From The Editor | October 1, 2019

Regeneron Manages Clinical Costs In A Fast-Growing Organization

Ed Miseta

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

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These days, more and more complex oncology and rare disease trials are being launched, leading to a corresponding rise in the number of patients, sites, and endpoints. All of that adds to an already challenging environment for biopharma companies struggling to understand where costs are increasing and what can be done to control them.

Bari Kowal, VP and head of global clinical operations at Regeneron, has been actively addressing this challenge. She believes there is more that sponsor companies and CROs can do, independently and together, to address the situation. Essentially, she says sponsors and CROs must partner to make clinical trial execution more efficient and cost-effective.

Regeneron has almost doubled its number of employees in the last three years. The company’s pipeline has doubled in size, as well, and now includes more than 20 molecules. In 2012 the company was operating clinical trials in two countries. Today, it’s working with sites in more than 50 countries. In order to achieve this growth, and because it doesn’t maintain a broad network of country offices, Regeneron complements its internal resources and competencies by using various outsourcing models to support its clinical trials. That strategy is evaluated on a biannual basis, with the company reviewing all available models to determine what will work best for a growing organization.

Bari Kowal
Regeneron expects its current growth path to continue over the next five to 10 years. Therefore, the outsourcing model the company uses will have to be effective and align with the company’s core competencies, evolving structure, and desire to remain nimble. “We hope to put as many molecules as possible into clinical trials at a reasonable cost,” says Kowal. “We want to be cost-efficient without pinching the wallets of our CROs. We want to conduct more trials, which creates more business for CROs, but doing so requires us to assess our current and future strategy for conducting trials alongside our growing expertise and infrastructure. We need to keep an eye out as well for evolving technologies that have the potential to change the future shape of clinical trials.”

"If the agreed-upon cost goes off track due to a lack of performance or quality, that would be a situation where a cost discussion would take place."

Retain Core Competencies

Regeneron has consistently used a combination of internal resources and competencies along with outsourcing solutions. Outsourcing is considered for large volume and transactional activities where CROs and vendors have traditionally demonstrated expertise and value. For example, CROs have global networks to help manage regulatory requirements and certain logistics around global supply chains.

Trial monitoring, data management, and safety reporting are other areas for which Regeneron uses CRO partners. All of this support helps the company with its expanding global footprint and growing portfolio.

Conversely, core competencies are retained for numerous reasons. That could include areas where knowledge of product strategy or intellectual property exists in-house, or where sponsor companies have traditionally held that expertise.

“We had some very interesting discussions, here and at other companies where I have worked, around what skills to keep in-house and what skills to outsource,” states Kowal. “There are some core competencies, such as medical monitoring and biostatistics (closely intertwined with the safety of patients in the trials), scientific aspects of the trials, and key data analyses that are important and must be managed internally. That information is critical to the success of any study and the safety of patients. These are core competencies that we wanted to enhance internally. These capabilities extend from the early design of trials to the medical monitoring of them and the data analysis. We want to internalize those tasks that are critically important to the success of the study.”

Regeneron is not alone when focusing on internalizing these types of skills. Even in companies where these competencies were once outsourced, Kowal now sees them being brought back in-house.

A Two-Provider Model

Several years ago, Regeneron opted to institute an outsourcing model in global development consisting of two primary CRO partners augmented by other providers in ancillary services. The company now uses three primary providers. All three CROs are large, global service providers. As the company was growing, the global reach and regulatory expertise of these firms were important considerations. Within the CRO partnership model, Regeneron has built-in strategies regarding how it oversees and governs the CROs and how the companies work together to ensure efficiency (e.g., incorporating metrics and analytics to identify risk and drive performance enhancement).

“We do not go outside of those partners for our trials,” says Kowal. “We are committed to work with them and ultimately sharing the work with them in a reasonable fashion. Still, we continue to look at core competencies and question whether certain tasks should continue to be outsourced, brought in-house, or switched to a functional service provider [FSP] or staff-augmentation model.”

Although Regeneron continues to work with its three primary partners, its model has been evolving into more of a hybrid approach. Data management is now outsourced via an FSP model. That is also the case with oversight monitoring, where the company is working with a single partner that will provide only monitoring support for studies run in-house, as well as oversight of the CROs.

Kowal cautions against making hasty decisions when it comes to an existing outsourcing model. “Starting out as a small company, CRO partnerships were effective and efficient,” states Kowal. “I believe it takes two to three years to build a relationship and a team environment. Making quick changes just doesn’t make much sense. We took our time building those relationships, and it’s best for us to slowly evolve our current model as we continue to examine and build our internal capabilities.”

Understand Costs And Enhancing Performance

One of the key success factors in conducting clinical trials with CROs is a shared understanding of cost and performance. This is one area where sponsors and CROs can work together to better interact and drive needed improvements.

For example, Regeneron is working toward establishing standard work order templates and benchmarking. These benchmarks will allow Regeneron to understand how much specific tasks should cost and how much time they should take. The benchmarks also can be varied depending on the criteria in certain types of trials. Kowal is attempting to align with CROs on what those benchmarks should be.

This benchmarking concept is not new. When Kowal worked for a large CRO 10 years ago she had clients ask her to do the same thing. Still, she notes it is not a concept that is widely accepted in the industry. It’s a challenge just getting some CROs to agree to attempt it.

“I do see this approach growing in popularity,” she says. “I don’t see how it can’t. The pressures to keep development costs down are part of every company’s boardroom discussions. We need to do a better job of understanding the transaction, specifically what we’re buying, what we’re expecting, and how much it will cost.”

One way clinical trial efficiency could be improved is by standardizing IT systems and how data is shared between sponsors and CROs. As an industry, Kowal believes there is a huge opportunity to further exploit technology in numerous areas, especially in terms of data- and knowledge-sharing around quality and cost.

Efficiencies also can be gained by optimizing and standardizing the partnership, regardless of the outsourcing model. For example, the roles and responsibilities between sponsor and CRO regarding communication of status, issue escalation, and resolution and performance/quality monitoring often evolve over the course of a relationship. Having a standard practice in each of these areas would make sponsor-CRO partnerships more efficient, effective, and quicker to take off.

Implement Cost Sharing

In most business relationships, the vendor agrees to provide a product or service and is paid a contracted fee by the sponsor company. Regeneron follows a standard method of contracting with vendors that is activity- based. However, Kowal believes a true strategic relationship is not a one-off contract but should bring together partners to work throughout the entire life cycle of development, from planning to commercialization.

"We took our time building those relationships, and it’s best for us to slowly evolve our current model as we continue to examine and build our internal capabilities."

These partnership models sometimes involve cost sharing, though it has not been a part of Regeneron’s pricing strategy. Many companies, however, do have a fixed-price contract strategy where the CRO takes responsibility for certain tasks, such as trial feasibility and site selection. In executing these tasks, the CRO agrees to conduct the trial at a fixed cost. When necessary, the CRO may have to conduct additional services or deploy additional resources to bring a study back on track. Changes made outside of the CRO’s control or by the sponsor company are the sponsor company’s responsibility.

“Cost sharing comes into play when something arises that is not under the control of the sponsor or the CRO,” says Kowal. “It is a tough model to put in place because the work we do is complex and there is variance in how the research evolves. That can make it very difficult to look at extenuating factors and determine how they occurred and whether the sponsor or CRO has culpability. This effort requires significant work to make it successful.”

“In any trial, the sponsor company will request specified services. We will tell a CRO we have a certain trial with a specified number of sites and patients. Available tools and industry benchmarks provide key information on trial cost estimates, so going in, we have a pretty good understanding of what it’s going to cost. While we do not have fixed-price contracts, we do hold our vendors accountable for providing the services they agreed to within their contract and with a level of quality that they must uphold. If the agreed-upon cost goes off track due to a lack of performance or quality, that would be a situation where a cost discussion would take place.”

Invest In Your Partners

Kowal believes it is important to invest in your partners. While some companies will look at options for sponsors and CROs to invest in drug partnerships, she is more interested in investment that brings about needed capabilities.

“There are capabilities that biopharma companies want but prefer not to build within their organizations,” says Kowal. “Feasibility, risk-based monitoring, and study start-up are a few of those capabilities. We know we can benefit when our partners have greater access to certain technologies, databases, and information. CROs are growing and acquiring more services and capabilities. This allows them to offer more ‘full-service’ opportunities to sponsors. It also means sponsors do not have to work with multiple suppliers or build additional infrastructure. Although these capabilities allow us to streamline drug development, they also come at a cost.”

Instead of building those capabilities in-house, Regeneron is investigating whether a shared investment model would help both partners benefit from a given technology. Kowal believes this model will be part of the continuing evolution of CROs. By acquiring other companies and technologies and building their service offerings, CROs can build on the value they provide to partners.

Technology companies continue to produce new and novel clinical technologies, and many CROs are looking to add those capabilities. Regeneron has had discussions regarding how it can be part of those efforts. Kowal notes the investment could be monetary or simply a willingness to partner with CROs by providing the right type of trials where these new technologies could be piloted.

Overall, partnership between sponsors and CROs has the potential to be highly synergistic and offers a significant opportunity to improve the efficiency and cost-effectiveness of clinical trials.