Sourcing Strategies in Clinical Development Which model yields
the most cost savings? Ken Dhimitri Vice President, Operations
February 19, 2015 2015 Boston Biomedical Associates Rev A Page
1
Slide 2
This presentation will answer four key questions 1.Why develop
a sourcing strategy? 2.What are your sourcing options? 3.How do
sourcing options compare? 4.What are the keys to sourcing success?
Sourcing Strategies in Clinical Development Agenda 2015 Boston
Biomedical Associates Rev A Page 2
Slide 3
2014 Boston Biomedical Associates Rev A Page 3 Why develop a
sourcing strategy?
Slide 4
More than one in ten clinical trial sites fail to enroll a
single patient and nearly 40% of investigative sites under- enroll.
1 Reaching enrollment goals typically means nearly doubling the
original enrollment timelines. 1 Why develop a sourcing strategy?
Trials subject to timeline slippage and cost overruns 1 Tufts CSDD,
"Tufts CSDD Press Release PDF," 15 January 2013. [Online].
Available:
http://csdd.tufts.edu/files/uploads/02_-_jan_15,_2013_-_recruitment-retention.pdf.
[Accessed Sep 2014].
http://csdd.tufts.edu/files/uploads/02_-_jan_15,_2013_-_recruitment-retention.pdf
2015 Boston Biomedical Associates Rev A Page 4
Slide 5
Why develop a sourcing strategy? Protocol Complexity Increasing
2 2015 Boston Biomedical Associates Rev A Page 5 2 Getz, Campo,
Kaitin. Variability in Protocol Design Complexity by Phase and
Therapeutic Area. DIJ 2011 45(4); 413-420. 00 0304-07 08-11 Percent
Change 00-11 Unique procedures per protocol20.528.230.448% Total
procedures per protocol105.9158.1166.657% Total investigative site
work burden (median units) 28.944.647.564% Total eligibility
criteria31495158% Median study duration in days14015417525% Median
number of CRF pages per protocol55180176227%
Slide 6
Serious Adverse Events (SAEs) reported to the FDA are
increasing at a rate about twice as fast as the overall growth of
the medical device market 3 The increasing likelihood of a quality
event, the rising costs of such events, and the public nature of
quality performance will force device companies to focus on quality
3 Why develop a sourcing strategy? Increasing regulatory burden and
safety concerns 2015 Boston Biomedical Associates Rev A Page 6 3
McKinsey, "The Business Case for Medical Device Quality PDF"
[Online] Available:
http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/public%20sector/regulatory%20exce
llence/the_business_case_for_medical_device_quality.ashx [Accessed
Sep 2014
http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/public%20sector/regulatory%20exce
llence/the_business_case_for_medical_device_quality.ashx
Slide 7
Medical devices developers are facing the greatest pressure to
date from increased efforts by buyers to cut reimbursement and the
price paid for devices. 5 Revenue growth rates declined
significantly from 2005-2011. -At a rate of approximately 12% per
year. 5 Why develop a sourcing strategy? Revenue growth rates
declining 2015 Boston Biomedical Associates Rev A Page 7 5 PwC,
"Operating Performance in the Medtech Industry PDF" [Online]
Available
http://download.pwc.com/ie/pubs/2012_operating_performance_in_the_medtech_industry.pdf
[Accessed Sep 2014]
http://download.pwc.com/ie/pubs/2012_operating_performance_in_the_medtech_industry.pdf
Slide 8
Experiment with novel models of driving innovation, such as
in-licensing, partnerships, and strategic investment and
divestitures. 6 Deploy more cash into external development by
viewing new programs as a collective effort. 6 Consider changing
compensation practices to reflect spending efficiency and project
hit rate. 6 Why develop a sourcing strategy? Declining R&D
efficiency warrants novel solutions 2015 Boston Biomedical
Associates Rev A Page 8 6 Morgan Stanley, The US Healthcare Formula
Cost Control and True Innovation [Online]. Available:
http://www.morganstanley.com/views/perspectives/US_Healthcare.pdf
[Accessed Sep 2014].
http://www.morganstanley.com/views/perspectives/US_Healthcare.pdf
Slide 9
Payor pressure Utilization is being pressured by limited
coverage on certain procedures that do not have the appropriate
supporting clinical data. 6 Device makers increasingly are turning
to clinical trials to differentiate their products from competitors
and improve their odds of adoption in the marketplace. 7 Why
develop a sourcing strategy? A changing device development
landscape 2015 Boston Biomedical Associates Rev A Page 9 7 Jim
Pomager, Med Device Online, 5 Tips For Successfully Outsourcing A
Medical Device Clinical Trial [Online]. Available:
http://www.meddeviceonline.com/doc/five-tips-for-successfully-outsourcing-a-medical-
device-clinical-trial-0001 [Accessed Sep
2014].http://www.meddeviceonline.com/doc/five-tips-for-successfully-outsourcing-a-medical-
device-clinical-trial-0001 8 FDA, Device Approvals, Denials and
Clearances [Online]. Available:
http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/DeviceAppr
ovalsandClearances/default.htm [Accessed Sep 2014]
http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/DeviceAppr
ovalsandClearances/default.htm
Slide 10
2014 Boston Biomedical Associates Rev A Page 10 What are your
strategic sourcing options?
Slide 11
Insourcing Outsourcing Transactional Functional Service
Provider (FSP) Preferred Provider Strategic Partnership What are
your strategic sourcing options? 2015 Boston Biomedical Associates
Rev A Page 11
Slide 12
Utilization of an organization's own personnel and resources to
accomplish a project and/or task. Projects and/or tasks are
assigned to persons or departments within the company instead of
contracting an outside party to do the work. What are your
strategic sourcing options? Insourcing 2015 Boston Biomedical
Associates Rev A Page 12 Control over personnel, processes,
technology Perceived quality improvement High costs Less favorable
cycle time and overall timeline performance as compared to
strategic outsourced models
Slide 13
What are your strategic sourcing options? Insourcing 2015
Boston Biomedical Associates Rev A Page 13 When to Use Who is most
apt to use? Why Use In the context of a pre-existing volume of
in-house personnel that have the capability, experience and
infrastructure to manage Clinical Development independently, absent
the support of a Contract Research Organization and/or other major
third party vendors. Mid-sized and large device companies who have
over time acquired meaningful personnel, process and technology
assets. Preference for control over cost-savings. Need for control
is strong enough to justify trade-offs against efficient task
performance and value creation.
Slide 14
Practice of contracting an outside party to perform a task,
project or business process. Transactional outsourced models in
Clinical Development are often comprised of multiple vendors,
RFIs/RFPs and proposal processes, competitive bids/awards and
ongoing vendor management. What are your strategic sourcing
options? Outsourcing (Transactional) 2015 Boston Biomedical
Associates Rev A Page 14 Modest cost savings Able to initiate
projects and scale resources quickly Less favorable cycle times and
overall timeline performance Some quality concerns
Slide 15
What are your strategic sourcing options? Outsourcing
(Transactional) 2015 Boston Biomedical Associates Rev A Page 15
When to Use Who is most apt to use? Why Use Single or stand-alone
trial (non-program level outsourcing) Small and mid-sized device
companies who lack personnel, process and technology assets.
Companies subject to M&A. Need for FTE support. Modest to
moderate cost pressures. Competitive pressures to initiate human
trials (investors/shareholders, competitive landscape).
Slide 16
Utilization of a highly specialized single vendor service in a
specific functional area, geography, or field of subject matter
expertise. For example: Clinical Monitoring in Asia-Pacific or
provision of Statistical services across multiple clinical trials.
What are your strategic sourcing options? Functional Service
Provider 2015 Boston Biomedical Associates Rev A Page 16 Good
timeline and quality performance Geographic FSPs yield broad global
reach for Sponsors that have limited global footprint Unfavorable
cost profile High oversight requirements for Sponsor
Slide 17
What are your strategic sourcing options? Functional Service
Provider 2015 Boston Biomedical Associates Rev A Page 17 When to
Use Who is most apt to use? Why Use When planning trials in
emerging regions. When internal vendor management capabilities are
high. Mid-sized and large device companies who have core personnel,
process and technology assets, but are weak in a specific
functional area or geography critical to their development
objectives. Limited global reach (especially in emerging regions).
Limited in-house capabilities/expertise in a specific functional
area.
Slide 18
Utilization of a preferred vendor who as a result of either
pre- qualification or prior work history provides services known to
meet a predetermined set of specifications; often defined in a
Service Level Agreement (SLA) or Quality Contract. What are your
strategic sourcing options? Preferred Provider 2015 Boston
Biomedical Associates Rev A Page 18 Good timeline and quality
performance Moderate to significant cost savings Modest Sponsor
oversight FTE requirements Modest to moderate upfront labor and
infrastructure development time requirements
Slide 19
What are your strategic sourcing options? Preferred Provider
2015 Boston Biomedical Associates Rev A Page 19 When to Use Who is
most apt to use? Why Use When looking for a comprehensive
outsourcing solution, but dont have the time and/or resources to
develop a full strategic partnership. Mid-sized and large device
companies who have core personnel but are looking to control costs
through some shared processes, efficiencies and integrated
technology assets. Cost savings. Reduced Sponsor FTE requirements
(no shadow resources / mirror teams).
Slide 20
A formal alliance between Sponsor and CRO that is characterized
by a shared vision, early engagement, alignment of incentives,
process & technology innovation, joint governance, and robust
metrics. What are your strategic sourcing options? Strategic
Partnership 2015 Boston Biomedical Associates Rev A Page 20
Substantial cost savings Very low Sponsor oversight FTE
requirements Broader relationship that generates innovative
processes, efficiencies Good timeline and quality performance 6-9
month build time 15-18 months to realize gains
Slide 21
What are your strategic sourcing options? Preferred Provider
2015 Boston Biomedical Associates Rev A Page 21 When to Use Who is
most apt to use? Why Use When vested in developing a comprehensive,
long-term sourcing solution. Small device companies with a vision
that includes a long-term, ongoing clinical development strategy.
Mid-sized and large device companies looking for substantial cost
control through the alignment and innovation born out of strategic
partnership. Most substantial cost savings. Most substantial
reduction in Sponsor FTE requirements. Long-term sourcing
strategy.
Slide 22
2014 Boston Biomedical Associates Rev A Page 22 How do
strategic sourcing options compare?
Slide 23
Insourcing and FSP models fail to yield cost savings due to
high resource requirements and inefficient integration of
cross-functional processes Strategic Partnership yields the most
substantial savings due to lean FTE ratios, process efficiency and
reduced overall timelines How do sourcing options compare? Cost
Savings by Sourcing Model 2015 Boston Biomedical Associates Rev A
Page 23
Slide 24
How do sourcing options compare? Reduced CRO/Sponsor Headcount
Ratio 2015 Boston Biomedical Associates Rev A Page 24 Early
engagement Defined oversight model Structured governance Formal
communication planning Informative metrics Dedicated staff more
efficient Fewer hand-offs due to deep back- up language and
templates Technology integration & automation (e.g., eTMF and
metrics reporting) # of CRO Staff (FTEs) per Sponsor Staff Assigned
to Project 3-1 FTE ratio reduced to 15-1Drivers of reduced FTE
ratio
Slide 25
How do sourcing options compare? Outsourced Models
Transactional OutsourcingPreferred ProviderStrategic Partner
Initial Time Investment NoneModestSubstantial Award Process
Competitive (many providers with bid defenses, RFIs, RFPs, and
contract negotiation) Competitive (2-4 providers) Often
non-competitive between one or two partners Award Strategy Focused
on a projectFocused on projects or a program Focused on Therapeutic
Area & Portfolio awards Opportunity for Cycle Time Reduction
None Some (particularly in contracting) Substantial (contracting,
start-up, enrollment, database lock, hand- offs between phases)
Shared Processes or Technologies NoneLimited/none Substantial
(focus on automation, integration and real time visibility to data)
Pipeline Visibility NoneLimitedSubstantial 6+ mos lead time
Explicit Incentive Alignment None Study level with some
service-level agreements Relationship-level service agreements
Relationship Owner/Driver Outsourcing Outsourcing (with support
from senior management) Senior management (with support from
outsourcing) Risk Assumption Sponsor Sponsor. Transactional risk
assignment to CRO Robust Sponsor/CRO Risk Sharing Overall cost
savings rises with depth and breadth of outsourcing model 2015
Boston Biomedical Associates Rev A Page 25
Slide 26
53% of Medical Device companies surveyed indicated reliance on
Transactional Outsourcing models 35% of total clinical research
spend was insourced 68% of respondents anticipate an increase in
their clinical outsourcing over the next three years How do
sourcing options compare? Current trends in Medical Device Clinical
Outsourcing 2015 Boston Biomedical Associates Rev A Page 26 9 Avoca
Group, Trends in Medical Device Clinical Outsourcing [Online].
Available:
http://www.slideshare.net/AvocaGroup/avoca-presentation-to-medical-devices-
conferences?ref=http://www.meddeviceonline.com/doc/five-tips-for-successfully-outsourcing-a-medical-
device-clinical-trial-0001 [Accessed Sep 2014].
http://www.slideshare.net/AvocaGroup/avoca-presentation-to-medical-devices-
conferences?ref=http://www.meddeviceonline.com/doc/five-tips-for-successfully-outsourcing-a-medical-
device-clinical-trial-0001
Slide 27
What are the keys to successful sourcing?
Slide 28
Shared Vision Robust Governance Defined Oversight Model Defined
Acceptance Criteria Informative Metrics Early Engagement &
Joint Operational Planning Structured Financial Model What are the
keys to successful sourcing? Lessons Learned from Strategic
Partnerships 2015 Boston Biomedical Associates Rev A Page 28
Slide 29
Create a Shared Vision 1.What does each partner hope to gain
from the relationship? 2.What contributions will each partner make
to the success of the relationship? 3.To what extent does the
Sponsor or CRO need to exercise control? Is the need for control
strong enough to justify trade-offs against efficient task
performance and value creation? In what areas? 4.What underlying
assumptions need to hold true for the partners to remain
strategically committed to the relationship and its success? 5.Are
there risks that individuals will lose from the alliance? Is the
partnership seen as a personal threat (e.g., to anyones job). If
so, how will these risks be mitigated? What are the keys to
successful sourcing? Shared Vision 2015 Boston Biomedical
Associates Rev A Page 29
Slide 30
Management by Exception Focuses on identifying and handling
issues and events that deviate from defined processes and
requirements Trust, but Verify Assumes quality and performance are
compliant with defined processes and requirements but adds
additional quality checks to verify that outputs conform What are
the keys to successful sourcing? Defined Oversight Model 2015
Boston Biomedical Associates Rev A Page 30 At what altitude will
you fly?
Slide 31
A Tale of Two Trials Comparative spend through Last Patient In
2015 Boston Biomedical Associates Rev A Page 31 Sponsor ASponsor B
Sites2530 Subjects185220 Enrollment Duration24 mos. Sourcing
Strategy Transactional Outsourcing, Partially Insourced Preferred
Provider Oversight Model Shadow Resources, "Check with me" Trust
& Verify, Pre-defined Acceptance Criteria Governing
ProcessesSponsor/CRO Hybrid100% CRO Communication Plan65 explicit
requirements 3 standard definitions and a single escalation pathway
Sponsor/CRO FTE Ratio1:21:12 CRO Service Fees$6.25M$5.32M Sponsor
Labor + Overhead (Est.)$1.82M$0.46M Total Spend through
LPI$8.07M$5.78M
Slide 32
Acceptance Criteria: What does good look like? Predefined
requirements, specifications and thresholds that detail the
acceptability of planned deliverables. Metrics Informative Metrics:
How do we measure success? Operational Metrics Timelines,
Productivity, Quality Relationship Metrics Innovation Metrics
Process Improvements; Application of new technologies; Integration
of key systems between CRO and Sponsor Knowledge of Performance or
Knowledge of Results? What are the keys to successful sourcing?
Acceptance Criteria and Informative Metrics 2015 Boston Biomedical
Associates Rev A Page 32
Slide 33
Build infrastructure to facilitate development of a mutually
agreed, data driven, operational plan including appropriate scope,
timelines, buffers and contingency plans prior to the commencement
of work. Protocol Design Considerations: (eligibility criteria,
schedule of events). Regulatory: (pre/post market, use of control,
pt. risk, protected pop.). Investigator Survey Data. KOL
Panel/Focus Group Data. ICD-9, CPT code and EMR Data. Competitive
Trial Landscape. Commercial Product Landscape. Country level SoC
& Healthcare Delivery System Constraints. Patient Outreach and
Recruitment Considerations. Reimbursement Issues (cost of
comparator or adjunctive therapy). Country Allocation & Site
Activation Forecast. Consent, Screen Failure, Enrollment and
Withdrawal rate Projections. What are the keys to successful
sourcing? Early Engagement & Joint Operational Planning 2015
Boston Biomedical Associates Rev A Page 33
Slide 34
Rate Card establishing fixed rates per country (or country
bands) across all CRO services with inflation rate adjustors for
out years Volume discount (provided at point of sale) based on YTD
awarded business applied to new business going forward Tiered based
on increasing bands of awarded business Bundling discount for
multi-protocol awards within the same product and applied to all
additional budgets Service Level Agreements (SLA) for some services
Selective Risk/Reward for some studies Link to key milestones,
e.g., LPI, DBL +/- x weeks Reward should be greater than the risk
What are the keys to successful sourcing? Financial Model 2015
Boston Biomedical Associates Rev A Page 34
Slide 35
Acknowledge the pressures on the Medical Device industry
Recognize strategic sourcing as a viable and important mechanism of
cost control in Clinical Development. Understand your strategic
sourcing options Consider timeline, quality and cost implications
of insourced vs. outsourced models. Develop a sourcing strategy
Choose a model that matches your organizations short term needs and
long term objectives. Define your oversight model Regardless of
sourcing strategy, collaborate with your CRO vendor to define an
efficient Sponsor oversight model that ensures quality while
maintaining cost controls. Summary 2015 Boston Biomedical
Associates Rev A Page 35
Slide 36
2014 Boston Biomedical Associates Rev A Page 36 THANK YOU Visit
BBA at www.boston-biomedical.com or contact Ken at
kdhimitri@boston-biomedical.comwww.boston-biomedical.comkdhimitri@boston-biomedical.com
Slide 37
Boston Biomedical Associates (BBA) www.boston-biomedical.com is
a full service product development consultancy and contract
research organization (CRO) serving the medical device and
biopharmaceutical industries.www.boston-biomedical.com BBA was
founded in 2000 by Lauren Baker, PhD, PE. Our team is comprised of
more than 60 experts with global product development, regulatory
and clinical trial experience. BBA is an ISO 13485:2003 certified
organization. BBA offers broad-ranging capabilities in product
development from initial design and first in human, through large
pivotal trials and post-market studies. About Boston Biomedical
Associates 2015 Boston Biomedical Associates Rev A Page 37
Slide 38
BBAs Service Lines 2015 Boston Biomedical Associates Rev A Page
38 Product Development Regulatory Strategy & Submissions
Regulatory Authority Liaison Pre & Non-clinical Clinical Study
Design Statistical Consulting Quality System Assessment and
Development Strategic Consulting Product Development Expertise
Protocol Design KOL/PI management Site Selection & Management
Clinical Operations Monitoring Medical Affairs Data Management
& Statistics Safety, DMC & CEC Medical Writing Trial
Management Operational Expertise Clindex EDC & CTMS Imaging
Core Lab Services (ICLS) Integrated Project Metrics Dashboard
(iPMD) eClinical Platform Technology Expertise Functional Service
Provider (FSP) Contract Staffing for clients not ready to outsource
full service projects Staffing Solutions Personnel Expertise