Biotech's Long Road to Savvy

Alan Louie, PhD, Research Director for IDC Health Insights, told Applied Clinical Trials in a podcast available on http://appliedclinicaltrialsonline.findpharma.com/podcasts that biotech is an industry sector driving growth in eClinical software. The reasons are clear: biotechs are under increased scrutiny by pharma and other potential investors to ensure that the compounds they wish to sell have undergone the best early phase studies to establish more than acceptable safety and efficacy profiles. To that end, the adoption of software and services by biotechs is on the rise.

Case in point, John Burnett is a clinical trial manager for a small West Coast biotech that has been in business for 10 years, selling its compounds off at Phase IIa or early Phase III. "There are increased challenges for the small biotech," Burnett said. "The [investors] are being more critical of the earlier trials. The trial design is more complicated. And there is a lot more outsourcing to CROs so that we can do that effectively."

For Burnett, his goal is to apply a more systematic approach to the business side of clinical trials for biotechs, beginning with the requests for proposals (RFP) process.

When Burnett came on board, the company of course was using software to manage its business, however, as Burnett quickly discovered, not to its fullest capabilities. One package was ClearTrial's Clinical Trial Operations (CTO) software.

At his former company, Burnett was trained on the ClearTrial SaaS (Software-as-a-Service) software to optimize trial designs, estimate CRO costs, and analyze CRO bids. What he discovered at this biotech was it used ClearTrial for clinical trial planning only. Draft protocol and case report forms were sent to CROs for competitive bids. However, CROs returned with bids that always varied significantly from each other and the company's original estimates. It was extremely time-consuming to realign CRO cost estimates that were based on individual CRO templates. Uncovering the root causes for cost variances was almost impossible. Negotiating was a long painful process of back and forth.

"The problem with CRO bids was the lack of transparency to assumptions and cost drivers," recalled Burnett. "When ClearTrial's bid grid and baseline assumptions weren't sent to CROs with the RFP, the CRO expense categories failed to align with other CRO bids and in-house estimates, and costs were based on different drivers and assumptions. It was a tangled mess."

Burnett immediately began including bid grids, trial assumptions, and standardized categories, when sending RFPs to CROs and told the CROs that the ClearTrial bid grid must be used to analyze all bids. Further, if their assumptions differed from the baseline case, then justifications must be provided, and unit costs and labor calculations must also be disclosed on the grid.

Using the ClearTrial bid grid, Burnett discovered that:

• Some CROs used higher unit rates than ClearTrial estimates.

• Total project management hours, time allocated for monitoring, and number of monitoring trips often contributed to higher CRO estimates.

• Variance between CRO bids was easy to identify.

• Extraneous items outside of the scope became readily apparent.

• Transparency on all sides made the processes easier.

Previously, CRO bids on a single Phase II ranged from $8 million to $13 million, about a 60% variance. There were still some variances between ClearTrial estimates and CRO bids, but the discussions were more focused on cost drivers and underlying assumptions. In addition, the biotech compressed the CRO contracting cycle time from over three months to two weeks, and saved $600,000 on a single Phase II contract. An unforeseen but positive consequence was a shift toward a more constructive and collaborative working relationship between the biotech and the CRO.

In addition to these external comparisons, Burnett was also able to get a handle on internal benchmarking. Burnett says even if you don't have ClearTrial or other software to provide benchmarks, you can utilize your own database to ballpark prices of what things have cost in past trials.

The biotech does use preferred provider agreements with CROs, as well as strategic partnerships. In the end, the choice of CRO comes down to the size of the study, the therapeutic area expertise, and the need for a global reach. "Cost always plays into it," Burnett said. "But when we are choosing one vendor over another, the assumptions on cost; their understanding of our development plan; their scientific experience and credibility all bring to bear on the decision."

In the end, the differences between biotechs and pharma are not that many, except in the area of approach. Says Burnett: "Pharma is more business savvy. Biotechs are more scientific, they go out and get it done and do things based on a scientific hunch. But they need to apply a more systematic approach to the process."

—Lisa Henderson