Sponsors' efforts to control the costs of using CROs Among respondents who could estimate the relative cost of using CROs, the prevailing view (66% of the respondents) was that CROs are more expensive than in-house resources. The category "26–50% more expensive" was most frequently cited (30% of the respondents). The vast majority of sponsors attempt to negotiate lower CRO fees, and "rate card" is the most frequently used technique (42% of the respondents). In addition to CRO fees, there is the in-house cost of managing the CRO. These costs are significant, as indicated by 61% of the respondents reporting that managing the CRO required more than 20% of the resources that would have been needed to conduct the study in-house. Despite the apparent concern of biopharmaceutical companies over CRO costs, 20% of the respondents could not estimate how CRO and in-house costs compare. Similarly, 22% of the respondents reported that they do not negotiate fees with CROs.

Discussion There are a number of key takeaways from our recent survey. Although sponsors still report mixed impressions about CRO service, quality, and costs, most sponsors are using CROs frequently for a wide variety of activities. Sponsors now believe their outsourcing practices are more strategic in nature, i.e., they are more deliberate, aimed at evaluating individual aspects of projects and trying to find the most cost-effective outside partners to carry out specific parts of the project.

Likewise, sponsors convey confidence and skill at playing the experienced general manager of a diverse, multivendor team involving both full- and niche-service providers. In order to achieve higher levels of quality and efficiency, sponsors are finding that they must proactively and flexibly manage teams comprised of internally and externally based resources. Global projects involving the utilization of local and international CROs in combination is yet another variation on the flexible outsourcing practices now utilized by sponsors.

Despite the time and budget constraints that usually occur at project initiation, some sponsors and CROs are conducting project kick-off meetings. Vogel⁷ recently noted that most outsourcing failures can be traced to differences in sponsor and CRO expectations. He described how the project kick-off meeting can be used to negotiate mutual understandings in six critical project governance areas: roles and responsibilities of sponsor and provider team members; succession planning at the sponsor and provider levels; communication and decision-making strategy; expectations and performance metrics; issue resolution process; and budget planning and management. Sponsors report that some of these governance topics are being addressed when project kick-off meetings are held. However, the evidence suggests that project kick-off meetings are not held for a majority of projects

Conclusions The evidence from this survey supports a continued role for outsourcing in clinical drug development as sponsor practices become more advanced and more efficient. Sponsors report significant improvement in the quality of services delivered by full-service and niche-service CROs. Sponsors also report that they are increasingly making strategic decisions on what activities to outsource and which type of CRO (full-service, niche-service, regional abroad) to contract with. The authors intend to follow up this survey with one directed to full-service CROs and niche-service CROs to gain their perspective on outsourcing practices and trends.

Acknowledgements The authors wish to thank Toby Jane Hindin and Barbara Sefchick for their assistance in conducting this survey and analyzing the data.

References 1. J. Kreger, Investment Analyst Report, William Blair & Company, 2005.

2. Wall Street Forecast and Analysis of Outsourcing Trends, 14th Annual Partnerships with CROs and Other Outsourcing Providers, April 6, 2005.

3. J. Vogel, "Achieving Results with Contract Research Organizations: Pharmaceutical Industry Views," Applied Clinical Trials, 2 (1) 44–49 (January 1993).