Pharmaceutical Outsourcing’s New Frontiers

Pharmacovigilance and Clinical Data Management

By Vicki Tauscher Phelan and Charles Arnold
EquaTerra

As companies in the pharmaceutical industry continue their drive to reduce costs and enhance efficiency by outsourcing various processes, they are increasingly pursuing newer areas, specifically pharmacovigilance and clinical data management.

Compelled by both external market factors and internal pressures to constrain costs and enhance shareholder value, pharmaceutical firms are turning to these two areas as they seek ways to maximize the resources devoted to their core activities, R&D and getting drugs to market. Shifting this type of work to offshore locations helps them meet that goal.

What may be one of the first significant pharmacovigilance and clinical data management outsourcing deals in the industry was the Bristol-Myers Squibb agreement with Accenture, announced in March, in which the work is being done in India.

Both pharmacovigilance and clinical data management are expensive work, yet because they are process-driven, they are strong candidates for alternative delivery models. The work involves highly-skilled individuals, from registered nurses to specialist doctors who are performing relatively clerical functions, such as sifting through data and probing case reports; but despite the clerical nature of the work, it requires such a high level of expertise that a company must pay dearly for it if the work is done domestically.

The requirements, and the stakes, of this kind of work continue to rise. Each new drug is put under great scrutiny, exacerbated by negative news coverage. The volume of events to be reviewed and addressed is going up at an incredible rate, and of course, so is the cost.

BPO vs. CRO

Because pharmacovigilance is a relatively new function in terms of outsourcing, there are not a large number of providers currently able to do the work. Essentially, there are two classes of providers capable of moving strategically, and quickly, into this space:

• The traditional contract research organizations (CROs), those companies focused on drug development and managing trials through their various steps and processes. These companies, such as Quintiles, Covance, and MDS Pharma Services, are well suited to step up and address pharmacovigilance. From a staffing perspective, they have the right ingredients, with doctors on staff who are focused on the relevant processes.

• The more traditional business process outsourcing (BPO) organizations, particularly those based entirely in India. Examples are Cap Gemini, Tata Consultancy Services, Infosys, and Keane.

India is the most obvious choice for offshore outsourcing of these processes. India-based operations have excellent language skills, good education, and a large number of doctors who are looking for higher-dollar work in a related field. This is another instance in which what is considered in India to be expensive, high-dollar work is, by U.S. standards, inexpensive.

While pharmacovigilance and clinical data management processes can be performed in offshore locations other than India, India’s stability makes it the most appealing locale, as evidenced by the Bristol-Myers Squibb deal. The nature of this work makes it a conservative, risk-management function where extreme care and caution are essential.

Why BPOs Have an Edge

The Bristol-Myers Squibb pharmacovigilance and clinical data management outsourcing deal, as well as the recent outsourcing of clinical data management by GlaxoSmithKline to Tata Consultancy Services, both went to well-established BPO organizations. It is these organizations that are actively recruiting the right people to fill both current and future needs. These providers see that while these areas are somewhat of a niche, they still represent a potentially lucrative market space. They are ramping up their hiring not only of practitioners, but also of the skilled individuals to run the operations.

While CRO organizations at this point are better equipped from a technical standpoint, what they lack are some of the things that make large pharmaceutical organizations most comfortable. While they do have the name brand and a record of established stability within the pharmaceutical industry, in most cases they lack the scale that gives clients the impression that they can ramp up to meet the needs of a huge global account. Even in cases where they do possess the scalability, they are having a difficult time convincing huge potential clients of that fact.

CROs bidding for the additional business are doing so with fees roughly comparable to the large BPOs. This takes the cost issue off the table and ends up pitting them against the BPOs on the “soft” questions such as such as scalability, stability, knowledge transfer, and other areas where they can’t compare with the large, familiar BPOs. However, it is important to note that the CROs are working very hard to close that gap and compete at every level for pharmaceutical firms’ business.

Navigating the New Territory

These newer migrations to outsourcing are quite different, from several perspectives, for a pharmaceutical company considering them. From a sourcing process viewpoint, the current pharmacovigilance and clinical data management landscape is similar to the early days of human resources and finance and accounting outsourcing, when the work was not yet commoditized. Because companies, both pharmaceutical firms and service providers, are contracting for an evolving process, it is harder to forge an agreement due to the difficulty of developing a concrete statement of work.

The relationship, by necessity, becomes much more focused on trust and flexibility. Certainly, the agreement can address specific service levels or performance guarantees, but it must also build in other forms of measurement and management, more qualitative than quantitative.

Governing this type of relationship will also be more cooperative between the company and service provider. Often, there will be one or more individuals from the company working on-site in the provider’s facility, on a daily basis. These individuals will serve a two-fold purpose; one is the day-to-day management of the pharmacovigilance or clinical data management function, the other is to serve as a conduit to the company’s governance team.

The qualitative observations of these individuals will form the basis of the company’s evaluation of the service provider. While some baseline comparisons are possible between the performance of the service provider’s teams with what was done in the past by the company itself, they can only be a starting point due to the rapidly evolving nature of the pharmacovigilance and clinical data management processes.

At the point of selection of a service provider, more emphasis must be placed on the levels of training each provides to its people, scalability, and the comparative rates of turnover. These are key areas that affect not only the choice of service provider, but the shape of ongoing governance.

For these reasons, pharmaceutical companies are making much more use of outside resources as they craft agreements with service providers, build their governance organizations, and manage the agreement over time. Outside advisors with expertise in the market, the nature of the work, and the legal aspects of the relationships are being used extensively both by pharmaceutical organizations and service providers.

Some companies first achieve a comfort level in outsourcing (in areas such as IT, human resources, finance and accounting, procurement, etc.) and then deal directly with their existing providers or additional providers to expand agreements or forge new ones. However, pharmaceutical companies, even those who outsource heavily in other areas, still feel they are treading on new ground when it comes to pharmacovigilance and clinical data management outsourcing.

Conclusion

The outsourcing of pharmacovigilance and clinical data management is a trend that is clearly gaining momentum, as pharmaceutical companies reach deeper into their business processes to reduce costs and enhance performance. We should expect significant acceleration now that the trend-setters are falling into place. As the BPO organizations broaden their footprint in these types of deals, and the CROs strive to compete with the BPOs on equal footing, both types of provider organizations will enhance their operations with the right people. As a result, each successive deal becomes that much easier to win.

About the authors:
Vicki Tauscher Phelan is EquaTerra’s pharmaceutical practice lead, guiding clients in service delivery strategies. She has more than 20 years of expertise in IT, consulting, and outsourcing.

Charles Arnold is EquaTerra’s managing director in the pharmaceutical practice. He has more than a dozen years of consulting and financial management experience, with a particular focus on business and IT strategy.

Pharmaceutical Processing
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