SUBSCRIBE

Breaking News on Contract Research, Manufacturing & Clinical Trials

Headlines > Clinical Development

Dispatches from DIA

Pfizer offers update on risk-sharing deals with Icon, Parexel

By Zachary Brennan , 30-Jun-2014
Last updated on 30-Jun-2014 at 11:25 GMT

Three years after Pfizer began strategic partnerships with CROs Icon and Parexel, and the companies are still ironing out differences and tweaking their relationships, Mark Sanders, senior director of global sourcing, told attendees at DIA’s annual conference.

But what’s common for both CROs is that they’re beginning to ramp up and accept the risks that are a part of their identical master service agreements. “We are really working with them on an asset level and give them a lot of autonomy to do things around the protocol, the lion’s share of the site selection, and it’s a lot more input than I’ve ever seen in the past,” Sanders said.

Pfizer also uses balanced scorecards for both CROs that measure about six metrics, Sanders said, noting that together “the most they can influence their bottom line is about 1% or 2%, which may not seem like a lot but when your net margins are 8% that can be a pretty significant chunk, though we have not applied that yet in our relationships.”

But what’s unique about these deals is the amount of autonomy the CROs have to make their own decisions about how best to meet the timelines set.

They’re responsible for meeting the timelines or throwing additional money at the projects at their cost – if they want to add sites or hire a recruitment company, these are things they can do to invest in a study – so it’s risky for both of us, we’re trying something new and not sure what the answer is yet,” Sanders said.

Real Risk Sharing

And what really defines a partnership is that they’re accepting risk – once they sign up for that, they do own a lot of that risk – if timelines go over, they’re held much more accountable than I’ve ever seen in the past,” Sanders added. “A lot of times, if they deliver early, they can keep some of the money on the table. But if they’re constantly leaving 20% of study budget on the table, that’s not going to work for us – there needs to be some balance.”

He also cautioned that because of the amount of work it takes to bring a CRO up to speed with a pharma behemoth like Pfizer, it’s unlikely that they’ll add any new CRO partners in the near future. “We have a significant amount of metrics that we oversee and that makes barriers high for other organizations to enter in,” Sanders said.

Working Together

And despite their competitiveness, Icon and Parexel are actually working together on some facets of the Pfizer work.

We share a lot more between the three parties than you can imagine, as they work together closely on joint initiatives, there’s a lot more transparency than in the past, though there are certain performance aspects that are kept quiet, such as data on their KPIs [key performance indicators],” Sanders said. Business terms of the CRO agreements are confidential but the master service agreements “are almost identical by design because we wanted them to be equally attractive…they do share a lot more data than I’ve seen in other types of relationships.”

Trial sites may also soon share risk, according to some, though currently even the concept of risk sharing is foreign among the vast majority of sites, Mark Lacy of Benchmark Research added. “It doesn’t reach that far down to them,” he said, adding, “What’s exciting is that it’s coming – they have to understand the concept.”

Service Model Impacts Risk

The type of service model also makes a difference in terms of how much risk can be shared between a CRO and a sponsor. Full service outsourcing typically makes risk sharing easier due to KPI-based payments, Sanders said.

We were in a functional service provider model for almost seven years and that had some benefits but that was probably the lowest risk put on providers – no exposure to risk,” Sanders said, noting that it was “a little too fragmented and if something went wrong it was difficult to find the source of the problem.”

Linda Strauss, a clinical consultant, added that often times in relationships, companies will have to choose between three major factors: the quality of a study, the timeline and how much money they can spend. “Pick two,” she said.

Subscribe to our FREE newsletter

Get FREE access to authoritative breaking news, videos, podcasts, webinars and white papers. SUBSCRIBE

Related products