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Investigating more objectively measured 'structural' characteristics.
During the past three decades, reliance on outsourcing has steadily increased as sponsor companies seek capacity and scale, scientific and executional expertise, cost containment, and operating efficiencies.
There are many indicators of the magnitude of sponsor demand for, and dependence on, contract service providers. Outsourcing has been the single largest category of clinical development spending by sponsor organizations since 2017. At the present time, spending by pharmaceutical and biotechnology companies on contract clinical services is growing at three times the rate of spending on sponsors’ own internal development operations and infrastructure (6-8% annually).
And there are no signs that demand for outsourcing will diminish. We have seen a proliferation of smaller pharma and biotech companies with at least one drug in active clinical testing. For these organizations, outsourcing meets a critical need for personnel, experience, and expertise. The year 2023 has also been experiencing a global economic downturn with major and mid-size pharma companies—such as Amgen, Biogen, Bristol Myers Squibb, Novo Nordisk, and Takeda—responding in part by consolidating operations. The high volume of drugs in the global R&D pipeline continues to grow, signaling that variable capacity obtained through outsourcing will be an essential near-term drug development operating strategy.
Columns and articles that I have authored and co-authored in Applied Clinical Trials over the yearscharacterize the wide variety of outsourcing models that sponsor companies are implementing. Outsourcing models have become increasingly complex operationally, with more intermediary service providers and more data-intensive and technology-enabled elements. Pharma and biotech companies are implementing ever-more customized approaches to engage with collaborative partners. Sponsors are mixing and matching internal and contract staff across functions, varying use of full-service and functional service arrangements—and many variations in between—largely on a clinical-trial- by-clinical-trial basis.
A study recently completed by the Tufts Center for the Study of Drug Development (Tufts CSDD) of approximately 120 late-stage pivotal trials shows that functional service provider-sourcing strategies were most commonly used (30-40% of pivotal trials) to support clinical monitoring, data management, and statistical analyses. Core areas most commonly kept in-house include site initiation and study start-up, overall project management, and medical writing. Many other sourcing strategies were used with relatively low and variable frequencies, including full- and multi-service, blended, embedded, and staff augmentation models.
Wide variation on sourcing model use was also observed across therapeutic areas with full-service models most commonly used in oncology (30% of pivotal trials) and functional service provider models used in non-oncology pivotal trials (58% of pivotal trials).
As complexity and customization in contract service provider usage has increased during the past several decades, sponsors’ capacity, experience, and expertise needs have largely been met. But improvements in drug development operating performance and economic outcomes have been elusive.
Overall drug development program speed, cost, and success rates have not gotten better—they have all worsened during the past 30 years. We have observed a higher incidence of unplanned delays and out-of-scope activity. Clinical trial durations across all phases have lengthened with high and wider variation observed around mean durations, suggesting less consistent and predictable cycle time performance.
Many factors contribute to this long time horizon of operating performance shortcomings, delays, and inefficiencies. Sponsor-CRO collaborative effectiveness has played a part. R&D executives in both sponsor and CRO companies have long lamented relationship attributes such as the lack of trust, poor communication, and the lack of senior management support as major contributors. These perennial conditions have been difficult to identify and address, as they are intangible and diffuse.
Tufts CSDD has been looking at other, more tangible and objectively measured “structural” relationship attributes. Last year in Applied Clinical Trials, we proposed that specific underlying structures may be associated with and predictive of collaborative efficiency and effectiveness. These structures include the systems and processes used to support a given collaboration (i.e., sponsor vs. vendor) as well as the primary party accountable for functional timelines and deliverables.
The results of a pilot study will soon be published showing that these structural characteristics are measurably associated with performance and economic outcomes.
In this pilot study, Tufts CSDD had sponsor companies define specific outsourcing models used on individual late-stage clinical trials. Sponsor organizations also provided performance measures associated with each clinical trial.
The Tufts CSDD research team has recently turned its attention to pre-existing relationship structures—cultural and infrastructure—that are likely contributing to performance inefficiencies. These pre-existing structures often render parties incompatible and introduce interactive tensions at the outset of a collaboration. They include: decision-making hierarchies such as functional or matrix operational designs vs. decentralized approaches organized around therapeutic area; risk aversion and how parties plan for and manage operating risk; each party’s conflict escalation and resolution handling processes; and the ways that collaborative parties manage, access, and transfer data.
There are no doubt other areas to include in this list of pre-existing structures and processes that are brought to a given collaboration. We welcome comments and additions to this list. During the next 12 months, Tufts CSDD plans to look at these specific structural attributes and their association with clinical trial performance and economic outcomes.
Knowledge of the role that pre-existing attributes play on collaboration inefficiencies may inform other relationships, including joint development arrangements, in-licensing deals, and mergers and acquisitions. Indeed, in the wake of the pandemic, the volume and scale of M&A activity has been rising with a number of highly notable deals during 2022 and 2023, including Pfizer’s $43 billion purchase of Seagen; Amgen’s $28 billion acquisition of Horizon Therapeutics; and Merck‘s $11 billion purchase of Prometheus Biosciences. The rise of such transactions makes early assessment of misalignment areas critical.
Ultimately, learnings and insights drawn from research on culture and infrastructure-based collaboration attributes will inform new operating practices and processes, vendor qualification strategies, and staff training.
Ken Getz, MBA, executive director and research professor, Tufts Center for the Study of Drug Development, Tufts University School of Medicine