The Challenge Of Vendor Selection, Cost Overruns, And Change Orders

By Ed Miseta, Chief Editor, Clinical Leader

I recently had the opportunity to speak with the director of clinical operations for a small pharma company that currently has assets in Phase 1 trials. Although he has spent a good amount of his 20-year pharma career working in Big Pharma, he was able to give me a nice perspective of the challenges he faces in his current company.

The company’s mission is to develop new therapies for diseases with significant unmet medical needs, and he spends most of his time managing vendors, performing vendor selection, handling most regulatory filings, and interacting with consultants.

Being employed by a small pharma firm, he asked that his name and his company not be mentioned in this article. However, I felt his comments, challenges, and insights were worthy of discussion. For the sake of convenience, let’s just call him John Smith.

Ed Miseta: Where does your pipeline stand at this time?

John Smith: We have assets that are currently in clinical trials. All of those assets right now are in Phase 1 but we are in the process of making plans for Phase 2. We are currently building our development abilities as we take on additional projects.

Miseta: Do you outsource those trials?

Smith: We do outsource those trials to CROs and we also outsource all of our toxicology studies. I oversee all of that and also get vendors lined up for bioanalytical work. That obviously makes managing vendors one of my primary responsibilities.

Miseta: What is the biggest challenge you face in your job?

Smith: The biggest challenge I face definitely has to do with vendor management. The 20 years I spent at Big Pharma taught me the importance of proper oversight of your CROs. We work with a lot of different companies and not everyone has the same amount of training or knowledge of what we want. For that reason I work very closely with them and sometimes it can be difficult, especially when the company you are working with does not have the same experience or sense of urgency that you do. That is not so much a criticism as it is recognition that the CRO does not always have the same outlook as a sponsor in terms of what they want to get out of the relationship.     

Miseta: Can you discuss your CRO selection process?

Smith: Sure. A lot of individuals on my team have worked on projects with Big Pharma companies, so we are familiar with the selection process and all of the big players, like Quintiles, ICON, and PPD. But some of our target indications are niche. So I will also look for CROs with experience in those specific areas. For example, on a recent program we started, the feedback I received from our consultants and key opinion leaders said we needed to go with a CRO that had expertise in that specific therapeutic area. They felt a CRO with that experience would be very familiar with the space and also be familiar with sites that understand the condition. So in that instance we took their advice and searched for CROs with knowledge of the disease state.

Miseta: Was that approach worthwhile?

Smith: I would say we are still evaluating it, but also doing a little rethinking of the strategy. There is certainly a lot of value that a specialty CRO can bring to the table. But at the same time, you could argue that a really efficient CRO could also perform the tasks we need them to do. They have the tools and resources that would be needed. 

Miseta: How does the search process generally work?

Smith: We will do a lot of research and evaluate a lot of CROs. Once we have narrowed down our search to the top three or four with the most experience, we will request an RFP. We review the RFPs and have each one come in and give a presentation on their capabilities to our CSO and other key team members. After that it is a group decision to select the one we feel is the best fit.  

When it comes to the toxicology work I will request multiple bids, but will often use outside toxicology consultants to suggest where we should start our search. After we get the recommendations and do some research, it is again a group decision.  

Miseta: Being a small company, do most of the CROs you work with tend to be large or small?

Smith: When we solicit the RFPs we tend to hear from CROs of all sizes. We have found many are getting into the immunology space and many will have the dermatology expertise we require. But I would say we generally tend to gravitate to the small and midsized CROs. As a small company we seem to make more of a connection with the smaller ones, and don’t feel as lost as we sometimes do with many of the larger ones. For the project I mentioned earlier we did go with a small to midsized company.

Miseta: For many sponsor companies I talk to, their biggest concern is timeliness. It that a major consideration for you?

Smith: Absolutely. I think a lot of people believe you can hand a project off to a CRO and just forget about it, much like tossing something over a fence. My experience has been that this is not the case. I like to stay more hands on. I spend a lot of time reviewing study documents, timelines, and the site selection process.

But timeliness is definitely the biggest challenge. There are times when CROs seem like they just don’t get the importance of timelines, even though you stress from the very beginning how important they are. Sometimes I will be looking at the recruitment effort and will realize we are not going to be able to hit the recruitment deadline, but it seems like the CRO is not even concerned about it. We have recruitment timeframes that are very aggressive. If early on a CRO realizes that the recruitment trajectory will not meet the timeline, they should immediately bring that information back to the sponsor so they are aware of the potential shortfall. It’s very frustrating when that does not happen.

Miseta: Can you give an example?

Smith: We recently selected a certain CRO because they could do Phase 1 testing and proof of concept in a multi-center type of environment. We emphasized how connected the studies were and how they had to start, initiate recruitment, and end on specific dates. Everything was very tightly coordinated, and they said they understood the timelines. But once we started the work, they didn’t seem to get it. This was not even a situation where we had to change the dates. They were aware of the timeline from the very beginning. I think that is why you have to count on doing a certain amount of management oversight when you outsource anything. Sometimes you’re pleasantly surprised by the performance of your CROs, but unfortunately there are times when you’re not.

Miseta: Are cost overruns and change orders a challenge for you?

Smith: Yes and I think that is primarily due to two things. First, there are times when we are forced to change or amend the protocol or add patients. Obviously that will result in a legitimate change order. It is not a problem and I am happy to pay for it. But I have been involved in projects with CROs where we seem to be paying for project management, and those charges can be really steep.

I have seen CROs submit change orders for things such as sending a memo to a site. Something came up, they had to let the sites know, and they submitted a change order as a result. To me, that is simply project management. It’s ridiculous to think a sponsor should pay you extra for having to send out a memo. Situations like that make me feel like I’m being nickel and dimed.   

Here is another situation that came up recently: We went to a CRO and asked them to give us a fair per-patient price. We have very aggressive timelines and we wanted to produce a budget that was reasonable and would not require a lot of negotiation. We used the amount provided but still ended up having to negotiate every budget. Overall we were about 30% lower than what the sites ended up agreeing to. That is frustrating because the CRO knows the patients, they know the sites, and they know their costs. We admitted up front we didn’t know and wanted to prepare a fair budget. They should be able to produce a more accurate estimation of costs.