1. Ken Dhimitri Vice President, Operations February 19, 2015
Sourcing Strategies in Clinical Development Which model yields the most cost savings?
Ken Dhimitri
Vice President, Operations
February 19, 2015
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2. Sourcing Strategies in Clinical Development Agenda
This presentation will answer four key questions…
Why develop a sourcing strategy?
What are your sourcing options?
How do sourcing options compare?
What are the keys to sourcing success?
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Why develop a sourcing strategy?
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Why develop a sourcing strategy? Trials subject to timeline slippage and cost overruns
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
1Tufts CSDD, "Tufts CSDD Press Release PDF," 15 January [Online]. Available: [Accessed Sep 2014].
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5. Why develop a sourcing strategy? Protocol Complexity Increasing2
00 – 03
04-07
08-11
Percent Change
00-11
Unique procedures per protocol
20.5
28.2
30.4
48%
Total procedures per protocol
105.9
158.1
166.6
57%
Total investigative site work burden (median units)
28.9
44.6
47.5
64%
Total eligibility criteria 31 49 51
58%
Median study duration in days
140
154
175
25%
Median number of CRF pages per protocol 55
180
176
227%
2Getz, Campo, Kaitin. Variability in Protocol Design Complexity by Phase and Therapeutic Area. DIJ (4);
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Why develop a sourcing strategy? Increasing regulatory burden and safety concerns
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 market3
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 quality3
3McKinsey, "The Business Case for Medical Device Quality PDF" [Online] Available: [Accessed Sep 2014
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7. Why develop a sourcing strategy? Revenue growth rates declining
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 At a rate of approximately 12% per year.5
5PwC, "Operating Performance in the Medtech Industry PDF" [Online] Available [Accessed Sep 2014]
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Why develop a sourcing strategy? Declining R&D efficiency warrants novel solutions
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
6Morgan Stanley, “The US Healthcare Formula Cost Control and True Innovation” [Online]. Available: [Accessed Sep 2014].
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Why develop a sourcing strategy? A changing device development landscape
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
8FDA, Device Approvals, Denials and Clearances [Online]. Available: [Accessed Sep 2014]
7 Jim Pomager, Med Device Online, “5 Tips For Successfully Outsourcing A Medical Device Clinical Trial” [Online]. Available: [Accessed Sep 2014].
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10. What are your strategic sourcing options?
Insourcing
Outsourcing
Functional Service Provider
Strategic Partnership
What are your strategic sourcing options?
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11. What are your strategic sourcing options?
Insourcing
Outsourcing
Transactional
Functional Service Provider (FSP)
Preferred Provider
Strategic Partnership
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12. What are your strategic sourcing options? Insourcing
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.
Control over personnel, processes, technology
“Perceived” quality improvement
High costs
Less favorable cycle time and overall timeline performance as compared to strategic outsourced models
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13. What are your strategic sourcing options? Insourcing
When to 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.
Who is most apt to use?
Mid-sized and large device companies who have over time acquired meaningful personnel, process and technology assets.
Why Use
Preference for control over cost-savings.
Need for control is strong enough to justify trade-offs against efficient task performance and value creation.
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14. What are your strategic sourcing options? Outsourcing (Transactional)
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.
Modest cost savings
Able to initiate projects and scale resources quickly
Less favorable cycle times and overall timeline performance
Some quality concerns
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15. What are your strategic sourcing options? Outsourcing (Transactional)
When to Use
Single or stand-alone trial (non-program level outsourcing)
Who is most apt to use?
Small and mid-sized device companies who lack personnel, process and technology assets.
Companies subject to M&A.
Why Use
Need for FTE support.
Modest to moderate cost pressures.
Competitive pressures to initiate human trials (investors/shareholders, competitive landscape).
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16. What are your strategic sourcing options? Functional Service Provider
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.
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
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17. What are your strategic sourcing options? Functional Service Provider
When to Use
When planning trials in emerging regions.
When internal vendor management capabilities are high.
Who is most apt to use?
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.
Why Use
Limited global reach (especially in emerging regions).
Limited in-house capabilities/expertise in a specific functional area.
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18. What are your strategic sourcing options? Preferred Provider
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.
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
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19. What are your strategic sourcing options? Preferred Provider
When to Use
When looking for a comprehensive outsourcing solution, but don’t have the time and/or resources to develop a full strategic partnership.
Who is most apt to use?
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.
Why Use
Cost savings.
Reduced Sponsor FTE requirements (no shadow resources / mirror teams).
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20. What are your strategic sourcing options? Strategic Partnership
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.
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
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21. What are your strategic sourcing options? Preferred Provider
When to Use
When vested in developing a comprehensive, long-term sourcing solution.
Who is most apt to use?
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.
Why Use
Most substantial cost savings.
Most substantial reduction in Sponsor FTE requirements.
Long-term sourcing strategy.
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How do strategic sourcing options compare?
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23. How do sourcing options compare? Cost Savings by Sourcing Model
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
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24. How do sourcing options compare? Reduced CRO/Sponsor Headcount Ratio
3-1 FTE ratio reduced to 15-1
Drivers of reduced FTE ratio
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
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25. How do sourcing options compare? Outsourced Models
Transactional Outsourcing
Preferred Provider
Strategic Partner
Initial Time Investment
None
Modest
Substantial
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 project
Focused on projects or a program
Focused on Therapeutic Area & Portfolio awards
Opportunity for Cycle Time Reduction
Some (particularly in contracting)
Substantial (contracting, start-up, enrollment, database lock, hand-offs between phases)
Shared Processes or Technologies
Limited/none
Substantial (focus on automation, integration and real time visibility to data)
Pipeline Visibility
Limited
Substantial 6+ mos lead time
Explicit Incentive Alignment
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
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How do sourcing options compare? Current trends in Medical Device Clinical Outsourcing
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
9Avoca Group, “Trends in Medical Device Clinical Outsourcing” [Online]. Available: [Accessed Sep 2014].
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27. What are the keys to successful sourcing?

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What are the keys to successful sourcing? Lessons Learned from Strategic Partnerships
Shared Vision
Robust Governance
Defined Oversight Model
Defined Acceptance Criteria
Informative Metrics
Early Engagement & Joint Operational Planning
Structured Financial Model
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29. What are the keys to successful sourcing? Shared Vision
Create a Shared Vision
What does each partner hope to gain from the relationship?
What contributions will each partner make to the success of the relationship?
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?
What underlying assumptions need to hold true for the partners to remain strategically committed to the relationship and its success?
Are there risks that individuals will lose from the alliance? Is the partnership seen as a personal threat (e.g., to anyone’s job). If so, how will these risks be mitigated?
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30. What are the keys to successful sourcing? Defined Oversight Model
At what altitude will you fly?
“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
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31. A Tale of Two Trials Comparative spend through Last Patient In
Sponsor A
Sponsor B
Sites 25 30
Subjects
185
220
Enrollment Duration
24 mos.
Sourcing Strategy
Transactional Outsourcing, Partially Insourced
Preferred Provider
Oversight Model
Shadow Resources, "Check with me"
Trust & Verify, Pre-defined Acceptance Criteria
Governing Processes
Sponsor/CRO Hybrid
100% CRO
Communication Plan
65 explicit requirements
3 standard definitions and a single escalation pathway
Sponsor/CRO FTE Ratio
1:2
1:12
CRO Service Fees
$6.25M
$5.32M
Sponsor Labor + Overhead (Est.)
$1.82M
$0.46M
Total Spend through LPI
$8.07M
$5.78M
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What are the keys to successful sourcing? Acceptance Criteria and Informative Metrics
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?
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What are the keys to successful sourcing? Early Engagement & Joint Operational Planning
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.
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34. What are the keys to successful sourcing? Financial Model
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
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Summary
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 organization’s 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.
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THANK YOU Visit BBA at or contact Ken at
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37. About Boston Biomedical Associates
Boston Biomedical Associates (BBA) is a full service product development consultancy and contract research organization (CRO) serving the medical device and biopharmaceutical industries.
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.
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38. BBA’s Service Lines Strategic Consulting Trial Management
eClinical Platform
Staffing Solutions
Product Development
Regulatory Strategy & Submissions
Regulatory Authority Liaison
Pre & Non-clinical
Clinical Study Design
Statistical Consulting
Quality System Assessment and Development
Protocol Design
KOL/PI management
Site Selection & Management
Clinical Operations
Monitoring
Medical Affairs
Data Management & Statistics
Safety, DMC & CEC
Medical Writing
Clindex EDC & CTMS
Imaging Core Lab Services (ICLS)
Integrated Project Metrics Dashboard (iPMD)
Functional Service Provider (FSP)
Contract Staffing for clients not ready to outsource full service projects
Product Development Expertise
Operational Expertise
Technology Expertise
Personnel Expertise
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