By Jeffrey S. Handen, Ph.D., and Daniel W. Patrick, TayganPoint Consulting Group
The number of clinical trials worldwide is increasing around 10 to 12 percent per year.1 R&D spending (of which direct clinical development spend generally accounts for about two-thirds) has been increasing at a compounded annual growth rate of 1.76 percent over the past decade.2
While many new innovations continue to be brought to market, the overall productivity of the biopharmaceutical industry has remained relatively stagnant. From 2007 to 2016, new molecule entity (NME) and biologic license application (BLA) approvals have had some outstanding years but show little upward trend.3 The disconnect between increased investment/activity and output points to continuing significant challenges in the global clinical trials market. Here we examine three of the leading issues facing the biopharmaceutical industry today.
Outsourcing And Externalization
One of the trends driving both opportunities and challenges is the increased use of outsourcing. By 2020 it is estimated almost 75 percent of all clinical trials will be run by CROs.4 While preferred providers are commonplace in both full-service and functional service provider (FSP) outsourcing models, the sponsor-CRO relationship remains a transactional one. True risk and reward sharing has eluded the sponsor-CRO relationship in biopharma. Best practices leveraged from other industries can be brought to bear to create win-win relationships for both the sponsor and the CRO. These include:
- Defining key assumptions regarding relevant projections (e.g., sales, expenses, patient enrollment, etc.)
- Clarifying roles and responsibilities and who is accountable for specific aspects of the study
- Defining base case, worst case, and optimistic projections for the key performance indicators (KPIs)
- Developing metrics and KPIs that will be monitored for performance goals
- Instituting incentives and penalties for each party, if performance goals are exceeded/underrun
- Agreeing that the financial books of each firm may be audited by the other party’s internal audit team (only as it pertains to the financials/operations for the study/studies in question)
- Deciding when the senior management and study teams of each party will meet (at a minimum, quarterly, and perhaps more frequently if the study/studies encounter difficulties in execution).
- Sharing of any underruns/overruns of expenses and/or revenues, with specific formulas for each
A corollary to outsourcing is the increase in partnering (i.e., the externalization of research). Licensing activities among the top 15 pharma companies comprised approximately 37 deals per company in 2016 alone, across all stages of development, with a mean total deal value of $250 million.5 Long gone are the days of value created within the four walls of a pharma company. Conversely, many biotech companies are looking to pharma to commercialize their products and wholly pick up clinical development, particularly post-Phase 2b. The idea of Big Pharma becoming clinical development, manufacturing, and sales organizations is rapidly becoming a reality as the “R” in R&D is increasingly being sourced outside the four walls of pharma. This brings the need for new core competencies on both sides of the fence.
Depending on the size of a company, available cash, and size/scope of the global trial, there are many potential routes to finance a trial. The first step is ensuring, from an overall project portfolio perspective, that the trial is indeed worth pursuing. Conducting an R&D portfolio review with in-depth discussions between senior management, the project team, and key opinion leaders, will vet the value drivers of the study and affirm the necessity of conducting the trial at this time.
Options include funding the study internally, partnering with a third party to reduce cost and/or gain access to expertise, and raising capital to fund the trial. Below are the pros and cons of each approach.
- Most large pharmaceutical firms that are vertically integrated and well-capitalized will choose to finance the study internally. The primary reasons for this approach are funds that are readily available from cash flow generated by sales and the scientific and operational expertise to execute the trial. The potential downside is that it may not adequately consider the opportunity costs of funding the trial versus the myriad other potential uses of the funds because the firm is so cash rich.In addition, if internal funding is readily available, there is often little pressure or incentive to explore partnering with a CRO, e.g., to reduce the total cost of the trial.
- A firm may choose to contract with a third party to help reduce the cost of the study to achieve operational efficiencies and to accelerate the timeline for completion of the study. There are many cases when entering into an agreement with a CRO will achieve these goals. Prior to entering into an agreement, the firm should have clear contractual terms for roles/responsibilities, performance incentives (and penalties), and review meetings between the senior management and members of the study teams of the CRO and the pharma/biotech company to confirm alignment on study performance and mutually resolve any risks that may impede the successful and timely conclusion of the study.
- External financing of a trial should be the last route to be considered. The cost of capital will likely be excessive given the risk inherent in conducting a global clinical trial (and hence, the lender will want to be compensated for assuming this risk). In addition, the company receiving the financing may be subject to onerous oversight and performance provisions.
Phase 3 industry-sponsored trials completing enrollment between 2013 and 2017, n=3,723, had an average Phase 3 enrollment of 622 subjects per trial.6 It is not uncommon for studies across a wide range of therapeutic areas to have thousands of subjects, and increasingly we are seeing mega-trials with tens of thousands of subjects. In this cohort alone, 124 studies had enrollments above 2,000, and 28 studies had enrollments of more than 10,000.
The need and challenge to recruit and retain these numbers of patients is not new to the industry. Forty-eight percent of sites miss their enrollment targets7 and 80 percent of trials are delayed due to recruitment.8 Additionally, while the dropout rate of clinical trials has historically hovered around 30 percent, the effects of noncompliance are, by nature, impossible to quantify, and they add a potentially significant confounding factor. Clinical trial adherence rates have been reported to average from 43 to 78 percent among trials addressing chronic conditions.9
But there are new opportunities to achieve recruitment goals while also minimizing dropout. These tools allow for better focus on patient experience and, ultimately, better trials.
- Voice of the patient – Patient burden is a key factor in recruitment and retention. Approaches exist that can efficiently address patient burden, e.g., leveraging disease registries and patient advocacy organizations (indication-specific) or populations with similar demographics to those of expected trial participants (indication-agnostic) through online surveys or focus groups to assess perceptions and implications of burden, such as number of required visits, length of visits, geographic distance, possibility of placebo, potential degree of invasiveness, etc.
- Patient journey maps – Borrowed from the healthcare environment and applied to clinical trials, they can be created through a relatively small number of focused interviews with patients and/or caregivers to provide the best chance of maximizing data collection from the subject population.
- Electronic clinical outcomes assessment (eCOA), wearables, and other site-remote approaches minimize the burden of frequent site visits by the patient while maximizing data collection.
- Use of today’s two-way smart technologies that allow confidential site communication to be shared directly between the site and the subject — more than just reminders, as individual subject data and lab results are also part of the exchange. To reap the benefits of engaging the subject as a true partner in clinical research, sponsors and sites will need to change the way they think about subjects — from passive patients upon which procedures are inflicted, to active stakeholders who are part and parcel of the study team.
- Focusing on key geographies and “customer service” – Make trials the studies of choice by providing best-in-class support to key geographies and customer groups, e.g., connecting patients with sites, providing concierge services to remove barriers such as excessive travel to the clinical site and long times for appointments with study investigators, and ensuring the ongoing needs of study participants are understood and met.
While the need for growth in global clinical trials continues, and many unmet medical needs remain, these challenges (along with others, such as how to integrate new technologies, increasing regulatory burdens, adapting to new trial complexities, need for better decision making, and increasing probabilities of success) provide opportunities to implement operational innovations that can bring medicines, i.e., scientific and clinical innovation, to patients who need them, more efficiently and effectively.
- Nature Reviews Drug Discovery, 16, 376 (2017)
- FDA, 2016 Novel Drugs Summary
- PharmaVoice, June 2015, Clinical Solutions: Clinical Services Market Poised For Growth
- IMS PharmaDeals: Review of 2016
- Clinical Leader, May 2018, What Does Patient-Centricity Really Mean … And Why Do We Need It?
- Tufts CSDD Impact Report, 2013, 15(1)
- Drugdevelopment-technology.com, 2012, Clinical Trial Delays: America’s Patient Recruitment Dilemma
- N Engl J Med 2005;353:487-97, Adherence to Medication
About The Authors:
Jeffrey S. Handen, Ph.D., is a senior management consultant at TayganPoint Consulting Group and a leader in the firm's Life Sciences R&D Practice. He has published in multiple peer-reviewed and business journals, presented at numerous industry conferences and scientific meetings as an invited speaker, served as past editor in chief of the Industrialization of Drug Discovery compendium, and currently serves as the editor in chief of Re-inventing Clinical Development. Handen has over 20 years’ experience in pharmaceutical and biotechnology R&D, process re-engineering, and systems and process implementation. He is responsible for overseeing business process improvement and solution architecting for optimizing both clinical development and discovery.
Daniel Patrick is a principal consultant at TayganPoint Consulting Group and has more than 25 years of experience in the life sciences and financial services industries. His areas of expertise include program and project management, merger and acquisition planning and integration, business process re-engineering, R&D, and strategy development and implementation. He spent over 20 years of his career at Merck, holding positions in Financial Evaluation and Analysis, Divisional Financial Services, Treasury, Johnson and Johnson/Merck Joint Venture, Corporate Operational Excellence, and R&D. Patrick led the Strategy Realization Office for Merck's R&D division and the division’s integration team for the Merck/Schering-Plough merger. He later served as executive director of Global Financial Planning and Analysis at Celgene.