pharma-cro relationships managing risk a lawyer\'s view

$: Pharma-CRO Relationships Managing Risk A Lawyer\'s View$
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

3

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

4

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

5

CROs v SMOs

Sponsor

Sponsor’s Agent (CRO)

Researcher’sAgent (SMO)

Research Site/

Investigator

6

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

7

Topics

– ABCs of CROs– Planning– RFP and Due Diligence– Contracting– Execution of Work– Evaluation– Take Aways

8

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

9

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

10

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

11

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

12

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


Portion of Transfer of Obligations form:

13


– 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

14

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

15

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

16

Topics

– ABCs of CROs– Planning– RFP and Due Diligence– Contracting– Execution of Work– Evaluation– Take Aways.

17

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?

18

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

19

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

20

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

21

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

22

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

23

Topics

1. ABC of CROs2. Planning3. RFP and Due Diligence4. Contracting



24

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

25

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

26

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

27

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

28

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

29

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

30


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

31


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

32

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

33

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

34

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)

35

Topics

1. ABCs of CROs.2. Planning3. RFP and Due Diligence4. Contracting



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)

37

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

38

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

39

Topics




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

41

Topics




42

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

43

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

44

Topics

1. ABCs of CROs2. Planning3. RFP and Due Diligence4. Contracting5. Execution of Work

a. Red Flagsb. Communicationsc. Dispute resolution

6. Evaluation

45

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



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)

49

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

51

Topics



6. Evaluation

52

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

53

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.

54

Topics

1. ABCs of CROs2. Planning3. RFP and Due Diligence4. Contracting5. Execution of Work6. Evaluation7. Take Aways

55

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?

pharma-cro relationships managing risk a lawyer\'s view

Documents