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Study holds new benchmarks and improvement opportunities.
In 2018, global drug development companies spent approximately $375 million to perform 25,000 qualification
assessments of contract research organizations (CROs) and other service and technology solutions providers. These estimates are based on the results of a new study conducted by the Tufts Center for the Study of Drug Development (Tufts CSDD) in collaboration with The Avoca Group. The results highlight a demanding area that has often been discounted as simply a cost of doing business but for which there are process improvements and efficiencies to be gained.
The study benchmarked the vendor qualification assessment (VQA) process and found that the process-from a request for information (RFI) through the vendor assessment questionnaire and audit-is complex-, labor- and time-intensive, with wide variation observed within and between companies. A high percentage of assessments-most notably those conducted by larger sponsor companies-involve customized assessment areas, making it difficult to streamline the process and to execute consistently.
The assessment process today is elaborate. It covers a wide range of areas, including regulatory and ethical compliance; technology expertise; quality management practices; data privacy, confidentiality and security; and operational and financial health, controls, and oversight. As demand for vendor services to support drug development activity continues to grow, the assessment qualification process represents an untapped area to apply new practices and solutions-such as standardization and risk-based approaches-to drive speed and efficiency and lower cost.
Seventy-eight distinct pharmaceutical and biotechnology companies and 31 distinct CROs completed an in-depth online survey during the summer and fall of 2019. The survey looked at several primary areas: (1) the volume and types of VQAs conducted each year; (2) direct and indirect costs associated with the assessment process; and (3) the time required to perform each assessment. Two primary subgroups were evaluated: sponsor vs. CRO differences and company size
differences. Small companies were defined as those with annual R&D budgets below $250 million; medium-sized companies had $250 million to $2 billion annual R&D budgets; and large companies had annual R&D budgets greater than $2 billion.
The typical VQA consists of an average of 61 primary questions across 24 broad areas of inquiry (See Table 1). The most frequently assessed areas include the vendor’s data privacy protection provisions (94% of companies); quality management system (93%); document management and control (89%); and 21 CFR part 11 system compliance (87%). The least common areas assessed include product communications (25.5%); human resources management (23.6); and fair trade (23.6%).
Most new vendor assessments are conducted in person, whereas most vendor requalifications are conducted remotely. Companies that responded to the survey indicate that nearly two-thirds (62%) of questions in the qualification process are routinely or commonly assessed. Approximately one-third of questions are customized to new areas or capabilities-of-interest (e.g., a new biomarker or diagnostic test; a new data analytic capability; a new patient-centric service). Large companies qualify and verify many more areas than do small and medium-sized companies. And large companies in particular report a very high level of customization, with only 50% of areas of inquiry commonly assessed.
In 2018, large companies each completed an average of 86 vendor qualification assessments; medium-sized and small companies completed 28 and 12 qualification assessments, respectively. From the time the RFI is sent to the vendor to when the contract is signed, sponsor companies, overall, take 19 weeks-or nearly five months-on average to complete the vendor qualification process for a new single-service vendor. It takes sponsor companies nearly 27 weeks (almost seven months) to complete the vendor qualification process for a new vendor that is providing multiple services.
CROs are significantly faster, cutting the overall cycle time by 35%-45%. No significant differences in cycle time or cost were observed between companies that use a centralized vs. a decentralized vendor qualification approach. Small companies have longer relative RFI completion times but shorter timelines assessing new vendor qualifications culminating in a contract signature. Large companies have relatively short RFI-initiation-to-VQA-completion cycle times but significantly longer time periods to execute the vendor contract.
For all sponsor companies, vendor requalifications are two-to-four-weeks faster on average than qualifying new single- and multi-service vendors, respectively (see Table 2). Mid-sized companies report the most substantial time savings between new vendor qualifications and requalifications.
Large companies report dedicating an average of 27.7 full-time equivalents (FTEs) to perform VQAs in 2018. Medium-sized and small companies dedicated an average of 11.1 and 3.5 FTEs, respectively. The typical sponsor company completes an average of 2.5 to 3.5 new vendor qualifications per FTE annually. CROs are significantly more productive. Compared to sponsor companies, CROs completed 2.5 times the number of new vendor qualifications per FTE.
Large companies each spend on average $2.5 million annually in direct and indirect costs to complete vendor qualifications and requalifications. Mid-sized companies each spend about $600,000 and small companies spend approximately $180,000 annually to perform vendor qualifications and requalifications.
More than 90% of assessments-including those requiring some remediation-result in a vendor being qualified to work with the sponsor. Approximately 20% of new vendor assessments identify a vendor deficiency and require remediation (e.g., modifying or correcting a capability or operating practice) before the vendor can be qualified. Despite longer cycle times and more elaborate and demanding assessments, large sponsor companies have the highest rate of vendors failing to qualify (11.5%).
Companies are investing substantial time, personnel, and resources to complete vendor qualifications and requalifications each year. Despite familiarity with existing vendors, requalification cycle times are only marginally faster-by only two to four weeks on average. Growing functional requirements and demanding procurement practices are likely contributing factors here.
Wide variation around mean cycle times and workload were observed throughout the study. Some of the variation can be explained by the diversity of the vendor companies now requiring qualification. A growing community of technology and application solution providers, specialty labs, and service providers offering enhanced convenience to study volunteers (e.g., participant navigators and assistants; transportation support; decentralized clinical trial support) may be new to the clinical research industry and are unfamiliar to the sponsor company performing the assessment. These providers no doubt require more time and resources to qualify.
Wide variation signals opportunity to isolate and uncover factors contributing to best and worst outcomes. Some of the variance can be explained by the absence of standardized qualification practices and the prevalence of custom areas of inquiry. More effective and robust internal data sharing and precompetitive information sharing on routinely-assessed and new vendor qualification areas may play a part in helping to reduce cycle times and their variability. Risk-based approaches to reduce and streamline select qualification areas of inquiry may also contribute to faster timelines and efficiency.
Large companies have the longest overall vendor qualification cycle times. They generally enjoy a speed advantage over small and medium-sized companies in completing the RFI and VQA processes, but subsequently lose that advantage to significantly longer contract negotiation and execution. Large company contracting practices appear to be an important improvement area warranting attention.
Although CROs report dedicating more hours to perform each RFI and VQA, process cycle times are significantly faster and more resource-efficient in qualifying vendors than are their sponsor company counterparts. This may in part be due to the urgency that CROs place on meeting clients’ tight project timelines and budget requirements and on achieving rigid corporate operating profit targets.
The vendor qualification and requalification processes take far longer than expected at substantial personnel and resource expense. As sponsors and CROs look for ways to accelerate drug development timelines and lower development costs, these processes hold new and untapped opportunities to qualify and verify vendors faster and more effectively.
Ken Getz, MBA, is Deputy Director and Research Professor, Tufts CSDD and Chairman of CISCRP, both based in Boston, MA. email: firstname.lastname@example.org