can be tracked

C—Collection of cash is supported by invoicing and A/R management

. If your organization is not already doing so, it is critical to establish a budget. Budgets aid administrative decision makers in their feasibility assessments aid research personnel in managing the financial aspects of specific trials, and are a mechanism for monitoring certain billing compliance initiatives. They also should include all costs of conducting clinical trials such as study start-up costs, IRB and departmental taxes, patient care items and services, and supplies. 

A critical part of your clinical trial budget is evaluating milestones and how they impact your budget. The milestone method aligns incentives of the site and sponsor, but in general, sponsor payments tend to be spread over the life of a study with an emphasis on payments at the completion of the study, while most of the expenses occur at the beginning of the study. This can have a negative impact on budgets. Therefore, timing of expenses and sponsor payments is important to consider in sponsor negotiations or even determining whether to take on a study. 

. It is widely understood that patient accrual is important to any study. However, patient accrual has a major impact on the financial success of sites. It's important to evaluate criteria such as fixed cost per patient, start-up costs, and patient management costs. For example, let's look at how fixed cost are recovered. A study is expected to enroll 10 patients with a fixed cost of $3500 (or $350/patient). If the study were to enroll 12 patients, the site would receive $4200 (12 x $350) for a gain of $700. However, in the event the study only enrolls five patients, the site would receive $1750 (5 x $35) for a loss of $1750. 

Also, in many cases adding even one more patient can have a positive impact on the bottom line. Based on a recent review of 100 closed studies over a 12 month period at one academic medical center, the incremental revenue of adding just one more patient per closed study revealed a revenue potential of more than $1.26 million. Part of this recovery would be to pay for additional costs and coordinator time, but a large portion would be the estimated fixed costs and overhead, which do not increase materially for one additional patient enrolled. Therefore, adding one more patient could have the effect of transforming the clinical trials portfolio from a break-even to a revenue generating venture and at the same time help fund needed expansion and additional resources. 

. Many sites face challenges related to sponsor invoicing including: undefined processes for tracking when milestones are reached, absence of a process for creating an invoice, difficulties tracking how long an invoice is outstanding, waiting for monitor visits, sponsor hold-backs, contracts that are not clear on when the sponsor must pay for separate billable items, and other issues. These factors combine to add to an already lengthy payment time frame, and can potentially result in missed payments. 

To ensure a site is profitable, it's important to evaluate the types of studies performed and what financial and strategic factors can help. From a financial perspective, factors such as looking at patient accrual and how adding just a single patient can have a dramatic impact. Other factors include evaluating how negotiations with sponsors are handled and exploring what information management systems are available to help centralize and manage this information. In the end, the key is to make sure the right study is selected using a portfolio approach and to cover your "BAC." 

,* MD, MBA, is Vice President, Medical Affairs, at StudyManager, 520 Pike Street, Suite 2522, Seattle, WA 98101, email: 

 is Managing Director for Huron Consulting Group, Chicago, IL.

*To whom all correspondence should be addressed.

1. ACRP Wire, "Record High Number of Clinical Trials Initiated," July 3, 2008, 

http://newsmanager.commpartners.com/acrpwire/issues/2008-07-03/4.html

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