pharma-cro relationships managing risk a lawyer\'s view
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property of Epstein Becker & Green, P.C @ www.ebglaw.comTRANSCRIPT
February 26, 2008
Bradley Merrill Thompson
Sponsor-CRO Relationships: Managing Risk
2
Topics
– ABCs of CROs– Planning– RFP and Due Diligence– Contracting– Execution of Work– Evaluation– Take Aways
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What is a Contract Research Organization?
– FDA Definition: A CRO is a person that assumes, as an independent contractor of the sponsor, one or more obligations of the sponsor, such as design of the protocol, selection of the research site(s), monitoring of investigators, evaluation of the study data, and/or preparation of materials to be filed with the FDA.
See 21 CFR §312.3(b)
– ICH Definition: – A CRO is a person or an organization (commercial, academic, or other) contracted by the sponsor to perform one or more of a sponsor’s trial-related duties and functions.
See GCP §1.20
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SMOs Defined
– What is a Site Management Organization (SMO)?
o A person that is retained as an independent contractor of the principal investigator or research site to provide administrative support of the conduct of the study, such as recruitment of the subjects, collection and preparation of the study data and reports for submission to the sponsor.
o A CRO may perform SMO functions
o Definition based on agency relationships
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CROs v SMOs
Sponsor
Sponsor’s Agent (CRO)
Researcher’sAgent (SMO)
Research Site/
Investigator
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CRO Industry
– CRO industry is booming, taking a larger piece of worldwide R&D expenditures -- $14 billion by CROs in 2005
– The industry is fragmented with over 1000 CROs, including:
oA small group of large, full service multinational entities representing 50% of worldwide CRO revenue
oThe remaining CROs being small to mid-sized entities providing a more limited menu of services, including:
Niche CROs providing services in a limited geographic region or on a specific disease state or therapeutic model
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Topics
– ABCs of CROs– Planning– RFP and Due Diligence– Contracting– Execution of Work– Evaluation– Take Aways
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CRO Clinical Trial Services
– Protocol development– Site/Investigator recruitment and
selection– Personnel training– Clinical trial management– Quality assurance and site monitoring– Data analysis– Medical writing– Processing and preparing regulatory
filings and liaison with regulatory bodies
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Potential Advantages of CROs
– Reduce:o Time needed to develop and
commercialize a new drugo Sponsor’s fixed costs associated with
personnel, equipment and facilities needed for its R&D function
– Provide:o Ready access to needed expertise and/or
technologyo Greater access to potential investigatorso Knowledge of regulatory climate in
foreign markets
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Potential Risks of Outsourcing to CROs
– Risks generally associated with reduced control of the clinical trial process by the Sponsor
– Risks include:
o Delays in completion of studies
o Lost or poor data
o Regulatory infractions produce indirect consequences
FDA regulations/GCPs
HIPAA
Fraud and Abuse
o Private litigation exposure
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Delegation of Authority to CRO
– Sponsors may transfer regulatory obligations to a CROo Must describe in writing – usually this is done in a
written Transfer of Obligations form
– If not all are transferred, specify which ones are and which ones are not
– Any regulatory obligation not expressly delegated remains the responsibility of the Sponsor
– CROs that assume regulatory risk for delegated areas
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Sponsor ResponsibilityMaintaine
d by Sponsor
Transferred to CRO
212 CRF 312.50 General responsibilities of sponsors
Selecting qualified Investigators X
Providing Investigators with the information they need to conduct the Study properly
X
Ensuring proper monitoring of the Study X
Ensuring that the Study is conducted in accordance with the Protocol
X
Maintaining an effective IND with respect to the Study
X
Ensuring the FDA and all participating Investigators are promptly informed of significant new adverse effects or risks with respect to the Study Materials
X
Delegation of Authority to CRO
Portion of Transfer of Obligations form:
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Delegation of Authority to CRO
– CRO may have key roles and responsibilities pertaining to regulatory responsibilities, even when obligation is not “transferred” to CRO
– Example: Adverse Event Reporting o Sponsor retains responsibility to report to
investigators and FDA o CRO may still be responsible for:
Reporting AEs to Sponsor Drafting AE descriptions Providing summary reports of AEs Following up with sites to ensure complete AE
information is obtained Safety database maintenance and/or
reconciliation- These responsibilities should be described in
the Work Order
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Shares common goal/objectives
Engages in joint strategic planning
Forms relationship-based structure
Makes open-ended agreements
New business forms
Strategic Alliance
Preferred Supplier
Establish core team Builds collaborative
mechanisms Develops
understanding of client’s customers
Incorporates client into strategic planning
Assigns dedica70
ted relationship management
Makes directed investments
Builds collaborative mechanisms
Partnership
Source: August 2004, Goldman Sachs Research
Traditional Pattern of Outsourcing Integration
Responsiveness to requests
Transactional
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Checks and Balances
Primary Vendor Secondary Vendors– Clinical research
operations Protocol Development Site/Investigator
Recruitment and Selection Personnel Training Clinical Trial Management Data Analysis Medical Writing Processing and Preparing of
Regulatory Filings and liaison with Regulatory bodies
– QA and QC
– Monitoring– Systems auditing– Trial auditing– Contract
negotiations
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Topics
– ABCs of CROs– Planning– RFP and Due Diligence– Contracting– Execution of Work– Evaluation– Take Aways.
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CRO Selection
– Business and legal risks will be minimized when the Sponsor-CRO relationship is based on open communication and trust
– Imperative that Sponsor adopt a CRO selection process that assesses:
o Expertise: Does the CRO have the expertise to undertake duties Sponsor desires?
o Compatibility: Can the CRO fulfill its duties in manner that is compatible with the Sponsor (i.e., is there a good fit)?
o Capacity: Does the CRO have the ability to commit the manpower and resources needed in the Sponsor’s timeframe?
o Price: Does the CRO provide services at same price as competitors? If not, what added value is being offered?
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CRO Selection
– Sponsor usually conducts an RFP process tailored to the specific trial at hand
– Sponsor’s due diligence should include: o Web research o Public directorieso Careful analysis of Responses to RFP o Interviews with operational leaders o Site visits
– Information gleaned by Sponsor during the CRO selection process should be communicated to counsel to ensure that CRO’s verbal claims are reflected in the CRO contract
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QA Questions to Ask
– How does the CRO measure quality?– What CRO processes are in place to
continually monitor quality?– What is the size of the CRO quality
assurance (QA) department? – What internal QA procedures are in
place? For example, does QA audit studies independent of sponsor-CRO contract, as part of internal CRO quality control?
Winther
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Topics
1. ABC of CROs2. Planning3. RFP and Due Diligence4. Contracting
a. Risks to manageb. Metricsc. 3rd Party Agreementd. Change Orderse. Staffing Issues
5. Execution of Work6. Evaluation7. Take Aways
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Common Project Risks
– Inefficiency and quality issues from staff changeover
– Delays in obtaining regulatory approvals– Delays in site initiation– Delays with patient recruitment– Difficulties with the management of clinical trial
supplies– Issues with vendors– Delays with the processing of CRFs– Utilization of resources at a level that exceeds
the budget
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52%45%
37% 35%28%
0%
10%
20%
30%
40%
50%
60%
Contract andbudget
negotiation &approval
Patientrecruitment &
enrollment
Protocolamendment
and refinement
IRB review &approval
Review&approval of
consent forms
Source: Thomson CenterWatch 2005 Survey of 612 Investigative Sites in the U.S.
Factor Most Often Causing Study Delays United States
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Topics
1. ABC of CROs2. Planning3. RFP and Due Diligence4. Contracting
a. Risks to manageb. Metricsc. 3rd Party Agreementd. Change Orderse. Staffing Issues
5. Execution of Work6. Evaluation7. Take Aways
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Metrics--Why Measure?
– Performance management requires metrics to:o Create alignment and focuso Assess and manage risko Inspire/motivate peopleo Create accountability for those responsibleo Learn lessons regarding what workso Reduce subjectivity and political bias in
decision-makingo Maximize data qualityo Ensure timelines
– What gets measured, gets doneo What does not get measured, may not get
done
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CRO and Sponsor Relationships
– Transparency of performance builds trusto Assures alignment on study qualityo Provides the tools for proactive and
focused management of issues early so they don’t become bigger problems
o Allows for shared consensus on steps for resolution
– Celebrating successes provides positive reinforcement and motivation
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CRO EngagementCRO Engagement
RFP and Due Diligence
Contracting Execution of work
Evaluation
Metric Creation
Key Performance Indicators
Critical Success Factors
Specific Performance Indicators Discussion
Senior Committee
Junior Committee Discussion
AnalysisMeasurement
Feedback & Adjustment
Feedback
Planning
Metric UseMetric Use
Metrics in a CRO Relationship
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Key Metrics for Early Identification of Project Risk
Clinical Operations
• Start-up metrics
• Enrollment metrics
• CRF backlog
Data Management
• Data entry
• Data review
• Data quality
Varawalla
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Example Metric Definition Table
KPIRelated Metrics Definition
Data Source
Target*
Achievement of key project timelines
Final protocol to first patient recruited
Number of days from final protocol approval by sponsor to first patient enrolled at first site
Clinical trial management system (CTMS)
60 days (mean); 90 days (oncolog
y)
Visit data to lab data available in database
Average number of days from patient visit to lab data available in CDMS
Clinical data management system (CDMS)
5 days
*All days specified are elapsed timeCuddigan & King
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Example Metric Definition Table, contd.
KPIRelated Metrics
DefinitionData
SourceTarget*
Last patient last visit (LPLV) to database lock
Number of days from LPLV at site to database locked
CDMS 5 days
Database lock to final study report
Number of days between database lock and final approval study report
CTMS 21 days
*All days specified are elapsed time Cuddigan & King
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Example Metric Definition Table, contd.
KPIRelated Metrics Definition
Data Source
Achievement of target quality standards
Database error rate
Number of database errors found on database audit/total number of data fields audited
Data manager
Percent of non-performing centers
Percent of sites enrolled that recruits 1 subject within one month of initiation visit
CTMS
Cuddigan & King
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Example Metric Definition Table, contd.
KPIRelated Metrics
DefinitionData
Source
Compliance with agreed contract value
Final actual contract cost as percent of initial contract value
Total project fees after final invoice paid, compared with initial contract value (includes pass-through costs)
Finance
Number of change orders
Number of change orders approved after initial contract sign-off
Finance
Cuddigan & King
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CRO EngagementCRO Engagement
RFP and Due Diligence
Contracting Execution of work
Evaluation
Metric CreationMetric Creation
Key Performance Indicators
Critical Success Factors
Specific Performance Indicators Discussion
Senior Committee
Junior Committee Discussion
AnalysisMeasurement
Feedback & Adjustment
Feedback
Planning
Metric UseMetric Use
Metrics in a CRO Relationship
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How Do We Use Metrics?
– Just as you would internally, for performance management:o Create alignment and focuso Assess and manage risko Inspire/motivate peopleo Create accountability for those responsibleo Learn lessons regarding what workso Reduce subjectivity and political bias in decision-makingo Maximize data qualityo Ensure timelines
– Dispute Resolution (later)– Contractually in a few cases
o Contractual management process and dispute resolutiono Contractual rewardso Contractual penalties
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Utility in Managing Sites
Compare sites on the basis of:– Subjects (overall enrollment, enrollment
per month, screen fail rate, dropout rate)– Start up (contract completion time,
document completion time)– Data (query rate, query completion time)– Money (overall cost per patient,
advertising cost per patient)
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Topics
1. ABCs of CROs.2. Planning3. RFP and Due Diligence4. Contracting
a. Risks to manageb. Metricsc. 3rd Party Agreementd. Change Orderse. Staffing Issues
5. Execution of Work6. Evaluation7. Take Aways
36
SPONSOR
SUBJECTFDAIRB**
DSMB, MRC, etc
CRO*
INVESTIGATOR
INSTITUTION/ CLINICAL SITE
CTA
Informed Consent1572
CTA
CTAs
*Contracts on behalf of sponsor (donated by dotted line)
**May or may not be a written agreement - depends on whether IRB is commercial, local, centralized, etc
Services Agreements
Blue = CTA
Orange = Service Agreement
Green = Regulatory “agreement”
Third party vendors (e.g., labs)
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Ability to Bind Sponsor to CTAs
– Sponsor may want CRO to handle CTAs because of:o Speed
o Cost
o Strength of CRO’s relationships with research sites/investigators
– However, sponsors may have problems with CROs protecting sponsors’ interests o CRO sometimes want to get contract in place
quickly and not expend resources in lengthy negotiations
o CRO may not have adequate legal expertise
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Ability to Bind Sponsor to CTAs
– If CRO is allowed to contract on the sponsor’s behalf, contractual controls can help protect sponsor’s interests
– Range of Possibilitieso CTA template
Sponsor provides template for CRO use CRO provides CTA template for Sponsor review and
approvalo CRO authority to negotiate
Only extends to certain provisions CRO must submit all changes to Sponsor for review
and approvalo Notification of changes and amendments
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Topics
1. ABCs of CROs.2. Planning3. RFP and Due Diligence4. Contracting
a. Risks to manageb. Metricsc. 3rd Party Agreementd. Change Orderse. Staffing Issues
5. Execution of Work6. Evaluation7. Take Aways
40
Change Orders
– Typically, the SoW sets forth the particular services to be provided by the CRO to the sponsor
– Additional services beyond those in the SoW are generally subject to a “change in scope” or “change order” that modifies the agreement and increases the total cost of the project
– Some sponsors have negotiated a shift of the risk of cost overruns to the CRO absent an executed addendum setting forth the change of scope and any additional charges for these services
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Topics
1. ABCs of CROs.2. Planning3. RFP and Due Diligence4. Contracting
a. Risks to manageb. Metricsc. 3rd Party Agreementd. Change Orderse. Staffing Issues
5. Execution of Work6. Evaluation7. Take Aways
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Personnel
– Experience & qualification of CRO personnel varies widelyo Educational backgroundo Therapeutic area experienceo Duration of monitoring experienceo Trainingo Accreditation (e.g. ACRP, SoCRA)
– Study personnel change frequentlyo Turnovero Moving people around
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Managing Personnel
― Sponsor should retain the right to approve at least key study personnel, including additional or replacement personnel added during the course of a study
– Sponsor access to study team training records
– Consider specifying training requirements for the study team, including any replacement personnel
– The cost of study-specific training of study personnel is typically included in the budget
– Training of replacement personnel should generally be allocated to the CRO
– Institutionalize communication and systems to reduce dependence on merely outstanding people
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Topics
1. ABCs of CROs2. Planning3. RFP and Due Diligence4. Contracting5. Execution of Work
a. Red Flagsb. Communicationsc. Dispute resolution
6. Evaluation
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Watch for Red Flags
– Selection of inexperienced investigators by the CRO
– Questions from study site directed to sponsor– Inadequate monitoring reports– Enrollment of patients who don’t fit criteria– Higher screening-to-enrollment ratio at one site
than others– Failure of CRO to submit monitoring reports
promptly after visit– Frequent rescheduling of meetings and reports by
CRO– Delays in cleaning up CRFs– Changes in CRO personnel– Unscheduled request for payment by the CRO
Vogel
46
Strategy for Avoiding Delays
– Efficient change order process– Also need good communication more
generally– And a good process for conflict
resolution, that escalates it up three steps before the conflict goes to the lawyerso CRO needs to agree contractually to not
unreasonably refuse a change order
47
Topics
1. ABCs of CROs2. Planning3. RFP and Due Diligence4. Contracting5. Execution of Work
a. Red Flagsb. Communicationsc. Dispute resolution
6. Evaluation
48
Managing Communications
– Poor communication is often cited as a prime reason for frosty relations between CRO and Sponsors o CRO contract should contain an express
liaison provision establishing a point of contact for each party
o Provide for basic joint committee structure
o Consider including list of all key operations, billing and legal personnel as part of MSA or SoW (link to change of personnel provision)
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Preferred Provider Agreement Relationship Management Model—Joint Committees
Project Team 1
Project Team 2
Project Team 3
Project Team 4
Governance/Steering Committee (VPs)
Operational Committee (Directors)
Thomis & Desai
50
Speaking The Same Language
– Define systems and expectations up front– Joint committees of designated people by title– Weekly, monthly and quarterly meetings with
the clinical and operations project teams– Discuss at team level
o Operational issueso Quality/compliance issueso Metrics reviewo Cost vs budget
– Escalate as appropriate to operational and steering committees
– Periodic comprehensive reviews by operational and steering committees
– Other Communicationso Establish systems that identify and track key
issues and their resolutiono Keep other key stakeholders informed
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Topics
1. ABCs of CROs2. Planning3. RFP and Due Diligence4. Contracting5. Execution of Work
a. Red Flagsb. Communicationsc. Dispute resolution
6. Evaluation
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Proactively Avoiding Disputes
– Obviously write a clear contract– Payment Terms
o The CRO must remain cash neutral: not a bank
o Clearly define “delivery” and “completion”
o Sponsors should negotiate payment for performance, including milestones and deliverables
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Resolving Payment Disputes
– Make delivery of data independent of paymento Why? This is the reciprocal of a common
request by a CRO to include limitations on liability, such as limiting damages to contract price, not actual damages due to delay, etc.
o If the CRO does withhold data to secure payment, the CRO opens itself up to actual damages—the limitation is lost.
– This dovetails with the termination provision, which might for example require 10 days notice during which the contract is still valid.
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Topics
1. ABCs of CROs2. Planning3. RFP and Due Diligence4. Contracting5. Execution of Work6. Evaluation7. Take Aways
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Post Study Learning
– How did the CRO perform? Look at final metrics.
– How did other third parties perform?– How did the sponsor perform?– What unexpected risks were there, and how
can they be better managed in the future?– How can operations be improved, including
communication?– Channel that learning back to the
contracting and operations units
56
Topics
1. ABCs of CROs2. Planning3. RFP and Due Diligence4. Contracting5. Execution of Work6. Evaluation7. Take Aways
57
Take Aways
– Establish realistic objectives and expectations– Understand your internal capabilities and advise the
other party accordingly– Budget early– Establish clear lines of communications between
parties and identify contract liaisons– One size does not fit all; make CRO selections based
on specific needs of each trial – Use contract templates with caution
o Do templates contain party’s wish list or minimum requirements?
– Review/update templates periodically, particularly MSAs
Questions?