OR WAIT null SECS
© 2023 MJH Life Sciences™ and Applied Clinical Trials Online. All rights reserved.
Applied Clinical Trials
Knowing what you want from a CROs proposal will help make the most of the selection process.
Sponsors know that clinical trials are one of the most expensive endeavors for their company. Many sponsors would like to manage their trials in-house, but lack the needed infrastructure. Yet, sponsors have reservations outsourcing clinical research due to problems experienced working with CROs. These difficulties include lack of pricing clarity, poor communication, and inconsistent commitment to projects.1 In our experience, sponsors can better manage these issues by improving the processes they use when selecting CROs.
Sponsors typically select CROs in a competitive bid process. Sponsors issue a request for proposal (RFP) to a number of CROs. The RFP describes the project the winning CRO will perform. In addition, it instructs CROs to provide information the sponsor requires to identify the vendor that best meets its needs.
CROs then bid on the project by preparing a proposal. The sponsor reviews all proposals and awards the contract to one of the bidders.
The winning CRO's proposal, premised on the RFP, establishes the foundation of the project plan. An inadequate RFP leads to inadequate proposals, which leads to an inadequate project plan. This, in turn, leads to budget creep, insufficient resources to complete the project, and the potential collapse of the relationship between sponsor and CRO.2
We have written proposals for CROs bidding on clinical projects valued at more than $10 million. Through this experience, we have seen poor RFPs as well as excellent ones. This article distils our experience and presents the five biggest mistakes sponsors make when preparing RFPs. Readers will learn what these mistakes are and gain insight into how to avoid these pitfalls. These mistakes include:
Many sponsors issue RFPs before they have a sufficient understanding of their outsourcing needs. In some cases, this is okay if the sponsor is using a CRO to help finalize certain details of its clinical plan. However, if too much of the clinical plan is undeveloped, the sponsor gives the CRO power to design a plan they want, not the one the sponsor needs. The plan the CRO wants is the one that will win the contract.
CROs have learnt that, on average, a low price wins contracts. Moreover, they know that many sponsors will choose a proposal with a low price even if the proposed project plan does not reflect their needs. We once raised this issue with a clinical manager at a sponsor when we lost its contract to a lower bidder. To our surprise, the manager agreed with us. She knew she would need "extra" services from the CRO to meet their clinical needs. However, key decision makers at her company focused more on price than on what their actual needs were, or the risks of not having those needs met.
Sponsors allow this to happen when they do not take the time to educate themselves on what their needs are. Thus, CROs will design a bare-bones project plan with a low price. Only once the project starts does the sponsor learn the extent of the services it actually needs, and the project's scope and budget inflate. So, before issuing the RFP, sponsors should have a solid clinical plan.
Perhaps the sponsor will leave some details for the CRO to finalize. But the more the sponsor can tell the CRO, the more it retains the power to ensure the project plan and budget developed by the CRO are realistic. To do this, the sponsor must put in effort before issuing the RFP. It must thoughtfully map out its clinical program. If the company lacks the expertise to do this in-house, it should acquire expert help.
There is information CROs must have to develop a budget and work plan. In the absence of this information, CROs must make budget assumptions. Different CROs will choose different assumptions, undermining your ability to compare the costs from one CRO to another. Moreover, when CROs get to choose their budget assumptions, they tend to choose ones that make their costs look good.
It is true that in many cases sponsors may not know the details the CRO needs. Indeed, you may not know certain details, such as the number of queries per subject, until the study begins. In these cases, the sponsor should provide the budget assumptions in its RFP. If this is not possible—say, because you are asking the CRO to suggest the monitoring frequency—the RFP should clearly ask the CRO to state its assumptions, justify those assumptions, and provide a unit cost for the activity.
To help the CRO write a proposal, the RFP should provide:
This list is far from complete. Given the range of services a sponsor might require, providing a complete list of the information needed by the CRO is beyond this article's scope. There are, however, a number of resources available to sponsors, such as RFP manuals and templates.2,4 If you are unsure what information the CRO needs, ask them prior to submitting your RFP.
A clinical trial is one of the most costly activities sponsors perform. Moreover, the future success of the sponsor is dependant on the trial's results. Is it not worth some effort to ensure the CRO you hire is up to the task?
Sponsors should perform proper due diligence of the CRO they hire. This includes reference checks, review of financial information, study of staff turnover, and a site visit.
Reference check. The RFP should instruct the CRO to provide at least three references from customers who have had projects similar to yours run by the CRO. This is critical to ensuring the CRO is capable of delivering the work you are contracting out at the level of quality you need.
Financial check. The CRO industry is becoming more competitive.5 As a result, the number of CROs in the United States is decreasing through attrition and consolidation.6 Should your CRO experience financial distress, this can jeopardize your project. Sponsors can assess this risk by asking the CRO to provide at least three years of financial statements. Someone with financial training at the sponsor should review this data to assess the CRO's financial strength.
Staff turnover. High staff turnover at the CRO can be disruptive to your study. The RFP should instruct the CRO to provide turnover data. The sponsor can then compare the turnover data among bidding CROs. Note that you can define turnover in several ways. Thus, the RFP should define how to make this calculation. We recommend the method presented in Figure 1.
Site visit. A site visit allows you to verify with your own eyes the CRO's abilities. In addition, when you hire a CRO their project team becomes a part of yours. Therefore, the compatibility of the two project teams is important. The site visit allows you to assess this compatibility.
As Table 1 shows, despite the importance of due diligence, very few sponsors make the effort to do it. This table summarizes the percent of sponsors who performed due diligence over one year at a CRO we worked with. As you can see, many companies did very little, if any due diligence on the CRO. This laxity increases the risk that the sponsor will end up hiring a CRO that will not meet its needs.
Sponsor Performance of Due Diligence
Unless instructed otherwise, each CRO will present its budget in its own format. To control for this, some sponsors present a bid grid in their RFP that instructs CROs how they want the budget presented.
In theory, this makes sense, as you can easily see where differences between CROs lie. In practice, though, there are shortcomings of relying too heavily on a bid grid. This stems from the fact that there are many ways a CRO can organize its workforce to perform a clinical trial. Each CRO organizes its budget to reflect its unique workflow. When you present it with a bid grid, it must now translate its budget into your grid. This requires discretion.
Consider the following: Where should a CRO allocate the cost for overseeing copying and shipment of paper CRFs from global sites to your data center? One CRO may file it under data management because they assign a data manager to oversee this task. In another, the monitor performs this function, so they allocate it to monitoring.
Once the CRO has allocated its expenses across your bid grid, it will review each category to see if any item seems too big or too small. It will then readjust how it allocated costs until the bid grid "looks about right."
If the sponsor does provide a bid grid in its RFP, we recommend keeping the details to a minimum. We have seen bid grids provided from sponsors containing over 100 budget line items that contain minutia such as "Prepare Investigator Notebooks." Imagine the effort required to compare the bids from three to five CROs across 100+ line items. Given the latitude CROs have in translating their budget to your bid grid, are differences across line items such as "Prepare Investigator Notebooks" very meaningful?
Dividing your bid grid into major categories, such as project management, data management, and so on is sufficient. Moreover, we recommend that sponsors not read too much into differences observed across categories in their grids. If the total budget of the most and least expensive CRO is within 25% of each other, then differences observed across the bid grid are probably not important.2
Because of rising costs, sponsors obsessively search for the cheapest solution to their needs. To achieve this, they mercilessly drive down CRO rates and cut corners on their clinical plan. Unfortunately, many companies incur long-term costs in their search for short-term savings.
We have observed sponsors approach CROs they have short-listed and ask them to find ways to cut their price. CROs often respond by scaling back the services offered in their initial proposal, for example, by reducing monitoring frequency. Justifications for this will often include wording like, "Now that we understand your project better, we feel some of our earlier assumptions were too conservative."
However, if the sponsor needs extra monitoring visits later, the CRO will bill this as an extra service. We have often observed that services removed from the proposal to lower costs end up being required. Many CROs bill for these "extra services" at a higher rate than activities scheduled in the proposal. Thus, not only do sponsors not get the savings they were expecting, they end up paying more than the CRO's original plan. To reduce overall costs, companies need to stop looking for the cheapest solution and start looking for the best value.
We recommend sponsors do two things in their search for value. First, as stated, they must put effort into identifying their needs before issuing an RFP. Continuing with the earlier example, the sponsor should know the appropriate monitoring frequency for its study. Then, rather than allowing CROs to cut visits to reduce costs, sponsors should look for CROs that can deliver those visits for the best cost. If a CRO suggests a lower monitoring frequency, the sponsor should press them to justify their recommendation.
Secondly, once the sponsor has received proposals, it should select CROs based on value obtained per dollar, rather than the raw dollar amount of the proposal. To achieve this, sponsors can design a point system to grade proposals received—say, for instance, a score out of 100 total points. Dividing this score by the price quoted by the CRO yields a "value ratio." This is the number of points the CRO scores per dollar. The higher the value ratio, the more value you are getting for your dollar (see Table 2).
Measuring a CROs Value for its Dollar
Sponsors cannot abdicate the design of their clinical program to a CRO while grinding the CRO's rates down and then expect they will get the study they need with a realistic budget. By improving processes to select CROs, sponsors can reduce overall costs and improve the quality of their program.
However, to achieve this, sponsors must educate themselves on their needs for the project. They must then translate these needs into an RFP that will lead CROs to develop a realistic project plan and budget. To reduce long-term project costs, sponsors must then evaluate each proposal and select the CRO that will provide the best value.
Brad Anderson is president of Integrative Consulting Services, Suite 849, 104-1015 Columbia Street, New Westminster, BC, Canada V3M 6V3, email: firstname.lastname@example.org.
1. V. Charlon, "A Clinical Development Solution Tailored for Biopharmaceutical Companies," Applied Clinical Trials, November 2003, 36-39.
2. B. Anderson, The RFP: Writing Effective Requests for Proposals in the Clinical Trial Industry (Integrative Consulting Services, Vancouver, Canada, 2008).
3. B. Anderson, The RFP Template: A Template for Writing an RFP to Select a CRO (Integrative Consulting Services, Vancouver, Canada, 2008).
4. N. Goldfarb, "Common RFP Template for CROs, Sponsored by POMA," Journal of Clinical Best Practices, http://1stclinical.com/journal/contents.html?when=March+2005 (March 2005).
5. B. Anderson, "CRO Market View: What Lies Ahead of the Curve?" Contract Pharma, 56-61 (March 2008).
6. P. Dewberry, S. DeSantis, J. Kalt, S. Gambrill, and S. Zisson, Clinical Trials State of the Industry Report 2006: Market Players, Data, Drug Development and the Future, M.J. Lamberti, ed. (CenterWatch, Boston, 2006).