Effective Vendor Oversight: A Fundamental Element of Drug Development

Of all the potential drugs being developed today, it’s likely no more than five percent will make it to market. On top of this high failure rate, complex protocols and stringent regulatory requirements--while necessary to ensure safety and efficacy—have greatly increased the burden of process, documentation and data collection. With an industry-wide spend of nearly $50 billion a year on outsourced services, almost all BioPharma companies depend on vendors to conduct some of their most complex and sensitive development activities. The operational and clinical expertise of those vendors is crucial to success.

Clearly, both sponsors and vendors care deeply about getting the maximum value from these relationships. But value is not the same thing as cost. Financial analyses can only give you one part of the picture. Sponsors also need to take a hard look at what they’re investing in vendor oversight.

For starters, many sponsors struggle with helping their internal staff make the transition from study management roles to performing vendor oversight. The ability to oversee outsourced activities in a way that delivers optimal performance while minimizing risk requires an entirely different set of strategies and skills than running a clinical trial. And once a sponsor internal team has the right training, they’re still going to need the metrics and leading indicators to proactively identify risk and reliably predict timelines and costs. Without these tools there is no way of knowing if the value being achieved meets the objectives that drove the decision to outsource in the first place.

Companies can use the following best practices to help ensure a maximum return on outsourcing investment:

• Start with the right contract. Make sure vendor agreements are fit for purpose. They should be clear about deliverables and expectations—and easily understood by the people who need to implement them. Then make sure they’re operationalized in a way that’s consistent with their original intent. What if a contract is out of date, or in practice those initial operating ideas just don’t work the way they need to? Consider renegotiating—it’s important to keep outsourcing contracts up-to-date with practices. Other industries do it all the time.
• Establish clear lines of accountability. Remember that regulators will evaluate the effectiveness of oversight against what you said you would be doing. Simplify as much as you can. Determine and clearly communicate who is in charge, who to go to with questions, who resolves conflicts, who approves deliverables and who approves changes to operating strategies.
• Document requirements and expectations. Though there may not have been a lack of vendor oversight in the pharmaceutical industry, there has been a lack of documentation. In the absence of documentation, there is no way to prove adequate oversight has taken place.
• Monitor performance. Establish in advance what successful deliverables will look like, how often they are expected and what interim measures of success are going to be evaluated. Use metrics and key performance indicators, not raw output, to measure progress against risk plans, quality plans, project plans and customer satisfaction criteria. Use audit techniques to evaluate quality.
• Communicate constantly. Sponsors should not assume a vendor knows what’s most critical if business drivers change, which happens more often than any of us would like. And be prepared to manage resource turnover, which means bringing new team members up to date. Proactively manage frustrations–they’re not going to go away if you ignore them. Most importantly, ensure all project staff are trained to use these standards. Otherwise, people typically default to the way they’ve always done things.
• Remain flexible. Encourage vendors to suggest alternative ways to get the job done. Make maximum use of their experience, but also continually assess the maturity of processes and the health of the relationship. If necessary, renegotiate critical terms in the contract to reflect newly established oversight practices.

Effective oversight begins with the realization that vendor resources are an integral part of the project delivery team. Appropriately conducted oversight is the most powerful tool a company can use to ensure the return on investment from outsourcing.

ISG’s Clinical Sourcing Advisory team provides the tools, benchmarks and expertise to help organizations assess and improve oversight of their drug development vendors. Please feel free to contact Frances Grote at frances.grote@isg-one.com for further information.

About the Author: Frances Grote has been in the Biopharma industry for over twenty years and has worked extensively in Clinical Operations, Vendor Management and Strategic Sourcing, building innovative provider partnerships at such companies as Bristol-Myers Squibb, Takeda and Biogen. She joined ISG in 2016 to lead their Clinical Sourcing Advisory practice, focusing on leading-edge approaches to maximizing the value of outsourced relationships for both the customer and the provider.