Big Pharma's Second Life

Can big pharma solve its fixed cost problem by going virtual? Not entirely, but drug companies can get more out of their CRO partners by treating them less like avatars and more like equals, according to conference-goers at a CBI event in The Triangle.

The problem with overbearing project mangers on the sponsor side of the of pharma/contract research organization (CRO) equation is that they dynamite the efficiencies CROs are hired to deliver.

“Micromanagement hurts us in the long run,” said Colleen Cox, senior manager, data management at Infinity Pharmaceuticals, at CBI’s (PharmExec and CBI are both owned by Advanstar) Sponsor/CRO Systems & Business Process Integration conference in Raleigh, North Carolina yesterday. Pharma doesn’t like ceding control of certain aspects of the R&D process to an external group, but it’s necessary, said Cox. Apart from slowing down a project, micromanagement also “damages trust” between partners, she said.

Ian Lauf, associate director, clinical alliance management at Eisai and conference emcee, countered that consistent oversight isn’t the same thing as micromanagement, noting that regulatory authorities “need to know the sponsor is in charge.” However, Lauf agreed that drug sponsors sacrifice key CRO efficiencies – like speed – when they “force their SOPs on their partners,” rendering the CRO into a mere extension of internal employee personnel, and driving up costs.

Should pharma hand its clinical programs over to the CRO and it’s own SOPs and processes, essentially without oversight? John Jones, global practice leader, IT strategy and implementation at Quintiles said they could but don’t, thanks to the “elephant in the room” – the prospect of pharma’s internal clinical staffers rendering themselves redundant. People whose jobs have been made redundant by a CRO contract become “oversight specialists,” said Jones.

From the perspective of clinical trial site managers – who can sometimes get caught in a pharma/CRO instructional tug of war – partners need to present themselves as a united front, said Ana Marquez, CEO at Marquez Clinical Site Partners. Marquez said the three most important things pharma and their CRO partners can do for clinical trial sites are: 1) pay monthly, not quarterly; 2) pay on time; and 3) consult with site managers about trial design and protocols, like inclusion/exclusion criteria. “We know our patients,” said Marquez. Sometimes trial protocols simply aren’t practical. “Our voice is often not heard,” she said.

Stefan Proniuk, vice president of product development at Arno Therapeutics, a totally virtual company focused on early stage development, said Arno doesn’t have the resources to micromanage its CRO partners, even if it wanted to; small virtual biotechs live and die by the performance of their partners, and the CRO’s ability to hit deadlines for Arno’s investors. “Venture capitalists want their money back in five years,” said Proniuk, adding that for early stage virtual companies, the process beginning with preclinical chemistry, manufacturing and control (CMC) and toxicology studies and ending with the conclusion of phase 2 trials should last 48 months, maximum. For virtual companies, the four most important CRO capabilities, per Proniuk, are: 1) speed; 2) speed; 3) speed; and 4) quality, which cannot be compromised. In 10 to 15 years time, “early stage R&D work will be almost entirely virtual,” and that includes big pharma, he said.

For pharma, increased utilization of CROs for critical R&D functions means that employees will have to learn new skills and adapt their positions to justify the associated fixed costs, also known as annual salaries. As pharma and CROs shift toward integrated partnering models that put CROs on a more equal footing with drug sponsors, pharma will need to reexamine and focus on its remaining key competencies, and make tough decisions about internal headcount as more functions are outsourced.