Clinical outsourcing spend down 20% on 2006

The “Streamlining Clinical Trials” study suggests that pharmaceutical firms have cut their spending on outsourced trials by around 20 per cent over the last two years, with the proportion of budget for Phase I studies being reduced from 65 per cent to just 35 percent over the period.

The authors argue that in the general climate of cost cutting sweeping the drug industry, companies “are not allowing [clinical trial] vendors the same free reign as in the past.” ​

They explain that increasingly drugmakers are insisting on milestone-based payment schemes or are only choosing to outsource clinical development when sufficient resources are not available in-house.

Lead author David Richardson went on to say that: “Companies are now realising that outsourcing does not necessarily make things easier, cheaper or remove a burden from their plate.”​

“Companies are being more frugal. Keeping things in-house grants easier oversight because institutional proximity, ensuring efficient and competent work, instead of spending the same time managing a CRO (contract research organisation),”​ added Richardson.

Cutting Edge believes that the considerable effort required to coordinate CROs, academic researchers, site managers, patient recruiters and clinical investigators is dampening drug firms enthusiasm for outsourced trials.

The researchers cite data suggesting that the average Phase I, II, and III trials exceed their timelines by 20 per cent and add that such delays can cost big pharma companies millions in potential sales.

While it is difficult to draw any long term conclusions from analysis covering only the last two years, the report’s conclusions are based on a proportion of overall drug industry budgets which suggest that the the decline may be a genuine trend. If correct, the opinions presented in the report do appear to suggest that the outsourcing boom may be starting to peak, at least in terms of clinical trials.

Conversely of course it can be argued that a drop in trial spending is simply a reflection of a reduction in the number of new products that are being developed as drugmakers focus on less costly activities such as extending the lifespan of already approved drugs in the face of the current global economic downturn.

Whatever the conclusion, it seems clear that factors such as missed timelines and clinical trial management difficulties do play a role in drug industry spending decisions.