William Norman Birkett

1. I do not object to people looking at their watches when I'm speaking.But I strongly object when they start shaking them to make sure they are still going. William Norman Birkett

2. February 26, 2008 Sponsor-CRO Relationships: Managing Risk Bradley Merrill Thompson

3. Topics • ABCs of CROs • Planning • RFP and Due Diligence • Contracting • Execution of Work • Evaluation • Take Aways I feel like Zsa Zsa Gabor’s fifth husband. I know what I'm supposed to do but I don't know if I can make it interesting. Al Gore

4. It’s good to know the basics

5. What is a Contract Research Organization? • FDA Definition: A CRO is a person that assumes, as an independent contractor of the sponsor, one or more obligations of the sponsor, such as design of the protocol, selection of the research site(s), monitoring of investigators, evaluation of the study data, and/or preparation of materials to be filed with the FDA. See 21 CFR §312.3(b) • ICH Definition: – A CRO is a person or an organization (commercial, academic, or other) contracted by the sponsor to perform one or more of a sponsor’s trial-related duties and functions. See GCP §1.20

6. SMOs Defined • What is a Site Management Organization (SMO)? • A person that is retained as an independent contractor of the principal investigator or research site to provide administrative support of the conduct of the study, such as recruitment of the subjects, collection and preparation of the study data and reports for submission to the sponsor. • A CRO may perform SMO functions • Definition based on agency relationships

7. CROs v SMOs Sponsor Sponsor’s Agent (CRO) Researcher’sAgent (SMO) Research Site/ Investigator

8. CRO Industry • CRO industry is booming, taking a larger piece of worldwide R&D expenditures -- $14 billion by CROs in 2005 • The industry is fragmented with over 1000 CROs, including: • A small group of large, full service multinational entities representing 50% of worldwide CRO revenue • The remaining CROs being small to mid-sized entities providing a more limited menu of services, including: • Niche CROs providing services in a limited geographic region or on a specific disease state or therapeutic model

9. Topics • ABCs of CROs • Planning • RFP and Due Diligence • Contracting • Execution of Work • Evaluation • Take Aways I've often wondered how some people in positions of this kind . . . manage without having had any acting experience. Ronald Reagan

10. CRO Clinical Trial Services • Protocol development • Site/Investigator recruitment and selection • Personnel training • Clinical trial management • Quality assurance and site monitoring • Data analysis • Medical writing • Processing and preparing regulatory filings and liaison with regulatory bodies

11. Potential Advantages of CROs • Reduce: • Time needed to develop and commercialize a new drug • Sponsor’s fixed costs associated with personnel, equipment and facilities needed for its R&D function • Provide: • Ready access to needed expertise and/or technology • Greater access to potential investigators • Knowledge of regulatory climate in foreign markets

12. Potential Risks of Outsourcing to CROs • Risks generally associated with reduced control of the clinical trial process by the Sponsor • Risks include: • Delays in completion of studies • Lost or poor data • Regulatory infractions produce indirect consequences • FDA regulations/GCPs • HIPAA • Fraud and Abuse • Private litigation exposure

13. Weighing risk can be tricky

14. Delegation of Authority to CRO • Sponsors may transfer regulatory obligations to a CRO • Must describe in writing – usually this is done in a written Transfer of Obligations form • If not all are transferred, specify which ones are and which ones are not • Any regulatory obligation not expressly delegated remains the responsibility of the Sponsor • CROs that assume regulatory risk for delegated areas

15. Delegation of Authority to CRO Portion of Transfer of Obligations form:

16. Delegation of Authority to CRO • CRO may have key roles and responsibilities pertaining to regulatory responsibilities, even when obligation is not “transferred” to CRO • Example: Adverse Event Reporting • Sponsor retains responsibility to report to investigators and FDA • CRO may still be responsible for: • Reporting AEs to Sponsor • Drafting AE descriptions • Providing summary reports of AEs • Following up with sites to ensure complete AE information is obtained • Safety database maintenance and/or reconciliation - These responsibilities should be described in the Work Order

17. Traditional Pattern of Outsourcing Integration Strategic Alliance • Shares common goal/objectives • Engages in joint strategic planning • Forms relationship-based structure • Makes open-ended agreements • New business forms Partnership • Incorporates client into strategic planning • Assigns dedica70 • ted relationship management • Makes directed investments • Builds collaborative mechanisms Preferred Supplier Transactional • Establish core team • Builds collaborative mechanisms • Develops understanding of client’s customers • Responsiveness to requests Source: August 2004, Goldman Sachs Research

18. Checks and Balances

19. Topics • ABCs of CROs • Planning • RFP and Due Diligence • Contracting • Execution of Work • Evaluation • Take Aways. Politics gives guys so much power that they tend to behave badly around women. And I hope I never get into that. Bill Clinton

20. CRO Selection • Business and legal risks will be minimized when the Sponsor-CRO relationship is based on open communication and trust • Imperative that Sponsor adopt a CRO selection process that assesses: • Expertise: Does the CRO have the expertise to undertake duties Sponsor desires? • Compatibility: Can the CRO fulfill its duties in manner that is compatible with the Sponsor (i.e., is there a good fit)? • Capacity: Does the CRO have the ability to commit the manpower and resources needed in the Sponsor’s timeframe? • Price: Does the CRO provide services at same price as competitors? If not, what added value is being offered?

21. CRO Selection • Sponsor usually conducts an RFP process tailored to the specific trial at hand • Sponsor’s due diligence should include: • Web research • Public directories • Careful analysis of Responses to RFP • Interviews with operational leaders • Site visits • Information gleaned by Sponsor during the CRO selection process should be communicated to counsel to ensure that CRO’s verbal claims are reflected in the CRO contract

22. QA Questions to Ask • How does the CRO measure quality? • What CRO processes are in place to continually monitor quality? • What is the size of the CRO quality assurance (QA) department? • What internal QA procedures are in place? For example, does QA audit studies independent of sponsor-CRO contract, as part of internal CRO quality control? Winther

23. Quality is important

24. Topics • ABC of CROs • Planning • RFP and Due Diligence • Contracting • Risks to manage • Metrics • 3rd Party Agreement • Change Orders • Staffing Issues • Execution of Work • Evaluation • Take Aways

25. Expect the Unexpected

26. Common Project Risks • Inefficiency and quality issues from staff changeover • Delays in obtaining regulatory approvals • Delays in site initiation • Delays with patient recruitment • Difficulties with the management of clinical trial supplies • Issues with vendors • Delays with the processing of CRFs • Utilization of resources at a level that exceeds the budget

27. Factor Most Often Causing Study Delays United States Source: Thomson CenterWatch 2005 Survey of 612 Investigative Sites in the U.S.

28. Topics • ABC of CROs • Planning • RFP and Due Diligence • Contracting • Risks to manage • Metrics • 3rd Party Agreement • Change Orders • Staffing Issues • Execution of Work • Evaluation • Take Aways

29. Metrics--Why Measure? • Performance management requires metrics to: • Create alignment and focus • Assess and manage risk • Inspire/motivate people • Create accountability for those responsible • Learn lessons regarding what works • Reduce subjectivity and political bias in decision-making • Maximize data quality • Ensure timelines • What gets measured, gets done • What does not get measured, may not get done

30. CRO and Sponsor Relationships • Transparency of performance builds trust • Assures alignment on study quality • Provides the tools for proactive and focused management of issues early so they don’t become bigger problems • Allows for shared consensus on steps for resolution • Celebrating successes provides positive reinforcement and motivation

31. Metric Creation Metric Use Feedback Critical Success Factors Key Performance Indicators Specific Performance Indicators Senior Committee Discussion Feedback & Adjustment Junior Committee Discussion CRO Engagement Measurement Analysis Planning RFP and Due Diligence Execution of work Contracting Evaluation Metrics in a CRO Relationship

32. Make metric development collaborative

33. Key Metrics for Early Identification of Project Risk • Clinical Operations • Start-up metrics • Enrollment metrics • CRF backlog • Data Management • Data entry • Data review • Data quality Varawalla

34. Example Metric Definition Table Cuddigan & King *All days specified are elapsed time

35. Example Metric Definition Table, contd. *All days specified are elapsed time Cuddigan & King

36. Example Metric Definition Table, contd. Cuddigan & King

37. Example Metric Definition Table, contd. Cuddigan & King

38. Metric Creation Metric Use Feedback Critical Success Factors Key Performance Indicators Specific Performance Indicators Senior Committee Discussion Feedback & Adjustment Junior Committee Discussion CRO Engagement Measurement Analysis Planning RFP and Due Diligence Execution of work Contracting Evaluation Metrics in a CRO Relationship

39. How Do We Use Metrics? • Just as you would internally, for performance management: • Create alignment and focus • Assess and manage risk • Inspire/motivate people • Create accountability for those responsible • Learn lessons regarding what works • Reduce subjectivity and political bias in decision-making • Maximize data quality • Ensure timelines • Dispute Resolution (later) • Contractually in a few cases • Contractual management process and dispute resolution • Contractual rewards • Contractual penalties

40. Utility in Managing Sites Compare sites on the basis of: • Subjects (overall enrollment, enrollment per month, screen fail rate, dropout rate) • Start up (contract completion time, document completion time) • Data (query rate, query completion time) • Money (overall cost per patient, advertising cost per patient) If one morning I walked on top of the water across the Potomac River, the headline that afternoon would read "President Can't Swim." Lyndon Baines Johnson

41. Topics • ABCs of CROs. • Planning • RFP and Due Diligence • Contracting • Risks to manage • Metrics • 3rd Party Agreement • Change Orders • Staffing Issues • Execution of Work • Evaluation • Take Aways The pure and simple truth is rarely pure and never simple. Oscar Wilde

42. DSMB, MRC, etc SPONSOR Services Agreements CTA CTA CTAs CRO* INSTITUTION/ CLINICAL SITE *Contracts on behalf of sponsor (donated by dotted line) INVESTIGATOR Blue = CTA Orange = Service Agreement Green = Regulatory “agreement” Informed Consent 1572 **May or may not be a written agreement - depends on whether IRB is commercial, local, centralized, etc FDA SUBJECT IRB** Third party vendors (e.g., labs)

43. Ability to Bind Sponsor to CTAs • Sponsor may want CRO to handle CTAs because of: • Speed • Cost • Strength of CRO’s relationships with research sites/investigators • However, sponsors may have problems with CROs protecting sponsors’ interests • CRO sometimes want to get contract in place quickly and not expend resources in lengthy negotiations • CRO may not have adequate legal expertise

44. Ability to Bind Sponsor to CTAs • If CRO is allowed to contract on the sponsor’s behalf, contractual controls can help protect sponsor’s interests • Range of Possibilities • CTA template • Sponsor provides template for CRO use • CRO provides CTA template for Sponsor review and approval • CRO authority to negotiate • Only extends to certain provisions • CRO must submit all changes to Sponsor for review and approval • Notification of changes and amendments

45. Topics • ABCs of CROs. • Planning • RFP and Due Diligence • Contracting • Risks to manage • Metrics • 3rd Party Agreement • Change Orders • Staffing Issues • Execution of Work • Evaluation • Take Aways

46. Change Orders • Typically, the SoW sets forth the particular services to be provided by the CRO to the sponsor • Additional services beyond those in the SoW are generally subject to a “change in scope” or “change order” that modifies the agreement and increases the total cost of the project • Some sponsors have negotiated a shift of the risk of cost overruns to the CRO absent an executed addendum setting forth the change of scope and any additional charges for these services

47. Topics • ABCs of CROs. • Planning • RFP and Due Diligence • Contracting • Risks to manage • Metrics • 3rd Party Agreement • Change Orders • Staffing Issues • Execution of Work • Evaluation • Take Aways

48. Personnel • Experience & qualification of CRO personnel varies widely • Educational background • Therapeutic area experience • Duration of monitoring experience • Training • Accreditation (e.g. ACRP, SoCRA) • Study personnel change frequently • Turnover • Moving people around

49. A lot of the rules are obvious

50. Managing Personnel • Sponsor should retain the right to approve at least key study personnel, including additional or replacement personnel added during the course of a study • Sponsor access to study team training records • Consider specifying training requirements for the study team, including any replacement personnel • The cost of study-specific training of study personnel is typically included in the budget • Training of replacement personnel should generally be allocated to the CRO • Institutionalize communication and systems to reduce dependence on merely outstanding people