So much of what we do and how we work runs in cycles, and if you stay in any role or industry long enough you will see the same (or slightly tweaked) ideas and ways of working falling in and out of fashion.
The world of pharmaceutical development and clinical outsourcing is no different.
Having been in the pharmaceutical industry for over 25 years, I have seen my fair share of this, such as the strategy shifts from full-service to preferred providers, to FSP and strategic “partnerships” and back again, often without giving each the time to really embed and deliver value, or within companies the merry-go-round of switching from one supplier to the next following a perceived negative experience.
One of the major shifts which took place around 10-15 years ago was the incorporation of specialist clinical outsourcing teams into the wider procurement organisations and the application of standard procurement best practices onto the process.
Having been involved in this transformation at more than one major pharmaceutical company, it appeared to me that the focus shifted from being part of the team actually delivering the clinical trial to being one step removed. When one moves from being in the thick of the action to a support role behind the scenes, your priorities and goals become different and sometimes divergent. We in clinical sourcing changed from being responsible for finding the right solutions for the programme to identifying the “best” vendors for the company, more often than not based on price, with much less accountability for successful delivery. We shifted from delivering value to delivering savings.
As this movement took hold across large pharma companies, it opened up many opportunities for procurement professionals from other industries to apply their expertise, insights and skills to the clinical development environment. But as a result, this skill set was prioritised over strong clinical development understanding.
Please don’t misinterpret any of my opinions here. I have a huge amount of respect for my procurement friends and colleagues and there is a massive amount of good practice that we should be applying to the practice of “outsourcing services”, however, I do feel that some aspects, associated with the successful prosecution of clinical trials, have been lost as a result of this shift in strategy.
The most important of these was the ability of a sourcing manager, who genuinely understands what is happening with a particular study, vendor or issue, to use their relationships to find solutions (sometimes behind the scenes) to operational issues. A regular part of my role in the past, when closely supporting teams, was to be another route of communication to the CRO about niggles and seeds of problems that I was beginning to hear within the internal team (often without their knowledge). By communicating on these through my own channels, using my own relationships with the companies and suggesting potential remedial actions, many small problems were nipped in the bud.
Now that we’ve lived through a couple of “industrial generations” with this way of working, however, the expected perceived role of sourcing being a support role and not an integral part of delivery has become fairly entrenched from the largest to the smallest companies. I’ve had multiple conversations with key stakeholders of small and emerging biopharma companies, including CEOs, CMOs, Heads of Development and Heads of Clinical Operations. When I’ve asked them why they don’t have an expert managing their vendor selection process, the answer has commonly been a variation on the theme “we’d like to have a procurement person, but with limited funds, we need to invest and focus on operational delivery”. This starkly demonstrates my point – the perception of the sourcing professional is one of “nice to have” rather than real “value add”.
So why has this come about? As mentioned above, I feel the prevailing direction of the industry for the last 10-15 years has been one of driving down costs and holding CROs accountable for delivery. The focus is on units, price, delivering to the contract and (dare I say) penalties should that not happen. It has become very process and numbers oriented; the human element and the importance of focusing on the relationship have been lost.
So, it was with something of a wry smile that I sat at a conference earlier this year and listened to a number of speakers extolling (as if it was a new concept) the benefits of ensuring that good buying knowledge is complemented with an understanding of clinical development and what the internal customers really need, as opposed to what they say they want. It feels like the pendulum is slowly swinging back again.
The prime problem that has beset the delivery of clinical development has been the ongoing and pervasive lack of trust between the parties. I feel that this has been exacerbated through the commoditisation of service purchasing, at the expense of long-term relationship building. We use the term “partnerships” with disturbing frequency. But if we truly examine our CRO to sponsor relationships and ask ourselves “do we really work in partnership?” the overwhelming answer, from the many people I’ve spoken to, is “no”.
Unfortunately, history has been against us in this regard, and high-profile failures and repeated (perceived) poor performance across the industry have only magnified the impression that CROs cannot be trusted to deliver on their promises and commitments.
I came across the following quote about the impact of low trust in a book focused on relationship selling, and it really resonated with me:
“When buyers do not trust sellers, they hide and protect vital information and restrict personal contact. Sellers have to guess what would actually work for the client and often guess wrong. This reinforces the perception that sellers can’t be trusted, and dissatisfied buyers then create bigger hurdles. Sellers acquiesce and either go along with things that do not make sense… or chose to withdraw”.
For me, this sums up pharma/CRO relationships very well. We have a massive trust issue, and it’s reaching breaking point. I’ve heard of a number of suppliers who, when receiving RFPs from certain companies, are making the decision (because of negative prior experiences) not to bid, or in one very extreme case writing back with the request that they “never send us another RFP ever again”.
How does that impact the pharma companies? Some of my personal observations include:
- Low trust makes interactions adversarial from the start.
- Poor scoping and communication lead to poor proposed solutions and inaccurate cost projections.
- Major decisions are based on flawed and erroneous information.
- Failure to deliver and meet expectations is built in.
- “Master and servant” attitude to management and oversight.
- Oversight models are focused on finding mistakes; demotivating service providers and further reducing trust.
The typical response from pharma is to double down with more oversight, more measurement and more micromanagement. This in turn disenfranchises the CRO delivery team still further and we enter the death spiral of the relationship.
Throughout my career in clinical and product development, I have tried to focus on the relationship between the companies I work for and work with:
- Focused on ensuring that there is mutual understanding.
- Facilitating conversations so that there are open discussions on whether it makes sense to work together, and what success looks like for both parties.
- Driven to achieve the right result at the right value, not the lowest price.
- Advocate for the supplier and sponsor of choice mentality.
This has been primarily driven purely on the basis of “because that makes sense to me” – it seems like the right thing to do.
Recently, however, I was introduced to some research that has been done over the past 10+ years. Through this research, the team “seek to explain why some relationships between project clients and contractors are managed in such a way that leads to success and others are not”. 2 The stated aim has been to contribute to “advancing knowledge in the management of relational risk…focus[ing] on how the relationship between client and contractor contributes to project success.”.
They identified that the following areas have the most impact on whether a project will be a success or failure:
- Degree of goal conflict.
- Degree of opportunistic behaviour.
- Degree of information asymmetry.
- Level of trust.
- Level of information to verify contractor performance.
- Level of concealment of negative outcomes.
For me, the outcome of this research validated my historic approach and explained how behaviours and relationships can have a tremendous effect on the ultimate outcomes of a clinical trial. It also demonstrates, in my opinion, why the sourcing manager can have such an important role in this process as they are perfectly placed to help articulate needs, set shared goals, document decisions, manage conflict and build trust… provided they are close enough to the project and the team.
As a real example, from my personal archive of experience, to demonstrate this, when working with the CMC department for a major pharma company, one of the preferred providers for analytical research and development activities showed a marked downturn in their performance levels, quality and attitudes. The initial response from the business was to drop them from the vendor pool and cease ongoing work. By investing more time in the relationship, and using the principles outlined above to address the relationship issues, within six months the supplier was outperforming the competitors on all KPIs and we achieved a 20% reduction in proposed costs without impacting the profitability of the service provider.
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Are you looking for procurement solutions in the clinical and life sciences industry from specialists that truly understand your business? Get in touch with Rob Aitchison, Head of R&D Outsourcing Advisory at 4C Life Sciences, has over 25 years of experience in the pharmaceutical industry across clinical development and CMC, primarily in outsourcing and business-to-business-facing roles.
