The Growing Role of Performance Incentives Between Sponsors, CROs

Clinical drug trials require enormous commitments of money and time, and sponsors are understandably motivated to ensure they’re run efficiently. Late patient enrollment, delayed site activation, and missteps during the course of the trial are just some occurrences that can raise the already high stakes in developing new therapies.

So when we recently performed a double-blind trial of a treatment for major depressive disorder, the contract included bonuses - and corresponding penalties - tied to five factors: U.S. patient enrollment (40 percent), enrollment in Australia and Canada (7.5 percent each), database lock (30 percent), and first patient screened (10 percent).

When contract provisions like these started showing up a few years ago, they were generally an afterthought. Only recently have they started to become a standard part of the negotiation process, with risk-reward terms typically tied to milestones such as:

• Time from contract award to first patient screened.

• Time from contract award to opening of the first study site.

• Percentage of sites activated within a prescribed period.

• Date of database lock relative to last patient last visit, with a greater incentive paid for every week that lock date precedes LPLV.

A maturing business model

The expanding role of incentives is a healthy trend in an industry defined by high costs and the pressure of project deadlines, and these agreements between drug makers and their clinical research providers have matured significantly in recent years - to each party’s mutual benefit.

Part of that maturation has been the recognition that everyone has much to gain from a successful trial - and everything to lose from a failed one. A sponsor that enters a negotiation seeking to extract penalties from an underperforming CRO overlooks the real value of risk-sharing as much as a CRO that grudgingly accepts these terms as a threat to its profitability. In fact, I prefer to avoid the word “risk” altogether, seeing these instead as opportunity-sharing arrangements.

No risk-reward deal set up as a trip wire - the sponsor seeking to extract its pound of flesh for missed commitments - has any real chance of succeeding. Indeed, smart drug companies pursue these deals hoping the CRO hits those incentive milestones and happily paying for performance that meets or exceeds contract terms. In turn, we share these payments as project team bonuses, a great motivator for our staff in an industry that’s synonymous with rapid employee turnover.

Many things drive the high-functioning teams that are so important to successful trial execution, of course, and bonus payments alone cannot provide all the needed impetus. Professionals in this field thrive on teaming with sponsors on work that has potential to advance science and improve lives, and on the satisfaction that comes from collaborating with talented colleagues. But bonuses have shown to be an important tool in improving employee morale and retention.

Choosing the right measures

A vital part of effective performance incentives is agreeing on measurements that are meaningful and equally advantageous. Some of the targets the industry tried early on were just plain unworkable, such as penalties without corresponding rewards (it’s hard to imagine a worse deal from our perspective) and CROs agreeing to accept royalties from future drug sales as part of their fee (a long wait for a very uncertain return).

We’ll assume risk only at a level commensurate with the control we’re allowed over the study’s execution - things like:

• Protocol design and site selection, which have a significant bearing on patient recruitment, retention, and compliance.

• Appropriate level of feasibility assessments to be performed.

• Operational strategy, such as recruitment plans, monitoring, strategy, data management and statistical analysis planning.

Over time, we have advanced risk-reward negotiation to a process that’s straightforward, predictable, and repeatable. The results are convincing - for example, in an Eastern European study to evaluate an adult schizophrenia drug, our incentivized team moved up the timeline for the 400-person trial - and every member remained for its entire 22-month duration.

There are other performance measures - mostly factors beyond your control - that should never be part of a risk negotiation. For example, CROs have limited influence over enrolled patient numbers, so that’s a metric to avoid. Also stay clear of customer-induced delays from any number of origins, such as contract approvals, implementation of protocol amendments, and late reviews and approvals. Still more things to exclude: unforeseen regulatory intervention, product safety issues, import complications, and unexpected standard-of-care changes.

An encouraging trend

To give customers the greatest value, contract researchers must deliver high quality on an accelerated schedule. A CRO whose foremost goal is low cost cannot help but lose sight of the ultimate goal: performing effective clinical trials that get new drugs to market for the good of their customers and for the ultimate benefit of patients whose futures hinge on availability of new treatments.

Sponsors’ growing embrace of incentive payment models is an encouraging trend, and we look forward to an expanded role in refining this promising approach to drug development.

Sean Russell is Chief Commercial Officer at Premier Research