Transactional vs. Strategic Sourcing

September 1, 2010
Applied Clinical Trials

Volume 0, Issue 0

A close-up look at these two approaches to comparator drug sourcing and how they differ.

The current focus on comparative effectiveness research and its ties to health care reform has translated into an increased demand for pharmaceutical and biotechnology companies to demonstrate the relative benefits of their drugs during the clinical trial process. Sponsors of comparative clinical trials therefore need to put in place robust processes to ensure that they can effectively select, source, and supply comparators in a reliable manner, to all trial sites, in the most cost-effective way. It should be noted that while neither the FDA nor EU regulatory authorities offer explicit guidelines for the procurement and use of comparators, both encourage adherence to good manufacturing and clinical practice when sourcing.

This article will examine two comparator sourcing models: a transactional model and a strategic model. It will review the pros and cons of each to help guide procurement teams on the most effective sourcing approach to help ensure an uninterrupted supply, avoid unnecessary trial delays, and mitigate unexpected costs.

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Find it yesterday

Despite having the comparator identified during development of the trial protocol, procurement teams can be left with precious little lead-time to source the drug. It's frequently a situation of "here's the comparator that's needed...find it yesterday." Having to source a comparator in a very short amount of time can impose a transactional approach to sourcing, rather than a strategic one. In a transactional model, the comparator is typically sourced from a wholesaler or other vendor who has the comparator drug on hand and can supply it quickly to the trial site, at short notice.

In a transactional situation where procurement teams are frequently faced with sourcing comparators at short notice, a network of wholesaler vendors must be vetted and maintained. Such a network is required in order to rapidly locate the needed supply of comparator in a compressed time frame. This network should consist solely of reliable sources that are audited on a regular basis to ensure supply chain security and minimize the risk of counterfeit products. When time is short, however, this is not always achievable.

Unfortunately, a short lead-time may also preclude the ability to source directly from the manufacturer of the comparator through a sourcing specialist, a route that can mitigate supply risks through demand planning and development of long-term agreements for comparators.

If the transactional approach is the only route available for short-notice supplies, one of the major risks is that there can be great variability in supply. Wholesalers may not be able to provide large, single lot batches with long expiration dates. The purchasing company may have to buy the comparator in multiple lots, reducing clinical consistency and creating a significant challenge should there be a recall.

In addition, unlike some sourcing specialists, wholesalers are unlikely to be well versed in the range of regulations governing use of comparators and the logistics necessary to deliver the comparator to global trial sites. Suppliers should also know the requirements governing import and export, as well as the special handling criteria necessary for each type of delivery (i.e., cold chain requirements, controlled drug laws, and complex small volume distribution).

Another challenge if the lead-time for sourcing is limited is that the trial sponsor may have to forego timely receipt—or receipt at all—of the proper pedigree and product documentation to support the comparator.

The risks of using a transactional approach are clear and don't seem to be outweighed by perceived cost savings. The cost to conduct multiple rounds of sourcing can actually exceed any savings realized by lower cost comparators.

Planning ahead

A more strategic approach to comparator sourcing can help companies reduce risks and access much more meaningful cost reductions. Two key elements facilitate a strategic approach to comparator sourcing:

  • Providing the greatest length of time for the procurement team to identify the best sourcing strategy

  • Sourcing directly from the comparator's manufacturer through a sourcing specialist that has an established relationship with that manufacturer

Companies that procure using a strategic approach generally get the process underway about six to nine months before the delivery date of the drug; some companies put in place processes with even longer lead times.

Increasing the length of time available for sourcing requires a more direct interface between those responsible for procurement and the clinical teams they support. This direct interface provides procurement teams with greater visibility of the trial protocol and establishes a feedback mechanism with the clinical team. This allows the clinical team to become aware early on of any difficulties that the selected comparator may present and allows time to weigh alternative strategies as appropriate. Once the forecast for initial and future estimated volume requirements can be provided, the procurement team can work with a good sourcing specialist to secure supply of the comparator and finalize purchase terms as soon as possible.

Once a sourcing procedure with an adequate timeline is established, more sourcing options become available, including access to the drug from the actual innovator of the comparator. Trial sponsors can leverage this direct sourcing route while preserving anonymity by partnering with a proven sourcing specialist that maintains extensive relationships with manufacturers and can negotiate on the sponsor's behalf. This route allows access to comparators with full documentation, long expiration dates, large single batches, and a highly secure supply chain. A sourcing specialist can even work with the comparator's manufacturer to schedule production runs to ensure reliability of supply throughout a trial with the same quality of material.

Migrating to a strategic approach

There are times when a transactional approach is either necessitated by a last minute demand or the protocol dictates that resupply has to be obtained from a very specific source. A company can take steps, however, to migrate from a transactional approach to a strategic one. The move to a more strategic approach enables companies to access pathways of procurement that reduce the risk of an unreliable supply of comparator, reduces the chance of unnecessary delays in the trial, and reduces the total cost of acquisition throughout the trial (see Figure 1).

Figure 1. Unlike wholesalers, a sourcing specialist can secure single lots with maximum expiry-among other benefits.

In contrast to transactional sourcing, taking a strategic approach allows the procurement team to:

  • Properly assess options/availability/limitations for sourcing the desired comparator.

  • Evaluate regional variations of comparators including dosage form, strength, and licensing.

  • Review regulatory requirements and the importation requirements of different trial countries.

  • Establish required volume and delivery schedule based on lead times, batching, and shelf life of the required drugs

  • Consider different strategic approaches that can be employed based on protocol stipulations, trial duration, and country requirements.

  • Evaluate price and more importantly the total cost of acquisition of comparator for the duration of the trial—a well thought out procurement strategy can save millions of dollars a year for just one trial.

  • Confirm availability of required product documentation.

Mitigating risks

Costly delays in the start of a trial can result from an inability to locate a reliable, secure source for the comparator or from not having the required product documentation. If the comparator drug isn't consistently available throughout the duration of the study, the worst-case scenario can take place—the trial comes to an abrupt halt. Any interruption could potentially jeopardize the entire clinical program by affecting trial timelines and have a significant financial impact on the sponsor company. Allowing time to identify a source that can reliably provide the comparator is time well spent to avoid the unseen costs of delays. Many pharma and biotech companies have already fully migrated to a strategic approach that can minimize exposure to risks, which can cost far more than a simple one-off initial review of options based solely on price.

Conclusion

There are circumstances that demand and enable both approaches to sourcing. Often a company will take a transactional approach to comparator sourcing as a result of last minute demand; this approach may also be necessitated by a lack of a close connection between the clinical team and the procurement team. While necessary on some occasions, this type of approach carries with it greater risk than the strategic approach. Comparators that are sought at the "last minute" can open up a company to regulatory, operational, and financial risks.

Comparator sourcing should be considered an important strategic element of the planning and preparation for clinical trials. Taking a strategic approach to comparator sourcing requires proactive, close communication between procurement and clinical teams so that advanced planning can take place. The goal for the procurement team should be to have early visibility to comparator needs—timing, volume requirements, and geographic requirements—and the time needed to properly evaluate all sourcing options and opt for the one that will minimize a company's exposure to risk and possible significant unseen costs.

Mark Ware is Director of Clinical Trial Services at Idis, USA Headquarters, 902 Carnegie Center, Suite 160, Princeton, NJ 08540 email: mware@idispharma.com.

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