From The Editor | January 14, 2022

Is A Preferred Provider Agreement Right For You?

Ed Miseta

By Ed Miseta, Chief Editor, Clinical Leader
Follow Me On Twitter @EdClinical

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A preferred provider and/or a strategic provider is a vendor company, often a CRO or other specialty service provider, that has achieved priority status in the awarding of contracts by pharmaceutical and biotech companies. With the growing complexity of clinical research, the preferred provider is gaining popularity with many companies that have chosen to outsource their trials. Although the model was once used to simplify the complexity of outsourcing, it has now become an important tool for companies to better control the spiraling cost of clinical trials and outsourcing. For UCB, a global biopharmaceutical company focused on the discovery and development of innovative medicines and solutions to transform the lives of people living with severe diseases, strategic providers add a lot more than cost containment, but also allows UCB to tap into external capabilities, technology, innovation and to focus on core strategic priorities that create value for patients. But is this model right for your company, and what challenges should you expect to encounter when trying to put a model in place?

I spoke with Jennifer Johnson, global VP, strategic partnering & medical operations at UCB to gain some insights. Johnson majored in accounting and finance and has worked in the life sciences industry for over 16 years on both the pharma and CRO sides of the aisle. For the last seven years she has specialized in strategic partnering and collaborations.

Ed Miseta: Can you start off by explaining the difference between preferred providers and approved vendors?

Jennifer Johnson
Jennifer Johnson: That’s a good place to start. An approved provider is one that is on our list as an organization that the business is approved to work with. That company may or may not have an existing MSA (master service agreement) in place, but some work has been conducted around the qualification of the provider. A preferred provider is one that we have either 1) further qualified (quality management system, ability to scale up or down quickly, can recruit and retain highly qualified talent, etc.) and have determined we would like to work with them as their values are aligned to UCB, 2) have received services from the provider, which resulted in high quality outcomes and we would work with again (perhaps that specific scope of work has now ended, but we would consider them for future opportunities), 3) we have been able to negotiate competitive pricing, including commercial discounts, volume discounting and other commercial terms, 4) whose objectives are aligned to UCB’s technology transformation and focus on continued efficiencies and 5) who UCB believes will provide high quality outcomes due to aligned KPIs and SLAs. They are a strategic provider/partner if we are working with them in this manner with an existing scope of work (preferred if we are no longer working with them but would do so if the opportunity arose).

These are just a few examples of where UCB would refer to those companies as preferred or strategic partners. Purchasing may have specific requirements for their preferred vendor lists. UCB has two strategic partnering groups in the organization that follow this type of methodology. 

Miseta: What would initiate a PPA?

Johnson: At UCB, one of our two strategic partnering groups would identify an opportunity for a strategic partnership based upon multi-year engagements and where UCB would align the framework, governance, values/culture and ways of working as a partnership and extension of UCB. We would identify the potential need and conduct a provider identification process, RFI, RFP, bid defense, final selection, and transition and/or implementation.

Miseta: What circumstances would justify adding a new preferred provider?

Johnson: Generally, we would identify a need for critical services to the organization that are longer term needs. In other words, services we would not bring back into the organization under most circumstances, and they are not a short-term need that a contractor could fulfill.

Miseta: I have to think that removing a preferred provider is a difficult part of any sourcing manager’s job. Can you tell us when, why, and how you would decide to remove a company from your preferred provider list?

Johnson: This would normally occur if we determine that we would not work with a partner in the future. This could happen for a variety of reasons. One would be the inability of a vendor to deliver high quality services due to high attrition, inability to bring on the right talent, or improper conduct of onboarding and transition. Other reasons might be budget repeatedly not adhered to, violations of contractual requirements, a lack of alignment to patient values of UCB, or other experiences that are not aligned to a mutually beneficial partnership. 

Miseta: How long would the process normally take to add or remove a preferred provider?

Johnson: Typically, our processes to add a provider are three to six months dependent upon the scope of work to fully fund the RFI, RFP, business case, or qualification process, and to finalize the contracting. With regard to removing, that will be dependent upon the rationale for wanting to end the partnership, ability to replace the services quickly, etc.

Miseta: Who are the individuals involved with PPAs on the sponsor side?

Johnson: From the strategic partnering perspective, it would be someone from one the Strategic Partnering Teams at UCB. We have one focused on clinical and the other team, which is in my group, is focused on services related to pharmacovigilance, medical operations, regulatory, and real-world evidence with ad hoc needs that may arise from other stakeholders. This team will partner with the internal SMEs for input on the potential need that has been identified. 

The strategic partnering team will help identify potential solutions or approaches, develop the business case for approval, and run the selection, qualification and contracting processes in partnership with the relevant SMEs and quality teams. The SMEs will own the operational oversight once the partnership is in place. Then, a strategic partnering lead (SPL) will be assigned to each partnership (from my strategic partnering team) to provide oversight in partnership with the operational team. That would include the first point of escalation, and contract and budget management, oversight of performance (for example KPIs, SLAs and other key metrics). For purchasing, the need would arise within one of the affiliates or other parts of the organization where they work with the business to identify potential providers and run a selection process and support the contracting needs. 

Miseta: Is purchasing generally involved in those decisions?

Johnson: Purchasing is typically involved for those areas outside of the Strategic Partnering scope and/or where the expertise in that team is not required for the services and type of contract. They also manage our outsourcing platform where we disseminate and receive RFIs and RFPs. Purchasing may not be involved as there is not always a formal governance processes in place for those services/purchases and they are not responsible for the ongoing oversight and management of the partnership moving forward.

Miseta: Does the use of PPAs change the buyer's journey in any way?

Johnson: What you might want to keep in mind is the projected length of the relationship. For example, if you expect this is going to be a long-term relationship, I would recommend sharing some key differences in what you focus on in the selection process outside of just a quick service contract.