Does using a CRO reduce site profits?

By Kirsty Barnes

- Last updated on GMT

Related tags Contract research organization Clinical trial

Are profits for clinical investigative sites reduced by the
presence of a contract research organisation (CRO)?

According to Thomson CenterWatch's '2007 Survey of Investigative Sites in the US', 62 per cent of US investigative sites believe that, compared with three years ago, profit per clinical study grant is "getting worse".

This is despite the fact that industry grants per trial have risen $10,000 (€7,300) since 2004 to an average of $39,348.

Of the 37 sites interviewed, 74 per cent indicated that when a CRO is involved in a clinical study, as opposed to those done directly with the study sponsor, the profits per clinical study grant are "somewhat" or "substantially" lower.

Salaries were revealed as the biggest drain on profit, being by far the highest site expenditure, comprising 69 per cent of the total.

This picture ties in with a research report published last year by Cutting Edge Information, which fingerpointed rising CRO and investigator fees as largely contributing to the skyrocketing cost of new drug development.

According to survey data published by the market research firm, big pharma industry executives rated vendor fees 4.1 and investigator fees 4.0 out of 5.0 as having the highest impact on clinical development costs.

Commenting on the CentreWatch findings, Alan Morgan, president of Icon Clinical Research, Europe, told Outsourcing-Pharma.com that CROs typically have no vested interest in the revenue of profit streams from grants, other than potentially charging a fee to administer the physical payment of grants.

"It is therefore surprising that the perception from the survey is that the involvement of CROs suppresses the size of grants, as there is indeed a real incentive from a CRO perspective to ensure that sites are appropriately remunerated for the work they do," said Morgan.

"This ensures that sites are motivated to participate in a particular trial when there are so many competing trials on offer in many countries for sites with a background and reputation for performing high quality work."

Morgan added that the data may suggest that there is more of a continuing trend of sponsor companies trying to maximise the work they can achieve within a given budget.

"Whilst we have no data to substantiate this, we certainly hold the view that it would be a false economy to penalise sites.

Our philosophy is to try to ensure that we make appropriate recommendations to sponsors in respect of grants to ensure that investigators are properly compensated for the work they do.

We have no financial vested interest in lowering the grant values."

Meanwhile, the survey pinpointed contract and budget negotiation and approval as the greatest cause of study delays, with this cited as the number one reason by 38 per cent of investigative sites in the US (n=522) and 47 per cent in Europe (n=306).

"This finding is consistent with our own experience of the bottlenecks that can occur in study start-up across many countries," said Morgan.

"CROs are typically dependent upon a client's decision as to the amount of control that is delegated to the CRO in respect of the value of the grant; the legal wording of the agreement; and the mechanism for paying the grants.

In an ideal world CROs tend to want to gain as much control over the discretionary elements in order to eliminate the delays in study initiation that can impact on the clinical trial schedule."

Meanwhile, the survey revealed that in the pool of investigative sites interviewed for, 62 per cent of all industry sponsored studies now have a CRO involved.

93 per cent of respondents indicated that lack of available internal resources was a factor in the choice to use a CRO, while only 19 per cent said that a comparison of the financial implications, of in-house vs. outsourcing, prompted the decision.

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