Addressing operational risk and variability in the clinical development process can reduce cycle times by more than six months on average and shave around 30% off the cost of clinical trials, argues a new paper from Quintiles Consulting.

The authors of the white paper, the first in a series of three On the Re-Balancing of Risk to Transform Cost and Productivity in Drug Development, used a database of over 10,000 clinical trials to calculate historical variance from expectations in cycle times and costs across clinical development.

One development organisation found that, by focusing on operations risk, it could reduce overall cycle time (from study start-up to report writing) by 56% to around half the industry average, they say.

Moroever, the direct benefits and cost savings are minor compared with the associated indirect reductions in overhead, recaptured opportunity cost and time-based competitive advantages from reaching the market quicker, which could add up to more than US$1 billion for a medium-sized portfolio.

Despite a concerted focus on trial planning and budgeting, medians and variances in clinical development costs and timelines remain “unnecessarily high”, the paper comments. While these variances went largely unaddressed while pharmaceuticals was a high-margin business, the costs and operational unpredictability of trials are now “incompatible with today’s less profitable business model”, it argues.

Piecemeal outsourcing

From interviews with cross-functional development teams from a number of trial sponsors, it was apparent that clinical development was generally being outsourced on a piecemeal basis.

Tactical elements of the clinical development chain, such as data management or monitoring, were awarded to a range of vendors through a procurement process designed to minimise cost at every stage. Sponsors then tended to recognise and pay for value based on completed ‘inputs’ to the development process, such as the number of monitor visits or the volume of sites initiated, the authors note.

In a number of companies, outsourcing had evolved in an ad hoc fashion to cope with the disparate needs of different functions, geographies, therapeutic areas and external service providers, they found. Many pharmaceutical organisations were “structured to actively encourage up to 100% management overhead on outsourced trials, with functions and roles being duplicated depending on the specific composition of the various internal and external teams”.

Much of the behaviour driving these inefficiencies derives from a “perceived risk-reward imbalance” in relationships with providers that “reinforces a lack of trust and consequently leads to a high burden of internal pharma oversight”, both institutionalising and perpetuating inefficiency in a vicious circle, the authors determined.

One way around the problem is to adopt outcomes-based pricing and management models, whereby service providers “promise discrete outcomes in the form of agreed-upon units of measurement (such as a randomised patient), with minimal sponsor oversight”.

This kind of model radically alters the pricing model for outsourcing, moving away from costs based on unit activity (e.g., a patient visit) and towards a price “to adopt the risk of guaranteeing an outcome”, the paper explains. As part of the ‘risk trade’ transaction, service providers agree to a more equitable level of control over the design and execution of the trial, “sufficient to manage the risk to an acceptable level for both parties”.

The authors cite three reasons for the increasing interest in outcomes-based approaches as more effective vehicles for the delivery of trial objectives:

- They increase the accountability of the service provider for solving operational problems, rather than just ‘taking orders’.
- They encourage a deeper exploration of design and operational feasibility by the service provider and sponsor before the trial starts.

- They rebalance risk inequity “by creating an economically rational downside for late delivery of outcomes”.

The white paper is available for download at www.quintiles.com/consulting.