Should You Choose An FSP Model? It Depends…
By Dan Schell, Chief Editor, Clinical Leader
Imagine having to coordinate and oversee 3,000 investigator agreements a year. That’s what Réne Stephens’ life was like years ago when he was at Pfizer helping to manage the two functional providers that did all the site contract negotiation budgets across hundreds of studies. “Because of the volume, we decided to outsource this centralized activity,” he says. “Otherwise, it would have been unsustainable to keep using numerous CROs, because we would have needed more and more people internally [e.g., legal, finance] to manage this function across all the CROs. Once we centralized with two providers, we also standardized the language in our documents for things like budget parameters, which gave us more control and helped us manage the flow of escalations.”
Stephens’ days of working in Big Pharma — and with big clinical budgets — are long in his past. Today he’s Managing Director, Clinical Business Operations at Danforth Advisors where he tends to work with more midsize to small biotechs. It’s his work with those clients that led me to contact him after reading an article he posted to Danforth’s website called Full-Service vs. Functional Outsourcing in Clinical Development. In the article, he was essentially saying that smaller biotechs tend to be drawn toward the FSP model because they think it’s a cheaper option. But that’s not always the case. In fact, during our discussion, Stephens laughed about how often his response to some of my questions was, “It depends.”
IT WILL SAVE YOU MONEY … RIGHT?
Of the smaller companies that he deals with, Stephens says there’s probably an underappreciation for the total cost of ownership that’s involved to really implement an FSP model. He also says there’s some confusion as to what an FSP model is. For example, he doesn’t consider choosing a monitoring CRO and a CRO for data management to be an FSP model. “That’s just spreading out your sourcing amongst different types of functionally related suppliers,” he clarifies.
Indeed, there are some semantics involved when determining what is and is not deemed a model in these scenarios. The way I understood it after our conversation, an FSP model is more of a strategic choice as compared to simply a tactic to deliver a service. Functions like pharmacovigilance and safety management are commonly found at FSPs, and he adds that study startup is another service that’s becoming more popular to deliver in this manner.
“There’s a tendency to think that you can get a better deal with an FSP, but often companies don’t really understand what it takes to manage such a model,” he explains.
Some of the questions he usually asks clients who inquire about an FSP model are:
- What is your definition of an FSP?
- What are you trying to accomplish by choosing an FSP model?
- Why do you think you want an FSP?
- How many studies do you have currently in progress?
- What does the future look like for your company, and what is your business strategy?
- Do you have the internal resources needed to oversee and govern the functional supplier relationships?
Those scale and volume questions are intended to identify if the biotech can offer enough business to the provider that will, in turn, justify the provider lowering their price point. Sometimes, with only one or two studies, the math just doesn’t work out for this model (key word: sometimes). But there’s another reason an FSP may not be your best choice.
MORE SUPPLIERS = MORE OVERSIGHT & GOVERNANCE
When you choose to outsource any function, the terms oversight and governance come into play.
Stephens says governance is part of oversight, and in this discussion, we are talking about clinical oversight of all the deliverables that come through the various providers. It also means financial and relationship-management oversight. No matter how you define it, it inevitably means you need some type of “infrastructure” — people and policies — to get the job done and done right.
Some of the oversight/governance issues you should be prepared to explain to regulators include:
- your escalation path for resolution of issues (e.g., how many times are you going to convene an OSC [operational steering committee] or an ESC [executive steering committee] and who’s going to participate in each?)
- how and why you selected a particular partner and what P&P or standards you have to oversee that those partners are following the applicable regulations and laws
- who (e.g., OSC, ESC) is going to meet and when during the course of a study/relationship to determine the metrics and how you’re doing against progress and what you promised in your contract
- safety issues
- what’s been escalated from the operational teams and from the site level that needs resolved by a team of people (e.g., OSC or ESC), and how do you track all of that.
“It’s not straightforward how companies operate in this environment; it can get very tricky, and there are a lot of pitfalls,” says Stephens. “Often, we find companies agree to things that they really shouldn’t have, and it puts them in a bind. It’s not done maliciously by, say a CRO; it’s just their template, and nobody at the biotech took the time — or had the time — to look closely at an agreement. There’s a lot of opportunity for cost to go way over if nobody’s watching. That’s why I always say, when it comes to choosing an FSO or FSP model, it’s not clearcut. It … depends.”